ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT, effective May 1, 2005, is made by and among:

UCN, Inc., a Delaware corporation (“Buyer”),

And

Telephone Electronics Corporation, a Mississippi corporation (“TEC”),

Transtel Communications, Inc., a Delaware corporation and subsidiary of TEC
(“TCI”),

Tel-America of Salt Lake City, Inc., a Utah corporation and subsidiary of TCI
(“TAI”),

Extelcom, Inc., a Utah corporation and subsidiary of TCI (“ECI”),

Communication Recovery Services, Inc., a Utah corporation and subsidiary of

TCI (“CRS”), and

National Network Corporation, a Colorado corporation and subsidiary of TCI
(“NNC”).

 

In consideration of the mutual promises contained herein, and intending to be
legally bound, the parties agree as follows:

ARTICLE I. DEFINITIONS/PURCHASE & SALE/CLOSING

1.1

Definitions.

For all purposes of this Agreement, except as otherwise expressly provided, the
terms defined in this Article I have the meanings assigned to them in this
Article I and include the plural as well as the singular, all accounting terms
not otherwise defined herein have the meanings assigned under generally accepted
accounting principles, all references in this Agreement to designated
“Articles,” “Sections” and other subdivisions are to the designated Articles,
Sections and other subdivisions of the body of this Agreement, pronouns of
either gender or neuter shall include, as appropriate, the other pronoun forms,
and the words “herein,” “hereof” and “here under” and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.

As used in this Agreement and the Exhibits and Disclosure Schedule delivered
pursuant to this Agreement, the following definitions shall apply, except as
otherwise expressly provided.

“Accepting Employee” shall have the meaning set forth in Section 4.7.

“Acquired Assets” means all tangible and intangible assets of Sellers relating
to or used in the operation of the business of the Sellers as of the Effective
Date, together with the business as a going concern associated with such assets,
including the following:

(a)        All customer accounts served by the Sellers, including all contracts
and agreements pertaining thereto (the “Customer Accounts”);

 

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(b)        All customer data associated with the Customer Accounts, including
all associated letters of authorization, customer service records, all related
computer tapes and/or records, accounts receivable status and history reports
and all customer service and provisioning history;

(c)

Accounts, notes, and other receivables;

(d)

Leased Real Property;

(e)        All fixed assets, switches, machinery, equipment and other tangible
personal property (including all furnishings and fixtures, materials, supplies
and other miscellaneous items) located at the premises of the Sellers and each
of their respective switch sites and co-location facilities; and all other fixed
assets, switches, machinery, equipment and other tangible personal property
related to or used in connection with the business of the Sellers, including all
furnishings and fixtures, materials, supplies and other miscellaneous items of
tangible personal property whether located at the foregoing premises, switch
sites or co-location facilities of the Sellers or at the premises of any
customer or supplier;

(f)         All right, title and interest in and to the Assigned Contracts and
any related leasehold improvements;

(g)        All insurance claims and rights under manufacturers’ and vendors’
warranties relating to the Acquired Assets, and all rights of recovery
pertaining to the Customer Accounts and accounts, notes, and other receivables
included in the Acquired Assets;

(h)        All financial, commercial, marketing, advertising, and administrative
books and records relating to the business of the Sellers in any form or medium,
including, computer databases, correspondence files, administrative guidelines,
personnel records relating to Accepting Employees (if and to the extent
permitted by applicable law) and employee manuals and all accounting and tax
files and records used in connection with or relating to the business of the
Sellers, as well as files relating to litigation that has been settled, closed,
or otherwise dismissed; provided, however, that Sellers shall enjoy a continuing
right of reasonable access during normal business hours to such assets for
purposes of claims resolution, litigation, and administration;

(i)         All computer systems and non-proprietary software, and all
electronic databases and other data processing and storage materials (regardless
of format or medium), used in or related to the business of the Sellers;

(j)

The Carrier Identification Codes of the Sellers;

(k)        Franchises, approvals, permits, licenses, orders, registrations,
certificates, and similar rights obtained from governments and governmental
agencies;

 

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(l)         All Intellectual Property, goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto, and rights there
under, remedies against infringements thereof, and rights to protection of
interests therein under the Laws of all jurisdictions; and

(m)       All materials, supplies, personal property and other assets, tangible
or intangible, used in or relating to the business of the Sellers, including the
goodwill of the business of the Sellers as a going concern;

provided, however, that the Acquired Assets shall not include (i) cash
(including certificates of deposit, money market accounts, and similar cash
equivalents) held by the Sellers as of the close of business on the day
immediately preceding the Effective Date, (ii) the corporate charter,
qualifications to conduct business as a foreign corporation, arrangements with
registered agents relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization, maintenance, and
existence of any of the Sellers as corporations, (iii) any deferred tax loss or
net operating loss of any of the Sellers; (iv) any offset, credit, or
counterclaim any of Sellers may have against any Person asserting a claim or
pursuing an Action against any of the Sellers that arises from or pertains to
any Liability that is not an Assumed Liability; (v) any of the intercompany
advances, credits, accounts receivable, accounts payable, notes or similar
obligations between any of TEC and the Sellers and between any of them and their
respective Affiliates; (vi) any stock or equity owned by any of the Sellers in
any of the other Sellers; (vii) any file, document, or other written
communication pertaining to any Action to which any of TEC and the Sellers is or
is threatened to be made a party that is not an Acquired Asset or Assumed
Liability and that any of TEC and the Sellers can reasonably claim is protected
from discovery by attorney-client privilege or attorney work product exception;
or (viii) any of the rights of Sellers under this Agreement.

“Action” means any action, complaint, petition, investigation, suit or other
proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator or Governmental Entity.

“Adverse Consequences” means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys’ fees and expenses.

“Affiliate” means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
a specified Person.

“Agreement” means this Agreement by and among Buyer, TEC, and Sellers as amended
or supplemented together with all Exhibits, Annexes, and Disclosure Schedule
attached or incorporated by reference.

“Approval” means any approval, authorization, consent, qualification or
registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or

 

 

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other communication required to be filed with or delivered to, any Governmental
Entity or any other Person.

“Assigned Contracts” means

(a)        All agreements with suppliers of telecommunications products and
services that are offered and sold to any of the customers under the Customer
Accounts;

(b)        All contracts for construction or for the purchase of equipment,
machinery and other items;

(c)        All contracts relating to the rental or use of equipment, other
personal property, or fixtures;

(d)

All Leases;

(e)        All contracts pertaining to the licensing or use of computer software
that is used or useful in the business of the Sellers;

(f)         Each contract upon which the business of Sellers is substantially
dependent or which is otherwise material to the Business; and

(g)

All other contracts affecting the business of Sellers.

“Assumed Liabilities” means, and is strictly limited to, those liabilities and
obligations of Sellers set forth on Exhibit D to this Agreement.

“Basis” means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.

“BSLC” means Blackburn & Stoll, LC, a limited liability company located in Salt
Lake City, Utah.

“Buyer Note” has the meaning set forth in Section 1.3(a), below.

“Closing” and “Closing Date” each have the meaning set forth in Section 1.5.

“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.

“Confidential Information” means any information concerning the businesses and
affairs of any of the Sellers that is not already generally available to the
public.

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“Disclosure Schedule” means the record of Schedules specified under Article II
delivered to Buyer by TEC and the Sellers following the Effective Date, but in
any event not later than May 30, 2005, containing all lists, descriptions,
exceptions, and other information and materials as are required to be included
therein by any of TEC and the Sellers pursuant to this Agreement.

“Effective Date” means May 1, 2005.

“Employee Benefit Plan” means any “employee benefit plan” (as such term is
defined in ERISA §3(3)) and any other employee benefit plan, program or
arrangement of any kind.

“Employee Pension Benefit Plan” has the meaning set forth in ERISA §3(2).

“Employee Welfare Benefit Plan” has the meaning set forth in ERISA §3(1).

“Encumbrance” means any claim, charge, easement, encumbrance, lease, covenant,
security interest, lien, option, pledge, rights of others, or restriction
whether imposed by agreement, Law, or equity.

“Environmental, Health, and Safety Requirements” shall mean 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, and all common law concerning public health and safety, worker
health and safety, pollution, or protection of the environment.

“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
Transtel for purposes of Code §414.

“Fiduciary” has the meaning set forth in ERISA §3(21).

“Governmental Entity” means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign, including the Federal Communications Commission and state
public utility and public service commissions, and any industry self-regulatory
or administrative agency, including the North American Numbering Plan
Administrator.

“Indemnified Party” has the meaning set forth in Section 8.3(a).

“Indemnifying Party” has the meaning set forth in Section 8.3(a).

“Intellectual Property” means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and

 

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reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
slogans, trade names, corporate names, Internet domain names, and rights in
telephone numbers, 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, know-how,
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 source code, executable code, data,
databases, and related documentation), (g) all advertising and promotional
materials, (h) all other proprietary rights, and (i) all copies and tangible
embodiments thereof (in whatever form or medium).

“Knowledge” has the meaning set forth in Section 9.14.

“Law” means any constitutional provision, statute or other law, rule,
regulation, or other pronouncement having the effect of law.

“Lease Consents” means the written consents of the applicable lessors for the
assignment of each of the Leases pertaining to the Leased Real Property in form
and substance satisfactory to Buyer.

