Exhibit
10.20


 


EXECUTION
VERSION


 


ASSET
PURCHASE AGREEMENT


 


BY AND
AMONG


 


LEVEL 3
COMMUNICATIONS, LLC,


 


ICG
TELECOM GROUP, INC.,


 


and


 


ICG
COMMUNICATIONS, INC.


 


 


Dated as
of April 1, 2004


 

















 


TABLE
OF CONTENTS


 


	
  ARTICLE I

  	
  THE
  PURCHASE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Sale and Purchase of the Acquired
  Assets

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.02

  	
  Excluded Assets

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.03

  	
  Limited Assumption of Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.04

  	
  Excluded Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.05

  	
  Proration of Receivables

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.06

  	
  Consents of Third Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.07

  	
  Purchase Price

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.08

  	
  Allocation of Purchase Price

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.09

  	
  The Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE SELLERS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Organization; Authority; Binding
  Obligation

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.02

  	
  No Conflict; Required Filings and
  Consents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.03

  	
  Licenses; Compliance

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.04

  	
  Financial Statements and Condition

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.05

  	
  Intellectual Property

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.06

  	
  Absence of Undisclosed Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.07

  	
  Absence of Certain Changes or Events

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.08

  	
  Litigation; Disputes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.09

  	
  Taxes and Tax Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.10

  	
  Disclosure Schedule Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.11

  	
  Title to Assets

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.12

  	
  Scope of Business

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.13

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.14

  	
  Certain Contracts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.15

  	
  Brokers

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.16

  	
  Receivables

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.17

  	
  Minute Books and Financial
  Records

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.18

  	
  Affiliate Transactions

  	
   

  



 


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  ARTICLE III

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE BUYER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Organization; Authority; Binding
  Obligation

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.02

  	
  No Conflict; Required Filings and
  Consents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.03

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.04

  	
  Funds

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.05

  	
  Brokers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  COVENANTS
  RELATING TO CONDUCT OF BUSINESS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Conduct of Business of the Sellers

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.02

  	
  Access and Information

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  ADDITIONAL
  AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Appropriate Action; Consents; Filings

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.02

  	
  Updated Disclosure; Breaches

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.03

  	
  Public Announcements

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.04

  	
  Collection of Receivables; Other
  Assets; Payment of Current Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.05

  	
  Mail

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.06

  	
  Preservation of Books and
  Records

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.07

  	
  No Negotiation; Other Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.08

  	
  Excluded Customer Contracts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.09

  	
  Business Employees

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.10

  	
  Acquired Assets and Excluded Assets

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.11

  	
  Certain Tax Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  CONDITIONS
  PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Conditions
  to Obligations of Each Party Under This Purchase Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.02

  	
  Additional
  Conditions to Obligations of the Buyer

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.03

  	
  Additional
  Conditions to Obligations of the Sellers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  TERMINATION,
  AMENDMENT AND WAIVER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Termination

  	
   

  



 


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  Section 7.02

  	
  Effect of
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.03

  	
  Amendment

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.04

  	
  Extension;
  Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  SURVIVAL; INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01

  	
  Covenants
  and Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.02

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.02

  	
  Headings

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.03

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.04

  	
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.05

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.06

  	
  Parties in
  Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.07

  	
  Mutual Drafting

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.08

  	
  Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.09

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.10

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.11

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.12

  	
  Bulk
  Sales

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.13

  	
  Assistance
  in Proceedings

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.14

  	
  Further
  Assurances

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  DEFINITIONS

  	
   

  



 


iii

















 


ASSET PURCHASE AGREEMENT


 


ASSET PURCHASE AGREEMENT, dated as of April
1, 2004 (“Purchase Agreement”), among Level 3 Communications, LLC, a
Delaware limited liability company (“Level 3” or the “Buyer”),
ICG Communications, Inc. (“Parent”), a Delaware corporation, ICG Telecom Group,
Inc., a Colorado corporation (the “Company” and, together with the
Parent, the “Sellers”).


 


Recitals


 


WHEREAS, the Company is engaged in the
Business (as defined in Article X hereof);


 


WHEREAS, upon the terms and subject to the
conditions set forth herein, the Sellers desire to sell to the Buyer, and the
Buyer desires to purchase from the Sellers, certain of the Sellers’ assets used
or held for use in the conduct of the Business;


 


NOW, THEREFORE, in consideration of the
foregoing and the respective representations, warranties, covenants and
agreements set forth in this Purchase Agreement, and intending to be legally
bound hereby, the parties hereto do hereby agree as follows.


 


ARTICLE I

THE PURCHASE


 


SECTION 1.01     Sale and Purchase of the Acquired Assets.


 


Upon the terms and
subject to the conditions of this Purchase Agreement, the Sellers shall sell,
transfer, assign, convey and deliver to the Buyer (or Buyer’s designated
assignee, as hereinafter provided), free and clear of any Encumbrances, and the
Buyer shall purchase and acquire from the Sellers, all of their right, title to
and interest in and to the following assets and properties (collectively, the “Acquired
Assets”), as the same may exist on the date of conveyance thereof to Buyer:


 


(a)                                  all
Customer Contracts set forth on Schedule 1.01(a) (the “Assumed
Customer Contracts”);


 


(b)                                 all
Numbers used by Sellers in the conduct of the Business, except for the Excluded
Numbers, including, without limitation, all Numbers delineated on Schedule
1.01(b), which Numbers shall be conveyed to Buyer through local number
portability or “LNP,” or, at Buyer’s option, by assignment directly to
Buyer (which assignment Sellers shall use all reasonable efforts to effect);


 


(c)                                  the
equipment delineated on Schedule 1.01(c), which such equipment includes
all of the network access servers, or NAS equipment, owned by Sellers and used,
contemplated to be used, or held for use, solely in the Business  (“Purchased Equipment”);


 

















 


(d)                                 subject
to Section 1.05, all accounts receivable arising from the Assumed
Customer Contracts with respect to services provided on or after the Closing
Date, including (i) all trade accounts receivable and other rights to
payment from customers of the Sellers under the Assumed Customer Contracts and
the full benefit of all security for such accounts or rights to payment,
including all trade accounts receivable representing amounts receivable in
respect of goods shipped or products sold or services rendered to customers of
the Sellers under the Assumed Customer Contracts, (ii) all other accounts
or notes receivable of the Sellers under the Assumed Customer Contracts and all
deposits with respect to such accounts or notes receivable, (iii) any
claim, remedy or other right related to any of the foregoing (“Receivables”),
and (iv) reciprocal compensation, if any, with respect to each Number from and
after the applicable Effective Date for such Number;


 


(e)                                  all
books and records to the extent related to the Acquired Assets (“Books and
Records”), including, without limitation, client and customer lists and
Records, referral sources, research and development reports and Records,
production reports and Records, service and warranty Records, equipment logs,
operating guides and manuals, environmental Records, financial and accounting
Records, creative materials, advertising materials, promotional materials,
studies, reports, correspondence and other similar documents and Records;


 


(f)                                    all
claims of Sellers against third parties arising on and after the Closing Date
relating to the Acquired Assets or the Assumed Liabilities, whether choate or
inchoate, known or unknown, contingent or noncontingent; and


 


The Acquired
Assets shall include such other contracts or assets as requested by Buyer and
which the Sellers and the Buyer reasonably determine are necessary for the
Buyer’s operation of the Business after the Closing Date, as the Sellers and
the Buyer may agree in writing by amendment to the schedules hereto.


 


SECTION 1.02     Excluded Assets.


 


Except as set forth in
Section 1.01, none of the Sellers shall sell, transfer, assign, convey or
deliver to the Buyer any of its right, title to or interest in or to any of its
assets or properties (those assets and properties not conveyed by the Sellers
shall be referred to herein, collectively, as the “Excluded Assets”).  Excluded Assets are not part of the sale and
purchase contemplated by this Purchase Agreement, are excluded from the
Acquired Assets and shall remain the property of the Sellers after the Closing
Date.  Excluded Assets include, without
limitation, the following:


 


(a)                                  all
assets that relate exclusively to any business of the Sellers other than the
Business, and any other assets of any of the Sellers if such assets relate to
any business other than the Business;


 


(b)                                 any
contract, agreement, or arrangement not expressly assumed by Buyer in writing;


 


2

















 


(c)                                  all
Customer Contracts except for Assumed Customer Contracts (the “Excluded
Customer Contracts”), including, without limitation, those set forth on Schedule
1.02(c);


 


(d)                                 the
Sellers’ names and all related or associated trade names, trade name rights,
trademarks, trademark rights, service marks and copyrights and all
registrations and applications pending therefor;


 


(e)                                  all
cash, cash deposits, performance bonds, and other cash equivalents of the Sellers;


 


(f)                                    subject
to Section 1.05, all Receivables with respect to services provided under
the Assumed Customer Contracts prior to the Closing Date;


 


(g)                                 all
equipment, gear, facilities, contracts and other rights (other than the
Purchased Equipment, the Numbers and the Assumed Customer Contracts) held by
Sellers and used to deliver services to customers under the Assumed Customer
Contracts;


 


(h)                                 all
rights to refunds of Taxes paid by the Sellers;


 


(i)                                     all
Excluded Numbers;


 


(j)                                     all
reciprocal compensation payable with respect to each Excluded Number and with
respect to each Retained Number until the applicable Effective Date of each
such Retained Number; and


 


(k)                                  all
consideration received by, and all rights of, the Sellers pursuant to this
Purchase Agreement.


 


SECTION 1.03     Limited Assumption of Liabilities.


 


Buyer is not acquiring or
otherwise assuming any Liability of Sellers with respect to the Business or
otherwise, except for any Liability under the Assumed Customer Contracts that
arises from Buyer’s obligations under the Assumed Contracts on and after the
Closing Date.  Buyer shall assume and
thereafter pay, perform and discharge, and shall from and after the applicable
date of conveyance of the Acquired Assets indemnify, defend and hold the
Sellers harmless from, any Liability under the Assumed Customer Contracts that
arises from Buyer’s obligations under the Assumed Customer Contracts on and
after the Closing Date (collectively, the “Assumed Liabilities”).  Such indemnity by the Buyer shall survive the
Closing.


 


SECTION 1.04     Excluded Liabilities.


 


(a)           Notwithstanding
the provisions of Section 1.03 or any other provision of this Purchase
Agreement to the contrary, the Buyer shall not and does not assume, agree to
pay, perform or discharge any of the Liabilities of the Sellers or the Business
other than the Assumed Liabilities (those Liabilities not assumed by the Buyer
shall be referred to herein, collectively, as the “Excluded Liabilities”).  The Excluded Liabilities shall remain the
sole responsibility of and shall be retained, paid, performed and discharged
solely by the Sellers, and the Sellers shall from


 


3

















 


and after the Closing Date indemnify, defend and hold
the Buyer harmless therefrom.  Such
indemnity by the Sellers shall survive the Closing.


 


(b)           Excluded
Liabilities shall include, without limitation:


 


(i)                                     any
Liabilities of the Sellers associated with or arising out of any business other
than the Business;


 


(ii)                                  any
Liabilities with respect to the Business or otherwise incurred by any of the
Sellers for goods or services provided prior to the Closing Date (including
liabilities for service credits claimed under Assumed Customer Contracts
relating to service issues experienced prior to the Closing Date);


 


(iii)                               any
Liabilities for Taxes (regardless of whether such Taxes are reserved) owed or
required to be remitted by any of the Sellers in respect of any periods prior
to or after the date of conveyance of the Acquired Assets to Buyer;


 


(iv)                              any
employee-related Liabilities, including, without limitation, any liability or
obligation under any employee compensation plan or other arrangement or
collective bargaining agreement or other labor contract associated with any
employee of the Business or any Seller;


 


(v)                                 any
Liabilities of the Sellers arising under any credit agreement, credit facility,
loan agreement or indenture;


 


(vi)                              any
Environmental, Health and Safety Liabilities arising out of or relating to the
operation of the Business by the Sellers or the current or former leasing,
ownership or operation of real property by the Sellers in connection with the
Business;


 


(vii)                           any
Liabilities arising under or relating to any contract, arrangement or
undertaking of the Sellers which is not an Assumed Customer Contract
(including, but not limited to, the Excluded Customer Contracts);


 


(viii)                        any
Liability with respect to any Accounts Payable of Sellers;


 


(ix)                                any
Liabilities to indemnify, reimburse or advance amounts to any officer,
director, employee, agent or Affiliate of either Seller;


 


(x)                                   any
Liabilities to distribute to any of the Sellers’ shareholders, or otherwise
apply all or any part of the consideration received by the Sellers under this
Purchase Agreement;


 


(xi)                                any
Liability relating to or arising in respect of the ownership or operation of
any Excluded Asset;


 


4

















 


(xii)                             any
Liabilities of the Sellers under this Purchase Agreement or any other document
executed by the Sellers in connection with any of the transactions contemplated
by this Purchase Agreement; and


 


(xiii)                          any
Losses or Liabilities arising from or relating to any claim or allegation
brought by any stockholder of Parent in connection with or involving the
transactions contemplated by this Purchase Agreement.


