Execution Copy

 
 
 
STOCK PURCHASE AGREEMENT
 
BY AND AMONG
 
COUNTRY ROAD COMMUNICATIONS LLC
 
AS SELLER
 
AND
 
OTELCO INC.
AS BUYER

 
 
DATED AS OF August 7, 2008
 

 

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Purchase of All the Outstanding Capital Stock of
PINE TREE HOLDINGS, INC.,
GRANBY HOLDINGS, INC.
and
WAR HOLDINGS, INC.
 

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TABLE OF CONTENTS

   
Page
Article I DEFINITIONS
1
 1.1
 Definitions
1
 1.2
 Use of Words and Phrases
6
Article II PURCHASE AND SALE
7
 2.1
 Purchase and Sale of the Shares
7
 2.2
 Purchase Price
7
 2.3
 Closing Statement; Revised Closing Statement
7
 2.5
 Certain Definitions
8
 2.6
 Closing
9
 2.7
 Actions Prior to or at Closing
9
Article III REPRESENTATIONS AND WARRANTIES OF SELLER
10
 3.1
 Capacity of Seller
10
 3.2
 Organization, Qualification, and Power
10
 3.3
 Capitalization; Constituent Documents
11
 3.4
 Noncontravention
11
 3.5
 Financial Statements
12
 3.6
 Absence of Changes
12
 3.7
 No Undisclosed Liabilities
13
 3.8
 Title to Properties
13
 3.9
 Equipment, Etc
13
 3.10
 Receivables
13
 3.11
 Inventory
13
 3.12
 Intellectual Property
14
 3.13
 Communications Regulatory Matters
15
 3.14
 Real Property
16
 3.15
 Leases
16
 3.16
 Material Contracts
17
 3.17
 Directors and Officers
18
 3.18
 Bank Accounts
18
 3.19
 Litigation
18
 3.20
 Labor Relations
18
 3.21
 ERISA
20
 3.22
 Taxes
21
 3.23
 Compliance with Applicable Laws
22
 3.24
 Environmental Matters
22
 3.25
 Interest in Customers, Suppliers and Competitors
24
 3.26
 Insurance
24
 3.27
 Bankruptcy
24
 3.28
 Brokers’ Fees
24
 3.29
 Absence of Other Warranties
24
Article IV REPRESENTATIONS AND WARRANTIES OF BUYER
25
 4.1
 Organization, Qualification, and Corporate Power
25
 4.2
 Authorization of Transaction
25
 4.3
 Noncontravention
26
 4.4
 Investment
26
 4.5
 Brokers’ Fee
26

 

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TABLE OF CONTENTS
 

   
Page
 4.6
 Financing
26
 4.7
 Evaluation of Business
26
 4.8
 Regulatory Approvals
27
Article V DISCLOSURE SCHEDULE
27
Article VI COVENANTS; ADDITIONAL AGREEMENTS
27
 6.1
 General
27
 6.2
 Notices and Consents
27
 6.3
 Regulatory Matters and Approvals
28
 6.4
 Operation of Business
28
 6.5
 Access
30
 6.6
 Notice of Developments
30
 6.7
 Exclusivity
30
 6.8
 Director and Officer Insurance
30
 6.9
 Tax Matters
31
 6.10
 Further Assurances
33
 6.11
 Environmental Matters
33
 6.12
 Financial Statements
33
 6.13
 Books and Records
33
 6.14
 Financing Commitments
33
 6.15
 Company Audits
33
 6.16
 Seller’s Legal Existence
34
 6.17
 Employee Plan Matters
34
Article VII CONDITIONS TO OBLIGATION TO CLOSE
34
 7.1
 Conditions to Obligation of the Buyer
34
 7.2
 Conditions to Obligation of Seller
36
 7.3
 Deemed Waiver
37
Article VIII TERMINATION
37
 8.1
 Termination of Agreement
37
 8.2
 Effect of Termination
38
 8.3
 Fees and Expenses
38
Article IX SURVIVAL; INDEMNIFICATION
39
 9.1
 Survival
39
 9.2
 Indemnification of the Buyer
39
 9.3
 Indemnification of the Seller
40
 9.4
 Procedure for Indemnification
40
 9.5
 Remedies Exclusive
41
 9.6
 Treatment of Indemnity Payments
42
Article X MISCELLANEOUS
42
 10.1
 Press Releases and Public Announcements
42
 10.2
 No Third-Party Beneficiaries
42
 10.3
 Agreement
42
 10.4
 Succession and Assignment
42
 10.5
 Counterparts
42
 10.6
 Headings
43
 10.7
 Notices
43
 10.8
 No Recourse
44

 

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TABLE OF CONTENTS

   
Page
10.9
 Privilege and Related Matters
45
10.10
 Governing Law
45
10.11
 Amendments and Waivers
45
10.12
 Severability
45
10.13
 Construction
45
10.14
 Incorporation of Exhibits and Disclosure Schedule
45

 

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Execution Copy
 
STOCK PURCHASE AGREEMENT
 
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is made and entered into this
7th day of August, 2008 (the “Agreement Date”), by and among Otelco Inc., a
Delaware corporation (“Buyer”) and Country Road Communications LLC (the
“Seller”). The Buyer and the Seller are hereinafter sometimes referred to
collectively as the “Parties” or singly as a “Party.”
 
WHEREAS, the Seller owns all of the issued and outstanding capital stock (the
“Shares”) of each of Pine Tree Holdings, Inc. (“Pine Tree Holdings”), Granby
Holdings, Inc. (“Granby Holdings”) and War Holdings, Inc. (“War Holdings” and,
together with Pine Tree Holdings and Granby Holdings, the “Companies” and each a
“Company”); and
 
WHEREAS, the Seller wishes to sell the Shares to the Buyer, and the Buyer wishes
to purchase the Shares from the Seller, upon the terms and subject to the
conditions set forth herein;
 
NOW, THEREFORE, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties and covenants
herein contained, the Parties agree as follows:
 
ARTICLE I
DEFINITIONS
 
1.1 Definitions. As used in this Agreement, the following terms shall have the
definitions set forth below:
 
“Agreed Closing Statement” has the meaning set forth in Section 2.4(a).
 
“Agreement” means this Stock Purchase Agreement (including the Exhibits hereto
and the Disclosure Schedule) and all amendments hereto made in accordance with
the provisions of Section 10.11.
 
“Agreement Date” has the meaning set forth in the preface above.
 
“Audited Financial Statements” has the meaning set forth in Section 3.5.
 
“Balance Sheet Date” has the meaning set forth in Section 3.5.
 
“Benefit Plans” has the meaning set forth in Section 3.21.
 
“Business” means the telecommunications businesses conducted by the Companies
and the Subsidiaries.
 
“Business Day” means any day other than a Saturday, Sunday or a day on which
banks are permitted or required to be closed in New York, New York.
 
“Buyer” has the meaning set forth in the preface above.
 

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“CALEA” has the meaning set forth in Section 3.13(d).
 
“Closing” has the meaning set forth in Section 2.6.
 
“Closing Date” has the meaning set forth in Section 2.6.
 
“Closing Purchase Price” has the meaning set forth in Section 2.2.
 
“Closing Statement” has the meaning set forth in Section 2.3.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Communications Act” means the Communications Act of 1934, as amended.
 
“Communication Laws” means the Communications Act or the rules, regulations,
orders and published policies of the FCC and all laws, statutes, rules,
regulations, ordinances, judgments, orders, decrees, injunctions and writs of
any State PUC or municipal Government Entity that regulates telecommunications
and has jurisdiction over the business and operations of any Company or
Subsidiary.
 
“Communications Licenses” has the meaning set forth in Section 3.13(a).
 
“Company” and “Companies” have the meanings set forth in the preface above.
 
“Company Benefit Plans” has the meaning set forth in Section 6.17.
 
“Confidentiality Agreement” means that certain Confidentiality and
Non-Disclosure Agreement, dated November 5, 2007 by and between the Seller and
the Buyer.
 
“Contracts” has the meaning set forth in Section 3.16.
 
“Current Assets” shall be as set forth on Schedule 2.3.
 
“Current Liabilities” shall be as set forth on Schedule 2.3.
 
“Current Premium” has the meaning set forth in Section 6.8.
 
“Cut-Off Date” has the meaning set forth in Section 9.1.
 
“Disclosure Schedule” has the meaning set forth in Article III.
 
“Environmental Laws” means all applicable Laws, rules, regulations, orders,
treaties, statutes, and codes promulgated by any governmental entity which
prohibit, regulate or control any environmental, health or safety activity or
Hazardous Substance, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, the Resource
Recovery and Conservation Act of 1976, the Federal Water Pollution Control Act,
the Clean Air Act and the regulations promulgated pursuant to any of the
foregoing, and all amendments and modifications of any of the foregoing.
 
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“Equipment” has the meaning set forth in Section 3.9.
 
“Escrow Agent” means the escrow agent serving in such capacity under the Escrow
Agreement and the Special Escrow Agreement.
 
“Escrow Agreement” has the meaning set forth in Section 2.7(b).
 
“Escrow Amount” has the meaning set forth in Section 2.7(b).
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“FCC” means the Federal Communications Commission.
 
“Final Closing Statement” has the meaning set forth in Section 2.4(c).
 
“Final Purchase Price” has the meaning set forth in Section 2.2.
 
“Financial Statements” has the meaning set forth in Section 3.5.
 
“Financing Commitments” has the meaning set forth in Section 4.6.
 
“Firms” has the meaning set forth in Section 10.9.
 
“GAAP” means United States generally accepted accounting principles as in effect
from time to time, subject to adjustments customary for the telecommunications
industry and, with respect to Interim Financial Statements and the financial
statements provided in accordance with Section 6.12 hereof, year end and
consolidating adjustments and the omission of footnotes.
 
“Governmental Entity” means any government or subdivision thereof, whether
domestic or foreign, or any administrative, governmental or regulatory
authority, agency, department, division, commission, court, tribunal or body,
whether domestic, foreign or multinational.
 
“Granby Holdings” has the meaning set forth in the preface.
 
“Hazardous Substance” means any chemical, substance, waste, toxic or hazardous
material, pollutant, or contaminant, regardless of quantity, the use, storage,
handling, Release, disposal, treatment or transportation of which is regulated
under Environmental Laws, including but not limited to petroleum products,
asbestos and polychlorinated biphenyls.
 
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
 
“Independent Accountants” has the meaning set forth in Section 2.4(c).
 
“Insurance Policies” has the meaning set forth in Section 3.26.
 
“Intellectual Property” has the meaning set forth in Section 3.12(a).
 
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“Interim Financial Statements” has the meaning set forth in Section 3.5.
 
“Inventory” has the meaning set forth in Section 3.11.
 
“IRS” has the meaning set forth in Section 3.21(a).
 
“Knowledge of Buyer” means that one of the persons listed on Exhibit 1.1(a) (i)
actually is aware of a particular fact or matter or (ii) the knowledge such
person would reasonably be expected to have as a result of the performance of
his or her duties in his or her capacity as the person with the position listed
for him or her on Exhibit 1.1(a).
 
“Knowledge of Seller” means that one of the persons listed on Exhibit 1.1(b) (i)
actually is aware of a particular fact or matter or (ii) the knowledge such
person would reasonably be expected to have as a result of the performance of
his or her duties in his or her capacity as the person with the position listed
for him or her on Exhibit 1.1(b).
 
“Law” means any federal, state, local or foreign law, statute, code, ordinance,
rule, regulation, judgment, order, injunction, decree, arbitration award, agency
requirement, license or permit of any Governmental Entity.
 
“Leases” has the meaning set forth in Section 3.15.
 
“Liens” means mortgages, deeds of trust, pledges, liens, encumbrances, charges,
or other security interests, other than (i) purchase money Liens and Liens
securing rental payments under capital lease arrangements, and (ii) other Liens
arising in the Ordinary Course of Business and not incurred in connection with
the borrowing of money.
 
“Local Authorizations” has the meaning set forth in Section 3.13(a).
 
“Losses” has the meaning set forth in Section 9.2(a).
 
“Material Adverse Effect” means with respect to the Buyer or a Company or any of
its Subsidiaries, as the case may be, any event, development, state of facts,
occurrence or change that would, individually or in the aggregate, (i) result in
a material adverse effect on the business, results of operations or condition
(financial or otherwise) of such party and its subsidiaries taken as a whole or
(ii) prevent or delay the consummation by the Companies of the transactions
contemplated by this Agreement, in each case, other than any such effect
attributable to or resulting from (A) any change in law or any change in the
rules or regulations of or interpretations of law by the FCC, the MPUC, the
MDTC, the NHPUC, the PSCWVA or any other state public utility commission or
other Governmental Entity; provided that such change does not have a
disproportionate effect on the Companies and the Subsidiaries relative to
private companies in the rural telecommunications industry, (B) any action or
omission of any of the Companies or the Buyer or any subsidiary of any Party
taken with the express prior written consent of the other Party hereto, (C) any
expenses incurred by such party where such expenses are contemplated by or
reasonably incurred in connection with this Agreement or the transactions
contemplated hereby, or (D) any change resulting from the announcement or
pending nature of the transactions contemplated by this Agreement or the
compliance by such Party with the terms of, or the taking of any such action by
such Party required by, this Agreement.
 
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“Material Owned Real Property” means Real Property owned by a Company or
Subsidiary, listed on Schedule 3.14 and marked with an asterisk.
 
“MDTC” means the Massachusetts Department of Telecommunications and Cable.
 
“MPUC” means the Maine Public Utilities Commission.
 
“Net Working Capital” has the meaning set forth in Section 2.5.
 
“NHPUC” means the New Hampshire Public Utilities Commission.
 
“Notice of Objection” has the meaning set forth in Section 2.4(a).
 
“Ordinary Course of Business” means the ordinary course of business materially
consistent with past custom and practice (including with respect to quantity and
frequency) or with the business plan, as the case may be, of a Company and its
Subsidiaries.
 
“Party” has the meaning set forth in the preface above.
 
“Permits” has the meaning set forth in Section 3.23.
 
“Permitted Liens” means (i) Liens for Taxes, assessments or other governmental
charges or levies not yet due, (ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other liens imposed by Law
and created in the Ordinary Course of Business, (iii) Liens (other than any Lien
imposed by ERISA) incurred or deposits made in the Ordinary Course of Business
in connection with workers’ compensation, unemployment insurance or other types
of social security, (iv) minor defects of title, easements, rights-of-way,
restrictions and other similar charges or encumbrances not materially detracting
from the value of the Real Property or interfering with the ordinary conduct of
the Business, (v) Liens arising out of liabilities reflected on the Financial
Statements, and (vi) those Liens, if any, listed on Schedule 3.8.
 
“Person” means an individual, partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization or Governmental Entity.
 
“Pine Tree Holdings” has the meaning set forth in the preface.
 
“PSCWVA” means the Public Services Commission of West Virginia.
 
“Real Property” means any real property owned or leased by a Company or any
Subsidiary.
 
“Regulatory Permits” has the meaning set forth in Section 3.13(a).
 
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“Release” shall have the meaning assigned it at 42 U.S.C. Section 9601(22)
without giving effect to exception (A) therein. 
 
