Exhibit 10.1

 
AGREEMENT AND PLAN OF MERGER
 
dated as of
 
October 18, 2005
 
Among
 
NT CORPORATION
 
TALK AMERICA HOLDINGS, INC.
 
AND
 
THNETCO, INC.
 

    

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Table of Contents
 
 
 
 
 ARTICLE I
DEFINITIONS

 
1.1. Definitions.                                                                                   1
 
 ARTICLE II
THE TRANSACTION

 
 2.1. The
Merger.                                                                                  
8
2.2. The
Closing.                                                                                   8
2.3. Actions at the
Closing.                                                                             8
2.4. Effect of
Merger.                                                                                 9
2.5. Procedure for
Exchange.                                                                                                                                                                                                                               
13
2.6. Escrow.                                                                                                                                                                                                                                                              
13
2.7. Closing of Transfer
Record.                                                                                                                                                                                                                           
14
 
 ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY

 
3.1. Organization, Qualification and Corporate Power; Transaction
Authorization.                                                                                                                                 
14
3.2. Capitalization.                                                                                             
16
3.3. Noncontravention;
Consents.                                                                                                                                                                                                                           
17
3.4. Compliance with Laws,
Licenses.                                                                     
18
3.5. Customers.                                                                                      19
3.6. Securities.                                                                                      
19
3.7. Brokers’
Fees.                                                                           19
3.8. Title to
Assets.                                                                                                                               
19
3.9. Subsidiaries.                                                                                      19
3.10. Financial
Statements.                                                                                                                               
20
3.11. Events Subsequent to Most Recent Fiscal Year
End.                                                                   20
3.12. Undisclosed
Liabilities.                                                                                                        23
3.13. Antitakeover
Statutes.                                                                                                                                                                                                                                       24
3.14. Tax
Matters.                                                                                         24
3.15. Real
Property.                                                                                                                     26
3.16. Intellectual
Property.                                                                                                                                28
3.17. Tangible
Assets.                                                                                  29
3.18. Contracts.                                                                                                     29
3.19. Notes and Accounts
Receivable.                                                                       
31
3.20. Powers of
Attorney.                                                                              
31
3.21. Insurance.                                                                                       31
3.22. Litigation.                                                                                       32
3.23. Employees.                                                                                      32
3.24. Employee
Benefits.                                                                                 32
3.25. Guaranties.                                                                                      34
3.26. Environmental, Health and Safety
Matters.                                                                  34
3.27. Certain Business Relationships with Company and its
Subsidiaries.                                                         35
 

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3.28. Accounts; Lockboxes; Safe Deposit
Boxes.                                                                    35
3.29. Accounting
Matters.                                                                               35
3.30. PUHCA.                                                                                            
35
3.31. Investment Company
Act.                                                                                             
35
3.32. Disclosure.                                                                                                       
35
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 
4.1. Organization.                                                                                        36
4.2. Authorization of
Transaction.                                                                            36
4.3. Noncontravention.                                                                                 
36
4.4. Brokers’
Fees.                                                                                                              
37
4.5. Capital
Resources.                                                                                                                                                                                              
37
 
 ARTICLE V
COVENANTS

 
5.1. Interim
Operations.                                                                                                                             
37
5.2. Filings; Other Actions;
Notification.                                                                                                                               
42
5.3. Company Financial
Statements.                                                                                                               
44
5.4. Access.                                                                                                                                                                                            
44
5.5. Director and Officer
Liability.                                                                                                                            
45
5.6. Employee Benefits After the
Merger.                                                                                                                                                         
46
5.7. Notices and Filing by
Company.                                                                                                                                       
47
 
ARTICLE VI
CONDITIONS TO OBLIGATIONS TO CLOSE

 
6.1. Conditions to Each Party’s
Obligation.                                                                                                                          
48
6.2. Conditions to Obligation of Parent and Merger
Sub.                                                                48
6.3. Conditions to Obligation of
Company.                                                                      
50
 
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

 
 7.1. Survival of Representations and
Warranties.                                                                                                                       
 51
7.2. Indemnification.                                                                                                                                                   
 51
 
 ARTICLE VIII
TERMINATION

 
 8.1. Termination of
Agreement.                                                                              58
8.2. Effect of
Termination                                                                                  58
 
ARTICLE IX
MISCELLANEOUS

 
 9.1. Press Releases and Public
Announcements.                                                                   
59
9.2. No Third-Party
Beneficiaries.                                                                         
 59
9.3. Entire
Agreement.                                                                                 
59
9.4. Binding Effect;
Assignment.                                                                              60
9.5. Counterparts.                                                                                      60
9.6. Headings.                                                                                     
 60
9.7. Notices.                                                                                                                                                
60
9.8. Governing
Law.                                                                                                                                                                                                                                                          
63
9.9. Amendments and
Waivers.                                                                             
64
 

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9.10. Severability.                                                                                      64
9.11. Expenses.                                                                                           
64
9.12. Survival.                                                                                         64
9.13. Construction.                                                                                     64
9.14. Incorporation of Exhibits and
Schedules.                                                                    
65
9.15. Specific
Performance.                                                                                
65
9.16. Submission to
Jurisdiction.                                                                              66
9.17. Waiver of Jury
Trial.                                                                                  66

Exhibits:
 
A. Form of Escrow Agreement

 

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AGREEMENT AND PLAN OF MERGER
 
THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) is dated effective October
18, 2005, by and among TALK AMERICA HOLDINGS, INC., a Delaware corporation
(“Parent”), THNETCO, INC., a Delaware corporation and indirectly wholly owned
subsidiary of Parent (“Merger Sub”), and NT CORPORATION, a Delaware corporation
(“Company”). Parent, Merger Sub and Company are referred to collectively herein
as the “Parties,” and Company and Merger Sub are sometimes collectively referred
to as the “Constituent Corporations.”
 
WITNESSETH:
 
WHEREAS, this Agreement contemplates a transaction whereby Parent will acquire
all of the outstanding capital stock of Company through a merger of Merger Sub
with and into Company;
 
WHEREAS, the Board of Directors of each of Parent, Merger Sub and Company has
approved the acquisition of Company by Parent, including the merger of Merger
Sub with and into Company (the “Merger”), upon the terms and subject to the
conditions set forth herein, and the Board of Directors of each of Company and
Merger Sub has adopted this Agreement;
 
WHEREAS, the Board of Directors of Company has determined that the Merger is
advisable and is fair to and in the best interests of the holders of the Company
Shares and recommended the approval of the Merger and this Agreement by the
stockholders of Company and this Agreement and the Merger have been approved by
the requisite vote of the stockholders of Company; and
 
NOW, THEREFORE, in consideration of the premises and the mutual promises set
forth herein, and in consideration of the representations, warranties and
covenants set forth herein, the Parties agree as follows:
 
ARTICLE I  
 
DEFINITIONS
        1.1.  Definitions.
 
        (a)  The following terms, as used herein, have the following meanings:
 
“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
 
“Affiliated Group” means any affiliated group within the meaning of Code Section
1504(a) or any similar group defined under a similar provision of federal,
state, local or foreign law.
 
“Claim Date” means the earlier of (a) the 60th day after Parent files its Annual
Report on Form 10-K with the SEC for its fiscal year ending December 31, 2006
and (b) May 31, 2007.
 
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“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and
Code Section 4980B and of any similar state law.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Combined Material Adverse Effect” means a Material Adverse Effect on Company or
a Material Adverse Effect on Parent and its Subsidiaries (including the
Surviving Corporation), taken as a whole, after the Effective Time.
 
“Company Board” means the board of directors of Company.
 
“Company’s Restated Charter” means the Fourth Amended and Restated Certificate
of Incorporation of NT CORPORATION filed with the Delaware Secretary of State on
July 29, 2004, as in effect as of the Effective Time.
 
“Confidentiality Agreement” means the letter agreement dated August 23, 2005
between Parent and Company, as it may be amended, providing that, among other
things, each Party would maintain confidential certain information of the other
Party.
 
“Consenting Stockholders” means the Preferred Stockholders that approve the
adoption of this Agreement and the Merger by written consent pursuant to
Stockholder Consents.
 
“Deferred Intercompany Transaction” has the meaning set forth in Treas. Reg.
Section 1.1502-13.
 
“Delaware Law” means the General Corporation Law of the State of Delaware,
Chapter 1, Title 8 of the Delaware Code 1953, as amended.
 
“Dissenting Stockholder” at any time means a holder of Company Shares that are
Dissenting Shares at such time the holder of which continues to be entitled to
appraisal rights under Section 262 of the Delaware Law (including not having
withdrawn any demand or otherwise waived or lost such rights) in respect of such
shares.
 
“Employee Benefit Plan” means any “employee benefit plan” (as such term is
defined in ERISA Section 3(3)) and any other employee benefit plan, program or
arrangement of any kind.
 
“Employee Options” means any stock options to purchase shares of Common Stock
granted under any employee stock option or compensation plan or arrangement of
Company.
 
“Employee Pension Benefit Plan” has the meaning set forth in ERISA Section 3(2).
 
“Employee Welfare Benefit Plan” has the meaning set forth in ERISA Section 3(1).
 
“Environmental, Health and Safety Requirements” means all federal, state, local
and foreign statutes, regulations, ordinances and other provisions having the
force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyl,
noise or radiation, each as amended and as now or hereafter in effect.
 
 
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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“ERISA Affiliate” means each entity that is treated as a single employer with
Company for purposes of Code Section 414.
 
“Excess Loss Account” has the meaning set forth in Treas. Reg. Section
1.1502-19.
 
“FCC” means the Federal Communications Commission.
 
“FCC Consent” means the grant by the FCC of its consent to the transfer of the
FCC Licenses in connection with the consummation of the transactions
contemplated hereby.
 
“Fiduciary” has the meaning set forth in ERISA Section 3(21).
 
“GAAP” means United States generally accepted accounting principles as in effect
from time to time.
 
“Governmental Entity” means any United States federal, state or local or any
foreign government, governmental regulatory or administrative authority, agency,
commission (including any department or political subdivision of any of the
foregoing), court, tribunal or judicial or arbitral body.
 
“Governmental Order” means any order, ruling, writ, judgment, injunction,
decree, charge, stipulation, determination or award entered by or with any
Governmental Entity.
 
“Intellectual Property” means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (c) all copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulae, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all Computer Software (including data and
related documentation), (g) all other proprietary rights and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
 
 
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“Interim Agreement” means the Interim Operating and Integration Agreement, dated
as of the date hereof, between Parent and Company.
 
“Interim Escrow Amount” means, as of any date, the aggregate amount remaining in
the Escrow Fund as of such date, as such amount is reduced by the aggregate
amount of any claims for indemnification that have been resolved but not yet
paid as of such date or that have not been resolved but have been asserted in
writing prior to such date pursuant to Section 7.2.
 
“Knowledge” of any Person that is not an individual means the actual knowledge
of (i) such Person’s executive officers, in the case of Parent and Merger
Subsidiary, and (ii) each of Leo J. Cyr and Danyelle L. Kennedy-Lantz, in the
case of the Company, in each case after reasonable investigation by such
individual.
 
“Laws” mean any laws, statutes, rules, ordinances, regulations, codes, plans,
injunctions, judgments, orders, writs, decrees, rulings and charges thereunder
of any Governmental Entity.
 
“Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
 
“Lien” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such property
or asset.
 
“Main Leases” means collectively all leases by Company or any of its
Subsidiaries of 3300 Pace Street, Pensacola, Florida and 2700 N.E. Expressway,
Building B, Suites 700 and 900, Atlanta, Georgia.
 
“Material Adverse Effect” means, with respect to or of or on any Person, (a) a
material adverse change in, or materially adverse effect on, the business,
assets, revenues, financial condition or results of operations of such Person
and its Subsidiaries taken as a whole, excluding any such effect resulting from
(i) changes in political or regulatory conditions generally, (ii) changes or
conditions generally affecting the U.S. economy or financial markets or
generally affecting the segments of the telecommunications industry in which
such Person or any of its Subsidiaries operates, (iii) changes in GAAP, (iv)
actions or forbearances taken in accordance with the terms of the Interim
Agreement or (v) the announcement or consummation of this Agreement, or (b) an
effect that would prevent, materially delay or materially impair the ability of
such Person to consummate the Merger and the other transactions contemplated by
this Agreement.
 
“Most Recent Balance Sheet” means the balance sheet contained within the Most
Recent Financial Statements.
 
“Multiemployer Plan” has the meaning set forth in ERISA Section 3(37).
 
“Nasdaq” means the Nasdaq National Market.
 
“Ordinary Course of Business” means the ordinary course of business consistent
with past practice.
 
 
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“Parent Board” means the board of directors of Parent.
 
“PBGC” means the Pension Benefit Guaranty Corporation.
 
“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a Governmental Entity.
 
“Preferred Stockholder” means a holder of record of shares of Preferred Stock.
 
“Prohibited Transaction” has the meaning set forth in ERISA Section 406 and Code
Section 4975.
 
“Reportable Event” has the meaning set forth in ERISA Section 4043.
 
“Representatives” has the meaning set forth in the Escrow Agreement.
 
“Requisite Stockholder Approval” means adoption of this Agreement by the
affirmative vote, at a meeting or by written consent, of (i) the holders of a
majority of the outstanding Common Stock and Preferred Stock voting together as
a single class, with the Preferred Stock voting on an as-converted-to-Common
Stock basis, (ii) the holders of 60% of the outstanding shares of Series A
Preferred, Series B Preferred and Series C Preferred, voting together as a
single class, and (iii) the holders of 75% of the shares of Series D Preferred,
voting separately as a class.
 
“SEC” means the Securities and Exchange Commission.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
 
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
 
“Security Interest” means any Lien other security interest, other than (a)
mechanic’s, materialman’s and similar liens; (b) Liens for taxes not yet due and
payable; (c) purchase money Liens and Liens securing rental payments under
capital lease arrangements; and (d) other Liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
 
“Severance Amounts” means all out-of-pocket compensation, bonuses, fees and
expenses payable by Company or any of its Subsidiaries to any of its employees
or directors in connection with or by reason of the transactions contemplated
hereby and the consummation of any thereof, including payments and amounts of
the categories, natures and types reflected in the statement in Section 5.6(e)
of the Company Disclosure Letter and including all costs and payments to be paid
as contemplated by Section 5.6(e), but in any case not including payments
described in Note 2 of Section 5.6(e) of the Company Disclosure Letter, and any
other amount that is stated in Section 5.1(a)(18)(z) to be, or be deemed to be,
a Severance Amount. By way of example but not limitation of the generality of
the foregoing definition, set forth in Section 5.6(e) of the Company Disclosure
Letter is an estimate, as of the date of this Agreement, of the “Severance
Amounts.”
 
 
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“State PUC Consent” means the grant by any state Governmental Entity that
granted or issued any of the State Licenses or otherwise has authority in the
matter of its consent to the transfer of the State Licenses in connection with
the consummation of the transactions contemplated hereby.
 
“Stockholder Consent” means a Consent, executed by a Preferred Stockholder,
approving the adoption of this Agreement and the Merger.
 
“Subsidiary” of a specified Person means any corporation, limited liability
company, partnership, joint venture or other legal entity of which the specified
Person (either alone or together with any other Subsidiary of the specified
Person) owns, directly or indirectly, more than 50% of the stock or other
equity, partnership, limited liability company or equivalent interests, the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity, or
otherwise has the power to vote or direct the voting of sufficient securities to
elect a majority of such board of directors or other governing body.
 
“Tax” means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
 
“Tax Return” means any report, return, declaration or other information required
to be supplied to a taxing authority in connection with Taxes.
 
“Total Merger Consideration” means $23,000,000, minus the sum of the Transaction
Costs and Severance Amounts, as set forth in the Closing Costs Certificate.
 
“Transaction Costs” means all fees and expenses of legal counsel, investment
bankers, brokers or other representatives and consultants, including
Breckenridge Securities Corp. and The Breckenridge Group, Inc., Latham & Watkins
LLP, Cooley Godward LLP, Nowalsky Bronston & Gothard PLLC, Kilpatrick Stockton
LLP and Ernst & Young LLP, incurred or accrued by Company, or for which Company
or any of its Subsidiaries is liable, in connection with the negotiation,
execution and delivery of this Agreement, the performance of the obligations of
Company and its Subsidiaries hereunder and the consummation of the transactions
contemplated hereby, including payments and amounts of the categories, natures
and types reflected in the statement in Section 5.6(b) of the Company Disclosure
Letter, the premium payable for the purchase of the “tail” policy required to be
procured pursuant to Section 5.5(b) and any other amount that is stated in
Section 5.1(a)(18)(z) to be, or be deemed to be, a Transaction Cost. By way of
example but not limitation of the generality of the foregoing definition, set
forth in Section 5.6(b) of the Company Disclosure Letter is an estimate, as of
the date of this Agreement, of the maximum amounts of the various categories of
“Transaction Costs.”
        
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        (b)  Each of the following terms is defined in the Section set forth
opposite such term:
 
TERM
SECTION
   
Agreement
Preamble
Allocable Series Consideration
2.4(f)
Allocated Portion
7.2(e)(2)
Applicable Series Liquidation Amount
2.4(f)
Basket Amount
7.2(f)
Certificate of Merger
2.3
Closing
2.2
Closing Costs Certificate
6.2(i)
Closing Date
2.2
Common Stock
3.2
Common Stock Exchange Ratio
2.4(f)
Communications Licenses
3.4
Company
Preamble
Company Disclosure Letter
ARTICLE III
Company Indemnified Party
7.2(a)(2)
Company Outstanding Shares
2.4(f)
Company Shares
3.2(a)(2)
Computer Software
3.16
Compensation Plan
5.1(a)(18)
Constituent Corporations
Preamble
Dissenting Shares
2.4(g)
Effective Time
2.4(a)
Escrow Agent
2.6(a)
Escrow Agreement
2.6(a)
Escrow Amount
2.6(a)
Escrow Fund
2.6(a)
Escrowed Consideration
2.5(a)
Exchange Agent
2.5(a)
Exchange Fund
2.5(a)
FCC Licenses
3.4(b)
Financial Statements
3.10
Indemnified Party
7.2(b)(1)
Indemnifying Party
7.2(b)(1)
IT Assets
3.16
Licenses
3.4(b)
Local Licenses
3.4(b)
Material Contract
3.18
Merger
Recitals
Merger Consideration
2.4(e)
Merger Sub
Preamble
Most Recent Financial Statements
3.10
Most Recent Fiscal Year End
3.10
Parent
Preamble
Parent Indemnified Party
7.2(a)(1)
Parties
Preamble
Per Share Merger Consideration
2.4(e)
Preferred Merger Consideration
2.4(f)
Preferred Share Liquidation Consideration
2.4(f)
Preferred Stock
3.2(a)(2)
Reserved Insurance Proceeds
7.2(g)(1)
Series A Preferred
3.2
Series B Preferred
3.2
Series C Preferred
3.2
Series D Preferred
3.2
Series E Preferred
3.2
Series F Preferred
3.2
Series Shares Outstanding
2.4(f)
State Licenses
3.4
Stockholder
3.2(b)
Surviving Corporation
2.1
Surviving Corporation New Plans
5.6(b)
Termination Date
8.1(d)
Third Party Claim
7.2(b)(1)
Total Liquidation Amount
2.4(f)

 
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        (c)  Any reference to any federal, state, local or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The words “include,”
“includes” and “including” shall mean include, includes or including without
limitation. The phrase “business day” shall mean any day other than a day on
which banks in the State of New York are required or authorized to be closed.
The phrases “herein,” “hereof,” “hereunder” and words of similar import shall be
deemed to refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, and not to any particular provision of this Agreement. The
word “or” shall be inclusive and not exclusive. Any pronoun shall include the
corresponding masculine, feminine and neuter forms.
 
ARTICLE II  
 
THE TRANSACTION
2.1.  The Merger.
 
On and subject to the terms and conditions of this Agreement, Merger Sub will
merge with and into Company at the Effective Time and the separate corporate
existence of Merger Sub will thereupon cease. Company shall be the surviving
corporation in the Merger (the “Surviving Corporation”), and the separate
corporate existence of Company, with all of its rights, privileges, summary
powers and franchises, shall continue unaffected by the Merger, except as
provided for in Section 2.4.
 
2.2.  The Closing.
 
The closing of the transactions contemplated by this Agreement (the “Closing”)
shall take place (i) at the offices of Latham & Watkins LLP, 555 Eleventh
Street, NW, Suite 1000 Washington, D.C. 20004, commencing at 9:00 A.M. local
time on January 2, 2006 or, in the event the conditions set forth in Article VI
are not satisfied or waived (other than those conditions that by their terms are
to be satisfied at the Closing, but subject to the satisfaction or waiver of
those conditions) as of such date, the first day that is the last business day
of a month and at least three business days after the satisfaction or waiver of
all conditions set forth in ARTICLE VI (other than those conditions that by
their terms are to be satisfied at the Closing, but subject to the satisfaction
or waiver of those conditions) or (ii) at such other place and time or on such
other date as Parent and Company may agree in writing (the “Closing Date”).
 