 


SECTION 1.05     Proration of Receivables.


 


(a)                                  To
the extent any Receivable under an Assumed Customer Contract relates in part to
goods or services provided before the Closing Date and in part to goods or
services provided after the Closing Date, each such Receivable (i) with
respect to a customer that is invoiced at a flat rate based on number of ports
used in the billing cycle, shall be proportioned as of 12:01 a.m., Mountain
Time, on the Closing Date (the “Proration Time”), based on the number of
calendar days in the relevant billing cycle to which the Receivable relates for
which the Buyer, on the one hand, provided goods or services after the
Proration Time, including the day of Closing (the “Buyer’s Receivables”),
which shall be apportioned to the Buyer, and for which the Sellers, on the
other hand, provided goods or services prior to the Proration Time, excluding
the day of Closing, (the “Sellers’ Receivables”), which shall be
apportioned to the Sellers, and (ii) with respect to a customer that is
invoiced based on actual usage during the billing cycle, based on actual usage,
pursuant to which usage by the customer before the Proration Time shall be
Sellers’ Receivables and usage from and after the Proration Time shall be
Buyer’s Receivables.


 


(b)                                 Sellers
shall bill customers with respect to Receivables that would be invoiced in
April 2004 in accordance with its normal billing practices in the ordinary
course of business only (i) for March 2004 port usage for customers invoiced
based on actual usage and (ii) for March 2004 port fees for customers that are
invoiced in arrears at a flat rate per port based on number of ports used.  Buyer shall bill customers with respect to
Receivables that would be invoiced in April 2004 for April 2004 port fees for
customers that are invoiced in advance at a flat rate per port based on number
of ports used.  Buyer shall also bill
customers with respect to Receivables that would be invoiced in May 2004 in
accordance with its normal billing practices in the ordinary course of business
(i) for April 2004 port usage for customers invoiced based on actual usage,
(ii) for April 2004 port fees for customers that are invoiced in arrears at a
flat rate per port based on number of ports used, and (iii) for May 2004 port
fees for customers that are invoiced in advance at a flat rate per port based
on number of ports used.  The Sellers,
on the one hand, and the Buyer, on the other hand, shall be entitled to collect
and retain those funds so collected with respect to the Receivables for which
it is obligated to bill customers pursuant to this Section 1.05(b), subject to
adjustment of the Purchase Price in accordance with Sections 1.05(a) and 1.07.


 


5

















 


(c)                                  From
and after the Closing Date, (i) Buyer shall, within five (5) business days,
remit to Sellers any monies, checks or instruments of payment received from
customers that reference or otherwise relate to invoices sent by Sellers
pursuant to Section 1.05(b) and (ii) Sellers shall, within five (5) business
days, remit to Buyer any monies, checks or instruments of payment received from
customers that reference or otherwise relate to invoices sent by Buyer pursuant
to Section 1.05.


 


SECTION 1.06     Consents of Third Parties.


 


To the extent required by
any Assumed Customer Contract and with respect to each Key Customer Contract,
the Sellers shall seek the consent of the parties (other than the Sellers) to
each such Assumed Customer Contract with respect to the assignment of such Assumed
Customer Contract to the Buyer. 
Notwithstanding anything in this Purchase Agreement to the contrary, to
the extent the assignment of any Assumed Customer Contract shall require, in
the Buyer’s reasonable judgment, the consent of any party, this Purchase
Agreement shall not constitute a breach thereof or create rights in others not
desired by the Buyer.  During the
Closing Period, the Sellers covenant and agree that they shall each use
commercially reasonable efforts to obtain written, unconditional and
irrevocable consents to the assignment to the Buyer of each such Assumed
Customer Contract from all parties (other than the Sellers) to such Assumed
Customer Contract, (each such consent, which shall be in form and substance
reasonably acceptable to Buyer, shall be referred to herein as a “Third
Party Consent”).  At the request of
the Sellers, the Buyer shall use its commercially reasonable efforts to assist
the Sellers in such undertaking.


 


SECTION 1.07     Purchase Price.


 


The Purchase Price is $35
million (“Purchase Price”), adjusted and payable as follows:


 


(a)                                  Adjustments:  The Purchase Price shall be adjusted (the “Net
Adjustment”) in connection with the distribution of the Holdback pursuant
to Section 1.07(c) as follows (as adjusted, the “Adjusted Purchase Price”):


 


(i)                                     The
Purchase Price shall be reduced by the amount of Buyer’s Receivables which are
invoiced by Sellers, regardless of whether such Buyer’s Receivables are
collected by Sellers.


 


(ii)                                  The
Purchase Price shall be increased by the amount of Sellers’ Receivables which
are invoiced by Buyer regardless of whether such Sellers’ Receivables are
collected by Buyer.


 


(iii)                               The
Purchase Price shall be decreased by the amount of customer service credits and
customer deposits assumed by Buyer.


 


(b)                                 Closing
Date Payment:  All of the Purchase Price
except $10 million (the “Holdback”) shall be paid by Buyer to the
Company at Closing in immediately available funds by wire transfer to an
account designated by Company to Buyer in writing prior to the Closing Date.


 


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(c)                                  Holdback:  The Holdback shall secure Sellers’
performance of this Purchase Agreement and the Seller Ancillary
Agreements.  In the event Buyer suffers
a Loss, or reasonably believes that it will suffer, a Loss, Buyer shall have
the right to offset the amount of such Loss (or Buyer’s reasonable estimate
thereof) from the Holdback to the extent it is or believes it may reasonably be
entitled to indemnification for such Loss under Article VIII of this
Agreement.  On the date three months
after the Closing Date, Buyer shall pay Sellers $5 million of the Holdback (i)
less any amount offset for Losses pursuant to Section 8.02(h) to the extent it
is or believes it may reasonably be entitled to indemnification for such Losses
under the terms of Article VIII of this Purchase Agreement, and (ii)
further adjusted up or down to reflect the Net Adjustment, in immediately
available funds by wire transfer to an account designated by Sellers to Buyer
in writing prior thereto.  On the date
six months after the Closing Date, Buyer shall pay Sellers the remaining amount
of the Holdback, (i) after adjustment pursuant to the prior sentence, (ii) less
any additional amounts offset for Losses pursuant to Section 8.02(h), to
the extent Buyer is or believes it may reasonably be entitled to
indemnification for such Losses under the terms of Article VIII of this
Purchase Agreement, and (iii) further adjusted up or down to reflect any
additional Net Adjustment, in immediately available funds by wire transfer to
an account specified by Sellers to Buyer in writing prior to the date thereof.


 


SECTION 1.08     Allocation of Purchase Price.


 


The Adjusted Purchase
Price and other relevant items shall be allocated among the Acquired Assets in
accordance with the rules of Section 1060 of the Code and Treasury
Regulations thereunder.  Such allocation
shall be set forth on a schedule which shall be prepared jointly and in good
faith by the Buyer and Sellers within 75 days following the payment of the
Holdback.  All allocations contained in
such schedule shall be used by each party in preparing any filings required
pursuant to Section 1060 of the Code or any similar provisions of state or
local Law and all relevant Tax Returns, subject to adjustment to reflect
(x) the Sellers’ selling expenses as a reduction of sales proceeds, and
(y) the Buyer’s acquisition expenses as an addition to the Adjusted
Purchase Price.


 


SECTION 1.09     The Closing.


 


(a)           Subject
to the terms and conditions of this Purchase Agreement, the closing of the
transactions contemplated hereby (the “Closing”) shall take place as
soon as practicable (but, in any event, within two business days) after the
satisfaction or, if permissible, the waiver of the conditions set forth in Article VI
hereof (other than conditions which by their terms are to be satisfied at the
Closing) (the “Closing Date”), at the offices of Otten, Johnson,
Robinson, Neff & Ragonetti, P.C., 950 Seventeenth Street, Suite 1600,
Denver, Colorado, unless another date or place is agreed to in writing by the
parties hereto.


 


(b)           At
the Closing, (i) Company shall deliver to the Buyer duly executed
instruments of transfer and assignment of the Assumed Customer Contracts that,
taken together with any necessary consents of third parties in connection with
such transfer and assignment, will be sufficient to vest in the Buyer the
interests in the Assumed Customer Contracts; (ii) Company


 


7

















 


shall convey such of the Numbers as it can through the
consummation of any LNP arrangements which have, as of the Closing Date, been
finalized; (iii) the Buyer shall deliver to Company duly executed
instruments of assumption evidencing the assumption by the Buyer of the Assumed
Customer Contracts in accordance with the terms of this Purchase Agreement;
(iv) Company shall deliver to the Buyer duly executed instruments of
transfer and conveyance of the Purchased Equipment; and (v) Company shall
deliver to the Buyer duly executed instruments of transfer, assignment, and
conveyance of all other Acquired Assets. 
The Buyer and Sellers shall bear equally the cost of any documentary,
stamp, sales, excise, transfer, gross receipts or other Taxes (other than Income
Taxes) payable in respect of the sale of the Acquired Assets. The Sellers
shall, subject to the Buyer’s review and consent, which consent shall not be
unreasonably withheld, pay such Taxes to the applicable Taxing authority and
prepare and file all Tax Returns with respect to such Taxes, and Buyer shall,
promptly after receipt of evidence of Sellers’ payment thereof, reimburse
Sellers for its half of such Taxes.


 


(c)           At
the Closing, the Buyer and the Sellers shall execute (i) a transition
services agreement (the “Transition Services Agreement”) substantially
in the form set forth as Exhibit A hereto, and (ii) a
non-competition agreement (the “Non-Competition Agreement”)
substantially in the form set forth as Exhibit B hereto.


 


(d)           At
the Closing, the Sellers shall deliver to the Buyer a certificate certifying
the accuracy of their representations and warranties in all material respects
as of the date of this Purchase Agreement and as of the Closing in accordance
with Section 6.02(a) and as to their compliance with and performance of,
in all material respects, their covenants and obligations to be performed or
complied with at or before the Closing in accordance with Section 6.02(b).


 


(e)           At
the Closing, the Buyer shall deliver to the Sellers a certificate certifying
the accuracy of its representations and warranties in all material respects as
of the date of this Purchase Agreement and as of the Closing in accordance with
Section 6.03(a) and as to its compliance with and performance of, in all
material respects, its covenants and obligations to be performed or complied
with at or before the Closing in accordance with Section 6.03(b).


 


(f)            At
the Closing, each Seller shall deliver to the Buyer a certificate of the
secretary of such Seller certifying and attaching all requisite resolutions or
actions of such Seller’s board of directors or other governing body and
shareholders approving the execution and delivery of this Purchase Agreement
and the consummation of the transactions contemplated hereby and certifying to
the incumbency and signatures of the officers of such Seller executing this
Purchase Agreement and any other document executed at the Closing by such
Seller.


 


(g)           At
the Closing, the Buyer shall deliver to the Sellers a certificate of the
secretary of the Buyer certifying and attaching all requisite resolutions or
actions of the Buyer’s board of directors or other governing body and
shareholders approving the execution and delivery of this Purchase Agreement
and the consummation of the transactions contemplated hereby and certifying to
the incumbency and signatures of the officers of the Buyer executing this
Purchase Agreement and any other document executed at the Closing by the Buyer.


 


(h)           At
the Closing, the Sellers shall deliver to Buyer an opinion of counsel in form
and substance acceptable to Buyer in its sole discretion.


 


8

















 


(i)            At
the Closing, the Sellers shall deliver all originally executed Assumed Customer
Contracts.


 


ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLERS


 


Except as specifically
set forth in the attached disclosure schedule delivered by the Sellers to the
Buyer (the “Business Disclosure Schedule”), acknowledging that the Buyer
is hereby, and in consummating the transactions contemplated hereby will be,
relying thereon, hereby jointly and severally represent and warrant (which
representation and warranty shall be deemed to include only the disclosures
with respect to the representation and warranty so specified or specifically
cross-referenced with respect to the disclosures in the Business Disclosure
Schedule) to the Buyer as follows, both as of the date hereof and as of the
Closing Date, unless otherwise specifically set forth herein:


 


SECTION 2.01     Organization; Authority; Binding Obligation.


