Exhibit 10.5

THIRD AMENDMENT (this “Third Amendment”) to the TERM LOAN AGREEMENT, dated as of
February 18, 2005 (as amended through the date hereof, the “Term Loan
Agreement”), among PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED, a Delaware
corporation (the “Parent”), PRIMUS TELECOMMUNICATIONS HOLDING, INC., a Delaware
corporation (the “Borrower”), the several banks and other financial institutions
or entities from time to time parties thereto (the “Lenders”), LEHMAN COMMERCIAL
PAPER INC. (“Lehman”), a debtor and debtor in possession under chapter 11 of the
Bankruptcy Code (defined below) acting through one or more of its branches as
the Administrative Agent (in such capacity, the “Existing Agent”) and THE BANK
OF NEW YORK MELLON, as the successor Administrative Agent (in such capacity, the
“Successor Agent”) is dated as of the Third Amendment Effective Date (as defined
below). Unless otherwise noted herein, terms defined in the Term Loan Agreement
and used herein shall have the meanings given to them in the Term Loan
Agreement.

W I T N E S S E T H:

WHEREAS, Parent, the Borrower and certain Subsidiary Guarantors commenced
voluntary bankruptcy proceedings (the “Proceedings”) on March 16, 2009, in
connection with a prenegotiated plan of reorganization (as such plan may be
modified from time to time, the “Plan of Reorganization”) under Chapter 11 of
title 11 of the United States Code (the “Bankruptcy Code”);

WHEREAS, subject to the satisfaction of certain conditions, the Plan of
Reorganization provides for the amendment of the Term Loan Agreement in
accordance with this Third Amendment in certain circumstances;

WHEREAS, pursuant to the terms of this Third Amendment, each Default and Event
of Default under the Term Loan Agreement arising out of the Proceedings (the
“Specified Defaults”) shall be waived; and

WHEREAS, On October 5, 2008, the Existing Agent commenced a voluntary case under
Chapter 11 of the Bankruptcy Code and on such date, pursuant to section 362(a)
of the Bankruptcy Code, an automatic stay went into effect that prohibits
actions to interfere with, or obtain possession or control of, the Existing
Agent’s property or to collect or recover from the Existing Agent any debts or
claims that arose before such date;

WHEREAS, the Existing Agent desires to resign as Administrative Agent under the
Term Loan Agreement and the other Loan Documents;

WHEREAS, Parent, the Borrower and the Required Lenders desire to ratify the
appointment of The Bank of New York Mellon as successor Administrative Agent (in
such capacity, the “Successor Agent”) under the Term Loan Agreement and the
other Loan Documents and the Successor Agent wishes to accept such appointment;
and

WHEREAS, this Third Amendment will become effective on the date the conditions
set forth in Section 5 hereto are satisfied and the Plan of Reorganization is
substantially consummated.

NOW, THEREFORE, in consideration of the premises herein contained and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:

1. Amendments to Term Loan Agreement.

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(a) Each instance of the words “Lehman Commercial Paper Inc.” and “Lehman
Entity” in the Term Loan Agreement is hereby replaced with “The Bank of New York
Mellon”. The role of the Syndication Agent is hereby deleted.

(b) Section 1.1 (Defined Terms).

(i) Section 1.1 of the Term Loan Agreement is hereby amended by deleting the
terms “Applicable Margin”, “Unclaimed Excess Proceeds”, “Lehman Commercial Paper
Inc.”, “Lehman Entity”, “Parent Indenture”, “Parent Indebtedness to Consolidated
Cash Flow Ratio”, “Priority Indebtedness to Consolidated Cash Flow Ratio”,
“Senior Note Indenture”, “Senior Notes” and “Syndication Agent” and all
references thereto in the Term Loan Agreement are hereby deleted in their
entirety except as otherwise set forth in this Third Amendment.

(ii) Section 1.1 of the Term Loan Agreement is hereby further amended by adding
thereto the following definitions, which shall be inserted in proper
alphabetical order:

“Acquisition Debt Ratio Test”: as defined in Section 6.2(b)(xii).

“Adjusted EBITDA” shall mean “Adjusted EBITDA” as externally reported by Parent
in its earnings releases, in a manner consistent with Parent’s past practices
plus, to the extent otherwise deducted in calculating net income during such
period, professional fees, costs and expenses incurred in connection with the
Proceedings, the confirmation and effectiveness of the Plan of Reorganization
and the related Fresh Start Accounting implementation. Notwithstanding anything
to the contrary herein, in calculating Adjusted EBITDA (i) for the fiscal
quarters ending September 30, 2009 and December 31, 2009: foreign currency
exchange rates shall be deemed to be as follows: (a) 1.00 Canadian dollar shall
equal 0.80 United States dollar; (b) 1.00 Australian dollar shall equal 0.65
United States dollar; (c) 1.00 Euro shall equal 1.275 United States dollars; and
(d) 1.00 British Pound shall equal 1.40 United States dollars, (ii) for the
fiscal quarters ending March 31, 2010 and June 30, 2010: foreign currency
exchange rates shall be deemed to be the actual exchange rates in effect on, and
as of, December 31, 2009, as published in the Wall Street Journal, and (iii) for
the fiscal quarters ending September 30, 2010 and December 31, 2010: foreign
currency exchange rates shall be deemed to be the actual exchange rates in
effect on, and as of, June 30, 2010, as published in the Wall Street Journal.
Adjusted EBITDA shall be calculated to eliminate the effect of Fresh Start
Accounting and to eliminate the effect of any Asset Disposition or Asset
Acquisition (including acquisitions of other Persons by merger, consolidation or
purchase of Capital Stock), based upon adjustments calculated by the Parent and
such adjustments shall be subject to agreed upon procedures performed by the
Parent’s nationally recognized independent accountants, and such procedures
shall be disclosed to the Administrative Agent in writing at the same time as
Financial Statements are required to be delivered pursuant to Section 5.1.

“Base Rate PIK Interest”: as defined in Section 2.10(b).

“Capital Expenditures”: for any period the aggregate amount of all expenditures
(whether paid in cash or other consideration or accrued as a liability) that
would, in accordance with GAAP, be included as capital expenditures of Parent
and its Subsidiaries for such period, as the same are or would be set forth in a
consolidated statement of cash flows of Parent and its Subsidiaries for such
period (including, solely to the extent required to be so included in accordance
with GAAP, the amount of assets leased under any Capitalized Lease); provided
that

 

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in determining the amounts of Capital Expenditures of purposes of
Section 6.15(c), such amount shall be subject to adjustments for Asset
Acquisitions and Asset Dispositions based upon adjustments calculated by the
Parent and such adjustments shall be subject to agreed upon procedures performed
by the Parent’s nationally recognized independent accountants. Such procedures
shall be disclosed to the Administrative Agent in writing at the same time as
Financial Statements are required to be delivered pursuant to Section 5.1.

“Interest Election Notice”: a written notice delivered by the Borrower to the
Administrative Agent at least 30 days prior to each Interest Payment Date
providing notice that the Borrower has elected to pay PIK Interest on the
applicable Interest Payment Date.

“LIBOR PIK Interest”: as defined in Section 2.10(a).

“Non-Compliance Period”: as defined in Section 6.15(a).

“Non-Participating Lender”: with respect to any proposed Permitted Parent
Assignment or Permitted Parent Loan Purchase, any Lender that has elected not to
participate, or has been deemed to have elected not to participate, in such
Permitted Parent Assignment or Permitted Parent Repurchase, as the case may be.

“Parent Purchaser”: as defined in Section 9.6(i).

“Permitted Parent Assignment”: as defined in Section 9.6(h).

“Permitted Parent Loan Purchase”: as defined in Section 9.6(i).

“PIK Interest”: either Base Rate PIK Interest or LIBOR PIK Interest, as
applicable.

“Plan of Reorganization”: the Joint Plan of Reorganization of Primus
Telecommunications Group, Incorporated and its Affiliated Debtors Under Chapter
11 of the Bankruptcy Code, as approved by the United States Bankruptcy Court for
the District Delaware by entry of a Confirmation Order on June 12, 2009 in Case
No. 09-10867.

“Proceedings”: the voluntary bankruptcy proceedings of Parent, the Borrower,
Primus Telecommunications IHC, Inc., and Primus Telecommunications
International, Inc.

“Qualified Capital Stock”: with respect to any Person, all Capital Stock of such
Person other than Redeemable Stock.

“Second Lien Indebtedness”: Indebtedness incurred under the New Notes
Indentures.

“Third Amendment”: the Third Amendment, dated as of the Third Amendment
Effective Date, to this Agreement.

“Third Amendment Effective Date”: the date of effectiveness of the Third
Amendment.

“Third Amendment Term Sheet Date”: April 14, 2009.

 

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(iii) The definition of “Base Rate” in Section 1.1 of the Term Loan Agreement is
hereby amended by deleting such definition in its entirety and substituting the
following in lieu thereof:

“Base Rate”: for any day, the greater of (i) a rate per annum equal to 4.00% and
(ii) a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus  1/2 of 1%; provided,
that the Base Rate, in the sole determination of the Administrative Agent, must
at all times be a rate per annum that is at least 1% per annum greater than the
Eurodollar Rate. For purposes hereof: “Prime Rate” shall mean the prime lending
rate as set forth on the British Banking Association Telerate Page 5 (or such
other comparable publicly available page as may, in the reasonable opinion of
the Administrative Agent after notice to the Borrower, replace such page for the
purpose of displaying such rate if such rate no longer appears on the British
Bankers Association Telerate page 5), as in effect from time to time. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually available. Any change in the Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.

(iv) The definition of “Consolidated Net Income” in Section 1.1 of the Term Loan
Agreement is hereby amended by (A) deleting clause (i) of the proviso thereto
and substituting in lieu thereof “[reserved]” and (B) deleting the phrase
“except for purposes of calculating the amount of Restricted Payments that may
be made pursuant to clause (C) of the first paragraph of Section 6.3,” from
clause (iii) of the proviso thereto.

(v) The definition of “Eurodollar Rate” in Section 1.1 of the Term Loan
Agreement is hereby amended by inserting immediately following the phrase “with
respect to each day during each Interest Period,” the following phrase: “the
greater of (a) a rate per annum equal to 3.00% and (b)”.

(vi) The definition of “Net Cash Proceeds” in Section 1.1 of the Term Loan
Agreement is hereby amended by (i) deleting the word “and” at the end of clause
(a) thereto; (ii) inserting immediately after the phrase “the proceeds of such
issuance or sale in the form of cash or cash equivalents” in clause (b) thereto
the following phrase: “(which shall include, without duplication, any cash or
cash equivalents of any Person acquired pursuant to an Asset Acquisition in
exchange for the issuance of Capital Stock, solely to the extent there are no
encumbrances or restrictions existing on the date of such Asset Acquisition on
the ability of such Person to pay dividends or make other distributions to the
Borrower with such cash or cash equivalents; provided that any such encumbrances
or restrictions were previously existing prior to any such Asset Acquisition,
and not imposed in contemplation of any such Asset Acquisition)”; and
(iii) immediately prior to the period at the end of clause (b) thereto inserting
the following “; and (c) with respect to the incurrence by the Borrower or any
of its Restricted Subsidiaries of any Indebtedness (other than Indebtedness
permitted under Section 6.2), the proceeds of such incurrence of Indebtedness in
the form of cash or cash equivalents, net of reasonable and customary attorney’s
fees, accountants fees, underwriters’, arrangers’ or placement agents’ fees,
discounts or commissions and brokerage, consultant or other fees incurred in
connection with such incurrence of”

(vii) The definition of “New Notes” in Section 1.1 of the Term Loan Agreement is
hereby amended by (a) deleting the phrase “in conformity with
Section 6.2(b)(xi)” and substituting the phrase “pursuant to the New Notes
Indentures” therefor, and (b) after the phrase “to the extent secured,”
inserting the phrase “in conformity with”.