2.3.  Actions at the Closing.
 
At the Closing, (i) Company will deliver to Parent and Merger Sub the various
certificates, instruments and documents referred to in Section 6.2; (ii) Parent
and Merger Sub will deliver to Company the various certificates, instruments and
documents referred to in Section 6.3; (iii) Company and Merger Sub shall duly
execute and deliver a certificate of merger (the “Certificate of Merger”)to the
Secretary of State of the State of Delaware for filing under Section 251 of the
Delaware Law and make all other filings or recordings required by the Delaware
Law in connection with the Merger and (iv) Parent will deliver or cause to be
delivered the Exchange Fund to the Exchange Agent in the manner provided below
in this ARTICLE II.
 
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2.4.  Effect of Merger.
 
    (a)  General. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or at such later date or time as is specified in the Certificate of
Merger (the “Effective Time”). From and after the Effective Time, the Surviving
Corporation shall possess all of the property, rights, privileges, immunities,
powers and franchises and be subject to all of the debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and Merger
Sub, all as provided under this Agreement and the Delaware Law. The Surviving
Corporation may, at any time after the Effective Time, take any action
(including executing and delivering any document) in the name and on behalf of
either Company or Merger Sub in order to carry out and effectuate the
transactions contemplated by this Agreement.
 
    (b)  Certificate of Incorporation. At the Effective Time, the certificate of
incorporation of the Surviving Corporation shall be amended and restated to read
in its entirety as did the certificate of incorporation of Merger Sub in effect
immediately prior to the Effective Time, except that the name of the Surviving
Corporation shall be NT CORPORATION, and, as so amended, shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended in accordance with their terms and as provided by law.
 
    (c)  By-laws. The By-laws of the Surviving Corporation shall be amended and
restated at and as of the Effective Time to read in their entirety as did the
By-laws of Merger Sub in effect immediately prior to the Effective Time and
shall be the By-laws of the Surviving Corporation until amended in accordance
with their terms and as provided by law.
 
    (d)  Directors and Officers. The directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation at and as of the Effective Time (retaining their
respective positions and terms of office), until the earlier of their respective
resignation, removal or otherwise ceasing to be a director or officer,
respectively, or until their respective successors are duly elected and
qualified, as the case may be.
 
    (e)  Conversion of Company Shares. At and as of the Effective Time, (A) each
issued and outstanding Company Share will be converted into the right to receive
the Merger Consideration set forth below in Section 2.4(f) (as to each Company
Share, its “Per Share Merger Consideration”), and all such Company Shares will
no longer be outstanding, will be canceled and retired and will cease to exist,
and each holder of a certificate representing any such Company Shares will
thereafter cease to have any rights with respect to such Company Shares, except
the right to receive the respective Per Share Merger Consideration for each such
Company Share to which the holder of such Company Shares is entitled pursuant to
Section 2.4(f) upon the surrender of such certificate in accordance with Section
2.4(f) (collectively, the “Merger Consideration”) and (B) each Company Share
owned by Company or any Subsidiary of Company shall be canceled and retired
without payment of any consideration therefor and shall cease to exist. No
Company Share shall be deemed to be outstanding or to have any rights other than
those set forth above in this Section 2.4(e) after the Effective Time.
 
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    (f)  Per Share Merger Consideration. The Company Shares will be converted
into the respective rights to receive the following Per Share Merger
Consideration, which shall be payable in cash, as provided, and subject to the
limitations set forth, below:
 
        (1)  each share of Common Stock held by the Company as treasury stock or
owned by Parent or any Subsidiary of Parent immediately prior to the Effective
Time shall be cancelled and retired, and no payment shall be made with respect
thereto;
 
        (2)  each share of any series of Preferred Stock outstanding immediately
prior to the Effective Time shall be converted into the right to receive from
Parent a portion of the Merger Consideration determined in accordance with the
following formula:
 
(Allocable Series Consideration multiplied by Total Merger Consideration)
Number of Applicable Series Shares Outstanding
 
   (3)  thereafter, a holder of a share of Common Stock and a holder of
Preferred Stock other than the Series E Preferred (treating the Preferred Stock
on an as-converted to Common Stock basis) outstanding immediately prior to the
Effective Time shall be converted into the right to receive from Parent, a
portion of the Merger Consideration determined in accordance with the following
formula:
 

(Total Merger Consideration minus Preferred Share Liquidation Consideration)
Company Outstanding Shares

Notwithstanding clause (2) or (3) immediately above, the maximum Merger
Consideration that shall be paid by Parent in the Merger shall not exceed the
Total Merger Consideration.

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For purposes of this Section 2.4(f), each of the following terms is defined as
follows:

“Allocable Series Consideration” means the Applicable Series Liquidation Amount
divided by the Total Liquidation Amount.

“Applicable Series Liquidation Amount” means the total amount that would be
payable to the holders of outstanding Preferred Stock in the Merger if, in the
Merger, the holders of Preferred Stock were entitled to receive the following:
(a) with respect to the Series A Preferred, the Series B Preferred and the
Series C Preferred, the Liquidation Price (as defined in the Company’s Restated
Charter); (b) with respect to the Series D Preferred, the Series D Liquidation
Preference (as defined in the Company’s Restated Charter); and (c) with respect
to the Series E Preferred, the Sale Preference (as defined in the Company’s
Restated Charter).

“Common Stock Exchange Ratio” means, for the Common Stock, the ratio obtained
pursuant to clause (3) immediately above.

“Company Outstanding Shares” means the number of shares of Common Stock
outstanding as of the Effective Time (assuming the exercise, conversion or
exchange of all outstanding rights, warrants, options, convertible securities or
indebtedness or other rights exercisable, convertible or exchangeable for or
into, directly or indirectly, Common Stock whether at the time of issue or upon
the passage of time or the occurrence of some future event, including the
conversion into Common Stock of all shares of Preferred Stock outstanding as of
the Effective Time).

“Preferred Merger Consideration” means the merger consideration paid to all
holders of Preferred Stock pursuant to clauses (2) and (3) immediately above.

“Preferred Share Liquidation Consideration” means the total amount of Merger
Consideration allocated at the Effective Time to the holders of Preferred Stock
pursuant to clause (2) immediately above.

“Series Shares Outstanding” means (a) in the case of the Series A Preferred, the
total number of shares of Series A Preferred outstanding at the Effective Time;
(b) in the case of the Series B Preferred, the total number of shares of Series
B Preferred outstanding at the Effective Time; (c) in the case of the Series C
Preferred, the total number of shares of Series C Preferred outstanding at the
Effective Time; (d) in the case of the Series D Preferred, the total number of
shares of Series D Preferred outstanding at the Effective Time; and (e) in the
case of the Series E Preferred, the total number of shares of Series E Preferred
outstanding at the Effective Time.

“Total Liquidation Amount” means the sum of all Applicable Series Liquidation
Amounts.
 
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    (g)  Notwithstanding anything in this Agreement to the contrary, each Share
that is held by a holder (i) who has not voted in favor of the Merger or
consented thereto in writing, (ii) who shall have properly demanded in writing
appraisal of such Shares pursuant to, and who complies in all respects with,
Section 262 of the Delaware Law and (iii) who has neither effectively withdrawn
nor lost the right to such payment (each such share, a “Dissenting Share” and
collectively, the “Dissenting Shares”) shall not be converted into the right to
receive Merger Consideration as provided in Sections 2.4(e) and (f), but rather
the holders of Dissenting Shares shall be entitled to payment of the fair value
of such Dissenting Shares in accordance with Section 262 of the Delaware Law;
provided, however, that if any such holder shall fail to perfect or otherwise
shall waive, withdraw or lose the right to appraisal under Section 262 of the
Delaware Law, then the right of such holder to be paid the fair value of such
holder’s Dissenting Shares shall cease and such Dissenting Shares shall be
deemed to have been converted as of the Effective Time into, and to have become
exchangeable solely for the right to receive, Merger Consideration as provided
in Section 2.4(f). Company shall serve prompt notice to Parent of any written
demands received by Company for appraisal of any Company Shares, and Parent
shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, without the prior written consent of Parent, make any payment
with respect to, or settle or offer to settle, any such demands, or agree to do
any of the foregoing.
 
    (h)  Cancellation of Employee Stock Options. At or immediately prior to the
Effective Time, each stock option or warrant to purchase Company Shares or any
other capital stock of Company or any Company Subsidiary outstanding, whether or
not vested or exercisable, and each commitment or agreement to issue Company
Shares or any other capital stock of Company or any Company Subsidiary,
including without limitation, all such stock options, warrants and commitments
or agreements to issue Shares or any other capital stock of the Company or any
Subsidiary set forth in Section 3.2(b) of the Company Disclosure Letter, shall
be cancelled without the payment of any consideration, and Company and its
Subsidiaries shall take all such actions, and shall obtain all consents and
approvals as are necessary, to effect such cancellation.
 
    (i)  Conversion of Capital Stock of Merger Sub. At and as of the Effective
Time, each share of common stock, $.01 par value per share, of Merger Sub shall
be converted into one share of common stock, $.0l par value per share, of the
Surviving Corporation.
 
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2.5.  Procedure for Exchange.
 
    (a)  Immediately after the Effective Time, (A) Parent shall furnish to
StockTrans, Inc., its transfer agent, or such other bank or trust company
reasonably acceptable to Company to act as exchange agent (the “Exchange
Agent”), a corpus (the “Exchange Fund”) consisting of cash sufficient to permit
the Exchange Agent to make full payment of the Merger Consideration to the
holders of all of the issued and outstanding Company Shares (other than any
Company Shares owned by Company), less the amount in cash equal to 10% of the
Total Merger Consideration, which amount (the “Escrowed Consideration”) will be
withheld from the amounts otherwise to be delivered to the holders of Preferred
Stock as Merger Consideration to which each such holder of Preferred Stock
would, but for this Section 2.5(a), be entitled to be delivered pursuant to this
Agreement, pro rata in proportion to the respective amount otherwise so
deliverable and (B) Parent will cause the Exchange Agent to mail a letter of
transmittal (with instructions for its use) in a form to be mutually agreed upon
by Company and Parent prior to Closing to each holder of issued and outstanding
Company Shares (other than any Company Shares owned by Company) that is entitled
to receive any Merger Consideration for the holder to use in surrendering the
certificates that, immediately prior to the Effective Time, represented his or
its Company Shares against payment of the Merger Consideration to which the
holder is entitled pursuant to Section 2.4(f), subject to the escrow of the
Escrowed Consideration pursuant to the Escrow Agreement. Notwithstanding the
withholding of the Escrowed Consideration and deposit thereof with the Escrow
Agent pursuant to Section 2.6(a), each Preferred Stockholder shall, for all
purposes of Section 2.4, be deemed to have received its pro rata share of such
Escrowed Consideration so withheld and deposited. Upon surrender to the Exchange
Agent of these certificates, together with the letter of transmittal, duly
executed and completed in accordance with the letter of transmittal
instructions, subject to the escrow of the Escrow Amount pursuant to the Escrow
Agreement, Parent shall promptly cause to be issued a check representing the
Merger Consideration (after giving effect to any required tax withholdings and
the withholding of the Escrowed Consideration). No interest will be paid or
accrued on any amounts payable to former holders of Company Shares. If payment
is to be made to a Person other than the registered holder of the certificate
surrendered, it shall be a condition of payment that the surrendered certificate
must be properly endorsed or otherwise in proper form for transfer and that the
Person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a Person other than the registered holder of the
certificate surrendered or establish to the reasonable satisfaction of the
Surviving Corporation or the Exchange Agent that this tax has been paid or is
not applicable. If any certificate representing Company Shares is lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming a certificate to be lost, stolen or destroyed, the Exchange Agent will
issue in exchange for this lost, stolen or destroyed certificate the Merger
Consideration deliverable in respect thereof except that the Person to whom this
Merger Consideration is paid shall, as a condition precedent to the payment
thereof, indemnify the Surviving Corporation in a manner reasonably satisfactory
to it against any claim that may be made against the Surviving Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
 
    (b)  Parent shall pay, or shall cause the Surviving Corporation to pay, all
charges and expenses of the Exchange Agent.
 
2.6.  Escrow.
 
    (a)  At the Effective Time, Parent, Merger Sub, Company, the Representatives
and the Escrow Agent shall execute and deliver an escrow agreement substantially
in the form of the attached Exhibit A (the “Escrow Agreement”) under which U.S.
Bank Corporate Trust Services or other Person mutually satisfactory to Parent
and Company shall act as escrow agent (the “Escrow Agent”) with respect to the
Escrowed Consideration (the aggregate value of which, the “Escrow Amount”),
which shall be deposited in an escrow fund (the “Escrow Fund”) to be governed by
the terms set forth in the Escrow Agreement. Parent shall deposit the Escrowed
Consideration with the Escrow Agent, which shall be withheld from the Merger
Consideration as provided in Section 2.5 in connection with the indemnification
obligations set forth in Section 7.2.
 
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    (b)  Subject to the provisions of this Section 2.6 and the Escrow Agreement,
(i) on the first business day that is at least 270 days after the Closing Date,
an amount equal to 50% of the Interim Escrow Amount as of such date shall be
paid to the Preferred Stockholders, and (ii) on the Claim Date, the then
remaining amount in the Escrow Fund, as such amount is reduced by the aggregate
amount of any claims for indemnification that have been resolved but not yet
paid or that have not been resolved but have been asserted in writing prior to
the Claim Date pursuant to Section 7.2, shall be paid to the Preferred
Stockholders.
 
2.7.  Closing of Transfer Record. After the Effective Time, no transfer of
Company Shares outstanding prior to the Effective Time may be made on the stock
transfer books of the Surviving Corporation. If, after the Effective Time,
certificates representing such shares are presented for transfer to the Exchange
Agent, they shall be canceled and exchanged for Merger Consideration as provided
in Section 2.5.
 
ARTICLE III  
 
REPRESENTATIONS AND WARRANTIES OF COMPANY
 
Except as set forth in the disclosure letter (subject to Section 9.13(c))
delivered to Parent by Company at or prior to entering into this Agreement (the
“Company Disclosure Letter”), Company hereby represents and warrants to Parent
and Merger Sub that:
 
3.1.  Organization, Qualification and Corporate Power; Transaction
Authorization.
 
    (a)  Each of Company and its Subsidiaries is a corporation duly organized,
validly existing, and in good standing under the Laws of the jurisdiction of its
incorporation and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
assets or properties or conduct of its business requires such qualification,
except where the failure to be so organized, validly existing, qualified or in
good standing, or to have such power or authority, would not be reasonably
expected to have a Material Adverse Effect on Company. Section 3.1 of the
Company Disclosure Letter lists for each of Company and its Subsidiaries (i) the
directors and officers, (ii) the state of incorporation and (iii) the
jurisdictions in which the corporation is qualified to do business. Company has
delivered to Parent correct and complete copies of the charter and bylaws of
each of Company and its Subsidiaries (as amended to date). The minute books
(containing the records of meetings of the stockholders, the board of directors
and any committees of the board of directors), the stock certificate books, and
the stock record books of each of Company and its Subsidiaries are correct and
complete, and Company has delivered to Parent copies of all such items. None of
Company and its Subsidiaries is in default under or in violation of any
provision of its charter or bylaws.
 
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    (b)  The Company Board has received the opinion of Breckenridge Securities
Corp., dated October 18, 2005, to the effect that, as of such date, based upon
and subject to the terms, qualifications, assumptions, limitations and
exceptions set forth therein, the aggregate consideration to be received by the
holders of the Company Shares pursuant to the Merger is fair to such holders,
taken as a whole, from a financial point of view. A copy of such opinion was
furnished to Parent on or before the date hereof. The Company Board, at a
meeting duly called and held, has (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, are fair to and in the
best interest of Company’s stockholders, (ii) adopted this Agreement and the
transactions contemplated hereby, including the Merger, in accordance with the
requirements of Section 251 of the Delaware Law with respect to the transactions
contemplated hereby, (iii) adopted resolutions recommending to the Company’s
stockholders approval of the transactions contemplated hereby, including the
Merger, (iv) directed that this Agreement and the transactions contemplated
hereby, including the Merger, be submitted to the Preferred Stockholders for
their approval and adoption on or before the date of this Agreement, and (v)
taken all necessary action to provide that Employee Options outstanding as of
the Effective Time will be in all respects cancelled and of no further force and
effect from and after the Effective Time. The only vote of holders of any class
or series of Common Stock or Preferred Stock necessary to approve and adopt this
Agreement and the Merger and the transactions contemplated hereby is the
Requisite Stockholder Approval and no vote of the holders of the shares of
Common Stock and the Preferred Stock, or any of them, is necessary to consummate
any transaction expressly contemplated hereby other than the Merger. Company has
received the consents of the Consenting Stockholders in the Stockholder
Consents, a true and correct copy of each of which has been provided to Parent,
and such consents so received constitute the Requisite Stockholder Approval.
This Agreement and the transactions contemplated hereby, including the Merger,
have been duly authorized by all necessary corporate action.
 
    (c)  Company has all requisite corporate power and authority and has taken
all corporate action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate the Merger in accordance with
its terms. This Agreement is a valid and binding agreement of Company
enforceable against Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles and except as indemnification obligations hereunder may be
limited by applicable securities laws. No Stockholder is entitled to any
dissenter’s rights with respect to, or other rights of appraisal of, its Company
Shares in respect or by reason of the Merger or any of the transactions
contemplated hereby, except only such rights of appraisal as a holder of Company
Shares that is not a Consenting Stockholder shall have under Section 262 of the
Delaware Law.
 
    (d)  Company has all requisite corporate power and authority and has taken
all corporate action necessary in order to execute, deliver and perform its
obligations under the Interim Agreement and the Interim Agreement is a valid and
binding agreement of Company enforceable against Company in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.
 
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3.2.  Capitalization.
 
    (a)  As of the date of this Agreement, Company’s authorized capitalization
consisted of:
 
        (1)  90,028,495 shares of Common Stock, par value $0.01 per share (the
“Common Stock”), of which 9,408,544 shares were issued and outstanding, an
aggregate of 5,033,998 shares were issuable upon exercise of outstanding
Employee Options and an aggregate of 67,731,279 shares were issuable upon
conversion of shares of the Preferred Stock, as set forth below; and
 
        (2)  58,020,595 shares of Preferred Stock, par value $0.01 per share
(the “Preferred Stock” and, collectively with the Common Stock, the “Company
Shares”), designated as:
 

(i)  
7,500,000 shares of Series A Convertible Preferred Stock (“Series A Preferred”),
of which 7,500,000 shares were issued and outstanding and were convertible into
7,704,628 shares of Common Stock;

 

(ii)  
4,459,320 shares of Series B Convertible Preferred Stock (“Series B Preferred”),
of which 4,459,320 shares were issued and outstanding and were convertible into
4,581,326 shares of Common Stock;

 

(iii)  
6,584,372 shares of Series C Convertible Preferred Stock (“Series C Preferred”),
of which 6,584,372 shares were issued and outstanding and were convertible into
6,764,747 shares of Common Stock;

 

(iv)  
29,668,487 shares of Series D Convertible Preferred Stock (“Series D
Preferred”), of which 25,584,455 shares were issued and outstanding and were
convertible into 38,615,437 shares of Common Stock; and

 

(v)  
9,796,238 shares of Series E Convertible Preferred (“Series E Preferred”), of
which 9,796,238 shares were issued and outstanding and were convertible into
10,065,142 shares of Common Stock.

 

(vi)  
2,178 shares of Series F Convertible Preferred (“Series F Preferred”), of which
0 shares were issued and outstanding.

 
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    (b)  All of the issued and outstanding Company Shares have been duly
authorized, are validly issued, fully paid and nonassessable, and, as of the
date of this Agreement, are held of record by the respective stockholders as set
forth in Section 3.2(b) of the Company Disclosure Letter (each a “Stockholder”
and collectively, the “Stockholders”). The Company has no treasury stock. Other
than the Employee Options that are exercisable for 5,033,998 shares of Common
Stock as of the date of this Agreement, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require Company to
issue, sell or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to Company. There are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of the capital stock of Company, provided that the foregoing representation and
warranty is to the Knowledge of Company as respects voting trusts, proxies or
other agreements or understandings to which none of Company and its Subsidiaries
is a party or has acknowledged in writing. Each Stockholder holds of record and,
to Company’s Knowledge, owns beneficially, as of the date of this Agreement, the
number of Company Shares set forth next to his or its name and record address in
Section 3.2(b) of the Company Disclosure Letter, free and clear, to Company’s
Knowledge, of any restrictions on transfer (other than any generally applicable
restrictions on transfer under the Securities Act and state securities laws),
Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims and demands. To Company’s Knowledge, no
Stockholder is a party to any option, warrant, purchase right or other contract
or commitment that could require the Stockholder to sell, transfer or otherwise
dispose of any capital stock of Company (other than this Agreement). From and
after the Effective Time, all Employee Options will be cancelled and shall
represent no rights of any holder thereof. As of the Effective Time, each of the
Employee Options shall in all respects be cancelled and of no further force or
effect.
 
