Exhibit 10.2

 

THIS AGreement IS SUBJECT TO THE TERMS OF AN INTERCREDITOR AND SUBORDINATION
AGREEMENT DATED January 25, 2016, AS SUCH AGREEMENT MAY FROM TIME TO TIME BE
AMENDED, RESTATED OR OTHERWISE MODIFIED (OR ANY SUCCESSOR AGREEMENT WHICH
REPLACES AND REFERENCES SUCH AGREEMENT) by and between Cerberus Business
Finance, LLC, a Delaware limited liability company, in its capacity as
collateral agent and administrative agent under and pursuant to the Original
Senior Loan Agreement (as defined therein), NewSpring Mezzanine Capital III,
L.P., a Delaware limited partnership, in its capacity as collateral agent for
the Investors, Otelco Inc. and each other obligor a party thereto from time to
time, and each holder hereof by its acceptance hereof shall be bound by the
provisions of such intercreditor and subordination agreement.

 

SUBORDINATED LOAN AGREEMENT

 

BY AND among

 

NEWSPRING mezzanine capital III, L.P. FOR ITSELF AS AN INVESTOR

 

and IN ITS CAPACITY AS COLLATERAL AGENT,

 

THE OTHER Investors party hereto,

 

otelco inc., A DELAWARE CORPORATION (THE “company”),

 

AND THE SUBSIDIARIES OF THE COMPANY SET FORTH ON APPENDIX I HERETO

(COLLECTIVELY AS BORROWERS)

 

January 25, 2016

 

 

 

 

TABLE OF CONTENTS

 

      Page         Article 1 Definitions 1           Section 1.1. Definitions 1
          Section 1.2. Interpretation 26         Article 2 Loan 27          
Section 2.1. The Loan 27           Section 2.2. Promissory Note 27          
Section 2.3. Payments of Principal 27           Section 2.4. Payment of Interest
27           Section 2.5. Default and Remedies 28           Section 2.6.
Payments 28           Section 2.7. Optional Prepayments 28           Section
2.8. Mandatory Prepayments 28           Section 2.9. Prepayment Premium 29      
    Section 2.10. Joint and Several Obligations 29           Section 2.11.
Administrative Borrower 29           Section 2.12. Increased Costs. 30          
Section 2.13. Taxes. 30           Section 2.14. Mitigation Obligations;
Replacement of Investors. 33           Section 2.15. AHYDO Catch-Up Payments 34
        Article 3 Representations and Warranties of the Borrowers 34          
Section 3.1. Organization, Good Standing, Etc 34           Section 3.2.
Authorization, Etc 35           Section 3.3. Governmental Approvals 35          
Section 3.4. Enforceability of Loan Documents 36           Section 3.5.
Capitalization 36           Section 3.6. Litigation 36           Section 3.7.
Financial Statements. 37           Section 3.8. Compliance with Law, Etc 37    
      Section 3.9. ERISA 37           Section 3.10. No Violation 38

 

 

 

 

  Section 3.11. Regulations T, U and X 38           Section 3.12. Nature of
Business. 38           Section 3.13. Adverse Agreements, Etc 38          
Section 3.14. Permits, Etc 39           Section 3.15. Properties. 39          
Section 3.16. Employee and Labor Matters 40           Section 3.17.
Environmental Matters 40           Section 3.18. Insurance 41           Section
3.19. Use of Proceeds 41           Section 3.20. Solvency 41           Section
3.21. Intellectual Property 41           Section 3.22. Material Contracts 41    
      Section 3.23. Governmental Regulation 42           Section 3.24. Customers
and Suppliers 42           Section 3.25. SBA Forms and Representations 42      
    Section 3.26. Statements and Other Documents Not Misleading 42          
Section 3.27. Foreign Assets Control Regulations, Etc. 43           Section
3.28. Full Disclosure. 43           Section 3.29. Anti-Bribery and
Anti-Corruption Laws 44           Section 3.30. Taxes. 44           Section
3.31. Senior Credit Facility 45         Article 4 Representations and Warranties
of the Investors 45           Section 4.1. Investor Loan Representations and
Warranties 45           Section 4.2. Non-Contravention 45           Section 4.3.
No Conflict of Interest 45           Section 4.4. Investment Representations 46
        Article 5 Conditions Precedent to Closing 46           Section 5.1.
Conditions Precedent to Execution 46           Section 5.2. Conditions Precedent
to Funding 48           Section 5.3. Conditions Subsequent to Effectiveness 51  
      Article 6 Survival of Representations, Warranties and Agreements;
Indemnification; Fees and Expenses 52           Section 6.1. Survival of
Representations, Warranties and Agreements 52

 

-ii- 

 

 

  Section 6.2. Indemnification. 52           Section 6.3. Fees and Expenses. 53
        Article 7 Affirmative Covenants 53           Section 7.1. Reporting
Requirements 53           Section 7.2. Additional Borrowers, Guarantors and
Collateral Security 57           Section 7.3. Compliance with Laws; Payment of
Taxes. 58           Section 7.4. Preservation of Existence, Etc 59          
Section 7.5. Keeping of Records and Books of Account 59           Section 7.6.
Inspection Rights 59           Section 7.7. Maintenance of Properties, Etc 59  
        Section 7.8. Maintenance of Insurance 60           Section 7.9.
Obtaining of Permits, Etc. 60           Section 7.10. Environmental 60          
Section 7.11. Fiscal Year 61           Section 7.12. Landlord Waivers;
Collateral Access Agreements 61           Section 7.13. After Acquired Real
Property 61           Section 7.14. Anti-Bribery and Anti-Corruption Laws 61    
      Section 7.15. Investor Meetings 61           Section 7.16. Cash Management
Arrangements and Other Collateral Matters 62           Section 7.17. Rights in
Respect of Board of Directors of Company. 63           Section 7.18. Further
Assurances 63         Article 8 Negative Covenants 63           Section 8.1.
Liens, etc 63           Section 8.2. Indebtedness 64           Section 8.3.
Fundamental Changes; Dispositions 64           Section 8.4. Change in Nature of
Business 64           Section 8.5. Loans, Advances, Investments, Etc 65        
  Section 8.6. Sale and Leaseback Transactions 65           Section 8.7. Capital
Expenditures 65           Section 8.8. Restricted Payments 65           Section
8.9. Federal Reserve Regulations 65           Section 8.10. Transactions with
Affiliates 65

 

-iii- 

 

 

  Section 8.11. Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries 65           Section 8.12. Limitations on Negative
Pledges 66           Section 8.13. Modifications of Indebtedness, Organizational
Documents and Certain Other Agreements; Etc. 67           Section 8.14.
Investment Company Act of 1940 68           Section 8.15. ERISA 68          
Section 8.16. Environmental 68           Section 8.17. Accounting Methods 68    
      Section 8.18. No Excess Cash 68           Section 8.19. Anti-Bribery and
Anti-Corruption Laws 69           Section 8.20. Terrorism Sanctions Regulations
69           Section 8.21. Financial Covenants 69         Article 9 Default
Provisions 71           Section 9.1. Monetary Defaults 71           Section 9.2.
Representations and Warranties 71           Section 9.3. Covenants 71          
Section 9.4. Other Breaches 72           Section 9.5. Indebtedness 72          
Section 9.6. Insolvency; Creditors’ Process; Dissolution 72           Section
9.7. Validity and Enforceability of Loan Documents 72           Section 9.8.
Security Documents 73           Section 9.9. Judgments 73           Section
9.10. Discontinuation of Business 73           Section 9.11. Damage to
Collateral 73           Section 9.12. Criminal Activity 73           Section
9.13. ERISA 73           Section 9.14. Cross-Acceleration 74           Section
9.15. Loss of Subsidy or Reimbursement Revenue 74           Section 9.16. Change
of Control 74         Article 10 Remedies 74           Section 10.1.
Acceleration 74           Section 10.2. Post Default Interest 75

 

-iv- 

 

 

  Section 10.3. Costs 75           Section 10.4. Remedies Non-Exclusive 75      
    Section 10.5. Proceeds of Remedies 75         Article 11 Agency Provisions
76           Section 11.1. Appointment and Authorization of Collateral Agent 76
          Section 11.2. Delegation of Duties 76           Section 11.3.
Liability of Collateral Agent 76           Section 11.4. Reliance by Collateral
Agent 77           Section 11.5. Notice of Default 77           Section 11.6.
Investment Decisions; Disclosure of Information by Collateral Agent 77          
Section 11.7. Indemnification of Collateral Agent 78           Section 11.8.
Collateral Agent in its Individual Capacity 79           Section 11.9. Successor
Collateral Agent 79         Article 12 Miscellaneous 79           Section 12.1.
Notices 79           Section 12.2. Binding Agreement; Assignment 80          
Section 12.3. Amendment 81           Section 12.4. Consents and Waivers 82      
    Section 12.5. Governing Law; Consent to Jurisdiction; Waiver of Trial by
Jury. 82           Section 12.6. Prior Agreements 83           Section 12.7.
Counting of Days; Payments on Business Days 83           Section 12.8. Captions
84           Section 12.9. Headings 84           Section 12.10. Counterparts 84
          Section 12.11. Confidentiality 84           Section 12.12. Interest
and Charges Not to Exceed Maximum Allowed by Law 84

 

Appendix:

 

Appendix I: Borrowers Appendix II: Investors and Note Amounts

 

Exhibits:

 

Exhibit A: Form of Subordinated Promissory Note

 

-v- 

 

 

Exhibit B: Form of Automatic Debit Authorization Exhibit C: Form of Joinder
Agreement

 

Schedules:

 

Schedule 1.01 (A) Facilities Schedule 1.01 (B) Key Management Schedule 1.01 (C)
PUC Restricted Subsidiaries Schedule 2.6 Investor Wire Instructions Schedule 3.1
Organization Schedule 3.3 Communications Licenses and Governmental
Authorizations Schedule 3.5 Capitalization; Subsidiaries Schedule 3.6 Litigation
Schedule 3.9 ERISA Schedule 3.12 Nature of Business Schedule 3.17 Environmental
Matters Schedule 3.18 Insurance Schedule 3.21 Intellectual Property Schedule
3.22 Material Contracts Schedule 3.23 Government Regulation Schedule 7.16 Cash
Management Accounts Schedule 8.1 Existing Liens Schedule 8.2 Existing
Indebtedness Schedule 8.5 Existing Investments Schedule 8.11 Limitations on
Dividends and Other Payment Restrictions

 

-vi- 

 

 

SUBORDINATED LOAN AGREEMENT

 

THIS SUBORDINATED LOAN AGREEMENT (the “Agreement”) is dated this 25th day of
January, 2016, by and among OTELCO INC., a Delaware corporation (the “Company”),
and the Subsidiaries of the Company set forth on Appendix I hereto (together
with Company, each a “Borrower” or “Loan Party” and collectively the “Borrowers”
or “Loan Parties”) and NEWSPRING MEZZANINE CAPITAL III, L.P., a Delaware limited
partnership (together with its successors and assigns, “NewSpring”), each other
Person from time to time party hereto as an investor (together with NewSpring,
each, an “Investor” and collectively the “Investors”) and NewSpring in its
capacity as collateral agent for the Investors (together with its successors and
assigns, “Collateral Agent”) under the terms of Article 11 hereof.