(viii) The definition of “New Notes Collateral Agreement” is hereby amended by

 

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deleting the phrase “as the same may be amended, supplemented or otherwise
modified from time to time” at the end thereof and substituting “as in effect on
the Third Amendment Effective Date and as subsequently supplemented or modified
as required thereunder, under the New Notes Indentures or under the
Intercreditor Agreement, in each case pursuant to the terms of the Intercreditor
Agreement” therefor.

(ix) The definition of “New Notes Indentures” is hereby amended by adding at the
end thereof immediately prior to the period the following new proviso: “;
provided, however, that (w) the terms of the New Notes Indentures and any New
Notes or other Indebtedness issued thereunder shall not, at any time, have any
scheduled amortization, do not mature and do not have any mandatory prepayments
(other than customary asset sale and change of control offer requirements), in
each case, prior to the date that is at least 91 days following the final
maturity of the Loans and do not have terms and conditions which are materially
more restrictive, taken as a whole, than the terms and conditions of this
Agreement, (x) any New Notes or other Indebtedness issued thereunder shall at
all times be subject to the terms and provisions of the Intercreditor Agreement
or the New Intercreditor Agreement, (y) the New Notes Issuer shall remain at all
times Primus Telecommunications IHC, Inc. or its permitted successors, and
(z) the proceeds of any New Notes issued under the New Notes Indentures after
the Third Amendment Effective Date shall be solely used for the purposes of, and
in compliance with, the requirements of Section 6.2(b)(xii).”

(x) The definition of “Permitted Investment” in Section 1.1 of the Term Loan
Agreement is hereby amended by deleting phrase “provided that the amount of such
excess shall be included in calculating whether the conditions of clause (c) of
the first paragraph of Section 6.3 have been met with respect to any subsequent
Restricted Payments;”.

(xi) The definition of “Redeemable Stock” in Section 1.1 of the Term Loan
Agreement is hereby amended by deleting such definition in its entirety and
substituting the following in lieu thereof:

“Redeemable Stock”: any class or series of Capital Stock of any Person that by
its terms or otherwise is (i) required to be redeemed prior to a date which is
91 days following the final scheduled maturity date of the Loans,
(ii) redeemable at the option of the holder of such class or series of Capital
Stock at any time prior to a date which is 91 days following the final scheduled
maturity date of the Loans or (iii) convertible into or exchangeable for Capital
Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to a date which is 91 days following the final scheduled maturity
date of the Loans; provided that any Capital Stock that would not constitute
Redeemable Stock but for provisions thereof giving holders thereof the right to
require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an “Asset Sale” or “Change of Control” occurring prior to the date
which is 91 days following the final scheduled maturity date of the Loans will
not constitute Redeemable Stock if the “Asset Sale” or “Change of Control”
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions contained in herein and such Capital
Stock specifically provides that such Person will not repurchase or redeem any
such stock pursuant to such provision prior to the earlier of (x) a date which
is 91 days following the final scheduled maturity date of the Loans or (y) the
date the Loans are indefeasibly paid in full.

 

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(xii) The definition of “Unrestricted Subsidiary” Section 1.1 of the Term Loan
Agreement is hereby amended by inserting the following immediately prior to the
period at then end of the second sentence thereof:

“; provided further that, from and after the Third Amendment Effective Date,
except in connection with a refinancing of the Loans in whole, but not in part,
no Subsidiary of Parent shall be designated an Unrestricted Subsidiary”.

(c) Section 2.3 (Repayment of Loans). Section 2.3(a) of the Term Loan is hereby
amended by deleting the table contained therein in its entirety and substituting
the following therefore:

 

Installment

   Principal
Amount

June 30, 2005

   $ 250,000

September 30, 2005

   $ 250,000

December 31, 2005

   $ 250,000

March 31, 2006

   $ 250,000

June 30, 2006

   $ 250,000

September 30, 2006

   $ 250,000

December 31, 2006

   $ 250,000

March 31, 2007

   $ 250,000

June 30, 2007

   $ 250,000

September 30, 2007

   $ 250,000

December 31, 2007

   $ 250,000

March 31, 2008

   $ 250,000

June 30, 2008

   $ 250,000

September 30, 2008

   $ 250,000

December 31, 2008

   $ 250,000

March 31, 2009

   $ 250,000

June 30, 2009

   $ 250,000

September 30, 2009

   $ 925,000

December 31, 2009

   $ 925,000

March 31, 2010

   $ 1,400,000

June 30, 2010

   $ 1,400,000

September 30, 2010

   $ 1,400,000

December 31, 2010

   $ 1,400,000

February 18, 2011

    
 
 
 
 
 
 
  Remaining
outstanding
principal
amount
(including
PIK
Interest, if
any)

(d) Section 2.7 (Mandatory Prepayments).

(i) Section 2.7(a) of the Term Loan Agreement is hereby amended by deleting such
section in its entirety and substituting the following in lieu thereof:

“Except for dispositions of Capital Stock of the Lingo Subsidiary in the Lingo
Offering (which shall be governed by Section 2.7(b)) not less than 10 days after
the date of receipt

 

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by the Parent or any of its Restricted Subsidiaries of Net Cash Proceeds from
any Asset Sale or receipt by the Parent or any of its Restricted Subsidiaries of
any insurance (other than business interruption insurance) or condemnation
proceeds the Borrower shall prepay the Loans in an amount equal to (A) 80% of
the Net Cash Proceeds of (x) any such Asset Sale (other than any disposition or
issuance of all or any of the Capital Stock of Parent or any Restricted
Subsidiary of Parent) and (y) any such insurance or condemnation proceeds;
provided that such Net Cash Proceeds shall not be required to be applied toward
the prepayment of the Loans should the Borrower, at its option, deliver written
notice to the Administrative Agent of the Borrower’s intention to invest such
monies within 180 days of receipt in long-term assets, properties or equipment
used in a business similar or related to the nature or type of the equipment,
property or assets of, or the business of, the Borrower and its Restricted
Subsidiaries existing on the date of such reinvestment or to finance the costs
of repair or replacement of the equipment, properties or assets that are the
subject of such sale, disposition, event giving rise to such insurance proceeds
or condemnation or the cost of purchase or construction of other long-term
assets useful in the business of the Borrower or its Restricted Subsidiaries, as
such business is being conducted on, and as of, the date of such reinvestment;
provided, further, that within 10 days after the expiration of such 180-day
period (x) the Borrower shall deliver to the Administrative Agent an Officer’s
Certificate executed by a senior officer of the Borrower certifying the amount
of such reinvestment that has occurred and the amount of binding commitments
with regard to any such reinvestment and (y) any portion of such Net Cash
Proceeds not reinvested or subject to binding commitments which commit Borrower
and/or any of its Restricted Subsidiaries to make such reinvestment within a
90-day period after the date of such Officer’s Certificate delivered in
accordance with the immediately preceding clause (x) shall be applied toward the
prepayment of the Loans (and any amounts subject to such binding commitments and
not actually reinvested within such 90-day period shall be required to be
applied to the prepayment of the Loans) and (B) 25% of the Net Cash Proceeds
from any disposition or issuance of all or any Capital Stock of Parent or any
Restricted Subsidiary of Parent (excluding Net Cash Proceeds received upon
exercise of stock options by employees, or directors of Parent, the Borrower, or
any Restricted Subsidiary; provided that such Net Cash Proceeds do not exceed
$1,000,000 in the aggregate in any calendar year).”

(ii) Section 2.7 of the Term Loan Agreement is hereby further amended by
inserting the following new clause (e) at the end thereto:

“(e) Upon the incurrence by the Parent or any of its Restricted Subsidiaries of
any Indebtedness (other than Indebtedness permitted under Section 6.2), the
Borrower shall immediately prepay the Loans in an amount equal to 100% of the
Net Cash Proceeds received in connection with such incurrence of Indebtedness.”

(e) Section 2.10 (Interest Rates and Payment Dates). Section 2.10 of the Term
Loan Agreement is hereby amended by deleting clauses (a) and (b) thereto in
their entirety and substituting in lieu thereof the following new clauses
(a) and (b):

“(a) Each Eurodollar Loan shall bear interest during each Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate determined for
such Interest Period plus (i) if an Interest Election Notice has not been
delivered with respect to such Eurodollar Loan for such Interest Period, 9.00%,
which amount shall be paid in cash on each Interest Payment Date with respect to
such Interest Period that relates to such Eurodollar Loan, or (ii) if the
Borrower has delivered an Interest Election Notice with respect to such
Eurodollar Loan for such Interest

 

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Period, 11.00%; provided that in connection with this clause (ii), an amount
equal to 4.00% per annum shall be paid on the Interest Payment Date with respect
to such Interest Period that relates to such Eurodollar Loan by increasing the
principal of the outstanding Loans (“LIBOR PIK Interest”), with the remainder
paid in cash on the applicable Interest Payment Date.

(b) Each Base Rate Loan shall bear interest for each day such Base Rate Loan is
outstanding at a rate per annum equal to the Base Rate in effect for such day
plus (i) if an Interest Election Notice has not been delivered with respect to
such Base Rate Loan and the interest owing in connection therewith on the next
succeeding Interest Payment Date, 8.00%, which amount shall be paid in cash on
such Interest Payment Date, or (ii) if the Borrower has delivered an Interest
Election Notice with respect to such Base Rate Loan and the interest owing in
connection therewith on the next succeeding Interest Payment Date, 10.00%;
provided that in connection with this clause (ii), an amount equal to 4.00% per
annum shall be paid on such Interest Payment Date by increasing the principal of
the outstanding Loans (“Base Rate PIK Interest”), with the remainder paid in
cash on the applicable Interest Payment Date.”

(f) Section 2.13 (Pro Rata Treatment and Payment). Section 2.13(b) of the Term
Loan Agreement is hereby amended by inserting the following sentence at the end
thereof:

“The parties hereby agree, for avoidance of doubt, that any Permitted Parent
Assignment and Permitted Parent Loan Purchases (and the purchase price paid to
any Lender in consideration of purchase of such Lender’s Loans in connection
therewith) will not constitute a payment under this Section 2.13(b).”

(g) Section 2.16 (Indemnity). Section 2.16 of the Term Loan Agreement is hereby
amended by deleting the phrase “the Applicable Margin included therein, if any”
at the end of the parenthetical in clause (i) thereof and substituting “the
interest rate margin included therein as provided under Section 2.10(a), if any,
and the effect of clause (a) of the definition of “Eurodollar Rate”“ therefor.

(h) Section 5.1 (Financial Statements). Section 5.1 of the Term Loan Agreement
is hereby amended by (i) replacing the number “90” with “105” in clause (a),
(ii) replacing the number “45” with “50” in clause (b) and (iii) deleting the
word “and” at the end of clause (b) and inserting the following immediately
prior to the period at the end of clause (c) thereof:

“and

(d) upon request of any Lender, furnish to such Lender within 10 Business Days
of such request, the unaudited monthly consolidated balance sheet of Parent as
at the end of the most recently completed calendar month for which financial
statements are available, and the related unaudited consolidated monthly
statements of income and of cash flows for such calendar month”.

(i) Section 5.2: (Certificates; Other Information). Section 5.2 of the Term Loan
Agreement is hereby amended by (i) deleting the phrase “Section 5.1” in clause
(b) thereto and substituting in lieu thereof the phrase “Sections 5.1(a) and
5.1(b),” (ii) inserting the following parenthetical phrase in clause (b) thereof
immediately after the comma at the end of clause (x) of clause (ii) thereof
“(including without limitation, and for the avoidance of doubt, such Compliance
Certificate will show in reasonably satisfactory detail compliance with
Section 6.2(b)(xii) but, with respect to any such Compliance Certificate
delivered in connection with Section 5.1(b) only in the event Indebtedness has
been incurred pursuant to Section 6.2(b)(xii) during the last quarter of the
four quarter period covered by such Compliance Certificate)”, and (iii) deleting
the phrase “Senior Note Indenture” in clause (d) thereto and substituting in
lieu thereof the phrase “Second Lien Indebtedness, the New Notes or the New
Notes Indentures”.