“Revised Closing Statement” has the meaning set forth in Section 2.4(a).
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Seller” has the meaning set forth in the preface above.
 
“Shares” has the meaning set forth in the preface above.
 
“Software” means all material computer software used by any of the Companies or
any of the Subsidiaries in the conduct of the Business.
 
“Special Escrow Agreement” has the meaning set forth in Section 2.7(b).
 
“Special Escrow Amount” has the meaning set forth in Section 2.7(b).
 
“State Licenses” has the meaning set forth in Section 3.13(a).
 
“State PUCs” means collectively, the MPUC, the MDTC, the NHPUC and PSCWVA.
 
“Subsidiary” means any corporation, partnership, limited liability company or
other business entity with respect to which any of the Companies (or a
Subsidiary thereof), directly or indirectly, owns a majority of the ownership
interests therein or has the power to vote or direct the voting of sufficient
securities thereof to elect a majority of its directors or other persons
performing similar functions.
 
“Tax” or “Taxes” means any and all federal, state, provincial, local, foreign
and other taxes, levies, fees, imposts, duties and similar governmental charges
(including any interest, fines, assessments, penalties or additions to tax
imposed in connection therewith or with respect thereto) including (A) taxes
imposed on, or measured by, income, franchise, profits or gross receipts, and
(B) ad valorem, value added, capital gains, sales, goods and services, use, real
or personal property, capital stock, license, branch, payroll, estimated
withholding, employment, social security (or similar), unemployment,
compensation, utility, severance, production, excise, stamp, occupation,
premium, windfall profits, transfer and gains taxes, and customs duties.
 
“Tax Returns” means all reports, estimates, declarations of estimated Tax,
information statements and returns relating to Taxes and any schedules attached
to or amendments of any of the foregoing.
 
“Trademarks” has the meaning set forth in Section 3.12(a).
 
“War Holdings” has the meaning set forth in the preface above.
 
1.2 Use of Words and Phrases. “Herein,” “hereby,” “hereunder,” “hereof,”
“hereinabove,” “hereinafter” and other equivalent words refer to this Agreement
as a whole and not solely to the particular Section of this Agreement in which
any such word is used. The definitions set forth in Section 1.1 hereof include
both the singular and the plural. Whenever used in this Agreement, any pronoun
shall be deemed to include both singular and plural and to cover all genders.
All references to dollars in this Agreement shall mean U.S. dollars.
 
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ARTICLE II
PURCHASE AND SALE
 
2.1 Purchase and Sale of the Shares. Upon the terms and subject to the
conditions of this Agreement, at the Closing, the Seller shall sell to the
Buyer, and the Buyer shall purchase from the Seller, the Shares.
 
2.2 Purchase Price. The aggregate purchase price for the Shares shall be
$101,329,000 in cash (the “Closing Purchase Price” and, after giving effect to
any adjustment in accordance with Section 2.3, the “Final Purchase Price”).
 
2.3 Closing Statement; Revised Closing Statement.
 
(a) As soon as practicable and in no event less than five (5) Business Days
prior to the Closing Date, after consultation with the Buyer, the Seller shall
deliver to the Buyer a statement (the “Closing Statement”) prepared in
accordance with the books and records of each Company and its Subsidiaries
setting forth the Net Working Capital as estimated as of the open of business on
the Closing Date and as determined in accordance with the format shown on
Schedule 2.3 and consistent in all respects with the definitions of Current
Assets and Current Liabilities contained in this Agreement. Based on the Closing
Statement, at Closing the Closing Purchase Price shall be subject to (i)
reduction (on a dollar for dollar basis) if the Net Working Capital as shown on
the Closing Statement is less than $2,500,000 or (ii) increase (on a dollar for
dollar basis) if the Net Working Capital as shown on the Closing Statement is
greater than $3,000,000. In the event that the Net Working Capital is equal to
or greater than $2,500,000 but equal to or less than $3,000,000, no adjustment
shall be made.
 
(b) Within forty five (45) days after the Closing Date, the Buyer shall prepare,
in and after consultation with the Seller, and deliver to the Seller a statement
(the “Revised Closing Statement”) setting forth its determination of the Net
Working Capital as of the open of business on the Closing Date as determined in
accordance with the format shown on Schedule 2.3 and consistent in all respects
with the definitions of Current Assets and Current Liabilities in this
Agreement. If the amount shown by the Buyer to be Net Working Capital on the
Revised Closing Statement is different than the amount shown on the Closing
Statement, the Final Purchase Price shall be readjusted promptly (on a dollar
for dollar basis) in accordance with Schedule 2.3 using the amount shown to be
Net Working Capital on the Agreed Closing Statement or the Final Closing
Statement, as applicable. To the extent any readjustment is made, then, within
five (5) days after such final determination is made, either party will pay the
other (in immediately available funds) in accordance with the provision above.
 
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2.4 Adjustment Procedure.
 
(a) Revised Closing Statement Review. During the thirty (30) days immediately
following delivery of the Revised Closing Statement, the Seller shall be
entitled to review the Revised Closing Statement and any working papers,
financial records, trial balances and similar materials relating to the Revised
Closing Statement prepared by the Buyer or by Persons retained by it, and the
Buyer shall provide the Seller with access to the principal office and the
personnel, properties, books and records of each Company and its Subsidiaries,
during normal business hours. The Revised Closing Statement prepared by the
Buyer shall become final and binding (the “Agreed Closing Statement”) upon the
parties hereto on the thirty-first day following receipt thereof by the Seller,
unless the Seller gives written notice to the Buyer of its objection to the
Revised Closing Statement (a “Notice of Objection”) prior to such thirty-first
day. Any Notice of Objection shall specify in reasonable detail the nature of
any objection so asserted.
 
(b) Closing Statement Dispute Resolution. During the fifteen (15) days
immediately following the delivery of any Notice of Objection, the Buyer and the
Seller shall seek in good faith to resolve in writing any differences which they
may have with respect to any matter specified in such Notice of Objection.
During such period, the Buyer and the Seller shall each have access to the other
party’s working papers, financial records, trial balances and similar materials
prepared (by such other party or Persons retained by it) in connection with the
other party’s preparation of the Revised Closing Statement or the Notice of
Objection, as the case may be. The matters set forth in any such written
resolution shall be final and binding on the parties hereto on the date of such
written resolution.
 
(c) If the Buyer and the Seller are unable to agree upon any of the items set
forth on the Revised Closing Statement, within the fifteen day period referred
to in Section 2.4(b), the parties shall mutually engage and submit any
unresolved dispute to, and the same shall be finally and conclusively resolved
in accordance with the provisions of this Agreement by Ernst & Young or Deloitte
Touche, or such other accounting firm of national reputation, in either case, as
shall be mutually acceptable to the Buyer and the Seller (the “Independent
Accountants”). Each party shall be afforded the opportunity to prepare and
submit a written report to the Independent Accountants. The Buyer and the Seller
will instruct the Independent Accountants to determine and report in writing to
the Buyer and the Seller as to the resolution of all disputed matters submitted
to the Independent Accountants and the effect of such determinations on the
Revised Closing Statement within twenty (20) days after such submission or such
longer period as the Independent Accountants may reasonably require, and such
determinations shall be final, binding and conclusive as to the Buyer and the
Seller. The statement setting forth such final and binding determination of the
Net Working Capital as of open of business on the Closing Date is hereinafter
referred to as the “Final Closing Statement.” The fees and disbursements of the
Independent Accountants shall be payable one-half by the Seller, on the one
hand, and one-half by the Buyer, on the other hand.
 
2.5 Certain Definitions. “Net Working Capital” means the sum of the respective
amounts of the consolidated Current Assets of the Companies and their respective
Subsidiaries minus the sum of the respective amounts of the consolidated Current
Liabilities of the Companies and their respective Subsidiaries as of the open of
business on the Closing Date, as determined in accordance with the format shown
on Schedule 2.3 and consistent in all respects with the definitions of Current
Assets and Current liabilities contained in this Agreement.
 
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2.6 Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Dorsey & Whitney LLP, 1105 North
Market Street, Suite 1600, Wilmington, Delaware, commencing at 9:00 a.m. local
time on the third (3rd) Business Day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other place and date
as the Parties may mutually determine (the “Closing Date”); provided, however,
that the Closing Date shall be no later than December 31, 2008, as such date may
be extended by the mutual agreement of the Parties.
 
2.7 Actions Prior to or at Closing. At least two (2) Business Days prior to the
Closing, the Seller shall provide to the Buyer (i) a payoff letter from each
holder of indebtedness listed on Schedule 2.7(b)(ii) indicating the amount
required to discharge such indebtedness, including wire transfer instructions.
At the Closing,
 
(a) the Seller will deliver to the Buyer
 
(i) stock certificates evidencing the Shares duly endorsed in blank, or
accompanied by stock powers duly executed in blank;
 
(ii) a receipt for the Closing Purchase Price; and
 
(iii) the various certificates, instruments and documents referred to in Section
7.1, and
 
(b) the Buyer will deliver
 
(i) to the Escrow Agent, $6,300,000 (the “Escrow Amount”) to be held by the
Escrow Agent in a separate account pursuant to the Escrow Agreement in the form
annexed hereto as Exhibit 2.7(b) (the “Escrow Agreement”) to provide for a
source of the satisfaction of Seller’s obligations, if any, under Sections 2.4
and 9.2 of this Agreement, as well as any payments due to Buyer under the
Special Escrow Agreement in excess of the Special Escrow Amount;
 
(ii) to any holders of indebtedness listed on Schedule 2.7(b)(ii), the amount
set forth in the payoff letters referenced in the first sentence of this Section
2.7;
 
(iii) to the Escrow Agent, $1,300,000 (the “Special Escrow Amount”) to be held
by the Escrow Agent in a separate account pursuant to the Special Escrow
Agreement in the form annexed hereto as Exhibit 2.7(b)(iii) (the “Special Escrow
Agreement”) to be released in accordance with the terms of the Special Escrow
Agreement.
 
(iv) to the Seller, the remainder of the Closing Purchase Price, after giving
effect to clauses (i), (ii) and (iii) above, by wire transfer in immediately
available funds as directed by the Seller; and
 
(v) to Seller, the various certificates, instruments and documents referred to
in Section 7.2. 
 
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The amount held by the Escrow Agent under Section 2.7(b)(i) will bear interest
at the rate provided for in the Escrow Agreement and, subject to the provisions
of the Escrow Agreement, shall be paid to Seller on the first anniversary of the
Closing Date.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
 
The Seller represents and warrants to the Buyer that the statements contained in
this Article III are correct and complete as of the Agreement Date and will be
correct and complete as of the Closing Date, except as set forth in the
Disclosure Schedule identified in this Article III “Disclosure Schedule”). The
numbering of the Disclosure Schedule will correspond to the numbered Sections
contained in this Article III.
 
3.1 Capacity of Seller. The Seller is a limited liability company duly formed
and validly existing under the laws of the State of Delaware. The Seller has
full limited liability company power and authority to conduct its business as it
is presently conducted, to enter into this Agreement, to carry out the Seller’s
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Seller, and assuming
due execution and delivery by the Buyer, this Agreement constitutes a legal,
valid and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
rights of creditors generally or by general principles of equity.
 
3.2 Organization, Qualification, and Power. Each Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Schedule 3.2 contains a list of each Company’s Subsidiaries. Each
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Each Company and its Subsidiaries
are duly authorized to conduct business and are in good standing under the laws
of each jurisdiction in which the character and location of their respective
properties or the nature of their respective businesses require qualification,
except where the lack of such qualification would not have a Material Adverse
Effect. Each Company and its Subsidiaries have full legal power and authority to
own their respective properties and to carry on that portion of the Business
they presently are conducting. The Seller has previously delivered or made
available to the Buyer complete and correct copies of (i) the articles of
incorporation and bylaws of each Company and its Subsidiaries (or comparable
organizational documents) and all amendments thereto, (ii) the minutes of board
of directors meetings and shareholder meetings of each Company and each
Subsidiary in the possession of the Seller and (iii) organizational documents,
agreements of partnership, buy-sell agreements, shareholder agreements,
shareholder control agreements and other similar documents and agreements
applicable to each Company and its Subsidiaries and in the possession of the
Seller. Such documents are in full force and effect.
 
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3.3 Capitalization; Constituent Documents. The authorized capital of Pine Tree
Holdings consists of 1,000 shares of common stock, $0.01 par value per share, of
which 1,000 shares are issued and outstanding. The authorized capital of Granby
Holdings consists of 1,000 shares common stock, $0.01 par value per share, of
which 100 shares are issued and outstanding. No shares of the capital stock of
any of the Companies are preferred shares or held as treasury shares. The
authorized capital of War Holdings consists of 1,000 shares of common stock,
$0.01 par value per share, of which 100 shares are issued and outstanding. The
record owners of all of the issued and outstanding capital stock or other equity
interests of each of the Subsidiaries are as listed on Schedule 3.3. Except as
set forth on Schedule 3.3, all of the Shares have been duly authorized and are
validly issued, fully paid and nonassessable, free and clear of preemptive (or
similar) rights and are held free and clear of any Liens, other than Permitted
Liens. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require any of the Companies or any of the
Subsidiaries to issue, sell or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, or similar rights with respect to any Company or its
Subsidiaries. Except as set forth on Schedule 3.3, there are no voting trusts,
proxies or other commitments, understandings, restrictions or arrangements in
favor of any Person with respect to the voting of, or right to participate in
dividends or other earnings, on any capital stock of any Company or Subsidiary.
 
3.4 Noncontravention. Except as set forth on Schedule 3.4, neither the execution
and the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any Law to which any Company or any
Subsidiary is subject, or (ii) conflict with, result in a breach of, constitute
(with or without notice or lapse of time or both) a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice or consent under any agreement, contract,
lease, license, instrument or other arrangement to which a Company or a
Subsidiary is a party, by which such Company or Subsidiary is bound or to which
any of their assets are subject (or result in the imposition of any Lien upon
any of their assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice or
Lien would not have a Material Adverse Effect. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will violate any provision of the articles of incorporation
or bylaws (or similar governing documents) of the Companies or the Subsidiaries.
Other than in connection with (i) the provisions of the HSR Act and state
securities laws, (ii) the necessary notices to and approvals or consents of the
State PUCs and the FCC, and (iii) the necessary notices to and approvals and
consents, if any, of other state public utility commissions or similar state
regulatory bodies pursuant to applicable state laws regulating the telephone or
other telecommunications business, none of the Seller, the Companies or the
Subsidiaries are required to give notice to, file with or obtain authorization,
consent or approval of any Governmental Entity in order for the Seller to
perform its obligations under this Agreement, except where the failure to give
such notice to file or to obtain such authorization, consent or approval would
not have a Material Adverse Effect.
 