 

BACKGROUND

 

The Borrowers desire to obtain from the Investors a senior subordinated term
loan in an original principal amount set forth on Appendix II (the “Loan”) in
the form of a senior subordinated promissory note, and the Investors are willing
to provide the Loan to the Borrowers on the terms and pursuant to the conditions
set forth herein, including but not limited to the Borrowers entering into
security documents in favor of the Collateral Agent, for the benefit of the
Investors.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises set forth
herein, the parties hereto, intending to be legally bound, agree as follows:

 

Article 1

Definitions

 

Section 1.1.          Definitions. Unless the context otherwise requires, the
following terms shall have the following meanings for purposes of this
Agreement:

 

“AHYDO Catch-Up Payment” has the meaning specified therefor in Section 2.5.

 

“Act of Dissolution” when used in reference to any Person (other than an
individual) means the occurrence of any action initiating, or any event that
results in, the dissolution, liquidation, winding-up or termination of such
Person.

 

“Additional Amount” has the meaning given to it in Section 2.13(b) hereof.

 

“Additional Investor” has the meaning given to it in Section 12.2 hereof.

 

“Administrative Borrower” means the Company.

 

“Affiliate”, when used in reference to any Person, means any Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person in question. For
purposes of this definition, “control” (including, with correlative meaning, the
terms “controlled by” and “under common control with”), as used with respect to
a Person, means (i) owning or having the power to vote, directly or indirectly,
securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person and entitled to cast more
than 10% of such votes, or (ii) the possession, directly or indirectly, of the
power to direct or cause the direction of management

 

 

 

 

policies of such Person, whether through ownership of voting securities, by
contract or otherwise.

 

“Anti-Corruption Laws” has the meaning specified therefor in Section 3.30.

 

“Anti-Terrorism Law” means any Requirement of Law related to money laundering or
financing terrorism including the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (“USA PATRIOT
Act”) of 2001 (Title III of Pub. L. 107-56), the Currency and Foreign
Transactions Reporting Act (also known as the “Bank Secrecy Act”, 31 U.S.C. §§
5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959), the Trading With the
Enemy Act (50 U.S.C. § 1 et seq., as amended) and Executive Order 13224
(effective September 24, 2001).

 

“Authorized Officer” means, with respect to any Person, the chief executive
officer, chief operating officer, chief financial officer, treasurer or other
financial officer performing similar functions, president or senior vice
president of such Person.

 

“Board of Directors” means with respect to (a) any corporation, the board of
directors of the corporation or any committee thereof duly authorized to act on
behalf of such board, (b) a partnership, the board of directors of the general
partner of the partnership, (c) a limited liability company, the managing member
or members or any controlling committee or board of directors of such company or
the sole member or the managing member thereof, and (d) any other Person, the
board or committee of such Person serving a similar function.

 

“Business Day” means any day other than a Saturday, a Sunday or any other day
which is considered a federal holiday or on which banks in the Commonwealth of
Pennsylvania or in New York City are closed.

 

“Capital Expenditure” means, with respect to any Person for any period, the sum
of (a) the aggregate of all expenditures by such Person and its Subsidiaries
during such period that in accordance with GAAP are or should be included in
“property, plant and equipment” or in a similar fixed asset account on its
balance sheet, whether such expenditures are paid in cash or financed, including
all Capitalized Lease Obligations that are paid or due and payable during such
period and (b) to the extent not covered by clause (a) above, the aggregate of
all expenditures by such Person and its Subsidiaries during such period to
acquire by purchase or otherwise the business or fixed assets of, or the Equity
Interests of, any other Person.

 

“Capital Lease Obligations” means, with respect to any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP;
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.

 

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case, maturing within six months from the date of acquisition thereof; (b)
commercial paper, maturing not more than 270 days after the date of issue rated
P 1 by Moody’s or A 1 by Standard & Poor’s; (c) certificates of deposit maturing
not more than 270 days after the date of issue, issued by commercial banking
institutions and money market or demand deposit accounts maintained at
commercial banking

 

 -2- 

 

 

institutions, each of which is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$500,000,000; (d) repurchase agreements having maturities of not more than 90
days from the date of acquisition which are entered into with major money center
banks included in the commercial banking institutions described in clause (c)
above and which are secured by readily marketable direct obligations of the
United States Government or any agency thereof; (e) money market accounts
maintained with mutual funds having assets in excess of $2,500,000,000, which
assets are primarily comprised of Cash Equivalents described in another clause
of this definition; and (f) marketable tax exempt securities rated A or higher
by Moody’s or A+ or higher by Standard & Poor’s, in each case, maturing within
270 days from the date of acquisition thereof.

 

“Cash Management Accounts” means the bank accounts of each Loan Party maintained
at one or more Cash Management Banks listed on Schedule 7.16.

 

“Cash Management Bank” has the meaning specified therefor in Section 7.16.

 

“Cerberus Intercreditor Agreement” has the meaning set forth in Section 5.1(h)
hereof.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or United States or foreign
regulatory authorities, in each case pursuant to Basel III, shall in each case
be deemed to be a “Change in Law”, regardless of the date enacted, adopted or
issued.

 

“Change of Control” means each occurrence of any of the following:

 

(a)          the acquisition, directly or indirectly, by any person or group
(within the meaning of Section 13(d)(3) of the Exchange Act) of beneficial
ownership of more than 35% of the aggregate outstanding voting or economic power
of the Equity Interests of the Company;

 

(b)          during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Company was approved by
a vote of at least a majority of the directors of the Company then still in
office who were either directors at the beginning of such period, or whose
election or nomination for election was previously approved) cease for any
reason to constitute a majority of the Board of Directors of the Company;

 

(c)          the Company shall cease to have beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of 100% of the aggregate voting or economic
power of the Equity Interests of each other Loan Party and each of its
Subsidiaries (other than in connection with any transaction permitted pursuant
to Section 7.02(c)(i)), free and clear of all Liens (other than Permitted
Specified Liens); or

 

 -3- 

 

 

(d)          a “Change of Control” (or any comparable term or provision) under
any documents governing any Equity Interests of the Company or any of its
Subsidiaries or any loan documents evidencing Indebtedness of the Company of any
or its Subsidiaries in excess of $1,500,000.

 

“Claim” means any claim, demand, suit, litigation, arbitration, investigation,
action or proceeding by or before any Governmental Authority seeking penalties,
monetary damages, equitable relief or compliance with any Law under any theory,
including those based on theories of contract, tort, equity, statutory
liability, strict liability, employer liability, premises liability, product
liability or breach of warranty.

 

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

 

“Collateral” means all Property of the Borrowers, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.

 

“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, proceeds of cash sales, rental proceeds,
and tax refunds).

 

“Communications Laws” means, collectively, (a) the Communications Act of 1934,
as amended, and the rules, orders, regulations and other applicable requirements
of the FCC promulgated thereunder, as from time to time in effect and applicable
to the Telecommunications Business, (b) the Copyright Act of 1976, as amended,
and the rules, orders, regulations and other applicable requirements of the
Copyright Office promulgated thereunder, as from time to time in effect and
applicable to the Telecommunications Business, (c) the laws of any state
governing or regulating the provision of any telecommunications services offered
as part of the Telecommunications Business, (d) the rules, orders, regulations
and other applicable requirements of any PUC as from time to time in effect and
applicable to the Telecommunications Business and (e) the ordinances, rules,
orders, regulations agreements and other applicable requirements of any
Franchising Authority as from time to time in effect and applicable to the
Telecommunications Business.

 

“Communications License(s)” means any license, authorization, certification,
waiver or permit required from the FCC, any PUC, any Franchising Authority or
any other relevant Governmental Authority acting under applicable law or
regulations pertaining to or regulating the Telecommunications Business of the
Loan Parties, including any FCC License, any PUC Authorization and any
Franchise.

 

“Company” means Otelco Inc., a Delaware corporation.

 

“Company Group” means, collectively, each of the Borrowers and each of their
direct and indirect Subsidiaries.

 

“Compliance Certificate” has the meaning set forth in Section 7.1(d).

 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

 

“Consolidated EBITDA” means, with respect to any Person for any period:

 

(a)          the Consolidated Net Income of such Person for such period,

 

plus

 

 -4- 

 

 

(b)          without duplication, the sum of the following amounts for such
period to the extent deducted in the calculation of Consolidated Net Income for
such period:

 

(i)          any provision for United States federal income taxes or other taxes
measured by net income,

 

(ii)         Consolidated Net Interest Expense,

 

(iii)        any loss from extraordinary items,

 

(iv)        any depreciation and amortization expense,

 

(v)         any aggregate net loss on the Disposition of property (other than
accounts and Inventory) outside the ordinary course of business,

 

(vi)        any non-recurring fees, expenses and other charges incurred in
connection with the making of Permitted Investments, the incurrence of Permitted
Indebtedness or the consummation of any acquisition permitted under this
Agreement; and

 

(vii)       any other non-cash expenditure, charge or loss for such period
(other than any non-cash expenditure, charge or loss relating to write-offs,
write-downs or reserves with respect to accounts and Inventory),

 

minus

 

(c)          without duplication, the sum of the following amounts for such
period to the extent included in the calculation of such Consolidated Net Income
for such period:

 

(i)          any credit for U.S. federal income taxes or other taxes measured by
net income,

 

(ii)         any gain from extraordinary items,

 

(iii)        any aggregate net gain from the Disposition of property (other than
accounts and Inventory) outside the ordinary course of business, and

 

(iv)        any other non-cash gain, including any reversal of a charge referred
to in clause (b)(vii) above by reason of a decrease in the value of any Equity
Interest; and

 

(v)         solely for the purpose of calculating the Leverage Ratio on the
Funding Date, any dividends or other distributions received by the Loan Parties
from CoBank, ACB in connection with the Loan Parties’ investment in the stock of
CoBank, ACB;

 

in each case, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means, with respect to any Person, for any period, the
consolidated net income (or loss) of such Person and its Subsidiaries for such
period; provided, however, that the following shall be excluded: (a) the net
income of any other Person in which such Person or one of its Subsidiaries has a
joint interest with a third-party (which interest does not cause the net income
of such other Person to be consolidated into the net income of such Person),
except to the extent of the amount of dividends or distributions paid to such
Person or Subsidiary, (b) the net income of any Subsidiary of such Person that
is, on the last day of such period, subject to any restriction or limitation on
the payment of dividends or the

 

 -5- 

 

 

making of other distributions, to the extent of such restriction or limitation,
and (c) the net income of any other Person arising prior to such other Person
becoming a Subsidiary of such Person or merging or consolidating into such
Person or its Subsidiaries.