3.3.  Noncontravention; Consents. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i), assuming the filing of the Certificate of Amendment as contemplated by
Section 2.3, violate any provision of the charter or bylaws of any of Company
and its Subsidiaries or (ii), assuming compliance with the matters referred to
in the next sentence of this Section 3.3, (A) violate any Laws or Governmental
Order to which any of Company and its Subsidiaries is subject or (B) with or
without notice, lapse of time or both, conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under any agreement, contract, lease, license, instrument or other arrangement
to which any of Company and its Subsidiaries is a party or by which it is bound
or to which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets), except, in the case of clause (ii),
such violation, breach, default, acceleration or other change that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company. Except for (a) any FCC Consent, State PUC Consent or
consent or approval of any other Governmental Entity identified in Section 3.3
of the Company Disclosure Letter, in each case as required by applicable Laws,
(b) the filing of the Certificate of Merger with the Secretary of State of
Delaware pursuant to the Delaware Law and of appropriate documents with relevant
authorities of other states in which Company is qualified to do business to
reflect such Certificate of Merger filing, and (c) any other third party
approvals as are reflected in Section 3.3 of the Company Disclosure Letter,
including with respect to any Computer Software program and databases (other
than commercial, non-exclusive end-user licenses having a total consideration,
with respect to each license, of less than $50,000), the execution, delivery and
performance by Company of this Agreement and the transactions contemplated
hereby do not require any consents, waivers, authorizations or approvals of, or
filings with, any Governmental Entity or any other third Person except for those
that the failure to make or obtain would not reasonably be expected to have a
Material Adverse Effect on Company.
 
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3.4.  Compliance with Laws, Licenses.
 
    (a)  Company and its Subsidiaries are not in violation of any Laws, License
or Governmental Order applicable to any of the businesses in which any of
Company and its Subsidiaries is engaged except to the extent that noncompliance
would not reasonably be expected to have a Material Adverse Effect on Company
and no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand or notice has been filed or, to Company’s Knowledge, commenced,
and currently pending, against any of them alleging any failure so to comply,
except to the extent such failure would not reasonably be expected to have a
Material Adverse Effect on Company.
 
    (b)  Company and its Subsidiaries hold all permits, licenses, certificates,
variances, exemptions, orders, approvals, tariffs, rate schedules and similar
documents from Governmental Entities (collectively, “Licenses”) that are
necessary to own, lease and operate the assets and properties they currently
own, lease and operate and to conduct their respective businesses and operations
in the manner currently conducted, except where the failure to hold such
Licenses would not reasonably be expected to have a Material Adverse Effect on
Company. Section 3.4 of the Company Disclosure Letter sets forth all Licenses
issued or granted to Company or any of its Subsidiaries by the FCC (“FCC
Licenses”), all Licenses issued or granted to Company or any of its Subsidiaries
by any state public utility commission or other state commission or authority
regulating telecommunications businesses or services (“State Licenses”) and all
Licenses issued or granted to Company or any of its Subsidiaries by any local
government regulating telecommunications businesses or services or authorizing
Company or any of its Subsidiaries to place facilities within the boundary of
such local government (“Local Licenses”) and, collectively with the FCC Licenses
and the State Licenses, the “Communications Licenses”) and all other material
Licenses held by Company or its Subsidiaries, together with any pending
applications filed by Company or its Subsidiaries for Communications Licenses or
other material Licenses that would be Licenses if issued or granted or for
modification, extension or renewal of any License. Company has delivered to
Parent correct and complete copies of all Licenses (including the applications
related thereto) and all pending applications listed on Section 3.4 of the
Company Disclosure Letter.
 
    (c)  Each of Company and its Subsidiaries is in compliance in all material
respects with each Communications License. Each of Company and its Subsidiaries
is in compliance with (A) its obligations under each of the Licenses and (B) the
rules and regulations of the Governmental Entity issuing such Licenses, except
for any failures to be in compliance that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on
Company. There is not pending or, to the Knowledge of Company, threatened in
writing before the FCC or any other Governmental Entity any material proceeding,
notice of violation, order of forfeiture or complaint or investigation against
Company or any of its Subsidiaries relating to any of the Licenses, except, in
the case of Licenses other than Communications Licenses, for any of the
foregoing that would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on Company. As of the date of
this Agreement, Company has received no written notice, and, as to any
Communications License, has no Knowledge, that any event has occurred with
respect to any such License or application that would permit the revocation,
termination, suspension or denial thereof or would result in any impairment of
the rights of the holder thereof. No written notice has been received and to
Company’s Knowledge no investigation or review is pending or threatened in
writing by any Governmental Entity with regard to any alleged violation by
Company or any of its Subsidiaries of any License or any alleged failure by
Company or any of its Subsidiaries to have any Licenses. The actions of the
applicable Governmental Entities granting all Licenses have not been reversed,
stayed, enjoined, annulled or suspended, and there is not pending or, to the
Knowledge of Company, threatened in writing, any material application, petition,
objection or other pleading with the FCC or any other Governmental Entity that
challenges or questions the validity of or any rights of the holder under any
License, except, in the case of Licenses other than Communications Licenses, for
any of the foregoing that would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on Company.
 
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3.5.  Customers. Listed in Section 3.5 of the Company Disclosure Letter are the
names and addresses of the 50 most significant separate customer billing
accounts (by revenue) of Company and its Subsidiaries for the twelve-month
period ended June 30, 2005 and the amount for which each such customer was
invoiced during such period. As of the date of this Agreement, Company has not
received any written notice nor does it have any Knowledge that any of the
above-listed significant customers of Company or any of its Subsidiaries has
ceased, or will cease, to use the products, equipment, goods or services of
Company or any of its Subsidiaries, or has substantially reduced or will
substantially reduce, the use of such products, equipment, goods or services at
any time.
 
3.6.  Securities. To the Knowledge of Company, the outstanding shares of Company
were issued in accordance with the registration or qualification provisions of
the Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom.
 
3.7.  Brokers’ Fees. Except for fees payable to Breckenridge Securities Corp.
and The Breckenridge Group, Inc. as set forth in the Company Disclosure Letter,
neither Company nor its Subsidiaries has any Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
 
3.8.  Title to Assets. Company and its Subsidiaries have good and marketable
title to, or a valid leasehold interest in, the properties and tangible assets
used by them, located on their premises or shown on the Most Recent Balance
Sheet or acquired after the date thereof, free and clear of all Security
Interests, except for (i) properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet, (ii)
Security Interests disclosed in Section 3.8 of the Company Disclosure Letter,
(iii) Security Interests or imperfections of title that are not, individually,
material in character, amount or extent and that do not, individually or in the
aggregate, materially detract from the value or materially interfere with the
present or presently contemplated use by Company of the assets subject thereto
or affected thereby, (iv) Security Interests arising under conditional sale or
title retention agreements, real property leases, equipment leases or lease
purchase agreements that are disclosed in Section 3.8 of the Company Disclosure
Letter, (v) Security Interests arising in the Ordinary Course of Business
(including, but not limited to, Liens for Taxes or governmental charges or
levies, Security Interests of mechanics, carriers, workmen and repairmen,
Security Interests incurred in connection with workmen’s compensation,
unemployment insurance, social security and other like laws) for amounts that
are not delinquent, except such Security Interests as are being contested in
good faith, and (vi) Security Interests or imperfections of title that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company.
 
3.9.  Subsidiaries. Section 3.9 of the Company Disclosure Letter sets forth for
each Subsidiary of Company (i) its name and jurisdiction of incorporation, (ii)
the number of shares of authorized capital stock of each class of its capital
stock, (iii) the number of issued and outstanding shares of each class of its
capital stock, the names of the holders thereof, and the number of shares held
by each such holder, and (iv) the number of shares of its capital stock held in
treasury. All of the issued and outstanding shares of capital stock of each
Subsidiary of Company have been duly authorized and are validly issued, fully
paid and nonassessable. All of the outstanding shares of each Subsidiary of
Company is free and clear of any restrictions on transfer (other than generally
applicable restrictions under the Securities Act and state securities laws),
Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims and demands. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could require any
of Company and its Subsidiaries to sell, transfer or otherwise dispose of any
capital stock, of any of its Subsidiaries or that could require any Subsidiary
of Company to issue, sell or otherwise cause to become outstanding any of its
own capital stock. There are no outstanding stock appreciation, phantom stock,
profit participation or similar rights with respect to any Subsidiary of
Company. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of any capital stock of any Subsidiary
of Company. None of Company and its Subsidiaries controls directly or indirectly
or has any direct or indirect equity participation in any corporation,
partnership, trust or other business association, which is not a Subsidiary of
Company.
 
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3.10.  Financial Statements.
 
Company has furnished to Parent prior to the date of this Agreement audited
consolidated balance sheets and statements of income, changes in stockholders’
equity, and cash flow as of, and for the fiscal years ended, December 31, 2002,
December 31, 2003 and December 31, 2004 (the “Most Recent Fiscal Year End”) for
Company and its Subsidiaries, together with the reports of Company’s independent
auditors thereon, and the unaudited consolidated balance sheet and statements of
income, changes in stockholders’ equity, and cash flow as of, and for the fiscal
quarter ended, June 30, 2005 (the “Most Recent Financial Statements”). Such
financial statements so furnished and the subsequent unaudited quarterly
financial statements that may be delivered to Parent as provided in this
Agreement are collectively the “Financial Statements.” The Financial Statements
(including the notes thereto) present fairly (or will present fairly, in the
case of those furnished after the date hereof) the financial condition of
Company and its Subsidiaries as of their respective dates and the results of
operations of Company and its Subsidiaries for their respective periods
(subject, in the case of the unaudited statements, to notes and normal year-end
audit adjustments that will not be material in amount or effect), in each case
in accordance with GAAP applied on a consistent basis throughout the periods
covered thereby.
 
3.11.  Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent
Fiscal Year End, Company and its Subsidiaries have conducted their businesses
only in, and have not engaged in any material transaction other than in
accordance with, the Ordinary Course of Business of Company and its
Subsidiaries. Since the Most Recent Fiscal Year End and prior to the date
hereof, there has not been any Material Adverse Effect on Company, provided,
however, that, any damage to properties, service interruptions, loss of
customers, additional operating and other costs and other adverse consequences
resulting from Hurricanes Katrina and Rita, as and to the extent described in
the Section 3.11(m) of the Company Disclosure Letter under the heading
“Katrina/Rita Impact,” shall not be deemed to be a Material Adverse Effect.
Since the Most Recent Fiscal Year End and prior to the date hereof:
 
     (a)  none of Company and its Subsidiaries has sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than in the Ordinary
Course of Business;
 
     (b)  none of Company and its Subsidiaries has entered into any agreement,
contract, lease or license (or series of related agreements, contracts, leases
and licenses with the same other party or Affiliates of such other party) either
involving more than $250,000 or other than in the Ordinary Course of Business;
 
     (c)  no party (including any of Company and its Subsidiaries) has
accelerated, terminated, modified or cancelled any agreement, contract, lease or
license (or series of related agreements, contracts, leases and licenses with
the same other party or Affiliates of such other party) involving more than
$250,000 to which any of Company and its Subsidiaries is a party or by which any
of them is bound;
 
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     (d)  none of Company and its Subsidiaries has made any capital expenditure
(or series of related capital expenditures) either involving more than $250,000
or other than in the Ordinary Course of Business;
 
     (e)  none of Company and its Subsidiaries has made any capital investment
in, any loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans or acquisitions with the
same other party or Affiliates of such other party) either involving more than
$50,000 or other than in the Ordinary Course of Business;
 
     (f)  none of Company and its Subsidiaries has issued any note, bond or
other debt security or created, incurred, assumed or guaranteed any indebtedness
for borrowed money or capitalized lease obligation either involving more than
$50,000 singly or $250,000 in the aggregate;
 
     (g)  none of Company and its Subsidiaries has delayed or postponed the
payment of accounts payable or other Liabilities other than in the Ordinary
Course of Business;
 
     (h)  none of Company and its Subsidiaries has cancelled, compromised,
waived or released any right or claim (or series of related rights and claims)
either involving more than $50,000 or other than in the Ordinary Course of
Business;
 
     (i)  none of Company and its Subsidiaries has granted any license or
sublicense of any rights under or with respect to any Intellectual Property;
 
     (j)  other than as contemplated by this Agreement, there has been no change
made or authorized in the charter or bylaws of any of Company and its
Subsidiaries;
 
     (k)  none of Company and its Subsidiaries has issued, sold or otherwise
disposed of any of its capital stock, or granted any options, warrants or other
rights to purchase or obtain (including upon conversion, exchange or exercise)
any of its capital stock except for the issuance of shares of Common Stock upon
exercise of Employee Stock Options outstanding as of the Most Recent Fiscal Year
End in accordance with their terms;
 
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     (l)  none of Company and its Subsidiaries has declared, set aside or paid
any dividend or made any distribution with respect to its capital stock (whether
in cash, property, stock or any combination thereof) or redeemed, purchased or
otherwise acquired any of its capital stock;
 
     (m)  none of Company and its Subsidiaries has experienced any damage,
destruction or loss (whether or not covered by insurance) to its property that
could reasonably be expected to have a Material Adverse Effect on Company;
 
     (n)  none of Company and its Subsidiaries (x) has made any loan or advance
to, or entered into any other transaction with, any of its directors, officers
or stockholders, or (y) made any loans or advances to, or entered into any other
transactions with, any of its employees that were in the aggregate as to an
employee in excess of $10,000 at any one time outstanding, other than, in the
case of transactions with officers or employees (including stockholders in their
capacity as officers or employees) referenced in either of clause (x) or (y),
employment arrangements in the Ordinary Course of Business;
 
     (o)  none of Company and its Subsidiaries has entered into any employment
contract or collective bargaining agreement, written or oral, or modified the
terms of any such existing contract or agreement;
 
     (p)  none of Company and its Subsidiaries has granted any increase in the
base compensation of any of its directors or officers or, other than in the
Ordinary Course of Business, any of its employees;
 
     (q)  none of Company and its Subsidiaries has adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance or other plan,
contract or commitment for the benefit of any of its directors, officers or
employees (or taken any such action with respect to any other Employee Benefit
Plan);
 
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     (r)  none of Company and its Subsidiaries has made any other change in
employment terms for any of its directors or officers;
 
     (s)  none of Company and its Subsidiaries has made or pledged to make any
charitable or other capital contribution other than in the Ordinary Course of
Business; and
 
     (t)  none of Company and its Subsidiaries has committed to any of the
foregoing.
 
3.12.  Undisclosed Liabilities. There are no liabilities or obligations of
Company or any Subsidiary of Company, whether or not accrued, contingent or
otherwise and whether or not required to be disclosed, nor any other facts or
circumstances that would reasonably be expected to result in any liabilities or
obligations of Company or any of its Subsidiaries, other than:
 
     (a)  liabilities or obligations to the extent (i) reflected on the Most
Recent Balance Sheet or (ii) readily apparent in the notes thereto;
 
     (b)  liabilities or obligations incurred in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet (none of which results from,
arises out of, relates to, is in the nature of or was caused by any breach of
contract, breach of warranty, tort, infringement or violation of law);
 
     (c)  liabilities or obligations under this Agreement or in the Interim
Agreement;
 
     (d)  performance obligations under contracts required in accordance with
their terms, or performance obligations to the extent required under applicable
Laws, in each case to the extent arising after the date hereof; and
 
     (e)  liabilities or obligations that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on
Company.
 
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3.13.  Antitakeover Statutes. No anti-takeover or similar statute or regulation
under Delaware Law applies to any of the transactions contemplated by this
Agreement. No other “control share acquisition,” “fair price,” “moratorium” or
other similar anti-takeover laws or regulations enacted under Delaware Law or
under any other laws of the State of Delaware or under any laws of the State of
Florida apply to this Agreement or any of the transactions contemplated hereby.
Without limitation of the foregoing, the business combination restrictions of
Section 203 of the Delaware Law are inapplicable to the Merger, this Agreement
or the other transactions contemplated by this Agreement and no other state
takeover statute or similar statute or regulation is or purports to be
applicable to the Merger, this Agreement or the transactions contemplated
hereby.
 
3.14.  Tax Matters.
 
     (a)  Each of Company and its Subsidiaries has filed all Tax Returns that it
was required to file, except, in the case of Tax Returns other than federal or
state income, sales and use Tax Returns, where failure to file such Return would
not reasonably be expected to have a Material Adverse Effect on Company. All
such Tax Returns were correct and complete in all material respects. All Taxes
owed by any of Company and its Subsidiaries (whether or not shown on any Tax
Return) have been paid, except where failure to pay such Taxes would not
reasonably be expected to have a Material Adverse Effect on Company. None of
Company and its Subsidiaries currently is the beneficiary of any extension of
time within which to file any Tax Return. No claim has been made in the last 5
years, by a Governmental Entity in a jurisdiction where any of Company and its
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. There are no Security Interests on any of the assets of
any of Company and its Subsidiaries that arose in connection with any failure
(or alleged failure) to pay any Tax, except for (i) Liens for current Taxes not
yet due and (ii) Liens arising in connection with any failure or alleged failure
that is being contested in good faith by appropriate proceedings and are set
forth in Section 3.14 of the Company Disclosure Letter.
 
     (b)  Each of Company and its Subsidiaries has, in all material respects,
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid, or owing to any employee, independent contractor,
creditor, stockholder or other third party.
 
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     (c)  There is no dispute or claim concerning any Liability for any Tax of
any of Company and its Subsidiaries either (A) claimed or raised by any
Governmental Entity in writing received by Company or any of its Subsidiaries or
(B) as to which any of the directors and officers (and employees responsible for
Tax matters) of Company and its Subsidiaries has Knowledge based on personal
contact with any agent of such Governmental Entity. Section 3.14 of the Company
Disclosure Letter lists all federal, state and foreign income Tax Returns filed
with respect to any of Company and its Subsidiaries for taxable periods ended on
or after December 31, 2002, indicates those Tax Returns that have been audited
and indicates those Tax Returns that currently are being audited. Company has
delivered to Parent correct and complete copies of all federal income Tax
Returns, examination reports and statements of deficiencies assessed against or
agreed to by any of Company and its Subsidiaries since December 31, 2002.
 
     (d)  None of Company and its Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency, which waiver or extension is currently in
effect, in each case with respect to any taxable period that remains open.
 
     (e)  None of Company and its Subsidiaries has made any payments, is
obligated to make any payments or is a party to any agreement that could
obligate it to make any payments that will not be deductible under Code Section
280G, in part, as a result of the transactions contemplated by this Agreement.
None of Company and its Subsidiaries has been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). Each of Company
and its Subsidiaries 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 Code Section 6662. None of Company and
its Subsidiaries is a party to any Tax allocation or sharing agreement. None of
Company and its Subsidiaries (A) has been a member of an Affiliated Group filing
a consolidated federal income Tax Return (other than a group the common parent
of which was Company) or (B) has any Liability for the Taxes of any Person
(other than any of Company and its Subsidiaries) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise.
 
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3.15.  Real Property.
 
    (a)  Neither Company nor any of its Subsidiaries owns any real property.
 
    (b)  Section 3.15 of the Company Disclosure Letter lists and describes
briefly all real property leased or subleased to any of Company and its
Subsidiaries. Company has delivered to Parent correct and complete copies of the
leases and subleases with respect to the real property listed in Section 3.15 of
the Company Disclosure Letter. With respect to each lease and sublease listed in
Section 3.15 of the Company Disclosure Letter and, other than with respect to
the Main Leases, except as would not reasonably be expected to have a Material
Adverse Effect on Company:
 
        (1)  the lease or sublease is legal, valid, binding, enforceable and in
full force and effect;
 
        (2)  the lease or sublease will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby;
 
        (3)  no party to the lease or sublease is in breach or default, and no
event has occurred that, with notice or lapse of time, would constitute a breach
or default or permit termination, modification or acceleration thereunder,
except for any such breach or default as would not reasonably be expected to
have a Material Adverse Effect on Company;
 
        (4)  no party to the lease or sublease has repudiated any provision
thereof;
 
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        (5)  there are no disputes, oral agreements or forbearance programs in
effect as to the lease or sublease;
 
        (6)  with respect to each sublease, to the Knowledge of Company, the
representations and warranties set forth in subsections (1) through (5) above
are true and correct with respect to the underlying lease;
 
        (7)  none of Company and its Subsidiaries has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold
or subleasehold;
 
        (8)  all facilities leased or subleased thereunder have received all
approvals of Governmental Entities (including Licenses) required in connection
with the operation thereof required to be obtained by Company or any of its
Subsidiaries and have been operated and maintained by Company and its
Subsidiaries in accordance with all Laws, except in each case (including the
Main Leases) where failure to receive such approval or so operate and maintain
would not reasonably be expected to have a Material Adverse Effect on Company;
 
        (9)  all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities; and
 
        (10)  to the Knowledge of Company, there are no restrictions that impair
the current use or occupancy of the property that is subject to the lease.
 