“Leased Real Property” means all leasehold or subleasehold estates and other
rights to use or occupy any land, buildings, structures, improvements, fixtures,
or other interest in real property held by any of the Sellers.

“Leases” means all leases, subleases, licenses, concessions and other agreements
(written or oral), including all amendments, extensions, renewals, guaranties,
and other agreements with respect thereto, pursuant to which any of the Sellers
holds any Leased Real Property, including the right to all security deposits and
other amounts and instruments deposited by or on behalf of any of the Sellers
there under.

“Liability” means any liability or obligation of whatever kind or nature
(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.

“Management Agreement” is identified in Section 1.4.

“Material Adverse Effect” or “Material Adverse Change” means any effect or
change that would be (or could reasonably be expected to be) materially adverse
to ownership and use of the Acquired Assets taken as a whole, or the ability of
any Party to consummate timely the transactions contemplated hereby (regardless
of whether or not such adverse effect or change can be or has been cured at any
time), including any adverse change, event, development, or effect arising from
or relating to changes in Laws, rules, regulations, orders, or other binding
directives issued by any governmental entity.

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“Most Recent Balance Sheet” has the meaning set forth in Section 2.9.

“Multiemployer Plan” has the meaning set forth in ERISA §3(37).

“Order” means any decree, injunction, judgment, order, ruling, assessment or
writ.

“Ordinary Course of Business” means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).

“Party” means a signatory to this Agreement and “Parties” means all the
signatories to this Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation.

“PBL” means Parsons Behle & Latimer, a professional law corporation located in
Salt Lake City, Utah.

“Permit” means any license, permit, franchise, consent, registration,
certificate of authority and other approval (including, without limitation,
those relating to Federal Communications Commission and state public service
commission certifications and Carrier Identification Codes issued by the North
American Numbering Plan Administrator) or Order, or any waiver of the foregoing,
required to be issued by any Governmental Entity.

“Person” means an association, a corporation, a limited liability company, an
individual, a partnership, a trust or any other entity or organization,
including a Governmental Entity.

“Prohibited Transaction” has the meaning set forth in ERISA §406 and Code §4975.

“Reportable Event” has the meaning set forth in ERISA §4043.

“Security Agreement” has the meaning set forth in Section 1.4(b)(ii), below.

“Sellers” means TCI, TAI, ECI, CRS, and NNC, collectively; and “Seller” means
any one of the foregoing.

“Tax” or “Taxes” means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, service fund, 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 and including any obligations to indemnify or
otherwise assume or succeed to the Tax liability of any other Person.

 

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“Tax Return” means a report, return or other information required to be supplied
to a Governmental Entity with respect to Taxes including, where permitted or
required, combined or consolidated returns for any group of entities that
includes Seller.

“TCI Financial Statements” has the meaning set forth in Section 2.8.

“Third-Party Claim” has the meaning set forth in Section 8.3(a).

1.2.

Purchase and Sale of Assets.

On and subject to the terms and conditions of this Agreement, the Buyer agrees
to purchase from Sellers, and each of the Sellers agrees to sell, transfer,
convey, and deliver to the Buyer, all of the Acquired Assets at the times and
for the consideration specified below in this Article I.

1.3.

Purchase Price; Assumption of Certain Liabilities.

(a)        Buyer agrees to pay to Sellers at the Closing the aggregate amount of
$2,150,000 (the “Purchase Price”) by delivery of its promissory note (the “Buyer
Note”) in the form of Exhibit A attached hereto.

(b)        On and subject to the terms and conditions of this Agreement, Buyer
agrees to assume and become responsible for all Assumed Liabilities at the
Closing. Buyer will not assume or have any responsibility, however, with respect
to any other Liability of any of TEC or the Sellers not specifically included in
the Assumed Liabilities.

(c)        The dollar amount of the Purchase Price and Assumed Liabilities are
allocated among the Sellers and to the Acquired Assets in accordance with Annex
I attached hereto. The Parties acknowledge that such allocations are made in
accordance with Section 1060 of the Code and the regulations adopted there
under. The Parties shall report, act, and file Tax Returns (including, but not
limited to Internal Revenue Service Form 8594) in all respects and for all
purposes consistent with such allocation. None of the Parties shall take any
position (whether in audits, tax returns or otherwise) that is inconsistent with
allocations set forth in Annex I unless required to do so by applicable Law.

1.4

Deliveries.

Immediately following the execution of this Agreement:

(a)

The Sellers shall deliver to PBL:

(i)         Signed original general assignment and bill of sale in the form
attached hereto as Exhibit C and such additional instruments of conveyance as

 

 

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Buyer may reasonably request that are necessary to vest in Buyer good title to
the Acquired Assets as of the Effective Date;

(ii)         Certificates of good standing for TEC and each of the Sellers
issued by the Secretary of State (or comparable officer) of the jurisdiction of
each such Person’s organization (which shall be delivered as soon as they can be
obtained by TEC and the Sellers); and

(iii)        Signed original copy of the Management Agreement in the form
attached as Exhibit E.

(b)

The Buyer shall deliver to BSLC:

(i)         Signed original instrument of assumption for the Assumed Liabilities
in the forms attached hereto as Exhibit D and such additional instruments as TEC
and the Sellers may reasonably request that are necessary to confirm Buyer’s
assumption of the Assumed Liabilities as of the Effective Date;

(ii)         The signed original Buyer Note and signed original security
agreement granting a security interest in the Acquired Assets to secure payment
of the Buyer Note in the form attached hereto as Exhibit B (the “Security
Agreement”);

(iii)        A certificate of good standing for Buyer issued by the Secretary of
State of the state of Delaware; and

(iv)        Signed original copy of the Management Agreement in the form
attached as Exhibit E.

1.5

Closing.

On the Business Day following the day on which any of the parties receives (a)
Approval by the Federal Communications Commission for transfer of the Acquired
Assets from Sellers to Buyer, (b) Approval of the California Public Utilities
Commission for transfer of the Acquired Assets from Sellers to Buyer, and (c)
Approval of the North American Numbering Plan Administrator for transfer of the
Acquired Assets from Sellers to Buyer, it or they shall give written notice
thereof (an “Approval Notice”) to all other Parties, PBL, and BSLC. The Closing
(the “Closing”) shall occur on the next Business Day (the “Closing Date”)
following the day on which the last of the foregoing Approval Notices is given.
On the Closing Date, PBL will cause to be delivered to Buyer the instruments
described in Section 1.4(a)(i), and BSLC will cause to be delivered to Sellers
the instruments described in Sections 1.4(b)(i) and (ii).

 

 

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ARTICLE II. REPRESENTATIONS AND WARRANTIES CONCERNING

TEC AND SELLERS

 

Each of TEC and the Sellers represents and warrants to Buyer that the statements
contained in this Article II are correct and complete as of the date of this
Agreement.

2.1

Organization.

Each of TEC and the Sellers is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation.

2.2

Authorization of Transaction.

Each of TEC and the Sellers has full power and authority (including full
corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of each of TEC and the Sellers, enforceable in
accordance with its terms and conditions. Except as contemplated by Section 4.6,
none of TEC and the Sellers need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Governmental Entity in
order to consummate the transactions contemplated by this Agreement. The
execution, delivery, and performance of this Agreement and all other agreements
contemplated hereby have been duly authorized by each of TEC and the Sellers.

2.3

Non-contravention.

Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will (a) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
any of TEC and the Sellers is subject or any provision of its charter, bylaws,
or other governing documents, (b) except as set forth in Schedule 2.3, 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 TEC and the Sellers is a party
or by which it is bound or to which any of its assets are subject, or (c) result
in the imposition or creation of an Encumbrance upon or with respect to any of
the Acquired Assets.

2.4

Permits; Compliance with Law.

The Sellers hold all Permits required for providing products and services to the
Customer Accounts and are operating in compliance therewith, and all such
Permits are valid and in full force and effect, except where the failure to hold
any such Permit or to operate in compliance therewith or the invalidity or
ineffectiveness thereof would not reasonably be expected to have a Material
Adverse Effect, and, to the Knowledge of each of TEC and the Sellers no
suspension, cancellation, or termination of such Permits has been threatened or
is imminent, except for any suspension, cancellation, or termination that would
not reasonably be expected to have a

 

 

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Material Adverse Effect. Sellers have dealt with the customers under the
Customer Accounts and account debtors under the accounts receivable included in
the Acquired Assets in compliance with all Laws applicable thereto, except where
the failure to comply with such Laws would not reasonably be expected to have a
Material Adverse Effect.

2.5

Litigation; Orders.

Except as set forth in Schedule 2.5, there is no Order or Action pending or, to
the Knowledge of any of TEC and the Seller, threatened against or affecting any
of TEC and the Sellers or any of its properties, which (individually or in the
aggregate) would reasonably be expected to have a Material Adverse Effect.

2.6

Title to Assets.

Each of The Sellers has good and marketable title to, or a valid leasehold
interest in, its properties and assets used by it, located on its premises, or
shown on the Most Recent Balance Sheet or acquired after the date thereof, free
and clear of all Encumbrances. Without limiting the generality of the foregoing,
subject to obtaining the Approvals contemplated by Section 4.6, the Sellers have
good and marketable title to all of the Acquired Assets, free and clear of any
Encumbrances or restriction on transfer.