 

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(j) Section 5.12 (Post Closing Items). Section 5.12(b) of the Term Loan
Agreement is hereby amended by inserting the phrase “and any deposit account or
securities account used solely as a payroll or benefits account; provided that
in no event shall the aggregate amount in all such deposit accounts and
securities accounts used as (i) payroll accounts exceed $1,500,000 at any time
and (ii) benefits accounts exceed $500,000 at any time” immediately following
the phrase “letters of credit” in the final parenthetical therein. A new
Section 5.12 (f) is hereby added as follows: “(f) Within thirty (30) days
following the Third Amendment Effective Date, Lingo Holdings, Inc., Lingo, Inc.
and Lingo Network Services, Inc. shall comply with the provisions and
requirements of Section 5.9 applicable to such Persons.”

(k) Section 6.1 (Obligors May Consolidate, Etc). Section 6.1 of the Term Loan
Agreement is hereby amended by deleting clause (3) thereto in its entirety and
substituting the following new clause (3) in lieu thereof:

“(3) (a) in the case of Parent, or any Person becoming the successor obligor to
Parent, immediately after giving effect to such transaction on a pro forma basis
the ratio of (i) the aggregate principal amount (or accreted value, as the case
may be) of Indebtedness of Parent and its Restricted Subsidiaries on a
consolidated basis outstanding as of the Transaction Date, to (ii) the Pro Forma
Consolidated Cash Flow of Parent for the preceding two full fiscal quarters
multiplied by two, determined on a pro forma basis as if any such Indebtedness
that had been Incurred and the proceeds thereof had been applied at the
beginning of such two fiscal quarters, would be greater than zero and less than
5.0 to 1.0; and (b) in the case of the Borrower, or any Person becoming the
successor obligor to the Borrower, immediately after giving effect to such
transaction on a pro forma basis the ratio of (i) the aggregate principal amount
(or accreted value, as the case may be) of Indebtedness of the Borrower and its
Restricted Subsidiaries on a consolidated basis outstanding as of the
Transaction Date, to (ii) the Pro Forma Consolidated Cash Flow of the Borrower
for the preceding two full fiscal quarters multiplied by two, determined on a
pro forma basis as if any such Indebtedness that had been Incurred and the
proceeds thereof had been applied at the beginning of such two fiscal quarters,
would be greater than zero and less than 3.5 to 1.0; and”

(l) Section 6.2 (Limitation on Indebtedness).

(i) Section 6.2(a) of the Term Loan Agreement is hereby amended by deleting the
proviso thereto in its entirety.

(ii) Section 6.2(b) of the Term Loan Agreement is hereby amended by:

(A) deleting clause (i) thereto in its entirety and substituting in lieu thereof
the following new clause (i):

“(i) Indebtedness of the Borrower under this Agreement, and any Indebtedness
incurred pursuant to any refinancing of the Loans in whole but not in part
(which Indebtedness may include all of the then outstanding principal balance of
the Loans and any premiums, accrued interest (including PIK Interest) payable
thereon and customary and reasonable fees and expenses with respect to any such
refinancing);”

 

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(B) deleting clause (iii) thereto in its entirety and substituting in lieu
thereof the following new clause (iii):

“(iii) Indebtedness of any Restricted Subsidiary of Parent to Parent or
Indebtedness of Parent or any of its Restricted Subsidiaries to any other of its
Restricted Subsidiaries; provided that any subsequent issuance or transfer of
any Capital Stock which results in any such Restricted Subsidiary ceasing to be
a Restricted Subsidiary of Parent or any subsequent transfer of such
Indebtedness permitted by this clause (iii) (other than to Parent or another
Restricted Subsidiary of Parent or a collateral assignment thereof) shall be
deemed, in each case, to constitute the Incurrence of such Indebtedness, which
Incurrence shall otherwise be permitted under this Section 6.2; and provided
further that (x) intercompany Indebtedness among the Parent, the Borrower or a
Subsidiary Guarantor, must be unsecured and subordinated in right of payment to
the Loans or any Guarantee thereof, as the case may be and (y) intercompany
Indebtedness owed by the Parent, the Borrower or a Subsidiary Guarantor to a
Foreign Subsidiary, must be unsecured and subordinated in right of payment to
the Loans or any Guarantee thereof, as the case may be;”

(C) deleting the “and” at the end of clause (iv)(C) thereof and adding the
following new clauses (E), (F), (G) and (H) to clause (iv) thereof:

“(E) if the Indebtedness to be refinanced consists of New Notes or any Second
Lien Indebtedness, such new Indebtedness will be subject to (1) the
Intercreditor Agreement, or (2) an intercreditor agreement (a “New Intercreditor
Agreement”) with terms substantially consistent with the Intercreditor
Agreement, the terms of which New Intercreditor Agreement are reasonably
satisfactory to the Administrative Agent;

(F) if the Indebtedness to be refinanced consists of Indebtedness incurred under
Section 6.2(b)(xii)(B), such new Indebtedness shall not be recourse to Parent
and its Restricted Subsidiaries other than the purchaser of such acquired assets
or any acquired Persons;

(G) if the Indebtedness to be refinanced consists of New Notes, such new
Indebtedness shall not have a cash interest rate in excess of 14.25%; and

(H) if the Indebtedness to be refinanced consists of Second Lien Indebtedness
(other than New Notes), the implied all-in per annum rate of interest applicable
to such new Indebtedness (taking into account any original issue discount and
fees (excluding any such customary discount or market-rate fees payable to the
underwriters or arrangers of such Indebtedness) associated with such new
Indebtedness being calculated within such rate by amortizing such original issue
discount and fees equally over a four year period (e.g., such that 1.00% of
original issue discount equals 0.25% of interest)) shall not exceed 18%.”

(D) deleting the provisions of clause (vi) thereto and substituting in lieu
thereof “[reserved];”

(E) deleting the provisions of clause (vii) thereto and substituting in lieu
thereof “[reserved];”

(F) deleting the provisions of clause (ix) thereto and substituting in lieu
thereof “[reserved];”

 

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(G) deleting the “and” at the end of clause (x) thereto;

(H) deleting the provisions of clause (xi) thereto and substituting in lieu
thereof “[reserved]; and”

(I) inserting the following new clause (xii):

“(xii) Acquired Indebtedness and other Indebtedness incurred in connection with
an Asset Acquisition, so long as the ratio of the aggregate principal amount of
such Indebtedness incurred with respect to any such Asset Acquisition to the
Adjusted EBITDA (for the most recent 12 calendar month period for which
financial statements are available) attributable to the assets or Persons so
acquired pursuant to such Asset Acquisition (as determined by the Borrower,
subject to agreed upon procedures performed by its nationally recognized
independent accountants) 2.5 to 1.0 or less (the “Acquisition Debt Ratio Test”),
and:

(A) such Indebtedness is subordinated in right of payment and lien priority to
the Loans and any Second Lien Indebtedness in a manner substantially similar to
the payment and lien subordination provisions applicable to the Second Lien
Indebtedness pursuant to the Intercreditor Agreement, and does not mature prior
to a date which is 91 days following the final scheduled maturity date of the
Loans; or

(B) such Indebtedness is non-recourse to Parent and its Restricted Subsidiaries
(other than the purchaser of such acquired assets or any acquired Persons) and
does not exceed $52,500,000 in the aggregate at any one time outstanding; or

(C) such Indebtedness (1) is Second Lien Indebtedness and (2) has an implied
all-in per annum rate of interest (taking into account any original issue
discount and fees (excluding any such customary discount or market-rate fees
payable to the underwriters or arrangers of such Indebtedness) associated with
such Indebtedness being calculated within such rate by amortizing such original
issue discount and fees equally over a four year period (e.g., such that 1.00%
of original issue discount equals 0.25% of interest)) that does not exceed 18%;
or

(D) any combination of the preceding clauses (A), (B) or (C) so long as the
incurrence of any Indebtedness under the preceding clauses (A), (B) or (C) or
any combination thereof complies with the Acquisition Debt Ratio Test at the
time of incurrence;

provided that any assets (other than assets of Excluded Foreign Subsidiaries)
acquired with such Indebtedness shall be pledged as additional Collateral in
accordance with and to the extent required by Section 5.9; provided, further, in
each such case, the purchase price of any acquisition of assets by a Foreign
Subsidiary may be funded with Indebtedness permitted hereunder and from one or
more of (x) Qualified Capital Stock of Parent issued to the seller, (y) proceeds
from the issuance or sale of Qualified Capital Stock of Parent, or (z) cash and
cash equivalents acquired in such acquisition, in each case, so long as the
portion of any Net Cash Proceeds from any disposition or issuance of Capital
Stock of Parent or any Restricted Subsidiary have been applied, or substantially
concurrently are applied, to prepay the Loans to the extent required under
Section 2.7;”

 

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(J) inserting the following new clause (xiii):

“(xiii) Indebtedness of Parent or any of its Restricted Subsidiaries outstanding
as of the Third Amendment Term Sheet Effective Date (other than Indebtedness
described in clause (ii) of this Section 6.2(b)) set forth on Schedule
6.2(b)(xiii) hereto;”

(K) inserting the following new clause (xiv):

“(xiv) unsecured Indebtedness of Parent or any Restricted Subsidiary of Parent
not otherwise permitted hereunder in an aggregate principal amount incurred
pursuant to this clause (xiv) not to exceed $7,500,000 at any time outstanding;
and

(L) inserting the following new clause (xv):

“(xv) any Indebtedness incurred from interest which has been paid-in-kind,
including with respect to the Second Lien Indebtedness.”

(iii) Section 6.2(d) of the Term Loan Agreement is hereby amended by deleting
the first sentence thereto and substituting in lieu thereof the following two
sentences:

“For purposes of determining the amount of any particular item of Indebtedness
under this Section 6.2 (other than non-recourse indebtedness incurred pursuant
to clause (xii)(B) of Section 6.2(b)), (x) any Guarantees of Indebtedness of
Parent, the Borrower or any Subsidiary Guarantor by Parent, the Borrower or any
Subsidiary Guarantor and (y) any Guarantees of Indebtedness of Restricted
Subsidiaries that are not Loan Parties by Parent, the Borrower or any Subsidiary
Guarantor shall not be included in determining such amounts to the extent the
Incurrence of such Indebtedness that is so guaranteed is permitted pursuant to
cause (b) above. For purposes of determining the amount of any non-recourse
Indebtedness incurred pursuant to clause (xii)(B) of Section 6.2(b), any
Guarantees of such Indebtedness by the purchaser of such acquired assets or any
acquired Persons shall not be included in determining such amount.”

(m) Section 6.3 (Limitation on Restricted Payments).

(i) The first paragraph of Section 6.3 of the Term Loan Agreement is hereby
amended by:

(A) deleting clause (iii) thereto in its entirety and substituting in lieu
thereof the following new clause (iii):

“(iii) make any voluntary or optional principal payment, or voluntary or
optional purchase, redemption, repurchase, defeasance, prepayment or other
acquisition or retirement for value of Indebtedness other than Indebtedness
permitted under Sections 6.2(b)(i) and 6.2(b)(ii); or”

(B) Inserting a period at the end of clause (iv) thereto and deleting all of the
text following such period in the first paragraph of Section 6.3 of the Term
Loan Agreement.

