**Exhibit 2.3**

 

**ASSET PURCHASE AGREEMENT**

 

THIS ASSET PURCHASE AGREEMENT (the “Agreement”)is entered into as of December 14, 2005, by and among FAIRPOINTCOMMUNICATIONS, INC., a corporation organized under the laws of the Stateof Delaware (or any subsidiary or affiliate as permitted under Section 8.7hereof, the “Buyer”), LOCAL EXCHANGE COMPANY LLC, a limited liability companyorganized under the laws of the State of Maryland (“LEC”), CASS COUNTYTELEPHONE COMPANY LIMITED PARTNERSHIP, a limited partnership organized underthe laws of the State of Maryland (“CassTel”) and LEC LONG DISTANCE, INC.a corporation organized under the laws of the State of Missouri (“CassTel LD”and, together with LEC and CassTel, the “Sellers”).

 

WITNESSETH:

 

WHEREAS, Sellers are engaged in the businessof providing telecommunications and related services including but not limitedto wireline services to approximately 8,083 access lines, CLASS services,voice-mail services, Internet services, long distance services, 911 services,switching and transport services, billing and collection services and directoryservices in and around the geographical territory of Cass County, Missouri andMiami County, Kansas (the “Business”); and

 

WHEREAS, Sellers wish to sell all of thePurchased Assets (as defined herein) of the Business to Buyer, and Buyer wishesto purchase the Purchased Assets from Sellers; and

 

WHEREAS, the members of LEC, the partners ofCassTel and the Board of Directors and sole shareholder of CassTel LD have,subject to the terms and conditions of this Agreement, determined that the saleof the Purchased Assets contemplated by this Agreement is in the best interestsof the Sellers and have approved this Agreement and the transactionscontemplated hereby pursuant to and in accordance with the provisions of thelaw applicable to each Seller and have provided evidence of the same to Buyer;and

 

WHEREAS, in order to induce the Buyer toenter into this Agreement, and in order to receive the benefits that willaccrue to Sellers if the Buyer purchases the Purchased Assets, the Sellers haveagreed to make certain representations, warranties and covenants as set forthherein.

 

NOW, THEREFORE, in order to consummate saidpurchase and sale and in consideration of the mutual agreements set forthherein and other valuable consideration, the receipt and legal adequacy whereofare hereby acknowledged, the parties hereto agree as follows:

 

# ARTICLE I

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# PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES; CLOSING

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1.1           PurchasedAssets. Except for the Excluded Assets, at the Closing, Sellers shall sellto the Buyer, and the Buyer shall purchase from Sellers, all of the tangibleand intangible

 

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assets of Sellers relating to and necessaryfor the operation of the Business as of the Closing Date (collectively, the “PurchasedAssets”), including, but not limited to, the following (to the extent relatingto the Business), free and clear of all Liens except Permitted Liens:

 

### (a)           allcash, bank accounts and accounts receivable of CassTel and CassTel LD;

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### (b)           allinventory, materials, customer premise equipment and supplies including but notlimited to the items listed on Schedule 1.1(b);

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### (c)           tothe extent assignable, any and all permits, consents and licenses relating tothe Business, including licenses issued by the Federal CommunicationsCommission (“FCC”) or the Missouri Public Service Commission (“MPSC”) or theKansas Corporation Commission (“KCC”) which are necessary to engage in theBusiness;

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### (d)           allfurniture, fixtures, machinery, vehicles, plant, systems, optical fiber,computers, switches, twisted copper, pay phones, test equipment, structures,construction, telephone line facilities, tools, implements, conduits, stations,substations and equipment of any kind, character or nature including but notlimited to the items listed on Schedule 1.1(d);

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### (e)           theAssumed Contracts as listed on Schedule 1.1(e);

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### (f)            allreal estate interests, including without limitation all leases, licenses,easements, rights of ways and the like, and all real property with all privilegesappurtenant thereto owned by Sellers, as listed on Schedule 2.13;

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### (g)           allof the Sellers’ interests in all real property improvements;

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### (h)           allprepaid expenses, including amounts paid in advance on account of rent,property taxes, utility charges, fees and deposits;

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### (i)            originals(if available) or copies (at the option of Buyer) of (i) all books,records, manuals, files, customer lists and records, accounts and billingrecords, plans, blueprints, specifications, drawings, surveys, engineering reports,personnel and employee benefit plan records and operating data whether inelectronic format or otherwise, and (ii) the Assumed Contracts related tothe Business;

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### (j)            allrights of the Sellers in and to all databases, software, software programs,object codes, source codes, systems documentation and user manuals used inconnection with the Business as listed on Schedule 1.1(j);

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### (k)           allIntellectual Property Rights, including all rights to all of the corporate,domain, trade names and trademarks of CassTel and CassTel LD and the brandnames, trademarks and trade names of the Business as listed on Schedule 1.1(k);

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### (l)            allclaims, causes of action and rights of recovery relating to the Business,whether asserted or commenced on or before the Closing Date other than accountsreceivable owed by T-Mobile that arose prior to the Closing Date;

 

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### (m)          theright to receive and retain mail, accounts receivable payments and othercommunications relating to the Business, except as provided in Section 1.1(l)above;

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### (n)           theright to bill and receive payments for products shipped or delivered andservices performed but unbilled or unpaid as of the Closing related to theBusiness;

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### (o)           tothe extent transferable, all telephone numbers (e.g., toll free numbers),facsimile numbers, Internet addresses, websites and similar numbers oraddresses assigned to or used by CassTel or CassTel LD or their respectivecustomers; and

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### (p)           allrights of the Sellers with respect to each of its customers related to theBusiness;

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### (q)           allother business, property, assets and rights or benefits of Sellers on theClosing Date not described above, relating to the Business including, but notlimited to, the Sellers’ interest in Missouri Network Alliance, L.L.C.;

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1.2           ExcludedAssets. Notwithstanding anything to the contrary contained herein orotherwise, the Purchased Assets do not include the following assets of Sellers(collectively, the “Excluded Assets”):

 

### (a)           allfederal, state and local income tax, franchise tax or other tax credits and taxrefund claims arising out of the operations of the Business prior to Closing;

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### (b)           theminute books, equity record books and tax returns of Sellers;

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### (c)           exceptas provided in Section 1.5, any insurance policies (other than insurancepolicies constituting Assumed Contracts), insurance proceeds, insurance refundsand prepaid expenses relating to the period prior to the Closing (other thanproceeds, refunds or prepaid expenses relating to Assumed Contracts);

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### (d)           allcontracts other than the Assumed Contracts;

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### (e)           anyand all equity interests in the Sellers, and any and all investments of LECother than in Missouri Network Alliance, L.L.C.;

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### (f)            allrights to the names, trade names and trademarks of LEC not listed on Schedule 1.1(k);

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### (g)           anyrecovery by the Sellers from T-Mobile for accounts receivable arising prior tothe Closing Date;

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### (h)           anyinterest or investment in the stock of CoBank, ACB; and

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### (i)            anyand all intercompany accounts receivable owed by any Seller to any one or moreof the Sellers.

 

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1.3           LimitedAssumption of Liabilities. Buyer hereby agrees to assume, as of the ClosingDate, and agrees to pay, perform and discharge when due, only the followingliabilities, responsibilities and obligations of Sellers relating to theBusiness and the Purchased Assets, thereafter arising (collectively, the “AssumedLiabilities”):

 

### (a)           Allliabilities, responsibilities and obligations of the Sellers arising out of orrelating to the Assumed Contracts, but only to the extent same arise, accrue orbecome performable after the Closing Date; and

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### (b)           Allliabilities, responsibilities and obligations relating to security or otherdeposits made by customers of CassTel or CassTel LD to the extent theseliabilities are considered Current Liabilities in Section 1.10

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### (c)           Allaccounts payable and accrued expenses related to the Purchased Assets (butexcluding any intercompany payables) to the extent these payables and expensesare considered Current Liabilities in Section 1.10.

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Notwithstanding anything in this Section 1.3to the contrary, “Assumed Liabilities” shall not include any liabilities,responsibilities or obligations expressly identified as an Excluded Liabilitypursuant to Section 1.4.

 

1.4           ExcludedLiabilities. Except as set forth in Section 1.3, the Buyer shall notassume or be responsible for any of the liabilities or obligations of theSellers (collectively, the “Excluded Liabilities”), including without limitation:

 

### (a)           anyand all liabilities or obligations associated with or relating to any ExcludedAssets, any long term indebtedness and any intercompany payables or receivablesof the Sellers owed to any one or more of Sellers or Sellers’ Affiliates; members,managers or partners;

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### (b)           anyliability, complaint, claim or obligation of any kind, character or naturearising out of (i) the conduct of the Sellers whether or not in connectionwith the operations of the Business (except as expressly provided for in Section 1.3),or (ii) the employment by the Sellers of any employees of the Business orthe provision of any employee benefit to such employees pursuant to any plan,program or arrangement maintained by any Seller (whether or not subject toERISA and whether or not written), whether such claim arises before or afterthe Closing Date and whether or not such employees become Buyer’s employees;

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### (c)           anyliability or obligation of the Sellers owing to any equity holder or Affiliatethereof including, without limitation, any obligations arising out of orrelated to the transactions contemplated hereby;

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### (d)           anyliabilities related to (i) income taxes of the Sellers, (ii) allother taxes attributable to the Sellers or to Sellers’ operation of theBusiness including, but not limited to, sales and use taxes, and (iii) taxesof any other person or third party (except Buyer) pursuant to an agreement orotherwise;

 

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### (e)           anyliabilities, responsibilities and obligations relating to the operation of theBusiness or the actions of the Sellers prior to the Closing Date under anyrule, regulation, law, mandate, decision or order of the MPSC, KCC, FCC,National Exchange Carriers Association (“NECA”), Universal Service AdministrationCompany (“USAC”) or any other Governmental Entity (as defined in Section 8.9(d)),whether enacted or promulgated before, on or after the Closing Date;

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### (f)            anyliabilities existing or arising under Environmental Laws attributable to orincurred as a result of any acts, omissions or conditions first occurring or inexistence as of or prior to the Closing Date, including, but not limited to,liabilities for the release, threatened release, handling, discharge,treatment, storage, disposal, transport, presence, or migration of RegulatedMaterials (as defined in Section 2.12(d));

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### (g)           anyobligation or requirement imposed by any Governmental Entity, including anyEnvironmental Authority (as hereinafter defined) arising and required to beperformed prior to the Closing Date; and

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### (h)           Sellers’contract with GVNW Consulting, Inc.

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1.5           InsuranceProceeds. If prior to the Closing, any Purchased Assets shall havesuffered, sustained or incurred any material loss, damage or destruction andthe Sellers shall not have completed the repair or replacement of suchPurchased Assets as of the Closing Date to the reasonable satisfaction ofBuyer, then at Buyer’s option, the Sellers shall, at the Closing, assign andtransfer to Buyer, and Buyer shall be entitled to receive from the Sellers, allinsurance proceeds collected by reason of such loss, damage or destructionwhich have not been expended on such repair or replacement, together with anyrights to receive any uncollected insurance proceeds relating to such loss, damageor destruction which is payable to the Sellers. This Section shall notlimit Buyer’s other rights hereunder.

 

1.6           PurchasePrice; Tax Allocation. The purchase price for the Purchased Assets shall bean aggregate amount of Thirty Three Million Dollars ($33,000,000) (the “PurchasePrice”). The Purchase Price shall be subject to adjustment in accordance with Section 1.10.The Purchase Price shall be allocated for tax purposes in accordance with Schedule 1.6attached hereto. Each of Buyer and Sellers shall file its respective federalincome tax returns consistent with such allocation for the tax year in whichthis Agreement is executed, and each of Sellers and Buyer shall report all taxconsequences of the transactions contemplated by this Agreement, in a mannerconsistent with such allocation, and not take any position inconsistenttherewith upon examination of any tax return, in any refund claim, in anylitigation or investigation or otherwise.

 

## 1.7           Closing.The closing of the purchase of the Purchased Assets under this Agreement shalltake place at the offices of Buyer located at 521 East Morehead Street, Suite 250,Charlotte, North Carolina 28202 at 9:00 a.m. local time, on the closingdate (the “Closing” or the “Closing Date”), which shall be on the first day ofthe month which is at least ten (10) days after the fulfillment or waiverof each of the conditions set forth in Article V hereof or at such otherplace, or on such earlier or later date and time as may be mutually agreedin writing by Buyer and Sellers, with the parties executing documents andexchanging signed documents. All proceedings to be taken and all documents tobe executed and delivered by all parties at the

 

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## Closing shall be deemed to have been taken and executed simultaneously,and no proceedings shall be deemed to have been taken nor any documentsexecuted or delivered until all have been taken, executed and delivered. AtClosing, (i) the Sellers shall deliver to Buyer all executed documentscontemplated hereby including, without limitation, bills of sale and quitclaimdeeds with covenant, necessary to transfer all of Sellers’ right, title andinterest in and to the Purchased Assets, subject only to Permitted Liens, toBuyer as provided herein, (ii) the Buyer shall deliver to the Sellers allexecuted documents contemplated hereby, including without limitationinstruments of assumption with respect to the Assumed Liabilities, and (iii) Buyershall hand deliver or wire transfer the Purchase Price to or at the writtendirection of the Sellers on the terms set forth herein.

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1.8           FurtherAssurances. Each of the Sellers shall from time to time after the Closing,at the reasonable request of the Buyer and without further consideration,execute and deliver further documents, instruments of transfer, conveyance,endorsement, direction, authorization or assignment and take such other actionas the Buyer may reasonably require to more effectively transfer andassign to, and vest in, the Buyer the Purchased Assets and all of Sellers’rights thereto (as provided herein), and to fully implement the provisions ofthis Agreement.

 

### 1.9           TransferTaxes(a). All sales, income, recording, stamp, conveyance,value added, use, or similar asset transfer taxes, fees and duties or chargesunder applicable law incurred in connection with the sale and transfer of thePurchased Assets under this Agreement will be borne and paid by the Sellers.

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### 1.10         PurchasePrice Adjustment.