 

“Consolidated Net Interest Expense” means, with respect to any Person for any
period, (a) gross interest expense of such Person and its Subsidiaries for such
period determined on a consolidated basis and in accordance with GAAP
(including, without limitation, interest expense paid to Affiliates of such
Person), less (b) the sum of (i) interest income for such period and (ii) gains
for such period on hedging agreements (to the extent not included in interest
income above and to the extent not deducted in the calculation of gross interest
expense), plus (c) the sum of (i) losses for such period on hedging agreements
(to the extent not included in gross interest expense) and (ii) the upfront
costs or fees for such period associated with hedging agreements (to the extent
not included in gross interest expense), in each case, determined on a
consolidated basis and in accordance with GAAP.

 

“Contract” means a purchase order, sales agreement, equipment lease,
distribution agreement, licensing agreement, franchise, bond, note, mortgage,
indenture, guaranty, release, instrument, contract, agreement, commitment or
arrangement (in every case, oral or written).

 

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Control Agreement” means, with respect to any deposit account, any securities
account, commodity account, securities entitlement or commodity contract, an
agreement, in form and substance satisfactory to the Collateral Agent, among the
Collateral Agent, the financial institution or other Person at which such
account is maintained or with which such entitlement or contract is carried and
the Loan Party maintaining such account, effective to grant “control” (as
defined under the applicable UCC) over such account to the Collateral Agent.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect.

 

“Default” means any event or condition that, but for the giving of notice or the
lapse of time, or both, would constitute an Event of Default.

 

“Disposition” means any transaction, or series of related transactions, pursuant
to which any Person or any of its Subsidiaries sells, assigns, transfers,
leases, licenses (as licensor) or otherwise disposes of any property or assets
(whether now owned or hereafter acquired) to any other Person, in each case,
whether or not the consideration therefor consists of cash, securities or other
assets owned by the acquiring Person. For purposes of clarification,
“Disposition” shall include (a) the sale or other disposition for value of any
contracts and (b) the early termination or modification of any contract
resulting in the receipt by any Loan Party of a cash payment or other
consideration in exchange for such event (other than payments in the ordinary
course for accrued and unpaid amounts due through the date of termination or
modification).

 

 -6- 

 

 

“Disqualified Equity Interests” means any Equity Interest that, by its terms (or
by the terms of any security or other Equity Interest into which it is
convertible or for which it is exchangeable), or upon the happening of any event
or condition, (a) matures or is mandatorily redeemable, pursuant to a sinking
fund obligation or otherwise, (b) is redeemable at the option of the holder
thereof, in whole or in part, (c) provides for the scheduled payments of
dividends or distributions in cash, or (d) is convertible into or exchangeable
for (i) Indebtedness or (ii) any other Equity Interests that would constitute
Disqualified Equity Interests, in each case of clauses (a) through (d), prior to
the date that is six months after the Maturity Date.

 

“Dollar, Dollars, U.S. Dollars” and the symbol “$”means lawful money of the
United States of America.

 

“Effective Date” means (a) the Execution Date and (b) for purposes of Article 3
hereof and all other representation and warranties made by the Loan Parties
hereunder or under any other Loan Document, the Funding Date.

 

“Employee Plan” means an employee benefit plan (other than a Multiemployer Plan)
covered by Title IV of ERISA and maintained (or that was maintained at any time
during the 6 calendar years preceding the date of any borrowing hereunder) for
employees of any Loan Party or any of its ERISA Affiliates.

 

“Environment” means humans, animals, plants and all other living organisms
including the ecological systems of which they form part and the following
media:

 

(a)          air (including, without limitation, air within natural or man-made
structures, whether above or below ground);

 

(b)          water (including, without limitation territorial, coastal and
inland waters, water under or within land and water in drains and sewers); and

 

(c)          land (including, without limitation, land under water).

 

“Environmental Actions” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter or other communication from any Person or
Governmental Authority involving violations of Environmental Laws or Releases of
Hazardous Materials (a) from any assets, properties or businesses owned or
operated by any Loan Party or any of its Subsidiaries or any predecessor in
interest; (b) from adjoining properties or businesses; or (c) onto any
facilities which received Hazardous Materials generated by any Loan Party or any
of its Subsidiaries or any predecessor in interest.

 

“Environmental Laws” means the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. § 9601, et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. § 1801, et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. § 6901, et seq.), the Federal Clean
Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.) and the
Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as such laws may
be amended or otherwise modified from time to time, and any other Requirement of
Law, permit, license or other binding determination of any Governmental
Authority imposing liability or establishing standards of conduct for protection
of the environment or other government restrictions relating to the protection
of the environment or the Release, deposit or migration of any Hazardous
Materials into the environment.

 

 -7- 

 

 

“Environmental Liabilities and Costs” means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and costs of
investigations and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any environmental condition or
a Release of Hazardous Materials from or onto (a) any property presently or
formerly owned by any Loan Party or any of its Subsidiaries or (b) any facility
which received Hazardous Materials generated by any Loan Party or any of its
Subsidiaries.

 

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.

 

“Equity Interests” means (a) all shares of capital stock (whether denominated as
common stock or preferred stock), equity interests, beneficial, partnership or
membership interests, joint venture interests, participations or other ownership
or profit interests in or equivalents (regardless of how designated) of or in a
Person (other than an individual), whether voting or non-voting and (b) all
securities convertible into or exchangeable for any of the foregoing and all
warrants, options or other rights to purchase, subscribe for or otherwise
acquire any of the foregoing, whether or not presently convertible, exchangeable
or exercisable.

 

“Equity Issuance” means either (a) the sale or issuance by any Loan Party or any
of its Subsidiaries of any shares of its Equity Interests or (b) the receipt by
the Company of any cash capital contributions.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute of similar import, and regulations thereunder, in each
case, as in effect from time to time. References to sections of ERISA shall be
construed also to refer to any successor sections.

 

“ERISA Affiliate” means, with respect to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which such Person
is a member and which would be deemed to be a "controlled group" within the
meaning of Sections 414(b), (c), (m) and (o) of the Code.

 

“Event of Default” has the meaning set forth in Article 9 hereof.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Excluded Account” means (a) any deposit account specifically and exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of any Loan Party's employees, (b) any Petty Cash Accounts,
(c) any deposit account used for the purposes described in clause (f) of the
definition of Permitted Liens or to secure letter of credit reimbursement
obligations in an aggregate amount (with respect to such letter of credit
reimbursement obligations) not to exceed $150,000 at any time, and (d) the
Borrower’s deposit account at Wells Fargo Bank, N.A. so long as the balance
thereof does not exceed $65,000, no new funds are added to such account
following the Funding Date and such account is closed within 90 days after the
Funding Date.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
any Investor or required to be withheld or deducted from a payment to any
Investor: (a) Taxes

 

 -8- 

 

 

imposed on or measured by net income (however denominated), franchise Taxes and
branch profits Taxes, in each case, (i) imposed as a result of any Investor
being organized under the laws of, or having its principal office or its lending
office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) Taxes
attributable to any Investor’s failure to comply with Section 2.13(f) and (h)
hereof and (c) any U.S. federal withholding Taxes imposed under FATCA.

 

“Execution Date” has the meaning specified therefor in Section 5.1.

 

“Existing Credit Facility” means the Third Amended and Restated Credit
Agreement, dated as of May 24, 2013, by and among Otelco Inc. and certain of its
subsidiaries, as credit parties, the lenders from time to time party thereto and
General Electric Capital Corporation, as agent and lender.

 

“Existing Lenders” means the lenders party to the Existing Credit Facility.

 

“Extraordinary Receipts” means any cash received by the Company or any of its
Subsidiaries not in the ordinary course of business (and not consisting of
proceeds described in Section 2.05(c)(ii) or (iii) of the Senior Loan
Agreement), including, without limitation, (a) foreign, United States, state or
local tax refunds, (b) pension plan reversions, (c) proceeds of insurance (other
than to the extent such insurance proceeds are immediately payable to a Person
that is not the Company or any of its Subsidiaries in accordance with applicable
Requirements of Law or with Contractual Obligations entered into in the ordinary
course of business), (d) judgments, proceeds of settlements or other
consideration of any kind in connection with any cause of action, (e)
condemnation awards (and payments in lieu thereof), (f) indemnity payments
(other than to the extent such indemnity payments are immediately payable to a
Person that is not an Affiliate of the Company or any of its Subsidiaries) and
(g) any purchase price adjustment received in connection with any purchase
agreement (excluding, however, any cash received by the Company or any of its
Subsidiaries in respect of any working capital adjustments made pursuant to such
purchase agreement). Notwithstanding the foregoing, in no event shall any
dividends received by the Loan Parties from CoBank, ACB be deemed to constitute
Extraordinary Receipts hereunder.

 

“Facility” means the real property identified on Schedule 1.01(A) and any New
Facility hereafter acquired by the Company or any of its Subsidiaries,
including, without limitation, the land on which each such facility is located,
all buildings and other improvements thereon, and all fixtures located thereat
or used in connection therewith.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code.

 

“FCC” means the Federal Communications Commission and any successor thereto.

 

“FCC License” means any Governmental Authorization granted or issued by the FCC.

 

 -9- 

 

 

“Federal Power Act” means the Federal Power Act, 16 U.S.C. §§ 791 et seq.

 

“Financial Statements” means (a) the audited consolidated balance sheet of the
Company and its Subsidiaries for the fiscal year ended December 31, 2014, and
the related consolidated statement of operations, shareholders’ equity and cash
flows for the fiscal year then ended, and (b) the unaudited consolidated balance
sheet of the Company and its Subsidiaries for the 9 months ended September 30,
2015, and the related consolidated statement of operations, shareholder’s equity
and cash flows for the 9 months then ended.

 

“Fixed Charge Coverage Ratio” means, with respect to any Person for any period,
the ratio of (a) Consolidated EBITDA of such Person and its Subsidiaries for
such period minus Capital Expenditures made by such Person and its Subsidiaries
during such period, to (b) the sum of (i) all principal of Indebtedness of such
Person and its Subsidiaries scheduled to be paid or prepaid during such period
to the extent there is an equivalent permanent reduction in the commitments
thereunder, plus (ii) Consolidated Net Interest Expense of such Person and its
Subsidiaries for such period, plus (iii) income taxes paid or payable by such
Person and its Subsidiaries during such period, plus (iv) cash dividends or
distributions paid, or the purchase, redemption or other acquisition or
retirement for value (including in connection with any merger or consolidation),
by such Person or any of its Subsidiaries, in respect of the Equity Interests of
such Person or any of its Subsidiaries (other than dividends or distributions
paid by a Loan Party to any other Loan Party) during such period.

