Exhibit 10.2

TAX MATTERS AGREEMENT

BY AND BETWEEN

NTELOS HOLDINGS CORP.

AND

LUMOS NETWORKS CORP.

DATED AS OF

OCTOBER 31, 2011

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TABLE OF CONTENTS

 

         Page  

SECTION 1.

 

DEFINITION OF TERMS

     2   

SECTION 2.

 

ALLOCATION OF TAX LIABILITIES

     10   

Section 2.01

 

General Rule

     10   

Section 2.02

 

Allocation of United States Federal Income Tax and Federal Other Tax

     11   

Section 2.03

 

Allocation of State Income and State Other Taxes

     11   

Section 2.04

 

Certain Transaction and Other Taxes.

     12   

SECTION 3.

 

PRORATION OF TAXES FOR STRADDLE PERIODS

     12   

SECTION 4.

 

PREPARATION AND FILING OF TAX RETURNS

     13   

Section 4.01

 

General

     13   

Section 4.02

 

NTELOS’ Responsibility

     13   

Section 4.03

 

Wireline’s Responsibility

     13   

Section 4.04

 

Tax Accounting Practices

     13   

Section 4.05

 

Consolidated or Combined Tax Returns

     14   

Section 4.06

 

Right to Review Tax Returns

     14   

Section 4.07

 

Wireline Carrybacks and Claims for Refund

     15   

Section 4.08

 

Apportionment of Earnings and Profits and Tax Attributes

     15   

SECTION 5.

 

TAX PAYMENTS

     16   

Section 5.01

 

Payment of Taxes with Respect to NTELOS Federal Consolidated Income Tax Returns

     16   

Section 5.02

 

Payment of Taxes With Respect to Joint Returns (other than a NTELOS Federal
Consolidated Income Tax Return) and Certain Returns of Other Taxes

     16   

Section 5.03

 

Payment of Separate Company Taxes

     17   

Section 5.04

 

Indemnification Payments

     17   

SECTION 6.

 

TAX BENEFITS

     17   

Section 6.01

 

Tax Benefits

     17   

Section 6.02

 

NTELOS and Wireline Income Tax Deductions in Respect of Certain Equity Awards
and Incentive Compensation

     19   

SECTION 7.

 

TAX-FREE STATUS

     19   

Section 7.01

 

Tax Opinions/Rulings and Representation Letters

     19   

Section 7.02

 

Restrictions on Wireline

     19   

 

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TABLE OF CONTENTS

 

         Page  

Section 7.03

 

Restrictions on NTELOS

     21   

Section 7.04

 

Procedures Regarding Opinions and Rulings

     21   

Section 7.05

 

Liability for Tax-Related Losses

     22   

SECTION 8.

 

ASSISTANCE AND COOPERATION

     24   

Section 8.01

 

Assistance and Cooperation

     24   

Section 8.02

 

Income Tax Return Information

     25   

Section 8.03

 

Reliance by NTELOS

     26   

Section 8.04

 

Reliance by Wireline

     26   

SECTION 9.

 

TAX RECORDS

     26   

Section 9.01

 

Retention of Tax Records

     26   

Section 9.02

 

Access to Tax Records

     27   

SECTION 10.

 

TAX CONTESTS

     27   

Section 10.01

 

Notice

     27   

Section 10.02

 

Control of Tax Contests

     27   

SECTION 11.

 

EFFECTIVE DATE; TERMINATION OF PRIOR INTERCOMPANY TAX ALLOCATION AGREEMENTS

     29   

SECTION 12.

 

SURVIVAL OF OBLIGATIONS

     30   

SECTION 13.

 

TREATMENT OF PAYMENTS; TAX GROSS UP

     30   

Section 13.01

 

Treatment of Tax Indemnity and Tax Benefit Payments

     30   

Section 13.02

 

Tax Gross Up

     30   

Section 13.03

 

Interest Under This Agreement

     30   

SECTION 14.

 

DISAGREEMENTS

     31   

Section 14.01

 

Tax Disputes

     31   

Section 14.02

 

High-Level Disputes

     31   

SECTION 15.

 

LATE PAYMENTS

     31   

SECTION 16.

 

EXPENSES

     31   

SECTION 17.

 

GENERAL PROVISIONS

     31   

Section 17.01

 

Addresses and Notices

     31   

Section 17.02

 

Binding Effect

     32   

Section 17.03

 

Waiver

     32   

Section 17.04

 

Severability

     32   

 

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TABLE OF CONTENTS

 

         Page  

Section 17.05

 

Authority

     32   

Section 17.06

 

Further Action

     33   

Section 17.07

 

Integration

     33   

Section 17.08

 

Construction

     33   

Section 17.09

 

No Double Recovery

     33   

Section 17.10

 

Counterparts

     33   

Section 17.11

 

Governing Law

     33   

Section 17.12

 

Jurisdiction

     34   

Section 17.13

 

Amendment

     34   

Section 17.14

 

Wireline Subsidiaries

     34   

Section 17.15

 

Successors

     34   

Section 17.16

 

Injunctions

     34   

 

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Schedules

 

Schedule 6.01(b)    Tax Benefits Schedule 7.02(a)    Restrictions on Wireline;
Transactions

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FORM OF TAX MATTERS AGREEMENT

TAX MATTERS AGREEMENT (this “Agreement”), dated as of October 31, 2011 is
entered into by and between NTELOS Holdings Corp., a Delaware corporation
(“NTELOS”) and Lumos Networks Corp., a Delaware corporation (“Wireline”)
(together, the “Companies” and, as the context requires, individually referred
to herein as the “Company”).

RECITALS

WHEREAS, the Board of Directors of NTELOS has determined that it is in the best
interests of NTELOS and its stockholders to separate NTELOS’ wireline business
from its wireless business;

WHEREAS, as of the date hereof, NTELOS is the common parent of an affiliated
group, including Wireline, which has elected to file consolidated Federal income
tax returns;

WHEREAS, the Companies have entered into the Separation and Distribution
Agreement (as defined below), pursuant to which NTELOS has agreed to contribute
to Wireline the stock of certain subsidiaries engaged in, and other assets
associated with NTELOS’ wireline business and certain other assets in exchange
for all of the outstanding shares of common stock of Wireline and the assumption
by Wireline of certain liabilities of NTELOS (the “Contribution”);

WHEREAS, NTELOS intends to distribute to its stockholders all the outstanding
shares of stock of Wireline owned by NTELOS (the “Distribution”);

WHEREAS, the Companies believe the Distribution will allow NTELOS and Wireline
to each be better positioned, among other items, to manage their operations and
capital investments, leverage their distinct competitive strengths, effectively
structure employee compensation and pursue growth strategies to enhance
stockholder value;

WHEREAS, the Companies intend that the Contribution, the Distribution and the
other transactions contemplated by the Separation and Distribution Agreement
qualify as a “reorganization” under the Code (as defined below), with respect to
which no gain or loss is recognized under Code Sections 361 and 355;

WHEREAS, as a result of the Distribution, Wireline and its subsidiaries will
cease to be members of the affiliated group (as that term is defined in
Section 1504 of the Code) of which NTELOS is the common parent (the
“Deconsolidation”);

WHEREAS, the parties desire to provide for and agree upon the allocation between
the parties of liabilities for Taxes (as defined below) arising prior to, as a
result of, and subsequent to the Distribution, and to provide for and agree upon
other matters relating to Taxes;

NOW THEREFORE, in consideration of the mutual agreements contained herein, the
parties hereby agree as follows:

Section 1. Definition of Terms. For purposes of this Agreement (including the
recitals hereof), the following terms have the following meanings, and
capitalized terms used but

 

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not otherwise defined herein shall have the meaning ascribed to them in the
Separation and Distribution Agreement:

“Accounting Cutoff Date” means, with respect to Wireline, any date as of the end
of which there is a closing of the financial accounting records for such entity.

“Active Trade or Business” means the active conduct (as defined in
Section 355(b)(2) of the Code and the regulations thereunder) by Wireline and
its “separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code)
of the Wireline Business as conducted immediately prior to the Distribution.

“Adjustment Request” means any formal or informal claim or request filed with
any Tax Authority, or with any administrative agency or court, for the
adjustment, refund, or credit of Taxes, including (a) any amended Tax return
claiming adjustment to the Taxes as reported on the Tax Return or, if
applicable, as previously adjusted, (b) any claim for equitable recoupment or
other offset, and (c) any claim for refund or credit of Taxes previously paid.

“Affiliate” means any entity that is directly or indirectly “controlled” by
either the person in question or an Affiliate of such person. “Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contract or otherwise. The term Affiliate shall refer
to Affiliates of a person as determined immediately after the Distribution.

“Agreement” shall mean this Tax Matters Agreement.

“Board Certificate” shall have the meaning set forth in Section 7.02(d) of this
Agreement.

“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in Virginia, West Virginia or New York City are authorized or
obligated by law to close. Any event the scheduled occurrence of which would
fall on a day that is not a Business Day shall be deferred until the next
succeeding Business Day.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Companies” and “Company” shall have the meaning provided in the first sentence
of this Agreement.

“Contribution” shall have the meaning provided in the Recitals.

“Controlling Party” shall have the meaning set forth in Section 10.02(e) of this
Agreement.

“Deconsolidation” shall have the meaning provided in the Recitals.

“Deconsolidation Date” means the last date on which Wireline qualifies as a
member of the affiliated group (as defined in Section 1504 of the Code) of which
NTELOS is the common parent.

 

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“DGCL” means the Delaware General Corporation Law.

“Distribution” shall have the meaning provided in the Recitals.

“Distribution Date” shall mean the date on which the Distribution occurs.

“Employee Matters Agreement” means the Employee Matters Agreement, dated as of
October 31, 2011, by and between NTELOS and Wireline.

“Federal Income Tax” means any Tax imposed by Subtitle A of the Code, and any
interest, penalties, additions to tax, or additional amounts in respect of the
foregoing.

“Federal Other Tax” means any Tax imposed by the federal government of the
United States of America other than any Federal Income Taxes, and any interest,
penalties, additions to tax, or additional amounts in respect of the foregoing.

“Fifty-Percent or Greater Interest” shall have the meaning ascribed to such term
for purposes of Sections 355(d) and (e) of the Code.

“Filing Date” shall have the meaning set forth in Section 7.05(d) of this
Agreement.

“Final Determination” means the final resolution of liability for any Income Tax
or Other Tax, which resolution may be for a specific issue or adjustment or for
a taxable period, (a) by IRS Form 870 or 870-AD (or any successor forms
thereto), on the date of acceptance by or on behalf of the taxpayer, or by a
comparable form under the laws of a State, local, or foreign taxing
jurisdiction, except that a Form 870 or 870-AD or comparable form shall not
constitute a Final Determination to the extent that it reserves (whether by its
terms or by operation of law) the right of the taxpayer to file a claim for
refund or the right of the Tax Authority to assert a further deficiency in
respect of such issue or adjustment or for such taxable period (as the case may
be); (b) by a decision, judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable; (c) by a closing
agreement or accepted offer in compromise under Sections 7121 or 7122 of the
Code, or a comparable agreement under the laws of a State, local, or foreign
taxing jurisdiction; (d) by any allowance of a refund or credit in respect of an
overpayment of Income Tax or Other Tax, but only after the expiration of all
periods during which such refund may be recovered (including by way of offset)
by the jurisdiction imposing such Income Tax or Other Tax; (e) by a final
settlement resulting from a treaty-based competent authority determination; or
(f) by any other final disposition, including by reason of the expiration of the
applicable statute of limitations or by mutual agreement of the parties.

“Group” means the NTELOS Group or the Wireline Group, or both, as the context
requires.

“High-Level Dispute” means any dispute or disagreement (a) relating to liability
under Section 7.05 of this Agreement or (b) in which the amount of liability in
dispute exceeds $20 million.

“Income Tax” means any Federal Income Tax or State Income Tax.

 

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“Indemnitee” shall have the meaning set forth in Section 13.03 of this
Agreement.