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3.5 Financial Statements. The Seller has heretofore furnished the Buyer with
true and complete copies of (i) the unaudited consolidated balance sheets and
income statements of each of the Companies and its respective Subsidiaries for
the fiscal years ended December 31, 2006 and December 31, 2007, and (ii) the
unaudited consolidated balance sheet and income statement of each of the
Companies and its respective Subsidiaries for the one month and four month
periods ended April 30, 2008 ((the “Interim Financial Statements”) such date,
the “Balance Sheet Date”). The financial statements referred to in clauses
(i)-(ii) above are collectively referred to herein as the “Financial
Statements”. Except as disclosed therein, the Financial Statements, insofar as
they related to any of the Companies and its respective Subsidiaries, are
complete and correct in all material respects, have been prepared on a
consistent basis and present fairly the financial position and operating results
of the respective entity as of the dates, and during such periods, indicated
therein, subject to the disclosures set forth on Schedule 3.5. Notwithstanding
the foregoing, the occurrence of any event or action, or the incurring of any
claim or liability, that adversely affects the financial position or operating
results of the Companies or the Subsidiaries as of the dates, and during the
periods, covered by, and as presented in, the Financial Statements shall not
constitute a breach of or an inaccuracy in this Section 3.5 if said event,
action, claim or liability is the subject of or is covered by another Section
within this Article III (e.g., litigation is the subject of and is covered by
Section 3.19) and the occurrence or incurring thereof does not constitute a
breach of or inaccuracy in such other Section. 
 
3.6 Absence of Changes. Except as set forth on Schedule 3.6, and as contemplated
hereby, since December 31, 2007 and through the Agreement Date, (i) none of the
Companies nor any of the Subsidiaries has suffered any Material Adverse Effect;
(ii) none of the Companies nor any of the Subsidiaries has entered into any
transaction that was not in the Ordinary Course of Business; (iii) except for
sales of goods and services in the Ordinary Course of Business, there has been
no sale, assignment, transfer, mortgage, pledge, encumbrance or lease of any
material asset or property including capital stock of a Company or any of its
Subsidiaries; (iv) there has been no material change in Tax or financial
accounting methods or practices from those used in the preparation of the most
recently filed Tax Returns or the Financial Statements, or revaluation of any
asset of any Company or any of its Subsidiaries (other than accounts receivable
written down in the Ordinary Course of Business); (v) there has been no material
damage, destruction to or loss of, physical property adversely affecting the
Business; (vi) there has been no material loan by any Company or any of its
Subsidiaries, or guaranty by any Company or any of its Subsidiaries of any loan,
to any employee of any Company or any of its Subsidiaries; (vii) none of the
Companies nor any of the Subsidiaries have ceased to transact business with any
customer that, as of the date of such cessation, represented more than five
percent (5%) of the annual gross revenues of the applicable Company; (viii) none
of the Companies nor any of the Subsidiaries have failed to satisfy any of its
debts, obligations or liabilities related to the assets of the applicable
Company as the same became due and payable (except for accounts payable which
are paid in accordance with past practices and in the Ordinary Course of
Business); (ix) no material Contract has been accelerated, suspended,
terminated, modified or cancelled; (x) none of the Companies nor any of the
Subsidiaries has canceled any debts or waived any claims or rights with a value
greater than $25,000; (xi) none of the Companies nor any of the Subsidiaries has
disposed of or permitted to lapse any rights to the use of any patent,
trademark, trade name or copyright; (xvi) none of the Companies nor any of the
Subsidiaries has entered, amended, modified or terminated any employment,
collective bargaining or noncompetition agreement or Benefit Plan or made any
changes in the terms of employment, compensation or benefits of any of its
directors, officers or employees, except for entering into, amending, modifying
or terminating such agreements and making such changes in the Ordinary Course of
Business, (xvii) none of the Companies nor any of the Subsidiaries has failed to
maintain in full force and effect all existing policies of insurance at least at
such levels as were in effect prior to such date or canceled any such insurance
or, to the Knowledge of Seller, taken or failed to take any action that would
enable the insurers under such policies to avoid liability to claims arising our
of occurrences prior to the Closing; and (xviii) there has been no agreement or
commitment by any Company or any of its Subsidiaries to do any of the
foregoing. 
 
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3.7 No Undisclosed Liabilities. None of the Companies nor any of the
Subsidiaries has any liability or obligation of the type that would be required
to be reflected on a balance sheet of such entity prepared in accordance with
GAAP except (i) as set forth on Schedule 3.7; (ii) debts, liabilities and
obligations incurred in the Ordinary Course of Business after the Balance Sheet
Date, that would not have a Material Adverse Effect, (iii) liabilities reflected
on the Financial Statements, and (iv) those debts, liabilities or obligations
incurred as a result of the transactions contemplated hereby. Notwithstanding
the foregoing, no debt, liability or obligation shall constitute a breach of or
an inaccuracy in this Section 3.7 if said debt, liability or obligation is the
subject of or is covered by another Section within this Article III (e.g.,
litigation is the subject of and is covered by Section 3.19) and the existence
of said debt, liability or obligation does not constitute a breach or inaccuracy
in such other Section.
 
3.8 Title to Properties. Except as set forth on Schedule 3.8, each Company and
each Subsidiary has good and marketable title to all its owned Real Property and
tangible personal property and assets used in the Business, and valid leasehold
interests to all of its leased property used in the Business, in each case free
and clear of any and all Liens other than Permitted Liens. The existence of
mortgages, security interests, encumbrances and other Liens, other than those
expressly set forth in this Agreement, shall not be objections to title,
provided that properly executed instruments, in recordable form, necessary to
satisfy the same are delivered to the Buyer at Closing.
 
3.9 Equipment, Etc. Except as set forth on Schedule 3.9, all items of tangible
personal property (including computer hardware) used in the operation of the
Business (the “Equipment”), in the aggregate, are in satisfactory condition and
repair, ordinary wear and tear excepted, so as to operate the Business in the
manner in which it is now operated by the Companies and the Subsidiaries.
 
3.10 Receivables. Except as set forth on Schedule 3.10, all of the trade
receivables and notes receivable which are reflected on the Financial Statements
or which arose subsequent to December 31, 2007, arose out of bona fide,
arms-length transactions and, to the Knowledge of Seller, all such receivables
are good and collectible (or have been collected) in the Ordinary Course of
Business in accordance with their terms, and at the aggregate recorded amounts
thereof, using normal collection practices, less the amount of applicable
reserves for doubtful accounts and for allowances and discounts. To the
Knowledge of Seller, all such reserves, allowances and discounts were and are
adequate.
 
3.11 Inventory. To the Knowledge of Seller, all inventory of the Companies and
the Subsidiaries which is held for use, sale or resale (the “Inventory”)
consists of items of a quantity and quality historically useable and/or saleable
in the Ordinary Course of Business, except for items of obsolete and slow-moving
material and materials which are below standard quality, all of which have been
written down on the Financial Statements to estimated net realizable value in
accordance with the Ordinary Course of Business.
 
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3.12 Intellectual Property. 
 
(a) List of Intellectual Property. Schedule 3.12 sets forth an accurate and
complete list of all of the following which are used in the Business or in which
any of the Companies or the Subsidiaries claim any ownership rights: (i) all
trademarks, service marks, trade names, trade dress, domain names and other
indicia of origin, and all registrations and pending applications to register
any of the foregoing (collectively, together with the associated good will of
each, “Trademarks”); (ii) all patents and the pending patent applications
(provisional or non-provisional) and any division, continuation or
continuation-in-part thereof; (iii) all copyrights and all copyrightable works,
and all registrations, applications for registration, extensions and renewals
thereof; (iv) all licenses of rights in Trademarks, patents, copyrights and
other intellectual property, whether to or by any Company or any Subsidiary (for
this purpose, excluding so-called “off-the-shelf” products and “shrink wrap”
software licensed to any of the Companies or Subsidiaries in the Ordinary Course
of Business and easily obtainable without material expense); and (v) all
Software developed by any Company or any Subsidiary. The rights required to be
so identified, together with all proprietary know how and trade secrets which
are material to any Company, any Subsidiary or the Business, are referred to
herein collectively as the “Intellectual Property.”
 
(b) Ownership of Intellectual Property. Either a Company and/or a Subsidiary has
the sole, exclusive and irrevocable title to, or is duly authorized to use, the
Intellectual Property, and, except for as set forth on Schedule 3.12, has not
granted any liens, mortgages or encumbrances thereon or thereto. The
Intellectual Property is valid and enforceable and has been maintained in good
standing, and no Company or Subsidiary has undertaken or omitted to undertake
any acts and, to the Knowledge of Seller, no circumstances or grounds exist,
that would invalidate, reduce or eliminate, in whole or in part, the
enforceability or scope of such Intellectual Property.
 
(c) Intellectual Property Disputes. Except as set forth on Schedule 3.19, there
are no pending or, to the Knowledge of Seller, threatened, claims (whether
orally or in writing), that any Company or Subsidiary has infringed,
misappropriated, diluted or violated any intellectual property rights of any
third party. The use of the Intellectual Property by any Company or Subsidiary
has not and does not infringe upon, misappropriate, dilute or violate the
intellectual property rights of any third party. To the Knowledge of Seller, (i)
the Intellectual Property has not been and is not being infringed,
misappropriated, diluted or violated by any third party and, (ii) no
circumstances or grounds exist that would indicate that the Intellectual
Property is about to be so infringed, misappropriated, diluted or violated.
 
(d) Computer Software. The Seller has heretofore furnished the Buyer with a list
of all Software (for this purpose, excluding so-called “off-the-shelf” products
and “shrink wrap” software licensed to any of the Companies or Subsidiaries in
the Ordinary Course of Business and easily obtainable without material expense).
Either a Company and/or a Subsidiary currently owns or licenses, or otherwise
have the legal right to use, all of the Software (including any upgrade,
alteration or enhancement with respect thereto), and to the Knowledge of Seller,
all of the Software is being used in compliance with applicable licenses or
other agreements.
 
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3.13 Communications Regulatory Matters. 
 
(a) Except as set forth in Schedule 3.13(a)(i), each of the Companies or their
respective Subsidiaries has all permits, licenses, variances, exemptions,
waivers, orders, approvals, concessions, registrations and other authorizations
issued or provided by each Governmental Entity that regulates telecommunications
in each applicable jurisdiction (together with any renewals, extensions, or
modifications thereof and any additions thereto made as of the Closing Date,
“Communications Licenses”), including (i) the FCC; (ii) the State PUCs, as
applicable (together with any renewals, extensions, or modifications thereof and
any additions thereto made as of the Closing Date, the “State Licenses”); and
(iii) all permits, licenses, franchises, approvals, rights-of-way or other
authorizations issued or provided by the appropriate municipal governmental
entities (together with any renewals, extensions, or modifications thereof and
any additions thereto made as of the Closing Date, the “Local Authorizations”
together with the Communications, Licenses and the State Licenses the
“Regulatory Permits”); in each case that are required for the conduct of the
Business and to the extent that any failure to hold such Regulatory Permits
would not have a Material Adverse Effect. Schedule 3.13(a)(ii) sets forth a
true, correct and complete list of all of the Communications Licenses and
correctly specifies the expiration date of each Communications License in effect
as of the Agreement Date. No Company is required to obtain or hold in its own
name any Communication Licenses in order for its Subsidiaries to conduct
business as presently conducted.
 
(b) Except as set forth in Schedule 3.13(b), each of the Communications Licenses
was duly issued, is valid and in full force and effect, has not been suspended,
canceled, revoked or modified in any materially adverse manner and is not
subject to conditions or requirements that are not generally imposed on such
authorizations.
 
(c) Except as set forth in Schedule 3.13(c), (i) each holder of a Communications
License is in material compliance with, and the conduct of its business has been
and is in material compliance with, the terms of the Communications Licenses,
the Communications Act, and any applicable Communications Laws; (ii) each such
holder has timely filed all material registrations and reports that were due to
be filed in the three years prior to the execution of this Agreement, including
any renewal applications, required by the Communications Act, or any other
applicable Communications Laws, and all such registrations and reports were true
and correct in all material respects; and (iii) each such holder has paid all
amounts owed to the FCC, any State PUC or any municipal Governmental Entity in
connection with the grant and maintenance of the good standing of the
Communications Licenses and no further amounts are currently due to the FCC, any
State PUC or any municipal Governmental Entity. Except as set forth in Schedule
3.13(c), (x) there is no pending or, to the Knowledge of Seller, any threatened
action by or before the FCC, any State PUC, or any municipal Governmental Entity
to revoke, cancel, suspend, modify or refuse to renew any material
Communications License, (y) there is not now issued, outstanding or, to the
Knowledge of Seller, threatened, any notice by the FCC, any State PUC, or any
municipal Governmental Entity, any material violation or complaint, or any
application, complaint, or proceeding (other than applications, proceedings, or
complaints that generally affect the industry of the applicable Company or any
of its Subsidiaries as a whole) relating to the Business or operations of the
applicable Company and its Subsidiaries, and (z) to the Knowledge of Seller, no
Person has asserted in writing to a Governmental Entity that any material
Communications License should be modified or revoked, or that any Company or
Subsidiary is not in material compliance with any Communications License.
 
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(d) Without limiting the foregoing, each Subsidiary (i) complies in all material
respects with the requirements of the Communications Assistance for Law
Enforcement Act (“CALEA”), 47 U.S.C. Sec. 1001 et seq. and the implementing
rules of the FCC; (ii) is capable of providing enhanced 911 service in material
compliance with 47 U.S.C. Sec.251(e)(3) and the implementing rules of the FCC
and FCC policies thereunder; and (iii) currently is a party to and is in
material compliance with any and all necessary pole sharing, conduit occupancy
or similar agreements and is currently in material compliance with any and all
Laws of the FCC, any State PUC, or any municipal Governmental Entity with regard
to the placement and/or spacing of telephone lines.
 
(e) The regulatory tariffs applicable to the Company and each Subsidiary stand
in full force and effect in accordance with their terms, and there is no
outstanding notice of suspension, cancellation or termination or, to the
Knowledge of Seller, any threatened suspension, cancellation or termination in
connection therewith. None of the Companies nor any Subsidiary is subject to any
restrictions or conditions applicable to its regulatory tariffs that limit or
would materially limit the operations of the Companies or the Subsidiaries
(other than restrictions or conditions generally applicable to tariffs of that
type). To the extent that regulatory approvals are required under the
Communications Laws, each such tariff has been duly and validly approved by the
appropriate regulatory agency. None of the Companies nor any Subsidiary is in
violation under the terms and conditions of any such tariff, and there is no
basis for any claim of violation by any Company or Subsidiary under any such
tariff. 
 
3.14 Real Property.
 
(a) Schedule 3.14 contains a list of all Real Property.
 
(b) Except as set forth on Schedule 3.14 to the Knowledge of Seller, there are
no parties in possession of any portion of the Real Property other than one of
the Companies or one of the Subsidiaries, whether as lessees, sublessees,
tenants at will or trespassers, which materially impair the use thereof in a
manner which it is now operated by such Company or Subsidiary.
 
(c) To the Knowledge of Seller, there is no Law, that would require any material
expenditure by any Company or any Subsidiary to modify or improve any of the
Real Property to bring it into compliance therewith that would have a Material
Adverse Effect.
 