(ii) The second paragraph of Section 6.3 of the Term Loan Agreement is hereby
amended by:

(A) deleting clauses (a), (g), (i), (l) and (m) thereto in their entirety and
substituting in lieu of each of such clauses: “[reserved];”

 

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(B) deleting clause (b) thereto in its entirety and substituting in lieu thereof
the following:

“(b) the purchase, redemption, repurchase, prepayment or other acquisition or
retirement for value of Indebtedness in connection with any refinancing
permitted under Section 6.2(b)(iv);”

(C) deleting clause (d) thereto in its entirety and substituting in lieu thereof
the following:

“(d) the purchase, redemption, repurchase, prepayment or other acquisition or
retirement for value of Indebtedness, including, without limitation, Second Lien
Indebtedness, (i) with the Net Cash Proceeds of any Asset Sale (other than an
issuance or sale of Capital Stock) to the extent not required to prepay the
Loans pursuant to Section 2.7(a), (ii) with the Net Cash Proceeds from the
issuance or sale of any Qualified Capital Stock to the extent not required to
prepay the Loans pursuant to Section 2.7(a) and (iii) in exchange for, or with
the Net Cash Proceeds from the sale or issuance of, Qualified Capital Stock of
Parent to the extent not required to prepay the Loans pursuant to
Section 2.7(a);”

(D) deleting clause (k) thereto in its entirety and substituting in lieu thereof
the following:

“(k) Restricted Payments not to exceed $1,000,000 in the aggregate from and
after the Third Amendment Effective Date;”

(E) deleting the proviso immediately after clause (m) thereto and substituting
in lieu thereof the following:

“provided, however, in connection with any Restricted Payment or any purchase,
redemption, repurchase, prepayment or other acquisition or retirement for value
of Indebtedness, including, without limitation, Second Lien Indebtedness, in any
case pursuant to this Section 6.3, no Default or Event of Default shall have
occurred and be continuing or would result therefrom and all scheduled
amortization payments and other payments on the Loans due on or prior to the
date of such Restricted Payment shall have been made.”

(iii) The third paragraph of Section 6.3 is hereby deleted in its entirety.

(n) Section 6.7 (Limitation on Liens). Section 6.7 of the Term Loan Agreement is
hereby amended by deleting such section in its entirety and substituting in lieu
thereof the following:

“Limitation on Liens. Parent will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or suffer to exist any Lien (other than
Permitted Liens) on any of its assets or properties of any character (including,
without limitation, licenses, trademarks and Capital Stock owned by Parent or
any of its Restricted Subsidiaries and any Indebtedness owed to Parent or any of
its Restricted Subsidiaries).”

(o) Section 6.8 (Limitation on Asset Sales). Section 6.8 of the Term Loan
Agreement is hereby amended by deleting the phrase “in accordance with the
Senior Note Indenture as in effect on the date hereof (subject to Section 2.7)”
and substituting in lieu thereof the phrase “in accordance with Section 2.7.”

 

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(p) Section 6.12 (Restriction on Certain Purchases of Indebtedness).
Section 6.12 of the Term Loan Agreement is hereby amended by deleting such
section in its entirety and substituting in lieu thereof “[reserved]”.

(q) Section 6.14 (Restriction on Deposit Accounts and Securities Accounts).
Section 6.14 of the Term Loan Agreement is hereby amended by (i) changing the
relevant account number from “24900074” to “899660”, (ii) re-lettering clause
(c) therein as clause (d) and inserting immediately after the figure “$500,000”
the phrase “, (c) any deposit account or securities account used solely as a
payroll or benefits account; provided that in no event shall the aggregate
amount in all such deposit accounts and securities accounts used as (i) payroll
accounts exceed $1,500,000 at any time and (ii) benefits accounts exceed
$500,000 at any time” and (iii) deleting the figure “$10,000,000” therein and
substituting in lieu thereof the figure “$5,000,000.”

(r) Section 6.15 (Financial Covenants). The following new Section 6.15 shall be
added to the Term Loan Agreement:

“Financial Covenants.

(a) Minimum Adjusted EBITDA. Commencing on September 30, 2009, and as measured
at the end of each fiscal quarter thereafter, Parent and its Restricted
Subsidiaries shall maintain on a consolidated basis Adjusted EBITDA for the four
previous fiscal quarters of not less than $42,000,000. The Borrower shall
include on each Compliance Certificate delivered pursuant to Section 5.2(b)
reasonable detail showing compliance at the end of the applicable accounting
period with the restriction set forth in the preceding sentence. Should Adjusted
EBITDA of Parent and its Restricted Subsidiaries as reflected on the Compliance
Certificate be greater than or equal to $42,000,000 but less than $50,000,000,
from the date of delivery of such Compliance Certificate though the date of
delivery of a Compliance Certificate reflecting Adjusted EBITDA of Parent and
its Restricted Subsidiaries of at least $50,000,000 for the applicable
four-fiscal quarter period (such time period, a “Non-Compliance Period”),
(x) the Borrower shall prepay the Loans in an incremental principal amount equal
to $250,000 on each scheduled payment date identified on the amortization
schedule set forth in Section 2.3 occurring during such Non-Compliance Period
(which, for the avoidance of doubt, shall be in addition to any amounts required
to be paid pursuant to Section 2.3) and (y) during any such Non-Compliance
Period, all outstanding Loans shall bear interest at a rate per annum that is
equal to the rate that would otherwise be applicable thereto pursuant to
Sections 2.10(a) and 2.10(b) plus 0.50% (such additional amount to be paid in
cash on the applicable Interest Payment Date).

(b) Maximum Indebtedness. Commencing on the Third Amendment Effective Date, and
at all times thereafter, aggregate Indebtedness of Parent and its Restricted
Subsidiaries shall not exceed $270,000,000; provided that (x) any interest which
has been paid-in-kind, including with respect to the Second Lien Indebtedness
and (y) Indebtedness incurred or assumed under Section 6.2(b)(xii) shall not be
included when calculating the aggregate amount of Indebtedness; provided,
further, Indebtedness incurred in connection with a refinancing pursuant to
Sections 6.2(b)(i) or 6.2(b)(iv) shall not be included when calculating the
aggregate amount of Indebtedness outstanding until such refinancing has been
effectuated (provided such refinancing is effectuated within 45 days, or such
longer period of time as may be determined by the Required Lenders in their sole
discretion).

(c) Maximum Capital Expenditures. Parent and its Restricted Subsidiaries shall
not make aggregate Capital Expenditures in excess of (x) $18,000,000 during the
fiscal year ending December 31, 2009 and (y) $23,000,000 during the fiscal year
ending December 31, 2010; provided that any amounts not used in the prior fiscal
year shall be carried forward to the next succeeding fiscal year.”

 

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(s) Section 7 (Events of Default). Section 7 of the Term Loan Agreement is
hereby amended by (i) deleting the word “or” at the end of clause (j) thereto,
(ii) inserting the word “or” immediately after the semicolon in clause
(k) thereto, and (iii) inserting a new clause (l) after clause (k) thereto as
follows:

“(l) any provision of the Intercreditor Agreement (or the New Intercreditor
Agreement, as applicable), at any time for any reason other than as expressly
permitted hereunder or thereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party contests
in any manner the validity or enforceability of any provision of the
Intercreditor Agreement (or the New Intercreditor Agreement, as applicable); or
any Loan Party denies that it has any or further liability or obligation under
the Intercreditor Agreement (or the New Intercreditor Agreement, as applicable),
or purports to revoke, terminate or rescind any provision of the Intercreditor
Agreement (or the New Intercreditor Agreement, as applicable);”

(t) Section 8.3 (Exculpatory Provisions).

(i) Section 8.3 of the Term Loan Agreement is hereby amended by inserting
immediately prior to the period at the end of the first sentence thereof the
following:

“or, (iii) to the maximum extent not prohibited by law, liable for any special,
exemplary, punitive or consequential damages arising out of, in connection with,
or as a result of, this Agreement, any of the other Loan Documents or any
agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby.”

(ii) Section 8.3 of the Term Loan Agreement is hereby further amended by
inserting the following at the end thereof:

“No provision of this Agreement or any other Loan Document shall require the
Agents to expend or risk their own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or the exercise of
any of its rights or powers.

The Agents shall not be responsible or liable for any failure or delay in the
performance of its obligations under this Agreement or any other Loan Document
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of God; earthquakes;
fire; flood; terrorism; wars and other military disturbances; sabotage;
epidemics; riots; business interruptions; loss or malfunctions of utilities,
computer (hardware or software) or communication services; accidents; labor
disputes; acts of civil or military authority and governmental action.

The Agents shall not be required to qualify in any jurisdiction in which they
are not presently qualified.

The Agents shall not be responsible for providing, maintaining, monitoring or
preserving insurance on or the payment of taxes with respect to any of the
Collateral. The actions described in the immediately preceding sentence shall be
the responsibility of the Loan Parties.

The Agents shall not be responsible for (i) perfecting, maintaining, monitoring,

 

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preserving or protecting the security interest or lien granted under this
Agreement or other Loan Documents or (ii) the filing, re-filing, recording,
re-recording or continuing of any document, financing statement, mortgage,
assignment, notice, instrument of further assurance or other instrument in any
public office at any time or times.

The Agents’ duties hereunder and under this Agreement or any other Loan Document
are administrative only and it may, but shall not be required under any
circumstances to exercise discretion in the performance of its duties hereunder
or under the Loan Documents.”

(u) Section 8.10 (Authorization to Release Liens and Guarantees). Section 8.10
of the Term Loan Agreement is hereby amended by deleting such section in its
entirety and substituting in lieu thereof the following:

“The Administrative Agent is hereby irrevocably authorized by each of the
Lenders to effect any release of Liens or guarantee obligations contemplated by
Section 9.15 and shall not be responsible or liable for relying exclusively on
an Officer’s Certificate, unless the Administrative Agent has received an
objection to any such release pursuant to Section 9.15 from the Required
Lenders.”

(v) Section 9.2 (Notices). Section 9.2 of the Term Loan Agreement is hereby
amended by deleting the notice address given therein for the Administrative
Agent in its entirety and inserting the following in lieu thereof:

 

The Administrative Agent:   

The Bank of New York Mellon

600 East Las Colinas Blvd.

Suite 1300

Irving, TX 75039

Attention: Melinda Valentine/Vice President

Telephone: (972) 401-8500

Telecopy: (972) 401-8555

With a copy to (which shall

not constitute notice):

  

McGuire, Craddock & Strother, P.C.

500 North Akard

Suite 3550

Dallas, TX 75201

Attention: Jonathan Thalheimer

Telephone: (214) 954-6855

Telecopy: (214) 954-6868

(w) Section 9.5 (Payment of Expenses). Section 9.5(d) of the Term Loan Agreement
is hereby amended by deleting clause (iv) thereto in its entirety and
substituting in lieu thereof the following new clause (iv) prior to the comma:

“(iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, including, with respect to any
Non-Participating Lender, in connection with or arising out of any Permitted
Parent Assignment or Permitted Parent Loan Purchase, in each case, whether based
on contract, tort or any other theory, whether brought by any third party or by
the Borrower or any other Loan Party, and regardless of whether any Indemnitee
is a party thereto (all of the foregoing in this clause (d), collectively, the
“Indemnified Liabilities”)”.

 

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(x) Section 9.6 (Successors and Assigns; Participations and Assignments).
Section 9.6 of the Term Loan Agreement is hereby amended by inserting the
following new clauses (h) and (i) at the end thereof:

“(h) Any Assignor may at any time and from time to time assign to Parent or any
of its Affiliates (a “Permitted Parent Assignment”), all or any part of its
rights and obligations under this Agreement pursuant to an Assignment and
Acceptance, substantially in the form of Exhibit D with such changes as may be
necessary or advisable to give effect to this clause (h), executed by such
Assignee and Parent or any of its Affiliates and delivered to the Administrative
Agent for its acceptance and recording in the Register; provided that the
aggregate principal amount of all such assignments to Parent or any of its
Affiliates pursuant to this Section 9.6(h) shall not exceed $5,000,000 in the
aggregate in any calendar year. Any Loans acquired by a Parent or any of its
Affiliates pursuant to this Section 9.6(h) shall be cancelled and retired
immediately upon closing of such assignment (for avoidance of doubt, upon such
cancellation or retirement, the Loans so cancelled or retired shall be deemed
not to be outstanding and to have no principal amount for any purposes under
this Agreement). Upon such execution, delivery, acceptance and recording, from
and after the effective date determined pursuant to such Assignment and
Acceptance, the Assignor thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
Agreement. The Administrative Agent shall not be required to recognize a
Permitted Parent Assignment unless it has received a certificate from Parent
stating that such assignment is a Permitted Parent Assignment pursuant to this
Section 9.6(h). The Administrative Agent shall be entitled to rely, and shall
not incur any liability for relying on, such certificate.