“Indemnitor” shall have the meaning set forth in Section 13.03 of this
Agreement.

“Internal Restructuring” shall have the meaning set forth in Section 7.02(e) of
this Agreement.

“IRS” means the United States Internal Revenue Service.

“Joint Adjustment” means any proposed adjustment by a Tax Authority or claim for
refund asserted in a Tax Contest which is neither a Wireline Adjustment nor an
NTELOS Adjustment.

“Joint Return” shall mean any Return of a member of the NTELOS Group or the
Wireline Group that is not a Separate Return.

“Non-Controlling Party” shall have the meaning set forth in Section 10.02(e) of
this Agreement.

“Notified Action” shall have the meaning set forth in Section 7.04(a) of this
Agreement.

“NTELOS” shall have the meaning provided in the first sentence of this
Agreement.

“NTELOS Adjustment” means any proposed adjustment by a Tax Authority or claim
for refund asserted in a Tax Contest to the extent NTELOS would be exclusively
liable for any resulting Tax under this Agreement or exclusively entitled to
receive any resulting Tax Benefit under this Agreement.

“NTELOS Affiliated Group” shall have the meaning provided in the definition of
“NTELOS Federal Consolidated Income Tax Return.”

“NTELOS Federal Consolidated Income Tax Return” means any United States federal
Income Tax Return for the affiliated group (as that term is defined in
Section 1504 of the Code and the regulations thereunder) of which NTELOS is the
common parent (the “NTELOS Affiliated Group”).

“NTELOS Group” means NTELOS and its Affiliates, excluding any entity that is a
member of the Wireline Group.

“NTELOS Group Transaction Returns” shall have the meaning set forth in
Section 4.04(b) of this Agreement.

“NTELOS Separate Return” means any Separate Return of NTELOS or any member of
the NTELOS Group.

“NTELOS State Combined Income Tax Return” means a consolidated, combined or
unitary State Income Tax Return that actually includes, by election or
otherwise, one or more members of the NTELOS Group together with one or more
members of the Wireline Group.

 

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“Other Tax” means any Federal Other Tax or State Other Tax.

“Past Practices” shall have the meaning set forth in Section 4.04(a) of this
Agreement.

“Payment Date” means (i) with respect to any NTELOS Federal Consolidated Income
Tax Return, the due date for any required installment of estimated taxes
determined under Section 6655 of the Code, the due date (determined without
regard to extensions) for filing the return determined under Section 6072 of the
Code, and the date the return is filed, and (ii) with respect to any other Tax
Return, the corresponding dates determined under the applicable Tax Law.

“Payor” shall have the meaning set forth in Section 5.04 of this Agreement.

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof, without regard to whether any entity is
treated as disregarded for U.S. federal income tax purposes.

“Post-Deconsolidation Period” means any Tax Period beginning after the
Deconsolidation Date, and, in the case of any Straddle Period, the portion of
such Straddle Period beginning the day after the Deconsolidation Date.

“Pre-Deconsolidation Period” means any Tax Period ending on or before the
Deconsolidation Date, and, in the case of any Straddle Period, the portion of
such Straddle Period ending on the Deconsolidation Date.

“Prime Rate” means the base rate on corporate loans charged by Citibank, N.A.
from time to time, compounded daily on the basis of a year of 365 or 366 (as
applicable) days and actual days elapsed.

“Privilege” means any privilege that may be asserted under applicable law,
including, any privilege arising under or relating to the attorney-client
relationship (including the attorney-client and work product privileges), the
accountant-client privilege and any privilege relating to internal evaluation
processes.

“Proposed Acquisition Transaction” means a transaction or series of transactions
(or any agreement, understanding or arrangement, within the meaning of
Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other
regulations promulgated thereunder, to enter into a transaction or series of
transactions), whether such transaction is supported by Wireline management or
shareholders, is a hostile acquisition, or otherwise, as a result of which
Wireline would merge or consolidate with any other Person or as a result of
which any Person or any group of related Persons would (directly or indirectly)
acquire, or have the right to acquire, from Wireline and/or one or more holders
of outstanding shares of Wireline Capital Stock, a number of shares of Wireline
Capital Stock that would, when combined with any other changes in ownership of
Wireline Capital Stock pertinent for purposes of Section 355(e) of the Code,
comprise 40% or more of (A) the value of all outstanding shares of stock of
Wireline as of the date of such transaction, or in the case of a series of
transactions, the date of the last transaction of such series, or (B) the total
combined voting power of all outstanding shares of voting stock of

 

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Wireline as of the date of such transaction, or in the case of a series of
transactions, the date of the last transaction of such series. Notwithstanding
the foregoing, a Proposed Acquisition Transaction shall not include (A) the
adoption by Wireline of a shareholder rights plan or (B) issuances by Wireline
that satisfy Safe Harbor VIII (relating to acquisitions in connection with a
person’s performance of services) or Safe Harbor IX (relating to acquisitions by
a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d). For
purposes of determining whether a transaction constitutes an indirect
acquisition, any recapitalization resulting in a shift of voting power or any
redemption of shares of stock shall be treated as an indirect acquisition of
shares of stock by the non-exchanging shareholders. This definition and the
application thereof is intended to monitor compliance with Section 355(e) of the
Code and shall be interpreted accordingly. Any clarification of, or change in,
the statute or regulations promulgated under Section 355(e) of the Code shall be
incorporated in this definition and its interpretation.

“Representation Letters” means the representation letters and any other
materials (including, without limitation, a Ruling Request and any related
supplemental submissions to the IRS) delivered or deliverable by NTELOS and
others in connection with the rendering by Tax Advisors, and/or the issuance by
the IRS, of the Tax Opinions/Rulings.

“Required Party” shall have the meaning set forth in Section 5.04 of this
Agreement.

“Responsible Company” means, with respect to any Tax Return, the Company having
responsibility for preparing and filing such Tax Return under this Agreement.

“Retention Date” shall have the meaning set forth in Section 9.01 of this
Agreement.

“Ruling” means a private letter ruling (including a supplemental private letter
ruling) issued by the IRS to NTELOS in connection with the Contribution and
Distribution.

“Ruling Request” means any letter filed by NTELOS with the IRS requesting a
ruling regarding certain tax consequences of the Transactions (including all
attachments, exhibits, and other materials submitted with such ruling request
letter) and any amendment or supplement to such ruling request letter.

“Section 7.02(d) Acquisition Transaction” means any transaction or series of
transactions that is not a Proposed Acquisition Transaction but would be a
Proposed Acquisition Transaction if the percentage reflected in the definition
of Proposed Acquisition Transaction were 25% instead of 40%.

“Separate Return” means (a) in the case of any Tax Return of any member of the
Wireline Group (including any consolidated, combined or unitary return), any
such Tax Return that does not include any member of the NTELOS Group and (b) in
the case of any Tax Return of any member of the NTELOS Group (including any
consolidated, combined or unitary return), any such Tax Return that does not
include any member of the Wireline Group.

“Separation and Distribution Agreement” means the Separation and Distribution
Agreement, dated as of October 31, 2011, by and between NTELOS and Wireline.

 

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“State Income Tax” means any Tax imposed by any State of the United States or by
any political subdivision of any such State which is imposed on or measured by
net income, including state and local franchise or similar Taxes measured by net
income, and any interest, penalties, additions to tax, or additional amounts in
respect of the foregoing.

“State Other Tax” means any Tax imposed by any State of the United States or by
any political subdivision of any such State other than any State Income Taxes,
and any interest, penalties, additions to tax, or additional amounts in respect
of the foregoing.

“State Tax” means any State Income Taxes or State Other Taxes.

“Straddle Period” means any Tax Period that begins on or before and ends after
the Deconsolidation Date.

“Tax” or “Taxes” means any income, gross income, gross receipts, profits,
capital stock, franchise, withholding, payroll, social security, workers
compensation, unemployment, disability, property, ad valorem, stamp, excise,
severance, occupation, service, sales, use, license, lease, transfer, import,
export, value added, alternative minimum, estimated or other tax (including any
fee, assessment, or other charge in the nature of or in lieu of any tax) imposed
by any governmental entity or political subdivision thereof, and any interest,
penalties, additions to tax, or additional amounts in respect of the foregoing.

“Tax Advisor” means a United States tax counsel, accountant, or other
professional tax service provider of recognized national standing.

“Tax Attribute” or “Attribute” shall mean a net operating loss, net capital
loss, unused investment credit, excess charitable contribution, general business
credit or any other Tax Item that could reduce a Tax.

“Tax Authority” means, with respect to any Tax, the governmental entity or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision.

“Tax Benefit” means any refund, credit, or other reduction in otherwise required
Tax payments.

“Tax Contest” means an audit, review, examination, or any other administrative
or judicial proceeding with the purpose or effect of redetermining Taxes
(including any administrative or judicial review of any claim for refund).

“Tax Contest Committee” shall have the meaning provided in Section 10.02(d) of
this Agreement.

“Tax Control” means the definition of “control” set forth in Section 368(c) of
the Code (or in any successor statute or provision), as such definition may be
amended from time to time.

“Tax-Free Status” means the qualification of the Contribution and Distribution,
taken together, (a) as a reorganization described in Sections 355(a) and
368(a)(1)(D) of the Code, (b)

 

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as a transaction in which the stock distributed thereby is “qualified property”
for purposes of Sections 355(d), 355(e) and 361(c) of the Code and (c) as a
transaction in which NTELOS, Wireline and the shareholders of NTELOS recognize
no income or gain for U.S. federal income tax purposes pursuant to Sections 355,
361 and 1032 of the Code, other than, in the case of NTELOS and Wireline,
intercompany items or excess loss accounts taken into account pursuant to the
Treasury Regulations promulgated pursuant to Section 1502 of the Code.

“Tax Item” means, with respect to any Income Tax, any item of income, gain,
loss, deduction, or credit.

“Tax Law” means the law of any governmental entity or political subdivision
thereof relating to any Tax.

“Tax Opinions/Rulings” means the opinions of Tax Advisors and/or the rulings by
the IRS delivered or deliverable to NTELOS in connection with the Contribution
and the Distribution.

“Tax Period” means, with respect to any Tax, the period for which the Tax is
reported as provided under the Code or other applicable Tax Law.

“Tax Records” means any Tax Returns, Tax Return workpapers, documentation
relating to any Tax Contests, and any other books of account or records (whether
or not in written, electronic or other tangible or intangible forms and whether
or not stored on electronic or any other medium) required to be maintained under
the Code or other applicable Tax Laws or under any record retention agreement
with any Tax Authority.

“Tax-Related Losses” means (i) all federal, state and local Taxes (including
interest and penalties thereon) imposed pursuant to any settlement, Final
Determination, judgment or otherwise; (ii) all accounting, legal and other
professional fees, and court costs incurred in connection with such Taxes; and
(iii) all costs, expenses and damages associated with stockholder litigation or
controversies and any amount paid by NTELOS (or any NTELOS Affiliate) or
Wireline (or any Wireline Affiliate) in respect of the liability of
shareholders, whether paid to shareholders or to the IRS or any other Tax
Authority, in each case, resulting from the failure of the Contribution and the
Distribution to have Tax-Free Status.

“Tax Return” or “Return” means any report of Taxes due, any claim for refund of
Taxes paid, any information return with respect to Taxes, or any other similar
report, statement, declaration, or document required to be filed under the Code
or other Tax Law, including any attachments, exhibits, or other materials
submitted with any of the foregoing, and including any amendments or supplements
to any of the foregoing.

“Transactions” means the Contribution, the Distribution and the other
transactions contemplated by the Separation and Distribution Agreement.

“Transfer Pricing Adjustment” shall mean any proposed or actual allocation by a
Tax Authority of any Tax Item between or among any member of the NTELOS Group
and any member of the Wireline Group with respect to any Pre-Deconsolidation
Period.

 

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“Treasury Regulations” means the regulations promulgated from time to time under
the Code as in effect for the relevant Tax Period.