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### (a)           Asused herein, for the purposes of this Section, (i) “Net Working Capital”shall mean Current Assets minus Current Liabilities; (ii) “Current Assets”shall mean the following current assets of the Sellers, combined, calculated inaccordance with generally accepted accounting principles consistently applied (“GAAP”)to the extent included as Purchased Assets: (A) cash, cash equivalents ofCassTel and CassTel LD; and (B) accounts receivable (net of reserves fordoubtful accounts and excluding intercompany accounts receivable andpre-Closing accounts receivable from T-Mobile) as represented on Schedule 1.10;and (iii) “Current Liabilities” shall mean the following currentliabilities of Sellers, combined, calculated in accordance with GAAP; (A) accountspayable and accrued expenses related to the Purchased Assets but excluding anyintercompany payables; (B) taxes, to the extent payable by the Buyer; (C) customerdeposits; (D) accrued compensation; and (E) any other AssumedLiability that would be classified as a current liability in accordance withGAAP.

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### (b)           The“Purchase Price Adjustment” is an adjustment to the Purchase Price representingthe obligation of the Sellers to have not less than zero dollars in Net WorkingCapital at the close of business on the day before the Closing Date. If, as ofthe close of business as of the day before the Closing Date, Net WorkingCapital (as estimated in good faith by the Sellers in consultation with and asagreed to by the Buyer) exceeds $0, then the Purchase Price Adjustment shallcredit Sellers (and increase the Purchase Price at Closing) for the amount bywhich Net Working Capital exceeds $0. If as of the close of business as of theday before the Closing Date, Net Working Capital (as estimated in good faith bythe Sellers in consultation with the Buyer) is less than $0, then at Closing,the Purchase Price Adjustment shall credit the Buyer

 

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### (and decrease the Purchase Price at Closing) for the amount by whichNet Working Capital is less than $0. For illustration purposes only, thePurchase Price Adjustment shall be determined as represented on Schedule 1.10annexed hereto.

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### (c)           TheSellers shall prepare and submit to the Buyer for Buyer’s approval and consent,not later than five (5) business days prior to the expected or agreed uponClosing Date, a written good faith estimate of the amount of the Net WorkingCapital as of the close of business as of the day before the Closing Date (the “PurchasePrice Adjustment Estimate”), which amount shall be used to adjust the PurchasePrice at Closing.

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### (d)           Withinthirty (30) days following the Closing Date, the Sellers will prepare andsubmit to the Buyer financial statements (balance sheets, income and cash flowstatements) for the period from the execution of this Agreement through theClosing Date (the “Closing Financials”). Within thirty (30) days afterreceiving the Closing Financials, Buyer shall prepare and deliver to Sellersfor review and comment a closing statement (the “Closing Statement”) reasonablydetailing as of the close of the business day prior to the Closing the Buyer’sdetermination of the amount of the final Net Working Capital of Sellers as ofthe business day prior to the Closing Date. If Sellers object to any amountsreflected on the Closing Statement, then Sellers must, within ten (10) daysafter their receipt of the Closing Statement, give written notice (the “Notice”)to Buyer specifying in reasonable detail any objections, or Buyer’sdetermination of the final Net Working Capital and the final Purchase PriceAdjustment shall be final, binding and conclusive on the parties on such tenth(10th) day. With respect to any disputed amounts, the parties shallmeet in person and negotiate in good faith during the ten (10) daybusiness day period (the “Resolution Period”) after the date of Buyer’s receiptof the Notice to resolve any such disputes. If the parties are unable toresolve all such disputes within the Resolution Period, then within five (5) businessdays after the expiration of the Resolution Period, all disputes shall besubmitted to arbitration. The determination of the final Purchase PriceAdjustment by arbitration shall be final, binding and conclusive on the partieshereto. From and after the Closing Date, each of the parties shall provide theother access to their books, records and personnel as such requesting partyreasonably determines is necessary to prepare, review or dispute the ClosingStatement.

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### (e)           Ifthe final Purchase Price Adjustment (as finally determined in accordance withthe provisions set forth above) differs from the Purchase Price AdjustmentEstimate, then within five (5) business days after such finaldetermination, Buyer will pay the Sellers, or the Buyers will be entitled torecover from the Escrow Account, the difference in immediately available funds,in accordance with the provisions above, or as otherwise directed by sucharbitration decision.

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# ARTICLE II

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# REPRESENTATIONS AND WARRANTIES OF THE SELLERS

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The Sellers hereby represent and warrant,jointly and severally, to the Buyer that:

 

2.1           Organizationand Existence. LEC is a limited liability company duly organized, validlyexisting and in good standing under the laws of the State of Maryland and isqualified to

 

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do business as a foreign limited liabilitycompany and is in good standing in each jurisdiction in which suchqualification is required, including but not limited to, Missouri and Kansas. CassTelis a limited partnership duly organized, validly existing and in good standingunder the laws of the State of Maryland and is qualified to do business as aforeign limited partnership and is in good standing in each jurisdiction inwhich such qualification is required, including but not limited to Missouri andKansas. CassTel LD is a corporation duly organized, validly existing and ingood standing under the laws of the State of Missouri and is qualified to dobusiness as a foreign corporation and is in good standing in each jurisdictionin which such qualification is required including but not limited to Kansas. Eachof LEC, CassTel and CassTel LD has all requisite power and authority to own itsproperties and to carry on its business as it is now being conducted orcontemplated. The Sellers have heretofore made available to Buyer complete andcorrect copies of the Partnership Agreement of CassTel, the Articles ofOrganization and Operating Agreement of LEC and the Articles of Incorporationand By-Laws of CassTel LD. None of the Sellers is in violation of any term ofits respective organizational, operating or governing documents or anyjudgment, decree, order, law, statute, ordinance, rule or governmentregulation applicable to it.

 

## 2.2           AuthorityRelative to this Agreement. Each of the Sellers has the requisite power andauthority to execute and deliver this Agreement and to consummate thetransactions contemplated hereby. This Agreement and the consummation by eachof the Sellers of the transactions contemplated hereby have been duly andvalidly authorized by each of the Sellers and no other authorizations orproceedings on the part of any of the Sellers is necessary to authorizethis Agreement or to consummate the transactions contemplated hereby. TheSellers have each provided evidence of its authority to enter into the Agreementand consummate the transactions contemplated hereby to the Buyer. ThisAgreement has been duly and validly executed and delivered by each Seller andthis Agreement constitutes the valid and binding agreement of each, enforceableagainst each Seller in accordance with its terms, except that suchenforceability may be limited by (i) bankruptcy, insolvency,reorganization, moratorium or other similar laws now or hereafter in effectrelating to creditors’ rights generally, and (ii) general principles ofequity (regardless of whether enforceability is considered in a proceeding inequity or at law).

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## 2.3           Consentsand Approvals; No Violation. Neither the execution and delivery of thisAgreement nor the consummation by any of the Sellers of the transactionscontemplated hereby will:

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### (a)           conflictwith or result in any breach of any provision of the respective operating orgoverning documents of or laws applicable to any of the Sellers;

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### (b)           exceptas set forth on Schedule 2.3(b), require any consent, approval,authorization or permit of, or filing with or notification to, any GovernmentalEntity or other third party;

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### (c)           exceptas set forth in Schedule 2.3(c), violate or result in a violationor breach of, or constitute (with or without due notice or lapse of time orboth) a default (or give rise to any right of termination, cancellation oracceleration or lien or other charge or encumbrance) under any of the terms,conditions or provisions of any contract, indenture,

 

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### obligation, commitment, note, license,agreement or other instrument or obligation to which the Sellers are parties,or by which any of their respective assets may be bound, except for suchviolations, breaches and defaults (or rights of termination, cancellation oracceleration or lien or other charge or encumbrance) as to which requisitewaivers or consents have been obtained;

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### (d)           assumingthe consents, approvals, authorizations or permits and filings or notificationsreferred to in this Section 2.3 (including Schedule 2.3(b) andSchedule 2.3(c)) are duly and timely obtained or made, violate orconstitute a default under any judgment, order, restriction, writ, injunction,decree, law, statute, ordinance, rule or regulation applicable to any ofthe Sellers or to any of their respective assets; or

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### (e)           create(directly or indirectly with or without notice of or lapse of time or both) anyLien on any of the Purchased Assets except pursuant to this Agreement and theagreements contemplated hereby.

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## 2.4           FinancialStatements. **  **TheSellers have delivered to the Buyer the consolidated balance sheets and therelated consolidated statements of income and cash flows (including the relatednotes thereto, if any) of each of the Sellers as of and for the years ended December 31,2004 (audited and regulatory versions), December 31, 2003 (audited andregulatory versions) and December 31, 2002 (audited and regulatoryversions) and the monthly unaudited balance sheets and related statements ofincome and cash flows to date of each of the Sellers for the year 2005 (the “FinancialStatements”). Except as set forth on Schedule 2.4, all of theFinancial Statements, as of their respective dates, were prepared in accordancewith (i) to the extent required, with respect to the regulatory versionsof the Financial Statements the rules and regulations of the MPSC, KCC andFCC, and (ii) with respect to all other Financial Statements, GAAP appliedon a basis consistent with prior periods (except as otherwise noted therein). Exceptas set forth on Schedule 2.4, all of the Financial Statements, were trueand correct on their respective dates, and presented fairly on their respectivedates, in all material respects, the consolidated financial position andresults of operation and cash flows of each of the Sellers on a consolidatedand consolidating basis as of and for the years ended December 31, 2004(the “Balance Sheet Date”), December 31, 2003 and December 31, 2002and monthly to date for 2005 subject, in the case of the unaudited financialstatements, to normal year-end audit adjustments and the absence of footnotedisclosures. Except as set forth in the December 31, 2004 balance sheetsthat are part of the Financial Statements (the “Latest Balance Sheet”) orin Schedule 2.4, and except for Excluded Liabilities, none of theSellers has any material obligations, liabilities or material forward or longterm commitments (including contingent liabilities). Except as provided on Schedule 2.4with respect to the Purchased Assets, nothing has come to Sellers’ attentionthat would indicate that the Financial Statements were not true and correct inall material respects as of their respective dates or for the periods coveredthereby.

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## 2.5           Contracts.Sellers have delivered to Buyer complete and accurate copies of each of theAssumed Contracts as in effect as set forth on Schedule 1.1(e). EachAssumed Contract is in full force and effect and is valid and enforceableagainst the applicable Seller in accordance with its terms. Neither the applicableSeller, nor any other party thereto, to such Sellers’ knowledge, is in breachor default of any material terms or conditions thereunder. Between the datehereof and the Closing, no Seller shall agree to any termination ormodification of any of the Assumed Contracts without the prior written consentof Buyer.

 

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## 2.6           OperationsSince Balance Sheet Date.

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### (a)           Sincethe Balance Sheet Date, except as set forth in Schedule 2.6, therehas been no damage, destruction or loss, whether or not covered by insurance,or condemnation or other taking adversely affecting in any material respect anyof the Purchased Assets or the Business.

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### (b)           Exceptas set forth in Schedule 2.6 and except with respect to the actionsof the Sellers resulting in this Agreement, since the Balance Sheet Date, eachSeller has conducted the Business only in conformity with all rules andregulations of any Governmental Entity. Without limiting the generality of theforegoing, since the Balance Sheet Date, except as set forth in such Schedule,none of the Sellers has:

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#### (i)            made or permitted anyamendment, cancellation or termination of any of the Assumed Contracts;

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#### (ii)           with respect to thePurchased Assets, cancelled or waived any debts owed to or claims held by anyof Sellers (including the settlement of any claims or litigation) other thandebts owed among the Sellers to each other or a Seller Affiliate;

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#### (iii)          created, incurred orassumed, guaranteed or agreed to create, incur, assume or guarantee, anyindebtedness for borrowed money resulting in the imposition of a Lien on any ofthe Purchased Assets (other than a Permitted Lien or a Lien which Sellers areobligated to discharge at or prior to the Closing) or entered into, as lessee,any capitalized lease obligations (as defined in Statement of FinancialAccounting Standards No. 13);

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#### (iv)          revalued any assets orproperties, or accelerated or delayed collection of or (except as contemplatedby subparagraph (ii) above) written off notes or accounts receivable inadvance of or beyond their regular due dates or the dates when the same wouldhave been collected in the ordinary course of its business consistent with pastpractice, or increased or changed any assumptions underlying bad debt calculationsor contingency or other reserves;

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#### (v)           suffered, made (orcommitted to make) any sale, transfer, lease, license, encumbrance, loss,disposition, destruction or damage of any asset or property that, if it wereheld by a Seller on the Closing Date, would be part of the PurchasedAssets (except as permitted under Section 4.2 hereof);

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#### (vi)          acquired or disposed ofassets (or entered into any agreement to do so) or entered into or becomecommitted to enter into any other material transaction (except as permittedunder Section 4.2 hereof);

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#### (vii)         instituted any increaseor decrease in any compensation payable to any employee of Sellers or adoptedor made any change or amendment in any profit-sharing, bonus, incentive,deferred compensation, retention, severance, golden parachute, insurance,pension, retirement, medical, hospital, disability,

 

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#### welfare orother benefits made available to employees of Sellers, except in each case asrequired by any Company Plan (as herein defined), written employment agreement,collective bargaining agreement or multi-employer health and welfare or pensionplan and except as permitted under Section 4.2 hereof;

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#### (viii)        made any change in theaccounting methods, principles and practices used by Sellers from those appliedin the preparation of the Latest Balance Sheet and the related statements ofincome, stockholders’, partners’ or members’ equity and cash flow as of and forthe twelve months ended December 31, 2004; or

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#### (ix)           experienced any strike,work stoppage, slow down, union organizing or recognition efforts, claims ofunfair labor practices, grievances, labor arbitrations, or any similarsignificant labor difficulty of any kind, character or nature or any hiring ortermination of employees or independent contractors of the Business, or anychange in any employment or consulting agreements.

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2.7           Absenceof Certain Changes or Events. Except as set forth in the schedules to thisAgreement, since the Balance Sheet Date, none of the Sellers has suffered anymaterial adverse change in the properties, financial statements, businessprospects, condition (financial or otherwise) or results of operation of theBusiness.

 

2.8           Absenceof Undisclosed Liabilities. Except as set forth on Schedule 2.8or on the Latest Balance Sheet, none of the Sellers has any absolute, accruedor contingent indebtedness, liability or liabilities arising out of anytransaction or state of facts, whether accrued, to become due, contingent, orotherwise.