(i) Parent and its Affiliates (collectively, the “Parent Purchaser”) shall be
permitted to purchase Loans under this clause (i) (a “Permitted Parent Loan
Purchase”) from Lenders at any time and from time to time, in one or more
transactions; provided that in connection with any Permitted Parent Loan
Purchase the Parent Purchaser must extend such offer to all Lenders to
participate in the Permitted Parent Loan Purchase in the manner proscribed in
Exhibit J. Any Loans purchased in connection with a Permitted Parent Loan
Purchase shall be cancelled and retired immediately upon closing of such
Permitted Parent Loan Purchase (for avoidance of doubt, upon such cancellation
or retirement, the Loans so cancelled or retired shall be deemed not to be
outstanding and to have no principal amount for any purposes under this
Agreement). Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to the relevant Assignment and
Acceptance, the applicable Lender shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
Agreement.”

(y) Section 9.7 (Adjustments; Set-Off). Section 9.7 of the Term Loan Agreement
is hereby amended by inserting the following parenthetical “(including in
connection with any Permitted Parent Assignment or Permitted Parent Loan
Purchase)” immediately after the phrase “Except to the extent that this
Agreement provides for payments to be allocated to a particular Lender,” in
clause (a) thereto.

(z) Section 9.15 (Release of Collateral and Guarantee Obligations).

(i) Section 9.15 of the Term Loan Agreement is hereby amended by deleting clause
(a) thereto in its entirety and inserting the following new clause (a) in lieu
thereof:

“(a) Notwithstanding anything to the contrary contained herein or in any other
Loan Document, upon request of the Borrower pursuant to an Officer’s Certificate
(i) setting

 

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forth the Collateral being Disposed of in such Disposition or the Person being
Disposed of in such Disposition and (ii) stating that the Collateral being
Disposed of in such Disposition or the Person being Disposed of in such
Disposition is being disposed of in compliance with the terms hereof, the
Administrative Agent shall ((i) without being required to give notice to, or
obtain the vote or consent of, any Lender, or any affiliate of any Lender that
is a party to any Specified Hedge Agreement in the case of any Disposition of
Collateral whose value, as determined by the Borrower in good faith, is less
than $2,500,000, or (ii) after delivery of such Officer’s Certificate to the
Lenders and without reasonable objection thereto by the Required Lenders
identifying, in reasonable detail, why such Disposition does not comply with the
terms of the Term Loan Agreement within 5 Business Days of receipt of such
Officer’s Certificate by the Administrative Agent, in the case of any
Disposition of Collateral whose value, as determined by the Borrower in good
faith, is $2,500,000 or greater) take such actions as shall be requested to
release its security interest in any Collateral being Disposed of in such
Disposition, and to release any guarantee obligations and any other obligations
under any Loan Document of any Person being Disposed of in such Disposition,
without representation, warranty, indemnity or recourse, and at the Borrower’s
sole cost and expense, to the extent necessary to permit consummation of such
Disposition in accordance with the Loan Documents. In addition, upon the request
of the Borrower pursuant to an Officer’s Certificate delivered in connection
with any Lingo Offering (i) setting forth the Lingo Subsidiary being released
and (ii) stating that such release is in compliance with the terms hereof, the
Administrative Agent shall (without notice to, or vote or consent of, any
Lender, or any affiliate of any Lender that is a party to any Specified Hedge
Agreement) take such actions as shall be required or reasonably requested by the
Borrower to evidence the release of the Lingo Subsidiary from its guaranty
obligations and any other obligations under the Loan Documents without
representation, warranty, indemnity or recourse and at the Borrower’s sole cost
and expense. The Administrative Agent shall be entitled to rely, and shall not
incur any liability for relying on, any such Officer’s Certificates.”

(ii) Section 9.15 of the Term Loan Agreement is hereby further amended by
deleting the first sentence in clause (b) thereto and inserting the following in
lieu thereof:

“Notwithstanding anything to the contrary contained herein or any other Loan
Document, upon request of the Borrower pursuant to an Officer’s Certificate when
all Obligations (other than obligations in respect of any Specified Hedge
Agreement) have been paid in full and all Commitments have terminated or
expired, upon request of the Borrower, the Administrative Agent shall (without
being required to give notice to, or obtain the vote or consent of, any Lender,
or any affiliate of any Lender that is a party to any Specified Hedge Agreement,
provided that Administrative Agent may prior to any such release obtain
confirmation that all such Obligations have been paid in full) take such actions
as shall be reasonably required to release its security interest in all
Collateral, without representation, warranty, indemnity or recourse, and at the
Borrower’s sole cost and expense, and to release all guarantee obligations,
without representation, warranty, indemnity or recourse, and at the Borrower’s
sole cost and expense under any Loan Document, whether or not on the date of
such release there may be outstanding Obligations in respect of Specified Hedge
Agreements. The Administrative Agent shall be entitled to rely, and shall not
incur any liability for relying on, any such Officer’s Certificates.”

(aa) Schedule 6.2(b)(xiii) to this Third Amendment is hereby added to the Term
Loan Agreement as new Schedule 6.2(b)(xiii) thereto.

 

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(bb) Exhibit J (Permitted Loan Purchase Procedures). The Term Loan Agreement is
hereby further amended by inserting the document attached as Exhibit B hereto as
a new Exhibit J thereto.

2. Waiver. The Lenders hereby waive any Default or Event of Default resulting
from or arising in connection with (a) the Proceedings, (b) the Borrower’s or
any Loan Parties’ participation in, or being subject to, the Proceedings,
(c) Parent, the Borrower or any of Borrower’s Significant Subsidiaries being
generally not able to, or being unable to, or admitting in writing its inability
to, pay its debts as they become due, in each case, on or prior to the Third
Amendment Effective Date, (d) the Borrower’s failure to deliver the documents
required by Section 5.1(a) of the Term Loan Agreement prior to the Third
Amendment Effective Date, (e) the Borrower’s failure to deliver the documents
required by Section 5.2(b) of the Term Loan Agreement as in effect prior to the
Third Amendment Effective Date, (f) the Borrower’s failure to deliver the
documents required by Section 5.2(c) of the Term Loan Agreement as in effect
prior to the Third Amendment Effective Date, (g) the failure to pay any annual
administrative fees owing to the Existing Agent due in 2009, (h) any failure of
any of Lingo Holdings, Inc., Lingo, Inc. and Lingo Network Services, Inc. to
comply with the provisions and requirements of Section 5.9 of the Term Loan
Agreement or of Parent or any Subsidiary of Parent to comply with any provisions
of any Loan Document requiring a pledge of the stock or delivery of the stock
certificates of Lingo Holdings, Inc., Lingo, Inc. and Lingo Network Services,
Inc. (provided that the waiver in this clause (h) shall cease to be effective
after the date which is thirty (30) days following the Third Amendment Effective
Date) and (i) any failure to deliver a notice of Default or Event of Default
relating to any of the foregoing clauses (a) through (h) or this clause (i).

3. Agency Resignation, Waiver, Consent and Appointment.

(a) As of the Third Amendment Effective Date, (i) the Existing Agent hereby
resigns as the Administrative Agent as provided under Section 8.9 (Successor
Administrative Agent) of the Term Loan Agreement and shall have no further
obligations under the Loan Documents in such capacity; (ii) the Required Lenders
hereby appoint The Bank of New York Mellon as successor Administrative Agent
under the Term Loan Agreement and the other Loan Documents and waive any notice
requirements with respect thereto under the Loan Documents; (iii) Parent, the
Borrower and Required Lenders hereby waive any notice requirement provided for
under the Loan Documents in respect of such resignation or appointment;
(iv) Parent, the Borrower and Required Lenders hereby consent to the appointment
of the Successor Agent; (v) The Bank of New York Mellon hereby accepts its
appointment as Successor Agent; (vi) the Successor Agent shall bear no
responsibility for any actions taken or omitted to be taken by the Existing
Agent or that otherwise occurred prior to the Third Amendment Effective Date and
(vii) each of the Existing Agent and the Borrower authorizes the Successor Agent
to file any Uniform Commercial Code assignments or amendments with respect to
the Uniform Commercial Code Financing Statements, mortgages, and other filings
in respect of the Collateral as the Successor Agent deems necessary or desirable
to evidence the Successor Agent’s succession as Administrative Agent under the
Term Loan Agreement and the other Loan Documents and each party hereto agrees to
execute any documentation reasonably necessary to evidence such succession;
provided that the Existing Agent shall bear no responsibility for any actions
taken or omitted to be taken by the Successor Agent under this clause (vii).

(b) The parties hereto hereby confirm that the Successor Agent succeeds to the
Term Loan Agreement and becomes vested with all of the rights, powers and duties
of the Administrative Agent under each of the Loan Documents, and the Existing
Agent is discharged from all of its duties, obligations and responsibilities as
the Administrative Agent under the Term Loan Agreement or the other Loan
Documents, in each case, as of the Third Amendment Effective Date.

 

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(c) The parties hereto hereby confirm that, as of the Third Amendment Effective
Date, all of the provisions of the Term Loan Agreement, including, without
limitation, Article 8 (The Agents), Section 9.5 (Payment of Expenses) and
Section 8.7 (Indemnification) to the extent they pertain to the Existing Agent,
continue in effect for the benefit of the Existing Agent, its sub-agents and
their respective affiliates in respect of any actions taken or omitted to be
taken by any of them while the Existing Agent was acting as Administrative Agent
and inure to the benefit of the Existing Agent.

(d) The Existing Agent hereby assigns to the Successor Agent each of the Liens
and security interests assigned to the Existing Agent under the Loan Documents
and the Successor Agent hereby assumes all such Liens, for its benefit and for
the benefit of the Secured Parties.

(e) On and after the Third Amendment Effective Date, all possessory collateral
held by the Existing Agent for the benefit of the Lenders shall be deemed to be
held by the Existing Agent as agent and bailee for the Successor Agent for the
benefit of the Lenders until such time as such possessory collateral has been
delivered to the Successor Agent. Notwithstanding anything herein to the
contrary, each Loan Party agrees that all of such Liens granted by any Loan
Party, shall in all respects be continuing and in effect and are hereby ratified
and reaffirmed by each Loan Party. Without limiting the generality of the
foregoing, any reference to the Existing Agent on any publicly filed document,
to the extent such filing relates to the liens and security interests in the
Collateral assigned hereby and until such filing is modified to reflect the
interests of the Successor Agent, shall, with respect to such liens and security
interests, constitute a reference to the Existing Agent as collateral
representative of the Successor Agent (provided, that the parties hereto agree
that the Existing Agent’s role as such collateral representative shall impose no
duties, obligations, or liabilities on the Existing Agent, including, without
limitation, any duty to take any type of direction regarding any action to be
taken against such Collateral, whether such direction comes from the Successor
Agent, the Required Lenders, or otherwise and the Existing Agent shall have the
full benefit of the protective provisions of Article 8 (The Agents) while
serving in such capacity). The Successor Agent agrees to take possession of any
possessory collateral delivered to the Successor Agent following the Third
Amendment Effective Date upon tender thereof by the Existing Agent.

