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Exhibit 10.1  


STOCK PURCHASE AGREEMENT  


 BY AND BETWEEN  


 ADVANCED TELCOM GROUP, INC.  


 AND  


 ESCHELON TELECOM, INC.  


 October 13, 2004  


 



  








 
 

TABLE OF CONTENTS    
    



	ARTICLE I    DEFINITIONS	 	1
	

 	
 	

1.1	

Definitions	
 	

1
	 	 	1.2	Construction	 	6
	

ARTICLE II    PURCHASE AND SALE OF THE SHARES	
 	

6
	

 	
 	

2.1	

Purchase and Sale	
 	

6
	 	 	2.2	Consideration	 	6
	 	 	2.3	Closing	 	7
	 	 	2.4	Deliveries by the Seller	 	7
	 	 	2.5	Deliveries by the Purchaser	 	7
	 	 	2.6	Retained Assets	 	7
	 	 	2.7	Retained Liabilities	 	7
	 	 	2.8	Minimum Net Working Capital	 	7
	

ARTICLE III    RELATED MATTERS	
 	

8
	

 	
 	

3.1	

Use of Names	
 	

8
	 	 	3.2	No Ongoing or Transition Services	 	8
	

ARTICLE IV    REPRESENTATIONS AND WARRANTIES OF THE SELLER	
 	

8
	

 	
 	

4.1	

Organization and Qualification.	
 	

8
	 	 	4.2	Authorization; Enforceability	 	8
	 	 	4.3	Capital Stock	 	9
	 	 	4.4	Ownership of the Shares	 	9
	 	 	4.5	No Violation or Conflict	 	9
	 	 	4.6	Financial Statements	 	9
	 	 	4.7	Accounts Receivable	 	9
	 	 	4.8	Contracts	 	9
	 	 	4.9	Customers	 	9
	 	 	4.10	Suppliers and Vendors	 	10
	 	 	4.11	Real Property	 	10
	 	 	4.12	Assets	 	10
	 	 	4.13	Permits	 	10
	 	 	4.14	Intellectual Property	 	10
	 	 	4.15	Labor Matters	 	10
	 	 	4.16	Employee Benefit Plans	 	10
	 	 	4.17	No Other Agreements to Purchase	 	10
	 	 	4.18	No Known Material Adverse Effect	 	10
	 	 	4.19	Brokers	 	11
	 	 	4.20	Tax Matters	 	11
	

ARTICLE V    REPRESENTATIONS AND WARRANTIES OF THE PURCHASER	
 	

11
	

 	
 	

5.1	

Organization and Qualification	
 	

11
	 	 	5.2	Authorization; Enforceability	 	11
	 	 	5.3	No Violation or Conflict	 	11
	 	 	5.4	Investigation	 	11
	 	 	5.5	Brokers	 	12
	

ARTICLE VI    COVENANTS	
 	

12
	

 	
 	

6.1	

Performance	
 	

12
	 	 	6.2	Regulatory and Other Authorizations; Notices and Consents; Etc	 	12
	 	 	6.3	Conduct of ATI Business Prior to the Closing	 	12
	 	 	 	 	 	 









	 	 	6.4	Access	 	12
	 	 	6.5	Notification	 	13
	 	 	6.6	Exclusivity	 	13
	 	 	6.7	Financing	 	13
	 	 	6.8	Certain Tax Matters	 	13
	

ARTICLE VII    EMPLOYEE MATTERS	
 	

17
	 	 	7.1	Employment	 	17
	 	 	7.2	WARN	 	18
	 	 	7.3	Excluded Employees	 	19
	 	 	7.4	Past Service	 	19
	 	 	7.5	ATI Benefit Plan	 	19
	

ARTICLE VIII    CONDITIONS PRECEDENT TO CLOSING; TERMINATION	
 	

19
	

 	
 	

8.1	

Conditions Precedent to the Obligations of the Purchaser	
 	

19
	 	 	8.2	Conditions Precedent to the Obligations of the Seller	 	20
	 	 	8.3	Termination	 	21
	

ARTICLE IX    INDEMNIFICATION	
 	

22
	

 	
 	

9.1	

Survival	
 	

22
	 	 	9.2	Indemnification	 	22
	 	 	9.3	Procedures	 	22
	 	 	9.4	Calculation of Damages	 	23
	 	 	9.5	Assignment of Claims	 	24
	 	 	9.6	Fraud; Intentional Misrepresentation	 	24
	 	 	9.7	Sole Remedy	 	24
	

ARTICLE X    MISCELLANEOUS	
 	

24
	

 	
 	

10.1	

Notices	
 	

24
	 	 	10.2	Entire Agreement	 	25
	 	 	10.3	Binding Effect	 	25
	 	 	10.4	Assignment	 	25
	 	 	10.5	Modifications and Amendments	 	25
	 	 	10.6	Waivers and Consents	 	26
	 	 	10.7	No Third Party Beneficiary	 	26
	 	 	10.8	Severability	 	26
	 	 	10.9	Publicity	 	26
	 	 	10.10	Governing Law; Jurisdiction	 	26
	 	 	10.11	Force Majeure	 	27
	 	 	10.12	Execution by Facsimile; Counterparts	 	27
	 	 	10.13	Headings and Captions	 	27
	 	 	10.14	Expenses	 	27
	 	 	10.15	Interpretation	 	27
	 	 	10.16	Further Assurances	 	27




 
 

EXHIBITS AND SCHEDULES    
    



	Exhibit A	 	GECC Guaranty
	

Schedule 2.6(b)	
 	

Retained Assets
	Schedule 2.7	 	Retained Liabilities
	Schedule 4.6	 	Financial Statements
	Schedule 4.11(a)	 	Leased Real Property
	Schedule 4.13	 	Permits
	Schedule 4.14	 	Intellectual Property
	Schedule 4.15	 	Labor Matters
	Schedule 4.16	 	Employee Benefit Plans
	Schedule 7.1(f)	 	Accrual of Vacation, Sick Time and Floating Holidays
	Schedule 8.1(b)	 	The Seller's Consents and Approvals
	Schedule 8.1(f)	 	EBITDA
	Schedule 8.2(b)	 	The Purchaser's Consents and Approvals











 
 

STOCK PURCHASE AGREEMENT  
    


        THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of October 13, 2004 by and between Advanced TelCom Group, Inc., a Delaware corporation (the "Seller"), and Eschelon
Telecom, Inc., a Delaware corporation (the "Purchaser"). 


        WHEREAS, the Seller owns all of the issued and outstanding shares of common stock, par value $0.001 per share (the  "Shares"), of Advanced TelCom, Inc., a
Delaware corporation, ("ATI"); 


        WHEREAS, ATI owns all of the issued and outstanding shares of common stock, par value $0.001 per share (the "SCS
Shares"), of Shared Communications Systems, Inc., an Oregon corporation ("SCS" and, together with ATI, the  "Companies"); 


        WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Seller, the Shares on the terms and
conditions set forth in this Agreement; 


        WHEREAS, the Purchaser has delivered to the Seller an earnest money payment in the amount of $1.5 million (the  "Earnest Money"); 



        WHEREAS, simultaneously herewith, GE Business Productivity Solutions, Inc., a Georgia corporation
("GEBPS"), and the Purchaser have entered into an asset purchase agreement (the "Asset Purchase
Agreement") pursuant to which the Purchaser will acquire substantially all of the assets of GEBPS; and 


        WHEREAS, NTFC Capital Corporation, a Delaware corporation ("NTFC") owns 6,780,541 shares
of the Purchaser's Series A Preferred Stock, par value $0.01 per share (the "Eschelon Preferred Shares"); and 



        WHEREAS, simultaneously herewith, NTFC and the Purchaser have entered into a redemption agreement (the "Eschelon
Preferred Shares Redemption Agreement"), pursuant to which the Purchaser will purchase the Eschelon Preferred Shares from GECC (or one or more of its Affiliates). 


        NOW, THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 


 
 

ARTICLE I    
    
    DEFINITIONS    
    


        1.1    Definitions.    In addition to terms defined elsewhere in this Agreement, the following terms when used in this
Agreement shall have the respective meanings set forth below: 


        "2003 Audit" has the meaning set forth in Section 8.1(f). 


        "2003 Financial Statements" has the meaning set forth in Section 4.6. 


        "2004 Interim Financial Statements" has the meaning set forth in Section 4.6. 


        "2004 Review" has the meaning set forth in Section 8.1(f). 



        "Accounts Receivable" means all of the Companies' accounts and notes receivable from any Person. 


        "Affiliate" means, with respect to a specified Person, any other Person which, directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes, with respect to the specified Person: (a) any other
Person which beneficially owns or holds 10% or more of the outstanding voting securities or other securities convertible into voting securities of such Person, (b) any other Person of which the
specified Person beneficially owns or holds 10% or more of the outstanding voting securities or other securities convertible into voting securities, or (c) any director, officer or employee of
such Person. 


        "Agreement" has the meaning set forth in the Preamble. 







 



        "Asset Purchase Agreement" has the meaning set forth in the recitals to this Agreement. 


        "Assets" has the meaning set forth in Section 4.12(a). 


        "ATI" has the meaning set forth in the recitals to this Agreement. 


        "ATI Contracts" means all material Customer Contracts, Real Property Leases and Supplier Contracts. 



        "ATI Employees" has the meaning set forth in Section 7.1. 


        "Business" means the business of providing telecommunications products and services to small and mid-sized business customers
primarily in California, Nevada, Oregon and Washington. 


        "Business Day" means any day other than Saturday, Sunday or any other day on which banks are required or authorized to be closed in the
city of New York, New York. 


        "Cash" means all cash and cash equivalents (including marketable securities and short-term investments) on hand or in banks or
other depositories. 


        "Claim" has the meaning set forth in Section 9.3(a). 


        "Closing" has the meaning set forth in Section 2.3. 


        "Closing Date" has the meaning set forth in Section 2.3. 


        "Code" means the Internal Revenue Code of 1986, as amended. 


        "Companies" has the meaning set forth in the recitals to this Agreement. 


        "Confidentiality Agreement" means the confidentiality agreement, dated as of August 6, 2004, by and between the Purchaser and GE
Vendor Financial Services, an Affiliate of the Seller. 


        "Contract" means any contract, plan, undertaking, understanding, agreement, license, lease, note, mortgage or other binding commitment,
whether written or oral. 


        "Court" means any court or arbitration tribunal of the United States, any domestic state, or any foreign country, and any political
subdivision thereof. 


        "Customer Contracts" means all written sales orders, master services agreements, customer contracts or other similar Contracts entered
into by either Company with all customers of the Companies used solely in the operation of the Business. 


        "Damages" has the meaning set forth in Section 9.2(a). 


        "Database" means all data and other information recorded, stored, transmitted and retrieved in electronic form. 


        "Earnest Money" has the meaning set forth in the recitals of this Agreement. 



        "EBITDA" means, during the measuring period, consolidated net income (including gain from extraordinary items) of the Companies  less (1) interest income and
(2) gain on sale of assets, plus (1) provision for
income taxes recorded during such measuring period or allocated or allocable to the Companies with respect to such measuring period, (2) interest expense, (3) depreciation and
(4) amortization, in each case as determined in accordance with the past practice and procedures of GECC. 


        "Employee Plans" has the meaning set forth in Section 4.16. 


        "Eschelon Preferred Shares" has the meaning set forth in the recitals of this Agreement. 


2







 



        "Eschelon Preferred Shares Redemption Agreement" has the meaning set forth in the recitals of this Agreement. 



        "Excluded Employees" has the meaning set forth in Section 7.3. 


        "Financial Statements" has the meaning set forth in Section 4.6. 


        "GE" means General Electric Company, a New York corporation. 


        "GEBPS" has the meaning set forth in the recitals of this Agreement. 


        "GECC" means General Electric Capital Corporation, a Delaware corporation. 


        "GECC Guaranty" means the Guaranty of GECC, substantially in the form attached hereto as  Exhibit A. 


        "Governmental Authority" means any governmental or legislative agency or authority (other than a Court) of the United States, any domestic
state, or any foreign country, and any political subdivision or agency thereof, and includes any authority having governmental or quasi-governmental powers, including any administrative agency or
commission. 


        "Indemnification Statement" has the meaning set forth in Section 6.8(d). 


        "Indemnified Party" has the meaning set forth in Section 9.3(a). 


        "Indemnifying Party" has the meaning set forth in Section 9.3(a). 



        "Intellectual Property" means, in each case used solely in the operation of the Business, all: (a) Patents; (b) trademarks,
service marks, domain names and internet protocol addresses; (c) copyrights; (d) Software; (e) trade secrets and confidential, technical or business information;
(f) Databases proprietary to any Seller; (g) copies and tangible embodiments of all the foregoing, in whatever form or medium; (h) all rights to obtain and rights to apply for
patents, and to register trademarks and copyrights; (i) all rights under any licenses, registered user agreements, technology or materials, transfer agreements, and other agreements or
instruments with respect to items in (a) to (h) above; (j) all goodwill associated therewith; (k) all applications and registrations therefor; and (l) all rights to
sue and recover and retain damages and costs and attorneys' fees for present and past infringement of any rights appurtenant to the Intellectual Property. 


        "Law" means all laws, statutes, ordinances and Regulations of any Governmental Authority including all decisions of Courts having the
effect of law in each such jurisdiction. 


        "Leased Real Property" means, in each case used solely in the operation of the Business, the real property leased by either Company as a
tenant pursuant to the Real Property Leases in locations at which either Company has employees or switches, together with, to the extent leased by either Company, all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all fixtures, systems, equipment and items of personal property of either Company attached or appurtenant thereto and all easements,
licenses, rights and appurtenances relating to the foregoing. 


        "Licensed Intellectual Property" means all Intellectual Property licensed or sublicensed by either Company from a third party. 


        "Liens" means any mortgage, pledge, security interest, attachment, encumbrance, lien (statutory or otherwise), option, conditional sale
agreement, right of first refusal, first offer, termination, participation or purchase, or charge of any kind (including any agreement to give any of the foregoing),  provided, however, that the term "Lien" shall not include: (a) Liens for Taxes, assessments and
charges any Governmental Authority due and being contested in good faith and diligently by appropriate proceedings; (b) servitudes, easements, restrictions,
rights-of-way and other similar rights in real property or any interest therein, provided the same are not of such nature as to materially adversely 


3







 



affect
the use of the property subject thereto; (c) Liens with respect to leasehold interests and licensed products; (d) Liens for Taxes either not due and payable or due but for which
notice of assessments has not been given; (e) undetermined or inchoate Liens, charges and privileges incidental to current construction or current operations and statutory Liens, charges,
adverse claims, security interests or encumbrances of any nature whatsoever claimed or held by any Governmental Authority which have not at the time been filed or registered against the title to the
asset or served upon the Seller pursuant to Law or which relate to obligations not due or delinquent; (f) assignments of insurance provided to landlords (or their mortgagees) pursuant to the
terms of any lease, and Liens or rights reserved in any lease for rent or for compliance with the terms of such lease; (g) security given in the ordinary course of the operation of the Business
to any public utility, municipality or Government Authority in connection with the operation of the Business, other than security for borrowed money; (h) deposits or pledges made in connection
with, or to secure payment of, workers' compensation, unemployment insurance, old age pension or other social security programs mandated under applicable Laws; (i) restrictions on transfer of
securities imposed by applicable state and federal securities Laws; (j) purchase money liens incurred in the ordinary course consistent with past practices; and (k) Liens of carriers,
warehousemen, mechanics, materialmen and repairmen incurred in the ordinary course of business consistent with past practices. 


        "Litigation" means any suit, action, arbitration, cause of action, claim, complaint, criminal prosecution, investigation, inquiry, demand
letter, governmental or other administrative proceeding, whether at law or at equity, before or by any Court, Governmental Authority, arbitrator or other tribunal. 



        "Material Adverse Effect" means any circumstance, change in, or effect on the Business or the Assets that, individually or in the
aggregate with any other circumstances, changes in, or effects on the Business, is materially adverse to the business, operations, assets, results of operations or financial condition of the Business
or the Assets, taken as a whole, provided that the term "Material Adverse Effect" shall not include any circumstance, change in, or effect resulting from (a) changes in general economic
conditions or the financial markets, (b) the announcement or performance of this Agreement and the transactions contemplated hereby, (c) general changes or developments in the industry
in which either Company operates, (d) changes in any tax laws or regulations or applicable accounting regulations or principles, (e) changes caused by conditions or terms imposed by
third parties in connection with obtaining any authorization, consent, order, approval, guarantee, bond or estoppel certificate or (f) changes in general legal, regulatory, political, economic
or business conditions that generally affect the industry in which either Company conducts business or in which the Business operates. 


        "Net Working Capital" has the meaning set forth in Section 2.8. 



        "Non-Assumable Claim" has the meaning set forth in Section 9.3(f). 


        "NTFC" has the meaning set forth in the recitals to this Agreement. 


        "Order" means any judgment, order, writ, injunction, ruling, stipulation, determination, award or decree of or by, or any settlement under
the jurisdiction of, any Court or Governmental Authority. 


        "Owned Intellectual Property" means all Intellectual Property in and to which either Company has, or has a right to hold, right, title and
interest. 


        "Patents" means all national (including the United States) and multinational statutory invention registrations, patents, patent
registrations and patent applications, including all reissues, divisions, continuations, continuations-in-part, extensions and reexaminations, and all rights therein provided
by multinational treaties or conventions and all improvements to the inventions disclosed in each such registration, patent or application. 


4







 



        "Permits" means, to the extent transferable under applicable Law, all rights of the Companies under permits, authorizations, approvals,
registrations and licenses issued by any Governmental Authority (and pending applications for the foregoing). 



        "Person" means any natural person, corporation, limited liability company, unincorporated organization, partnership, association, joint
stock company, joint venture, trust or any other entity. 


        "Potential Contributor" has the meaning set forth in Section 9.5. 


        "Pre-Closing Period" has the meaning set forth in Section 6.8(a). 


        "Pre-Closing Period Returns" has the meaning set forth in Section 6.8(d). 


        "Purchase Price" has the meaning set forth in Section 2.2. 


        "Purchaser" has the meaning set forth in the Preamble. 


        "Purchaser Tax Group" has the meaning set forth in Section 6.8(a). 


        "Purchaser Basket" has the meaning set forth in Section 9.2(b). 


        "Purchaser Flexible Benefit Plans" has the meaning set forth in Section 7.1(g). 


        "Real Property Leases" has the meaning set forth in Section 4.11(b). 


        "Regulation" means any rule or regulation of any Governmental Authority. 


        "Retained Assets" has the meaning set forth in Section 2.6. 


        "Retained Marks" has the meaning set forth in Section 2.6(c). 


        "Retained Liabilities" has the meaning set forth in Section 2.7. 


        "SCS" has the meaning set forth in the recitals to this Agreement. 


        "SCS Shares" has the meaning set forth in the recitals to this Agreement. 



        "Section 338(h)(10) Election" has the meaning set forth in Section 6.8(a). 


        "Seller" has the meaning set forth in the Preamble. 


        "Seller Basket" has the meaning set forth in Section 9.2(a). 


        "Seller Flexible Benefit Plans" has the meaning set forth in Section 7.1(g). 


        "Shares" has the meaning set forth in the recitals to this Agreement. 


        "Software" means, to the extent owned or licensed by either Company and used solely in the operation of the Business, any and all
(a) computer programs, (b) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (c) descriptions,
flow-charts and other work product used to design, plan, organize and develop any of the foregoing, (d) the technology supporting any Internet site(s) operated by or on behalf of
either Company and (e) all documentation, including user manuals and training materials, relating to any of the foregoing. 


        "Straddle Period" has the meaning set forth in Section 6.8(a). 


        "Straddle Period Returns" has the meaning set forth in Section 6.8(d). 


        "Subsidiary" of a specified Person means any other Person in which such Person owns, directly or indirectly, more than 50% of the
outstanding voting securities or other securities convertible into voting securities, or which may effectively be controlled, directly or indirectly, by such Person. 


5







 



        "Supplier Contracts" means all Contracts for the provision of products or services, including interconnection agreements, entered into
with either Company with any supplier of goods, services, materials or supplies used solely in the operation of the Business. 


        "Survival Date" has the meaning set forth in Section 9.1. 


        "Tangible Personal Property" means each item or distinct group of furniture, fixtures, equipment, switches, tools, supplies, vehicles and
other tangible personal property used solely in the operation of the Business and owned or leased by either Company, wherever located. 


        "Tax" means any and all federal, state, local, or foreign taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority or other taxing authority, including: taxes
or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, disability, social security, workers'
compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs' duties, tariffs, and similar charges, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, whether disputed or not and
including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person. 


        "Tax Claim" has the meaning set forth in Section 6.8(f). 


        "Tax Indemnified Party" has the meaning set forth in Section 6.8(f). 


        "Tax Indemnifying Party" has the meaning set forth in Section 6.8(f). 


        "Tax Returns" means returns, reports and information statements, including any schedule or attachment thereto, with respect to Taxes
required to be filed with the IRS or any other Governmental Authority or other taxing authority or agency, domestic or foreign, including consolidated, combined and unitary tax returns. 


        "Third Party Claim" has the meaning set forth in Section 9.3(b). 