 

2.9           Litigation.Except as disclosed on Schedule 2.9, there are no investigations,complaints, charges, grievances, actions, claims, suits, proceedings at law orin equity or by any governmental or administrative instrumentality or agency(including without limitation, the MPSC, KCC, FCC, NECA and USAC) (“Proceedings”)pending or, to the knowledge of Sellers, threatened against any Seller (or anyof their respective managers, members, partners, directors, officers oremployees) which relate to the Business or the Purchased Assets. Noinvestigation, complaint, action, suit or proceeding is pending at law or inequity or by or before any governmental instrumentality or other agency againstany Seller, or any partner, director, officer or key employee of any Seller thathas a reasonable possibility of calling into question the validity, orhindering the enforceability or performance, of this Agreement or any actiontaken or to be taken pursuant hereto or any of the other agreements andtransactions contemplated hereby, nor, to the Sellers’ knowledge, has thereoccurred any event or does there exist any condition on the basis of which anysuch litigation, proceeding or investigation might properly be instituted. Exceptas disclosed on Schedule 2.9, there is no outstanding judgment,injunction, decree or order issued by any governmental instrumentality or otheragency (including, without limitation, the MPSC, the KCC, FCC, NECA and USAC)against any Seller.

 

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## 2.10         Taxes.

##  

### (a)           TaxReturns. Each Seller has timely and properly filed all federal, state, localand foreign tax returns (including but not limited to income, franchise, sales,payroll, employee withholding and social security and unemployment) (“TaxReturns”) that it was required to file since January 1, 1998. All such TaxReturns are correct and true in all material respects. Except as disclosed on Schedule 2.10,all taxes (including interest and penalties) due and owing by Seller, or towhich any of them may be liable under Treasury Regulations §1.1502-6 (oranalogous state or foreign provisions) by virtue of having been a member of anyaffiliated group (as defined in Section 1504(a) of the InternalRevenue Code, as amended to date (the “Code”)) (or other group filing on acombined or unitary basis), have been paid. Seller was not (at any time after January 1,1998) and is not now a party to any tax sharing agreement, nor currently is thebeneficiary of any extension of time within which to file any report or return.No claim has been made since January 1, 1998 by a taxing authority in ajurisdiction where Seller does not file reports and returns that it is or may besubject to taxation by that jurisdiction. Any liability of the Sellers fortaxes not yet due and payable, or which are being contested in good faith, hasbeen provided for on the Financial Statements in accordance with GAAP or aredescribed on Schedule 2.10.

###  

### (b)           EachSeller (or any officer or employee responsible for tax matters) has no actualknowledge or reason to believe that any taxing authority will assess anyadditional taxes against it for any period for which returns have been filed. Exceptas disclosed in Schedule 2.10, there is no dispute or claimconcerning any tax liability of any Seller either (i) claimed or raised byany Governmental Entity or taxing authority in writing, or (ii) as towhich such Seller has knowledge. Schedule 2.10 lists all taxreturns filed with respect to Sellers for taxable periods beginning January 1,1998 to and including the date of this Agreement, and indicates those returnsthat have been audited or currently are the subject of an audit. Sellers havemade available to Buyer true, correct and complete copies of all federal, stateand local income Tax Returns, examination reports and statements ofdeficiencies assessed against or agreed to by CassTel or CassTel LD for theperiod beginning January 1, 1998 to present.

###  

### (c)           Noneof the Sellers is a “foreign person” within the meaning of Section 1445 ofthe Code. None of the Sellers is a party to any agreement, whether written orunwritten, providing for the payment of taxes, payment for tax losses,entitlements to refunds or similar tax matters. None of the Sellers has been aUnited States real property holding corporation within the meaning of Section 897(c)(2) ofthe Code during the applicable period specified in Section 897(c)(1)(A)(ii) ofthe Code.

###  

### (d)           Noproperty of Sellers is “tax-exempt use property” within the meaning of Section 168(h) ofthe Code or property that the Sellers will be required to treat as being ownedby another person pursuant to Section 168(f)(8) of the InternalRevenue Code of 1954, as amended, in effect immediately before the enactment ofthe Tax Reform Act of 1986.

###  

### (e)           Noneof the Sellers has consented to any extension of the statute of limitationswith respect to any open federal, state or local tax returns. None of theSellers has, since January 1, 1998, entered into a closing agreementpursuant to Section 7121 of the Code.

 

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### (f)            Thereare no tax liens upon any property or assets of Sellers, including but notlimited to the Purchased Assets, except for liens for current taxes not yet dueand payable.

###  

### (g)           EachSeller and each payor of benefit payments under any Company Plan, has withheldand timely paid all taxes (including, without limitation, federal, state,local, or foreign income, franchise, payroll, employee withholding and socialsecurity and unemployment taxes) required to have been withheld and paid inconnection with amounts paid or owing to any employee, creditor, independentcontractor, stockholder or other third party since January 1, 1998. AllForms W-2 and 1099-series forms required to be filed with respect theretohave been timely and properly filed.

###  

## 2.11         EmployeeBenefit Plans; Labor and Employment Matters.

##  

### (a)           Setforth in Schedule 2.11 is a true, correct and complete list of eachof the following employee benefit plans, labor and employee matters maintained,sponsored or contributed to by the Sellers or any ERISA Affiliate at any timesince January 1, 2000, or with respect to which the Sellers or any ERISAAffiliate could reasonably have any liabilities, or which provides or willprovide benefits to present or former members, managers, partners, employees,officers or directors of the Sellers or any ERISA Affiliate, or theirdependents, survivors or beneficiaries (the “Company Plans”):  (i) each “employee pension benefit plan”(as such term is defined in Section 3(2) of ERISA) (“Pension Plan”), (ii) each“employee welfare benefit plan” (as such term is defined in Section 3(1) ofERISA), and (iii) each employee benefit plan, program or arrangement thatis not subject to ERISA, including without limitation any retirement, pension,savings, profit sharing, money purchase pension, defined benefit, deferredcompensation, severance, retention, golden parachute, stock ownership, stockpurchase, stock option, phantom stock, equity, performance, bonus, incentive,vacation or holiday pay, educational assistance or tuition remission orreimbursement, cafeteria, dependent care, transportation, hospitalization orother medical, disability, death benefit plan (whether provided throughinsurance, on a funded or unfunded basis, or otherwise), or other welfare,benefit or fringe benefit plan, policy, trust, understanding or arrangement ofany kind, whether written or oral. None of the Sellers nor any ERISA Affiliatecurrently sponsors, maintains or is required to contribute to or make anypayments in respect of, or has at any time sponsored, maintained or beenrequired to contribute to or make any payments in respect of, (i) anyPension Plan subject to Title IV or Section 302 of ERISA or Section 412of the Code or (ii) any “multiemployer plan” (as such term is defined in Section 3(37)of ERISA) (“Multiemployer Plan”).

###  

With respect to each Company Plan, Sellershave provided to Buyer a true, correct and complete copy of each of thefollowing that is applicable to such Company Plan:  the current plan document with all amendmentsthereto; any related trust or custodial agreements, insurance or annuitycontracts currently in effect; the current summary plan description and anysubsequent summary of material modifications; the Sellers’ current employeehandbooks, personnel policies and procedures, individual employment contracts,independent contractor agreements and collective bargaining agreements, themost recent favorable IRS determination or opinion letter received; Form 5500sfor the plan year ended December 31, 2004 and any Form 5330s filedwith the Internal Revenue Service.

 

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### (b)           Withrespect to the Company Plans, except as set forth in Schedule 2.11:(i) each Company Plan intended to be qualified under Section 401(a) ofthe Internal Revenue Code of 1986, as amended (the “Code”) has received afavorable determination letter or prototype approval letter from the InternalRevenue Service (the “IRS”) that it is so qualified and since the date of suchletter there are no circumstances that are reasonably likely to affect thequalified status of such Company Plan, (ii) each Company Plan has beenoperated in accordance with its terms and the requirements of any applicablelaws, regulations or administrative rulings, (iii) none of the Sellers norany ERISA Affiliate has incurred or has any reason to believe that it willincur any direct or indirect liability under, arising out of or by operation ofTitle IV of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),and no fact or event exists that is reasonably likely to give rise to any suchliability, (iv) there is no pending or, to the knowledge of the Sellers,threatened claim, suit or grievance in respect of any of the Company Plans or,to the knowledge of Sellers, any basis for any such claim, suit or grievance,other than claims for benefits in the ordinary course of business, and (v) allrequired contributions, reserves or premium payments for the Company Plans havebeen made.

###  

### (c)           Noneof the Sellers, to the knowledge of the Sellers, any other “disqualified person”(within the meaning of Section 4975 of the Code) or “party in interest”(within the meaning of Section 3(14) of ERISA) has taken any action withrespect to any Company Plan that could subject any such plan (or its relatedtrust), the Sellers or any member, manager, partner, officer, director oremployee of any of the foregoing to a material penalty or tax under Section 502(i) orSection 502(l) of ERISA or Section 4975 of the Code.

###  

### (d)           Exceptas set forth in Schedule 2.11, none of the Sellers maintains orcontributes to any employee welfare benefit plan which provides benefits toemployees after termination of employment other than as required by Part 6of Title I of ERISA. Any employee welfare benefit plan set forth in Schedule 2.11as described in the previous sentence can be amended or terminated at any timein the future.

###  

### (e)           Exceptas set forth in Schedule 2.11, (i) Sellers have complied withall applicable laws, rules and regulations which relate to wages, hours,discrimination in employment and collective bargaining and are not liable forany arrears of wages or any taxes or penalties for failure to comply with anyof the foregoing and (ii) there is no pending or, to the knowledge of theSellers, threatened claim, suit, arbitration, grievance or investigationregarding employment matters against the Sellers. Except as set forth in Schedule 2.11,(x) there is no unsatisfied award, judgment or other final resolution of adispute regarding employment matters against the Sellers that requirescontinuing compliance therewith or that individually or in the aggregateconstitutes a material liability and (y) none of the Sellers is a party to anycollective bargaining or other labor union contracts. There is no pending or,to the knowledge of the Sellers, threatened labor dispute, strike or work stoppage againstthe Sellers which would interfere with the respective business activities ofthe Sellers and, to the knowledge of the Sellers, there are no pending orthreatened union organizing or election activities involving any non-unionemployees of the Sellers.

###  

### (f)            Asused herein, “ERISA Affiliate” shall mean (i) any corporation which at anytime on or before the Closing Date is or was a member of the same controlledgroup of corporations (within the meaning of Section 414(b) of theCode) with Sellers, (ii) any

 

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### partnership, trade or business (whether ornot incorporated) which at any time on or before the Closing Date is or wasunder common control (within the meaning of Section 414(c) of theCode) with Sellers, (iii) any entity which at any time on or before theClosing Date is or was a member of the same affiliated service group (within themeaning of Section 414(m) of the Code) with Sellers or any corporationdescribed in clause (i) of this paragraph or any partnership, trade orbusiness described in clause (ii) of this paragraph, and (iv) anyentity which at any time on or before the Closing Date was required to beaggregated with Sellers under Code Section 414(o).

###  

### (g)           Schedule 2.11contains a true and complete list of names and current hourly wage, monthlysalary or other compensation of all directors, officers, managers, employees,consultants, independent contractors or managers of the Business, with asummary of existing bonuses, additional compensation and other benefits(whether current or deferred), if any, paid or payable to each such person forservices rendered in the fiscal year ended December 31, 2004. Schedule 2.11contains a true and complete listing and summary description of all employment,compensation, non competition, confidentiality, consulting and independentcontractor agreements and any other similar agreements between either Sellerand their respective members, managers, partners, directors, officers,employees, independent contractors and consultants.

###  

### (h)           Exceptas listed on Schedule 2.11, none of the Sellers is a party to anycontract with any labor organization, nor have they agreed to, been required toor been asked to recognize or negotiate any union or other collectivebargaining unit, nor has any union or other collective bargaining unit beencertified as representing any of their respective employees. None of theSellers has knowledge of any organization currently being made, pursued orthreatened by or on behalf of any labor union with respect to their respectiveemployees. Except as listed on Schedule 2.11, the Business has not,within the last three years, experienced any strike, work stoppage, slow down,lockout, grievance proceeding, claim of unfair labor practices or othersignificant labor difficulty of any nature, nor are any claims pending or, tothe best knowledge of Sellers, threatened between any of the Sellers and theirrespective employees.

###  

### (i)            Noneof the Sellers has received notification as of the date of this Agreement thatany of its current significant employees (or one or more employees who, whentaken together, would be significant to the Sellers) presently plan toterminate or otherwise resign from employment, whether by reason of thetransactions contemplated hereby or otherwise. Except as listed on Schedule 2.11,the employment of all nonunion employees presently employed or retained in theBusiness is terminable at will, and the Buyer will not be, pursuant to anycurrent contract, arrangement or understanding (including collective bargainingagreements), applicable law, or otherwise, obligated to pay any severance payor other benefit by reason of the voluntary or involuntary termination ofemployment of any present or former employee (including managers), consultant,independent contractor or agent of any of the Sellers prior to, on or after theClosing.

###  

2.12         EnvironmentalLaws and Regulations. When used in this Section 2.12:

 

### (a)           “EnvironmentalLaws” shall mean any and all federal, state or local laws, rules, orders,regulations, statutes, common law, ordinances, codes, decrees or requirementsof any Environmental Authority or any other Governmental Entity regulating,relating to or

 

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### imposing liability or standards of conductconcerning any Regulated Materials, environmental protection, or human healthprotection involving Regulated Materials or worker health and safety ascurrently in effect or as in effect at any time in the past;

###  

### (b)           “EnvironmentalAuthority” shall mean any Governmental Entity (as such term is defined in Section 8.9(c) below)responsible for the due administration and/or enforcement of any EnvironmentalLaw.

###  

### (c)           “EnvironmentalPermits” shall mean all governmental approvals, authorizations, registrations,permits and licenses, including those related to environmental quality and theemission, discharge, storage, handling, treatment, use, generation ortransportation of Regulated Materials required by Environmental Laws orotherwise required for the Sellers to conduct the Business.

###  

### (d)           “RegulatedMaterials” shall mean any pollutant, contaminant, hazardous material, hazardouswaste, infectious medical waste, hazardous or toxic substance (and allconstituents and degradation products thereof) defined or regulated as such inor under any Environmental Law, including, without limitation, petroleum, crudeoil or fractions thereof, petroleum products, waste or used oil, natural orsynthetic gas, asbestos or asbestos-containing materials and polychlorinatedbiphenyls, materials exhibiting the characteristics of ignitability,corrosivity, reactivity or extraction procedure toxicity, as such terms aredefined in connection with hazardous materials or hazardous wastes or hazardousor toxic substances in any Environmental Law; and

###  

### (e)           “Release”shall have the same meaning as provided in the Comprehensive EnvironmentalResponse, Compensation, and Liability Act, as amended, Section 101(22), 42U.S.C. Section 9601(22).