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3.16.  Intellectual Property.
 
    (a)  Set forth in Section 3.16 of the Company Disclosure Letter is a
complete and correct list of all material patents, patent applications, and all
registrations or applications for registration of trademarks, servicemarks,
copyrights and mask works owned or used by Company or its Subsidiaries. With
respect to all Intellectual Property owned or used by Company or its
Subsidiaries, except as would not reasonably be expected to have a Material
Adverse Effect on Company, (A) Company and/or its Subsidiaries own or have the
right to use all of such Intellectual Property free and clear of any Security
Interest, license or other restriction, other than commercial, non-exclusive
end-user licenses having a total consideration, with respect to each license, of
less than $50,000; (B) no proceedings have been instituted, are pending or, to
the Knowledge of Company, are threatened in writing that challenge the rights of
Company and/or its Subsidiaries, in respect of such Intellectual Property or the
validity thereof and, to the Knowledge of Company, there is no basis for any
such proceedings; (C) none of such Intellectual Property violates any Laws, or
has at any time infringed on or, to the Company’s Knowledge, violated any rights
of others, or, to the Company’s Knowledge, is being infringed by others; and (D)
to the Company’s Knowledge, none of such Intellectual Property is subject to any
outstanding Governmental Order except for rulings generated in the ordinary
course of ex parte prosecution of applications for patents or for registration
of trademarks, servicemarks, copyrights or mask works.
 
    (b)  Company and its Subsidiaries own or have the right to use pursuant to
license, sublicense, agreement or permission all Intellectual Property necessary
for the operation of the businesses of Company and its Subsidiaries as presently
conducted. Each item of Intellectual Property owned or used by any of Company
and its Subsidiaries immediately prior to the Closing hereunder will be owned or
available for use by the Surviving Corporation or its Subsidiary, on
substantially identical terms and conditions immediately subsequent to the
Closing hereunder, except as such non-ownership or unavailability or change in
terms would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Company. Each of Company and its Subsidiaries
has taken all necessary action to maintain and protect each item of Intellectual
Property that it owns or uses, except where failure to take such action would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company. None of Company and its Subsidiaries has any
obligation to indemnify any Person for or against any interference,
infringement, misappropriation or other conflict with respect to any item
included in such Intellectual Property owned by Company or any of its
Subsidiaries.
 
    (c)  Except where failure so to operate and perform would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Company, the IT Assets of Company and its Subsidiaries operate and perform in
accordance with their documentation and functional specifications and otherwise
as required by Company and its Subsidiaries for the operation of their
respective businesses, and, except as the result of such malfunction or failure
did not have a Material Adverse Effect on Company at the time, have not
malfunctioned or failed within the three (3) year period immediately preceding
the date of this Agreement. To the Knowledge of Company, no Person has gained
unauthorized access to such IT Assets. Company and its Subsidiaries have
implemented and maintained for the three (3) year period immediately preceding
the date of this Agreement reasonable and sufficient backup and disaster
recovery technology consistent with industry practices.
 
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As used in this Agreement,
 
            (1)  “Computer Software” means all computer software and databases
(including source code, object code, and all related documentation).
 
            (2)  “IT Assets” means computers, Computer Software, firmware,
middleware, servers, workstations, routers, hubs, switches, data communications
lines, and all other information technology equipment and elements, and all
associated documentation.
 
3.17.  Tangible Assets. Company and its Subsidiaries own or lease all buildings,
machinery, equipment and other tangible assets necessary for the conduct of
their businesses as presently conducted. Except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Company, each such tangible asset is free from material defects (patent and
latent), has been maintained in accordance with normal industry practice, is in
good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used.
 
3.18.  Contracts. Section 3.18 of the Company Disclosure Letter lists the
following contracts and other agreements to which any of Company and its
Subsidiaries is a party or by which its assets are bound, in each case as of the
date of this Agreement (each contract or other agreement required to be so
listed, a “Material Contract”):
 
    (a)  any agreement (or group of related agreements with the same other party
or Affiliates of such other party) for the lease of personal property to or from
any Person providing for annual lease payments in excess of $50,000 per annum;
 
    (b)  any agreement (or group of related agreements with the same other party
or Affiliates of such other party) for the purchase of raw materials,
commodities, supplies, products or other personal property, or for the receipt
of services, the performance of which will extend over a period of more than one
year or involve annual consideration in excess of $250,000;
 
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    (c)  any agreement (or group of related agreements with the same other party
or Affiliates of such other party) for the sale of raw materials, commodities,
supplies, products or other personal property, or for the furnishing of
services, that involves annual consideration in excess of $250,000;
 
    (d)  any agreement concerning a partnership or joint venture;
 
    (e)  any agreement (or group of related agreements) under which it has
created, incurred, assumed or guaranteed any indebtedness for borrowed money, or
any capitalized lease obligation, in excess of $50,000 or under which it has
imposed a Security Interest on any of its assets, tangible or intangible;
 
    (f)  any agreement limiting the solicitation or hiring by Company or its
Subsidiaries of employees or agents of, or the pursuit or consummation by
Company or its Subsidiaries of investments in, or transactions with, any other
Person or otherwise concerning competition or noncompetition by Company or its
Subsidiaries;
 
    (g)  any agreement with any of the Stockholders and their Affiliates (other
than Company and its Subsidiaries);
 
    (h)  any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance or other plan or arrangement for the benefit of
its current or former directors, officers or employees;
 
    (i)  any collective bargaining agreement;
 
    (j)  any agreement for the employment of any individual on a full-time,
part-time, consulting or other basis providing annual compensation in excess of
$250,000 or providing severance benefits;
 
    (k)  any agreement under which Company or its Subsidiaries (x) has made any
loan or advance to any of its directors, officers or stockholders, or (y) has
made any loans or advances to any of its employees that were in the aggregate as
to an employee in excess of $10,000 at any one time outstanding;
 
    (l)  any agreement under which Company or its Subsidiaries would be
required, by its terms, to pay in excess of $250,000 to terminate the agreement;
and
 
    (m)  any other agreement (or group of related agreements with the same other
party or Affiliates of such other party) the performance of which involves
annual consideration in excess of $250,000.
 
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Company has made available to Parent a correct and complete copy of each written
agreement listed in Section 3.18 of the Company Disclosure Letter (as amended to
date) and a written summary setting forth the terms and conditions of each oral
agreement referred to in Section 3.18 of the Company Disclosure Letter. Except
as the failure of this representation and warranty to be true and correct,
individually or in the aggregate as to all such agreements, would not reasonably
be expected to have a Material Adverse Effect, with respect to each such
agreement, to Company’s Knowledge: (A) the agreement is legal, valid, binding,
enforceable and in full force and effect; (B) the agreement will continue to be
legal, valid, binding, enforceable and in full force and effect on substantially
identical terms following the consummation of the transactions contemplated
hereby; (C) no party is in material breach or material default, and no event has
occurred that with notice or lapse of time would constitute a material breach or
material default, or permit termination, modification or acceleration under the
agreement; and (D) no party has repudiated any material provision of the
agreement.
 
3.19.  Notes and Accounts Receivable. Listed in Section 3.19 of the Company
Disclosure Letter are notes or accounts receivable of Company or any of its
Subsidiaries in excess of $50,000 as of the date of this Agreement.
 
3.20.  Powers of Attorney. There are no outstanding powers of attorney executed
on behalf of any of Company and its Subsidiaries.
 
3.21.  Insurance. Section 3.21 of the Company Disclosure Letter sets forth the
following information with respect to each current insurance policy (including
policies providing property, casualty, liability and workers’ compensation
coverage and bond and surety arrangements) to which any of Company and its
Subsidiaries is a party, a named insured or otherwise the beneficiary of
coverage:
 
    (a)  the name, address and telephone number of the agent;
 
    (b)  the name of the insurer, the name of the policyholder, and the name of
each covered insured;
 
    (c)  the policy number and the period of coverage;
 
    (d)  the scope (including an indication of whether the coverage was on a
claims made, occurrence or other basis) and amount (including a description of
how deductibles and ceilings are calculated and operate) of coverage; and
 
    (e)  a description of any retroactive premium adjustments or other
loss-sharing arrangements.
 
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With respect to each such insurance policy, to Company’s Knowledge: (A) the
policy is legal, valid, binding, enforceable and in full force and effect; (B)
the Policy will continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither any of Company and its
Subsidiaries nor any other party to the policy is in breach or default
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred that, with notice or the lapse of time, would
constitute such a breach or default, or permit termination, modification or
acceleration under the policy; and (D) no party to the policy has repudiated any
provision thereof or otherwise indicated that any coverage under the policy
would be reduced or not available, for any reason whatsoever. Each of Company
and its Subsidiaries has been covered during the past 5 years by insurance in
scope and amount customary and reasonable for the businesses in which it has
engaged during the aforementioned period. Neither Company nor any of its
Subsidiaries has maintained any self-insurance arrangements during the past 5
years.
 
3.22.  Litigation. Section 3.22 of the Company Disclosure Letter sets forth each
instance in which any of Company and its Subsidiaries is, as of the date of this
Agreement, (i) subject to any outstanding Governmental Order or (ii) a party or,
to the Knowledge of Company, threatened to be made a party to any action, suit,
proceeding, hearing or investigation of, in or before, any Governmental Entity
or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator or mediator. There are no (i)
civil, criminal or administrative actions, suits, claims, hearings,
arbitrations, investigations or proceedings pending or, to Company’s Knowledge,
threatened against Company or any of its Subsidiaries or (ii) litigations,
arbitrations, investigations or other proceedings, or Governmental Orders
relating thereto, pending or, to Company’s Knowledge, threatened against Company
or any of its Subsidiaries before any Governmental Entity, including the FCC,
except in the case of either clause (i) or (ii), for those that would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on Company.
 
3.23.  Employees. To the Knowledge of Company, there is no organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of any of Company and its Subsidiaries. None of Company and
its Subsidiaries is a party to or bound by any collective bargaining agreement,
nor has any of them experienced any strikes, material grievances, claims of
unfair labor practices or other collective bargaining disputes since January 1,
2003. None of Company and its Subsidiaries has committed any unfair labor
practice, except any such as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on Company.
 
3.24.  Employee Benefits.
 
    (a)  Section 3.24 of the Company Disclosure Letter lists each Employee
Benefit Plan that any of Company and its Subsidiaries maintains or to which any
of Company and its Subsidiaries contributes or has any obligation to contribute.
 
        (1)  To the Knowledge of Company, each such Employee Benefit Plan (and
each related trust, insurance contract or fund) has been maintained, funded and
administered in all material respects in accordance with the terms of such
Employee Benefit Plan and complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code and other
applicable laws.
 
        (2)  To the Knowledge of Company, all material required reports and
descriptions (including annual reports (IRS Form 5500), summary annual reports,
and summary plan descriptions) have been timely filed and/or distributed in
accordance with the applicable requirements of ERISA and the Code with respect
to each such Employee Benefit Plan. To the Knowledge of Company, the
requirements of COBRA have been met in all material respects with respect to
each such Employee Benefit Plan that is an Employee Welfare Benefit Plan subject
to COBRA.
 
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        (3)  All material contributions (including all employer contributions
and employee salary reduction contributions) that are due have been made within
the time period prescribed by ERISA to each such Employee Benefit Plan that is
an Employee Pension Benefit Plan and all material contributions for any period
ending on or before the Closing Date that are not yet due have been made to each
such Employee Pension Benefit Plan or accrued in accordance with the past custom
and practice of Company and its Subsidiaries. All premiums or other payments for
all periods ending on or before the Closing Date that are due on or before the
Closing Date have been paid with respect to each such Employee Benefit Plan that
is an Employee Welfare Benefit Plan.
 
        (4)  Each such Employee Benefit Plan that is intended to meet the
requirements of a “qualified plan” under Code Section 401(a) has received a
determination from the Internal Revenue Service that such Employee Benefit Plan
is so qualified, and to the Knowledge of Company nothing has occurred since the
date of such determination that could adversely affect the qualified status of
any such Employee Benefit Plan.
 
        (5)  There is no Employee Benefit Plan that is an Employee Pension
Benefit Plan.
 
        (6)  Company has delivered to Parent correct and complete copies of the
plan documents and summary plan descriptions, the most recent determination
letter received from the Internal Revenue Service, the most recent annual report
(IRS Form 5500, with all applicable attachments), and all related trust
agreements, insurance contracts, and other funding arrangements that implement
each such Employee Benefit Plan.
 
    (b)  With respect to each Employee Benefit Plan that any of Company, its
Subsidiaries, and any ERISA Affiliate maintains or to which any of them
contributes or has any obligation to contribute or has any liability:
 
        (1)  To the Knowledge of Company, there have been no Prohibited
Transactions with respect to any such Employee Benefit Plan. No Fiduciary has
any material Liability for breach of fiduciary duty or any other failure to act
or comply in connection with the administration or investment of the assets of
any such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims for benefits) is
pending or to the Knowledge of Company is threatened.
 
        (2)  None of Company and its Subsidiaries has incurred any material
Liability under COBRA with respect to any such Employee Benefit Plan that is an
Employee Welfare Benefit Plan.
 
     (c)  None of Company, its Subsidiaries and any ERISA Affiliate contributes
to, has any obligation to contribute to, or has any Liability (including
withdrawal liability as defined in ERISA Section 4201) under or with respect to
any Multiemployer Plan.
 
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    (d)  Section 3.24(d) of the Company Disclosure Letter lists each Employee
Welfare Benefit Plan that any of Company and its Subsidiaries maintains, to
which any of Company and its Subsidiaries contributes or has any obligation to
contribute, and describes any Liability or potential Liability that may be
incurred by or imposed on Company or any of its Subsidiaries with respect to
medical, health or life insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses or their dependents (other
than with respect to claims incurred prior to an employee’s retirement or other
termination or in accordance with COBRA or similar statutes).
 
3.25.  Guaranties. None of Company and its Subsidiaries is a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person.
 
3.26.  Environmental, Health and Safety Matters.
 
    (a)  Except as would not reasonably be expected to have a Material Adverse
Effect on Company, the properties and facilities currently occupied by Company
and its Subsidiaries are not being used by Company or its Subsidiaries to make,
store, handle, treat, dispose, generate, or transport hazardous substances in
violation of any Environmental, Health and Safety Requirement.
 
    (b)  To the Knowledge of Company, hazardous substances have never been made,
stored, handled, treated, disposed of, generated, or transported on or from the
properties and facilities occupied by Company and its Subsidiaries during the
term of such occupancy, except in accordance with Environmental, Health and
Safety Requirements and except as would not reasonably be expected to have a
Material Adverse Effect on Company.
 
    (c)  The properties, facilities and operations of Company and its
Subsidiaries and their respective predecessors and Affiliates have complied and
are in compliance in all material respects with all applicable Environmental,
Health and Safety Requirements. Without limiting the generality of the
foregoing, each of Company, its Subsidiaries and their respective Affiliates has
obtained and complied with, and is in compliance with, all permits, licenses and
other authorizations that are required pursuant to Environmental, Health and
Safety Requirements for the occupation of its facilities and the operation of
its business, except for those the failure of which to obtain or comply or be in
compliance with would not reasonably be expected to result in a Material Adverse
Effect on Company. A list of all such permits, licenses and other authorizations
is set forth in Section 3.26 of the Company Disclosure Letter.
 
    (d)  To the Knowledge of Company, none of the properties, facilities or
operations of Company and its Subsidiaries is subject to any judicial or
administrative proceedings alleging the violation of any applicable
Environmental, Health and Safety Requirements.
 
    (e)  To the Knowledge of Company, none of the properties, facilities or
operations of Company and its Subsidiaries is the subject of federal, state or
local investigation evaluating whether any remedial action is needed to respond
to a release of any hazardous or toxic waste, substance or constituent, any
petroleum or petroleum product or any other hazardous, illegal or unlawful
substance into the environment.
 
    (f)  Neither Company nor its Subsidiaries has filed any notice under any
Environmental, Health and Safety Requirements indicating past or present
treatment or disposal of a hazardous waste, hazardous substance or any petroleum
or petroleum product, or reporting a spill or release of a hazardous or toxic
waste, substance or constituent, any petroleum or petroleum product or any other
substance into the environment.
 
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    (g)  None of Company and its Subsidiaries have within the past year received
written notice nor are they aware of any Liability of any of Company and its
Subsidiaries in connection with any release of any hazardous or toxic waste,
substance or constituent, any petroleum or petroleum product or any other
substance into the environment.
 
3.27.  Certain Business Relationships with Company and its Subsidiaries. None of
the Stockholders and their Affiliates has been involved in any business
arrangement or relationship with any of Company and its Subsidiaries within the
past 12 months, and none of the Company’s employees, the Stockholders and their
respective Affiliates owns any asset, tangible or intangible, that is used in
the business of any of Company and its Subsidiaries.
 
3.28.  Accounts; Lockboxes; Safe Deposit Boxes. Section 3.28 of the Company
Disclosure Letter contains a true and complete list of (i) the names of each
bank, savings and loan association, securities or commodities broker or other
financial institution in which any of Company and its Subsidiaries has an
account, including cash contribution accounts, and the names of all persons
authorized to draw thereon or have access thereto and (ii) the location of all
lockboxes and safe deposit boxes of Company or its Subsidiaries and the names of
all persons authorized to draw thereon or have access thereto. The Stockholders
and their Affiliates have not commingled monies or accounts of Company or its
Subsidiaries with other monies or accounts of the Stockholders and their
Affiliates or relating to their other businesses nor have the Stockholders or
their Affiliates transferred monies or accounts of Company or its Subsidiaries
other than to an account of Company or its Subsidiaries. At the Effective Time,
all monies and accounts of Company and its Subsidiaries shall be held by, and be
accessible only to, Company or its Subsidiaries.
 
3.29.  Accounting Matters. Listed in Section 3.29 of the Company Disclosure
Letter are all predecessor companies of Company, the names of any Persons from
which, since January 1, 1999, Company previously acquired material properties or
assets in a single transaction or series of related transactions with a single
party in excess of $2,000,000, and the changes in Company’s capital structure
and capital stock ownership since October 1, 2003.
 
3.30.  PUHCA.  Company, together with its affiliates (as defined in
Section 2(a)(11)(B) of the Public Utility Holding Company Act of 1935, as
amended (“PUHCA”) (15 U.S.C. § 79b(a)(11)(B))), is engaged exclusively in the
business of providing telecommunications services, information services, other
services or products subject to the jurisdiction of the FCC or products or
services that are related or incidental to the provision of any of the foregoing
products or services, within the meaning of Section 34(a)(1) of PUHCA (15 U.S.C.
§ 79z-5c(a)(1)) and the rules and regulations thereunder.
 
3.31.  Investment Company Act. Neither the Company nor any Subsidiary is an
“investment company” as defined in the Investment Company Act of 1940, as
amended.
 
3.32.  Disclosure. The representations and warranties contained in this ARTICLE
III do not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained in this ARTICLE III, in
the light of the circumstances under which they are made, not misleading.
 
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ARTICLE IV  
 
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
 
Except as set forth in the disclosure letter (subject to Section 9.13(c))
delivered to Company by Parent at or prior to entering into this Agreement (the
“Parent Disclosure Letter”), Parent hereby represents and warrants to Company
that:
 
4.1.  Organization. Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has all requisite corporate or similar
power and authority to own and operate its properties and assets and to carry on
its business as presently conducted.
 
4.2.  Authorization of Transaction. Each of Parent and Merger Sub has all
requisite corporate power and authority to, and has taken all corporate action
necessary in order to, execute, deliver and perform its obligations under this
Agreement. This Agreement is a valid and binding agreement of each of Parent and
Merger Sub, enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.
 