        "Unrelated Accounting Firm" has the meaning set forth in Section 6.8(a). 


        1.2    Construction.    Unless the context requires otherwise: (a) the gender (or lack of gender) of all words
used in this Agreement includes the masculine, feminine and neuter; (b) references to Articles and Sections refer to Articles and Sections of this Agreement; (c) "include", "includes",
and "including" shall mean "including, without limitation"; (d) definitions used herein defined in the plural shall be deemed to include the singular as the context may require and definitions
used herein defined in the singular shall be deemed to include the plural as the context may require; and (e) references to
Schedules and Exhibits are to the Schedules and Exhibits attached to this Agreement, each of which is incorporated herein and made a part hereof for all purposes. 


 
 

ARTICLE II    
    
    PURCHASE AND SALE OF THE SHARES    
    


        2.1    Purchase and Sale.    Subject to the terms and conditions set forth in this Agreement, at the Closing, the
Seller agrees to sell, transfer and deliver to Purchaser, and Purchaser agrees to purchase, acquire and accept from the Seller, the Shares. 



        2.2    Consideration.    The aggregate consideration for the sale of the Shares to Purchaser shall be $45,480,500 (the  "Purchase
Price"). At the Closing (as herein defined), the Purchaser shall pay the Purchase Price (less the Earnest Money) to the Seller by wire
transfer of immediately available funds. 


6







 



        2.3    Closing.    Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Piper Rudnick LLP, 1251 Avenue of the Americas, 29th Floor, New York, New York, 10020, at 10:00 A.M. on
December 31, 2004 or at such other place or time or on such other date as the Seller and the Purchaser may mutually agree upon in writing (the day on which the Closing takes place being the  "Closing
Date"). 



        2.4    Deliveries by the Seller.    At the Closing, the Seller shall deliver or cause to be delivered to the Purchaser
(unless delivered previously) the following: 



        (a)   The
stock certificates representing all of the Shares, duly endorsed in blank or accompanied by stock powers duly executed in blank; and 


        (b)   All
documents, instruments and writings required to be delivered by the Seller at or prior to the Closing pursuant to this Agreement. 




        2.5    Deliveries by the Purchaser.    At the Closing, the Purchaser shall deliver or cause to be delivered to the
Seller (unless previously delivered) the following: 



        (a)   The
Purchase Price (less the Earnest Money) in accordance with Section 2.2 of this Agreement; and 


        (b)   All
documents, instruments and writings required to be delivered by the Purchaser at or prior to the Closing pursuant to this Agreement. 




        2.6    Retained Assets.    Prior to the Closing, ATI shall distribute to the Seller the following assets of the
Companies (the "Retained Assets") as part of a plan of complete liquidation of ATI within the meaning of Section 332 of the Code as provided in
Section 338(h)(10) of the Code and the Treasury regulations promulgated thereunder: 



        (a)   Cash;



        (b)   the
assets listed on Schedule 2.6(b); 



        (c)   all
tradenames, trademarks, identifying logos and service marks related to or employing any part or variation of the "GE" name, the name of any Subsidiary or Affiliate
of GE (other than the Companies and/or pursuant to any other agreement between any Subsidiary or Affiliate of GE and the Purchaser or any Affiliate of the Purchaser) or any similar tradename,
trademark, logo and service mark and any other tradenames, trademarks, identifying logos and service marks not used solely in connection with the Business (the "Retained
Marks"); and 


        (d)   any
other assets, rights, or properties not solely related to the Business. 




        2.7    Retained Liabilities.    Prior to the Closing, ATI shall transfer and/or assign to Seller the liabilities
described on Schedule 2.7 (the "Retained Liabilities"). 


        2.8    Minimum Net Working Capital.    Seller covenants that Net Working Capital on the Closing Date shall not be less
than negative $100,000. As used in this Section 2.8, "Net Working Capital" shall mean the sum of (A) the sum of (i) accounts
receivable plus (ii) unbilled revenue minus (B) the sum of (i) accounts payable, (ii) accrued carrier costs,
(iii) accrued customer billed and other taxes, (iv) accrued other and (v) current portion of capital leases. Each of the terms set forth in foregoing clauses (A) and
(B) shall be derived from line items presented on the balance sheet of the Company to be prepared consistent with the books and records of the Company and delivered by Seller at Closing. 


7







 


 
 

ARTICLE III    
    
    RELATED MATTERS    
    


        3.1    Use of Names.    



        (a)   It
is expressly agreed that the Purchaser shall acquire pursuant to this Agreement all of the Companies' rights, title or interest in the tradenames, trademarks,
identifying logos and service marks used solely in connection with the Business (excluding the Retained Marks). The Purchaser agrees that neither it nor any of its Affiliates shall make any use of the
Retained Marks from and after the Closing Date. Simultaneously with the Closing, without limiting the foregoing, the Purchaser shall remove any reference to the Retained Marks from premises,
letterhead, domain names and websites of the Companies. 


        (b)   The
Purchaser acknowledges the Seller's (and their respective Affiliates') rights in and title to the Retained Marks and agrees that it shall not do or cause to be done
any act that in any manner might infringe, or impair the validity, scope, or title in the Retained Marks. 



        (c)   In
the event the Purchaser or any Affiliate of the Purchaser violates any of its obligations under this Section 3.1, the Seller may proceed against it in Law or
in equity for such damages or other relief as a Court may deem appropriate. The Purchaser acknowledges that a violation of this Section 3.1 may cause the Seller irreparable harm that may not be
adequately compensated for by money damages. The Purchaser hereby agrees that in the event of any actual or threatened violation of this Section 3.1, the Seller shall be entitled, in addition
to other remedies that it may have, to a temporary restraining order and to a preliminary and final injunctive relief against the Purchaser or such Affiliate of the Purchaser to prevent any violations
of this Section 3.1, without the necessity of posting a bond. 




        3.2    No Ongoing or Transition Services    All data processing, accounting, insurance, banking, personnel, legal,
communications and other services provided to the Companies by the Seller or any Affiliate of the Seller, including any agreements or understandings (written or oral) with respect thereto, shall
terminate upon the Closing. 


 
 

ARTICLE IV    
    
    REPRESENTATIONS AND WARRANTIES OF THE SELLER    
    



        The Purchaser agrees and acknowledges that, except as expressly set forth in this Agreement, the Purchaser is acquiring the Companies and the Assets on an
"as-is, where-is" basis. As an inducement to the Purchaser to enter into this Agreement and to consummate the transactions contemplated hereby, the Seller represents and
warrants to the Purchaser as follows: 


        4.1    Organization and Qualification.    



        (a)   The
Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 



        (b)   ATI
is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. SCS is a corporation duly organized, validly existing
and in good standing under the laws of the state of Oregon. 




        4.2    Authorization; Enforceability.    



        (a)   The
Seller has the corporate power and authority to own, hold, lease and operate its properties and assets and to carry on its business as currently conducted. The
Seller has the corporate power and authority to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized and approved by the Seller and no other action on the part of the Seller is necessary in order to give effect thereto. This Agreement has been duly 



8







 

executed
and delivered by, and constitutes the legal, valid and binding obligations of the Seller, enforceable against the Seller, in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally and except that the availability of equitable remedies is subject to the discretion of
the court before which any proceeding therefor may be brought. 


        (b)   Each
Company has the corporate power and authority to own, hold, lease and operate its properties and assets and to carry on the Business as currently conducted. 




        4.3    Capital Stock.    



        (a)   There
are (i) 3,000 Shares of ATI issued and outstanding, all of which are owned by the Seller, and (ii) 3,000 shares of SCS Shares issued and outstanding,
all of which are owned by ATI. The Shares have been validly issued and are fully paid and non-assessable. There are no other shares of capital stock of ATI or SCS issued or outstanding.
There are no shares of capital stock of ATI or SCS held as treasury shares. There are not any outstanding securities convertible into, exchangeable for, or carrying the right to acquire, equity
securities of ATI or SCS, nor are there any subscriptions, warrants, options, rights or other arrangements or commitments which could obligate ATI or SCS to issue any shares of its capital stock or
other equity interests. 


        (b)   Other
than SCS, ATI does not own, directly or indirectly, any capital stock, membership interest or any other equity or debt securities of any corporation, firm,
partnership, limited liability company, joint venture, association or other entity. 




        4.4    Ownership of the Shares.    The Seller has good title to the Shares, and shall at the Closing own the Shares
free and clear of all Liens. 


        4.5    No Violation or Conflict.    None of the (a) execution and delivery of this Agreement by the Seller,
(b) consummation of the transactions contemplated by this Agreement by the Seller and (c) performance by the Seller of its obligations under this Agreement, will (i) conflict with
or violate the organizational documents of the Seller, ATI or SCS, as applicable, (ii) conflict with or violate any Law, Order or Permit applicable to the Seller, ATI or SCS or by which any
Asset is bound or (iii) violate any order,
injunction, decree, statute, rule or regulation applicable to the Seller, ATI or SCS, excluding from the foregoing clauses (ii) and (iii) such requirements, violations, conflicts,
defaults or rights which would not individually or in the aggregate have a Material Adverse Effect. 



        4.6    Financial Statements.    Attached hereto as Schedule 4.6
are (a) the unaudited balance sheet and related statements of income of the Companies for the period from May 15, 2003 through December 31, 2003 (the "2003
Financial Statements"); and (b) the unaudited balance sheet and related statements of income of the Companies for the nine month period ended September 30, 2004
(the "2004 Interim Financial Statements" and, together with the 2003 Financial Statements, collectively, the "Financial
Statements"). The Financial Statements have been prepared for internal management purposes from the books and records of the Companies. 


        4.7    Accounts Receivable.    ATI has made available to the Purchaser a list of the Accounts Receivable as of
September 20, 2004. All Accounts Receivable shall at the Closing be owned by the Companies free and clear of any Liens. 


        4.8    Contracts.    ATI has made available to the Purchaser a list of all written contracts and agreements related
solely to the operation of the Business, as of the date hereof, to which either Company is a party requiring payment or receipt by the Companies in excess of $25,000 per annum. 


        4.9    Customers.    ATI has made available to the Purchaser the names and addresses of substantially all of the
customers of the Companies as of August 4, 2004. ATI has made available to the Purchaser substantially all Customer Contracts. 


9







 



        4.10    Suppliers and Vendors.    ATI has made available the names and addresses of substantially all suppliers and
vendors of the Companies, as of the date hereof, from which the Companies received or licensed supplies, goods, services in calendar year 2004. ATI has made available to the Purchaser substantially
all Supplier Contracts. 


        4.11    Real Property.    



        (a)   Schedule 4.11(a) lists the street address of each parcel of Leased Real Property. 


        (b)   ATI
has made available to the Purchaser copies of all real property leases to which either Company is a party (the "Real Property
Leases") and all ancillary documents pertaining thereto in the possession of the Companies. 




        4.12    Assets.    



        (a)   Other
than the Assets owned by ATG and used solely in the operation of the Business that will be contributed to the Companies at or prior to Closing, either ATI or SCS
(i) owns, leases or has the legal right to use all of the assets (including Contracts) used solely in the operation of the Business (the  "Assets") and (ii) with respect to Assets that
are contractual rights, is a party to and enjoys the right to the benefits of all ATI Contracts. 


        (b)   Except
as set forth on Schedule 2.6(b), the Assets constitute all of the material properties, assets and rights
used solely in the operation of the Business. 


        (c)   All
of the Tangible Personal Property shall be owned by the Companies free and clear of any Liens as of the Closing. 




        4.13    Permits.    Schedule 4.13 lists, as of
October 6, 2004, all material Permits and all pending applications therefor obtained by ATI and SCS that are used solely in the operation of the Business. 



        4.14    Intellectual Property.    Schedule 4.14 sets forth, as
indicated therein, all of the material Owned Intellectual Property and the material Licensed Intellectual Property. Except as set forth on  Schedule 4.14 and other than the rights of software
licensors or developers in software related to such Intellectual Property, either ATI or SCS
owns or has the legal right to use all of its Intellectual Property and has a valid license to use all of its Licensed Intellectual Property. 



        4.15    Labor Matters.    Schedule 4.15 lists, as of the date
hereof, by identifying code, place of employment, current annual salary, bonuses, accrued vacation, the date of employment of each employee of ATI and each GEBPS employee that will be transferred to
ATI at or prior to the Closing. 


        4.16    Employee Benefit Plans.    Schedule 4.16 lists all
employee benefit plans (as defined in Section 3(3) of ERISA) and all bonus, stock or other security option, stock or other security purchase, stock or other security appreciation rights,
incentive, deferred compensation, retirement or supplemental retirement, severance, golden parachute, vacation, cafeteria, dependent care, medical care, employee assistance program, education or
tuition assistance programs, insurance and other similar fringe or employee benefit plans, programs or arrangements providing coverage for the benefit of any employee of ATI (each, an  "Employee Plan," and together, the "Employee Plans"). ATI has made available to the Purchaser an
accurate written summary of each Employee Plan. 


        4.17    No Other Agreements to Purchase.    No Person, other than the Purchaser pursuant to this Agreement, has been
granted by the Seller, ATI or SCS any written or oral agreement or option or any right or privilege capable of becoming an agreement or option for the purchase of the Shares or the purchase or
acquisition of any of the Assets, other than orders for goods or services accepted by ATI or SCS in the ordinary course of business, consistent with past practice. 


        4.18    No Known Material Adverse Effect.    To the actual knowledge of any of Dave O'Neill, Eric Russell and Dan
Wigger, there does not exist any event, fact or circumstance that has not been 


10







 



disclosed
to the Purchaser and which has resulted in or could be reasonably expected to result in a Material Adverse Effect. 


        4.19    Brokers.    Neither the Seller nor ATI has employed any financial advisor, broker or finder, and neither the
Seller nor ATI has not incurred nor will incur any broker's, finder's, investment banking or similar fees, commissions or expenses in connection with the consummation of the transactions contemplated
by this Agreement. 


        4.20    Tax Matters.    For U.S. federal income tax purposes, ATI currently is, and, for the taxable year which
includes the Closing Date, will be, a member of the affiliated group which includes the Seller, and such group will file a consolidated federal income tax return. 


 
 

ARTICLE V    
    
    REPRESENTATIONS AND WARRANTIES OF THE PURCHASER    
    



        In order to induce the Seller to enter into this Agreement and to consummate the transactions contemplated hereby, the Purchaser represents and warrants to the
Seller as follows: 


        5.1    Organization and Qualification.    The Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. 


        5.2    Authorization; Enforceability.    The Purchaser has the corporate power and authority to execute, deliver and
perform this Agreement. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein and therein have been duly authorized and approved by all
necessary corporate or other action by the Purchaser (including, without limitation, the Purchaser's Board of Directors). This Agreement has been duly executed and delivered by, and constitute the
legal, valid and binding obligations of, the Purchaser, enforceable against the Purchaser, in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding
therefor may be brought. 


        5.3    No Violation or Conflict.    None of (a) the execution and delivery by the Purchaser of this Agreement;
(b) consummation by the Purchaser of the transactions contemplated by this Agreement; or (c) the performance of this Agreement will (i) conflict with or violate the Certificate of
Incorporation or Bylaws of the Purchaser, or (ii) conflict with, violate or require consent or approval pursuant to any Law, Order or Permit applicable to the Purchaser or any note, loan
agreement, contract, or agreement to Purchaser is party or its properties or assets are bound. 



        5.4    Investigation.    The Purchaser acknowledges and agrees that it (i) has made its own inquiry and
investigation into, and, based thereon, has formed an independent judgment concerning the Companies, the Assets and the Business and (ii) has been furnished with or given adequate access to
such information about the Companies, the Assets and the Business as it has requested. The Purchaser further acknowledges and agrees that the only representations, warranties, covenants and agreements
made by the Seller are the representations, warranties, covenants, and agreements made in this Agreement and the Seller makes no express or implied representation or warranty with respect to the
Companies, the Assets, the Business or otherwise or with respect to any other information provided by the Seller or its Affiliates including as to (a) the operation of the Business by the
Purchaser after the Closing in any manner or (b) the probable success or profitability of the ownership, use or operation of the Business by the Purchaser after the Closing. The Purchaser has
not relied upon any other representations or other information made or supplied by or on behalf of the Seller of any its Affiliates. 


11









  





        5.5    Brokers.    The Purchaser has not employed any financial advisor, broker or finder, and the Purchaser has
not
incurred, and will not incur, any broker's, finder's, investment banking or similar fees, commissions or expenses in connection with the transactions contemplated by this Agreement. 


 
 

ARTICLE VI    
    
    COVENANTS    
    



        6.1    Performance.    Subject to the terms and conditions provided in this Agreement, each of the parties to this
Agreement shall exercise reasonable commercial efforts to take or cause to be performed and fulfilled those of the conditions precedent to its obligations to consummate the transactions contemplated
by this Agreement that are dependent upon its actions, including obtaining all necessary consents and approvals, to the end that the transactions contemplated hereby shall be fully and timely
consummated. 


        6.2    Regulatory and Other Authorizations; Notices and Consents; Etc.    



        (a)   The
Purchaser shall, and the Seller shall cause the Companies, to use their respective reasonable best efforts to obtain all authorizations, consents, orders and
approvals of all Governmental Authorities and other Persons that may be or become necessary for its execution and delivery of, and the performance of its obligations pursuant to, this Agreement and
shall cooperate fully with each other in promptly seeking to obtain all such authorizations, consents, orders and approvals. In addition, the Purchaser, at or prior to the Closing, shall use its
reasonable best efforts to cause all guaranties, bonds (whether performance, financial or otherwise) and letters of credit with respect to the operations of ATI, SCS or the Business by any Affiliates
of ATI (other than SCS) to be terminated and shall or shall cause an Affiliate of the Purchaser to guaranty such obligations and deliver such bonds and letters of credit as may be required with
respect thereto. 


        (b)   The
Purchaser shall, and the Seller shall cause ATI, to give promptly such notices to third parties and exercise commercially reasonable efforts to obtain such third
party consents and estoppel
certificates as are reasonably necessary in connection with the consummation of the transactions contemplated by this Agreement. 




        6.3    Conduct of ATI Business Prior to the Closing.    Between the date hereof and the Closing, except as expressly
required or permitted by this Agreement or unless the Purchaser shall otherwise agree in writing, the Seller shall cause the Companies to conduct Business only in the ordinary course of business
consistent with past practice and policies, including with respect to collection of Accounts Receivable and processing of accounts payables; provided,  however, it is understood and agreed that, at or prior the Closing, (i) all Cash of the Companies shall be distributed to the Seller,
(ii) certain GEBPS employees shall be transferred to ATI, (iii) certain Assets held by the Seller shall be transferred and/or contributed to ATI and (iv) intercompany debt shall
be transferred or distributed to the Seller. 


        6.4    Access.    



        (a)   From
the date hereof, during normal business hours and upon reasonable notice, the Seller shall cause ATI and each of ATI's officers, directors, employees, and agents
to: (i) afford the Purchaser's officers and employees and authorized agents, accountants, counsel and Jefferies & Co. (solely in its capacity as a financing source for the transactions
contemplated by this Agreement), to the extent they have agreed in writing to be bound by the terms of the Confidentiality Agreement, reasonable access, during normal business hours, to the offices,
properties, plants, other facilities, books and records of ATI and SCS and to those officers, directors, employees, and agents of ATI and SCS who have any material knowledge relating to the Business;
and (ii) furnish to such parties such information regarding ATI, SCS and/or the Business 



12







 

as
the Purchaser and its agents may from time to time reasonably request, in the case of both clauses (i) and (ii), including for the purposes of completing audits. 


        (b)   For
a period of six years after the Closing, the Purchaser shall retain the books and records of ATI and SCS that are transferred to the Purchaser pursuant to this
Agreement relating to periods prior to the Closing in a manner reasonably consistent with the prior practices of ATI and (ii) upon reasonable notice, afford the officers, employees and
authorized agents and representatives of ATI (or any of its Affiliates) reasonable access (including the right to make photocopies at ATI's expense), during normal business hours, to such books and
records. 




        6.5    Notification.    From the date hereof until the Closing, the Purchaser shall notify and the Seller shall cause
ATI to notify the other parties to this Agreement in writing of the occurrence, or pending or threatened occurrence, of (a) any event that would constitute a breach or violation of this
Agreement by any party or that could reasonably be anticipated to cause any representation or warranty made by the notifying party in this Agreement to be false or misleading in any respect (including
any event or circumstance which would have been required to be disclosed if such event or circumstance occurred or existed on or prior to the date of this Agreement); and (b) all other material
developments affecting the
Assets or the Business. Any such notification shall not limit or alter any of the representations, warranties or covenants of the parties set forth in this Agreement nor any rights or remedies a party
may have with respect to a breach of any representation, warranty or covenant. 


        6.6    Exclusivity.    Subject to and in consideration of receipt of the Earnest Money, the Seller shall not, and
shall cause ATI and SCS not to, directly or indirectly, through any officer, director, manager or agent of any of them or otherwise, initiate, solicit or encourage (including by way of furnishing
non-public information or assistance), or enter into negotiations of any type, directly or indirectly, or enter into a confidentiality agreement, letter of intent or purchase agreement,
merger agreement or other similar agreement with any Person other than the Purchaser with respect to a sale of all or any substantial portion of the Assets, or a merger, consolidation, business
combination, sale of all or any substantial portion of the capital stock of ATI, or the liquidation or similar extraordinary transaction with respect to ATI. 