4. Release of Lehman Commercial Paper Inc. Each of the Borrower and the other
Loan Parties hereby unconditionally and irrevocably waive all claims, suits,
debts, liens, losses, causes of action, demands, rights, damages or costs, or
expenses of any kind, character or nature whatsoever, known or unknown, fixed or
contingent, which any of them may have or claim to have against Lehman
Commercial Paper Inc. (“LCPI”) (in its capacity as Administrative Agent,
Collateral Agent, Syndication Agent or Arranger under the Loan Documents) or its
agents, employees, officers, affiliates, directors, representatives, attorneys,
successors and assigns (collectively, the “Released Parties”) to the extent
arising at any time on or before the Third Amendment Effective Date out of or in
connection with LCPI’s or Lehman Brothers Inc.’s capacity as Administrative
Agent, Collateral Agent or Arranger under the Loan Documents (collectively, the
“Claims”). Each of the Borrower and the other Loan Parties further agree forever
to refrain from commencing, instituting or prosecuting any lawsuit, action or
other proceeding against any Released Parties with respect to any and all of the
foregoing described waived, released, acquitted and discharged Claims and from
exercising any right of recoupment or setoff that it may have under a master
netting agreement or otherwise against any Released Party with respect to
Obligations under the Loan Documents. Each of the Released Parties shall be a
third party beneficiary of this Agreement. Notwithstanding anything herein to
the contrary, in no event shall this Section 4 release or be deemed to release
LCPI or any other Released Party from any claims, suits, debts, liens, losses,
causes of actions, damages, costs or expenses of any kind, character or nature
(i) arising under (a) this Third Amendment to the extent arising after the Third
Amendment Effective Date or (b) the ISDA Master Agreement (Multicurrency-Cross
Border), dated as of October 17, 2007, between Primus Telecommunications Canada
Inc. and Lehman Brothers Special Financing Inc., the Schedule thereto and

 

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the Credit Support Annex of even date therewith between such parties or the
guarantee obligations of Parent with respect thereto or (ii) which any of the
Lenders may have or claim to have against LCPI or any of the Released Parties.

5. Conditions to Effectiveness. This Third Amendment shall become effective on
and as of the earlier of the effective date of the Plan of Reorganization or the
first date following June 30, 2009 (the “Third Amendment Effective Date”) that
the following conditions precedent are satisfied:

(a) The Loan Parties shall have entered into control agreements in connection
with each deposit account and securities account (as each such term is defined
in the Uniform Commercial Code in the State of New York (the “UCC”)) with any
bank or securities intermediary in the United States held by such Loan Party
(other than those deposit accounts and securities accounts holding cash and
investment property in an aggregate amount not exceeding $500,000, accounts used
as a payroll or benefits account and Account No. 899660 maintained at Bank of
America, N.A.) giving control (as defined in Article 9 of the UCC) of such
accounts to the Successor Agent (“Control Agreements”);

(b) The Required Lenders shall have received an Officer’s Certificate from the
chief executive officer of the Borrower certifying (i) the accuracy of the of
the information provided in the schedules to the Loan Agreement (except as
supplemented by the Schedules attached to this Third Amendment) and the
information provided in the Schedules to this Third Amendment, (ii) all the
consents, authorizations, licenses and approvals required in the consummation of
the Plan of Reorganization and the execution, delivery and performance by the
Borrower and the validity against the Borrower of this Third Amendment and the
other Loan Documents have been obtained and remain in full force and effect (or
no such consents, authorizations, licenses and approvals are required) and
(iii) attaching execution copies of each of the Control Agreements required to
be entered into and certifying compliance with the requirements of Section 5(a)
of this Third Amendment;

(c) The Plan of Reorganization shall have been substantially consummated and
shall provide for this Third Amendment to become effective and this Third
Amendment shall have been approved by the Bankruptcy Court;

(d) Each of the Loan Parties and the Existing Agent and Successor Agent shall
have executed and delivered this Third Amendment;

(e) The Second Lien Indebtedness and the Intercreditor Agreement shall have been
amended such that the Second Lien Indebtedness is subordinated in right of
payment to the Loans, in substantially the form attached hereto as Exhibit A;

(f) Existing Agent and Successor Agent shall have confirmed in writing that each
of the tasks listed on Schedule I attached hereto (other than clause
(e) thereto) have been completed; provided that Successor Agent’s confirmation
shall not be a representation by Successor Agent as to the accuracy or
completeness of the items provided;

(g) The Successor Agent shall have received (i) all promissory notes evidencing
Indebtedness, in an amount greater than $100,000 per promissory note, owing by
any Subsidiary of the Borrower to Parent, the Borrower or any Subsidiary
Guarantor, together with appropriate indorsements with respect thereto, to the
extent such promissory notes and indorsements were not delivered to the
Administrative Agent on the Closing Date and (ii) all stock certificates
representing Capital Stock of its Subsidiaries (to the extent such Capital Stock
is certificated) required to be pledged pursuant to the Guarantee and Collateral
Agreement;

 

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(h) The Guarantors shall have delivered to the Agent an executed original of
Guarantors’ Consent and Agreement attached as Annex A to this Third Amendment;
and

(i) The Existing Agent shall have received from the Borrower payment, free and
clear of any recoupment or set-off, in immediately available funds of all
reasonable costs, expenses, accrued and unpaid fees and other amounts payable to
it as the Existing Agent pursuant to the Loan Documents (including reasonable
fees and expenses of counsel), set forth on Schedule II hereto, which shall
include an estimate of fees and expenses through the Third Amendment Effective
Date, in each case to the account specified on Schedule II hereto;

(j) The Successor Agent shall have confirmed in writing that it has received the
items set forth on Schedule III hereto; and

(k) The Successor Agent shall have received from the Borrower payment, free and
clear of any recoupment or set-off, in immediately available funds all fees and
expenses set forth in that Fee Schedule dated December 5, 2008 (including
reasonable, documented fees and expenses of counsel).

(l) Prior to the Third Amendment Effective Date, the Borrower shall deliver
Schedule 6.2(b)(xiii), which shall be added to the Term Loan Agreement as new
Schedule 6.2(b)(xiii) thereto.

6. Representations and Warranties of Agents.

(a) Exiting Agent hereby represents and warrants that it is legally authorized
to enter into and has duly executed and delivered this Agreement.

(b) Successor Agent hereby represents and warrants that it is legally authorized
to enter into and has duly executed and delivered this Agreement.

7. Representations and Warranties. Parent and the Borrower hereby represent and
warrant to the Administrative Agent and each Lender that after giving effect to
this Third Amendment:

(a) no Default or Event of Default has occurred and is continuing;

(b) each of the representations and warranties made by the Loan Parties in the
Loan Documents (other than those contained in Sections 3.7 (No Default), 3.8
(Ownership of Property; Liens) and 3.20 (Solvency)) are true and correct in all
material respects on and as of the Third Amendment Effective Date as though made
on the Third Amendment Effective Date (except to the extent that such
representations and warranties relate to a specific date);

(c) as of the Third Amendment Effective Date, (x) no Subsidiaries of Parent have
been designated, or are currently designated, as Unrestricted Subsidiaries under
the Term Loan Agreement and (y) except for Subsidiaries which account for, in
the aggregate, 5% or less of the consolidated assets of Parent and its
Subsidiaries and 5% or less of the consolidated revenue of Parent and its
Subsidiaries, each Domestic Subsidiary of the Borrower is a Subsidiary
Guarantor;

(d) except as set forth on Schedule IV attached hereto, which shall be provided
by the Borrower prior to the Third Amendment Effective Date, each of Parent, the
Borrower and its Subsidiaries has title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other Property, and none of such Property is subject to any
Lien other than a Permitted Lien;

 

22

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(e) subject to Permitted Liens and excluding deposit accounts not required to be
subject to control agreements, the Administrative Agent, for the benefit of the
Lenders, has a fully perfected first priority Lien on, and security interest in,
all right, title or interest of the Loan Parties in the Collateral required to
be pledged to the Lenders pursuant to the Loan Documents to the extent a Lien on
such Collateral may be perfected through Domestic Perfection Actions;

(f) Schedule V, which shall be provided by the Borrower prior to the Third
Amendment Effective Date, shall list all deposit accounts or securities accounts
held by the Loan Parties with any bank or securities intermediary in the United
States and each such deposit account and securities account (other than those
deposit accounts and securities accounts holding cash and investment property in
an aggregate amount not exceeding $500,000, accounts used as a payroll or
benefits account and Account No. 899660 maintained at Bank of America, N.A.) is
subject to Control Agreements;

(g) Schedule VI, which shall be provided by the Borrower prior to the Third
Amendment Effective Date, lists as of the last day of the most recently ended
month at least 30 days prior to the date hereof, all intercompany accounts
receivable, accounts payable and loan balances of the Loan Parties;

(h) all security interests created in favor of the Existing Agent for the
benefit of the secured parties as required under the Loan Documents are valid
security interests in the Collateral, as security for the Obligations. The
Borrower authorizes Successor Agent to file or affect all amendments and
assignments reasonably necessary or appropriate to transfer all such security
interests to Successor Agent, and the Borrower shall, within 60 days from the
date hereof, transfer all insurance policies that are in the name of the
Existing Agent to the Successor Agent; and

(i) (x) Schedule III contains a complete list of all possessory Collateral and
security filings related to the Collateral required to have been delivered to
the Existing Agent pursuant to the Guarantee and Collateral Agreement and
(y) the actions described in Schedule VII hereto have been performed prior to
the date hereof.

8. Further Assurances.

(a) Without limiting their obligations in any way under any of the Loan
Documents, the Borrower reaffirms and acknowledges its obligations to the
Successor Agent and the Lenders with respect to the Term Loan Agreement and the
other Loan Documents, and that following the Third Amendment Effective Date the
delivery of any agreements, instruments or any other document required pursuant
to the Loan Documents and any other actions taken or to be taken in accordance
with the Loan Documents, shall be to the reasonable satisfaction of Successor
Agent notwithstanding whether any of the foregoing was or were previously
satisfactory to the Existing Agent.

(b) Each of the Borrower and the Existing Agent agrees that, following the Third
Amendment Effective Date, it shall promptly furnish, at the Borrower’s expense,
additional releases, amendment or termination statements and such other
documents, instruments and agreements as are customary and may be reasonably
requested by the Successor Agent in order to effect and evidence more fully the
matters covered hereby.

(c) The Borrower shall reimburse the Existing Agent for all reasonable
out-of-pocket costs and expenses incurred by the Existing Agent in connection
with any actions taken pursuant to this Agreement.

 

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9. Effect of Agreement.

(a) The parties hereto acknowledge that Lehman shall have no obligation to
provide any further financial accommodations to or for the benefit of the
Borrower or its Affiliates pursuant to the Loan Documents.

(b) As of the Third Amendment Effective Date, the Borrower hereby agrees that
any payment to be made pursuant to the Term Loan Agreement, including, without
limitation, Section 2.13 (Pro Rata Treatment and Payments) of the Term Loan
Agreement, but excluding any payments in connection with any Permitted Parent
Assignment or Permitted Parent Loan Purchase, shall be made by wire transfer to
the following account for distribution to the Lenders in accordance with the
terms of the Loan Documents or to such other account specified in writing by
Successor Agent to the Borrower from time to time, with a copy to the Lenders:

 

Bank Name:    The Bank of New York ABA Number:    021-000-018 Account Name:   
BNYAS Agent Services Clearing Account Account Number:    8900415460 Reference:
   Primus Contact:    Tequlla English (972) 401-8569

10. Payment of Fees and Expenses. The Borrower agrees to pay or reimburse the
Lenders for all reasonable and documented expenses, including fees and expenses
of counsel, incurred in connection with the preparation, execution and delivery
of this Third Amendment, any other documents prepared in connection herewith and
the transactions contemplated hereby.

11. Reaffirmation; Limited Effect.

(a) All references to the Term Loan Agreement shall refer to the Term Loan
Agreement as amended by this Third Amendment. Except as expressly provided
hereby, all of the terms and provisions of the Term Loan Agreement and the other
Loan Documents are and shall remain in full force and effect. However, in the
event of any inconsistency between the terms of the Term Loan Agreement (as
amended by this Third Amendment) and the Guarantee and Collateral Agreement, the
terms of the Term Loan Agreement (as amended by this Third Amendment) shall
control and the Guarantee and Collateral Agreement shall be deemed to be amended
to conform to the terms of the Term Loan Agreement (as amended by this Third
Amendment). The amendments, waivers and releases contained herein shall not be
construed as a waiver or amendment of any other provision of the Term Loan
Agreement or the other Loan Documents or for any purpose except as expressly and
specifically set forth herein or a consent to any further or future action on
the part of the Borrower that would require the waiver or consent of the
Administrative Agent or the Lenders. Borrower hereby reaffirms its obligations
under the Loan Documents to which it is a party and agrees that all Loan
Documents to which it is a party remain in full force and effect and continue to
be legal, valid, and binding obligations enforceable in accordance with their
terms (as the same are amended by this Third Amendment) except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors’ rights generally or by equitable principles relating
to enforceability.