###  

#### (i)            Except as set forth inSchedule 2.12, the Sellers are in compliance in all materialrespects with all Environmental Laws and the conduct of the Business by theSellers does not violate or conflict with and has not in the past violated orconflicted with any Environmental Laws in any material respect. None of theSellers has handled any Regulated Materials on any real property used inconnection with the Business that is now or previously owned or leased by anyof the Sellers. To the Sellers’ knowledge, there is no asbestos located in oron any of the real property used in connection with the Business that is nowowned or leased by any of the Sellers. To the Sellers’ knowledge, none of thereal property used in connection with the Business that is now or previouslyowned or leased by any of the Sellers has been contaminated with creosote nor,to the Sellers’ knowledge, has any creosote been allowed to accumulate in the soilor ground water of any real property used in connection with the Business thatis now or previously owned or leased by the Sellers.

####  

#### (ii)           Except as set forth in Schedule 2.12,the Sellers have obtained all necessary Environmental Permits. The Sellers’ EnvironmentalPermits are in full force and effect, and the Sellers are in compliancetherewith in all material respects.

 

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#### (iii)          Except as set forth in Schedule 2.12,(A) None of the Sellers have received any complaint or notice from anyEnvironmental Authority or any other person alleging any past or presentviolation of any Environmental Law in connection with the operation of theBusiness, (B) to the Sellers’ knowledge, there is no investigative proceedingagainst the Sellers by any Environmental Authority in connection with the pastor present operation of the Business or ownership or operation of any of thereal properties identified on Schedule 2.13, or any other realproperty used in connection with the Business that is leased or licensed by anyof the Sellers, and (C) there are no pending claims under anyEnvironmental Law against any of the Sellers.

####  

#### (iv)          Except as set forth in Schedule 2.12,none of the Sellers have been subject to any administrative or judicialenforcement action or proceeding of any kind pursuant to any Environmental Lawin connection with the Business.

####  

#### (v)           Except as set forth in Schedule 2.12,none of the Sellers are subject to any remedial obligation or other responseaction (including without limitation, any assessment, containment or removalaction) under any administrative order, decree, or agreement pursuant to anyEnvironmental Law.

####  

#### (vi)          Except as set forth in Schedule 2.12,(A) no real property currently or formerly owned, leased, operated or usedby any of the Sellers in connection with the Business (including any realproperty used for off-site disposal, deposit or storage of any RegulatedMaterial) is listed or, to the knowledge of Sellers, has been proposed forlisting on any federal list of Superfund or National Priorities List, includingany analogous state lists, sites or similar governmental lists, (B) to theSellers’ knowledge, there exist no circumstances that could result in any suchproperty being listed on any federal list of Superfund or National PrioritiesList sites or similar governmental lists, including any analogous state lists,regarding waste sites at which there has been a Release or threatened Releaseof Regulated Materials, and (C) to the Sellers’ knowledge, none of theSellers’ real property has been used at any time by any person as a hazardouswaste treatment, hazardous storage or hazardous disposal site.

####  

#### (vii)         Except as set forth in Schedule 2.12,there are no (A) underground storage tanks (as defined under the ResourceConservation and Recovery Act or any other applicable Environmental Law), or (B) capacitors,transformers or other equipment or fixtures containing polychlorinatedbiphenyls (“PCBs”) (other than light fixtures which contain PCBs) located in,at, under or on the real property owned or leased by any of the Sellers.

####  

#### (viii)        Except as set forth in Schedule 2.12,to the Sellers’ knowledge, there are no facts, actions, activities,circumstances, conditions, occurrences, events, liabilities, or incidents,including any Release, threatened Release, generation, use, treatment, storage,disposal, arranging for disposal, transportation, or the presence of RegulatedMaterials, that are likely to (A) result in any environmental liability ofSellers, (B) prevent or interfere with the

 

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#### operation ofthe Sellers’ Business as it is currently being conducted, in compliance withall applicable Environmental Laws, (C) adversely affect the assets,Business or financial condition of the Sellers, or (D) adversely impact oraffect the use of any real property owned, operated, or leased by the Sellersin connection with the Business.

####  

#### (ix)           The Sellers haveprovided to Buyer all environmental reports, documents and other writtenmaterials relating to environmental conditions and compliance withEnvironmental Laws which are within Sellers’ custody, possession and control.

####  

#### (x)            Neither thistransaction or any element of this transaction requires any disclosures ornotifications to any Environmental Authority or other Government Entitypursuant to any transaction-triggered Environmental Law.

####  

## 2.13         RealProperty.

##  

### (a)           Allowned or leased real property of the Business (the “Properties”) is describedon Schedule 2.13. Except for (i) Permitted Liens and (ii) Liensas set forth on Schedule 2.13 which are to be discharged at orprior to Closing, Sellers have good, valid and marketable title to all of theirreal property (other than properties which are leased), free and clear of allLiens, mortgages, restrictions and other encumbrances and defects of title ofany nature whatsoever. A true copy of each lease has been delivered by Sellersto Buyer, and each such lease is listed on Schedule 2.13, is infull force and effect and affords such company peaceful and undisturbedpossession of the subject matter of such lease subject to the terms andconditions of the Permitted Liens, and subject to applicable law. Each of theSellers has performed all obligations required to be performed by it under eachof the leases to which it is a party, no amount due under any such leasesremains unpaid, and to the Sellers’ knowledge, no contingency, claim, disputeor other disagreement exists between the parties to any such lease. No defaultor event of default on the part of any of the Sellers or, to the knowledgeof Sellers, on the part of the lessor, exists under any such lease, andnone of the Sellers has received any notice of default under any such lease orany indication that the owner of the leased property intends to terminate suchlease, and to the Sellers’ knowledge, no event has occurred which with noticeor the lapse of time, or both, would constitute a default under any such lease.Except as specifically disclosed on Schedule 2.13, the Sellers holdall easements, rights-of-way and other rights necessary to own, operate andmaintain the physical plant of the Sellers (including all telephone and cablelines) to operate the business and to provide services to existing customersand none of the Sellers is in breach of, or default under, any such easement,right-of-way or other right and there are not any burdensome limitations orobligations under any such easement, right-of-way or other right. All easementsand rights of way have been properly recorded or registered, if needed, and arevalid and enforceable. A true copy of all easements, rights of way and allother rights necessary to own, operate and maintain the physical plant of theSellers (including all telephone lines and cable lines) (collectively the “Easements”)and all deeds for real property owned have been delivered by Sellers to Buyer,and each such deed and Easement is listed on Schedule 2.13.

 

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### (b)           Exceptas set forth on Schedule 2.13, none of the Sellers is in violationof any zoning, land use, building or safety law, ordinance, regulation orrequirement or other law or regulation applicable to the operation of its ownedor leased properties (“Zoning Requirements”), nor has it received any notice ofviolation with which it has not complied, in any case in which the consequencesof such violation if asserted by the applicable Governmental Entity would beadverse with respect to such company or would materially impair the ability ofsuch company to use the affected parcel of owned or leased property in themanner and scope in which it is now being used and/or necessary for theoperation of the Business. Except as set forth on Schedule 2.13, (i) thereare no operations on the Properties which constitute nonconforming uses underany Zoning Requirement, and (ii) none of the Sellers has any knowledge of,nor received any notice (other than published notice not actually received) of,any pending or contemplated rezoning proceeding affecting the Properties.

###  

### (c)           Exceptas set forth on Schedule 2.13, (i) to the Sellers’ knowledge,no person or entity has any right or option to purchase, lease, sublease orlicense the real property used in the Business or any portion thereof, and (ii) theuse of the real property of the Business is permitted under applicable laws,ordinances, rules, or regulations and is in conformity with the same.

###  

## 2.14         TangiblePersonal Property; Intangible Property.

##  

### (a)           ThePurchased Assets include any and all personal property used in and/or necessaryfor the operation of the Business. Except for (i) Permitted Liens and (ii) Liensto be discharged at the Closing that are set forth in Schedule 2.14,none of the Purchased Assets is subject to any Lien and each Seller has good,valid, and marketable title, free and clear of all title defects, objectionsand Liens, to the tangible and intangible personal property included in thePurchased Assets. Except as set forth in Schedule 2.14, each Sellerholds good and transferable leaseholds in all of the personal property leasedby it, in each case under valid and enforceable leases. None of the Sellers isin default with respect to any item of personal property purported to be leasedby it, and no event has occurred that constitutes or with due notice or lapseof time or both would constitute a default under any lease thereof.

###  

### (b)           ThePurchased Assets include all items of intangible property which are material tothe Business as currently conducted, including, without limitation, tradenames, trademarks and service marks, brand names, patents and copyrights.

###  

2.15         Insurance.Schedule 2.15 sets forth a list of all insurance policies and allmaterial fidelity bonds or other insurance service contracts (the “InsurancePolicies”) providing coverage for the properties or operations of the Business,the type and amount of coverage, and the expiration dates of the InsurancePolicies. There is no claim pending under any of the Insurance Policies as towhich coverage has been questioned, denied or disputed by the underwriters ofsuch policies. All premiums payable under all Insurance Policies have beenpaid, and Sellers have otherwise complied in all material respects with theterms and conditions of all of the Insurance Policies. To Sellers’ knowledge,the Insurance Policies are valid and enforceable in accordance with theirterms, are issued by insurers that are financially sound and reputable, are infull force and effect and insure against risk and liabilities customary in theindustry and as required by law or any material contract to which either Selleris a party. Since January 1, 2002,

 

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except as set forth on Schedule 2.15,Sellers have not received notice from any of their current insurancecarriers:  (i) threatening asuspension, revocation, modification or cancellation of any Insurance Policy ora material increase in any premium in connection therewith, or (ii) informingsuch company that any coverage listed on Schedule 2.15 will or may notbe available in the future on substantially the same terms as now in effect.

 

2.16         Compliancewith Laws and Orders. Except as set forth in Schedule 2.16,each Seller has been and is in compliance with all applicable statutes, laws,ordinances, regulations, franchises, licenses, permits, administrativepermissions or approvals, rules, governmental policies or orders of anyGovernmental Entity (including, without limitation, the MPSC, KCC and FCC), andany judgment, ruling, decree or order of any court, administrative agency ortribunal or any arbitrator or arbitral panel or tribunal applicable to itsbusiness or operations; and the conduct of the Business has been and is incompliance with all federal, state and local energy, public utility, health, wageand hour (including but not limited to the Fair Labor Standards Act),employment, workplace or worker safety and health, including but not limited toOSHA, and all other requirements of any Governmental Entity (including, withoutlimitation, requirements of the MPSC, KCC and FCC). Each Seller has allpermits, licenses, registrations, franchises and other authorizations from, andhas made all necessary filings with, all Governmental Entities, including theMPSC, KCC and FCC, required to conduct the Business as now being conducted. Noinvestigation or review by any Governmental Entity with respect to the Businessis pending or, to the knowledge of Sellers, has been threatened. Since theBalance Sheet Date, except as set forth on Schedule 2.16, none ofthe Sellers has received any notice or other communication (whether oral orwritten) from any Governmental Entity or any other person regarding (i) anyactual, alleged, possible, or potential violation of or failure to comply with,any applicable law, or (ii) any actual, alleged, possible, or potentialobligation on the part of either Seller to undertake, or to bear all orany portion of the cost of, any remedial action of any nature.

 

## 2.17         Permits.

##  

### (a)           EachSeller owns, holds or possesses all licenses, franchises, permits, privileges,immunities, approvals and other authorizations from Governmental Entities whichare necessary to entitle it to own or lease, operate and use its assets and tocarry on and conduct the Business substantially as currently conducted (hereincollectively called “Governmental Permits”). Complete and correct copies of allof the Governmental Permits have heretofore been delivered or made available toBuyer and are listed on Schedule 2.17.

###  

### (b)           Exceptas set forth in Schedule 2.17, each of such Governmental Permits isin full force and effect, and each Seller has fulfilled and performed itsobligations under each of the Governmental Permits. No proceedings to revoke,refuse, renew, modify or restrict the Governmental Permits are pending or, toSellers’ knowledge, threatened, and no event has occurred or condition or stateof facts exists which constitutes or, after notice or lapse of time or both,would constitute a breach or default under any such Governmental Permit orwhich permits or, after notice or lapse of time or both, would permitrestriction, modification, revocation or termination of any such GovernmentalPermit, or which would adversely affect the rights of Sellers under any suchGovernmental Permit, (ii) no notice of cancellation, of default or of anydispute concerning any Governmental Permit, or of any event, condition or stateof facts described in the preceding clause, has been received by, or is knownto Sellers and (iii) all filings

 

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### and reports required by Governmental Entitieshave been timely and properly made. The transactions contemplated by thisAgreement shall not cause the study area of the Business to change.

###  

2.18         IntellectualProperty. The Purchased Assets include all rights in all patents, patentrights, trademarks, trade names, trade dress, logos, service marks, copyrights,know how and other proprietary intellectual property rights and computerprograms necessary to carry out the Business (“Intellectual Property Rights”),all of which are listed on Schedule 2.18. The Purchased Assets donot include the trade names of LEC which are not necessary to carry out theBusiness. Except as set forth on Schedule 2.18, to Sellers’knowledge, the Intellectual Property Rights do not infringe on any proprietaryright of any person and no claims challenging the validity, effectiveness orownership by any Seller of any of the Intellectual Property Rights, or to theeffect that the Intellectual Property Rights infringe or will infringe anyintellectual property or other proprietary right of any person have beenasserted or, to the Sellers’ knowledge, are threatened by any person nor toSellers’ knowledge are there any valid grounds for any bona fide claim of anysuch kind. To the best of the Sellers’ knowledge, there is no materialunauthorized use, infringement or misappropriation of any of the IntellectualProperty Rights by any third party.

 

## 2.19         CertainAgreements.

##  

### (a)           Exceptas set forth in Schedule 2.19, there are no amounts payable bySellers to any partner, manager, officers or employees of Sellers (in theircapacity as partner, manager, officers or employees), and there is no vestingor acceleration of rights or the lapse of restrictions, as a result of thetransactions contemplated by this Agreement and/or any subsequent employmenttermination.