2.7

No Brokers.

None of TEC and the Sellers has any Liability to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement for which Buyer could become liable or obligated.

2.8

Financial Statements.

Presented in Schedule 2.8 are financial statements of the Sellers consisting of
the 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, 2004, 2003, and 2002, and the unaudited consolidated balance sheet
and statements of income and cash flow as of and for the three month period
ended March 31, 2005 (the “TCI Financial Statements”). The TCI Financial
Statements (including the notes thereto) have been prepared in accordance with
United States generally accepted accounting principles consistently applied
throughout the periods covered thereby, present fairly the consolidated
financial condition of the Sellers as of such dates and the consolidated results
of operations of Sellers for such periods, are correct and complete, and are
consistent with the books and records of Sellers (which books and records are
correct and complete).

2.9

Events Subsequent to TCI Financial Statements.

Except as described in Schedule 2.9, since March 31, 2005, the date of the most
recent balance sheet included in the TCI Financial Statements (the “Most Recent
Balance Sheet”), there

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has not been any Material Adverse Change. Without limiting the generality of the
foregoing, since that date:

(a)        None of the Sellers has sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;

(b)        No party (including TEC and any of the Sellers) has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses) involving
more than $25,000 to which any of the Sellers is a party or by which any of them
is bound;

(c)        None of the Sellers has imposed any Encumbrances upon any of its
assets, tangible or intangible;

(d)        None of the Sellers has delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;

(e)        None of the Sellers has transferred, assigned, or granted any license
or sublicense of any rights under or with respect to any Intellectual Property;

(f)         None of the Sellers has experienced any damage, destruction, or loss
(whether or not covered by insurance) to any of the Acquired Assets;

(g)        None of the Sellers has made any loan to, or entered into any other
transaction with TEC or any of the directors, officers, and employees TEC and
any of the Sellers outside the Ordinary Course of Business;

(h)        There has not been any other material occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of Business
involving any of the Sellers;

(i)         None of TEC and the Sellers has disclosed any Confidential
Information; and

(j)         None of TEC and the Sellers has committed to any of the foregoing.

2.10

Undisclosed Liabilities.

None of the Sellers has any Liability (and there is no Basis for any present or
future Action against any of them giving rise to any Liability), except for (i)
Liabilities set forth on the face of the Most Recent Balance Sheet (rather than
in any notes thereto), and (ii) Liabilities that have arisen after the Most
Recent Balance Sheet in the Ordinary Course of Business (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).

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2.11

Tax Matters.

(a)        Each of the Sellers has filed all Tax Returns, other than income Tax
Returns, that it was required to file under applicable Laws and regulations. All
such Tax Returns, other than income Tax Returns, were correct and complete in
all respects and were prepared in substantial compliance with all applicable
Laws and regulations. All Taxes, other than income Tax, due and owing by any of
the Sellers (whether or not shown on any such Tax Return) have been paid. None
of the Sellers currently is the beneficiary of any extension of time within
which to file any such Tax Return, other than income Tax Returns.

(b)        There are no Encumbrances for Taxes (other than Taxes not yet due and
payable) upon any of the assets of the Sellers.

(c)        Each of the Sellers has, as of the Effective Date, withheld and paid
all Taxes required to have been withheld and paid in connection with any amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party.

2.12

Real Property.

(a)        Except for Leased Real Property, none of the Sellers has any fee or
other ownership or possessory right to any land, buildings, or structures.

(b)        Schedule 2.12 sets forth the address of each parcel of Leased Real
Property, and a true and complete list of all Leases for each such Leased Real
Property (including the date and name of the parties to such Lease document).
TEC and Sellers have delivered to Buyer a true and complete copy of each such
Lease document, and in the case of any oral Lease, a written summary of the
material terms of such Lease. Except as set forth in Schedule 2.12, with respect
to each of the Leases:

(i)         Such Lease is legal, valid, binding, enforceable and in full force
and effect;

(ii)         The transactions contemplated by this Agreement do not require the
consent of any other party to such Lease (except for those Leases for which
Lease Consents are required), will not result in a breach of or default under
such Lease, and will not otherwise cause such Lease to cease to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the Closing;

(iii)        None of the Sellers’ possession and quiet enjoyment of the Leased
Real Property under such Lease has been disturbed and there are no disputes with
respect to such Lease;

(iv)        None of the Sellers, nor any other party to the Lease is in breach
of or default under such Lease, and no event has occurred or circumstance exists

 

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that, with the delivery of notice, the passage of time or both, would constitute
such a breach or default, or permit the termination, modification or
acceleration of rent under such Lease;

(v)        No security deposit or portion thereof deposited with respect to such
Lease has been applied in respect of a breach of or default under such Lease
that has not been redeposited in full;

(vi)        None of the Sellers owes, or will owe in the future, any brokerage
commissions or finder’s fees with respect to such Lease;

(v)        The other party to such Lease is not an Affiliate of, and otherwise
does not have any economic interest in, TEC or any of the Sellers;

(vi)        None of the Sellers has subleased, licensed or otherwise granted any
Person the right to use or occupy the Leased Real Property or any portion
thereof;

(vii)       None of the Sellers has collaterally assigned or granted any other
Encumbrance in such Lease or any interest therein; and

(viii)      There are no Encumbrances on the estate or interest created by such
Lease.

(c)        The Leased Real Property identified in Schedule 2.12 comprise all of
the real property used or intended to be used in, or otherwise related to,
Sellers’ business; and none of the Sellers is a party to any agreement or option
to purchase any real property or interest therein.

(d)        There is no condemnation, expropriation or other proceeding in
eminent domain, pending or, to the Knowledge of any of TEC and the Sellers,
threatened, affecting any parcel of Leased Real Property or any portion thereof
or interest therein. There is no injunction, decree, order, writ or judgment
outstanding, or any claim, litigation, administrative action or similar
proceeding, pending or threatened, relating to the ownership, lease, use or
occupancy of the Leased Real Property or any portion thereof, or the operation
of Sellers’ business as currently conducted thereon.

(e)         All water, oil, gas, electrical, steam, compressed air,
telecommunications, sewer, storm and waste water systems and other utility
services or systems for the Leased Real Property have been installed and are
operational and sufficient for the operation of Sellers’ business as currently
conducted thereon.

(f)         All certificates of occupancy, permits, licenses, franchises,
approvals and authorizations of all governmental authorities, boards of fire
underwriters, associations or any other entity having jurisdiction over the
Leased Real Property that are required or

 

 

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appropriate to use or occupy the Leased Real Property or operate Sellers’
business as currently conducted thereon, have been issued and are in full force
and effect.

(g)        The current use and occupancy of the Leased Real Property and the
operation of Sellers’ business as currently conducted thereon do not, to the
Knowledge of any of TEC and the Sellers, violate any easement, covenant,
condition, restriction or similar provision in any instrument of record or other
unrecorded agreement affecting such Leased Real Property, and none of TEC or
Sellers has received any notice of violation of any such instruments, agreements
or documents, and there is no Basis for the issuance of any such notice or the
taking of any action for such violation.

(h)        None of the Leased Real Property or any portion thereof is located in
a flood hazard area (as defined by the Federal Emergency Management Agency).

2.13

Intellectual Property.

(a)        Sellers own and possess or have the right to use pursuant to a valid
and enforceable written license, sublicense, agreement, or permission, all
Intellectual Property necessary for the operation of the business of the Sellers
as presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Sellers immediately prior to the
Effective Date will be owned or available for use by Buyer on identical terms
and conditions immediately subsequent to the Effective Date. Each of the Sellers
has taken all necessary action to maintain and protect each item of Intellectual
Property that they own or use.

(b)        None of the Sellers has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of third parties and, except as set forth in Schedule 2.13, none of TEC
and the Sellers and the directors and officers (and employees with
responsibility for Intellectual Property matters) of TEC and the Sellers has
ever received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that any of the Sellers must license or refrain from using any Intellectual
Property rights of any third party). Except as set forth in Schedule 2.13, to
the Knowledge of any of TEC and the Sellers and the directors and officers (and
employees with responsibility for Intellectual Property matters) of TEC and the
Sellers, no third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of the
Sellers.

(c)        Schedule 2.13 identifies each trademark (registered and
unregistered), service mark, trade name, or Internet domain name, computer
software item (other than commercially available off-the-shelf software
purchased or licensed for less than a total cost of $1,000 in the aggregate) and
each material unregistered copyright used by any of the Sellers. With respect to
each item of Intellectual Property required to be identified in Schedule 2.13:

 

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(i)         The Sellers own and possess all right, title, and interest in and to
the item, free and clear of any Encumbrance, license, or other restriction or
limitation regarding use or disclosure;

(ii)         The item is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;

(iii)        No Action is pending or, to the Knowledge of any of TEC and the
Sellers and the directors and officers (and employees with responsibility for
Intellectual Property matters) of TEC and the Sellers, is threatened that
challenges the legality, validity, enforceability, use, or ownership of the
item, and there are no grounds for the same;

(iv)        None of the Sellers has ever agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other conflict with
respect to the item; and

(v)        Except as set forth in Schedule 2.13, no loss or expiration of the
item is threatened, pending, or reasonably foreseeable.

(d)        Schedule 2.13 identifies each item of Intellectual Property that any
third party owns and that any of the Sellers uses pursuant to license,
sublicense, agreement, or permission. Sellers have delivered to Buyer correct
and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of Intellectual
Property required to be identified in Schedule 2.13:

(i)         The license, sublicense, agreement, or permission covering the item
is legal, valid, binding, enforceable, and in full force and effect;

(ii)         The license, sublicense, agreement, or permission will continue to
be legal, valid, binding, enforceable, and in full force and effect on identical
terms following consummation of the transactions contemplated hereby;

(iii)        No party to the license, sublicense, agreement, or permission 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 there under;

(iv)        No party to the license, sublicense, agreement, or permission has
repudiated any provision thereof;

(v)        With respect to each sublicense, the representations and warranties
set forth in subsections (i) through (iv) above are true and correct with
respect to the underlying license;

 

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(vi)        The underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;

(vii)       No Action is pending or, to the Knowledge of any of TEC and the
Sellers and the directors and officers (and employees with responsibility for
Intellectual Property matters) of TEC and the Sellers, is threatened that
challenges the legality, validity, or enforceability of the underlying item of
Intellectual Property, and there are no grounds for the same; and

(viii)      None of the Sellers has granted any sublicense or similar right with
respect to the license, sublicense, agreement, or permission.

(e)        To the Knowledge of any of TEC and the Sellers and the directors and
officers (and employees with responsibility for Intellectual Property matters)
of TEC and the Sellers: (i) none of the Sellers has in the past nor will
interfere with, infringe upon, misappropriate, or otherwise come into conflict
with, any Intellectual Property rights of third parties as a result of the
continued operation of its business as presently conducted and as presently
proposed to be conducted; (ii) there are no facts that indicate a likelihood of
any of the foregoing; and (iii) except as set forth in Schedule 2.13, no notices
regarding any of the foregoing (including, without limitation, any demands or
offers to license any Intellectual Property from any third party) have been
received.

2.14

Tangible Assets.

Except as set forth in Schedule 2.14, the Sellers own or lease all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of the
business of the Sellers as presently conducted and as presently proposed to be
conducted. Each such tangible asset is free from 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 and presently is
proposed to be used.

2.15

Contracts.

Schedule 2.15 lists the following contracts and other agreements to which any of
the Sellers is a party:

(a)         Any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of $25,000 per annum;

(b)        Any agreement (or group of related agreements) for the purchase or
sale of any telecommunications products or services, the performance of which
will extend over a period of more than one year or involve consideration in
excess of $25,000;

(c)        Any agreement concerning a partnership or joint venture;

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(d)        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 $25,000 or under which it has
imposed an Encumbrance on any of its assets, tangible or intangible;

(e)         Any agreement concerning confidentiality or non-competition;

(f)         Any agreement with any of TEC and its Affiliates (other than
Sellers);

(g)         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, and employees;

(h)         Any collective bargaining agreement;

(i)          Any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in excess of
$75,000 or providing severance benefits;

(j)         Any agreement under which it has advanced or loaned any amount to
any of its directors, officers, and employees outside the Ordinary Course of
Business;

(k)        Any agreement under which the consequences of a default or
termination could have a Material Adverse Effect;

(l)          Any settlements, conciliations or similar agreements, the
performance of which will involve payment after the Effective Date of
consideration in excess of $10,000, in the aggregate;

(m)        Any agreement under which any of the Sellers has advanced or loaned
any other Person amounts in the aggregate exceeding $25,000; or

(n)         Any other agreement (or group of related agreements) the performance
of which involves consideration in excess of $50,000.

TEC and Sellers have delivered to Buyer a correct and complete copy of each
written agreement (as amended to date) listed in Schedule 2.15 and a written
summary setting forth the terms and conditions of each oral agreement referred
to in Schedule 2.15. With respect to each such agreement that is an Assigned
Contract: (w) the agreement is legal, valid, binding, enforceable, and in full
force and effect; (x) except as set forth in Schedule 2.15, the agreement 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; (y) no party 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, under the agreement; and (z) no
party has repudiated any provision of the agreement.

 

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2.16

Notes and Accounts Receivable.

All notes and accounts receivable of the Sellers are reflected properly on their
books and records, are valid receivables subject to no setoffs or counterclaims,
are current and collectible, and will be collected in accordance with their
terms at their recorded amounts, subject only to the reserve for bad debts set
forth on the face of the Most Recent Balance Sheet (rather than in any notes
thereto) as adjusted for the passage of time through the Effective Date in
accordance with the past custom and practice of the Sellers.

2.17

Insurance.

Each of the Sellers has been covered during the past ten years by insurance in
scope and amount customary and reasonable for the businesses in which they have
engaged during the aforementioned period.

2.18

Litigation.

Schedule 2.18 sets forth (excluding collection and customer bankruptcy matters
that arose in the Ordinary Course of Business) each instance in which any of the
Sellers (i) is subject to any outstanding injunction, judgment, order, decree,
ruling, or charge or (ii) is a party or is threatened to be made a party to any
Action of, in, or before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any arbitrator.
None of the Actions set forth in Schedule 2.18 is included in the Assumed
Liabilities, and none of the Actions could result in any Material Adverse
Change. None of TEC and the Sellers and the directors and officers (and
employees with responsibility for litigation matters) of TEC and the Sellers has
any reason to believe that any such Action, which could result in any Material
Adverse Change, may be brought or threatened against the Sellers or that there
is any Basis for the foregoing.

2.19

Employees.

(a)         With respect to the business of the Sellers:

(i)         There is no collective bargaining agreement or relationship with any
labor organization;

(ii)         No labor organization or group of employees has filed any
representation petition or made any written or oral demand for recognition;

(iii)        To the Knowledge of any of TEC and the Sellers, no union organizing
or decertification efforts are underway or threatened and no other question
concerning representation exists;

(iv)        No labor strike, work stoppage, slowdown, or other material labor
dispute has occurred, and none is underway or, to the Knowledge of any of TEC
and the Sellers, threatened;

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(v)        There is no workman’s compensation liability, experience or matter
that could have a Material Adverse Effect;

(vi)        there is no employment-related charge, complaint, grievance,
investigation, inquiry or obligation of any kind, pending or threatened in any
forum, relating to an alleged violation or breach by any of the Sellers (or its
or their officers or directors) of any Law, regulation or contract; and,

(vii)       No employee or agent of any of the Sellers has committed any act or
omission giving rise to material liability for any violation or breach
identified in Section 2.19(a)(vi).

(b)        Except as set forth in Schedule 2.19, (i) there are no employment
contracts or severance agreements with any employees of any of the Sellers, and
(ii) there are no written personnel policies, rules or procedures applicable to
employees of any of the Sellers.

(c)        With respect to this transaction, any notice required under any Law
or collective bargaining agreement has been given and all bargaining obligations
with any employee representative have been satisfied. None of the Sellers has
implemented any plant closing or layoff of employees that could implicate the
Worker Adjustment and Retraining Notification Act of 1988, as amended, or any
similar foreign, state, or local Law, regulation, or ordinance.

2.20

Employee Benefits.

Schedule 2.20 lists each Employee Benefit Plan that any of TEC and the Sellers
maintains, to which any of the Sellers contributes or has any obligation to
contribute, or with respect to which any of the Sellers has any Liability.

(a)        Each such Employee Benefit Plan (and each related trust, insurance
contract, or fund) has been maintained, funded and administered in accordance
with the terms of such Employee Benefit Plan and complies in form and in
operation in all respects with the applicable requirements of ERISA, the Code,
and other applicable Laws.

(b)        The requirements of COBRA have been met with respect to each such
Employee Benefit Plan and each Employee Benefit Plan maintained by an ERISA
Affiliate that is an Employee Welfare Benefit Plan subject to COBRA.

(c)         All contributions (including all employer contributions and employee
salary reduction contributions) that are due have been made. All premiums or
other payments for all periods ending on or before the Effective Date have been
paid with respect to each such Employee Benefit Plan that is an Employee Welfare
Benefit Plan.

 

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2.21

Guaranties.

None of the Sellers is a guarantor or otherwise is liable for any Liability
(including indebtedness) of any other Person that is not one of the Sellers.

2.22

Environmental, Health, and Safety Matters.

(a)        Each of the Sellers and their respective predecessors and Affiliates
has complied and are in compliance with all Environmental, Health, and Safety
Requirements.

(b)        Without limiting the generality of the foregoing, each of the Sellers
and their respective Affiliates have obtained and complied with, and are in
compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental, Health, and Safety Requirements for the
occupation of their facilities and the operation of their business.

(c)        Except as set forth in Schedule 2.22, none of the Sellers nor their
respective predecessors or Affiliates has received any written or oral notice,
report or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any Liabilities, including
any investigatory, remedial or corrective obligations, relating to any of them
or their facilities arising under Environmental, Health, and Safety
Requirements.

2.23

Certain Business Relationships with Sellers.

Except as set forth in Schedule 2.23, none of TEC, its Affiliates, TEC’s
directors, officers, employees and shareholders and the Sellers’ directors,
officers, and employees has been involved in any business arrangement or
relationship with any of the Sellers within the past 12 months, and none of TEC,
its Affiliates, TEC’s directors, officers, employees and shareholders, and any
of the Sellers’ directors, officers, and employees owns any asset, tangible or
intangible, that is used in the business of the Sellers.

2.24

Customers and Suppliers.

(a)        Schedule 2.24 lists the 100 largest customers of the Sellers (on a
consolidated basis) for the fiscal year ended December 31, 2004.

(b)        Since the date of the Most Recent Balance Sheet, no supplier of any
of the Sellers has indicated that it shall stop, or substantially modify the
price or availability of telecommunications products or services to any of the
Sellers, and, except as set forth in Schedule 2.24, no customer listed on
Schedule 2.24 has indicated that it shall stop, or decrease the rate of, buying
telecommunications products or services from any of the Sellers.

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2.25

Disclosure.

The representations and warranties contained in Sections 2.1 through 2.24 do not
contain any untrue statement of fact or omit to state any fact necessary in
order to make the statements and information contained therein not misleading.

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to TEC and each of the Sellers that the statements
contained in this Article III are correct and complete as of the date of this
Agreement.

3.1

Organization.

Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation.

3.2

Authorization of Transaction.

Buyer has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of Buyer, enforceable in accordance with its terms and conditions. Except as
contemplated by Section 4.6, Buyer need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any Governmental
Entity in order to consummate the transactions contemplated by this Agreement.
The execution, delivery, and performance of this Agreement and all other
agreements contemplated hereby have been duly authorized by Buyer.

3.3

Non-contravention.

Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any Governmental Entity, or court to which Buyer is
subject or any provision of its charter, bylaws, or other governing documents or
(ii) 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 Buyer is a party or by which
it is bound or to which any of its assets are subject.

3.4

No Brokers.

Buyer has no Liability 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 TEC or Sellers could become liable or obligated.

 

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ARTICLE IV. COVENANTS WITH RESPECT TO CONDUCT OF

BUSINESS PRIOR TO THE CLOSING

4.1

Access and Control.

Prior to the Closing, each of TEC and the Sellers shall authorize and permit
Buyer and its officers, employees, counsel, accountants, financial advisers,
consultants, and other representatives with reasonable access during normal
business hours, upon reasonable notice and in such manner as will not
unreasonably interfere with the business activities of TEC or the Sellers, to
all of the properties, books, records, operating instructions and procedures,
and all other information with respect to the ownership and use of the Acquired
Assets as Buyer may from time to time reasonably request, and to make copies of
such books, records and other documents and to discuss the Acquired Assets with
such officers, employees, and agents of TEC and the Sellers who have
responsibility for information pertaining to the Acquired Assets, as Buyer
considers necessary or appropriate for the purposes of familiarizing itself with
the Acquired Assets and obtaining any necessary Approvals of or Permits for the
transactions contemplated by this Agreement, except to the extent that
furnishing any such information or data would violate any Law, Order, Permit or
contract applicable to Seller or to which Seller is subject.

4.2

Material Adverse Changes.

Prior to the Closing, each of TEC and the Sellers will promptly notify Buyer of
any event of which it (or they) obtains Knowledge that has had or would
reasonably be expected to have a Material Adverse Effect or which if known as of
the date hereof would have been required to be disclosed to Buyer. No such
notification shall affect the representations or warranties of the Parties or
the conditions to their respective obligations hereunder.

4.3

Maintenance of the Acquired Assets By Seller.

During the period beginning on the date hereof and ending on the Closing Date,
each of TEC and the Sellers will use its best efforts to preserve the goodwill
of customers serviced under the Customer Accounts that are consistent with
industry standards for customer service. Prior to the Closing, each of the
Sellers agrees with and for the benefit of Buyer that it shall not without the
prior consent in writing of Buyer, which may not be unreasonably withheld:

(a)        Except as required by their terms, amend, terminate, renew or
renegotiate any contract included in the Acquired Assets or default (or take or
omit to take any action that, with or without the giving of notice or passage of
time, would constitute a default) in any of its obligations under any contract
included in the Acquired Assets;

(b)        Terminate or fail to renew or preserve any Permits that would
reasonably be expected to have a Material Adverse Effect;

(c)        Sell, transfer, mortgage, encumber or otherwise dispose of any
Acquired Assets, except as contemplated by the Management Agreement; or

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(d)        Agree to or make any commitment to take any actions prohibited by
this Section 4.3.

4.4

Maintenance of the Acquired Assets By Buyer.

During the period beginning on the Effective Date and continuing through the
Closing Date, Buyer will use its best efforts to preserve the goodwill of
customers serviced under the Customer Accounts that are consistent with industry
standards for customer service. Prior to the Closing, Buyer agrees with and for
the benefit of Sellers that it shall not other than in the Ordinary Course of
Business or without the prior consent in writing of Sellers, which may not be
unreasonably withheld:

(a)        Terminate any Customer Account included in the Acquired Assets,
except Customer Accounts terminated for non-payment consistent with the past
custom and practice of Seller, Customer Accounts that average monthly billing
for call minutes of $5.00 or less over a term of three months, or Customer
Accounts the Buyer is unable to service or determines are uneconomical to
service;

(b)        Default (or take or omit to take any action that, with or without the
giving of notice or passage of time, would constitute a default) in any of its
obligations under any contract included in the Acquired Assets;

(c)        Terminate or fail to renew or preserve any Permits that would
reasonably be expected to have a Material Adverse Effect;

(d)

Sell any of the Acquired Assets; or

(e)        Agree to or make any commitment to take any actions prohibited by
this Section 4.4.

4.5

Notification of Certain Matters.

Each Party shall give prompt notice to the other Parties of (a) the occurrence,
or failure to occur, of any event that would be likely to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the Effective Date to the
Closing Date, and (b) any failure of the Party to comply with or satisfy, in any
material respect, any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement. No such notification shall affect the
representations or warranties of the Parties or the conditions to their
respective obligations hereunder.

4.6

Consents

(a)        Sellers and Buyer each agree to cooperate and use their best efforts
to obtain all Approvals from all third parties (including Governmental Entities)
that may be necessary to consummate the transactions contemplated by this
Agreement.

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(b)        Buyer shall promptly, with the reasonable assistance of and in
consultation with Sellers, prepare and file, or cause to be prepared and filed,
any and all applications necessary to obtain the Approval of all relevant
Governmental Entities for Buyer to purchase the Acquired Assets. Buyer and
Sellers shall prosecute such applications with all reasonable diligence and
otherwise use their reasonable best efforts (including, with respect to Buyer,
providing financial assurance to a Governmental Entity, to the extent required)
to obtain grants of approval as expeditiously as practicable. Each of Buyer and
Sellers shall bear their own expenses of prosecuting such applications;
provided, that Buyer shall bear all fees payable by Buyer and/or Sellers to any
Governmental Entity and local counsel fees, where necessary as determined in the
sole discretion of Buyer, in connection with the filing and prosecution of the
applications necessary to obtain such Approvals and any other fees or Taxes
accruing after the Effective Date imposed by Governmental Entities in connection
with obtaining Approval of the transfer of the Acquired Assets to Buyer.

(c)        In the event the North American Numbering Plan Administrator fails or
refuses to transfer control of the Carrier Identification Codes directly from
Seller to Buyer, (i) Seller agrees to transfer the Carrier Identification Codes
to a subsidiary of Seller that has no assets, liabilities, or business
operations, (ii) agree after such transfer to sell all of the capital stock of
such subsidiary to Buyer for no consideration in addition to the purchase price
provided for in Section 1.3, (iii) use its best efforts to obtain approval from
the North American Numbering Plan Administrator for transfer of control of the
Carrier Identification Codes resulting from the sale of the subsidiary stock to
Buyer, and (iv) upon obtaining such approval transfer and convey the capital
stock of such subsidiary to Buyer.

(d)        Buyer acknowledges that the contracts governing certain of the
Customer Accounts require the consent of customers to assignment of their
Customer Accounts. Each of Sellers and Buyer agree to cooperate and use their
best efforts to obtain the consents of such customers. Buyer agrees the failure
to obtain one or more of such consents is not a Material Adverse Effect and is
not a default under this Agreement or the breach of any representation of
Sellers. If a consent to assignment under a contract governing a Customer
Account is not obtained, the Parties agree to take all action necessary to
terminate the Customer Account as soon as possible in accordance with the terms
of the contract.

(e)        Each of the Sellers shall promptly, with the reasonable assistance of
and in consultation with Buyer, give any notices to third parties, and will use
its best efforts to obtain the Lease Consents.

4.7

Offers of Employment.

Sellers agree and acknowledge that Buyer may make offers of employment to
persons employed by Seller on the Effective Date. Any person who accepts such an
offer of employment with Buyer shall be an “Accepting Employee” and shall be
employed by Buyer on such terms and conditions as Buyer and each such Accepting
Employee may mutually agree. Seller agrees

 

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and acknowledges that the Accepting Employee’s employment with Buyer does not
violate and will not violate any non-disclosure, non-solicitation, or
non-competition obligation the Accepting Employee may have with any of the
Sellers, and waives any claim against the Accepting Employee and Buyer arising
there from. Notwithstanding the foregoing, Buyer does not assume, and has no
Liability to any of TEC and the Sellers or any of the employees of any of the
Sellers prior to the Effective Date with respect to, any Employee Benefit Plan,
Employee Pension Benefit Plan, Employee Welfare Benefit Plan, COBRA obligation,
unemployment payment, or other right or obligation arising by Law or from the
employment arrangement between any such employees and any of TEC and the
Sellers.

4.8

Supplementation of Schedules and Exhibits.

The parties acknowledge that as of the date of execution of this Agreement,
certain of the Schedules and Exhibits referenced herein have not been completed
or reviewed by the Sellers for accuracy. Accordingly, TEC and the Sellers shall
have through May 31, 2005, within which to complete, supplement, and/or amend
the various Schedules and Exhibits (provided that they shall use their best
efforts to do so prior to May 31, 2005), and, notwithstanding any provision
hereof to the contrary, the Schedules and Exhibits as completed, supplemented or
amended, shall constitute the Schedules and Exhibits referenced in and attached
to this Agreement. The right of Buyer to terminate this Agreement, as described
in Section 7.1 hereof, shall apply to such Schedules and Exhibits as completed,
supplemented or amended.

ARTICLE V. ADDITIONAL COVENANTS

5.1

Non-solicitation.

Each of TEC and the Sellers agree that from and after the Effective Date Buyer
shall be entitled to the on-going value of Customer Accounts and relationships
and employee experience and know-how of the Sellers. For these and other reasons
and as an inducement to Buyer to enter into this Agreement, each of TEC and the
Sellers agrees for itself and its Affiliates that for a period of three years
after the Effective Date (the “Restricted Period”) not to engage in solicitation
activities as provided in this Section 5.1.

(a)        During the Restricted Period none of TEC, the Sellers, and their
respective Affiliates will, directly or indirectly for its own benefit or as
agent for another, solicit any of the customers of the Sellers included in the
Acquired Assets as of the Effective Date to purchase any telecommunications
products or services.

(b)        During the Restricted Period none of TEC, the Sellers, and their
respective Affiliates will, directly or indirectly, solicit or induce any of the
employees of Sellers as of the Effective Date that are employed by Buyer after
the Effective Date to leave such employment or assist any other entity in hiring
any such employee.

(c)        Nothing contained herein shall limit during the Restricted Period the
right of any of TEC, the Sellers, and their respective Affiliates as an investor
to hold and make investments in securities of any corporation or limited
partnership that is registered on a

 

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national securities exchange or admitted to trading privileges thereon or
actively traded in a generally recognized over-the-counter market, provided such
Person’s equity interest therein does not exceed one percent of the outstanding
shares or interests in such corporation or partnership.

(d)        TEC and Sellers recognize and agree that a breach of any of the
covenants set forth in this Section 5.1 could cause irreparable harm to Buyer,
that Buyer’s remedies at law in the event of such breach would be inadequate,
and that, accordingly, in the event of such breach a restraining order or
injunction or both may be issued against it, in addition to any other rights and
remedies that are available to Buyer. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section 5.1
is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.

(e)        For income Tax purposes only, Buyer and Seller agree that no portion
of the Purchase Price shall be allocated to the covenants in this Section 5.1.

(f)         The covenants of this Section 5.1 will automatically terminate if
the Closing does not occur and this Agreement is terminated for any reason.

5.2

Provider and Customer Accounts.

In the event Buyer realizes credits or other reductions in the amounts payable
under the Assigned Contracts to providers of telecommunications services that
are attributable to services provided prior to the Effective Date and exceed, in
the aggregate, $100,000, then Buyer will promptly refund to Sellers’ the amount
in excess of $100,000. In the event any of the customers serviced under the
Customer Accounts claim credits or other account adjustments that are
attributable to services provided prior to the Effective Date, Buyer makes any
such credits or adjustments to the Customer Accounts after the Effective Date,
and the aggregate amount of such credits and adjustments exceeds $100,000, Buyer
will send written notice thereof to TEC and the Sellers, and TEC and the Sellers
shall promptly pay to Buyer (and shall be jointly and severally liable for
payment of) the amount in excess of $100,000. Any adjustments and payments made
under this Section 5.2 are not Adverse Consequences for purposes of Article
VIII, and shall not be taken into account in calculating any amount payable by
any of the Parties pursuant to Article VIII.

5.3

Certain Tax Matters.

Each of TEC and the Sellers shall indemnify the Buyer and hold it harmless from
and against any loss, claim, Liability, expense, or other damage attributable to
(i) all Taxes (or the non-payment thereof) of any of TEC and the Sellers for all
taxable periods ending on or before

 

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the Effective Date and the portion through the end of the Effective Date for any
taxable period that includes (but does not end on) the Effective Date, (ii) all
Taxes of any member of an affiliated, consolidated, combined or unitary group of
which any of TEC and the Sellers (or any predecessor of any of the foregoing) is
or was a member on or prior to the Effective Date, including pursuant to
Treasury Regulation §1.1502-6 or any analogous or similar state, local, or
foreign law or regulation, and (iii) any and all Taxes of any of TEC and the
Sellers, or of any other Person imposed on Buyer as a transferee or successor,
by contract or pursuant to any Law, rule, or regulation, which Taxes relate to
an event or transaction occurring before the Effective Date. The Parties agree
to utilize, or cause their respective Affiliates to utilize, the standard
procedure set forth in Revenue Procedure 96-60 with respect to wage reporting.

ARTICLE VI. CONDITIONS OF PURCHASE

The obligations of the Parties to effect the Closing shall be subject to the
condition that no Law or Order shall have been enacted, entered, issued,
promulgated or enforced by any Governmental Entity, at or prior to such closing,
which prohibits or restricts, or would (if successful) prohibit or restrict, the
transactions contemplated by this Agreement, or (with respect to obligations of
Buyer only) which would not permit the Buyer, after the Closing, to service
substantially all of the Customer Accounts in the same manner as the Sellers. No
Governmental Entity shall have notified any Party to this Agreement that
consummation of the transactions contemplated by this Agreement would constitute
a violation of any Laws of any jurisdiction or that it intends to commence an
Action to restrain or prohibit such transactions or force divestiture or
rescission, unless such Governmental Entity shall have withdrawn such notice and
abandoned any such Action prior to the time which otherwise would have been the
Closing Date, unless counsel known to have expertise as to such matters on
behalf of the Party against whom such Action was or would be instituted renders
to the Parties a favorable opinion that such Action is or would be without
merit.

ARTICLE VII. TERMINATION OF OBLIGATIONS; SURVIVAL

7.1

Termination of Agreement.

Anything herein to the contrary notwithstanding, this Agreement and the
transactions contemplated by this Agreement may be terminated by any Party if
the Closing does not occur on or before the close of business on December 31,
2005 (unless extended by mutual consent in writing of all the Parties), provided
that such failure is not due to the action or inaction of, or breach of this
Agreement by, such Party. This Agreement and the transactions contemplated by
this Agreement may also be terminated at any time before the Closing by (i)
mutual consent in writing of the Parties, (ii) by any Party in the event that
any Order or Law becomes effective restraining, enjoining, or otherwise
prohibiting or making illegal the consummation of the transactions contemplated
by this Agreement, or (iii) in the event of termination of the Management
Agreement due to a default or breach thereof, at the election of the
non-breaching Party under the Management Agreement. Buyer may, at its election,
terminate this Agreement if, after an examination of all of the Disclosure
Schedules, it reasonably determines that there has been a Material Adverse
Change after the date of the Most Recent Balance Sheet in the Acquired Assets,
Assumed Liabilities, or the business of the Sellers taken as a whole; provided,
however,

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the right of the Buyer to terminate this Agreement under this sentence shall
terminate at the end of the 10th Business Day following the date that the last
of the Disclosure Schedules are delivered to Buyer.

7.2

Effect of Termination.

In the event that this Agreement shall be terminated pursuant to Section 7.1,
TEC and the Sellers shall immediately return to Buyer the items described in
Section 1.4(b)(i) and (ii), Buyer shall immediately return to TEC and Sellers
the items described in Section 1.4(a)(i), and all further obligations of the
Parties under this Agreement shall terminate without further liability of any
Party to another; provided that the obligations of the Parties contained in
Article VIII, Section 9.9 (Confidentiality), and Section 9.12 (Expenses) shall
survive any such termination. A termination under Section 7.1 shall not relieve
any Party of any liability for a breach of, or for any misrepresentation under
this Agreement, or be deemed to constitute a waiver of any available remedy
(including specific performance if available) for any such breach or
misrepresentation.

7.3

Survival of Representations and Warranties.

All of the representations and warranties of TEC and the Sellers contained in
Sections 2.5, 2.8-2.10, 2.12-2.21, and 2.23-2.25, above, shall survive the
Effective Date hereunder and continue in full force and effect for a period of
three years thereafter. All of the other representations and warranties of the
Parties contained in this Agreement (including the representations and
warranties of Seller contained in Section 2.11 and Section 2.22, above) shall
survive the Effective Date and continue in full force and effect until the
expiration of any applicable statutes of limitations (after giving effect to any
extensions or waivers) plus 60 days.

ARTICLE VIII. INDEMNIFICATION

8.1

Indemnification Provisions for Buyer’s Benefit.

(a)        In the event any of TEC and the Sellers breaches (or in the event any
third party alleges facts that, if true, would mean any of TEC and the Sellers
has breached) any of its representations, warranties, and covenants contained
herein without regard to any limitation or qualification by materiality and,
provided that Buyer makes a written claim for indemnification against TEC and
the Sellers pursuant to Section 8.3 below within the survival period (if there
is an applicable survival period pursuant to Section 7.3, above), then each of
TEC and the Sellers shall be obligated to indemnify Buyer from and against the
entirety of any cost, expense, or Liability arising from any Adverse
Consequences Buyer may suffer (including any Adverse Consequences Buyer may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the alleged
breach); provided, however, that none of TEC and the Sellers shall have any
obligation to indemnify Buyer from and against any cost, expense, or Liability
arising from any Adverse Consequences resulting from, arising out of, relating
to, in the nature of, or caused by the breach (or alleged breach) of any
representation or warranty contained in Sections 2.5, 2.8-2.10, 2.12-2.21, and
2.23-2.25,

 

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above, until Buyer has suffered costs, expenses, and Liabilities attributable to
such Adverse Consequences by reason of all such breaches (or alleged breaches)
in excess of one percent of the sum of the Buyer Note and Assumed Liabilities,
at which point each of TEC and the Sellers will be obligated to indemnify Buyer
from and against all such costs, expenses, and Liabilities relating back to the
first dollar).

(b)        In the event any third party takes or institutes any Action against
Buyer arising from or pertaining to TEC’s or Sellers’ ownership and use of the
Acquired Assets prior to the Effective Date, or any Liabilities of any of TEC
and the Sellers arising prior to the Effective Date that are not specifically
included in the Assumed Liabilities, and provided that Buyer makes a written
claim for indemnification against TEC and the Sellers pursuant to Section 8.3
below, then Seller shall indemnify Buyer from and against the entirety of any
cost, expense, or Liability arising from any Adverse Consequences Buyer may
suffer resulting from, arising out of, relating to, or caused by the Action.

8.2

Indemnification Provisions for TEC’s and Sellers’ Benefit.

(a)        In the event Buyer breaches (or in the event any third party alleges
facts that, if true, would mean Buyer has breached) any of its representations,
warranties, and covenants contained herein and, provided that TEC and the
Sellers make a written claim for indemnification against Buyer pursuant to
Section 8.3 below within such survival period (if there is an applicable
survival period pursuant to Section 7.3, above), then Buyer shall indemnify each
of TEC and the Sellers from and against the entirety of any cost, expense, or
Liability arising from any Adverse Consequences suffered (including any Adverse
Consequences suffered after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach).

(b)        In the event any third party takes or institutes any Action against
any of TEC and the Sellers arising from or pertaining to Buyer’s ownership and
use of the Acquired Assets after the Effective Date, or any failure or alleged
failure of Buyer to pay or discharge any of the Assumed Liabilities after the
Effective Date, and provided that TEC and the Sellers make a written claim for
indemnification against Buyer pursuant to Section 8.3 below, then Buyer shall
indemnify TEC and the Sellers from and against the entirety of any cost,
expense, or Liability arising from any Adverse Consequences any of them may
suffer resulting from, arising out of, relating to, or caused by the Action.

(c)        The performance by Buyer of its obligations under this Section 8.2
shall be secured by the Acquired Assets in accordance with the Security
Agreement.

8.3

Matters Involving Third Parties.

(a)        If any third party notifies any Party (the “Indemnified Party”) with
respect to any matter (a “Third-Party Claim”) that may give rise to a claim for
indemnification against any other Party (the “Indemnifying Party”) under Section
8.1 or Section 8.2, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing;

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provided, however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the Indemnifying
Party is thereby prejudiced.

(b)        Any Indemnifying Party will have the right to defend the Indemnified
Party against the Third-Party Claim with counsel of its choice reasonably
satisfactory to the Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after the Indemnified
Party has given notice of the Third-Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of any cost,
expense, or Liability arising from any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third-Party Claim, (ii) the Indemnifying Party provides the
Indemnified Party with evidence acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the
Third-Party Claim and fulfill its indemnification obligations hereunder, (iii)
the Third-Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (iv) settlement of, or an adverse judgment
with respect to, the Third-Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice adverse
to the continuing business interests or the reputation of the Indemnified Party,
and (v) the Indemnifying Party conducts the defense of the Third-Party Claim
actively and diligently.

(c)        So long as the Indemnifying Party is conducting the defense of the
Third-Party Claim in accordance with Section 8.3(b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third-Party Claim, (ii) the Indemnified Party
will not consent to the entry of any judgment on or enter into any settlement
with respect to the Third-Party Claim without the prior written consent of the
Indemnifying Party (not to be unreasonably withheld), and (iii) the Indemnifying
Party will not consent to the entry of any judgment on or enter into any
settlement with respect to the Third-Party Claim without the prior written
consent of the Indemnified Party (not to be unreasonably withheld).

(d)        In the event any of the conditions in Section 8.3(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment on or enter into any settlement with
respect to, the Third-Party Claim in any manner it may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third-Party Claim (including attorneys’ fees and
expenses), and (iii) the Indemnifying Parties will remain responsible for any
cost, expense, or Liability arising from any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third-Party Claim to the fullest extent provided in
this Article VIII.

 

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8.4

Determination of Adverse Consequences.

The Parties shall take into account the time cost of money (using the
three-month LIBOR rate publicly announced from time to time by Bloomberg as the
discount rate) in determining Adverse Consequences for purposes of this Article
VIII.

8.5

Recoupment Against Buyer Note.

Any indemnification to which Buyer is entitled under this Agreement as a result
of any Adverse Consequences it may suffer may be recouped at the election of the
Buyer (in lieu of seeking any indemnification to which it is entitled under
Article VIII) by notifying TEC and the Sellers that Buyer is reducing the
principal amount outstanding under any one or more of the Buyer Note. This
reduction in the principal amount of the Buyer Note shall affect the timing and
amount of payments required under the Buyer Note in the same manner as if Buyer
had made a permitted prepayment (without premium or penalty) there under.

8.6

Other Indemnification Provisions.

The foregoing indemnification provisions are in addition to, and not in
derogation of, any statutory, equitable, or common law remedy (including without
limitation any such remedy arising under Environmental, Health, and Safety
Requirements) any Party may have with respect to any other Party, or the
transactions contemplated by this Agreement.

ARTICLE IX. GENERAL

9.1

Amendments; Waivers.

This Agreement and any Disclosure Schedule, Annex, or Exhibit hereto may be
amended only by agreement in writing of all parties. No waiver of any provision
nor consent to any exception to the terms of this Agreement shall be effective
unless in writing and signed by the Party to be bound and then only to the
specific purpose, extent and instance so provided.

9.2

Schedules; Exhibits; Integration.

Each Disclosure Schedule, Annex, and Exhibit delivered pursuant to the terms of
this Agreement shall be in writing and shall constitute a part of this
Agreement, although Disclosure Schedules, Annexes, and Exhibits need not be
attached to each copy of this Agreement. This Agreement, together with such
Disclosure Schedules, Annexes, and Exhibits, constitutes the entire agreement
among the Parties pertaining to the subject matter hereof and supersedes all
prior agreements and understandings of the Parties in connection herewith.

9.3

Best Efforts; Further Assurances.

(a)        Each Party will use its best efforts to cause all conditions to its
obligations hereunder to be timely satisfied and to perform and fulfill all
obligations on its part to be performed and fulfilled under this Agreement, to
the end that the transactions

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contemplated by this Agreement shall be effected substantially in accordance
with its terms as soon as reasonably practicable. The Parties shall cooperate
with each other in such actions and in securing requisite Approvals. Each Party
shall execute and deliver both before and after Closing such further
certificates, agreements, instruments of transfer, and other documents and take
such other actions as may be necessary or appropriate to consummate or implement
the transactions contemplated hereby or to evidence such events or matters.

(b)        As used in this Agreement, the term “best efforts” shall not mean
efforts which require the performing Party to do any act that is unreasonable
under the circumstances, to make any capital contribution or to expend any funds
other than reasonable out-of-pocket expenses incurred in satisfying its
obligations hereunder, including but not limited to the fees, expenses and
disbursements of its accountants, actuaries, counsel and other professionals.

(c)        Following the Closing, each Party will afford the other Party, its
counsel and its accountants, during normal business hours, reasonable access to
the books, records, and other data relating to the Acquired Assets in its
possession with respect to periods prior to the Closing and the right to make
copies and extracts there from, to the extent that such access may be reasonably
required by the requesting Party in connection with (i) the preparation of Tax
Returns, (ii) the determination or enforcement of rights and obligations under
this Agreement, (iii) compliance with the requirements of any Governmental
Entity, (iv) the determination or enforcement of the rights and obligations of
any Party to this Agreement, or (v) in connection with any actual or threatened
Action. Further, each Party agrees for a period extending six years after the
Closing Date not to destroy or otherwise dispose of any such books, records, and
other data unless such Party shall first offer in wring to surrender such books,
records, and other data to the other Party and such other Party shall not agree
in writing to take possession thereof, at its cost and expense, during the ten
day period after such offer is made. Buyer shall also afford to TEC and the
Sellers reasonable access to employees of Buyer for the purpose of obtaining
information regarding Liabilities not constituting Assumed Liabilities, and/or
in connection with the defense or prosecution of any Action.

(d)        If, in order properly to prepare its Tax Returns, other documents or
reports required to be filed with Governmental Entities, or its financial
statements, or to fulfill obligations hereunder, it is necessary that a Party be
furnished with additional information, documents, or records relating to the
Acquired Assets not referred to in Section 9.3(c), and such information,
documents, or records are in the possession or control of the other Party, such
other Party shall use its best efforts to furnish or make available such
information, documents, or records (or copies thereof) at the recipient’s
request, cost, and expense. Any information obtained by such Party in accordance
with this paragraph shall be held confidential by such Party in accordance with
Section 9.8.

(e)        Notwithstanding anything to the contrary contained in the Section
9.3, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of

 

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information, documents, or records in accordance with Section 9.3 shall be
subject to applicable rules of discovery.

9.4

Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of
the state of Utah applicable to contracts made and performed in such state and
without giving effect to the conflicts of law principles thereof.

9.5

No Assignment.

Neither this Agreement nor any rights or obligations under it are assignable.

9.6

Headings.

The descriptive headings of the Articles, Sections and subsections of this
Agreement are for convenience only and do not constitute a part of this
Agreement.

9.7

Counterparts.

This Agreement and any amendment hereto or any other agreement (or document)
delivered pursuant hereto may be executed in one or more counterparts and by
different Parties in separate counterparts. All of such counterparts shall
constitute one and the same agreement (or other document) and shall become
effective (unless otherwise provided therein) when each Party has signed one or
more counterparts and the signature pages delivered to the other Parties.

9.8

Publicity and Reports.

At all times at or before the Closing, TEC and Buyer shall coordinate all
publicity relating to the transactions contemplated by this Agreement and no
Party shall issue any press release, publicity statement or other public notice
relating to this Agreement, or the transactions contemplated by this Agreement,
without, in the case of TEC and Sellers, TEC obtaining the prior consent of
Buyer and, in the case of Buyer, Buyer obtaining the prior consent of TEC,
except to the extent that in the opinion of legal counsel to such Party that
such disclosure is required by Law to discharge such Party’s disclosure
obligations. The Parties acknowledge that Buyer will issue and file a press
release and report on Form 8-K with the Securities and Exchange Commission
reporting on this Agreement within four Business Days following the date the
Agreement is signed by all Parties.

9.9

Confidentiality.

All information disclosed in writing and designated in writing as confidential
by any Party whether before or after the date hereof in connection with the
transactions contemplated by or the discussions and negotiations preceding this
Agreement to any other Party shall be kept confidential by such other Party and
shall not be used, directly or through an Affiliate, by any Party other than as
contemplated by this Agreement, except to the extent that such information

 

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(i) was known by the recipient when received, (ii) is or hereafter becomes
lawfully obtainable from other sources, (iii) is necessary or appropriate to
disclose to a Governmental Entity having jurisdiction over the Party, (iv) as
may otherwise be required by Law or (v) to the extent such duty as to
confidentiality is waived in writing by the other Party. If this Agreement is
terminated in accordance with its terms, each Party shall promptly redeliver all
documents (and reproductions thereof) received by it or its representatives from
such other Party (and, in the case of reproductions, all such reproductions made
by the receiving Party) that include information not within the exceptions
contained in the first sentence of this Section 9.9, unless the recipients
provide assurances reasonably satisfactory to the requesting Party that such
documents have been destroyed.

9.10

Parties in Interest.

This Agreement shall be binding upon and inure to the benefit of each Party, and
nothing in this Agreement, express or implied, is intended to confer upon any
other Person any rights or remedies of any nature whatsoever under or by reason
of this Agreement, except for Sections 8.l and 8.2 (which are intended to be for
the benefit of the Persons provided for therein and may be enforced by such
Persons). Nothing in this Agreement is intended to relieve or discharge the
obligation of any third Person to any Party to this Agreement.

9.11

Notices.

All notices, requests, demands, claims, and other communications hereunder shall
be in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given (i) when delivered personally to the
recipient, (ii) one Business Day after being sent to the recipient by reputable
overnight courier service (charges prepaid), (iii) one Business Day after being
sent to the recipient by facsimile transmission or electronic mail, or (iv) four
Business Days after being mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid, and addressed to the
intended recipient as set forth below:

If to any of TEC

or the Sellers

Telephone Electronics Corporation

Attn: Bob Healea, Chief Financial Officer

236 E. Capitol Street

Jackson, MS 39201

Telephone: (601) 354-9070

Fax No.: (601) 352-1394

Email: bhealea@tec.com

 

Copy to:

Stanley K. Stoll

Blackburn & Stoll, LC

257 East 200 South, Suite 800

Salt Lake City, UT 84111

Telephone: (801) 521-7900

Fax No.: (801) 521-7965

Email: sstoll@blackburn-stoll.com

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If to Buyer:

UCN, Inc.

Attn: Paul Jarman, President

14870 Pony Express Road

Bluffdale, UT 84065

Telephone: (801) 715-5020

Fax No.: (801) 715-5022

Email: pj@ucn.net

 

Copy to:

Mark E. Lehman

Parsons Behle & Latimer

201South Main Street, Suite 1800

Salt Lake City, UT 84111

Telephone: (801) 532-1234

Fax No.: (801) 536-6111

Email: mlehman@pblwest.com

 

Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.

9.12

Expenses.

Except as otherwise set forth in this Agreement, TEC, Sellers and Buyer shall
each pay their own expenses incident to the negotiation, preparation and
performance of this Agreement and the transactions contemplated hereby,
including but not limited to the fees, expenses and disbursements of their
respective accountants and counsel, and none of such costs or expenses of any of
TEC and the Sellers shall be included in the Assumed Liabilities.

9.13

Waiver.

No failure on the part of any Party to exercise or delay in exercising any right
hereunder shall be deemed a waiver thereof, nor shall any single or partial
exercise preclude any further or other exercise of such right or any other
right.

9.14

Knowledge Convention.

Whenever any statement herein or in any Schedule, Exhibit, certificate or other
documents delivered to any Party pursuant to this Agreement is made to the
Knowledge of such Party, such Party makes such statement based upon actual
knowledge of the officers of such Party having responsibility for such matters
without conducting an independent investigation of the subject matter thereof.

9.15

Representation By Counsel; Interpretation.

Seller and Buyer acknowledge that each Party has been represented by counsel in
connection with this Agreement and the transactions contemplated by this
Agreement.

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Accordingly, any applicable rule of Law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the Party
that drafted it has no application and is expressly waived. The provisions of
this Agreement shall be interpreted in a reasonable manner to effect the intent
of the Parties.

9.16

Specific Performance.

Seller and Buyer acknowledge that, in view of the uniqueness of the Acquired
Assets and the transactions contemplated by this Agreement, each such Party
would not have an adequate remedy at law for money damages in the event that
this Agreement has not been performed in accordance with its terms, and
therefore agrees that the other Party shall be entitled to specific enforcement
of the terms hereof in addition to any other remedy to which it may be entitled,
at law or in equity.

9.17

Severability.

If any provision of this Agreement is determined to be invalid, illegal or
unenforceable by any Governmental Entity, the remaining provisions of this
Agreement to the extent permitted by Law shall remain in full force and effect
provided that the economic and legal substance of the transactions contemplated
is not affected in any manner materially adverse to any Party. In the event of
any such determination, the Parties agree to negotiate in good faith to modify
this Agreement to fulfill as closely as possible the original intents and
purposes hereof. To the extent permitted by Law, the Parties hereby to the same
extent waive any provision of Law that renders any provision hereof prohibited
or unenforceable in any respect.

9.18

Tax Disclosure Authorization.

Notwithstanding anything herein to the contrary, the Parties (and each Affiliate
and Person acting on behalf of any Party) agree that each Party (and each
employee, representative, and other agent of such Party) may disclose to any and
all Persons, without limitation of any kind, the transaction’s tax treatment and
tax structure (as such terms are used in Code §§6011 and 6112 and regulations
there under) contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) provided to such Party or such Person
relating to such tax treatment and tax structure, except to the extent necessary
to comply with any applicable federal or state securities laws; provided,
however, that such disclosure may not be made until the earlier of date of (a)
public announcement of discussions relating to the transaction, (b) public
announcement of the transaction, or (c) execution of an agreement to enter into
the transaction. This authorization is not intended to permit disclosure of any
other information including (without limitation) (v) any portion of any
materials to the extent not related to the transaction’s tax treatment or tax
structure, (w) the identities of participants or potential participants, (x) the
existence or status of any negotiations, (y) any pricing or financial
information (except to the extent such pricing or financial information is
related to the transaction’s tax treatment or tax structure), or (z) any other
term or detail not relevant to the transaction’s tax treatment or the tax
structure.

[Signatures on following page.]

 

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IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
executed by its duly authorized officers as of the day and year first above
written.

 

 

By:

    /s/  

 

    Paul Jarman, as President of:

    UCN, Inc.

 

 

By:

    /s/  

 

Joseph D. Fail, as President of:

Telephone Electronics Corporation

Transtel Communications, Inc.

Tel-America of Salt Lake City, Inc.

Extelcom, Inc.

Communication Recovery Services, Inc.

National Network Corporation

 

 

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