 


(a)           The
Business Disclosure Schedule contains a complete and accurate list of the
Sellers’ respective jurisdictions of incorporation or formation and any other
jurisdictions in which they are qualified to do business as a foreign
corporation.  Each of the Sellers is an
entity duly organized, validly existing and in good standing under the Laws of
the jurisdiction of its incorporation or organization, and has the full
corporate or limited liability company power and authority to execute and
deliver this Purchase Agreement, to carry out the transactions contemplated
hereby, to conduct its business as it is now being conducted, to own or use the
properties and assets that it purports to own or use, and to perform all its
obligations under the Business Contracts. 
Each Seller is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification, except
where the failure to be so qualified or be in good standing would not
reasonably be expected to have a Business Material Adverse Effect.  The execution and delivery by the Sellers of
this Purchase Agreement and all other agreements, instruments or other
documents to be executed by any of them in connection with any of the
transactions contemplated hereby, including the Transition Services Agreement
and the Non-Competition Agreement (collectively, the “Seller Ancillary
Agreements”), and the consummation by the Sellers of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action, and no other corporate or company proceedings on the part of
the Sellers are necessary to authorize this Purchase Agreement and the Seller
Ancillary Agreements or to consummate the transactions contemplated hereby and
thereby, including, without limitation, any consent, vote or other approval of
Parent’s stockholders.  The sale of the
Acquired Assets hereunder is not part of plan by Parent or its Board of
Directors to sell all or substantially all of Parent’s consolidated assets.


 


(b)           This
Purchase Agreement has been duly executed and delivered by the Sellers and
constitutes a legal, valid and binding obligation of the Sellers, enforceable
in accordance with its terms, except as such enforceability may be subject to
the effects of any applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar Laws affecting


 


9

















 


creditors’ rights generally and subject to the effects
of general equitable principles (whether considered in a proceeding in equity
or at law).


 


SECTION 2.02     No Conflict; Required Filings and Consents.


 


The execution, delivery
and performance by the Sellers of this Purchase Agreement and of all Seller
Ancillary Agreements, and the consummation by the Sellers of the transactions
contemplated hereby and thereby, do not and will not, directly or indirectly
(with or without notice or lapse of time): (i) conflict with, or violate
any provision of, the certificate or articles of incorporation or
formation or the bylaws or operating agreement of any of the Sellers;
(ii) conflict with or violate any Law applicable to any of the Sellers;
(iii) conflict with, result in any breach of, or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under any Assumed Customer Contract; (iv) result in or require the
creation or imposition of any Encumbrance, or result in the acceleration of any
indebtedness, of any nature upon, or with respect to, any of the Acquired
Assets; (v) require any consent, approval, authorization or permit of, or
filing with or notification to, any Person not party to this Purchase Agreement
other than those consents that will have been obtained as of the Closing; or
(vi) result in or give rise to any penalty, forfeiture, termination, right
of termination, amendment, cancellation or restriction under any Assumed Customer
Contract.


 


SECTION 2.03     Licenses; Compliance.


 


(a)           Each
of the Sellers is, and since January 1, 2003 has been, in possession of
all Licenses necessary for it to own, lease and operate the Business and to
carry on the Business as presently conducted (the “Business Licenses”),
except where the failure to possess any such Business License would not
reasonably be expected to have a Business Material Adverse Effect.  None of the Sellers is in violation of or
default under any Business License, except for any such violation or default
that would not reasonably be expected to have a Business Material Adverse
Effect.


 


(b)           Each
of the Sellers is, and since January 1, 2003 has been, in full compliance
with all Laws that are applicable to the conduct or operation of the Business
or the ownership or use of the Acquired Assets, except where the failure so to
comply would not reasonably be expected to have a Business Material Adverse
Effect.


 


(c)           The
Sellers have not, in connection with the Business, received, since January 1,
2003, any written notice or other written communication of any actual, alleged
or potential violation of, or failure to comply with, any Laws, or of any
actual, alleged or potential obligation on the part of the Sellers to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature, except violations, failures or obligations that would not
reasonably be expected to have a Business Material Adverse Effect.


 


(d)           All
returns, reports, statements and other documents required to be filed by each
of the Sellers with any Governmental Entity in connection with the Business
have been filed and complied with and are true, correct and complete (and any
related fees required to be paid have been paid in full), except where the failure
of any of the foregoing would not reasonably be expected to have a Business
Material Adverse Effect.  To the
Knowledge of the Sellers, all


 


10

















 


written Records relating to the Business Licenses or
the Business have been maintained in accordance with good business practices
and the rules of any Governmental Entity and are maintained at the appropriate
Seller, except where the failure so to maintain would not reasonably be
expected to have a Business Material Adverse Effect.


 


(e)           Since
January 1, 2003, the Company has been the sole provider of all services to
customers purchasing services from the Business, and has been the only Person
that has presented bills to customers relating to the Business.


 


SECTION 2.04     Financial Statements and Condition


 


(a)           Prior
to the Closing Date, Sellers have delivered to Buyer the audited consolidated
balance sheets and statements of income, changes in stockholders’ equity, and
cash flow as of and for the fiscal year ended December 31, 2003 for Parent and
its subsidiaries (the “Most Recent Financial Statements”).  The Most Recent Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, present
fairly the financial condition of Parent and its subsidiaries as of such date
and the results of operations of Parent and its subsidiaries for such periods,
are correct and complete, and are consistent with the books and records of Parent
and its subsidiaries (which books and records are correct and complete).


 


(b)           Immediately
after giving effect to the consummation of the transactions contemplated
hereby, Parent  and its subsidiaries,
will (i) be able to pay their respective debts as they become due, and their
respective properties will have a fair saleable value determined on a going
concern basis greater than the amounts required to pay their respective debts
(including a reasonable estimate of the amount of all known contingent liabilities),
and (ii) have adequate capital to conduct their respective businesses.  No action has been taken nor any obligation
incurred by Sellers in connection with the transactions contemplated hereby, or
by any of their Affiliates at either of their direction, with the intent to
hinder, delay or defraud any of their respective present or future creditors.


 


SECTION 2.05     Intellectual Property.


 


Each of the Sellers has
valid right, title and interest in, or a valid and binding license or similar
right to use, all material Intellectual Property used or held for use by any
such Seller in connection with the Business or necessary for the operation of
the Business (“Business Intellectual Property”).  None of the Sellers (a) has defaulted
under any license to use Business Intellectual Property or (b) is the
subject of or a party to any proceeding or litigation for infringement of any
Intellectual Property in connection with the operation of the Business, other
than a default, proceeding or litigation that would not reasonably be expected
to have a Business Material Adverse Effect. 
Sellers have no patents used in connection with the Business and, to the
Knowledge of the Sellers, there are no infringements of any patents of other
Persons in connection with the operation of the Business.


 


SECTION 2.06     Absence of Undisclosed Liabilities.


 


There are no Liabilities
associated with or arising out of the Business conducted with the Acquired
Assets other than (i) those Liabilities reflected, or reserved against, in
the Most Recent


 


11

















 


Financial Statements, (ii) Liabilities arising in
accordance with the terms of the Business Contracts of a nature not required
under GAAP to be reflected, or reserved against, in the Most Recent Financial
Statements, and (iii) Liabilities arising after December 31, 2003 in
the Ordinary Course of Business, none of which will be assumed by Buyer except
to the extent any Liability under an Assumed Contract constitutes an Assumed
Liability.


 


SECTION 2.07     Absence of Certain Changes or Events.


 


Since December 31,
2003, (a) there has been no adverse change, and no change except in the
Ordinary Course of Business, in the business, operations or condition
(financial or otherwise) of the Business, except such changes that would not
reasonably be expected to have a Business Material Adverse Effect, (b) the
Business has been conducted in all material respects substantially in the
manner theretofore conducted and only in the Ordinary Course of Business (excluding
the incurrence of reasonable and customary liabilities related to this Purchase
Agreement and the Seller Ancillary Agreements and the transactions contemplated
hereby and thereby), and (c) none of the Sellers has taken any action or
omitted to take any action, which, if taken or omitted after the date hereof,
would violate Section 4.01, except for actions or omissions that would not
reasonably be expected to have a Business Material Adverse Effect.


 


SECTION 2.08     Litigation; Disputes.


 


There are no actions,
suits, claims, arbitrations, proceedings or investigations pending or, to the
Knowledge of the Sellers, threatened against any of the Sellers in respect of
the Business, the Acquired Assets, the Assumed Liabilities or the transactions
contemplated hereby, at law or in equity, or before or by any court, arbitrator
or Governmental Entity, domestic or foreign, except for actions, suits, claims,
arbitrations, proceedings or investigations that would not reasonably be
expected to (i) have a Business Material Adverse Effect or
(ii) prevent the consummation of the transactions contemplated
hereby.  None of the Sellers is
(i) operating under or subject to any order (except for orders that
Persons similarly situated, engaged in similar businesses and owning similar assets
are operating under or subject to), award, writ, injunction, decree or judgment
of any court, arbitrator or Governmental Entity, or (ii) in default with
respect to any order, award, writ, injunction, decree or judgment of any court,
arbitrator or Governmental Entity, except for orders, awards, writs,
injunctions, decrees, judgments or defaults that would not reasonably be
expected to (iii) have a Business Material Adverse Effect or
(iv) prevent the consummation of the transactions contemplated hereby.  To the Knowledge of the Sellers, no officer,
director, agent or employee of a Seller is subject to any order that prohibits
such officer, director, agent or employee from engaging in or continuing any
conduct or activity relating to the Business, except for orders that would not
reasonably be expected to have a Business Material Adverse Effect.


 


SECTION 2.09     Taxes and Tax Matters.


 


(a)           The
Sellers have duly and timely filed all Business Tax Returns required to be
filed by the Sellers and all such Business Tax Returns are true and complete in
all material respects, in each case. 
The Sellers have paid all Taxes with respect to the Business which are
due or claimed to be due by any Taxing authority, other than those Taxes
currently in good faith


 


12

















 


dispute (without regard to whether or not such Taxes
are shown as due on any Business Tax Returns).


 


(b)           Section 2.09
of the Business Disclosure Schedule lists all Business Tax Returns that have
been examined by the relevant Taxing authorities, and all deficiencies proposed
as a result of such examinations, all of which have been paid.  There is no action, suit, proceeding, audit,
investigation or claim pending or, to the Knowledge of the Sellers, threatened
in respect of any Taxes relating to the Business for which a Seller is or may
become liable, nor has any deficiency or claim for any such Taxes been
proposed, asserted or, to the Knowledge of the Sellers, threatened.


 


(c)           None
of the Sellers is subject to a Business Contract relating to the sharing,
allocation or payment of, or indemnity for, Taxes relating to the Business
(other than a Business Contract the only parties to which are the Sellers).


 


(d)           The
Sellers have complied in all material respects with all rules and regulations
relating to the collection and withholding of Taxes relating to the Business.


 


SECTION 2.10     Disclosure Schedule Documents.


 


True and complete copies
of all documents listed in the Business Disclosure Schedule have been made
available to the Buyer prior to the execution of this Purchase Agreement.  No representation or warranty made by the
Sellers in Article II of this Purchase Agreement (as qualified by the
Business Disclosure Schedule) or in the Seller Ancillary Agreements, as of the
date when made or deemed made for purposes of this Purchase Agreement, contains
or will contain any untrue statement of material fact or omits or will omit to
state any material fact required to be disclosed by the terms of such
representation or warranty.


 


SECTION 2.11     Title to Assets.


 


Each of the Sellers has
good and marketable title to or a valid leasehold interest or valid contractual
right in all of the assets and properties relating to the Business which it
purports to own and which are material to the Business, free and clear of all
Encumbrances other than statutory liens for property Taxes on Purchased
Equipment located in Arapahoe County, Colorado for the year 2000.  On the Closing Date, the Buyer will receive
good and marketable title to or a valid contractual right in, all of the
Acquired Assets, free and clear of all Encumbrances.  Except as set forth on Schedule 2.11, none of the
Purchased Equipment is subject to any maintenance agreement or to any software
license.  The Purchased Equipment includes
all of the network access servers, or NAS equipment, owned by Sellers, and
used, contemplated to be used, or held for use, solely in the Business.


 


SECTION 2.12     Scope of Business.


 


None of the Business is
performed or provided outside of the United States.


 


13

















 


SECTION 2.13     Insurance.


 


(a)           Each
of the Sellers is insured with financially responsible insurers in such amounts
and against such risks and losses as are customary for companies conducting
business as conducted by the Sellers. 
Since January 1, 2003, no Seller has received notice of
cancellation or termination with respect to any material insurance policy of
such Seller which has not been cured, except for notices which would not
reasonably be expected to have a Business Material Adverse Effect.  The insurance policies of the Sellers are
valid and enforceable policies, except to the extent that such invalidity or
unenforceability would not reasonably be expected to have a Business Material
Adverse Effect.