 

“Foreign Official” has the meaning specified therefor in Section 3.30.

 

“Franchising Authority” means any Governmental Authority authorized by any
federal, state or local law to grant a Franchise or to exercise jurisdiction
over the rates or services provided by a cable television system pursuant to a
Franchise or over Persons holding a Franchise.

 

“Franchise” means an initial Governmental Authorization or renewal thereof
issued by a Franchising Authority which authorizes the acquisition, ownership,
construction or operation of a cable television system.

 

“Funding Date” has the meaning specified therefor in Section 5.2.

 

“GAAP” means generally accepted accounting principles applicable in the United
States of America.

 

“Governing Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization, and the operating agreement; (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture, declaration or other applicable agreement or
documentation evidencing or otherwise relating to its formation or organization,
governance and capitalization; and (d) with respect to any of the entities
described above, any other agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization.

 

“Governmental Authority(ies)” when used in the singular, means any federal,
state, local or foreign governmental or quasi-governmental instrumentality,
agency, board,

 

 -10- 

 

 

commission or department or any regulatory agency, bureau, commission or
authority and, when used in the plural, means all such entities.

 

“Governmental Authorization(s)” means any authorization, approval, consent,
franchise, license, covenant, order, ruling, permit, certification, exemption,
notice, declaration or similar right, undertaking or other action of, to or by,
or any material filing, qualification or registration with, any Governmental
Authority, including any Communications License.

 

“Hazardous Materials” means all materials of any kind which are flammable,
explosive, toxic, radioactive or otherwise hazardous to animal or plant life or
the environment, including, without limitation, “hazardous wastes,” “hazardous
substances” and “contaminants,” as such terms are defined by Environmental Laws.

 

“High Cost Loop Support” means a federal funding program that provides support
for the last mile of connection for rural companies in service areas where the
cost to provide this services exceeds 115 percent of the national average cost
per line.

 

“Indebtedness” means, with respect to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money; (b) all obligations of such
Person for the deferred purchase price of property or services (other than trade
payables or other accounts payable incurred in the ordinary course of such
Person’s business and not outstanding for more than ninety (90) days after the
date such payable was created and any earn-out, purchase price adjustment or
similar obligation until such obligation appears in the liabilities section of
the balance sheet of such Person); (c) all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments or upon which interest
payments are customarily made; (d) all reimbursement, payment or other
obligations and liabilities of such Person created or arising under any
conditional sales or other title retention agreement with respect to property
used and/or acquired by such Person, even though the rights and remedies of the
lessor, seller and/or lender thereunder may be limited to repossession or sale
of such property; (e) all Capital Lease Obligations of such Person; (f) all
obligations and liabilities, contingent or otherwise, of such Person, in respect
of letters of credit, acceptances and similar facilities; (g) all obligations
and liabilities, calculated on a basis satisfactory to the Collateral Agent and
the Investors and in accordance with accepted practice, of such Person under
hedging agreements; (h) all monetary obligations under any receivables
factoring, receivable sales or similar transactions and all monetary obligations
under any synthetic lease, tax ownership/operating lease, off-balance sheet
financing or similar financing; (i) all Contingent Obligations; (j) all
Disqualified Equity Interests; and (k) all obligations referred to in clauses
(a) through (j) of this definition of another Person secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) a Lien upon property owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
The Indebtedness of any Person shall include the Indebtedness of any partnership
of or joint venture in which such Person is a general partner or a joint
venturer.

 

“Indemnified Party” has the meaning set forth in Section 6.2.1 hereof.

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any
Borrower under any Loan Document and (b) to the extent not otherwise described
in (a), Other Taxes.

 

“Information” has the meaning set forth in Section 12.11 hereof.

 

 -11- 

 

 

“Intellectual Property” has the meaning specified therefor in the IP Security
Agreement.

 

“Intercompany Subordination Agreement” means an Intercompany Subordination
Agreement made by the Borrowers in favor of the Collateral Agent for the benefit
of the Investors, in form and substance reasonably satisfactory to the
Collateral Agent.

 

“Interstate Common Line Support” means a federal funding program that provides
support to offset interstate access charges, to the extent that subscriber line
charge caps do not permit the recovery of the common line revenue requirements.

 

“Investment” means, with respect to any Person, (a) any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances or other extensions of credit (excluding Accounts arising
in the ordinary course of business), capital contributions or acquisitions of
Indebtedness (including, any bonds, notes, debentures or other debt securities),
Equity Interests, or all or substantially all of the assets of such other Person
(or of any division or business line of such other Person), (b) the purchase or
ownership of any futures contract or liability for the purchase or sale of
currency or other commodities at a future date in the nature of a futures
contract, or (c) any investment in any other items that are or would be
classified as investments on a balance sheet of such Person prepared in
accordance with GAAP.

 

“IP Security Agreement(s)” means each Intellectual Property Security Agreement
delivered to the Collateral Agent under Article 5 hereof or Section 7.2 hereof
by and between any Loan Party and the Collateral Agent, for the benefit of the
Investors, in form and substance acceptable to the Collateral Agent.

 

“IRS” means the United States Internal Revenue Service.

 

“Issue Date” means the date on which the Note is first issued.

 

“Joinder Agreement” means a Joinder Agreement, substantially in the form of
Exhibit C, duly executed by a Subsidiary of a Loan Party made a party hereto
pursuant to Section 7.2).

 

“Key Management” means those persons identified as “Key Management” pursuant to
Schedule 1.01(B) hereto.

 

“Law or Laws” means all (a) constitutions, treaties, statutes, laws (including
common law), codes, rules, regulations, ordinances, requests or orders of any
Governmental Authority; and (b) orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any Governmental Authority, in each
case including all Environmental Laws, Tax, labor, employment and intellectual
property laws.

 

“Legal Reservations” means the principle that equitable remedies may be granted
or refused at the discretion of a court and the limitation of enforcement by
laws relating to insolvency, reorganization and other laws of general
applicability relating to or affecting the rights of creditors.

 

“Leverage Ratio” means, with respect to any Person and its Subsidiaries for any
period, the ratio of (a) all Indebtedness described in clauses (a), (b), (c),
(d) and (e) in the

 

 -12- 

 

 

definition thereof of such Person and its Subsidiaries as of the end of such
period to (b) Consolidated EBITDA of such Person and its Subsidiaries for such
period.

 

“Liabilities” means, without limitation, any direct or indirect Indebtedness,
guaranty, endorsement, Claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or unfixed, known or unknown, asserted or
unasserted, choate or inchoate, liquidated or unliquidated, secured or
unsecured.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.

 

“Loan” has the meaning set forth in the Background section hereof.

 

“Loan Documents” means, collectively, this Agreement, the Note, the Security
Documents, the Cerberus Intercreditor Agreement, the Intercompany Intercreditor
Agreement, and all other instruments and documents executed and delivered in
connection with the Loan.

 

“Losses” has the meaning set forth in Section 6.2.1 hereof.

 

“Mandatory Prepayment Event” has the meaning set forth in Section 2.8 hereof.

 

“Material Adverse Effect” means a material adverse effect on any of (a) the
operations, assets, liabilities, financial or other condition of the Borrowers
taken as a whole, (b) the ability of the Borrowers taken as a whole to perform
any of their payment or other material obligations under any Loan Document, (c)
the legality, validity or enforceability of this Agreement or any other Loan
Document, (d) the rights and remedies of the Collateral Agent or any Investor
under any Loan Document, or (e) the validity, perfection or priority of a Lien
in favor of the Collateral Agent for the benefit of the Investors on Collateral
having a fair market value in excess of $385,000.

 

“Material Contract” and “Material Contracts” means, with respect to any Person,
(a) any contract described as a material contract in any filings made by the
Company with the SEC, (b) the Senior Loan Documents, (c) each contract or
agreement to which such Person or any of its Subsidiaries is a party involving
aggregate consideration payable to or by such Person or such Subsidiary of
$550,000 or more in any fiscal year (other than purchase orders in the ordinary
course of the business of such Person or such Subsidiary and other than
contracts that by their terms may be terminated by such Person or Subsidiary in
the ordinary course of its business upon less than 60 days’ notice without
penalty or premium) and (d) all other contracts or agreements as to which the
breach, nonperformance, cancellation or failure to renew by any party thereto
could reasonably be expected to have a Material Adverse Effect.

 

“Material Facility” means (a) any Facility subject to any Mortgage, (b) any
fee-owned Facility having a value in excess of $275,000, (c) any Facility
leased, subleased or used by any Loan Party with respect to which the aggregate
annual rent payments therefor exceed $330,000 and/or (d) any Facility that the
Collateral Agent has determined is material to the business, operations, assets
or financial condition of the Loan Parties.

 

“Maturity Date” has the meaning set forth in Section 2.2 hereof.

 

 -13- 

 

 

“Mortgage” means a mortgage, deed of trust or deed to secure debt, in form and
substance satisfactory to the Collateral Agent, made by a Loan Party in favor of
the Collateral Agent for the benefit of the Investors, securing the Obligations
and delivered to the Collateral Agent.

 

“Multiemployer Plan” means a “multiemployer plan” within the meaning of Section
3(37) of ERISA.

 

“Net Cash Proceeds” means, with respect to, any issuance or incurrence of any
Indebtedness, any Equity Issuance, any Disposition or the receipt of any
Extraordinary Receipts by any Person or any of its Subsidiaries, the aggregate
amount of cash received (directly or indirectly) from time to time (whether as
initial consideration or through the payment or disposition of deferred
consideration) by or on behalf of such Person or such Subsidiary, in connection
therewith after deducting therefrom only (a) in the case of any Disposition or
the receipt of any Extraordinary Receipts consisting of insurance proceeds or
condemnation awards, the amount of any Indebtedness secured by any Permitted
Lien on any asset (other than Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection therewith (other
than Indebtedness under this Agreement), (b) reasonable expenses related thereto
incurred by such Person or such Subsidiary in connection therewith, (c) transfer
taxes paid to any taxing authorities by such Person or such Subsidiary in
connection therewith, and (d) net income taxes to be paid in connection
therewith (after taking into account any tax credits or deductions and any tax
sharing arrangements), in each case, to the extent, but only to the extent, that
the amounts so deducted are (i) actually paid to a Person that, except in the
case of reasonable out-of-pocket expenses, is not an Affiliate of such Person or
any of its Subsidiaries and (ii) properly attributable to such transaction or to
the asset that is the subject thereof.

 

“New Facility” has the meaning specified therefor in Section 7.13.

 

“Note” means individually and “Notes” means collectively, the senior
subordinated promissory notes executed by the Borrowers in favor of each of the
Investors, in the aggregate original principal amount set forth on Appendix II,
in substantially the form attached hereto as Exhibit A.