4.3.  Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any provision of the charter or bylaws of any of Parent and its
Subsidiaries or (ii), assuming compliance with the matters referred to in the
next sentence of this Section 4.3, (A) violate any Laws or Governmental Order to
which any of Parent and its Subsidiaries is subject or (B) with or without
notice, lapse of time or both, conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
any of Parent and its Subsidiaries is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets), except, in the case of clause (ii), such
violation, breach, default, acceleration or other change that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent. Except (a) for any FCC Consent, State PUC Consent or
consent or approval of any other Governmental Entity identified in Section 3.3
of the Company Disclosure Letter or in Section 4.3 of the Parent Disclosure
Letter, in each case as required by applicable Laws, (b) as may be necessary as
a result of any facts or circumstances relating solely to Company, any of its
Subsidiaries or any holder of Company Shares, (c) for the filing of the
Certificate of Merger with the Delaware Secretary of State pursuant to the
Delaware Law and of appropriate documents with relevant authorities of other
states in which Company is qualified to do business to reflect such Certificate
of Merger filing, (d) for filings by Parent under, and compliance by Parent with
the requirements under, the Securities Exchange Act and the applicable
requirements of Nasdaq and (e) for any other third party approvals as are
reflected in Section 4.3 of the Parent Disclosure Letter, the execution,
delivery and performance by Parent and Merger Sub of this Agreement and the
transactions contemplated hereby do not require any consents, waivers,
authorizations or approvals of, or filings with, any Governmental Entity or any
other third Person, except in any case for those that the failure to make or
obtain would not be reasonably expected to have a Material Adverse Effect on
Parent.
 
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4.4.  Brokers’ Fees. Neither Parent nor Merger Sub has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which any of
Company and its Subsidiaries could become liable or obligated.
 
4.5.  Capital Resources. Parent has sufficient capital resources to pay the
Merger Consideration and shall maintain such capital resources through the
effective date of the Merger.
 

 
ARTICLE  V  
                                                 
                                                                                                                                                                      
COVENANTS
 
5.1.  Interim Operations. The Parties agree as follows with respect to the
period from and after the execution of this Agreement.
 
    (a)  Company shall not knowingly take or permit any of its Subsidiaries to
take any action or refrain from taking any action the result of which would be
reasonably and foreseeably likely to prevent the consummation of the Merger by
the Termination Date. Company covenants and agrees as to itself and its
Subsidiaries that, after the date hereof and prior to the Effective Time, unless
Parent shall otherwise approve in writing, and except as otherwise expressly
contemplated by this Agreement or the Interim Agreement or as required by
applicable Laws, the business of it and its Subsidiaries shall be conducted in
the ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use their respective reasonable best efforts to preserve
their business organizations intact, maintain existing relations and goodwill
with Governmental Entities, customers, suppliers, distributors, creditors,
lessors, employees and business associates and keep available the services of
the present employees and agents of Company and its Subsidiaries, maintain the
validity of the Communications Licenses and, except as disclosed in Section 5.1
of the Company Disclosure Letter, comply in all material respects with all
requirements of the Communications Licenses and the rules and regulations of the
FCC and State PUCs. Without limiting the generality of the foregoing and in
furtherance thereof, from the date of this Agreement until the Effective Time,
except (A) as otherwise expressly required by this Agreement or as otherwise
contemplated by the Interim Agreement or as permitted in Section 5.6(d), (B) as
Parent may approve in writing, (C) as set forth in Section 5.1(a) of the Company
Disclosure Letter or (D), in the case of any of the following clauses in this
Section 5.1(a), as may be expressly permitted by another of the following
clauses in this Section 5.1(a), the Company will not and will not permit its
Subsidiaries to:
 
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        (1)  adopt or propose any material change in its articles of
incorporation or by-laws or other applicable governing instruments or amend any
term of the Company Shares;
 
        (2)  merge or consolidate Company or any of its Subsidiaries with any
other Person, except for any such transactions among wholly owned Subsidiaries
of Company that are not obligors or guarantors of third-party indebtedness, or
adopt a plan of liquidation;
 
        (3)  acquire assets outside of the Ordinary Course of Business from any
other Person with a value or purchase price in excess of $50,000 in the
aggregate, other than acquisitions pursuant to Contracts to the extent in effect
immediately prior to the execution of this Agreement and as otherwise set forth
in Section 5.1(a)(3) of the Company Disclosure Letter, and other than capital
expenditures as permitted by Section 5.1(a)(12);
 
        (4)  (x) enter into any material line of business in any geographic area
other than the current lines of business of Company or any of its Subsidiaries,
and in the geographic areas where they are currently conducted, as of the date
hereof or (y) engage in the conduct of any business in any state that would
require the receipt or transfer of a Communications License;
 
        (5)  file for any License outside of the Ordinary Course of Business;
 
        (6)  other than as set forth in Section 5.1(a)(6) of the Company
Disclosure Letter and other than the issuance of shares of Common Stock upon
exercise of Employee Stock Options or conversion of shares of Preferred Stock
outstanding as of the date of this Agreement, issue, sell, pledge, dispose of,
grant, transfer, lease, license, guarantee, encumber, or authorize the issuance,
sale, pledge, disposition, grant, transfer, lease, license, guarantee or
encumbrance of, any shares of capital stock of Company or any of its
Subsidiaries (other than the issuance of shares by a wholly owned Subsidiary of
Company to Company or another wholly owned Subsidiary), or securities
convertible or exchangeable into or exercisable for any shares of such capital
stock, or any options, warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements, arrangements, calls,
commitments or other rights of any kind to acquire any shares of such capital
stock or such convertible or exchangeable securities;
 
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        (7)  other than (i) in connection with receivables, facilities and
securitizations as in effect on the date hereof and disclosed in the Company
Disclosure Letter and renewals thereof in the Ordinary Course of Business, (ii)
in connection with the refinancing of Company’s indebtedness under its credit
facility as in effect on the date hereof and disclosed in the Company Disclosure
Letter, (iii) Liens created or incurred to secure the purchase price of assets
acquired as permitted by Section 5.1(a)(12) and (iv) Liens described in clause
(ii), (iii), (iv), (v) or (vi) of Section 3.8, create or incur any Security
Interest on any assets of the Company or any of its Subsidiaries;
 
        (8)  other than loans and advances to employees of Company or its
Subsidiaries in the Ordinary Course of Business and not in excess of $10,000 at
any time outstanding to any employee, make any loans, advances or capital
contributions to or investments in any Person (other than Company or any direct
or indirect wholly owned Subsidiary of Company);
 
        (9)  declare, set aside or pay any dividend or distribution with respect
to Company’s capital stock (whether in cash, stock or property or any
combination thereof) or redeem, purchase or acquire any of its capital stock;
 
        (10)  reclassify, split, combine, subdivide or repurchase, redeem or
otherwise acquire, directly or indirectly, any of its capital stock or
securities convertible or exchangeable into or exercisable for any shares of its
capital stock;
 
        (11)  other than (i) in connection with receivables, facilities and
securitizations as in effect on the date hereof and disclosed in the Company
Disclosure Letter and renewals thereof in the Ordinary Course of Business, (ii)
in connection with the refinancing of Company’s indebtedness under its credit
facility as in effect on the date hereof and disclosed in the Company Disclosure
Letter, and (iii) indebtedness incurred to finance the capital expenditures
permitted by Section 5.1(a)(12) and guarantees thereof, incur any indebtedness
for borrowed money or guarantee such indebtedness of another Person, or issue or
sell any debt securities or warrants or other rights to acquire any debt
security of the Company or any of its Subsidiaries;
 
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        (12)  except for the capital expenditures set forth in Section
5.1(a)(12) of the Company Disclosure Letter and asset acquisitions otherwise
permitted by Section 5.1(a)(3) (without giving effect to the exception therein
for capital expenditures as permitted by this clause (12)), make or authorize
any capital expenditure;
 
        (13)  enter into any contract or other agreement (x) that would have
been a Material Contract as described in Section 3.18 (d), (f) or (g) had it
been entered into prior to the date of this Agreement, (y) other than in the
Ordinary Course of Business, that involves annual consideration in excess of
$50,000 or (z) that involves annual consideration in excess of $250,000 and is
not terminable by Company and its Subsidiaries without additional payment or
penalty (including by any acceleration of remaining amounts), upon not more than
90 days’ notice;
 
        (14)  make any changes with respect to accounting policies or
procedures, except as required by changes in GAAP or by applicable Laws or
except as Company, based upon the advice of its independent auditors after
consultation with Parent, determines in good faith is advisable to conform to
best accounting practices;
 
        (15)  settle any litigation or other proceedings before or threatened to
be brought before a Governmental Entity for an amount to be paid by Company or
any of its Subsidiaries in excess of $25,000 or that would be reasonably likely
to have any adverse impact on the operations of Company or any of its
Subsidiaries;
 
        (16)  other than in the Ordinary Course of Business or as disclosed in
Section 5.1(a)(16) of the Company Disclosure Letter, (i) amend or modify in any
material respect adverse to Company or its Subsidiaries, or terminate or waive
any material right or benefit of Company or its Subsidiaries under, any Material
Contract, or (ii) cancel, modify or waive any debts or claims held by it or
waive any rights;
 
        (17)  sell, lease, license or otherwise dispose of any assets of Company
or its Subsidiaries except (i) in the Ordinary Course of Business or obsolete
assets or (ii) as set forth in Section 5.1(a)(17) of the Company Disclosure
Letter;
 
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        (18)  except as (x) required pursuant to existing written, binding
agreements in effect prior to the date of this Agreement or as otherwise
required by applicable Laws, (y) set forth in Section 5.1(a)(18) of the Company
Disclosure Letter or (z) the costs and expenses of which will be a Transaction
Cost or Severance Amount, (i) enter into any commitment to provide any severance
or termination benefits to (or amend any such existing arrangement with) any
director, officer or employee of Company or any of its Subsidiaries, other than
for severance or termination benefits to employees (other than officers) in the
Ordinary Course of Business and pursuant to the terms of plans, programs or
arrangements in effect prior to the date of this Agreement and disclosed on
Section 3.18 or 3.25 of the Company Disclosure Letter, (ii) increase the
benefits payable under any existing severance or termination benefit policy or
employment agreement (other than as required to be increased pursuant to the
existing terms of any such policy or agreement or as a result of ordinary pay
raises or promotions), (iii) enter into any employment, severance, change in
control, termination, deferred compensation or other similar agreement (or amend
any such existing agreement) with any director, officer or employee of the
Company or any of its Subsidiaries other than pursuant to the terms of any plan
or agreement in effect on the date hereof and disclosed on Section 3.18 or 3.25
of the Company Disclosure Letter, (iv) establish, adopt, amend or terminate any
employee or director compensation or other benefit, employment or severance
plan, program or agreement (including Employee Benefit Plans, each, a
“Compensation Plan”), except for technical amendments in the Ordinary Course of
Business, provided that such amendments do not materially increase the cost of
such arrangements to Company, (v) increase the compensation, bonus or other
benefits of, make any new awards under any Compensation Plan to, or pay any
bonus to any director, officer, employee, consultant or independent contractor
of the Company or any of its Subsidiaries, except for (1) the payment of the
first half 2005 bonus amounts set forth in Section 5.1(a)(18) of the Company
Disclosure Letter and accrued for in the Most Recent Financial Statements by the
Company and (2) increases, new awards or payments in the Ordinary Course of
Business for employees who are not officers of Company, (vi) take any action to
fund or in any other way secure the payment of compensation or benefits under
any Compensation Plan, except as required pursuant to the terms thereof as in
effect as of the date of this Agreement, (vii) take any action to accelerate the
vesting or payment of any compensation or benefits under any Compensation Plan,
to the extent not already required in any such Compensation Plan, or (viii)
enter into any collective bargaining agreements; provided, however, that the
prohibitions contained in the foregoing clauses (i) and (v) shall not apply in
connection with newly hired or newly promoted employees, in each case to the
extent consistent with past practice;
 
        (19)  (a) take any action that may reasonably be expected to jeopardize
the validity of any of the Communications Licenses or result in the revocation,
surrender or any adverse modification of, forfeiture of, or fail to renew under
regular terms, any of the Communications Licenses, (b) fail to use commercially
reasonable efforts to prosecute with due diligence any pending applications with
respect to the Communications Licenses, including any renewals thereof, and (c)
with respect to Communications Licenses, fail to make all material filings and
reports and pay all material fees necessary or reasonably appropriate for the
continued operation of the Business, as and when such approvals, consents,
permits, licenses, filings, or reports or other authorizations are necessary or
appropriate or (d) fail to initiate appropriate steps to renew any material
Licenses held by Company or any of its Subsidiaries that are scheduled to
terminate prior to or within 60 days after the Effective Time or to prosecute
any pending applications for any material License; or
 
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        (20)  agree or commit to do any of the foregoing.
 
    (b)  Parent shall not knowingly take or permit any of its Subsidiaries to
take any action or refrain from taking any action the result of which would be
reasonably and foreseeably likely to prevent the consummation of the Merger by
the Termination Date.
 
5.2.  Filings; Other Actions; Notification.
 
    (a)  Company and Parent shall cooperate with each other and use (and shall
cause their respective Subsidiaries to use) their respective reasonable best
efforts to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable on its part under this Agreement and
applicable Laws to consummate and make effective the Merger and the other
transactions contemplated by this Agreement as soon as practicable, including
preparing and filing as promptly as practicable all documentation to effect all
necessary notices, reports and other filings (including by filing no later than
5 business days after the date of this Agreement all applications required to be
filed with the FCC; provided, however, that the failure to file within 5
business days will not constitute a breach of this Agreement) and to obtain as
promptly as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement; provided, however, that nothing in
this Section 5.2 (i) shall require, or be construed to require, Parent to take
or to refrain from taking any action, to agree to any restriction with respect
to any assets or operations of Parent or its Subsidiaries, or to cause its
Subsidiaries to do or agree to do any of the foregoing, in each case that would
take effect prior to the Effective Time, or (ii) shall require, or be construed
to require, Parent to take or to refrain from taking any action, to agree to any
restriction with respect to any assets or operations of Parent or Company or its
respective Subsidiaries, or to cause its Subsidiaries to do or agree to do any
of the foregoing, if any such action, failure to act, restriction or agreement,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on it or a Combined Material Adverse Effect. Subject to
applicable Laws relating to the exchange of information, Parent and Company
shall have the right to review in advance, and to the extent practicable each
will consult the other on, all of the information relating to Parent or Company,
as the case may be, and any of their respective Subsidiaries, that appears in
any filing made with, or written materials submitted to, any third party and/or
any Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement. To the extent permitted by law, each Party shall
provide the other with copies of all correspondence between it (or its advisors)
and any Governmental Entity relating to the transactions contemplated by this
Agreement and, to the extent reasonably practicable, all telephone calls and
meetings with a Governmental Entity regarding the transactions contemplated by
this Agreement shall include representatives of Parent and Company. In
exercising the foregoing rights, each of Company and Parent shall act reasonably
and as promptly as practicable.
 
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    (b)  To the extent permitted by law, Company and Parent each shall, upon
request by the other, furnish the other with all information concerning itself,
its Affiliates, directors, officers and stockholders and such other matters as
may be reasonably necessary or advisable in connection with any statement,
filing, notice or application made by or on behalf of Parent, Company or any of
their respective Affiliates to any third party and/or any Governmental Entity in
connection with the Merger and the transactions contemplated by this Agreement.
 
    (c)  Subject to applicable Laws and the instructions of any Governmental
Entity, Company and Parent each shall keep the other apprised of the status of
matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notices or other
communications received by Parent or Company, as the case may be, or any of its
Subsidiaries, from any third party and/or any Governmental Entity with respect
to the Merger and the other transactions contemplated by this Agreement. Company
shall give prompt notice to Parent of any change, fact or condition of which it
has Knowledge that is reasonably expected to result in a Material Adverse Effect
on Company or of any failure of any condition to Parent’s obligations to effect
the Merger. Parent shall give prompt notice to Company of any change, fact or
condition of which it has Knowledge that is reasonably expected to result in a
Material Adverse Effect on Parent or of any failure of any condition to
Company’s obligations to effect the Merger.
 
    (d)  Subject to the proviso set forth in Section 5.2(a), Parent’s and
Company’s obligations under this Section 5.2 shall include, without limitation,
the obligation to use their respective reasonable best efforts to defend any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging the consummation of the Merger or the other transactions
contemplated hereby, including using reasonable best efforts to seek to have any
stay or other injunctive relief which would prevent or materially delay or
impair the consummation of the transactions contemplated by this Agreement
entered by any court or other Governmental Entity reversed on appeal or vacated.
 
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5.3.  Company Financial Statements.
 
    (a)  As soon as reasonably practicable, but in any event within 20 days
after the end of each calendar month commencing with October 2005, Company will
deliver to Parent unaudited consolidated balance sheets of Company and its
Subsidiaries as of the end of such calendar month and as at the end of the
comparative month in the preceding year, together with unaudited summaries of
consolidated earnings of Company and its Subsidiaries for such calendar month
and for the comparative month in the preceding year. As soon as reasonably
practicable, but in any event within 45 days after the end of each fiscal
quarter of Company, commencing with the quarter ended September 30, 2005,
Company will deliver to Parent unaudited consolidated balance sheets of Company
and its Subsidiaries as at the end of such fiscal quarter and as at the end of
the comparative fiscal quarter of the preceding year, together with the
unaudited statements of consolidated income and cash flows for the fiscal
quarters then ended.
 
    (b)  Company will use its reasonable best efforts to work with Ernst & Young
LLP to deliver to Parent as promptly as practicable after the date of this
Agreement (and in any event prior to the Closing Date) the following information
with respect to each of Company and its Subsidiaries (or, in the case of clause
(B) below, with respect to each of the Subsidiaries) as of the then most recent
practicable date: (A) the amount of any net operating loss, net capital loss,
unused investment or other credit, unused foreign tax or excess charitable
contribution allocable to Company or Subsidiary; (B) the amount of any deferred
gain or loss allocable to Company or Subsidiary arising out of any Deferred
Intercompany Transaction; (C) the basis of Company or Subsidiary in its assets
and (D) the basis of the stockholder(s) of the Subsidiary in its stock (or the
amount of any Excess Loss Account).
 
5.4.  Access. Subject to confidentiality obligations and similar restrictions
that may be applicable to information furnished to Company or its Subsidiaries
by third-parties that may be in Company’s or its Subsidiaries’ possession from
time to time, from the date hereof until the Closing, Company shall (i) give
Parent and its counsel, financial advisors, auditors and other authorized
representatives (collectively, the “Parent Representatives”) reasonable access
during normal business hours to the offices, properties, books and records of
Company and its Subsidiaries, (ii) furnish to Parent and the Parent
Representatives such financial and operating data and other information as such
Persons may reasonably request and (iii) instruct its employees, counsel and
financial advisors to cooperate with Parent in Parent’s investigation of the
business of Company and its Subsidiaries; provided that any information provided
to Parent or the Parent Representatives pursuant to this Section 5.4 shall be
subject to the Confidentiality Agreement; and provided further that no
investigation pursuant to this Section 5.4 or otherwise in connection with this
Agreement and the other Transaction Agreements shall affect any representation
or warranty given by Company hereunder or by any Preferred Stockholder in any
instrument or certificate delivered pursuant to this Agreement. Any
investigation pursuant to this Section 5.4 shall be conducted in such manner as
not unreasonably to interfere with the conduct of the business of Company and
its Subsidiaries. Notwithstanding the foregoing, Parent shall not have access to
personnel records of Company and its Subsidiaries relating to individual
performance or evaluation records, medical histories or other information that,
in the Company’s good faith opinion, is sensitive or the disclosure of which
could subject Company or any of its Subsidiaries to risk of liability. From the
date hereof until the Closing, Company shall furnish and shall cause each
Company Subsidiary to furnish to Parent copies of any notices, documents,
requests, court papers or other materials received from any governmental agency
or third party with respect to the Transactions.
 
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5.5.  Director and Officer Liability. Parent shall cause the Surviving
Corporation, and the Surviving Corporation hereby agrees, to do the following:
 
    (a)  From and for six years after the Effective Time, Parent shall cause the
Surviving Corporation to, and the Surviving Corporation shall, indemnify and
hold harmless each present and former officer and director of Company and of any
Subsidiary of the Company (each an “Indemnified Person”) in respect of acts or
omissions occurring at or prior to the Effective Time to the fullest extent
permitted by Delaware Law and as provided under the Company’s certificate of
incorporation and bylaws in effect on the date hereof; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law. The Indemnified Person shall be entitled to control the
defense of any action, suit, investigation or proceeding with counsel of his or
her own choosing reasonably acceptable to the Surviving Corporation and the
Surviving Corporation shall cooperate in the defense thereof, provided that the
Surviving Corporation shall not be liable for the fees of more than one counsel
for all Indemnified Persons, other than local counsel, in any one jurisdiction,
unless a conflict of interest shall be caused thereby, and provided further that
the Surviving Corporation shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld).
 