 


(b)           The
Sellers have not received (i) any refusal of coverage or any written
notice that a defense will be afforded with reservations of rights or
(ii) any written notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or that the issuer of any
insurance policy is not willing or able to perform its obligations thereunder,
except for such refusals, notices or indications that would not reasonably be
expected to have a Business Material Adverse Effect.  The Sellers have paid all premiums due from the Sellers, and have
otherwise performed all of their obligations, under each insurance policy
relating to the Business to which a Seller is a party or that provides coverage
to the Sellers, and have given notice to the insurer of all claims that may be
insured thereby, except for failures to pay or give notice that would not
reasonably be expected to have a Business Material Adverse Effect.


 


SECTION 2.14     Certain Contracts.


 


(a)           The
Business Disclosure Schedule sets forth a list, as of the date hereof, of all
contracts, agreements and commitments which are material to the Business to
which any of the Sellers is a party or by which any of the Sellers may be bound
(the “Business Contracts”). 
Except as set forth on Schedule 2.14, the Sellers have provided
to the Buyer true, correct and complete copies of all Assumed Customer
Contracts, as in effect as of the date hereof. 
There are no customer contracts or other understandings or arrangements
for the provision of services in the Business except as provided in the Assumed
Customer Contracts and the Excluded Customer Contracts.  Except as set forth in the Business
Disclosure Schedule, neither Sellers nor their Affiliates provide any services
under the Assumed Customer Contracts other than dial-up Internet access.  All of the Assumed Customer Contracts are
valid and in full force and effect except to the extent that such invalidity or
failure to be in full force and effect would not reasonably be expected to have
a Business Material Adverse Effect, and none of the Sellers, nor (to the
Sellers’ Knowledge) any other Person that is a party to any Assumed Customer
Contract has violated any provision of, or committed or failed to perform any
act which with or without notice, lapse of time or both would constitute a
default under the provisions of, any Assumed Customer Contract, except for
defaults which would not reasonably be expected to result in a Business
Material Adverse Effect.  To the best of
Sellers’ Knowledge, there is no Customer MAC threatened, proposed or pending.


 


(b)           There
are no agreements or arrangements pursuant to which any Person is or may be
entitled to receive any of the revenues or earnings, or any payment based
thereon or calculated in accordance therewith, of the Business, other than
employee bonus compensation (including, without limitation, sales commission
arrangements) entered into in the Ordinary Course of Business.


 


14

















 


(c)           To
Sellers’ Knowledge, no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with or result in a
breach of, or give the Sellers or other Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or payment under, or to cancel, terminate or modify, any Assumed Customer
Contract, except for events or circumstances that would not reasonably be
expected to have a Business Material Adverse Effect.


 


(d)           The
Sellers have not given to or received from any other Person any written notice
or other written communication (or, to Sellers’ Knowledge, oral communication)
regarding any actual or alleged violation or breach of, or default under, any
Assumed Customer Contract, except for notices or communications that would not
reasonably be expected to have a Business Material Adverse Effect.


 


(e)           None
of the Sellers has made any oral or written promise to modify any Assumed
Customer Contract in any material respect other than in connection with the
transactions contemplated by this Purchase Agreement as set forth on the
Business Disclosure Schedule.


 


SECTION 2.15     Brokers.


 


Except for Gleacher
Partners, no broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions
contemplated by this Purchase Agreement based upon arrangements made by or on
behalf of the Sellers or any of their respective Affiliates.  Buyer will not  become liable for any such fees. 
Sellers shall indemnify Buyer and hold Buyer harmless from any and all
fees or expenses claimed by Gleacher Partners.


 


SECTION 2.16     Receivables.


 


The Receivables, as of
the Closing, will represent valid obligations arising under Assumed Customer
Contracts and will relate to sales actually made or services actually performed
by the Sellers in the Ordinary Course of Business.  To the Knowledge of the Sellers, there is no contest, claim,
defense or right of setoff involving a material amount under any Assumed Customer
Contract with any account debtor of a Receivable relating to the amount or
validity of such Receivable.


 


SECTION 2.17     Minute Books and Financial Records.


 


The Sellers have provided
to the Buyers all material portions of the minute books of the Sellers
relating to the Business.  Those
portions of the minute books of the Sellers relating to the Business are
complete and accurate in all material respects.  The books of account and other financial Records of the
Sellers with respect to the Business, all material portions of which have been
made available to the Buyer, are complete and correct in all material respects
and represent actual, bona fide transactions and have been maintained in
accordance with sound business practices.


 


15

















 


SECTION 2.18     Affiliate Transactions


 


Each transaction relating
to the Business, between a Seller, on the one hand, and any director, officer,
or employee of a Seller or a shareholder of the Parent (or any trust,
partnership, limited liability company or corporation in which any of such
directors, officers, employees or shareholders has or has had an interest), on
the other hand, that was consummated on or after March 31, 2001 (a “Related
Party Transaction”), was made on terms that are at least as favorable to
such Seller as would be available with independent third parties dealing at
arm’s length.  The Business Disclosure
Schedule contains a list of all Assumed Customer Contracts involving a Related
Party Transaction.


 


ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE BUYER


 


The Buyer, acknowledging
that the Sellers are hereby, and in consummating the transactions contemplated
hereby, relying thereon, hereby represents and warrants to the Sellers as
follows, both as of the date hereof and as of the Closing Date, unless
otherwise specifically set forth herein:


 


SECTION 3.01     Organization; Authority; Binding Obligation.


 


(a)           The
Buyer is a limited liability company duly formed, validly existing and in good
standing under the Laws of the jurisdiction of its formation, and has the full
corporate limited liability company power and authority to execute and deliver
this Purchase Agreement, to carry out the transactions contemplated hereby, to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under the Buyer Contracts.  The
execution and delivery by the Buyer of this Purchase Agreement and all other
agreements, instruments or other documents to be executed by the Buyer in
connection with any of the transactions contemplated hereby (the “Buyer
Ancillary Agreements”), and the consummation by the Buyer of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action, and no other corporate company proceedings on the
part of the Buyer are necessary to authorize this Purchase Agreement and the
Buyer Ancillary Agreements or to consummate the transactions contemplated
hereby and thereby.


 


(b)           This
Purchase Agreement has been duly executed and delivered by the Buyer and
constitutes a legal, valid and binding obligation of the Buyer, enforceable in
accordance with its terms, except as such enforceability may be subject to the
effects of any applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar Laws affecting creditors’ rights
generally and subject to the effect of general equitable principles (whether
considered in a proceeding in equity or at law).


 


SECTION 3.02     No Conflict; Required Filings and Consents.


 


The execution, delivery
and performance by the Buyer of this Purchase Agreement and all Buyer Ancillary
Agreements, and the consummation by the Buyer of the transactions contemplated
hereby and thereby, do not and will not, directly or indirectly (with or
without notice or lapse of time): (i) conflict with, or violate any
provision of, the certificate of


 


16

















 


incorporation or organization, the bylaws or operating
agreement of the Buyer; (ii) conflict with or violate any Law applicable
to the Buyer; (iii) conflict with, result in any breach of, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under any contract, agreement or commitment to which the Buyer or any
of its Subsidiaries is a party or by which the Buyer or any of its Subsidiaries
may be bound (a “Buyer Contract”); (iv) result in or require the
creation or imposition of any Encumbrance, or result in the acceleration of any
indebtedness, of any nature upon, or with respect to, the Buyer or any of its
Subsidiaries or any of their respective assets; (v) except for the
obtaining of any Third Party Consents, require any consent, approval,
authorization or permit of, or filing with or notification to, any Person not
party to this Purchase Agreement; or (vi) result in or give rise to any
penalty, forfeiture, termination, right of termination, amendment,
cancellation, or restriction under any Buyer Contract.


 


SECTION 3.03     Litigation.


 


There are no actions,
suits, claims, arbitrations, proceedings or investigations pending or, to the
knowledge of the Buyer, threatened against the Buyer or its Subsidiaries in
respect of their respective businesses or assets or the transactions
contemplated hereby, at law or in equity, or before or by any court, arbitrator
or Governmental Entity, domestic or foreign, except for actions, claims,
arbitrations, proceedings or investigations that would not reasonably be
expected to have a Buyer Material Adverse Effect or to prevent the consummation
of the transactions contemplated hereby. 
Neither the Buyer nor its Subsidiaries is (i) operating under or
subject to any order (except for orders that Persons similarly situated,
engaged in similar businesses and owning similar assets are operating under or
subject to), award, writ, injunction, decree or judgment of any court,
arbitrator or Governmental Entity, or (ii) in default with respect to any
order, award, writ, injunction, decree or judgment of any court, arbitrator or
Governmental Entity, except for orders, awards, writs, injunctions, decrees,
judgments or defaults that would not reasonably be expected to have a Buyer
Material Adverse Effect or to prevent the consummation of the transactions
contemplated hereby.


 


SECTION 3.04     Funds.


 


The Buyer has available,
and will have available on the dates such payments are due, funds sufficient to
pay the Adjusted Purchase Price and to pay or otherwise discharge the Assumed
Liabilities pursuant to Article I of this Purchase Agreement.


 


SECTION 3.05     Brokers.


 


No broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Purchase
Agreement based upon arrangements made by or on behalf of the Buyer or any of
its Affiliates.


 


17

















 


ARTICLE IV

COVENANTS RELATING TO CONDUCT OF BUSINESS


 


SECTION 4.01     Conduct of Business of the Sellers.


 


The Sellers hereby
covenant and agree that, from the date of this Purchase Agreement until the
Closing Date, unless expressly contemplated by this Purchase Agreement or
consented to in writing by the Buyer, they will (i) carry on the Business
only in the Ordinary Course of Business in all material respects and
(ii) use their reasonable efforts to preserve substantially intact the
business organizations and assets of the Business, to maintain the rights and
franchises of the Business, to maintain the current relationships of the Business
with current customers, suppliers, licensors, licensees and others having
business dealings with the Business, and to keep in full force and effect
liability insurance for the Business comparable in amount and scope of coverage
to that currently maintained.  Without
limiting the generality of the foregoing, except as otherwise expressly
contemplated by this Purchase Agreement, or as consented to in writing by the
Buyer (which consent will not be unreasonably withheld), from the date of this
Purchase Agreement until the Closing Date, the Sellers shall not:


 


(a)           sell,
lease, exchange, mortgage, pledge, transfer or otherwise subject to any
Encumbrance or otherwise dispose of any of the assets of the Business, except
for sales or other dispositions in the Ordinary Course of Business and sales or
other dispositions of any Excluded Assets (but only to the extent that such
sales or other dispositions do not result in a Business Material Adverse
Effect);


 


(b)           (i)
incur by or on behalf of the Business any indebtedness for borrowed money or
guarantee by or on behalf of the Business any indebtedness of another Person
(other than the Sellers), guarantee by or on behalf of the Business any debt
securities of another Person (other than the Sellers), enter into any “keep
well” or other agreement to maintain any financial statement condition of
another Person (other than the Sellers) by or on behalf of the Business or
enter into any agreement by or on behalf of the Business having the economic
effect of any of the foregoing, except for short-term borrowings incurred in
the Ordinary Course of Business, or (ii) make any loans, advances or
capital contributions to, or investments in, any other Person by or on behalf
of the Business other than intra-group loans, advances, capital contributions
or investments between or among the Sellers and other than the extension of
credit to customers of the Business in the Ordinary Course of Business;


 


(c)           except
in the Ordinary Course of Business, waive, release or assign any material rights
or claims, or modify, amend or terminate any Assumed Customer Contract;


 


(d)           enter
into any Business Contract with a customer or vendor of the Business;


 


(e)           change
the fundamental architecture or infrastructure of the network of the Business
in any material respect; or


 


(f)            authorize,
or commit or agree to do, any of the foregoing.


 


SECTION 4.02     Access and Information.


 


Between the date hereof
and the Closing, the Sellers shall (i) afford to the Buyer and its
officers, employees, accountants, consultants, legal counsel and other
representatives reasonable access during normal business hours, subject to
reasonable advance notice, to all of the properties, agreements, books, Records
and personnel of the Business and (ii) furnish promptly to the Buyer all information
in the Sellers’ possession concerning the business, operations,


 


18

















 


prospects, condition (financial or otherwise), assets,
liabilities and personnel of the Business as the Buyer may reasonably request.  The Sellers shall not be required to provide
access to or to disclose information where such access or disclosure would be
prohibited or otherwise limited by any Law or agreement.


 


ARTICLE V

ADDITIONAL AGREEMENTS


 


SECTION 5.01     Appropriate Action; Consents; Filings.


 


(a)           Upon
the terms and subject to the conditions set forth in this Purchase Agreement,
from the date of this Purchase Agreement until the Closing Date, the Sellers
and the Buyer shall use their respective reasonable efforts to take, or cause
to be taken, all appropriate action, and do, or cause to be done, and to assist
and cooperate with the other parties in doing all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective
the transactions contemplated hereby as promptly as practicable, including
(i) executing and delivering any additional instruments necessary, proper
or advisable to consummate the transactions contemplated by, and to carry out
fully the purposes of, this Purchase Agreement, and (ii) obtaining from
any Governmental Entities any Licenses or consents required to be obtained or
made by the Buyer or the Sellers in connection with the authorization,
execution and delivery of this Purchase Agreement and the consummation of the
transactions contemplated hereby.  The
Sellers and the Buyer shall furnish to each other all information required for
any application or other filing to be made pursuant to the rules and
regulations of any applicable Law in connection with the transactions contemplated
hereby.


 


(b)           From
the date of this Purchase Agreement until the Closing Date, the Sellers and the
Buyer shall each give any notices to third parties, and the Sellers and the
Buyer shall use their reasonable efforts to obtain any third party consents,
approvals or waivers (i) necessary, proper or advisable to consummate the
transactions contemplated hereby, (ii) disclosed or required to be
disclosed in the Business Disclosure Schedule, or (iii) required to
prevent a Business Material Adverse Effect from occurring prior to or after the
Closing Date or a Buyer Material Adverse Effect from occurring prior to or
after the Closing Date.


 


(c)           From
the date of this Purchase Agreement until the Closing Date, the Sellers and the
Buyer shall promptly notify each other in writing of any pending or, to the
Knowledge of the Sellers or the Buyer, threatened action, proceeding or
investigation by any Governmental Entity or any other Person
(i) challenging or seeking damages in connection with the transactions contemplated
hereby or (ii) seeking to restrain or prohibit the consummation of the
transactions contemplated hereby or otherwise limit the right of the Buyer or
its Subsidiaries to own or operate all or any portion of the Business or the
Acquired Assets.  The Sellers and the
Buyer each shall cooperate, at their own cost and expense, with each other in
defending any such action, proceeding or investigation, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed.


 


19

















 


SECTION 5.02     Updated Disclosure; Breaches.


 


(a)           From
and after the date of this Purchase Agreement until the Closing Date, the
Sellers shall promptly notify the Buyer by written update to the Business
Disclosure Schedule of (i) any representation or warranty made by the
Sellers in connection with this Purchase Agreement becoming untrue or
inaccurate in any material respect, (ii) the occurrence, or non-occurrence,
of any event the occurrence, or non-occurrence, of which would be likely to
cause any condition to the obligations of any party to effect the transactions
contemplated hereby not to be satisfied, or (iii) the failure of any party
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it pursuant to this Purchase Agreement which would be
likely to result in any condition to the obligations of any party to effect the
transactions contemplated hereby not to be satisfied; provided, however,
that the delivery of any notice pursuant to this Section 5.02(a) shall not
(x) cure any breach of any representation or warranty requiring disclosure
of such matter prior to the date of this Purchase Agreement, (y) modify
the requirement that, except as expressly provided in this Purchase Agreement,
representations and warranties made as of the date of this Purchase Agreement
shall also be true and correct as of the Closing Date or (z) otherwise
limit or affect the rights and remedies available hereunder to the Buyer;
provided, further, that by participating in the Closing Buyer shall be deemed
to waive any breach specified in any notice delivered pursuant to this
Section 5.02(a) only to the extent that such breach results in Losses to
the Buyer in excess of $250,000.


 


(b)           From
and after the date of this Purchase Agreement until the Closing Date, the Buyer
shall promptly notify the Sellers in writing of (i) any representation or
warranty made by the Buyer in connection with this Purchase Agreement becoming
untrue or inaccurate in any material respect, (ii) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause any condition to the obligations of any party to effect the
transactions contemplated hereby not to be satisfied, or (iii) the failure
of any party to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it pursuant to this Purchase Agreement which
would be likely to result in any condition to the obligations of any party to
effect the transactions contemplated hereby not to be satisfied; provided,
however, that the delivery of any notice pursuant to this
Section 5.02(b) shall not (x) cure any breach of any representation
or warranty requiring disclosure of such matter prior to the date of this
Purchase Agreement, (y) modify the requirement that, except as expressly
provided in this Purchase Agreement, representations and warranties made as of
the date of this Purchase Agreement shall also be true and correct as of the
Closing Date or (z) otherwise limit or affect the rights and remedies
available hereunder to the Sellers; provided, however, that by participating in
the Closing Seller shall be deemed to waive any breach specified in with any
notice delivered pursuant to this Section 5.02(b) only to the extent that
such breach results in Losses to Seller in excess of $250,000.


 


SECTION 5.03     Public Announcements.


 


Neither the Buyer nor the
Sellers shall issue or make any press release or other public statement with
respect to the transactions contemplated hereby without the prior written
approval of the other, except as may be required by Law.


 


20

















 


SECTION 5.04     Collection of Receivables; Other Assets;
Payment of Current Liabilities.


 


The Sellers agree that,
from and after the Closing, the Buyer shall, subject to Section 1.05 and
Section 1.07, have the right and authority to collect for its own account
or the account of its Affiliates all Receivables which are transferred and
assigned to the Buyer as provided herein, and the Buyer and its Affiliates
shall have the right to endorse with the name of the appropriate Seller any
checks received on account of any such Receivable.  Subject to Section 1.05 and Section 1.07, the Sellers
agree that they will promptly transfer and deliver to the Buyer any cash or
other property which the Sellers may receive in respect of any receivables to
which Buyer is entitled under the terms of this Purchase Agreement or any other
Acquired Asset .  The Buyer agrees that,
from and after the Closing, the Sellers shall, subject to Section 1.05 and
Section 1.07, have the right and authority to collect for their own
account or the account of their Affiliates all Sellers’ Receivables.  Buyer agrees that it will within five days
of receipt transfer and deliver to the Sellers any cash or other property which
the Buyer may receive in respect of any receivables to which Sellers are
entitled under the terms of this Purchase Agreement or any other Excluded
Asset.   The covenants and agreements
made in this Section 5.04 shall survive the Closing.


 


SECTION 5.05     Mail.


 


The Sellers agree that,
from and after the Closing, the Buyer and its Affiliates shall have the right
and authority to open all mail received by the Business, even if addressed to a
Seller, for processing or forwarding to the appropriate Seller.  The Buyer shall promptly forward to the
Sellers any mail received by it that does not relate to the Business or that
relates to any Excluded Assets or Excluded Liabilities.


 


SECTION 5.06     Preservation of Books and Records.


 


For a period of six years
from the Closing Date consistent with its own records retention policy:


 


(a)                                  The
Buyer shall not dispose of or destroy any of the Books and Records without
first offering to turn over possession thereof to the Sellers by written notice
to the Sellers at least 60 days prior to the proposed date of such disposition
or destruction.


 


(b)                                 The
Buyer shall allow the Sellers and their agents access to all Books and
Records on reasonable notice and at reasonable times at the Buyer’s principal
place of business or at any location where any Books and Records are
stored, and the Sellers shall have the right, at their own expense, to make
copies of any Books and Records; provided, however, that any such access
or copying shall be had or done in such a manner so as not to unduly interfere
with the normal conduct of the Buyer’s business.


 


(c)                                  The
Buyer shall make available to the Sellers upon reasonable notice to the Sellers
and at reasonable times and upon written request (A) the Buyer’s personnel
to assist the Sellers in locating and obtaining any Books and Records, and
(B) any of the Buyer’s personnel whose assistance or participation is reasonably
required by the Sellers or any of their Affiliates in anticipation of, or
preparation for, existing or future litigation or other matters in which the
Sellers


 


21

















 


or any of their Affiliates are involved.  The Sellers shall reimburse the Buyer for
the reasonable out-of-pocket expenses incurred by it in performing the
covenants contained in this Section 5.06.


 


SECTION 5.07     No Negotiation; Other Transactions.


 


(a)           Until
such time, if any, as this Purchase Agreement shall be terminated pursuant to
Section 7.01, Sellers shall deal exclusively with Buyers with respect to
the purchase of the Business or any portion thereof, and no Seller nor any
Affiliate, agent, or other Person acting on behalf of either Seller, shall directly
or indirectly solicit, initiate, encourage or entertain any inquiries or
proposals from, discuss or negotiate with or provide any nonpublic information
to any Person (other than the Buyer) relating to a sale of the Business or any
of the Acquired Assets (except such disclosures as may be required to obtain
Third Party Consents).  Sellers agree
that Buyer may seek to restrain or enjoin any activity of Sellers that is in
violation of this Section, and that Sellers waive any defense to the
application of such remedies that might otherwise be available under applicable
Laws.


 


(b)           In
the event that, after the Closing, Sellers engage in any discussions regarding
the sale of assets or operations that are not part of the Business, or enter
into any agreement that may result in a change in Control of Parent or the
Company, but which sale or change in Control is otherwise permitted by this
Section 5.07, Sellers shall assure, to the reasonable satisfaction of Buyer,
that the purchaser of such assets or operations or the acquiring or surviving
entity in any change of Control, (i) agrees in writing to fulfill Sellers’
obligations under this Purchase Agreement and under the Transition Services
Agreement and (ii) is willing and able to fulfill such obligations, as may be
required given the anticipated conveyance of assets and operations or the
change in Control, as applicable.  Any
failure by Sellers to provide such assurances shall constitute a forfeiture by
Sellers and any such purchaser of the entire Holdback and any and all rights
thereto, and Buyer shall retain the Holdback free and clear of any claims by
Sellers and any such purchaser to all or any part thereof.  Prior to the 60th day after the
Closing Date, Sellers shall not consummate any transaction that would result in
a sale of all or substantially all of Parent’s assets on a consolidated basis
or a change in Control of Parent, it being understood that consummation of an
(i) unsolicited tender offer or (ii) equity financing or sales of stock by
existing stockholders of Parent which do not result in the ability of any one
stockholder or group of stockholders to elect a majority of the Board of
Directors of Parent will not be deemed to be a change in Control of Parent for
purposes of this Section 5.07(b).


 


SECTION 5.08     Excluded Customer Contracts.


 


(a)           The
customers listed on Schedule 5.08 are parties to Excluded Customer
Contracts with the Sellers pursuant to which such customers receive services
from Sellers related to the Business, in addition to other types of services.  During the fifteen-day period immediately
following the Closing, Buyer shall be entitled to contact such customers for
the purpose of discussing and entering into a contract or other agreement with
Buyer for purposes of providing to such customers the services of the
Business.  Sellers agree to fully
cooperate with Buyer in connection therewith as reasonably requested by Buyer,
at Sellers’ expense.  If Buyer fails to
give Sellers notification that it has or intends to enter into any such
contract or other agreement with any such customer for the provision of the
services of the Business within the fifteen-day


 


22

















 


period immediately following the Closing, Sellers
shall terminate their agreement with, and the provision of services to, such
customer within 60 days thereafter, or by such earlier time as is practicable
under the applicable Excluded Customer Contract and applicable law.  To the extent Buyer does provide such
notice, Sellers shall cooperate with Buyer to terminate Sellers’ agreement with
respect to any such customer to provide the services of the Business, such
termination to be effective as of the time Buyer reasonably requests in
connection therewith.


 


(b)           Sellers shall, within two business
days after the Closing, send notices to the customers under all Excluded
Customer Contracts, other than those listed on Schedule 5.08, to
terminate such Excluded Customer Contracts and related services with respect to
the Business effective within 60 days or such earlier time as is practicable
under each such Excluded Customer Contract and applicable law.


 


SECTION 5.09     Business Employees.


 


For six months from and
after the Closing, Sellers shall give Buyer notice as promptly as practicable
of its intent to terminate the employment of any of their employees involved in
the Business, or of the resignation or other termination of employment with
Sellers by any such employees, for the purpose of Buyer’s consideration of
hiring such employees.  In connection therewith,
Sellers shall provide Buyer with such information relating to such employees as
reasonably requested by Buyer, subject to any confidentiality or other
restrictions on disclosure imposed on Sellers as a matter of Law or contract.


 


SECTION 5.10     Acquired Assets and Excluded Assets.  Any asset (including all remittances and all
mail and other communications) that is or otherwise relates to an Excluded
Asset and that is or comes into the possession, custody or control of Buyer or
any of Buyer’s Affiliates (including its or their successors in interest or
assigns) must forthwith be transferred, assigned and conveyed by Buyer or such
Affiliate to Sellers.  Until such
transfer, assignment and conveyance, Buyer and Buyer’s Affiliates do not have
any right, title or interest in such asset nor may they use the same; rather,
they hold such asset in trust for the benefit of Sellers.  Any asset (including all remittances and all
mail and other communications) that is or otherwise relates to an Acquired
Asset and that is or comes into the possession, custody or control of Sellers
or any of Seller’s Affiliates (including its or their successors in interest or
assigns) must forthwith be transferred, assigned and conveyed by Sellers or
such Affiliate to Buyer.  Until such
transfer, assignment and conveyance, Sellers and Seller’s Affiliates do not
have any right, title or interest in such asset nor may they use the same;
rather, they hold such asset in trust for the benefit of Buyer.


 


SECTION 5.11     Certain Tax Matters.


 


(a)           Buyer
and Sellers shall share responsibility for property Taxes with respect to the
Purchased Equipment for 2004 in proportion to the number of days in the
relevant period in which Buyer, on the one hand, and Sellers, on the other
hand, owned the Purchased Equipment. 
Sellers shall pay the full amount of such property Taxes for 2004 when
or prior to the time due.  Buyer shall
reimburse Sellers for Buyer’s pro rata portion of such property Taxes within
thirty (30) days after receipt of an invoice for the same, along with
documentation reasonably satisfactory to Buyer evidencing the full amount of
such property Taxes, Buyer’s proportionate


 


23

















 


share, and
Sellers’ payment of such property Taxes in full to the applicable Taxing
authority; provided, however, that in no event shall Buyer’s
proportionate share exceed $50,000.


 


(b)           Within
three months after the Closing Date, Sellers shall take all necessary actions,
and pay all necessary amounts, to cause the full release of the Tax lien
referenced in the first sentence of Section 2.11.  If Sellers fail to do so, Buyer may take
such actions and pay such amounts, and offset all Losses therefor against the
Holdback pursuant to Section 8.02(h) and Section 1.07(c).


 


ARTICLE VI

CONDITIONS PRECEDENT


 


SECTION 6.01     Conditions to Obligations of Each Party
Under This Purchase Agreement.


 


The respective
obligations of each party to effect the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the Closing Date of the following
conditions, any or all of which may be waived by agreement of the Buyer and the
Sellers, in whole or in part, to the extent permitted by applicable Law:


 


(a)           No
Order.  No Governmental Entity or
federal or state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, judgment, injunction or other order (whether temporary,
preliminary or permanent), in any case which is in effect and which prevents or
prohibits consummation of the transactions contemplated hereby; provided,
however, that each of the parties shall use its reasonable efforts to
cause any such decree, judgment, injunction or other order to be vacated or
lifted.


 


(b)           No
Challenge. There shall not be pending any action, proceeding or
investigation by any Governmental Entity (i) challenging or seeking
material damages in connection with the transactions contemplated hereby, or
(ii) seeking to restrain or prohibit the consummation of the transactions
contemplated hereby.


 


SECTION 6.02     Additional Conditions to Obligations of the
Buyer.


 


The obligations of the
Buyer to effect the transactions contemplated hereby are also subject to the
satisfaction at or prior to the Closing Date of the following conditions, any
or all of which may be waived by the Buyer in writing, in whole or in part, to
the extent permitted by applicable Law:


 


(a)           Representations
and Warranties.  Each of the
representations and warranties of the Sellers contained in this Purchase
Agreement shall be true and correct in all material respects (except that where
any statement in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects giving effect
to such standard) as of the date of this Purchase Agreement, and as of the
Closing Date as though made as of the Closing Date, except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct in all material respects (except that where
any statement in a representation or warranty expressly includes a standard of
materiality, such


 


24

















 


statement shall be
true and correct in all respects giving effect to such standard) as of such
date, and except for (i) changes permitted or contemplated by this
Purchase Agreement, or (ii) in a representation and warranty that does not
expressly include a standard of materiality, any untrue or incorrect statements
therein that, considered in the aggregate, do not indicate a Business Material
Adverse Effect.  The Buyer shall have
received a certificate of an executive officer of each of the Sellers to that
effect.


 


(b)           Agreements
and Covenants.  The Sellers shall
have performed or complied with, in all material respects, all agreements and
covenants required by this Purchase Agreement to be performed or complied with
by them on or prior to the Closing Date. 
The Buyer shall have received a certificate of an executive officer of
each of the Sellers to that effect.


 


(c)           Approvals
and Consents.  All consents,
waivers, approvals and authorizations required to be obtained, including the
Third Party Consents, and all filings or notices required to be made, by the
Buyer or the Sellers prior to consummation of the transactions contemplated
hereby shall have been obtained from and made with all required third parties
and  Governmental Entities.


 


(d)           Consents
Under Key Customer Contracts.  The
Company shall have obtained Third-Party Consents with respect to the assignment
to the Buyer of each of the Assumed Customer Contracts set forth in Schedule
6.02(d) (each such contract, a “Key Customer Contract”), each in
form and substance reasonably acceptable to Buyer.


 


(e)           Conveyance
of Numbers.  The appropriate Seller
shall have obtained Third Party Consents and other agreements with respect to,
and can during the Migration Period transfer or assign the Numbers to Buyer in
accordance with the Transition Services Agreement.


 


(f)            Absence
of a Customer MAC.  Buyer shall have
confirmed, after discussions with each of the customers under Key Customer
Contracts, that no Customer MAC is planned or reasonably anticipated to occur
within the one-year period following Closing with respect to any Key Customer
Contract.


 


(g)           Revenue
Requirement.  The billed revenue
(the “Revenue Requirement”) of the Business during the 30 days
immediately prior to Closing shall be greater than $3.9 million.  In making such determination, any pricing
concessions and/or reductions in purchase commitments made prior to Closing
with respect to the Key Customer Contracts shall be applied as if in effect for
such 30-day period.


 


(h)           Other
Closing Deliveries.  The Sellers
shall deliver to Buyer such other documents, certificates, instruments and
other items that they are required to deliver at the Closing pursuant to
Section 1.09 or as otherwise reasonably requested by Buyer.


 


SECTION 6.03     Additional Conditions to Obligations of the
Sellers.


 


The obligations of the
Sellers to effect the transactions contemplated hereby are also subject to the
satisfaction at or prior to the Closing Date of the following conditions, any
or all of which may be waived by the Sellers in writing, in whole or in part,
to the extent permitted by applicable Law:


 


25

















 


(a)           Representations
and Warranties.  Each of the
representations and warranties of the Buyer contained in this Purchase
Agreement shall be true and correct in all material respects (except that where
any statement in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects giving
effect to such standard) as of date of this Purchase Agreement, and as of the Closing
Date as though made as of the Closing Date, except that those representations
and warranties which address matters only as of a particular date shall remain
true and correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects giving effect to such
standard) as of such date, and except for (i) changes permitted or
contemplated by this Purchase Agreement or (ii) in a representation and
warranty that does not expressly include a standard of materiality, any untrue
or incorrect statements therein that, considered in the aggregate, do not
indicate a Buyer Material Adverse Effect. 
The Parent shall have received a certificate of an executive officer of
the Buyer to that effect.


 


(b)           Agreements
and Covenants.  The Buyer shall have
performed or complied in all material respects with all agreements and
covenants required by this Purchase Agreement to be performed or complied with
by it on or prior to the Closing Date. 
The Sellers shall have received a certificate of an executive officer of
the Buyer to that effect.


 


(c)           Other
Closing Deliveries.  The Buyer shall
deliver to Sellers such other documents, certificates, instruments and other
items that it is required to deliver at the Closing pursuant to
Section 1.09  or as otherwise
reasonably requested by Sellers.


 


ARTICLE VII

TERMINATION, AMENDMENT AND WAIVER


 


SECTION 7.01     Termination.


 


This Purchase Agreement
may be terminated at any time prior to the Closing Date by written notice by
the terminating party to the other party (except if such termination is
pursuant to Section 7.01(a)):


 


(a)           by
mutual written agreement of the Buyer and the Sellers;


 


(b)           by
either the Buyer or the Sellers, if


 


(i)            the
transactions contemplated hereby shall not have been consummated by the close
of business on May 1, 2004 (the “End Date”); provided, however, that the
right to terminate this Purchase Agreement under this Section 7.01(b)(i)
shall not be available to any party whose breach of any provision of this
Purchase Agreement has resulted in the failure of the transactions contemplated
hereby to occur on or before the End Date; or


 


(ii)           there
shall be any Law that makes consummation of the transactions contemplated
hereby illegal or otherwise prohibited or any judgment, injunction, order or
decree of any Governmental Entity having competent jurisdiction enjoining the
Buyer or any of the Sellers from consummating the transactions contemplated hereby
is entered and such judgment, injunction, order or decree shall have become
final and nonappealable and, prior to such


 


26

















 


termination, the
parties shall have used reasonable efforts to resist, resolve or lift, as
applicable, such judgment, injunction, order or decree;


 


(c)           by
the Buyer, if a breach of any representation, warranty, covenant or agreement
on the part of the Sellers set forth in this Purchase Agreement shall have
occurred that would cause the conditions set forth in Section 6.02(a) or
Section 6.02(b) not to be satisfied, and such condition shall be incapable
of being satisfied by the End Date; or


 


(d)           by
the Sellers, if a breach of any representation, warranty, covenant or agreement
on the part of the Buyer set forth in this Purchase Agreement shall have
occurred that would cause the conditions set forth in Section 6.03(a) or
Section 6.03(b) not to be satisfied, and such condition shall be incapable
of being satisfied by the End Date.


 


SECTION 7.02     Effect of Termination.


 


Termination of this
Purchase Agreement pursuant to Section 7.01 shall terminate all rights and
obligations of the parties hereunder and none of the parties shall have any
liability to the other party hereunder, except that Section 5.03 and
Section 7.02 and Article IX and (to the extent necessary)
Article X of this Purchase Agreement shall remain in effect, and provided
that nothing herein shall relieve any party from liability for any breach of
any covenant or agreement in this Purchase Agreement prior to such termination.


 


SECTION 7.03     Amendment.


 


This Purchase Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.


 


SECTION 7.04     Extension; Waiver.


 


At any time prior to the
Closing Date, the parties hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions contained
herein.  Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.  The
failure of any party to assert any of its rights under this Purchase Agreement
or otherwise shall not constitute a waiver of such rights.  Any waiver or extension under this Purchase
Agreement executed by the Parent on behalf of the Sellers shall be deemed to
constitute a waiver or extension by all of the Sellers without further consent
or writing by each of the Sellers individually.


 


ARTICLE VIII

SURVIVAL; INDEMNIFICATION


 


SECTION 8.01     Covenants and Agreements


 


The covenants and
agreements contained herein (and any right to indemnification for breach
thereof) shall survive the Closing until the expiration of the applicable
statute of limitations, and shall thereupon expire together with any right to
indemnification for breach


 


27

















 


thereof, except to
the extent an Indemnification Notice shall have been given prior to such date
in accordance with Section 8.02.


 


SECTION 8.02     Indemnification


 


(a)           Indemnification.  If the Closing shall occur, (i) the
Sellers hereby agree to indemnify and hold harmless the Buyer from and against
any and all Losses which are incurred or suffered by the Buyer by reason of a
Buyer Indemnification Event and (ii) the Buyer hereby agrees to indemnify
the Sellers from and against any and all Losses which are incurred or suffered
by the Sellers or any of them by reason of a Seller Indemnification Event.  Notwithstanding the foregoing,  (x) with respect to breaches of
Sellers’ representations and warranties contained in Section 2.05,
Section 2.10, Section 2.12, Section 2.13, Section 2.16,
Section 2.17 and Section 2.18 (the “Business Representations”)
Sellers shall not have liability for indemnification under this
Article VIII until the total of all Buyer’s Losses, incurred with respect
to a Buyer Indemnification Event, exceeds $300,000, and then only for the
amount by which such Buyer’s Losses or Sellers’ Losses exceed $300,000, and
(y) the aggregate liability of Sellers and Buyer, respectively, for
indemnification under this Article VIII for breaches of representations and
warranties shall in no event exceed the amount of the Purchase Price actually
paid by Buyer to Sellers; provided, however, that the limitations contained in
the foregoing clauses (x) and (y) shall not apply and shall not
relieve Sellers or Buyer of any liability in the case of fraud or intentional
breach or misrepresentation in this Purchase Agreement on the part of Sellers
or Buyer, respectively.