3.15 Leases. Schedule 3.15 contains a list of all material leases pursuant to
which any of the Companies or any of the Subsidiaries leases from a Person other
than a Company or a Subsidiary, as lessor or lessee, real or tangible personal
property used in operating the Business or otherwise (the “Leases”), true and
complete copies of which have previously been made available to the Buyer. All
of the Leases are valid, binding and enforceable against the applicable Company
or Subsidiary and, to the Knowledge of Seller, against the other parties
thereto, in accordance to their respective terms, and there is not under any
such Lease any existing default by the applicable Company or Subsidiary, or by
any other party thereto, or any condition or event that, with notice or lapse of
time or both, would constitute a default. None of the Companies nor any of the
Subsidiaries has received notice that the lessor of any of the Leases intends to
cancel, suspend or terminate such Lease or to exercise or not exercise any
option thereunder. For purposes of inclusion on Schedule 3.15, a Lease shall be
deemed material if it is a lease for real property or if it requires the payment
by, or to, a Company or its Subsidiaries of $25,000 or more during any twelve
(12) month period for tangible personal property.
 
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3.16 Material Contracts.
 
(a) Schedule 3.16 contains a list of all material contracts, agreements and
commitments (whether written or oral) to which any Company or any Subsidiary is,
directly or indirectly, a party (in its own name or as a successor in interest),
or by which it or any of its properties or assets is otherwise bound, in each
case that is in effect on the Agreement Date (collectively, the “Contracts”),
including the following: (i) all franchise, dealer, or other distribution
agreements pursuant to which any of them sells or otherwise distributes its
products or services; (ii) all supply contracts, construction contracts, or
other such agreements or understandings pursuant to which any of them purchased
in 2007, or expects to purchase in 2008, in excess of $50,000 in products or
services; (iii) any agreement involving the licensing of Intellectual Property
or the payment of royalties; (iv) any consulting agreement providing for total
remaining payments by any of them in excess of $50,000, (v) an agreement that
would restrict a Company’s or any Subsidiary’s ability to compete in any
business in any location, (vi) agreements concerning a partnership or joint
venture; (vii) any guaranty or undertaking to be liable for the debts of others;
(viii) any letters of credit; (ix) any agreement relating to ownership of or
investments in any Person (including investments in joint ventures and minority
equity investments); (x) any agreement relating to business acquisitions or
dispositions entered into since January 1, 2007, including any not yet
consummated; (xi) any resale or collocation agreements with any communications
carriers; (xii) contracts for the sales of any capital asset in excess of
$50,000; (xiii) contract for capital expenditures in excess of $100,000, outside
the Ordinary Course of Business; (xiv) any written warranties, guaranties or
similar undertakings with respect to contractual performance extended by a
Company or any Subsidiary other than in the Ordinary Course of Business; (xv)
contracts terminable by any other party upon a change of control of a Company or
any Subsidiary or upon failure of a Company or any Subsidiary to satisfy
financial or performance criteria; (xvi) any employment agreement containing
provisions of severance, otherwise limiting any Company or Subsidiary to
terminate such agreement or the employment of the individual under such
agreement, or providing rights or benefits to the employee in the event of a
change of control of any Company or any Subsidiary or (xvii) powers of attorney
that are currently in effect.
 
(b) True and complete copies of the Contracts (or a true and compete narrative
description of any oral Contract) previously have been made available to the
Buyer. Except as set forth on Schedule 3.16, none of the Companies, the
Subsidiaries, nor, to the Knowledge of Seller, any other party to any of the
Contracts (i) is in default under (nor does there exist any condition that, with
notice or lapse of time or both, would cause such a default under) any of the
Contracts, or (ii) has waived any right it may have under any of the Contracts.
All of the Contracts constitute valid and binding obligations of a Company
and/or its Subsidiaries, enforceable in accordance with their respective terms,
and to the Knowledge of Seller, of the other parties thereto. For purposes of
inclusion on Schedule 3.16, a Contract shall be deemed material if it requires
the payment by, or to, any Company or its Subsidiary of $50,000 or more during
any twelve (12) month period.
 
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3.17 Directors and Officers. Schedule 3.17 contains a list, as of the Agreement
Date, of the directors and officers of each Company and its Subsidiaries.
 
3.18 Bank Accounts. Schedule 3.18 contains a list, as of the Agreement Date, of
each bank or other financial institution in which a Company or any Subsidiary
has an account, safe deposit box or lock box arrangement, the name of the
Company or Subsidiary in whose name such account, box or arrangement is held,
the identifying numbers or symbols of the account, box or arrangement, and the
name of each person authorized to draw thereon or to have access thereto.
 
3.19 Litigation. Except as set forth on Schedule 3.19, there is no suit, action,
claim, investigation or proceeding pending, or, to the Knowledge of Seller,
threatened, against any of the Companies, any of the Subsidiaries, or the
Business, nor is there any judgment, decree, injunction or order of any
applicable Governmental Entity or arbitrator outstanding against a Company or
any of its Subsidiaries, which would have a Material Adverse Effect.
 
3.20 Labor Relations. Except as set forth on Schedule 3.20:
 
(a) None of the Companies nor any of the Subsidiaries is a party to any
collective bargaining agreement; no collective bargaining agent has been
certified as a representative of any of the employees of any of the Companies or
any of the Subsidiaries; no representation campaign or election is now in
progress with respect to any employee of a Company or its Subsidiaries; and
there are no labor disputes, grievances, controversies, work stoppages, strikes
or requests for union representation pending, or to the Knowledge of Seller,
threatened, relating to or affecting the Business.
 
(b) There is no pending, or to the Knowledge of Seller, threatened action,
complaint, arbitration, proceeding or investigation against the Companies or any
of the Subsidiaries by or before any court, governmental agency, administrative
agency, board, commission or arbitrator brought by or on behalf of any
prospective, current or former employees of the Company or any of its
Subsidiaries. To the Knowledge of Seller, none of the Companies nor any of their
Subsidiaries is currently under review, audit, investigation, or prosecution by
or subject to any order, consent decree, or conciliation agreement from any
federal, state, or local governmental agency with respect to any employment or
labor practices, including but not limited to the U.S. Department of Labor, the
U.S. Department of Homeland Security, the U. S. Office of Federal Contract
Compliance, the National Labor Relations Board, the U.S. Occupational Safety and
Health Administration, or the state or local counterparts. None of the Companies
or the Subsidiaries has received written notice of the commencement of any
action asserting that any of the Companies or the Subsidiaries has engaged in
any unfair labor practice.
 
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(c) The Companies and each of the Subsidiaries have complied in good faith with
all applicable federal, state, and local labor and employment Laws, including
laws regulating wage and hour practices and Laws prohibiting discrimination in
the terms and conditions of employment, except where such noncompliance would
not reasonably be expected to have a Material Adverse Effect. For each employee
hired within the last ten (10) years and employed in the United States, the
employee has completed and the employing Company or Subsidiary has retained an
Immigration and Naturalization Service Form I-9 in accordance with applicable
rules and regulations. No employee is a non-permanent resident employee whose
status would terminate or otherwise be affected by the business transaction
consummated by this Agreement.
 
(d) As of the Agreement Date, there are no workers’ compensation claims pending
against the Companies or the Subsidiaries, nor is the Seller aware of any facts,
that will or reasonably could give rise to such claims. No employee is on a
leave of absence or is otherwise not actively at work for any reason. Schedule
3.20(d) includes a complete list of all manager level or above employees and all
employees of each Company or any of its Subsidiaries who receives annualized
salary of at least Fifty Thousand Dollars ($50,000) as of the Agreement Date. No
Company or Subsidiary has given notice of termination to or received notice of
resignation from any such employee listed on Schedule 3.20(d). No employee or
former employee of any Company or any of its Subsidiaries has any employment,
change in control, severance, or similar agreement with any Company or
Subsidiary that would affect or be affected by the transactions contemplated
under this Agreement. Each employee is employed “at will.”
 
(e) True and correct copies of all current employee handbooks, summary plan
descriptions, policy manuals and/or written policies applicable to employees
have been provided to the Buyer. Other than current salary or wages (including
commissions, accrued vacation and sick-leave and non-discretionary bonuses), no
amount is owing to any employee or former employee of any Company or its
Subsidiaries.
 
(f) To the Knowledge of Seller, no employee of any Company or Subsidiary is
subject to a non-competition restriction limiting such employee’s ability to be
employed by Buyer in the same capacity as such employee is currently employed by
such Company or Subsidiary.
 
(g) Seller has not engaged in any workforce reduction or other action related to
any employee or former employee of the Companies or the Subsidiaries that has
resulted or could result in liability under the Worker Adjustment and Retraining
Notification Act of 1988 or under any comparable law or regulation of a state or
a foreign jurisdiction, and none of the Seller, the Companies nor the
Subsidiaries has issued any notice that any such action is to occur in the
future. 
 
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3.21 ERISA. 
 
(a) Schedule 3.21 lists all Benefit Plans of each Company and its Subsidiaries.
With respect to each Benefit Plan, Seller has furnished or made available to
Buyer a current, accurate and complete copy thereof and all amendments thereto
and, to the extent applicable: (i) any related trust agreement or other funding
instrument, (ii) the most recent determination letter of the Internal Revenue
Service (the “IRS”), (iii) any summary plan description and summaries of
material modifications, (iv) if applicable, for the most recent year (A) the
Form 5500 and attached schedules, and (B) actuarial valuation reports and (v)
all material correspondence with the IRS or Department of Labor. Except as set
forth on Schedule 3.21, there are no written employee benefit plans, agreements
or arrangements maintained by any of the Companies or any of the Subsidiaries,
including (i) “employee benefit plans” within the meaning of Section 3(3) of
ERISA, (ii) current or deferred compensation, pension, profit sharing, vacation
or severance plans or programs, or (iii) medical, hospital, accident, disability
or death benefit plans (collectively, “Benefit Plans”). All Benefit Plans that
are subject to ERISA have been administered in accordance, and are in compliance
in all material respects with, the applicable provisions of ERISA, the Code,
other applicable law and their respective terms. Each of the Benefit Plans that
is intended to meet the requirements of Section 401(a) of the Code, has been
determined by the IRS to meet such requirements in a favorable determination
letter or opinion letter, and such determination or opinion letter has not been
revoked or withdrawn. No Benefit Plan is subject to Title IV of ERISA or Section
412 of the Code. Each Company and its Subsidiaries has not engaged in any
nonexempt “prohibited transactions,” as such term is defined in Section 4975 of
the Code or Section 406 of ERISA, involving the Benefit Plans that would subject
such Company or its Subsidiaries to any material amount of penalty or tax
imposed under Section 502(i) of ERISA or Section 4975 of the Code. Each Company
and its Subsidiaries have not engaged in any transaction described in Section
4069 of ERISA within the last five (5) years.
 
(b) Except as set forth on Schedule 3.21 or pursuant to the terms of the Benefit
Plans, neither the execution and delivery hereof nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including
severance, unemployment compensation or golden parachute) becoming due to any
director, officer of other employee of any Company, or (ii) increase any benefit
otherwise payable under any Benefit Plan or result in the acceleration of the
time of payment or vesting of any such benefit, which would require such Company
to make additional contributions to any Benefit Plan. Except as set forth on
Schedule 3.21, each Benefit Plan covers only employees who are employed by
Seller or a Company or Subsidiary. Neither Seller nor any Company or Subsidiary,
nor any other corporation or organization controlled by in common control with
the forgoing within the meaning of Section 4001 of ERISA has at any time
contributed to any “multi-employer plan” as described in Section 413(c) of the
Code. No employer securities, employer real property or other employer property
is included in the assets of any Benefit Plan. Neither Seller, nor any Company
or Subsidiary have any obligation to contribute to or any liabilities with
respect to a “defined benefit plan” as defined in Section 3(35) of ERISA, or a
pension plan subject to the funding standards of Section 302 of ERISA or Section
412 of the Code. There are no pending, or threatened, claims, actions or
proceedings of any kind with respect to any Benefit Plan, other than routine
claims for benefits.
 
(c) Except as set forth on Schedule 3.21, all contributions required to be made
by any Company or Subsidiary to any Benefit Plan in accordance with its terms or
by Law or regulation and all premiums due and payable from any Company or
Subsidiary with respect to a Benefit Plan have been timely made.
 
(d) The Seller and each Company and its Subsidiaries do not have any liability
in respect of post-termination or post-retirement health, life, medical or other
welfare benefits to former or current employees thereof, except for benefits
required under Code Section 4980B or any similar state or local law.
 
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(e) Each Benefit Plan that is a “nonqualified deferred compensation plan” within
the meaning of Section 409A(d)(1) of the Code subject to Section 409A of the
Code has been operated in good faith, reasonable compliance with Section 409A of
the Code since January 1, 2005 and no Company stock option subject to Code
Section 409A was granted at an exercise price less than the fair market value
(within the meaning of Code Section 409A) of a share on the date of grant.
 
(f) There is no action or audit by the Department of Labor, the Pension Benefit
Guaranty Corporation, the IRS or any other Governmental Entity or by any plan
participant or beneficiary pending, or to the Knowledge of Seller, threatened,
relating to the Benefit Plans, any fiduciaries thereof with respect to their
duties to the Benefit Plans or the assets of any of the trusts under any of the
Benefit Plans (other than routine claims for benefits) nor are there facts or
circumstances that exist that would reasonably be expected to give rise to any
such actions.
 
3.22 Taxes. Except as set forth on Schedule 3.22, each of the Companies, any
Subsidiary, and any affiliated, combined or unitary group of which any Company
is or was a member, as the case may be (each, a “Tax Affiliate” and,
collectively, the “Tax Affiliates”), has duly and timely filed all Tax Returns,
including extensions, required to be filed by it in respect of any Taxes. All of
such Tax Returns are true, complete and accurate in all material respects. The
Companies and the Tax Affiliates have duly and timely paid all Taxes and other
governmental charges, and all interest and penalties with respect thereto,
whether or not shown on said Tax Returns (whether by way of withholding or
otherwise) to any federal, state, local or other taxing authority (except to the
extent the same are being contested in good faith and adequate reserves therefor
have been provided in the Financial Statements). No deficiency for any Taxes has
been proposed, asserted or assessed against the Companies or Tax Affiliates that
has not been resolved and paid in full (except to the extent the same is being
disputed in good faith by the relevant Company or Tax Affiliate). No waiver,
extension or comparable consent given by any Company or Tax Affiliate regarding
the application of the statute of limitations with respect to any Taxes or Tax
Returns is outstanding, nor is any request for any such waiver or consent
pending. Since March 6, 2000 in the case of War Holdings and its Subsidiary,
June 15, 2000 in the case of Pine Tree Holdings and its Subsidiaries and
February 18, 2001 in the case of Granby Holding and its Subsidiary, none of the
Companies or Subsidiaries has been a member of an affiliated group filing a
consolidated federal income Tax Return other than a group the common parent of
which is one of the Companies or the Seller. No Company or Subsidiary (i) is a
party to, or bound by, or otherwise in any way obligated under, any Tax sharing
or similar agreement; or (ii) has any liability for the Taxes of any Person
other than a group of which any Company is the common parent and one or more
Subsidiaries is a member, under Section 1.1502-6 of the United States Treasury
Regulations (or any similar provision of state or local Law), as a transferee or
successor, by contract, or otherwise. No Company or Subsidiary has consented to
have the provisions of Section 341(f)(2) of the Code (or comparable state law
provisions) apply to it. There are no Liens for Taxes upon any assets of the
Companies or the Subsidiaries, except Liens for Taxes not yet due. No Company or
Subsidiary has agreed or been requested to make any adjustment under Section 481
of the Code by reason of a change in accounting method or otherwise. No Company
or Subsidiary is a party to any Contract that would result, separately or in the
aggregate, in the payment of any “excess parachute payments” within the meaning
of Section 280G of the Code. No claim has been made by a taxing authority in a
jurisdiction where the Companies or the Subsidiaries do not file Tax Returns
that they, individually or collectively, are or may be subject to taxation by
that jurisdiction. None of the Companies nor any of the Subsidiaries has
participated in any reportable or listed transaction as defined under Code
Section 6011.
 