    (b)  Any Indemnified Person wishing to claim indemnification under Section
5.5(a), upon learning of any such claim, action, suit, proceeding or
investigation that may give rise to such claim, shall promptly notify Parent
thereof, but the failure to so notify shall not relieve Parent or the Surviving
Corporation of any liability it may have to such Indemnified Person except to
the extent such failure materially and actually prejudices the indemnifying
party. In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) Parent or the
Surviving Corporation shall have the right to assume the defense thereof and
Parent shall not be liable to such Indemnified Persons for any legal expenses of
other counsel or any other expenses subsequently incurred by such Indemnified
Persons in connection with the defense thereof, except that if Parent or the
Surviving Corporation does not elect to assume such defense or counsel for the
Indemnified Persons advises that there are issues that raise conflicts of
interest between Parent or the Surviving Corporation and the Indemnified
Persons, the Indemnified Persons may retain counsel satisfactory to them, and
Parent and the Surviving Corporation shall jointly and severally be obligated to
pay all reasonable fees and expenses of such counsel for the Indemnified Persons
promptly as statements therefor are received; provided, however, that Parent and
the Surviving Corporation shall be obligated pursuant to this Section 5.5(b) to
pay for only one firm of counsel for all Indemnified Persons in any jurisdiction
unless the use of one counsel for such Indemnified Persons would present such
counsel with a conflict of interest; provided, that the fewest number of counsel
necessary to avoid conflicts of interest shall be used; (ii) the Indemnified
Persons will use their reasonable efforts to cooperate in the defense of any
such matter, and (iii) Parent and the Surviving Corporation shall not be liable
for any settlement effected without their prior written consent (such consent
not to be unreasonably withheld or delayed); and provided, further, that Parent
and the Surviving Corporation shall not have any obligation under this Agreement
to any Indemnified Person if and when a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final, that the
indemnification of such Indemnified Person in the manner contemplated hereby is
prohibited by applicable law.
 
    (c)  Prior to the Closing Date, Company shall procure a six-year “tail”
prepaid policy prior to the Effective Time on terms with respect to coverage and
amount substantially comparable to, but no less favorable to Company and the
Indemnified Persons than, those under the directors’ and officers’ liability
policy maintained by Company and in effect on the date hereof.
 
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5.6.  Employee Benefits After the Merger.
 
    (a)  Until at least June 30, 2006, Parent shall cause the Surviving
Corporation to provide those of its and its Subsidiaries’ employees who were
employed by Company or its Subsidiaries immediately prior to the Effective Time
with compensation and employee benefits at least as favorable, in the aggregate,
as the compensation and benefits provided by Company and its Subsidiaries to
such employees immediately prior to the date hereof. The preceding sentence
shall not preclude Parent or the Surviving Corporation at any time following the
Effective Time from terminating the employment of any Company employee.
 
    (b)  Parent shall, or shall cause the Surviving Corporation to, give each
Company employee full credit in respect of his or her employment with Company or
its Subsidiaries prior to the Effective Time for purposes of eligibility,
vesting, level of benefits and service under any new employee benefit plans
offered by the Surviving Corporation after the Merger (“Surviving Corporation
New Plans”) or any Parent Employee Benefit Plan in which the Company employee is
permitted to participate (to the extent that the corresponding Company Employee
Benefit Plan currently provided to Company employees gave such credit).
 
    (c)  From and after the Effective Time, Parent will, or will cause the
Surviving Corporation to, (i) cause any pre-existing conditions or limitations
and eligibility waiting periods (only to the extent such limitations or waiting
periods did not apply to the Company employees under the Company Employee
Benefit Plans) under any group health plans of Parent, or any group health plans
constituting Surviving Corporation New Plans, in which Company employees are
permitted to participate to be waived with respect to the Company employees and
their eligible dependents and (ii) give each Company employee credit toward
applicable deductibles and annual out-of-pocket limits under group health plans
of Parent or group health plans constituting Surviving Corporation New Plans for
expenses incurred under the Benefit Plans during the plan year in which such
employees and their eligible dependents are transferred to the group health
plans of Parent, or any group health plans constituting Surviving Corporation
New Plans.
 
    (d)  From and after the Effective Time, Parent will, and will cause the
Surviving Corporation to, honor, without modification, perform all acts and pay
all amounts required or due under or with respect to each Company Employee
Benefit Plan and each agreement that relates to any current or former employee
of the Company and its Subsidiaries or the terms of any such employee’s
employment or termination of employment, including, without limitation, all
employment, retention, change of control, employment protection, severance,
termination, consulting, deferred compensation, executive pension and
retirement, welfare and fringe benefit agreements, plans and programs. Without
limiting the generality of the foregoing, Parent will, and will cause the
Surviving Corporation, to administer the Company’s 2005 Bonus Plan in the manner
set forth in Section 5.6(d) of the Company Disclosure Letter.
 
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    (e)  Parent acknowledges and agrees that the consummation of the
transactions contemplated by this Agreement will constitute a “change of
control” of the Company for purposes of each Company Employee Benefit Plan and
each program, policy and agreement covering any current or former employee of
the Company and its Subsidiaries as has been specifically indicated in Section
5.6(e) of the Company Disclosure Letter to have any such “change of control”
provisions, and, accordingly agrees to, and agrees to cause the Surviving
Corporation to, honor all provisions relating to a change of control under such
Company Employee Benefit Plans, programs, policies and agreements as have been
specifically indicated in Section 5.6(e) of the Company Disclosure Letter to
have any such “change of control” provisions and pay all costs associated
therewith and specifically indicated in Section 5.6(e) of the Company Disclosure
Letter.
 
    (f)  Notwithstanding the foregoing, nothing in this Section 5.6 shall
preclude Parent from seeking to (i) modify any employment agreement with the
consent of the affected employee or employees or (ii) modify any Company
Employee Benefit Plan to the extent such modification is permitted by the terms
of such Company Employee Benefit Plan and is consistent with Section 5.6(a).
 
5.7.  Notices and Filing by Company.
 
    (a)  As promptly as practicable, but in no event more than three business
days after the date hereof, Company shall give to all holders of Company Shares
other than the Consenting Stockholders the notice (which shall be in form and
content reasonably acceptable to Parent) of the approval and adoption of this
Agreement and the Merger and appraisal rights required to be given pursuant to
the first sentence of Section 262(d) of the Delaware Law and the Secretary of
Company shall execute a written affidavit certifying to Company and Parent that
such notice has been given as so required.
 
    (b)  As promptly as practicable, but in no event more than three business
days after the Effective Time, the Surviving Corporation shall give to all
former holders of Company Shares that were still Dissenting Stockholders as of
the Effective Time the notice of the Effective Time required to be given
pursuant to the fifth sentence of Section 262(d) of the Delaware Law and the
Secretary of the Surviving Corporation shall execute a written affidavit
certifying to Company and Parent that such notice has been given as so required.
 
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ARTICLE VI  
 
CONDITIONS TO OBLIGATIONS TO CLOSE
 
6.1.  Conditions to Each Party’s Obligation. The respective obligation of each
Party to consummate the Merger is subject to the satisfaction or waiver of each
of the following conditions at or prior to the Effective Time:
 
    (a)  (i) All approvals and authorizations required to be obtained in respect
of the FCC Licenses for the consummation of the Merger shall have been obtained;
and (ii) all other Governmental Consents the failure of which to make or obtain
would, individually or in the aggregate, provide a reasonable basis to conclude
that Company or its directors or officers would be subject to risk of criminal
liability or to risk of civil liability for which they are not entitled to
indemnification by Company (or the Surviving Corporation), shall have been made
or obtained. For purposes of this Agreement, “Governmental Consents” means all
notices, reports, filings, consents, registrations, approvals, permits or
authorizations required to be made prior to the Effective Time by Company or
Parent or any of their respective Subsidiaries with, or obtained prior to the
Effective Time by Company or Parent or any of their respective Subsidiaries
from, any Governmental Entity in connection with the execution and delivery of
this Agreement and the consummation of the Merger and other transactions
contemplated hereby.
 
    (b)  Neither any Laws or Governmental Order shall be enacted, promulgated,
entered, enforced or deemed applicable to the Merger nor any other action shall
have been taken by any Governmental Entity that is in effect and that (i)
restrains, enjoins or otherwise prohibits the consummation of the transactions
contemplated by this Agreement or (ii) makes the purchase of, or payment for,
some or all of Company Shares illegal.
 
6.2.  Conditions to Obligation of Parent and Merger Sub. The obligations of each
of Parent and Merger Sub to consummate the Merger are also subject to
satisfaction or waiver by Parent or Merger Sub of the following conditions at or
prior to the Effective Time:
 
    (a)  (i) Each of the representations and warranties of Company set forth in
the first three and the last sentences of Section 3.1(a) and in Sections 3.1(b),
3.1(c), 3.1(d), 3.2, 3.3(i) and 3.13 of this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (except to the extent any such
representation and warranty expressly speaks as of an earlier date, in which
case such representation and warranty shall be true and correct as of such
earlier date); (ii) any failure of any of the other representations and
warranties of Company set forth in this Agreement (without giving effect to any
materiality or Material Adverse Effect qualifications contained therein),
individually or in the aggregate, to be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date (except to the extent any such representation and warranty expressly speaks
as of an earlier date, in which case such representation and warranty shall be
true and correct as of such earlier date) shall not have had a Material Adverse
Effect on Company; (iii) from and after the date of this Agreement and to the
Closing Date there has not been any Material Adverse Effect on Company,
provided, however, that, any damage to properties, service interruptions, loss
of customers, additional operating and other costs and other adverse
consequences resulting from Hurricanes Katrina and Rita, as and to the extent
described in Section 3.11(m) of the Company Disclosure Letter under the heading
“Katrina/Rita Impact,” shall not be deemed to be a Material Adverse Effect; and
(iv) Parent shall have received a certificate signed on behalf of Company by the
chief executive officer and the chief financial officer of Company to such
effect.
 
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    (b)  Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, and Parent shall have received a certificate signed on behalf of Company
by the chief executive officer and the chief financial officer of Company to
such effect.
 
    (c)  No Governmental Entity of applicable jurisdiction shall have instituted
(or, if instituted, shall not have withdrawn) any proceeding seeking any
Governmental Order and no Governmental Entity shall have instituted any civil,
criminal or administrative action, suit, claim, hearing, investigation or other
proceeding the existence of which would, in the reasonable judgment of Parent,
individually or in the aggregate, be reasonably likely to result in a failure of
the condition set forth in Section 6.1(b).
 
    (d)  All approvals and authorizations required to be obtained in respect of
the Communications Licenses for the consummation of the Merger shall have been
obtained and all other Governmental Consents (other than those described in
Section 6.1(a)(i)) the failure of which to make or obtain would, individually or
in the aggregate, (i) reasonably be expected to result in a Combined Material
Adverse Effect or (ii) provide a reasonable basis to conclude that Parent or any
of its directors or officers would be subject to the risk of criminal liability,
shall have been made or obtained (such consents, together with those consents
that are conditions under Section 6.1(a)(i) being the “Required Governmental
Consents”). All Governmental Consents that have been obtained shall have been
obtained without the imposition of any term, condition or consequence the
acceptance of which would, individually or in the aggregate, reasonably be
expected to have or result in a Combined Material Adverse Effect.
 
    (e)  Company shall have obtained the consent or approval of each Person
whose consent or approval shall be required under any Contract set forth in
Section 6.2(e) of the Company Disclosure Letter to which Company or any of its
Subsidiaries is a party in connection with the transactions contemplated by this
Agreement except where the failure to obtain such consent or approval,
individually or in the aggregate, would not reasonably be expected to result in
a Combined Material Adverse Effect.
 
    (f)  Except as set forth in Section 6.2(f) of the Company Disclosure Letter,
Parent and Merger Sub shall have received the resignations as directors and
officers, effective as of the Closing, of each director and officer of Company
and its Subsidiaries other than those whom Parent shall have specified in
writing at least five business days prior to the Closing.
 
    (g)  Company and the Representatives shall have delivered to Parent and
Merger Sub an executed counterpart of the Escrow Agreement.
 
    (h)  There shall not have been any material default by Company or its
Subsidiaries under the Interim Agreement and the Interim Agreement shall be in
full force and effect.
 
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    (i)  Parent shall have received a certificate dated the Closing Date and
signed on behalf of Company by the chief executive officer and the chief
financial officer of Company certifying as to the respective amounts of the
Transaction Costs and the Severance Amount (the “Closing Costs Certificate”).
 
    (j)  Holders of no more than 400,000 shares of Common Stock shall be
Dissenting Stockholders or holders of no more than 400,000 shares of Preferred
Stock shall be Dissenting Stockholders.
 
Subject to the provisions of applicable law, Parent and Merger Sub may waive, in
whole or in part, any condition specified in this Section 6.2 if they execute a
writing so stating at or prior to the Closing.
 
6.3.  Conditions to Obligation of Company. The obligation of Company to
consummate the Merger are also subject to satisfaction or waiver by Company of
the following conditions at or prior to the Effective Time:
 
    (a)  (i) Each of the representations and warranties of Parent and Merger Sub
set forth in Sections 4.1, 4.2, 4.3(i) and 4.5 of this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except to the
extent any such representation and warranty expressly speaks as of an earlier
date, in which case such representation and warranty shall be true and correct
as of such earlier date); (ii) any failure of any of the other representations
and warranties of Parent and Merger Sub set forth in this Agreement (without
giving effect to any materiality or Material Adverse Effect qualifications
contained therein), individually or in the aggregate, to be true and correct as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (except to the extent any such representation and
warranty expressly speaks as of an earlier date, in which case such
representation and warranty shall be true and correct as of such earlier date)
shall not have had a Material Adverse Effect on Parent; and (iii) Company shall
have received a certificate signed on behalf of Parent and Merger Sub by the
chief executive officer and the chief financial officer of Parent to such
effect.
 
    (b)  Each of Parent and Merger Sub shall have performed in all material
respects all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and Company shall have received a certificate
signed on behalf of Parent and Merger Sub by the chief executive officer and the
chief financial officer of Parent to such effect.
 
    (c)  Parent shall have delivered to Company an executed counterpart of the
Escrow Agreement.
 
Subject to the provisions of applicable law, Company may waive, in whole or in
part, any condition specified in this Section 6.3 if it executes a writing so
stating at or prior to the Closing.
 
 
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ARTICLE VII  
 
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
 
7.1.  Survival of Representations and Warranties. The representations and
warranties of the Parties contained in this Agreement shall survive the Closing
hereunder (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty or covenant at the time of Closing) and
continue in full force and effect until the Claim Date (subject, in each case,
to any applicable statutes of limitations).
 
7.2.  Indemnification.
 
    (a)  Indemnification. From and after the Effective Time:
 
        (1)  From the Escrow Fund and as provided in, and subject to the terms
and conditions of, this Section 7.2, Parent and its officers, directors,
affiliates (including the Surviving Corporation), employees, agents and
representatives (each a “Parent Indemnified Party” and, collectively, the
“Parent Indemnified Parties”), shall be indemnified and held harmless against
(i) all claims (including without limitation Third Party Claims, as defined
below, and any claims for indemnification against Company, Surviving Corporation
or Parent by officers, directors or employees of Company), losses, liabilities,
damages, diminutions in value, deficiencies, costs, interest, awards, amounts
paid in settlement, judgments, penalties and expenses, including reasonable
attorneys’ and consultants’ fees and expenses and including any such expenses
incurred in connection with investigating, defending against or settling any of
the foregoing, but excluding liability for any lost profits or incidental,
consequential, indirect or special damages, (hereinafter individually a “Loss”
and collectively “Losses”), incurred or sustained by the Parent Indemnified
Parties, or any of them, directly or indirectly, arising out of or by reason of
or as a result of (x) any breach or inaccuracy of a representation or warranty
of Company contained in this Agreement or in any certificate or other instrument
delivered by or on behalf of Company pursuant to this Agreement or (y) any claim
by any holder of Common Stock in respect of or arising out of or as a result or
by reason of (or alleged to be in respect of or to arise out of or as a result
or by reason of) this Agreement or the transactions contemplated thereby,
including the Merger, the approval or adoption thereof or any solicitation of
such approval or adoption (other than appraisal proceedings under Section 262 of
the Delaware Law) and (ii) the amount, if any, by which the payment required to
be paid to any Dissenting Stockholder in respect of its Company Shares exceeds
the amount of the Merger Consideration that would have been received by such
holder in respect of such Company Shares pursuant to Sections 2.4(e) and (f) had
such holder not been a Dissenting Stockholder and that was not paid out as
Merger Consideration, and (iii) any costs and expenses, including attorneys’ and
consultants’ fees and expenses (including any that may be assessed by the court)
and including any such expenses incurred in connection with investigating,
defending against or settling, but not including the amounts paid to the former
holders in respect of their Company Shares as determined pursuant to Section 262
of the Delaware Law, incurred or sustained by the Parent Indemnified Parties, or
any of them, directly or indirectly, arising out of or by reason of or as a
result of any appraisal proceeding in respect of the Company Shares under
Section 262 of the Delaware Law and (iv) the amount by which the aggregate
amount of all Transaction Costs and Severance Amounts shall exceed the aggregate
amount thereof set forth in the Closing Costs Certificate.
 
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        (2)  As provided in, and subject to the terms and conditions of, this
Section 7.2, Parent shall indemnify and hold harmless each of the Preferred
Stockholders and its shareholders, officers, directors, affiliates, employees,
agents and representatives (each a “Company Indemnified Party” and,
collectively, the “Company Indemnified Parties”), against all Losses incurred or
sustained by the Company Indemnified Parties, or any of them, directly or
indirectly, arising out of any breach or inaccuracy of a representation or
warranty of Parent or Merger Sub contained in this Agreement or in any
certificate or other instrument delivered by or on behalf of Parent or Merger
Sub pursuant to this Agreement.
 
    (b)  Third Party Claims.
 
        (1)  Promptly after receipt by any Person entitled to indemnification
under this Section 7.2 (the “Indemnified Party”) of notice of the commencement
of any action by a third party in respect of which, if successful, the
Indemnified Party would be entitled to indemnification under this Section 7.2 (a
“Third Party Claim”), the Indemnified Party shall notify the Representative in
writing, who shall in turn notify each person that is obligated to provide such
indemnification (an “Indemnifying Party”) thereof in writing, but any failure to
so notify the Representative or the Indemnifying Party, as the case may be,
shall not relieve the Indemnifying Party from any liability that it may have to
the Indemnified Party other than to the extent the Indemnifying Party is
actually prejudiced thereby.
 
        (2)  The Representative shall have the right to assume control of the
defense of the Indemnified Party against the Third Party Claim with counsel
reasonably satisfactory to such Indemnified Party or, if the Representative does
not assume such defense, to participate in the defense of such Third Party Claim
at its own expense.
 
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        (3)  So long as the Representative is diligently conducting the defense
of the Third Party Claim:
 

(i)  
the Indemnified Party shall be entitled to participate in the defense of such
claim and to employ counsel at its own cost and expense (which expense shall not
constitute a Loss unless the Indemnified Party reasonably determines that the
Representative, because of a conflict of interest, may not adequately represent
any interests of the Indemnified Parties and to the extent such costs and
expenses are reasonable) to assist in the handling of such claim;

 

(ii)  
the Representative shall not consent to the entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by each claimant or plaintiff to each Indemnified Party of a release from all
liability in respect of such claim; and

 

(iii)  
the Representative shall not be liable to such Indemnified Party hereunder for
any legal expenses subsequently incurred by such Indemnified Party in connection
with the defense.

 
        (4)  Notwithstanding the foregoing, if (x) a Third Party Claim seeks
equitable relief or (y) the subject matter of a Third Party Claim relates, in
whole or in part, to the ongoing business of any of the Indemnified Parties,
which Claim, if decided against any of the Indemnified Parties, would materially
adversely affect the ongoing business of any of the Indemnified Parties, or (z)
a Third Party Claim, if decided against any of the Indemnified Parties, would,
together with any other claims for indemnification under this Section 7.2 by
such Indemnified Parties, result in Losses that would reasonably be expected to
exceed, by 25% or more, the maximum amount of the Indemnifying Party’s remaining
indemnification obligations under this Section 7.2 (after giving effect to the
limitations herein on the maximum payments under this Section 7.2 by the
Indemnifying Party) then, in any such case, the Indemnified Parties alone shall
be entitled to contest, defend and settle such Third Party Claim in the first
instance and, if the Indemnified Parties do not contest, defend or settle such
Third Party Claim, the Indemnifying Party shall have the right to contest and
defend (but not settle) such Third Party Claim. If the Indemnified Parties shall
have exercised the right to contest, defend and settle any such Third Party
Claim instead of the Indemnifying Party by reason of the foregoing provisions of
this Section 7.2(b)(4), such Indemnifying Party shall be entitled, at its own
cost and expense, to participate in the defense of such claim and to employ
counsel.
 