 

“Obligations” means any and all indebtedness, obligations and liabilities of any
type or nature, direct or indirect, absolute or contingent, related or
unrelated, due or not due, liquidated or unliquidated, arising by operation of
law or otherwise, now existing or hereafter arising or created by any Borrower
to any Investor, related to the Loan or (without duplication) represented by or
incurred pursuant or relating to the Loan Documents. Without limiting the
generality of the foregoing, the term “Obligations” shall include, without
limitation:

 

(a)          the principal of and interest on the Loan and the Notes;

 

(b)          any and all other fees, indemnities, costs, obligations and
liabilities of the Borrowers from time to time under or in connection with the
Loan Documents; and

 

(c)          all amounts (including but not limited to post-petition interest)
in respect of the foregoing that would be payable but for the fact that the
obligations to pay such amounts are unenforceable or not allowable due to the
existence of a proceeding under any Debtor Relief Law involving any Borrower.

 

“Ordinary Course of Business” means, as to any Person, the ordinary course of
business for such Person consistent in all material respects with past
practices.

 

 -14- 

 

 

“Other Connection Taxes” means, with respect to any Investor, Taxes imposed as a
result of a present or former connection between such Investor and the
jurisdiction imposing such Tax (other than connections arising from such
Investor having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in the Loan or any of the Loan
Documents).

 

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 2.14).

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor
authority.

 

“Participant” has the meaning set forth in Section 12.2 hereof.

 

“Participant Register” has the meaning set forth in Section 12.2 hereof.

 

“Participations” has the meaning set forth in Section 12.2 hereof.

 

“Permitted Disposition” means:

 

(a)          sale of inventory in the ordinary course of business;

 

(b)          leasing or subleasing assets in the ordinary course of business;

 

(c)          any involuntary loss, damage or destruction of property;

 

(d)          any involuntary condemnation, seizure or taking, by exercise of the
power of eminent domain or otherwise, or confiscation or requisition of use of
property;

 

(e)          Dispositions of assets (i) by a Borrower to another Borrower, (ii)
by any Subsidiary of the Company that is not a Borrower to any other Subsidiary
of the Company that is not a Borrower, (iii) so long as no Event of Default has
occurred and is continuing or would result therefrom, by Subsidiaries of the
Company that are not Borrowers to the Borrowers and (iv) so long as no Event of
Default has occurred and is continuing or would result therefrom, by the
Borrowers to Subsidiaries of the Company that are not Borrowers (including,
without limitation, any PUC Restricted Subsidiary) so long as, for purposes of
this clause (iv), (A) the aggregate fair market value of all such assets does
not exceed $110,000 in any single transaction or $275,000 in the aggregate in
any fiscal year and (B) the Borrowers have Availability plus Qualified Cash of
not less than $5,000,000 before and after giving effect to such Disposition;

 

(f)          the use or transfer of cash and Cash Equivalents by Company and its
Subsidiaries in a manner that is not prohibited by the terms of this Agreement
or the other Loan Documents;

 

(g)          Disposition of equipment, fixtures or real estate that are
obsolete, surplus or no longer used or useful in the Borrowers’ business so long
as the aggregate fair market value

 

 -15- 

 

 

of all such assets does not exceed $110,000 in any single transaction or
$275,000 in the aggregate in any fiscal year;

 

(h)          Disposition of assets acquired in a Permitted Investment described
in clause (d) of the definition thereof so long as the aggregate fair market
value of all such assets does not exceed $110,000 at any time;

 

(i)          Disposition of other equipment and fixtures having a fair market
value not exceeding $110,000 in any single transaction or $550,000 in the
aggregate in any fiscal year;

 

(j)          Dispositions of customer accounts by a Borrower in connection with
compromise or collections in the ordinary course of business;

 

(k)          Dispositions of non-material Intellectual Property so long as the
aggregate fair market value of all such Intellectual Property does not exceed
$110,000 in any fiscal year.

 

provided that (x) the Net Cash Proceeds of all Dispositions described above are
paid to the Senior Lenders pursuant to the terms of Section 2.05(c)(ii) of the
Senior Loan Agreement or applied as provided in Section 2.05(c)(vi) of the
Senior Loan Agreement and (y) each Disposition described above (other than
Dispositions described in clauses (c) and (d) above) shall be for fair market
value and (other than Dispositions described in clauses (c), (d) and (e) above)
for proceeds consisting of at least 75% cash.

 

“Permitted Indebtedness” means:

 

(a)          any Indebtedness owing to any Investor under this Agreement and the
other Loan Documents;

 

(b)          any other Indebtedness listed on Schedule 8.2, and any Permitted
Refinancing Indebtedness in respect of such Indebtedness;

 

(c)          Permitted Purchase Money Indebtedness and any Permitted Refinancing
Indebtedness in respect of such Indebtedness;

 

(d)          Permitted Intercompany Investments;

 

(e)          Indebtedness incurred in the ordinary course of business under
performance, surety, statutory, and appeal bonds;

 

(f)          Indebtedness of any Borrower incurred in connection with the
issuance of letters of credit on behalf of such Borrower in the ordinary course
of business; provided that (i) the aggregate amount of such letters of credit
shall not exceed $165,000 at any one time outstanding and (ii) such letters of
credit must be cash collateralized in an amount not to exceed the amount set
forth in clause (p) of the definition of Permitted Liens;

 

(g)          Indebtedness incurred in respect of netting services, overdraft
protections and otherwise in connection with deposit accounts, to the extent
such arrangement is customary

 

 -16- 

 

 

and is entered into in the ordinary course of business so long as the aggregate
amount of all such Indebtedness does not to exceed $110,000 at any time;

 

(h)          Indebtedness of any Borrower under or in connection with the Senior
Debt, provided that such Indebtedness is subject to the Cerberus Intercreditor
Agreement;

 

(i)          guaranties made by a Borrower or a Subsidiary thereof for the
benefit of any other Borrower or any other Subsidiary of a Borrower if the
primary obligation of such other Borrower or such other Subsidiary is permitted
by this Agreement, provided that if the payment of such primary obligation is
subordinated to the payment of any of the Obligations, then the payment of such
guaranteed Indebtedness shall be subordinated to the payment of the Obligations
on the same basis that such primary obligation is so subordinated;

 

(j)          Indebtedness arising under indemnity agreements with title insurers
to cause such title insurers to issue in favor of the Collateral Agent mortgagee
Title Insurance Policies;

 

(k)          Subordinated Indebtedness (other than Indebtedness under the
Subordinated Debt Credit Facility) in an aggregate outstanding principal amount
not exceeding $1,650,000 at any time;

 

(l)          additional unsecured Indebtedness in an aggregate amount not to
exceed $1,100,000 at any time; and

 

(m)          any Indebtedness owing to any Existing Lender under the Existing
Credit Facility, provided that such Indebtedness shall be paid in full on or
before the Funding Date, all as described in subclause (j) of Section 5.2.

 

“Permitted Intercompany Investments” means Investments made by (a) a Borrower to
or in another Borrower, (b) a Subsidiary that is not a Borrower to or in another
Subsidiary that is not a Borrower, (c) a Subsidiary that is not a Borrower to or
in a Borrower, so long as, in the case of a loan or advance, the parties thereto
are party to the Intercompany Subordination Agreement (as defined in the Senior
Loan Agreement) and (d) a Borrower to or in a Subsidiary that is not a Borrower
(including, without limitation, a PUC Restricted Subsidiary) so long as, for
purposes of this clause (d), (i) the aggregate amount of all such Investments
made by the Borrowers to or in Subsidiaries that are not Borrowers does not
exceed $110,000 at any time outstanding, (ii) no Default or Event of Default has
occurred and is continuing either before or after giving effect to such
Investment, and (iii) the Borrowers have Availability plus Qualified Cash of not
less than $5,000,000 after giving effect to such Investment.

 

“Permitted Investments” means:

 

(a)          Investments in cash and Cash Equivalents;

 

(b)          Investments in negotiable instruments deposited or to be deposited
for collection in the ordinary course of business;

 

 -17- 

 

 

(c)          advances made in connection with purchases of goods or services in
the ordinary course of business;

 

(d)          Investments received in settlement of amounts due to any Borrower
or any of its Subsidiaries effected in the ordinary course of business or owing
to any Borrower or any of its Subsidiaries as a result of insolvency proceedings
involving an account debtor or upon the foreclosure or enforcement of any Lien
in favor of a Loan Party or its Subsidiaries;

 

(e)          Investments existing on the date hereof, as set forth on Schedule
8.5 hereto, but not any increase in the amount thereof as set forth in such
Schedule or any other modification of the terms thereof;

 

(f)          Permitted Intercompany Investments;

 

(g)          loans and advances by the Loan Parties to employees in the ordinary
course of business not to exceed $110,000 in the aggregate at any time
outstanding;

 

(h)          Investments consisting of deferred payment obligations received as
consideration from a Permitted Disposition, so long as such Investments do not
in the aggregate exceed $110,000 at any time;

 

(i)          prepaid expenses, negotiable instruments held for collection and
lease, and utility and workers’ compensation, performance and other similar
deposits, in each case, created in the ordinary course of business;

 

(j)          to the extent constituting an Investment, Contingent Obligations
permitted pursuant to Section 8.5; and

 

(vi)        other Investments made by the Borrowers not exceeding $1,100,000 in
the aggregate outstanding at any time plus Equity Interests (other than
Disqualified Equity Interests) and/or the proceeds of Equity Interests (other
than Disqualified Equity Interests).