“Unqualified Tax Opinion” means an unqualified “will” opinion of a Tax Advisor,
which Tax Advisor is acceptable to NTELOS, on which NTELOS may rely to the
effect that a transaction will not affect the Tax-Free Status. Any such opinion
must assume that the Contribution and Distribution would have qualified for
Tax-Free Status if the transaction in question did not occur.

“Wireless Business” shall have the meaning provided to it in the Ruling Request
filed by NTELOS on March 23, 2011.

“Wireline” shall have the meaning provided in the first sentence of this
Agreement.

“Wireline Adjustment” means any proposed adjustment by a Tax Authority or claim
for refund asserted in a Tax Contest to the extent Wireline would be exclusively
liable for any resulting Tax under this Agreement or exclusively entitled to
receive any resulting Tax Benefit under this Agreement.

“Wireline Business” shall have the meaning provided to it in the Ruling Request
filed by NTELOS on March 23, 2011.

“Wireline Capital Stock” means all classes or series of capital stock of
Wireline, including (i) the Wireline Common Stock, (ii) all options, warrants
and other rights to acquire such capital stock and (iii) all instruments
properly treated as stock in Wireline for U.S. federal income tax purposes.

“Wireline Carryback” means any net operating loss, net capital loss, excess tax
credit, or other similar Tax item of any member of the Wireline Group which may
or must be carried from one Tax Period to another prior Tax Period under the
Code or other applicable Tax Law.

“Wireline Common Stock” has the meaning set forth in the Separation and
Distribution Agreement.

“Wireline Federal Consolidated Income Tax Return” shall mean any United States
federal Income Tax Return for the affiliated group (as that term is defined in
Section 1504 of the Code) of which Wireline is the common parent.

“Wireline Group” means Wireline and its Affiliates, as determined immediately
after the Distribution.

“Wireline Separate Return” means any Separate Return of Wireline or any member
of the Wireline Group.

Section 2. Allocation of Tax Liabilities.

Section 2.01 General Rule.

 

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(a) NTELOS Liability. NTELOS shall be liable for, and shall indemnify and hold
harmless the Wireline Group from and against any liability for, Taxes which are
allocated to NTELOS under this Section 2.

(b) Wireline Liability. Wireline shall be liable for, and shall indemnify and
hold harmless the NTELOS Group from and against any liability for, Taxes which
are allocated to Wireline under this Section 2.

Section 2.02 Allocation of United States Federal Income Tax and Federal Other
Tax. Except as provided in Section 2.04, Federal Income Tax and Federal Other
Tax shall be allocated as follows:

(a) Allocation of Tax Relating to NTELOS Federal Consolidated Income Tax
Returns. With respect to any NTELOS Federal Consolidated Income Tax Return,
NTELOS shall be responsible for any and all Federal Income Taxes due or required
to be reported on any such Income Tax Return (including any increase in such Tax
as a result of a Final Determination).

(b) Allocation of Tax Relating to Federal Separate Income Tax Returns.
(i) NTELOS shall be responsible for any and all Federal Income Taxes due with
respect to or required to be reported on any NTELOS Separate Return (including
any increase in such Tax as a result of a Final Determination); (ii) Wireline
shall be responsible for any and all Federal Income Taxes due with respect to or
required to be reported on any Wireline Separate Return (including any increase
in such Tax as a result of a Final Determination).

(c) Allocation of Federal Other Tax. NTELOS shall be responsible for any and all
Federal Other Taxes attributable to the Wireless Business. Wireline shall be
responsible for any and all Federal Other Taxes attributable to the Wireline
Business.

Section 2.03 Allocation of State Income and State Other Taxes. Except as
provided in Section 2.04, State Income Tax and State Other Tax shall be
allocated as follows:

(a) Allocation of Tax Relating to NTELOS State Combined Income Tax Returns.
NTELOS shall be responsible for any and all State Income Taxes due with respect
to or required to be reported on any NTELOS State Combined Income Tax Return
(including any increase in such Tax as a result of a Final Determination).

(b) Allocation of Tax Relating to Separate Returns. (i) NTELOS shall be
responsible for any and all State Income Taxes due with respect to or required
to be reported on any NTELOS Separate Return (including any increase in such Tax
as a result of a Final Determination); (ii) Wireline shall be responsible for
any and all State Income Taxes due with respect to or required to be reported on
any Wireline Separate Return (including any increase in such Tax as a result of
a Final Determination).

(c) Allocation of State Other Tax. NTELOS shall be responsible for any and all
State Other Taxes attributable to the Wireless Business. Wireline shall be
responsible for any and all State Other Taxes attributable to the Wireline
Business.

 

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Section 2.04 Certain Transaction and Other Taxes.

(a) Wireline Liability. Wireline shall be liable for, and shall indemnify and
hold harmless the NTELOS Group from and against any liability for:

(i) Any stamp, sales and use, gross receipts, value-added or other transfer
Taxes imposed by any Tax Authority on any member of the Wireline Group (if such
member is primarily liable for such Tax) on the transfers occurring pursuant to
the Transactions;

(ii) any Tax resulting from a breach by Wireline of any covenant in this
Agreement, the Separation and Distribution Agreement or any Ancillary Agreement;
and

(iii) any Tax-Related Losses for which Wireline is responsible pursuant to
Section 7.05 of this Agreement.

(b) NTELOS Liability. NTELOS shall be liable for, and shall indemnify and hold
harmless the Wireline Group from and against any liability for:

(i) Any stamp, sales and use, gross receipts, value-added or other transfer
Taxes imposed by any Tax Authority on any member of the NTELOS Group (if such
member is primarily liable for such Tax) on the transfers occurring pursuant to
the Transactions;

(ii) any Tax resulting from a breach by NTELOS of any covenant in this
Agreement, the Separation and Distribution Agreement or any Ancillary Agreement;
and

(iii) any Tax-Related Losses for which NTELOS is responsible pursuant to
Section 7.05 of this Agreement.

Section 3. Proration of Taxes for Straddle Periods.

(a) General Method of Proration. In the case of any Straddle Period, Tax Items
shall be apportioned between Pre-Deconsolidation Periods and
Post-Deconsolidation Periods in accordance with the principles of Treasury
Regulation Section 1.1502-76(b) as reasonably interpreted and applied by the
Companies. No election shall be made under Treasury Regulation
Section 1.1502-76(b)(2)(ii) (relating to ratable allocation of a year’s items).
If the Deconsolidation Date is not an Accounting Cutoff Date, the provisions of
Treasury Regulation Section 1.1502-76(b)(2)(iii) will be applied to ratably
allocate the items (other than extraordinary items) for the month which includes
the Deconsolidation Date.

(b) Transaction Treated as Extraordinary Item. In determining the apportionment
of Tax Items between Pre-Deconsolidation Periods and Post-Deconsolidation
Periods, any Tax Items relating to the Transactions shall be treated as
extraordinary items described in Treasury Regulation
Section 1.1502-76(b)(2)(ii)(C) and shall (to the extent occurring on or prior to
the Deconsolidation Date) be allocated to Pre-Deconsolidation Periods, and any
Taxes related to such items shall be treated under Treasury Regulation
Section 1.1502-76(b)(2)(iv) as relating to

 

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such extraordinary item and shall (to the extent occurring on or prior to the
Deconsolidation Date) be allocated to Pre-Deconsolidation Periods.

Section 4. Preparation and Filing of Tax Returns.

Section 4.01 General. Except as otherwise provided in this Section 4, Tax
Returns shall be prepared and filed when due (including extensions) by the
person obligated to file such Tax Returns under the Code or applicable Tax Law.
The Companies shall provide, and shall cause their Affiliates to provide,
assistance and cooperation to one another in accordance with Section 8 with
respect to the preparation and filing of Tax Returns, including providing
information required to be provided in Section 8.

Section 4.02 NTELOS’ Responsibility. NTELOS has the exclusive obligation and
right to prepare and file, or to cause to be prepared and filed:

(a) NTELOS Federal Consolidated Income Tax Returns for any Tax Periods ending
on, before or after the Deconsolidation Date;

(b) NTELOS State Combined Income Tax Returns and any other Joint Returns which
NTELOS reasonably determines are required to be filed (or which NTELOS chooses
to be filed) by the Companies or any of their Affiliates for Tax Periods ending
on, before or after the Deconsolidation Date; provided, however, that NTELOS
shall provide written notice of such determination to file such NTELOS State
Combined Income Tax Returns or other Joint Returns to Wireline; and

(c) NTELOS Separate Returns and Wireline Separate Returns which NTELOS
reasonably determines are required to be filed by the Companies or any of their
Affiliates for Tax Periods ending on, before or after the Deconsolidation Date
(limited, in the case of Wireline Separate Returns, to such Returns as are
required to be filed for Tax Periods ending on or prior to the Deconsolidation
Date).

Section 4.03 Wireline’s Responsibility. Wireline shall prepare and file, or
shall cause to be prepared and filed, all Tax Returns required to be filed by or
with respect to members of the Wireline Group other than those Tax Returns which
NTELOS is required to prepare and file under Section 4.02. The Tax Returns
required to be prepared and filed by Wireline under this Section 4.03 shall
include (a) any Wireline Federal Consolidated Income Tax Return for Tax Periods
ending after the Deconsolidation Date and (b) Wireline Separate Returns required
to be filed for Tax Periods ending after the Deconsolidation Date.

Section 4.04 Tax Accounting Practices.

(a) General Rule. Except as provided in Section 4.04(b), with respect to any Tax
Return that Wireline has the obligation and right to prepare and file, or cause
to be prepared and filed, under Section 4.03, for any Pre-Deconsolidation Period
or any Straddle Period (or any taxable period beginning after the
Deconsolidation Date to the extent items reported on such Tax Return might
reasonably be expected to affect items reported on any Tax Return for any
Pre-Deconsolidation Period or any Straddle Period), such Tax Return shall be
prepared in accordance with past practices, accounting methods, elections or
conventions (“Past Practices”) used with

 

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respect to the Tax Returns in question (unless there is no reasonable basis for
the use of such Past Practices or unless there is no adverse effect to NTELOS),
and to the extent any items are not covered by Past Practices (or in the event
that there is no reasonable basis for the use of such Past Practices or there is
no adverse effect to NTELOS), in accordance with reasonable Tax accounting
practices selected by Wireline. Except as provided in Section 4.04(b), NTELOS
shall prepare any Tax Return which it has the obligation and right to prepare
and file, or cause to be prepared and filed, under Section 4.02, in accordance
with reasonable Tax accounting practices selected by NTELOS.

(b) Reporting of Transactions. The Tax treatment of the Transactions, reported
on any Tax Return, shall be consistent with the treatment thereof in the Ruling
Requests and the Tax Opinions/Rulings, unless there is no reasonable basis for
such Tax treatment. The Tax treatment reported on any Tax Return for which
Wireline is the Responsible Party shall be consistent with that on any Tax
Return filed or to be filed by NTELOS or any member of the NTELOS Group or
caused or to be caused to be filed by NTELOS, in each case with respect to
periods prior to the Distribution Date or with respect to Straddle Periods
(“NTELOS Group Transaction Returns”), unless there is no reasonable basis for
such Tax treatment. To the extent there is a Tax treatment relating to the
Transactions which is not covered by the Ruling Requests, the Tax
Opinions/Rulings or NTELOS Group Transaction Returns, the Companies shall agree
on the Tax treatment to be reported on any Tax Return. For this purpose, the Tax
treatment shall be determined by the Responsible Company with respect to such
Tax Return and shall be agreed to by the other Company unless either (i) there
is no reasonable basis for such Tax treatment, or (ii) such Tax treatment is
inconsistent with the Tax treatment contemplated in the Ruling Requests, the Tax
Opinions/Rulings and/or the NTELOS Group Transaction Returns. Such Tax Return
shall be submitted for review pursuant to Section 4.06(a), and any dispute
regarding such proper Tax treatment shall be referred for resolution pursuant to
Section 14, sufficiently in advance of the filing date of such Tax Return
(including extensions) to permit timely filing of the Tax Return.