###  

### (b)           Exceptas set forth on Schedule 2.19, there are no contracts,understandings, arrangements or commitments (whether written or oral) betweenany of the Sellers, on the one hand, and another Seller or any stockholder,member, manager, partner, officer, director or employee of a Seller or any ofan Affiliate of Sellers, on the other hand.

###  

2.20         Brokersand Finders. None of the Sellers has employed any investment banker,broker, finder, consultant or intermediary in connection with the transactionscontemplated by this Agreement which would be entitled to any investmentbanking, brokerage, finder’s or similar fee or commission in connection withthis Agreement or the transactions contemplated hereby.

 

2.21         Adequacyof Purchased Assets. The Purchased Assets include all assets necessary forthe operation of the Business in the ordinary course and in the manner in whichthe Business is currently operated.

 

## 2.22         AccountsReceivable. The accounts receivable of CassTel and CassTel LD that areincluded in the Purchased Assets represent valid obligations owed to CassTeland CassTel LD. To the best of Sellers’ knowledge, such accounts receivable arecollectible in the ordinary course of business, subject to a reasonable reservefor doubtful accounts. Neither this Section 2.22

 

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## nor any other provision of this Agreement shall be construed as aguarantee by Sellers that Buyer will collect all of the accounts receivablethat are included in the Purchased Assets.

##  

## 2.23         CALEACompliance. Sellers are in compliance with the Federal Bureau ofInvestigation’s current CALEA requirements and are not in violation of anystatute, regulation or rule or requirement associated with CALEA.

##  

## 2.24         Disclosure.Neither this Agreement, nor any of the attachments, Schedules, Exhibits,written Statements, documents, certificates or other items prepared for orsupplied to Buyer by or on behalf of Sellers with respect to the transactionscontemplated hereby contains or will contain any untrue statement of a materialfact or omits or will omit any material fact necessary to make each statementcontained herein or therein not misleading. No Seller has knowledge of any factrelating to the Business that has not been disclosed to Buyer which materiallyadversely affects the Business or which would prevent Sellers from completingthe transactions contemplated by this Agreement.

##  

# ARTICLE III

#  

# REPRESENTATIONS AND WARRANTIES OF BUYER

#  

Buyerrepresents and warrants to the Sellers that:

 

3.1           CorporateOrganization and Qualification. Buyer is a corporation duly organized,validly existing and in good standing under the laws of the State of Delawareand is qualified to do business as a foreign corporation in each jurisdictionand is in good standing in each jurisdiction where the properties owned, leasedor operated, or the business conducted, by it require such qualification. Buyerhas all requisite power and authority (corporate or otherwise) to own itsproperties and to carry on its business as it is now being conducted orcontemplated.

 

3.2           AuthorityRelative to This Agreement. Buyer has the requisite corporate power andauthority to execute and deliver this Agreement and to consummate thetransactions contemplated hereby. This Agreement and the consummation by Buyerof the transactions contemplated hereby have been duly and validly authorizedby the Board of Directors of Buyer, and no other corporate proceedings on the part ofBuyer are necessary to authorize this Agreement or to consummate thetransactions contemplated hereby. The Buyer has provided evidence of itsauthority to enter into the Agreement and consummate the transactionscontemplated hereby to Sellers. This Agreement has been duly and validlyexecuted and delivered by Buyer and constitutes the valid and binding agreementof Buyer, enforceable against Buyer in accordance with its terms, except thatsuch enforceability may be limited by (a) bankruptcy, insolvency,reorganization, moratorium or other similar laws now or hereafter in effectrelating to creditors’ rights generally, and (b) general principles ofequity (regardless of whether enforceability is considered in a proceeding atlaw or in equity).

 

3.3           Consentsand Approvals; No Violation. Neither the execution and delivery of thisAgreement by Buyer nor the consummation by Buyer of the transactionscontemplated hereby will:

 

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###  

### (a)           conflictwith or result in any breach of any provision of the Articles of Incorporationor the By-Laws of Buyer;

###  

### (b)           requireany consent, approval, authorization or permit of, or filing with ornotification to, any Governmental Entity, except (i) such filings andconsents as may be required by the FCC or the FCC Rules, or by the MPSC orthe MPSC Rules or by the KCC or the KCC Rules (ii) as may berequired by any applicable state securities or “blue sky” laws or statetakeover laws or (iii) such filings and consents as may be requiredunder any local government environmental, health or safety law or regulationpertaining to any notification, disclosure or required approval triggered bythe transactions contemplated by this Agreement;

###  

### (c)           exceptas set forth in Schedule 3.3(c), violate or result in a violationor breach of, or constitute (with or without due notice or lapse of time orboth) a default (or give rise to any right of termination, cancellation oracceleration or lien or other charge or encumbrance) under any of the terms,conditions or provisions of any contract, indenture, obligation, commitment, note,license, agreement or other instrument or obligation to which Buyer or any ofits Subsidiaries is a party or by which any of their respective assets may bebound; or

###  

### (d)           assumingthe consents, approvals, authorizations, permits, filings and notificationsreferred to in this Section 3.3 (including Schedule 3.3(c)) areduly and timely obtained or made, violate or constitute a default under any judgment,order, restriction, writ, injunction, decree, law, statute, ordinance, rule orregulation applicable to Buyer or any of its Subsidiaries or to any of theirrespective assets.

###  

3.4           Brokersand Finders. Buyer has not employed any investment banker, broker, finder,consultant or intermediary in connection with the transactions contemplated bythis Agreement which would be entitled to any investment banking, brokerage,finder’s or similar fee or commission in connection with this Agreement or thetransactions contemplated hereby.

 

# ARTICLE IV

#  

# ADDITIONAL COVENANTS AND AGREEMENTS

#  

4.1           RegulatoryMatters. The parties shall, promptly after the date hereof, cooperativelycommence efforts to obtain all Governmental Entity approvals, including but notlimited to, MPSC, KCC and FCC approvals of the transactions contemplated herebyand the authorizations listed in Schedule 2.3(b). The parties shalldiligently pursue and use their best efforts to obtain such authorizations andapprovals as promptly as practicable following the execution of this Agreement.

 

## 4.2           Conductof Business. Each Seller agrees that during the period from the date ofthis Agreement to the Closing Date (unless the Buyer shall otherwise agree inwriting and except as otherwise contemplated by this Agreement), each Sellerwill: conduct its operations according to all applicable laws and regulationswith no less diligence and effort than would be applied in absence of thisAgreement; with respect to the Business preserve and maintain its physical plant;make capital expenditures with respect to the Business each year in theordinary course,

 

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## consistent with the needs of the Business; andpreserve its relationships with customers, suppliers and others having businessdealings with it to the end that goodwill and ongoing businesses shall not beimpaired in any material respect on the Closing Date. Without limiting thegenerality of the foregoing, and except as otherwise permitted in thisAgreement or as set forth in Schedule 4.2, prior to the ClosingDate, none of the Sellers will, without the prior written consent of Buyer(which consent shall not be unreasonably withheld):

 

### (a)           sell,pledge, lease, license or otherwise encumber or transfer any of the PurchasedAssets or adopt a plan of complete or partial liquidation, dissolution, merger,consolidation, restructuring, recapitalization or other reorganization of anyof Sellers except for the sales of obsolete or worn-out assets or assets beingreplaced prior to the Closing Date

###  

### (b)           modifyor adopt any amendments to its organizing or governing documents or alterthrough merger, liquidation, reorganization, restructuring or in any otherfashion its corporate structure or ownership;

###  

### (c)           grantany material increases in (or make amendments to) the compensation of any ofits employees listed on Schedule 4.8;

###  

### (d)           exceptas set forth on Schedule 4.2, pay or agree to pay any pension,retirement allowance or other employee benefit not required or contemplated byany of the existing benefit, severance, termination, pension or employmentplans, agreements or arrangements as in effect on the date hereof to any such member,partner, manager, employee, director or officer, whether past or present;

###  

### (e)           exceptas set forth on Schedule 4.2, enter into any new, or materiallyamend any existing, bonus, profit sharing, retention, golden parachute,employment, severance, termination or similar agreement with any member,manager, partner, director, officer or employee;

###  

### (f)            exceptas set forth on Schedule 4.2 or as may be required to complywith applicable law or as may be required by those items listed on Schedule 4.2,adopt or become obligated under any plan, program or arrangement which, ifexisting on the date hereof, would be a Company Plan in accordance with Section 2.11or amend any Company Plan if such amendment would have the effect of enhancingany benefits thereunder;

###  

### (g)           exceptas set forth on Schedule 4.2, take any position with respect to orsettle or compromise any material tax claim, file any material amended taxreturn or claim for refund, or file any tax return incorporating a materialposition, election or method of accounting inconsistent with a position,election or method incorporated in past tax returns, except as required by law,or take any action or position that would increase the tax liability of any ofthe Sellers so as to have a material adverse effect;

###  

### (h)           subjectany of the Purchased Assets, or any part thereof, to any Lien or suffersuch to be imposed other than such Liens as may arise in the ordinarycourse of business or by operation of law;

 

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### (i)            failto keep in full force and effect insurance comparable in amount and scope tocoverage maintained by it (or on behalf of it) with respect to the Business orthe Purchased Assets on the date hereof;

###  

### (j)            takeor permit to occur any other action or omission that would cause any of therepresentations and warranties made by it in this Agreement not to remain trueand correct in all material respects;

###  

### (k)           makeany change in any method of accounting or accounting principle, method,estimate or practice except for any such change required by reason of aconcurrent change in GAAP or write down the value of any inventory or write-offas uncollectible any accounts receivable except in the ordinary course ofbusiness consistent with past practices or unless required to do so by aGovernmental Entity;

###  

### (l)            exceptfor matters involving a Governmental Entity, settle, release or forgive (orcommence) any material claim, litigation or adversarial proceeding or waive anymaterial right; or

###  

### (m)          authorize,recommend, propose or announce an intention to do any of the foregoing, orenter into any contract, agreement, commitment or arrangement to do any of theforegoing.

###  

## 4.3           NoSolicitation of Transactions. Except as contemplated or as otherwisepermitted by this Agreement, none of the Sellers shall authorize or permit any member,manager, officer, director, partner or employee of, or investment banker,attorney or other advisor or representative of any of the Sellers to (i) solicitor initiate, encourage, or facilitate, directly or indirectly, any inquiriesrelating to, or the submission of, any proposal or offer, whether in writing orotherwise, from any person other than Buyer or any Affiliates thereof (a “ThirdParty”) to acquire beneficial ownership of any of the Purchased Assets, or any beneficialownership of any of the Sellers pursuant to a merger, consolidation or otherbusiness combination, sale of equity interest, sale of assets, tender offer,exchange offer or other transaction (a “Competing Transaction”), (ii) participatein any discussions or negotiations regarding, or furnish to any person anyinformation or data with respect to or access to the properties of, or take anyother action to knowingly facilitate the making of any proposal thatconstitutes, or may reasonably be expected to lead to, any CompetingTransaction, or (iii) enter into any agreement with respect to anyCompeting Transaction, approve or recommend or resolve to approve or recommendany Competing Transaction or enter into any agreement requiring it to abandon,terminate or fail to consummate the transactions contemplated by this Agreement.

##  

## 4.4           ReasonableEfforts. Subject to the terms and conditions herein provided, each of theparties hereto shall use all reasonable efforts to take, or cause to be taken,all action and to do, or cause to be done, all things necessary, proper oradvisable under applicable laws and regulations to consummate and makeeffective the transactions contemplated by this Agreement, including using itsreasonable efforts to obtain all necessary or appropriate waivers, consents andapprovals, to effect all necessary registrations, filings and submissions(including, but not limited to any submissions requested by the MPSC, KCC orFCC) and to lift any injunction or other

 

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## legal bar to the consummation of the transactions contemplated by thisAgreement (and, in such case, to proceed with such transactions asexpeditiously as possible).

##  

4.5           Accessto Information. Following execution of this Agreement, upon reasonablenotice, each of the Sellers shall afford to officers, employees, counsel,accountants, engineers, consultants, prospective financing sources, and otherauthorized representatives of Buyer (“Representatives”), full, open, continuingand reasonable access, throughout the period prior to the Closing Date, to its (i) equipment,personal and intangible properties, facilities and real properties, (ii) accountingfiles, financial and operating data, budgets, projections and plans, (iii) regulatoryand other government filings, (iv) employment records, policies and files,and records and documents pertaining to Company Plans, (v) contracts,agreements and undertakings, (vi) environmental filings and tax returns, (vii) organizational,governing, corporate and ownership records and legal files, (viii) reports,schedules, books and records, and (ix) other information relevant to theBusiness (the “Information”); and, during such period, each Seller shallfurnish or make available reasonably promptly to such Representatives copies ofall such Information as may reasonably be requested, including but notlimited to a copy of each report, schedule or other document filed orreceived by any of Sellers pursuant to federal or state securities laws or withany Governmental Entity at any time prior to the Closing. In addition, in furtheranceof the foregoing, promptly following the date of this Agreement, Sellers shallprovide to Buyer an operating plan and budget for the Business for the remaining2005 fiscal year and the 2006 fiscal year (the “Plan and Budget”). The Sellersshall exercise reasonable efforts to manage the operations of the Business tothe Plan and Budget. The Sellers will promptly provide Buyer written copies ofany reports, data or summaries describing any material variance or deviationfrom the Plan and Budget. Upon reasonable notice, Sellers shall make availableall managers, officers, employees, agents or advisors to Buyer’sRepresentatives for purposes of reviewing, providing, discussing, or describingany of the Information or otherwise keeping the Buyer and its Representativesapprised with respect to, and responding to Buyer’s inquiries regarding, theBusiness and the Plan and Budget. Buyer agrees that it will not, and will causeits Representatives to not, use any information obtained pursuant to this Section forany purpose unrelated to the consummation of the transactions contemplated bythis Agreement. No information or knowledge obtained in any investigationpursuant to this Section shall affect or be deemed to modify anyrepresentation or warranty contained in this Agreement or the conditions to theobligations of the parties to consummate the transactions contemplated thereby.