 

“Permitted Liens” means:

 

(a)          Liens securing the Obligations;

 

(b)          Liens for taxes, assessments and governmental charges the payment
of which is not required under Section 7.3(b);

 

(c)          Liens imposed by law, such as carriers’, warehousemen’s,
mechanics’, materialmen’s and other similar Liens arising in the ordinary course
of business and securing obligations (other than Indebtedness for borrowed
money) that are not overdue by more than 30 days or are being contested in good
faith and by appropriate proceedings promptly initiated and diligently
conducted, and a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;

 

(d)          Liens described on Schedule 8.1, provided that any such Lien shall
only secure the Indebtedness that it secures on the Effective Date and any
Permitted Refinancing Indebtedness in respect thereof;

 

 -18- 

 

 

(e)          purchase money Liens on equipment acquired or held by any Borrower
or any of its Subsidiaries in the ordinary course of its business to secure
Permitted Purchase Money Indebtedness so long as such Lien only (i) attaches to
such property and (ii) secures the Indebtedness that was incurred to acquire
such property or any Permitted Refinancing Indebtedness in respect thereof;

 

(f)          deposits and pledges of cash securing (i) obligations incurred in
respect of workers’ compensation, unemployment insurance or other forms of
governmental insurance or benefits, (ii) the performance of bids, tenders,
leases, contracts (other than for the payment of money) and statutory
obligations or (iii) obligations on surety or appeal bonds, but only to the
extent such deposits or pledges are made or otherwise arise in the ordinary
course of business and secure obligations not past due;

 

(g)          with respect to any Facility, easements, zoning restrictions and
similar encumbrances on real property and minor irregularities in the title
thereto that do not (i) secure obligations for the payment of money or (ii)
materially impair the value of such property or its use by any Borrower or any
of its Subsidiaries in the normal conduct of such Person’s business;

 

(h)          Liens of landlords and mortgagees of landlords (i) arising by
statute or under any lease or related Contractual Obligation entered into in the
ordinary course of business, (ii) on fixtures and movable tangible property
located on the real property leased or subleased from such landlord, or (iii)
for amounts not yet due or that are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves or other
appropriate provisions are maintained on the books of such Person in accordance
with GAAP;

 

(i)          the title and interest of a lessor or sublessor in and to personal
property leased or subleased (other than through a Capital Lease), in each case
extending only to such personal property;

 

(j)          non-exclusive licenses of Intellectual Property rights in the
ordinary course of business;

 

(k)          judgment liens (other than for the payment of taxes, assessments or
other governmental charges) securing judgments and other proceedings not
constituting an Event of Default under Section 9.9;

 

(l)          rights of set-off or bankers’ liens upon deposits of cash in favor
of banks or other depository institutions, solely to the extent incurred in
connection with the maintenance of such deposit accounts in the ordinary course
of business;

 

(m)          licenses, sublicenses, leases or subleases granted to other Persons
in the ordinary course of business not materially interfering with the conduct
of the business of Company or any of its Subsidiaries;

 

(n)          precautionary financing statement filings regarding operating
leases;

 

(o)          Liens securing the obligations under the Senior Debt, so long as
the Senior Debt is subject to the Cerberus Intercreditor Agreement;

 

(p)          Liens on cash that is pledged as cash collateral to secure letters
of credit permitted under clause (f) of the definition of Permitted Indebtedness
in an amount not to exceed 105% of the greatest amount that can be drawn; and

 

 -19- 

 

 

(q)          Liens securing the obligations owed by the Loan Parties to the
Existing Lenders under the Existing Credit Facility, provided that such shall be
released on or before the Funding Date all as described in subclause (j) of
Section 5.2.

 

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Indebtedness (other than the Obligations, but including Capital Lease
Obligations) incurred to finance the acquisition of any fixed assets secured by
a Lien permitted under clause (e) of the definition of “Permitted Liens”;
provided that (a) such Indebtedness is incurred within 20 days after such
acquisition, (b) such Indebtedness when incurred shall not exceed the purchase
price of the asset financed and (c) the aggregate principal amount of all such
Indebtedness shall not exceed $275,000 at any time outstanding.

 

“Permitted Refinancing Indebtedness” means the extension of maturity,
refinancing or modification of the terms of Indebtedness so long as:

 

(a)          after giving effect to such extension, refinancing or modification,
the amount of such Indebtedness is not greater than the amount of Indebtedness
outstanding immediately prior to such extension, refinancing or modification;

 

(b)          such extension, refinancing or modification does not result in a
shortening of the average weighted maturity (measured as of the extension,
refinancing or modification) of the Indebtedness so extended, refinanced or
modified;

 

(c)          such extension, refinancing or modification is pursuant to terms
that are not less favorable to the Loan Parties and the Investors than the terms
of the Indebtedness (including, without limitation, terms relating to the
collateral (if any) and subordination (if any)) being extended, refinanced or
modified; and

 

(d)          the Indebtedness that is extended, refinanced or modified is not
recourse to any Loan Party or any of its Subsidiaries that is liable on account
of the obligations other than those Persons which were obligated with respect to
the Indebtedness that was refinanced, renewed, or extended.

 

“Permitted Restricted Payments” means any of the following Restricted Payments
made by:

 

(a)          any Borrower to the Borrowers,

 

(b)          any Subsidiary of any Borrower to such Borrower,

 

(c)          the Company to pay dividends in the form of common Equity
Interests,

 

(d)          the Company may redeem or repurchase shares of its common Equity
Interests from its officers, employees, consultants and directors in connection
with the termination of employment or engagement of any such Person, provided
that (i) no Default or Event of Default has occurred and is continuing or would
result therefrom and (ii) the aggregate amount paid in respect of all such
shares so redeemed or repurchased does not exceed $110,000 in any fiscal year,

 

 -20- 

 

 

(e)          to the extent constituting a Restricted Payment, any Permitted
Intercompany Investment, and

 

(f)          the automatic conversion of the Company’s Class B Common Stock into
Class A Common Stock (as such terms are defined in the Company’s certificate of
incorporation) upon the payment in full of the Indebtedness under the Existing
Credit Facility pursuant to the Company’s certificate of incorporation.

 

“Permitted Specified Liens” means Permitted Liens described in clauses (a), (b)
and (c) of the definition of Permitted Liens, and, solely in the case of Section
7.2(a), including clauses (g), (h) and (i) of the definition of Permitted Liens.

 

“Person” means an individual, corporation, partnership, joint venture,
association, trust, or other entity or organization.

 

“Petty Cash Accounts” means Cash Management Accounts with deposits at any time
in an aggregate average monthly balance not in excess of $20,000 for any one
account and $100,000 in the aggregate for all such accounts.

 

“Plan” means any Employee Plan or Multiemployer Plan.

 

“Prepayment Premium” has the meaning set forth in Section 2.9 hereof.

 

“Projections” means financial projections of the Company and its Subsidiaries
delivered pursuant to Section 3.7(b), as updated from time to time pursuant to
Section 7.1(e).

 

“Property” means any right or interest in or to property or assets of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, Equity Interests.

 

“PUC” means any state Governmental Authority that exercises jurisdiction over
the rates or services or the acquisition, ownership, construction or operation
of any telecommunications systems or over Persons who own, construct or operate
a telecommunications system, in each case by reason of the nature or type of the
business subject to regulation and not pursuant to laws and regulations of
general applicability to Persons conducting business in such state, including,
without limitation, the PUC of Alabama, the PUC of Missouri, the Department of
Telecommunications and Cable of Massachusetts, the PUC of New Hampshire, Public
Services Commission of West Virginia, the Public Utilities Commission of Maine
and the Vermont Public Service Board.

 

“PUC Authorization” means any Governmental Authorization granted or issued by a
PUC.

 

“PUC Restricted Subsidiary” means each Subsidiary of the Company listed on
Schedule 1.01(D), but only for so long as such Subsidiary is required by
applicable law to obtain consent from a PUC in order to execute and deliver a
Security Agreement or guaranty any of the Obligations hereunder.

 

 -21- 

 

 

“Qualified Equity Interests” means, with respect to any Person, all Equity
Interests of such Person that are not Disqualified Equity Interests.

 

“Real Property” means, collectively, all real property owned by any Borrower or
in which any Borrower has a leasehold interest and all real property hereafter
acquired by any Borrower in fee or by means of a leasehold interest, including
all real property on which any Borrower’s business is now conducted, together
with all goods located on any such real property that are or may become
“fixtures” under the law of the jurisdiction in which such real property is
located.

 

“Real Property Deliverables” means each of the following agreements, instruments
and other documents in respect of each Material Facility:

 

(a)          a Mortgage duly executed by the applicable Loan Party,

 

(b)          evidence of the recording of each Mortgage in such office or
offices as may be necessary or, in the opinion of the Collateral Agent,
desirable to perfect the Lien purported to be created thereby or to otherwise
protect the rights of the Collateral Agent and the Investors thereunder;

 

(c)          a Title Insurance Policy or bring-down of the existing Title
Insurance Policy with respect to each Mortgage, dated as of the date on which
such Mortgage is required to be delivered;

 

(d)          a current ALTA survey and a surveyor’s certificate, in form and
substance satisfactory to the Collateral Agent, certified to the Collateral
Agent and to the issuer of the Title Insurance Policy with respect thereto by a
professional surveyor licensed in the state in which such Facility is located
and satisfactory to the Collateral Agent;

 

(e)          a copy of each letter issued by the applicable Governmental
Authority, evidencing each Material Facility’s compliance with all applicable
building codes, fire codes, other health and safety rules and regulations,
parking, density and height requirements and other building and zoning laws
together with a copy of all certificates of occupancy issued with respect to
each Material Facility;

 

(f)          an opinion of counsel, satisfactory to the Collateral Agent, in the
state where such Material Facility is located with respect to the enforceability
of the Mortgage to be recorded and such other matters as the Collateral Agent
may reasonably request; and

 

(g)          such other agreements, instruments and other documents (including
guarantees and opinions of counsel) as the Collateral Agent may reasonably
require.

 

“Register” has the meaning set forth in Section 12.2 hereof.

 

“Registered Intellectual Property” means Intellectual Property that is issued,
registered, renewed or the subject of a pending application.

 

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, seeping, migrating, dumping or
disposing of any Hazardous Material (including the abandonment or discarding of
barrels, containers and other closed receptacles containing any Hazardous
Material) into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through or in the ambient air, soil, surface
or ground water, or property.

 

 -22- 

 

 

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate or in any other way address Hazardous
Materials in the indoor or outdoor environment; (b) prevent or minimize a
Release or threatened Release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; (c) perform pre-remedial studies and investigations and
post-remedial operation and maintenance activities; or (d) perform any other
actions authorized by 42 U.S.C. § 9601.

 

“Reportable Event” means an event described in Section 4043 of ERISA (other than
an event not subject to the provision for 30-day notice to the PBGC under the
regulations promulgated under such Section).

 

“Required Investors” means Investors holding more than 66 2/3% of the sum of the
aggregate unpaid amount of the loan then outstanding.

 

“Requirements of Law” means, with respect to any Person, collectively, the
common law and all federal, state, provincial, local, foreign, multinational or
international laws, statutes, codes, treaties, standards, rules and regulations,
guidelines, ordinances, orders, judgments, writs, injunctions, decrees
(including administrative or judicial precedents or authorities) and the
interpretation or administration thereof by, and other determinations,
directives, requirements or requests of, any Governmental Authority, in each
case that are applicable to or binding upon such Person or any of its property
or to which such Person or any of its property is subject.

 

“Restricted Payment” means (a) the declaration or payment of any dividend or
other distribution, direct or indirect, on account of any Equity Interests of
any Loan Party or any of its Subsidiaries, now or hereafter outstanding, (b) the
making of any repurchase, redemption, retirement, defeasance, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any Equity Interests of any Loan Party or any direct or indirect parent of any
Loan Party, now or hereafter outstanding, (c) the making of any payment to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights for the purchase or acquisition of shares of any class of Equity
Interests of any Loan Party, now or hereafter outstanding, (d) the return of any
Equity Interests to any shareholders or other equity holders of any Loan Party
or any of its Subsidiaries, or make any other distribution of property, assets,
shares of Equity Interests, warrants, rights, options, obligations or securities
thereto as such or (e) the payment of any management, consulting, monitoring or
advisory fees or any other fees or expenses (including the reimbursement thereof
by any Loan Party or any of its Subsidiaries) pursuant to any management,
consulting, monitoring, advisory or other services agreement to any of the
shareholders or other equityholders of any Loan Party or any of its Subsidiaries
or other Affiliates, or to any other Subsidiaries or Affiliates of any Loan
Party.