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3.23 Compliance with Applicable Laws. To the Knowledge of Seller, each Company
and its Subsidiaries hold all material permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities necessary to own, lease or
operate all of the assets and properties of such Company and its Subsidiaries,
as appropriate, and to carry on the Business as presently conducted other than
the Regulatory Permits covered under Section 3.13 hereof (the “Permits”).
Subject to Section 3.13 hereof, each Company and its Subsidiaries are in
material compliance with (i) all Laws applicable to the Business including those
of the Occupational Safety and Health Administration, Equal Employment
Opportunity Commission, and National Labor Relations Board, and (ii) the terms
of the Permits. Except as set forth on Schedule 3.23, to the Knowledge of
Seller, none of the Permits will be adversely impacted or affected by or as a
result of the transactions contemplated by this Agreement. The Seller has
previously provided the Buyer with true and complete copies of a Permits that
are necessary for each Company and its Subsidiaries to operate their respective
Businesses as they are currently being operated. The Permits are listed on
Schedule 3.23. Since December 31, 2007, no Company or Subsidiary has received
any written, or to the Knowledge of Seller, oral notice from and Person or
entity alleging noncompliance with any applicable Law or the terms of any
Permit. None of the Permits will lapse, terminate, expire or in any way be
adversely impacted or affected by or as a result of the performance of this
Agreement or the consummation of the transactions contemplated thereby.
 
3.24 Environmental Matters.
 
(a) Each Company and Subsidiary is, and since the date each such entity was
acquired directly or indirectly by the Seller has been, in compliance in all
material respects with Environmental Laws. To the Knowledge of Seller, there has
been no exposure of any person or property to any Hazardous Substance in a
manner which has caused or would reasonably be expected to subject any Company
or Subsidiary to any material liability under applicable Environmental Laws.
 
(b) To the Knowledge of Seller, no Hazardous Substances in quantities or
concentrations which would require notification, investigation, remediation or
monitoring under applicable Environmental Laws, have been Released or are
present on, in, under or migrating from any Real Property, or, were present on
any other real property at the time it ceased to be owned, operated, occupied,
controlled or leased by any Company or Subsidiary. No Company or Subsidiary has
generated, treated, stored, Released or disposed of any Hazardous Substance at,
on, under, to or from any of the Real Property except in compliance with
Environmental Laws or in a manner that would not reasonably be expected to
subject any Company or Subsidiary to material liability under applicable
Environmental Laws.
 
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(c) No Company or Subsidiary is a party to any litigation or administrative
proceeding nor, to the Knowledge of Seller, is any litigation or administrative
proceeding threatened against them, that, in either case, asserts or alleges
that a Company or Subsidiary (i) violated Environmental Laws, (ii) is required
to clean up, remove or take remedial or other responsive action due to the
disposal, deposit, discharge, leak or other Release of any Hazardous Substance,
or (iii) is required to pay all or a portion of the cost of any past, present or
future cleanup, removal or remedial or other action that arises out of or is
related to the disposal, deposit, discharge, leak or other Release of any
Hazardous Substance.
 
(d) Each Company and Subsidiary is in compliance in all material respects with
all covenants and conditions of any environmental permits issued to such Company
or Subsidiary. To the Knowledge of Seller, no circumstances exist which would
reasonably be expected to cause any environmental permit issued to any Company
or Subsidiary to be revoked, modified, or rendered non-renewable upon payment of
the permit fee. All environmental permits and all other consents and clearances
required pursuant to any applicable Environmental Laws, or any agreement to
which any Company or Subsidiary is bound as a condition to the performance and
enforcement of any such permit, have been obtained or will be obtained prior to
the Closing, except where such failure would not reasonably be expected to have
a Material Adverse Effect. All such environmental permits are listed on Schedule
3.24.
 
(e) Except as set forth on Schedule 3.24, to the Knowledge of Seller, there are
no underground storage tanks, friable asbestos, urea formaldehyde,
polychlorinated biphenyl-containing materials or other facilities or structures
on, in, under or at any Real Property containing materials that, if known to be
present in soil or ground water, would require cleanup, removal or other
remedial action by any Company or Subsidiary under any Environmental Laws. 
 
(f) Except as set forth on Schedule 3.24, no Company or Subsidiary is subject to
any judgment, order or citation related to or arising out of any Environmental
Laws or has been named or listed as a potentially responsible party by any
Governmental Entity in a matter related to or arising out of any Environmental
Laws. To the Knowledge of Seller, there is no fact or circumstance which could
result in any environmental liability to the Company or any Subsidiary which
could reasonably be expected to result in a Material Adverse Effect. 
 
(g) To the Knowledge of Seller, no Company or Subsidiary has sent any Hazardous
Substances to a site that, pursuant to any applicable Environmental Law (i) has
been placed or proposed for placement on the National Priorities List or any
similar state list, or (ii) is subject to or the source of an order, demand or
request from a Government Entity to take “response,” “corrective,” “removal,” or
“remedial” action, as defined in any applicable Environmental Law, or to pay for
the costs of any such action at any location.
 
(h) Seller has delivered or made available for inspection all records in the
possession of each Company and Subsidiary concerning any Hazardous Substances or
compliance with Environmental Laws relating to the business, including but not
limited to all environmental audits, environmental assessments, and
environmental investigations of any Real Property.  
 
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3.25 Interest in Customers, Suppliers and Competitors. Except as set forth on
Schedule 3.25, no officer or director of any Company or its Subsidiaries, the
Seller and, to the Knowledge of Seller, no spouse, parent, sibling or lineal
descendent of any of the foregoing, has any direct or indirect material interest
in any material customer, supplier or competitor of any of the Companies or any
of the Subsidiaries, or in any Person from whom or to whom any of the Companies
or any of the Subsidiaries lease any real or personal property, or in any other
Person with whom any of the Companies or any of the Subsidiaries are doing
business, directly or indirectly (including as a debtor or creditor), whether in
existence as of the Closing Date or proposed, other than the ownership of stock
of publicly traded corporations and other entities.
 
3.26 Insurance. Each Company or one of its Subsidiaries currently maintains, in
full force and effect, all insurance policies that are required or customarily
maintained for the conduct of the Business or the ownership of such Company and
its Subsidiaries’ property (both real and personal), including, without
limitation, workers compensation, and property and casualty insurance (the
“Insurance Policies”). The Insurance Policies are listed on Schedule 3.26 and
true and complete copies of all Insurance Policies previously have been made
available to the Buyer. Each Company or its Subsidiaries has paid all premiums
due thereunder and, to the Knowledge of Seller, (i) are not in default regarding
any material provision of any Insurance Policy, and (ii) have not failed to
present any notice or material claim thereunder in a due and timely fashion.
 
3.27 Bankruptcy. None of the Companies nor any of the Subsidiaries have filed a
petition or request for reorganization or protection or relief under the
bankruptcy laws of the United States or any state or territory thereof, made any
general assignment for the benefit of creditors, or consented to the appointment
of a receiver or trustee, including a custodian under the United States
bankruptcy laws, whether such receiver or trustee was appointed in a voluntary
or involuntary proceeding.
 
3.28 Brokers’ Fees. Other than Miller Buckfire & Co., LLC, none of the Seller,
the Companies nor any of the Subsidiaries has any liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
 
3.29 Absence of Other Warranties. Except as and to the extent expressly set
forth in this Article III, the Seller does not make any representation or
warranty whatsoever, and the Seller expressly disclaims any liability and
responsibility for any statement or information not contained in this Agreement,
any certificates delivered by or on behalf of Seller pursuant to Article VII, or
any other document contemplated hereby made or communicated, by oversight or
otherwise (orally or in writing), to the Buyer (including, without limitation,
any opinion, information, projection, statement or advice provided by any
employee, officer, director, agent, stockholder or other representative of any
of the Companies or any of the Subsidiaries in connection with the transactions
contemplated hereby). Without limiting the foregoing, the Buyer acknowledges
that any estimates of future profitability of the Business based upon any
financial statements, business plans, projections or other financial information
provided to the Buyer by or on behalf of the Seller are inherently uncertain and
subject to a variety of variables which are difficult or impossible to predict.
 
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3.30 Related Party Transactions. Except as set forth in Schedule 3.30, no
officer or director of a Company or any Subsidiary is a party to any transaction
or contract (other than for at-will employment) with a Company or any
Subsidiary.
 
3.31 Customers. Schedule 3.31 lists the ten (10) largest customers of the
Companies and the Subsidiaries on a consolidated basis for the fiscal year ended
December 31, 2007 and sets forth opposite the name of each such customer the
approximate aggregate amount of net sales by the Companies and the Subsidiaries
attributable to such customer for such period. No customer listed on Schedule
3.31 has given the Seller, any Company or any Subsidiary written or, to the
Knowledge of Seller, oral notice that it will stop or materially decrease the
rate of business done with such Company or Subsidiary.
 
3.32 Suppliers. Schedule 3.32 lists the ten (10) largest suppliers of the
Companies and the Subsidiaries on a consolidated basis for the fiscal year ended
December 31, 2007 and sets forth opposite the name of each such supplier the
approximate aggregate amount of purchases by the Companies and the Subsidiaries
attributable to such supplier for such period. Except as set forth on Schedule
3.32, no supplier listed on Schedule 3.32 is a sole source of supply for any
Company. No supplier listed on Schedule 3.32 has given the Seller, any Company
or any Subsidiary written or, to the Knowledge of Seller, oral notice that it
will stop or materially decrease the rate of business done with such Company or
Subsidiary.
 
3.33 Availability of Documents. The Company has delivered or made available to
Buyer correct and complete copies of the items referred to in the Disclosure
Schedule or in this Agreement (and in the case of any items not in written form,
a written description thereof).
 
3.34 Indebtedness. Schedule 3.34 sets forth a listing of all indebtedness for
borrowed money of each Company and its Subsidiaries on a consolidated basis as
of a recent date.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
 
The Buyer represents and warrants to the Seller that the statements contained in
this Article IV are correct and complete as of the Agreement Date and will be
correct and complete as of the Closing Date.
 
4.1 Organization, Qualification, and Corporate Power. The Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware.
 
4.2 Authorization of Transaction. The execution, delivery and performance of
this Agreement by the Buyer has been duly authorized and approved by the Buyer’s
board of directors. The Buyer has full power and authority (including full
corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. Assuming due execution and delivery by the
Seller, this Agreement constitutes the valid and legally binding obligation of
the Buyer, enforceable in accordance with its terms and conditions.
 
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4.3 Noncontravention. To the Knowledge of Buyer, neither the execution and the
delivery of this Agreement nor the consummation of the transactions contemplated
hereby, will (i) violate any Law to which the Buyer is subject, 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 or consent under any agreement, contract,
lease, license, instrument or other arraignment to which either the Buyer is a
party or by which it is or will be bound or to which any of its assets are or
will be subject (or result in the imposition of any Lien upon any of its
assets), except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice or Lien would
not have a Material Adverse Effect. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate any provision of the charter or bylaws of the Buyer. To the Knowledge of
Buyer, and other than in connection with (i) the provisions of the HSR Act, the
Securities Act, the Securities Exchange Act and the applicable state securities
law, (ii) the necessary notices to and consents and approvals, if any, of the
FCC, and (iii) the necessary notices to and consents and approvals, if any, of
state public utility commissions or similar state regulatory bodies pursuant to
applicable state laws regulating the telephone, or other telecommunications
business, the Buyer is not required to give any notice to, file with or obtain
authorization, consent or approval of any Governmental Entity in order for the
Buyer to perform its obligations under this Agreement, except where the failure
to give such noticed to file or to obtain such authorization, consent or
approval would not have a Material Adverse Effect.
 
4.4 Investment. The Shares are being acquired by the Buyer in a private
transaction for its own account and not with a view to, or for offer or resale
in connection with, any distribution within the meaning of Section 2(11) of the
Securities Act. The Buyer hereby acknowledges that the Shares are unregistered
and must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. The Buyer
acknowledges and agrees that it will not make any disposition of the Shares
which will or may involve any of the Companies or the Seller in a violation of
the Securities Act, the Securities Exchange Act or of any state securities laws.
 
4.5 Brokers’ Fee. The Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transaction
contemplated by this Agreement for which the Seller or any of the Companies or
Subsidiaries could become liable or obligated.
 
4.6 Financing. The Buyer possesses, and has furnished to the Seller, true and
complete copies of binding written commitments from financially responsible
providers (the “Financing Commitments”) the proceeds of which will be sufficient
to permit the Buyer to consummate the transactions contemplated by this
Agreement. To the Knowledge of Buyer there are no facts or circumstances that
would create a reasonable basis for the Seller to believe the lenders would not
be required or able to fund the transactions contemplated by this Agreement in
accordance with the terms hereof.
 
4.7 Evaluation of Business. The Buyer acknowledges that Seller makes or has made
only the representations and warranties expressly set forth in Article III and
any certificates delivered by or on behalf of Seller pursuant to Article VII. In
particular, and without limiting the generality of the foregoing, the Buyer
acknowledges that no representation or warranty is made with respect to any
financial projections or in any management presentations and accompanying
materials.
 
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4.8 Regulatory Approvals. To the Knowledge of Buyer, (i) the Buyer is fully
qualified under the Communications Laws to be a transferee to the Communications
Licenses, (ii) there is no fact or circumstance in relation to the Buyer or in
relation to the combination of the assets of the Buyer and the Companies that
could reasonably be expected to result in the denial of the transfer of control
to the Buyer of the Communications Licenses by the FCC or the State PUCs (iii)
applications for FCC consent to the transfer of control to the Buyer of the
Communications Licenses issued by the FCC should qualify for streamlined
processing under Sections 63.03 and 63.12 of the rules of the FCC and (iv) no
foreign entity holds a ten percent (10%) or greater equity or voting interest in
the Buyer, and the Buyer is not controlled by a foreign entity or entities such
that the FCC approval process could reasonably be expected to include review by
the Executive Branch agencies with national security responsibilities (known as
“Team Telecom”).
 
ARTICLE V
DISCLOSURE SCHEDULE
 
Notwithstanding anything in this Agreement to the contrary, the mere inclusion
of an item in the Disclosure Schedule as an exception to a representation or
warranty shall not be deemed an admission by the Seller that such item
represents a material exception or material fact, event or circumstance or that
such item has had or could be reasonably expected to have a Material Adverse
Effect. The Disclosure Schedule shall be arranged in sections corresponding to
the numbered and lettered sections and subsections contained in Article III, and
the disclosures in any section or subsection of the Disclosure Schedule shall
qualify other sections and subsections in Article III to the extent it is
readily apparent from a reading of the disclosure that such disclosure is
applicable to such other sections and subsections.
 