 

4.6           Publicity.The parties must approve and agree upon any press releases or publicannouncements to be made by any party pertaining to the transactionscontemplated by this Agreement. No party shall issue any such press releases ormake any such public announcements without the consent of the other parties,which consent shall not be unreasonably withheld, except as required to obtainthe consents, waivers and authorizations listed in the Schedules and inconnection with Buyer’s financing of the transaction contemplated hereby. Notwithstandingthe proceeding provisions, each party hereto shall be free to make suchdisclosures and filings as may be required by law without the otherparties’ prior written consent; but such party shall provide the other partiesa copy of any such disclosure or filing.

 

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## 4.7           Cooperationwith SEC Filings.

##  

### (a)           Allparties understand that Buyer is a publicly-owned company and is subject to thereporting requirements of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), and may be required to include in its reports filed with theSecurities and Exchange Commission (the “SEC”) pursuant to the Exchange Act, orin any registration statements it may file with the SEC pursuant to theSecurities Act of 1933, as amended (the “Securities Act”):

###  

#### (i)            certain reviewedconsolidated financial statements of Sellers;

####  

#### (ii)           certain unaudited stubperiod consolidated financial statements of Sellers;

####  

#### (iii)          certain pro formafinancial information relating to Sellers; and

####  

#### (iv)          the consent(s) of theaccountants who reviewed Sellers’ financial statements to the inclusion of thereviewed financial statements in such reports or registration statements of Buyer.

####  

(b)           Sellers agree toprovide to Buyer upon Buyer’s written request, as promptly as reasonablypracticable after receipt of any such written request and in any event by thedelivery date reasonably specified in any such written notice, any of the itemsspecified under clauses (i) through (iii) above that Buyer isrequired under applicable SEC rules and regulations to include in a reportunder the Exchange Act or in a registration statement under the Securities Act,and to cause the Sellers independent certified public accountants to provideany required consent specified in clause (iv) above.

 

## 4.8           Employees.

##  

### (a)           Ator prior to the Closing, Buyer hereby agrees to offer employment to eachindividual listed on Schedule 4.8 on the terms and conditions setforth in Schedule 4.8. In addition, Buyer shall have the right tointerview each of the Sellers employees as soon as possible after execution ofthis Agreement and can offer employment, at the sole discretion of Buyer, toany of the Sellers’ employees. For all purposes under the employee benefitplans of Buyer providing benefits after the Closing Date, each Seller employeethat becomes an employee of Buyer shall be credited for purposes of eligibilityand vesting (but not for purposes of benefits accrued) under Buyer’s 401(k),medical and insurance plans with his or her years of service with the Sellersbefore the Closing Date, to the same extent as such individual was entitled tocredit for such service under the Company Plans, except to the extent suchcredit would result in a duplication of benefits.

###  

### (b)           Sellersagree to make health insurance plan continuation coverage available to theextent required by Part 6 of Title I of ERISA (and similar provisionsunder the Code and any similar continuation coverage law) (collectively “COBRA”)under the appropriate Company Plan for each employee or former employee ofSellers (and any covered dependent of any such employee or former employee) whoceased to be covered under such Company Plan under circumstances permitting theelection of continuation coverage, regardless of whether such

 

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### employee or former employee (or dependent)ceased to be so covered before or at the Closing Date. Premiums for suchcontinuation coverage shall be borne by the applicable employee or formeremployee.

###  

### (c)           Sellersagree to make good faith efforts to continue to maintain a health plan followingClosing Date which is reasonably comparable to the health plan it hasmaintained during the one year period prior to Closing Date, and such healthplan shall be designed so that it will fully meet all obligations which COBRA may imposeupon Sellers and Buyer regarding offering continuation coverage to any past orpresent employees (and their dependents) of the Business (and any otheraffiliated entity related to the Business or Sellers) (collectively “SellersCOBRA Continuees”).  Sellers agree toimmediately notify Buyer in the event it cannot or does not maintain such ahealth plan for Sellers COBRA Continuees.

###  

### (d)           Inthe event Buyer determines that Buyer or any affiliate of Buyer (or any healthplan of Buyer or an affiliate of Buyer) (collectively “Buyer Plan”) has becomeresponsible for providing health coverage to any Sellers COBRA Continuees, thenSellers shall fully indemnify Buyer Plan for all costs of Buyer Plan providingCOBRA coverage to Sellers COBRA Continuees. The amount of such indemnificationshall be determined on a monthly basis by Buyer by taking into account thecosts of all Sellers COBRA Continuees covered by Buyer Plan (including, withoutlimitation, the actual costs of claims paid on behalf of Sellers COBRAContinuees, the administrative costs of such claims and of otherwisemaintaining coverage for Sellers COBRA Continuees, the cost of maintainingreasonable stop-loss coverage for Sellers COBRA Continuees, and any additionalcosts assessed generally by virtue of increased underwriting costs attributableto Sellers COBRA Continuees). COBRA premiums paid by Sellers COBRA Continueesshall offset the costs for Sellers COBRA Continuees for that plan year of theBuyer Plan, but any positive credit shall not be paid to Sellers at any time (althoughsuch positive credit may be considered through the end of the Buyer Plan’splan year). Buyer shall have the discretion to determine whether it isnecessary for Buyer Plan to provide COBRA coverage for any Sellers COBRAContinuees and also to determine the amount of the costs of such COBRA coveragefor Sellers COBRA Continuees, and Sellers shall not have the right to disputeany such determinations by Buyer unless Sellers can prove that Buyer’sdetermination was arbitrary and capricious. Sellers shall recompense BuyersPlan for any and all such costs (either directly, or from the aforementionedescrow) immediately upon demand by Buyer, which may be on a monthly basis(or in the event of large claims, on a weekly basis).

###  

4.9           Noticeof Breach. Through the Closing Date, each party shall promptly give theother parties written notice with particularity upon having knowledge of anymatter that may constitute a breach of any representation, warranty,agreement or covenant contained in this Agreement. Through the Closing Date, eachparty shall promptly supplement the schedules to this Agreement (a “Supplement”)after the occurrence of any event that changes or is reasonably likely tochange in any material respect any statement made by such party in this Agreementor in any such Schedule, provided that no such Supplement or modification willbe effective to amend or otherwise modify any Schedule or any other party’srights under this Agreement, unless such updated information shall beacceptable to the applicable party in its sole discretion and such acceptanceis expressly set forth in an amendment to this Agreement.

 

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4.10         Obligationto File Tax Returns. Sellers shall cause to be prepared and filed all taxreturns with the appropriate Governmental Entities relating to the Business forperiods ending on or prior to the Closing Date and shall pay all taxes due withrespect to such tax returns.

 

## 4.11         Obligationto Remediate. If, prior to the Closing, any Regulated Material is Releasedor found to have been Released or contained or present on or in any propertyused in connection with the past or present operation of the Business, and if Sellersdo not elect to terminate this Agreement pursuant to Section 7.1(f) below,Sellers shall diligently pursue and complete the required assessment andremediation activities, requested, specified or directed by the applicableGovernmental Entities having jurisdiction or as otherwise required byapplicable Environmental Laws in order to obtain from such Governmental Entitythe highest level of a “no further action” or “spill inactivation” letter or othersimilar designation with respect to each such environmental contamination priorto the Closing.

##  

## 4.12         CustomerNotices. Buyer and Sellers shall cooperate to prepare and deliver, at leastthirty (30) days prior to the Closing (or such other time as may berequired by applicable law or Order), a notice, in form and substancereasonably acceptable to each of them in compliance with Section 64.1120(e) ofthe FCC’s rules and any and all other applicable state and federal law, tocustomers notifying them of the pending sale transaction contemplated by thisAgreement. Sellers shall provide Buyer with the Sellers’ information necessary,including subscriber names and addresses, for Buyer to comply with therequirements of Section 64.1120(e) of the FCC’s rules and anyand all other applicable state and federal law with respect to customernotifications required as a result of the transaction contemplated by thisAgreement.

##  

## 4.13         FinancialStatements.          Sellers shall provideBuyer with the monthly unaudited balance sheets and related statements ofincome and cash flow to date of each of the Sellers for the additional monthsbetween the date hereof and the closing date in each instance within forty-five(45) days after the end of the month in question. Sellers shall provide Buyerwith the audited year ending December 31, 2005 consolidated balance sheetsand related consolidated statements of income and cash flow (including therelated rates thereto, if any) of each of the Sellers by March 31, 2006and the regulatory version of the year ending December 31, 2005consolidated balance sheets and the related statement of income and cash flow(including the related notes thereto, if any, upon preparation of the same inthe normal course of business.

##  

# ARTICLE V

#  

# CONDITIONS TO CLOSING

#  

5.1           Conditionsto Each Party’s Obligations to Effect the Closing. The respectiveobligations of each party to consummate the transactions contemplated by thisAgreement are subject to the satisfaction at or prior to the Closing Date ofthe following conditions:

 

(a)           Injunction.There shall not be in effect, enacted, promulgated or threatened any action, statute,rule, regulation, executive order, decree, ruling or injunction or other orderof any court or any Governmental Entity which seeks to or declares thisAgreement invalid in any respect or seeks to or prevents or delays theconsummation of the transactions contemplated hereby or which challenges thevalidity or enforceability of this Agreement;

 

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provided, however, that prior to invokingthis condition the invoking party shall have used its reasonable efforts tohave resolved any such threatened actions or actions or to have any decree,ruling, injunction or order vacated.

 

(b)           GovernmentalFilings and Consents. All governmental consents, orders, approvals, certifications,authorizations, permits, filings, licenses or notifications legally required bythe MPSC, KCC or FCC or any other Governmental Entity for the consummation ofthe transactions contemplated hereby shall have been given or obtained on termsthat are satisfactory and acceptable to the Buyer in its sole discretion and shallbe final, nonappealable, and in effect on the Closing Date.

 

### (c)           Resolutionof Pending Complaint and Investigations. All issues that have been or canbe raised by any Governmental Entity, including but not limited to the MPSC,FCC, NECA, USAC or KCC, that are related to or arise out of (i) theoperation of Business by the Sellers prior to the Closing Date; (ii) theallegations contained in the Complaint of the Staff of the MPSC pending in CaseNo. TC-2005-0357 before the Public Service Commission of the State ofMissouri; or (iii) any over-earnings of the Business prior to the ClosingDate, must have been reasonably resolved.

###  

5.2           Conditionsto Sellers’ Obligations to Effect the Closing. The obligations of theSellers to consummate the transactions contemplated by this Agreement aresubject to the satisfaction at or prior to the Closing Date of the followingadditional conditions:

 

### (a)           Therepresentations and warranties of Buyer contained in this Agreement thataddress matters only as of a particular date shall be true and correct as ofsuch date and all other representations and warranties of the Buyer containedin this Agreement shall be true and correct as of the Closing Date and theSellers shall have received a certificate of an executive officer of Buyer tothe foregoing effect.

###  

### (b)           Buyershall have performed and complied with in all material respects its obligationsunder this Agreement to be performed or complied with by Buyer on or prior tothe Closing Date, and the Sellers shall have received a certificate of anexecutive officer of Buyer to the foregoing effect.

###  

5.3           Conditionsto the Buyer’s Obligations to Effect the Closing. The obligations of Buyerto consummate the transactions contemplated by this Agreement are subject tothe satisfaction on or prior to the Closing Date of the following additionalconditions:

 

### (a)           Therepresentations and warranties of the Sellers contained in this Agreement thataddress matters only as of a particular date shall be true and correct as ofsuch date and all other representations and warranties of the Sellers containedin this Agreement shall be true and correct as of the Closing Date and theBuyer shall have received a certificate of an executive officer, manager orgeneral partner as applicable of each Seller to the foregoing effect.

###  

### (b)           EachSeller shall have performed and complied with in all material respects itsobligations under this Agreement to be performed or complied with on or priorto the Closing Date, and Buyer shall have received a certificate of anexecutive officer, manager or general partner as applicable of each Seller tothe foregoing effect.

 

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### (c)           Duringthe period from the date of this Agreement to the Closing Date, there shall nothave been any change, effect or circumstance constituting a material adverse changein the Business, Purchased Assets, Financial Statements, Schedules for thisAgreement, business prospects, regulatory climate, condition (financial orotherwise) or results of operations of the Business or Sellers. Buyer shallhave received a certificate, dated the Closing Date, from the Sellers, in a form reasonablysatisfactory to the Buyer certifying the same.

###  

### (d)           Buyerand its lender shall have received favorable legal opinions, dated the ClosingDate, from (i) Davis Wright Tremaine LLP, counsel to the Sellers, substantiallyin the form attached hereto as Exhibit 5.3(d)(i) or in suchother form as may be agreed by Buyer and Sellers’ counsel; (ii) Fischer &Dority, PC, special counsel to Buyer, substantially in the form attachedhereto as Exhibit 5.3(d)(ii); (iii) James M. Caplinger, Chtd.,special counsel to Buyer, substantially in the form attached hereto as Exhibit 5.3(d)(iii);and (iv) federal regulatory counsel designated by Buyer as special counselto Buyer, substantially in the form attached hereto as Exhibit 5.3(d)(iv).Buyer will take all actions reasonably requested by its counsel to enable suchcounsel to deliver the opinion required of it hereunder.

###  

### (e)           Buyershall have received such other certificates, instruments, deeds (quitclaim withcovenant) of all real or personal property owned by Sellers, assignments of allleases (under which a Seller is lessee) with applicable consents, assignmentsof all easements held by Sellers with applicable consents, and documents inconfirmation of the representations and warranties of Sellers or in furtheranceof the transactions contemplated by this Agreement as Buyer or its counsel may reasonablyrequest.

###  

### (f)            TheBuyer shall have timely received the monthly unaudited balance sheets andrelated statements of income and cash flow of each Seller for the additionalmonths between the date hereof and the Closing Date, and the consolidatedbalance sheets and the related consolidated statements of income and cash flow(including the related notes thereto, if any) of each of the Sellers for theyear ending December 31, 2005 (audited and regulatory versions), all ofwhich financial statements shall have been prepared in accordance with thestandards reflected elsewhere herein and none of which financial statementsshall have reflected any change, effect or circumstance constituting a materialadverse change or any other breach of any representation or warranty containedherein.

###  

### (g)           Noreport or opinion (for example, a phase I environmental report) obtained by theBuyer from a Representative as contemplated in Section 4.5 shall reflectthe existence of an adverse change as a result of any matter not expresslyagreed to be accepted or consented to by the Buyer herein that is not cured ator prior to Closing by Sellers at Sellers’ sole expense.