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        (5)  The Indemnified Party shall obtain the prior written approval of
the Indemnifying Party before admitting liability or entering into any
settlement of such claim or ceasing to defend against such claim that the
Indemnified Party is defending (with such approval not to be unreasonably
withheld or delayed), provided that the Indemnified Party shall not be required
to obtain approval from the Representative of the Indemnifying Party in respect
of any claims to the extent that the Losses resulting from such admission of
liability or settlement or cessation of defense exceed, by 25% or more, the
maximum amount of the Indemnifying Party’s remaining indemnification obligations
under this Section 7.2 (after giving effect to the limitations herein on the
maximum payments under this Section 7.2 by the Indemnifying Party).
 
        (6)  If the Representative does not assume defense of the Third Party
Claim, the Indemnified Party shall have the right to defend such claim in such
manner as it may deem appropriate at the cost and expense of the Indemnifying
Party, and the Indemnifying Party will promptly reimburse the Indemnified Party
therefor in accordance with this Section 7.2(b).
 
        (7)  If the Indemnified Party is a Parent Indemnified Party, the
reimbursement of fees, costs and expenses incurred by the defending party as
required by this Section 7.2(b) shall be made from the Escrow Fund by periodic
payments during the course of the investigations or defense, as and when bills
are received or expenses incurred.
 
    (c)  Other Claims. In the event any Indemnified Party should have a claim
under Section 7.2(a) that does not involve a Third Party Claim being asserted
against or sought to be collected from such Indemnified Party, the Indemnified
Party shall deliver written notice of such claim with reasonable promptness and
stating the nature, basis and amount of the claim in reasonable detail to the
Representative, who shall in turn notify the Indemnifying Party. The failure by
any Indemnified Party to so notify the Representative, or the Representative to
so notify the Indemnifying Party, as the case may be, shall not relieve any
liability under Section 7.2(a), except to the extent that the ability to defend
such claim or demand shall have been prejudiced as a result of such failure. If
the Indemnifying Party disputes the liability with respect to such claim, the
Indemnifying Party and the Indemnified Party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
 
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    (d)  Termination of Indemnification.
 
        (1)  The rights of the Parent Indemnified Parties to be indemnified,
defended and held harmless under Section 7.2(a)(1) shall terminate at 11:59 p.m.
EST on the Claim Date; provided, however, that such obligations to indemnify,
defend and hold harmless shall not terminate with respect to any item as to
which the Person to be indemnified or the related party thereto shall have,
before the expiration of the applicable period, previously made a claim by
delivering a notice of such claim (stating in reasonable detail the basis and
amount of such claim) to the Company and Preferred Stockholders.
 
        (2)  The rights of the Company Indemnified Parties to be indemnified,
defended and held harmless under Section 7.2(a)(2) shall terminate at 11:59 p.m.
EST on the Claim Date; provided, however, that such obligations to indemnify,
defend and hold harmless shall not terminate with respect to any item as to
which the Person to be indemnified or the related party thereto shall have,
before the expiration of the applicable period, previously made a claim by
delivering a notice of such claim (stating in reasonable detail the basis and
amount of such claim) to Parent.
 
    (e)  Escrow Fund; Maximum Payments; Remedy.
 
        (1)  By virtue of this Section 7.2 and as security for the indemnity
obligations provided for in Section 7.2(a) hereof, at the Effective Time, Parent
will deposit with the Escrow Agent the Escrowed Consideration as provided in
Section 2.6(a). Solely for purposes of this Section 7.2 and the allocation of
interests in the Escrow Fund among the Preferred Stockholders, and without
limitation of the amount of the Escrow Fund available for satisfaction of claims
by the Parent Indemnified Parties under this Section 7.2, each Preferred
Stockholder shall be deemed to have received and deposited such Preferred
Stockholder’s pro rata share of the Escrow Fund with the Escrow Agent as
provided in Section 2.5(a) of this Agreement. The Escrow Fund shall be deposited
with, and shall be held by, the Escrow Agent and shall be available to
compensate the Parent Indemnified Parties for any claims by such parties for any
Losses suffered or incurred by them and for which they are entitled to recovery
under this Agreement. Claims by the Parent Indemnified Parties under this
Section 7.2 for Losses shall be limited to, and shall be satisfied solely from,
the Escrow Fund.
 
        (2)  Any payment to any Parent Indemnified Party under this Section 7.2
from the Escrow Fund shall be deemed made by each of the Preferred Stockholders
in their respective Allocated Portions. The “Allocated Portion” of any Preferred
Stockholder shall be such amount that bears the same relationship to the total
payment to any Parent Indemnified Party as the value of the Merger Consideration
to be received by such Preferred Stockholder bears to the Total Merger
Consideration.
 
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        (3)  Claims by the Company Indemnified Parties under this Section 7.2
for Losses shall be limited to, and shall not exceed, an amount equal to the
Escrow Amount, reduced dollar-for-dollar by the amount, if any, of any direct or
indirect payment by or on behalf of Parent to any Stockholder or former
Stockholder, in each case in its capacity as a Stockholder or former
Stockholder, by reason of any claim, statutory or otherwise, in respect of the
Merger or this Agreement or the Interim Agreement that is made other than under
this Section 7.2 (other than (i) the payment of the Merger Consideration as
provided in this Agreement, (ii) payments by Parent to the extent that any such
payment is by reason of a loss, claim, damage or liability arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission in written materials furnished by Company to the Stockholders,
in connection with the solicitation of the Stockholders of their approval of
this Agreement, in reliance upon and in conformity with written information
furnished to Company by or on behalf of Parent specifically for inclusion in
such furnished written materials, and (iii) payments made to any Stockholders
for breach by Parent of any obligation of Parent under this Agreement that is
expressly stated herein to be for the benefit of such Stockholder). No payment
by Parent of Losses to any Company Indemnified Party shall be made until the
expiration of Parent’s indemnification period, as set forth in Section
7.2(d)(2), and any such payment may be withheld or reduced (x) pending the final
resolution of any claim that would have reduced the Escrow Amount indemnity
obligation of Parent as provided above in this Section 7.2(e)(3) had payment
thereof been made prior to such expiration date and as to which Parent shall
have, before such expiration date, given notice of such claim (stating in
reasonable detail the basis and amount of such claim) to the Company and
Preferred Stockholders and (y) by the amount at issue in such claim.
 
    (f)  Basket Amount. Notwithstanding any other provision of this Section 7.2
to the contrary, but subject to the proviso below in this sentence, an
Indemnified Party may not recover any Losses under Section 7.2(a) hereof unless
and until such Losses exceed $50,000 (the “Basket Amount”), in which case the
Indemnified Party shall be entitled to recover all Losses, including the Basket
Amount, provided that Parent may recover any amount described under Section
7.2(a)(1)(ii), (iii) or (iv) upon occurrence and without regard to the Basket
Amount.
 
    (g)  Insurance; Tax Benefit; Mitigation.
 
        (1)  All indemnification or reimbursement payments required pursuant to
this Section 7.2 shall be (i) made net of all insurance proceeds actually
received by the party to be indemnified, and (ii) reduced to take account of any
net tax benefit when and as realized by the indemnified party arising from the
incurrence or payment of any Loss. In the event a payment has been made without
reduction (in whole or in part) because any net tax benefit has not yet been
realized (in whole or in part), the indemnified party shall reimburse the paying
party promptly at the time of the realization of the net tax benefit. Proceeds
received from an insurance carrier which are subject to a reservation of rights
by the carrier that has not been released in writing by the carrier (“Reserved
Insurance Proceeds”) shall be taken into account in the calculation of Losses
once received by the party to be indemnified; provided, however, that Reserved
Insurance Proceeds with respect to which the insurance carrier subsequently
obtains reimbursement shall be deemed to be Losses on a dollar for dollar basis
with the amount by which Losses were previously reduced as a result of the
receipt of such proceeds. Parent Indemnified Parties and Company Indemnified
Parties shall each use commercially reasonable efforts to obtain a release of a
reservation of rights from the insurance carrier promptly following the
settlement or final adjudication of the claim or proceeding to which the
Reserved Insurance Proceeds related.
 
        (2)  Each Indemnified Party shall use commercially reasonable efforts to
mitigate Losses, including seeking recovery under insurance policies. If a
Parent Indemnified Party is the Indemnified Party, it shall reimburse the Escrow
Fund (if the Escrow Agreement is still in effect) or the Preferred Stockholders
(if the Escrow Agreement has been terminated), or if a Company Indemnified Party
is the Indemnified Party, it shall reimburse Parent, for any Loss indemnified by
them to the extent all or a portion of such Loss (net of reasonable collection
costs) is subsequently recovered by the Indemnified Party under any such
insurance, but in each case only to the extent that the amount of such recovery
exceeds the amount of the Losses claimed by such Indemnified Party that have not
been paid to such Indemnified Party because of the limitations of Section 7.2(e)
hereof.
 
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    (h)  Exclusive Remedy.
 
        (1)  From and after the Closing and to the fullest extent allowed by
law, the indemnification pursuant to this Section 7.2 shall be the exclusive
remedy of the Parent Indemnified Parties for any Loss or Losses arising out of
or by reason of or as a result of any matter described in clause (i), (ii) or
(iii) of Section 7.2(a)(1).
 
        (2)  From and after the Closing and to the fullest extent allowed by
law, the indemnification pursuant to this Agreement shall be the exclusive
remedy of the Company Indemnified Parties for any Loss or Losses arising out of
or by reason of or as a result of any matter described in Section 7.2(a)(2).
 
        (3)  Notwithstanding the foregoing in this Section 7.2(h), nothing
herein shall prevent any of the Indemnified Parties from bringing an action
based upon allegations of fraud or other intentional breach of an obligation of
or with respect to any party in connection with this Agreement or the Interim
Agreement.
 
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ARTICLE VIII  
 
TERMINATION
 
8.1.  Termination of Agreement. The Parties may terminate this Agreement and the
Merger may be abandoned as provided below at any time prior to the Effective
Time before or after the approval by the Stockholders or Merger Sub stockholder:
 
    (a)  the Parties may terminate this Agreement by mutual written consent of
Parent and Company with the prior authorization of their respective board of
directors;
 
    (b)  Parent may terminate this Agreement with the prior authorization of the
Parent Board by giving written notice to Company at any time prior to the
Closing in the event Company has breached any of its representations,
warranties, covenants or agreements contained in this Agreement in any material
respect, or any such representation or warranty shall have become untrue or
incorrect after the execution of this Agreement, such that Section 6.2(a) or
Section 6.2(b), as the case may be, would not be satisfied, and (x) such breach
is not reasonably capable of being cured prior to the Termination Date or (y) in
the case of a breach of a covenant or agreement, if such breach is reasonably
capable of being cured prior to the Termination Date, such breach shall not have
been cured prior to the Termination Date;
 
    (c)  Company may terminate this Agreement with the prior authorization of
the Company Board by giving written notice to Parent at any time prior to the
Closing in the event Parent or Merger Sub has breached any of its
representations, warranties, covenants or agreements contained in this Agreement
in any material respect, or any such representation or warranty shall have
become untrue or incorrect after the execution of this Agreement, such that
Section 6.3(a) or Section 6.3(b), as the case may be, would not be satisfied,
and (x) such breach is not reasonably capable of being cured prior to the
Termination Date or (y) in the case of a breach of a covenant or agreement, if
such breach is reasonably capable of being cured prior to the Termination Date,
such breach shall not have been cured prior to the Termination Date; and
 
    (d)  either Company or Parent may terminate this Agreement with the prior
authorization of its respective board of directors by giving written notice to
the other Party if (i) the Closing shall not have occurred on or before March
31, 2006 (the “Termination Date”), by reason of the failure of any condition
precedent under ARTICLE VI hereof; or (ii) there shall be any law or regulation
that makes consummation of the Merger illegal or otherwise prohibited or any
judgment, injunction, order or decree of any court or governmental body having
competent jurisdiction enjoining Company or Parent from consummating the Merger
and such judgment, injunction, order or decree shall have become final and
nonappealable; provided that the right to terminate this Agreement pursuant to
this Section 8.1(d) shall not be available to any Party that has breached its
obligations under this Agreement or under any other agreement contemplated
hereunder in any manner that shall have proximately contributed to the
occurrence of the failure of a condition to the consummation of the Merger.
 
8.2.  Effect of Termination.  If this Agreement is terminated pursuant to
Section 8.1, all rights and obligations of the Parties hereunder shall terminate
without any liability of any Party to any other Party, except that the
provisions of the Confidentiality Agreement and the provisions of Sections 8.2
and 9.11 shall survive any such termination, and provided, however, except as
otherwise provided herein, no such termination shall relieve any Party of any
liability or damages resulting from any willful or intentional breach of any
covenant in this Agreement.
 
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ARTICLE IX  
 
MISCELLANEOUS
 
9.1.  Press Releases and Public Announcements. The initial press release
disclosing this Agreement shall be a press release issued jointly by Parent and
Company. Company shall issue no press releases or otherwise make any public
announcements with respect to the Merger or the other transactions contemplated
by this Agreement without the express written consent of Parent. Parent shall
consult with Company prior to issuing any press releases or otherwise making
public announcements with respect to the Merger and the other transactions
contemplated by this Agreement and, except as may be required by applicable Laws
or by obligations pursuant to any listing agreement with or rules of Nasdaq or
by the request of any Governmental Entity, will not issue any such press
releases or make any such public statement prior to such consultation. Company
and Parent each shall consult with the other prior to making any filings with
any third party or any Governmental Entity (including any national securities
exchange) with respect thereto.
 
9.2.  No Third-Party Beneficiaries. This Agreement is not intended to, and does
not, confer any rights or remedies hereunder upon any Person other than the
Parties and their respective successors and permitted assigns; provided,
however, that (a) the Stockholders shall be deemed third party beneficiaries
solely with respect to the right to receive the Per Share Merger Consideration
pursuant to ARTICLE II hereof, (b) the Indemnified Parties shall be deemed third
party beneficiaries solely with respect to Section 7.2 and (c) the Indemnified
Persons shall be deemed third party beneficiaries solely with respect to Section
5.5.
 
9.3.  Entire Agreement. This Agreement and the other documents referred to
herein, including the Confidentiality Agreement, the Escrow Agreement and the
Interim Agreement constitute the entire agreement among the Parties and
supersede all other prior understandings, agreements or representations by or
among the Parties, written or oral, to the extent they relate in any way to the
subject matter hereof.
 
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9.4.  Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective successors and permitted
assigns. This Agreement shall not be assignable by operation of law or
otherwise; provided, however, that Parent may designate, by written notice to
Company, another wholly owned direct or indirect subsidiary to be a Constituent
Corporation in lieu of Merger Sub, in which event all references herein to
Merger Sub shall be deemed references to such other subsidiary, except that all
representations and warranties made herein with respect to Merger Sub as of the
date of this Agreement shall be deemed representations and warranties made with
respect to such other subsidiary as of the date of such designation; provided
that any such designation shall not relieve Parent or Merger Sub of any of its
obligations hereunder or materially impede or delay the consummation of the
transactions contemplated by this Agreement or otherwise materially impede the
rights of the Stockholders under this Agreement. Any purported assignment in
violation of this Agreement will be void ab initio.
 
9.5.  Counterparts. This Agreement may be executed (including by facsimile) in
one or more counterparts, each of which shall be deemed an original instrument
but all of which together will constitute the same instrument.
 
9.6.  Headings. The table of contents and headings contained in this Agreement
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect in any way the meaning or
interpretation of this Agreement.
 
9.7.  Notices. Any notice, request, demand, claim or other communication or
document to be given hereunder shall be in writing and delivered personally or
sent by registered or certified mail, return receipt requested, postage prepaid,
by facsimile or by overnight courier, addressed to the intended recipient as set
forth below:
 
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If to Company: 
 
NT CORPORATION.
 
3300 North Pace Boulevard
 
Pensacola, FL 30505
 
Attention: Danyelle Kennedy, Chief Financial Officer
 
Facsimile: (850) 470-9641
 
 
with a copy(which shall not constitute notice) to: 
 
Latham & Watkins LLP
 
555 Eleventh Street, NW, Suite 1000
 
Washington, D.C. 20004
 
Attention: David M. McPherson
 
Facsimile: (202) 637-1080
 
 
If to Parent: 
 
TALK AMERICA HOLDINGS, INC.
 
6805 Route 202
 
New Hope, PA 18938
 
Attention: Aloysius T. Lawn, IV, Executive Vice President - General Counsel
 
Facsimile: 215.862.1960
 
 
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with a copy (which  shall not constitute notice) to: 
 
Arnold & Porter LLP
 
399 Park Avenue
 
New York, New York 10022
 
Attention: Jonathan C. Stapleton, Esq.
 
Facsimile: (212) 715-1111
 
 
If to Merger Sub: 
 
THNETCO, INC.
 
c/o TALK AMERICA HOLDINGS, INC.
 
6805 Route 202
 
New Hope, PA 18938
 
Attention: Aloysius T. Lawn, IV, Executive Vice President - General Counsel
 
Facsimile: 215.862.1960
 
 
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with a copy (which  shall not constitute notice) to: 
 
Arnold & Porter LLP
 
399 Park Avenue
 
New York, New York 10022
 
Attention: Jonathan C. Stapleton, Esq.
 
Facsimile: (212) 715-1111,
 
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above. Any notice, request, instruction
or other communication or document given as provided above shall be deemed given
to the receiving party upon actual receipt, if delivered personally; three
business days after deposit in the mail, if sent by registered or certified
mail; upon confirmation of successful transmission if sent by facsimile
(provided that if given by facsimile such notice, request, instruction or other
document shall be followed up within one business day by dispatch pursuant to
one of the other methods described herein); or on the next business day after
deposit with an overnight courier, if sent by an overnight courier.
 
9.8.  Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF DELAWARE.
 
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9.9.  Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Effective Time with the prior
authorization of their respective boards of directors; except that any amendment
will be subject to the restrictions contained in the Delaware Law, to the extent
applicable. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by all of the Parties. The
conditions to each of the Parties’ obligations to consummate the Merger are for
the sole benefit of such Party and may be waived by such Party in whole or in
part to the extent permitted by applicable Laws. No waiver by any Party of any
default, misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any such prior or subsequent
occurrence.
 
9.10.  Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement, or the application thereof to any Person or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision
and (b) the remainder of this Agreement and the application of such provision to
other Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
 
9.11.  Expenses. Except as expressly set forth elsewhere in this Agreement, each
of Company and Parent shall bear its own costs and expenses (including legal
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
 
9.12.  Survival. This ARTICLE IX and the agreements of Company, Parent and
Merger Sub contained in Sections 5.5, 5.6 and 7.2 shall survive the consummation
of the Merger. This ARTICLE IX and the agreements of Company, Parent and Merger
Sub contained in Section 9.11 (Expenses) and Section 8.2 (Effect of Termination)
and the Confidentiality Agreement shall survive the termination of this
Agreement. If the Merger shall be consummated, the representations and
warranties of Company set forth in ARTICLE III and the representations and
warranties of Parent set forth in ARTICLE IV shall survive the consummation of
the Merger for the period set forth in Section 7.1; except as otherwise set
forth in this Section 9.12, all other representations, warranties, covenants and
agreements in this Agreement shall not survive the consummation of the Merger or
the termination of this Agreement.
 
9.13.  Construction.
        
        (a)  The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.
 
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        (b)  The Parties intend that each representation, warranty and covenant
contained herein shall have independent significance. If any Party has breached
any representation, warranty or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating to
the same subject matter (regardless of the relative levels of specificity) that
the Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty or covenant.
 
        (c)  Each of Company and Parent has or may have set forth information in
its respective disclosure letter in a section thereof that corresponds to the
section of this Agreement to which it relates. A matter set forth in one section
of a disclosure letter need not be set forth in any other section of the
disclosure letter so long as its relevance to the latter section of the
disclosure letter or section of this Agreement is readily apparent on the face
of the information disclosed in the disclosure letter to the Person to which
such disclosure is being made. The fact that any item of information is
disclosed in such a disclosure letter shall not be construed to mean that such
information is required to be disclosed pursuant to this Agreement. Such
information and the dollar thresholds set forth herein shall not be used as a
basis for interpreting the terms “material,” “Material Adverse Effect” or other
similar terms in this Agreement.
 
9.14.  Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
 
9.15.  Specific Performance. Each of the Parties acknowledges and agrees that
the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or other equitable relief
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 9.16 below), in addition to any other remedy to which they may
be entitled, at law or in equity.
 
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9.16.  Submission to Jurisdiction. Each Party irrevocably submits to the
jurisdiction of the courts of the State of Delaware and the federal courts of
the United States of America located in the State of Delaware for the purposes
of any suit, action or other proceeding arising out of this Agreement and of the
documents referred to in this Agreement and any transaction contemplated hereby.
Each Party irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or any
transaction contemplated hereby in said courts and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum. Each Party further irrevocably consents to the
service of process out of any of the aforementioned courts in any such suit,
action or other proceeding by the mailing of copies thereof by mail to such
party at its address set forth in this Agreement, such service of process to be
effective upon acknowledgment of receipt of such registered mail; provided that
nothing in this Section 9.16 shall affect the right of any party to serve legal
process in any other manner permitted by law. The consent to jurisdiction set
forth in this Section 9.16 shall not constitute a general consent to service of
process in the State of Delaware and shall have no effect for any purpose except
as provided in this Section 9.16. The parties agree that a final judgment in any
such suit, action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
 
9.17.  Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.17.
 