 


(b)           Definitions.  “Buyer Indemnification Event” is
(i) any breach or inaccuracy of any representation or warranty made by the
Sellers in this Purchase Agreement or in any Seller Ancillary Agreement,
(ii) any breach of any covenant or agreement made by the Sellers in this
Purchase Agreement or in any Seller Ancillary Agreement, including, without
limitation, failure by Sellers to satisfy any and all Excluded Liabilities and
any Losses of Buyer relating to Sellers’ failure to satisfy any and all
Excluded Liabilities when due or otherwise, (iii) any claim or allegation
brought by any stockholder of Parent in connection with, relating to, or
involving the transactions contemplated by this Purchase Agreement, or (iv) any
and all claims, allegations or Losses incurred or suffered by Buyer relating to
any collocation agreement to which either of the Sellers or their Affiliates is
party with iPass Inc., and any licenses thereunder.  “Seller Indemnification Event” is (i) any breach or
inaccuracy of any representation or warranty made by the Buyer in this Purchase
Agreement or (ii) any breach of any covenant or agreement made by the
Buyer in this Purchase Agreement or any Seller Ancillary Agreement.  “Indemnification Event” is either a
Buyer Indemnification Event or a Seller Indemnification Event as the context
may require.  “Indemnification Notice”
is a written notice delivered to the Sellers by the Buyer, or to the Buyer by
the Sellers, which notice states the Buyer or the Sellers, as applicable,
demands indemnification under this Section 8.02 with respect to Losses
arising from a therein-specified Indemnification Event.  “Losses” are any and all losses,
damages, liabilities, obligations, costs and expenses (including, without
limitation, reasonable attorneys’ fees and disbursements) sustained, suffered
or incurred by the party seeking indemnification on account of any Indemnification
Event; provided, however, that in no event shall “Losses” include
consequential, incidental, special, punitive or similar damages, including,
without limitation, loss of profits, goodwill or capital, or downtime
expenses..


 


28

















 


(c)           Survival.  On the Expiration Date, the Business
Representations and the representations and warranties contained in Section
2.09 and Section 2.14 shall expire, together with any right to indemnification
for breach thereof, except to the extent an Indemnification Notice shall have
been given prior to such date in accordance with this Section 8.02.  The “Expiration Date” shall be
fifteen (15) months from the Closing Date for any Business Representations
and the representations and warranties contained in Section 2.14, and with
respect to the representations and warranties made by the Sellers in
Section 2.09 (Taxes), the Expiration Date shall be one month after the
expiration of the applicable statute of limitations.  Each other representation, warranty, covenant and agreement made
in this Purchase Agreement shall survive the Closing in perpetuity.


 


(d)           Procedure.


 


(i)            In
the event that a party shall incur or suffer any Losses (or shall reasonably
anticipate that it shall suffer a Loss) in respect of which indemnification may
be sought by such party (an “Indemnified Party”) pursuant to the
provisions of this Section 8.02 from any other party or parties (each, an
“Indemnifying Party”), the Indemnified Party shall submit to the Indemnifying
Party an Indemnification Notice stating the nature and basis of such
claim.  In the case of Losses arising by
reason of any third party claim, the Indemnification Notice shall be given
within 30 days of the filing or other written assertion of any such claim
against the Indemnified Party, but the failure of the Indemnified Party to give
the Indemnification Notice within such time period shall not relieve the
Indemnifying Party of any liability that the Indemnifying Party may have to the
Indemnified Party except to the extent that the Indemnifying Party is
prejudiced thereby.


 


(ii)           The
Indemnified Party shall provide to the Indemnifying Party on request all
information and documentation in the Indemnified Party’s possession
(x) that is not privileged and is reasonably necessary and (y) that
is critical (whether or not privileged) to support and verify any Losses which
the Indemnified Party believes give rise to a claim for indemnification
hereunder and shall give the Indemnifying Party reasonable access to all books,
Records and personnel in the possession or under the control of the Indemnified
Party which would have bearing on such claim.


 


(iii)          In
the case of third party claims with respect to which an Indemnification Notice
is given, the Indemnifying Party shall have the option (x) to conduct any
proceedings or negotiations in connection therewith, (y) to take all other
steps to settle or defend any such claim and (z) to employ counsel of the
Indemnifying Party’s choosing to contest any such claim in the name of the
Indemnified Party or otherwise; provided that unless a settlement of a claim
contains an unconditional release of the Indemnified Party, no settlement shall
be effected without the advance written consent of the Indemnified Party (which
consent shall not be unreasonably withheld, conditioned or delayed).  In any event, the Indemnified Party shall be
entitled to participate at its own expense and by its own counsel in any
proceedings relating to any third party claim, and the Indemnified Party shall
be entitled to participate with counsel of its own choice at the expense of the
Indemnifying Party if representation of both parties by the same counsel
presents a conflict of interest or is otherwise inappropriate under applicable
standards of professional conduct.  The
Indemnifying Party shall, within 30 days of receipt of the Indemnification
Notice, notify the Indemnified Party of its intention to assume the defense of


 


29

















 


any such claim. 
Until the Indemnified Party has received notice of the Indemnifying
Party’s election whether to defend any such claim, the Indemnified Party shall
take reasonable steps to defend (but may not settle) such claim.  If the Indemnifying Party shall decline to assume
the defense of any such claim, or shall fail to notify the Indemnified Party
within 30 days after receipt of the Indemnification Notice of the Indemnifying
Party’s election to defend such claim, the Indemnified Party shall defend
against such claim.  The expenses of all
proceedings, contests or lawsuits in respect of any such claims (other than
those incurred by the Indemnified Party which are referred to in the second
sentence of this subparagraph (iii)) shall be borne by the
Indemnifying Party but only if the Indemnifying Party is responsible pursuant
hereto to indemnify the Indemnified Party in respect of such claim and, if
applicable, only to the extent required by this Section 8.02.  Regardless of which party shall assume the
defense of the claim, the parties agree to cooperate fully with one another in
connection therewith.


 


(e)           No
Limitation on Right to Contest. 
Nothing in this Section 8.02 shall be construed as a limitation on
the Indemnifying Party’s right to contest in good faith whether the Indemnified
Party is entitled to indemnification pursuant to this Section 8.02 with
respect to a particular claim.


 


(f)            Sole
Remedy.  From and after the Closing,
the indemnification provided for in this Section 8.02 shall be the sole
and exclusive monetary remedy, whether in contract, tort or otherwise, for any
inaccuracy or breach of any representation or warranty or any breach of any
covenant or agreement set forth in this Purchase Agreement.


 


(g)           Subrogation.  Upon making any payment to the Indemnified Party
for any indemnification claim pursuant to this Section 8.02, the
Indemnifying Party shall be subrogated, to the extent of such payment, to any
rights which the Indemnified Party may have against any third parties with
respect to the subject matter underlying such indemnification claim.


 


(h)           Offset.  In the event of a breach by an Indemnifying
Party giving rise to a claim for indemnification by the Indemnified Party
hereunder, the Indemnified Party shall have the right to withhold, recoup or
offset such amounts from payments due from it to the Indemnifying Party under
Section 1.07(c) or the Transition Services Agreement.  Notwithstanding the foregoing, any amount
offset by Buyer pursuant to this Section 8.02(h) or Section 1.07(c)
which is later determined not to be due and payable by Sellers to Buyer shall,
within five business days after such determination, be paid over to Sellers,
and such payment shall include interest on such amount from the date such
amount would have otherwise been required to have been paid in accordance with
Section 1.07(c) but for such offset until the date repaid to Sellers,
calculated at the actual annual rate of interest, as such rate may adjust from
time to time, actually received by Buyer on such amount.


 


ARTICLE IX

MISCELLANEOUS


 


SECTION 9.01     Notices.


 


All notices and other
communications given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made as of the date delivered, if delivered


 


30

















 


personally, three
business days after being mailed by registered or certified mail (postage
prepaid, return receipt requested) or one business day after being sent by
overnight courier (providing proof of delivery), to the parties at the
following addresses:


 


(a)           If to the Buyer:


 


Level 3
Communications, LLC


1025 Eldorado
Blvd.


Broomfield,
CO  80021


Attention:  General Counsel


 


(b)           If to the Sellers:


 


ICG
Communications, Inc.


161 Inverness
Drive West


Englewood, CO
80112


Attention:  General Counsel


 


SECTION 9.02     Headings.


 


The headings contained in
this Purchase Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Purchase Agreement.


 


SECTION 9.03     Severability.


 


If any term or other
provision of this Purchase Agreement is invalid, illegal or incapable of being
enforced by any rule of Law or public policy, all other conditions and
provisions of this Purchase 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 materially 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 Purchase 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.


 


SECTION 9.04     Entire
Agreement.


 


This Purchase Agreement
(together with the Exhibits, the Business Disclosure Schedule, and the other
documents delivered pursuant hereto) and the Confidentiality Agreement
constitute the entire agreement of the parties and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof, and, except as expressly
provided herein, are not intended to confer upon any other Person any rights or
remedies hereunder.  The disclosure of
any matter in the Business Disclosure Schedule shall not be deemed to be a
disclosure for any purposes of this Purchase Agreement except for the
representation or warranty to which such disclosure expressly relates or
references.  Any such disclosure shall
expressly not be deemed to constitute an admission by the Sellers or otherwise
to imply that any such matter is material for the purposes of this Purchase
Agreement.


 


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SECTION 9.05     Assignment.


 


This Purchase Agreement
shall not be assigned, transferred or otherwise conveyed by operation of Law,
in connection with a sale or lease of assets, merger, change in Control
(regardless, of whether or not a Seller is the “surviving corporation” as a
matter of law, in connection with any merger or change in Control), or
otherwise without the prior written consent of the other parties, which may be
withheld in any party’s sole discretion. 
Notwithstanding the generality of the foregoing, Buyer may assign this
Purchase Agreement in whole or in part (including the right to acquire any or
all of the Acquired Assets) to any Affiliate of Buyer; provided such assignment
shall not relieve Buyer of its duties and obligations to Sellers hereunder, and
Sellers may assign this Purchase Agreement and the Transition Services
Agreement after the Closing, in whole but not in part, pursuant to and in
compliance with Section 5.07(b), provided such assignment shall not relieve
Sellers of their duties and obligations to Buyer hereunder.


 


SECTION 9.06     Parties in Interest.


 


This Purchase Agreement
shall be binding upon, inure solely to the benefit of and be enforceable by
each party and their respective successors and assigns hereto, and nothing in
this Purchase Agreement, express or implied, is intended to or shall confer
upon any other Person other than the parties hereto any right, benefit or
remedy of any nature whatsoever under or by reason of this Purchase Agreement.


 


SECTION 9.07     Mutual
Drafting.


 


Each party hereto has
participated in the drafting of this Purchase Agreement, which each party
acknowledges is the result of extensive negotiations between the parties.


 


SECTION 9.08     Expenses.


 


All fees and expenses
incurred in connection herewith and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the transactions
contemplated hereby are consummated.


 


SECTION 9.09     Governing
Law.


 


This Purchase Agreement
shall be governed by, and construed in accordance with, the Laws of the State
of Colorado applicable to agreements made and to be performed wholly within
such jurisdiction.  Each of the parties
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Colorado and of the United States of
America, in each case located in the County of Denver, for any litigation
arising out of or relating to this Purchase Agreement and the transactions
contemplated hereby, and further agrees that service of any process, summons, notice
or document by U.S. registered mail to its respective address set forth in this
Purchase Agreement shall be effective service of process for any litigation
brought against it in any such court. 
Each of the parties hereto hereby irrevocably and unconditionally waives
any objection to the laying of venue of any litigation arising out of this
Purchase Agreement or the transactions contemplated hereby in the courts of the
State of Colorado or the United States of America, in each case, located in the
County of Denver, and


 


32

















 


hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such litigation brought in any such court has been brought
in an inconvenient forum.


 


SECTION 9.10     Counterparts.


 


This Purchase Agreement
may be executed and delivered in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed and
delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement. 
This Agreement may be transmitted and executed by facsimile, or
electronically in a .pdf file format, and such facsimile or electronically
transmitted signatures shall constitute original signatures for all applicable
purposes.


 


SECTION 9.11     Confidentiality.


 


All information delivered
to or obtained by or on behalf of any party to this Purchase Agreement shall be
held pursuant to the Confidentiality Agreement.


 


SECTION 9.12     Bulk
Sales.


 


The Buyer (on its own
behalf and on behalf of its Affiliates and the successors and assigns of any of
the foregoing) hereby waives compliance with any bulk sales or other similar
Laws in any applicable jurisdiction in respect of the transactions contemplated
hereby.


 


SECTION 9.13     Assistance in Proceedings.