###  

### (h)           TheSellers shall have removed or shall pay at Closing all Liens on the PurchasedAssets other than Permitted Liens.

###  

### (i)            TheBuyer shall have been furnished with such other and further documents andcertificates, including certificates of the Sellers, as the Buyer shallreasonably request to evidence compliance with the conditions set forth in thisAgreement.

 

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### (j)            Atthe Closing, the Sellers shall have delivered to the Buyer Certificates issuedby the appropriate Governmental Entities evidencing good standing of theSellers in their respective jurisdictions of incorporation and in eachjurisdiction in which each is qualified to do business as a foreigncorporation.

###  

### (k)           Atthe Closing, the Sellers shall have delivered to the Buyer Certificates ofTitle to all vehicles, free and clear of all Liens, duly assigned to the Buyer.

###  

### (l)            TheBuyer’s Affiliate that will operate the Business after Closing (“Buyer’sAffiliate”) must be certified by the MPSC and KCC as of the Closing as anEligible Telecommunications Carrier. In addition, as of the Closing the Buyer’sAffiliate must have obtained a waiver of the FCC rules to the extentnecessary to ensure that all federal Universal Service Funds to which the studyarea associated with the Business is entitled are paid as of Closing of the transactioncontemplated by this Agreement to the Buyer’s Affiliate in its capacity as an incumbentrural local exchange carrier designated as an Eligible TelecommunicationsCarrier in an amount satisfactory to Buyer in its sole discretion. Seller shallcooperate with Buyer and Buyer’s Affiliate prior to the Closing in its effortsto obtain any necessary waivers or approvals including but not limited to theprovision of all information required to determine the amount of Universal ServiceFunding to which the Buyer’s Affiliate will be entitled subsequent to theClosing of the transaction contemplated by this Agreement. Buyer’s Affiliateshall have received consent from NECA indicating that Buyer’s Affiliate may participatewithout limitation in the NECA interstate exchange access tariff as aconcurring carrier and in the NECA revenue pool processes. Such consent shallbe in a form reasonably satisfactory to Buyer.

###  

### (m)          Sellersshall have replaced or repaired any and all Purchased Assets that havesuffered, sustained or incurred any material loss, damage or destruction.

###  

### (n)           Buyershall have received a tax clearance letter for each of the Sellers from theMissouri Department of Revenue.

###  

# ARTICLE VISURVIVAL OF TERMS; INDEMNIFICATION

#  

6.1           Survival;Limitations. All of the terms and conditions of this Agreement, togetherwith the representations, warranties and covenants contained herein or in anyinstrument or document delivered or to be delivered pursuant to this Agreementand the agreements of the parties to indemnify each other as set forth in this Article VIshall survive the execution of this Agreement and the Closing Datenotwithstanding any investigation heretofore or hereafter made by or on behalfof any party hereto and shall continue for, and all claims with respect theretoshall be made three (3) years from the Closing Date (the **“Indemnification Period”**).

 

6.2           Escrowof Liquid Assets. Five Million Dollars ($5,000,000) of the Purchase Priceotherwise payable to Sellers for the Purchased Assets (the “Escrow Amount”)shall be maintained in an escrow account (the “Escrow Account”) in U.S. Bank TrustNational Association or such other bank as may be agreed to by theparties, pursuant to the terms and provisions of an Escrow Agreement to beexecuted at Closing substantially in the form attached hereto as Exhibit 6.2(the “Escrow Agreement”). The Escrow Amount shall be reduced to Two

 

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Million Dollars ($2,000,000)on the first anniversary of the Closing Date if at that time Buyer has nopending claims against the Escrow Account for any indemnity payments pursuantto Section 6.3 below. If Buyer has one or more pending claims against theEscrow Account on the first anniversary of the Closing Date, the Escrow Accountshall instead be reduced to the sum of Two Million Dollars ($2,000,000) plusthe indemnification amount of the claims of Buyer pending at that time. Oncethe claim or claims of Buyer pending after the first anniversary of the ClosingDate have been resolved, the Escrow Account shall be reduced to Two MillionDollars ($2,000,000). Any indemnity payment due to Buyers under Section 6.3shall be paid to Buyer solely from the Escrow Account in the manner provided inthe Escrow Agreement and Buyer shall have no recourse against Sellers withrespect to any indemnification obligations under Section 6.3 that exceedthe then current balance in the Escrow Account.

 

6.3           Indemnificationby the Sellers. After the Closing Date, subject to the limitations setforth in Sections 6.1 and 6.2 hereof, the Buyer and its Affiliates, successorsand assigns shall be indemnified and held harmless jointly and severally by theSellers against and in respect of any and all damage, loss, liability, cost orexpense (including, unless otherwise provided herein, the reasonable fees andexpenses of counsel and any tax liability resulting from any indemnity paymentmade hereunder) resulting from, or in respect of, any of the following to theextent the aggregate amount thereof exceeds Twenty-Five Thousand Dollars($25,000):

 

### (a)           Misrepresentationor Breach. Any misrepresentation or breach of warranty of any of theSellers or nonfulfillment of any obligation on the part of Sellers underthis Agreement, or contained in any Schedule or Exhibit to thisAgreement or from any misrepresentation in or omission from any certificate,Schedule, Exhibit, related agreement, Financial Statement or instrumentdelivered by or on behalf of the Sellers hereunder.

###  

### (b)           Taxes.All taxes of the Sellers.

###  

### (c)           GovernmentalAction. Any action by any Governmental Entity that negatively and materiallyimpacts the revenue or receivables of the Business after the Closing that is adirect result of the operation of the Business prior to Closing and that isspecifically applicable to the Business and not subject of a policy law, rule orregulation of general application.

###  

### (d)           EmployeeMatters. All costs, expenses or loss of revenue incurred by Buyer, theBusiness, or any of Buyer’s employee benefit plans after the Closing arisingout of or related to any of Sellers’ COBRA Continuees as provided in Section 4.8(d) hereofor any Seller defined benefit pension plan.

###  

### (e)           Easementsand Permits. All costs, expense or loss of revenue incurred by the Businessafter the Closing arising out of or related to the failure of the Sellers toobtain or record any easement, right of way, license or permit for the physicalplant of the Business.

###  

### (f)            RegulatedMaterials. All costs, expenses or loss of revenue incurred by the Businessafter the Closing related to the Release, use or storage of any RegulatedMaterials attributable to any period prior to Closing.

 

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### (g)           OtherClaims. Any Claim (as defined in Section 8.9(c)) arising out of the Businessor operation of the Business by Sellers or any Claim relating to the ExcludedLiabilities or Excluded Assets of the Business.

 

### (h)           RelatedExpenses. All expenses and costs, including but not limited to reasonablelegal fees, paid or incurred in connection with any such indemnified Claim.

 

6.4           Indemnificationby the Buyer. After the Closing Date, subject to the limitations set forthin Sections 6.1 hereof, the Sellers and their respective Affiliates,successors, representatives and assigns shall be indemnified and held harmlessby the Buyer against and in respect of any and all damage, loss, liability,cost or expense (including, unless otherwise provided herein, the reasonablefees and expenses of counsel and any tax liability resulting from any indemnitypayment made hereunder) resulting from, or in respect of, any of the followingto the extent the aggregate amount thereof exceeds Twenty Five Thousand Dollars($25,000).

 

### (a)           Misrepresentationor Breach. Any misrepresentation or breach of warranty of the Buyer ornonfulfillment of any obligation on the part of the Buyer under thisAgreement, or contained in any Schedule or Exhibit to this Agreementor from any misrepresentation in or omission from any certificate, Schedule,Exhibit, related agreement or instrument delivered by or on behalf of the Buyerhereunder.

 

### (b)           Taxes.All Taxes of the Buyer or of the Business attributable to any period on orafter the Closing Date.

 

### (c)           OtherClaims. Any Claim of a third party arising out of the operation of the Businessby Buyer or the Purchased Assets after the Closing Date or relating to theAssumed Liabilities.

 

### (d)           RelatedExpenses. All expenses and costs, including but not limited to legal fees,reasonably paid or incurred in connection with any such indemnified Claim.

 

## 6.5           ThirdParty Claims.

##  

### (a)           Generally.Except as otherwise provided in this Agreement, the following procedures shallbe applicable with respect to indemnification for third party Claims. Promptlyafter receipt by the party seeking indemnification hereunder (hereinafterreferred to as the **“**Indemnitee**”**) of notice of the commencement of any action or theassertion of any Claim, liability or obligation by a third party (whether bylegal process or otherwise), against which Claim, liability or obligationanother party to this Agreement (hereinafter the **“**Indemnitor**”**) is, or may be, required under this Agreement toindemnify such Indemnitee, the Indemnitee shall, if a claim thereon is to be,or may be, made against the Indemnitor, immediately notify the Indemnitorin writing of the commencement or assertion thereof and give the Indemnitor acopy of such Claim or process and all legal pleadings. The Indemnitee’s failureto give timely notice as required by this Section 6.5(a) shall notserve to eliminate or limit the Indemnitor’s obligation to indemnify theIndemnitee unless such failure prejudices the rights of the Indemnitor, andthen only to the extent of such prejudice. Moreover, the Indemnitee shall havethe right to take any actions or steps it deems reasonable to avoid theoccurrence of any prejudice to the rights of the Indemnitee. The Indemnitorshall have the right to assume the defense of such action with

 

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### counsel of reputable standing unless withrespect to such action (A) injunctive or equitable remedies have been soughttherein in respect of the Indemnitee or its business or (B) such action isfor an alleged amount of less than Five Thousand Dollars ($5,000); provided,that the Indemnitee and counsel to the Indemnitee shall have the right toparticipate in the defense of any and all Claims pursuant to the provisions of Section 6.5(b) hereof.The Indemnitor and the Indemnitee shall reasonably cooperate in the defense ofsuch Claims. If the Indemnitee shall be required by judgment or a settlementagreement to pay any amount in respect of any obligation or liability againstwhich the Indemnitor has agreed to indemnify the Indemnitee under thisAgreement, the Indemnitor shall immediately pay such amount to the Indemniteein order to enable the Indemnitee to make such payment, and otherwise shallpromptly reimburse the Indemnitee in an amount equal to the amount of suchpayment, in either case, plus all reasonable out-of-pocket expenses (includinglegal fees and expenses) incurred by such Indemnitee at the specific written requestof the Indemnitor, or as otherwise authorized by Section 6.5(b) hereof,in connection with such obligation or liability subject to this Article VI.No Indemnitor, in the defense of any such Claim, shall, except with the consentof the Indemnitee, consent to entry of any judgment or enter into anysettlement which does not include as an unconditional term thereof the givingby the claimant or plaintiff to such Indemnitee of a release from all liabilitywith respect to such Claim. In the event that the Indemnitor does not acceptthe defense of any matter for which it is entitled to assume such defense asprovided in this Section 6.5(a), the Indemnitee shall have the full rightto defend against any such Claim and shall be entitled to settle or agree to payin full such Claim in its sole discretion. With respect to any matter as towhich the Indemnitor is not entitled to assume the defense pursuant to theterms of this Section 6.5(a), the Indemnitee shall not enter into anysettlement for which an indemnification Claim will be made hereunder withoutthe approval of the Indemnitor, which shall not be unreasonably withheld.

 

### (b)           Counsel.An Indemnitee shall have the right to employ its own counsel, but the fees andexpenses of such counsel shall be at the expense of the Indemnitee, unless (i) theemployment of such counsel shall have been authorized in writing by theIndemnitor in connection with the defense of such Claim and the Indemnitor hasagreed in writing to pay such fees and expenses, or (ii) the Indemnitorshall not have employed counsel in the defense of such Claim (which counsel may bein-house counsel unless and until a lawsuit has been commenced). In either ofwhich events, such fees and expenses of not more than one additional counselfor the Indemnitee shall be borne by the Indemnitor.

 

## 6.6           OtherClaims.

##  

### (a)           Inthe event an Indemnitee should have a claim under this Article VI againstan Indemnitor that does not involve a third party Claim, the Indemnitee shallpromptly give notice (the “Indemnitee Notice”) and the details thereof,including copies of all relevant information and documents, to the Indemnitorwithin a period of thirty (30) days following the discovery of the claim by theIndemnitee (the “Claim Notice Period”). The failure by any Indemnitee to givethe Indemnitee Notice within the Claim Notice Period shall not impair theIndemnitee’s rights hereunder except to the extent that the Indemnitordemonstrates that it has been prejudiced thereby. The Indemnitor will notifythe Indemnitee within a period of twenty (20) days after the receipt of theIndemnitee Notice by the Indemnitor (the “Indemnity Response Period”) whetherthe Indemnitor disputes its liability to the Indemnitee under this Article VIwith

 

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### respect to such Claim. If the Indemnitornotifies the Indemnitee that it does not dispute the Claim described in suchIndemnitee Notice or fails to notify the Indemnitee within the IndemnityResponse Period whether the Indemnitor disputes the claim described in suchIndemnitee Notice, the actual damages as finally determined will beconclusively deemed to be a liability of the Indemnitor under this Article VIand the Indemnitor shall pay the amount of such damages to the Indemnitee ondemand. If the Indemnitor notifies the Indemnitee within the Indemnity ResponsePeriod that the Indemnitor disputes its liability with respect to such Claim,the Indemnitor and the Indemnitee will proceed in good faith to negotiate aresolution of such dispute, and if not resolved through negotiations within aperiod of thirty (30) days from the date of such notice or such longer periodas may be agreed to by the parties in writing, such dispute shall beresolved by arbitration in accordance with Section 6.6(b) hereof.

###  

### (b)           Anydispute required to be submitted to arbitration pursuant to this Section 6.6shall be finally and conclusively determined in accordance with the CommercialArbitration Rules of the American Arbitration Association (the “Rules ofArbitration”) then in effect by the decision of three (3) arbitrators (the“Board of Arbitration”) selected in accordance with the Rules ofArbitration. The Board of Arbitration shall meet in Kansas City, Missouri andshall render a decision in writing (concurred in by a majority of the membersof the Board of Arbitration) with respect to and stating the amount, if any,which the Indemnitor is required to pay to the Indemnitee in respect of theclaim made by the Indemnitee. The decision of the Board of Arbitration shall berendered as soon as practical following commencement of proceedings withrespect thereto. The Board of Arbitration shall cause its written decision tobe delivered to the Indemnitee and the Indemnitor. Any decision made by theBoard of Arbitration shall be final, binding and conclusive on the Indemniteeand the Indemnitor and entitled to be enforced to the fullest extent permittedby law and entered in any court of competent jurisdiction.