(b) Each party hereto hereby agrees that (i) this Third Amendment does not
impose on the Existing Agent affirmative obligations or indemnities not already
existing, as of the date of its petition commencing its proceeding under Chapter
11 of the Bankruptcy Code, and that could give rise to administrative expense
claims, and (ii) this Third Amendment is not inconsistent with the terms of the
Term Loan Agreement.

 

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12. GOVERNING LAW; Miscellaneous. THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective proper and duly authorized officers
as of the First Amendment Effective Date.

 

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED By:  

/s/ Thomas R. Kloster

Name:  

Thomas R. Kloster

Title:  

Chief Financial Officer

PRIMUS TELECOMMUNICATIONS HOLDING, INC. By:  

/s/ Thomas R. Kloster

Name:  

Thomas R. Kloster

Title:  

Chief Financial Officer

--------------------------------------------------------------------------------

Solely with respect to Sections 3, 4, 5, 6, 8, 9 and 10 of this Third Amendment,
the undersigned acknowledge and agree as of the date first written above.

 

LEHMAN COMMERCIAL PAPER INC. ,

as Existing Agent

By:  

/s/ Randall Braunfeld

Name:   Randall Braunfeld Title:   Authorized Signatory

THE BANK OF NEW YORK MELLON,

as Successor Agent

By:  

/s/ Melinda Valentine

Name:  

Melinda Valentine

Title:  

Vice President

 

2

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Exhibit A to Third Amendment

[Form of Intercreditor Agreement Amendment]

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Exhibit B to Third Amendment

Exhibit J to Term Loan Agreement

Permitted Parent Loan Purchase Procedures

This Exhibit is intended to summarize certain basic terms of the Permitted
Parent Loan Purchase procedures pursuant to and in accordance with the terms and
conditions of Section 9.6(i) of the Term Loan Agreement, of which this Exhibit
is a part. It is not intended to be a definitive list of all of the terms and
conditions of a Permitted Parent Loan Purchase, and all such terms and
conditions shall be set forth in the applicable offer procedures set for each
Permitted Parent Loan Purchase (the “Offer Documents”). The Administrative
Agent, or any of its affiliates may tender Return Bids and be a participating
Lender on the same terms and conditions set forth in this Exhibit and the
applicable Offer Document, and such participation may not be deemed a
recommendation to any Lender to submit a Return Bid or to take part in this or
any other offer.

Reference is made to the Term Loan Agreement dated as of February 18, 2005 (as
amended from time to time, the “Term Loan Agreement”), among Primus
Telecommunications Group, Incorporated, a Delaware corporation (the “Parent”),
Primus Telecommunications Holding, Inc., a Delaware corporation (the
“Borrower”), the several banks and other financial institutions or entities from
time to time parties thereto (the “Lenders”) and Bank of New York Mellon (as
successor to Lehman Commercial Paper Inc.), as Administrative Agent (the
“Administrative Agent”). Capitalized terms used herein but not defined herein
have the meanings given to such terms in the Loan Agreement.

Summary. Parent and its Affiliates (“Parent Purchaser”) may make one or more
offers to purchase Loans from Lenders (each such offer, an “Auction”) (each such
purchase, a “Discounted Purchase”) pursuant to the procedures described herein.
No Auction may be commenced if any other Auction has been previously commenced
and not yet completed, terminated or expired. Separate Auctions may not be
commenced on the same day.

Notice Procedures. Parent Purchaser will provide written notice in the form
attached hereto as Annex A to the Administrative Agent that the Parent Purchaser
desires to purchase Loans (each an “Auction Notice”). Each Auction Notice shall
specify:

(i) the maximum principal amount of outstanding Loans the Parent Purchaser is
willing to purchase in the Auction (which shall be no less than $250,000 and may
be in integral multiples of $250,000 in excess thereof (the “Auction Amount”);

(ii) the range of discounts (the “Discount Range”), expressed as a range of
prices per $1,000 of the Loans at issue, equal to a percentage of par of the
principal amount of the applicable Loans at which the Parent Purchaser would be
willing to purchase Loans in the Auction (i.e. a discount range of 20% to 40%
means a discount of 20% to 40% of par and, commensurately, a payment range of
60% (in the case of a 40% discount) to 80% (in the case of a 20% discount) of
par);

(iii) whether the Auction with be a Modified Dutch Auction, Dutch Auction or a
Variable Price Auction; and

(iv) the date on which the Auction will conclude, on which date Return Bids
(defined below) will be due by 1:00 p.m. New York time, as such date and time
may be extended (such time, the “Expiration Time”) for a period not exceeding
three Business Days upon notice by the Parent Purchaser to the Administrative
Agent not less than 24 hours before the original Expiration Time; provided,
however, that only one extension per Auction shall be permitted. An Auction
shall be regarded as a “Failed Auction” in the event that either (x) the Parent
Purchaser

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Exhibit B to Third Amendment

Exhibit J to Term Loan Agreement

 

withdraws such Auction in accordance with the terms hereof or (y) the Expiration
Time occurs with no Return Bids having been received. In the event of a Failed
Auction, the Parent Purchaser shall not be permitted to deliver a new Auction
Notice prior to the date occurring three Business Days after such withdrawal or
Expiration Time, as the case may be.

Reply Procedures. Each Lender holding Loans wishing to participate in such
Auction must by the date and time specified in the Auction Notice provide the
Administrative Agent with a written notice of participation in the form attached
hereto as Annex B (a “Return Bid”) which shall specify:

(i) a discount to par that must be expressed as a price per $1,000 of Loans (the
“Reply Discount”) within the Discount Range (in multiples of $5 per $1,000
principal amount); and

(ii) the principal amount of Loans, in an amount not less than $250,000 and may
be in integral multiples of $250,000 in excess thereof (but subject to rounding
requirements specified by the Administrative Agent), that such Lender would be
willing to offer for purchase at that Reply Discount (the “Reply Amount”).

A Lender may submit a Reply Amount that is less than the minimum amount and
incremental amount requirements described above only if the Reply Amount
comprises the entire amount of such Loans held by such Lender. Lenders may only
submit one Return Bid per Auction but each Return Bid may contain up to three
component bids, each of which may result in a separate Qualifying Bid (as
defined below) and each of which will not be contingent on any other component
bid submitted by such Lender resulting in a Qualifying Bid, but the sum of any
Lender’s bid(s) may not exceed the principal face amount of Loans held by it. In
addition to the Return Bid, the participating Lender must execute and deliver,
to be held by the Administrative Agent, the Assignment and Acceptance in the
form included in the Offer Document. The Parent and its Affiliates will have no
obligation to (and may not) purchase any Loans at a Reply Discount that is
outside the applicable Discount Range, nor will any Return Bids (including any
component bids specified therein) submitted at a Reply Discount that is outside
such applicable Discount Range be considered in any calculation of the
Applicable Discount, if applicable. A Lender failing to submit a Return Bid
shall be conclusively deemed to have irrevocably elected not to participate in
the Auction.

Modified Dutch Auction Procedures: Identification of Clearing Bid and
Determination of the Applicable Discount. Based on the Reply Discounts and Reply
Amounts received by the Administrative Agent, the Administrative Agent, in
consultation with the Parent Purchaser, will determine the applicable discount
(the “Modified Dutch Auction Applicable Discount”) for the Auction, which will
be the Reply Discount at which the Parent Purchaser can complete the Auction by
accepting and purchasing the full Auction Amount (or such lesser amount of Loans
for which the Parent Purchaser has received Return Bids within the Discount
Range). The Modified Dutch Auction Applicable Discount will be determined and
computed by adding the Reply Amounts at each Reply Discount within the Discount
Range, commencing with the Reply Amounts which are offered at the highest of
such Reply Discounts (i.e. a Reply Discount of 20% is higher than a Reply
Discount of 19%) and followed by Reply Amounts which are offered at each lesser
Reply Discount within the Discount Range in descending order towards par until
the aggregate principal amount of Loans covered by Return Bids within the
Discount Range reaches the Auction Amount or, if less, the aggregate amount of
Loans for which the Parent Purchaser has received Return Bids within the
Discount Range. No Return Bids will be accepted which specify a Reply Discount
less than the Modified Dutch Auction Applicable Discount. The Modified Dutch
Auction Applicable Discount so derived shall be applicable for all Lenders who
have offered to participate in the Auction and whose Return Bids (including any
component bid thereof) specified a

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Exhibit B to Third Amendment

Exhibit J to Term Loan Agreement

 

Reply Discount equal to or greater than the Modified Dutch Auction Applicable
Discount (each a “Qualifying Bid”). If no such Modified Dutch Auction Applicable
Discount for the full Auction Amount can be so derived, then the Modified Dutch
Auction Applicable Discount for all Reply Amounts shall be the least of the
Reply Discounts that is within the Discount Range (i.e. a Reply Discount of 18%
is the least of Reply Discounts of 20%, 19% and 18%).

Dutch Auction Procedures: Identification of Clearing Bid and Determination of
the Applicable Discount. Based on the Reply Discounts and Reply Amounts received
by the Administrative Agent, the Administrative Agent, in consultation with the
Parent Purchaser, will determine the applicable discount (the “Dutch Auction
Applicable Discount”) for the Auction, which will be the Reply Discount at which
the Parent Purchaser can complete the Auction by accepting and purchasing the
full Auction Amount (or such lesser amount of Loans for which the Parent
Purchaser has received Return Bids within the Discount Range). The Dutch Auction
Applicable Discount will be determined and computed by adding the Reply Amounts
at each Reply Discount within the Discount Range, commencing with the Reply
Amounts which are offered at the lowest of such Reply Discounts (i.e. a Reply
Discount of 19% is lower than a Reply Discount of 20%) and followed by Reply
Amounts which are offered at each greater Reply Discount within the Discount
Range in ascending order towards par until the aggregate principal amount of
Loans covered by Return Bids within the Discount Range reaches the Auction
Amount or, if less, the aggregate amount of Loans for which the Parent Purchaser
has received Return Bids within the Discount Range. No Return Bids will be
accepted which specify a Reply Discount greater than the Dutch Auction
Applicable Discount. The Dutch Auction Applicable Discount so derived shall be
applicable for all Lenders who have offered to participate in the Auction and
whose Return Bids (including any component bid thereof) specified a Reply
Discount equal to or less than the Dutch Auction Applicable Discount (each a
“Qualifying Bid”). If no such Dutch Auction Applicable Discount for the full
Auction Amount can be so derived, then the Dutch Auction Applicable Discount for
all Reply Amounts shall be the highest of the Reply Discounts that is within the
Discount Range (i.e. a Reply Discount of 20% is the highest of Reply Discounts
of 20%, 19% and 18%).

Variable Price Auction Procedures: Determination of the Applicable Discount.
Based on the Reply Discounts and Reply Amounts received by the Administrative
Agent, the Administrative Agent, in consultation with the Parent Purchaser, will
determine the applicable discount (the “Variable Price Auction Applicable
Discount” and, together with the Modified Dutch Auction Applicable Discount and
the Dutch Auction Applicable Discount, each an “Applicable Discount”) for the
Auction, which shall be, for each Lender submitting a Return Bid, the Reply
Discount identified by such Lender. Parent Purchaser shall accept Return Bids
(each a “Qualifying Bid”), giving priority to Return Bids with the lowest Reply
Discounts, until the full Auction Amount (or such lesser amount of Loans for
which the Parent Purchaser has received Return Bids within the Discount Range)
has been reached. Return Bids (including any component bid thereof) specifying
the lowest Reply Discounts within the Discount Range will be given absolute
priority, commencing with the Reply Amounts which are offered at the lowest of
such Reply Discounts (i.e. a Reply Discount of 19% is lower than a Reply
Discount of 20%) and followed by Reply Amounts which are offered at each higher
Reply Discount within the Discount Range in ascending order towards par until
the aggregate principal amount of Loans covered by Return Bids within the
Discount Range reaches the Auction Amount or, if less, the aggregate amount of
Loans for which the Parent Purchaser has received Return Bids within the
Discount Range.