 

“Sanctions” means, individually and collectively, respectively, any and all
economic or financial sanctions, sectoral sanctions, secondary sanctions, trade
embargoes and Anti-Terrorism Laws, including but not limited to those imposed,
administered or enforced from time to time by: (a) the United States of America,
including those administered by the U.S. Treasury Department Office of Foreign
Assets Control (OFAC), the U.S. State Department, the U.S. Department of
Commerce, or through any existing or future Executive Order, (b) the United
Nations Security Council, (c) the European Union, (d) the United Kingdom, or (e)
any other governmental authorities with jurisdiction over any Investor or the
Borrowers.

 

 -23- 

 

 

“Sanctioned Person” means any Person that is a target of Sanctions, including
without limitation, a Person that is: (a) listed on OFAC’s Specially Designated
Nationals and Blocked Persons List; (b) listed on OFAC’s Consolidated Non-SDN
List; (c) a legal entity that is deemed by OFAC to be a Sanctions target based
on the ownership of such legal entity by Sanctioned Person(s); or (d) a Person
that is a Sanctions target pursuant to any territorial or country-based
Sanctions program.

 

“SBA” has the meaning set forth in Section 3.25 hereof.

 

“SBA Act” has the meaning set forth in Section 3.25 hereof.

 

“SBA Forms” means the Size Status Declaration (SBA Form 480), the Assurance of
Compliance for Non-Discrimination (SBA Form 652), and the Portfolio Financing
Report (SBA Form 1031).

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Security Agreement” means the Security Agreement delivered to the Collateral
Agent, for the benefit of the Investors, under Article 5 hereof by the Borrowers
in form and substance acceptable to the Collateral Agent, and any joinder or
supplement thereto, all as may be amended, modified or restated from time to
time in accordance with the terms hereof and thereof.

 

“Security Document” means, individually, and “Security Documents” means,
collectively, any or all of: (a) the Security Agreement, (b) the IP Security
Agreements, (c) any landlord or bailee waivers reasonably required by the
Collateral Agent under the terms of the Security Agreement, (d) any deposit
account control agreements, (e) the Mortgages, (f) any additional documents
required by the Collateral Agent under Section 7.2 hereof, (g) all other
security documents hereafter delivered to the Collateral Agent granting or
perfecting a Lien on any Property of any Person to secure the obligations and
liabilities of any Borrower under any Loan Document, (h) the ancillary documents
relating to the documents set forth in prior clauses (a) – (g), and (i) all
extensions, supplements, renewals, amendments, substitutions or replacements to
any of the foregoing.

 

“Senior Debt” means Indebtedness incurred by the Borrowers under the terms of
the Senior Loan Agreement in a principal amount up to the Senior Debt Cap (as
defined in the Cerberus Intercreditor Agreement), in each case which is subject
to the terms of the Cerberus Intercreditor Agreement.

 

“Senior Debt Loan Documents” means, collectively, the Senior Loan Agreement and
each other “Loan Document” as defined therein.

 

“Senior Agent” means Cerberus Business Finance, LLC, a Delaware limited
liability company.

 

“Senior Lenders” means, collectively, each lender from time to time party to the
Senior Loan Agreement.

 

“Senior Loan Agreement” means the Loan Agreement dated the date hereof by and
among the Company, each Subsidiary of the Company listed as a “Guarantor” on the
signature pages thereto, the Senior Lenders and Senior Agent, as collateral
agent and

 

 -24- 

 

 

administrative agent, as it may be amended, restated or modified from time to
time as permitted under the terms of the Cerberus Intercreditor Agreement.

 

“Solvent” means, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person is not less than the
total amount of the liabilities of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its existing debts as
they become absolute and matured, (c) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.

 

“Subordinated Indebtedness” means Indebtedness of any Loan Party the terms of
which (including, without limitation, payment terms, interest rates, covenants,
remedies, defaults and other material terms) are satisfactory to the Collateral
Agent and the Required Investors and which has been expressly subordinated in
right of payment to all Indebtedness of such Loan Party under the Loan Documents
(a) by the execution and delivery of a subordination agreement, in form and
substance satisfactory to the Collateral Agent and the Required Investors, or
(b) otherwise on terms and conditions satisfactory to the Collateral Agent and
the Required Investors.

 

“Subsidiary” means, with respect to any Person at any date, any corporation,
limited or general partnership, limited liability company, trust, estate,
association, joint venture or other business entity (a) the accounts of which
would be consolidated with those of such Person in such Person's consolidated
financial statements if such financial statements were prepared in accordance
with GAAP or (b) of which more than 50% of (i) the outstanding Equity Interests
having (in the absence of contingencies) ordinary voting power to elect a
majority of the Board of Directors of such Person, (ii) in the case of a
partnership or limited liability company, the interest in the capital or profits
of such partnership or limited liability company or (iii) in the case of a
trust, estate, association, joint venture or other entity, the beneficial
interest in such trust, estate, association or other entity business is, at the
time of determination, owned or controlled directly or indirectly through one or
more intermediaries, by such Person. References to a Subsidiary shall mean a
Subsidiary of the Company unless the context expressly provides otherwise.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

 

“Telecommunications Business(es)” means the business of (a) transmitting or
providing services relating to the transmission of voice, video or data through
transmission facilities, (b) constructing, creating, developing or producing
communications networks, related network transmission, equipment, software,
devices and content for use in a communications or content distribution business
or (c) evaluating, participating or pursuing any other activity or opportunity
that is primarily related to (a) or (b) above.

 

 -25- 

 

 

“Termination Event” means (a) a Reportable Event with respect to any Employee
Plan, (b) any event that causes any Loan Party or any of its ERISA Affiliates to
incur liability under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the Code, (c) the filing
of a notice of intent to terminate an Employee Plan or the treatment of an
Employee Plan amendment as a termination under Section 4041 of ERISA, (d) the
institution of proceedings by the PBGC to terminate an Employee Plan, or (e) any
other event or condition that could reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Employee Plan.

 

“Title Insurance Policy” means a mortgagee’s loan policy, in form and substance
satisfactory to the Collateral Agent, together with all endorsements made from
time to time thereto, issued to the Collateral Agent by or on behalf of a title
insurance company selected by or otherwise satisfactory to the Collateral Agent,
insuring the Lien created by a Mortgage in an amount and on terms and with such
endorsements satisfactory to the Collateral Agent, delivered to the Collateral
Agent.

 

“Transfer” means the sale, assignment, lease, transfer, mortgaging, encumbering
or other disposition, whether voluntary or involuntary, and whether or not
consideration is received therefor.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York.

 

“UCC Filing Authorization Letter” means a letter duly executed by each Loan
Party authorizing the Collateral Agent to file appropriate financing statements
on Form UCC-1 without the signature of such Loan Party in such office or offices
as may be necessary or, in the opinion of the Collateral Agent, desirable to
perfect the security interests purported to be created by each Security
Agreement and each Mortgage.

 

“U.S.” means the United States of America.

 

“Withholding Agent” means any Borrower and the Investor, as applicable.

 

Section 1.2.          Interpretation. (a)          Each reference herein to a
particular Person shall include a reference to such Person’s successors and
permitted assigns. A reference to any document or agreement shall include such
document or agreement as amended, restated, modified or supplemented from time
to time in accordance with its terms, unless otherwise noted. A reference to any
law, rule, regulation or statute includes any amendment or modification thereto.
A reference to the knowledge or awareness of Company or a Borrower shall mean
the actual knowledge of Key Management after reasonable inquiry by those
individuals. The words “herein” “hereof,” “hereunder,” “hereto,” and words of
like import shall refer to this Agreement as a whole and not any particular
article, section or subdivision of this Agreement. A reference to an Article,
Section, Exhibit or Appendix is a reference to the Article, Section, Exhibit or
Appendix of this Agreement unless otherwise indicated. The Exhibits and
Schedules hereto shall be deemed as fully a part of this Agreement as if set
forth herein in full. The headings in this Agreement are inserted for
convenience of reference only and shall not affect the interpretation of this
Agreement. In this Agreement, the singular includes the plural and the plural
includes the singular, pronouns stated in the neuter gender shall include

 

 -26- 

 

 

the masculine, the feminine and the neuter, and the words “including,” “include”
and “includes” shall be deemed to be followed by the words “without limitation.”

 

(b)          Terms defined in the UCC but not otherwise defined herein shall
have the meanings assigned to them in the UCC.

 

(c)          Except as otherwise expressly provided herein, all financial
statements to be delivered pursuant to this Agreement shall be prepared in
accordance with GAAP as in effect from time to time and all terms of an
accounting or financial nature shall be construed and interpreted in accordance
with GAAP as in effect on the date hereof unless otherwise agreed to by the
Borrowers and the Investor.

 

Article 2

Loan

 

Section 2.1.          The Loan. Subject to the provisions of this Agreement, and
relying upon the representations and warranties herein set forth as and when
made or deemed to be made, each Investor, severally, will advance the original
principal amount of its Note to the Borrowers upon the satisfaction of the
applicable conditions set forth in Sections 5.1 and 5.2. The Investors and the
original principal amounts of the Notes to be purchased by each are set forth on
Appendix II hereto.

 

Section 2.2.          Promissory Note. The indebtedness of the Borrowers to the
Investors for the Loan shall be evidenced by the Notes in the aggregate original
principal amount set forth on Appendix II. The Notes shall mature on the date
that is five years and six months after the Funding Date (the “Maturity Date”).
The Notes shall be subordinated to the Senior Debt pursuant to the terms of the
Cerberus Intercreditor Agreement.

 

Section 2.3.          Payments of Principal. The entire unpaid principal balance
of the Loan shall be due and payable on the Maturity Date, unless due sooner in
accordance with Section 10.1.

 

Section 2.4.          Payment of Interest. The Notes shall bear interest on the
outstanding amounts owed thereunder, computed on the basis of a 360-day year for
the actual number of days elapsed, and shall be payable in accordance with the
following:

 

(a)          Regular Interest. Interest shall accrue on the outstanding
principal amount of the Notes at a rate equal to twelve percent (12%) per annum.
The Borrowers shall pay unpaid interest accruing under this Section 2.4(a) on
the last Business Day of every month beginning with the first full calendar
month following the Funding Date in cash via ACH direct debit (or as otherwise
authorized by any Investor).

 

(b)          PIK Interest. Additional interest shall accrue on the outstanding
principal amount of the Notes at a rate equal to two percent (2%) per annum.
Interest accrued under this Section 2.4(b) shall be added to the principal
amount then outstanding hereunder on the last Business Day of every fiscal
quarter beginning with the first full fiscal quarter following the Funding Date.