 


Each party hereto shall
reasonably cooperate with the other parties hereto and their counsel in the
contest or defense of, and make available its personnel and provide access to
such party’s Books and Records in connection with any proceeding involving
or relating to (a) any transaction contemplated by this Purchase Agreement
or (b) any action, activity, incident, occurrence or transaction on or
before the Closing Date involving the Business.


 


SECTION 9.14     Further Assurances.


 


The parties shall
cooperate reasonably with each other and with their respective representatives
in connection with any steps required to be taken as part of their respective
obligations under this Purchase Agreement, and shall (a) furnish upon
request to each other such further information, (b) execute and deliver to
each other such other documents; and (c) do such other acts and things,
all as the other party may reasonably request for the purpose of carrying out
the transactions contemplated by this Purchase Agreement.


 


ARTICLE X

DEFINITIONS


 


For purposes of this
Purchase Agreement, the following terms, and the singular and plural thereof,
shall have the meanings set forth below:


 


33

















 


“Accounts Payable”
means any unpaid Liability to any vendor, supplier or provider of goods or
services to the Business for any goods provided or services rendered,
regardless of whether invoiced or billed.


 


“Acquired Assets”
is defined in  Section 1.01.


 


“Adjusted Purchase
Price” is defined in Section 1.07(a).


 


“Affiliate” means,
with respect to any Person, a Person that directly or indirectly, through one
or more intermediaries, Controls, is Controlled by, or is under common Control
with, such Person.


 


“Assumed Customer
Contracts” is defined in Section 1.01(a).


 


“Assumed Liabilities”
is defined in Section 1.03.


 


“Books and
Records” is defined in Section 1.01(e).


 


“Business” means
the dial-up ISP business whereby the Company provides dial-up Internet access
to Internet service providers and their customers, excluding the Company’s
direct Internet access and primary rate interface businesses.


 


“Business Contracts”
is defined in Section 2.14(a).


 


“Business Disclosure
Schedule” is defined in Article II.


 


“Business Intellectual
Property” is defined in Section 2.05.


 


“Business Licenses”
is defined in Section 2.03(a).


 


“Business Material
Adverse Effect” means any event, change or effect that, individually or
when taken together with all other such events, changes or effects, is or is
reasonably expected to be materially adverse to the business, operations,
condition (financial or otherwise), assets or liabilities of the Business,
taken as a whole, other than (i) adverse effects caused by changes in the
economy generally or in securities markets generally or in the Business’
industry in general and not specifically relating to the Business; or
(ii) the loss of personnel or similar occurrences which are the direct and
proximate result of the announcement of this Purchase Agreement and the
transactions contemplated hereby.


 


“Business
Representations” is defined in Section 3.01(a)


 


“Business Tax Returns”
means all Tax Returns required to be filed by the Sellers with respect to the
Business or the Acquired Assets (without regard to extensions of time permitted
by law or otherwise).


 


“Buyer” is defined
in the Preamble to this Purchase Agreement.


 


“Buyer Ancillary
Agreements” is defined in Section 3.01(a).


 


34

















 


“Buyer Contract”
is defined in Section 3.02.


 


“Buyer Indemnification
Event” is defined in Section 8.02(b).


 


“Buyer Material
Adverse Effect” means any event, change or effect that, individually or
when taken together with all other such events, changes or effects, is or is
reasonably likely to be materially adverse to the business, operations,
condition (financial or otherwise), assets or liabilities of the Buyer and its
Subsidiaries, taken as a whole, other than adverse effects caused by changes in
the economy generally or in securities markets generally or in the Buyer’s
industry in general and not specifically relating to the Buyer.


 


“Buyer’s Receivables”
is defined in Section 1.05(a).


 


“Closing” is
defined in Section 1.09(a).


 


“Closing Date” is
defined in Section 1.09(a).


 


“Closing Period”
is the period between the date of this Purchase Agreement and the Closing Date.


 


“Code” means the
United States Internal Revenue Code of 1986, as amended.


 


“Company” is
defined in the Preamble to this Purchase Agreement.


 


“Confidentiality
Agreement” means the Non-Disclosure Agreement dated as of the Closing Date
between Sellers and Buyer.


 


“Control”
(including the terms “Controlled by” and “under common Control with”)
means, as used with respect to any Person, possession, directly or indirectly
or as a trustee or executor, of power to direct or cause the direction of
management or policies of such Person (whether through ownership of voting
securities, as trustee or executor, by agreement or otherwise).


 


“Current Liabilities”
are the current liabilities respecting the Business identified in the Most
Recent Financial Statements, which liabilities may include but are not
necessarily limited to Accounts Payable, current maturities of long-term debt,
advanced billings and deferred revenue, customer deposits and other accrued
liabilities.


 


“Customer Contract”
means any legally binding agreement, contract, lease, license, or other
obligation (whether written or oral and whether express or implied) pursuant to
which either Seller or any of their respective Affiliates is obligated to
provide services or products relating to the Business to a customer, including,
without limitation, all service agreements and contracts and all amendments,
attachments, addenda, schedules, exhibits, service level agreements, waivers
and modifications relating thereto.


 


“Customer MAC” is
a statement, intention or action made or reasonably anticipated in which a
customer under a Key Customer Contract reduces or intends to reduce the volume
of its purchases or requests or intends to request pricing changes, which (if
it had been implemented in


 


35

















 


the 30-day period
prior to Closing) would have caused a failure to satisfy the Revenue
Requirement.


 


“Effective Date”
has the meaning given to such term in the Transition Services Agreement.


 


“Encumbrance”
means any lien, pledge, servitude, charge, claim, security interest, option,
mortgage, right of way, easement, encroachment, equitable interest, right of
first refusal or similar restriction, including any restriction on use,
transfer, receipt of income or exercise of any other attribute of ownership.


 


“End Date” is
defined in Section 7.01(b)(i).


 


“Environmental, Health
and Safety Liabilities” means any and all Liabilities arising under or
relating to any federal, state, local, and foreign statutes, regulations,
ordinances, and other provisions having the force or effect of law, all
judicial and administrative orders and determinations, all contractual
obligations, and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including,
without limitation, all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances, or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise, or radiation, each as amended and as now or hereafter in
effect.


 


“Excluded Assets”
is defined in Section 1.02.


 


“Excluded Customer
Contracts” is defined in Section 1.02(c).


 


“Excluded Liabilities”
is defined in Section 1.04(a).


 


“Excluded Numbers”
is defined as all telephone numbers of Sellers other than the Numbers.


 


“Expiration Date”
is defined in Section 8.02(c).


 


“GAAP” means
United States generally accepted accounting principles.


 


“Governmental Entity”
(including the term “Governmental”) means any governmental, quasi-governmental
or regulatory authority, whether domestic or foreign.


 


“Holdback” is
defined in Section 1.07(b).


 


“Income Tax” means
all federal, state, local and foreign income Taxes and franchise Taxes which
are based on net income, and any interest or penalties thereon.


 


“Indemnification Event”
is defined in Section 8.02(b).


 


36

















 


“Indemnification Notice”
is defined in Section 8.02(b).


 


“Indemnified Party”
is defined in Section 8.02(d)(i).


 


“Indemnifying Party”
is defined in Section 8.02(d)(i).


 


“Intellectual Property”
means (a) all inventions (whether patentable or unpatentable and whether
or not reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade
names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection therewith,
(c) all copyrightable works, all copyrights, all rights to database
information, and all applications, registrations, and renewals in connection
therewith, (d) all mask works and all applications, registrations, and
renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation),
(g) all rights, including rights of privacy and publicity, to use the
names, likenesses and other personal characteristics of any individual,
(h) all other proprietary rights, and (i) all copies and tangible
embodiments thereof (in whatever form or medium) existing in any part of the
world.


 


“IRS” means the
United States Internal Revenue Service and its successors.


 


“Key Customer Contract”
is defined in Section 6.02(d).


 


“Knowledge” will
be deemed to be present with respect to the Sellers when the matter in question
is actually known by any of Jeffrey R. Pearl, Richard L. Fish, Jr., Michael D.
Kallet, Bernard L. Zuroff, and Brian Timmons, after reasonable inquiry and
investigation by such persons.


 


“Law” means all
foreign, federal, state and local statutes, laws, ordinances, regulations,
rules, resolutions, orders, tariffs, determinations, writs, injunctions, awards
(including, without limitation, awards of any arbitrator), judgments and
decrees applicable to the specified Person or to the businesses and assets
thereof (including, without limitation, Laws relating to securities
registration and regulation; the sale, leasing, ownership or management of real
property; employment practices, terms and conditions, and wages and hours;
building standards, land use and zoning; safety, health and fire prevention;
and environmental protection, including Environmental Laws).


 


“Liability” means,
with respect to any Person, any liability or obligation of such Person of any
kind, character or description, whether known or unknown, absolute or
contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements
of such Person.


 


37

















 


“License” means
any franchise, grant, registration, authorization, license, tariff, permit,
easement, variance, exemption, consent, certificate, approval or order of any
Governmental Entity.


 


“LNP” is defined in
Section 1.01(b).


 


“Losses” are
defined in Section 8.02(b).


 


“Migration Period”
is the period between the Closing and the date that the Transition Services
Agreement is terminated in accordance with its terms.


 


“Most Recent Financial
Statements” is defined in Section 2.04(a).


 


“Net Adjustment”
is defined in Section 1.07(a).


 


“Non-Competition
Agreement” is defined in Section 1.09(c).


 


“Numbers” are the
telephone numbers used to provide services pursuant to the Assumed Customer
Contracts listed on Schedule 1.01(b).


 


“Ordinary Course of
Business” means ordinary course of business, consistent with past practices
in all material respects.


 


“Parent” is
defined in the Preamble to this Purchase Agreement.


 


“Person” means an
individual, corporation, partnership, joint venture, limited liability company,
trust, unincorporated organization or other entity, or a Governmental Entity.


 


“Proration Time”
is defined in Section 1.05(a).


 


“Purchase Agreement”
is defined in the Preamble to this Purchase Agreement.


 


“Purchase Price”
is defined in Section 1.07(a).


 


“Purchased Equipment”
is defined in Section 1.01(c).


 


“Receivables” is
defined in Section 1.01(d).


 


“Records” means
information that is inscribed on a tangible medium or that is stored in an
electronic or other medium and is retrievable in perceivable form.


 


“Related Party
Transaction” is defined in Section 2.18.


 


“Retained Number”
has the meaning given to such term in the Transition Services Agreement.


 


“Revenue Requirement”
is defined in Section 6.02(g).


 


“Sellers” is defined
in the Preamble to this Purchase Agreement.


 


38

















 


“Seller Ancillary
Agreements” is defined in Section 2.01(a).


 


“Seller
Indemnification Event” is defined in Section 8.02(b).


 


“Seller’s Receivable”
is defined in Section 1.05(a).


 


“Subsidiary” means
a corporation, partnership, joint venture or other entity of which the Buyer
owns, directly or indirectly, at least 50% of the outstanding securities or
other interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body or otherwise
exercise Control of such entity.


 


“Taxes” (including
the terms “Tax” and “Taxing”) means all federal, state, local and
foreign taxes (including, without limitation, income, profit, franchise, sales,
use, real property, personal property, ad valorem, excise, employment, social
security and wage withholding taxes and taxes required to be collected from
customers), all universal service fees and similar regulatory fees, whether
assessed on access lines, revenues or other measures, arising from sales of
telecommunications facilities and services (including, without limitation,
Telecommunications Relay Services surcharges and 911 surcharges), and
installments of estimated taxes, assessments, deficiencies, levies, imports,
duties, license fees, registration fees, withholdings, or other similar charges
of every kind, character or description imposed by any Governmental Entity, and
any interest, penalties or additions to tax imposed thereon or in connection
therewith.


 


“Tax Return” means
any federal, state, local, foreign and other applicable return, declaration,
report and information statement with respect to Taxes required to be filed
with the IRS or any other Governmental Entity or Tax authority or agency.


 


“Third Party Consent”
is defined in Section 1.06.


 


“Transition Services
Agreement” is defined in Section 1.09(c).


 


[SIGNATURE PAGE FOLLOWS]


 


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IN WITNESS WHEREOF, the
Buyer, the Parent and the Company have each caused this Purchase Agreement to
be executed and delivered as of the date first written above.


 


	
   

  	
  ICG COMMUNICATIONS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ICG TELECOM GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LEVEL 3 COMMUNICATIONS,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Robert M. Yates

  
	
   

  	
   

  	
  Title:  Senior Vice President and Assistant

  
	
   

  	
   

  	
  General Counsel

  
					



 


Signature Page to

Asset Purchase Agreement