Identification of Accepted Amounts and Acceptance of Bids; Proration. Once the
Applicable Discount for each Auction is determined, the Parent Purchaser shall
accept Return Bids (including any component bid thereof) (and commensurately
identify for purchase those Loans (or the respective portions thereof)
(“Qualifying Loans”)) offered by the Lenders whose Return Bids (or component
bids thereof) constitute Qualifying Bids, all at the Applicable Discount;
provided that if the aggregate principal amount of Qualifying Loans
(disregarding any interest and premium, if any, payable

--------------------------------------------------------------------------------

Exhibit B to Third Amendment

Exhibit J to Term Loan Agreement

 

thereon) would exceed the Auction Amount, the Parent Purchaser shall accept
Return Bids for purchase of Qualifying Loans all at the Applicable Discount
based on the respective principal amounts so offered by applying such respective
principal amounts (up to the Auction Amount (such amount being referred to as
the “Cap Amount”)) sequentially and pro-rata to the aggregate Reply Amounts
included in each Qualifying Bid at the level of each Reply Discount within the
Discount Range, until the aggregate principal amount of Qualifying Loans reaches
the Auction Amount or, if less, the aggregate amount of Loans for which the
Parent Purchaser has received Qualifying Bids. Such application shall be made at
each level of Reply Discounts without proration unless and until the aggregate
amount of Qualifying Loans exceed the Cap Amount, in which case the aggregate
Reply Amounts covered by Return Bids (or component bids thereof) specifying
Reply Discounts equal to the Applicable Discount shall be pro-rated to the
extent necessary so that the aggregate accepted bids do not exceed the Cap
Amount.

Notification Procedures. The Administrative Agent will calculate and post the
Applicable Discount and proration factor onto an internet site (including
IntraLinks or such other electronic workspace reasonably acceptable to the
Parent Purchaser) in accordance with the Administrative Agent’s standard
dissemination practices by 4:00 p.m. New York time on the same Business Day as
the date the Return Bids were due (as extended, if applicable). The
Administrative Agent will insert the amount of Loans to be assigned and the
applicable settlement date onto each applicable Assignment and Acceptance
received in connection with a Qualifying Bid. Upon request of the submitting
Lender, the Administrative Agent will promptly return any Assignment and
Acceptance received in connection with a Return Bid that is not a Qualifying
Bid.

Each Discounted Purchase shall be made within five Business Days of the date of
determination of the Applicable Discount, without premium or penalty, upon
irrevocable notice (each a “Discounted Purchase Notice”), delivered to the
Administrative Agent no later than 1:00 P.M. New York City time, three Business
Days prior to the date of such Discounted Purchase which notice shall specify
the date and amount of the Discounted Purchase and the Applicable Discount;
provided that if any Eurodollar Rate Loan is purchased on a date other than the
scheduled last day of the Interest Period applicable thereto, the Parent
Purchaser shall also pay any amounts owing pursuant to Section 2.16(c) of the
Term Loan Agreement. Upon receipt of any Discounted Purchase Notice the
Administrative Agent shall promptly notify each relevant Lender thereof. If any
Discounted Purchase Notice is given, the amount specified in such notice shall
be due and payable to the applicable Lenders on the date specified therein
together with accrued interest (on the par principal amount) to but not
including such date on the amount purchased.

Additional Procedures. Once initiated by an Auction Notice, the Parent Purchaser
may withdraw an Auction only in the event that, as of such time, no Return Bid
has been received by the Administrative Agent. Furthermore, in connection with
any Auction, upon submission by a Lender of a Return Bid, such Lender will not
have any withdrawal rights. Any Return Bid (including any component bid thereof)
delivered to the Administrative Agent may not be modified, revoked, terminated
or cancelled by a Lender.

All questions as to the form of documents and validity and eligibility of Loans
that are the subject of an Auction may be determined by the Administrative
Agent, in consultation with the Parent Purchaser, and their determination will
be final and binding. The Administrative Agent’s interpretation of the terms and
conditions of the Offer Document, in consultation with the Parent Purchaser,
will be final and binding.

This Exhibit J shall not require the Parent Purchaser to initiate any Auction.

--------------------------------------------------------------------------------

Exhibit B to Third Amendment

Exhibit J to Term Loan Agreement

 

Form of Auction Notice

Bank of New York Mellon, as Administrative Agent

[Address Line 1]

[Mail Code Information]

[Address Line 2]

Attention:

Telecopier:

Telephone:

Ladies and Gentlemen:

Reference is made to the Term Loan Agreement dated as of February 18, 2005 (as
amended from time to time, the “Term Loan Agreement”), among Primus
Telecommunications Group, Incorporated, a Delaware corporation (the “Parent”),
Primus Telecommunications Holding, Inc., a Delaware corporation (the
“Borrower”), the several banks and other financial institutions or entities from
time to time parties thereto (the “Lenders”) and Bank of New York Mellon (as
successor to Lehman Commercial Paper Inc.), as Administrative Agent. Capitalized
terms used herein but not defined herein have the meanings given to such terms
in the Term Loan Agreement.

The Parent and/or its Affiliates (the “Parent Purchaser”) hereby gives notice to
the Lenders that it desires to conduct the following Auction:

Loans to be Purchased:

Auction Amount: $            

Discount Range: Not less than $             nor greater than $             per
$1,000 principal amount of Loans.

The Parent Purchaser acknowledges that this Auction Notice may not be withdrawn
other than in accordance with the terms of the Auction. The Auction shall be
consummated in accordance with the Auction Procedures with each Return Bid due
by 1:00 PM (new York City time) on             , 20    .

 

Very truly yours, [PARENT PURCHASER NAME] By:  

 

Name:   Title:  

--------------------------------------------------------------------------------

Exhibit B to Third Amendment

Exhibit J to Term Loan Agreement

 

Form of Return Bid

Bank of New York Mellon, as Administrative Agent

[Address Line 1]

[Mail Code Information]

[Address Line 2]

Attention:

Telecopier:

Telephone:

Ladies and Gentlemen:

Reference is made to the Term Loan Agreement dated as of February 18, 2005 (as
amended from time to time, the “Term Loan Agreement”), among Primus
Telecommunications Group, Incorporated, a Delaware corporation (the “Parent”),
Primus Telecommunications Holding, Inc., a Delaware corporation (the
“Borrower”), the several banks and other financial institutions or entities from
time to time parties thereto (the “Lenders”) and Bank of New York Mellon (as
successor to Lehman Commercial Paper Inc.), as Administrative Agent. Capitalized
terms used herein but not defined herein have the meanings given to such terms
in the Term Loan Agreement.

The undersigned Lender hereby gives notice of its participation in the Auction
by submitting the following Return Bid:1

 

Reply Discount

(price per $1,000)

   Reply Amount US $      US $   US $      US $   US $      US $  

The undersigned Lender acknowledges and agrees that (i) Parent and its
Affiliates currently may have, and later may come into possession of,
information regarding Parent and its Subsidiaries, or the Obligations that is
not known to such Lender and that may be material to a decision to enter into a
sale transaction (any such information, “Excluded Information”), (ii) such
Lender has determined to enter into such transaction notwithstanding its lack of
knowledge of the Excluded Information, and (iii) none of Parent, the Borrower
nor any of their Affiliates shall have any liability to such selling Lender or
its successors or assigns, and such selling Lender to the maximum extent
permitted by law waives and releases any claims it may have against Parent, the
Borrower and their Affiliates, with respect to the nondisclosure of the Excluded
Information, now or in the future.

The undersigned Lender further acknowledges that the submission of this Return
Bid obligates the Lender to tender the entirety or its pro-rata portion of the
Reply Amount in accordance with the Auction Procedures, as applicable.

 

 

1

The Lender may submit up to three component bids but need not submit more than
one. The sum of the Lender’s bid(s) may not exceed the aggregate principal face
amount of Term Loans held by it.

--------------------------------------------------------------------------------

Very truly yours, [LENDER NAME]] By:  

 

Name:   Title:   [Lender Notice Address]

--------------------------------------------------------------------------------

Annex A

GUARANTORS’ CONSENT AND AGREEMENT

As an inducement to the Administrative Agent to execute, and in consideration of
the Administrative Agent’s execution of, the Third Amendment to the Term Loan
Agreement dated as of the Third Amendment Effective Date (the “Third
Amendment”), the undersigned hereby consent to the Third Amendment and agree
that the Third Amendment shall in no way release, diminish, impair, reduce or
otherwise adversely affect the obligations and liabilities of the undersigned
under the Guarantee and Collateral Agreement executed by the undersigned in
connection with the Term Loan Agreement, or under any Loan Documents,
agreements, documents or instruments executed by the undersigned to create
liens, security interests or charges to secure any of the Obligations (as
defined in the Term Loan Agreement), all of which are and remain in full force
and effect. The undersigned further represent and warrant to the Administrative
Agent that after giving effect to this Third Amendment (a) no Default or Event
of Default has occurred and is continuing; (b) each of the representations and
warranties made by the undersigned in the Loan Documents (other than those
contained in Sections 3.7 (No Default), 3.8 (Ownership of Property; Liens) and
3.20 (Solvency)) are true and correct in all material respects on and as of the
Third Amendment Effective Date as though made on the Third Amendment Effective
Date (except to the extent that such representations and warranties relate to a
specific date); (c) except as set forth on Schedule IV to the Third Amendment,
the undersigned has title in fee simple to, or a valid leasehold interest in,
all its real property, and good title to, or a valid leasehold interest in, all
its other Property, and none of such Property is subject to any Lien other than
a Permitted Lien; (d) subject to Permitted Liens and excluding deposit accounts
not required to be subject to control agreements, the Administrative Agent, for
the benefit of the Lenders, has a fully perfected first priority Lien on, and
security interest in, all right, title or interest of the undersigned in the
Collateral required to be pledged by the undersigned to the Lenders pursuant to
the Loan Documents to the extent a Lien on such Collateral may be perfected
through Domestic Perfection Actions; and (e) all security interests created by
the undersigned in favor of the Existing Agent for the benefit of the secured
parties as required under the Loan Documents are valid security interests in the
Collateral, as security for the Obligations. Guarantors hereby irrevocably
release the Administrative Agent and the Lenders from any liability for actions
or omissions in connection with the Loan Documents prior to the date of the
Third Amendment. This Guarantors’ Consent and Agreement shall be binding upon
the undersigned and their respective successors and assigns, and shall inure to
the benefit of Administrative Agent and its successors and assigns. This
Guarantors’ Consent and Agreement may be executed by facsimile and in multiple
counterparts, each of which shall constitute a fully executed original.

 

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

PRIMUS TELECOMMUNICATIONS, INC. By:  

 

Name:  

 

Title:  

 

PRIMUS TELECOMMUNICATIONS INTERNATIONAL, INC. By:  

 

Name:  

 

Title:  

 

TRESCOM INTERNATIONAL, INC. By:  

 

Name:  

 

Title:  

 

TRESCOM U.S.A., INC. By:  

 

Name:  

 

Title:  

 

LEAST COST ROUTING, INC. By:  

 

Name:  

 

Title:  

 

iPRIMUS USA, INC. By:  

 

Name:  

 

Title:  

 

 

--------------------------------------------------------------------------------

iPRIMUS.COM, INC. By:  

 

Name:  

 

Title:  

 

PRIMUS TELECOMMUNICATIONS IHC, INC. By:  

 

Name:  

 

Title: