Exhibit 10.1

 

EXECUTION COPY

 

 

 

PURCHASE AGREEMENT

 

AMONG

 

LEUCADIA NATIONAL CORPORATION,

 

BALDWIN ENTERPRISES, INC.,

 

LEVEL 3 COMMUNICATIONS, LLC

 

AND

 

LEVEL 3 COMMUNICATIONS, INC.

 

Dated as of October 30, 2005

 

 

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TABLE OF CONTENTS

 

 

 

Page

SECTION 1.

DEFINITIONS

1

 

 

 

SECTION 2.

PURCHASE AND SALE OF MEMBERSHIP UNITS

10

 

 

 

SECTION 2.1.

Components of Purchase Price

10

SECTION 2.2.

Substitution Rights

11

SECTION 2.3.

Closing Date Transactions

12

SECTION 2.4.

Allocation of Purchase Price

12

SECTION 2.5.

Further Assurances

12

 

 

 

SECTION 3.

ADJUSTMENT TO PURCHASE PRICE

13

 

 

 

SECTION 3.1.

Closing Date Adjustments

13

SECTION 3.2.

Post-Closing Determination

14

SECTION 3.3.

Post-Closing Adjustment

15

SECTION 3.4.

Estimate of Adjusted Net Working Capital

15

 

 

 

SECTION 4.

CLOSING

15

 

 

 

SECTION 5.

REPRESENTATIONS AND WARRANTIES OF THE SELLER

15

 

 

 

SECTION 5.1.

Corporate Organization

16

SECTION 5.2.

Qualification to Do Business

16

SECTION 5.3.

No Conflict or Violation

16

SECTION 5.4.

Consents and Approvals

16

SECTION 5.5.

Authorization and Validity of Agreement

17

SECTION 5.6.

Capitalization and Related Matters

17

SECTION 5.7.

Equity Investments

18

SECTION 5.8.

Financial Statements

18

SECTION 5.9.

Absence of Certain Changes or Events

19

SECTION 5.10.

Tax Matters

20

SECTION 5.11.

Absence of Undisclosed Liabilities

22

SECTION 5.12.

Company Real Property

22

SECTION 5.13.

Assets of the Company and its Subsidiaries

22

SECTION 5.14.

Intellectual Property

22

SECTION 5.15.

Licenses and Permits

22

SECTION 5.16.

Compliance with Law

22

 

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Page

SECTION 5.17.

Litigation

22

SECTION 5.18.

Contracts

22

SECTION 5.19.

Employee Plans

22

SECTION 5.20.

Insurance

22

SECTION 5.21.

Transactions with Directors, Officers, Managers, and Affiliates

22

SECTION 5.22.

Suppliers and Customers

22

SECTION 5.23.

Labor Matters

22

SECTION 5.24.

Environmental Matters

22

SECTION 5.25.

No Brokers

22

SECTION 5.26.

Acquisition of the Shares

22

SECTION 5.27.

SBC

22

SECTION 5.28.

No Other Representations or Warranties

22

 

 

 

SECTION 6.

REPRESENTATIONS AND WARRANTIES OF THE BUYER AND LEVEL 3

22

 

 

 

SECTION 6.1.

Corporate Organization

22

SECTION 6.2.

Qualification to Do Business

22

SECTION 6.3.

No Conflict or Violation

22

SECTION 6.4.

Consents and Approvals

22

SECTION 6.5.

Authorization and Validity of Agreement

22

SECTION 6.6.

Capitalization and Related Matters.

22

SECTION 6.7.

SEC Filings

22

SECTION 6.8.

No Material Adverse Effect

22

SECTION 6.9.

Private Placement

22

SECTION 6.10.

No Brokers

22

SECTION 6.11.

Sufficiency of Funds

22

SECTION 6.12.

No Other Representations or Warranties

22

 

 

 

SECTION 7.

COVENANTS OF LEUCADIA AND THE SELLER

22

 

 

 

SECTION 7.1.

Conduct of Business Before the Closing Date

22

SECTION 7.2.

Consents and Approvals

22

SECTION 7.3.

Access to Properties and Records

22

 

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Page

SECTION 7.4.

Pre-Closing Transfers

22

SECTION 7.5.

Registration Statement and Level 3 Commission Filing Requirements

22

SECTION 7.6.

Negotiations

22

SECTION 7.7.

Certain Real Estate Matters

22

SECTION 7.8.

Commercially Reasonable Efforts

22

SECTION 7.9.

Notice of Breach

22

SECTION 7.10.

Stock Certificate Legend

22

SECTION 7.11.

Non-Solicitation

22

SECTION 7.12.

Employees and Employee Benefits

22

SECTION 7.13.

Tax Matters

22

SECTION 7.14.

Name

22

SECTION 7.15.

Reimbursements; Cash Balance

22

SECTION 7.16.

Transferred Benefit Plans

22

 

 

 

SECTION 8.

COVENANTS OF LEVEL 3 AND THE BUYER

22

 

 

 

SECTION 8.1.

Commercially Reasonably Efforts

22

SECTION 8.2.

Consents and Approvals

22

SECTION 8.3.

Notice of Breach

22

SECTION 8.4.

Listing of Shares

22

SECTION 8.5.

WilTel Benefits Plans

22

SECTION 8.6.

Access to Properties and Records

22

SECTION 8.7.

Reimbursements; Cash Balance

22

SECTION 8.8.

Retention Payments

22

 

 

 

SECTION 9.

INDEMNIFICATION

22

 

 

 

SECTION 9.1.

Survival

22

SECTION 9.2.

Indemnification by Leucadia and the Seller

22

SECTION 9.3.

Indemnification by Level 3 and the Buyer

22

SECTION 9.4.

Procedures for Indemnification

22

SECTION 9.5.

Exclusive Remedy

22

 

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Page

SECTION 10.

CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER

22

 

 

 

SECTION 10.1.

Representations and Warranties of the Buyer and Level 3

22

SECTION 10.2.

Performance of the Obligations of the Buyer and Level 3

22

SECTION 10.3.

HSR Act

22

SECTION 10.4.

No Violation of Orders

22

SECTION 10.5.

No Material Adverse Change

22

SECTION 10.6.

Lease Agreement

22

SECTION 10.7.

Registration Rights Agreement

22

SECTION 10.8.

Securities Matters

22

SECTION 10.9.

Opinion of Counsel

22

SECTION 10.10.

Other Closing Documents

22

SECTION 10.11.

SBC Consent to Assignment

22

SECTION 10.12.

The Buyer Reimbursements; Cash Balance

22

 

 

 

SECTION 11.

CONDITIONS PRECEDENT TO PERFORMANCE BY THE BUYER AND LEVEL 3

22

 

 

 

SECTION 11.1.

Representations and Warranties of Leucadia and the Seller

22

SECTION 11.2.

Performance of the Obligations of Leucadia and the Seller

22

SECTION 11.3.

Approvals

22

SECTION 11.4.

HSR Act

22

SECTION 11.5.

No Violation of Orders

22

SECTION 11.6.

No Pension Plan Termination

22

SECTION 11.7.

No Material Adverse Change

22

SECTION 11.8.

Pre-Closing Transfers

22

SECTION 11.9.

The Company’s Credit Documents

22

SECTION 11.10.

The Company’s Real Estate Debt Documents

22

SECTION 11.11.

Lease Agreement

22

SECTION 11.12.

Registration Rights Agreement

22

SECTION 11.13.

Opinion of Counsel

22

SECTION 11.14.

Other Closing Documents

22

SECTION 11.15.

Tax Related Documentation

22

SECTION 11.16.

The Seller Pre-Closing Transfers, Reimbursements and Cash Balance

22

 

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Page

SECTION 12.

TERMINATION

22

 

 

 

SECTION 12.1.

Conditions of Termination

22

SECTION 12.2.

Effect of Termination

22

 

 

 

SECTION 13.

MISCELLANEOUS

22

 

 

 

SECTION 13.1.

Successors and Assigns

22

SECTION 13.2.

Governing Law, Jurisdiction

22

SECTION 13.3.

Expenses

22

SECTION 13.4.

Severability

22

SECTION 13.5.

Notices

22

SECTION 13.6.

Parent Guaranties.

22

SECTION 13.7.

Amendments; Waivers

22

SECTION 13.8.

Public Announcements

22

SECTION 13.9.

Entire Agreement

22

SECTION 13.10.

Parties in Interest

22

SECTION 13.11.

Scheduled Disclosures

22

SECTION 13.12.

Section and Paragraph Headings

22

SECTION 13.13.

Counterparts

22

 

v

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INDEX TO SCHEDULES

 

1.1

Adjusted Net Working Capital Categories

1.2

Seller’s Knowledge

1.5(a)

Miscellaneous Retention Plans

1.5(b)

Former Executive Retention Agreements

3.4

Estimate of Adjusted Net Working Capital

5.1

Subsidiaries

5.2

Qualification to do Business

5.3

No Conflict or Violation

5.4

Leucadia/Seller/Company Consents and Approvals

5.6(b)

Capitalization and Related Matters

5.7

Equity Investments

5.8

Financial Statements

5.9

Absence of Certain Changes or Events

5.10

Tax Matters

5.11

Absence of Undisclosed Liabilities

5.12(a)

Owned Real Property

5.12(b)

Leased Real Property

5.12(c)

Lease Amendments Adverse to the Businesses

5.12(d)

Agreements Affecting Company Real Property

5.12(e)

Material Improvements, Systems and Fixtures

5.13(a)

Assets of the Company and the Retained Subsidiaries

5.14(a)

Unlicensed IP/Non-Compliance

5.14(b)

Listed Intellectual Property

5.14(c)

Agreements relating to the Intellectual Property

5.14(d)

Intellectual Property Claims and Indemnification Agreements

5.15

Licenses and Permits

5.16

Compliance with Law

5.17

Litigation

5.18(a)

Contracts

5.18(f)

Contracts with Beneficial Pricing Clauses

5.18(h)

Maximum Liability - Leased Shared Network Circuits

5.18(i)

Shared Network Circuits

5.19(a)

Employee Benefit Plans

5.19(g)

Claims/Actions against Employee Benefit Plans

5.19(h)

ERISA Non-Compliance/Company Securities Included in Assets of Employee Benefit
Plans

5.19(i)

Employee Benefit Plan Payments

5.19(j)

OPEB Plans Participants

5.20

Insurance

5.21

Transactions with Directors, Officers, Managers and Affiliates

5.22(a)

Top Suppliers

5.22(b)

Top Customers

5.23(a)

Non-Terminable Employment Agreements/ Employment Agreements Requiring
Payments/Consulting Agreements

5.23(b)

Labor Law Violations/Notices

 

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5.23(c)(i)

Maximum Aggregate Severance

5.23(c)(ii)

Maximum Aggregate Obligations Under Company Plans

5.24

Environmental Matters

5.27(a)

SBC Credits, Refunds or Payments

5.27(b)

Included Services Billed Amounts

5.27(c)

SBC Material Disputes

6.4

Buyer/Level 3 Consents and Approvals

6.6

Capitalization and Related Matters

7.1(a)

Conduct of Businesses Before Closing Date

7.1(a)(vii)

New Employment Plans/Arrangements

7.1(b)(vi)

Capital Expenditure Projects

7.4

Excluded Assets; Excluded Liabilities

Annex A to 7.4

WilTel Technology Center, LLC Assets

7.7(a)

Leases to be Renewed

7.7(b)

Leases to Expire

7.7(c)

Leases to be Terminated

9.2(a)

Leucadia Covered Matters

9.3(a)(iii)

Level 3 Covered Matters

10.6

Form of Lease Agreement for Company’s Tulsa, Oklahoma headquarters

10.9

Form of Opinion of Counsel to the Buyer

10.11

SBC Consent to Assignment

11.3

Required Consents and Approvals

11.13

Form of Opinion of Counsel to the Seller

 

INDEX TO EXHIBITS

 

Exhibit A

Form of Registration Rights Agreement

 

vii

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PURCHASE AGREEMENT

 

PURCHASE AGREEMENT, dated as of October 30, 2005 (this “Agreement”), by and
among Leucadia National Corporation, a New York corporation (“Leucadia”),
Baldwin Enterprises, Inc., a Colorado corporation and wholly owned Subsidiary of
Leucadia (the “Seller”), Level 3 Communications, LLC, a Delaware limited
liability company (the “Buyer”), and Level 3 Communications, Inc., a Delaware
corporation (“Level 3”).

 

W I T N E S S E T H:

 

WHEREAS, WilTel Communications Group, LLC, a Nevada limited liability company
(the “Company”), is a telecommunications company that, together with its
Subsidiaries, conducts the Telecommunications Business and the Vyvx Business
(together, the “Businesses”);

 

WHEREAS, Seller owns all of the issued and outstanding membership units of the
Company (the “Membership Units”); and

 

WHEREAS, the Buyer desires to purchase the Membership Units from the Seller, and
the Seller desires to sell the Membership Units to the Buyer, in each case, upon
the terms and subject to the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing 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:

 

“Action” — See Section 5.17;

 

“Actual Adjusted Net Working Capital” — See Section 3.2;

 

“Actual Adjusted Net Working Capital Report” — See Section 3.2;

 

“Additional Cash Amount” — See Section 2.1;

 

“Adjusted Net Working Capital” shall mean the amount equal to (i) those current
assets of the Company and the Retained Subsidiaries (other than Excluded Assets)
on a consolidated basis in the balance sheet categories identified on
Schedule 1.1 as being included in the calculation of Adjusted Net Working
Capital (it being understood that current assets will be deemed to be increased
by the remaining balance of any reserve as of the Measurement Date that had been
established on or prior to October 24, 2005 by the Company or the Retained
Subsidiaries in respect of SBC disputes as to which written claims have been
received by the Company or its Subsidiaries on or before October 24, 2005, which
increase shall not exceed the amount of reserves set forth on Schedule 5.27(c))
minus (ii) those current liabilities of the Company and the Retained
Subsidiaries (other than Excluded Liabilities) on a consolidated basis

 

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in the balance sheet categories identified on Schedule 1.1 as being included in
the calculation of Adjusted Net Working Capital, in each case, as of the close
of business on the Measurement Date, and determined in accordance with GAAP
applied on a consistent basis consistent with, and following the accounting
principles, procedures, policies and methods employed in preparing, the
August 31 Balance Sheet;

 

“Affiliates” shall mean, with respect to a Person, any Person, directly or
indirectly, controlling, controlled by or under common control with the Person
specified;

 

“Agreement” — See Preamble hereto;

 

“Aircraft Leases” shall mean (i) Sublease and Consent Agreement between CXL
Aviation, LLC (sublessor) and WilTel Aircraft Leasing, LLC (subleasee), dated
September 30, 2005 (regarding N359WC), (ii) Sublease and Consent Agreement
between CX Aviation, LLC (sublessor) and WilTel Aircraft Leasing, LLC
(subleasee), dated September 30, 2005 (regarding N358WC) and (iii) Hangar Lease
Agreement between Tulsair Beechcraft, Inc. and Williams Communications, LLC,
dated April 25, 2001;

 

“Allocation” — See Section 2.4(a);

 

“August 31 Balance Sheet” — See Section 3.1(b);

 

“August Financial Statements” — See Section 5.8;

 

“Benefit Plan Substitution Right” — See Section 2.2(b);

 

“Businesses” — See Recitals hereto;

 

“Business Day” shall mean a day other than a Saturday, Sunday or other day on
which banks in the State of New York are required or authorized to close;

 

“Buyer” — See Preamble hereto;

 

“Buyer Indemnitees” — See Section 9.2(a);

 

“Cash Purchase Price” — See Section 2.1;

 

“Cash Substitution Right” — See Section 2.2(a);

 

“Closing” — See Section 4;

 

“Closing Balance Sheet” — See Section 3.2;

 

“Closing Date” — See Section 4;

 

“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, including rules and regulations adopted thereunder;

 

“Code” shall mean the Internal Revenue Code of 1986, as amended;

 

2

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“Commission” shall mean the Securities and Exchange Commission;

 

“Company” — See Recitals hereto;

 

“Company’s Credit Documents” shall mean the (i) Third Amended and Restated
Credit and Guaranty Agreement, dated as of September 24, 2004, among the
Company, WilTel Communications, LLC, certain of its domestic Subsidiaries, as
loan parties, the several banks and other financial institutions or entities
from time to time parties thereto as lenders, Credit Suisse First Boston, acting
through its Cayman Islands branch, as administrative agent, as first lien
administrative agent and as second lien administrative agent, and Wells Fargo
Foothill, LLC, as syndication agent, and (ii) First Amendment to Third Amended
and Restated Credit and Guaranty Agreement, dated as of September 2, 2005,
(iii) Second Amended and Restated Security Agreement, dated as of September 24,
2004, among the Company, WilTel Communications, LLC, and the additional grantors
party thereto in favor of Credit Suisse First Boston, acting through its Cayman
Islands branch, as administrative agent, as first lien administrative agent and
as second lien administrative agent and (iv) and any related UCC financing
statements filed by the lenders a party thereto;

 

“Company’s Real Estate Debt Documents” shall mean the (i) Long Term Note in the
original principal amount of $100 million, made by WilTel Technology Center, LLC
(f/k/a Williams Technology Center, LLC), as borrower, WilTel Communications
Group, LLC (f/k/a Williams Communications Group, Inc.), as guarantor, and WilTel
Communications, LLC (f/k/a Williams Communications, LLC), as guarantor, in favor
of the Williams Headquarters Building Company, dated October 15, 2002,
(ii) Mortgage with Power of Sale, Security Agreement, Assignment of Leases,
Rents and Profits, Financing Statement and Fixture Filing, dated as of
October 15, 2002, made by WilTel Technology Center, LLC (f/k/a Williams
Technology Center, LLC), as mortgagor, to Williams Headquarters Building
Company, as mortgagee (the “Mortgage”), as amended by the First Amendment to the
Mortgage, dated September 24, 2004, by and between Williams Headquarters
Building Company and WilTel Technology Center, LLC (f/k/a Williams Technology
Center, LLC) and (iii) Second Mortgage, Assignment of Leases and Rents, Security
Agreement, Financing Statement and Fixture Filing dated as of October 15, 2002
 by Williams Technology Center, LLC to Bank of America, N.A., as administrative
agent, dated October 15, 2002, as amended and assigned by Assignment of
Beneficiary’s Interest and Amendment to Mortgage, Assignment of Leases and
Rents, Security Agreement and Financing Statement of WilTel Technology Center,
LLC as Mortgagor in favor of Credit Suisse First Boston, acting through its
Cayman Islands Branch, as Administrative Agent, as First Lien Administrative
Agent and as Second Lien Administrative Agent, as Mortgagee, dated as of
September 23, 2004;

 

“Company Real Property” — See Section 5.12(b);

 

“Confidentiality Agreement” shall mean that certain Non-Disclosure Agreement by
and among Leucadia, WilTel and Level 3, dated October 13, 2004, as amended;

 

“Contracts” — See Section 5.18;

 

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“Covered Employee” shall mean any employee of the Company or the Retained
Subsidiaries having the title of director or above (other than the Chief
Executive Officer of the Company as of the date hereof);

 

“Covered Matter” — See Section 9.2(a)(vii);

 

“Deferred Compensation Plan” — See Section 7.12(b);

 

“Discharged Real Estate Debt Documents” shall mean the (i) Short Term Note in
the original principal amount of $74,360,295.29, made by WilTel Technology
Center, LLC (f/k/a Williams Technology Center, LLC), as borrower, WilTel
Communications Group, Inc. (f/k/a Williams Communications Group, Inc.), as
guarantor, and WilTel Communications, LLC (f/k/a Williams Communications, LLC),
as guarantor, in favor of the Williams Headquarters Building Company, dated
October 15, 2002, (ii) Pledge Agreement, dated as of October 15, 2002, made by
CG Austria, Inc. to Williams Headquarters Building Company and (iii) Equitable
Mortgage, dated as of October 15, 2002 made by CG Austria, Inc. to Williams
Headquarters Building Company;

 

“Employee Benefit Plans” — See Section 5.19(a);

 

“Environmental Laws” shall mean any applicable laws, regulations or other
requirements of law relating to pollution or the protection of the environment
or natural resources;

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, including the rules and regulations adopted thereunder;

 

“ERISA Affiliate” shall mean any Person under common control, or treated as a
single employer, with the Company or any Retained Subsidiaries, within the
meaning of Section 414(b), (c), (m) or (o) of the Code;

 

“Estimated Adjusted Net Working Capital” — See Section 3.1(b);

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended;

 

“Excluded Assets” shall mean (i) all cash and cash equivalents (including checks
payable to the Company or any of its Subsidiaries and deposited into a bank
account or lock box prior to the Measurement Date) of the Company and its
Subsidiaries as of the close of business on the Measurement Date to the extent
in excess of $100 million, (ii) marketable securities, (iii) all payments to the
Company or any of its Affiliates receivable from SBC pursuant to the SBC
Settlement Agreement, (iv) all right, title and interest in and to the
Transferred Subsidiaries, (v) all other rights and assets set forth on
Schedule 7.4 hereto and (vi) any cash received after the Measurement Date on
account of any of the assets set forth in (ii), (iii) or (v) above;

 

“Excluded Liabilities” shall mean (i) all liabilities of the Company and its
Subsidiaries set forth on Schedule 7.4 hereto (including, without limitation,
liabilities relating to the Company’s Credit Documents, the Company’s Real
Estate Debt Documents and the

 

4

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Retirement Plan) and (ii) those liabilities and obligations of the Company and
its Subsidiaries relating to or arising from the Excluded Assets;

 

“FCC” — See Section 5.4;

 

“Financial Statements” — See Section 5.8;

 

“Former Executive Retention Agreements” shall mean those agreements set forth on
Schedule 1.5(b);

 

“GAAP” shall mean U.S. generally accepted accounting principles;

 

“Governmental Entity” shall mean any federal, state, local or foreign court,
governmental, regulatory or other public body, agency or authority (including
self-regulatory organizations), domestic or foreign;

 

“Hazardous Material” shall mean any hazardous substance, hazardous waste,
contaminant, pollutant, or toxic substance as defined under applicable
Environmental Laws, including petroleum and its fractions;

 

“HSR Act” — See Section 5.4;

 

“Income Taxes” shall mean all Taxes based upon, measured by, or calculated with
respect to (i) gross or net income or gross or net receipts or profits
(including, but not limited to, any capital gains, alternative minimum taxes,
net worth and any taxes on items of tax preference, but not including sales,
use, goods and services, real or personal property transfer or other similar
taxes), (ii) multiple bases (including, but not limited to, corporate franchise,
doing business or occupation taxes) if one or more of the bases upon which such
tax may be based upon, measured by, or calculated with respect to, is described
in clause (i) above, or (iii) withholding taxes measured with reference to or as
a substitute for any tax described in clauses (i) or (ii) above; and “Income
Tax” shall mean any one of them;

 

“Indemnitee” — See Section 9.4;

 

“Indemnitor” — See Section 9.4;

 

“Independent Accounting Firm” — See Section 3.2;

 

“Initial Restricted Period” — See Section 7.11(a);

 

“Intellectual Property” shall mean U.S. and foreign rights under patent,
copyright, moral rights, trademark and service mark (including the goodwill
associated therewith), trade name, trade dress, industrial design, database
rights, domain name, trade secret law or any other similar statutory provision
or common law doctrine; all patents and patent applications in any jurisdiction
pertaining to the foregoing, including re-issues, continuations, divisions,
continuations-in-part, renewals or extensions; and all other applications or
registrations related to the foregoing;

 

5

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“IRS” shall mean the Internal Revenue Service;

 

“IRUs” — See Section 5.18(c)(i)(B);

 

“July 31 Balance Sheet” — See Section 5.8;

 

“Lease Agreement” — See Section 10.6;

 

“Leased Real Property” — See Section 5.12(b);

 

“Leases” — See Section 5.12(b);

 

“Leucadia” — See Preamble hereto;

 

“Level 3” — See Preamble hereto;

 

“Level 3 Common Stock” shall mean common stock, par value $0.01 per share, of
Level 3;

 

“Level 3 SEC Reports” — See Section 5.26(b);

 

“Licenses and Permits” — See Section 5.15;

 

“Lien” shall mean any mortgage, pledge, security interest, encumbrance or title
defect, lease, lien (statutory or other), conditional sale agreement, claim,
charge, limitation or restriction;

 

“Listed Intellectual Property” — See Section 5.14(b);

 

“Listed License Agreements” — See Section 5.14(c);

 

“Losses” — See Section 9.2(a);

 

“Material Adverse Effect” when used in connection with the Company and the
Retained Subsidiaries or Level 3 and its Subsidiaries, as the case may be, shall
mean any change, circumstance, effect or event that, individually or when taken
together, is or would reasonably be expected to be materially adverse to (A) the
business, assets, liabilities, condition (financial or other) or results of
operations of the Company and the Retained Subsidiaries or Level 3 and its
Subsidiaries, as the case may be, in each case taken as a whole, except in each
case for any change, circumstance, effect or event (i) affecting the industry in
which the Company or Level 3, as the case may be, operate in general and which
does not disproportionately affect such entity in any material respect,
(ii) affecting general economic, regulatory or political conditions, which does
not disproportionately affect such entity in any material respect, or
(iii) clearly shown to be directly resulting from this Agreement and the
announcement or performance hereof and the transactions contemplated hereby,
including without limitation, the direct impact thereof on relationships with
customers, suppliers or employees, or (B) the ability of the Seller, Leucadia,
the Company, the Retained Subsidiaries or WilTel Technology Center, LLC or Level
3 or its Subsidiaries, as the case may be, to perform their obligations under
this Agreement, the Lease

 

6

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Agreement or the Registration Rights Agreement to which they are a party or to
consummate the transactions contemplated hereby or thereby, including as a
consequence of any material impediment, interference or delay;

 

“Measurement Date” shall mean the earlier to occur of the Closing Date and
December 31, 2005;

 

“Membership Units” — See Recitals hereto;

 

“Miscellaneous Retention Plans” shall mean those items set forth on
Schedule 1.5(a);

 

“Month End” — See Section 3.1(b);

 

“Month End Balance Sheet” — See Section 3.1(b);

 

“Multiemployer Plan” — See Section 5.19(c);

 

“OPEB Plans” shall mean the WilTel Communications, LLC Health Plan for Full-time
Employees and the WilTel Communications, LLC Insurance Plan;

 

“Organizational Documents” shall mean certificates of incorporation, by-laws,
certificates of formation, limited liability company operating agreements,
limited liability partnership agreements, partnership or limited partnership
agreements or other formation or governing documents of a particular entity;

 

“Owned Real Property” — See Section 5.12(a);

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation;

 

“Permitted Lien” shall mean (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance referred to in Section 5.12(a); (ii) statutory liens for current
Taxes, assessments or other governmental charges not yet delinquent or the
amount or validity of which is being contested in good faith by appropriate
proceedings; (iii) mechanics’, carriers’, workers’, repairers’ and similar Liens
arising or incurred in the ordinary course of business; (iv) zoning, entitlement
and other land use and environmental regulations by any Governmental Entity;
(v) title of a lessor under a capital or operating lease; (vi) purchase money
security interests granted to vendors with respect to trade payables recorded on
the Company’s financial statements in accordance with GAAP and arising in the
ordinary course of business; and (vii) such other imperfections in title,
charges, easements, restrictions or encumbrances which do not interfere
materially with the use, operation or enjoyment, or materially detract from the
value of such property or asset;

 

“Person” shall mean any individual, corporation, company, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Entity or other entity;

 

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“Post-Closing Tax Period” shall mean any taxable period beginning after the
Closing Date and the portion starting the day following the Closing Date of any
Straddle Period;

 

“Pre-Closing Taxes” shall mean all liability for Taxes of the Company or any of
its Subsidiaries but, in the case of Taxes other than Income Taxes, only to the
extent in excess of any Taxes reflected in the determination of the Actual
Adjusted Net Working Capital for Pre-Closing Tax Periods, except for any such
liability resulting from any transaction not in the ordinary course of business
occurring on the Closing Date after the Closing;

 

“Pre-Closing Tax Period” shall mean any taxable period ending on or before the
Closing Date and the portion ending on and including the Closing Date of any
Straddle Period;

 

“Pre-Closing Transfers” — See Section 7.4;

 

“Property Taxes” shall mean all real, personal and intangible property Taxes,
and any similar Taxes;

 

“Purchase Price” — See Section 2.1;

 

“Registration Rights Agreement” — See Section 10.7;

 

“Registration Statement” — See Section 7.5;

 

“Retained Subsidiaries” shall mean all Subsidiaries of the Company other than
the Transferred Subsidiaries;

 

“Retirement Plan” — See Section 7.12(a);

 

“SBC” shall mean SBC Communications Inc.;

 

“SBC Agreement” shall mean the Master Services Agreement among WilTel
Communications, LLC, WilTel Local Network, LLC, SBC Services, Inc. and SBC
Communications Inc., dated as of June 15, 2005;

 

“SBC Settlement Agreement” shall mean the Termination, Mutual Release and
Settlement Agreement, dated June 15, 2005, among SBC, SBC Operations, Inc., SBC
Long Distance, LLC, WilTel Communications Group, LLC, WilTel Communications LLC
and Leucadia;

 

“Securities Act” shall mean the Securities Act of 1933, as amended;

 

“Seller” — See Preamble hereto;

 

“Seller’s Knowledge,” or “Knowledge of the Seller”, and other similar phrases
shall mean the actual knowledge of the individuals listed on Schedule 1.2, after
due inquiry of the senior employees of Leucadia, the Seller, the Company and its
Subsidiaries who have administrative or operational responsibility for the
particular subject matter in question;

 

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“Severance Plan” shall mean the Company Severance Protection Plan effective as
of December 1, 2004;

 

“Shared Network Circuits” —  See Section 5.18(i);

 

“Shares” — See Section 2.1;

 

“Software” shall mean computer programs, including but not limited to source
code, object code, executable code, programming tools, drawings, specifications
and data related thereto, in any form, together with all related documentation;

 

“State PUC” shall mean a state public service and utility commission or similar
Governmental Entity;

 

“Straddle Period” shall mean any taxable period that commences prior to and
includes (but does not end on) the Closing Date;

 

“Straddle Period Tax Proceeding” — See Section 7.13(f);

 

“Straddle Tax Return” shall mean any Tax Return required to be filed by the
Company or any of its Subsidiaries in respect of a Straddle Period;

 

“Subsequent Restricted Period” — See Section 7.11(b);

 

“Subsidiaries” shall mean, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock or other equity interest entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereto is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof;

 

“Substituted Shares” — See Section 2.2;

 

“Substitution Rights”  shall mean the Cash Substitution Right and the Benefit
Plan Substitution Right;

 

“Tax Proceeding” — See Section 7.13(e);

 

“Taxes” shall mean (i) all federal, state, local or foreign taxes, including,
without limitation, income, gross income, gross receipts, production, excise,
employment, sales, use, transfer, ad valorem, value added, 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,
alternative or add-on minimum, estimated and other taxes, governmental fees or
like charges of any kind whatsoever, including any interest, penalties or
additions thereto, whether disputed or not; (ii) any liability to pay amounts
due pursuant to clause (i) on behalf of another Person, including any
predecessor, under any contract, reimbursement or indemnity agreement, as
transferee, successor or otherwise; and (iii) any liability of any Person,
including any

 

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predecessor, to pay amounts described in clause (i) by reason of liability
imposed under Treasury Regulations § 1.1502-6 or similar provision imposing
liability by reason of participation in a consolidated, combined, unitary or
similar Tax Return or similar filing; and “Tax” shall mean any one of them;

 

“Tax Return” shall mean any report, return, information return, filing, claim
for refund or other information, including any schedules or attachments thereto,
and any amendments to any of the foregoing required to be supplied to a taxing
authority in connection with Taxes;

 

“Technology” shall mean, collectively, discoveries, designs, formulas,
algorithms, processes, procedures, models, methods (including but not limited to
business methods), techniques, ideas, know-how, Software, tools, data,
databases, confidential and proprietary information, inventions (whether on not
patentable), creations, improvements, writings, designs, mask works or other
works of authorship, and all recordings, graphs, drawings, reports, analyses,
other writings, Uniform Resource Locators, Internet Web sites, and any other
embodiment of the above, in any form whether or not specifically listed herein;

 

“Telecommunications Business” shall mean the business, other than the Vyvx
Business of the Company and its Subsidiaries, consisting of an inter-city and
local fiber-optic network providing Internet, data and voice and other
telecommunications services;

 

“Transferee” — See Section 7.4;

 

“Transferred Benefit Plans” shall mean the Retirement Plan and the Deferred
Compensation Plan;

 

“Transferred Subsidiaries” shall mean WilTel Aircraft Leasing, LLC, a Delaware
limited liability company, and WilTel Technology Center, LLC, a Delaware limited
liability company, each of which is a Subsidiary of the Company on the date
hereof and which shall cease to be a Subsidiary of the Company or the Retained
Subsidiaries upon completion of the Pre-Closing Transfers;

 

“Vendor Contracts” — See Section 5.18(c)(ii);

 

“Vyvx Business” shall mean the business segment of the Company that provides
data services, transmits audio, video and multimedia content, and distributes
advertising media in physical and electronic form; and

 

“WARN” shall mean the Worker Adjustment and Retraining Notification Act or any
similar state or local “plant closing” law.

 

SECTION 2.  PURCHASE AND SALE OF MEMBERSHIP UNITS.

 

SECTION 2.1.  COMPONENTS OF PURCHASE PRICE.  SUBJECT TO THE TERMS AND CONDITIONS
SET FORTH IN THIS AGREEMENT AND IN RELIANCE UPON THE REPRESENTATIONS AND
WARRANTIES OF THE SELLER SET FORTH BELOW, ON THE CLOSING DATE THE BUYER SHALL
PURCHASE FROM THE SELLER AND THE SELLER SHALL SELL TO THE BUYER, THE MEMBERSHIP
UNITS, FREE AND CLEAR OF ALL LIENS, FOR A TOTAL

 

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PURCHASE PRICE (THE “PURCHASE PRICE”) CONSISTING OF (A) $370 MILLION IN CASH (AS
SUCH AMOUNT MAY BE ADJUSTED PURSUANT TO EITHER SECTION 2.2 OR SECTION 3 HEREOF,
THE “CASH PURCHASE PRICE”), (B) 115 MILLION NEWLY ISSUED SHARES OF LEVEL 3
COMMON STOCK (AS SUCH NUMBER OF SHARES MAY BE ADJUSTED (I) PURSUANT TO
SECTION 2.2 HEREOF AND (II) AS A RESULT OF ANY STOCK SPLIT, COMBINATION,
SUBDIVISION OR RECLASSIFICATION, MERGER, EXCHANGE OF SHARES OR OTHER SIMILAR
BUSINESS COMBINATION TRANSACTION, OR ANY DIVIDENDS OR DISTRIBUTIONS WITH RESPECT
TO SUCH SHARES OF LEVEL 3 COMMON STOCK, IN EACH CASE, AFTER THE DATE HEREOF AND
PRIOR TO THE CLOSING (THE “SHARES”)) AND (C) AN ADDITIONAL CASH PAYMENT OF $100
MILLION WITH RESPECT TO THE CASH BALANCE TO BE RETAINED BY THE COMPANY AS OF THE
MEASUREMENT DATE (THE “ADDITIONAL CASH AMOUNT”).

 

SECTION 2.2.  SUBSTITUTION RIGHTS.

 

(A)                                  CASH SUBSTITUTION RIGHT.  NOT LESS THAN
THREE NOR MORE THAN FIVE BUSINESS DAYS PRIOR TO THE CLOSING, THE BUYER SHALL
HAVE THE RIGHT, IN ITS SOLE DISCRETION, UPON WRITTEN NOTICE TO THE SELLER, TO
ELECT TO REDUCE THE NUMBER OF SHARES OTHERWISE DELIVERABLE BY THE BUYER AT THE
CLOSING AND IN LIEU OF SUCH NUMBER OF SHARES NOT BEING DELIVERED (SUCH NUMBER OF
SHARES NOT BEING DELIVERED HEREUNDER REFERRED TO AS THE “SUBSTITUTED SHARES”)
PAY CASH TO THE SELLER AT THE CLOSING (THE “CASH SUBSTITUTION RIGHT”).  IF THE
BUYER EXERCISES ITS CASH SUBSTITUTION RIGHT, (I) THE CASH PURCHASE PRICE SHALL
BE INCREASED BY AN AMOUNT EQUAL TO THE PRODUCT OF (A) THE NUMBER OF SUCH
SUBSTITUTED SHARES (AS ADJUSTED AS A RESULT OF ANY STOCK SPLIT, COMBINATION,
SUBDIVISION OR RECLASSIFICATION, MERGER, EXCHANGE OF SHARES OR OTHER SIMILAR
BUSINESS COMBINATION TRANSACTION, OR ANY DIVIDENDS OR DISTRIBUTIONS WITH RESPECT
TO SUCH SHARES OF LEVEL 3 COMMON STOCK, IN EACH CASE, AFTER THE DATE HEREOF AND
PRIOR TO THE CLOSING) AND (B) THE GREATER OF (1) THE AVERAGE OF THE VOLUME
WEIGHTED SALES PRICES PER SHARE OF LEVEL 3 COMMON STOCK AS REPORTED BY THE
NASDAQ STOCK MARKET FOR THE 10 TRADING-DAY PERIOD ENDING UPON THE TRADING DAY
IMMEDIATELY PRECEDING THE DATE THE BUYER DELIVERS WRITTEN NOTICE OF ITS EXERCISE
OF THE CASH SUBSTITUTION RIGHT AND (2) $2.35, AND (II) THE NUMBER OF SHARES
DELIVERABLE AT CLOSING SHALL BE REDUCED BY THE NUMBER OF SUCH SUBSTITUTED
SHARES.

 

(B)                                 BENEFIT PLAN SUBSTITUTION RIGHT.  NOT LESS
THAN THREE NOR MORE THAN FIVE BUSINESS DAYS PRIOR TO THE CLOSING, THE BUYER
SHALL HAVE THE RIGHT, IN ITS SOLE DISCRETION, UPON WRITTEN NOTICE TO THE SELLER,
TO ELECT TO HAVE THE COMPANY RETAIN THE SPONSORSHIP OF THE TRANSFERRED BENEFIT
PLANS AND THE RELATED LIABILITIES AND OBLIGATIONS THEREUNDER IN RESPECT OF THE
PARTICIPANTS IN THE TRANSFERRED BENEFIT PLANS PRIOR TO THE CLOSING DATE (THE
“BENEFIT PLAN SUBSTITUTION RIGHT”).  IF THE BUYER EXERCISES ITS BENEFIT PLAN
SUBSTITUTION RIGHT, (I) THE NUMBER OF SHARES OTHERWISE DELIVERABLE BY THE BUYER
AT THE CLOSING (AS ADJUSTED AS A RESULT OF ANY STOCK SPLIT, COMBINATION,
SUBDIVISION OR RECLASSIFICATION, MERGER, EXCHANGE OF SHARES OR OTHER SIMILAR
BUSINESS COMBINATION TRANSACTION, OR ANY DIVIDENDS OR DISTRIBUTIONS WITH RESPECT
TO SUCH SHARES OF LEVEL 3 COMMON STOCK, IN EACH CASE, AFTER THE DATE HEREOF AND
PRIOR TO THE CLOSING) SHALL BE REDUCED BY A NUMBER EQUAL TO THE QUOTIENT
OBTAINED BY DIVIDING $80 MILLION BY THE GREATER OF (A) THE AVERAGE OF THE VOLUME
WEIGHTED SALES PRICES PER SHARE OF LEVEL 3 COMMON STOCK AS REPORTED BY THE
NASDAQ STOCK MARKET FOR THE 10 TRADING-DAY PERIOD ENDING UPON THE TRADING DAY
IMMEDIATELY PRECEDING THE DATE THE BUYER DELIVERS WRITTEN NOTICE OF ITS EXERCISE
OF THE BENEFIT PLAN SUBSTITUTION RIGHT AND (B) $2.35, (II) THE TRANSFERRED
BENEFIT PLANS SHALL NO LONGER BE EXCLUDED LIABILITIES FOR PURPOSES OF THIS
AGREEMENT AND SHALL BE DEEMED REMOVED FROM SCHEDULE 7.4 FOR ALL PURPOSES HEREOF
AND (III) THE ASSETS OF THE RETIREMENT PLAN HELD IN TRUST SHALL

 

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NO LONGER BE EXCLUDED ASSETS AND SHALL BE DEEMED REMOVED FROM SCHEDULE 7.4 FOR
ALL PURPOSES HEREOF.

 

SECTION 2.3.  CLOSING DATE TRANSACTIONS.  ON THE CLOSING DATE, THE BUYER SHALL
(I) PAY THE CASH PURCHASE PRICE AND THE ADDITIONAL CASH AMOUNT BY WIRE TRANSFER
OF IMMEDIATELY AVAILABLE FUNDS TO SUCH ACCOUNT (OR ACCOUNTS) AS THE SELLER
SHALL, NOT LESS THAN TWO BUSINESS DAYS PRIOR TO THE CLOSING DATE, DESIGNATE IN
WRITING TO THE BUYER AND (II) ISSUE THE SHARES TO THE SELLER (WITH ANY
FRACTIONAL SHARES THAT WOULD OTHERWISE RESULT ROUNDED TO THE NEAREST WHOLE
NUMBER) FREE AND CLEAR OF ALL LIENS (OTHER THAN LIENS INCURRED BY THE SELLER)
AND DELIVER OR CAUSE TO BE DELIVERED TO THE SELLER ONE OR MORE CERTIFICATES
THEREFOR REGISTERED IN THE NAME OF THE SELLER.  ON THE CLOSING DATE, THE SELLER
SHALL (A) DELIVER TO THE BUYER EVIDENCE OF THE MEMBERSHIP UNITS BEING PURCHASED
BY THE BUYER FROM THE SELLER AGAINST PAYMENT BY THE BUYER TO THE SELLER OF THE
PURCHASE PRICE FOR SUCH MEMBERSHIP UNITS AND (B) DULY AMEND THE ORGANIZATIONAL
DOCUMENTS OF THE COMPANY TO REFLECT, EFFECTIVE AS OF THE CLOSING DATE, THE
ADMISSION OF THE BUYER AS THE SOLE MEMBER OF THE COMPANY AND THE WITHDRAWAL OF
THE SELLER AS A MEMBER OF THE COMPANY.

 

SECTION 2.4.  ALLOCATION OF PURCHASE PRICE.

 

(A)                                  THE BUYER AND THE SELLER AGREE TO TREAT THE
SALE OF THE MEMBERSHIP UNITS AS A SALE OF THE ASSETS OF THE COMPANY BY THE
COMPANY TO THE BUYER FOR ALL FEDERAL, STATE AND LOCAL INCOME TAX PURPOSES
(INCLUDING TREATMENT AS A SALE OF THE ASSETS OF ANY OF THE COMPANY’S
SUBSIDIARIES THAT ARE DISREGARDED FOR TAX PURPOSES).  AS SOON AS REASONABLY
PRACTICABLE, BUT NOT LATER THAN 75 DAYS FOLLOWING THE CLOSING DATE, THE BUYER
SHALL PREPARE AND DELIVER TO THE SELLER A SCHEDULE WHICH SHALL SET FORTH THE
ALLOCATION OF THE PURCHASE PRICE, LIABILITIES AND OTHER RELATED ITEMS AMONG THE
ASSETS OF THE COMPANY (THE “ALLOCATION”).  THE SELLER SHALL, WITHIN 40 DAYS
AFTER THE DATE ON WHICH THE ALLOCATION IS DELIVERED TO THE SELLER, PROVIDE THE
BUYER WITH A WRITTEN NOTICE STATING THOSE ITEMS TO WHICH THE SELLER TAKES
EXCEPTION.  IF A CHANGE PROPOSED BY THE SELLER IS DISPUTED BY THE BUYER, THEN
THE SELLER AND THE BUYER SHALL NEGOTIATE IN GOOD FAITH TO RESOLVE SUCH DISPUTE. 
IF THE BUYER AND THE SELLER AGREE TO THE ALLOCATION, THE PARTIES FURTHER AGREE
TO ACT IN ACCORDANCE WITH THE ALLOCATION IN ANY FEDERAL, STATE AND LOCAL INCOME
AND FRANCHISE TAX RETURNS.

 

(B)                                 IF AND TO THE EXTENT THE BUYER AND THE
SELLER AGREE TO THE ALLOCATION, PROMPTLY AFTER THE CLOSING DATE (BUT NOT BEFORE
A RESOLUTION OF ALL DISPUTES, IF ANY, WITH REGARD TO THE CLOSING BALANCE SHEET)
THE BUYER SHALL PREPARE, IN CONSULTATION WITH THE SELLER OR THE SELLER’S
DESIGNEE, THOSE STATEMENTS OR FORMS (INCLUDING FORM 8594) REQUIRED BY
SECTION 1060 OF THE CODE AND THE TREASURY REGULATIONS PROMULGATED THEREUNDER
WITH RESPECT TO THE ALLOCATION.  SUCH STATEMENTS OR FORMS SHALL BE PREPARED
CONSISTENTLY WITH THE ALLOCATION IF AND TO THE EXTENT THE BUYER AND THE SELLER
AGREE TO THE ALLOCATION.  SUCH STATEMENTS OR FORMS SHALL BE FILED BY THE PARTIES
ON THEIR RESPECTIVE FEDERAL INCOME TAX RETURNS AS REQUIRED BY SECTION 1060 OF
THE CODE AND THE TREASURY REGULATIONS PROMULGATED THEREUNDER AND EACH PARTY
SHALL PROVIDE THE OTHER PARTY WITH A COPY OF SUCH STATEMENT OR FORM AS FILED.

 

SECTION 2.5.  FURTHER ASSURANCES.  CONSISTENT WITH THE TERMS AND CONDITIONS OF
THIS AGREEMENT AND TO EFFECTUATE THE PURPOSES OF THIS AGREEMENT AND THE OTHER
PRE-CLOSING TRANSACTIONS, AFTER THE CLOSING DATE, (I) THE BUYER AND ITS
AFFILIATES SHALL EXECUTE AND DELIVER TO THE SELLER SUCH FURTHER INSTRUMENTS OF
ASSIGNMENT, TRANSFER, CONVEYANCE, ENDORSEMENT, DIRECTION

 

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OR AUTHORIZATION AND SUCH OTHER DOCUMENTS REASONABLY REQUESTED BY THE SELLER IN
ORDER TO PERFECT TITLE OF THE SELLER TO THE EXCLUDED ASSETS AND SHALL TRANSFER
TO THE SELLER ANY PROCEEDS (INSURANCE, LITIGATION OR OTHERWISE) OF SUCH ASSETS
REALIZED OR RECEIVED BY THE BUYER OR ITS AFFILIATES AFTER THE CLOSING DATE AND
(II) THE SELLER AND ITS AFFILIATES SHALL EXECUTE AND DELIVER TO THE BUYER SUCH
FURTHER INSTRUMENTS OF ASSIGNMENT, TRANSFER, CONVEYANCE, ENDORSEMENT, DIRECTION
OR AUTHORIZATION AND SUCH OTHER DOCUMENTS REASONABLY REQUESTED BY THE BUYER IN
ORDER TO PERFECT TITLE OF THE BUYER AND ITS AFFILIATES TO THE ASSETS, RIGHTS AND
BUSINESS CONVEYED HEREUNDER AND SHALL TRANSFER TO THE BUYER THE PROCEEDS
(INSURANCE, LITIGATION OR OTHERWISE) OF SUCH ASSETS REALIZED OR RECEIVED BY THE
SELLER OR ITS AFFILIATES AFTER THE CLOSING DATE.

 

SECTION 3.  ADJUSTMENT TO PURCHASE PRICE.

 

In addition to any adjustment relating to the Buyer’s exercise of the Cash
Substitution Right or the Benefit Plan Substitution Right, the Purchase Price
shall be subject to adjustment as follows:

 

SECTION 3.1.  CLOSING DATE ADJUSTMENTS.  AT THE CLOSING, THE PURCHASE PRICE
SHALL BE ADJUSTED AS SET FORTH IN THIS SECTION 3.1.

 

(A)                                  IF THE CLOSING OCCURS AFTER DECEMBER 31,
2005, THEN THE CASH PURCHASE PRICE PAYABLE BY THE BUYER ON THE CLOSING DATE
SHALL BE INCREASED BY AN AMOUNT EQUAL TO THE INTEREST ON $370 MILLION FROM
JANUARY 1, 2006 TO (BUT NOT INCLUDING) THE CLOSING DATE AT A RATE OF 6.0% PER
ANNUM.

 

(B)                                 PRIOR TO THE CLOSING (BUT NO LESS THAN TWO
BUSINESS DAYS PRIOR TO THE CLOSING DATE), THE SELLER SHALL DELIVER TO THE BUYER
(I) THE CONSOLIDATED BALANCE SHEET OF THE COMPANY AND THE RETAINED SUBSIDIARIES
AS OF DECEMBER 31, 2005 OR (II) IF THE BALANCE SHEET DESCRIBED IN CLAUSE (I) IS
NOT AVAILABLE, THE THEN MOST RECENT REGULARLY PREPARED MONTH END CONSOLIDATED
BALANCE SHEET OF THE COMPANY AND THE RETAINED SUBSIDIARIES (WHICH SHALL BE AS OF
A  DATE NOT MORE THAN 50 DAYS PRIOR TO THE CLOSING DATE).  THE BALANCE SHEET
DELIVERED PURSUANT TO THE FOREGOING SENTENCE IS REFERRED TO AS THE “MONTH END
BALANCE SHEET” AND THE DATE OF SUCH MONTH END BALANCE SHEET IS REFERRED TO AS
THE “MONTH END.”  THE MONTH END BALANCE SHEET SHALL BE ACCOMPANIED BY A
SCHEDULE SETTING FORTH AN ESTIMATE OF THE ADJUSTED NET WORKING CAPITAL AS OF THE
CLOSE OF BUSINESS ON THE MONTH END (THE “ESTIMATED ADJUSTED NET WORKING
CAPITAL”).  THE MONTH END BALANCE SHEET SHALL BE PREPARED IN ACCORDANCE WITH
GAAP (EXCEPT FOR THE EXCLUSION OF THE TRANSFERRED SUBSIDIARIES), APPLIED ON A
BASIS CONSISTENT WITH (EXCEPT FOR THE EXCLUSION OF THE TRANSFERRED
SUBSIDIARIES), AND FOLLOWING THE ACCOUNTING PRINCIPLES, PROCEDURES, POLICIES AND
METHODS EMPLOYED IN PREPARING, THE UNAUDITED CONSOLIDATED BALANCE SHEET OF THE
COMPANY AND ITS SUBSIDIARIES AS OF AUGUST 31, 2005 (THE “AUGUST 31 BALANCE
SHEET”).  IF THE ESTIMATED ADJUSTED NET WORKING CAPITAL SET FORTH ON THE
SCHEDULE ACCOMPANYING THE MONTH END BALANCE SHEET IS LESS THAN $26 MILLION, THE
CASH PURCHASE PRICE PAYABLE TO THE SELLER AT THE CLOSING SHALL BE REDUCED BY AN
AMOUNT EQUAL TO SUCH DEFICIENCY.  IF THE ESTIMATED ADJUSTED NET WORKING CAPITAL
SET FORTH ON THE SCHEDULE ACCOMPANYING THE MONTH END BALANCE SHEET EXCEEDS $26
MILLION, THE CASH PURCHASE PRICE PAYABLE TO THE SELLER AT THE CLOSING SHALL BE
INCREASED BY AN AMOUNT EQUAL TO SUCH SURPLUS.

 

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SECTION 3.2.  POST-CLOSING DETERMINATION.  WITHIN 60 CALENDAR DAYS AFTER THE
CLOSING DATE, THE SELLER SHALL DELIVER TO THE BUYER THE CONSOLIDATED BALANCE
SHEET OF THE COMPANY AND THE RETAINED SUBSIDIARIES AS OF THE CLOSE OF BUSINESS
ON THE MEASUREMENT DATE (THE “CLOSING BALANCE SHEET”).  THE CLOSING BALANCE
SHEET SHALL BE PREPARED IN ACCORDANCE WITH GAAP (EXCEPT FOR THE EXCLUSION OF THE
TRANSFERRED SUBSIDIARIES), APPLIED ON A BASIS CONSISTENT WITH (EXCEPT FOR THE
EXCLUSION OF THE TRANSFERRED SUBSIDIARIES), AND FOLLOWING THE ACCOUNTING
PRINCIPLES, PROCEDURES, POLICIES AND METHODS EMPLOYED IN PREPARING, THE
AUGUST 31 BALANCE SHEET.  THE CLOSING BALANCE SHEET SHALL BE ACCOMPANIED BY A
SCHEDULE SETTING FORTH THE ACTUAL ADJUSTED NET WORKING CAPITAL AS OF THE CLOSE
OF BUSINESS ON THE MEASUREMENT DATE (THE “ACTUAL ADJUSTED NET WORKING
CAPITAL”).  DURING THE PREPARATION OF THE CLOSING BALANCE SHEET BY THE SELLER
AND THE PERIOD OF ANY DISPUTE WITH RESPECT TO THE APPLICATION OF THIS
SECTION 3.2, THE BUYER SHALL COOPERATE WITH THE SELLER TO THE EXTENT REASONABLY
REQUESTED BY THE SELLER TO PREPARE THE CLOSING BALANCE SHEET AND THE ACTUAL
ADJUSTED NET WORKING CAPITAL REPORT OR TO INVESTIGATE THE BASIS FOR ANY
DISPUTE.  THE CALCULATION OF THE ACTUAL ADJUSTED NET WORKING CAPITAL SHALL BE
EXAMINED BY THE BUYER WHO SHALL, NOT LATER THAN 30 CALENDAR DAYS AFTER RECEIPT
OF THE CLOSING BALANCE SHEET, DELIVER A REPORT THEREON (THE “ACTUAL ADJUSTED NET
WORKING CAPITAL REPORT”) TO THE SELLER.  THE ACTUAL ADJUSTED NET WORKING CAPITAL
REPORT SHALL LIST THOSE ITEMS INCLUDED IN THE ACTUAL ADJUSTED NET WORKING
CAPITAL, IF ANY, TO WHICH THE BUYER TAKES EXCEPTION AND THE BUYER’S PROPOSED
ADJUSTMENT.  IF THE BUYER FAILS TO DELIVER TO THE SELLER THE ACTUAL ADJUSTED NET
WORKING CAPITAL REPORT WITHIN 30 CALENDAR DAYS FOLLOWING RECEIPT OF THE CLOSING
BALANCE SHEET, THE BUYER SHALL BE DEEMED TO HAVE ACCEPTED THE ACTUAL ADJUSTED
NET WORKING CAPITAL FOR THE PURPOSES OF ANY ADJUSTMENT TO THE PURCHASE PRICE
UNDER SECTION 3.3.  IF THE SELLER DOES NOT GIVE THE BUYER NOTICE OF ITS
OBJECTIONS TO THE ACTUAL ADJUSTED NET WORKING CAPITAL REPORT WITHIN 30 CALENDAR
DAYS FOLLOWING RECEIPT OF THE ACTUAL ADJUSTED NET WORKING CAPITAL REPORT, THE
SELLER SHALL BE DEEMED TO HAVE ACCEPTED THE CLOSING BALANCE SHEET AS ADJUSTED BY
THE BUYER IN THE ACTUAL ADJUSTED NET WORKING CAPITAL REPORT FOR THE PURPOSES OF
ANY ADJUSTMENT TO THE PURCHASE PRICE UNDER SECTION 3.3.  IF THE SELLER GIVES THE
BUYER NOTICE OF ITS OBJECTIONS TO THE ACTUAL ADJUSTED NET WORKING CAPITAL
REPORT, AND IF THE SELLER AND THE BUYER ARE UNABLE, WITHIN 15 CALENDAR DAYS
AFTER RECEIPT BY THE BUYER OF THE NOTICE FROM THE SELLER OF OBJECTIONS, TO
RESOLVE THE DISPUTED EXCEPTIONS, SUCH DISPUTED EXCEPTIONS WILL BE REFERRED TO
DELOITTE & TOUCHE LLP OR ANOTHER FIRM OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS (THE “INDEPENDENT ACCOUNTING FIRM”) MUTUALLY ACCEPTABLE TO THE
SELLER AND THE BUYER.  THE INDEPENDENT ACCOUNTING FIRM SHALL, WITHIN 60 DAYS
FOLLOWING ITS SELECTION, DELIVER TO THE SELLER AND THE BUYER A WRITTEN REPORT
DETERMINING SUCH DISPUTED EXCEPTIONS, AND ITS DETERMINATIONS WILL BE CONCLUSIVE
AND BINDING UPON THE PARTIES THERETO FOR THE PURPOSES OF ANY ADJUSTMENT TO THE
PURCHASE PRICE UNDER SECTION 3.3.  THE FEES AND DISBURSEMENTS OF THE INDEPENDENT
ACCOUNTING FIRM ACTING UNDER THIS SECTION 3.2 SHALL BE APPORTIONED BETWEEN THE
BUYER AND THE SELLER BASED ON THE TOTAL DOLLAR VALUE OF DISPUTED EXCEPTIONS
RESOLVED IN FAVOR OF EACH SUCH PARTY, WITH EACH SUCH PARTY BEARING SUCH
PERCENTAGE OF THE FEES AND DISBURSEMENTS OF THE INDEPENDENT ACCOUNTING FIRM AS
THE AGGREGATE DISPUTED EXCEPTIONS RESOLVED AGAINST THAT PARTY BEARS TO THE TOTAL
DOLLAR VALUE OF ALL DISPUTED EXCEPTIONS CONSIDERED BY THE INDEPENDENT ACCOUNTING
FIRM.  FOR THE AVOIDANCE OF DOUBT, THE DELIVERY AND TIMING OF RECEIPT OF ANY
DOCUMENT SENT BY THE PARTIES PURSUANT TO THIS SECTION 3 SHALL BE GOVERNED BY THE
PROVISIONS SET FORTH IN SECTION 13.5 — “NOTICES.”

 

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SECTION 3.3.  POST-CLOSING ADJUSTMENT.

 

(A)                                  IF THE ACTUAL ADJUSTED NET WORKING CAPITAL
IS LESS THAN THE ESTIMATED ADJUSTED NET WORKING CAPITAL, THE SELLER SHALL,
WITHIN THREE CALENDAR DAYS FOLLOWING THE FINAL DETERMINATION OF THE ACTUAL
ADJUSTED NET WORKING CAPITAL PURSUANT TO SECTION 3.2, AND BASED UPON SUCH FINAL
DETERMINATION, PAY TO THE BUYER THE AMOUNT OF SUCH DEFICIENCY IN CASH, TOGETHER
WITH INTEREST ON SUCH AMOUNT FROM AND INCLUDING THE CLOSING DATE TO BUT
EXCLUDING THE DATE OF PAYMENT AT A RATE OF 6.0% PER ANNUM.  ANY PAYMENT BY THE
SELLER TO THE BUYER UNDER THIS SECTION 3.3(A) SHALL BE MADE BY WIRE TRANSFER OF
IMMEDIATELY AVAILABLE FUNDS TO SUCH ACCOUNT AS THE BUYER SHALL DESIGNATE IN
WRITING TO THE SELLER.

 

(B)                                 IF THE ACTUAL ADJUSTED NET WORKING CAPITAL
IS MORE THAN THE ESTIMATED ADJUSTED NET WORKING CAPITAL, THE BUYER SHALL, WITHIN
THREE CALENDAR DAYS FOLLOWING THE FINAL DETERMINATION OF THE ACTUAL ADJUSTED NET
WORKING CAPITAL PURSUANT TO SECTION 3.2, AND BASED UPON SUCH FINAL
DETERMINATION, PAY TO THE SELLER THE AMOUNT OF SUCH EXCESS IN CASH, TOGETHER
WITH INTEREST ON SUCH AMOUNT FROM AND INCLUDING THE CLOSING DATE TO BUT
EXCLUDING THE DATE OF PAYMENT AT A RATE OF 6.0% PER ANNUM.  ANY PAYMENT BY THE
BUYER TO THE SELLER UNDER THIS SECTION 3.3(B) SHALL BE MADE BY WIRE TRANSFER OF
IMMEDIATELY AVAILABLE FUNDS TO SUCH ACCOUNT AS THE SELLER SHALL DESIGNATE IN
WRITING TO THE BUYER.

 

SECTION 3.4.  ESTIMATE OF ADJUSTED NET WORKING CAPITAL.  SCHEDULE 3.4 SETS FORTH
AN ESTIMATE OF THE ADJUSTED NET WORKING CAPITAL AS OF AUGUST 31, 2005, IT BEING
AGREED THAT THE AUGUST 31, 2005 ADJUSTED NET WORKING CAPITAL IS PROVIDED FOR
ILLUSTRATIVE PURPOSES ONLY AND IS NOT INTENDED TO BE A BINDING EXPRESSION OF ANY
ADJUSTED NET WORKING CAPITAL CALCULATION REQUIRED UNDER THIS AGREEMENT.

 

SECTION 4.  CLOSING.

 

The closing (the “Closing”) for the consummation of the transactions
contemplated by this Agreement shall take place at the offices of Willkie Farr &
Gallagher LLP at 787 Seventh Avenue, New York, New York 10019 at 10:00 a.m. on
the third Business Day after all the conditions to the obligations of the
parties hereunder set forth in Sections 10 and 11 hereof have been satisfied or
waived (other than those conditions that are not capable of being satisfied
until the Closing, but subject to the satisfaction or waiver of those
conditions), or at such other place and time as may be mutually agreed to by the
parties hereto (the “Closing Date”).

 

SECTION 5.  REPRESENTATIONS AND WARRANTIES OF THE SELLER.

 

In this Section 5, (a) none of the representations and warranties contained
herein relate to the Transferred Subsidiaries, the Excluded Assets or the
Excluded Liabilities, in each case, unless expressly stated otherwise, and
(b) all of the representations and warranties relate solely to and include the
Businesses, the Company and the Retained Subsidiaries, in each case, unless
expressly stated otherwise.

 

The Seller hereby represents and warrants to the Buyer as follows:

 

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SECTION 5.1.  CORPORATE ORGANIZATION.  EACH OF THE SELLER, LEUCADIA, THE
COMPANY, THE RETAINED SUBSIDIARIES AND WILTEL TECHNOLOGY CENTER, LLC IS DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE
JURISDICTION OF ITS ORGANIZATION AND HAS ALL REQUISITE CORPORATE, LIMITED
LIABILITY COMPANY OR LIMITED PARTNERSHIP POWER (AS THE CASE MAY BE) TO OWN ITS
PROPERTIES AND ASSETS AND TO CONDUCT ITS BUSINESS AS NOW CONDUCTED.  COPIES OF
THE ORGANIZATIONAL DOCUMENTS OF THE SELLER, THE COMPANY, EACH OF THE RETAINED
SUBSIDIARIES AND WILTEL TECHNOLOGY CENTER, LLC, WITH ALL AMENDMENTS THERETO TO
THE DATE HEREOF, HAVE BEEN FURNISHED OR MADE AVAILABLE TO THE BUYER OR ITS
REPRESENTATIVES, AND SUCH COPIES ARE ACCURATE AND COMPLETE AS OF THE DATE
HEREOF.  A COMPLETE AND CORRECT CHART SHOWING THE COMPANY AND ALL OF ITS DIRECT
AND INDIRECT SUBSIDIARIES IS SET FORTH IN SCHEDULE 5.1.

 

SECTION 5.2.  QUALIFICATION TO DO BUSINESS.  EACH OF THE SELLER, LEUCADIA, THE
COMPANY AND THE RETAINED SUBSIDIARIES IS DULY QUALIFIED TO DO BUSINESS AS A
FOREIGN CORPORATION, LIMITED LIABILITY COMPANY OR PARTNERSHIP (AS THE CASE MAY
BE) AND IS IN GOOD STANDING IN EVERY JURISDICTION IN WHICH THE CHARACTER OF THE
PROPERTIES OWNED OR LEASED BY IT OR THE NATURE OF THE BUSINESS CONDUCTED BY IT
MAKES SUCH QUALIFICATION NECESSARY, EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED
OR IN GOOD STANDING WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY AND THE RETAINED
SUBSIDIARIES.  SCHEDULE 5.2 SETS FORTH ALL JURISDICTIONS IN WHICH EACH OF THE
COMPANY AND THE RETAINED SUBSIDIARIES ARE QUALIFIED TO DO BUSINESS.

 

SECTION 5.3.  NO CONFLICT OR VIOLATION.  THE EXECUTION, DELIVERY AND PERFORMANCE
BY LEUCADIA AND THE SELLER OF THIS AGREEMENT AND THE REGISTRATION RIGHTS
AGREEMENT AND BY THE COMPANY AND WILTEL TECHNOLOGY CENTER, LLC OF THE LEASE
AGREEMENT DO NOT AND WILL NOT (I) VIOLATE OR CONFLICT WITH ANY PROVISION OF ANY
ORGANIZATIONAL DOCUMENT OF LEUCADIA, THE SELLER, THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (II) VIOLATE ANY PROVISION OF LAW, OR ANY ORDER, JUDGMENT OR
DECREE OF ANY GOVERNMENTAL ENTITY, (III) EXCEPT AS SET FORTH IN SCHEDULE 5.3,
VIOLATE OR RESULT IN A BREACH OF OR CONSTITUTE (WITH DUE NOTICE OR LAPSE OF TIME
OR BOTH) A DEFAULT UNDER ANY CONTRACT OR RESULT IN THE CREATION OR IMPOSITION OF
ANY LIEN UPON ANY OF THE ASSETS, PROPERTIES OR RIGHTS OF EITHER OF THE COMPANY
OR ANY OF ITS SUBSIDIARIES OR RESULT IN OR GIVE TO OTHERS ANY RIGHTS OF
CANCELLATION, MODIFICATION, AMENDMENT, ACCELERATION, REVOCATION OR SUSPENSION OF
ANY OF THE CONTRACTS OR OBLIGATIONS THEREUNDER, OR LICENSES AND PERMITS THAT,
INDIVIDUALLY OR IN THE AGGREGATE, WOULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT ON THE COMPANY AND THE RETAINED SUBSIDIARIES OR
(IV) VIOLATE OR RESULT IN A BREACH OF OR CONSTITUTE (WITH DUE NOTICE OR LAPSE OF
TIME OR BOTH) A DEFAULT UNDER ANY MATERIAL CONTRACT, AGREEMENT OR INSTRUMENT TO
WHICH THE SELLER OR LEUCADIA IS A PARTY OR BY WHICH IT IS BOUND OR TO WHICH ANY
OF ITS PROPERTIES OR ASSETS IS SUBJECT THAT, INDIVIDUALLY OR IN THE AGGREGATE,
WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE ABILITY OF
THE SELLER, LEUCADIA OR WILTEL TECHNOLOGY CENTER, LLC TO PERFORM THEIR
RESPECTIVE OBLIGATIONS UNDER THIS AGREEMENT, THE LEASE AGREEMENT AND THE
REGISTRATION RIGHTS AGREEMENT OR TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, INCLUDING AS A CONSEQUENCE OF ANY MATERIAL IMPEDIMENT,
INTERFERENCE OR DELAY.

 

SECTION 5.4.  CONSENTS AND APPROVALS.  EXCEPT AS SET FORTH IN SCHEDULE 5.4, NO
CONSENT, WAIVER, AUTHORIZATION OR APPROVAL OF ANY GOVERNMENTAL ENTITY, AND NO
DECLARATION OR NOTICE TO OR FILING OR REGISTRATION WITH ANY GOVERNMENTAL ENTITY,
IS REQUIRED IN CONNECTION WITH THE EXECUTION AND DELIVERY BY LEUCADIA OR THE
SELLER OF THIS AGREEMENT, BY LEUCADIA AND THE

 

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SELLER OF THE REGISTRATION RIGHTS AGREEMENT AND BY THE COMPANY AND WILTEL
TECHNOLOGY CENTER, LLC OF THE LEASE AGREEMENT OR THE PERFORMANCE BY LEUCADIA,
THE SELLER, THE COMPANY OR WILTEL TECHNOLOGY CENTER, LLC OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THEREUNDER, EXCEPT FOR (I) THE FILING OF NOTIFICATION
AND REPORT FORM UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENT ACT OF 1976,
AS AMENDED (THE “HSR ACT”), (II) FILINGS REQUIRED UNDER, AND COMPLIANCE WITH
OTHER APPLICABLE RULES, REGULATIONS AND REQUIREMENTS OF, THE FEDERAL
COMMUNICATIONS COMMISSION (THE “FCC”) AND THE RELEVANT STATE PUC’S SET FORTH ON
SCHEDULE 5.4, AND (III) SUCH OTHER GOVERNMENTAL CONSENTS, WAIVERS,
AUTHORIZATIONS, APPROVALS, DECLARATIONS, NOTICES, FILINGS OR REGISTRATIONS THAT
IN THE CASE OF THIS CLAUSE (III), IF NOT OBTAINED, MADE OR GIVEN, WOULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT ON THE COMPANY AND THE RETAINED SUBSIDIARIES.

 

SECTION 5.5.  AUTHORIZATION AND VALIDITY OF AGREEMENT.  LEUCADIA AND THE SELLER
HAVE ALL REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT
AND THE REGISTRATION RIGHTS AGREEMENT AND TO CARRY OUT THEIR RESPECTIVE
OBLIGATIONS HEREUNDER AND THEREUNDER.  THE COMPANY AND WILTEL TECHNOLOGY CENTER,
LLC HAVE ALL REQUISITE LIMITED LIABILITY COMPANY POWER TO ENTER INTO THE LEASE
AGREEMENT AND TO CARRY OUT THEIR OBLIGATIONS THEREUNDER.  THE EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE LEASE AGREEMENT AND THE REGISTRATION RIGHTS
AGREEMENT AND THE PERFORMANCE OF THE RESPECTIVE OBLIGATIONS OF LEUCADIA, THE
SELLER, THE COMPANY, AND WILTEL TECHNOLOGY CENTER, LLC HEREUNDER AND THEREUNDER
HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY LIMITED LIABILITY COMPANY OR
CORPORATE ACTION (AS THE CASE MAY BE) AND NO OTHER LIMITED LIABILITY COMPANY OR
CORPORATE PROCEEDINGS (AS THE CASE MAY BE) ON THE PART OF LEUCADIA, THE SELLER,
THE COMPANY OR WILTEL TECHNOLOGY CENTER, LLC ARE NECESSARY TO AUTHORIZE SUCH
EXECUTION, DELIVERY AND PERFORMANCE.  THIS AGREEMENT HAS BEEN DULY EXECUTED BY
LEUCADIA AND THE SELLER AND, ASSUMING DUE EXECUTION AND DELIVERY BY LEVEL 3 AND
THE BUYER, SHALL CONSTITUTE THEIR VALID AND BINDING OBLIGATION, ENFORCEABLE
AGAINST THEM IN ACCORDANCE WITH ITS TERMS, SUBJECT TO (I) THE EFFECT OF
BANKRUPTCY, FRAUDULENT CONVEYANCE, REORGANIZATION, MORATORIUM AND OTHER SIMILAR
LAWS RELATING TO OR AFFECTING THE ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY,
(II) GENERAL EQUITABLE PRINCIPLES (WHETHER CONSIDERED IN A PROCEEDING IN EQUITY
OR AT LAW) AND (III) AN IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING.

 

SECTION 5.6.  CAPITALIZATION AND RELATED MATTERS.

 

(A)                                  ALL OF THE OUTSTANDING MEMBERSHIP UNITS ARE
VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE AND ARE HELD SOLELY OF RECORD AND
BENEFICIALLY BY THE SELLER, A WHOLLY OWNED INDIRECT SUBSIDIARY OF LEUCADIA.  THE
SELLER HAS, AS OF THE DATE HEREOF AND SHALL HAVE ON THE CLOSING DATE, VALID AND
MARKETABLE TITLE TO ALL OF THE MEMBERSHIP UNITS, FREE AND CLEAR OF ANY LIENS,
OTHER THAN THOSE LIENS UNDER THE COMPANY’S CREDIT DOCUMENTS.  THE MEMBERSHIP
UNITS ARE THE SOLE OUTSTANDING SECURITIES OF THE COMPANY; THE COMPANY DOES NOT
HAVE OUTSTANDING ANY SECURITIES CONVERTIBLE INTO OR EXCHANGEABLE FOR ANY
MEMBERSHIP UNITS, ANY RIGHTS TO SUBSCRIBE FOR OR TO PURCHASE OR ANY OPTIONS FOR
THE PURCHASE OF, OR ANY AGREEMENTS PROVIDING FOR THE ISSUANCE (CONTINGENT OR
OTHERWISE) OF, OR ANY CALLS, COMMITMENTS OR CLAIMS OF ANY OTHER CHARACTER
RELATING TO THE ISSUANCE OF, ANY MEMBERSHIP UNITS, OR ANY STOCK OR SECURITIES
CONVERTIBLE INTO OR EXCHANGEABLE FOR ANY MEMBERSHIP UNITS; AND NEITHER LEUCADIA,
THE SELLER, ANY AFFILIATE OF THE SELLER NOR THE COMPANY IS SUBJECT TO ANY
OBLIGATION (CONTINGENT OR OTHERWISE) TO REPURCHASE OR OTHERWISE ACQUIRE OR
RETIRE, OR TO REGISTER UNDER THE SECURITIES ACT, ANY MEMBERSHIP UNITS.

 

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(B)                                 EXCEPT AS SET FORTH ON SCHEDULE 5.6(B), ALL
OF THE OUTSTANDING SHARES OF CAPITAL STOCK, OR MEMBERSHIP UNITS OR OTHER
OWNERSHIP INTERESTS OF, EACH RETAINED SUBSIDIARY, AS APPLICABLE, IS VALIDLY
ISSUED, FULLY PAID AND NONASSESSABLE AND IS OWNED OF RECORD AND BENEFICIALLY BY
THE COMPANY OR ANOTHER RETAINED SUBSIDIARY.  EXCEPT AS SET FORTH ON
SCHEDULE 5.6(B), THE COMPANY HAS, AS OF THE DATE HEREOF AND SHALL HAVE ON THE
CLOSING DATE, VALID AND MARKETABLE TITLE, DIRECTLY OR INDIRECTLY, TO ALL OF THE
SHARES OF CAPITAL STOCK OF, OR MEMBERSHIP UNITS OR OTHER OWNERSHIP INTERESTS IN,
EACH RETAINED SUBSIDIARY, FREE AND CLEAR OF ANY LIENS, OTHER THAN THOSE LIENS
UNDER THE COMPANY’S CREDIT DOCUMENTS.  SUCH OUTSTANDING SHARES OF CAPITAL STOCK
OF, OR MEMBERSHIP UNITS OR OTHER OWNERSHIP INTERESTS IN, THE RETAINED
SUBSIDIARIES, AS APPLICABLE, ARE THE SOLE OUTSTANDING SECURITIES OF THE RETAINED
SUBSIDIARIES; THE RETAINED SUBSIDIARIES DO NOT HAVE OUTSTANDING ANY SECURITIES
CONVERTIBLE INTO OR EXCHANGEABLE FOR ANY CAPITAL STOCK OF, OR MEMBERSHIP UNITS
OR OTHER OWNERSHIP INTERESTS IN, THE RETAINED SUBSIDIARIES, ANY RIGHTS TO
SUBSCRIBE FOR OR TO PURCHASE OR ANY OPTIONS FOR THE PURCHASE OF, OR ANY
AGREEMENTS PROVIDING FOR THE ISSUANCE (CONTINGENT OR OTHERWISE) OF, OR ANY
CALLS, COMMITMENTS OR CLAIMS OF ANY OTHER CHARACTER RELATING TO THE ISSUANCE OF,
ANY CAPITAL STOCK OF, OR MEMBERSHIP UNITS OR OTHER OWNERSHIP INTERESTS IN, THE
RETAINED SUBSIDIARIES, OR ANY STOCK OR SECURITIES CONVERTIBLE INTO OR
EXCHANGEABLE FOR ANY CAPITAL STOCK OF, OR MEMBERSHIP UNITS OR OTHER OWNERSHIP
INTERESTS IN, THE RETAINED SUBSIDIARIES; AND NEITHER LEUCADIA, THE SELLER, ANY
AFFILIATE OF THE SELLER, THE COMPANY OR ANY RETAINED SUBSIDIARY IS SUBJECT TO
ANY OBLIGATION (CONTINGENT OR OTHERWISE) TO REPURCHASE OR OTHERWISE ACQUIRE OR
RETIRE, OR TO REGISTER UNDER THE SECURITIES ACT, ANY CAPITAL STOCK OF, OR
MEMBERSHIP UNITS OR OTHER OWNERSHIP INTERESTS IN, ANY RETAINED SUBSIDIARY.

 

SECTION 5.7.  EQUITY INVESTMENTS.  EXCEPT AS SET FORTH IN SCHEDULE 5.7, THE
COMPANY AND ITS SUBSIDIARIES DO NOT DIRECTLY OR INDIRECTLY OWN, OR HOLD ANY
RIGHTS TO ACQUIRE, ANY CAPITAL STOCK OR ANY OTHER SECURITIES, INTERESTS OR
INVESTMENTS IN ANY OTHER PERSON OTHER THAN THE SUBSIDIARIES AND INVESTMENTS THAT
CONSTITUTE CASH, CASH EQUIVALENTS OR MARKETABLE SECURITIES THAT CONSTITUTE
EXCLUDED ASSETS.  UPON THE CLOSING, NEITHER THE COMPANY NOR ANY RETAINED
SUBSIDIARY WILL DIRECTLY OR INDIRECTLY OWN, OR HOLD ANY RIGHTS TO ACQUIRE, ANY
SUCH CAPITAL STOCK, SECURITIES, INTERESTS OR INVESTMENTS IN THE TRANSFERRED
SUBSIDIARIES.

 

SECTION 5.8.  FINANCIAL STATEMENTS.  THE SELLER HAS HERETOFORE FURNISHED TO THE
BUYER (A) COPIES OF THE AUDITED CONSOLIDATED BALANCE SHEET OF THE COMPANY AND
ITS SUBSIDIARIES AS OF NOVEMBER 5, 2003, TOGETHER WITH THE RELATED CONSOLIDATED
STATEMENTS OF OPERATIONS, STOCKHOLDERS’ EQUITY (DEFICIT) AND CASH FLOWS FOR THE
PERIOD FROM JANUARY 1, 2003 TO NOVEMBER 5, 2003, THE PERIOD FROM NOVEMBER 1,
2002 TO DECEMBER 31, 2002, AND THE PERIOD FROM JANUARY 1, 2002 TO OCTOBER 31,
2002  AND THE NOTES THERETO, ACCOMPANIED BY THE REPORTS THEREON OF ERNST & YOUNG
LLP, (B) COPIES OF THE AUDITED CONSOLIDATED BALANCE SHEETS OF THE COMPANY AND
ITS SUBSIDIARIES AT DECEMBER 31, 2004 AND DECEMBER 31, 2003, TOGETHER WITH THE
RESULTS OF THEIR OPERATIONS AND CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2004
AND THE PERIOD FROM NOVEMBER 6, 2003 THROUGH DECEMBER 31, 2003 AND THE NOTES
THERETO, ACCOMPANIED BY THE REPORTS THEREON OF PRICEWATERHOUSECOOPERS LLP AND
(C) COPIES OF THE UNAUDITED AUGUST 31 BALANCE SHEET, TOGETHER WITH THE RELATED
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS AND STATEMENT OF CASH FLOWS FOR
THE PERIOD THEN ENDED ATTACHED HERETO AS SCHEDULE 5.8 (THE “AUGUST FINANCIAL
STATEMENTS” AND TOGETHER WITH THE FINANCIAL STATEMENTS REFERRED TO IN CLAUSES
(A) AND (B) ABOVE BEING HEREINAFTER COLLECTIVELY REFERRED TO AS THE “FINANCIAL
STATEMENTS”).  THE FINANCIAL STATEMENTS (INCLUDING WITH REGARD TO CLAUSES
(A) AND (B) ABOVE THE NOTES THERETO) (I) WERE PREPARED IN ACCORDANCE WITH GAAP
(OTHER THAN THE STATEMENT OF CASH FLOWS REFERRED TO IN CLAUSE (C) ABOVE),
APPLIED ON A CONSISTENT

 

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BASIS THROUGHOUT (X) THE PERIODS COVERED BY THE FINANCIAL STATEMENTS IN CLAUSE
(B) ABOVE AND (Y) THE PERIODS COVERED BY THE FINANCIAL STATEMENTS IN CLAUSE
(C) ABOVE, AND (II) PRESENT FAIRLY IN ALL MATERIAL RESPECTS THE FINANCIAL
POSITION, RESULTS OF OPERATIONS, CASH FLOWS AND CHANGES IN FINANCIAL POSITION OF
THE COMPANY AND ITS SUBSIDIARIES AS OF SUCH DATES AND FOR THE PERIODS THEN ENDED
(SUBJECT, IN THE CASE OF THE AUGUST FINANCIAL STATEMENTS, TO NORMAL YEAR-END
AUDIT ADJUSTMENTS CONSISTENT WITH PRIOR PERIODS AND EXCEPT THAT SUCH
AUGUST FINANCIAL STATEMENTS DO NOT CONTAIN ALL FOOTNOTE DISCLOSURES NORMALLY
REQUIRED UNDER GAAP).  THE AUGUST FINANCIAL STATEMENTS HAVE BEEN PREPARED ON A
BASIS CONSISTENT WITH THOSE FINANCIAL STATEMENTS SET FORTH IN CLAUSE (B) ABOVE
AND THE ACCOUNTING METHODS EMPLOYED IN PREPARING THE UNAUDITED CONSOLIDATED
BALANCE SHEET OF THE COMPANY AND ITS SUBSIDIARIES AS OF JULY 31, 2005 (THE
“JULY 31 BALANCE SHEET”), TOGETHER WITH THE RELATED CONSOLIDATED UNAUDITED
STATEMENT OF OPERATIONS FOR THE PERIOD THEN ENDED (COPIES OF EACH OF WHICH THE
SELLER HAS HERETOFORE FURNISHED TO THE BUYER).  SINCE DECEMBER 31, 2004, THERE
HAS NOT BEEN ANY CHANGE IN ANY METHOD OF ACCOUNTING OF EITHER OF THE COMPANY OR
ANY OF THE RETAINED SUBSIDIARIES.  THE COMPANY HAS RECORDED THE ADJUSTMENTS SET
FORTH IN THE COLUMN “ESTIMATED ADJUSTMENTS” ON SCHEDULE 5.8 IN ACCORDANCE WITH
GAAP.

 

SECTION 5.9.  ABSENCE OF CERTAIN CHANGES OR EVENTS.

 

(A)                                  EXCEPT AS SET FORTH IN SCHEDULE 5.9 OR AS
REFLECTED IN THE JULY 31 BALANCE SHEET, SINCE JULY 31, 2005, THERE HAS NOT BEEN:

 

(I)                                     ANY MATERIAL ADVERSE EFFECT ON THE
COMPANY AND THE RETAINED SUBSIDIARIES;

 

(II)                                  ANY MATERIAL LOSS, DAMAGE, DESTRUCTION OR
OTHER CASUALTY TO THE ASSETS OR PROPERTIES OF EITHER OF THE COMPANY OR ANY OF
THE RETAINED SUBSIDIARIES (OTHER THAN ANY FOR WHICH INSURANCE AWARDS HAVE BEEN
RECEIVED OR GUARANTEED); OR

 

(III)                               THROUGH THE DATE HEREOF ANY LOSS OF THE
EMPLOYMENT, SERVICES OR BENEFITS OF ANY EMPLOYEE OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES WITH THE TITLE OF VICE PRESIDENT OR ABOVE.

 

(B)                                 SINCE JULY 31, 2005, THE COMPANY AND THE
RETAINED SUBSIDIARIES HAVE OPERATED IN THE ORDINARY COURSE OF THEIR BUSINESS
CONSISTENT WITH PAST PRACTICE AND, EXCEPT (1) AS SET FORTH IN SCHEDULE 5.9
HERETO, (2) WITH RESPECT TO ANY EXCLUDED ASSETS OR EXCLUDED LIABILITIES,
(3) LIENS IN CONNECTION WITH THE COMPANY’S CREDIT DOCUMENTS, (4) AS OTHERWISE
REFLECTED IN THE JULY 31 BALANCE SHEET OR (5) AS OTHERWISE PERMITTED OR REQUIRED
UNDER THIS AGREEMENT, EACH OF THE COMPANY AND THE RETAINED SUBSIDIARIES HAS NOT:

 

(I)                                     FAILED TO DISCHARGE OR SATISFY ANY LIEN
OR PAY OR SATISFY ANY OBLIGATION OR LIABILITY (WHETHER ABSOLUTE, ACCRUED,
CONTINGENT OR OTHERWISE), OTHER THAN LIABILITIES BEING CONTESTED IN GOOD FAITH
AND FOR WHICH ADEQUATE RESERVES HAVE BEEN PROVIDED AND PERMITTED LIENS;

 

(II)                                  MORTGAGED, PLEDGED OR SUBJECTED TO ANY
LIEN (OTHER THAN PERMITTED LIENS) ANY OF ITS ASSETS, PROPERTIES OR RIGHTS
MATERIAL TO THE OPERATION OF THE BUSINESSES AS CURRENTLY CONDUCTED;

 

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(III)                               SOLD OR TRANSFERRED ANY OF ITS MATERIAL
ASSETS OR CANCELED ANY MATERIAL DEBTS OR CLAIMS OR WAIVED ANY MATERIAL RIGHTS;

 

(IV)                              SOLD OR TRANSFERRED (OTHER THAN TO A RETAINED
SUBSIDIARY) ANY PATENTS, TRADEMARKS OR COPYRIGHTS OR ANY PATENT, TRADEMARK OR
COPYRIGHT APPLICATIONS;

 

(V)                                 DEFAULTED ON ANY MATERIAL OBLIGATION;

 

(VI)                              ENTERED INTO ANY TRANSACTION MATERIAL TO ITS
BUSINESS, EXCEPT IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
PRACTICE;

 

(VII)                           LAID OFF ANY SIGNIFICANT NUMBER OF ITS
EMPLOYEES;

 

(VIII)                        DISCONTINUED THE OFFERING OF ANY MATERIAL SERVICES
OR PRODUCT OF THE BUSINESSES;

 

(IX)                                INCURRED ANY MATERIAL OBLIGATION OR
LIABILITY FOR THE PAYMENT OF SEVERANCE BENEFITS;

 

(X)                                   DECLARED, PAID, OR SET ASIDE FOR PAYMENT
ANY DIVIDEND OR OTHER DISTRIBUTION IN RESPECT OF SHARES OF ITS CAPITAL STOCK,
MEMBERSHIP UNITS OR OTHER SECURITIES, OR REDEEMED, PURCHASED OR OTHERWISE
ACQUIRED, DIRECTLY OR INDIRECTLY, ANY SHARES OF ITS CAPITAL STOCK, MEMBERSHIP
UNITS OR OTHER SECURITIES, OR AGREED TO DO SO (OTHER THAN THE PRE-CLOSING
TRANSFERS); OR

 

(XI)                                ENTERED INTO ANY AGREEMENT OR MADE ANY
COMMITMENT TO DO ANY OF THE FOREGOING.

 

SECTION 5.10.  TAX MATTERS.  EXCEPT AS SET FORTH ON SCHEDULE 5.10,

 

(A)                                  (I) THE COMPANY AND EACH OF ITS
SUBSIDIARIES AND EACH OF THEIR PREDECESSORS, IF ANY, HAS FILED (OR HAS BEEN
INCLUDED IN THE FILING OF) ON OR PRIOR TO THE DUE DATE (AFTER GIVING EFFECT TO
ANY EXTENSIONS) ALL MATERIAL TAX RETURNS REQUIRED BY APPLICABLE LAW TO BE FILED
WITH RESPECT TO THE COMPANY AND EACH OF ITS SUBSIDIARIES AND ALL TAXES SHOWN TO
BE DUE ON SUCH TAX RETURNS HAVE BEEN TIMELY PAID; (II) ALL SUCH TAX RETURNS WERE
TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS AS OF THE TIME OF SUCH
FILING; (III) ALL MATERIAL AMOUNTS OF TAXES OWED BY THE COMPANY (WHETHER OR NOT
SHOWN ON ANY TAX RETURN) AND EACH OF ITS SUBSIDIARIES AND EACH OF THEIR
PREDECESSORS, IF REQUIRED TO HAVE BEEN PAID, HAVE BEEN PAID (EXCEPT FOR TAXES
WHICH ARE BEING CONTESTED IN GOOD FAITH, WITH ADEQUATE RESERVES BEING
ESTABLISHED IN ACCORDANCE WITH GAAP); AND (IV) ANY LIABILITY OF THE COMPANY OR
ANY OF ITS SUBSIDIARIES FOR TAXES NOT YET DUE AND PAYABLE, OR WHICH ARE BEING
CONTESTED IN GOOD FAITH, HAVE BEEN PROVIDED FOR ON THE FINANCIAL STATEMENTS OF
THE COMPANY IN ACCORDANCE WITH GAAP OR THE BOOKS AND RECORDS OF THE COMPANY IN
ACCORDANCE WITH GAAP;

 

(B)                                 THERE IS NO ACTION, SUIT, PROCEEDING,
INVESTIGATION, AUDIT OR CLAIM NOW PENDING AGAINST THE COMPANY OR ANY OF ITS
SUBSIDIARIES IN RESPECT OF ANY TAX, NOR, TO THE SELLER’S KNOWLEDGE, HAS ANY
CLAIM FOR ADDITIONAL TAX BEEN OVERTLY THREATENED BY ANY TAX AUTHORITY;

 

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(C)                                  SINCE JANUARY 1, 1995, NO CLAIM HAS BEEN
MADE BY ANY TAX AUTHORITY IN A JURISDICTION WHERE THE COMPANY OR ANY OF ITS
SUBSIDIARIES HAS NOT FILED A TAX RETURN THAT IT IS OR MAY BE SUBJECT TO TAX BY
SUCH JURISDICTION, NOR TO THE SELLER’S KNOWLEDGE, IS ANY SUCH ASSERTION OVERTLY
THREATENED;

 

(D)                                 (I) THERE IS NO OUTSTANDING REQUEST FOR ANY
EXTENSION OF TIME FOR THE COMPANY OR ANY OF ITS SUBSIDIARIES TO PAY ANY TAXES OR
FILE ANY TAX RETURNS; (II) THERE HAS BEEN NO WAIVER OR EXTENSION OF ANY
APPLICABLE STATUTE OF LIMITATIONS FOR THE ASSESSMENT OR COLLECTION OF ANY TAXES
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES THAT IS CURRENTLY IN FORCE, AND NO
POWER OF ATTORNEY GRANTED BY OR WITH RESPECT TO THE COMPANY AND ITS SUBSIDIARIES
FOR TAXES IS CURRENTLY IN FORCE; (III) THE STATUTE OF LIMITATION FOR TAX YEARS
CONCERNING ANY MATERIAL TAX OR ANY MATERIAL AMOUNT OF TAX OF THE COMPANY AND ITS
SUBSIDIARIES HAS CLOSED FOR ALL YEARS ENDING PRIOR TO JANUARY 1, 1995; AND
(IV) NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS A PARTY TO OR BOUND BY
ANY AGREEMENT, WHETHER WRITTEN OR UNWRITTEN, PROVIDING FOR THE PAYMENT OF TAXES,
PAYMENT FOR TAX LOSSES, ENTITLEMENTS TO REFUNDS OR SIMILAR TAX MATTERS;

 

(E)                                  THE COMPANY AND EACH OF ITS SUBSIDIARIES
HAVE WITHHELD, COLLECTED AND PAID ALL TAXES REQUIRED TO BE WITHHELD IN
CONNECTION WITH ANY AMOUNTS PAID OR OWING TO ANY EMPLOYEE, CREDITOR, INDEPENDENT
CONTRACTOR OR OTHER THIRD PARTY;

 

(F)                                    THE SELLER IS NOT A “FOREIGN PERSON”
WITHIN THE MEANING OF SECTION 1445 OF THE CODE;

 

(G)                                 NONE OF THE COMPANY’S SUBSIDIARIES THAT IS
OR WAS TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION FOR U.S. FEDERAL
INCOME TAX PURPOSES HAS DISTRIBUTED STOCK OF ANOTHER PERSON, OR HAS HAD ITS
STOCK DISTRIBUTED BY ANOTHER PERSON, IN A TRANSACTION THAT WAS GOVERNED IN WHOLE
OR IN PART BY SECTION 355 OF THE CODE (I) WITHIN THE PAST 2 YEARS OR (II) IN A
DISTRIBUTION THAT WOULD OTHERWISE CONSTITUTE PART OF A “PLAN” OR “SERIES OF
RELATED TRANSACTIONS” (WITHIN THE MEANING OF SECTION 355(E) OF THE CODE) IN
CONJUNCTION WITH THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT;

 

(H)                                 EACH OF THE SUBSIDIARIES THAT IS OR WAS
TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION FOR U.S. FEDERAL INCOME TAX
PURPOSES HAS DISCLOSED ON ITS FEDERAL INCOME TAX RETURNS ALL POSITIONS TAKEN
THEREIN THAT COULD GIVE RISE TO A SUBSTANTIAL UNDERSTATEMENT OF FEDERAL INCOME
TAX WITHIN THE MEANING OF SECTION 6662 OF THE CODE;

 

(I)                                     (I) NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES IS A PARTY TO ANY CONTRACT, ARRANGEMENT OR PLAN THAT WOULD RESULT,
SEPARATELY OR IN THE AGGREGATE, IN A PAYMENT BY REASON OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT THAT WOULD NOT BE DEDUCTIBLE UNDER SECTION 280G
OF THE CODE (OR ANY CORRESPONDING PROVISION OF STATE, LOCAL OR FOREIGN TAX LAW);
AND (II) THE DISALLOWANCE OF A DEDUCTION UNDER SECTION 162(M) OF THE CODE (OR
ANY CORRESPONDING PROVISION OF STATE, LOCAL OR FOREIGN TAX LAW) FOR EMPLOYEE
REMUNERATION WILL NOT APPLY TO ANY AMOUNT PAID OR PAYABLE BY THE COMPANY UNDER
ANY CONTRACT, BENEFIT PLAN, PROGRAM, ARRANGEMENT OR UNDERSTANDING CURRENTLY IN
EFFECT;

 

(J)                                     (I) NONE OF THE ASSETS, PROPERTIES OR
RIGHTS OF THE COMPANY AND ITS SUBSIDIARIES ARE “TAX-EXEMPT USE PROPERTY” WITHIN
THE MEANING OF SECTION 168(H) OF THE CODE;

 

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(II) NONE OF THE ASSETS, PROPERTIES OR RIGHTS OF THE COMPANY AND ITS
SUBSIDIARIES INCLUDE ANY LEASE MADE PURSUANT TO FORMER SECTION 168(F)(8) OF THE
INTERNAL REVENUE CODE OF 1954; AND (III) THERE IS NO LIEN OTHER THAN A PERMITTED
LIEN AFFECTING ANY OF THE ASSETS, PROPERTIES OR RIGHTS OF THE COMPANY AND ITS
SUBSIDIARIES THAT AROSE IN CONNECTION WITH ANY FAILURE OR ALLEGED FAILURE TO PAY
ANY TAX;

 

(K)                                  NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES OR ANY PREDECESSOR THEREOF HAS BEEN A MEMBER OF AN AFFILIATED GROUP
(WITHIN THE MEANING OF CODE § 1504(A)) FILING A CONSOLIDATED FEDERAL INCOME TAX
RETURN (OTHER THAN A GROUP THE COMMON PARENT OF WHICH IS LEUCADIA);

 

(L)                                     THE COMPANY AND ITS SUBSIDIARIES HAVE
NEITHER (I) MADE, CHANGED OR REVOKED, OR PERMITTED TO BE MADE, CHANGED OR
REVOKED, ANY MATERIAL ELECTION OR METHOD OF ACCOUNTING WITH RESPECT TO TAXES
AFFECTING OR RELATING TO THE COMPANY AND ITS SUBSIDIARIES SINCE THE FILING OF
THE APPLICABLE TAX RETURN RELATING TO TAX PERIODS ENDING ON OR BEFORE
DECEMBER 31, 2003, NOR (II) ENTERED INTO, OR PERMITTED TO BE ENTERED INTO, ANY
CLOSING OR OTHER AGREEMENT OR SETTLEMENT WITH RESPECT TO TAXES AFFECTING OR
RELATING TO THE COMPANY AND ITS SUBSIDIARIES;

 

(M)                               THE COMPANY AND EACH OF ITS SUBSIDIARIES IS
AND HAS ALWAYS BEEN CLASSIFIED AS AN ENTITY DISREGARDED AS SEPARATE FROM ITS
OWNER (WITHIN THE MEANING OF TREASURY REGULATIONS § 301.7701-2(C)(2)) FOR U.S.
FEDERAL TAX PURPOSES AND WILL CONTINUE TO BE SO CLASSIFIED UP TO AND INCLUDING
THE CLOSING DATE; AND

 

(N)                                 NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES HAVE A PERMANENT ESTABLISHMENT IN A JURISDICTION OUTSIDE THE UNITED
STATES.

 

This Section 5.10 represents the sole and exclusive representations and
warranties  of the Seller regarding Tax matters.

 

SECTION 5.11.  ABSENCE OF UNDISCLOSED LIABILITIES.  EXCEPT AS SET FORTH IN
SCHEDULE 5.11, NEITHER OF THE COMPANY NOR ANY OF THE RETAINED SUBSIDIARIES HAS
ANY MATERIAL INDEBTEDNESS OR LIABILITY, ABSOLUTE OR CONTINGENT, KNOWN OR
UNKNOWN, WHICH IS NOT SHOWN OR PROVIDED FOR ON THE JULY 31 BALANCE SHEET OTHER
THAN LIABILITIES AS SHALL HAVE BEEN INCURRED OR ACCRUED IN THE ORDINARY COURSE
OF BUSINESS SINCE JULY 31, 2005.  EXCEPT AS SHOWN IN THE JULY 31 BALANCE SHEET
OR IN SCHEDULE 5.11, NEITHER OF THE COMPANY NOR ANY OF THE RETAINED SUBSIDIARIES
IS DIRECTLY OR INDIRECTLY LIABLE UPON OR WITH RESPECT TO (BY DISCOUNT,
REPURCHASE AGREEMENTS OR OTHERWISE), OR OBLIGED IN ANY OTHER WAY TO PROVIDE
FUNDS IN RESPECT OF, OR TO MAKE GUARANTEES OR ASSUME, ANY DEBT, OBLIGATION OR
DIVIDEND OF ANY PERSON OTHER THAN THE COMPANY OR ANY RETAINED SUBSIDIARIES,
EXCEPT ENDORSEMENTS IN THE ORDINARY COURSE OF BUSINESS IN CONNECTION WITH THE
DEPOSIT, IN BANKS OR OTHER FINANCIAL INSTITUTIONS, OF ITEMS FOR COLLECTION.

 

SECTION 5.12.  COMPANY REAL PROPERTY.

 

(A)                                  SCHEDULE 5.12(A) CONTAINS A TRUE AND
COMPLETE LIST OF ALL REAL PROPERTY OWNED IN FEE SIMPLE BY THE COMPANY OR THE
RETAINED SUBSIDIARIES (THE “OWNED REAL PROPERTY”).  THE SELLER HAS MADE
AVAILABLE TO THE BUYER COPIES OF ANY TITLE INSURANCE POLICIES (TOGETHER WITH
COPIES OF ANY DOCUMENTS OF RECORD LISTED AS EXCEPTIONS TO TITLE ON SUCH
POLICIES) CURRENTLY INSURING EACH OWNED REAL PROPERTY AND COPIES OF THE MOST
RECENT SURVEYS OF THE SAME TO THE

 

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EXTENT THE SELLER, THE COMPANY OR ITS SUBSIDIARIES HAS SUCH DOCUMENTS.  THE
COMPANY OR THE RETAINED SUBSIDIARIES HAVE GOOD AND VALID TITLE TO ALL OF THE
OWNED REAL PROPERTY FREE AND CLEAR OF ALL LIENS OTHER THAN PERMITTED LIENS.

 

(B)                                 SCHEDULE 5.12(B) SETS FORTH A LIST OF ALL
LEASES, LICENSES, SUBLEASES AND OCCUPANCY AGREEMENTS, TOGETHER WITH ALL
AMENDMENTS THERETO, WITH RESPECT TO ALL PROPERTIES WHICH ARE MATERIAL TO THE
OPERATION OF THE BUSINESSES (OTHER THAN WITH RESPECT TO ANY IRUS,
CROSS-CONNECTION, INTERCONNECTION, CO-LOCATION OR ENTRANCE FACILITY
ARRANGEMENTS) IN WHICH EITHER OF THE COMPANY OR THE RETAINED SUBSIDIARIES HAS A
LEASEHOLD INTEREST, LICENSE OR SIMILAR OCCUPANCY RIGHTS (EACH, A “LEASE” AND
COLLECTIVELY, THE “LEASES”; THE PROPERTY COVERED BY LEASES UNDER WHICH EITHER OF
THE COMPANY OR THE RETAINED SUBSIDIARIES IS A LESSEE IS REFERRED TO HEREIN AS
THE “LEASED REAL PROPERTY”; THE LEASED REAL PROPERTY, TOGETHER WITH THE OWNED
REAL PROPERTY, COLLECTIVELY BEING THE “COMPANY REAL PROPERTY”).  NEITHER THE
COMPANY NOR ANY OF THE RETAINED SUBSIDIARIES IS A PARTY TO ANY CONTRACT (OTHER
THAN A LEASE) WITH THE LESSOR OF ANY OF THE LEASED REAL PROPERTIES, WHICH GIVES
SUCH LESSOR ANY RIGHT TO TERMINATE OR ADVERSELY ALTER THE TERMS OF THE LEASE TO
WHICH SUCH LESSOR IS A PARTY.  EXCEPT AS SET FORTH IN SCHEDULE 5.11 AND
SCHEDULE 5.17, THE COMPANY OR THE RETAINED SUBSIDIARIES ENJOYS PEACEFUL AND
UNDISTURBED POSSESSION OF THE LEASED REAL PROPERTY PURSUANT TO THE LEASES IN ALL
MATERIAL RESPECTS EXCEPT FOR LEASES EXPIRING IN ACCORDANCE WITH THEIR TERMS
AFTER THE DATE HEREOF AND PRIOR TO THE CLOSING DATE.  NO OPTION HAS BEEN
EXERCISED UNDER ANY OF SUCH LEASES, EXCEPT OPTIONS WHOSE EXERCISE HAS BEEN
EVIDENCED BY A WRITTEN DOCUMENT, A TRUE AND COMPLETE COPY OF WHICH HAS BEEN
DELIVERED OR MADE AVAILABLE TO THE BUYER WITH THE CORRESPONDING LEASE.

 

(C)                                  EXCEPT AS SET FORTH ON SCHEDULE 5.12(C),
SINCE JULY 31, 2005, NO LEASE HAS BEEN MODIFIED OR AMENDED IN WRITING IN ANY WAY
MATERIALLY ADVERSE TO THE OPERATION OF THE BUSINESSES AND NO PARTY TO ANY LEASE
HAS GIVEN EITHER OF THE COMPANY OR THE RETAINED SUBSIDIARIES WRITTEN NOTICE OF
OR, TO THE SELLER’S KNOWLEDGE, MADE A CLAIM WITH RESPECT TO ANY BREACH OR
DEFAULT.

 

(D)                                 EXCEPT AS SET FORTH IN SCHEDULE 5.12(D) AND
OTHER THAN WITH RESPECT TO IRUS, CO-LOCATION, CROSS-CONNECTION, INTERCONNECTION,
ENTRANCE FACILITIES OR OTHER RIGHTS INCIDENTAL TO THE PROVISION OF SERVICES
ESTABLISHED IN THE ORDINARY COURSE OF BUSINESS, NONE OF THE COMPANY REAL
PROPERTY IS SUBJECT TO ANY OPTION, LEASE, SUBLEASE, LICENSE OR OTHER AGREEMENT
GRANTING TO ANY PERSON OR ENTITY ANY RIGHT TO THE USE, OCCUPANCY OR ENJOYMENT OF
SUCH PROPERTY OR ANY PORTION THEREOF OR TO OBTAIN TITLE TO ALL OR ANY PORTION OF
SUCH PROPERTY.

 

(E)                                  EXCEPT AS SET FORTH ON SCHEDULE 5.12(E),
ALL MATERIAL IMPROVEMENTS, SYSTEMS AND FIXTURES ON THE COMPANY REAL PROPERTY ARE
IN GOOD OPERATING CONDITION AND REPAIR, AND GENERALLY ARE ADEQUATE AND SUITABLE
IN ALL MATERIAL RESPECTS FOR THE PRESENT AND CONTINUED USE, OPERATION AND
MAINTENANCE THEREOF AS NOW USED, OPERATED OR MAINTAINED.  ALL IMPROVEMENTS ON
THE COMPANY REAL PROPERTY CONSTRUCTED BY OR ON BEHALF OF THE COMPANY OR ANY
RETAINED SUBSIDIARY, TO THE SELLER’S KNOWLEDGE, WERE CONSTRUCTED IN COMPLIANCE
IN ALL MATERIAL RESPECTS WITH APPLICABLE LAWS, ORDINANCES AND REGULATIONS
AFFECTING SUCH COMPANY REAL PROPERTY, EXCEPT FOR POSSIBLE NONCONFORMING USES OR
VIOLATIONS THAT DO NOT AND WILL NOT INTERFERE WITH THE PRESENT USE, OPERATION OR
MAINTENANCE THEREOF BY EITHER OF THE COMPANY OR THE RETAINED SUBSIDIARIES AS NOW
USED, OPERATED OR MAINTAINED OR ACCESS THERETO, AND NEITHER OF THE COMPANY OR
THE RETAINED

 

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SUBSIDIARIES HAS RECEIVED ANY WRITTEN NOTICE, OR TO THE SELLER’S KNOWLEDGE, ANY
VERBAL NOTICE, TO THE CONTRARY.

 

SECTION 5.13.  ASSETS OF THE COMPANY AND ITS SUBSIDIARIES.

 

(A)                                  THE COMPANY AND THE RETAINED SUBSIDIARIES
OWN, LICENSE UNDER VALID AND ENFORCEABLE LICENSES OR LEASE UNDER VALID AND
ENFORCEABLE LEASES AND WILL OWN, LICENSE OR LEASE AFTER THE CLOSING ALL OF THE
ASSETS, PROPERTIES AND RIGHTS MATERIAL TO THE OPERATION OF THE BUSINESSES AS
CURRENTLY CONDUCTED.  EXCEPT AS SET FORTH ON SCHEDULE 5.13(A), NEITHER THE
COMPANY NOR THE RETAINED SUBSIDIARIES HAVE ANY MATERIAL ASSETS, PROPERTIES,
RIGHTS OR INTERESTS OF ANY KIND OR NATURE THAT EITHER THEY ARE PRESENTLY OR HAVE
BEEN SINCE JULY 31, 2005, USING, HOLDING OR OPERATING IN THE BUSINESSES PRIOR TO
THE CLOSING THAT WILL NOT CONTINUE TO BE USED, HELD OR OWNED BY THEM IMMEDIATELY
FOLLOWING THE CLOSING.

 

(B)                                 EXCEPT AS SET FORTH ON SCHEDULE 5.13(A), THE
TRANSFERRED SUBSIDIARIES DO NOT OWN ANY ASSETS OR PROPERTIES WHICH ARE MATERIAL
TO THE OPERATION OF THE BUSINESSES AS CURRENTLY CONDUCTED, AND SUCH TRANSFERRED
SUBSIDIARIES DO NOT HAVE ANY RIGHTS WITH RESPECT THERETO.

 

(C)                                  THE ASSETS AND RIGHTS OF THE TRANSFERRED
SUBSIDIARIES CONSIST EXCLUSIVELY OF (I) THE OWNERSHIP OF THE COMPANY’S TULSA,
OKLAHOMA HEADQUARTERS, INCLUDING ALL OWNED OR LEASED FURNITURE, EQUIPMENT AND
FIXTURES LOCATED THEREIN SET FORTH ON ANNEX A TO SCHEDULE 7.4 AND (II) RIGHTS
UNDER THE AIRCRAFT LEASES.

 

(D)                                 EACH OF THE COMPANY AND THE RETAINED
SUBSIDIARIES HAS GOOD AND VALID FEE SIMPLE TITLE, FREE AND CLEAR OF ANY LIENS,
TO, OR A VALID LEASEHOLD INTEREST UNDER ENFORCEABLE LEASES IN, ALL OF ITS
ASSETS, PROPERTIES AND RIGHTS, OTHER THAN PURSUANT TO (I) THE COMPANY’S CREDIT
DOCUMENTS, (II) THE COMPANY’S REAL ESTATE DEBT DOCUMENTS AND (III) PERMITTED
LIENS.  THE DISCHARGED REAL ESTATE DEBT DOCUMENTS HAVE BEEN DISCHARGED IN FULL,
ALL LIENS UNDER THE DISCHARGED REAL ESTATE DEBT DOCUMENTS HAVE BEEN RELEASED AND
ALL OBLIGATIONS OF THE COMPANY AND THE RETAINED SUBSIDIARIES UNDER THE
DISCHARGED REAL ESTATE DEBT DOCUMENTS OR RELATED TO THE DEBT EVIDENCED OR
SECURED BY SAME HAVE BEEN SATISFIED.

 

SECTION 5.14.  INTELLECTUAL PROPERTY.

 

(A)                                  EXCEPT AS LISTED IN SCHEDULE 5.14(A):
(I) EACH OF THE COMPANY AND THE RETAINED SUBSIDIARIES OWNS OR HAS A VALID AND
ENFORCEABLE LICENSE TO USE, (AND AS APPLIED TO SOFTWARE OWNED BY THE COMPANY OR
THE RETAINED SUBSIDIARIES, TO REPRODUCE, MODIFY, DISTRIBUTE AND SUBLICENSE
COPIES OF) ALL INTELLECTUAL PROPERTY AND TECHNOLOGY USED IN AND MATERIAL TO THE
OPERATION OF THE BUSINESSES AS PRESENTLY CONDUCTED; (II) THE INTELLECTUAL
PROPERTY AND TECHNOLOGY OWNED BY OR LICENSED TO EACH OF THE COMPANY AND THE
RETAINED SUBSIDIARIES INCLUDES ALL OF THE INTELLECTUAL PROPERTY AND TECHNOLOGY
MATERIAL TO THE OPERATION OF THE BUSINESSES AS PRESENTLY CONDUCTED; (III) EACH
OF THE COMPANY AND THE RETAINED SUBSIDIARIES IS IN COMPLIANCE WITH ALL MATERIAL
CONTRACTUAL OBLIGATIONS RELATING TO THE PROTECTION OF INTELLECTUAL PROPERTY AND
TECHNOLOGY LICENSED TO THEM; (IV) TO THE SELLER’S KNOWLEDGE, NO THIRD PARTY IS
INFRINGING ANY INTELLECTUAL PROPERTY OF THE COMPANY OR ANY OF ITS RETAINED
SUBSIDIARIES IN ANY MATERIAL RESPECT; (V) NO CLAIMS ARE PENDING OR, TO THE
SELLER’S KNOWLEDGE, THREATENED THAT THE COMPANY OR ANY OF

 

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ITS RETAINED SUBSIDIARIES HAS INFRINGED OR MISAPPROPRIATED INTELLECTUAL PROPERTY
OF A THIRD PARTY, AND TO THE SELLER’S KNOWLEDGE THE CONDUCT OF THE BUSINESSES
DOES NOT INFRINGE OR MISAPPROPRIATE ANY INTELLECTUAL PROPERTY OF A THIRD PARTY
IN ANY MATERIAL RESPECT; AND (VI) NO CLAIMS ARE PENDING OR, TO THE SELLER’S
KNOWLEDGE, THREATENED CHALLENGING THE OWNERSHIP, VALIDITY OR ENFORCEABILITY OF
THE INTELLECTUAL PROPERTY OWNED BY THE COMPANY OR ANY OF ITS RETAINED
SUBSIDIARIES OR THE POSSESSION OR USE OF THE TECHNOLOGY OWNED BY THE COMPANY OR
ANY OF ITS RETAINED SUBSIDIARIES.

 

(B)                                 SCHEDULE 5.14(B) SETS FORTH A COMPLETE AND
CURRENT LIST OF PATENTS AND APPLICATIONS THEREFOR, COPYRIGHT REGISTRATIONS AND
APPLICATIONS THEREFOR, REGISTERED TRADEMARKS, REGISTERED SERVICE MARKS AND
APPLICATIONS THEREFOR AND DOMAIN NAMES OWNED BY, FILED IN THE NAME OF, OR
APPLIED FOR, BY THE COMPANY ANYWHERE IN THE WORLD (THE “LISTED INTELLECTUAL
PROPERTY”), INCLUDING THE OWNER OF RECORD, DATE OF APPLICATION OR ISSUANCE AND
RELEVANT JURISDICTION AS TO EACH. EXCEPT AS LISTED IN SCHEDULE 5.14(B), ALL
LISTED INTELLECTUAL PROPERTY IS OWNED BY THE COMPANY AND/OR THE RETAINED
SUBSIDIARIES, FREE AND CLEAR OF ALL LIENS. EXCEPT AS LISTED IN SCHEDULE 5.14(B),
THERE ARE NO ACTIONS THAT MUST BE TAKEN OR PAYMENTS THAT MUST BE MADE BY THE
COMPANY OR THE RETAINED SUBSIDIARIES WITHIN NINETY (90) DAYS OF THE CLOSING
THAT, IF NOT TAKEN OR PAID, WILL ADVERSELY AFFECT THE LISTED INTELLECTUAL
PROPERTY OR THE RIGHT OF THE BUYER TO USE THE SAME AS AND WHERE USED AS OF THE
EFFECTIVE DATE HEREOF. TO THE SELLER’S KNOWLEDGE, ALL LISTED INTELLECTUAL
PROPERTY IS VALID, SUBSISTING, UNEXPIRED, IN PROPER FORM AND ENFORCEABLE. EXCEPT
AS LISTED IN SCHEDULE 5.14(B), NO LISTED INTELLECTUAL PROPERTY IS THE SUBJECT OF
ANY PROCEEDING BEFORE ANY GOVERNMENTAL, REGISTRATION OR OTHER AUTHORITY IN ANY
JURISDICTION, OTHER THAN ANY OFFICE ACTION OR OTHER FORM OF PRELIMINARY OR FINAL
REFUSAL OF REGISTRATION. THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT WILL NOT ALTER OR IMPAIR ANY LISTED INTELLECTUAL PROPERTY OWNED
BY THE COMPANY OR THE RETAINED SUBSIDIARIES.

 

(C)                                  EXCEPT WITH RESPECT TO LICENSES BY WHICH
THE COMPANY OR THE RETAINED SUBSIDIARIES AUTHORIZE CUSTOMERS TO USE SOFTWARE
OWNED BY THE COMPANY OR THE RETAINED SUBSIDIARIES AND LICENSES FOR SOFTWARE
INTEGRATED WITH OR EMBEDDED IN PRODUCTS SOLD BY THEM IN THE ORDINARY COURSE OF
BUSINESS, SCHEDULE 5.14(C) SETS FORTH A COMPLETE LIST OF AGREEMENTS BY WHICH
INTELLECTUAL PROPERTY AND TECHNOLOGY OWNED BY THE COMPANY OR THE RETAINED
SUBSIDIARIES HAVE BEEN LICENSED TO A THIRD PARTY.  EXCEPT WITH RESPECT TO
(I) LICENSES BY WHICH THE COMPANY OR THE RETAINED SUBSIDIARIES ARE AUTHORIZED TO
USE OR SUBLICENSE TO THEIR CUSTOMERS SOFTWARE OWNED BY THIRD PARTIES AND
INTEGRATED WITH OR EMBEDDED IN PRODUCTS PURCHASED BY THE COMPANY OR THE RETAINED
SUBSIDIARIES FOR USE OR RESALE IN THE ORDINARY COURSE OF BUSINESS AND
(II) LICENSES OF GENERALLY AVAILABLE SOFTWARE WITH AN ANNUAL MAINTENANCE FEE OF
NO MORE THAN $25,000, SCHEDULE 5.14(C) FURTHER SETS FORTH A COMPLETE LIST OF
AGREEMENTS BY WHICH THE COMPANY AND THE RETAINED SUBSIDIARIES ARE AUTHORIZED TO
USE INTELLECTUAL PROPERTY AND TECHNOLOGY OWNED BY THIRD PARTIES THAT  ARE
MATERIAL TO THE CONDUCT OF THE BUSINESSES AS PRESENTLY CONDUCTED (“LISTED
LICENSE AGREEMENTS”). EXCEPT AS SET FORTH IN SCHEDULE 5.14(C), THE COMPANY AND
THE RETAINED SUBSIDIARIES ARE IN MATERIAL COMPLIANCE WITH ALL THE LISTED LICENSE
AGREEMENTS AND NEITHER THE COMPANY NOR THE RETAINED SUBSIDIARIES WILL BE, AS A
RESULT OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE PERFORMANCE OF ITS
OBLIGATIONS UNDER THIS AGREEMENT, IN BREACH OF ANY LISTED LICENSE AGREEMENT. 
NEITHER COMPANY NOR THE RETAINED SUBSIDIARIES HAS RECEIVED WRITTEN NOTICE OF A
MATERIAL DEFAULT OF ANY LISTED LICENSE AGREEMENT WHICH REMAINS UNCURED AS OF THE
CLOSING.

 

(D)                                 EXCEPT AS SET FORTH IN SCHEDULE 5.14(D),
NEITHER THE COMPANY NOR THE RETAINED SUBSIDIARIES HAS MADE ANY CLAIM OF A
VIOLATION, INFRINGEMENT, MISUSE OR

 

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MISAPPROPRIATION BY ANY THIRD PARTY (INCLUDING ANY EMPLOYEE OR FORMER EMPLOYEE
OF THE COMPANY OR THE RETAINED SUBSIDIARIES) OF ANY INTELLECTUAL PROPERTY OWNED
BY THE COMPANY OR THE RETAINED SUBSIDIARIES, WHICH CLAIM IS PENDING.  EXCEPT AS
SET FORTH IN SCHEDULE 5.14(D), NEITHER THE COMPANY NOR THE RETAINED SUBSIDIARIES
HAVE ENTERED INTO ANY AGREEMENT TO INDEMNIFY ANY OTHER PERSON AGAINST ANY CHARGE
OF INFRINGEMENT OF ANY INTELLECTUAL PROPERTY, OTHER THAN INDEMNIFICATION
PROVISIONS CONTAINED IN EMPLOYMENT POLICIES AND AGREEMENTS, CUSTOMER AGREEMENTS,
AGREEMENTS FOR THE PURCHASE OF CAPACITY, EQUIPMENT PROCUREMENT AGREEMENTS,
SOFTWARE LICENSE AGREEMENTS AND MAINTENANCE AGREEMENTS RELATED TO THE FOREGOING
ARISING IN THE ORDINARY COURSE OF BUSINESS.

 

(E)                                  THE COMPANY AND RETAINED SUBSIDIARIES HAVE
TAKEN REASONABLE STEPS, INCLUDING, WITHOUT LIMITATION, THE EXECUTION OF
APPROPRIATE CONFIDENTIALITY AGREEMENTS, TO PROTECT AND PRESERVE THE
CONFIDENTIALITY OF ALL THE COMPANY’S AND RETAINED SUBSIDIARIES’ TRADE SECRETS,
INCLUDING CUSTOMER DATA, OWNED AND LICENSED SOFTWARE, OWNED AND LICENSED
DATABASES AND CUSTOMER LISTS, AND ALL DISCLOSURES OF SUCH INFORMATION TO, AND
USE BY, ANY THIRD PARTY (OTHER THAN (I) TO COMPETENT REGULATORS, ACCOUNTANTS AND
COUNSEL, IN EACH INSTANCE ACTING IN THEIR PROFESSIONAL CAPACITIES, OR
(II) PURSUANT TO AN APPLICABLE COURT ORDER) HAVE BEEN PURSUANT TO THE TERMS OF
WRITTEN CONFIDENTIALITY UNDERTAKINGS BETWEEN SUCH THIRD PARTY AND THE COMPANY OR
RETAINED SUBSIDIARIES.

 

(F)                                    TO THE KNOWLEDGE OF THE SELLER AND EXCEPT
IN CONNECTION WITH OCCASIONAL SALES OF EXCESS EQUIPMENT OR INVENTORY, NEITHER
THE COMPANY NOR THE RETAINED SUBSIDIARIES HAVE PURCHASED OR SOLD ANY MATERIAL
TELECOMMUNICATIONS EQUIPMENT WITHOUT PROCURING OR HAVING THE TRANSFEREE PROCURE
A SOFTWARE LICENSE FOR THE IMBEDDED SOFTWARE IN SUCH EQUIPMENT.

 

(G)                                 THIS SECTION 5.14 SHALL CONSTITUTE THE SOLE
AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES REGARDING INTELLECTUAL PROPERTY OF
THE SELLER OTHER THAN AS SET FORTH IN SECTIONS 5.13(A) AND (B) HEREOF.

 

SECTION 5.15.  LICENSES AND PERMITS.  EXCLUSIVE OF ANY ZONING OR CONSTRUCTION
PERMITS, CONTRACTOR LICENSES OR LOCAL GOVERNMENT LICENSES AND PERMITS TO DO
BUSINESS, VARIANCES, ORDERS, EXCEPTIONS OR SIMILAR LICENSES ISSUED BY
GOVERNMENTAL ENTITIES, WHICH THE PARTIES HERETO AGREE ARE NOT MATERIAL EITHER
INDIVIDUALLY OR IN THE AGGREGATE, SCHEDULE 5.15 SETS FORTH A TRUE AND COMPLETE
LIST OF ALL MATERIAL LICENSES, PERMITS, FRANCHISES,  REGISTRATIONS,
AUTHORIZATIONS AND APPROVALS ISSUED OR GRANTED TO ANY OF THE COMPANY OR THE
RETAINED SUBSIDIARIES BY ANY GOVERNMENTAL ENTITY (THE “LICENSES AND PERMITS,”
WHICH SUCH TERM SHALL NOT INCLUDE THE LISTED LICENSE AGREEMENTS), APPLICABLE TO
THE COMPANY AND THE RETAINED SUBSIDIARIES, ANY OF THEIR RESPECTIVE PROPERTIES OR
OTHER ASSETS OR THE BUSINESSES.  THE COMPANY AND THE RETAINED SUBSIDIARIES ARE
(AND SINCE JANUARY 1, 2004 HAVE BEEN) IN COMPLIANCE IN ALL MATERIAL RESPECTS
WITH THE LICENSES AND PERMITS.  THE COMPANY AND THE RETAINED SUBSIDIARIES HOLD
ALL LICENSES AND PERMITS NECESSARY FOR THE LAWFUL CONDUCT OF THEIR RESPECTIVE
BUSINESSES AND FOR THEM TO OPERATE THE BUSINESSES AS CURRENTLY CONDUCTED. 
EXCEPT AS SET FORTH ON SCHEDULE 5.15, THE COMPANY AND THE RETAINED SUBSIDIARIES
ARE (AND SINCE JANUARY 1, 2004 HAVE BEEN) IN COMPLIANCE IN ALL MATERIAL RESPECTS
WITH THE TERMS OF ALL LICENSES AND PERMITS AND NO ADMINISTRATIVE OR JUDICIAL
PROCEEDING IS PENDING OR, TO THE SELLER’S KNOWLEDGE, OVERTLY THREATENED TO
AMEND, TERMINATE, REVOKE, LIMIT, SUSPEND OR CANCEL ANY SUCH LICENSE OR PERMIT. 
SINCE JANUARY 1, 2004, EXCEPT AS SET FORTH ON SCHEDULE 5.15, NEITHER THE COMPANY
NOR ANY OF THE RETAINED SUBSIDIARIES

 

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HAS RECEIVED WRITTEN NOTICE TO THE EFFECT THAT (A) ANY GOVERNMENTAL ENTITY
CLAIMED OR ALLEGED THAT THE COMPANY OR ANY RETAINED SUBSIDIARY WAS NOT IN
COMPLIANCE WITH ALL LICENSES AND PERMITS APPLICABLE TO THE COMPANY OR THE
RETAINED SUBSIDIARIES, ANY OF THEIR PROPERTIES OR OTHER ASSETS OR THE BUSINESSES
OR (B) ANY GOVERNMENTAL ENTITY WAS CONSIDERING THE AMENDMENT, TERMINATION,
SUSPENSION, REVOCATION OR CANCELLATION OF ANY LICENSE OR PERMIT.  COPIES OF THE
LICENSES AND PERMITS AND ALL PENDING APPLICATIONS THEREFOR HAVE BEEN MADE
AVAILABLE TO THE BUYER.

 

SECTION 5.16.  COMPLIANCE WITH LAW.  EXCEPT AS SET FORTH IN SCHEDULE 5.16, THE
OPERATIONS OF THE BUSINESS OF THE COMPANY AND THE RETAINED SUBSIDIARIES HAVE
BEEN CONDUCTED IN ACCORDANCE IN ALL MATERIAL RESPECTS WITH ALL APPLICABLE LAWS,
REGULATIONS AND ORDERS OF ALL COURTS AND OTHER GOVERNMENTAL ENTITY HAVING
JURISDICTION OVER SUCH ENTITY AND ITS ASSETS, PROPERTIES AND OPERATIONS.  EXCEPT
AS SET FORTH IN SCHEDULE 5.16, SINCE JANUARY 1, 2004, NONE OF THE COMPANY OR THE
RETAINED SUBSIDIARIES HAS RECEIVED NOTICE OF ANY VIOLATION (OR ANY INVESTIGATION
WITH RESPECT THERETO) OF ANY SUCH LAW, REGULATION OR ORDER, AND NONE OF THE
COMPANY OR THE RETAINED SUBSIDIARIES IS IN DEFAULT WITH RESPECT TO ANY MATERIAL
ORDER, WRIT, JUDGMENT, AWARD, INJUNCTION OR DECREE OF ANY NATIONAL, STATE OR
LOCAL COURT OR GOVERNMENTAL OR REGULATORY AUTHORITY OR ARBITRATOR, DOMESTIC OR
FOREIGN, APPLICABLE TO ANY OF ITS ASSETS, PROPERTIES OR OPERATIONS.

 

SECTION 5.17.  LITIGATION.  EXCEPT AS SET FORTH IN SCHEDULE 5.17, THERE ARE NO
MATERIAL CLAIMS, ACTIONS, SUITS, PROCEEDINGS, SUBPOENAS OR, TO THE SELLER’S
KNOWLEDGE, INVESTIGATIONS (EACH, AN “ACTION”) PENDING OR, TO THE SELLER’S
KNOWLEDGE, OVERTLY THREATENED, BEFORE ANY GOVERNMENTAL ENTITY, OR BEFORE ANY
ARBITRATOR OF ANY NATURE, BROUGHT BY OR AGAINST ANY OF THE COMPANY OR ITS
SUBSIDIARIES OR INVOLVING, AFFECTING OR RELATING TO THEIR RESPECTIVE ASSETS,
PROPERTIES OR RIGHTS OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  THERE
IS NO MATERIAL JUDGMENT, DECREE, INJUNCTION, RULE OR ORDER OF ANY GOVERNMENTAL
ENTITY, OR BEFORE ANY ARBITRATOR OF ANY NATURE OUTSTANDING, OR TO THE SELLER’S
KNOWLEDGE, OVERTLY THREATENED TO BE IMPOSED, AGAINST EITHER OF THE COMPANY OR
THE RETAINED SUBSIDIARIES.

 

SECTION 5.18.  CONTRACTS.

 

(A)                                  SCHEDULE 5.18(A) SETS FORTH A COMPLETE AND
CORRECT LIST OF ALL CONTRACTS.

 

(B)                                 EACH CONTRACT IS VALID, BINDING AND
ENFORCEABLE AGAINST THE COMPANY OR THE RETAINED SUBSIDIARIES PARTY THERETO AND,
TO THE SELLER’S KNOWLEDGE, AGAINST THE OTHER PARTIES THERETO IN ACCORDANCE WITH
ITS TERMS, AND IS IN FULL FORCE AND EFFECT, SUBJECT TO (I) THE EFFECT OF
BANKRUPTCY, FRAUDULENT CONVEYANCE, REORGANIZATION, MORATORIUM AND OTHER SIMILAR
LAWS RELATING TO OR AFFECTING THE ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY,
(II) GENERAL EQUITABLE PRINCIPLES (WHETHER CONSIDERED IN A PROCEEDING IN EQUITY
OR AT LAW) AND (III) AN IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING.  EACH
OF THE COMPANY AND THE RETAINED SUBSIDIARIES HAS PERFORMED ALL OBLIGATIONS
REQUIRED TO BE PERFORMED BY IT TO DATE UNDER, AND IS NOT IN DEFAULT OR
DELINQUENT IN PERFORMANCE, STATUS OR ANY OTHER RESPECT (CLAIMED OR ACTUAL) IN
CONNECTION WITH, ANY CONTRACT, AND NO EVENT HAS OCCURRED WHICH, WITH DUE NOTICE
OR LAPSE OF TIME OR BOTH, WOULD CONSTITUTE SUCH A DEFAULT AND, TO THE SELLER’S
KNOWLEDGE, NO OTHER PARTY TO ANY CONTRACT IS IN DEFAULT IN RESPECT THEREOF, AND
NO EVENT HAS OCCURRED WHICH, WITH DUE NOTICE OR LAPSE OF TIME OR BOTH, WOULD
CONSTITUTE SUCH A DEFAULT, IN EACH CASE, EXCEPT FOR THOSE DEFAULTS OR
DELINQUENCIES THAT WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE
EXPECTED TO MATERIALLY ADVERSELY AFFECT THE ABILITY OF THE COMPANY AND THE
RETAINED SUBSIDIARIES TO CONDUCT THE BUSINESSES AS CURRENTLY CONDUCTED.

 

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THE SELLER HAS DELIVERED TO THE BUYER OR ITS REPRESENTATIVES TRUE AND COMPLETE
COPIES OF ALL THE CONTRACTS.

 

(C)                                  A “CONTRACT” MEANS ANY AGREEMENT, CONTRACT
OR COMMITMENT, ORAL OR WRITTEN, TO WHICH EITHER OF THE COMPANY OR ANY RETAINED
SUBSIDIARY IS A PARTY OR BY WHICH IT OR ANY OF ITS ASSETS ARE BOUND (OTHER THAN
THE LISTED LICENSE AGREEMENTS) CONSTITUTING:

 

(I)                                     (A) ONE OF THE 50 LARGEST (BY REVENUE
GENERATED FOR THE COMPANY AND THE RETAINED SUBSIDIARIES IN 2005 THROUGH
JULY 31ST) TELECOMMUNICATIONS BUSINESS CONTRACTS OR AGREEMENTS FOR THE SALE,
LICENSE (AS LICENSOR) OR LEASE (AS LESSOR) BY THE COMPANY OR ANY OF THE RETAINED
SUBSIDIARIES OF SERVICES, PRODUCTS, INTELLECTUAL PROPERTY OR OTHER ASSETS TO ANY
THIRD PARTY; (B) ONE OF THE 20 LARGEST (BY REVENUE GENERATED FOR THE COMPANY AND
THE RETAINED SUBSIDIARIES IN 2005 THROUGH AUGUST 31ST) VYVX BUSINESS CONTRACTS
OR AGREEMENTS FOR THE SALE, LICENSE (AS LICENSOR) OR LEASE (AS LESSOR) BY THE
COMPANY OR ANY OF THE RETAINED SUBSIDIARIES OF SERVICES, PRODUCTS, INTELLECTUAL
PROPERTY OR OTHER ASSETS TO ANY THIRD PARTY; OR (C) A CONTRACT OR AGREEMENT
RELATING TO THE SALE, LICENSE OR LEASE BY THE COMPANY OR ANY OF THE RETAINED
SUBSIDIARIES OF ANY INDEFEASIBLE RIGHTS OF USE OF CAPACITY OR INFRASTRUCTURE
(“IRUS”);

 

(II)                                  (A) A TELECOMMUNICATIONS BUSINESS
CONTRACT, AGREEMENT OR PURCHASE UNDER A TARIFF FOR THE PURCHASE, LICENSE (AS
LICENSEE) OR LEASE (AS LESSEE) BY THE COMPANY OR ANY OF THE RETAINED
SUBSIDIARIES OF SERVICES, MATERIALS, PRODUCTS, PERSONAL PROPERTY, SUPPLIES,
INTELLECTUAL PROPERTY OR OTHER ASSETS FROM ANY SUPPLIER OR VENDOR OR FOR THE
FURNISHING OF SERVICES TO THE COMPANY OR ANY OF THE RETAINED SUBSIDIARIES
INVOLVING TOTAL PAYMENTS IN EXCESS OF $250,000 FROM JANUARY 1, 2005 THROUGH
JULY 31, 2005 OR (B) A VYVX BUSINESS CONTRACT, AGREEMENT OR PURCHASE UNDER A
TARIFF FOR THE PURCHASE, LICENSE (AS LICENSEE) OR LEASE (AS LESSEE) BY THE
COMPANY OR ANY OF THE RETAINED SUBSIDIARIES OF SERVICES, MATERIALS, PRODUCTS,
PERSONAL PROPERTY, SUPPLIES, INTELLECTUAL PROPERTY OR OTHER ASSETS FROM ANY
SUPPLIER OR VENDOR OR FOR THE FURNISHING OF SERVICES TO THE COMPANY OR ANY OF
THE RETAINED SUBSIDIARIES INVOLVING TOTAL PAYMENTS IN EXCESS OF $300,000 FROM
JANUARY 1, 2005 THROUGH JULY 31, 2005 (THE FOREGOING IN CLAUSES (A) AND (B) ARE
COLLECTIVELY, THE “VENDOR CONTRACTS”);

 

(III)                               A PEERING AGREEMENT OF THE COMPANY OR A
RETAINED SUBSIDIARY USED BY THE COMPANY OR ITS RETAINED SUBSIDIARIES SINCE
JANUARY 1, 2005;

 

(IV)                              A MORTGAGE, INDENTURE, SECURITY AGREEMENT,
GUARANTY OR OTHER AGREEMENT OR INSTRUMENT RELATING TO THE BORROWING OF MONEY OR
EXTENSION OF CREDIT (OTHER THAN ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE IN THE
ORDINARY COURSE OF BUSINESS);

 

(V)                                 AN EMPLOYMENT, EMPLOYMENT CHANGE OF CONTROL,
RETENTION, SEVERANCE OR MATERIAL CONSULTING AGREEMENT WITH INDIVIDUALS (OTHER
THAN A SALES COMMISSION PLAN ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS OR
ANY EMPLOYEE BENEFIT PLANS SET FORTH ON SCHEDULE 5.19(A));

 

(VI)                              A JOINT VENTURE, PARTNERSHIP OR LIMITED
LIABILITY COMPANY AGREEMENT WITH THIRD PARTIES;

 

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(VII)                           A NON-COMPETITION AGREEMENT OR ANY OTHER
AGREEMENT OR OBLIGATION WHICH PURPORTS TO LIMIT IN ANY MATERIAL RESPECT (I) THE
MANNER IN WHICH, OR THE LOCALITIES IN WHICH, THE BUSINESSES MAY BE CONDUCTED OR
(II) THE ABILITY OF EITHER OF THE COMPANY OR THE RETAINED SUBSIDIARIES TO
PROVIDE ANY TYPE OF SERVICE;

 

(VIII)                        A LEASE SET FORTH ON SCHEDULE 5.12(B) HERETO;

 

(IX)                                AN AGREEMENT REQUIRING CAPITAL EXPENDITURES
BY THE COMPANY OR ITS RETAINED SUBSIDIARIES IN EXCESS OF $500,000 FOLLOWING THE
MEASUREMENT DATE (EXCLUSIVE OF THE ITEMS SET FORTH ON
SCHEDULE 7.1(B)(VI) HERETO); OR

 

(X)                                   ANY OTHER MATERIAL AGREEMENT NOT IN THE
ORDINARY COURSE OF BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES.

 

(D)                                 [INTENTIONALLY OMITTED]

 

(E)                                  [INTENTIONALLY OMITTED]

 

(F)                                    EXCEPT AS SET FORTH ON SCHEDULE 5.18(F),
NONE OF THE CONTRACTS OR AGREEMENTS FOR THE SALE, LICENSE (AS LICENSOR) OR LEASE
(AS LESSOR) BY THE COMPANY OR ANY OF ITS SUBSIDIARIES OF SERVICES, PRODUCTS,
INTELLECTUAL PROPERTY RIGHTS OR OTHER ASSETS TO ANY THIRD PARTY CONTAIN ANY
EXCLUSIVITY CLAUSE, MOST-FAVORED-NATIONS CLAUSE, BENCHMARKING CLAUSE OR
MARKED-TO-MARKET PRICING PROVISION.  EACH OF THE COMPANY AND ITS SUBSIDIARIES
(AS APPLICABLE) IS NOT IN MATERIAL DEFAULT IN ANY RESPECT (CLAIMED OR ACTUAL) IN
CONNECTION WITH ANY EXCLUSIVITY CLAUSE, MOST FAVORED NATIONS CLAUSE,
BENCHMARKING CLAUSE OR MARKED-TO-MARKET PRICING PROVISION CONTAINED IN ANY
CONTRACT LISTED ON SCHEDULE 5.18(F), AND NO EVENT HAS OCCURRED WHICH, WITH DUE
NOTICE OR LAPSE OF TIME OR BOTH, WOULD CONSTITUTE SUCH A DEFAULT.

 

(G)                                 ALL OF THE PEERING AGREEMENTS OF THE COMPANY
AND ITS RETAINED SUBSIDIARIES THAT WILL BE IN EFFECT AS OF THE CLOSING ARE
TERMINABLE BY THE COMPANY OR THE RETAINED SUBSIDIARIES ON 90 DAYS’ PRIOR NOTICE
WITHOUT LIABILITY OR OBLIGATION TO THE COMPANY OR THE RETAINED SUBSIDIARIES.

 

(H)                                 SCHEDULE 5.18(H) SETS FORTH THE ESTIMATED
AGGREGATE MAXIMUM LIABILITY OF THE COMPANY AND THE RETAINED SUBSIDIARIES AS OF
JANUARY 1, 2006, (I) TO SBC AND ITS AFFILIATES IN THE EVENT OF THE TERMINATION
OF AGREEMENTS AND TARIFFS WITH SBC AND ITS AFFILIATES RELATING TO LEASED SHARED
NETWORK CIRCUITS AND (II) TO ALL OTHER LEASED SHARED NETWORK CIRCUIT VENDORS IN
THE EVENT OF THE TERMINATION OF AGREEMENTS AND TARIFFS WITH SUCH VENDORS
RELATING TO THE LEASED SHARED NETWORK CIRCUITS.

 

(I)                                     SCHEDULE 5.18(I) SETS FORTH A LIST OF
ALL LEASED ENTRANCE FACILITY AND DS-3 MUXED CIRCUITS OF THE COMPANY AND THE
RETAINED SUBSIDIARIES OTHER THAN THOSE THAT ARE TERMINABLE BY THE COMPANY OR THE
RETAINED SUBSIDIARIES ON LESS THAN 60 DAYS’ PRIOR NOTICE WITHOUT LIABILITY TO
THE COMPANY OR THE RETAINED SUBSIDIARIES (COLLECTIVELY, THE “SHARED NETWORK
CIRCUITS”) THAT IS CORRECT IN ALL MATERIAL RESPECTS AS OF SEPTEMBER 30, 2005 AND
IS THE BASIS FOR THE ESTIMATE PROVIDED PURSUANT TO SECTION 5.18(H), TOGETHER
WITH THE VENDOR NAME, SPEED, MONTHLY RECURRING CHARGE, AND TERMINATION DATE FOR
EACH CIRCUIT.

 

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SECTION 5.19.  EMPLOYEE PLANS.

 

(A)                                  SCHEDULE 5.19(A) SETS FORTH ALL “EMPLOYEE
BENEFIT PLANS,” AS DEFINED IN SECTION 3(3) OF ERISA, AND ALL OTHER PLANS,
POLICIES AND AGREEMENTS PROVIDING SEVERANCE PAY, SICK LEAVE, VACATION PAY,
SALARY CONTINUATION, RETIREMENT BENEFITS, DEFERRED COMPENSATION, BONUS PAY,
INCENTIVE PAY, STOCK OPTIONS, HOSPITALIZATION INSURANCE, MEDICAL INSURANCE, LIFE
INSURANCE, CAFETERIA BENEFITS, DEPENDENT CARE REIMBURSEMENTS, PREPAID LEGAL
BENEFITS, SCHOLARSHIPS OR TUITION REIMBURSEMENTS, MAINTAINED BY THE COMPANY OR
ANY OF THE RETAINED SUBSIDIARIES OR TO WHICH THE COMPANY OR ANY OF THE RETAINED
SUBSIDIARIES IS OBLIGATED TO CONTRIBUTE THEREUNDER FOR CURRENT OR FORMER
EMPLOYEES THE COMPANY AND THE RETAINED SUBSIDIARIES (EXCLUDING THE TRANSFERRED
BENEFIT PLANS, THE “EMPLOYEE BENEFIT PLANS”).

 

(B)                                 TRUE, CORRECT AND COMPLETE COPIES OF THE
FOLLOWING DOCUMENTS, WITH RESPECT TO EACH OF THE EMPLOYEE BENEFIT PLANS, HAVE
BEEN DELIVERED TO THE BUYER, TO THE EXTENT APPLICABLE:  (I) ALL PLANS AND
RELATED TRUST DOCUMENTS, AND AMENDMENTS THERETO; (II) FORMS 5500 FILED FOR THE
THREE MOST RECENT PLAN YEARS; (III) THE MOST RECENT IRS DETERMINATION LETTER;
AND (IV) THE MOST RECENT SUMMARY PLAN DESCRIPTIONS, ANNUAL REPORTS AND MATERIAL
MODIFICATIONS.

 

(C)                                  NONE OF THE EMPLOYEE BENEFIT PLANS IS A
MULTIEMPLOYER PLAN, AS DEFINED IN SECTION 3(37) OF ERISA (“MULTIEMPLOYER
PLAN”).  NEITHER THE COMPANY NOR ANY ERISA AFFILIATE HAS WITHDRAWN IN A COMPLETE
OR PARTIAL WITHDRAWAL, WITHIN THE MEANING OF SECTION 4201 OF ERISA, FROM ANY
MULTIEMPLOYER PLAN, NOR HAS ANY OF THEM INCURRED ANY LIABILITY DUE TO THE
TERMINATION OR REORGANIZATION OF A MULTIEMPLOYER PLAN WHICH HAS NOT BEEN
SATISFIED IN FULL.

 

(D)                                 EACH EMPLOYEE BENEFIT PLAN THAT IS INTENDED
TO QUALIFY UNDER SECTION 401 OF THE CODE AND THE TRUST MAINTAINED PURSUANT
THERETO IS EXEMPT FROM FEDERAL INCOME TAXATION UNDER SECTION 501 OF THE CODE,
AND NOTHING HAS OCCURRED WITH RESPECT TO THE OPERATION OF ANY SUCH EMPLOYEE
BENEFIT PLAN THAT WOULD REASONABLY BE EXPECTED TO CAUSE THE LOSS OF SUCH
QUALIFICATION OR EXEMPTION OR THE IMPOSITION OF ANY MATERIAL LIABILITY, PENALTY
OR TAX UNDER ERISA OR THE CODE.

 

(E)                                  ALL CONTRIBUTIONS (INCLUDING ALL EMPLOYER
CONTRIBUTIONS AND EMPLOYEE SALARY REDUCTION CONTRIBUTIONS) AND ALL PREMIUMS
REQUIRED TO HAVE BEEN PAID UNDER ANY OF THE EMPLOYEE BENEFIT PLANS OR BY LAW
(WITHOUT REGARD TO ANY WAIVERS GRANTED UNDER SECTION 412 OF THE CODE) TO ANY
FUNDS OR TRUSTS ESTABLISHED THEREUNDER OR IN CONNECTION THEREWITH HAVE BEEN MADE
BY THE DUE DATE THEREOF (INCLUDING ANY VALID EXTENSION).  NO ACCUMULATED FUNDING
DEFICIENCIES EXIST IN ANY OF THE EMPLOYEE BENEFIT PLANS SUBJECT TO SECTION 412
OF THE CODE.

 

(F)                                    NEITHER THE COMPANY NOR ANY ERISA
AFFILIATE HAS TERMINATED ANY EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE IV, OR
INCURRED ANY OUTSTANDING LIABILITY UNDER SECTION 4062 OF ERISA, TO THE PBGC OR
TO A TRUSTEE APPOINTED UNDER SECTION 4042 OF ERISA.  NEITHER THE COMPANY NOR ANY
ERISA AFFILIATE HAS ENGAGED IN ANY TRANSACTION DESCRIBED IN SECTION 4069 OF
ERISA.

 

(G)                                 EXCEPT AS SET FORTH ON
SCHEDULE 5.19(G) HERETO, THERE ARE NO PENDING MATERIAL ACTIONS, CLAIMS OR
LAWSUITS WHICH HAVE BEEN ASSERTED OR INSTITUTED AGAINST THE EMPLOYEE BENEFIT
PLANS, THE ASSETS OF ANY OF THE TRUSTS UNDER SUCH PLANS OR THE PLAN SPONSOR OR
THE PLAN

 

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ADMINISTRATOR, OR AGAINST ANY FIDUCIARY OF THE EMPLOYEE BENEFIT PLANS WITH
RESPECT TO THE OPERATION OR ADMINISTRATION OF SUCH PLANS OR THE INVESTMENT OF
PLAN ASSETS (OTHER THAN ROUTINE BENEFIT CLAIMS), NOR DOES THE SELLER HAVE
KNOWLEDGE OF FACTS WHICH COULD FORM THE BASIS FOR ANY SUCH CLAIM OR LAWSUIT. 
EXCEPT AS SET FORTH ON SCHEDULE 5.19(G) HERETO, NO EMPLOYEE BENEFIT PLAN HAS
BEEN THE SUBJECT OF AN AUDIT, INVESTIGATION OR EXAMINATION BY ANY GOVERNMENTAL
ENTITY WITHIN THE THREE PRECEDING YEARS.

 

(H)                                 EXCEPT AS SET FORTH ON SCHEDULE 5.19(H), THE
EMPLOYEE BENEFIT PLANS HAVE BEEN MAINTAINED, IN ALL MATERIAL RESPECTS, IN
ACCORDANCE WITH THEIR TERMS AND WITH ALL PROVISIONS OF ERISA, THE CODE AND OTHER
APPLICABLE FEDERAL AND STATE LAWS.  NONE OF THE COMPANY, THE RETAINED
SUBSIDIARIES, OR, TO THE SELLER’S KNOWLEDGE, ANY “PARTY IN INTEREST” OR
“DISQUALIFIED PERSON” WITH RESPECT TO THE EMPLOYEE BENEFIT PLANS HAS ENGAGED IN
A “PROHIBITED TRANSACTION” WITHIN THE MEANING OF SECTION 406 OF ERISA OR 4975 OF
THE CODE.  EXCEPT AS SET FORTH ON SCHEDULE 5.19(H), NO STOCK OR OTHER SECURITY
ISSUED BY THE COMPANY OR ANY AFFILIATE FORMS OR HAS FORMED A PART OF THE ASSETS
OF ANY EMPLOYEE BENEFIT PLAN.

 

(I)                                     EXCEPT AS SET FORTH ON
SCHEDULE 5.19(I) HERETO, NEITHER THE EXECUTION AND DELIVERY OF THIS AGREEMENT
NOR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY WILL, EITHER ALONE
OR AS A PREREQUISITE TO THE OCCURRENCE OF ANY SUBSEQUENT EVENT: (I) RESULT IN
ANY PAYMENT BECOMING DUE TO ANY EMPLOYEE (CURRENT, FORMER OR RETIRED) OF THE
COMPANY OR THE RETAINED SUBSIDIARIES; (II) INCREASE ANY BENEFITS OTHERWISE
PAYABLE UNDER ANY EMPLOYEE BENEFIT PLAN; (III) RESULT IN THE ACCELERATION OF THE
TIME OF PAYMENT OR VESTING OF ANY BENEFITS UNDER ANY EMPLOYEE BENEFIT PLAN; OR
(IV) CONSTITUTE A “CHANGE IN CONTROL” OR SIMILAR EVENT UNDER ANY EMPLOYEE
BENEFIT PLAN.

 

(J)                                     SCHEDULE 5.19(J) SETS FORTH THE NAMES OF
THE PERSONS ELIGIBLE TO PARTICIPATE IN THE OPEB PLANS, THEIR AGES AND YEARS OF
SERVICE CREDITED UNDER THE OPEB PLANS ON THE DATE HEREOF, DATE OF RETIREMENT (IF
APPLICABLE), AND WHETHER THEY ARE UNION EMPLOYEES.

 

SECTION 5.20.  INSURANCE.  SCHEDULE 5.20 LISTS THE MATERIAL SURETY BONDS,
FIDELITY BONDS AS WELL AS THE INSURANCE COMPANIES, POLICY NUMBERS, AGGREGATE
COVERAGE AMOUNT AND TYPE, AND DEDUCTIBLES OF ALL MATERIAL POLICIES OF TITLE,
LIABILITY, FIRE, CASUALTY, BUSINESS INTERRUPTION, WORKERS’ COMPENSATION AND
OTHER FORMS OF INSURANCE INSURING EACH OF THE COMPANY AND THE RETAINED
SUBSIDIARIES AND THEIR ASSETS, PROPERTIES AND OPERATIONS.  THE SELLER HAS MADE
AVAILABLE TO THE BUYER A TRUE AND COMPLETE COPY OF ALL SUCH BONDS AND POLICIES. 
EXCEPT AS SET FORTH IN SCHEDULE 5.20, ALL SUCH POLICIES AND BONDS ARE IN FULL
FORCE AND EFFECT AND NONE OF THE COMPANY OR THE RETAINED SUBSIDIARIES IS IN
MATERIAL DEFAULT UNDER ANY PROVISIONS OF ANY SUCH BOND OR POLICY OF INSURANCE
NOR HAS ANY OF THE COMPANY OR THE RETAINED SUBSIDIARIES RECEIVED NOTICE OF
CANCELLATION OF OR CANCELLED ANY SUCH INSURANCE WITHOUT REPLACEMENT THEREOF. 
FOR ALL CLAIMS MADE UNDER SUCH BONDS OR POLICIES, THE COMPANY AND ITS
SUBSIDIARIES HAVE TIMELY COMPLIED WITH ANY APPLICABLE NOTICE PROVISIONS, EXCEPT
WHERE THE FAILURE TO SO COMPLY WOULD NOT MATERIALLY ADVERSELY AFFECT THE
OPERATION OF THE BUSINESSES AS CURRENTLY CONDUCTED.

 

SECTION 5.21.  TRANSACTIONS WITH DIRECTORS, OFFICERS, MANAGERS, AND AFFILIATES. 
EXCEPT AS SET FORTH IN SCHEDULE 5.21 AND WITH RESPECT TO ANY EXCLUDED
LIABILITIES OR EXCLUDED ASSETS, NONE OF THE COMPANY OR THE RETAINED SUBSIDIARIES
IS A PARTY TO ANY AGREEMENT OR ARRANGEMENT (OTHER THAN EMPLOYMENT AGREEMENTS OR
ARRANGEMENTS) WITH ANY OF THE DIRECTORS,

 

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OFFICERS, MANAGERS, MEMBERS, PARTNERS OR STOCKHOLDERS OF THE COMPANY OR THE
RETAINED SUBSIDIARIES OR TO THE SELLER’S KNOWLEDGE, ANY AFFILIATE (OTHER THAN
THE COMPANY OR ANY RETAINED SUBSIDIARY) OR IMMEDIATE FAMILY MEMBER OF ANY OF THE
FOREGOING UNDER WHICH IT:  (I) LEASES ANY REAL OR PERSONAL PROPERTY (EITHER TO
OR FROM SUCH PERSON); (II) LICENSES TECHNOLOGY (EITHER TO OR FROM SUCH PERSON);
(III) IS OBLIGATED TO PURCHASE ANY TANGIBLE OR INTANGIBLE ASSET FROM OR SELL
SUCH ASSET TO SUCH PERSON; (IV) PURCHASES PRODUCTS OR SERVICES FROM SUCH PERSON;
(V) PAYS OR RECEIVES COMMISSIONS, REBATES OR OTHER PAYMENTS; OR (VI) PROVIDES OR
RECEIVES ANY OTHER MATERIAL BENEFIT.  EXCEPT AS SET FORTH ON SCHEDULE 5.21, TO
THE SELLER’S KNOWLEDGE, DURING THE PERIOD FROM AND INCLUDING NOVEMBER 6, 2003 TO
AND INCLUDING SEPTEMBER 30, 2005, NONE OF THE DIRECTORS, OFFICERS, MANAGERS,
MEMBERS OR STOCKHOLDERS OF THE COMPANY OR THE RETAINED SUBSIDIARIES, OR ANY
IMMEDIATE FAMILY MEMBER OF ANY OF SUCH PERSONS, HAS BEEN A DIRECTOR, OFFICER,
MANAGER OR MEMBER OF, OR HAS HAD ANY DIRECT OR INDIRECT INTEREST IN (OTHER THAN
BENEFICIAL OWNERSHIP OF LESS THAN 5% OF THE OUTSTANDING CAPITAL STOCK OF ANY
PUBLICLY TRADED COMPANY OR ANY PASSIVE INVESTMENT) ANY CUSTOMER IDENTIFIED ON
SCHEDULE 5.22(B).  NO AFFILIATE OF THE COMPANY AND THE RETAINED SUBSIDIARIES
(OTHER THAN THE COMPANY AND THE RETAINED SUBSIDIARIES) OWNS OR HAS ANY RIGHTS IN
OR TO ANY OF THE ASSETS, PROPERTIES OR RIGHTS USED BY EITHER OF THE COMPANY OR
THE RETAINED SUBSIDIARIES IN THE ORDINARY COURSE OF ITS BUSINESSES EXCEPT AS SET
FORTH ON SCHEDULE 5.21.

 

SECTION 5.22.  SUPPLIERS AND CUSTOMERS.

 

(A)                                  SCHEDULE 5.22(A) SETS FORTH A LIST OF THE
TOP 25 SUPPLIERS OF THE TELECOMMUNICATIONS BUSINESS AND THE TOP 20 SUPPLIERS OF
THE VYVX BUSINESS BY DOLLAR AMOUNT PAID BY THE COMPANY AND THE RETAINED
SUBSIDIARIES (TAKEN TOGETHER) DURING THE SEVEN-MONTH PERIOD ENDED JULY 31, 2005
(WITH RESPECT TO THE TELECOMMUNICATIONS BUSINESS) AND THE SEVEN-MONTH PERIOD
ENDED JULY 31, 2005 (WITH RESPECT TO THE VYVX BUSINESS), FROM WHOM THE COMPANY
OR ANY RETAINED SUBSIDIARY HAS PURCHASED GOODS AND/OR SERVICES.  AS OF THE DATE
HEREOF, NO SUCH SUPPLIER HAS EXPRESSED IN WRITING, AND TO THE SELLER’S KNOWLEDGE
NO SUCH SUPPLIER HAS EXPRESSED VERBALLY, TO THE COMPANY OR ANY RETAINED
SUBSIDIARY ITS INTENTION TO CANCEL OR OTHERWISE TERMINATE OR MATERIALLY REDUCE
OR MODIFY ITS RELATIONSHIP WITH THE COMPANY OR ANY RETAINED SUBSIDIARY.

 

(B)                                 SCHEDULE 5.22(B) SETS FORTH A LIST OF THE
TOP 25 CUSTOMERS OF THE TELECOMMUNICATIONS BUSINESS AND THE TOP 20 CUSTOMERS OF
THE VYVX BUSINESS BY REVENUE DERIVED BY THE COMPANY AND THE RETAINED
SUBSIDIARIES (TAKEN TOGETHER) DURING THE SEVEN-MONTH PERIOD ENDED JULY 31, 2005
(WITH RESPECT TO THE TELECOMMUNICATIONS BUSINESS) AND THE EIGHT-MONTH PERIOD
ENDED AUGUST 31, 2005 (WITH RESPECT TO THE VYVX BUSINESS), TO WHOM THE COMPANY
OR ANY RETAINED SUBSIDIARY HAS SOLD GOODS AND/OR SERVICES.  AS OF THE DATE
HEREOF, OTHER THAN SBC PRIOR TO JUNE 15, 2005, NO SUCH CUSTOMER HAS EXPRESSED IN
WRITING, AND TO THE SELLER’S KNOWLEDGE NO SUCH CUSTOMER HAS EXPRESSED VERBALLY,
TO THE COMPANY OR ANY RETAINED SUBSIDIARY ITS INTENTION TO CANCEL OR OTHERWISE
TERMINATE OR MATERIALLY REDUCE OR MODIFY ITS RELATIONSHIP WITH THE COMPANY OR
ANY RETAINED SUBSIDIARY.

 

SECTION 5.23.  LABOR MATTERS.

 

(A)                                  EXCEPT AS SET FORTH IN SCHEDULE 5.23(A):
(I)  NEITHER OF THE COMPANY OR THE RETAINED SUBSIDIARIES IS A PARTY TO ANY
OUTSTANDING EMPLOYMENT AGREEMENTS OR CONTRACTS WITH

 

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OFFICERS, MANAGERS OR EMPLOYEES OF EITHER OF THE COMPANY OR THE RETAINED
SUBSIDIARIES THAT ARE NOT TERMINABLE AT WILL, OR THAT PROVIDE FOR THE PAYMENT OF
ANY BONUS OR COMMISSION; (II) NEITHER OF THE COMPANY OR THE RETAINED
SUBSIDIARIES IS A PARTY TO ANY AGREEMENT, POLICY OR PRACTICE THAT REQUIRES IT TO
PAY TERMINATION, CHANGE OF CONTROL OR SEVERANCE PAY TO SALARIED, NON-EXEMPT OR
HOURLY EMPLOYEES OF SUCH COMPANY (OTHER THAN AS REQUIRED BY LAW); (III) NEITHER
OF THE COMPANY OR THE RETAINED SUBSIDIARIES IS A PARTY TO ANY COLLECTIVE
BARGAINING AGREEMENT OR OTHER LABOR UNION CONTRACT APPLICABLE TO ITS EMPLOYEES
NOR DOES THE SELLER KNOW OF ANY ACTIVITIES OR PROCEEDINGS OF ANY LABOR UNION
WITHIN THE PRECEDING THREE YEARS TO ORGANIZE ANY SUCH EMPLOYEES; AND
(IV) NEITHER OF THE COMPANY OR THE RETAINED SUBSIDIARIES IS A PARTY TO ANY
CONSULTING AGREEMENTS WITH ANY INDIVIDUAL PROVIDING SERVICES TO THE COMPANY OR
ANY OF THE RETAINED SUBSIDIARIES.

 

(B)                                 EXCEPT AS SET FORTH IN SCHEDULE 5.23(B):
(I) EACH OF THE COMPANY AND THE RETAINED SUBSIDIARIES IS IN COMPLIANCE IN ALL
MATERIAL RESPECTS WITH ALL APPLICABLE LAWS RELATING TO EMPLOYMENT AND EMPLOYMENT
PRACTICES, THE CLASSIFICATION OF EMPLOYEES, WAGES, HOURS, COLLECTIVE BARGAINING,
UNLAWFUL DISCRIMINATION, CIVIL RIGHTS, SAFETY AND HEALTH, WORKERS’ COMPENSATION,
THE COLLECTION AND PAYMENT OF WITHHOLDING AND/OR SOCIAL SECURITY TAXES AND TERMS
AND CONDITIONS OF EMPLOYMENT; (II) THERE ARE NO CHARGES WITH RESPECT TO OR
RELATING TO EITHER OF THE COMPANY OR THE RETAINED SUBSIDIARIES PENDING OR, TO
THE SELLER’S KNOWLEDGE, THREATENED BEFORE THE EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION OR ANY STATE, LOCAL OR FOREIGN AGENCY RESPONSIBLE FOR THE PREVENTION
OF UNLAWFUL EMPLOYMENT PRACTICES; AND (III) NEITHER OF THE COMPANY OR THE
RETAINED SUBSIDIARIES HAS RECEIVED ANY NOTICE FROM ANY NATIONAL, STATE, LOCAL OR
FOREIGN AGENCY RESPONSIBLE FOR THE ENFORCEMENT OF LABOR OR EMPLOYMENT LAWS OF AN
INTENTION TO CONDUCT AN INVESTIGATION OF EITHER OF THE COMPANY OR THE RETAINED
SUBSIDIARIES AND NO SUCH INVESTIGATION IS IN PROGRESS.

 

(C)                                  THE MAXIMUM AGGREGATE SEVERANCE OBLIGATIONS
OF THE COMPANY AND THE RETAINED SUBSIDIARIES UNDER ALL PROGRAMS, POLICIES,
ARRANGEMENTS (INCLUDING UNDER THE SEVERANCE PLAN) OR OTHERWISE, ASSUMING THE
REQUISITE CONDITIONS FOR THE PAYMENT OF SEVERANCE WERE TRIGGERED AND THE CLOSING
AND ALL PAYMENTS OCCUR ON JANUARY 1, 2006, WOULD NOT BE MORE THAN THE AMOUNT SET
FORTH ON SCHEDULE 5.23(C)(I) BASED UPON THE ASSUMPTIONS SET FORTH ON
SCHEDULE 5.23(C)(I).  ASSUMING THE CLOSING AND ALL PAYMENTS OCCUR ON JANUARY 1,
2006, THE MAXIMUM AGGREGATE OBLIGATIONS PAYABLE UNDER THE FOLLOWING PLANS WOULD
NOT EXCEED THE AMOUNT SET FORTH ON SCHEDULE 5.23(C)(II) BASED UPON THE
ASSUMPTIONS SET FORTH ON SCHEDULE 5.23(C)(II):  (I) THE WILTEL COMMUNICATIONS,
LLC EMPLOYEE RETENTION PLAN, AS ADOPTED EFFECTIVE APRIL 11, 2004; AND (II) THE
MISCELLANEOUS RETENTION PLANS.  THERE ARE NO NON-CURRENT LIABILITIES OF THE
COMPANY OR THE RETAINED SUBSIDIARIES IN RESPECT OF THE FORMER EXECUTIVE
RETENTION AGREEMENTS.

 

SECTION 5.24.  ENVIRONMENTAL MATTERS.  EXCEPT AS DISCLOSED ON SCHEDULE 5.24 AND
EXCEPT FOR CONDITIONS THAT WOULD NOT REASONABLY BE EXPECTED TO RESULT IN THE
COMPANY AND ITS SUBSIDIARIES INCURRING MATERIAL LIABILITY UNDER ENVIRONMENTAL
LAWS:

 

(A)                                  EACH OF THE COMPANY AND THE RETAINED
SUBSIDIARIES IS, AND TO THE KNOWLEDGE OF THE SELLER HAS BEEN, IN COMPLIANCE IN
ALL MATERIAL RESPECTS WITH ALL APPLICABLE ENVIRONMENTAL LAWS, WHICH COMPLIANCE
INCLUDES OBTAINING, MAINTAINING AND COMPLYING IN MATERIAL RESPECTS WITH ALL
MATERIAL LICENSES, PERMITS AND OTHER AUTHORIZATIONS REQUIRED UNDER ALL
ENVIRONMENTAL LAWS;

 

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(B)                                 TO THE SELLER’S KNOWLEDGE, EACH OF THE
COMPANY AND THE RETAINED SUBSIDIARIES HAS NOT RECEIVED ANY NOTICE OF VIOLATION
OR POTENTIAL LIABILITY UNDER ANY ENVIRONMENTAL LAWS FROM ANY PERSON OR ANY
GOVERNMENTAL AGENCY INQUIRY, REQUEST FOR INFORMATION, OR DEMAND LETTER UNDER ANY
ENVIRONMENTAL LAW RELATING TO OPERATIONS OR PROPERTIES, WHETHER CURRENTLY OR
FORMERLY OWNED OR OPERATED, OF THE COMPANY OR THE RETAINED SUBSIDIARIES OR THEIR
PREDECESSORS AS OF THE CLOSING DATE, WHICH IS OUTSTANDING AND WOULD REASONABLY
BE EXPECTED TO RESULT IN THE COMPANY OR ANY RETAINED SUBSIDIARY INCURRING
MATERIAL LIABILITY UNDER ENVIRONMENTAL LAWS;

 

(C)                                  EACH OF THE COMPANY AND THE RETAINED
SUBSIDIARIES IS NOT SUBJECT TO ANY OUTSTANDING ORDERS ARISING UNDER
ENVIRONMENTAL LAWS NOR ARE THERE ANY ADMINISTRATIVE, CIVIL OR CRIMINAL ACTIONS,
SUITS OR PROCEEDINGS PENDING OR, TO THE SELLER’S KNOWLEDGE, THREATENED, AGAINST
THE COMPANY OR THE RETAINED SUBSIDIARIES, OR TO SELLER’S KNOWLEDGE, THEIR
PREDECESSORS UNDER ANY ENVIRONMENTAL LAW;

 

(D)                                 TO THE SELLER’S KNOWLEDGE, THERE HAS BEEN NO
RELEASE OF HAZARDOUS MATERIALS BY THE COMPANY OR ANY RETAINED SUBSIDIARY AT, ON
OR UNDER ANY OF THE COMPANY REAL PROPERTY OR OTHER PROPERTIES CURRENTLY OR
FORMERLY OWNED OR LEASED BY THE COMPANY OR THE RETAINED SUBSIDIARIES OR THEIR
PREDECESSORS, WHICH WOULD REASONABLY BE EXPECTED TO RESULT IN THE COMPANY OR ANY
RETAINED SUBSIDIARY OR THEIR PREDECESSORS INCURRING ANY MATERIAL LIABILITY OR
DAMAGES UNDER ENVIRONMENTAL LAWS;

 

(E)                                  THE SELLER HAS MADE AVAILABLE TO THE BUYER
COPIES OF ALL MATERIAL ENVIRONMENTAL STUDIES, INVESTIGATIONS, REPORTS OR
ASSESSMENTS PREPARED BY OR FOR THE SELLER, OR IN THE SELLER’S POSSESSION,
CONCERNING THE COMPANY, ITS RETAINED SUBSIDIARIES, THE COMPANY REAL PROPERTY AND
ANY REAL PROPERTY PREVIOUSLY OWNED, OPERATED OR USED FOR DISPOSAL BY THE COMPANY
OR THE RETAINED SUBSIDIARIES OR THEIR PREDECESSORS, WHICH ARE IN THE POSSESSION,
CUSTODY OR CONTROL OF THE SELLER.

 

(F)                                    THIS SECTION 5.24 SHALL CONSTITUTE THE
SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES REGARDING ENVIRONMENTAL
MATTERS, ENVIRONMENTAL LAWS OR HAZARDOUS MATERIALS.

 

SECTION 5.25.  NO BROKERS.  NO BROKER, FINDER OR SIMILAR INTERMEDIARY HAS ACTED
FOR OR ON BEHALF OF, OR IS ENTITLED TO ANY BROKER’S, FINDER’S OR SIMILAR FEE OR
OTHER COMMISSION FROM EITHER OF LEUCADIA, THE SELLER, THE COMPANY OR ITS
SUBSIDIARIES IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

SECTION 5.26.  ACQUISITION OF THE SHARES.  (A)  THE SELLER IS ACQUIRING THE
SHARES TO BE ISSUED BY LEVEL 3 HEREUNDER FOR ITS OWN ACCOUNT FOR INVESTMENT AND
NOT WITH A VIEW TOWARDS THE RESALE, TRANSFER OR DISTRIBUTION THEREOF, NOR WITH
ANY PRESENT INTENTION OF DISTRIBUTING SUCH SHARES IN VIOLATION OF APPLICABLE
FEDERAL SECURITIES LAWS.

 

(B)                                 THE SELLER HAS SUCH KNOWLEDGE AND EXPERIENCE
IN FINANCIAL AND BUSINESS MATTERS THAT IT IS CAPABLE OF EVALUATING THE MERITS
AND RISKS OF ITS INVESTMENT IN THE COMPANY AS CONTEMPLATED BY THIS AGREEMENT,
AND IS ABLE TO BEAR THE ECONOMIC RISK OF SUCH INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.  THE SELLER HAS BEEN AFFORDED ACCESS TO LEVEL 3’S ANNUAL REPORT
ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004 AND THE LEVEL 3’S
QUARTERLY REPORT ON

 

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FORM 10-Q FOR FISCAL QUARTERS ENDED MARCH 31, 2005 AND JUNE 30, 2005 (“LEVEL 3
SEC REPORTS”) AND HAS BEEN AFFORDED AN OPPORTUNITY TO ASK QUESTIONS OF AND
RECEIVE ANSWERS FROM REPRESENTATIVES OF LEVEL 3 AND THE BUYER CONCERNING THE
TERMS AND CONDITIONS OF THIS AGREEMENT AND THE ACQUISITION OF SUCH SHARES.

 

(C)                                  THE SELLER IS AN “ACCREDITED INVESTOR” AS
SUCH TERM IS DEFINED IN RULE 501(A) PROMULGATED UNDER THE SECURITIES ACT.

 

(D)                                 THE SELLER UNDERSTANDS THAT THE SHARES HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAW, BY
REASON OF THEIR ISSUANCE IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS, WHICH
EXEMPTION DEPENDS UPON, AMONG OTHER THINGS, THE BONA FIDE NATURE OF THE SELLER’S
INVESTMENT INTENT AS EXPRESSED HEREIN.  THE SELLER UNDERSTANDS THAT SUCH
SECURITIES MUST BE HELD INDEFINITELY UNLESS THEY ARE SUBSEQUENTLY REGISTERED
UNDER THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS OR A SUBSEQUENT
DISPOSITION THEREOF IS EXEMPT FROM REGISTRATION.  THE SELLER UNDERSTANDS THAT
THE EXEMPTION FROM REGISTRATION AFFORDED BY RULE 144 (THE PROVISIONS OF WHICH
ARE KNOWN TO THE SELLER) PROMULGATED UNDER THE SECURITIES ACT DEPENDS UPON THE
SATISFACTION OF VARIOUS CONDITIONS AND THAT, IF APPLICABLE, RULE 144 MAY AFFORD
THE BASIS FOR SALES ONLY IN LIMITED AMOUNTS.

 

SECTION 5.27.  SBC.

 

(A)                                  EXCEPT AS SET FORTH IN SCHEDULE 5.27(A), AS
OF THE DATE HEREOF, NO CREDITS, REFUNDS OR PAYMENTS OF ANY KIND ARE DUE OR OWING
TO SBC.  THE COMPANY AND ITS SUBSIDIARIES HAVE BILLED SBC PURSUANT TO THE SBC
AGREEMENT IN A MANNER THAT IS CONSISTENT, ACCURATE AND IN ACCORDANCE WITH THE
TERMS OF SUCH AGREEMENT IN ALL MATERIAL RESPECTS.

 

(B)                                 SCHEDULE 5.27(B) SETS FORTH THE AMOUNTS
BILLED TO SBC AND ITS AFFILIATES FOR INCLUDED SERVICES PURSUANT TO, AND AS THAT
TERM IS DEFINED IN, THE SBC AGREEMENT AS OF OCTOBER 15, 2005 AND FOR EACH OF THE
CALENDAR MONTHS OF JULY, AUGUST AND SEPTEMBER 2005.

 

(C)                                  SBC HAS NEVER MADE AN INDEMNIFICATION CLAIM
OR OTHER CLAIM FOR LOSSES AGAINST THE COMPANY OR ANY OF ITS AFFILIATES.  EXCEPT
AS SET FORTH IN SCHEDULE 5.27(C), TO THE SELLER’S KNOWLEDGE, THERE ARE NO
MATERIAL DISPUTES PENDING WITH OR OVERTLY THREATENED BY SBC.

 

(D)                                 THE COMPANY AND ITS AFFILIATES HAVE NOT
REQUESTED, AND SBC AND ITS AFFILIATES HAVE NOT PAID FOR, ANY REIMBURSEMENTS
CONTEMPLATED BY SECTION 3.3(B) OF THE SBC AGREEMENT.

 

SECTION 5.28.  NO OTHER REPRESENTATIONS OR WARRANTIES.  EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION 5, NEITHER THE SELLER
NOR LEUCADIA NOR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY ON BEHALF OF THE SELLER OR LEUCADIA WITH RESPECT TO
THE COMPANY AND THE RETAINED SUBSIDIARIES.

 

SECTION 6.  REPRESENTATIONS AND WARRANTIES OF THE BUYER AND LEVEL 3.

 

The Buyer and Level 3 hereby jointly and severally represent and warrant to
Leucadia and the Seller as follows:

 

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SECTION 6.1.  CORPORATE ORGANIZATION.  THE BUYER IS A LIMITED LIABILITY COMPANY
AND LEVEL 3 IS A CORPORATION, EACH OF WHICH HAS BEEN DULY ORGANIZED, VALIDLY
EXISTING AND IS IN GOOD STANDING UNDER THE LAWS OF THE STATE OF DELAWARE, AND
HAS ALL REQUISITE LIMITED LIABILITY COMPANY OR CORPORATE POWER (AS THE CASE MAY
BE) AND AUTHORITY TO OWN ITS PROPERTIES AND ASSETS AND TO CONDUCT ITS BUSINESSES
AS NOW CONDUCTED.

 

SECTION 6.2.  QUALIFICATION TO DO BUSINESS.  THE BUYER AND LEVEL 3 ARE DULY
QUALIFIED TO DO BUSINESS AS A FOREIGN LIMITED LIABILITY COMPANY OR CORPORATION
(AS THE CASE MAY BE) AND IS IN GOOD STANDING IN EVERY JURISDICTION IN WHICH THE
CHARACTER OF THE PROPERTIES OWNED OR LEASED BY IT OR THE NATURE OF THE BUSINESS
CONDUCTED BY IT MAKES SUCH QUALIFICATION NECESSARY EXCEPT WHERE THE FAILURE TO
BE SO QUALIFIED OR IN GOOD STANDING THAT, INDIVIDUALLY OR IN THE AGGREGATE,
WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE BUYER
OR LEVEL 3.

 

SECTION 6.3.  NO CONFLICT OR VIOLATION.  THE EXECUTION, DELIVERY AND PERFORMANCE
BY THE BUYER AND LEVEL 3 OF THIS AGREEMENT AND BY LEVEL 3 OF THE REGISTRATION
RIGHTS AGREEMENT DO NOT AND WILL NOT (I) VIOLATE OR CONFLICT WITH ANY PROVISION
OF ANY ORGANIZATIONAL DOCUMENTS OF THE BUYER AND LEVEL 3, (II) VIOLATE ANY
PROVISION OF LAW, OR ANY ORDER, JUDGMENT OR DECREE OF ANY GOVERNMENTAL ENTITY OR
(III) VIOLATE OR RESULT IN A BREACH OF OR CONSTITUTE (WITH DUE NOTICE OR LAPSE
OF TIME OR BOTH) A DEFAULT UNDER ANY MATERIAL CONTRACT, AGREEMENT OR INSTRUMENT
TO WHICH THE BUYER OR LEVEL 3 IS A PARTY OR BY WHICH IT IS BOUND OR TO WHICH ANY
OF ITS PROPERTIES OR ASSETS IS SUBJECT THAT, INDIVIDUALLY OR IN THE AGGREGATE,
WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE BUYER OR
LEVEL 3.

 

SECTION 6.4.  CONSENTS AND APPROVALS.  EXCEPT AS SET FORTH IN SCHEDULE 6.4, NO
CONSENT, WAIVER, AUTHORIZATION OR APPROVAL OF ANY GOVERNMENTAL ENTITY, AND NO
DECLARATION OR NOTICE TO OR FILING OR REGISTRATION WITH ANY GOVERNMENTAL ENTITY,
IS REQUIRED IN CONNECTION WITH THE EXECUTION AND DELIVERY BY LEVEL 3 AND THE
BUYER OF THIS AGREEMENT AND THE EXECUTION AND DELIVERY BY LEVEL 3 OF THE
REGISTRATION RIGHTS AGREEMENT OR THE PERFORMANCE BY LEVEL 3 AND THE BUYER OF
THEIR OBLIGATIONS HEREUNDER OR THEREUNDER, EXCEPT FOR (I) THE FILING OF
NOTIFICATION AND REPORT FORM UNDER THE HSR ACT, (II) FILINGS WITH THE COMMISSION
AND THE NASDAQ STOCK MARKET, INCLUDING WITHOUT LIMITATION, THE FILING OF THE
REGISTRATION STATEMENT COVERING THE RESALE OF THE SHARES TO BE ISSUED HEREUNDER
(THE “REGISTRATION STATEMENT”) AND A NOTIFICATION FORM FOR LISTING ADDITIONAL
SHARES WITH RESPECT TO THE SHARES TO BE ISSUED HEREUNDER, RESPECTIVELY, AND
(III) SUCH OTHER CONSENTS, WAIVERS, AUTHORIZATIONS, APPROVALS, DECLARATIONS,
NOTICES, FILINGS OR REGISTRATIONS THAT, IF NOT OBTAINED, MADE OR GIVEN, WOULD
NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO IMPAIR IN ANY
MATERIAL RESPECT THE ABILITY OF LEVEL 3 OR THE BUYER TO PERFORM ITS OBLIGATIONS
HEREUNDER, OR PREVENT OR MATERIALLY IMPEDE, INTERFERE WITH, HINDER OR DELAY THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.

 

SECTION 6.5.  AUTHORIZATION AND VALIDITY OF AGREEMENT.  THE BUYER AND LEVEL 3
HAVE ALL REQUISITE LIMITED LIABILITY COMPANY OR CORPORATE POWER (AS THE CASE MAY
BE) AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND THE REGISTRATION RIGHTS
AGREEMENT TO WHICH THEY ARE A PARTY AND TO CARRY OUT THEIR RESPECTIVE
OBLIGATIONS HEREUNDER AND THEREUNDER.  THE EXECUTION AND DELIVERY OF THIS
AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT AND THE PERFORMANCE OF THE
BUYER’S AND LEVEL 3’S RESPECTIVE OBLIGATIONS HEREUNDER AND THEREUNDER HAVE BEEN
DULY AUTHORIZED BY ALL NECESSARY LIMITED LIABILITY COMPANY OR CORPORATE ACTION
(AS THE CASE MAY BE) OF THE BUYER AND

 

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LEVEL 3, AND NO OTHER LIMITED LIABILITY COMPANY OR CORPORATE PROCEEDINGS (AS THE
CASE MAY BE) ON THE PART OF THE BUYER AND LEVEL 3 ARE NECESSARY TO AUTHORIZE
SUCH EXECUTION, DELIVERY AND PERFORMANCE.  THIS AGREEMENT HAS BEEN DULY EXECUTED
BY THE BUYER AND LEVEL 3 AND, ASSUMING DUE EXECUTION AND DELIVERY BY LEUCADIA
AND THE SELLER, SHALL CONSTITUTE THEIR VALID AND BINDING OBLIGATION, ENFORCEABLE
AGAINST THEM IN ACCORDANCE WITH ITS TERMS, SUBJECT TO (I) THE EFFECT OF
BANKRUPTCY, FRAUDULENT CONVEYANCE, REORGANIZATION, MORATORIUM AND OTHER SIMILAR
LAWS RELATING TO OR AFFECTING THE ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY,
(II) GENERAL EQUITABLE PRINCIPLES (WHETHER CONSIDERED IN A PROCEEDING IN EQUITY
OR AT LAW) AND (III) AN IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING.

 

SECTION 6.6.  CAPITALIZATION AND RELATED MATTERS.

 

(A)                                  AS OF THE DATE HEREOF, LEVEL 3’S CAPITAL
STOCK CONSISTS OF (A) 1.5 BILLION AUTHORIZED SHARES OF LEVEL 3 COMMON STOCK AND
(B) 10,000,000 AUTHORIZED SHARES OF PREFERRED STOCK, PAR VALUE $0.01 PER SHARE,
OF WHICH NO SHARES OF PREFERRED STOCK ARE OUTSTANDING.  AS OF OCTOBER 27, 2005,
THERE WERE 701,076,214 SHARES OF LEVEL 3 COMMON STOCK OUTSTANDING.   EXCEPT AS
SET FORTH ON SCHEDULE 6.6 HERETO AS OF JUNE 30, 2005, (I) NEITHER LEVEL 3 NOR
ANY OF ITS SUBSIDIARIES HAS OUTSTANDING ANY STOCK OR OTHER SECURITIES
CONVERTIBLE INTO OR EXCHANGEABLE FOR ANY SHARES OF CAPITAL STOCK OF LEVEL 3, ANY
RIGHTS TO SUBSCRIBE FOR OR TO PURCHASE OR ANY OPTIONS FOR THE PURCHASE OF, OR
ANY AGREEMENTS PROVIDING FOR THE ISSUANCE (CONTINGENT OR OTHERWISE) OF, OR ANY
CALLS, COMMITMENTS OR CLAIMS OF ANY OTHER CHARACTER RELATING TO THE ISSUANCE OF,
ANY CAPITAL STOCK OF LEVEL 3, OR ANY STOCK OR SECURITIES CONVERTIBLE INTO OR
EXCHANGEABLE FOR ANY CAPITAL STOCK OF LEVEL 3 OTHER THAN THOSE ISSUED UNDER
EMPLOYEE BENEFIT PLANS OF LEVEL 3; AND (II) NEITHER LEVEL 3 NOR ANY OF ITS
SUBSIDIARIES IS SUBJECT TO ANY OBLIGATION (CONTINGENT OR OTHERWISE) TO
REPURCHASE OR OTHERWISE ACQUIRE OR RETIRE ANY SHARES OF CAPITAL STOCK OF LEVEL
3.  ALL OF THE OUTSTANDING SHARES OF LEVEL 3 COMMON STOCK HAVE BEEN DULY AND
VALIDLY ISSUED AND ARE FULLY PAID AND NON-ASSESSABLE.  AS OF THE CLOSING, THE
SHARES WILL BE DULY AUTHORIZED AND, UPON ISSUANCE, SALE AND DELIVERY AS
CONTEMPLATED BY THIS AGREEMENT, THE SHARES WILL BE VALIDLY ISSUED, FULLY PAID
AND NON-ASSESSABLE SECURITIES OF LEVEL 3.

 

(B)                                 ALL OF THE OUTSTANDING MEMBERSHIP UNITS OF
THE BUYER ARE OWNED OF RECORD AND BENEFICIALLY BY LEVEL 3, DIRECTLY OR
INDIRECTLY.

 

SECTION 6.7.  SEC FILINGS.

 

(A)                                  THE BUYER HAS DELIVERED OR MADE AVAILABLE
TO LEUCADIA AND THE SELLER A CORRECT AND COMPLETE COPY OF THE LEVEL 3 SEC
REPORTS.  THE LEVEL 3 SEC REPORTS HAVE BEEN TIMELY FILED PURSUANT TO THE
EXCHANGE ACT.

 

(B)                                 THE LEVEL 3 SEC REPORTS COMPLIED AS TO FORM
IN ALL MATERIAL RESPECTS WITH THE REQUIREMENTS OF THE EXCHANGE ACT IN EFFECT ON
THE DATE OF FILING.  THE LEVEL 3 SEC REPORTS, WHEN FILED PURSUANT TO THE
EXCHANGE ACT, DID NOT CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO
STATE ANY MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN, IN
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING.

 

(C)                                  EACH OF LEVEL 3’S FINANCIAL STATEMENTS
(INCLUDING THE RELATED NOTES) INCLUDED IN THE LEVEL 3 SEC REPORTS PRESENT FAIRLY
IN ALL MATERIAL RESPECTS THE CONSOLIDATED

 

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FINANCIAL POSITION AND CONSOLIDATED RESULTS OF OPERATIONS AND CASH FLOWS OF
LEVEL 3 AND ITS SUBSIDIARIES AS OF THE RESPECTIVE DATES OR FOR THE RESPECTIVE
PERIODS SET FORTH THEREIN, ALL IN CONFORMITY WITH GAAP CONSISTENTLY APPLIED
DURING THE PERIOD INVOLVED EXCEPT AS OTHERWISE NOTED THEREIN, AND SUBJECT, IN
THE CASE OF ANY UNAUDITED INTERIM FINANCIAL STATEMENTS INCLUDED THEREIN, TO
NORMAL YEAR-END ADJUSTMENTS AND TO THE ABSENCE OF COMPLETE FOOTNOTES.

 

SECTION 6.8.  NO MATERIAL ADVERSE EFFECT.  SINCE JUNE 30, 2005, THERE HAS NOT
BEEN ANY MATERIAL ADVERSE EFFECT ON LEVEL 3 AND ITS SUBSIDIARIES.

 

SECTION 6.9.  PRIVATE PLACEMENT.  THE ISSUANCE OF THE SHARES TO LEUCADIA
PURSUANT TO THIS AGREEMENT WILL NOT REQUIRE REGISTRATION UNDER THE SECURITIES
ACT, ASSUMING THAT (I) THE REPRESENTATIONS AND WARRANTIES OF THE SELLER MADE TO
LEVEL 3 AND THE BUYER IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT ARE TRUE, COMPLETE AND ACCURATE (UPON WHICH
ASSUMPTION LEVEL 3 AND THE BUYER HAVE RELIED WITHOUT INDEPENDENT INVESTIGATION);
AND (II) THE SELLER COMPLIES WITH ITS REPRESENTATIONS AND WARRANTIES SET FORTH
IN SECTION 5.26 OF THIS AGREEMENT.

 

SECTION 6.10.  NO BROKERS.  NO BROKER, FINDER OR SIMILAR INTERMEDIARY HAS ACTED
FOR OR ON BEHALF OF, OR IS ENTITLED TO ANY BROKER’S, FINDER’S OR SIMILAR FEE OR
OTHER COMMISSION FROM THE BUYER IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, OTHER THAN JP MORGAN SECURITIES INC. AND
EVERCORE PARTNERS.

 

SECTION 6.11.  SUFFICIENCY OF FUNDS.  THE BUYER HAS, AND AT THE CLOSING WILL
HAVE, SUFFICIENT FUNDS AVAILABLE TO PAY THE CASH PURCHASE PRICE AND THE
ADDITIONAL CASH AMOUNT AT THE CLOSING.

 

SECTION 6.12.  NO OTHER REPRESENTATIONS OR WARRANTIES.  EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION 6, NEITHER THE BUYER
NOR LEVEL 3 NOR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY ON BEHALF OF THE BUYER NOR LEVEL 3.

 

SECTION 7.  COVENANTS OF LEUCADIA AND THE SELLER.

 

Leucadia and the Seller hereby jointly and severally covenant as follows:

 

SECTION 7.1.  CONDUCT OF BUSINESS BEFORE THE CLOSING DATE.  (A)  WITHOUT THE
PRIOR WRITTEN CONSENT OF THE BUYER, BETWEEN THE DATE HEREOF AND THE CLOSING
DATE, LEUCADIA AND THE SELLER SHALL NOT PERMIT EITHER THE COMPANY OR ITS
RETAINED SUBSIDIARIES TO, EXCEPT (W) AS CONTEMPLATED BY THIS AGREEMENT, (X) AS
SET FORTH IN SCHEDULE 7.1(A), (Y) AS IT RELATES EXCLUSIVELY TO THE EXCLUDED
ASSETS OR THE EXCLUDED LIABILITIES OR (Z) IN CONNECTION WITH THE PRE-CLOSING
TRANSFERS:

 

(I)                                     MAKE ANY MATERIAL CHANGE IN THE CONDUCT
OF ITS BUSINESSES OR ENTER INTO ANY TRANSACTION, OTHER THAN IN THE ORDINARY
COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICES;

 

(II)                                  MAKE ANY CHANGE IN ANY ORGANIZATIONAL
DOCUMENT; ISSUE ANY ADDITIONAL SHARES OF CAPITAL STOCK, MEMBERSHIP UNITS OR
PARTNERSHIP INTERESTS OR OTHER

 

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EQUITY SECURITIES OR GRANT ANY OPTION, WARRANT OR RIGHT TO ACQUIRE ANY CAPITAL
STOCK, MEMBERSHIP UNITS OR PARTNERSHIP INTERESTS OR OTHER EQUITY SECURITIES OR
ISSUE ANY SECURITY CONVERTIBLE INTO OR EXCHANGEABLE FOR SUCH SECURITIES OR ALTER
IN ANY WAY ANY ITS OUTSTANDING SECURITIES OR MAKE ANY CHANGE IN OUTSTANDING
SHARES OF CAPITAL STOCK, MEMBERSHIP UNITS OR PARTNERSHIP INTERESTS OR OTHER
OWNERSHIP INTERESTS OR ITS CAPITALIZATION, WHETHER BY REASON OF A
RECLASSIFICATION, RECAPITALIZATION, STOCK SPLIT OR COMBINATION, EXCHANGE OR
READJUSTMENT OF SHARES, STOCK DIVIDEND OR OTHERWISE.  LEUCADIA AND THE SELLER
SHALL ADVISE LEVEL 3 OF THE AGGREGATE AMOUNT OF CASH, CASH EQUIVALENTS AND
MARKETABLE SECURITIES TRANSFERRED OR TO BE TRANSFERRED TO LEUCADIA OR AN
AFFILIATE (OTHER THAN THE COMPANY AND ITS RETAINED SUBSIDIARIES) PURSUANT TO
THIS AGREEMENT;

 

(III)                               MAKE ANY SALE, ASSIGNMENT, TRANSFER,
ABANDONMENT, SUBLEASE, ASSIGNMENT OR OTHER CONVEYANCE OF ITS ASSETS, COMPANY
REAL PROPERTY OR RIGHTS OR ANY PART THEREOF, OTHER THAN PURSUANT TO IRUS THAT
ARE ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS AND ON CUSTOMARY TERMS AND
WHICH IRUS RESULT IN PAYMENTS TO THE COMPANY AND ITS SUBSIDIARIES OF AN
AGGREGATE AMOUNT NOT TO EXCEED THE GREATER OF (I) $65,000 PER DAY FOR EACH DAY
BETWEEN THE DATE HEREOF AND THE CLOSING DATE AND (II) $4.0 MILLION;

 

(IV)                              SUBJECT ANY OF ITS ASSETS, PROPERTIES OR
RIGHTS OR ANY PART THEREOF, TO ANY LIEN OR SUFFER SUCH TO EXIST OTHER THAN SUCH
LIENS AS MAY ARISE IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
PRACTICE BY OPERATION OF LAW, PERMITTED LIENS AND LIENS PURSUANT TO THE
COMPANY’S CREDIT DOCUMENTS OR THE COMPANY’S REAL ESTATE DEBT DOCUMENTS;

 

(V)                                 REDEEM, RETIRE, PURCHASE OR OTHERWISE
ACQUIRE, DIRECTLY OR INDIRECTLY, ANY SHARES OF THE CAPITAL STOCK, MEMBERSHIP
UNITS OR PARTNERSHIP INTERESTS OR OTHER OWNERSHIP INTERESTS OF THE COMPANY AND
ITS SUBSIDIARIES OR DECLARE, SET ASIDE OR PAY ANY DIVIDENDS OR OTHER
DISTRIBUTION IN RESPECT OF SUCH SHARES OR INTERESTS (OTHER THAN TO ISSUE A
DIVIDEND TO THE SELLER OF EXCLUDED ASSETS AND TO SATISFY INTERCOMPANY
INDEBTEDNESS BALANCES);

 

(VI)                              ACQUIRE, LEASE OR SUBLEASE ANY MATERIAL
ASSETS, RAW MATERIALS OR PROPERTIES (INCLUDING ANY REAL PROPERTY), OR ENTER INTO
ANY OTHER TRANSACTION, OTHER THAN IN THE ORDINARY COURSE OF BUSINESS CONSISTENT
WITH PAST PRACTICE;

 

(VII)                           ENTER INTO ANY NEW (OR AMEND ANY EXISTING)
EMPLOYEE BENEFIT PLAN, PROGRAM OR ARRANGEMENT OR ANY NEW (OR AMEND ANY EXISTING)
EMPLOYMENT, SEVERANCE, RETENTION, CHANGE OF CONTROL OR CONSULTING AGREEMENT,
GRANT ANY GENERAL INCREASE IN THE COMPENSATION OF OFFICERS OR EMPLOYEES
(INCLUDING ANY SUCH INCREASE PURSUANT TO ANY BONUS, PENSION, PROFIT-SHARING OR
OTHER PLAN OR COMMITMENT) OR GRANT ANY INCREASE IN THE COMPENSATION PAYABLE OR
TO BECOME PAYABLE TO ANY EMPLOYEE, EXCEPT IN ACCORDANCE WITH PRE-EXISTING
CONTRACTUAL PROVISIONS OR CONSISTENT WITH PAST PRACTICE;

 

(VIII)                        MAKE OR COMMIT TO MAKE CAPITAL EXPENDITURES THAT
ARE NOT OTHERWISE IN THE ORDINARY COURSE OF BUSINESS, AND (X) THAT REQUIRE
AGGREGATE PAYMENTS IN EXCESS OF $500,000 PER WEEK FOR EACH WEEK BETWEEN THE
MEASUREMENT DATE AND THE

 

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CLOSING DATE OR (Y) THAT REQUIRE AGGREGATE PAYMENTS AFTER THE CLOSING IN EXCESS
OF $2,000,000;

 

(IX)                                PAY, LEND OR ADVANCE ANY AMOUNT TO, OR SELL,
TRANSFER OR LEASE ANY PROPERTIES OR ASSETS TO, OR ENTER INTO ANY AGREEMENT OR
ARRANGEMENT WITH, ANY OF ITS AFFILIATES OTHER THAN AMONG THE COMPANY AND THE
RETAINED SUBSIDIARIES;

 

(X)                                   FAIL TO KEEP IN FULL FORCE AND EFFECT
INSURANCE COMPARABLE IN AMOUNT AND SCOPE TO COVERAGE MAINTAINED AT THE DATE
HEREOF;

 

(XI)                                MAKE ANY CHANGE IN ANY METHOD OF ACCOUNTING
OR ACCOUNTING PRINCIPLE OR METHOD EXCEPT FOR ANY SUCH CHANGE REQUIRED BY REASON
OF A CONCURRENT CHANGE IN GAAP, OR WRITE OFF AS UNCOLLECTIBLE ANY ACCOUNTS
RECEIVABLE EXCEPT IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
PRACTICE;

 

(XII)                             MAKE OR CHANGE ANY MATERIAL TAX ELECTION,
CHANGE AN ANNUAL ACCOUNTING PERIOD OR ADOPT OR CHANGE ANY MATERIAL ACCOUNTING
METHOD, FILE ANY AMENDED TAX RETURN, ENTER INTO ANY CLOSING AGREEMENT, SETTLE
ANY MATERIAL TAX CLAIM OR ASSESSMENT RELATING TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, SURRENDER ANY MATERIAL RIGHT TO CLAIM A REFUND OF TAXES, CONSENT
TO ANY EXTENSION OR WAIVER OF THE LIMITATION PERIOD APPLICABLE TO ANY TAX CLAIM
OR ASSESSMENT RELATING TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR TAKE ANY
OTHER SIMILAR ACTION RELATING TO THE FILING OF ANY TAX RETURN OR THE PAYMENT OF
ANY TAX;

 

(XIII)                          (A) MODIFY, AMEND IN ANY MATERIAL RESPECT OR
TERMINATE ANY CONTRACT IN ANY MANNER THAT WOULD REASONABLY BE EXPECTED TO HAVE
AN ADVERSE EFFECT ON THE COMPANY AND THE RETAINED SUBSIDIARIES OR (B) MAKE OR
ENTER INTO SUPPLIER CONTRACTS (INCLUDING ANY PURCHASES UNDER TARIFFS) HAVING A
TERM OF MORE THAN 12 MONTHS THAT (X) WOULD HAVE PAYMENT OBLIGATIONS OVER THE
COURSE OF SUCH CONTRACTS IN EXCESS OF $1.0 MILLION IN THE AGGREGATE OR (Y) ARE
NOT OTHERWISE IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE;

 

(XIV)                         SETTLE, RELEASE OR FORGIVE ANY MATERIAL
LITIGATION; OR

 

(XV)                            COMMIT TO DO ANY OF THE FOREGOING.

 

(B)                                 FROM AND AFTER THE DATE HEREOF AND UNTIL THE
CLOSING DATE, LEUCADIA AND THE SELLER SHALL CAUSE EACH OF THE COMPANY AND ITS
SUBSIDIARIES TO:

 

(I)                                     CONTINUE TO MAINTAIN, IN ALL MATERIAL
RESPECTS, ITS ASSETS, PROPERTIES, RIGHTS AND OPERATIONS IN ACCORDANCE WITH
PRESENT PRACTICE IN A CONDITION SUITABLE FOR THEIR CURRENT USE;

 

(II)                                  FILE, WHEN DUE OR REQUIRED, ALL TAX
RETURNS AND OTHER REPORTS REQUIRED TO BE FILED AND PAY WHEN DUE ALL TAXES
LAWFULLY LEVIED OR ASSESSED AGAINST IT, UNLESS THE VALIDITY THEREOF IS CONTESTED
IN GOOD FAITH AND BY APPROPRIATE PROCEEDINGS DILIGENTLY CONDUCTED;

 

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(III)                               CONTINUE TO CONDUCT ITS BUSINESS IN THE
ORDINARY COURSE CONSISTENT WITH PAST PRACTICE;

 

(IV)                              KEEP ITS BOOKS OF ACCOUNT, FILES AND RECORDS
IN THE ORDINARY COURSE AND IN ACCORDANCE WITH EXISTING PRACTICE;

 

(V)                                 USE COMMERCIALLY REASONABLE EFFORTS IN LIGHT
OF THE TRANSACTIONS CONTEMPLATED HEREIN CONSISTENT WITH THE OPERATION OF THE
COMPANY’S BUSINESS IN THE ORDINARY COURSE AND CONSISTENT WITH PAST PRACTICE TO
PRESERVE INTACT ITS OPERATIONS, ORGANIZATION AND REPUTATION;

 

(VI)                              PAY OR ACCRUE BY THE MEASUREMENT DATE FOR THE
CAPITAL EXPENDITURE PROJECTS LISTED ON SCHEDULE 7.1(B)(VI) HERETO AND MAKE
COMMERCIALLY REASONABLE EFFORTS TO COMPLETE SUCH PROJECTS; AND

 

(VII)                           USE COMMERCIALLY REASONABLY EFFORTS TO CONTINUE
TO SPEND THE AMOUNTS UNDER THE VENDOR CONTRACTS AT RATES CONSISTENT WITH PAST
PRACTICE AND IN A MANNER THAT IS REASONABLY LIKELY TO AVOID ASSESSMENTS AGAINST
THE COMPANY OR ITS RETAINED SUBSIDIARIES DURING THE 12 MONTHS AFTER THE CLOSING.

 

(C)                                  NOTHING CONTAINED IN THIS AGREEMENT SHALL
GIVE TO LEVEL 3 OR BUYER, DIRECTLY OR INDIRECTLY, RIGHTS TO CONTROL OR DIRECT
THE OPERATIONS OF THE COMPANY OR THE RETAINED SUBSIDIARIES PRIOR TO THE CLOSING
DATE.  PRIOR TO THE CLOSING DATE, THE COMPANY AND THE RETAINED SUBSIDIARIES
SHALL EXERCISE, CONSISTENT WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT,
COMPLETE CONTROL AND SUPERVISION OF ITS AND ITS SUBSIDIARIES’ OPERATIONS.

 

SECTION 7.2.  CONSENTS AND APPROVALS.  LEUCADIA AND THE SELLER SHALL, AND SHALL
CAUSE EACH OF THE COMPANY AND ITS SUBSIDIARIES TO (A) USE THEIR COMMERCIALLY
REASONABLE EFFORTS TO OBTAIN ALL CONSENTS, WAIVERS, AUTHORIZATIONS AND APPROVALS
OF ALL GOVERNMENTAL ENTITIES, AND OF ALL OTHER PERSONS, REQUIRED IN CONNECTION
WITH THE EXECUTION, DELIVERY AND PERFORMANCE BY THE SELLER AND LEUCADIA OF THIS
AGREEMENT, AND THE BUYER AND LEVEL 3 SHALL COOPERATE WITH THE SELLER AND
LEUCADIA IN OBTAINING SUCH CONSENTS AND (B) COOPERATE WITH THE BUYER AND LEVEL 3
IN PREPARING AND FILING ALL DOCUMENTS REQUIRED TO BE SUBMITTED BY THE BUYER OR
LEVEL 3 TO ANY GOVERNMENTAL ENTITY, IN CONNECTION WITH SUCH TRANSACTIONS AND IN
OBTAINING ANY GOVERNMENTAL CONSENTS, WAIVERS, AUTHORIZATIONS OR APPROVALS WHICH
MAY BE REQUIRED TO BE OBTAINED BY THE BUYER OR LEVEL 3 IN CONNECTION WITH SUCH
TRANSACTIONS (WHICH ASSISTANCE AND COOPERATION SHALL INCLUDE, WITHOUT
LIMITATION, TIMELY FURNISHING TO THE BUYER AND LEVEL 3 ALL INFORMATION
CONCERNING LEUCADIA, THE SELLER AND THE COMPANY AND ITS SUBSIDIARIES THAT
COUNSEL TO THE BUYER DETERMINES IS REQUIRED TO BE INCLUDED IN SUCH DOCUMENTS).

 

SECTION 7.3.  ACCESS TO PROPERTIES AND RECORDS.  LEUCADIA AND THE SELLER SHALL
CAUSE EACH OF THE COMPANY AND THE RETAINED SUBSIDIARIES TO AFFORD TO THE BUYER
AND LEVEL 3, AND TO THE ACCOUNTANTS, COUNSEL AND REPRESENTATIVES OF THE BUYER
AND LEVEL 3, REASONABLE ACCESS DURING NORMAL BUSINESS HOURS THROUGHOUT THE
PERIOD PRIOR TO THE CLOSING DATE (OR THE EARLIER TERMINATION OF THIS AGREEMENT
PURSUANT TO SECTION 12) TO ALL PROPERTIES, BOOKS, CONTRACTS, COMMITMENTS AND
FILES AND RECORDS (BUT LIMITED WITH RESPECT TO TAX RETURNS AND CORRESPONDENCE
WITH ACCOUNTANTS TO THESE PORTIONS OF TAX RETURNS AND CORRESPONDENCE WITH
ACCOUNTANTS THAT

 

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RELATE TO THE COMPANY AND ITS RETAINED SUBSIDIARIES AND TO THE EXTENT REASONABLY
NECESSARY TO EVALUATE THE PURCHASE OF THE MEMBERSHIP UNITS) OF THE COMPANY AND
ITS SUBSIDIARIES AND, DURING SUCH PERIOD, SHALL FURNISH PROMPTLY TO THE BUYER
AND LEVEL 3 ALL OTHER INFORMATION CONCERNING THE COMPANY AND THE RETAINED
SUBSIDIARIES, PROPERTIES AND PERSONNEL AS THE BUYER AND LEVEL 3 MAY REASONABLY
REQUEST TO EVALUATE THE TRANSACTIONS CONTEMPLATED HEREBY; PROVIDED THAT NEITHER
LEUCADIA NOR THE SELLER SHALL BE REQUIRED TO PROVIDE ACCESS TO ANY SUCH
PROPERTIES, PERSONNEL OR INFORMATION TO THE EXTENT RELATING EXCLUSIVELY TO THE
EXCLUDED ASSETS OR EXCLUDED LIABILITIES.  LEUCADIA AND THE SELLER ALSO SHALL
CAUSE EACH OF THE COMPANY AND THE RETAINED SUBSIDIARIES TO AFFORD TO THE BUYER
AND LEVEL 3 REASONABLE ACCESS TO ITS ASSETS AND OPERATIONS THROUGHOUT THE PERIOD
PRIOR TO THE CLOSING DATE TO EVALUATE THE TRANSACTIONS CONTEMPLATED HEREBY. 
UNLESS OTHERWISE AGREED TO BY LEUCADIA AND THE SELLER, ALL INFORMATION PROVIDED
TO BUYER AND LEVEL 3 AND THEIR ADVISORS AND REPRESENTATIVES SHALL BE KEPT
CONFIDENTIAL IN ACCORDANCE WITH THE TERMS OF THE CONFIDENTIALITY AGREEMENT;
PROVIDED, HOWEVER, THAT SUCH OBLIGATION WILL TERMINATE UPON THE CLOSING WITH
RESPECT TO INFORMATION RELATING TO THE COMPANY AND THE RETAINED SUBSIDIARIES
(EXCEPT, IF THE BUYER HAS NOT EXERCISED THE BENEFIT PLAN SUBSTITUTION RIGHT
PURSUANT TO SECTION 2.2(B), IN CONNECTION WITH LEVEL 3’S AND THE BUYER’S
INVESTIGATION OF THE TRANSFERRED BENEFIT PLANS IN ACCORDANCE WITH
SECTION 7.16).  NO INVESTIGATION OR RECEIPT OF INFORMATION PURSUANT TO THIS
SECTION 7.3 SHALL QUALIFY ANY REPRESENTATION OR WARRANTY OF LEUCADIA OR THE
SELLER OR THE CONDITIONS TO THE OBLIGATIONS OF THE BUYER OR LEVEL 3.

 

SECTION 7.4.  PRE-CLOSING TRANSFERS.  ON OR PRIOR TO THE CLOSING, LEUCADIA AND
THE SELLER SHALL CAUSE THE COMPANY AND THE RETAINED SUBSIDIARIES TO TRANSFER TO
ONE OR MORE ENTITIES DIRECTLY OR INDIRECTLY WHOLLY OWNED BY LEUCADIA (OTHER THAN
THE COMPANY OR THE RETAINED SUBSIDIARIES) (THE “TRANSFEREE”) ALL OF THE RIGHT,
TITLE AND INTEREST OF THE COMPANY AND THE RETAINED SUBSIDIARIES IN AND TO THE
EXCLUDED ASSETS.  SUCH TRANSFER SHALL BE ON AN “AS IS, WHERE IS” BASIS, AND THE
COMPANY AND THE RETAINED SUBSIDIARIES WILL MAKE NO REPRESENTATIONS OR
WARRANTIES, EITHER EXPRESS OR IMPLIED, TO THE TRANSFEREE WITH RESPECT TO THE
EXCLUDED ASSETS AND THE TRANSFEREE WILL HAVE NO RECOURSE AGAINST THE COMPANY AND
THE RETAINED SUBSIDIARIES WITH RESPECT TO THE EXCLUDED ASSETS OR THE EXCLUDED
LIABILITIES.  IN ADDITION, LEUCADIA AND THE SELLER SHALL CAUSE THE TRANSFEREE TO
ASSUME AND TO PAY, PERFORM, SETTLE AND DISCHARGE WHEN DUE ALL OBLIGATIONS WITH
RESPECT TO THE EXCLUDED LIABILITIES.  FURTHERMORE, TO THE EXTENT THAT ANY OF THE
EXCLUDED ASSETS OR THE EXCLUDED LIABILITIES REQUIRE THE COMPANY AND THE RETAINED
SUBSIDIARIES TO PERFORM OBLIGATIONS THEREUNDER (INCLUDING ANY GUARANTEES),
LEUCADIA AND THE SELLER SHALL, PRIOR TO THE CLOSING, OBTAIN FROM THE OTHER
PARTIES THERETO THE WRITTEN UNCONDITIONAL RELEASE OF THE COMPANY AND THE
RETAINED SUBSIDIARIES FROM ALL OBLIGATIONS (INCLUDING ANY GUARANTEES) AND
LIABILITIES UNDER SUCH CONTRACTS AND PROVIDE ANY REQUIRED NOTICES TO ANY PERSON
OR SHALL OTHERWISE INDEMNIFY THE BUYER AND LEVEL 3 WITH RESPECT THERETO WITHOUT
LIMITATION PURSUANT TO THE PROVISIONS OF SECTION 9.3(B)(II) AND (III) HEREOF. 
IN CONNECTION WITH OBTAINING THE RELEASE OF THE COMPANY AND THE RETAINED
SUBSIDIARIES FROM THE COMPANY’S CREDIT DOCUMENTS, THE COMPANY MAY BORROW FUNDS
FROM LEUCADIA OR AN AFFILIATE OF LEUCADIA AND, SUBJECT TO SECTION 7.15(A), SUCH
INTER-COMPANY LOANS WILL BE REPAID BY THE COMPANY AT OR PRIOR TO THE CLOSING. 
FOR PURPOSES OF THIS AGREEMENT, SUCH TRANSFER OF THE EXCLUDED ASSETS AND
ASSUMPTION OF THE EXCLUDED LIABILITIES AND RELEASE OR INDEMNIFICATION OF THE
COMPANY’S AND THE RETAINED SUBSIDIARIES’ OBLIGATIONS THEREUNDER (INCLUDING ANY
GUARANTEES) ARE COLLECTIVELY REFERRED TO AS THE “PRE-CLOSING TRANSFERS.” 
NOTWITHSTANDING THE FOREGOING, PRIOR TO TRANSFERRING THE CAPITAL STOCK,
MEMBERSHIP UNITS OR OTHER OWNERSHIP INTERESTS OF THE TRANSFERRED SUBSIDIARIES TO
THE TRANSFEREE, LEUCADIA AND THE SELLER SHALL CAUSE THE COMPANY AND THE RETAINED
SUBSIDIARIES TO TRANSFER TO THE COMPANY OR A

 

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RETAINED SUBSIDIARY ALL OF THE RIGHT, TITLE AND INTERESTS OF THE TRANSFERRED
SUBSIDIARIES IN AND TO ANY OF THE ASSETS AND RIGHTS PRIMARILY USED IN THE
BUSINESSES.  LEUCADIA AND THE SELLER SHALL ASSUME FULL LIABILITY FOR ANY AND ALL
TAXES THAT RESULT FROM THE PRE-CLOSING TRANSFERS TO THE EXTENT IN EXCESS OF ANY
TAX (EXCEPT LIABILITY FOR ANY INCOME TAX) REFLECTED IN THE DETERMINATION OF THE
ACTUAL ADJUSTED NET WORKING CAPITAL.

 

SECTION 7.5.  Registration Statement and Level 3 Commission Filing
Requirements.   Leucadia and the Seller shall and shall use their commercially
reasonable efforts to cause the Company and its Subsidiaries to (i) prepare and
timely deliver to the Buyer, such that the Buyer can meet any Commission filing
deadlines with respect to the transactions contemplated by this Agreement,
audited GAAP financial statements of the Company and its consolidated
Subsidiaries for the year ended December 31, 2004 and, upon the completion
thereof, the year ended December 31, 2005, as well as unaudited quarterly
financials of the Company and its consolidated subsidiaries for the nine months
ended September 30, 2005 and the financial statements for 2006 quarterly periods
ending prior to the Closing, for inclusion in the Registration Statement or to
meet Level 3’s Commission filing requirements with respect to the transactions
contemplated by this Agreement, (ii) cause Leucadia’s independent public
accountants to perform the procedures specified by the American Institute of
Certified Public Accountants for a review of financial information as described
in SAS 100, Interim Financial Information with respect to the unaudited
financial statements of the Company and its consolidated Subsidiaries for the
nine months ended September 30, 2005 and the financial statements for 2006
quarterly periods ending prior to the Closing and (iii) to the extent required
by the Company’s independent public accountants, cooperate with Level 3 and the
Company to obtain the consent of the Company’s independent public accountants,
when required, with respect to the 2004 and 2005 audited financial statements so
that such audited financial statements can, if required, be included in the
Registration Statement or other Commission reports required to filed with or
furnished to the Commission by Level 3 with respect to the transactions
contemplated by this Agreement.  Level 3 and the Buyer acknowledge that if the
Closing has occurred, timely delivery of certain items required under this
Section 7.5 will require the cooperation and efforts of Level 3 and the Buyer to
the same extent as Leucadia and the Seller.

 

SECTION 7.6.  NEGOTIATIONS.  FROM AND AFTER THE DATE HEREOF AND UNTIL THE
EARLIER TO OCCUR OF THE CLOSING DATE OR THE TERMINATION OF THIS AGREEMENT
PURSUANT TO SECTION 12 HEREOF, LEUCADIA AND THE SELLER SHALL NOT, AND SHALL
CAUSE ANY PERSONS ACTING ON BEHALF OF LEUCADIA, THE SELLER, THE COMPANY AND ITS
SUBSIDIARIES NOT TO ENCOURAGE, SOLICIT, ENGAGE IN DISCUSSIONS OR NEGOTIATIONS
WITH, OR PROVIDE ANY INFORMATION TO, ANY PERSON OR GROUP (OTHER THAN THE BUYER
OR ITS REPRESENTATIVES) CONCERNING ANY MERGER, SALE OF SUBSTANTIAL ASSETS, SALE
OF SHARES OF CAPITAL STOCK, MEMBERSHIP UNITS OR PARTNERSHIP INTERESTS OR SIMILAR
TRANSACTION INVOLVING THE COMPANY AND THE RETAINED SUBSIDIARIES (OTHER THAN WITH
RESPECT TO THE EXCLUDED ASSETS AND EXCLUDED LIABILITIES).

 

SECTION 7.7.  CERTAIN REAL ESTATE MATTERS.  PRIOR TO THE CLOSING, LEUCADIA AND
THE SELLER SHALL CAUSE THE COMPANY AND ITS SUBSIDIARIES TO (I) RENEW THE LEASES
SET FORTH ON SCHEDULE 7.7(A), (II) ALLOW THE LEASES SET FORTH ON
SCHEDULE 7.7(B) TO EXPIRE IN ACCORDANCE WITH THEIR TERMS AND (III) TERMINATE THE
INTERCOMPANY LEASES SET FORTH ON SCHEDULE 7.7(C), IN THE CASE OF CLAUSES
(II) AND (III), WITH NO LIABILITY OR OBLIGATION ON THE PART OF THE COMPANY, THE
RETAINED SUBSIDIARIES, THE BUYER OR LEVEL 3, EXCEPT AS THEREIN PROVIDED.

 

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SECTION 7.8.  Commercially Reasonable Efforts.  Upon the terms and subject to
the conditions of this Agreement, Leucadia and the Seller will use and shall
cause each of the Company and its Subsidiaries to use, their commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby.  Upon the terms and subject to
the conditions of this Agreement, Leucadia and the Seller shall execute the
Registration Rights Agreement on the Closing Date and Leucadia and the Seller
shall cause the Company and WilTel Technology Center, LLC to execute the Lease
Agreement on the Closing Date.

 

SECTION 7.9.  NOTICE OF BREACH.  THROUGH THE CLOSING DATE, LEUCADIA AND THE
SELLER SHALL (A) PROMPTLY GIVE WRITTEN NOTICE WITH PARTICULARITY UPON HAVING
KNOWLEDGE OF ANY MATTER THAT CONSTITUTES OR IS REASONABLY LIKELY TO CONSTITUTE A
BREACH OF ANY REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT OF LEUCADIA OR THE
SELLER CONTAINED IN THIS AGREEMENT AND (B) PROMPTLY NOTIFY LEVEL 3 UPON HAVING
KNOWLEDGE OF THE ANNOUNCED INTENTION OF ANY OF THE SUPPLIERS OR CUSTOMERS LISTED
ON SCHEDULE 5.22(A) AND SCHEDULE 5.22(B), RESPECTIVELY, TO CANCEL, TERMINATE OR
MATERIALLY REDUCE ITS RELATIONSHIP WITH THE COMPANY OR ANY RETAINED SUBSIDIARY
AS SUCH RELATIONSHIP EXISTS ON THE DATE HEREOF.  NO NOTIFICATION PURSUANT TO
THIS SECTION 7.9 SHALL QUALIFY ANY REPRESENTATION OR WARRANTY OF LEUCADIA OR THE
SELLER OR THE CONDITIONS TO THE OBLIGATIONS OF THE BUYER OR LEVEL 3.

 

SECTION 7.10.  STOCK CERTIFICATE LEGEND.  THE CERTIFICATES EVIDENCING THE SHARES
WILL BEAR SUBSTANTIALLY THE FOLLOWING LEGEND REFLECTING THE FOREGOING
RESTRICTIONS ON THE TRANSFER OF SUCH SHARES:

 

“The securities evidenced hereby have not been registered under the Securities
Act, and may not be transferred except pursuant to an effective registration
under the Act or in a transaction which, in the opinion of counsel reasonably
satisfactory to Level 3 Communications, Inc. qualifies as an exempt transaction
under the Act and the rules and regulations promulgated thereunder.  Such
securities are also subject to the agreements, covenants and restrictions in
regard to the transfer of such securities as provided in that certain
Registration Rights and Transfer Restriction Agreement, dated as of [the Closing
Date], among Level 3 Communications, Inc., Leucadia National Corporation and
Baldwin Enterprises, Inc., a copy of which Registration Rights and Transfer
Restriction Agreement is on file at the office of the Secretary of Level 3
Communications, Inc.”

 

SECTION 7.11.  NON-SOLICITATION.

 

(A)                                  DURING THE PERIOD COMMENCING ON THE DATE OF
THIS AGREEMENT AND ENDING ON THE 12-MONTH ANNIVERSARY OF THE CLOSING DATE (THE
“INITIAL RESTRICTED PERIOD”), EACH OF THE SELLER AND LEUCADIA SHALL NOT AND
SHALL CAUSE THEIR AFFILIATES NOT TO, DIRECTLY OR INDIRECTLY, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE BUYER, INDUCE OR SOLICIT FOR EMPLOYMENT OR ENGAGEMENT AS
A

 

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CONSULTANT, OR HIRE OR ENGAGE AS A CONSULTANT, ANY COVERED EMPLOYEE OF THE
COMPANY AND THE RETAINED SUBSIDIARIES, PROVIDED, THAT NEITHER (I) GENERALIZED
SEARCHES THROUGH MEDIA ADVERTISEMENT, EMPLOYMENT FIRMS OR OTHERWISE THAT ARE NOT
DIRECTED TO SUCH PERSONNEL NOR (II) SOLICITING OR HIRING SUCH INDIVIDUALS
FOLLOWING THEIR TERMINATION OF EMPLOYMENT OR NOTIFICATION OF TERMINATION BY THE
COMPANY OR THE RETAINED SUBSIDIARIES SHALL CONSTITUTE A VIOLATION OF THE
FOREGOING; PROVIDED, SUCH HIRING OCCURS AFTER THE ACTUAL DATE OF TERMINATION.

 

(B)                                 DURING THE PERIOD COMMENCING ON THE DAY
AFTER THE 12-MONTH ANNIVERSARY OF THIS AGREEMENT AND ENDING ON THE 18-MONTH
ANNIVERSARY OF THE CLOSING DATE (THE “SUBSEQUENT RESTRICTED PERIOD”), EACH OF
THE SELLER AND LEUCADIA SHALL NOT AND SHALL CAUSE THEIR AFFILIATES NOT TO,
DIRECTLY OR INDIRECTLY, WITHOUT THE PRIOR WRITTEN CONSENT OF THE BUYER, INDUCE
OR SOLICIT FOR EMPLOYMENT OR ENGAGEMENT AS A CONSULTANT, ANY COVERED EMPLOYEE OF
THE COMPANY AND THE RETAINED SUBSIDIARIES, PROVIDED, THAT NEITHER
(I) GENERALIZED SEARCHES THROUGH MEDIA ADVERTISEMENT, EMPLOYMENT FIRMS OR
OTHERWISE THAT ARE NOT DIRECTED TO SUCH PERSONNEL NOR (II) SOLICITING SUCH
INDIVIDUALS FOLLOWING THEIR TERMINATION OF EMPLOYMENT OR NOTIFICATION OF
TERMINATION BY THE COMPANY OR THE RETAINED SUBSIDIARIES SHALL CONSTITUTE A
VIOLATION OF THE FOREGOING.

 

(C)                                  THE PARTIES AGREE THAT A MONETARY REMEDY
FOR A BREACH OF THE AGREEMENTS SET FORTH IN SECTIONS 7.11(A) AND (B) HEREOF WILL
BE INADEQUATE AND IMPRACTICABLE AND FURTHER AGREE THAT SUCH A BREACH WOULD CAUSE
LEVEL 3 AND THE BUYER IRREPARABLE HARM, AND THAT LEVEL 3 AND THE BUYER SHALL BE
ENTITLED TO TEMPORARY AND PERMANENT INJUNCTIVE RELIEF WITHOUT THE NECESSITY OF
PROVING ACTUAL DAMAGES.  IN THE EVENT OF SUCH A BREACH, LEUCADIA AND THE SELLER
AGREE THAT LEVEL 3 AND THE BUYER SHALL BE ENTITLED TO SUCH INJUNCTIVE RELIEF,
INCLUDING TEMPORARY RESTRAINING ORDERS, PRELIMINARY INJUNCTIONS AND PERMANENT
INJUNCTIONS AS A COURT OF COMPETENT JURISDICTION SHALL DETERMINE.

 

(D)                                 IF ANY PROVISION OF THIS SECTION 7.11 IS
INVALID IN PART, IT SHALL BE CURTAILED, AS TO TIME, LOCATION OR SCOPE, TO THE
MINIMUM EXTENT REQUIRED FOR ITS VALIDITY UNDER THE LAWS OF THE UNITED STATES AND
SHALL BE BINDING AND ENFORCEABLE WITH RESPECT TO THE SELLER AND LEUCADIA AS SO
CURTAILED.

 

SECTION 7.12.  EMPLOYEES AND EMPLOYEE BENEFITS.

 

(A)                                  CERTAIN CURRENT AND FORMER EMPLOYEES OF THE
COMPANY AND ITS SUBSIDIARIES (INCLUDING CERTAIN PREDECESSOR COMPANIES)
PARTICIPATE IN A QUALIFIED DEFINED BENEFIT PENSION PLAN KNOWN AS THE WILTEL
COMMUNICATIONS, LLC PENSION PLAN (THE “RETIREMENT PLAN”).  PRIOR TO THE CLOSING
DATE, LEUCADIA AND THE SELLER SHALL TAKE ALL NECESSARY AND APPROPRIATE ACTION
TO:  (I) CAUSE THE COMPANY AND ITS SUBSIDIARIES TO AMEND OR REVISE THE
RETIREMENT PLAN SO THAT NO FURTHER BENEFITS WILL BE ACCRUED BY THEIR EMPLOYEES
UNDER SUCH PLAN ON OR AFTER THE CLOSING DATE, (II) ASSUME THE SPONSORSHIP OF THE
RETIREMENT PLAN AND THE RELATED OBLIGATIONS AND LIABILITIES THEREUNDER ACCRUED
IN RESPECT OF THE ELIGIBLE EMPLOYEES PRIOR TO THE CLOSING DATE, AND (III) CAUSE
THE COMPANY AND ITS SUBSIDIARIES TO CEASE TO SPONSOR AND MAINTAIN THE RETIREMENT
PLAN AS OF THE DATE SUCH SPONSORSHIP IS ASSUMED BY LEUCADIA AND THE SELLER;
PROVIDED, HOWEVER, THAT THE COVENANTS OF THE SELLER SET FORTH IN CLAUSES
(I) THROUGH (III) OF THIS SECTION 7.12(A) SHALL BE OF NO FURTHER FORCE AND
EFFECT UPON THE EXERCISE BY THE BUYER OF ITS BENEFIT PLAN SUBSTITUTION RIGHT IN
ACCORDANCE WITH SECTION 2.2(B).  THE COMPANY AND ITS SUBSIDIARIES SHALL HAVE NO
OBLIGATION TO

 

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IMPLEMENT A QUALIFIED DEFINED BENEFIT PENSION PLAN FOR THEIR EMPLOYEES ON OR
AFTER THE CLOSING DATE.

 

(B)                                 CERTAIN CURRENT AND FORMER EMPLOYEES OF THE
COMPANY AND ITS SUBSIDIARIES PARTICIPATE IN A NONQUALIFIED DEFERRED COMPENSATION
PLAN KNOWN AS THE WILTEL COMMUNICATIONS, LLC SUPPLEMENTAL EXECUTIVE RETIREMENT
PLAN (THE “DEFERRED COMPENSATION PLAN”).  PRIOR TO THE CLOSING DATE, LEUCADIA
AND THE SELLER SHALL TAKE ALL NECESSARY AND APPROPRIATE ACTION TO:  (I) CAUSE
THE COMPANY AND ITS SUBSIDIARIES TO AMEND OR REVISE THE DEFERRED COMPENSATION
PLAN SO THAT NO FURTHER BENEFITS WILL BE ACCRUED BY THEIR EMPLOYEES UNDER SUCH
PLAN ON OR AFTER THE CLOSING DATE, (II) ASSUME THE SPONSORSHIP OF THE DEFERRED
COMPENSATION PLAN AND THE RELATED OBLIGATIONS AND LIABILITIES THEREUNDER ACCRUED
IN RESPECT OF THE ELIGIBLE EMPLOYEES PRIOR TO THE CLOSING DATE, AND (III) CAUSE
THE COMPANY AND ITS SUBSIDIARIES TO CEASE TO SPONSOR AND MAINTAIN THE DEFERRED
COMPENSATION PLAN AS OF THE DATE SUCH SPONSORSHIP IS ASSUMED BY LEUCADIA AND THE
SELLER; PROVIDED, HOWEVER, THAT THE COVENANTS OF THE SELLER SET FORTH IN CLAUSES
(I) THROUGH (III) OF THIS SECTION 7.12(B) SHALL BE OF NO FURTHER FORCE AND
EFFECT UPON THE EXERCISE BY THE BUYER OF ITS BENEFIT PLAN SUBSTITUTION RIGHT IN
ACCORDANCE WITH SECTION 2.2(B).  THE COMPANY AND ITS SUBSIDIARIES SHALL HAVE NO
OBLIGATION TO IMPLEMENT A NONQUALIFIED DEFERRED COMPENSATION PLAN FOR THEIR
EMPLOYEES ON OR AFTER THE CLOSING DATE.

 

(C)                                  WITHIN THREE DAYS AFTER THE DATE HEREOF,
THE SELLER SHALL DELIVER TO THE BUYER A LIST DATED AS OF OCTOBER 28, 2005
CONTAINING THE NAME, POSITION, STARTING EMPLOYMENT DATE, CURRENT ANNUAL SALARY,
BONUS AND COMMISSIONS IN 2004 OF EACH CURRENT EMPLOYEE OF EITHER OF THE COMPANY
OR ITS RETAINED SUBSIDIARIES.

 

(D)                                 NO PROVISION OF THIS SECTION 7.12 SHALL
CREATE ANY THIRD PARTY BENEFICIARY OR OTHER RIGHTS IN ANY EMPLOYEE OR FORMER
EMPLOYEE (INCLUDING ANY BENEFICIARY OR DEPENDENT THEREOF) OF THE COMPANY OR OF
ANY OF ITS SUBSIDIARIES IN RESPECT OF CONTINUED EMPLOYMENT (OR RESUMED
EMPLOYMENT) AND NO PROVISION OF THIS SECTION 7.12 SHALL CREATE ANY SUCH RIGHTS
IN ANY SUCH PERSONS IN RESPECT OF ANY BENEFITS THAT MAY BE PROVIDED, DIRECTLY OR
INDIRECTLY, UNDER ANY EMPLOYEE PLAN OR ARRANGEMENT WHICH MAY BE ESTABLISHED OR
MAINTAINED BY THE BUYER OR ANY OF ITS AFFILIATES AFTER THE CLOSING DATE.  NO
PROVISION OF THIS AGREEMENT SHALL CONSTITUTE A LIMITATION ON RIGHTS TO AMEND,
MODIFY OR TERMINATE AFTER THE CLOSING DATE ANY SUCH PLANS OR ARRANGEMENTS OF THE
BUYER OR ANY OF ITS AFFILIATES.

 

SECTION 7.13.  TAX MATTERS.

 

(A)                                  ALL TRANSFER, DOCUMENTARY, SALES, USE,
STAMP, REGISTRATION AND OTHER SUCH TAXES, AND ALL RECORDING CHARGES (INCLUDING
ANY PENALTIES AND INTEREST) INCURRED IN CONNECTION WITH CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE PAID BY THE BUYER AND THE
PARTIES SHALL COOPERATE IN THE FILING OF ALL NECESSARY TAX RETURNS AND OTHER
DOCUMENTATION WITH RESPECT TO SUCH TAXES AND CHARGES.

 

(B)                                 (I) THE SELLER SHALL PREPARE AND FILE, OR
CAUSE TO BE PREPARED AND FILED, WHEN DUE ALL TAX RETURNS THAT ARE REQUIRED TO BE
FILED BY OR WITH RESPECT TO THE COMPANY AND ITS SUBSIDIARIES FOR ALL PRE-CLOSING
TAX PERIODS TO THE EXTENT THAT SUCH TAX RETURNS ARE REQUIRED TO BE FILED ON OR
PRIOR TO THE CLOSING DATE, TAKING INTO ACCOUNT ALL VALID EXTENSIONS OF TIME TO
FILE SUCH RETURNS. THE SELLER SHALL ALSO PREPARE AND FILE OR CAUSE TO BE
PREPARED AND FILED WHEN DUE ALL

 

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TAX RETURNS THAT ARE REQUIRED TO BE FILED BY OR WITH RESPECT TO THE COMPANY AND
ITS SUBSIDIARIES FOR ALL PRE-CLOSING TAX PERIODS TO THE EXTENT SUCH TAX RETURNS
RELATE TO INCOME TAXES, IRRESPECTIVE OF WHEN DUE.  (II) THE BUYER SHALL PREPARE
AND FILE OR CAUSE TO BE PREPARED AND FILED WHEN DUE ALL TAX RETURNS THAT ARE
REQUIRED TO BE FILED BY OR WITH RESPECT TO THE COMPANY AND ITS SUBSIDIARIES FOR
ALL PRE-CLOSING TAX PERIODS TO THE EXTENT THAT SUCH TAX RETURNS RELATE TO TAXES
OTHER THAN INCOME TAXES AND ARE REQUIRED TO BE FILED AFTER THE CLOSING DATE,
TAKING INTO ACCOUNT ALL VALID EXTENSIONS OF TIME TO FILE SUCH RETURNS. 
(III) THE SELLER SHALL PAY, OR CAUSE TO BE PAID, ANY TAXES DUE IN RESPECT OF ANY
SUCH TAX RETURNS IN EXCESS OF ANY TAXES REFLECTED IN THE DETERMINATION OF THE
ACTUAL ADJUSTED NET WORKING CAPITAL, WHICH SHALL BE PAID BY THE COMPANY, BUT
SUCH LIMITATION SHALL HAVE NO APPLICATION TO INCOME TAXES.  IN THE CASE OF TAX
RETURNS PREPARED BY THE BUYER PURSUANT TO CLAUSE (II), THE BUYER SHALL COOPERATE
WITH AND SHALL FOLLOW THE DIRECTION OF THE SELLER IN THE PREPARATION OF SUCH TAX
RETURNS AND THE SELLER SHALL PAY OVER TO THE BUYER THE AMOUNT OF ANY TAX OWING
UNDER SUCH TAX RETURN TO BE PAID BY THE SELLER UNDER THIS SECTION 7.13(B) WITHIN
THREE DAYS OF RECEIVING NOTICE FROM THE BUYER OF SUCH AMOUNT, WHICH NOTICE SHALL
BE DELIVERED NOT BE LESS THAN SEVEN DAYS PRIOR TO THE DUE DATE OF SUCH RETURN;
PROVIDED, HOWEVER, THAT THERE IS AT LEAST SUBSTANTIAL AUTHORITY FOR THE
POSITIONS REQUIRED TO BE TAKEN ON SUCH TAX RETURNS.  THE TAX RETURNS PREPARED
PURSUANT TO THE FIRST SENTENCE OF CLAUSE (I) AND CLAUSE (II) SHALL BE PREPARED
CONSISTENT WITH PAST PRACTICE UNLESS THERE SHALL BE NO REASONABLE BASIS THEREFOR
AND UNLESS THE FAILURE TO PREPARE SUCH RETURNS IN SUCH A MANNER WOULD
NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL AND ADVERSE EFFECT ON THE COMPANY,
THE RETAINED SUBSIDIARIES OR THE BUYER AFTER THE CLOSING.

 

(C)                                  THE BUYER SHALL PREPARE AND FILE, OR CAUSE
TO BE PREPARED AND FILED, WHEN DUE ALL STRADDLE TAX RETURNS AND SHALL CAUSE THE
COMPANY TO PAY THE TAXES SHOWN TO BE DUE THEREON; PROVIDED, HOWEVER, THAT THE
SELLER SHALL PAY OVER TO THE BUYER WITHIN THREE DAYS OF RECEIVING NOTICE FROM
THE BUYER OF SUCH AMOUNT, WHICH NOTICE SHALL BE DELIVERED NOT LESS THAN SEVEN
DAYS PRIOR TO THE DUE DATE OF SUCH STRADDLE TAX RETURN FOR THE PORTION OF ANY
SUCH TAX THAT RELATES TO THE PORTION OF THE STRADDLE PERIOD ENDING ON THE
CLOSING DATE, BUT ONLY TO THE EXTENT IN EXCESS OF ANY TAXES REFLECTED IN THE
DETERMINATION OF THE ACTUAL ADJUSTED NET WORKING CAPITAL, WHICH SHALL BE PAID BY
THE COMPANY.  THE SELLER WILL FURNISH TO THE BUYER ALL INFORMATION AND RECORDS
REASONABLY REQUESTED BY THE BUYER FOR USE IN PREPARATION OF ANY STRADDLE TAX
RETURN.  THE BUYER SHALL FURNISH THE SELLER WITH A COMPLETED DRAFT OF ANY
STRADDLE TAX RETURN FOR THE SELLER TO REVIEW AND COMMENT UPON NO LATER THAT 20
DAYS BEFORE THE BUYER FILES ANY SUCH RETURN OR SUCH SHORTER PERIOD THAT MAY BE
PRACTICAL IN THE CIRCUMSTANCES, PROVIDED THAT REASONABLY ADEQUATE TIME UNDER THE
CIRCUMSTANCES IS PROVIDED TO THE SELLER FOR SUCH REVIEW.  THE BUYER SHALL NOT
FILE ANY SUCH STRADDLE TAX RETURN WITHOUT THE SELLER’S CONSENT, WHICH CONSENT
MAY NOT BE UNREASONABLY WITHHELD, CONDITIONED OR DELAYED.

 

(D)                                 IN THE CASE OF ANY STRADDLE PERIOD,
(I) PROPERTY TAXES OF THE COMPANY AND ITS SUBSIDIARIES FOR THE PRE-CLOSING TAX
PERIOD SHALL BE EQUAL TO THE AMOUNT OF SUCH PROPERTY TAXES FOR THE ENTIRE
STRADDLE PERIOD MULTIPLIED BY A FRACTION, THE NUMERATOR OF WHICH IS THE NUMBER
OF DAYS DURING THE STRADDLE PERIOD THAT ARE IN THE PRE-CLOSING TAX PERIOD AND
THE DENOMINATOR OF WHICH IS THE NUMBER OF DAYS IN THE STRADDLE PERIOD; AND
(II) THE TAXES OF THE COMPANY AND ITS SUBSIDIARIES (OTHER THAN PROPERTY TAXES)
FOR THE PORTION OF THE STRADDLE PERIOD THAT CONSTITUTES A PRE-CLOSING TAX PERIOD
SHALL BE COMPUTED AS IF SUCH TAXABLE PERIOD ENDED AS OF THE CLOSE OF BUSINESS ON
THE CLOSING DATE.  IF NECESSARY BECAUSE THE ASSETS WERE REPORTED TO THE TAX
AUTHORITIES ON A COMBINED BASIS (I.E., CLOSING OCCURS ON OR BEFORE DECEMBER 31,
2005), THE

 

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PROPERTY TAXES SHALL BE ALLOCATED BY THE BUYER BETWEEN THE ASSETS ACQUIRED IN
THIS TRANSACTION AND THE BUYER’S REMAINING ASSETS IN ACCORDANCE WITH THE BUYER’S
REASONABLE ASSET ALLOCATION PRACTICE.  IF THE BUYER’S ALLOCATION IS DISPUTED BY
THE SELLER, THEN THE SELLER AND THE BUYER SHALL NEGOTIATE IN GOOD FAITH TO
RESOLVE SUCH DISPUTE.

 

(E)                                  IF A TAX AUTHORITY COMMENCES ANY AUDIT,
EXAMINATION, LITIGATION OR OTHERWISE MAKES ANY CLAIM OR PROPOSES ANY ADJUSTMENT
THAT RELATES TO A PRE-CLOSING TAX PERIOD (OTHER THAN AN STRADDLE PERIOD)
(COLLECTIVELY, A “TAX PROCEEDING”), THEN THE BUYER SHALL PROMPTLY FURNISH
WRITTEN NOTICE TO THE SELLER OF SUCH TAX PROCEEDING.  FAILURE TO GIVE SUCH
NOTICE SHALL NOT RELIEVE THE SELLER FROM ANY LIABILITY WHICH IT MAY HAVE ON
ACCOUNT OF THIS INDEMNIFICATION OR OTHERWISE, EXCEPT TO THE EXTENT THAT THE
SELLER IS PREJUDICED THEREBY.  THE SELLER SHALL HAVE THE SHORTER OF (I) 45 DAYS
AFTER RECEIPT OF SUCH NOTICE OR (II) 15 DAYS LESS THAN THE NUMBER OF DAYS BEFORE
A RESPONSE TO THE RELEVANT TAX AUTHORITY IS REQUIRED, BUT IN NO EVENT SHALL THE
SELLER HAVE LESS THAN 15 DAYS, TO DECIDE WHETHER TO UNDERTAKE, CONDUCT AND
CONTROL (THROUGH COUNSEL OF ITS OWN CHOOSING AND AT ITS OWN EXPENSE) THE
RESPONSE TO SUCH TAX PROCEEDING AND THE SETTLEMENT OR DEFENSE THEREOF, AND THE
BUYER SHALL FULLY COOPERATE WITH SELLER IN CONNECTION THEREWITH INCLUDING, BUT
NOT LIMITED TO, PROVIDING POWERS OF ATTORNEY AUTHORIZING LEUCADIA (OR ITS
DESIGNEE) TO CONTROL AND TAKE ACTION IN CONNECTION WITH ANY SUCH TAXES.  THE
SELLER SHALL PERMIT THE BUYER TO PARTICIPATE IN SUCH RESPONSE, SETTLEMENT OR
DEFENSE THROUGH COUNSEL CHOSEN BY THE BUYER (BUT THE FEES AND EXPENSES OF SUCH
COUNSEL SHALL BE PAID BY BUYER).  IF ANY SETTLEMENT MATERIALLY ADVERSELY AFFECTS
ANY SUBSIDIARY IN A POST-CLOSING TAX PERIOD, THE SELLER SHALL NOT PAY OR SETTLE
ANY SUCH CLAIM WITHOUT THE PRIOR WRITTEN CONSENT OF BUYER (WHICH CONSENT SHALL
NOT BE UNREASONABLY WITHHELD, CONDITIONED OR DELAYED).  IF WITHIN THE SHORTER OF
(X) 45 DAYS AFTER THE RECEIPT OF THE BUYER’S NOTICE OF A TAX PROCEEDING OR (Y)
20 DAYS LESS THAN THE NUMBER OF DAYS BEFORE A RESPONSE TO THE RELEVANT TAX
AUTHORITY IS REQUIRED (BUT IN NO EVENT LESS THAN 20 DAYS), THE SELLER DOES NOT
NOTIFY THE BUYER THAT THE SELLER ELECTS (AT ITS COST AND EXPENSE) TO UNDERTAKE
THE DEFENSE THEREOF, OR GIVES SUCH NOTICE AND THEREAFTER FAILS TO CONTEST SUCH
CLAIM IN GOOD FAITH, THEN THE BUYER SHALL HAVE THE RIGHT TO CONTEST, SETTLE OR
COMPROMISE SUCH TAX PROCEEDING AND THE BUYER SHALL NOT THEREBY WAIVE ANY RIGHT
TO INDEMNITY FOR SUCH TAX PROCEEDING UNDER THIS AGREEMENT AND, FOR THE AVOIDANCE
OF DOUBT, THE BUYER SHALL BE INDEMNIFIED BY THE SELLER FOR THE BUYER’S
REASONABLE COSTS, INCLUDING ATTORNEYS’ AND CONSULTANTS’ FEES IN DEFENDING AND
SETTLING SUCH PROCEEDINGS; PROVIDED, HOWEVER, THE BUYER SHALL NOT, AND SHALL
CAUSE THE SUBSIDIARIES NOT TO, PAY OR SETTLE ANY SUCH TAX PROCEEDINGS WITHOUT
THE PRIOR WRITTEN CONSENT OF SELLER (WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD, CONDITIONED OR DELAYED).

 

(F)                                    IF A TAX AUTHORITY COMMENCES ANY AUDIT,
EXAMINATION, LITIGATION, OR OTHERWISE MAKES ANY CLAIM OR PROPOSES ANY ADJUSTMENT
THAT RELATES TO A STRADDLE PERIOD (COLLECTIVELY, A “STRADDLE PERIOD TAX
PROCEEDING”), THEN THE BUYER SHALL PROMPTLY FURNISH WRITTEN NOTICE TO THE SELLER
OF SUCH STRADDLE PERIOD TAX PROCEEDING.  FAILURE TO GIVE SUCH NOTICE SHALL NOT
RELIEVE THE SELLER FROM ANY LIABILITY WHICH IT MAY HAVE ON ACCOUNT OF THIS
INDEMNIFICATION OR OTHERWISE, EXCEPT TO THE EXTENT THAT THE SELLER IS PREJUDICED
THEREBY.  THE BUYER SHALL UNDERTAKE, CONDUCT AND CONTROL (THROUGH COUNSEL OF ITS
OWN CHOOSING AND AT ITS OWN EXPENSE) THE RESPONSE TO SUCH STRADDLE PERIOD TAX
PROCEEDING AND THE SETTLEMENT OR DEFENSE THEREOF.  THE SELLER SHALL COOPERATE
WITH THE BUYER IN CONNECTION THEREWITH, AND THE BUYER SHALL PERMIT THE SELLER TO
PARTICIPATE IN SUCH RESPONSE, SETTLEMENT OR DEFENSE THROUGH COUNSEL CHOSEN BY
THE SELLER (BUT THE FEES AND EXPENSES OF SUCH COUNSEL SHALL BE PAID BY SELLER).
TO THE EXTENT ANY SETTLEMENT ADVERSELY AFFECTS THE SELLER IN A PRE-CLOSING TAX
PERIOD, THE BUYER SHALL NOT PAY OR SETTLE ANY

 

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SUCH CLAIM WITHOUT THE PRIOR WRITTEN CONSENT OF THE SELLER (WHICH CONSENT SHALL
NOT BE UNREASONABLY WITHHELD, CONDITIONED OR DELAYED).  IF WITHIN THE SHORTER OF
(I) 45 DAYS AFTER THE RECEIPT OF THE BUYER’S NOTICE OF A STRADDLE PERIOD TAX
PROCEEDING OR (II) 15 DAYS LESS THAN THE NUMBER OF DAYS BEFORE A RESPONSE TO THE
RELEVANT TAX AUTHORITY IS REQUIRED (BUT IN NO EVENT LESS THAN 15 DAYS), THE
BUYER FAILS TO CONTEST SUCH CLAIM IN GOOD FAITH OR TO PREVENT ACTION TO
FORECLOSE A LIEN AGAINST OR ATTACHMENT OF THE BUYER’S PROPERTY, THEN THE SELLER
SHALL HAVE THE RIGHT TO CONTEST, SETTLE OR COMPROMISE SUCH STRADDLE PERIOD TAX
PROCEEDING AND THE SELLER SHALL NOT THEREBY WAIVE ANY RIGHT TO INDEMNITY FOR
SUCH STRADDLE PERIOD TAX PROCEEDING UNDER THIS AGREEMENT; PROVIDED, HOWEVER, THE
SELLER SHALL NOT PAY OR SETTLE ANY SUCH STRADDLE PERIOD TAX PROCEEDING WITHOUT
THE PRIOR WRITTEN CONSENT OF THE BUYER (WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD, CONDITIONED OR DELAYED).

 

(G)                                 THE BUYER SHALL NOT, AND SHALL NOT PERMIT
ANY OF ITS AFFILIATES TO, CARRY BACK ANY LOSS, CREDIT OR OTHER TAX ATTRIBUTE OF
THE COMPANY OR ANY OF ITS SUBSIDIARIES TO A PRE-CLOSING TAX PERIOD WITHOUT THE
PRIOR WRITTEN CONSENT OF THE SELLER, WHICH CONSENT MAY NOT BE UNREASONABLY
WITHHELD, CONDITIONED OR DELAYED.

 

(H)                                 ALL TAX SHARING, INDEMNITY OR ALLOCATION
AGREEMENTS OR ARRANGEMENTS AMONG THE COMPANY AND ITS SUBSIDIARIES ON THE ONE
HAND AND SELLER, LEUCADIA OR THEIR AFFILIATES ON THE OTHER HAND SHALL TERMINATE
AT OR PRIOR TO THE CLOSING AND THE PARTIES THERETO SHALL HAVE NO FURTHER
OBLIGATION THEREUNDER.

 

(I)                                     LEVEL 3 AND THE BUYER, ON THE ONE HAND,
AND LEUCADIA AND THE SELLER, ON THE OTHER HAND, WILL COOPERATE WITH EACH OTHER
IN CONNECTION WITH THE PREPARATION AND FILING OF TAX RETURNS REQUIRED UNDER THIS
AGREEMENT AND WILL PROVIDE TO EACH OTHER ACCESS, AT ANY REASONABLE TIME AND FROM
TIME TO TIME, AT THE BUSINESS LOCATION AT WHICH THE BOOKS AND RECORDS ARE
MAINTAINED, AFTER THE CLOSING DATE, TO SUCH TAX DATA RELATING TO THE COMPANY AND
THE RETAINED SUBSIDIARIES AS LEUCADIA AND THE SELLER OR LEVEL 3 AND THE BUYER,
AS THE CASE MAY BE, MAY FROM TIME TO TIME REASONABLY REQUEST.

 

SECTION 7.14.  NAME.  PROMPTLY AFTER THE CLOSING, LEUCADIA AND THE SELLER SHALL
CAUSE WILTEL AIRCRAFT LEASING, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AND
WILTEL TECHNOLOGY CENTER, LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO CHANGE
THEIR NAMES TO SUCH NAMES THAT DO NOT INCLUDE “WILTEL” AND TO OTHERWISE CEASE
USING SUCH NAME IN ITS OPERATIONS.

 

SECTION 7.15.  REIMBURSEMENTS; CASH BALANCE.

 

(A)                                  IF THE CLOSING OCCURS AFTER DECEMBER 31,
2005, THE SELLER SHALL PAY TO THE COMPANY AT THE CLOSING AN AMOUNT EQUAL TO ALL
CASH USED BY THE COMPANY, THE RETAINED SUBSIDIARIES OR THE BUSINESS ON AND AFTER
JANUARY 1, 2006 WITH RESPECT TO EXCLUDED LIABILITIES (INCLUDING, WITHOUT
LIMITATION, (I) PAYMENTS OF INTEREST OR PRINCIPAL UNDER THE COMPANY’S CREDIT
DOCUMENTS OR THE COMPANY’S REAL ESTATE DEBT DOCUMENTS AND (II) PAYMENTS OF
OPERATING AND MAINTENANCE EXPENSES OR CAPITAL EXPENDITURES WITH RESPECT TO THE
COMPANY’S TULSA, OKLAHOMA HEADQUARTERS) OR EXCLUDED ASSETS (INCLUDING, WITHOUT
LIMITATION, PAYMENTS TO ACQUIRE MARKETABLE SECURITIES).

 

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(B)                                 IF ON THE MEASUREMENT DATE, THE COMPANY AND
THE RETAINED SUBSIDIARIES HAVE AN AGGREGATE CASH BALANCE OF LESS THAN $100
MILLION (AFTER GIVING EFFECT TO THE PRE-CLOSING TRANSFERS), THE SELLER SHALL
MAKE A CONTRIBUTION TO THE CAPITAL OF THE COMPANY ON THE MEASUREMENT DATE TO THE
EXTENT NECESSARY TO CAUSE THE COMPANY AND THE RETAINED SUBSIDIARIES TO HAVE A
$100 MILLION AGGREGATE CASH BALANCE IMMEDIATELY FOLLOWING THE MEASUREMENT DATE.

 

(C)                                  THE SELLER SHALL ON THE CLOSING DELIVER TO
THE BUYER A CERTIFICATE SIGNED BY AN OFFICER OF THE SELLER SETTING FORTH IN
DETAIL ALL OF THE AMOUNTS TO BE REIMBURSED PURSUANT TO SECTION 7.15(A).

 

(D)                                 ALL PAYMENTS REFERRED TO IN
SECTION 7.15(A) AND (B) SHALL BE MADE ON THE RESPECTIVE DUE DATE FOR SUCH
PAYMENTS BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS.

 

SECTION 7.16.  TRANSFERRED BENEFIT PLANS.  IN CONNECTION WITH THE BUYER’S
ABILITY TO EXERCISE THE BENEFIT PLAN SUBSTITUTION RIGHT, THE SELLER SHALL
PROVIDE TO THE BUYER AND LEVEL 3 COMPLETE AND UNRESTRICTED ACCESS, DURING NORMAL
BUSINESS HOURS, TO ALL INFORMATION CONCERNING THE TRANSFERRED BENEFIT PLANS
WITHIN THE POSSESSION OF THE COMPANY, ITS SUBSIDIARIES, THE SELLER AND LEUCADIA,
TOGETHER WITH COMPLETE AND UNRESTRICTED ACCESS, DURING NORMAL BUSINESS HOURS, TO
THE EMPLOYEES OF THE COMPANY AND THE ADVISORS AND CONSULTANTS TO THE COMPANY
WITH RESPECT TO THE TRANSFERRED BENEFIT PLANS, IN EACH CASE SOLELY FOR THE
PURPOSE OF CONDUCTING ITS INVESTIGATION OF THE TRANSFERRED BENEFIT PLANS.  IF
THE BUYER EXERCISES ITS BENEFIT PLAN SUBSTITUTION RIGHT, THE SELLER AND LEUCADIA
WILL REPRESENT AND WARRANT THE FOREGOING TO THE BUYER AND LEVEL 3 AND WILL AGREE
TO INDEMNIFY THE BUYER AND LEVEL 3 FOR ANY BREACH OF SUCH REPRESENTATION,
SUBJECT TO THE PROVISIONS OF SECTION 9.2(B).  UNLESS OTHERWISE AGREED TO BY
LEUCADIA AND THE SELLER, ALL INFORMATION PROVIDED TO THE BUYER AND LEVEL 3 AND
THEIR ADVISORS AND REPRESENTATIVES PURSUANT TO THIS SECTION 7.16 SHALL BE KEPT
CONFIDENTIAL IN ACCORDANCE WITH THE TERMS OF THE CONFIDENTIALITY AGREEMENT,
PROVIDED, HOWEVER, THAT SUCH OBLIGATIONS WILL EXPIRE ON THE CLOSING IF THE BUYER
EXERCISES ITS BENEFIT PLAN SUBSTITUTION RIGHT IN ACCORDANCE WITH SECTION 2.2(B).
 ALL REQUESTS FOR INFORMATION UNDER THIS SECTION 7.16 SHALL BE MADE IN WRITING
TO MARDI DE VERGES, SENIOR VICE PRESIDENT OF THE COMPANY.

 

SECTION 8.  COVENANTS OF LEVEL 3 AND THE BUYER.

 

SECTION 8.1.  COMMERCIALLY REASONABLY EFFORTS.  UPON THE TERMS AND SUBJECT TO
THE CONDITIONS OF THIS AGREEMENT, THE BUYER AND LEVEL 3 WILL USE THEIR
COMMERCIALLY REASONABLE EFFORTS TO TAKE, OR CAUSE TO BE TAKEN, ALL ACTION, AND
TO DO, OR CAUSE TO BE DONE, ALL THINGS NECESSARY, PROPER OR ADVISABLE CONSISTENT
WITH APPLICABLE LAW TO CONSUMMATE AND MAKE EFFECTIVE IN THE MOST EXPEDITIOUS
MANNER PRACTICABLE THE TRANSACTIONS CONTEMPLATED HEREBY.  UPON THE TERMS AND
SUBJECT TO THE CONDITIONS OF THIS AGREEMENT, LEVEL 3 SHALL EXECUTE ON THE
CLOSING DATE THE REGISTRATION RIGHTS AGREEMENT.

 

SECTION 8.2.  CONSENTS AND APPROVALS.  THE BUYER AND LEVEL 3 SHALL USE
COMMERCIALLY REASONABLE EFFORTS (WHICH IN NO EVENT SHALL (A) REQUIRE THE BUYER
OR ANY AFFILIATE OF THE BUYER TO DIVEST ASSETS OWNED BY LEVEL 3 AND ITS
SUBSIDIARIES AS OF THE DATE HEREOF OTHER THAN ASSETS THAT IN THE AGGREGATE ARE
NOT MATERIAL TO THEIR RESPECTIVE OPERATIONS TAKEN AS A WHOLE OR (B) REQUIRE THE
COMPANY OR THE RETAINED SUBSIDIARIES TO DIVEST ASSETS OWNED BY THEM AS OF THE
DATE HEREOF OTHER THAN ASSETS THAT IN THE AGGREGATE ARE NOT MATERIAL TO THEIR
RESPECTIVE OPERATIONS TAKEN

 

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AS A WHOLE), (I) TO OBTAIN ALL CONSENTS AND APPROVALS OF THIRD PARTIES AND
GOVERNMENTAL ENTITIES REQUIRED TO BE OBTAINED BY THEM TO EFFECT THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND (II) TO NOT ALLOW ANY OTHER TRANSACTION, AS
TO WHICH THEY OR THEIR AFFILIATES ARE A PARTY, TO IMPEDE, INTERFERE WITH OR
DELAY IN ANY MATERIAL WAY WITH OBTAINING SUCH CONSENTS.  THE BUYER AND LEVEL 3
SHALL COOPERATE WITH THE SELLER AND LEVEL 3 IN OBTAINING ALL CONSENTS REQUIRED
HEREUNDER.

 

SECTION 8.3.  NOTICE OF BREACH.  THROUGH THE CLOSING DATE, THE BUYER AND LEVEL 3
SHALL PROMPTLY GIVE WRITTEN NOTICE WITH PARTICULARITY UPON HAVING KNOWLEDGE OF
ANY MATTER THAT CONSTITUTES OR IS REASONABLY LIKELY TO CONSTITUTE A BREACH OF
ANY REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT OF THE BUYER OR LEVEL 3
CONTAINED IN THIS AGREEMENT.  NO NOTIFICATION PURSUANT TO THIS SECTION 8.3 SHALL
QUALIFY ANY REPRESENTATION OR WARRANTY OF THE BUYER OR LEVEL 3 OR THE CONDITIONS
TO THE OBLIGATIONS OF THE SELLER OR LEUCADIA.

 

SECTION 8.4.  LISTING OF SHARES.  LEVEL 3 SHALL FILE A NOTIFICATION FORM FOR
LISTING OF ADDITIONAL SHARES WITH THE NASDAQ STOCK MARKET FOR THE SHARES TO BE
ISSUED HEREUNDER.

 

SECTION 8.5.  WILTEL BENEFITS PLANS.  FROM AND AFTER THE CLOSING DATE UNTIL THE
SECOND ANNIVERSARY THEREOF, LEVEL 3 SHALL NOT, AND SHALL CAUSE THE COMPANY NOT
TO TERMINATE, MODIFY OR AMEND THE SEVERANCE PLAN IN ANY MANNER THAT WOULD
ADVERSELY AFFECT THE RIGHTS, BENEFITS AND PRIVILEGES OF THE PARTICIPANTS IN THE
SEVERANCE PLAN.  FOLLOWING THE CLOSING, LEVEL 3 SHALL, AND SHALL CAUSE THE
COMPANY (A) TO COMPLY WITH ALL OBLIGATIONS AND MAKE ALL PAYMENTS UNDER THE
SEVERANCE PLAN, THE WILTEL COMMUNICATIONS, LLC EMPLOYEE RETENTION PLAN AND THE
MISCELLANEOUS RETENTION PLANS IN ACCORDANCE WITH THEIR RESPECTIVE TERMS AND
(B) IF NOT PREVIOUSLY PAID, TO PAY TO THE PARTICIPANTS IN THE WILTEL
COMMUNICATIONS, LLC LONG-TERM CASH INCENTIVE PLAN IN ACCORDANCE WITH THE TERMS
OF SUCH PLAN EQUAL TO THE AMOUNTS SET FORTH ON SCHEDULE 7.1(A)(VII) AND TO PAY
TO THE PARTICIPANTS IN THE COMPANY’S 2005 BONUS PLAN IN ACCORDANCE WITH THE
TERMS OF SUCH PLAN THE AMOUNTS ACCRUED ON THE CLOSING BALANCE SHEET WITH RESPECT
TO SUCH BONUS PLAN; PROVIDED, HOWEVER, THAT IN THE EVENT THE CLOSING OCCURS
BEFORE DECEMBER 31, 2005, THEN SOLELY FOR PURPOSES OF THE FOREGOING
CALCULATIONS, THE CLOSING SHALL BE DEEMED TO HAVE OCCURRED ON JANUARY 2, 2006.

 

SECTION 8.6.  ACCESS TO PROPERTIES AND RECORDS.  FOLLOWING THE CLOSING, LEVEL 3
AND BUYER SHALL CAUSE EACH OF THE COMPANY AND THE RETAINED SUBSIDIARIES TO
AFFORD TO LEUCADIA AND THE SELLER, AND TO THE ACCOUNTANTS, COUNSEL AND
REPRESENTATIVES OF LEUCADIA AND THE SELLER, REASONABLE ACCESS TO ALL PROPERTIES,
BOOKS, CONTRACTS, COMMITMENTS AND FILES AND RECORDS OF THE COMPANY AND THE
RETAINED SUBSIDIARIES AND SHALL MAKE AVAILABLE TO LEUCADIA AND THE SELLER, AND
TO THE ACCOUNTANTS, COUNSEL AND REPRESENTATIVES OF LEUCADIA AND THE SELLER, SUCH
OF THE OFFICERS AND EMPLOYEES OF THE COMPANY AND ITS RETAINED SUBSIDIARIES AS
LEUCADIA AND THE SELLER MAY REASONABLY REQUEST SOLELY FOR THE PURPOSE OF THE
TIMELY (I) PREPARATION OF THE COMPANY’S 2005 CONSOLIDATED FINANCIAL STATEMENTS,
(II) PREPARATION OF INTERNAL REPORTING PACKAGES, SUPPLEMENTAL SCHEDULES AND
RESPONSES TO REVIEW QUESTIONS NORMALLY REQUESTED AS PART OF LEUCADIA’S 2005
ANNUAL CLOSING PROCESS, (III) COMPLETION OF MANAGEMENT’S 2005 ASSESSMENT OF THE
EFFECTIVENESS OF THE COMPANY’S INTERNAL CONTROL OVER FINANCIAL REPORTING,
(IV) COMPLETION OF THE REPORT OF LEUCADIA’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS WITH RESPECT TO THEIR 2005 AUDIT OF THE COMPANY’S FINANCIAL
STATEMENTS, THEIR 2005 AUDIT OF MANAGEMENT’S ASSESSMENT OF THE COMPANY’S
INTERNAL CONTROL OVER FINANCIAL REPORTING AND THEIR 2005 AUDIT OF THE
EFFECTIVENESS OF

 

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THE COMPANY’S INTERNAL CONTROL OVER FINANCIAL REPORTING AND (V) FOR THE PERIOD
FROM JANUARY 1, 2006 TO THE CLOSING, PREPARATION OF THE COMPANY’S CONSOLIDATED
FINANCIAL STATEMENTS, INTERNAL REPORTING PACKAGES, SUPPLEMENTAL SCHEDULES AND
RESPONSES TO REVIEW QUESTIONS NORMALLY REQUESTED AS PART OF LEUCADIA’S NORMAL
QUARTERLY CLOSING PROCESS.  LEVEL 3 ACKNOWLEDGES THAT IT HAS RECEIVED LEUCADIA’S
REPORTING REQUIREMENTS AND REPORTING TIMETABLE FOR THE 2005 CALENDAR YEAR. 
LEUCADIA AND THE SELLER SHALL TREAT ALL INFORMATION PROVIDED BY LEVEL 3 AND THE
BUYER WITH THE SAME LEVEL OF CARE AND CONFIDENTIALITY AS EACH MAINTAINS WITH
RESPECT TO ITS OWN INFORMATION.

 

SECTION 8.7.  REIMBURSEMENTS; CASH BALANCE.

 

(A)                                  IF THE CLOSING OCCURS AFTER DECEMBER 31,
2005, THE BUYER SHALL PAY TO THE SELLER AT THE CLOSING AN AMOUNT IN CASH EQUAL
TO THE PRODUCT OF (I) $11,500 AND (II) THE NUMBER OF DAYS FROM JANUARY 1, 2006
TO BUT EXCLUDING THE CLOSING DATE.

 

(B)                                 IF (I) THE CLOSING OCCURS AFTER DECEMBER 31,
2005, (II) THE SELLER HAS COMPLIED IN ALL RESPECTS WITH ITS OBLIGATIONS UNDER
SECTION 7.15(A) AND (B), AND (III) AFTER GIVING EFFECT TO THE PRE-CLOSING
TRANSFERS AND THE PAYMENTS CONTEMPLATED BY SECTION 7.15(A), THE COMPANY AND THE
RETAINED SUBSIDIARIES WOULD HAVE AN AGGREGATE CASH BALANCE IMMEDIATELY FOLLOWING
THE CLOSING OF LESS THAN $100 MILLION, LEVEL 3 OR THE BUYER SHALL MAKE A
CONTRIBUTION TO THE CAPITAL OF THE COMPANY IMMEDIATELY AFTER THE CLOSING TO THE
EXTENT NECESSARY TO CAUSE THE COMPANY AND THE RETAINED SUBSIDIARIES TO HAVE A
$100 MILLION AGGREGATE CASH BALANCE IMMEDIATELY FOLLOWING THE CLOSING.

 

(C)                                  ALL PAYMENTS REFERRED TO IN
SECTION 8.7(A) AND (B) SHALL BE MADE ON THE RESPECTIVE DUE DATE FOR SUCH
PAYMENTS BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS.

 

SECTION 8.8.  RETENTION PAYMENTS.  TO THE EXTENT THAT THE AGGREGATE AMOUNT SET
FORTH ON SCHEDULE 5.23(C)(II) IS GREATER THAN THE AGGREGATE OF ALL PAYMENTS
ACTUALLY MADE BY THE COMPANY PURSUANT TO THE WILTEL COMMUNICATIONS, LLC EMPLOYEE
RETENTION PLAN, AS ADOPTED EFFECTIVE APRIL 11, 2004 AND THE MISCELLANEOUS
RETENTION PLANS REFERRED TO IN CLAUSES (I) AND (II) OF SECTION 5.23(C), LEVEL 3
SHALL PROMPTLY PAY TO THE SELLER THE AMOUNT OF SUCH EXCESS AFTER THE CLOSING AND
WITHIN TWO MONTHS AFTER THE PAYMENTS ARE DUE IN ACCORDANCE WITH THE APPLICABLE
AGREEMENTS.

 

SECTION 9.  INDEMNIFICATION.

 

SECTION 9.1.  SURVIVAL.  EACH OF THE REPRESENTATIONS, WARRANTIES AND COVENANTS
SET FORTH IN THIS AGREEMENT SHALL SURVIVE THE CLOSING EXCEPT THAT
SECTION 5.10(C) AND (N) SHALL NOT APPLY TO ANY POST-CLOSING TAX PERIODS;
PROVIDED, HOWEVER, THAT NO CLAIM, LAWSUIT, OR OTHER PROCEEDING ARISING OUT OF OR
RELATED TO THE BREACH OF ANY REPRESENTATION OR WARRANTY CONTAINED IN THIS
AGREEMENT MAY BE MADE BY ANY INDEMNITEE UNLESS NOTICE OF SUCH CLAIM, LAWSUIT OR
OTHER PROCEEDING, IS GIVEN TO THE INDEMNITOR IN ACCORDANCE WITH SECTION 9.4,
(I) FOR ALL REPRESENTATIONS AND WARRANTIES (OTHER THAN THOSE CONTAINED IN
SECTIONS 5.6, 5.10 (BUT WITH RESPECT TO SECTION 5.10, THIS EXCEPTION SHALL ONLY
APPLY TO THE EXTENT SUCH REPRESENTATIONS AND WARRANTIES RELATE TO INCOME TAXES),
5.19 (TO THE EXTENT SUCH REPRESENTATIONS AND WARRANTIES DO NOT RELATE TO THE
EXCLUDED ASSETS OR THE EXCLUDED LIABILITIES), 5.24 AND 6.6) PRIOR TO THE
18-MONTH ANNIVERSARY OF THE CLOSING DATE; (II) FOR REPRESENTATION AND WARRANTIES
CONTAINED IN SECTIONS 5.10 (TO THE EXTENT

 

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THOSE REPRESENTATIONS AND WARRANTIES  RELATE TO INCOME TAXES) AND 5.19 (TO THE
EXTENT SUCH REPRESENTATIONS AND WARRANTIES DO NOT RELATE TO THE EXCLUDED ASSETS
OR THE EXCLUDED LIABILITIES), WITHIN 45 DAYS AFTER THE EXPIRATION OF THE
APPLICABLE STATUTE OF LIMITATIONS; AND (III) FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN SECTION 5.24, PRIOR TO THE 24-MONTH ANNIVERSARY OF THE
CLOSING DATE.

 

SECTION 9.2.  INDEMNIFICATION BY LEUCADIA AND THE SELLER.

 

(A)                                  NOTWITHSTANDING THE CLOSING AND REGARDLESS
OF ANY INVESTIGATION AT ANY TIME MADE BY OR ON BEHALF OF THE BUYER OR LEVEL 3 OR
OF ANY KNOWLEDGE OR INFORMATION THAT THE BUYER OR LEVEL 3 MAY HAVE, LEUCADIA AND
THE SELLER SHALL JOINTLY AND SEVERALLY INDEMNIFY AND FULLY DEFEND, SAVE AND HOLD
THE BUYER, LEVEL 3 AND THEIR SUBSIDIARIES, INCLUDING FOLLOWING THE CLOSING, THE
COMPANY AND THE RETAINED SUBSIDIARIES (THE “BUYER INDEMNITEES”) HARMLESS IF ANY
BUYER INDEMNITEE SHALL AT ANY TIME OR FROM TIME TO TIME SUFFER ANY DAMAGE,
LIABILITY, LOSS, COST, EXPENSE (INCLUDING ALL REASONABLE ATTORNEYS’ FEES),
DEFICIENCY, INTEREST, PENALTY, IMPOSITIONS, ASSESSMENTS OR FINES (COLLECTIVELY,
“LOSSES”) ARISING OUT OF OR RESULTING FROM, OR SHALL PAY OR BECOME OBLIGED TO
PAY ANY SUM ON ACCOUNT OF, ONE OR MORE OF THE FOLLOWING:

 

(I)                                     ANY BREACH OF ANY REPRESENTATION OR
WARRANTY OF THE SELLER OR LEUCADIA CONTAINED IN THIS AGREEMENT OR IN ANY
CERTIFICATE DELIVERED TO THE BUYER OR LEVEL 3 IN CONNECTION WITH THE CLOSING
(BUT WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
SECTION 5.10, ONLY TO THE EXTENT ANY SUCH REPRESENTATION OR WARRANTY RELATES TO
INCOME TAXES);

 

(II)                                  ANY FAILURE OF THE SELLER OR LEUCADIA DULY
TO PERFORM OR OBSERVE ANY COVENANT OR AGREEMENT CONTAINED IN THIS AGREEMENT ON
THE PART OF THE SELLER OR LEUCADIA TO BE PERFORMED OR OBSERVED;

 

(III)                               ANY EXCLUDED ASSET, EXCLUDED LIABILITY OR
THE PRE-CLOSING TRANSFERS (INCLUDING THE FAILURE TO OBTAIN THE WRITTEN
UNCONDITIONAL RELEASES OF THE COMPANY AND THE RETAINED SUBSIDIARIES FROM
OBLIGATIONS OR LIABILITIES RELATING TO THE EXCLUDED ASSETS OR THE EXCLUDED
LIABILITIES);

 

(IV)                              ANY PRE-CLOSING TAXES EXCLUDING ANY TAX OR
LIABILITY DESCRIBED IN CLAUSE (V);

 

(V)                                 ANY LIABILITY IN RESPECT OF ANY TAX NOT
ATTRIBUTABLE TO THE COMPANY, ANY OF ITS SUBSIDIARIES, ANY OF THEIR ASSETS OR ANY
OF THEIR OPERATIONS, WHICH LIABILITY IS IMPOSED ON THE COMPANY OR ANY OF ITS
SUBSIDIARIES PURSUANT TO TREASURY REGULATIONS § 1.1502-6 OR ANY ANALOGOUS STATE,
LOCAL OR FOREIGN LAW OR REGULATION BY REASON OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES HAVING BEEN A MEMBER OF ANY CONSOLIDATED, COMBINED OR UNITARY GROUP
ON OR PRIOR TO THE CLOSING, BUT ONLY TO THE EXTENT IN EXCESS OF ANY TAXES (OTHER
THAN INCOME TAXES AS TO WHICH THIS LIMITATION DOES NOT APPLY) REFLECTED IN THE
DETERMINATION OF THE ACTUAL ADJUSTED NET WORKING CAPITAL;

 

(VI)                              (A) THE RETIREMENT PLAN AND ALL OTHER PENSION
PLANS MAINTAINED OR SPONSORED BY OR TO WHICH CONTRIBUTIONS ARE REQUIRED OF ANY
ERISA AFFILIATE AND THAT ARE SUBJECT TO TITLE IV OF ERISA OR SECTION 412 OF THE
CODE, INCLUDING, BUT NOT LIMITED TO (1)

 

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CLAIMS OF THE PBGC, THE IRS AND ANY OTHER GOVERNMENTAL AGENCY RELATING TO THE
FUNDING OF SUCH PLANS, (2) CLAIMS OF PARTICIPANTS AND BENEFICIARIES RELATING TO
BENEFIT PAYMENTS UNDER SUCH PLANS AND (3) CLAIMS RELATING TO FIDUCIARY
VIOLATIONS UNDER ERISA, AND (B) THE DEFERRED COMPENSATION PLAN; PROVIDED,
HOWEVER, THAT IF THE BUYER EXERCISES ITS BENEFIT PLAN SUBSTITUTION RIGHT IN
ACCORDANCE WITH SECTION 2.2(B), NEITHER LEUCADIA NOR THE SELLER SHALL HAVE ANY
LIABILITY WITH RESPECT TO THE RETIREMENT PLAN OR THE DEFERRED COMPENSATION PLAN
HEREUNDER;

 

(VII)                           ANY “COVERED MATTER” LISTED ON
SCHEDULE 9.2(A) IN ACCORDANCE WITH SUCH SCHEDULE; OR

 

(VIII)                        THE BUYER’S AND LEVEL 3’S ENFORCEMENT OF THEIR
RIGHTS UNDER THIS SECTION 9.2.

 

(B)                                 NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY:

 

(I)                                     LEUCADIA AND THE SELLER SHALL NOT HAVE
ANY LIABILITY UNDER SECTION 9.2(A)(I) (OTHER THAN WITH RESPECT TO (X)
SECTION 5.6, (Y) SECTION 5.10 (LIMITED HOWEVER TO INCOME TAXES) AND (Z) THE
SECOND AND THIRD SENTENCES OF SECTION 5.23(C)) OR SECTION 9.2(A)(IV) UNLESS THE
AGGREGATE OF ALL LOSSES RELATING THERETO FOR WHICH THE SELLER AND LEUCADIA
WOULD, BUT FOR THIS SECTION 9.2(B)(I), BE LIABLE EXCEEDS ON A CUMULATIVE BASIS
AN AMOUNT EQUAL TO $10 MILLION AND THEN ONLY TO THE EXTENT OF ANY SUCH EXCESS;

 

(II)                                  THE MAXIMUM AMOUNT FOR WHICH LEUCADIA AND
THE SELLER SHALL BE LIABLE WITH RESPECT TO MATTERS COVERED BY
SECTION 9.2(A)(I) (OTHER THAN WITH RESPECT TO (X) SECTION 5.6, (Y) SECTION 5.10
(LIMITED HOWEVER TO INCOME TAXES) AND (Z) THE SECOND AND THIRD SENTENCES OF
SECTION 5.23(C)) OR SECTION 9.2(A)(IV) SHALL NOT EXCEED IN THE AGGREGATE $100
MILLION;

 

(III)                               NEITHER LEUCADIA NOR THE SELLER SHALL HAVE A
RIGHT TO CONTRIBUTION AGAINST EITHER OF THE COMPANY OR ITS SUBSIDIARIES OR ANY
SIMILAR RIGHT IN RESPECT OF ANY AMOUNTS PAID BY THE SELLER TO THE BUYER
INDEMNITIES PURSUANT TO THE PROVISIONS OF THIS SECTION 9.2;

 

(IV)                              IN ALL CASES DETERMINING WHETHER THERE HAS
BEEN A BREACH OF A REPRESENTATION OR WARRANTY BY LEUCADIA OR THE SELLER FOR
PURPOSES OF THIS SECTION 9.2, OR IN DETERMINING THE AMOUNT OF ANY LOSSES WITH
RESPECT TO SUCH BREACH, SUCH REPRESENTATIONS AND WARRANTIES SHALL BE READ
WITHOUT REGARD TO ANY MATERIALITY QUALIFIER (INCLUDING, WITHOUT LIMITATION, ANY
REFERENCE TO MATERIAL ADVERSE EFFECT) CONTAINED THEREIN;

 

(V)                                 THE PARTIES AGREE THAT ANY AMOUNT PAYABLE TO
THE BUYER OR LEVEL 3 MADE PURSUANT TO THIS SECTION 9.2 SHALL BE TREATED FOR TAX
PURPOSES AS AN ADJUSTMENT TO THE PURCHASE PRICE, UNLESS OTHERWISE REQUIRED BY
APPLICABLE LAW;

 

(VI)                              THE PARTIES AGREE THAT ANY AMOUNT PAYABLE TO
THE BUYER OR LEVEL 3 MADE PURSUANT TO THIS SECTION 9.2 SHALL BE CALCULATED NET
OF ANY TAX BENEFITS REALIZED IN CASH (OR AS AN OFFSET TO AN OBLIGATION PAYABLE
CURRENTLY) WITHIN A PERIOD OF FIVE YEARS FOLLOWING THE CLOSING DATE BY THE
INDEMNITEE OR ITS AFFILIATES AS A RESULT OF THE LOSS. IN

 

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THE CASE OF ANY TAX BENEFITS REALIZED AFTER THE INDEMNITY AMOUNT HAS BEEN PAID
BY THE SELLER (BUT WITHIN THE FIVE-YEAR PERIOD FOLLOWING THE CLOSING DATE), THE
BUYER SHALL MAKE A FURTHER PAYMENT TO THE SELLER WHEN SUCH BENEFITS ARE
RECEIVED.  TAX BENEFITS SHALL BE CONSIDERED REALIZED WHEN THERE IS A REDUCTION
IN THE BUYER’S LIABILITY FOR TAXES, DETERMINED BY COMPARING THE AMOUNT OF SUCH
LIABILITY WITHOUT THE TAX BENEFITS TO THE AMOUNT OF SUCH LIABILITY WHEN SUCH TAX
BENEFITS ARE TAKEN INTO ACCOUNT;

 

(VII)                           THE PARTIES AGREE THAT, IF THE LIABILITIES
PURSUANT TO SECTION 9.2 EXCEED $50 MILLION IN THE AGGREGATE, LEUCADIA AND THE
SELLER SHALL BE ENTITLED TO SATISFY 50% OF SUCH LIABILITIES IN EXCESS OF $50
MILLION BY DELIVERY OF SHARES, WITH STOCK POWERS DULY ENDORSED, WITH THE VALUE
OF EACH SHARE AT THE TIME OF SUCH PAYMENT BEING DEEMED TO BE THE AVERAGE OF THE
VOLUME WEIGHTED SALES PRICES PER SHARE OF LEVEL 3 COMMON STOCK AS REPORTED BY
THE NASDAQ STOCK MARKET (OR SUCH OTHER NATIONALLY RECOGNIZED TRADING MARKET ON
WHICH THE LEVEL 3 COMMON STOCK IS THEN PRINCIPALLY TRADED) FOR THE 10
TRADING-DAY PERIOD ENDING UPON THE TRADING DAY IMMEDIATELY PRECEDING THE DATE
THAT LEUCADIA AND/OR THE SELLER MAKES THE PAYMENT PURSUANT TO THIS SECTION 9.2;

 

(VIII)                        NEITHER LEUCADIA NOR THE SELLER SHALL HAVE ANY
LIABILITY UNDER THIS SECTION 9.2 FOR A LOSS TO THE EXTENT SUCH LOSS HAS BEEN
REFLECTED IN THE ACTUAL ADJUSTED NET WORKING CAPITAL AS FINALLY DETERMINED
PURSUANT TO SECTION 3.2 HEREOF; AND

 

(IX)                                NEITHER LEUCADIA NOR THE SELLER SHALL HAVE
ANY LIABILITY WITH RESPECT TO THE TRANSFERRED BENEFIT PLANS IN THE EVENT THE
BUYER EXERCISES THE BENEFIT PLAN SUBSTITUTION RIGHT IN ACCORDANCE WITH
SECTION 2.2(B).

 

SECTION 9.3.  INDEMNIFICATION BY LEVEL 3 AND THE BUYER.

 

(A)                                  NOTWITHSTANDING THE CLOSING AND REGARDLESS
OF ANY INVESTIGATION AT ANY TIME MADE BY OR ON BEHALF OF THE SELLER OR LEUCADIA
OR OF ANY KNOWLEDGE OR INFORMATION THAT THE SELLER OR LEUCADIA MAY HAVE, THE
BUYER AND LEVEL 3 SHALL JOINTLY AND SEVERALLY INDEMNIFY AND FULLY DEFEND, SAVE
AND HOLD LEUCADIA AND THE SELLER HARMLESS IF LEUCADIA OR THE SELLER SHALL AT ANY
TIME OR FROM TIME TO TIME SUFFER ANY LOSSES ARISING OUT OF OR RESULTING FROM, OR
SHALL PAY OR BECOME OBLIGATED TO PAY ANY SUM ON ACCOUNT OF ANY ONE OR MORE OF
THE FOLLOWING:

 

(I)                                     ANY BREACH OF ANY REPRESENTATION OR
WARRANTY OF LEVEL 3 OR THE BUYER CONTAINED IN THIS AGREEMENT OR IN ANY
CERTIFICATE DELIVERED TO LEUCADIA OR THE SELLER IN CONNECTION WITH THE CLOSING;

 

(II)                                  ANY FAILURE OF LEVEL 3 OR THE BUYER DULY
TO PERFORM OR OBSERVE ANY COVENANT OR AGREEMENT CONTAINED IN THIS AGREEMENT ON
THE PART OF LEVEL 3 OR THE BUYER TO BE PERFORMED OR OBSERVED;

 

(III)                               THE MATTERS ADDRESSED IN THE LETTER SET
FORTH AS SCHEDULE 9.3(A)(III) TO THE EXTENT AND SUBJECT TO THE LIMITATIONS AND
PROCEDURES SET FORTH THEREIN; OR

 

(IV)                              ANY TAXES FOR ANY STRADDLE PERIOD OF THE
COMPANY OR ITS SUBSIDIARIES NOT PAYABLE OR INDEMNIFIABLE BY LEUCADIA OR SELLER
PURSUANT TO SECTION 7.13 AND SECTION 9.2(A).

 

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(B)                                 NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY:

 

(I)                                     THE BUYER AND LEVEL 3 SHALL NOT HAVE ANY
LIABILITY UNDER SECTION 9.3(A)(I) (OTHER THAN WITH RESPECT TO SECTION 6.6)
UNLESS THE AGGREGATE OF ALL LOSSES RELATING THERETO FOR WHICH THE BUYER AND
LEVEL 3 WOULD, BUT FOR THIS SECTION 9.3(B)(I), BE LIABLE EXCEEDS ON A CUMULATIVE
BASIS AN AMOUNT EQUAL TO $10 MILLION AND THEN ONLY TO THE EXTENT OF ANY SUCH
EXCESS;

 

(II)                                  THE MAXIMUM AMOUNT FOR WHICH THE BUYER AND
THE SELLER SHALL BE LIABLE WITH RESPECT TO MATTERS COVERED BY
SECTION 9.3(A)(I) (OTHER THAN WITH RESPECT TO SECTION 6.6) SHALL NOT EXCEED IN
THE AGGREGATE $100 MILLION;

 

(III)                               IN ALL CASES DETERMINING WHETHER THERE HAS
BEEN A BREACH OF A REPRESENTATION OR WARRANTY BY THE BUYER OR LEVEL 3 FOR
PURPOSES OF THIS SECTION 9.3, OR IN DETERMINING THE AMOUNT OF ANY LOSSES WITH
RESPECT TO SUCH BREACH, SUCH REPRESENTATIONS AND WARRANTIES SHALL BE READ
WITHOUT REGARD TO ANY MATERIALITY QUALIFIER CONTAINED THEREIN;

 

(IV)                              THE PARTIES AGREE THAT ANY AMOUNT PAYABLE TO
THE SELLER OR LEUCADIA MADE PURSUANT TO THIS SECTION 9.3 SHALL BE TREATED FOR
TAX PURPOSES AS AN ADJUSTMENT TO THE PURCHASE PRICE, UNLESS OTHERWISE REQUIRED
BY APPLICABLE LAW;

 

(V)                                 THE PARTIES AGREE THAT ANY AMOUNT PAYABLE TO
THE SELLER OR LEUCADIA MADE PURSUANT TO THIS SECTION 9.3 SHALL BE CALCULATED NET
OF ANY TAX BENEFITS REALIZED IN CASH (OR AS AN OFFSET TO AN OBLIGATION PAYABLE
CURRENTLY) WITHIN A PERIOD OF FIVE YEARS FOLLOWING THE CLOSING DATE BY THE
INDEMNITEE OR ITS AFFILIATES AS A RESULT OF THE LOSS.  IN THE CASE OF ANY TAX
BENEFITS REALIZED AFTER THE INDEMNITY AMOUNT HAS BEEN PAID BY THE BUYER (BUT
WITHIN THE FIVE-YEAR PERIOD FOLLOWING THE CLOSING DATE), THE SELLER PROMPTLY
SHALL MAKE A FURTHER PAYMENT TO THE BUYER WHEN SUCH BENEFITS ARE RECEIVED.  TAX
BENEFITS SHALL BE CONSIDERED REALIZED WHEN THERE IS A REDUCTION IN THE SELLER’S
LIABILITY FOR TAXES, DETERMINED BY COMPARING THE AMOUNT OF SUCH LIABILITY
WITHOUT THE TAX BENEFITS TO THE AMOUNT OF SUCH LIABILITY WHEN SUCH TAX BENEFITS
ARE TAKEN INTO ACCOUNT; AND

 

(VI)                              IF THE BUYER EXERCISES THE BENEFIT PLAN
SUBSTITUTION RIGHT, THE BUYER AND LEVEL 3 SHALL INDEMNIFY LEUCADIA AND THE
SELLER FOR ANY LOSSES ARISING OUT OF OR RESULTING FROM, OR SHALL PAY OR BECOME
OBLIGATED TO PAY ANY SUM ON ACCOUNT OF, THE RETIREMENT PLAN AND THE DEFERRED
COMPENSATION PLAN.

 

SECTION 9.4.  PROCEDURES FOR INDEMNIFICATION.  OTHER THAN AS SET FORTH IN
SECTION 7.13(E) AND (F), IF A PARTY ENTITLED TO INDEMNIFICATION UNDER THIS
SECTION 9 (AN “INDEMNITEE”) ASSERTS THAT A PARTY OBLIGATED TO INDEMNIFY IT UNDER
THIS SECTION 9 (AN “INDEMNITOR”) HAS BECOME OBLIGATED TO SUCH INDEMNITEE
PURSUANT TO SECTION 9.2 OR 9.3, OR IF ANY SUIT, ACTION, INVESTIGATION, CLAIM OR
PROCEEDING IS BEGUN, MADE OR INSTITUTED AS A RESULT OF WHICH THE INDEMNITOR MAY
BECOME OBLIGATED TO AN INDEMNITEE HEREUNDER, SUCH INDEMNITEE SHALL GIVE WRITTEN
NOTICE TO THE INDEMNITOR; PROVIDED, HOWEVER, THAT THE FAILURE OF THE INDEMNITEE
TO GIVE PROMPT NOTICE TO THE INDEMNITOR SHALL NOT RELEASE THE INDEMNITOR OF ITS
INDEMNIFICATION OBLIGATIONS HEREUNDER, EXCEPT TO THE EXTENT THE INDEMNITOR SHALL
HAVE BEEN MATERIALLY PREJUDICED BY SUCH FAILURE.  THE INDEMNITOR AGREES TO
DEFEND, CONTEST OR OTHERWISE PROTECT THE INDEMNITEE AGAINST ANY SUCH SUIT,

 

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ACTION, INVESTIGATION, CLAIM OR PROCEEDING AT ITS SOLE COST AND EXPENSE SUBJECT
TO THE PROVISIONS OF THIS SECTION 9.  THE INDEMNITOR SHALL HAVE THE SOLE POWER
TO DIRECT AND CONTROL THE DEFENSE OF ANY SUCH SUIT, ACTION, INVESTIGATION, CLAIM
OR PROCEEDING.  THE INDEMNITEE SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO
PARTICIPATE AT ITS OWN EXPENSE IN THE DEFENSE THEREOF BY COUNSEL OF THE
INDEMNITEE’S CHOICE.  THE INDEMNITEE SHALL MAKE AVAILABLE ALL INFORMATION AND
ASSISTANCE THAT THE INDEMNITOR MAY REASONABLY REQUEST AND SHALL FULLY COOPERATE
WITH THE INDEMNITOR IN SUCH DEFENSE, INCLUDING WITH RESPECT TO INDEMNIFICATION
WITH RESPECT TO TAXES, PROVIDING POWERS OF ATTORNEY AUTHORIZING LEUCADIA OR ITS
DESIGNEE TO CONTROL AND TAKE ACTION IN CONNECTION WITH ANY SUCH TAXES.  IN THE
EVENT OF A FAILURE OF THE INDEMNITEE TO PROVIDE COOPERATION AS REQUIRED UNDER
THIS SECTION 9.4, THE INDEMNITOR’S OBLIGATION TO INDEMNIFY THE INDEMNITEE SHALL
BE REDUCED TO THE EXTENT OF THE LOSSES WITH RESPECT TO WHICH THE INDEMNITOR’S
ABILITY TO DEFEND AGAINST THE ACTION, INVESTIGATION, CLAIM OR PROCEEDING
UNDERLYING SUCH INDEMNIFICATION OBLIGATION HAS BEEN PREJUDICED BY SUCH FAILURE. 
THE INDEMNITOR SHALL NOT COMPROMISE OR SETTLE ANY SUCH SUIT, ACTION,
INVESTIGATION, CLAIM OR PROCEEDING UNLESS (X) SUCH COMPROMISE OR SETTLEMENT IS
ON EXCLUSIVELY MONETARY TERMS AND SHALL BE PAID ENTIRELY BY THE INDEMNITOR
(SUBJECT TO THE PROVISIONS OF SECTION 9.2(B)(I) AND (II) AND 9.3(B)(I) AND (II),
WHICH SHALL BE CONTROLLING) AND THE INDEMNITEE RECEIVES AN UNCONDITIONAL RELEASE
IN SUCH COMPROMISE OR SETTLEMENT OR (Y) THE INDEMNITEE SHALL HAVE CONSENTED IN
WRITING TO THE TERMS OF SUCH COMPROMISE OR  SETTLEMENT, WHICH CONSENT SHALL NOT
UNREASONABLY WITHHELD; PROVIDED, HOWEVER, THAT IF THE INDEMNITEE FAILS TO
CONSENT THERETO, THE INDEMNITOR’S LIABILITY WITH RESPECT TO SUCH MATTER SHALL
NOT EXCEED THE PROPOSED SETTLEMENT AMOUNT.  IF THE INDEMNITOR FAILS TIMELY TO
DEFEND, CONTEST OR OTHERWISE PROTECT AGAINST SUCH SUIT, ACTION, INVESTIGATION,
CLAIM OR PROCEEDING, THE INDEMNITEE SHALL HAVE THE RIGHT TO DO SO, INCLUDING,
WITHOUT LIMITATION, THE RIGHT TO MAKE ANY COMPROMISE OR SETTLEMENT THEREOF, AND
THE INDEMNITEE SHALL BE ENTITLED TO RECOVER THE ENTIRE COST THEREOF FROM THE
INDEMNITOR SUBJECT TO THE PROVISIONS OF THIS SECTION 9, INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS’ FEES, DISBURSEMENTS AND AMOUNTS PAID AS THE
RESULT OF SUCH SUIT, ACTION, INVESTIGATION, CLAIM OR PROCEEDING.

 

SECTION 9.5.  EXCLUSIVE REMEDY.  FROM AND AFTER THE CLOSING DATE, THE SOLE AND
EXCLUSIVE REMEDY FOR ANY BREACH OR FAILURE TO BE TRUE AND CORRECT, OR ALLEGED
BREACH OR FAILURE TO BE TRUE AND CORRECT, OF ANY REPRESENTATION OR WARRANTY OR
ANY COVENANT OR AGREEMENT IN THIS AGREEMENT, EXCEPT FOR CLAIMS RELATING TO FRAUD
OR FOR INJUNCTIVE RELIEF, SHALL BE INDEMNIFICATION IN ACCORDANCE WITH THIS
SECTION 9.

 

SECTION 10.  CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER.

 

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

 

SECTION 10.1.  REPRESENTATIONS AND WARRANTIES OF THE BUYER AND LEVEL 3.  EACH OF
THE REPRESENTATIONS AND WARRANTIES OF THE BUYER AND LEVEL 3 CONTAINED IN THIS
AGREEMENT (READ WITHOUT ANY MATERIALITY QUALIFICATIONS) SHALL BE TRUE AND
CORRECT AS OF THE DATE OF THIS AGREEMENT AND AS OF THE CLOSING DATE (EXCEPT TO
THE EXTENT SUCH REPRESENTATIONS AND WARRANTIES SPEAK AS OF AN EARLIER DATE),
OTHER THAN SUCH FAILURES TO BE TRUE AND CORRECT THAT, INDIVIDUALLY OR IN THE
AGGREGATE, WOULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT WITH RESPECT TO LEVEL 3 AND ITS SUBSIDIARIES.  NOTWITHSTANDING THE
FOREGOING, SECTION 6.8 SHALL BE DISREGARDED

 

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FOR PURPOSES OF THE PRIOR SENTENCE IF THE BUYER EXERCISES ITS CASH SUBSTITUTION
RIGHT IN FULL IN ACCORDANCE WITH SECTION 2.2 WITHIN THE TIME PERIODS SET FORTH
IN SECTION 12.1(D).

 

SECTION 10.2.  PERFORMANCE OF THE OBLIGATIONS OF THE BUYER AND LEVEL 3.  LEVEL 3
AND THE BUYER SHALL HAVE PERFORMED IN ALL MATERIAL RESPECTS ALL OBLIGATIONS
REQUIRED UNDER THIS AGREEMENT TO BE PERFORMED BY IT ON OR BEFORE THE CLOSING
DATE.  THE SELLER SHALL HAVE RECEIVED A CERTIFICATE AS TO THE SATISFACTION OF
THE CONDITIONS SET FORTH IN SECTIONS 10.1 AND 10.2 DATED THE CLOSING DATE AND
SIGNED BY ANY OFFICER OF LEVEL 3 AND THE BUYER.

 

SECTION 10.3.  HSR ACT.  ANY APPLICABLE WAITING PERIOD UNDER THE HSR ACT SHALL
HAVE EXPIRED OR BEEN TERMINATED.

 

SECTION 10.4.  NO VIOLATION OF ORDERS.  NO TEMPORARY RESTRAINING ORDER,
PRELIMINARY OR PERMANENT INJUNCTION OR OTHER ORDER ISSUED BY A COURT OF
COMPETENT JURISDICTION OR OTHER LEGAL RESTRAINT OR PROHIBITION PREVENTING THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE IN EFFECT;
PROVIDED THAT ANY PARTY INVOKING THIS CONDITION SHALL HAVE USED COMMERCIALLY
REASONABLE EFFORTS TO HAVE ANY SUCH ORDER, INJUNCTION OR RESTRAINT VACATED OR
REMOVED.

 

SECTION 10.5.  NO MATERIAL ADVERSE CHANGE.  DURING THE PERIOD FROM THE DATE
HEREOF TO THE CLOSING DATE, THERE SHALL NOT HAVE BEEN ANY MATERIAL ADVERSE
EFFECT WITH RESPECT TO LEVEL 3 AND ITS SUBSIDIARIES; PROVIDED, HOWEVER, THAT
THIS CLOSING CONDITION SHALL BE VOID AND BE OF NO FURTHER FORCE AND EFFECT IF
THE BUYER EXERCISES ITS CASH SUBSTITUTION RIGHT IN FULL IN ACCORDANCE WITH THE
TIME PERIODS SET FORTH IN SECTION 2.2 OR SECTION 12.1(D).

 

SECTION 10.6.  LEASE AGREEMENT.  THE COMPANY SHALL HAVE EXECUTED THE LEASE
AGREEMENT, IN THE FORM ATTACHED HERETO AS SCHEDULE 10.6 (THE “LEASE AGREEMENT”),
FOR A PORTION OF THE TULSA, OKLAHOMA HEADQUARTERS, ALL AS SET FORTH MORE
PARTICULARLY THEREIN.

 

SECTION 10.7.  REGISTRATION RIGHTS AGREEMENT.  LEVEL 3 SHALL HAVE EXECUTED THE
REGISTRATION RIGHTS AND TRANSFER RESTRICTION AGREEMENT IN THE FORM ATTACHED
HERETO AS EXHIBIT A (THE “REGISTRATION RIGHTS AGREEMENT”).

 

SECTION 10.8.  SECURITIES MATTERS.  THE SHARES ISSUED HEREUNDER, IF ANY, SHALL
HAVE BEEN ADMITTED FOR LISTING ON THE NASDAQ STOCK MARKET.

 

SECTION 10.9.  OPINION OF COUNSEL.  THE SELLER AND LEUCADIA SHALL HAVE RECEIVED
AN OPINION, DATED AS OF THE CLOSING DATE, FROM WILLKIE FARR & GALLAGHER LLP,
COUNSEL TO THE BUYER, COVERING THE MATTERS SET FORTH ON SCHEDULE 10.9, SUBJECT
TO CUSTOMARY LIMITATIONS AND QUALIFICATIONS FOR OPINIONS GIVEN IN TRANSACTIONS
OF THE KIND CONTEMPLATED HEREBY.

 

SECTION 10.10.  OTHER CLOSING DOCUMENTS.  THE SELLER AND LEUCADIA SHALL HAVE
RECEIVED SUCH OTHER CERTIFICATES, INSTRUMENTS AND DOCUMENTS IN CONFIRMATION OF
THE REPRESENTATIONS AND WARRANTIES OF THE BUYER AND LEVEL 3 OR IN FURTHERANCE OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AS THE SELLER OR ITS COUNSEL MAY
REASONABLY REQUEST.

 

SECTION 10.11.  SBC CONSENT TO ASSIGNMENT.  THE CONSENT TO ASSIGNMENT, DATED
OCTOBER 28, 2005, AMONG SBC AND ITS AFFILIATES PARTY TO THE SBC SETTLEMENT
AGREEMENT,

 

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LEUCADIA, THE COMPANY AND WILTEL COMMUNICATIONS, LLC, ATTACHED HERETO AS
SCHEDULE 10.11, SHALL BE IN FULL FORCE AND EFFECT.

 

SECTION 10.12.  THE BUYER REIMBURSEMENTS; CASH BALANCE.  THE BUYER OR LEVEL 3
(AS APPLICABLE) SHALL HAVE COMPLIED IN ALL RESPECTS WITH THE COVENANTS SET FORTH
IN SECTION 8.7(A) AND (B) AND SHALL HAVE PAID ALL AMOUNTS DUE THEREUNDER.

 

SECTION 11.  CONDITIONS PRECEDENT TO PERFORMANCE BY THE BUYER AND LEVEL 3.

 

The obligations of Level 3 and the Buyer 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 Level 3 and the Buyer in their sole discretion:

 

SECTION 11.1.  REPRESENTATIONS AND WARRANTIES OF LEUCADIA AND THE SELLER.  EACH
OF THE REPRESENTATIONS AND WARRANTIES OF THE SELLER CONTAINED IN THIS AGREEMENT
(READ WITHOUT ANY MATERIALITY QUALIFICATIONS) SHALL BE TRUE AND CORRECT AS OF
THE DATE OF THIS AGREEMENT AND AS OF THE CLOSING DATE (EXCEPT TO THE EXTENT SUCH
REPRESENTATION AND WARRANTIES SPEAK AS OF AN EARLIER DATE), OTHER THAN SUCH
FAILURES TO BE TRUE AND CORRECT THAT, INDIVIDUALLY OR IN THE AGGREGATE, WOULD
NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT WITH RESPECT
TO THE COMPANY AND ITS RETAINED SUBSIDIARIES.

 

SECTION 11.2.  PERFORMANCE OF THE OBLIGATIONS OF LEUCADIA AND THE SELLER.  EACH
OF LEUCADIA AND THE SELLER SHALL HAVE PERFORMED IN ALL MATERIAL RESPECTS ALL
OBLIGATIONS REQUIRED UNDER THIS AGREEMENT TO BE PERFORMED BY IT ON OR BEFORE THE
CLOSING DATE; PROVIDED, HOWEVER, THAT THE OBLIGATION OF LEVEL 3 AND THE BUYER TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY SHALL NOT BE AFFECTED BY THE
FAILURE BY LEUCADIA AND THE SELLER TO PERFORM THEIR RESPECTIVE OBLIGATIONS UNDER
SECTION 7.1 OF THIS AGREEMENT, UNLESS SUCH FAILURE TO PERFORM SUCH OBLIGATIONS
WAS NOT IN GOOD FAITH OR WOULD REASONABLY BE EXPECTED TO RESULT, INDIVIDUALLY OR
IN THE AGGREGATE, IN A MATERIAL ADVERSE EFFECT WITH RESPECT TO THE COMPANY AND
ITS RETAINED SUBSIDIARIES.  LEVEL 3 AND THE BUYER SHALL HAVE RECEIVED A
CERTIFICATE AS TO THE SATISFACTION OF THE CONDITIONS IN SECTION 11.1, 11.2, 11.6
AND 11.8 DATED THE CLOSING DATE AND SIGNED BY ANY OFFICER OF EACH OF LEUCADIA
AND THE SELLER.

 

SECTION 11.3.  APPROVALS.  ALL CONSENTS, WAIVERS, AUTHORIZATIONS AND APPROVALS
OF ANY GOVERNMENTAL ENTITY SET FORTH ON SCHEDULE 11.3 REQUIRED IN CONNECTION
WITH THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT SHALL HAVE BEEN
DULY OBTAINED AND SHALL BE IN FULL FORCE AND EFFECT ON THE CLOSING DATE.

 

SECTION 11.4.  HSR ACT.  ANY APPLICABLE WAITING PERIOD UNDER THE HSR ACT SHALL
HAVE EXPIRED OR BEEN TERMINATED.

 

SECTION 11.5.  NO VIOLATION OF ORDERS.  NO TEMPORARY RESTRAINING ORDER,
PRELIMINARY OR PERMANENT INJUNCTION OR OTHER ORDER ISSUED BY A COURT OF
COMPETENT JURISDICTION OR OTHER LEGAL RESTRAINT OR PROHIBITION PREVENTING THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE IN EFFECT;
PROVIDED THAT ANY PARTY INVOKING THIS CONDITION SHALL HAVE USED

 

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COMMERCIALLY REASONABLE EFFORTS TO HAVE ANY SUCH ORDER, INJUNCTION OR RESTRAINT
VACATED OR REMOVED.

 

SECTION 11.6.  NO PENSION PLAN TERMINATION.  THE RETIREMENT PLAN SHALL NOT, AT
THE INITIATION OF THE PBGC OR OTHERWISE, HAVE BEEN TERMINATED PURSUANT TO TITLE
IV OF ERISA, NO ACTIONS OR PROCEEDINGS FOR THE TERMINATION OF SUCH PENSION PLAN
SHALL HAVE BEEN INITIATED OR BE PENDING AND NONE OF THE COMPANY, ANY OF ITS
SUBSIDIARIES OR ANY ERISA AFFILIATE SHALL HAVE AUTHORIZED OR AGREED TO ANY SUCH
TERMINATION.

 

SECTION 11.7.  NO MATERIAL ADVERSE CHANGE.  DURING THE PERIOD FROM THE DATE
HEREOF TO THE CLOSING DATE, THERE SHALL NOT HAVE BEEN ANY MATERIAL ADVERSE
EFFECT WITH RESPECT TO THE COMPANY AND THE RETAINED SUBSIDIARIES.

 

SECTION 11.8.  PRE-CLOSING TRANSFERS.  THE COMPANY AND ITS SUBSIDIARIES SHALL
HAVE COMPLETED THE PRE-CLOSING TRANSFERS IN ACCORDANCE WITH THE TERMS OF
SECTION 7.4.

 

SECTION 11.9.  THE COMPANY’S CREDIT DOCUMENTS.  LEUCADIA OR THE SELLER SHALL
HAVE ON THE CLOSING DATE PAID IN FULL ALL OBLIGATIONS OF THE COMPANY AND THE
RETAINED SUBSIDIARIES UNDER THE COMPANY’S CREDIT DOCUMENTS AND THE SELLER SHALL
HAVE DELIVERED TO THE BUYER A WRITTEN PAYOFF LETTER OF THE LENDERS A PARTY
THERETO, IN A FORM REASONABLY SATISFACTORY TO THE BUYER, STATING THAT UPON THE
LENDERS’ RECEIPT OF SUCH PAYMENT ON THE CLOSING DATE, ALL OBLIGATIONS OF THE
COMPANY AND THE RETAINED SUBSIDIARIES UNDER THE COMPANY’S CREDIT DOCUMENTS SHALL
BE DISCHARGED AND ANY LIEN HELD BY THEM WITH RESPECT TO THE ASSETS AND
PROPERTIES OF THE COMPANY AND THE RETAINED SUBSIDIARIES UNDER THE COMPANY’S
CREDIT DOCUMENTS SHALL BE RELEASED IN FULL.

 

SECTION 11.10.  THE COMPANY’S REAL ESTATE DEBT DOCUMENTS.  LEUCADIA SHALL HAVE
DELIVERED TO THE BUYER EXECUTED RELEASES OF THE OBLIGATIONS OF THE COMPANY AND
WILTEL COMMUNICATIONS, LLC WITH RESPECT TO THE COMPANY’S REAL ESTATE DEBT
DOCUMENTS.

 

SECTION 11.11.  LEASE AGREEMENT.  WILTEL TECHNOLOGY CENTER, LLC AND THE COMPANY
SHALL HAVE EXECUTED THE LEASE AGREEMENT.

 

SECTION 11.12.  REGISTRATION RIGHTS AGREEMENT.  LEUCADIA AND THE SELLER SHALL
HAVE EXECUTED THE REGISTRATION RIGHTS AGREEMENT.

 

SECTION 11.13.  OPINION OF COUNSEL.  THE BUYER AND LEVEL 3 SHALL HAVE RECEIVED
AN OPINION, DATED AS OF THE CLOSING DATE, FROM WEIL, GOTSHAL & MANGES LLP,
COUNSEL TO LEUCADIA AND THE SELLER, AND SUCH OTHER LOCAL COUNSEL TO THE SELLER
COVERING THE MATTERS SET FORTH ON SCHEDULE 11.13, SUBJECT TO CUSTOMARY
LIMITATIONS AND QUALIFICATIONS FOR OPINIONS GIVEN IN TRANSACTIONS OF THE KIND
CONTEMPLATED HEREBY.

 

SECTION 11.14.  OTHER CLOSING DOCUMENTS.  THE BUYER AND LEVEL 3 SHALL HAVE
RECEIVED SUCH OTHER CERTIFICATES, INSTRUMENTS AND DOCUMENTS IN CONFIRMATION OF
THE REPRESENTATIONS AND WARRANTIES OF THE SELLER AND LEUCADIA OR IN FURTHERANCE
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AS THE BUYER OR ITS COUNSEL
MAY REASONABLY REQUEST.

 

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SECTION 11.15.  TAX RELATED DOCUMENTATION.  THE SELLER SHALL DELIVER TO BUYER A
NON-FOREIGN AFFIDAVIT DATED AS OF THE CLOSING DATE, IN FORM AND SUBSTANCE
REQUIRED UNDER TREASURY REGULATION SECTION 1.1445-2(B)(2)(IV)(B) ISSUED PURSUANT
TO SECTION 1445 OF THE CODE STATING THAT THE SELLER IS NOT A “FOREIGN PERSON” AS
DEFINED IN SECTION 1445 OF THE CODE.

 

SECTION 11.16.  THE SELLER PRE-CLOSING TRANSFERS, REIMBURSEMENTS AND CASH
BALANCE.  THE SELLER SHALL HAVE COMPLIED IN ALL RESPECTS WITH THE COVENANTS SET
FORTH IN SECTION 7.4 AND SECTION 7.15(A) AND (B) AND SHALL HAVE PAID ALL AMOUNTS
DUE TO THE COMPANY THEREUNDER.

 

SECTION 12.  TERMINATION.

 

SECTION 12.1.  CONDITIONS OF TERMINATION.  NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN, THIS AGREEMENT MAY BE TERMINATED AT ANY TIME BEFORE
THE CLOSING:

 

(A)                                  BY MUTUAL CONSENT OF THE SELLER AND THE
BUYER;

 

(B)                                 BY THE BUYER, IF LEUCADIA OR THE SELLER HAS
BREACHED ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT CONTAINED IN THIS
AGREEMENT AND HAS NOT, IN THE CASE OF A BREACH OF A COVENANT OR AGREEMENT, CURED
SUCH BREACH WITHIN 15 BUSINESS DAYS AFTER WRITTEN NOTICE TO THE SELLER OF ITS
INTENT TO TERMINATE THIS AGREEMENT PURSUANT TO THIS SECTION 12.1(B) (PROVIDED,
THAT THE BUYER AND LEVEL 3 ARE NOT THEN IN MATERIAL BREACH OF THE TERMS OF THIS
AGREEMENT, AND PROVIDED FURTHER, THAT NO CURE PERIOD SHALL BE REQUIRED FOR A
BREACH WHICH BY ITS NATURE CANNOT BE CURED) SUCH THAT THE CONDITIONS SET FORTH
IN SECTION 11.1 OR THE FIRST SENTENCE OF 11.2 HEREOF, AS THE CASE MAY BE, WILL
NOT BE SATISFIED;

 

(C)                                  BY THE SELLER, IF LEVEL 3 OR THE BUYER HAS
BREACHED ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT CONTAINED IN THIS
AGREEMENT (OTHER THAN SECTION 6.8) AND HAS NOT, IN THE CASE OF A BREACH OF A
COVENANT OR AGREEMENT, CURED SUCH BREACH WITHIN 15 BUSINESS DAYS AFTER WRITTEN
NOTICE TO THE BUYER OF ITS INTENT TO TERMINATE THIS AGREEMENT PURSUANT TO THIS
SECTION 12.1(C) (PROVIDED, THAT THE SELLER AND LEUCADIA ARE NOT THEN IN MATERIAL
BREACH OF THE TERMS OF THIS AGREEMENT, AND PROVIDED FURTHER, THAT NO CURE PERIOD
SHALL BE REQUIRED FOR A BREACH WHICH BY ITS NATURE CANNOT BE CURED) SUCH THAT
THE CONDITIONS SET FORTH IN SECTION 10.1 OR THE FIRST SENTENCE SECTION 10.2
HEREOF, AS THE CASE MAY BE, WILL NOT BE SATISFIED;

 

(D)                                 BY THE SELLER, IF LEVEL 3 OR THE BUYER HAS
BREACHED SECTION 6.8 OF THIS AGREEMENT SUCH THAT THE CONDITION SET FORTH IN
SECTION 10.1 WOULD NOT BE SATISFIED AND HAS NOT GIVEN WRITTEN NOTICE TO THE
SELLER OF THE BUYER’S IRREVOCABLE ELECTION TO EXERCISE THE CASH SUBSTITUTION
RIGHT IN FULL IN ACCORDANCE WITH SECTION 2.2 OF THIS AGREEMENT WITHIN 10
BUSINESS DAYS AFTER THE SELLER HAS GIVEN WRITTEN NOTICE TO THE BUYER OF ITS
INTENT TO TERMINATE THIS AGREEMENT PURSUANT TO THIS SECTION 12.1(D) (PROVIDED,
THAT THE SELLER AND LEUCADIA ARE NOT THEN IN MATERIAL BREACH OF THE TERMS OF
THIS AGREEMENT);

 

(E)                                  BY THE SELLER OR THE BUYER IF:  (I) THERE
SHALL BE A FINAL, NON-APPEALABLE ORDER OF A FEDERAL OR STATE COURT IN EFFECT
PREVENTING CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY; OR (II) THERE
SHALL BE ENACTED ANY FEDERAL OR STATE STATUTE WHICH WOULD MAKE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY ILLEGAL; OR

 

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(F)                                    BY THE SELLER OR THE BUYER IF THE CLOSING
SHALL NOT HAVE BEEN CONSUMMATED BY MAY 1, 2006; PROVIDED THAT THE BUYER OR THE
SELLER MAY EXTEND SUCH DATE BY ONE (1) ADDITIONAL MONTH IF THE CONDITION SET
FORTH IN SECTION 11.3 IS THE ONLY CONDITION REMAINING TO BE SATISFIED ON SUCH
DATE (OTHER THAN THOSE CONDITIONS THAT ARE ONLY CAPABLE OF BEING SATISFIED ON
THE CLOSING) AND SUCH PARTY REASONABLY BELIEVES IN GOOD FAITH THAT SUCH
CONDITION IS LIKELY TO BE SATISFIED WITHIN SUCH ADDITIONAL ONE-MONTH PERIOD; AND
PROVIDED FURTHER THAT THE RIGHT TO TERMINATE THIS AGREEMENT UNDER THIS
SECTION 12.1(F) SHALL NOT BE AVAILABLE TO ANY PARTY WHOSE FAILURE TO FULFILL ANY
MATERIAL OBLIGATION UNDER THIS AGREEMENT HAS BEEN BOTH WILLFUL AND THE CAUSE OF,
OR RESULTED IN, THE FAILURE OF THE CLOSING TO OCCUR ON OR BEFORE SUCH DATE.

 

SECTION 12.2.  EFFECT OF TERMINATION.  IN THE EVENT OF THE TERMINATION OF THIS
AGREEMENT AS PROVIDED IN SECTION 12.1 HEREOF, THIS AGREEMENT SHALL FORTHWITH
BECOME VOID AND THERE SHALL BE NO LIABILITY OR OBLIGATION ON THE PART OF THE
SELLER OR THE BUYER, OR THEIR RESPECTIVE OFFICERS, DIRECTORS, STOCKHOLDERS,
MEMBERS OR OTHER PERSONS UNDER THEIR CONTROL, EXCEPT TO THE EXTENT THAT SUCH
TERMINATION RESULTS FROM THE WILLFUL BREACH BY A PARTY HERETO OF ANY OF ITS
REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS SET FORTH IN THIS
AGREEMENT, AND PROVIDED THAT THE PROVISIONS OF SECTIONS 9.2(B)(II),
SECTION 9.3(B)(II), 12 AND 13, HEREOF AND THE SECOND TO LAST SENTENCE IN
SECTION 7.3 HEREOF SHALL REMAIN IN FULL FORCE AND EFFECT AND SURVIVE ANY
TERMINATION OF THIS AGREEMENT.

 

SECTION 13.  MISCELLANEOUS.

 

SECTION 13.1.  SUCCESSORS AND ASSIGNS.  EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, NO PARTY HERETO SHALL ASSIGN THIS AGREEMENT OR ANY RIGHTS OR
OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTIES
HERETO AND ANY SUCH ATTEMPTED ASSIGNMENT WITHOUT SUCH PRIOR WRITTEN CONSENT
SHALL BE VOID AND OF NO FORCE AND EFFECT; PROVIDED, HOWEVER,  THAT THE BUYER MAY
ASSIGN ITS RIGHTS HEREUNDER TO AN AFFILIATE WHICH IS A SUBSIDIARY OF LEVEL 3;
PROVIDED, FURTHER THAT SUCH AFFILIATE ENTERS INTO A WRITTEN AGREEMENT WITH THE
OTHER PARTIES HERETO TO BE BOUND BY THE PROVISIONS OF THIS AGREEMENT IN ALL
RESPECTS AND TO THE SAME EXTENT AS THE ASSIGNING PARTY IS BOUND AND PROVIDED
THAT THE ASSIGNING PARTY SHALL CONTINUE TO BE BOUND BY ALL OF THE OBLIGATIONS
HEREUNDER AS IF SUCH ASSIGNMENT HAD NOT OCCURRED AND TO PERFORM SUCH OBLIGATIONS
TO THE EXTENT SUCH AFFILIATE FAILS TO DO SO.  NOTWITHSTANDING THE FOREGOING,
LEVEL 3 SHALL NOT BE RELIEVED OF ITS OBLIGATION TO ISSUE THE SHARES OR TO
GUARANTEE THE OBLIGATIONS OF BUYER HEREUNDER FOLLOWING ANY PERMITTED ASSIGNMENT
HEREUNDER AND LEUCADIA SHALL NOT BE RELIEVED OF ITS OBLIGATION TO GUARANTEE THE
OBLIGATIONS OF SELLER HEREUNDER FOLLOWING ANY PERMITTED ASSIGNMENT HEREUNDER. 
THIS AGREEMENT SHALL INURE TO THE BENEFIT OF AND SHALL BE BINDING UPON THE
SUCCESSORS AND PERMITTED ASSIGNS OF THE PARTIES HERETO.

 

SECTION 13.2.  GOVERNING LAW, JURISDICTION.  THIS AGREEMENT SHALL BE CONSTRUED,
PERFORMED AND ENFORCED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK.  THE PARTIES HERETO IRREVOCABLY ELECT AS THE SOLE JUDICIAL
FORUM FOR THE ADJUDICATION OF ANY MATTERS ARISING UNDER OR IN CONNECTION WITH
THIS AGREEMENT, AND CONSENT TO THE JURISDICTION OF, THE COURTS OF THE COUNTY OF
NEW YORK, STATE OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK.

 

SECTION 13.3.  EXPENSES.  EXCEPT AS OTHERWISE PROVIDED HEREIN, REGARDLESS OF
WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, (I) EACH OF
THE SELLER AND

 

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LEUCADIA, ON THE ONE HAND, AND THE BUYER AND LEVEL 3, ON THE OTHER HAND, WILL
PAY ITS OWN COSTS AND EXPENSES INCIDENT TO, PREPARING FOR, ENTERING INTO AND
CARRYING OUT THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY AND (II) THE SELLER AND LEUCADIA SHALL PAY SUCH COSTS AND
EXPENSES OF THE COMPANY AND ITS SUBSIDIARIES TO THE EXTENT NOT PAID PRIOR TO THE
CLOSING OR NOT REFLECTED IN THE FINAL DETERMINATION OF ACTUAL ADJUSTED NET
WORKING CAPITAL.

 

SECTION 13.4.  SEVERABILITY.  IN THE EVENT THAT ANY PART OF THIS AGREEMENT IS
DECLARED BY ANY COURT OR OTHER JUDICIAL OR ADMINISTRATIVE BODY TO BE NULL, VOID
OR UNENFORCEABLE, SAID PROVISION SHALL SURVIVE TO THE EXTENT IT IS NOT SO
DECLARED, AND ALL OF THE OTHER PROVISIONS OF THIS AGREEMENT SHALL REMAIN IN FULL
FORCE AND EFFECT.

 

SECTION 13.5.  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 OR (II) ON THE DAY AFTER DELIVERY (OR IF DELIVERED ON A
SATURDAY, THE NEXT FOLLOWING BUSINESS DAY) TO FEDERAL EXPRESS OR SIMILAR
OVERNIGHT COURIER OR THE EXPRESS MAIL SERVICE MAINTAINED BY THE UNITED STATES
POSTAL SERVICE (IN ALL CASES MAILED FOR NEXT DAY DELIVERY), TO THE PARTY AS
FOLLOWS:

 

If to Leucadia or the Seller:

 

Leucadia National Corporation

315 Park Avenue South

New York, New York 10010

Attn:  Joseph S. Steinberg, President

 

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

 

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn:  Andrea A. Bernstein, Esq.

 

If to the Buyer or Level 3:

 

Level 3 Communications, Inc.

1025 Eldorado Blvd.

Building 2000

Broomfield, Colorado  80021

Attn:  General Counsel

 

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

 

Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019
Attn:  David K. Boston, Esq.

 

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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.

 

SECTION 13.6.  PARENT GUARANTIES.

 

(A)                                  LEUCADIA SHALL PERFORM, OR CAUSE TO
PERFORMED, WHEN DUE ALL THE COVENANTS AND AGREEMENTS TO BE PERFORMED UNDER THIS
AGREEMENT BY THE SELLER.

 

(B)                                 LEVEL 3 SHALL PERFORM, OR CAUSE TO
PERFORMED, WHEN DUE ALL THE COVENANTS AND AGREEMENTS TO BE PERFORMED UNDER THIS
AGREEMENT BY THE BUYER.

 

SECTION 13.7.  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.

 

SECTION 13.8.  PUBLIC ANNOUNCEMENTS.  THE PARTIES AGREE THAT AFTER THE SIGNING
OF THIS AGREEMENT, NO PARTY SHALL, OR SHALL PERMIT ANY OF ITS AFFILIATES TO,
MAKE ANY PRESS RELEASE OR PUBLIC ANNOUNCEMENT CONCERNING THIS TRANSACTION
WITHOUT THE PRIOR APPROVAL OF THE OTHER PARTIES, UNLESS A PRESS RELEASE OR
PUBLIC ANNOUNCEMENT IS REQUIRED BY LAW, JUDICIAL OR ADMINISTRATIVE PROCESS OR BY
OBLIGATIONS PURSUANT TO ANY LISTING AGREEMENT WITH ANY NATIONAL SECURITIES
EXCHANGE OR THE NASDAQ STOCK MARKET.  BEFORE A PARTY MAKES ANY SUCH ANNOUNCEMENT
OR OTHER DISCLOSURE, IT AGREES TO GIVE THE OTHER PARTIES PRIOR NOTICE AND AN
OPPORTUNITY TO COMMENT ON THE PROPOSED DISCLOSURE.

 

SECTION 13.9.  ENTIRE AGREEMENT.  THIS AGREEMENT CONTAINS THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED HEREBY AND SUPERSEDES AND REPLACES ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS, ORAL OR WRITTEN, WITH REGARD TO SUCH TRANSACTIONS, UNLESS
OTHERWISE PROVIDED HEREIN.  THE CONFIDENTIALITY AGREEMENT AND ALL EXHIBITS AND
SCHEDULES HERETO AND ANY DOCUMENTS AND INSTRUMENTS DELIVERED PURSUANT TO ANY
PROVISION HEREOF, INCLUDING THE LEASE AGREEMENT AND THE REGISTRATION RIGHTS
AGREEMENT, ARE EXPRESSLY MADE A PART OF THIS AGREEMENT AS FULLY AS THOUGH
COMPLETELY SET FORTH HEREIN.

 

SECTION 13.10.  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, LEUCADIA, LEVEL 3
OR THE BUYER.  NO PROVISION OF THIS AGREEMENT SHALL GIVE ANY THIRD PARTIES ANY
RIGHT OF SUBROGATION OR ACTION OVER OR AGAINST THE SELLER, LEUCADIA, THE BUYER
OR LEVEL 3.

 

SECTION 13.11.  SCHEDULED DISCLOSURES.  DISCLOSURE OF ANY MATTER, FACT OR
CIRCUMSTANCE IN A SCHEDULE TO THIS AGREEMENT SHALL NOT BE DEEMED TO BE
DISCLOSURE THEREOF FOR PURPOSES OF ANY OTHER SCHEDULE HERETO (UNLESS REASONABLY
APPARENT FROM A READING OF THE SCHEDULES).

 

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SECTION 13.12.  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.

 

SECTION 13.13.  COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN COUNTERPARTS
(INCLUDING BY FACSIMILE), EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF
WHICH SHALL CONSTITUTE THE SAME INSTRUMENT.

 

[Remainder of Page Intentionally Left Blank.]

 

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

 

 

LEUCADIA NATIONAL CORPORATION,

 

a New York corporation

 

 

 

 

 

By:

/s/  Joseph A. Orlando

 

 

 

Name:  Joseph A. Orlando

 

 

Title: Vice President

 

 

 

 

 

 

 

BALDWIN ENTERPRISES, INC.,

 

a Colorado corporation

 

 

 

 

 

 

 

By:

/s/  Joseph A. Orlando

 

 

 

Name:  Joseph A. Orlando

 

 

Title:  Vice President

 

 

 

 

 

 

 

LEVEL 3 COMMUNICATIONS, LLC,

 

a Delaware limited liability company

 

 

 

 

 

 

 

By:

/s/ James Q. Crowe

 

 

 

Name:  James Q. Crowe

 

 

Title:  Chief Executive Officer

 

 

 

 

 

 

 

LEVEL 3 COMMUNICATIONS, INC.,

 

a Delaware corporation

 

 

 

 

 

 

 

By:

/s/  James Q. Crowe

 

 

 

Name:  James Q. Crowe

 

 

Title:  Chief Executive Officer

 

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