Section 4.05 Consolidated or Combined Tax Returns. Wireline will elect and join,
and will cause its respective Affiliates to elect and join, in filing any NTELOS
State Combined Income Tax Returns and any Joint Returns that NTELOS determines
are required to be filed or that NTELOS chooses to file pursuant to
Section 4.02(b). With respect to any Wireline Separate Returns relating to any
Tax Period (or portion thereof) ending on or prior to the Distribution Date,
Wireline will elect and join, and will cause its respective Affiliates to elect
and join, in filing consolidated, unitary, combined, or other similar joint Tax
Returns, to the extent each entity is eligible to join in such Tax Returns, if
NTELOS reasonably determines that the filing of such Tax Returns is consistent
with past reporting practices, or, in the absence of applicable past practices,
will result in the minimization of the net present value of the aggregate Tax to
the entities eligible to join in such Tax Returns.

Section 4.06 Right to Review Tax Returns.

(a) General. The Responsible Company with respect to any material Tax Return
shall make such Tax Return and related workpapers available for review by the
other Company, if requested, to the extent (i) such Tax Return relates to Taxes
for which the requesting party would reasonably be expected to be liable,
(ii) such Tax Return relates to Taxes and the

 

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requesting party would reasonably be expected to be liable in whole or in part
for any additional Taxes owing as a result of adjustments to the amount of such
Taxes reported on such Tax Return, (iii) such Tax Return relates to Taxes for
which the requesting party would reasonably be expected to have a claim for Tax
Benefits under this Agreement, or (iv) the requesting party reasonably
determines that it must inspect such Tax Return to confirm compliance with the
terms of this Agreement. The Responsible Company shall use its reasonable best
efforts to make such Tax Return available for review as required under this
paragraph sufficiently in advance of the due date for filing of such Tax Return
to provide the requesting party with a meaningful opportunity to analyze and
comment on such Tax Return and shall use its reasonable best efforts to have
such Tax Return modified before filing, taking into account the person
responsible for payment of the Tax (if any) reported on such Tax Return and
whether the amount of Tax liability with respect to such Tax Return is material.
The Companies shall attempt in good faith to resolve any issues arising out of
the review of such Tax Return. For purposes of this section 4.06(a), a Tax
Return is “material” if it could reasonably be expected to reflect (A) Tax
liability equal to or in excess of $1 million, (B) a credit or credits equal to
or in excess of $1 million or (C) a loss or losses equal to or in excess of $3
million.

(b) Execution of Returns Prepared by Other Party. In the case of any Tax Return
which is required to be prepared and filed by one Company under this Agreement
and which is required by law to be signed by the other Company (or by its
authorized representative), the Company which is legally required to sign such
Tax Return shall not be required to sign such Tax Return under this Agreement if
there is no reasonable basis for the Tax treatment of any item reported on the
Tax Return or the Tax treatment of any item reported on the Tax Return should,
in the opinion of a Tax Advisor, subject the other Company (or its authorized
representatives) to material penalties.

Section 4.07 Wireline Carrybacks and Claims for Refund. Wireline hereby agrees
that, unless NTELOS consents in writing, (i) no Adjustment Request with respect
to any Joint Return (or any Return of Other Taxes described in clause (II) of
Section 5.02) shall be filed, and (ii) any available elections to waive the
right to claim in any Pre-Deconsolidation Period with respect to any Joint
Return (or any Return of Other Taxes described in clause (II) of Section 5.02)
any Wireline Carryback arising in a Post-Deconsolidation Period shall be made,
and no affirmative election shall be made to claim any such Wireline Carryback;
provided, however, that the parties agree that any such Adjustment Request shall
be made with respect to any Wireline Carryback related to U.S. federal or State
Taxes, upon the reasonable request of Wireline, if such Wireline Carryback is
necessary to prevent the loss of the federal and/or State Tax Benefit of such
Wireline Carryback (including, but not limited to, an Adjustment Request with
respect to a Wireline Carryback of a federal or State capital loss arising in a
Post-Deconsolidation Period to a Pre-Deconsolidation Period) and such Adjustment
Request, based on NTELOS’ sole, reasonable determination, will cause no Tax
detriment to NTELOS, the NTELOS Group or any member of the NTELOS Group. Any
Adjustment Request which NTELOS consents to make under this Section 4.07 shall
be prepared and filed by the Responsible Company for the Tax Return to be
adjusted.

Section 4.08 Apportionment of Earnings and Profits and Tax Attributes. NTELOS
shall in good faith advise Wireline in writing of the portion, if any, of any
earnings and profits, Tax Attribute or other consolidated, combined or unitary
attribute which NTELOS determines

 

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shall be allocated or apportioned to the Wireline Group under applicable law.
Wireline and all members of the Wireline Group shall prepare all Tax Returns in
accordance with such written notice. In the event that any temporary or final
amendments to Treasury Regulations are promulgated after the date of this
Agreement that provide for any election to apply such regulations retroactively,
then any such election shall be made only to the extent that NTELOS and Wireline
collectively agree to make such election. As soon as practicable after receipt
of a written request from Wireline, NTELOS shall provide copies of any studies,
reports, and workpapers supporting the earnings and profits and other Tax
Attributes allocable to Wireline. Any dispute regarding the apportionment of
such earnings and profits or any Tax Attribute shall be resolved pursuant to the
provisions of Section 14 of this Agreement. All Tax Returns that are required to
be filed under this Agreement after such resolution shall be filed in accordance
with such resolution. In the event of a subsequent adjustment to the earnings
and profits or any Tax Attributes determined by NTELOS, NTELOS shall promptly
notify Wireline in writing of such adjustment. For the absence of doubt, NTELOS
shall not be liable to Wireline or any member of the Wireline Group for any
failure of any determination under this Section 4.08 to be accurate under
applicable law.

Section 5. Tax Payments.

Section 5.01 Payment of Taxes with Respect to NTELOS Federal Consolidated Income
Tax Returns. NTELOS shall pay to the IRS any Tax due with respect to any NTELOS
Federal Consolidated Income Tax Return (including any Federal Income Tax due
from the NTELOS Affiliated Group that is required to be paid as a result of an
adjustment to a NTELOS Federal Consolidated Income Tax Return).

Section 5.02 Payment of Taxes With Respect to Joint Returns (other than a NTELOS
Federal Consolidated Income Tax Return) and Certain Returns of Other Taxes. In
the case of (I) any Joint Return (other than a NTELOS Federal Consolidated Tax
Return) and (II) any Return of Other Taxes reflecting both Taxes for which
NTELOS is responsible under Section 2 and Taxes for which Wireline is
responsible under Section 2:

(a) Computation and Payment of Tax Due. At least three Business Days prior to
any Payment Date for any Tax Return, the Responsible Company shall compute the
amount of Tax required to be paid to the applicable Tax Authority (taking into
account the requirements of Section 4.04 relating to consistent accounting
practices, as applicable) with respect to such Tax Return on such Payment Date.
The Responsible Company shall pay such amount to such Tax Authority on or before
such Payment Date (and provide notice and proof of payment to the other
Company).

(b) Computation and Payment of Liability With Respect To Tax Due. Within 30 days
following the earlier of (i) the due date (including extensions) for filing any
such Tax Return (excluding any Tax Return with respect to payment of estimated
Taxes or Taxes due with a request for extension of time to file) or (ii) the
date on which such Tax Return is filed, if NTELOS is the Responsible Company,
then Wireline shall pay to NTELOS the amount allocable to the Wireline Group
under the provisions of Section 2, and if Wireline is the Responsible Company,
then NTELOS shall pay to Wireline the amount allocable to the NTELOS Group under
the provisions of Section 2, in each case, plus interest computed at the Prime
Rate on the

 

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amount of the payment based on the number of days from the earlier of (i) the
due date of the Tax Return (including extensions) or (ii) the date on which such
Tax Return is filed, to the date of payment.

(c) Adjustments Resulting in Underpayments. In the case of any adjustment
pursuant to a Final Determination with respect to any such Tax Return, the
Responsible Company shall pay to the applicable Tax Authority when due any
additional Tax due with respect to such Return required to be paid as a result
of such adjustment pursuant to a Final Determination. The Responsible Company
shall compute the amount attributable to the Wireline Group in accordance with
Section 2 and Wireline shall pay to NTELOS any amount due NTELOS (or NTELOS
shall pay Wireline any amount due Wireline) under Section 2 within 30 days from
the later of (i) the date the additional Tax was paid by the Responsible Company
or (ii) the date of receipt of a written notice and demand from the Responsible
Company for payment of the amount due, accompanied by evidence of payment and a
statement detailing the Taxes paid and describing in reasonable detail the
particulars relating thereto. Any payments required under this Section 5.02(c)
shall include interest computed at the Prime Rate based on the number of days
from the date the additional Tax was paid by the Responsible Company to the date
of the payment under this Section 5.02(c).

Section 5.03 Payment of Separate Company Taxes. Each Company shall pay, or shall
cause to be paid, to the applicable Tax Authority when due all Taxes owed by
such Company or a member of such Company’s Group with respect to a Separate
Return of Income Taxes and with respect to a Separate Return of Other Taxes
(provided that Separate Returns of Other Taxes described in clause (II) of
Section 5.02 shall be governed by Section 5.02).

Section 5.04 Indemnification Payments.

(a) If any Company (the “Payor”) is required under applicable Tax Law to pay to
a Tax Authority a Tax that another Company (the “Required Party”) is liable for
under this Agreement, the Required Party shall reimburse the Payor within 30
days of delivery by the Payor to the Required Party of an invoice for the amount
due, accompanied by evidence of payment and a statement detailing the Taxes paid
and describing in reasonable detail the particulars relating thereto. The
reimbursement shall include interest on the Tax payment computed at the Prime
Rate based on the number of days from the date of the payment to the Tax
Authority to the date of reimbursement under this Section 5.04.

(b) All indemnification payments under this Agreement shall be made by NTELOS
directly to Wireline and by Wireline directly to NTELOS; provided, however, that
if the Companies mutually agree with respect to any such indemnification
payment, any member of the NTELOS Group, on the one hand, may make such
indemnification payment to any member of the Wireline Group, on the other hand,
and vice versa.

Section 6. Tax Benefits.

Section 6.01 Tax Benefits.

(a) Except as set forth below, NTELOS shall be entitled to any refund (and any
interest thereon received from the applicable Tax Authority) of Income Taxes and
Other Taxes

 

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for which NTELOS is liable hereunder, Wireline shall be entitled to any refund
(and any interest thereon received from the applicable Tax Authority) of Income
Taxes and Other Taxes for which Wireline is liable hereunder and a Company
receiving a refund to which another Company is entitled hereunder shall pay over
such refund to such other Company within 30 days after such refund is received
(together with interest computed at the Prime Rate based on the number of days
from the date the refund was received to the date the refund was paid over).

(b) If a member of the Wireline Group actually realizes in cash any Tax Benefit
as a result of an adjustment (other than an adjustment set forth in Schedule
6.01(b), as) pursuant to a Final Determination to any Taxes for which a member
of the NTELOS Group is liable hereunder (or any Tax Attribute of a member of the
NTELOS Group) and such Tax Benefit would not have arisen but for such adjustment
(determined on a “with and without” basis), or if a member of the NTELOS Group
actually realizes in cash any Tax Benefit as a result of an adjustment (other
than an adjustment set forth in Schedule 6.01(b) ) pursuant to a Final
Determination to any Taxes for which a member of the Wireline Group is liable
hereunder (or any Tax Attribute of a member of the Wireline Group) and such Tax
Benefit would not have arisen but for such adjustment (determined on a “with and
without” basis), Wireline or NTELOS, as the case may be, shall make a payment to
either NTELOS or Wireline, as appropriate, within 30 days following such actual
realization of the Tax Benefit, in an amount equal to such Tax Benefit actually
realized in cash (including any Tax Benefit actually realized as a result of the
payment), plus interest on such amount computed at the Prime Rate based on the
number of days from the date of such actual realization of the Tax Benefit to
the date of payment of such amount under this Section 6.01(b).

(c) No later than 30 days after a Tax Benefit described in Section 6.01(b) is
actually realized in cash by a member of the NTELOS Group or a member of the
Wireline Group, NTELOS (if a member of the NTELOS Group actually realizes such
Tax Benefit) or Wireline (if a member of the Wireline Group actually realizes
such Tax Benefit) shall provide the other Company with a written calculation of
the amount payable to such other Company by NTELOS or Wireline pursuant to this
Section 6. In the event that NTELOS or Wireline disagrees with any such
calculation described in this Section 6.01(c), NTELOS or Wireline shall so
notify the other Company in writing within 30 days of receiving the written
calculation set forth above in this Section 6.01(c). NTELOS and Wireline shall
endeavor in good faith to resolve such disagreement, and, failing that, the
amount payable under this Section 6 shall be determined in accordance with the
disagreement resolution provisions of Section 14 as promptly as practicable.

(d) Wireline shall be entitled to any refund that is attributable to, and would
not have arisen but for, a Wireline Carryback pursuant to the proviso set forth
in Section 4.07. Any such payment of such refund made by NTELOS to Wireline
pursuant to this Section 6.01(d) shall be recalculated in light of any Final
Determination (or any other facts that may arise or come to light after such
payment is made, such as a carryback of a NTELOS Group Tax Attribute to a Tax
Period in respect of which such refund is received) that would affect the amount
to which Wireline is entitled, and an appropriate adjusting payment shall be
made by Wireline to NTELOS such that the aggregate amounts paid pursuant to this
Section 6.01(d) equals such recalculated amount (with interest computed at the
Prime Rate).

 

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Section 6.02 NTELOS and Wireline Income Tax Deductions in Respect of Certain
Equity Awards and Incentive Compensation. Solely the member of the Group for
which the relevant individual is currently employed or, if such individual is
not currently employed by a member of the Group, was most recently employed at
the time of the vesting, exercise, disqualifying disposition, payment or other
relevant taxable event, as appropriate, in respect of the equity awards and
other incentive compensation described in of the Employee Matters Agreement
shall be entitled to claim any Income Tax deduction in respect of such equity
awards and other incentive compensation on its respective Tax Return associated
with such event.

Section 7. Tax-Free Status.

Section 7.01 Tax Opinions/Rulings and Representation Letters. Each of Wireline
and NTELOS hereby represents and acknowledges that, as of the date hereof,
(A)(i) it has read the Representation Letters prior to the date submitted and
(ii) subject to any qualifications therein, all information contained in such
Representation Letters that concerns or relates to such Company or any member of
its Group are true, correct and complete, and (B) that it and each of its
Affiliates has not taken or failed to take any action which prevents or could
reasonably be expected to prevent (i) the Tax-Free Status, or (ii) any
transaction contemplated by the Separation and Distribution Agreement which is
intended by the parties to be tax-free from so qualifying

Section 7.02 Restrictions on Wireline.

(a) Wireline agrees that it will not take or fail to take, or permit any
Wireline Affiliate to take or fail to take, any action where such action or
failure to act would be inconsistent with or cause to be untrue any material,
information, covenant or representation in any Representation Letters or Tax
Opinions/Rulings. Wireline agrees that it will not take or fail to take, or
permit any Wireline Affiliate to take or fail to take, any action which prevents
or could reasonably be expected to prevent (A) the Tax-Free Status, or (B) any
transaction contemplated by the Separation and Distribution Agreement which is
intended by the parties to be tax-free (including, but not limited to, those
transactions listed on Schedule 7.02(a)) from so qualifying, including issuing
any Wireline Capital Stock that would prevent the Distribution from qualifying
as a tax-free distribution within the meaning of Section 355 of the Code.

(b) Wireline agrees that, from the date hereof until the first day after the
two-year anniversary of the Distribution Date, it will (i) maintain its status
as a company engaged in the Active Trade or Business for purposes of
Section 355(b)(2) of the Code and (ii) not engage in any transaction that would
result in it ceasing to be a company engaged in the Active Trade or Business for
purposes of Section 355(b)(2) of the Code, in each case, taking into account
Section 355(b)(3) of the Code.

(c) Wireline agrees that, from the date hereof until the first day after the
two-year anniversary of the Distribution Date, it will not (i) enter into any
Proposed Acquisition Transaction or, to the extent Wireline has the right to
prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition
Transaction to occur (whether by (a) redeeming rights under a shareholder rights
plan, (b) finding a tender offer to be a “permitted offer” under any such plan
or otherwise causing any such plan to be inapplicable or neutralized with
respect

 

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to any Proposed Acquisition Transaction, or (c) approving any Proposed
Acquisition Transaction, whether for purposes of Section 203 of the DGCL or any
similar corporate statute, any “fair price” or other provision of Wireline’s
charter or bylaws or otherwise), (ii) merge or consolidate with any other Person
or liquidate or partially liquidate, (iii) in a single transaction or series of
transactions sell or transfer (other than sales or transfers of inventory in the
ordinary course of business) all or substantially all of the assets that were
transferred to Wireline pursuant to the Contribution or sell or transfer 60% or
more of the gross assets of the Active Trade or Business or 60% or more of the
consolidated gross assets of Wireline and its Affiliates (such percentages to be
measured based on fair market value as of the Distribution Date), (iv) redeem or
otherwise repurchase (directly or through a Wireline Affiliate) any Wireline
stock, or rights to acquire stock, except to the extent such repurchases satisfy
Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the
amendment of such Revenue Procedure by Revenue Procedure 2003-48), (v) amend its
certificate of incorporation (or other organizational documents), or take any
other action, whether through a stockholder vote or otherwise, affecting the
voting rights of Wireline Capital Stock (including, without limitation, through
the conversion of one class of Wireline Capital Stock into another class of
Wireline Capital Stock) or (vi) take any other action or actions (including any
action or transaction that would be reasonably likely to be inconsistent with
any representation made in the Representation Letters or the Tax
Opinions/Rulings) which in the aggregate (and taking into account any other
transactions described in this subparagraph (d)) would be reasonably likely to
have the effect of causing or permitting one or more persons (whether or not
acting in concert) to acquire directly or indirectly stock representing a
Fifty-Percent or Greater Interest in Wireline or otherwise jeopardize the
Tax-Free Status, unless prior to taking any such action set forth in the
foregoing clauses (i) through (vi), (A) Wireline shall have requested that
NTELOS obtain a Ruling in accordance with Section 7.04(b) and (d) of this
Agreement to the effect that such transaction will not affect the Tax-Free
Status and NTELOS shall have received such a Ruling in form and substance
satisfactory to NTELOS in its sole and absolute discretion, which discretion
shall be exercised in good faith solely to preserve the Tax-Free Status (and in
determining whether a Ruling is satisfactory, NTELOS may consider, among other
factors, the appropriateness of any underlying assumptions and management’s
representations made in connection with such Ruling), or (B) Wireline shall
provide NTELOS with an Unqualified Tax Opinion in form and substance
satisfactory to NTELOS in its sole and absolute discretion, which discretion
shall be exercised in good faith solely to preserve the Tax-Free Status (and in
determining whether an opinion is satisfactory, NTELOS may consider, among other
factors, the appropriateness of any underlying assumptions and management’s
representations if used as a basis for the opinion and NTELOS may determine that
no opinion would be acceptable to NTELOS) or (C) NTELOS shall have waived the
requirement to obtain such Ruling or Unqualified Tax Opinion.

(d) Certain Issuances of Wireline Capital Stock. If Wireline proposes to enter
into any Section 7.02(d) Acquisition Transaction or, to the extent Wireline has
the right to prohibit any Section 7.02(d) Acquisition Transaction, proposes to
permit any Section 7.02(d) Acquisition Transaction to occur, in each case,
during the period from the date hereof until the first day after the two-year
anniversary of the Distribution Date, Wireline shall provide NTELOS, no later
than ten days following the signing of any written agreement with respect to the
Section 7.02(d) Acquisition Transaction, with a written description of such
transaction (including the type and amount of Wireline Capital Stock to be
issued in such transaction) and a certificate of the Board of Directors of
Wireline to the effect that the Section 7.02(d) Acquisition Transaction is not a

 

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Proposed Acquisition Transaction or any other transaction to which the
requirements of Section 7.02(c) apply (a “Board Certificate”).

(e) Wireline Internal Restructuring. Wireline shall provide written notice to
NTELOS describing any internal restructuring (including by making or revoking
any election under Treasury Regulation Section 301.7701-3) involving Wireline
and/or any of its subsidiaries or any contribution, sale or other transfer of
any of the assets directly or indirectly contributed to Wireline as part of the
Contribution or any of its subsidiaries (any such action, an “Internal
Restructuring”) proposed to be taken during or with respect to any Tax Period
(or portion thereof) beginning after the Distribution Date and ending on or
prior to the two-year anniversary of the Distribution Date and shall consult
with NTELOS regarding any such proposed Internal Restructuring reasonably in
advance of taking any such proposed Internal Restructuring and shall consider in
good faith any comments from NTELOS relating thereto.

Section 7.03 Restrictions on NTELOS. NTELOS agrees that it will not take or fail
to take, or permit any member of the NTELOS Group to take or fail to take, any
action where such action or failure to act would be inconsistent with or cause
to be untrue any material, information, covenant or representation in any
Representation Letters or Tax Opinions/Rulings. NTELOS agrees that it will not
take or fail to take, or permit any member of the NTELOS Group to take or fail
to take, any action which prevents or could reasonably be expected to prevent
(A) the Tax-Free Status, or (B) any other transaction contemplated by the
Separation and Distribution Agreement which is intended by the parties to be
tax-free from so qualifying; provided, however, that this Section 7.03 shall not
be construed as obligating NTELOS to consummate the Distribution without the
satisfaction or waiver of all conditions set forth in Section 3.04 of the
Separation and Distribution Agreement nor shall it be construed as preventing
NTELOS from terminating the Separation and Distribution Agreement pursuant to
Section 8.07 thereof.

Section 7.04 Procedures Regarding Opinions and Rulings.

(a) If Wireline notifies NTELOS that it desires to take one of the actions
described in clauses (i) through (vi) of Section 7.02(c) (a “Notified Action”),
NTELOS and Wireline shall reasonably cooperate to attempt to obtain the Ruling
or Unqualified Tax Opinion referred to in Section 7.02(c), unless NTELOS shall
have waived the requirement to obtain such Ruling or Unqualified Tax Opinion.

(b) Rulings or Unqualified Tax Opinions at Wireline’s Request. NTELOS agrees
that at the reasonable request of Wireline pursuant to Section 7.02(c), NTELOS
shall cooperate with Wireline and use its reasonable best efforts to seek to
obtain, as expeditiously as possible, a Ruling from the IRS or an Unqualified
Tax Opinion for the purpose of permitting Wireline to take the Notified Action.
Further, in no event shall NTELOS be required to file any Ruling Request under
this Section 7.04(b) unless Wireline represents that (A) it has read the Ruling
Request, and (B) all information and representations, if any, relating to any
member of the Wireline Group, contained in the Ruling Request documents are
(subject to any qualifications therein) true, correct and complete. Wireline
shall reimburse NTELOS for all reasonable costs and expenses incurred by the
NTELOS Group in obtaining a Ruling or Unqualified Tax Opinion

 

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requested by Wireline within ten Business Days after receiving an invoice from
NTELOS therefor.

(c) Rulings or Unqualified Tax Opinions at NTELOS’ Request. NTELOS shall have
the right to obtain a Ruling or an Unqualified Tax Opinion at any time in its
sole and absolute discretion. If NTELOS determines to obtain a Ruling or an
Unqualified Tax Opinion, Wireline shall (and shall cause each Affiliate of
Wireline to) cooperate with NTELOS and take any and all actions reasonably
requested by NTELOS in connection with obtaining the Ruling or Unqualified Tax
Opinion (including, without limitation, by making any representation or covenant
or providing any materials or information requested by the IRS or Tax Advisor;
provided that Wireline shall not be required to make (or cause any Affiliate of
Wireline to make) any representation or covenant that is inconsistent with
historical facts or as to future matters or events over which it has no
control). NTELOS and Wireline shall each bear its own costs and expenses in
obtaining a Ruling or an Unqualified Tax Opinion requested by NTELOS.

(d) Wireline hereby agrees that NTELOS shall have sole and exclusive control
over the process of obtaining any Ruling, and that only NTELOS shall apply for a
Ruling. In connection with obtaining a Ruling pursuant to Section 7.04(b),
(A) NTELOS shall keep Wireline informed in a timely manner of all material
actions taken or proposed to be taken by NTELOS in connection therewith;
(B) NTELOS shall (1) reasonably in advance of the submission of any Ruling
Request documents provide Wireline with a draft copy thereof, (2) reasonably
consider Wireline’s comments on such draft copy, and (3) provide Wireline with a
final copy; and (C) NTELOS shall provide Wireline with notice reasonably in
advance of, and Wireline shall have the right to attend, any formally scheduled
meetings with the IRS (subject to the approval of the IRS) that relate to such
Ruling. Neither Wireline nor any Wireline Affiliate directly or indirectly
controlled by Wireline shall seek any guidance from the IRS or any other Tax
Authority (whether written, verbal or otherwise) at any time concerning the
Contribution or the Distribution (including the impact of any transaction on the
Contribution or the Distribution) or any transaction listed on Section 7.02(a).

Section 7.05 Liability for Tax-Related Losses.

(a) Notwithstanding anything in this Agreement or the Separation and
Distribution Agreement to the contrary, subject to Section 7.05(c), Wireline
shall be responsible for, and shall indemnify and hold harmless NTELOS and its
Affiliates and each of their respective officers, directors and employees from
and against, one hundred percent (100%) of any Tax- Related Losses that are
attributable to or result from any one or more of the following: (A) the
acquisition (other than pursuant to the Contribution or the Distribution) of all
or a portion of Wireline’s stock and/or its or its subsidiaries’ assets by any
means whatsoever by any Person, (B) any negotiations, understandings, agreements
or arrangements by Wireline with respect to transactions or events (including,
without limitation, stock issuances, pursuant to the exercise of stock options
or otherwise, option grants, capital contributions or acquisitions, or a series
of such transactions or events) that cause the Distribution to be treated as
part of a plan pursuant to which one or more Persons acquire directly or
indirectly stock of Wireline representing a Fifty-Percent or Greater Interest
therein, (C) any action or failure to act by Wireline after the Distribution
(including, without limitation, any amendment to Wireline certificate of
incorporation (or other organizational documents), whether through a stockholder
vote or

 

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otherwise) affecting the voting rights of Wireline stock (including, without
limitation, through the conversion of one class of Wireline Capital Stock into
another class of Wireline Capital Stock), (D) any act or failure to act by
Wireline or any Wireline Affiliate described in Section 7.02 (regardless whether
such act or failure to act is covered by a Ruling, Unqualified Tax Opinion or
waiver described in clause (A), (B) or (C) of Section 7.02(c), a Board
Certificate described in Section 7.02(d) or a consent described in
Section 7.02(e) or (E) any breach by Wireline of its agreement and
representation set forth in Section 7.01.

(b) Notwithstanding anything in this Agreement or the Separation and
Distribution Agreement to the contrary, subject to Section 7.05(c), NTELOS shall
be responsible for, and shall indemnify and hold harmless Wireline and its
Affiliates and each of their respective officers, directors and employees from
and against, one hundred percent (100%) of any Tax-Related Losses that are
attributable to, or result from any one or more of the following: (A) the
acquisition (other than pursuant to the Contribution or the Distribution) of all
or a portion of NTELOS’ stock and/or its assets by any means whatsoever by any
Person, (B) any negotiations, understandings, agreements or arrangements by
NTELOS with respect to transactions or events (including, without limitation,
stock issuances, pursuant to the exercise of stock options or otherwise, option
grants, capital contributions or acquisitions, or a series of such transactions
or events) that cause the Distribution to be treated as part of a plan pursuant
to which one or more Persons acquire directly or indirectly stock of NTELOS
representing a Fifty-Percent or Greater Interest therein, (C) any act or failure
to act by NTELOS or a member of the NTELOS Group described in Section 7.03 or
(D) any breach by NTELOS of its agreement and representation set forth in
Section 7.01.

(c)

(i) To the extent that any Tax-Related Loss is subject to indemnity under both
Section 7.05(a) and (b), responsibility for such Tax-Related Loss shall be
shared by NTELOS and Wireline according to relative fault.

(ii) Notwithstanding anything in Section 7.05(b) or (c)(i) or any other
provision of this Agreement or the Separation and Distribution Agreement to the
contrary:

(A) with respect to (I) any Tax-Related Loss resulting from Section 355(e) of
the Code (other than as a result of an acquisition of a Fifty-Percent or Greater
Interest in NTELOS) and (II) any other Tax-Related Loss resulting (for the
absence of doubt, in whole or in part) from an acquisition after the
Distribution of any stock or assets of Wireline (or any Wireline Affiliate) by
any means whatsoever by any Person or any action or failure to act by Wireline
affecting the voting rights of Wireline stock, Wireline shall be responsible
for, and shall indemnify and hold harmless NTELOS and its Affiliates and each of
their respective officers, directors and employees from and against, one hundred
percent (100%) of such Tax-Related Loss; and

(B) for purposes of calculating the amount and timing of any Tax-Related Loss
for which Wireline is responsible under this Section 7.05, Tax-

 

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Related Losses shall be calculated by assuming that NTELOS, the NTELOS
Affiliated Group and each member of the NTELOS Group (I) pay Tax at the highest
marginal corporate Tax rates in effect in each relevant taxable year and (II)
have no Tax Attributes in any relevant taxable year.

(iii) Notwithstanding anything in Section 7.05(a) or (c)(i) or any other
provision of this Agreement or the Separation and Distribution Agreement to the
contrary, with respect to (I) any Tax-Related Loss resulting from Section 355(e)
of the Code (other than as a result of an acquisition of a Fifty-Percent or
Greater Interest in Wireline) and (II) any other Tax-Related Loss resulting (for
the absence of doubt, in whole or in part) from an acquisition after the
Distribution of any stock or assets of NTELOS (or any NTELOS Affiliate) by any
means whatsoever by any Person, NTELOS shall be responsible for, and shall
indemnify and hold harmless Wireline and its Affiliates and each of their
respective officers, directors and employees from and against, one hundred
percent (100%) of such Tax-Related Loss. For purposes of calculating the amount
and timing of any Tax-Related Loss for which NTELOS is responsible under this
Section 7.05(c)(iii), Tax-Related Losses shall be calculated by assuming that
Wireline and each member of the Wireline Group (I) pay Tax at the highest
marginal corporate Tax rates in effect in each relevant taxable year and (II)
have no Tax Attributes in any relevant taxable year.

(d) Wireline shall pay NTELOS the amount of any Tax-Related Losses for which
Wireline is responsible under this Section 7.05: (A) in the case of Tax-Related
Losses described in clause (i) of the definition of Tax-Related Losses no later
than two Business Days prior to the date NTELOS files, or causes to be filed,
the applicable Tax Return for the year of the Contribution or Distribution, as
applicable (the “Filing Date”) (provided that if such Tax-Related Losses arise
pursuant to a Final Determination described in clause (a), (b) or (c) of the
definition of “Final Determination,” then Wireline shall pay NTELOS no later
than two Business Days after the date of such Final Determination with interest
calculated at the Prime Rate plus two percent, compounded semiannually, from the
date that is two Business Days prior to the Filing Date through the date of such
Final Determination) and (B) in the case of Tax-Related Losses described in
clause (ii) or (iii) of the definition of Tax-Related Losses, no later than two
Business Days after the date NTELOS pays such Tax-Related Losses. NTELOS shall
pay Wireline the amount of any Tax-Related Losses (described in clause (ii) or
(iii) of the definition of Tax- Related Loss) for which NTELOS is responsible
under this Section 7.05 no later than two Business Days after the date Wireline
pays such Tax-Related Losses.

Section 8. Assistance and Cooperation.

Section 8.01 Assistance and Cooperation.

(a) The Companies shall cooperate (and cause their respective Affiliates to
cooperate) with each other and with each other’s agents, including accounting
firms and legal counsel, in connection with Tax matters relating to the
Companies and their Affiliates including (i) preparation and filing of Tax
Returns, (ii) determining the liability for and amount of any Taxes due
(including estimated Taxes) or the right to and amount of any refund of Taxes,
(iii) examinations of Tax Returns, and (iv) any administrative or judicial
proceeding in respect of

 

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Taxes assessed or proposed to be assessed. Such cooperation shall include making
all information and documents in their possession relating to the other Company
and its Affiliates available to such other Company as provided in Section 9.
Subject to the terms and conditions provided in the Transition Services
Agreement, each of the Companies shall also make available to the other, as
reasonably requested and available, personnel (including officers, directors,
employees and agents of the Companies or their respective Affiliates)
responsible for preparing, maintaining, and interpreting information and
documents relevant to Taxes, and personnel reasonably required as witnesses or
for purposes of providing information or documents in connection with any
administrative or judicial proceedings relating to Taxes. In the event that a
member of the NTELOS Group, on the one hand, or a member of the Wireline Group,
on the other hand, suffers a Tax detriment as a result of a Transfer Pricing
Adjustment, the Companies shall cooperate pursuant to this Section 8 to seek any
competent authority relief that may be available with respect to such Transfer
Pricing Adjustment.

(b) Any information or documents provided under this Section 8 shall be kept
confidential by the Company receiving the information or documents, except as
may otherwise be necessary in connection with the filing of Tax Returns or in
connection with any administrative or judicial proceedings relating to Taxes.
Notwithstanding any other provision of this Agreement or any other agreement,
(i) neither NTELOS nor any NTELOS Affiliate shall be required to provide
Wireline or any Wireline Affiliate or any other Person access to or copies of
any information or procedures (including the proceedings of any Tax Contest)
other than information or procedures that relate solely to Wireline, the
business or assets of Wireline or any Wireline Affiliate and (ii) in no event
shall NTELOS or any NTELOS Affiliate be required to provide Wireline, any
Wireline Affiliate or any other Person access to or copies of any information if
such action could reasonably be expected to result in the waiver of any
Privilege. In addition, in the event that NTELOS determines that the provision
of any information to Wireline or any Wireline Affiliate could be commercially
detrimental, violate any law or agreement or waive any Privilege, the parties
shall use reasonable best efforts to permit compliance with its obligations
under this Section 8 in a manner that avoids any such harm or consequence.
Notwithstanding any other provision of this Agreement or any other agreement, in
no event shall Wireline or any Wireline Affiliate be required to provide NTELOS,
any NTELOS Affiliate or any other Person access to or copies of any information
if such action could reasonably be expected to result in the waiver of any
Privilege. In addition, in the event that Wireline determines that the provision
of any information to NTELOS or any NTELOS Affiliate could be commercially
detrimental, violate any law or agreement or waive any Privilege, the parties
shall use reasonable best efforts to permit compliance with its obligations
under this Section 8 in a manner that avoids any such consequence.

Section 8.02 Income Tax Return Information. Wireline and NTELOS acknowledge that
time is of the essence in relation to any request for information, assistance or
cooperation made by NTELOS or Wireline pursuant to Section 8.01 or this
Section 8.02. Wireline and NTELOS acknowledge that failure to conform to the
deadlines set forth herein or reasonable deadlines otherwise set by NTELOS or
Wireline could cause irreparable harm.

Each Company shall provide to the other Company information and documents
relating to its Group required by the other Company to prepare Tax Returns. Any
information or documents the Responsible Company requires to prepare such Tax
Returns shall be provided in such form

 

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as the Responsible Company reasonably requests and in sufficient time for the
Responsible Company to file such Tax Returns on a timely basis.

Section 8.03 Reliance by NTELOS. If any member of the Wireline Group supplies
information to a member of the NTELOS Group in connection with a Tax liability
and an officer of a member of the NTELOS Group signs a statement or other
document under penalties of perjury in reliance upon the accuracy of such
information, then upon the written request of such member of the NTELOS Group
identifying the information being so relied upon, the chief financial officer of
Wireline (or any officer of Wireline as designated by the chief financial
officer of Wireline) shall certify in writing that to his or her knowledge
(based upon consultation with appropriate employees) the information so supplied
is accurate and complete. Wireline agrees to indemnify and hold harmless each
member of the NTELOS Group and its directors, officers and employees from and
against any fine, penalty, or other cost or expense of any kind attributable to
a member of the Wireline Group having supplied, pursuant to this Section 8, a
member of the NTELOS Group with inaccurate or incomplete information in
connection with a Tax liability.

Section 8.04 Reliance by Wireline. If any member of the NTELOS Group supplies
information to a member of the Wireline Group in connection with a Tax liability
and an officer of a member of the Wireline Group signs a statement or other
document under penalties of perjury in reliance upon the accuracy of such
information, then upon the written request of such member of the Wireline Group
identifying the information being so relied upon, the chief financial officer of
NTELOS (or any officer of NTELOS as designated by the chief financial officer of
NTELOS) shall certify in writing that to his or her knowledge (based upon
consultation with appropriate employees) the information so supplied is accurate
and complete. NTELOS agrees to indemnify and hold harmless each member of the
Wireline Group and its directors, officers and employees from and against any
fine, penalty, or other cost or expense of any kind attributable to a member of
the NTELOS Group having supplied, pursuant to this Section 8, a member of the
Wireline Group with inaccurate or incomplete information in connection with a
Tax liability.

Section 9. Tax Records.

Section 9.01 Retention of Tax Records. Each Company shall preserve and keep all
Tax Records exclusively relating to the assets and activities of its Group for
Pre-Deconsolidation Periods, and NTELOS shall preserve and keep all other Tax
Records relating to Taxes of the Groups for Pre-Deconsolidation Tax Periods, for
so long as the contents thereof may become material in the administration of any
matter under the Code or other applicable Tax Law, but in any event until the
later of (i) the expiration of any applicable statutes of limitations, or
(ii) seven years after the Deconsolidation Date (such later date, the “Retention
Date”). After the Retention Date, each Company may dispose of such Tax Records
upon 90 days’ prior written notice to the other Company. If, prior to the
Retention Date, (a) a Company reasonably determines that any Tax Records which
it would otherwise be required to preserve and keep under this Section 9 are no
longer material in the administration of any matter under the Code or other
applicable Tax Law and the other Company agrees, then such first Company may
dispose of such Tax Records upon 90 days’ prior notice to the other Company. Any
notice of an intent to dispose given pursuant to this Section 9.01 shall include
a list of the Tax Records to be disposed of describing

 

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in reasonable detail each file, book, or other record accumulation being
disposed. The notified Company shall have the opportunity, at its cost and
expense, to copy or remove, within such 90-day period, all or any part of such
Tax Records. If, at any time prior to the Retention Date, Wireline determine to
decommission or otherwise discontinue any computer program or information
technology system used to access or store any Tax Records, then Wireline may
decomission or discontinue such program or system upon 90 days’ prior notice to
NTELOS and NTELOS shall have the opportunity, at its cost and expense, to copy,
within such 90-day period, all or any part of the underlying data relating to
the Tax Records accessed by or stored on such program or system.

Section 9.02 Access to Tax Records. The Companies and their respective
Affiliates shall make available to each other for inspection and copying during
normal business hours upon reasonable notice all Tax Records (and, for the
avoidance of doubt, any pertinent underlying data accessed or stored on any
computer program or information technology system) in their possession and shall
permit the other Company and its Affiliates, authorized agents and
representatives and any representative of a Taxing Authority or other Tax
auditor direct access during normal business hours upon reasonable notice to any
computer program or information technology system used to access or store any
Tax Records, in each case to the extent reasonably required by the other Company
in connection with the preparation of Tax Returns or financial accounting
statements, audits, litigation, or the resolution of items under this Agreement.

Section 10. Tax Contests.

Section 10.01 Notice. Each of the Companies shall provide prompt notice to the
other Company of any written communication from a Tax Authority regarding any
pending or threatened Tax audit, assessment or proceeding or other Tax Contest
of which it becomes aware related to Taxes for Tax Periods for which it is
indemnified by the other Company hereunder. Such notice shall attach copies of
the pertinent portion of any written communication from a Tax Authority and
contain factual information (to the extent known) describing any asserted Tax
liability in reasonable detail and shall be accompanied by copies of any notice
and other documents received from any Tax Authority in respect of any such
matters. If an indemnified party has knowledge of an asserted Tax liability with
respect to a matter for which it is to be indemnified hereunder and such party
fails to give the indemnifying party prompt notice of such asserted Tax
liability and the indemnifying party is entitled under this Agreement to contest
the asserted Tax liability, then (i) if the indemnifying party is precluded from
contesting the asserted Tax liability in any forum as a result of the failure to
give prompt notice, the indemnifying party shall have no obligation to indemnify
the indemnified party for any Taxes arising out of such asserted Tax liability,
and (ii) if the indemnifying party is not precluded from contesting the asserted
Tax liability in any forum, but such failure to give prompt notice results in a
material monetary detriment to the indemnifying party, then any amount which the
indemnifying party is otherwise required to pay the indemnified party pursuant
to this Agreement shall be reduced by the amount of such detriment.

Section 10.02 Control of Tax Contests.

(a) Separate Company Taxes. In the case of any Tax Contest with respect to any
Separate Return (other than a Separate Return of Other Taxes described in clause
(II) of Section

 

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5.02), the Company having liability for the Tax shall have exclusive control
over the Tax Contest, including exclusive authority with respect to any
settlement of such Tax liability, subject to Section 10.02 (e) and (f) below.

(b) NTELOS Federal Consolidated Income Tax Return. In the case of any Tax
Contest with respect to any NTELOS Federal Consolidated Income Tax Return,
NTELOS shall have exclusive control over the Tax Contest, including exclusive
authority with respect to any settlement of such Tax liability, subject to
Section 10.02(e) and (f) below.

(c) NTELOS State Combined Income Tax Return. In the case of any Tax Contest with
respect to any NTELOS State Combined Income Tax Return, NTELOS shall have
exclusive control over the Tax Contest, including exclusive authority with
respect to any settlement of such Tax liability, subject to Section 10.02(e) and
(f) below.

(d) Joint Returns and Certain Other Returns. In the case of any Tax Contest with
respect to (I) any Joint Return (other than any NTELOS Federal Consolidated
Income Tax Return or any NTELOS State Combined Income Tax Return) or (II) any
Return of Other Taxes described in clause (II) of Section 5.02, (i) NTELOS shall
control the defense or prosecution of the portion of the Tax Contest directly
and exclusively related to any NTELOS Adjustment, including settlement of any
such NTELOS Adjustment and (ii) Wireline shall control the defense or
prosecution of the portion of the Tax Contest directly and exclusively related
to any Wireline Adjustment, including settlement of any such Wireline
Adjustment, and (iii) the Tax Contest Committee shall control the defense or
prosecution of Joint Adjustments and any and all administrative matters not
directly and exclusively related to any NTELOS Adjustment or Wireline
Adjustment. The “Tax Contest Committee” shall be comprised of two persons, one
person selected by NTELOS (as designated in writing to Wireline) and one person
selected by Wireline (as designated in writing to NTELOS). Each person serving
on the Tax Contest Committee shall continue to serve unless and until he or she
is replaced by the party designating such person. Any and all matters to be
decided by the Tax Contest Committee shall require the unanimous approval of
both persons serving on the committee. In the event the Tax Contest Committee
shall be deadlocked on any matter, the provisions of Section 14 of this
Agreement shall apply.

(e) Settlement Rights. The Controlling Party shall have the sole right to
contest, litigate, compromise and settle any Tax Contest without obtaining the
prior consent of the Non-Controlling Party. Unless waived by the parties in
writing, in connection with any potential adjustment in a Tax Contest as a
result of which adjustment the Non-Controlling Party may reasonably be expected
to become liable to make any indemnification payment (or any payment under
Section 6) to the Controlling Party under this Agreement: (i) the Controlling
Party shall keep the Non-Controlling Party informed in a timely manner of all
actions taken or proposed to be taken by the Controlling Party with respect to
such potential adjustment in such Tax Contest; (ii) the Controlling Party shall
provide the Non-Controlling Party copies of any written materials relating to
such potential adjustment in such Tax Contest received from any Tax Authority;
(iii) the Controlling Party shall timely provide the Non-Controlling Party with
copies of any correspondence or filings submitted to any Tax Authority or
judicial authority in connection with such potential adjustment in such Tax
Contest; (iv) the Controlling Party shall consult with the Non-Controlling Party
and offer the Non-Controlling Party a reasonable opportunity to comment

 

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before submitting any written materials prepared or furnished in connection with
such potential adjustment in such Tax Contest; and (v) the Controlling Party
shall defend such Tax Contest diligently and in good faith. The failure of the
Controlling Party to take any action specified in the preceding sentence with
respect to the Non-Controlling Party shall not relieve the Non-Controlling Party
of any liability and/or obligation which it may have to the Controlling Party
under this Agreement except to the extent that the Non-Controlling Party was
actually harmed by such failure, and in no event shall such failure relieve the
Non-Controlling Party from any other liability or obligation which it may have
to the Controlling Party. In the case of any Tax Contest described in
Section 10.02(a), (b) or (c), “Controlling Party” means the Company entitled to
control the Tax Contest under such Section and “Non-Controlling Party” means the
other Company.

(f) Tax Contest Participation. Unless waived by the parties in writing, the
Controlling Party shall provide the Non-Controlling Party with written notice
reasonably in advance of, and the Non-Controlling Party shall have the right to
attend, any formally scheduled meetings with Tax Authorities or hearings or
proceedings before any judicial authorities in connection with any potential
adjustment in a Tax Contest pursuant to which the Non-Controlling Party may
reasonably be expected to become liable to make any indemnification payment (or
any payment under Section 6) to the Controlling Party under this Agreement. The
failure of the Controlling Party to provide any notice specified in this
Section 10.02(g) to the Non-Controlling Party shall not relieve the
Non-Controlling Party of any liability and/or obligation which it may have to
the Controlling Party under this Agreement except to the extent that the
Non-Controlling Party was actually harmed by such failure, and in no event shall
such failure relieve the Non-Controlling Party from any other liability or
obligation which it may have to the Controlling Party.

(g) Power of Attorney. Each member of the Wireline Group shall execute and
deliver to NTELOS (or such member of the NTELOS Group as NTELOS shall designate)
any power of attorney or other similar document reasonably requested by NTELOS
(or such designee) in connection with any Tax Contest (as to which NTELOS is the
Controlling Party) described in this Section 10. Each member of the NTELOS Group
shall execute and deliver to Wireline (or such member of the Wireline Group as
Wireline shall designate) any power of attorney or other similar document
requested by Wireline (or such designee) in connection with any Tax Contest (as
to which Wireline is the Controlling Party) described in this Section 10.

Section 11. Effective Date; Termination of Prior Intercompany Tax Allocation
Agreements. This Agreement shall be effective as of the date hereof. As of the
date hereof, (i) all prior intercompany Tax allocation agreements or
arrangements shall be terminated, and (ii) amounts due under such agreements as
of the date hereof shall be settled as of the date hereof. Upon such termination
and settlement, no further payments by or to NTELOS or by or to Wireline, with
respect to such agreements shall be made, and all other rights and obligations
resulting from such agreements between the Companies and their Affiliates shall
cease at such time. Any payments pursuant to such agreements shall be
disregarded for purposes of computing amounts due under this Agreement; provided
that to the extent appropriate, as determined by NTELOS, payments made pursuant
to such agreements shall be credited to Wireline or NTELOS, respectively, in
computing their respective obligations pursuant to this Agreement, in

 

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the event that such payments relate to a Tax liability that is the subject
matter of this Agreement for a Tax Period that is the subject matter of this
Agreement.

Section 12. Survival of Obligations. The representations, warranties, covenants
and agreements set forth in this Agreement shall be unconditional and absolute
and shall remain in effect without limitation as to time.

Section 13. Treatment of Payments; Tax Gross Up.

Section 13.01 Treatment of Tax Indemnity and Tax Benefit Payments. In the
absence of any change in Tax treatment under the Code or other applicable Tax
Law,

(a) any Tax indemnity payments made by a Company under Section 5 shall be
reported for Tax purposes by the payor and the recipient as distributions or
capital contributions, as appropriate, occurring immediately before the
Deconsolidation (but only to the extent the payment does not relate to a Tax
allocated to the payor in accordance with Section 1552 of the Code or the
regulations thereunder or Treasury Regulation Section 1.1502-33(d) (or under
corresponding principles of other applicable Tax Laws)) or as payments of an
assumed or retained liability, and

(b) any Tax Benefit payments made by a Company under Section 6, shall be
reported for Tax purposes by the payor and the recipient as distributions or
capital contributions, as appropriate, occurring immediately before the
Deconsolidation (but only to the extent the payment does not relate to a Tax
allocated to the payor in accordance with Section 1552 of the Code or the
regulations thereunder or Treasury Regulation Section 1.1502-33(d) (or under
corresponding principles of other applicable Tax Laws)) or as payments of an
assumed or retained liability.

Section 13.02 Tax Gross Up. If notwithstanding the manner in which Tax indemnity
payments and Tax Benefit payments were reported, there is an adjustment to the
Tax liability of a Company as a result of its receipt of a payment pursuant to
this Agreement, such payment shall be appropriately adjusted so that the amount
of such payment, reduced by the amount of all Income Taxes payable with respect
to the receipt thereof (but taking into account all correlative Tax Benefits
resulting from the payment of such Income Taxes), shall equal the amount of the
payment which the Company receiving such payment would otherwise be entitled to
receive pursuant to this Agreement.

Section 13.03 Interest Under This Agreement. Anything herein to the contrary
notwithstanding, to the extent one Company (“Indemnitor”) makes a payment of
interest to another Company (“Indemnitee”) under this Agreement with respect to
the period from the date that the Indemnitee made a payment of Tax to a Tax
Authority to the date that the Indemnitor reimbursed the Indemnitee for such Tax
payment, the interest payment shall be treated as interest expense to the
Indemnitor (deductible to the extent provided by law) and as interest income by
the Indemnitee (includible in income to the extent provided by law). The amount
of the payment shall not be adjusted under Section 2.02 to take into account any
associated Tax Benefit to the Indemnitor or increase in Tax to the Indemnitee.

 

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Section 14. Disagreements.

Section 14.01 Tax Disputes. The parties will endeavor, and will cause their
respective Affiliates to endeavor, to resolve in an amicable manner all disputes
arising in connection with this Agreement. The parties shall negotiate in good
faith to resolve any Tax Dispute for not less than 45 days. Upon written notice
of either party after 45 days, the matter will be referred to a Tax Advisor
acceptable to both parties. The Tax Advisor may, in its discretion, obtain the
services of any third-party necessary to assist it in resolving the dispute. The
Tax Advisor shall furnish written notice to the Companies of its resolution of
the dispute as soon as practicable, but in any event no later than 45 days after
its acceptance of the matter for resolution. Any such resolution by the Tax
Advisor will be binding on the parties and the parties shall take, or cause to
be taken, any action necessary to implement the resolution. All fees and
expenses of the Tax Advisor shall be shared equally by NTELOS, on the one hand,
and Wireline, on the other hand. If, having determined that the dispute must be
referred to a Tax Advisor, after 45 days the parties are unable to find a Tax
Advisor willing to adjudicate the dispute in question and whom the parties in
good faith find acceptable, then the dispute will be submitted for arbitration
to the American Arbitrators Association, provided, however, that only an
arbitrator that qualifies as a Tax Advisor shall be selected.

Section 14.02 High-Level Disputes. Any High-Level Dispute shall be resolved
pursuant to the arbitration procedures set forth in Article 7 of the Separation
and Distribution Agreement, provided, however, that only an arbitrator that
qualifies as a Tax Advisor shall be selected to resolve a High-Level Dispute.

Section 15. Late Payments. Any amount owed by one party to another party under
this Agreement which is not paid when due shall bear interest at the Prime Rate
plus two percent, compounded semiannually, from the due date of the payment to
the date paid. To the extent interest required to be paid under this Section 15
duplicates interest required to be paid under any other provision of this
Agreement, interest shall be computed at the higher of the interest rate
provided under this Section 15 or the interest rate provided under such other
provision.

Section 16. Expenses. Except as otherwise provided in this Agreement, each party
and its Affiliates shall bear their own expenses incurred in connection with
preparation of Tax Returns, Tax Contests, and other matters related to Taxes
under the provisions of this Agreement.

Section 17. General Provisions.

Section 17.01 Addresses and Notices. Each party giving any notice required or
permitted under this Agreement will give the notice in writing and use one of
the following methods of delivery to the party to be notified, at the address
set forth below or another address of which the sending party has been notified
in accordance with this Section 17.01: (a) personal delivery; (b) facsimile or
telecopy transmission with a reasonable method of confirming transmission;
(c) commercial overnight courier with a reasonable method of confirming
delivery; or (d) pre-paid, United States of America certified or registered
mail, return receipt requested. Notice to a party is effective for purposes of
this Agreement only if given as provided in this

 

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Section 17.01 and shall be deemed given on the date that the intended addressee
actually receives the notice.

If to NTELOS:

NTELOS Holding Corp.

1154 Shenandoah Village Drive

P.O. Box 1990

Waynesboro, Virginia 22980

Attn: Brian O’Neil, Senior Vice President, General Counsel and Secretary

Facsimile: (540) 946-3599

If to Wireline:

Lumos Networks Corp.

One Lumos Plaza

P.O. Box 1068

Waynesboro, Virginia 22980

Attn: Mary McDermott, Senior Vice President, Legal and Regulatory Affairs, and
Secretary

Facsimile: (540) 946-3595

A party may change the address for receiving notices under this Agreement by
providing written notice of the change of address to the other parties.

Section 17.02 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their successors and assigns.

Section 17.03 Waiver. The parties may waive a provision of this Agreement only
by a writing signed by the party intended to be bound by the waiver. A party is
not prevented from enforcing any right, remedy or condition in the party’s favor
because of any failure or delay in exercising any right or remedy or in
requiring satisfaction of any condition, except to the extent that the party
specifically waives the same in writing. A written waiver given for one matter
or occasion is effective only in that instance and only for the purpose stated.
A waiver once given is not to be construed as a waiver for any other matter or
occasion. Any enumeration of a party’s rights and remedies in this Agreement is
not intended to be exclusive, and a party’s rights and remedies are intended to
be cumulative to the extent permitted by law and include any rights and remedies
authorized in law or in equity.

Section 17.04 Severability. If any provision of this Agreement is determined to
be invalid, illegal or unenforceable, the remaining provisions of this Agreement
remain in full force, if the essential terms and conditions of this Agreement
for each party remain valid, binding and enforceable.

Section 17.05 Authority. Each of the parties represents to the other that (a) it
has the corporate or other requisite power and authority to execute, deliver and
perform this Agreement, (b) the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate or other action,
(c) it has duly and validly executed and delivered this

 

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Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and general equity principles.

Section 17.06 Further Action. The parties shall execute and deliver all
documents, provide all information, and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this Agreement,
including the execution and delivery to the other parties and their Affiliates
and representatives of such powers of attorney or other authorizing
documentation as is reasonably necessary or appropriate in connection with Tax
Contests (or portions thereof) under the control of such other parties in
accordance with Section 10.

Section 17.07 Integration. This Agreement, together with each of the exhibits
and schedules appended hereto, constitutes the final agreement between the
parties, and is the complete and exclusive statement of the parties’ agreement
on the matters contained herein. All prior and contemporaneous negotiations and
agreements between the parties with respect to the matters contained herein are
superseded by this Agreement, as applicable. In the event of any inconsistency
between this Agreement and the Separation and Distribution Agreement, or any
other agreements relating to the transactions contemplated by the Separation and
Distribution Agreement, with respect to matters addressed herein, the provisions
of this Agreement shall control.

Section 17.08 Construction. The language in all parts of this Agreement shall in
all cases be construed according to its fair meaning and shall not be strictly
construed for or against any party. The captions, titles and headings included
in this Agreement are for convenience only, and do not affect this Agreement’s
construction or interpretation. Unless otherwise indicated, all “Section”
references in this Agreement are to sections of this Agreement.

Section 17.09 No Double Recovery. No provision of this Agreement shall be
construed to provide an indemnity or other recovery for any costs, damages, or
other amounts for which the damaged party has been fully compensated under any
other provision of this Agreement or under any other agreement or action at law
or equity. Unless expressly required in this Agreement, a party shall not be
required to exhaust all remedies available under other agreements or at law or
equity before recovering under the remedies provided in this Agreement.

Section 17.10 Counterparts. The parties may execute this Agreement in multiple
counterparts, each of which constitutes an original as against the party that
signed it, and all of which together constitute one agreement. This Agreement is
effective upon delivery of one executed counterpart from each party to the other
party. The signatures of the parties need not appear on the same counterpart.
The delivery of signed counterparts by facsimile or email transmission that
includes a copy of the sending party’s signature is as effective as signing and
delivering the counterpart in person.

Section 17.11 Governing Law. The internal laws of the State of Delaware (without
reference to its principles of conflicts of law) govern the construction,
interpretation and other

 

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matters arising out of or in connection with this Agreement and each of the
exhibits and schedules hereto and thereto (whether arising in contract, tort,
equity or otherwise).

Section 17.12 Jurisdiction. If any dispute arises out of or in connection with
this Agreement, except as expressly contemplated by another provision of this
Agreement, the parties irrevocably (and the parties will cause each other member
of their respective Group to irrevocably) (a) consent and submit to the
exclusive jurisdiction of federal and state courts located in Delaware,
(b) waive any objection to that choice of forum based on venue or to the effect
that the forum is not convenient, and (c) WAIVE TO THE FULLEST EXTENT PERMI1TED
BY LAW ANY RIGHT TO TRIAL OR ADJUDICATION BY JURY.

Section 17.13 Amendment. Except as otherwise expressly provided herein with
respect to the Schedules hereto, the parties may amend this Agreement only by a
written agreement signed by each party to be bound by the amendment and that
identifies itself as an amendment to this Agreement.

Section 17.14 Wireline Subsidiaries. If, at any time, Wireline acquires or
creates one or more subsidiaries that are includable in the Wireline Group, they
shall be subject to this Agreement and all references to the Wireline Group
herein shall thereafter include a reference to such subsidiaries.

Section 17.15 Successors. This Agreement shall be binding on and inure to the
benefit of any successor by merger, acquisition of assets, or otherwise, to any
of the parties hereto (including but not limited to any successor of NTELOS or
Wireline succeeding to the Tax attributes of either under Section 381 of the
Code), to the same extent as if such successor had been an original party to
this Agreement.

Section 17.16 Injunctions. The parties acknowledge that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. The
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof in any court having jurisdiction, such remedy being
in addition to any other remedy to which they may be entitled at law or in
equity.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, each party has caused this Agreement to be executed on its
behalf by a duly authorized officer on the date first set forth above.

 

NTELOS HOLDINGS CORP. By:  

/s/ James A. Hyde

  James A. Hyde   Chief Executive Officer and President LUMOS NETWORKS CORP. By:
 

/s/ Michael B. Moneymaker

  Michael B. Moneymaker   President

 

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