ARTICLE VI
COVENANTS; ADDITIONAL AGREEMENTS
 
6.1 General. Each of the Parties will use its reasonable best efforts to take
all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Article
VII).
 
6.2 Notices and Consents. The Seller will cause each of the Companies and each
of the Subsidiaries to give any notices to third parties, and will use their
reasonable best efforts to cause each of the Companies and each of the
Subsidiaries to obtain any third party consents that the Buyer reasonably may
request in connection with the matters referred to in Section 3.4. The Buyer
will give any notices to third parties, and will use its reasonable best efforts
to obtain any third party consents, that the Seller reasonably may request in
connection with the matters referred to in Section 4.3. 
 
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6.3 Regulatory Matters and Approvals. Each of the Parties will (and the Seller
will cause each of the Companies and each of the Subsidiaries to) give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any authorizations, consents and approvals of Governmental Entities in
connection with the matters referred to in Section 3.4 and Section 4.3. Without
limiting the generality of the foregoing:
 
(a) Hart-Scott-Rodino Act. In furtherance of and not in limitation of the
provisions of the Sections 6.1, 6.2 and 6.3(b), each of the Seller and the Buyer
shall, as promptly as practicable, but in no event later than fifteen (15)
Business Days following the execution and delivery of this Agreement, file, or
cause to be filed with the United States Federal Trade Commission and the United
States Department of Justice the notification and report form, if applicable,
required for the transactions contemplated hereby and any supplemental
information requested in connection therewith pursuant to the HSR Act. Any such
notification and report form and supplemental information shall be in
substantial compliance with the requirements of the HSR Act. The Buyer and the
Seller shall each pay one-half of the filing fee required by the HSR Act.
 
(b) State PUCs, FCC and Other State Public Utility Commissions. Within fifteen
(15) days after the Agreement Date, the Parties will file such individual or
joint applications which may be required, with the applicable State PUCs, the
FCC and other state public utility commissions or similar state regulatory
bodies to reflect the change of control of various operating certificates,
permits or other licenses held by any of the Companies or any of the
Subsidiaries. The Parties will respond as promptly as practicable to any
additional requests for information received from the FCC, any State PUC or
other Governmental Entity, and use commercially reasonable efforts to cure not
later than the Closing Date any violation or defaults under any Communications
Law. The Parties shall also file any post-transaction notices as may be required
by such Governmental Entities within the time periods prescribed by Law. The
Buyer and the Seller shall each pay one-half of the filing fees for such
applications.
 
6.4 Operation of Business. Prior to the Closing, the Seller will not cause or
permit any of the Companies or any of the Subsidiaries to engage in any
practice, take any action or enter into any transaction outside the Ordinary
Course of Business except as may be required in order to comply with this
Agreement. Without limiting the generality of the foregoing, except as set forth
on Schedule 6.4, prior to the Closing none of the Companies nor any of the
Subsidiaries will, without the prior written consent of the Buyer: 
 
(a) authorize or effect any change in its certificate of incorporation (or
articles of incorporation, as the case may be) or bylaws (or operating
agreement, as the case may be) in any manner that is adverse to the Buyer;
 
(b) (i) split, combine, reclassify or take similar action with respect to any of
its capital shares or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for its capital shares,
(ii) adopt a plan of complete or partial liquidation or resolutions providing
for or authorizing such liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization or (iii) directly or
indirectly redeem, repurchase or otherwise acquire any capital shares;
 
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(c) grant any options, warrants or other rights to purchase or obtain any of its
capital stock (or partnership or membership interests, as the case may be) or
issue, transfer, pledge, encumber, sell or otherwise dispose of or authorize or
propose the issuance, sale, transfer, pledge, encumbrance or other disposal of
any of its capital stock (or partnership or membership interests, as the case
may be);
 
(d) sell, lease, sell and leaseback, pledge, grant any security interest in or
otherwise dispose of or encumber any of its assets or properties or any
interests therein, other than sales of inventory or dispositions of replaced or
obsolete inventory each in the Ordinary Course of Business consistent with past
practice or enter into, modify or amend any lease, except for any renewals of
existing leases in the Ordinary Course of Business;
 
(e) issue any note, bond or other debt security or create, incur, assume or
guarantee any indebtedness for borrowed money or capitalized lease obligation or
guarantee any debt securities of another person, enter into any “keep well” or
other Contract to maintain the financial statement condition of another person
or enter into any arrangement having the economic effect of any of the forgoing
outside the Ordinary Course of Business, except as issued, created, incurred,
assumed or guaranteed (i) in a transaction provided for in such Company’s 2008
operating or capital budget, or (ii) with respect to intercompany loans or
transfers among the Companies and the Subsidiaries;
 
(f) acquire or agree to acquire (by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner) (i) any business or any corporation,
partnership, association or other business organization or division thereof, or
(ii) any assets other than inventory, equipment and supplies to be purchased,
sold or used in the Ordinary Course of Business consistent with past practice;
 
(g) make any capital investment in, make any loan to or acquire the securities
or assets of any other Person, except with respect to intercompany loans or
transfers among the Companies and the Subsidiaries;
 
(h) make any new capital expenditure which individually or in the aggregate is
in excess of $250,000, other than pursuant to its budgeted capital expenditures
for 2008.
 
(i) except to the extent required by applicable Law or Order, make or change any
election, change an annual accounting period, file any amended Tax Return, enter
into any closing agreement, settle or compromise any Tax claim or assessment
relating to any Company or Subsidiary, or take any other similar action, or omit
to take any action relating to the filing of any Tax Return or the payment of
any Tax with respect to any Company or Subsidiary, or consent to any extension
or waiver of the limitation period applicable to any Tax claim or assessment
relating to the Companies and the Subsidiaries;
 
(j) sell, transfer or license to any person or otherwise extend, amend or modify
any rights to the Intellectual Property of the Companies and the Subsidiaries;
 
(k) make any change in the terms of any employment agreement, or Benefit Plan
applicable to any of its directors, officers or employees or engage in any new
agreement or transaction with any director, officer or employee, or change the
terms of employment, compensation or benefits of any director, officer or
employee, in each case other than in the Ordinary Course of Business;
 
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(l) settle or compromise any litigation or other claim or proceeding (whether or
not commenced prior to the date of this Agreement) other than settlements
involving payments that are not in excess of $50,000 in the aggregate over
amounts fully recoverable in insurance;
 
(m) enter into any Contract containing any restriction on the ability of the
Companies and the Subsidiaries to enter in to the transaction contemplated by
this Agreement, unless such restriction expressly excludes the consummation of
the transactions contemplated by this Agreement; or
 
(n) commit to any of the foregoing.
 
6.5 Access. Until the Closing, the Seller will cause each of the Companies and
the Subsidiaries to permit representatives of the Buyer to have reasonable
access, at all reasonable times, upon reasonable advance notice, and in a manner
so as not to interfere with the normal business operations of the Companies and
the Subsidiaries, to all premises, properties, personnel, books, records
(including Tax records), contracts and documents of or pertaining to the
Companies and the Subsidiaries. Until the Closing, the Buyer shall continue to
be bound by the terms of the Confidentiality Agreement. 
 
6.6 Notice of Developments. From the date of this Agreement until the earlier of
the Closing or the date this Agreement is properly terminated in accordance with
Article VIII, each Party shall promptly notify the other in writing of (i) any
Material Adverse Effect , and (ii), any representation or warranty made by such
Party contained in this Agreement becoming untrue or inaccurate in any material
respect. Notwithstanding anything in this Agreement to the contrary, no such
notification shall affect the representations, warranties or covenants of the
Parties or the conditions to their obligations hereunder, nor shall it limit or
otherwise affect the remedies available hereunder.
 
6.7 Exclusivity. Until the Closing, the Seller will not (and will not cause or
permit any of the Companies, any of the Subsidiaries or any of the respective
agents, affiliates or representatives to) initiate the submission of any
proposal or offer from any Person relating to the acquisition of all or
substantially all of the capital stock or assets of any of the Companies or any
of the Subsidiaries (including any acquisition structured as a merger,
consolidation or share exchange).
 
6.8 Director and Officer Insurance. On and after the Closing Date, the Buyer
shall provide each individual serving as a director or officer of one or more
Companies and/or Subsidiaries at any time prior to the Closing Date with
liability insurance for a period of sixty (60) months after the Closing Date no
less favorable in coverage and amount than any comparable insurance the
Companies or the Subsidiaries maintained, or from which such Company or
Subsidiary benefited, in effect immediately prior to the Closing Date with
respect to acts or omissions occurring prior to the Closing Date which were
committed by such officers and directors in their capacity as such; provided
however that (i) the Buyer shall not be obligated to make annual premium
payments for such insurance to the extent such premiums exceed 150% of the
annual premiums paid as of the Agreement Date for such insurance (the “Current
Premium”) and (ii) such policies may in the sole discretion of the Buyer be one
or more tail policies for all or a portion of such sixty (60) month period. If
such premium for such insurance required to be maintained pursuant to this
Section 6.8 would at any time exceed 150% of the Current Premium, then the Buyer
shall cause to be maintained policies of insurance which, in the Buyer’s good
faith determination, provide the maximum dollar loss coverage available at an
annual premium equal to 150% of the Current Premium.
 
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6.9 Tax Matters.
 
(a) Liability for Tax Matters. Subject and pursuant to Article IX, the Seller
shall be liable for and pay all Taxes of the Companies and the Subsidiaries for
any Tax period or portion thereof ending on or before the Closing Date (whether
assessed or unassessed) and shall indemnify and hold harmless the Buyer (and,
following the Closing, the Companies and the Subsidiaries), from and against all
Taxes of the Companies, the Subsidiaries and/or any affiliated, combined or
unitary group of which any Company or Subsidiary is or was a member for any Tax
period or portion thereof ending on or before the Closing Date (whether assessed
or unassessed). The Seller shall be entitled to any refund actually received by
(or actually credited against the Tax liabilities of) the Buyer, any Company or
any Subsidiary which is attributable to Taxes paid by the Companies or any
Subsidiary for the period prior to and including the Closing Date; provided,
however, that the Seller shall not be entitled to any such refund (or credit) to
the extent that such refund (or credit) arises from or is attributable to a Tax
attribute, Tax credit or Tax net operating loss of the Buyer for any taxable
period; provided further that if any such refund (or credit), or portion
thereof, is attributable to the carryback or utilization of a Tax net operating
loss, Tax credit or any other Tax attribute of any Company or a Subsidiary
existing on the Closing Date, the Seller shall be entitled only to such portion
of the refund (or credit) that is attributable to Taxes paid by any Company or
Subsidiary on or prior to the Closing Date. The Buyer shall be entitled to any
refund or credit in respect of any Taxes applicable to the business, assets, or
results of operations of the Companies and Subsidiaries in each case
attributable to all periods of time following the Closing Date.
 
(b) For purposes of this Section 6.9, in the case of any Taxes that are imposed
on a periodic basis and are payable for a taxable period that includes (but does
not end on) the Closing Date, the portion of such Tax attributable to periods of
time up to and including the Closing Date shall (i) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be deemed to be
the amount of such Tax for the entire taxable period multiplied by a fraction
the numerator of which is the number of days in the taxable period ending on the
Closing Date and the denominator of which is the number of days in the entire
taxable period, and (ii) in the case of any Tax based upon or related to income
or receipts, be deemed equal to the amount which would be payable if the
relevant Taxable period ended on the Closing Date.
 
(c) Consistent Tax Reporting. The Buyer shall file a consolidated federal income
Tax Return that includes the Companies and the Subsidiaries for the taxable
period of the Companies starting with the day following the Closing Date.
Accordingly, the taxable year of each of the Companies and the Subsidiaries will
close for federal income Tax purposes at the end of the day on the Closing Date.
No election under Section 338 of the Code (relating to stock purchases treated
as asset acquisitions) or under Reg. Sec.1.1502-76(b)(2)(ii) (relating to
ratable allocation elections) shall be made. The Companies and the Subsidiaries
shall not engage in any transactions on or prior to the Closing Date outside the
ordinary course of business other than the transactions contemplated by this
Agreement. The Seller, the Companies, the Subsidiaries, and the Buyer shall (i)
treat and report the transactions contemplated by this Agreement in all respects
consistently with the provisions of this Agreement for purposes of any federal,
state, local or foreign Tax and (ii) not take any actions or positions
inconsistent with the obligations of the parties set forth herein.
 
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(d) Tax Returns for Tax Periods Ending on or Before the Closing Date. The Seller
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns of the Companies and Subsidiaries for taxable periods ending on or
before the Closing Date that have not been filed prior to the Closing Date. The
Seller shall permit the Buyer to review and comment on each such Tax Return
described in the prior sentence at least ten (10) days prior to filing and shall
make such revisions to such Tax Returns as are reasonably requested by the
Buyer. None of the Companies or any Subsidiary shall amend any Tax Return for
any Tax Period ending on or before the Closing Date without the written consent
of Seller, which shall not be unreasonably withheld or delayed. All Tax Returns
prepared by or for the Seller pursuant to this Section 6.9 shall be prepared in
a manner consistent with the past practice of the applicable Company or
Subsidiary, except as otherwise reasonably necessary to comply with Law.
 
(e) Tax Returns for Tax Periods that Include but do not End on the Closing Date.
The Buyer shall prepare or cause to be prepared and file or cause to be filed in
a timely manner all Tax Returns of the Companies and Subsidiaries for taxable
periods that include but do not end on the Closing Date. The Company shall
permit the Seller to review and comment on each such Tax Return described in the
prior sentence at least ten (10) days prior to filing and shall make such
revisions to such Tax Returns as are reasonably requested by the Seller. None of
the Companies or any Subsidiary shall amend any Tax Return for any such Tax
Period without the written consent of the Seller, which shall not be
unreasonably withheld. All Tax Returns to be prepared by or for a Company
pursuant to this Section 6.9 shall be prepared in a manner consistent with the
past practice of the applicable Company or Subsidiary, except as otherwise
reasonably necessary to comply with Law.
 
(f) Reimbursement; Notice. Each Party shall promptly pay the other for any Taxes
for which such Party is liable under this Section 6.9, but in no event later
than five days prior to the due date of the payment of such Taxes. The Parties
agree to negotiate in good faith to resolve any disputes regarding the payment
of any Taxes pursuant to this Section 6.9. Within a reasonable period of time
prior to the payment of any such Tax, the Party paying such Tax shall give
written notice to the other Party of the Tax payable and the portion that is the
liability of such Party, although failure to do so shall not relieve the other
Party from its liability hereunder.
 
(g) Assistance and Cooperation. After the Closing Date, each Party shall (and
shall cause its respective affiliates, representatives, and agents to): (i)
assist the other Party in preparing any Tax Returns that such other Party is
responsible for preparing and filing in accordance with this Section 6.9; (ii)
cooperate fully in preparing for any audits of, or disputes with taxing
authorities regarding, any Tax Returns described in this Section 6.9; and (iii)
make available to the other Party and to any taxing authority as reasonably
requested all information, records, and documents relating to the Taxes
described in this Section 6.9.
 