        6.7    Financing.    The Purchaser shall use its reasonable best efforts to obtain the financing described in
Section 8.1(e). The Seller shall assist the Purchaser with all reasonable requests with respect to the Purchaser's effort to obtain financing. 


        6.8    Certain Tax Matters    



        (a)   Certain Definitions. As used in this Agreement: 



        (i)    "Purchaser Tax Group" means the affiliated group, within the meaning of Section 1504(a) of the Code, of which the
Purchaser is the common parent; 


        (ii)   "Pre-Closing Period" means any taxable period, including that portion of any Straddle Period, which ends on
or before the Closing Date; 


        (iii)  "Section 338(h)(10) Election" means the election to be made by the Purchaser and the Seller pursuant to
Section 338(h)(10) of the Code, and any corresponding provision of state or local tax law, as described in Section 6.8(b) of this Agreement; and 


        (iv)  "Straddle Period" means any taxable period that includes (but does not end on) the Closing Date. 


        (v)   "Unrelated Accounting Firm" means Grant Thornton LLP. 




        (b)   Section 338(h)(10) Election. The Seller shall join with the Purchaser in making the Section 338(h)(10)
Election to treat the transaction hereunder as the deemed sale of the assets of ATI for U.S. federal and, to the extent applicable, state income tax purposes. The Seller and the 



13







 

Purchaser
agree (i) to execute, at the Closing or as promptly thereafter as practicable, all forms of any nature necessary to effectuate such elections (including, without limitation, Internal
Revenue Service Form 8023 and any comparable Forms under applicable state or local law), and (ii) to cooperate with each other and take all other actions necessary and appropriate
(including filing such Forms and any other documents as may be required) to effect and preserve a timely Section 338(h)(10) Election in accordance with applicable law. The Purchaser and the
Seller shall each cause such Forms or other documents to be duly executed by an authorized person. The Purchaser and the Seller shall report the acquisition of the Shares pursuant to the Agreement
consistent with the Section 338(h)(10) Election, and shall take no position inconsistent with such treatment. 


        (c)   Allocation of Purchase Price. The parties shall agree to the allocation of the Purchase Price among the assets of ATI at
or prior to Closing, and shall report the transaction in a manner consistent with such allocation. 


        (d)   Return Filing, Refunds, Credits and Transfer Taxes. 



        (i)    Except
with regard to Tax Returns for Straddle Periods, the Seller shall prepare, or cause to be prepared, and file, or cause to be filed, on a timely basis all Tax
Returns of ATI and SCS for all Pre-Closing Periods (the "Pre-Closing Period Returns"). The Seller shall pay, or cause to be
paid, all Taxes with respect to ATI and SCS shown to be due on the Pre-Closing Period Returns. 


        (ii)   The
Purchaser shall prepare, or cause to be prepared, and shall file, or cause to be filed, on a timely basis all Tax Returns other than the Pre-Closing
Period Returns with respect to ATI, including Tax Returns, if any, for the Straddle Period (the "Straddle Period Returns");  provided, that any
Straddle Period Return shall be prepared in a manner consistent with past practice, except as otherwise required by applicable Law.
The Purchaser shall pay, or cause to be paid, all Taxes shown to be due on such Tax Returns. 


        (iii)  The
Purchaser shall provide the Seller with copies of any Straddle Period Returns at least 45 business days prior to the due date thereof (giving effect to any
extensions thereto), accompanied by a statement calculating in reasonable detail the Seller' indemnification obligation pursuant to Section 6.8(f) (the "Indemnification
Statement"). The Seller shall have the right to review such Straddle Period Returns and Indemnification Statement prior to the filing of such Straddle Period Returns. If the
Seller disputes any amounts shown to be due on such Tax Returns or the amount calculated in the Indemnification Statement, the Seller and the Purchaser shall consult and resolve in good faith any
issues arising as a result of the review of such Straddle Period Return and Indemnification Statement. If the Seller agrees to the Indemnification Statement amount, the Seller shall pay to the
Purchaser an amount equal to the Taxes shown on the Indemnification Statement (less any estimated tax payments made by the Seller or ATI in respect of such Taxes on or before the Closing Date) not
later than three business days before the due date (including any extensions thereof) for payment of Taxes with respect to such Straddle Period Return. If the parties are unable to resolve any dispute
within thirty (30) business days after the Seller's receipt of such Straddle Period Return and Indemnification Statement, such dispute shall be resolved by the Unrelated Accounting Firm, which
shall resolve any issue in dispute as promptly as practicable. If the Unrelated Accounting Firm is unable to make a determination with respect to any disputed issue prior to the due date (including
any extensions) for the filing of the Straddle Period Return in question, (A) the Purchaser shall file, or shall cause to be filed, such Straddle Period Return without such determination having
been made and (B) the Seller shall pay to the Purchaser, not later than three days before the due date (including any extensions thereof) for the payment of Taxes with respect to such Straddle
Period Return, an amount determined by the Seller as the proper amount chargeable to the Seller pursuant to this Section 6.8. Upon 




14







 





delivery
to the Seller and the Purchaser by the Unrelated Accounting Firm of its determination, appropriate adjustments shall be made to the amount paid by the Seller in accordance with the
immediately preceding sentence in order to reflect the decision of the Unrelated Accounting Firm. The determination by the Unrelated Accounting Firm shall be final, conclusive and binding on the
parties. 


        (iv)  The
Seller and the Purchaser shall reasonably cooperate, and shall cause their respective Affiliates, officers, employees, agents, auditors and representatives
reasonably to cooperate, in preparing and filing all Tax Returns (including amended returns and claims for refund), including maintaining and making available to each other all necessary records in
connection with determining Taxes and in resolving all disputes and audits with respect to all taxable periods relating to Taxes. The Purchaser recognizes that the Seller will need access, from time
to time, after the Closing Date, to certain accounting and tax records and information held by ATI to the extent such records and information pertain to events occurring prior to the Closing Date;
therefore, without limiting the provisions set forth in Section 6.4, the Purchaser agrees that from and after the Closing Date the Purchaser shall, and shall cause ATI to, (A) retain and
maintain such records until such time as the Seller reasonably determines that such retention and maintenance is no longer necessary and (B) allow the Seller and their agents and
representatives (and agents and representatives of their Affiliates) reasonable access to inspect, review and make copies of such records as the Seller may deem necessary or appropriate from time to
time. The Purchaser shall indemnify the Seller from and against any penalties, additions to tax or interest imposed on the Seller as a result of any failure of the Purchaser to provide tax records or
other information to the Seller in a timely manner. 


        (v)   The
Purchaser shall not, and shall cause ATI not to, dispose of or destroy any of the business records and files of ATI relating to Taxes in existence on the Closing
Date without first offering to turn over possession thereof to the Seller by written notice to the Seller at least 30 days prior to the proposed date of such disposition or destruction. 


        (vi)  Any
refunds and credits of Taxes of ATI or similar benefit (including any interest or similar benefit) received from or credited thereon by the applicable tax authority
with respect to (A) any taxable period ending on or before the Closing Date or (B) Taxes for which the Seller have indemnified the Purchaser under the Agreement, shall be for the account
of the Seller, and if received or utilized by the Purchaser or ATI, shall be paid to the Seller within five business days after the Purchaser or ATI receives such refund or utilizes such credit.
Except as provided in the next sentence, any refunds or credits of ATI with respect to any Straddle Period shall be apportioned between the Seller, on the one hand, and the Purchaser, on the other
hand, on the basis of an interim closing of the books. In the case of a refund or credit attributable to any Taxes that are imposed on a periodic basis and are attributable to the Straddle Period,
other than Taxes based upon or related to gross or net income or receipts, the refund or credit of such Taxes of ATI for the Pre-Closing Period shall be deemed to be the amount of such
refund or credit for the Straddle Period multiplied by a fraction the numerator of which is the number of days in the Straddle Period ending on the Closing Date and the denominator of which is the
number of days in the Straddle Period. 


        (vii) Notwithstanding
any other provisions of this Agreement to the contrary, all sales, use, transfer, gains, stamp, duties, recording and similar Taxes incurred in
connection with the transactions contemplated by this Agreement (other than the transfers contemplated by Section 2.6) shall be borne equally by the Purchaser and ATI, and any Returns that must
be filed in connection with such Taxes shall be prepared and filed when due by the party primarily or customarily responsible under applicable Law for filing such Returns, and such party shall provide
such Returns to the other party for review at least ten days prior to the 




15







 





due
date for such Returns and shall file those Returns only with the consent of the other party, which consent shall not be unreasonably withheld. 




        (e)   Elections. Except with respect to the Section 338(h)(10) Election, the Purchaser shall not, and shall cause ATI
not to, make, amend, or revoke any Tax election if such action would adversely affect the Seller, or any Person (other than ATI) as to whom or with whom the Seller have filed a consolidated return,
with respect to any taxable period ending on or before the Closing Date or for the Pre-Closing Period or any Tax refund with respect thereto. 


        (f)    Tax Indemnification. 



        (i)    The
Purchaser shall indemnify, defend and hold harmless the Seller and its Affiliates, at any time after the Closing, from and against any liability for Taxes of ATI and
SCS for any taxable period ending
after the Closing Date, including any Taxes resulting solely from a transaction undertaken by the Purchaser or its Affiliates with respect to ATI or SCS after the Closing that are not otherwise
contemplated by this Agreement, except for Straddle Periods, in which case the Purchaser's indemnity will cover only that portion of any such Taxes that is not attributable to the
Pre-Closing Period. 


        (ii)   The
Seller shall indemnify, defend and hold harmless the Purchaser and its Affiliates, at any time after the Closing, from and against any liability for
(A) Taxes of ATI and SCS, except as provided in Section 6.8(d)(vii) of the Agreement, for the Pre-Closing Period (including the portion of any Straddle Period ending
on the Closing Date), including any Damages resulting from the distribution of the Retained Assets to the Seller pursuant to Section 2.6 hereof; and (B) Damages attributable to
(1) any breach of the representation contained in Section 4.20 or (2) the failure of the Seller (or any member of the affiliated group that includes the Seller) to comply with
Seller's obligations in Section 6.8(b). 


        (iii)  In
determining the responsibility of the Seller and the Purchaser for Taxes attributable to any Straddle Period, Taxes based upon or related to gross or net income or
receipts shall be apportioned on the basis of an interim closing of the books as of the Closing Date, and all other Taxes attributable to any Straddle Period shall be prorated on a daily basis. 



        (iv)  If
a claim for Taxes shall be made by any taxing authority in writing, which, if successful, might result in an indemnity payment pursuant to this Section 6.8,
the party seeking indemnification (the "Tax Indemnified Party") shall promptly notify the other party (the "Tax Indemnifying
Party") in writing of such claim (a "Tax Claim") within a reasonably sufficient period of time to allow the Tax Indemnifying
Party effectively to contest such Tax Claim, and in reasonable detail to apprise the Tax Indemnifying Party of the nature of the Tax Claim, and provide copies of all correspondence and documents
received by it from the relevant taxing authority. Failure to give prompt notice of a Tax Claim hereunder shall affect the Tax Indemnifying Party's obligation under this Section to the extent that the
Tax Indemnifying Party is prejudiced by such failure to give prompt notice. 


        (v)   With
respect to any Tax Claim which might result in an indemnity payment to the Purchaser pursuant to this Section 6.8(f), the party potentially liable for such
indemnification shall control all proceedings taken in connection with such Tax Claim and, without limiting the foregoing, may in its sole discretion and at its sole expense pursue or forego any and
all administrative appeals, proceedings, hearings and conferences with any taxing authority with respect thereto, and may, in its sole discretion, either pay the Tax claimed and sue for a refund where
applicable law permits such refund suits or contest such Tax Claim. The Tax Indemnified Party shall not under any circumstances settle or otherwise compromise any Tax Claim referred to in the
preceding sentence without the Tax Indemnifying Party's prior written consent. In connection with any proceeding taken in connection with such Tax Claim, each 




16







 





party
shall keep the other informed of all material developments and events relating to such Tax Claim if involving a material liability for Taxes. Each party shall cooperate with the other in
contesting such Tax Claim, which cooperation shall include, without limitation, the retention and the provision of records and information which are reasonably relevant to such Tax Claim, and making
employees available to provide additional information or explanation of any material provided hereunder or to testify at proceedings relating to such Tax Claim, provided that no charges shall be
incurred for the services of such employees. 


        (vi)  The
Seller and the Purchaser shall jointly control, at each party's own cost and expense, all proceedings taken in connection with any Tax Claim relating solely to
Taxes attributable to a Straddle Period, and neither the Seller nor the Purchaser shall settle a Tax Claim relating to such Straddle Period Taxes without the prior written consent of the other party,
which consent shall not be unreasonably withheld. 


        (vii) The
amount of any Taxes payable under this Section 6.8 shall be net of any tax benefit actually realized therefrom. 


        (viii) All
matters relating in any manner to Tax indemnification obligations and payment of Taxes shall be governed exclusively by this Section 6.8;  provided, however, that any indemnity relating to Section 6.8(f)(ii)(B) shall be subject to the
limitations on liability set forth in Section 9.2. 


        (ix)  The
representations, warranties, covenants and agreements contained in this Section 6.8 shall survive until the expiration of the applicable statute of
limitations (including extensions). 




 
 

ARTICLE VII    
    
    EMPLOYEE MATTERS    
    


        7.1    Employment.    All employees of ATI including the employees of GEBPS transferred to ATI at or prior to Closing
("ATI Employees") (other than Excluded Employees) shall be employed by the Purchaser or one of its Affiliates without any relocation, with positions and
working conditions that are substantially comparable to their positions with ATI on terms and conditions to be established by the Purchaser, which shall include the following employee benefit and
compensation arrangements: 



        (a)   Compensation. For each ATI Employee, commencing on the Closing Date and for a period of 12 months thereafter,
provided that such ATI Employee continues in the employment of the Purchaser or one of its Affiliates for such period of time, the Purchaser shall provide to such ATI Employee (i) salary no
less than 103% of the salary such ATI Employee is being paid as of the Closing Date and (ii) bonus and incentive compensation opportunities no less favorable than those provided to similarly
situated employees of the Purchaser. 


        (b)   Benefit Plans. For each ATI Employee, commencing on the Closing Date and for a period of 12 months thereafter,
provided that such ATI Employee continues in the employment of the Purchaser or one of its Affiliates for such period of time, the Purchaser shall provide to each ATI Employee benefit plans, including
any associated employee coverages and benefit costs (such as premiums, out-of-pocket expenses and deductibles), that are no less favorable than those provided to similarly
situated employees of the Purchaser. 


        (c)   Health Plans. Commencing on the Closing Date and for a period of twelve 12 months thereafter, provided that ATI
Employees continue in the employment of the Purchaser or one of its Affiliates for such period of time, the Purchaser shall provide ATI Employees and their eligible dependents with coverage under
group health plans and the Purchaser agrees that its or one of its affiliates' group health plan covering ATI Employees and their eligible dependents shall not 



17







 




contain
any pre-existing condition limitation or exclusion applicable to their participation therein and shall give each ATI Employee credit toward applicable deductibles and annual
out-of-pocket limits for expenses incurred in the calendar year in which the Closing Date occurs. 


        (d)   Defined Contribution Plan Loans. On or as soon as reasonably practicable after the Closing Date, the Purchaser or one of
its Affiliates shall permit ATI Employees who have outstanding loans under the 401(k) plan provided by ATI to roll over their account balance (including such loans) to a 401(k) plan sponsored by the
Purchaser. 


        (e)   Severance and Lay-Off. Commencing on the Closing Date, the Purchaser may terminate the employment of or lay
off any ATI Employee, provided that, for a period commencing on the Closing Date and ending on the second anniversary thereof, any such ATI Employee terminated or laid off without cause shall be
entitled to receive severance payments and severance health benefits no less favorable than, and on the same terms and conditions of, those being provided by ATI immediately prior to Closing. 


        (f)    Vacation, Sick Time and Floating Holidays. The Purchaser agrees that, for a period of at least 12 months following
the Closing and for every succeeding year, provided such ATI Employee remains an employee of the Purchaser or one of its Affiliates, the vacation entitlement provided to ATI Employees shall be equal
to the greater of the ATI Employee's current vacation entitlement under ATI's vacation policy in effect as of the Closing Date and the Purchaser's then current vacation policy. The Purchaser agrees
that each ATI Employee's remaining unused annual vacation time, sick days and floating holidays will have accrued (earned but unused) in full as of the Closing Date and such accruals are set forth on  Schedule 7.1(f)
 and shall be paid for by the Purchaser following the Closing in accordance with ATI's vacation, sick time and floating holiday
policies. 


        (g)   Flexible and Dependent Care Spending Accounts. Effective as of the Closing Date, the Seller shall transfer, or cause to
be transferred, to the Purchaser an amount, in cash, representing the aggregate 2004 contributions of each ATI Employee then participating in the GE flexible spending accounts (the
"Seller Flexible Benefits Plan"), net of reimbursements. The Purchaser shall cause such amounts to be credited to each such employee's accounts under
the Purchaser's (or one of its Affiliate's) corresponding health care and dependent care spending account plan (the "Purchaser Flexible Benefits Plan")
which shall be established and in effect for such employees as of the Closing Date, and all claims for reimbursement which have not been paid as of the date of the transfer to the Purchaser and
credited under the Purchaser Flexible Benefits Plan shall be paid pursuant to and under the terms of the Purchaser Flexible Benefits Plan. In connection with such transfer, Purchaser shall deem that
such employees' deferral elections made under the Seller Flexible Benefits Plan for the 2004 calendar year shall continue in effect under the Purchaser Flexible Benefits Plan for the remainder of the
2004 calendar year following the Closing Date. 


        (h)   Tuition Reimbursement. Purchaser shall provide, or cause an Affiliate to provide, tuition reimbursement under the
Purchaser's tuition reimbursement plan to ATI Employees for approved courses that commenced prior to the Closing Date and end following the Closing Date in accordance with the provisions of such plan;  provided, however,
 that the reimbursement for such approved courses under the Purchaser's Reimbursement Plan shall be no less than what would have been
if the reimbursement was provided under the GE tuition reimbursement plan. Purchaser shall provide, or cause an Affiliate to provide, tuition reimbursement under the Purchaser's Tuition Refund Plan to
ATI Employees for approved courses commencing on or after the Closing Date in accordance with the provisions of such plan. 




        7.2    WARN.    The Purchaser and its Affiliates shall take no action within six months following the Closing Date
which, together with actions taken prior to the Closing Date by ATI, would result in any obligation or liability to the Seller or constitute a "plant closing" or a "mass layoff" under the Worker 


18







 

Adjustment
and Retraining Notification Act, 29 U.S.C. § 2101 et seq. or any other similar federal, state or local statute, regulation or ordinance. 



        7.3    Excluded Employees.    On or prior to the Closing Date, the Seller shall, or shall cause one of its Affiliates
(other than ATI) to, hire any employee of ATI who is on short-term or long-term disability leave or military leave as of the Closing Date (the "Excluded
Employees"). After the Closing, the Purchaser or one of its Affiliates shall offer employment to any Excluded Employee subject to the following conditions: (a) if on
medical or disability leave, such individual is released by his or her physician to return to active employment and (b) such individual actually reports for active employment with the Purchaser
or one of its Affiliates promptly following such medical release or expiration of approved leave; provided,
however, that the Purchaser and its Affiliates shall not be required to offer employment under this provision to any Excluded Employee who does not
apply for such employment prior to the later of (i) twenty-four months after the Closing Date and (ii) the expiration of any period under applicable Law. The Seller shall
retain liability and responsibility for any Excluded Employee until such employee becomes an employee of the Purchaser or one of its Affiliates or, if earlier, until such employee's employment with
the Seller or its Affiliate terminates. Upon commencing employment with the Purchaser or one of its Affiliates, such Excluded Employee shall be deemed an ATI Employee, and Purchaser or one of its
Affiliates shall assume all liabilities and responsibilities for such employee accruing on and after the date such Excluded Employee becomes an ATI Employee. 



        7.4    Past Service.    If ATI Employees are included in any benefit plan or arrangement of Purchaser, the ATI
Employees shall receive credit for service to ATI or any of its Affiliates prior to the effective time to the same extent such service was counted under similar plans for purposes of determining
eligibility to participate, vesting and benefit accruals and entitlements, other than benefit accruals under any defined benefit pension plan (including service with a prior employer recognized by ATI
or any of its Affiliates). 


        7.5    ATI Benefit Plan.    Except as expressly provided in this Agreement, the Purchaser assumes no liability with
respect to, and receives no right or interest in, any Employee Plan or any other "employee benefit plan" (as defined in Section 3(3) of ERISA) maintained or sponsored by ATI or any of its
Affiliates. As of the Closing Date, all ATI Employees shall cease active participation in all Employee Plans. 


 
 

ARTICLE VIII    
    
    CONDITIONS PRECEDENT TO CLOSING; TERMINATION    
    


        8.1    Conditions Precedent to the Obligations of the Purchaser.    The obligation of the Purchaser to consummate the
transactions described in this Agreement and any and all liability of the Purchaser to the Seller shall be subject to the fulfillment on or before the Closing of the following conditions precedent,
each of which may be waived by the Purchaser in its sole discretion: 



        (a)   Representations, Warranties and Covenants. The representations and warranties contained in Article IV shall have
been true and correct in all material respects when made and as of the Closing, with the same force and effect as if made as of the Closing Date, other than such representations and warranties that
are expressly made as of another date which shall be true and correct in all material respects as of such date, and the material covenants and agreements contained in this Agreement to be complied
with by the Seller at or before Closing shall have been complied with in all material respects, and the Purchaser shall have received a certificate from the Seller to such effect signed by a duly
authorized officer of the Seller. 


        (b)   No Material Adverse Effect. To the actual knowledge of any of Dave O'Neill, Eric Russell and Dan Wigger, there shall not
exist any event, fact or circumstance that has resulted in or could be reasonably expected to result in a Material Adverse Effect. 



19







 




        (c)   No Actions, Suits or Proceedings. No Order of any Court or Governmental Authority shall have been issued restraining,
prohibiting, restricting or delaying, the consummation of the transactions contemplated by this Agreement. No Litigation shall be pending or before any Court or Governmental Authority to restrain,
prohibit, restrict or delay, or to obtain damages or a discovery order in respect of this Agreement or the consummation of the transactions contemplated hereby. 


        (d)   Closing Documents. The Seller shall have delivered or caused to be delivered to the Purchaser the following: 



        (i)    the
resignations of all officers and members of the Boards of Directors of ATI; 


        (ii)   the
GECC Guaranty, duly executed by GECC; 


        (iii)  a
list, as of the Closing Date, by identifying code, place of employment, current annual salary, bonuses, accrued vacation, the date of employment of each employee of
ATI; 


        (iv)  a
copy of the resolutions duly and validly adopted by the Board of Directors of the Seller, certified by its Secretary, authorizing and approving the execution,
delivery and performance of this Agreement and the transactions contemplated hereby. 




        (e)   Capital Raise. The Purchaser shall have consummated a debt offering and/or equity transaction, or shall have secured
other financing, resulting in net proceeds to the Purchaser of not less than $57,000,000. 


        (f)    Audited Financials. Seller shall have delivered to Purchaser (i) audited Financial Statements of ATI for the
period from May 15, 2003 through December 31, 2003, together with an unqualified audit opinion of KPMG LLP with respect to such Financial Statements (the "2003
Audit"), and (ii) ATI's Financial Statements for the nine-month period ended on September 30, 2004, together with (A) a review or similar
non-attestation opinion of KPMG LLP with respect to such Financial Statements (the "2004 Review") and (B) audited Financial
Statements of ATI for the ninth-month period ended on September 30, 2004, together with an unqualified audit opinion of KPMG LLP with respect to such Financial Statements. EBITDA determined
based on the 2003 Audit and the 2004 Review, in each case as calculated on a consistent basis and as set forth on Schedule 8.1(f),
(A) presented in the 2003 Audit shall not contain a negative variation of greater than $1,000,000 from EBITDA presented in the 2003 Financial Statements and (B) presented in the 2004
Review shall not contain a negative variation of greater than $750,000 from EBITDA presented in the 2004 Interim Financial Statements. 




        8.2    Conditions Precedent to the Obligations of the Seller.    The obligations of the Seller to consummate the
transactions described in this Agreement and any and all liability of the Seller to the Purchaser shall be subject to the fulfillment on or before the Closing Date of the following conditions
precedent, each of which may be waived by the Seller in its sole discretion: 



        (a)   Representations, Warranties and Covenants. The representations and warranties of the Purchaser contained in this
Agreement shall have been true and correct in all material respects when made and as of the Closing, with the same force and effect as if made as of the Closing Date, other than such representations
and warranties that are expressly made as of another date which shall be true and correct in all material respects as of such date, and the material covenants and agreements contained in
this Agreement to be complied with by the Purchaser on or before the Closing shall have been complied with in all material respects, and the Seller shall have received a certificate from the Purchaser
to such effect signed by a duly authorized officer thereof. 


        (b)   Authorizations, Consents Orders, Approvals, Guaranties, Bonds and Estoppel Certificates. Each of the authorizations,
consents, orders, approvals, guaranties, bonds, letters of credit and estoppel certificates described on Schedule 8.2(b) shall have been
obtained. 



20







 




        (c)   No Actions, Suits or Proceedings. No Order of any Court or Governmental Authority shall have been issued restraining,
prohibiting, restricting or delaying, the consummation of the transactions contemplated by this Agreement. No Litigation shall be pending before any Court or Governmental Authority to restrain,
prohibit, restrict or delay, or to obtain damages or a discovery order in respect of this Agreement or the consummation of the transactions contemplated hereby. 


        (d)   Purchase Price. The Purchaser shall have delivered the Purchase Price (less the Earnest Money) to the Seller as provided
in Section 2.2. 


        (e)   Cash Payment for Eschelon Preferred Shares. The Purchaser shall have delivered the purchase price under the Eschelon
Preferred Shares Redemption Agreement in accordance with the terms thereof and the closing contemplated therein shall have occurred. 


        (f)    Management
Services Agreement. If the closing under the Asset Purchase Agreement shall not occur on the same date as the Closing, the Purchaser shall have delivered a
duly executed Management Services Agreement (as defined in the Asset Purchase Agreement) to the Seller. 



        (g)   Closing Documents. The Purchaser shall have delivered or caused to be delivered to the Seller a copy of the resolutions
duly and validly adopted by the Board of Directors of the Purchaser (or a duly authorized committee thereof), certified by its Secretary, authorizing and approving the execution, delivery and
performance of this Agreement and the transactions contemplated hereby. 




        8.3    Termination.    



        (a)   This
Agreement may be terminated at any time prior to Closing: (i) by mutual written agreement of the Seller and the Purchaser; (ii) by either the Seller
or the Purchaser if Closing shall not have been
consummated on or before December 31, 2004, for any reason other than delay in or nonperformance of the covenants or obligations of the party seeking termination,  provided, however, that the foregoing date may be extended to January 31, 2005 in the reasonable
discretion of the Seller; or (iii) by either the Seller or the Purchaser if consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment
of any Court or Governmental Authority having competent jurisdiction. The party desiring to terminate this Agreement pursuant to Sections 8.3(a)(ii) or 8.3(a)(iii) shall provide notice
of such termination to the other party. 


        (b)   If
the Agreement is terminated as permitted by Section 8.3(a)(i), such termination shall be without liability of any party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to any other party to this Agreement; provided,  however, that if such termination shall result
from the willful (i) failure of either party to fulfill a condition to the performance of the
obligations of the other party, (ii) failure to perform a covenant of this Agreement or (iii) breach by either party hereto of any representation or warranty or agreement contained
herein, such party shall be fully liable for any and all Damages incurred or suffered by the other party as a result of such failure or breach. The provisions of Articles IX and X shall survive any
termination hereof pursuant to Section 8.3(a). 


        (c)   Notwithstanding
any termination described in this Section 8.3, the Earnest Money shall not be repaid by the Seller to the Purchaser;  provided, however, that the
Seller shall repay the Earnest Money to the Purchaser in the event that the
Agreement is terminated under (i) Section 8.3(a)(ii) solely due to failure of the conditions described in Sections 8.1(a), 8.1(b), 8.1(d)(ii), 8.1(d)(iii), 8.1(d)(iv) or
8.1(f) to be satisfied or the failure of the condition described in Section 8.2(b) to be satisfied or (ii) Section 8.3(a)(iii). Without limiting the foregoing, in the event that
this Agreement shall be terminated under Section 8.3(a)(ii) solely due to the failure of the condition described in Section 8.1(e) to be satisfied, the Seller shall retain the
Earnest Money as the sole and exclusive remedy for Damages with respect to termination of this Agreement. 



21







 




 
 

ARTICLE IX    
    
    INDEMNIFICATION    
    


        9.1    Survival.    The covenants, agreements, representations and warranties of the parties contained in this
Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing until the date which is 18 months after the Closing Date (the
"Survival Date")
(other than those covenants and agreements that by their terms survive the Survival Date, in which case such covenant or agreement shall survive until the applicable date thereof). Notwithstanding the
preceding sentence, any covenant, agreement, representation or warranty in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought
prior to such time. 


        9.2    Indemnification.    



        (a)   The
Seller hereby indemnifies the Purchaser against and agrees to hold it harmless from any and all damage, loss, liability and expense (including, without limitation,
reasonable expenses of investigation and reasonable attorneys' fees and expenses actually incurred in connection with any action, suit or proceeding whether involving a third party claim or a claim
solely between the parties hereto) ("Damages") incurred or suffered by the Purchaser arising out of (i) any misrepresentation or breach of
warranty or breach of covenant or agreement made or to be performed by the Seller pursuant to this Agreement, (ii) the Retained Assets or the Retained Liabilities or (iii) the ownership
and operation of the Business prior to the Closing (except that the Seller shall not have any liability for any Damages arising out of or with respect to the condition (including breaches) or
suitability for use of the Assets (other than pursuant to clause (i) of Section 9.2(a))); provided,  however, that (A) the Purchaser shall
not make a claim against the Seller for indemnification under Section 9.2 for Damages unless and
until the aggregate amount of such Damages exceeds $100,000 (the "Seller Basket"), in which event the Purchaser may claim indemnification only for
Damages in excess of the Seller Basket and (B) the aggregate maximum liability of the Seller under clause (i) of this Section 9.2(a) shall not exceed $6,875,000. 


        (b)   The
Purchaser hereby indemnifies the Seller against and agrees to hold the Seller harmless from any and all Damages incurred or suffered by the Seller arising out of
(i) any misrepresentation or breach of warranty or breach of covenant or agreement made or to be performed by Purchaser pursuant to this Agreement and (ii) the ownership and operation of
the Business after the Closing; provided, however, that (A) the Seller shall not make a claim
against the Purchaser for indemnification under this 9.2(b) for Damages unless and until the aggregate amount of such Damages exceeds $100,000 (the "Purchaser
Basket"), in which event the Seller may claim indemnification for Damages in excess of the Purchaser Basket and (B) Purchaser's maximum liability under clause (i)
of this Section 9.2(b) shall not exceed $6,875,000. 




        9.3    Procedures.    



        (a)   The
party seeking indemnification under Section 9.2 (the "Indemnified Party") agrees to give prompt notice to the
party against whom indemnity is sought (the "Indemnifying Party") of the assertion of any claim, or the commencement of any suit, action or proceeding
("Claim") in respect of which indemnity may be sought and will provide the Indemnifying Party such information with respect thereto that the
Indemnifying Party may reasonably request. The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure
shall have adversely prejudiced the Indemnifying Party. 


        (b)   Subject
to the limitations set forth in this Section 9.3, the Indemnifying Party shall be entitled to control the defense, and appoint lead counsel for such
defense, of any Claim asserted by any third party ("Third Party Claim"), in all cases at the Indemnified Party's expense. 



22







 




        (c)   If
the Indemnifying Party assumes the control of the defense of any Third Party Claim in accordance with the provisions of this Section 9.3, (i) the
Indemnifying Party shall obtain the prior written consent of the Indemnified Party (which shall not be unreasonably withheld) before entering into any settlement of such Third Party Claim, if the
settlement does not include an unconditional release of the Indemnified Party from all liabilities and obligations with respect to such Third Party Claim and (ii) the Indemnified Party shall be
entitled to participate in the defense of such Third Party Claim and to employ separate counsel of its choice for such purpose. The fees and expenses of such separate counsel shall be paid by the
Indemnified Party. 


        (d)   Each
party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Third Party Claim and shall furnish or cause to be
furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith. 


        (e)   Each
Indemnified Party shall use reasonable efforts to collect any amounts available under insurance coverage, or from any other Person alleged to be responsible, to
mitigate any claim or indemnity for any Damages payable under Section 9.2. 


        (f)    Notwithstanding
any provision in this agreement to the contrary, the Seller shall have the sole right, with counsel of its choice, to defend and/or settle any claim,
action or proceeding (i) in which a Governmental Authority has instituted or asserted a claim, whether directly or indirectly (including, without limitation, by counterclaim, cross-claim, third
party claim, interpleader or otherwise), (ii) seeking injunctive relief, (iii) involving a class action, (iv) involving allegations of criminal activities, or (v) involving
allegations of violations of the Racketeering Influenced and Corrupt Organizations Act, as amended or any securities or antitrust Law (a "Non-Assumable
Claim") and Purchaser will not be entitled to assume defense thereof; provided,  however, that the Seller shall consult with
Purchaser before settling any Non-Assumable Claim. If the Seller assumes the defense of a
Non-Assumable Claim, it must pursue such defense, settlement or negotiation diligently and in good faith. Upon the receipt by the Seller of an offer of compromise relating to such
Non-Assumable Claim that includes an unconditional release of the Seller from, or upon entry of a final judgment with respect to, such Non-Assumable Claim (and such offer to
compromise or judgment requires primarily the payment of money), the Seller shall promptly inform Purchaser of such offer or judgment, together with a description of the material terms and conditions
of such offer or judgment. Purchaser shall have the right to terminate its liability for Damages with respect to the Non-Assumable Claim that is the subject of such an unconditional offer
of compromise or judgment upon its irrevocable offer to the Seller to pay the amount contained in
such offer to compromise or judgment. Upon receipt, in the form of immediately available funds, by the Seller of the amount contained in such offer to compromise or judgment and payment of all other
Damages suffered or incurred by it in connection with such Non-Assumable Claim, Purchaser shall have no further liability to the Seller with respect to such Non-Assumable
Claim. 




        9.4    Calculation of Damages.    



        (a)   The
amount of any Damages payable under Section 9.2 by the Indemnifying Party shall be net of any (i) amounts recovered or recoverable by the Indemnified
Party under applicable insurance policies or from any other Person alleged to be responsible therefor and (ii) any current tax benefit realized therefrom. If the Indemnified Party receives any
amounts under applicable insurance policies, or from any other Person alleged to be responsible for any Damages, subsequent to an indemnification payment by the Indemnifying Party, then such
Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in connection with providing such indemnification payment up to
the amount received by the Indemnified Party, net of any expenses incurred by such Indemnified Party in collecting such amount. 



23







 

        (b)   Notwithstanding
any other provision of this Agreement to the contrary, if at the Closing the Indemnified Party knows or has been advised by the Indemnifying Party that
one or more of the representations and warranties made by the Indemnifying Party is inaccurate as of the Closing Date or the date made, then the Indemnified Party shall have no right or remedy after
the Effective Time with respect to such inaccuracy and shall be deemed to have waived its rights to indemnification in respect thereof. 




        9.5    Assignment of Claims.    Without limiting the generality of the last sentence of Section 9.4, if the
Indemnified Party receives any payment from an Indemnifying Party in respect of any Damages pursuant to Section 9.3 and the Indemnified Party could have recovered all or a part of such Damages
from a third party (a "Potential Contributor") based on the underlying Claim asserted against the Indemnifying Party, the Indemnified Party shall assign
such of its rights to proceed against the Potential Contributor as are necessary to permit the Indemnifying Party to recover from the Potential Contributor the amount of such payment 


        9.6    Fraud; Intentional Misrepresentation.    Notwithstanding any provision to the contrary contained in this
Agreement, no limitation on liability shall apply to any claim based on fraud or intentional misrepresentation. 


        9.7    Sole Remedy.    Except as otherwise expressly provided in this Agreement, the Seller and the Purchaser hereby
acknowledge and agree that the sole and exclusive remedy of the Seller and the Purchaser with respect to any and all Damages relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in this Article 9. Except as set forth in this Agreement, neither the Seller nor the Purchaser is making any representation, warranty, covenant or agreement
with respect to the matters contained herein. 


 
 

ARTICLE X    
    
    MISCELLANEOUS    
    



        10.1    Notices.    All notices, requests, consents and other communications hereunder shall be in writing, shall be
addressed to the receiving party's address set forth below or to such other address as a 


24







 

party
may designate by notice hereunder, and shall be delivered by hand or recognized overnight courier. 



	 	 	If to the Seller:	 	Advanced TelCom Group, Inc.

c/o GE Vendor Financial Services

10 Riverview Drive

Danbury, CT 06810

Attn: General Counsel

Facsimile: (203) 749-4534
	

 	
 	

And a copy to:	
 	

King & Spalding LLP

1185 Avenue of the Americas

New York, NY 10036-4003

Attn: Roth Kehoe, Esq.

Facsimile: (212) 556-2222
	

 	
 	

If to the Purchaser:	
 	

Eschelon Telecom, Inc.

730 2nd Ave. S.

Suite 900

Minneapolis, MN 55402

Attn: President

Facsimile: (612) 436-6726
	

 	
 	

With a copy to:	
 	

Piper Rudnick LLP

1775 Wiehle Avenue

Suite 400

Reston, Virginia

Attn: Edwin M. Martin, Esq.

Facsimile: (703) 773-5000





        All
notices, requests, consents and other communications hereunder shall be deemed to have been delivered (a) if by hand, at the time of the delivery thereof to the receiving
party at the address of such party set forth above or (b) if sent by overnight courier, on the next Business Day following the day such notice is delivered to the recognized overnight courier
service. 


        10.2    Entire Agreement.    This Agreement and the Confidentiality Agreement embody the entire agreement and
understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No
statement, representation, warranty, covenant or agreement of any kind not expressly set forth in this Agreement or the Related Agreements shall affect, or be used to interpret, change or restrict,
the express terms and provisions of this Agreement or the Related Agreements. 


        10.3    Binding Effect.    This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors, heirs, personal representatives, legal representatives, and permitted assigns. 



        10.4    Assignment.    Neither this Agreement, nor any right hereunder, may be assigned by any of the parties hereto
without the prior written consent of the other parties, except that the Purchaser may assign all or part of its rights and obligations under this Agreement and any of the Related Agreements to one or
more direct or indirect Subsidiaries without consent of any party hereto or thereto. 


        10.5    Modifications and Amendments.    The terms and provisions of this Agreement may be modified or amended only by
written agreement executed by all parties hereto. 


25







 



        10.6    Waivers and Consents.    The terms and provisions of this Agreement may be waived, or consent for the
departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a
waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the
purpose for which it was given, and shall not constitute a continuing waiver or consent. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no
course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of the party. No single or partial exercise of any right, power or remedy under this
Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the
exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No
notice to or demand on a party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand. 


        10.7    No Third Party Beneficiary.    Except with respect to Article VII and as provided in
Section 9.1, nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any Person other than the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 



        10.8    Severability.    If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible. 


        10.9    Publicity.    No party to this Agreement shall make, or cause to be made, any press release or public
announcement or filing in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the Purchaser and the
Seller, except as may be required by Law or any listing agreement related to the trading of the shares of such party on any national securities exchange or national automated quotation system, in
which case the party proposing to issue such press release or make such public announcement or filing shall use reasonable efforts to consult in good faith with the other party before issuing any such
press release or making such public announcement or filing. 


        10.10    Governing Law; Jurisdiction.    This Agreement and the rights and obligations of the parties hereunder shall
be construed in accordance with and governed by the internal laws of the State of New York, without giving effect to the conflict of law principles thereof. Except as otherwise expressly provided in
this Agreement, the parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York so long as one of such courts shall have subject matter jurisdiction over
such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the
parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted 


26







 



by
law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served in any manner authorized by the laws of the State of New York. Judgment upon
any award may be entered in any court having jurisdiction. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE RELATED AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. 



        10.11    Force Majeure.    In the event that the Seller or the Purchaser is prevented from performing or is unable to
perform any of its obligations under this Agreement due to any Act of God, fire, casualty, flood, earthquake, war, strike, lockout, epidemic, destruction of production facilities, riot, insurrection,
act of terrorism, material unavailability, or any other cause beyond the reasonable control of the party invoking this Section 10.11, and if such party shall have used commercially reasonable
efforts to mitigate its effects, such party shall give prompt written notice to the other party, its performance shall be excused, and the time for the performance shall be extended for the period of
delay or inability to perform due to such occurrences. Notwithstanding the foregoing, if such party is not able to perform within 60 calendar days after the event giving rise to the excuse of Force
Majeure, the other party may terminate this Agreement. 


        10.12    Execution by Facsimile; Counterparts.    This Agreement may be executed by facsimile and in any number of
counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement. 


        10.13    Headings and Captions.    The headings and captions of the various subdivisions of this Agreement are for
convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof. 


        10.14    Expenses.    Except as otherwise specified in this Agreement, all costs and expenses, including fees and
disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred. Notwithstanding any provision to the contrary contained herein, (i) the Seller, on the one hand, and the Purchaser, on the other hand,
shall each pay one half of all fees and expenses of Kelley, Drye & Warren LLP and (ii) the Purchaser shall pay all costs and expenses (including attorneys fees and expenses), or
reimburse the Seller if Seller or ATI pays subject to prior authorization from the Purchaser which shall not be unreasonably withheld, with respect to the Audit and with respect to obtaining any
required authorizations, consents, orders, approvals, guaranties, bonds and estoppel certificates, including the authorizations, consents, orders, approvals, guaranties, bonds, letters of credit and
estoppel certificates described on Schedule 8.2(b). 


        10.15    Interpretation.    The parties hereto acknowledge and agree that (i) each party and its counsel, if so
represented, reviewed and negotiated the terms and provisions of this Agreement, excluding Schedules, and have contributed to its revision and (ii) the rule of construction to the effect that
any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement. 


        10.16    Further Assurances.    From time to time after the Closing Date, at the reasonable request of the other party
to this Agreement and at the expense of the party so requesting, each of the parties to this Agreement shall execute and deliver to such requesting party such documents and take such other action as
such requesting party may reasonably request in order to consummate more effectively the transactions contemplated by this Agreement. In addition, after the Closing Date, (a) any amounts
received by the Seller or any of its Affiliates with respect to operation of the Business after the Closing shall be held by the Seller or such Affiliate for the benefit of the Purchaser and delivered
within ten 


27







 



business
days after receipt to the Purchaser and (b) any amounts received by the Purchaser or any of its Affiliates (including ATI and SCS) after the Closing with respect to operation of the
Business prior to the Closing (other than with respect to Assets, including any amounts received pursuant to Accounts Receivable) shall be held by the Purchaser or such Affiliate for the benefit of
the Seller and delivered within ten business days of receipt to the Seller. 


        [signatures on next page]


28










        IN WITNESS WHEREOF, the parties hereto have each executed and delivered this Agreement as of the day and year first above written. 



	 
	 	 
	 

	 	 	ADVANCED TELCOM GROUP, INC.
	

 	
 	

By	

/s/  DAVID M. O'NEILL      
 David M. O'Neill

President
	

 	
 	
ESCHELON TELECOM, INC.
	

 	
 	

By	

/s/  RICHARD A. SMITH      
 Richard A. Smith

President and CEO











 
 

Schedule 2.6(b)
  
    Retained Assets    
    


	1.
	Four
Thinkpad T41 Laptops and one Dell Laptop.



	2.
	Rights
and interests in the Oracle contract and associated licenses related to the ATI Business (for the avoidance of doubt, the Retained Assets will not include the financial data,
which, without the Purchaser obtaining an appropriate Oracle license, will be delivered in an Oracle non-proprietary format)



	3.
	Rights
and interests in GE Support Central



	4.
	Rights
and interests in GE Purchase Systems (Ulysses, eInvoice, etc.)



	5.
	Rights
and interests in benefit plans, insurance, payroll processing and other processes/systems associated with employee benefits



	6.
	Rights
and interests in the Travel and Living System—Employees will be transitioned back to ATI T&L system



	7.
	Rights
and interests in all Six Sigma training materials and documents associated with Six Sigma



	8.
	All
domain names employing any part or variation of the "GE" name, the name of any Subsidiary or Affiliate of GE (other than the Companies and/or pursuant to any other agreement
between any Subsidiary or Affiliate of GE and the Purchaser or any Affiliate of the Purchaser) or any similar tradename, trademark, logo and service mark and any other tradenames, trademarks,
identifying logos and service marks not used solely in connection with the Business



	9.
	The
performance bonds and letters of credit listed on Exhibit A hereto



	10.
	Deferred
Tax Assets



	11.
	Goodwill 









 
 

Schedule 2.7
  
    Retained Liabilities    
    


	1.
	Assessments
received from the General Electric Company



	2.
	Universal
Service Fund (USF) charges billed to customer but not included in the Accounts Receivable prior to the Closing Date



	3.
	Customer
billed taxes and surcharges billed to customers but not included in the Accounts Receivable prior to the Closing Date



	4.
	Invoices
that are due prior to the Closing Date



	5.
	Charges
associated with benefit plans, insurance, payroll processing and other processes/systems associated with employee benefits through the Closing Date



	6.
	All
intercompany debt 







 
 

Schedule 4.6
  
    Financial Statements    
    


Please
see the attached unaudited balance sheet and related statement of income of the Companies as of December 31, 2003 and unaudited balance sheet and related statements of income of the
Companies for the nine month period ended September 30, 2004. 









 
 

Advanced Telcom, Inc.
  Consolidated Balance Sheets    
    



	 
	 	Dec-03

Consolidated
	 	Sep-04

Consolidated
	 
	Cash and Cash Equivalents	 	9,962	 	9,399	 
	End User Accounts Receivable	 	3,285,363	 	3,973,806	 
	CABS Accounts Receivable	 	229,688	 	243,683	 
	Unbilled Revenue	 	1,835,278	 	1,838,564	 
	Prepaid Expenses and Other	 	525,360	 	665,175	 
	 	Total Current Assets	 	5,885,651	 	6,730,627	 
	

PP&E, net	
 	

6,755,823	
 	

7,065,155	
 
	Customer Intangible, net	 	0	 	0	 
	Investment in Subsidiary	 	0	 	0	 
	Goodwill	 	0	 	0	 
	 	Total Assets	 	12,641,474	 	13,795,782	 
	

Accounts Payable	
 	

876,066	
 	

396,391	
 
	Accrued Carrier Costs	 	1,435,763	 	3,394,544	 
	Accrued Customer Billed and Other Taxes	 	2,680,483	 	3,263,231	 
	Accrued Other	 	2,861,020	 	2,733,057	 
	Income Taxes, Current and Deferred (excl Pre Acqu NOLs)	 	49,331	 	12,986	 
	Deferred Revenue, net	 	0	 	0	 
	Customer Refunds	 	377,371	 	75,536	 
	Capital Leases	 	417,885	 	345,927	 
	 	Total Liabilities	 	8,697,919	 	10,221,672	 
	 	
 Total Intercompany Balances	
 	

(3,483,044	
)	

(4,346,741	
)
	

Common Stock	
 	

5,450,917	
 	

5,450,917	
 
	Retained Earnings	 	1,975,682	 	2,469,934	 
	 	Total Shareholder's Equity	 	7,426,599	 	7,920,851	 
	

Combined Intercompany and Equity	
 	

3,943,555	
 	

3,574,110	
 
	

Total Liabilities and Shareholder's Equity	
 	

12,641,474	
 	

13,795,782	
 











 
 

Advanced Telcom, Inc.
  Consolidated Income Statements    
    



	 
	 	May 15 to

Dec 31, 2003
	 	Jan 1 to

Sep 30, 2004
	 
	Revenue	 	 	 	 	 
	Local Facilities	 	11,620,223	 	14,148,060	 
	Local Resale & UNEP	 	7,884,071	 	8,191,799	 
	Carrier Access Billing Service	 	3,239,468	 	3,104,941	 
	LD Revenue	 	9,651,532	 	10,926,570	 
	Internet Revenue	 	7,050,866	 	8,610,568	 
	Prepaid Revenue	 	0	 	0	 
	 	 	
	 	
	 
	Total Revenue	 	39,446,160	 	44,981,938	 
	 	 	
	 	
	 
	

COS	
 	

 	
 	

 	
 
	Local Facilities COS	 	5,265,865	 	6,292,739	 
	Local Resale & UNEP COS	 	5,503,334	 	5,516,284	 
	LD COS	 	3,265,886	 	3,816,260	 
	Internet COS	 	634,479	 	752,567	 
	Lab COS	 	0	 	0	 
	Taxes, Surcharges, Late Fees COS	 	198,172	 	34,586	 
	Other COS	 	(28,303	)	1,867,517	 
	 	 	
	 	
	 
	Total COS	 	14,839,433	 	18,279,953	 
	 	 	
	 	
	 
	

Gross Margin	
 	

24,606,727	
 	

26,701,985	
 
	 	 	
	 	
	 
	

Network Operating Expenses:	
 	

 	
 	

 	
 
	Facility Leases	 	976,957	 	1,219,845	 
	Network Backbone Costs	 	3,337,134	 	3,070,532	 
	Network Monitoring	 	75,891	 	102,932	 
	Maintenance & Repair — Network	 	286,121	 	513,717	 
	Vehicle Expense	 	36,231	 	50,251	 
	 	 	
	 	
	 
	Total Network Operating Expenses:	 	4,712,334	 	4,957,277	 
	 	 	
	 	
	 
	Gross Margin after Network Costs	 	19,894,393	 	21,744,708	 
	 	 	
	 	
	 
	

Operating Expenses	
 	

 	
 	

 	
 
	Personnel Costs:	 	 	 	 	 
	Wages	 	6,807,330	 	8,752,934	 
	GE Continuity of Service	 	2,567,410	 	3,265,435	 
	Capitalized Labor	 	(485,137	)	(305,580	)
	Non-Employee Temp Labor	 	827,244	 	592,153	 
	GECIS	 	0	 	0	 
	Travel and Entertainment	 	154,115	 	205,385	 
	Seminars and Training	 	76,838	 	70,708	 
	Employee Relations	 	23,115	 	21,770	 
	Recruiting and Employee Relocation	 	16,986	 	29,086	 
	 	 	
	 	
	 
	Total Personnel Costs:	 	9,987,901	 	12,631,891	 
	 	 	
	 	
	 
	

Sales and Marketing:	
 	

 	
 	

 	
 
	Commissions	 	707,509	 	1,204,686	 
	Marketing	 	84,823	 	361,991	 
	 	 	
	 	
	 
	Total Sales and Marketing:	 	792,332	 	1,566,677	 
	 	 	
	 	
	 
	 	 	 	 	 	 










	

Facility Expenses:	
 	

 	
 	

 	
 
	Office Lease & Warehouse Rent	 	902,780	 	1,186,647	 
	Maintenance & Repair	 	148,807	 	162,158	 
	Office Supplies, FF&E	 	179,318	 	157,709	 
	Telephone	 	196,526	 	173,591	 
	Postage	 	15,415	 	23,557	 
	Subsciptions/Dues	 	2,955	 	2,340	 
	Utilities	 	268,045	 	283,269	 
	Moving Costs	 	(111	)	252,432	 
	 	 	
	 	
	 
	Total Facility Expenses:	 	1,713,735	 	2,241,703	 
	 	 	
	 	
	 
	

Legal, Accounting, Regulatory:	
 	

 	
 	

 	
 
	Legal Expense	 	293,726	 	249,927	 
	Regulatory Expense	 	174,133	 	91,163	 
	Accounting Expense	 	112,888	 	107,886	 
	Bank Fees	 	43,171	 	54,888	 
	 	 	
	 	
	 
	Total Legal, Accounting, Regulatory:	 	623,918	 	503,864	 
	 	 	
	 	
	 
	

OSS/BSS Costs:	
 	

 	
 	

 	
 
	Software License Fees	 	150,159	 	144,111	 
	Hardware and Software Maint/Support	 	583,009	 	535,785	 
	Billing Expense	 	616,682	 	643,436	 
	Alpharetta Data Processing	 	0	 	99,000	 
	Computer Supplies	 	0	 	32,321	 
	OSS Consulting	 	69,541	 	126,140	 
	 	 	
	 	
	 
	Total OSS Costs:	 	1,419,391	 	1,580,793	 
	 	 	
	 	
	 
	

Depreciation & Amortization:	
 	

 	
 	

 	
 
	Depreciation	 	491,282	 	1,015,497	 
	Amortization	 	48,992	 	62,136	 
	 	 	
	 	
	 
	Total Depreciation & Amortization:	 	540,274	 	1,077,633	 
	 	 	
	 	
	 
	

Management Fee	
 	

450,877	
 	

631,219	
 
	

Unidentified Cost Savings	
 	

266	
 	

0	
 
	 	 	
	 	
	 
	Total Controllable Expense	 	15,528,694	 	20,233,780	 
	 	 	
	 	
	 
	

Bad Debt	
 	

204,446	
 	

69,273	
 
	

GE Assessments	
 	

157,739	
 	

626,383	
 
	

Accounting Expense	
 	

(229	
)	

0	
 
	 	 	
	 	
	 
	Total Operating Expenses:	 	15,890,650	 	20,929,436	 
	 	 	
	 	
	 
	

Operating lncome/(Loss)	
 	

4,003,743	
 	

815,272	
 
	 	 	
	 	
	 
	

Loss on Disposal of Property, Plant, and	
 	

890	
 	

0	
 
	 	 	
	 	
	 
	Total Other Losses	 	890	 	0	 
	 	 	
	 	
	 
	

Total Operating Income/(Loss)	
 	

4,002,853	
 	

815,272	
 
	 	 	
	 	
	 
	

Interest Expense	
 	

736,822	
 	

0	
 
	 	 	 	 	 	 









	

Management Interest Expense	
 	

0	
 	

0	
 
	

Interest Income	
 	

2,250	
 	

2,339	
 
	Other Income	 	0	 	0	 
	 	 	
	 	
	 
	lncome/(Loss) before Income Taxes	 	3,268,281	 	817,611	 
	

Provision for Taxes	
 	

1,292,610	
 	

323,366	
 
	 	 	
	 	
	 
	Net lncome/(Loss)	 	1,975,671	 	494,245	 
	 	 	
	 	
	 
	

Consolidated Net Income	
 	

1,975,671	
 	

494,245	
 
	Less:	 	 	 	 	 
	 	Interest Income	 	2,250	 	2,339	 
	 	Gain on sale of Assets	 	(890	)	0	 
	Plus:	 	 	 	 	 
	 	Income Taxes	 	1,292,610	 	323,366	 
	 	Interest Expense	 	736,822	 	0	 
	 	Depreciation Expense	 	491,282	 	1,015,497	 
	 	Amortization Expense	 	48,992	 	62,136	 
	 	 	
	 	
	 
	

EBITDA	
 	

4,544,017	
 	

1,892,905	
 
	 	 	
	 	
	 











 
 

Schedule 4.11(a)
  
    Leased Real Property    
    



	Landlord
 
	 	Address
	 	 

	The Berkowitz Family	 	19 Old Courthouse Square

Santa Rosa, CA 95404	 	 
	WVB Holdings, LLC	 	463 Aviation Blvd, Suite 100

Santa Rosa, CA 95404	 	 
	Retro, LLC	 	198 Commercial Street

Salem, OR 97301	 	 
	U.S. Band, N.A.,

Trustee of the Condon Trust	 	810 S.E. Belmont,

Portland, OR	 	 
	Shaub Properties, Inc.

c/o Kellis Commercial Inc.	 	1124 Broadway

Tacoma, WA 98409	 	 
	Yesterday's Village, Inc.	 	115 West Yakima Avenue, Suite 240

Yakima, WA 98902	 	 
	Hartmann Limited Partnership and William Ludwig Hartmann Marital Trust (agent and Property Manager is Coast Management Co, Inc)	 	2939 Colby Avenue

Everett, Washington, 98206	 	 
	200 South Virginia Investments, LLC	 	200 Virginia Street

Reno NV 89511	 	 












 
 

Schedule 4.13    
    
    Permits    
    



        Please see the attached lists of (i) ATI's telecommunications certifications (as of 10/6/2004), (ii) ATI's qualifications to do business (as of
10/6/2004), (iii) SCS's telecommunications certifications (as of 10/6/2004), (iv) SCS's qualifications to do business (as of 10/6/2004), (v) ATI's franchise agreements,
(vi) environmental permits and (vii) miscellaneous matters. 








   Schedule 4.13

Advanced TelCom, Inc.

Telecommunications Certificates

(as of 10/6/2004)  



	Jurisdiction
 
	 	Type of Telecommunications Certification
 

	Federal	 	Sec 214 certification
	Arizona	 	LD Only
	Arkansas	 	LD Only
	California	 	Local and LD
	Delaware	 	LD Only
	District of Columbia	 	LD Only
	Florida	 	LD Only
	Idaho	 	LD Only
	Illinois	 	LD Only
	Indiana	 	LD Only
	Kentucky	 	LD Only
	Massachusetts	 	LD Only
	Minnesota	 	LD Only
	Nevada	 	Local and LD
	New Jersey	 	LD Only
	Oregon	 	Local and LD
	Pennsylvania	 	LD Only
	Texas	 	LD Only
	Utah	 	LD Only
	Virginia	 	LD Only
	Washington	 	Local and LD
	Wyoming	 	LD Only





Page 1 of 1








  



 
 

Schedule 4.13
  Advanced TelCom, Inc.
  Qualifications to do Business
  (as of 10/6/2004)    
    



	Jurisdiction
 
	 	 

	Arizona	 	 
	Arkansas	 	 
	California	 	 
	Connecticut	 	 
	Delaware	 	 
	District of Columbia	 	 
	Florida	 	 
	Idaho	 	 
	Illinois	 	 
	Indiana	 	 
	lowa	 	 
	Kentucky	 	 
	Massachusetts	 	 
	Michigan	 	 
	Minnesota	 	 
	Missouri	 	 
	Montana	 	 
	Nevada	 	 
	New Jersey	 	 
	New York	 	 
	North Carolina	 	 
	Ohio	 	 
	Oklahoma	 	 
	Oregon	 	 
	Pennsylvania	 	 
	South Carolina	 	 
	Texas	 	 
	Utah	 	 
	Virginia	 	 
	Washington	 	 
	Wisconsin	 	 
	Wyoming	 	 





Page 1 of 1








   Schedule 4.13

Shared Communications Services, Inc.

Telecommunications Certifications (as of 10/6/2004)  



	Jurisdiction
 
	 	Type of Telecommunications Certification
 

	Federal	 	Sec 214 certification
	Arizona	 	LD Only
	California	 	Local and LD
	Colorado	 	LD Only
	Delaware	 	LD Only
	Florida	 	LD Only
	Idaho	 	LD Only
	Illinois	 	LD Only
	Indiana	 	LD Only
	Maryland	 	LD Only
	Massachusetts	 	LD Only
	Minnesota	 	LD Only
	Missouri	 	LD Only
	Montana	 	LD Only
	Nevada	 	Local and LD
	New Jersey	 	LD Only
	New York	 	LD Only
	North Carolina	 	LD Only
	Ohio	 	LD Only
	Oklahoma	 	LD Only
	Oregon	 	Local and LD
	Pennsylvania	 	LD Only
	South Carolina	 	LD Only
	Texas	 	LD Only
	Utah	 	LD Only
	Virginia	 	LD Only
	Washington	 	Local and LD
	

 	
 	

 
	

 	
 	

 
	Kentucky	 	Application to provide LD services pending.





Page 1 of 1








   Schedule 4.13

Shared Communications Services, Inc.

Qualifications to do Business (as of 10/6/2004)  



	Jurisdiction
	 	 

	Arizona	 	 
	Arkansas	 	 
	California	 	 
	Colorado	 	 
	Connecticut	 	 
	Delaware	 	 
	Florida	 	 
	Idaho	 	 
	Indiana	 	 
	Kentucky	 	 
	Massachusetts	 	 
	Minnesota	 	 
	Missouri	 	 
	Montana	 	 
	Nevada	 	 
	New Jersey	 	 
	North Carolina	 	 
	Ohio	 	 
	Oklahoma	 	 
	Oregon	 	 
	Pennsylvania	 	 
	South Carolina	 	 
	Tennessee	 	 
	Texas	 	 
	Utah	 	 
	Virginia	 	 
	Washington	 	 
	Wisconsin	 	 





Page 1 of 1








  



 
 

Schedule 4.13
  Advanced TelCom
  Franchise Agreements    
    



	State
 
	 	City
 
	 	Franchise Agreement
 

	OR	 	City of Albany	 	Franchise Agreement
	

OR	
 	

City of Eugene	
 	

Ordinance No. 20167
	

OR	
 	

City of Salem, Oregon	
 	

Telecommunications Franchise Agt.-Ordinance 39-99
	

OR	
 	

City of Springfield, Oregon	
 	

Public Way Use Agreement
	

WA	
 	

City of Bellingham	
 	

Ordinance No. 200-12-085
	

WA	
 	

City of Bothell	
 	

Ordinance No. 1823
	

WA	
 	

City of Everett-City Hall	
 	

Revocable General Permit for Right of Way
	

WA	
 	

City of Fife	
 	

Ordinance #1238
	

WA	
 	

City of Lacey*	
 	

Temporary Right of Way
	

WA	
 	

City of Lynnwood	
 	

Ordinance #2326
	

WA	
 	

City of Mountlake Terrace, Washington	
 	

Ordinance No. 2272
	

WA	
 	

City of Olympia*	
 	

Ordinance No. 5816
	

WA	
 	

City of Puyallup	
 	

Franchise Ordinance
	

WA	
 	

City of Tacoma	
 	

Franchise Agreement
	

WA	
 	

City of Yakima	
 	

Ordinance #2000-13, 2001-67
	

WA	
 	

Pierce County Council*	
 	

Ordinace No. 99-72
	

WA	
 	

Snohomish County Council	
 	

Right of Way Franchise
	

WA	
 	

Thurston County Rights-of-Way	
 	

Telecommunications Nonexclusive Franchise






*  Agreement/Ordinance
has expired.

Currently working with city to renew. 


Page 1 of 1








  



 
 

Schedule 4.13
  Environmental Permits    
    



	Market/Manager/Phone
 
	 	Permit Issued By
	 	Address
	 	Date of Issue
	 	Date of Expiration
	 	Permit #
	 	Permit Type

	Everett, WA—Don McKay 425-339-4190	 	Everett Fire Dept	 	2939 Colby Avenue	 	5/7/2003	 	Valid until change in use or ownership	 	2003-047	 	Install or Operate Stationary lead-acid battery sys.
	

Salem (Central) OR—Ron Flores 503-485-4006	
 	

City of Salem Fire Dept.	
 	

198 Commercial Street, SE, Suite 160	
 	

3/28/2003	
 	

3/28/2005	
 	

 	
 	

Combustible Liquids, Class II
	

Portland, OR—Mike Jones 503-963-4670	
 	

City of Portland Fire Prevention	
 	

810 SE Belmont Street	
 	

4/16/2003	
 	

Valid as long as tank resides @ 810 SE Belmont address	
 	

030790	
 	

Tank Permit
	

Reno, NV—Bill Adams 707-284-4020 (on-site Brad Ryals 775-284-4016)	
 	

Nevada State Fire Marshall	
 	

200 S. Virginia Street	
 	

4/1/2003	
 	

3/31/2005	
 	

57018-52246	
 	

Haz Mat Storage
	

same as above	
 	

District Health Dept.	
 	

 	
 	

n/a	
 	

9/30/2005	
 	

A03-0011	
 	

Permit to Operate Air Pollution/Emissions
	

Santa Rosa—Bill Adams 707-284-4020	
 	

City of SR Fire Dept.	
 	

19 Old Courthouse Square	
 	

11/26/2003	
 	

7/31/2005	
 	

4452	
 	

Consolidated Permit to Operate HazMat Storage Range 3




Page 1 of 1









 
 

Schedule 4.13
  Miscellaneous    
    



        1.     Advanced
TelCom, Inc. and Shared Communications Services, Inc. have numerous business licenses that are maintained by their outside tax service, Tax
Partners. 


        2.     Although
not currently used, Advanced TelCom, Inc. has the following d/b/a's on file with various Secretaries of State: Advanced TelCom Group and ATG. 









 
 

Schedule 4.14
  Intellectual Property    
    



	(i)
	Please
also see the attached list of Licensed Intellectual Property.



	(ii)
	Owned
Intellectual Property (below) 




        Advanced
TelCom: IT Developed Applications 



	Application
 
	 	Technology

	SOFA (Sales Order Form Application)	 	Delphi, Oracle, XML, SOAP
	SCORE (Sales Commission Online Reporting Environment)	 	Delphi, MSSQL
	Product Catalog	 	Delphi, Oracle, XML
	User Security	 	Delphi, Oracle
	CoRe (Corporate Reporting)	 	CSP, MSSQL, Crystal Enterprise
	E911 Utility	 	Delphi, MSSQL
	Auto Agents	 	Delphi, MSSQL, Oracle, XML, ISAPI
	App Loader	 	Delphi, SOAP
	Switch Connect	 	Delphi, MSSQL











	Vendor
 
	 	Product

	Call Vision, Inc.	 	I-Report, I-Statement
	Citrix Systems	 	MetaFrame / Nfuse: 5 servers, 50 concurrent users
	Crystal Decisions (Business Objects)	 	Crystal Enterprise Reporting 20 concurrent, 10 named licenses
	DDP, Inc.	 	LIDS Hosted Billing services
	Embarcadero Technologies	 	(1) DBArtisan, (1) PL/SQL Debugger
	Esker Software	 	SmartTerm V10 TS Licenses
	FinePrint Software	 	pdfFactory
	Granite Systems	 	Xpercom/Xng maintenance
	Granite Systems	 	Xpercom Installation Services
	Hickory Tech Corp. Information Solutions	 	Carrier Access Billing Services
	Intrado, Inc.	 	E911 service address validation clearinghouse
	Intuit Information Technology Solutions	 	Track-It! Enterprise, 25 Named Technicians, 600 PC Audits
	MapInfo Corporation	 	MapInfo Discovery, StreetInfo Display, ExchangeInfo
	MapInfo Corporation	 	MapInfo Discovery, StreetInfo Display, ExchangeInfo
	Carrier Management Systems, Inc.	 	NAMS
	Noetix	 	NoetixViews for Oracle GL, AP, FA, Pur, EUL
	Olympic Data Services, Inc.	 	Postage fees for Bill mailing
	Olympic Data Services, Inc.	 	DDP/LIDS invoice printing/mailing services
	Pervasive Software (DataJunction)	 	DataJunction Enterprise, Content Extractor, Standard Engine (1 each)
	Quest Software	 	SQL Navigator, 4 licenses
	Red-Gate Software	 	SQL Bundle
	Retail Lockbox, Inc.	 	ATI bill payment lockbox service
	Riverbed Technology, Inc.	 	Steelhead 500, 1000, 2000 network appliances
	Salesnet Inc.	 	Salesnet Extended 65 Subscriptions
	Serence, Inc.	 	KlipFolio Enterprice 100 Users
	Somix Technologies	 	What's-Up, Denika — 1 server
	STEP 9 Software Corp.	 	iCustomer SDX maintenance
	STEP 9 Software Corp.	 	iCustomer SDX license
	STEP 9 Software Corp.	 	iCustomer SDX Administrative Support — 500 Hours
	Universal Access	 	LATTIS Pro Software
	Veritas Software Corp.	 	Backup-Exec, NetBackup
	Vibrant Solutions, Inc.	 	COA / ViewLogic, Unlimited licenses
	Vibrant Solutions, Inc.	 	COA / ViewLogic, Support
	Vibrant Solutions, Inc.	 	Qwest EDI 811
	Vibrant Solutions, Inc.	 	SBC EDI 811











 
 

Schedule 4.15
  
    Labor Matters    
    


Please
see the attached list of current ATI Employees and current GEBPS employees that will be transferred to ATI at or prior to the Closing. 


(Please
note that vacation balances will be finalized on the Closing Date.) 









Schedule 4.15 Employees
  Vacation Balances Will Be Confirmed as of the Closing Date 



	Company
 
	 	 
	 	Earn as You Go
	 	Annual Weeks of Vac Elig
	 	Annual Vac Days
	 	Vac Bal as of 9/12/04 (incl. carry- over)
	 	Projected as of 12/31/04 (incl. carry-over)
	 	Projected Carry-over Ballance 1/1/2005
	 	Annual Salary
	 	Projected 2004 Bonus

	ATI	 	1	 	Y	 	2	 	10	 	13.5	 	16	 	16	 	70,500	 	 
	ATI	 	2	 	N	 	2	 	10	 	8	 	8	 	0	 	45,800	 	 
	ATI	 	3	 	Y	 	4	 	20	 	1	 	6	 	10	 	65,700	 	 
	ATI	 	4	 	N	 	2	 	10	 	3.5	 	3.5	 	0	 	27,200	 	 
	ATI	 	5	 	N	 	3	 	15	 	6	 	6	 	2.5	 	60,000	 	 
	ATI	 	6	 	N	 	3	 	15	 	5.5	 	5.5	 	-0.5	 	37,700	 	 
	ATI	 	7	 	Y	 	3	 	15	 	2	 	15	 	17	 	52,000	 	 
	ATI	 	8	 	N	 	2	 	10	 	6	 	6	 	1	 	36,300	 	 
	ATI	 	9	 	Y	 	3	 	15	 	38	 	42	 	26	 	50,000	 	 
	ATI	 	10	 	Y	 	2	 	10	 	9	 	11.5	 	10	 	55,200	 	 
	ATI	 	11	 	N	 	3	 	15	 	0.5	 	0.5	 	2.5	 	37,600	 	 
	ATI	 	12	 	Y	 	2	 	10	 	16.5	 	19	 	13	 	25,700	 	 
	ATI	 	13	 	Y	 	4	 	20	 	40	 	45	 	34.5	 	83,200	 	 
	ATI	 	14	 	Y	 	4	 	20	 	2.5	 	7.5	 	3.5	 	71,300	 	 
	ATI	 	15	 	N	 	3	 	15	 	16	 	16	 	16	 	44,000	 	 
	ATI	 	16	 	N	 	2	 	10	 	0	 	-5	 	0	 	26,500	 	 
	ATI	 	17	 	N	 	3	 	15	 	9.5	 	9.5	 	6.5	 	30,900	 	 
	ATI	 	18	 	N	 	4	 	20	 	12.5	 	12.5	 	8.5	 	31,300	 	 
	ATI	 	19	 	N	 	2	 	10	 	11	 	6	 	6	 	43,000	 	 
	ATI	 	20	 	N	 	2	 	10	 	5	 	5	 	5	 	31,500	 	 
	ATI	 	21	 	N	 	2	 	10	 	11	 	6	 	6	 	31,500	 	 
	ATI	 	22	 	N	 	3	 	15	 	6	 	6	 	0	 	60,000	 	 
	ATI	 	23	 	N	 	3	 	15	 	40.5	 	40.5	 	24.5	 	60,700	 	 
	ATI	 	24	 	Y	 	2	 	10	 	5	 	7.5	 	7.5	 	57,700	 	 
	ATI	 	25	 	Y	 	3	 	15	 	41	 	45	 	45	 	88,000	 	 
	ATI	 	26	 	N	 	3	 	15	 	43	 	43	 	43	 	34,100	 	 
	ATI	 	27	 	Y	 	2	 	10	 	10	 	12.5	 	12.5	 	85,000	 	 
	ATI	 	28	 	Y	 	2	 	10	 	6	 	8.5	 	2.5	 	74,500	 	 
	ATI	 	29	 	Y	 	3	 	15	 	8	 	12	 	12	 	81,000	 	 
	ATI	 	30	 	N	 	2	 	10	 	11	 	6	 	6	 	43,000	 	 
	ATI	 	31	 	N	 	2	 	10	 	8	 	8	 	11	 	32,900	 	 
	ATI	 	32	 	N	 	2	 	10	 	-3.5	 	0	 	0	 	40,100	 	 
	ATI	 	33	 	N	 	2	 	10	 	1.5	 	1.5	 	0	 	38,400	 	 
	ATI	 	34	 	Y	 	2	 	10	 	8.5	 	11	 	0	 	31,500	 	 
	ATI	 	35	 	N	 	2	 	10	 	10	 	5	 	5	 	31,500	 	 
	ATI	 	36	 	N	 	2	 	10	 	5	 	5	 	5	 	36,400	 	 
	ATI	 	37	 	Y	 	2	 	10	 	1	 	3.5	 	4.5	 	33,400	 	 
	ATI	 	38	 	N	 	2	 	10	 	6	 	1	 	0	 	33,000	 	 
	ATI	 	39	 	Y	 	3	 	15	 	4.5	 	8.5	 	8.5	 	71,100	 	 
	ATI	 	40	 	Y	 	3	 	15	 	10.5	 	14.5	 	9.5	 	49,200	 	 
	ATI	 	41	 	N	 	2	 	10	 	9.5	 	9.5	 	1.5	 	52,400	 	 
	ATI	 	42	 	N	 	3	 	15	 	24.5	 	24.5	 	16.5	 	46,600	 	 
	ATI	 	43	 	Y	 	2	 	10	 	2	 	4.5	 	3	 	73,000	 	 
	ATI	 	44	 	N	 	2	 	10	 	1	 	1	 	0	 	28,000	 	 
	ATI	 	45	 	N	 	2	 	10	 	6	 	6	 	0	 	27,200	 	 
	ATI	 	46	 	Y	 	3	 	15	 	33.5	 	37.5	 	37.5	 	68,200	 	 
	ATI	 	47	 	Y	 	3	 	15	 	15.5	 	19.5	 	18.5	 	29,000	 	 
	ATI	 	48	 	Y	 	2	 	10	 	-3	 	0	 	0	 	42,500	 	 
	ATI	 	49	 	N	 	3	 	15	 	13	 	13	 	13	 	35,100	 	 
	ATI	 	50	 	Y	 	2	 	10	 	2.5	 	5	 	0	 	64,300	 	 
	ATI	 	51	 	Y	 	2	 	10	 	8	 	10.5	 	7.5	 	61,000	 	 
	ATI	 	52	 	Y	 	2	 	10	 	6.5	 	9	 	8	 	36,500	 	 
	ATI	 	53	 	N	 	2	 	10	 	6.5	 	6.5	 	2	 	47,200	 	 
	ATI	 	54	 	N	 	3	 	15	 	26	 	26	 	25	 	33,000	 	 
	ATI	 	55	 	Y	 	2	 	10	 	-2.5	 	0	 	10	 	148,600	 	12,500
	ATI	 	56	 	Y	 	2	 	10	 	12	 	12	 	12	 	25,000	 	 
	ATI	 	57	 	Y	 	3	 	15	 	19.5	 	23.5	 	23.5	 	48,200	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 









	ATI	 	58	 	N	 	4	 	20	 	10	 	10	 	8	 	42,600	 	 
	ATI	 	59	 	N	 	2	 	10	 	10	 	10	 	0	 	45,400	 	 
	ATI	 	60	 	Y	 	3	 	15	 	18.5	 	22.5	 	14.5	 	28,000	 	 
	ATI	 	61	 	N	 	2	 	10	 	11.5	 	11.5	 	0.5	 	52,002	 	 
	ATI	 	62	 	N	 	2	 	10	 	11	 	9.5	 	0	 	30,000	 	 
	ATI	 	63	 	Y	 	3	 	15	 	10.5	 	14.5	 	9.5	 	67,000	 	 
	ATI	 	64	 	N	 	2	 	10	 	3	 	3	 	0	 	42,500	 	 
	ATI	 	65	 	N	 	3	 	15	 	19.5	 	19.5	 	9.5	 	65,900	 	 
	ATI	 	66	 	N	 	2	 	10	 	10	 	5	 	0	 	31,200	 	 
	ATI	 	67	 	Y	 	2	 	10	 	11.5	 	14	 	19	 	94,000	 	 
	ATI	 	68	 	Y	 	3	 	15	 	15	 	19	 	19	 	96,500	 	 
	ATI	 	69	 	N	 	2	 	10	 	9	 	9	 	2	 	47,200	 	 
	ATI	 	70	 	N	 	2	 	10	 	6	 	6	 	0	 	30,400	 	 
	ATI	 	71	 	N	 	3	 	15	 	16	 	16	 	8.5	 	62,000	 	 
	ATI	 	72	 	Y	 	2	 	10	 	2.5	 	5	 	0	 	65,000	 	 
	ATI	 	73	 	Y	 	2	 	10	 	1	 	3.5	 	2.5	 	25,000	 	 
	ATI	 	74	 	Y	 	2	 	10	 	0.5	 	3	 	1	 	30,000	 	 
	ATI	 	75	 	N	 	2	 	10	 	11	 	6	 	0	 	41,500	 	 
	ATI	 	76	 	N	 	2	 	10	 	6.5	 	6.5	 	0	 	41,200	 	 
	ATI	 	77	 	Y	 	2	 	10	 	8.5	 	11	 	11	 	50,000	 	 
	ATI	 	78	 	N	 	2	 	10	 	9	 	9	 	9	 	36,300	 	 
	ATI	 	79	 	N	 	2	 	10	 	0.5	 	0.5	 	0.5	 	38,000	 	 
	ATI	 	80	 	N	 	3	 	15	 	25.5	 	25.5	 	25.5	 	66,500	 	 
	ATI	 	81	 	N	 	2	 	10	 	12.5	 	12.5	 	12.5	 	38,000	 	 
	ATI	 	82	 	N	 	3	 	15	 	12.5	 	12.5	 	5.5	 	28,500	 	 
	ATI	 	83	 	Y	 	2	 	10	 	8.5	 	11	 	5	 	52,000	 	 
	ATI	 	84	 	Y	 	2	 	10	 	2.5	 	5	 	0	 	30,000	 	 
	ATI	 	85	 	Y	 	3	 	15	 	6.5	 	10.5	 	11.5	 	34,200	 	 
	ATI	 	86	 	Y	 	3	 	15	 	27.5	 	31.5	 	16.5	 	40,000	 	 
	ATI	 	87	 	Y	 	3	 	15	 	6.5	 	10.5	 	9	 	60,000	 	 
	ATI	 	88	 	N	 	4	 	20	 	13	 	13	 	-1	 	36,500	 	 
	ATI	 	89	 	Y	 	4	 	20	 	7.5	 	12.5	 	6.5	 	83,500	 	 
	ATI	 	90	 	Y	 	2	 	10	 	7.5	 	10	 	0	 	25,000	 	 
	ATI	 	91	 	N	 	2	 	10	 	9.5	 	9.5	 	1.5	 	53,300	 	 
	ATI	 	92	 	N	 	2	 	10	 	4	 	4	 	0	 	45,400	 	 
	ATI	 	93	 	N	 	3	 	15	 	18	 	18	 	18	 	38,000	 	 
	ATI	 	94	 	N	 	2	 	10	 	7	 	7	 	7	 	45,500	 	 
	ATI	 	95	 	Y	 	3	 	15	 	16.5	 	20.5	 	20.5	 	73,600	 	 
	ATI	 	96	 	Y	 	2	 	10	 	13.5	 	18	 	15	 	76,300	 	 
	ATI	 	97	 	Y	 	3	 	15	 	13	 	17	 	17	 	92,500	 	 
	ATI	 	98	 	N	 	3	 	15	 	35	 	35	 	35	 	37,600	 	 
	ATI	 	99	 	Y	 	2	 	10	 	-1.5	 	1	 	2	 	26,000	 	 
	ATI	 	100	 	Y	 	3	 	15	 	11	 	15	 	7	 	65,800	 	 
	ATI	 	101	 	N	 	2	 	10	 	7	 	7	 	7	 	38,700	 	 
	ATI	 	102	 	Y	 	2	 	10	 	7	 	9.5	 	0	 	25,000	 	 
	ATI	 	103	 	N	 	4	 	20	 	-1	 	-1	 	-2.5	 	44,000	 	 
	ATI	 	104	 	N	 	2	 	10	 	-1	 	-1	 	1	 	36,200	 	 
	ATI	 	105	 	N	 	2	 	10	 	25.5	 	25.5	 	15	 	28,200	 	 
	ATI	 	106	 	N	 	2	 	10	 	10	 	10	 	7	 	28,900	 	 
	ATl	 	107	 	Y	 	2	 	10	 	9.5	 	12	 	5.5	 	26,250	 	 
	ATI	 	108	 	Y	 	3	 	15	 	3.5	 	7.5	 	7.5	 	84,000	 	 
	ATI	 	109	 	N	 	2	 	10	 	8	 	8	 	3	 	30,500	 	 
	ATI	 	110	 	Y	 	2	 	10	 	2.5	 	5	 	0	 	37,000	 	 
	ATI	 	111	 	N	 	2	 	10	 	9	 	4	 	0	 	26,000	 	 
	ATI	 	112	 	Y	 	2	 	10	 	5.5	 	8	 	0	 	30,000	 	 
	ATI	 	113	 	N	 	4	 	20	 	24.5	 	24.5	 	21.5	 	33,100	 	 
	ATI	 	114	 	Y	 	3	 	15	 	12.5	 	16.5	 	16.5	 	62,300	 	 
	ATI	 	115	 	N	 	2	 	10	 	11	 	11	 	0	 	45,400	 	 
	ATI	 	116	 	Y	 	3	 	15	 	15.5	 	19.5	 	19.5	 	73,500	 	 
	ATI	 	117	 	N	 	3	 	15	 	8	 	8	 	8	 	42,600	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 









	ATI	 	118	 	N	 	2	 	10	 	11	 	6	 	0	 	40,500	 	 
	ATI	 	119	 	Y	 	3	 	15	 	6.5	 	10.5	 	10.5	 	92,000	 	 
	ATI	 	120	 	N	 	2	 	10	 	11	 	6	 	0	 	38,500	 	 
	ATI	 	121	 	Y	 	3	 	15	 	-1.5	 	2.5	 	-1.5	 	33,000	 	 
	ATI	 	122	 	Y	 	3	 	15	 	14	 	18	 	18	 	117,000	 	 
	ATI	 	123	 	Y	 	2	 	10	 	2.5	 	5	 	0	 	75,000	 	 
	ATI	 	124	 	Y	 	4	 	20	 	18.5	 	23.5	 	17.5	 	89,000	 	 
	ATI	 	125	 	N	 	3	 	15	 	14.5	 	14.5	 	14.5	 	47,600	 	 
	ATI	 	126	 	N	 	2	 	10	 	4.5	 	4.5	 	2.5	 	31,700	 	 
	ATI	 	127	 	N	 	2	 	10	 	19.5	 	19.5	 	15.5	 	40,001	 	 
	ATI	 	128	 	N	 	4	 	20	 	13	 	13	 	16	 	41,300	 	 
	ATI	 	129	 	Y	 	2	 	10	 	2.5	 	5	 	5	 	83,000	 	 
	ATI	 	130	 	Y	 	3	 	15	 	15	 	19	 	17	 	70,500	 	 
	ATI	 	131	 	Y	 	2	 	10	 	1.5	 	4	 	0	 	81,500	 	 
	ATI	 	132	 	N	 	3	 	15	 	3.5	 	3.5	 	0	 	54,000	 	 
	ATI	 	133	 	Y	 	2	 	10	 	3	 	5.5	 	1.5	 	53,500	 	 
	ATI	 	134	 	Y	 	2	 	10	 	15.5	 	18	 	9	 	75,000	 	 
	ATI	 	135	 	Y	 	2	 	10	 	4.5	 	7	 	0	 	93,000	 	 
	ATI	 	136	 	Y	 	2	 	10	 	9	 	11.5	 	11.5	 	67,000	 	 
	ATI	 	137	 	Y	 	2	 	10	 	6	 	8.5	 	0	 	30,000	 	 
	ATI	 	138	 	Y	 	2	 	10	 	1.5	 	4	 	4	 	101,000	 	 
	ATI	 	139	 	N	 	3	 	15	 	1	 	1	 	0	 	79,000	 	 
	ATI	 	140	 	Y	 	3	 	15	 	16	 	20	 	18	 	74,000	 	 
	ATI	 	141	 	N	 	2	 	10	 	7.5	 	7.5	 	0	 	32,500	 	 
	ATI	 	142	 	N	 	3	 	15	 	7.5	 	7.5	 	7.5	 	55,000	 	 
	ATI	 	143	 	N	 	3	 	15	 	33.5	 	33.5	 	27.5	 	40,700	 	 
	ATI	 	144	 	N	 	2	 	10	 	11	 	11	 	0	 	 	 	 
	ATI	 	145	 	Y	 	3	 	15	 	21.5	 	25.5	 	25.5	 	52,000	 	 
	ATI	 	146	 	N	 	2	 	10	 	3	 	3	 	0	 	32,000	 	 
	ATI	 	147	 	Y	 	4	 	20	 	1	 	6	 	3	 	53,600	 	 
	ATI	 	148	 	Y	 	2	 	10	 	8	 	10.5	 	2.5	 	69,000	 	 
	ATI	 	149	 	Y	 	2	 	10	 	12	 	14.5	 	14.5	 	55,000	 	 
	ATI	 	150	 	N	 	2	 	10	 	8	 	8	 	8	 	43,000	 	 
	ATI	 	151	 	Y	 	3	 	15	 	13.5	 	17.5	 	9.5	 	86,400	 	 
	ATI	 	152	 	N	 	2	 	10	 	6	 	1	 	0	 	26,000	 	 
	ATI	 	153	 	Y	 	2	 	10	 	2	 	4.5	 	5.5	 	44,500	 	 
	ATI	 	154	 	N	 	2	 	10	 	6	 	6	 	0	 	27,000	 	 
	ATI	 	155	 	N	 	2	 	10	 	5	 	5	 	7	 	37,800	 	 
	ATI	 	156	 	N	 	3	 	15	 	8	 	8	 	9	 	63,200	 	 
	ATI	 	157	 	N	 	2	 	10	 	5.5	 	5.5	 	0.5	 	29,000	 	 
	ATI	 	158	 	N	 	2	 	10	 	6	 	6	 	0	 	30,000	 	 
	ATI	 	159	 	Y	 	3	 	15	 	10	 	14	 	4	 	74,500	 	 
	ATI	 	160	 	Y	 	3	 	15	 	22.5	 	26.5	 	17.5	 	88,300	 	 
	ATI	 	161	 	Y	 	3	 	15	 	27	 	31	 	26	 	72,200	 	 
	ATI	 	162	 	N	 	2	 	10	 	6	 	6	 	0	 	27,500	 	 
	ATI	 	163	 	Y	 	2	 	10	 	13	 	15.5	 	15.5	 	42,500	 	 
	ATI	 	164	 	Y	 	3	 	15	 	21.5	 	25.5	 	25.5	 	78,500	 	 
	ATI	 	165	 	Y	 	2	 	10	 	7.5	 	10	 	0	 	27,500	 	 
	ATI	 	166	 	Y	 	2	 	10	 	15.5	 	18	 	19	 	76,800	 	 
	ATI	 	167	 	N	 	3	 	15	 	4.5	 	4.5	 	0	 	33,100	 	 
	ATI	 	168	 	Y	 	2	 	10	 	8.5	 	11	 	0	 	36,000	 	 
	ATI	 	169	 	N	 	2	 	10	 	4	 	4	 	3	 	62,700	 	 
	ATI	 	170	 	N	 	2	 	10	 	8.5	 	8.5	 	4.5	 	40,500	 	 
	ATI	 	171	 	N	 	4	 	20	 	3	 	3	 	1	 	32,400	 	 
	ATI	 	172	 	Y	 	3	 	15	 	8	 	12	 	12	 	125,000	 	 
	ATI	 	173	 	Y	 	3	 	15	 	17.5	 	21.5	 	6.5	 	56,000	 	 
	ATI	 	174	 	Y	 	3	 	15	 	25.5	 	29.5	 	25.5	 	82,000	 	 
	ATI	 	175	 	Y	 	2	 	10	 	1.5	 	4	 	0	 	77,500	 	 
	ATI	 	176	 	N	 	2	 	10	 	5	 	5	 	-0,5	 	28,600	 	 
	ATI	 	177	 	N	 	3	 	15	 	7	 	7	 	4	 	41,500	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 









	ATI	 	178	 	Y	 	2	 	10	 	0.5	 	3	 	3	 	63,400	 	 
	ATI	 	179	 	N	 	3	 	15	 	11	 	11	 	0	 	37,600	 	 
	ATI	 	180	 	Y	 	3	 	15	 	20.5	 	24.5	 	24.5	 	160,500	 	57,000
	ATI	 	181	 	N	 	3	 	15	 	37.5	 	37.5	 	24.5	 	58,100	 	 
	ATI	 	182	 	Y	 	3	 	15	 	14.5	 	18.5	 	10	 	52,100	 	 
	ATI	 	183	 	N	 	2	 	10	 	-1	 	-1	 	-1	 	51,700	 	 
	ATI	 	184	 	N	 	4	 	20	 	18	 	18	 	6	 	49,000	 	 
	ATI	 	185	 	N	 	3	 	15	 	14	 	14	 	6.5	 	33,500	 	 
	ATI	 	186	 	N	 	2	 	10	 	0	 	0	 	0	 	31,000	 	 
	ATI	 	187	 	N	 	3	 	15	 	9.5	 	9.5	 	1	 	31,100	 	 
	ATI	 	188	 	N	 	2	 	10	 	21.5	 	21.5	 	21.5	 	42,000	 	 
	ATI	 	189	 	Y	 	2	 	10	 	-0.5	 	2	 	2	 	39,000	 	 
	ATI	 	190	 	Y	 	3	 	15	 	13.5	 	17.5	 	14.5	 	47,900	 	 
	ATI	 	191	 	Y	 	2	 	10	 	8	 	10.5	 	5.5	 	62,100	 	 
	ATI	 	192	 	N	 	3	 	15	 	8	 	8	 	1.5	 	26,000	 	 
	ATI	 	193	 	Y	 	3	 	15	 	24	 	28	 	24	 	45,200	 	 
	ATI	 	194	 	N	 	4	 	20	 	18	 	18	 	13	 	27,500	 	 
	ATI	 	195	 	Y	 	2	 	10	 	9.5	 	12	 	12	 	30,000	 	 
	ATI	 	196	 	Y	 	3	 	15	 	19.5	 	23.5	 	20	 	50,900	 	 
	ATI	 	197	 	Y	 	2	 	10	 	1	 	3.5	 	3.5	 	136,000	 	12,500
	ATI	 	198	 	N	 	2	 	10	 	8	 	8	 	5	 	53,000	 	 
	ATI	 	199	 	N	 	3	 	15	 	16.5	 	16.5	 	9	 	46,000	 	 
	ATI	 	200	 	Y	 	3	 	15	 	10.5	 	14.5	 	11.5	 	37,000	 	 
	ATI	 	201	 	N	 	2	 	10	 	5.5	 	8	 	0	 	40,000	 	 
	ATI	 	202	 	N	 	2	 	10	 	2.5	 	25	 	2.5	 	28,600	 	 
	ATI	 	203	 	Y	 	2	 	10	 	-0.5	 	2	 	2	 	40,000	 	 
	ATI	 	204	 	N	 	3	 	15	 	10	 	10	 	8	 	41,500	 	 
	ATI	 	205	 	N	 	2	 	10	 	6	 	6	 	-2	 	28,000	 	 
	ATI	 	206	 	N	 	4	 	20	 	16	 	16	 	17	 	29,600	 	 
	ATI	 	207	 	Y	 	2	 	10	 	5.5	 	8	 	0	 	42,000	 	 
	ATI	 	208	 	Y	 	2	 	10	 	15.5	 	18	 	18	 	92,500	 	 
	ATI	 	209	 	N	 	2	 	10	 	6	 	6	 	0	 	46,640	 	 
	ATI	 	210	 	N	 	3	 	15	 	9.5	 	9.5	 	1.5	 	58,000	 	 
	ATI	 	211	 	Y	 	3	 	15	 	5	 	9	 	9	 	170,000	 	34,500
	ATI	 	212	 	Y	 	3	 	15	 	36.5	 	40.5	 	29.5	 	97,000	 	 
	ATI	 	213	 	Y	 	3	 	15	 	7.5	 	11.5	 	11.5	 	80,000	 	 
	ATI	 	214	 	N	 	2	 	10	 	10	 	5	 	0	 	26,000	 	 
	ATI	 	215	 	Y	 	3	 	15	 	4	 	8	 	5	 	35,000	 	 










Schedule 4.15 GEBPS Employees
  Vacation Balances Will Be Finalized as of the Closing Date 



	Company
 
	 	 
	 	Earn as You Go
	 	Annual Weeks of Vac Elig
	 	Annual Vac Days
	 	Vac Bal as of 9/12/04 (incl. carry- over)
	 	Projected as of 12/31/04 (incl. carry-over)
	 	Projected Carry-over Ballance 1/1/2005
	 	Annual Salary
	 	Projected 2004 Bonus

	GEBPS	 	1	 	N	 	3	 	15	 	7	 	7	 	0	 	193,000	 	84,000
	GEBPS	 	2	 	N	 	3	 	15	 	6	 	6	 	0	 	79,000	 	 
	GEBPS	 	3	 	N	 	3	 	15	 	9	 	9	 	0	 	81,500	 	10,000
	GEBPS	 	4	 	N	 	6	 	30	 	27	 	27	 	2	 	135,000	 	65,000
	GEBPS	 	5	 	N	 	4	 	20	 	17	 	17	 	0	 	90,000	 	16,000
	GEBPS	 	6	 	N	 	5	 	25	 	14.5	 	14.5	 	0	 	155,000	 	55,500
	GEBPS	 	7	 	N	 	3	 	15	 	16	 	16	 	0	 	113,100	 	 
	GEBPS	 	8	 	N	 	2	 	10	 	11	 	11	 	0	 	45,800	 	 
	GEBPS	 	9	 	N	 	4	 	20	 	6	 	6	 	0	 	106,000	 	 
	GEBPS	 	10	 	N	 	3	 	15	 	16	 	16	 	0	 	71,800	 	 
	GEBPS	 	11	 	N	 	3	 	15	 	4	 	4	 	0	 	105,000	 	10,000
	GEBPS	 	12	 	Y	 	2	 	10	 	3.5	 	6	 	0	 	125,400	 	10,000
	GEBPS	 	13	 	N	 	3	 	15	 	7.5	 	7.5	 	0	 	 	 	 
	GEBPS	 	14	 	N	 	4	 	20	 	44	 	44	 	44	 	54,600	 	 
	GEBPS	 	15	 	N	 	4	 	20	 	44	 	44	 	44	 	68,500	 	 











 
 

Schedule 4.16
  Employee Benefit Plans    
    


Please
see the attached summary. 







 

Benefit Design Comparison Summary  



	


	Benefit
 
	 	Description
 
	 	 

	


	Pension	 	 	 	 	 	 	 
	

Eligibility	
 	

January 1 following employment	
 	

 
	

Pension Formula	
 	

•	

Career average, 1.45% pay to breakpoint + 1.9% pay above breakpoint for each year of service	
 	

 
	

 	
 	

•	

Breakpoint = social security covered compensation minus $12,000 (fixed at $35,000 for 2004-2007)	
 	

 
	

 	
 	

•	

Minimum benefit: Fixed dollar (based on FAP-3) ranging from $33.00 to $60.00/month/year of service (approximately 1.1% FAP-3 × service)	
 	

 
	

Covered Pay Definition	
 	

Base, overtime, night-shift bonus, commissions, and certain other bonus (50% of E-band)	
 	

 
	

Vesting	
 	

5 years of service	
 	

 
	

Employee Contributions	
 	

•	

Mandatory:	
 	

3% of pay above $50,000 ($60,000 eff. 1/1/2006) (PPA) provides benefits in addition to pension formula	
 	

 
	

 	
 	

•	

Voluntary:	
 	

3% of pay up to $50,000 ($60,000 eff. 1/1/2006)	
 	

 
	

Early Retirement	
 	

•	

Age 60	
 	

 
	

 	
 	

•	

Unreduced at Age 60	
 	

 
	

Supplements	
 	

•	

$15 ($16 eff. 7/1/2005) per month per year of service to age 80% of social security benefit payable if retire between age 60 to 62 with 5 years	
 	

 
	

 	
 	

•	

$350 per month special supplement if retirement within 3 months of reaching age 60 to 62 with 25 years (expires 7/1/2007) to age 80% of social security benefit payable	
 	

 
	

Normal Payment Form	
 	

5-year certain and life, subsidized spouse annuity	
 	

 
	


	
Job Loss Protection	
 	

Special Early Retirement Option (SERO) at age 55 with 25 years of pension service (or 30 years of pension service if less than age 55 and nonexempt or hourly) if impacted by Job Loss Event. Plant Closing Pension Option at age 50 with 25 years (or 30
years and less than age 50)...age 55 with 10 years of service. Both options available for retirements through July 1, 2007. Also, protection of supplements and pre-retirement surviving spouse benefit for long service (25 years of pension service and
up) employees impacted by job loss.	
 	

 
	






GE COMPANY CONFIDENTIAL 


1







 

Benefit Design Comparison Summary  



	


	Benefit
 
	 	Description
 
	 	 

	


	Supplemental Nonqualified Pension Plans	 	•	Excess plan for benefits in excess of 415 benefit limit. Benefits vest after 5 years of service.	 	 
	

 	
 	

•	

Supplemental plan (if E-band) provides richer formula (60% FAP-3 including 50% social security, pension, and PPA) and includes pay over pay limit. Benefits do not vest until age 60	
 	

 
	


	
Savings	
 	

 	

 	
 	

 	
 	

 
	

Eligibility	
 	

Immediate	
 	

 
	

Employee Contributions	
 	

•	

NHCE:	
 	

Up to 30% total pre-tax/after-tax	
 	

 
	 	 	•	HCE:	 	Up to 10% pre-tax; 12% total pre-tax/after-tax	 	 
	 	 	•	Roth contributions permitted	 	 
	

Employer Contributions	
 	

50% of first 7% of pay	
 	

 
	

Pay Definition	
 	

Base, overtime, night-shift bonus, commissions, and certain other bonus (50% if E-band)	
 	

 
	

Vesting	
 	

Immediate	
 	

 
	

Investments	
 	

10 choices—GE Stock; Stock Mutual Fund; International Equity Fund; Income Fund; Money Market; Short-Term Interest Fund; U.S. Savings Bonds; Vanguard Institutional Index Fund, Small-Cap Value Equity Fund; Strategic Investment Fund	
 	

 
	

In-Service Withdrawals	
 	

Non-hardships up to 7 per year of non-401 (k) amounts	
 	

 
	

Investment Switches	
 	

Up to 24 per year	
 	

 
	

Loans	
 	

May have 2 outstanding loans (one new loan per year)	
 	

 
	

Post-Termination Withdrawals	
 	

Up to 4 per year; minimum amount $500; or lump sum of entire account	
 	

 
	


	
Profit Sharing	
 	

 	

 	
 	

 	
 	

 
	

Eligibility	
 	

No plan	
 	

 
	

Employee Contributions	
 	

 	

 	
 	

 	
 	

 
	

Employer Contributions	
 	

 	

 	
 	

 	
 	

 
	

Pay Definition	
 	

 	

 	
 	

 	
 	

 
	

Vesting	
 	

 	

 	
 	

 	
 	

 
	

Investments	
 	

 	

 	
 	

 	
 	

 
	

In-Service Withdrawals	
 	

 	

 	
 	

 	
 	

 
	

Investment Switches	
 	

 	

 	
 	

 	
 	

 
	

Loans	
 	

 	

 	
 	

 	
 	

 
	

Post-Termination Withdrawals	
 	

 	

 	
 	

 	
 	

 
	






GE COMPANY CONFIDENTIAL 


2







 

Benefit Design Comparison Summary  



	


	Benefit
 
	 	Description
 
	 
	 	 
	 	 

	


	ESOP	 	 	 	 	 	 	 	 	 
	

Eligibility	
 	

No plan	

 	
 	

 	
 	

 
	

Employee Contributions	
 	

 	

 	

 	

 	
 	

 	
 	

 
	

Employer Contributions	
 	

 	

 	

 	

 	
 	

 	
 	

 
	

Pay Definition	
 	

 	

 	

 	

 	
 	

 	
 	

 
	

Vesting	
 	

 	

 	

 	

 	
 	

 	
 	

 
	


	
Supplemental Nonqualified Savings Plans	
 	

No plan	

 	
 	

 	
 	

 
	


	
Company-Paid Life Insurance	
 	

 	

 	

 	

 	
 	

 	
 	

 
	

Eligibility	
 	

Immediate	

 	
 	

 	
 	

 
	

Coverage	
 	

2.5 × pay ($50,000 minimum)	

 	
 	

 	
 	

 
	

Covered Pay Definition	
 	

Base, certain other bonus (50% if E-band), shift differential	

 	
 	

 	
 	

 
	

Other	
 	

Living benefit for terminally ill	

 	
 	

 	
 	

 
	


	
Optional Life Insurance (A Plus)	
 	

 	

 	

 	

 	
 	

 	
 	

 
	

Eligibility	
 	

Immediate	

 	
 	

 	
 	

 
	

Coverage	
 	

1, 2, or 3 × pay	

 	
 	

 	
 	

 
	

Covered Pay Definition	
 	

Base certain other bonus (50% if E-band), shift differential	

 	
 	

 	
 	

 
	


	

Employee Contributions


	
 	
Age
	

Monthly Rate Per $1,000
	

Age
	

Monthly Rate Per $1,000
	
 	

 
	
 	

 

	

 	
 	

<25	

$0.05	

50-54	

$0.26	
 	

 	
 	

 
	 	 	25-29	  0.06	55-59	  0.43	 	 	 	 
	 	 	30-34	  0.08	60-64	  0.68	 	 	 	 
	 	 	35-39	  0.09	65-69	  1.27	 	 	 	 
	 	 	40-44	  0.10	70+    	  2.06	 	 	 	 
	 	 	45-49	  0.16	 	 	 	 	 	 
	

Other	
 	

Living benefit for terminally ill	

 	
 	

 	
 	

 
	
Optional Life Insurance (Security Life)	

 	
 	

 	
 	

 
	

Eligibility	
 	

Immediate	

 	
 	

 	
 	

 
	

Coverage (decreasing term varying by age)	
 	

• Option I: 6.00 × pay (<age 30) to 0.16 × pay (age 70+)	
 	

 
	 	 	• Option II: 12.00 × pay (<age 30) to 0.16 × pay (age 70+)	 	 
	

Employee Contributions	
 	

• Option I: 0.45% of pay	
 	

 
	 	 	• Option II: 0.90% of pay	 	 
	

Other	
 	

Living benefit for terminally ill	
 	

 
	





GE COMPANY CONFIDENTIAL 


3







 

Benefit Design Comparison Summary  



	


	Benefit
 
	 	Description
 
	 	 

	


	Optional Dependent Life	 	 	 	 	 	 
	

Benefit	
 	

 	

 	

 	
 	

 
	

 	
 	

•	

Spouse:	

$5,000 to $25,000 in $5,000 increments; $25,000 to $100,000 in $25,000 increments	
 	

 
	

 	
 	

•	

Children:	

$1,000 increments to $4,000 or $10,000	
 	

 
	

Employee Contributions	
 	

•	

Spouse:	

$0.74 (< age 25) to $1.94 (age 65)

per month per $1,000	
 	

 
	

 	
 	

•	

Children:	

$0.13 per month per $1,000	
 	

 
	


	
Company-Paid AD&D	
 	

 	

 	

 	
 	

 
	

Benefit	
 	

•	

One × pay ($25,000 minimum)	
 	

 
	 	 	•	Two × pay if work-related	 	 
	

	
Optional AD&D (Personal Accident Insurance)	
 	

 	

 	

 	
 	

 
	

Coverage	
 	

•	

Employee:	

$10,000 increments up to 5x pay (maximum $2,000,000)	
 	

 
	 	 	•	Spouse:	$10,000 increments up to $250,000	 	 
	 	 	•	Children:	20% of spouse coverage	 	 
	

Employee Contributions	
 	

•	

Employee:	

$0.08 per month per $10,000	
 	

 
	 	 	•	Dependents:	$0.10 per month per $10,000	 	 
	

	
Salary Continuation	

 	

 	
 	

 
	

Eligibility	
 	

Immediate	
 	

 
	

Benefit (100% pay)	
 	

•	

20 days per rolling year, non-cumulative	
 	

 
	 	 	•	All days available for use immediately upon hire	 	 
	 	 	•	Once used, not available again for 1 calendar year	 	 
	

Benefit (after 100% pay ends)	
 	

Salary continuation at 50% pay (minimum 60% up to $550 ($600 eff. 1/1/2006) per week) or 100% at management discretion for 26 weeks	
 	

 
	

Employee Contributions	
 	

None	
 	

 
	

Eligibility	
 	

Immediate	
 	

 
	


	
Long-term Disability	
 	

 	

 	

 	
 	

 
	

Eligibility	
 	

Immediate	
 	

 
	

Benefit	
 	

Three options:

50%, 60% or 70% of base pay integrated with disability pension and primary social security. Reduced amount payable after age 65 if disabled prior to age 60.	
 	

 
	

Employee Contributions	
 	

0.40%, 0.55% or 0.70% of base pay if <14 years; 0.20%, 0.35% or 0.45% of pay if >14 years	
 	

 
	

Disability Definition	
 	

Own occupation for 12 months (18 if work-related), any occupation thereafter	
 	

 
	






GE COMPANY CONFIDENTIAL 


4







 

Benefit Design Comparison Summary  



	


	Benefit
 
	 	Description
 
	 	 

	


	Medical—Indemnity Plan	 	 	 	 	 	 
	

Eligibility	
 	

Immediate	
 	

 
	

Benefit	
 	

•	

Hospital:	

100% after $150 ($300 family) copay per admission ($250 if non-preferred hospital)	
 	

 
	 	 	•	Surgical:	80% (no deductible)	 	 
	 	 	•	Other:	80% after deductible	 	 
	

Limits	
 	

$2,500,000 lifetime maximum per person	
 	

 
	

Out-of-Pocket Limit	
 	

Varies by pay:	

$1,100 to $2,350 per family

(including deductible)	
 	

 
	

Deductible	
 	

Varies by pay:	

$150 to $600 per person;

$300 to $1,200 per family	
 	

 
	

Employee Contributions	
 	

Varies by pay:	
 	

 
	

 	
 	

•	

EE only:	

$30.21 to $81.08 per month

($33.95 to $101.51 eff. 1/1/2006)	
 	

 
	 	 	•	EE + I:	$79.16 to $179.85 per month

($86.68 to $220.67 eff. 1/1/2006)	 	 
	 	 	•	EE + family:	$93.68 to $244.01 per month

($108.68 to $325.70 eff. 1/1/2006)	 	 
	 	 	•	Additional:	$0 to $86.67 if elect to cover working spouse (with employer-provided coverage)	 	 
	

Mental Health/Chemical Dependency	
 	

 	

 	

 	
 	

 
	

•    Inpatient	
 	

30 days per year (in-network: 100%, out-of-network: 80%)	
 	

 
	

•    Outpatient	
 	

30 visits per year (in-network: 80% after deductible, out-of-network: 50%)	
 	

 
	


	

Preventive Care	
 	

Scheduled amounts for specific screenings	
 	

 
	

Prescription Drug	
 	

•	

Retail Network:	

Generic: $12 to $60 copay	
 	

 
	 	 	 	(21-90 day supply)	Brand: $16* to $80* copay	 	 
	 	 	 	(employee must file claim forms if out-of-network pharmacy used)	 	 
	 	 	•	Mail:	Generic: $20 copay	 	 
	 	 	 	(90-day supply)	Brand: $36* copay	 	 
	 	 	•	$2,000/$4,000 out-of-pocket limit	 	 
	 	 	•	*Employee pays difference between brand and generic if generic available	 	 
	





GE COMPANY CONFIDENTIAL 


5







 

Benefit Design Comparison Summary  



	


	Benefit
 
	 	Description
 
	 	 

	


	Medical Managed Care	 	POS	 	 
	

Eligibility	
 	

Immediate	
 	

 
	

Benefit	
 	

•	

In-network:	

100% after $150 ($300 family) copay per admission; $15 copay office visits ($25 specialists)	
 	

 
	 	 	•	Out-of-network:	80% after deductible	 	 
	

Limits	
 	

$2,500,000 lifetime maximum per person	
 	

 
	

Out-of-Pocket Limit	
 	

•	

In-network:	

Not applicable	
 	

 
	 	 	•	Out-of-network:	Varies by pay from $1,250 to $2,750 per person; $2,500 to $5,500 per family (including deductible)	 	 
	

Deductible	
 	

•	

In-network:	

None	
 	

 
	 	 	•	Out-of-network:	Varies by pay from $250 to $850 per person; $500 to $1,700 per family	 	 
	

	

Employee Contributions	
 	

Varies by pay:	
 	

 
	 	 	•	EE only:	$21.04 to $71.95 per month

($22.69 to $90.29 eff. 1/1/2006)	 	 
	 	 	•	EE + 1:	$50.38 to $151.11 per month

($53.73 to $187.76 eff. 1/1/2006)	 	 
	 	 	•	EE + family:	$59.12 to $209.45 per month

($65.77 to $282.79 eff. 1/1/2006)	 	 
	 	 	•	Additional:	$0 to $86.67 if elect to cover working spouse (with employer-provided coverage)	 	 
	

Mental Health/Chemical Dependency	
 	

 	

 	

 	
 	

 
	

•  Inpatient	
 	

30 days per year (in-network: 100%, out-of-network 80%)	
 	

 
	

•  Outpatient	
 	

30 visits per year (in-network: 100% after $15 copay, out-of-network: 50%)	
 	

 
	Preventive Care	 	•	In-network:	$0 or $15 copay;	 	 
	 	 	•	Out-of-network:	80% after deductible or not covered	 	 
	Prescription Drug	 	•	Retail Network:	Generic: $12 to $60 copay	 	 
	 	 	 	(21-90 day supply)	Brand: $16* to $80* copay	 	 
	 	 	 	(employee must file claim forms if out-of-network pharmacy used)	 	 
	 	 	•	Mail:	Generic: $20 copay	 	 
	 	 	 	(90-day supply)	Brand: $36* copay	 	 
	 	 	•	$2,000 / $4,000 out-of-pocket limit	 	 	 
	 	 	*  Employee pays difference between brand and generic if generic available	 	 
	





GE COMPANY CONFIDENTIAL 


6







 

Benefit Design Comparison Summary  



	


	Benefit
 
	 	Description
 
	 	 

	


	Dental Plan	 	 	 	 	 	 	 	 
	

•  Eligibility	
 	

Immediate	
 	

 	
 	

 
	

Benefit


	 	 
	
 Standard
 
	

Premium


	 	 
	 	 

	 	 	(2005 schedule)	 	 	 	 	 	 
	 	 	Diagnostic & Prev.	100% Target	100%	 	 	 	 
	 	 	Restorative	50% Target	80%	 	 	 	 
	 	 	Major	50% Target	50%	 	 	 	 
	 	 	Surgery	80% R & C	80%	 	 	 	 
	 	 	Orthodontia	50%	50%	 	 	 	 
	 	 	(children < 19 only)	 	 	 	 	 	 
	

Deductible	
 	

 	

None	

None	
 	

 	
 	

 
	

Maximums	
 	

Annual	

$2,000	

$2,000	
 	

 	
 	

 
	 	 	(restorative and major only)	biennial	annual	 	 	 	 
	

 	
 	

Orthodontia	

$2,000	

$2,000	
 	

 	
 	

 
	 	 	 	per person per lifetime	 	 	 	 
	

Employee Contributions	
 	

 	

None	

$6, $12, $18	
 	

 	
 	

 
	

	
Vision	
 	

 	

 	

 	
 	

 	
 	

 
	Benefit	 	Schedule amounts for exams, lenses, and frames (discounts available from network providers)	 	 
	

Employee Contributions	
 	

Included with medical	
 	

 
	

	
Spending Accounts	
 	

 	

 	

 	
 	

 	
 	

 
	

Health Care	
 	

$5,000 maximum per year	
 	

 
	

Dependent Care	
 	

$5,000 maximum per year	
 	

 
	

	
Long-Term Care	
 	

 	

 	

 	
 	

 	
 	

 
	

Benefit	
 	

$50 to $250 daily benefit for nursing home, assisted living, and respite care for employee, spouse, parents, or parents-in-law	
 	

 
	Employee Contributions	 	Varies by age and benefit level; employee-pay-all	 	 
	

	
Personal Excess Liability	
 	

 	

 	

 	
 	

 	
 	

 
	

Eligibility	
 	

Immediate	
 	

 
	

Benefit	
 	

$1, $2, $3, or $5 million liability insurance over underlying coverage — property damage or personal injury to others	
 	

 
	

Employee Contributions	
 	

 	

 	

 	
 	

 	
 	

 
	





GE COMPANY CONFIDENTIAL 


7







 

Benefit Design Comparison Summary  



	


	Benefit
 
	 	Description
 
	 	 

	


	Postretirement Medical

Pre-65	 	 	 	 	 	 	 	 
	

Eligibility	
 	

Age 60 & 10 years of service	
 	

 
	

Benefits	
 	

Same as active employees (including dental)	
 	

 
	

Retiree Contributions	
 	

Based on pay at retirement:	
 	

 
	

 	
 	
Medical Benefits (Indemnity)	
 	

 
	 	 	•	Retiree only:	$27.26 to $53.34 per month	 	 
	 	 	•	Retiree + family:	$73.29 to $124.37 per month	 	 
	

 	
 	
Health Care Preferred Benefits (POS)	
 	

 
	 	 	•	Retiree only:	$21.04 to $47.12 per month	 	 
	 	 	•	Retiree + family:	$50.38 to $101.46 per month	 	 
	
Postretirement Medical

Post-65	
 	

 	

 	

 	
 	

 	
 	

 
	

Eligibility for Company-Paid	
 	

Same as pre-65	
 	

 
	

Benefits	
 	

Prescription Drug Plan plus Medicare Supplement: Part A Partial Fill-in Plan	
 	

 
	

Retiree Contributions	
 	

None, 100% company-paid (retirees with 10-14 years of service pay 25% of plan cost) (medical credit if opt out of coverage)	
 	

 
	

Eligibility for Optional Plans	
 	

Same as pre-65	
 	

 
	

Benefits	
 	

Medicare Supplement Part A and B Partial Fill-in Plans	
 	

 
	

Retiree Contributions	
 	

100% retiree-paid ($8.50 and $81 per person per month)	
 	

 
	
Postretirement Life Insurance	
 	

 	

 	

 	
 	

 	
 	

 
	

Eligibility	
 	

Age 60 & 10 years of service	
 	

 
	Benefit (Employer-Paid)	 	•	60-6	2.5 × salary	 	 	 	 
	 	 	 	62	2.0 × salary	 	 	 	 
	 	 	 	63	1.5 × salary	 	 	 	 
	 	 	 	64	1.0 × salary	 	 	 	 
	 	 	 	65+	0.5 × salary (maximum $50,000)	 	 	 	 
	

 	
 	

•	

Employees with less than 15 years of service are eligible for 1/2 of the scheduled amount up to a maximum of $25,000	
 	

 
	

Benefit (Optional)	
 	

1, 2, or 3 × pay with reductions at ages 65, 70, and 75. Ultimate benefit 30% of initial amount	
 	

 
	

Employee Contributions	
 	

Age 60-64: $70; Age 65+: $1.31 per $1,000	
 	

 
	





GE COMPANY CONFIDENTIAL 


8







 

Benefit Design Comparison Summary  



	


	Benefit
 
	 	Description
 
	 	 

	


	Job Security Benefits	 	 	 	 	 	 	 	 	 	 	 	 
	

Eligibility	
 	

1 year of service	
 	

 
	Layoff Benefits (eligibility based on plan definition of Layoff Benefits)	 	•	 	< 15 years: 1week of pay for each full year of service plus 1 day of pay for each additional 11-week increment of a fractional year of continuous service (maximum 4 days of pay)	 	 
	 	 	•	 	15+ years: 1.5 weeks pay for each full year of service plus 1.5 days of pay for each additional 11-week increment of a fractional year of continuous service (maximum 6 days of pay)	 	 
	 	 	•	 	Minimum 1 week of pay	 	 
	 	 	•	 	Continuation of certain benefits (including medical/dental) for up to 1 year based on plan description	 	 
	

	Office Closing Benefits (eligibility based on plan definition of Office Closing Benefits)	 	•	 	Under 2 years of continuous service: 1 week per year of service plus 1 days pay for each additional 11 weeks of a fractional year of service (maximum 4 days of pay). The minimum each employee is eligible to receive is 1
week of pay	 	 
	 	 	•	 	>2 but <15 years of continuous service: 1.5 weeks pay for each full year of service plus 1.5 days for each additional 11 weeks of a fractional year of service (maximum 6 days of pay). The minimum each employee is
eligible to receive is 4 weeks of pay	 	 
	 	 	•	 	15+ years of continuous service: 2 weeks pay for each full year of service plus 2 days for each additional 11 weeks of a fractional year of service (maximum 6 days of pay)	 	 
	 	 	•	 	Continuation of certain benefits (including medical/dental) for up to I year based on plan description	 	 
	 	 	•	 	If within 12 months of reaching age 60 on the office closing termination date, eligible to receive office closing benefits and continuous service will be maintained until you become eligible to retire at age 60 (unless you
retire earlier)	 	 
	

	
Adoption Assistance	
 	

Up to $4,000 per adopted child	
 	

 
	

	
Holidays	
 	

11	
 	

 
	

	Vacation (no carryover)	 	 	 	Exempt
	 	Non-Exempt
	 	 
	 
	 	 
	 	Service
	 	Schedule
	 	Service
	 	Schedule
	 	 

	 	 	 	 	1st partial year of hire	 	Pro-rate portion of 10 days	 	1 year	 	10 days	 	 
	 	 	 	 	1-4 years	 	10 days	 	5 years	 	121/2 days	 	 
	 	 	 	 	5-9 years	 	15 days	 	7 years	 	15 days	 	 
	 	 	 	 	10-19 years	 	20 days	 	15 years	 	20 days	 	 
	 	 	 	 	20+ years	 	25 days	 	20 years	 	25 days	 	 
	 	 	 	 	 	 	 	 	30 years	 	30 days	 	 
	

 	
 	

 	
 	

*  Employees with 15+ years of service as of 12/31/2003 are eligible to earn 30 days of vacation each year once they reach 30 years of service.



Note:  Annual vacation eligibility was grandfathered for ATI employees at the time of the acquisition and vacation that was accrued but unused prior to the date of the acquisition was allowed to be carried over.	
 	

 	
 	

 
	





GE COMPANY CONFIDENTIAL 


9







 

Benefit Design Comparison Summary  



	




	Benefit
 
	 	Description
 

	




	Personal Business Days	 	Up to 5 days	 	 
	Family Care Resource Program	 	Child Care, Elder Care, and Adoption Referral Services, Education and career counseling for employee and dependents	 	 
	

	
Tuition Refund	
 	

100% for degree-related courses

(Note: Interest bearing education loans)	
 	

 
	

	
Emergency Aid	
 	

 	
 	

 
	

	

Disaster Relief

Personal Emergency	
 	

Up to $3,000 grant

Up to $500 loan or grant	
 	

 
	

	
Product Purchase Discount	
 	

Schedule discount on GE products purchased for home use	
 	

 
	

	
Anniversary Award Program	
 	

5th anniversary and every five years thereafter—choice of quality brand-name award from catalog.	
 	

 
	





GE COMPANY CONFIDENTIAL 


10








Schedule 7. l(f)


 Vacation, Sick Time and Floating Holidays  



Please
see Schedule 4.15. 








Schedule 8.1(f)


 EBITDA  



	 
	 
	 	2003

Financial

Statements
	 	2004 Interim

Financial

Statements
	 	2003 Audit
	 	2004 Review

	Consolidated Net Income (including gain from extraordinary items) of the Companies	 	$	1,975,671	 	$	494,245	 	$	 	 	$	 
	 	 	 	 	 	 	 	 	 	
	 	

	
Less:	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 
	
 	

interest income	
 	
 	

2,250	
 	
 	

2,399	
 	
 	

 	
 	
 	

 
	
 	

gain on sale of assets	
 	
 	

[890	
 ]	
 	

0	
 	
 	

 	
 	
 	

 
	

Plus:	

(in each case to the extent deducted in the calculation of Consolidated Net Income, but without duplication):	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 
	

 	

any provision for income taxes	
 	
 	

1,292,610	
 	
 	

323,366	
 	
 	

 	
 	
 	

 
	

 	

 	
 	
 	

 	
 	
 	

 	
 	

	
 	


	

 	

interest expense	
 	
 	

736,822	
 	
 	

0	
 	
 	

 	
 	
 	

 
	

 	

 	
 	
 	

 	
 	
 	

 	
 	

	
 	


	

 	

depreciation	
 	
 	

491,282	
 	
 	

1,015,497	
 	
 	

 	
 	
 	

 
	

 	

 	
 	
 	

 	
 	
 	

 	
 	

	
 	


	

 	

amortization	
 	
 	

48,992	
 	
 	

62,136	
 	
 	

 	
 	
 	

 
	

 	

 	
 	
 	

 	
 	
 	

 	
 	

	
 	


	

EBITDA	
 	
$	

4,544,017	
 	
$	

1,892,905	
 	
$	

 	
 	
$	

 
	

 	

 	
 	
 	

 	
 	
 	

 	
 	

	
 	












Schedule 8.2(b)


 Consents and Approvals  


	1.
	All
authorizations, consents, orders and approvals of all Governmental Authorities



	2.
	Lucent
Technologies Inc. consent to assignment of General Purchase Agreement dated April 11, 2003 (contract number LNM030411ATG00) and Software License Agreement dated
March 13, 2003 (contract # LL5CDO)



	3.
	Lucent
Technologies, Inc. release of GE Business Productivity Solutions, Inc., VFS Financing Inc. and all affiliates from obligations under Guaranty letter dated
April 7, 2003



	4.
	Bonds
and Letters of Credit to replace those listed on Exhibit A hereto 







Exhibit A


 Bonds and Letters of Credit

Advanced TelCom, Inc.  


I.    BONDS  



	Entity
	 	Bond #
	 	Amount

	Arizona Corporation Commission	 	Surety Bond #285021684	 	$	10,000
	

City of Salem, OR	
 	

License or Permit Bond #81908727	
 	
$	

100,000
	

City of Bellingham, WA	
 	

License or Permit Bond #81908726	
 	
$	

25,000
	

City of Tacoma, WA	
 	

License or Permit Bond #81908728	
 	
$	

100,000
	

Board of Commissioners of Thurston County, WA	
 	

Surety Bond—Right of Way #81940410	
 	
$	

15,000
	

City of Yakima, WA	
 	

Surety Bond—Right of Way #81940409	
 	
$	

100,000
	

Pacific Bell	
 	

Faithful Performance Bond #81941145	
 	
$	

100,000
	

State of Oklahoma	
 	

Sales Tax Bond #81941144	
 	
$	

500
	

Washington State

Department of Labor and Industries—Contractor's

Surety Bond	
 	

Continuous Contractor's

Surety Bond # 81941142	
 	
$	

12,000
	

Washington State

Department of Labor and Industries—Electric Contractor's Surety Bond	
 	

Electrical/Telecommunications Contractor's Bond #81941141	
 	
$	

4,000
	

State of Delaware	
 	

Surety Bond to Provide Telecommunications Services #81941147	
 	
$	

50,000
	

State of Washington,

Department of Transportation	
 	

Blanket Bond for Franchises and Permits #81941146	
 	
$	

10,000
	

Nevada State Contractors Board	
 	

Bond #81941143	
 	
$	

30,000
	

City of Fife, WA	
 	

Performance Bond & Performance Guaranty #285021678	
 	
$	

5,000
	

City of Tacoma, WA	
 	

License Bond #6300012	
 	
$	

10,000





II.    LETTERS OF CREDIT  



	Entity
	 	LOC #
	 	Amount

	City of Tacoma, WA	 	SM200459W	 	$	50,000
	City of Olympia, WA	 	SM200813W	 	$	20,000













QuickLinks


TABLE OF CONTENTS

EXHIBITS AND SCHEDULES


STOCK PURCHASE AGREEMENT

ARTICLE I DEFINITIONS

ARTICLE II PURCHASE AND SALE OF THE SHARES

ARTICLE III RELATED MATTERS

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER


ARTICLE VI COVENANTS

ARTICLE VII EMPLOYEE MATTERS

ARTICLE VIII CONDITIONS PRECEDENT TO CLOSING; TERMINATION

ARTICLE IX INDEMNIFICATION

ARTICLE X MISCELLANEOUS



Schedule 2.6(b) Retained Assets


Schedule 2.7 Retained Liabilities

Schedule 4.6 Financial Statements



Advanced Telcom, Inc. Consolidated Balance Sheets



Advanced Telcom, Inc. Consolidated Income Statements


Schedule 4.11(a) Leased Real Property



Schedule 4.13 Permits


Schedule 4.13 Advanced TelCom, Inc. Qualifications to do Business (as of 10/6/2004)



Schedule 4.13 Advanced TelCom Franchise Agreements



Schedule 4.13 Environmental Permits



Schedule 4.13 Miscellaneous


Schedule 4.14 Intellectual Property


Schedule 4.15 Labor Matters


Schedule 4.16 Employee Benefit Plans