**Exhibit 4.18**

 

**REDEMPTION AGREEMENT**

 

**THIS REDEMPTION AGREEMENT**is made and entered into as of October 13, 2004 by and between NTFCCapital Corporation, a Delaware corporation (the “***Stockholder***”)and Eschelon Telecom, Inc. (the “***Company***”).

 

**WHEREAS,** the Stockholder,the record and beneficial owner of 6,780,541 shares of the Company’s Series APreferred Stock, par value $0.01 per share (the “***Shares***”),desires to sell to the Company, and the Company desires to purchase, the Shareson the terms and conditions set forth hereinbelow;

 

**WHEREAS,**theCompany and an affiliate of the Stockholder have, concurrently with theexecution and delivery hereof, entered into a Stock Purchase Agreement pursuantto which the Company is acquiring all of the issued and outstanding capitalstock of an affiliate of the Stockholder (the “***StockPurchase Agreement***”).

 

**NOW, THEREFORE,**in consideration of the premises and the mutual covenants, representation andwarranties contained herein, and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the Stockholder andthe Company hereby agree as follows:

 

1.             The purchase price for the Shares is$5,085,405.75 (the “***Purchase Price***”), whichamount shall be delivered by the Company to the Stockholder in immediatelyavailable funds at the closing of the transactions contemplated herein whichshall occur concurrent with the closing of the transactions described in theStock Purchase Agreement (the “***Closing***”).

 

2.             At the Closing, the Stockholder agrees to sell,convey, transfer, assign and deliver to the Company the Shares against theCompany’s payment to the Seller of the Purchase Price in immediately availablefunds.  At the Closing, Seller shalldeliver stock certificates representing the Shares, duly endorsed to theCompany or accompanied by stock powers duly executed in blank or other dulyexecuted instruments of transfer, and any other documents that are reasonablynecessary to transfer to the Company good and marketable title to the Shares,free and clear of any and all Security Interests (as defined below).

 

3.             The Stockholder represents and warrants to theCompany that it is the record and beneficial owner of the Shares, free andclear of any and all Security Interests (as defined below) and, at Closing, theSeller will transfer to the Company good and valid title to the Shares, freeand clear of any and all Security Interests. As used herein, the term “***Security Interests***”shall mean any mortgage, pledge, security interest, encumbrance, charge, lien,security interest, right of first refusal, option or other right to acquire,transfer for security, claim, easement, conditional sale agreement, titleretention agreement, defect in title, or other interest, encumbrance or adverseclaim of any nature in respect of the Shares, whether voluntary or involuntaryand whether arising by contract, operation of law or otherwise.

 

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4.             Each of the Stockholder and the Company has fulllegal power, authority and capacity to execute, deliver and perform this Agreement.  This Agreement has been duly and validlyexecuted and delivered by each of the Stockholder and the Company andconstitutes a valid and binding obligation enforceable by and against each ofthem in accordance with its terms.

 

5.             The Stockholder has had the opportunity to askquestions of, and receive answers from, officers of the Company with respect tothe business and financial condition of the Company and to obtain informationnecessary to verify such information. The Stockholder has conducted an independent evaluation and made anindependent analysis as the Stockholder deems necessary, prudent or advisablein order to make the determination and decision to enter into this Agreement,sell the Shares hereunder and consummate the transactions contemplated hereby.

 

6.             If, at any time after the Closing, any furtheraction is necessary or desirable to carry out the purposes of this Agreementand to vest the Company with full right, title and possession to the Shares,the Seller agrees to take, and will take, all such lawful and necessary actionrequired to so do.

 

7.             This agreement shall automatically terminate upontermination of the Stock Purchase Agreement.

 

 

*[signatures on next page]*

 

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IN WITNESS WHEREOF, the undersigned have executed and delivered thisRedemption Agreement as of the date first written above.

 
|   | **NTFC CAPITAL CORPORATION** |
|--------|------------------------------|
|   |                         |   |   |
|   | By:                          |   /s/ Stephen Hacela |   |
|   |                         |   |   |
|   | Name:                        |   Stephen  Hacela |   |
|   |                         |   |   |
|   | Title:                       |   President |   |
|   |                         |   |   |
|   |                         |   |   |
|   | **ESCHELON TELECOM, INC.**   |   |
|   |                         |   |   |
|   | By:                          |   /s/ Richard A. Smith |   |
|   |                         |   |   |
|   | Name:                        |   Richard A. Smith |   |
|   |                         |   |   |
|   | Title:                       |   President and CEO |   |
|        |                              |  |  |  |  |

 

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