###  

The parties hereto herebyconsent to the jurisdiction of the foregoing Board of Arbitration and to thejurisdiction of any local, state or Federal court located in the State of NorthCarolina for the purpose of enforcing the decision or award of the Board ofArbitration or otherwise. The parties hereto agree that all service of process may bemade on any such party by personal delivery or by registered or certified mailaddressed to the appropriate party at the address for such party set forth inthis Agreement.

 

All fees, costs andexpenses of the prevailing party in any arbitration, including, but not limitedto, attorneys’ fees, shall be paid by the losing party and shall be awarded tothe prevailing party as part of the decision of the Board of Arbitration. Forpurposes hereof, a “Prevailing Party” shall mean the party which substantiallyprevails in its position in arbitration. Each and every arbitration proceedingcommenced pursuant to this Section 6.6(b) shall be consolidated withany arbitration proceedings simultaneously or previously commenced (but notconcluded) under this Section 6.6(b).

 

6.7           ContinuedLiability for Indemnity Claims. The liability of any Indemnitor hereunderwith respect to claims hereunder shall continue for so long as any Claims forindemnification may be made hereunder pursuant to this Article VIand, with respect to any such indemnification Claims duly and timely made,thereafter until the Indemnitor’s liability therefore is finally determined andsatisfied.

 

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# ARTICLE VIITERMINATION AND ABANDONMENT

#  

7.1           Methodsof Termination. This Agreement may be terminated and the transactionsherein contemplated may be abandoned at any time:

 

### (a)           Bymutual written consent of the Buyer and the Sellers.

###  

### (b)           Bythe Buyer if as of the Closing Date any of the conditions specified in Article Vhereof have not been satisfied (and remain so unsatisfied for more than twenty(20) days after the Buyer has notified the Sellers in writing thereof) or if anyof the Sellers are otherwise in default in any material respect under thisAgreement (and remains in default for more than twenty (20) days after the Buyerhas notified the Sellers in writing of such default) or if at any time prior tothe Closing Date it becomes apparent to the Buyer (on reasonable grounds) that (i) anyof the Sellers will be unable to satisfy one or more of the representations andwarranties in Article II hereof or one or more of the covenants oragreements in Articles IV or V hereof, or (ii) any of the conditionscontained in Article V hereof will not be satisfied.

###  

### (c)           Bythe Sellers if as of the Closing Date any of the conditions specified in Article Vhereof have not been satisfied (and remain so unsatisfied for more than twenty(20) days after the Sellers have notified the Buyer in writing thereof) or ifthe Buyer is otherwise in default in any material respect under this Agreement(and remains in default for more than twenty (20) days after the Sellers havenotified the Buyer in writing of such default) or if at any time prior to theClosing Date it becomes apparent to the Sellers (on reasonable grounds) that (i) theBuyer will be unable to satisfy one or more of its representations andwarranties in Article III hereof or one or more of the covenants oragreements in Article IV or V hereof, or (ii) any of the conditionscontained in Article V hereof will not be satisfied.

###  

### (d)           Byeither party in the event the Closing has not occurred by July 3, 2006,unless such failure to close shall be due to a breach of this Agreement by theparty seeking to terminate the Agreement.

###  

### (e)           Bythe Buyer if a material adverse change shall be shown or indicated (in the solediscretion of the Buyer) in any of the Financial Statements delivered after thedate hereof or otherwise with respect to any of the conditions to Closing setforth in Section V hereof, and written notice of termination of thisAgreement shall have been given by the Buyer within thirty (30) business daysof the Buyer’s receipt of such Financial Statements or the Buyer’s discovery ofsuch material adverse change.

###  

### (f)            Bythe Sellers, if prior to the Closing, any Regulated Material is Released orfound to have been Released or contained or present on or in any property usedin connection with the past or present operation of the Business, and the costof the required assessment and remediation activities requested, specified ordirected by the applicable Governmental Entities having jurisdiction or asotherwise required by applicable Environmental Laws in order to obtain fromsuch Governmental Entity the highest level of a “no further action” or “spillinactivation” letter or similar designation with respect to each such environmentalcontamination exceeds Five Hundred Thousand Dollars ($500,000).

 

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### (g)           Bythe Buyer if the settlements or resolutions with any Governmental Entity,including but not limited to the MPSC, FCC, NECA, USAC or KCC, of any issuesthat have been or can be raised or are related to or arising out of (i) anyof the allegations contained in the Complaint of the Staff of the MPSC pendingin Case No. TC 2005-0357 before the Public Service Commission of the Stateof Missouri or (ii) any over-earnings of the Business prior to the ClosingDate are not satisfactory to Buyer in its sole discretion or negatively affectthe revenues of the Business after the Closing Date.

###  

### (h)           Inthe event of any failure to perform as described in this Section 7.1,the non-breaching party shall have such remedies for breach of contract as areallowed by law in addition to or in substitution of the right of termination.

###  

7.2           ProcedureUpon Termination. If this Agreement is terminated as provided herein:

 

Each party shall aspromptly as practicable redeliver to the party furnishing the same, all data,information and other written material (including all copies thereof) of anyother party relating to the transactions contemplated hereby, whether obtainedbefore or after the execution hereof.

 

All information receivedby any party hereto with respect to the business of any other party (other thaninformation which is a matter of public knowledge or which has heretofore beenor is hereafter published in any publication for public distribution or filedas public information with any governmental authority) shall not at any time beused by such party, or disclosed to third parties.

 

7.3           Ifthis Agreement is terminated for any reason other than as a result of Buyer’sfailure to perform as provided in Section 7.1(c) and if thepurchase price that the Buyer is willing to pay the Sellers for the PurchasedAssets is greater than Twenty-Five Million Dollars ($25,000,000) at the time ofthe termination of this Agreement, then upon termination of this Agreement Sellersshall make payment to the Buyer in an amount equal to the Buyer’s third partyout-of-pocket costs incurred in connection with the transaction contemplated bythis Agreement. The Sellers shall be allowed thirty days after receipt ofnotice from Buyer of a change in the purchase price to decide whether or not toaccept the change in the purchase price. If within eighteen (18) months afterthe termination of this Agreement, Sellers consummate a Competing Transaction,then Sellers shall also make payment to Buyer, concurrently with theconsummation of such Competing Transaction (via wire or certified check), in anamount equal to One Million Dollars ($1,000,000).

 

# ARTICLE VIIIMISCELLANEOUS AND GENERAL

#  

8.1           Paymentof Expenses. Except as provided in Section 7.3, whether or not thetransactions contemplated by this Agreement shall be consummated, each partyhereto shall pay its own expenses incident to preparing for, entering into andcarrying out this Agreement and the consummation of the transactionscontemplated hereby.

 

8.2           Modificationor Amendment. The parties hereto may modify or amend this Agreement,by written agreement executed and delivered by duly authorized officers of therespective parties.

 

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8.3           Waiverof Conditions. The conditions to each party’s obligations to consummate thetransactions contemplated by this Agreement are for the sole benefit of suchparty and may be waived in writing by such party in whole or in part tothe extent permitted by applicable law.

 

8.4           Counterparts.For the convenience of the parties hereto, this Agreement may be executedin any number of counterparts, each such counterpart being deemed to be anoriginal instrument, and all such counterparts shall together constitute thesame agreement.

 

8.5           GoverningLaw; Dispute Resolution. This Agreement shall be governed by and construedin accordance with the laws of the State of North Carolina, without givingeffect to the principles of conflicts of law thereof; provided, however, thatthis Agreement shall be interpreted, construed and applied in accordance withthe language herein and the intent of the parties ignoring any presumptions, rules orconstruction or similar rules under the law of the State of North Carolinaor any other state. Unless otherwise provided, any and all disputes arisingunder this Agreement may, but are not required to be adjudicated in the stateor federal courts located in the State of Missouri and each party consents tothe nonexclusive jurisdiction of such courts.

 

8.6           Notices.Any notice, request, instruction or other document to be given hereunder by anyparty to the other parties shall be in writing and delivered personally or sentby registered or certified mail, postage prepaid, or by facsimile transmission(with a confirming copy sent by overnight courier), as follows:

 

### (a)           Ifto Sellers:

###  

### Terrence PeckLocal Exchange Company, LLC40 Park RoadIslamorada, FL 33036

###  

with a copy to:

 

### Randall Lowe, Esq.Davis Wright Tremaine LLP1500 K Street NWWashington, DC 20005Fax: (202) 508-6699

###  

### (b)           Ifto Buyer:

###  

Walter E. Leach, Jr.Executive Vice President, CorporateDevelopmentFairPoint Communications, Inc.521 E. Morehead Street, Suite 250Charlotte, NC 28202Fax:  (704) 344-8121

 

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with a copy to:

 

Susan L. Sowell, Esq.Assistant General CounselFairPoint Communications, Inc.521 East Morehead Street, Suite 250Charlotte, NC  28202Fax: (704) 344-1594

 

or to such other persons or addresses as may bedesignated in writing by the party to receive such notice.

 

8.7           EntireAgreement; Assignment. This Agreement (including the Schedules and Exhibitshereto) constitutes the entire agreement between the parties with respect tothe subject matter hereof and supersedes all other prior agreements andunderstandings, written or oral, between the parties with respect thereto. Theparties agree and acknowledge that (i) this Agreement has not been enteredinto under time pressure, and that all parties have had an adequate opportunityto review this Agreement with counsel, (ii) no oral assurances have beengiven by any party that this Agreement is an interim agreement or that a morecomprehensive Agreement is or will be forthcoming, (iii) there are no oralconditions or promises that supplement or modify the Agreement, and (iv) thisSection 8.7 does not constitute “boilerplate,” but rather is a criticalsubstantive provision of the Agreement. This Agreement may not be assignedby any party (by operation of law or otherwise) without the written consent ofthe other parties hereto, provided however, that no consent from anyparty shall be required for the assignment in whole or in part of theBuyer’s rights hereunder to any Affiliate or Affiliates of the Buyer.

 

8.8           Partiesin Interest. This Agreement shall be binding upon and inure solely to thebenefit of each party hereto and its respective successors and assigns. Nothingin this Agreement, express or implied, other than the right to receive theconsideration payable pursuant to Article I hereof, is intended to orshall confer upon any other person any rights, benefits or remedies of anynature whatsoever under or by reason of this Agreement.

 

8.9           CertainDefinitions. As used herein:

 

### (a)           An“Affiliate” of, or a person “affiliated” with, a specific person is a personthat directly, or indirectly through one or more intermediaries, controls, oris controlled by, or is under common control with, the person specified.

###  

### (b)           “AssumedContracts” means the following contracts, obligations, understandings orcommitments (whether written or oral) the Sellers to the extent same relate to

 

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### the Business: (i) all contracts entered into prior to the date hereof which (A) areset forth on Schedule 1.1(e) and (B) for which consent toassignment (if required) has been obtained at or prior to the Closing, (ii) allcontracts entered into by Sellers from and after the date hereof, provided theBuyer has consented in writing to the execution of such contract or suchcontract is specifically permitted under Section 4.2 hereof.

###  

### (c)           “Claim”shall mean any action, written claim, complaint, lawsuit, written demand, suit,notice of a violation, litigation, proceeding, arbitration or other disputenoticed in writing or otherwise, whether civil, criminal, administrative orotherwise, by corporation, partnership, Governmental Entity, entity, person,corporation, partnership, organization or joint venture.

###  

### (d)           “GovernmentalEntity” shall mean any federal, state or local government or any court,tribunal, administrative agency or commission or other governmental or otherregulatory authority or agency, including the MPSC, KCC or FCC and other publicutility or service commission or similar agency.

###  

### (e)           “Lien”means any lien, encumbrance, pledge, mortgage, security interest, claim, lease,charge, option, right of first refusal, easement, servitude, or transferrestriction of any kind, character or nature.

###  

### (f)            “PermittedLiens” shall mean any (i) platting, subdivision, zoning, building andother similar legal requirements relating to land which are not violated by thebuildings, structures and other improvements located thereon, (ii) easements,restrictive covenants, rights-of-way, leases, encroachments and otherencumbrances and agreements (other than contracts or options pursuant to whichany property owned by either Seller is or may be required to be sold),whether or not of record, (iii) reservations of coal, oil, gas, mineralsand mineral interests, whether or not of record, and (iv) Liens for taxesand other governmental charges, assessments or fees which are not yet due andpayable.

###  

8.10         Validity.The invalidity or unenforceability of any provision of this Agreement shall notaffect the validity or enforceability of any other provisions of thisAgreement, each of which shall remain in full force and effect.

 

8.11         Captions;Interpretation. The Article, Section and paragraph captions herein arefor convenience of reference only, do not constitute part of thisAgreement and shall not be deemed to limit or otherwise affect any of theprovisions hereof. No party shall be deemed to have been the drafter of thisAgreement, which is the product of detailed, arm’s length negotiations betweenthe parties and their respective counsel.

 

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IN WITNESS WHEREOF, the partieshereto have caused this Agreement to be executed by their respective dulyauthorized officers as of the date first above written.

 
|   | FAIRPOINT  COMMUNICATIONS, INC.        |
|--------|---------------------------------------------|
|   |                                        |
|   | By:                                         | /s/ Walter  E. Leach, Jr. |   |
|   | Name:                                       | Walter E. Leach, Jr. |   |
|   | Title:                                      | Executive  Vice President Corporate Development |   |
|   |                                        |
|   |                                        |
|   | LOCAL  EXCHANGE COMPANY LLC                 |
|   |                                        |
|   | By:                                         | /s/ Terrence  Peck |   |
|   | Name:                                       | Terrence  Peck |   |
|   | Title:                                      | Managing  Member |   |
|   |                                        |
|   |                                        |
|   | CASS COUNTY  TELEPHONE LIMITED  PARTNERSHIP |
|   |                                        |
|   | By:                                         | /s/ Terrence  Peck |   |
|   | Name:                                       | Terrence  Peck |   |
|   | Title:                                      | Managing  Member GP |   |
|   |                                        |
|   |                                        |
|   | LEC LONG  DISTANCE, INC.               |
|   |                                        |
|   | By:                                         | /s/ Terrence  Peck |   |
|   | Name:                                       | Terrence  Peck |   |
|   | Title:                                      | President |   |
|        |                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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