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6.10 Further Assurances. Following the Closing, each Party agrees to cooperate
fully with the other Party and to execute such further instruments, documents
and agreements and to give such further written assurances, as may be reasonably
requested by any other Party at that other Party's cost to give effect to the
transactions described herein and contemplated hereby.
 
6.11 Environmental Matters. The Seller shall cooperate with the Buyer in making
the environmental investigations of the Real Property set forth on Schedule
6.11; provided, however, that (i) the Buyer shall obtain the Seller’s written
consent prior to entering such Real Property in connection with conducting any
assessment or testing with respect thereto and (ii) Seller shall have entered
into an access or similar agreement reasonably satisfactory to it with each
contractor of the Buyer who will perform the testing. The Buyer shall pay all
fees and expenses in connection with such environmental investigations.
 
6.12 Financial Statements. During the period from the Agreement Date to the
Closing Date, the Seller shall not later than thirty (30) days after the end of
each month, cause the unaudited consolidated balance sheets and income
statements of each of the Companies and its respective Subsidiaries, prepared in
accordance with GAAP (except for year end and consolidating adjustments and the
omission of footnotes), to be delivered to the Buyer.
 
6.13 Books and Records. For a period of two (2) years following the Closing, the
Buyer will cause the Companies and the Subsidiaries to maintain a reasonable
records retention policy. From and after the Closing until ninety (90) days
after the expiration of all applicable statute of limitations periods, Seller
and its accountants, lawyers and representatives shall be entitled, upon
reasonable notice and during normal business hours to have access to and to make
copies, at Seller’s expense, of relevant books and records of the any or all of
the Companies and/or the Subsidiaries with respect to periods or occurrences
prior to Closing for reasonable purposes relating to the Seller’s ownership of
the Companies and Subsidiaries prior to the Closing, including the preparation
of Tax Returns. In the event of any litigation or threatened litigation between
the Parties relating to this Agreement or the transactions contemplated hereby,
the covenants contained in this Section 6.13 shall not be considered a waiver by
any Party of any right to assert the attorney-client privilege. With respect to
pre-Closing communications between any or all of the Seller, the Companies
and/or the Subsidiaries and its or their attorney or attorneys, only the Seller
shall be able to waive the attorney-client privilege.
 
6.14 Financing Commitments. Buyer covenants to use its commercially reasonable
efforts to cause all conditions to the funding under the Financing Commitments
to be satisfied and to cause the funding to occur as contemplated by the
Financing Commitments.
 
6.15 Company Audits. The Seller will retain an independent auditor (Berry Dunn
McNeil & Parker) and facilitate an audit of the Companies and Subsidiaries on an
combined basis to allow for the creation of audited balance sheets, income
statements and statements of cash flows for the years ending December 31, 2005,
December 31, 2006 and December 31, 2007, as well as a review (but not an audit)
of such statements for the interim period of January 1, 2008 through the Closing
(the “Combined Company Financials”). The Buyer and the Seller shall each pay
one-half of all fees and expenses of such independent auditor retained in
connection with the Combined Company Financials.
 
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6.16 Seller’s Legal Existence. The Seller will maintain its legal existence and
maintain sufficient capital to make any and all payments required to be made by
it under Section 2.4 hereof.
 
6.17 Employee Plan Matters. The Seller shall cause each Benefit Plan in which
employees of any Company participate (the “Company Benefit Plans”), to be
transferred and assumed by Pine Tree Holdings prior to the Closing. Pursuant to
Section 7.1(l), the Seller shall provide Buyer with evidence of the transfer and
assumption of the Company Benefit Plans.
 
ARTICLE VII
CONDITIONS TO OBLIGATION TO CLOSE
 
7.1 Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to the satisfaction of the following conditions:
 
(a) Subject to the provisions of Section 6.6, (i) the representations and
warranties of the Seller set forth in Article III (other than those that address
matters as of a particular date) shall be true and correct in all material
respects at and as of the Closing Date (without giving effect to any limitations
as to materiality or “Material Adverse Effect” set forth therein) and (ii) the
representations and warranties of the Seller set forth in Article III that
address matters as of a particular date shall be true and correct as of such
dates (without giving effect to any limitations as to materiality or “Material
Adverse Effect” set forth therein), with such exceptions in the case of all of
the representations and warranties described in clauses (i) and (ii), taken
together, as have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
 
(b) the Seller shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
 
(c) the Buyer shall have received a certificate signed by an officer of the
Seller certifying as to the matters set forth in Section 7.1(a) and Section
7.1(b);
 
(d) there shall not be any judgment, order, decree, stipulation, injunction or
charge in effect preventing consummation of any of the transactions contemplated
by this Agreement;
 
(e) since the Agreement Date, no event or events shall have occurred that
constitute(s) a Material Adverse Effect.
 
(f) the Seller shall have delivered to the Buyer a Certificate of Good Standing
(or comparative certificate) of each of the Companies and each of the
Subsidiaries issued by the appropriate governmental entity of the jurisdiction
of such Company’s or Subsidiary’s incorporation;
 
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(g) no litigation shall be pending (i) challenging or seeking to delay the
consummation of any of the transactions contemplated by this Agreement, (ii)
asserting the illegality of or seeking to render unenforceable any material
provision of this Agreement, or (iii) which has or could reasonably give rise to
a Material Adverse Effect;
 
(h) all applicable waiting periods (and any extensions thereof) under the HSR
Act, if applicable, shall have expired or otherwise been terminated and the
Parties shall have received all State PUCs, FCC and other authorizations,
consents and approvals of Governmental Entities referred to in Section 3.4 and
Section 4.3 above;
 
(i) the Buyer shall have received from counsel to the Seller the opinions in
form and substance as set forth in Exhibit 7.1(i) attached hereto, addressed to
the Buyer and dated as of the Closing Date;
 
(j) the Buyer shall have received the resignations, effective as of the Closing,
or evidence of removal as of the Closing, of all the directors and officers of
the Companies and their Subsidiaries, except for such persons as are designated
on Exhibit 7.1(j) hereto;
 
(k) the Buyer shall have received a noncompetition agreement in the form of
Exhibit 7.1(k), executed by each person listed on Schedule 7.1(k);
 
(l) the Buyer shall have received evidence of the transfer and assumption of the
Company Benefit Plans by Pine Tree Holdings;
 
(m) Title to all Material Owned Real Property shall be insurable for the benefit
of the current fee owner of each such property as of the date of Closing, on the
current ALTA form of owner’s policy of title insurance, subject to the terms,
conditions and exclusions set forth in the preprinted jacket to such policy, the
standard exceptions set forth in Schedule B to such policy and all material
conditions and stipulations disclosed in the title insurance policies listed on
Schedule 7.1(m)(ii) attached hereto and incorporated herein by reference (copies
of which have been provided to the Buyer), together with such other easements,
restrictions, covenants or other matters which do not prohibit or materially
interfere with the current use of any Material Owned Real Property, except that:
(a) Seller shall deliver or cause to be delivered such documents and instruments
required by the applicable title insurance company in order to delete any
exceptions for mechanic’s liens and/or parties-in-possession and to issue a
non-imputation endorsements to such policy; and (b) Seller shall discharge the
mortgages set forth in Schedule 7.1(m)(i)(ii) to this Agreement. 
Notwithstanding any of the foregoing, it is expressly agreed that Buyer shall be
solely responsible for any and all costs and expenses in connection with
obtaining title insurance, including, without limitation, any title examination
fees, copying fees, commitment preparation fees, premiums, survey expenses, and
all other fees and expenses of any kind or nature.
 
(n) the Buyer shall have received an affidavit sworn under penalty of perjury
and in a form and substance required by Section 1445(b)(3) of the Code and
Section 1.1445- 2(c)(3) of the Treasury Regulations, certifying that each
Company and Subsidiary is not and has not been a “United States real property
holding corporation” (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code;
 
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(o) the conditions set forth in the Financing Commitments shall have been
satisfied or waived and the funding referred to therein shall be available to
the Buyer on terms not materially less favorable to the Buyer than are set forth
in the Financing Commitments, provided that the failure to obtain such
satisfaction or waiver is not a result of the failure of the Buyer to carry out
its obligations to the financial institutions as set out in such letters and
such failure by the Buyer has not been primarily caused by a breach by the Buyer
of its obligations under this Agreement; and
 
(p) the Buyer shall have received the Combined Company Financials.
 
(q) all actions to be taken by the Seller in connection with the consummation of
the transactions contemplated hereby and all certificates, opinions, instruments
and other documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to the Buyer.
 
Except for the conditions contained in paragraph (h) of this Section 7.1, the
Buyer may waive any condition specified in this Section 7.1 by a writing so
stating delivered to the Seller at or prior to the Closing.
 
7.2 Conditions to Obligation of Seller. The obligation of the Seller to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
 
(a) Subject to the provisions of Section 6.6, (i) the representations and
warranties of the Buyer set forth in Article IV (other than those that address
matters as of a particular date) shall be true and correct in all material
respects at and as of the Closing Date (without giving effect to any limitations
as to materiality or “Material Adverse Effect” set forth therein) and (ii) the
representations and warranties of the Buyer set forth in Article IV that address
matters as of a particular date shall be true and correct as of such dates
(without giving effect to any limitations as to materiality or “Material Adverse
Effect” set forth therein), with such exceptions in the case of all of the
representations and warranties described in clauses (i) and (ii), taken
together, as have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
 
(b) the Buyer shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
 
(c) the Seller shall have received a certificate signed by an officer of the
Buyer certifying as to the matters set forth in Section 7.2(a) and Section
7.2(b) above;
 
(d) there shall not be any judgment, order, decree, stipulation, injunction or
charge in effect preventing consummation of any of the transactions contemplated
by this Agreement;
 
(e) the Buyer shall have delivered to the Seller the Closing Purchase Price as
contemplated by Section 2.7(b);
 
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(f) all applicable waiting periods (and any extensions thereof) under the HSR
Act, if applicable, shall have expired or otherwise been terminated and the
Parties shall have received all State PUC’s, FCC and other authorizations,
consents and approvals of Governmental Entities referred to in Section 3.4 and
Section 4.3;
 
(g) the Seller shall have received a certificate of the Secretary or Assistant
Secretary of the Buyer certifying the names and signatures of the officers of
the Buyers authorized to sign this Agreement, and the other documents
contemplated hereunder; and
 
(h) all actions to be taken by the Buyer in connection with the consummation of
the transactions contemplated hereby and all certificates, opinions, instruments
and other documents required to effect the transactions contemplated hereby will
be reasonable satisfactory in form and substance to the Seller.
 
Except for the conditions contained in paragraph (f) of this Section 7.2, the
Seller may waive any condition specified in this Section 7.2 by a writing so
stating delivered to the Buyer at or prior to the Closing.
 
7.3 Deemed Waiver. If either Party is not obligated to consummate the Closing
pursuant to this Agreement, but nevertheless elects to consummate the Closing,
and the other Party is obligated to consummate the Closing, the Parties shall
proceed with the consummation of the Closing as if all Parties were obligated to
do so, and the Party who is not obligated to proceed but elects to do so shall
be deemed to have specifically waived in writing, as provided in Section 7.1 and
Section 7.2, as the case may be, the fulfillment of the condition or conditions,
the nonfulfillment of which excused the obligation of said Party to perform
pursuant to this Agreement as contemplated by Section 7.1 and Section 7.2, as
the case may be.
 
ARTICLE VIII
TERMINATION
 
8.1 Termination of Agreement. The Parties may terminate this Agreement as
provided below:
 
(a) the Parties may terminate this Agreement by mutual written consent at any
time prior to the Closing Date;
 
(b) the Buyer (if the Buyer is not then in breach of this Agreement) may
terminate this Agreement by giving written notice to the Seller at any time
prior to Closing (i) (1) in the event the representations and warranties of the
Seller set forth in Article III (other than those that address matters of a
particular date) shall not be true and correct in all material respects (without
giving effect to any limitations as to materiality or “Material Adverse Effect”
set forth therein) and (2) the representations and warranties of the Seller set
forth in Article III that address matters as of a particular date shall not be
true and correct as of such date(s) (without giving effect to any limitations as
to materiality or “Material Adverse Effect” set forth therein), with such
exceptions in the case of all of the representations and warranties described in
clauses (1) and (2), taken together, as have not had and would not reasonably be
expected to have as of the Closing Date, individually or in the aggregate, a
Material Adverse Effect, the Buyer has notified the Seller of the breach, and,
if of a type which can be cured, the breach has continued without cure for a
period of ten (10) days after the notice of breach, or (ii) if the Closing shall
not have occurred on or before December 31, 2008, by reason of the failure of
any condition precedent under Section 7.1 or 7.2;
 
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(c) the Seller (if the Seller is not then in breach of this Agreement) may
terminate this Agreement by giving written notice to the Seller at any time
prior to Closing (i) (1) in the event the representations and warranties of the
Buyer set forth in Article IV (other than those that address matters of a
particular date) shall not be true and correct in all material respects (without
giving effect to any limitations as to materiality or “Material Adverse Effect”
set forth therein) and (2) the representations and warranties of the Buyer set
forth in Article IV that address matters as of a particular date shall not be
true and correct as of such date(s) (without giving effect to any limitations as
to materiality or “Material Adverse Effect” set forth therein), with such
exceptions in the case of all of the representations and warranties described in
clauses (1) and (2), taken together, as have not had and would not reasonably be
expected to have as of the Closing Date, individually or in the aggregate, a
Material Adverse Effect, the Seller has notified the Buyer of the breach, and,
if of a type which can be cured, the breach has continued without cure for a
period of ten (10) days after the notice of breach, or (ii) if the Closing shall
not have occurred on or before December 31, 2008, by reason of the failure of
any condition precedent under Section 7.1 or 7.2;
 
(d) Either of the Parties may terminate this Agreement if any court or
Governmental Entity has issued a final and non-appealable order, decree or
ruling permanently restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
 
8.2 Effect of Termination.
 
(a) Except as hereinafter provided in this Section 8.2, if either Party
terminates this Agreement pursuant to Section 8.1, all rights and obligations of
the Parties hereunder shall terminate without any liability of either Party;
provided, however, that the Confidentiality Agreement referred to in Section 6.5
shall survive any such termination.
 
(b) In the event the Buyer terminates this Agreement pursuant to Section
8.1(b)(i), the Buyer shall be entitled to pursue all legal and equitable
remedies against the Seller for such breach or failure to perform.
 
(c) In the event the Seller terminates this Agreement pursuant to Section
8.1(c)(i) (whether or not the Seller is then also entitled to terminate this
Agreement pursuant to Section 8.1(c)(ii)), the Seller shall be entitled to
pursue all legal and equitable remedies against the Buyer for such breach or
failure to perform, including, but not limited to, specific performance.
 
(d) All costs, fees and expenses (including reasonable attorneys’ fees and
expenses) incurred by the nonbreaching Party in connection with enforcing its
rights hereunder with respect to a breach shall be paid by the breaching Party.
 
8.3 Fees and Expenses. Except as otherwise provided herein, the reasonable
costs, fees and expenses incurred in connection with the negotiation, drafting
and execution of this Agreement and the consummation of the transactions
contemplated hereby (including the reasonable fees and expenses of counsel,
accountants and appraisers) shall be paid by the Party incurring such fees or
expenses.
 
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ARTICLE IX
SURVIVAL; INDEMNIFICATION
 
9.1 Survival. The Parties agree that the representations, warranties, covenants
and agreements contained in this Agreement and in any certificate delivered at
the Closing pursuant to this Agreement shall survive the Closing until the first
anniversary of the Closing Date (the “Cut-Off Date”); except for the
representations and warranties contained in each of Section 3.1, Section 3.2,
Section 3.3, Section 3.8 and Section 3.34, which shall survive for the
applicable statute of limitations; provided that the covenants and agreements in
each of Section 6.8, Section 6.9, Section 6.10 and Section 6.13 shall survive
the Closing in accordance with its terms. No claim for breach of any
representation, warranty, covenant or agreement contained in this Agreement may
be brought after the Cut-Off Date, except for claims (a) of which the Seller has
been notified in writing with reasonable specificity by the Buyer prior to the
Cut-Off Date, (b) of which the Buyer has been notified in writing with
reasonable specificity by the Seller prior to the Cut-Off Date, or (c) for
breach of Section 6.8, Section 6.9, Section 6.10 or Section 6.13.
 
9.2 Indemnification of the Buyer. Subject to the other terms of this Article IX,
from and after the Closing:
 
(a) The Seller agrees to indemnify the Buyer and hold it harmless against and in
respect of any and all damages, losses, expenses, costs, obligations and
liabilities, including reasonable attorneys’ fees (collectively, “Losses”),
incurred by the Buyer that arise or result from (as determined in each case by
an order of a court of competent jurisdiction or by written agreement of the
Seller and the Buyer) (i) any breach of any of the representations or warranties
contained in Article III or contained in any certificate delivered at the
Closing by the Seller pursuant to this Agreement; or (ii) the failure of the
Seller to perform any of its covenants or agreements contained herein.
 
(b) Notwithstanding the foregoing, the Buyer’s right to make claims against the
Seller under this Section 9.2 shall be subject to the following limitations and
conditions:
 
(i) no claim shall be made unless, and only to the extent that, the cumulative
amount of Losses incurred by the Buyer exceeds $250,000;
 
(ii) indemnification payments by Seller hereunder shall not exceed in the
aggregate $6,300,000;
 
(iii) no claim shall be made with respect to Losses arising out of any breach
(or facts constituting a breach) of this Agreement that, to the Knowledge of
Buyer, exist prior to the Agreement Date;
 
(iv) no claim shall be made with respect to Losses arising out of any breach of
representations or warranties in Article III or the covenants in Article VI to
the extent that a corresponding reserve for such Losses has been made on the
Balance Sheet or to the extent such amount is reflected in the Current
Liabilities that are used to compute the Net Working Capital; and
 
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(v) no claim shall be made for consequential damages, punitive or exemplary
damages, special damages, lost profits, incidental damages, indirect damages,
unrealized expectations or other similar items.
 
In determining the foregoing thresholds and in otherwise determining the amount
of any Losses for which the Buyer is entitled to assert a claim for
indemnification hereunder, the amount of any such Losses shall be determined
after deducting therefrom the amount of (a) any insurance proceeds that may be
received by the Buyer or any Company or Subsidiary upon the timely submission of
claims in respect thereof and after giving effect to any applicable deductible
or retention (which recoveries the Buyer agrees to use, or to cause such Company
or such Subsidiary to use, diligent efforts to obtain) and (b) any other third
party recoveries received by the Buyer, a Company or a Subsidiary in respect of
such Losses (which recoveries the Buyer agrees to use, or to cause such Company
or such Subsidiary to use, diligent efforts to obtain). If an indemnification
payment is received by the Buyer, and the Buyer, a Company or a Subsidiary later
receives insurance proceeds and other third party recoveries in respect of the
related Losses, the Buyer shall immediately pay to the Seller a sum equal to the
lesser of (y) the actual amount of such insurance proceeds and other third party
recoveries or (z) the actual amount of the indemnification payment previously
paid by the Seller with respect to such Losses.
 
9.3 Indemnification of the Seller. Subject to the other terms of this Article
IX, from and after the Closing, the Buyer agrees to indemnify the Seller and
hold the Seller harmless against and in respect of any and all Losses which
arise or result from: (a) any breach of any of the representations or warranties
of the Buyer contained in this Agreement or in any certificate delivered
pursuant to this Agreement or (b) the failure of the Buyer to perform any of its
covenants or agreements set forth herein.
 
9.4 Procedure for Indemnification.
 
(a) Any Party entitled to make a claim for indemnification hereunder shall
promptly notify the indemnifying Party of the claim in writing upon learning of
such claim or the facts constituting such claim, describing the claim in
reasonable detail, the amount thereof, and the basis therefor. The indemnifying
Party will be relieved of its indemnification obligations hereunder to the
extent that it is prejudiced by the indemnified party’s failure to give such
prompt notice. The Party from whom indemnification is sought shall respond to
each such claim within thirty (30) days of receipt of such notice. No action
shall be taken pursuant to the provisions of this Agreement or otherwise by the
Party seeking indemnification (unless reasonably necessary to protect the rights
of the Party seeking indemnification) until the later of (i) the expiration of
the thirty (30) day response period or (ii) thirty (30) days following the
expiration of the thirty (30) day response period if a response, received within
such thirty (30) day period by the Party seeking indemnification, requests an
opportunity to cure the matter giving rise to indemnification (and, in such
event, the amount of such claim for indemnification shall be reduced to the
extent so cured).
 
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(b) If a claim for indemnification hereunder is based on a claim by a third
party, the indemnifying Party shall have the right to assume the entire control
of the defense thereof, including at its own expense, employment of counsel
reasonably satisfactory to the indemnified Party, and, in connection therewith,
the Party claiming indemnification shall cooperate fully with the indemnifying
Party and make available to the indemnifying Party all pertinent information
under its control; provided, that the indemnified Party may participate in any
proceeding with counsel of its choice at its expense. In such event, the
indemnifying Party shall have the right to settle or resolve any such claim by a
third party; provided, that any such settlement or resolution contemplated by
the Seller, as the indemnifying Party, that involves any action by the Buyer
other than compliance with customary obligations to limit disclosure of the
terms thereof and the payment of money (which is paid in full by the Seller,
subject to the applicable conditions and limits contained in this Article IX)
shall not be concluded without the prior written approval of the Buyer, which
approval shall not be unreasonably withheld, delayed or conditioned; and
provided further, that any such settlement or resolution contemplated by the
Buyer, as the indemnifying Party, that involves any action other than compliance
with customary obligations to limit disclosure of the terms thereof and the
payment of money (which is to be paid in full by the Buyer) shall not be
concluded without the prior written approval of the Seller, which approval shall
not be unreasonably withheld, delayed or conditioned.
 
(c) Without limiting the generality of the foregoing, the Buyer will, and will
cause employees of the Buyer, the Companies and the Subsidiaries to, cooperate
fully with the Seller in connection with any matter for which the Seller is the
indemnifying Party. Such cooperation shall include (i) assisting in the
collection and preparation of discovery materials, (ii) meeting with (and making
employees available to meet with) the Seller and/or its counsel to prepare for
and/or appear as witnesses at depositions, court proceedings and/or trial, and
(iii) providing to the Seller and/or its counsel all information under the
control of the Buyer, any Company or any Subsidiary that is deemed necessary by
the Seller and/or its counsel for the defense or prosecution of such matter.
 
9.5 Remedies Exclusive. The remedies provided in this Article IX shall be the
exclusive remedies of the Parties hereto and their heirs, successors and assigns
after the Closing in connection with the transactions contemplated by this
Agreement, including any breach or non-performance of any representation,
warranty, covenant or agreement contained herein, except (i) in the case of
actual fraud, in which case the defrauded Party shall have all rights and
remedies available under this Agreement and available under the law against the
Party that committed such actual fraud and (ii) specific performance of
post-Closing covenants. Without limiting the foregoing, the sole source of
payment for any indemnification obligations of the Seller shall be the Escrow
Amount held by the Escrow Agent; provided that claims based on actual fraud
shall not be limited to the Escrow Amount. No Party may commence any suit,
action or proceeding against any other Party hereto with respect to the subject
matter of this Agreement or the transactions contemplated hereby, whether in
contract, tort or otherwise, except to bring a claim (a) to enforce such Party’s
express rights under Section 6.9 or this Article IX, (b) for actual fraud
against the Party that committed such actual fraud or (c) specific performance
of post-Closing covenants. The provisions of this Article IX constitute an
integral part of the consideration given pursuant to this Agreement and were
specifically bargained for and reflected in the total amount of the Final
Purchase Price payable to the Seller.
 
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9.6 Treatment of Indemnity Payments. To the maximum extent permitted by Law, it
is the intention of the Parties to treat any indemnity payment made under this
Agreement as an adjustment to the Final Purchase Price for all purposes, and the
Parties agree to file their Tax Returns accordingly.
 
ARTICLE X
MISCELLANEOUS
 
10.1 Press Releases and Public Announcements. Neither Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
however, that either Party may make any public disclosure it believes in good
faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its best efforts to advise the other Party prior to making the
disclosure).
 
10.2 No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns; provided, however, that the provisions in Section 6.8
concerning insurance are intended for the benefit of the individuals specified
therein and their respective legal representatives.
 
10.3 Agreement. This Agreement (including the Disclosure Schedule, the Exhibits
hereto and the documents referred to herein) constitutes the entire agreement
among the Parties and supersedes any prior understandings, agreements or
representations by or among the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof (other than the Confidentiality
Agreement).
 
10.4 Succession and Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Party. Notwithstanding anything to the contrary set forth herein,
after the Closing, the Buyer may assign and transfer to any entity providing the
financing to the Buyer for the transactions contemplated by this Agreement (or
any refinancing of such financing) as collateral security for such financing all
of the Buyer’s interest, rights and remedies of such parties in, to and with
respect to this Agreement. Each party to this Agreement and their assigns
expressly consent to such assignment after the Closing. Any such assignment
shall be made for collateral security purposes only and will not release or
discharge any party from any obligations it may have pursuant to this Agreement,
nor increase or expand in any way Seller’s obligations hereunder. The Buyer may
(a) authorize such financing sources to assert, either directly or on behalf of
the Buyer, any claims such party may have against Seller under this Agreement
and (b) make, constitute and appoint one agent bank in respect of such financing
(and all officers, employees and agents designated by such agent) as the true
and lawful attorney and agent-in-fact of such party for the purpose of enabling
the financing sources to assert and collect any such claims.
 
10.5 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument. For purposes hereof, facsimile copies
hereof and facsimile signatures hereof shall be authorized and deemed effective.
 
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10.6 Headings. The Section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
 
10.7 Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given upon receipt if it is sent by
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
 
If to Seller:
 
Country Road Communications LLC
56 Campus Drive
New Gloucester, Maine 04062
Attn: Stuart Wiet, Chief Financial Officer
Fax: (207) 699-0383
E-mail: sswiet@aol.com 
 
and
 
ABRY Partners LLC
111 Huntington Avenue
Boston, MA 02199
Attn: Jay Grossman
Fax: (617) 859-8797
E-mail: jgrossman@abry.com 

With copies (which shall not constitute notice) to:
 
Choate, Hall & Stewart LLP
Two International Place
Boston, Massachusetts 02110
Attn: Lawrence Gennari
Fax: (617) 248-4000
E-mail: lgennari@choate.com 
 
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and
 
Kirkland & Ellis LLP
Citigroup Center
153 East 53rd Street
New York, New York 10022-4611
Attn: John L. Kuehn
Fax: (212) 446-6460
E-mail: jkuehn@kirkland.com 
 
If to Buyer:
 
Otelco Inc.
505 Third Avenue East
Oneonta, Alabama 35121
Attn: Michael Weaver
Fax: (205) 625-3528
Email: mike@otelcotel.com 

With a copy (which shall not constitute notice) to:
 
Dorsey & Whitney LLP
250 Park Avenue
New York, New York 10177
Attn: Steven Khadavi
Fax: (212) 953-7201
E-mail: khadavi.steven@dorsey.com
 
Either Party may also send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Either
Party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
 
10.8 No Recourse. Notwithstanding anything that may be expressed or implied in
this Agreement, Buyer agrees and acknowledges that no recourse under this
Agreement or any documents or instruments delivered in connection with this
Agreement shall be had against any current or future direct or indirect
director, officer, employee, general or limited partner or member of the Seller
or of any Affiliate or assignee thereof, as such, whether by the enforcement of
any assessment or by an legal or equitable proceeding, or by virtue of any
statute, regulation or other applicable Law, it being expressly agreed and
acknowledged that no personal liability whatsoever shall attached to, be imposed
on or otherwise be incurred by any current or future officer, agent or employee
of the Seller or any current or future member of the Seller or any current or
future director, officer, employee, partner or member of the Seller or of any
Affiliate or assignee thereof, as such, for any obligation of the Seller under
this Agreement or any documents or instruments delivered in connection with this
Agreement or any claim based on, in respect of or by reason of such obligations
or their creation.
 
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10.9 Privilege and Related Matters. Buyer acknowledges that the Companies and
the Subsidiaries have been represented by the law firms of Choate, Hall &
Stewart LLP and Kirkland & Ellis LLP (collectively, the “Firms”) in connection
with the transactions contemplated by this Agreement. The Parties agree that,
although the representation by the Firms in such transactions has, in part,
nominally been of the Seller, the Companies and the Subsidiaries, the true
clients have been certain of the Seller’s members. As a consequence, the Parties
agree that: (i) the holder of the privilege with respect to any discussions with
any client of either Firm relative to such transactions on or prior to the
Closing Date will be the Seller and such members and no Company or Subsidiary
shall have the rights thereto; and (ii) that none of the Parties hereto shall
take any action to attempt to disqualify either Firm from representing the
Seller (or its members) in connection with any dispute relating to this
Agreement, any related agreement or any such transactions based on the
representation by such Firm of any Company or Subsidiary in connection therewith
on or prior to the Closing Date.
 
10.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to any
choice or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
 
10.11 Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Closing. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by each of the Parties. No waiver by either Party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent occurrence.
 
10.12 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
 
10.13 Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring either Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context otherwise requires. The word “including” shall
mean including without limitation.
 
10.14 Incorporation of Exhibits and Disclosure Schedule. The Exhibits and
Disclosure Schedule identified in this Agreement are incorporated herein by
reference and made a part hereof.
 
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[Remainder of Page Intentionally Left Blank]
 
 
 
 
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date
first above written.
 

        OTELCO INC.  
   
   
    By:     /s/ Michael D. Weaver   Name:   Michael D. Weaver   Title:  Chief
Executive Officer

 

      COUNTRY ROAD COMMUNICATIONS LLC  
   
   
    By:     /s/ Harry S. Bennett   Name:   Harry S. Bennett   Title:  Chief
Executive Officer

 

 
[Signature Page to Stock Purchase Agreement]

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