 
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective
the date first above written.
 
 
NT CORPORATION
 
By: /s/ Leo J. Cyr 
 
Name: Leo J. Cyr
 
Title: President and CEO
 
 
THNETCO, INC.
 
By: /s/ Aloysius T. Lawn IV 
 
Name: Aloysius T. Lawn IV
 
Title: EVP & Secretary
 
 
TALK AMERICA HOLDINGS, INC.
 
By: /s/ Aloysius T. Lawn IV 
 
Name: Aloysius T. Lawn IV
 
Title: EVP - General Counsel
 

 

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EXHIBIT A
Form of Escrow Agreement
 
ESCROW AGREEMENT
 
This ESCROW AGREEMENT (the “Agreement”) is dated as of [Closing Date], 2005, by
and among TALK AMERICA HOLDINGS, INC.., a Delaware corporation (“Parent”), VIC
PARKER, as representative of the Stockholders (as defined below)
(“Representative”), and [___________] (the “Escrow Agent”).
 
 
W I T N E S S E T H
 
WHEREAS, Parent, THNETCO, INC., a Delaware corporation and a subsidiary of
Parent (“Merger Sub”), and NT Corporation, a Delaware corporation (“Company”),
entered into an Agreement and Plan of Merger dated as of October 18, 2005 (the
“Merger Agreement”), pursuant to which Parent agreed to acquire all of the
outstanding shares of common stock, $0.01 par value per share (the “Common
Stock”), and preferred stock, $0.01 par value per share (the “Preferred Stock”),
of Company pursuant to a merger of Merger Sub with and into Company (the
“Merger”);
 
WHEREAS, at and as of the effective time of the Merger, each issued and
outstanding share of Preferred Stock and Common Stock will be converted into the
right to receive cash;
 
WHEREAS, certain indemnification obligations exist under the Merger Agreement,
which obligations are to be satisfied from cash (together with all earnings on
and income from the amounts held hereunder, the “Escrow Assets”) deposited with,
and to be held and disposed of by, the Escrow Agent under this Agreement, which
Escrow Assets are, in accordance with the terms of the Merger Agreement, to be
withheld from the Merger Consideration (as defined in the Merger Agreement)
otherwise payable to the holders of Preferred Stock identified on Exhibit A
attached hereto (the “Stockholders”) and in the respective amounts set forth in
such Exhibit A;
 
WHEREAS, Representative has agreed to act as Stockholders’ agent hereunder,
subject to the terms and conditions set forth herein; and
 
WHEREAS, to provide for the appropriate administration of the Escrow Assets,
Parent, Company and Representative desire to establish an escrow account with
the Escrow Agent subject to the terms and conditions set forth herein.
 
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, Parent, Company, Representative and the Escrow Agent
(collectively, the “Parties” and sometimes, individually, a “Party”), intending
to be legally bound, hereby agree as follows:
 
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I.  
Appointment. Parent, Company and Representative hereby appoint the Escrow Agent
as escrow agent, and the Escrow Agent hereby accepts such appointment, on the
terms and conditions set forth herein. Representative shall act hereunder as the
attorney-in-fact and agent of Stockholders, which Representative shall have full
authority to act for and on behalf of Stockholders with respect to the Escrow
Assets for all purposes of this Agreement. Representative’s authority to act
hereunder shall not be affected by the death, incapacity, illness, dissolution
or other inability to act of any of the Stockholders.

 

II.  
Establishment of Escrow.

 

A.  
Concurrently herewith, Parent is depositing with the Escrow Agent cash
representing the total amount of the Escrow Assets. The Escrow Agent hereby
acknowledges receipt of cash in an amount of $[_____________] constituting the
Escrow Assets.

 

 
          B.
The Escrow Agent shall invest and reinvest the Escrow Assets as directed in
Section IV. Any earnings on the amount of the Escrow Assets shall be credited to
and become part of the Escrow Assets and may be reinvested as provided in
Section IV and any loss on the investment of the Escrow Assets shall be charged
against the Escrow Assets.

 

 
          C.
The Escrow Agent shall hold the Escrow Assets deposited with the Escrow Agent
under this Agreement pursuant to and in accordance with this Agreement, and
shall disburse the Escrow Assets only when and to the extent required by Section
III hereof.

 
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III.  
Distributions from Escrow; Escrow Period.

 

A.  
If at any time and from time to time Parent advises the Escrow Agent in writing
(with a copy to Representative in the manner set forth in Section X hereof)
(such notice, a “Claim”) (a) that Parent is entitled to indemnification pursuant
to Section 7.2 of the Merger Agreement, identifying the basis for such claim and
the provision of the Merger Agreement upon which the claim is based, and (b) of
the amount of indemnification due (the “Indemnity Amount”), then the Escrow
Agent shall, within 15 Banking Days (as defined below) after the date of the
written notice from Parent, deliver Escrow Assets in an amount equal to the
Indemnity Amount to Parent, unless the Escrow Agent shall have received, within
10 Banking Days after the date of the written notice from Parent, a written
objection from Representative to such delivery setting forth the amount in
dispute, in which case the Escrow Agent shall deliver any undisputed amount to
Parent, and shall continue to hold the disputed amount until either (A) receipt
of a certificate signed by Parent and Representative directing the Escrow Agent
to deliver Escrow Assets in an amount equal to the Indemnity Amount set forth in
such certificate to Parent or (B) receipt of a formal order of a court of
competent jurisdiction directing the Escrow Agent to deliver Escrow Assets in an
amount equal to the Indemnity Amount specified in such order to Parent. Escrow
Agent has the right to institute upon a Bill of Interpleader, should a
controversy arise. The term “Banking Days” shall mean days other than Saturdays,
Sundays or days on which banks in the State of New York may be closed.

 

B.  
The release of Escrow Assets by the Escrow Agent to Parent of the Indemnity
Amount in respect of any Claim in accordance with this Section III shall be made
from the Escrow Assets in proportion to the respective interests of the
Stockholders, as set forth in Exhibit A.

 

C.  
The Escrow Agent shall disburse to the Stockholders (a) on the first business
day that is at least 270 days after the [date hereof] [Closing Date], an amount
equal to 50% of the Interim Escrow Amount (as defined below), to be distributed
to each Stockholder in proportion to its respective interest as set forth in
Exhibit A, and (b) within 10 days after the Claim Date, the remaining Escrow
Assets, (x) less the aggregate Indemnity Amounts related to all Claims made
pursuant to Section III.A and not yet resolved as of the Claim Date and (y) less
(i) any unpaid Escrow Agent fees or Escrow Agent expenses payable by the
Representative on behalf of Stockholders and then (ii) any unpaid Representative
claims pursuant to Section IX or expenses pursuant to Section X hereto, which
amount shall be distributed to each Stockholder in accordance with the remaining
cash constituting part of the Escrow Assets attributable to such Stockholder as
set forth in Exhibit A. “Interim Escrow Amount” means, as of any date, the
aggregate amount of Escrow Assets held by the Escrow Agent pursuant to this
Agreement as of such date, as such amount is reduced by the aggregate Indemnity
Amounts related to all Claims made pursuant to Section III.A and not yet
resolved.

 

D.  
Upon receipt by the Escrow Agent from time to time and at any time during the
term of this Agreement of joint written instructions executed by Representative
and Parent or a court order from a court of competent jurisdiction directing
disbursement of Escrow Assets, the Escrow Agent shall promptly disburse Escrow
Assets then held by it to the persons and in the amounts specified therein.

 

E.  
Notwithstanding anything contained herein to the contrary, the Escrow Agent
shall not be required at any time to disburse more than the aggregate amount of
Escrow Assets then held by it.

 

F.  
Nothing contained herein shall obligate or be construed to obligate
Representative or Parent to submit any dispute or claim to arbitration.

 
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IV.  
Investment of Escrow Assets.

 

A.  
During the term of this Agreement, at the joint written direction of Parent and
Representative, Escrow Assets deposited shall be invested in an interest-bearing
money market account or other pooling arrangement that exclusively purchases and
holds investments itemized in Exhibit B. All interest and other income earned on
the Escrow Assets shall be added to and be a part of the Escrow Assets. Periodic
statements will be provided to Parent and Representative reflecting transactions
executed in the Escrow Assets. Parent and Representative, upon written request,
shall receive a statement of transaction details upon completion of any
securities transaction in the Escrow Assets without any additional cost. The
Escrow Agent shall have the right to liquidate any investments held in order to
provide funds necessary to make required payments under this Agreement. The
Escrow Agent shall have no liability for any loss sustained as a result of any
investment in an investment indicated on Exhibit B or any investment made
pursuant to the joint written investment instructions of Parent and
Representative or as a result of any liquidation of any investment prior to its
maturity in order to provide funds necessary to make required payments under
this Agreement or for the failure of Representative or Parent to give the Escrow
Agent instructions to invest or reinvest the Escrow Assets.

 

B.  
Any earnings or loss on investment of the Escrow Assets shall be allocated as to
each Stockholder in the respective proportion of Escrow Assets for such
Stockholder set forth in Exhibit A. The parties hereto acknowledge and agree
that any interest or other income earned on the Escrow Assets shall constitute
gross income of the Stockholders for all income tax purposes, and the
Stockholders shall file all income tax returns (including without limitation,
information returns) in a manner consistent with such treatment. Representative
shall provide Escrow Agent with such written information as is necessary for the
Escrow Agent to determine each Stockholder’s share of any income earned on the
Escrow Assets for income tax reporting purposes (including, without limitation,
the preparation and filing of all IRS Form 1099s). The Escrow Agent shall
distribute to the Stockholders throughout the term of this Agreement, on or
about each April 1, June 1, September 1 and January 1, 48% of the interest or
other income earned on the Escrow Assets since the later of the date hereof or
the determination date for the most recent such payment.

 

C.  
The Escrow Agent may make investments permitted by this Section through or from
its own bond department or trust investments department, or its parent’s or
affiliate’s bond department or trust investments department. Except as otherwise
provided hereunder or agreed in writing among the parties hereto,
Representative, for and on behalf of the Stockholders, shall retain the
authority to institute, participate and join in any plan of reorganization,
readjustment, merger or consolidation with respect to the issuer of any
securities held hereunder, and, in general, to exercise each and every other
power or right with respect to each such asset or investment as individuals
generally have and enjoy with respect to their own assets and investment,
including power to vote upon any securities. Parent and Representative
acknowledge that regulations of the Comptroller of the Currency grant the
Stockholders the right to receive brokerage confirmations of the security
transactions as they occur. Representative, for and on behalf of the
Stockholders, specifically waives such notification to the extent permitted by
law and will receive periodic cash transaction statements which will detail all
investment transactions.

 
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V.  
Responsibilities and Duties of Escrow Agent.

 

A.  
The Escrow Agent shall not incur any liability for following the instructions
herein contained or provided for in any written instructions given jointly by
Representative and Parent. In the event that the Escrow Agent shall be uncertain
as to its duties or rights hereunder, shall fail to receive written instructions
or shall receive instructions, claims or demands from any other Party that, in
its opinion, conflict with any of the provisions of this Agreement, it shall be
entitled to refrain from taking any action and its sole obligation shall be to
keep safely all property held in escrow until it shall be directed otherwise in
writing by all of the other Parties or by a final order or judgment of a court
of competent jurisdiction.

 

B.  
The Escrow Agent may rely and shall be protected in acting or refraining from
acting on any written notice, instruction or request furnished to it hereunder.
The Escrow Agent shall not have any responsibility for the genuineness or
validity of any document or other material presented to or deposited with it nor
any liability for any action taken, suffered or omitted in accordance with any
written instructions or certificates given to it hereunder and believed by it to
be signed by the proper party or parties.

 

C.  
The Escrow Agent shall not be liable for any action taken by it in good faith
and believed by it to be authorized or within the rights or powers conferred on
it by this Agreement. The Escrow Agent may consult with counsel of its choice,
and shall not be liable for any action taken, suffered or omitted by it in good
faith in accordance with the opinion of such counsel.

 

D.  
The Escrow Agent shall not be required to institute legal proceedings of any
kind and shall not be required to initiate or defend any legal proceedings that
may be instituted against it by third parties with respect to the subject matter
of this Agreement. If the Escrow Agent does elect to act it will do so only to
the extent that it is indemnified to its satisfaction against the cost and
expense of such defense or initiation.

 

E.  
The duties and responsibilities of the Escrow Agent are those herein
specifically provided and no other. The Escrow Agent shall not have any
liability under, or duty to inquire into, the terms and provisions of the
Indemnification Agreement or of any other agreement or instrument, other than
this Agreement. Its duties are ministerial in nature and, the Escrow Agent shall
not incur any liability whatsoever other than for its own willful misconduct or
gross negligence.

 
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VI.  
Escrow Agent Indemnification. Parent and Representative, for and on behalf of
the Stockholders, hereby, jointly and severally, agree to indemnify, defend and
hold the Escrow Agent harmless from and against any and all loss, damage, tax,
liability and expense that may be incurred by the Escrow Agent arising out of or
in connection with its duties, obligations or performance as escrow agent under
this Agreement, except as caused by its gross negligence or willful misconduct,
including the legal costs and expenses of defending itself against or initiating
any claim or liability in connection with its performance hereunder. The terms
of this paragraph shall survive the termination of (i) this Agreement and (ii),
with respect to claims arising in connection with the Escrow Agent’s duties
while acting as such, the resignation or removal of the Escrow Agent.

 

VII.  
Escrow Agent Fee; Expenses of Escrow Agent. Each of Parent and Representative,
for and on behalf of the Stockholders, agrees to pay one-half of the fees of the
Escrow Agent for its services hereunder as and when billed by the Escrow Agent
or to reimburse the Escrow Agent on request for one-half of all expenses,
disbursements and advances, including reasonable attorneys fees, incurred or
made by the Escrow Agent in connection with carrying out its duties hereunder.
The payment obligations of Representative, on behalf of the Stockholders, shall
be paid out of, and charged against, the Escrow Assets, to the extent thereof.

 

VIII.  
Discharge and Resignation of Escrow Agent. The Escrow Agent may resign and be
discharged from its duties or obligations hereunder by giving Representative and
Parent at least thirty (30) days prior notice in writing of such resignation,
but such resignation shall not be effective until a successor escrow agent shall
have been appointed and shall have accepted such appointment in writing. As soon
as practicable after its resignation, the Escrow Agent shall turn over to a
successor escrow agent appointed by Representative and Parent the Escrow Assets
on presentation of the document appointing the successor escrow agent and its
acceptance thereof, whereupon all of the Escrow Agent’s duties and obligations
hereunder shall cease and terminate. If no successor escrow agent is so
appointed within the 30-day period following such notice of resignation, the
resigning Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor escrow agent.

 
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IX.  
Representative Indemnification. Stockholders shall, jointly and severally, agree
to indemnify, defend and hold Representative harmless from and against any and
all loss, damage, tax, liability and expense that may be incurred by
Representative arising out of or in connection with his/her duties, obligations
or performance as Representative under this Agreement, except as caused by
his/her gross negligence or willful misconduct, including the legal costs and
expenses of defending himself/herself against or initiating any claim or
liability in connection with his/her performance hereunder. Representative shall
not have any liability under the terms or provisions of this agreement or
instrument for any action taken or not taken in performance of his/her duties
under this Agreement, except for such liability as arises from Representative’s
gross negligence or willful misconduct. The terms of this paragraph shall
survive the termination of (i) this Agreement and (ii), with respect to claims
arising in connection with Representative’s duties while acting as such, the
resignation or removal of Representative.

 

X.  
Discharge and Resignation of Representative; Expenses of Representative.
Representative may resign from his/her duties or obligations hereunder by giving
Parent and Escrow Agent at least thirty (30) days prior notice in writing of
such resignation. In addition, the Stockholders to whom at least 50% of the
Escrow Assets are deemed attributable as set forth in Exhibit A (the “Required
Stockholder Interest”) may discharge Representative of his/her duties or
obligations hereunder by giving Parent and Escrow Agent at least thirty (30)
days prior notice in writing of such discharge. Prior to the effective time of
any resignation or discharge of Representative, the Required Stockholder
Interest shall provide written notice to Parent and Escrow Agent of a successor
Representative. Upon the death or incapacity of Representative, the Required
Stockholder Interest shall provide prompt written notice to Parent and Escrow
Agent of a successor Representative. Any and all costs and expenses incurred by
Representative in connection with any action taken as Representative, including
any action taken by Representative in enforcing or defending Stockholders rights
under this Agreement, shall be reimbursed to such Representative out of the
Escrow Assets in accordance with Section III.C. of this Agreement.

 

XI.  
Termination. This Agreement, except Sections V, VI, VII, IX, and X shall
terminate on disbursement of all Escrow Assets.

 

XII.  
Notice. All notices required or permitted to be given pursuant to this Agreement
shall be given in writing, shall be transmitted by registered or certified mail,
postage prepaid; and shall be addressed, as follows:

 
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When Escrow Agent is the intended recipient:

 
                Attention:
Facsimile:

 
If to Parent:
 
TALK AMERICA HOLDINGS, INC.
 
6805 Route 202
 
New Hope, PA 18938
 
Attention: Aloysius T. Lawn, IV, Executive Vice President - General Counsel
 
Facsimile: 215.862.1960
 

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With a copy to
 
Arnold & Porter LLP
 
399 Park Avenue
 
New York, NY 10022
 
Attention: Jonathan C. Stapleton, Esq.
 
Facsimile: (212) 715-1111
 
When the Representative is the intended recipient:
 
Vic Parker
 
c/o Spectrum Equity
 
333 Middlefield Road
 
Suite 200
 
Menlo Park, CA 94025
 
Facsimile: (415) 464-4601

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A Party may designate a new address to which notices required or permitted to be
given pursuant to this Agreement shall thereafter be transmitted by giving
written notice to that effect to the other Parties. Each notice transmitted in
the manner described in this Section XII shall be deemed to have been given,
received and become effective for all purposes at the time it shall have been
delivered to the addressee as indicated by the return receipt.
 

XIII.  
Entire Agreement; Binding Effect; Assignment. The terms and provisions of this
Agreement constitute the entire agreement among the Parties with respect to the
subject matter hereof. This Agreement shall be binding on and inure to the
benefit of the Parties and their respective successors and assigns. No Party
shall assign any of its rights or delegate any of its duties under this
Agreement (by operation of law or otherwise) without the prior written consent
of the other Parties. In the case of any inconsistency or conflict between the
provisions of this Agreement, the provisions of this Agreement shall govern.

 

XIV.  
Amendments. The Escrow Agent shall not be bound by any modification, amendment,
termination, cancellation, rescission or supersession of this Agreement unless
the same shall be in writing and signed by all of the other Parties and, if its
rights, duties, immunities or indemnities as Escrow Agent are affected thereby,
unless Escrow Agent shall have given its prior written consent thereto.

 
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XV.  
Governing Law; Jurisdiction. EXCEPT AS EXPRESSLY SET FORTH BELOW, THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE
STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE, OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF DELAWARE. Each of the Parties submits to the jurisdiction of any state
or federal court sitting in the State of Delaware in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court. Each Party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the parties hereto
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety or other security that might
be required of any other Party with respect thereto. Each Party agrees that a
final judgment in any action or proceeding so brought shall be conclusive and
may be enforced by suit on the judgment or in any other manner provided by law
or at equity. EACH OF PARENT, COMPANY, REPRESENTATIVE (FOR AND ON BEHALF OF
ITSELF AND STOCKHOLDERS) AND THE ESCROW AGENT HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

XVI.  
Headings; Counterparts. The headings in this Agreement have been inserted for
convenience of reference only, shall not be considered a part of this Agreement
and shall not limit, modify or affect in any way the meaning or interpretation
of this Agreement. This Agreement may be signed in any number of counterparts.

 

XVII.  
No Modification of Indemnification Agreement. Except as expressly provided
herein, the rights and obligations of Parent and Company in this Agreement shall
in no way affect their respective rights and obligations under the Merger
Agreement.

 

 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement effective the
date first above written.
 
 
TALK AMERICA HOLDINGS, INC..
 
By:___________________________
 
Name:
 
Title:
 

 
/s/____________________________
 
(AS REPRESENTATIVE)
 
 
[ESCROW AGENT]
 
By: /s/__________________________
 
Name:
 
Title:
 

 
12

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EXHIBIT A
 

 
STOCKHOLDER
 
SHARE OF ESCROW ASSETS
 
 
$