 

 -27- 

 

 

Section 2.5.          Default and Remedies. In the event of the occurrence and
continuance of any of the Events of Default described in Article 9 of this
Agreement or described in Section 2 of the Notes, the Investors shall be
entitled to the remedies set forth in Article 10 of this Agreement and Section 2
of the Note.

 

Section 2.6.          Payments. All payments of principal, interest, fees and
other amounts due under the Notes shall be made by the Borrowers to the
applicable Investor in lawful money of the United States of America, by check or
wire transfer (according to the wiring instructions set forth at Schedule 2.6)
or ACH direct debit pursuant to the authorization provided pursuant to Section
5.2(v), of immediately available funds before 5:00 p.m. on the Business Day on
which any such amount is due at the office of each Investor or such other office
or by such other means as each Investor shall direct in a written notice
delivered to Company in accordance with the terms of Article 11; provided, that
all payments of interest due under Section 2.4(a) shall be made via ACH direct
debit (or as otherwise authorized by any Investor).

 

Section 2.7.          Optional Prepayments. Upon five (5) Business Days’ prior
written irrevocable notice to the Investors, the Borrowers may elect to prepay,
in whole or in part, the outstanding amount of principal under the Notes,
together with all accrued and unpaid interest on the principal amount prepaid to
the date of prepayment, as well as all of the other monetary obligations or
Borrower Obligations that are payable with respect to the Notes; provided,
however, that any such prepayment must be accompanied by the applicable
Prepayment Premium, if any, computed pursuant to Section 2.9 hereof.
Notwithstanding the above, a Prepayment Premium shall not be applicable if any
prepayment is made from the proceeds of a Mandatory Prepayment Event due to an
Act of Dissolution as provided in Section 2.8(b).

 

Section 2.8.          Mandatory Prepayments. The Notes, including the
outstanding principal balance thereof, any accrued and unpaid interest thereon
(and the appropriate Prepayment Premium, if any, computed pursuant to Section
2.9 hereof), and all other Borrower Obligations shall be immediately due and
payable at the option of the Required Investors if any of the following events
occur (each, a “Mandatory Prepayment Event”):

 

(a)          the occurrence of a Change of Control; or

 

(b)          the occurrence of an Act of Dissolution.

 

Company shall deliver to the Investors notice: (x) with respect to a Mandatory
Prepayment Event under clause (a) or (b) above to which any Borrower is a party,
no later than the earliest of (i) approval by the Board of Directors of any
Borrower of any Contract or transaction, or the execution and delivery by any
Borrower of any Contract, which will result in (alone or together with any
related transactions) a Mandatory Prepayment Event, or (ii) thirty (30) days
prior to the occurrence of such Mandatory Prepayment Event; and (y) with respect
to a Mandatory Prepayment Event under clause (a) or (b) above if no Borrower is
party to the transaction(s) resulting in such Mandatory Prepayment Event,
promptly upon first becoming aware of such Mandatory Prepayment Event or of
transactions which would result in a Mandatory Prepayment Event. Such notice
shall describe the Mandatory Prepayment Event in detail. Nothing in this Section
2.8 shall constitute a consent to any Change of Control or Act of Dissolution to
the

 

 -28- 

 

 

extent such Change of Control or Act of Dissolution is otherwise prohibited or
constitutes an Event of Default.

 

Section 2.9.          Prepayment Premium. Any prepayment made by the Borrowers
pursuant to Section 2.7 or Section 2.8 or as a result of acceleration of the
Loan pursuant to Section 10.1 prior to the third (3rd) anniversary of the
Funding Date is subject to the following schedule of prepayment premiums, which
premiums shall be paid in full by the Borrowers at the time of any such
prepayment (the “Prepayment Premium”):

 

Prepayment made on or

After:

  Premium       the Funding Date, but before the first anniversary of the
Funding Date   Premium equal to 3% of the outstanding principal amount of the
Loan being repaid       the first anniversary of the Funding Date, but before
the second anniversary of the Funding Date   Premium equal to 2% of the
outstanding principal amount of the Loan being repaid       the second
anniversary of the Funding Date, but before the third anniversary of the Funding
Date   Premium equal to 1% of the outstanding principal amount of the Loan being
repaid

 

Notwithstanding the foregoing, prepayments of interest added to the principal
amount outstanding hereunder under the terms of Section 2.4(b) hereof shall not
be subject to this Prepayment Premium.

 

Section 2.10.         Joint and Several Obligations. The obligations of the
Borrowers hereunder shall be joint and several.

 

Section 2.11.         Administrative Borrower. Each Borrower hereby irrevocably
appoints Administrative Borrower as the borrowing agent and attorney-in-fact for
the Borrowers which appointment shall remain in full force and effect unless and
until the Collateral Agent and the Investors shall have received prior written
notice signed by all of the Borrowers that such appointment has been revoked and
that another Borrower has been appointed Administrative Borrower. Each Borrower
hereby irrevocably appoints and authorizes the Administrative Borrower (i) to
provide to the Collateral Agent and Investors and receive from the Collateral
Agent and Investors all notices with respect to Loans obtained for the benefit
of any Borrower and all other notices and instructions under this Agreement and
(ii) to take such action as the Administrative Borrower deems appropriate on its
behalf to obtain Loans and to exercise such other powers as are reasonably
incidental thereto to carry out the purposes of this Agreement. It is understood
that the handling of the Loan and Collateral of the Borrowers in a combined
fashion, as more fully set forth herein, is done solely as an accommodation to
the Borrowers in order to utilize the collective borrowing powers of the
Borrowers in the most efficient and economical manner and at their request, and
that neither the Collateral Agent nor the Investors

 

 -29- 

 

 

shall incur liability to the Borrowers as a result hereof. Each Borrower expects
to derive benefit, directly or indirectly, from the handling of the Loan and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group.

 

Section 2.12.         Increased Costs.

 

(a)          Increased Costs Generally. If any Change in Law shall:

 

(i)          impose, modify or deem applicable any reserve, capital
requirements, compulsory loan, insurance charge or similar requirement against
assets of, or loans extended by, the Investors;

 

(ii)         subject the Investors to any Taxes (other than (A) Indemnified
Taxes, (B) Taxes described in clauses (b) and (c) of the definition of Excluded
Taxes and (C) Connection Income Taxes) on its loans, loan principal or other
obligations, or its deposits, reserves, other liabilities or capital
attributable thereto; or

 

(iii)        impose on the Investors any other condition, cost or expense (other
than Taxes) affecting this Agreement or the Loan made by Investors;

 

and the result of any of the foregoing shall be to increase the cost to the
Investors of making, continuing or maintaining the Loan or of maintaining its
obligation to make the Loan, or to reduce the amount of any sum received or
receivable by the Investors (whether of principal, interest or any other amount)
then, upon request of any Investor, the Borrowers will pay to the Investor, such
additional amount or amounts as will compensate such Investor for such
additional costs incurred or reduction suffered.

 

(b)          Certificates for Reimbursement. A certificate of an Investor
setting forth the amount or amounts necessary to compensate such Investor as
specified in paragraph (a) of this Section and delivered to the Borrowers, shall
be conclusive absent manifest error. The Borrowers shall pay such Investor the
amount shown as due on any such certificate within 10 days after receipt
thereof.

 

(c)          Delay in Requests. Failure or delay on the part of any Investor to
demand compensation pursuant to this Section shall not constitute a waiver of
such Investor’s right to demand such compensation; provided that the Borrowers
shall not be required to compensate any Investor pursuant to this Section for
any increased costs incurred or reductions suffered more than nine months prior
to the date that any Investor notifies the Borrowers of the Change in Law giving
rise to such increased costs or reductions, and of such Investor’s intention to
claim compensation therefor (except that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

 

Section 2.13.         Taxes.

 

(a)          Defined Terms. For purposes of this Section 2.13, the term
“applicable law” includes FATCA.

 

 -30- 

 

 

(b)          Payments Free of Taxes. Any and all payments by or on account of
any obligation of any Borrower under any Loan Document shall be made without
deduction or withholding for any Taxes, except as required by applicable law. If
any applicable law (as determined in the good faith discretion of an applicable
Withholding Agent) requires the deduction or withholding of any Tax from any
such payment by a Withholding Agent, then the applicable Withholding Agent shall
be entitled to make such deduction or withholding and shall timely pay the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable law and, if such Tax is an Indemnified Tax, then the sum payable
by the applicable Borrower shall be increased by the amount (an “Additional
Amount”) necessary so that after such deduction or withholding has been made
(including such deductions and withholdings applicable to additional sums
payable under this Section) each Investor receives an amount equal to the sum it
would have received had no such deduction or withholding been made.

 

(c)          Payment of Other Taxes by the Borrowers. The Borrowers shall timely
pay to the relevant Governmental Authority in accordance with applicable law, or
at the option of each Investor timely reimburse it for the payment of, any Other
Taxes.

 

(d)          Indemnification by the Borrowers. The Borrowers shall jointly and
severally indemnify each Investor, within 10 days after demand therefor, for the
full amount of any Indemnified Taxes (including Indemnified Taxes imposed or
asserted on or attributable to amounts payable under this Section, and for the
avoidance of doubt, including Additional Amounts) payable or paid by each
Investor or required to be withheld or deducted from a payment to each Investor
and any reasonable expenses arising therefrom or with respect thereto, whether
or not such Indemnified Taxes were correctly or legally imposed or asserted by
the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the applicable Borrower by such Investor shall
be conclusive absent manifest error.

 

(e)          Evidence of Payments. As soon as practicable after any payment of
Taxes by any Borrower to a Governmental Authority pursuant to this Section 2.13,
such Borrower shall deliver to the Investors the original or a certified copy of
a receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Investors.

 

(f)          Status of Investors.

 

(i)          Each Investor (or any transferee or assignee thereof, including a
participation holder (any such entity, a “Transferee”)) that is not a U.S.
Person (a “Non-U.S. Lender”) agrees that it shall, no later than the Closing
Date (or, in the case of an Investor which becomes a party hereto pursuant to
Section 12.2 hereof after the Closing Date, promptly after the date upon which
such Investor becomes a party hereto) deliver to the applicable Borrower and the
Administrative Borrower one properly completed and duly executed copy of either
IRS Form W-8BEN, W-8BEN-E, W-8ECI or W-8IMY or any subsequent versions thereof
or successors thereto. In addition, in the case of a Non-U.S. Lender claiming
exemption from U.S. Federal withholding Tax under Section 871(h) or 881(c) of
the Code, such Non-U.S. Lender hereby represents to the applicable Borrower and
the Administrative Borrower that such Non-U.S. Lender is not a bank for purposes
of Section 881(c)(3)(A) of the Code, is not a 10-percent

 

 -31- 

 

 

shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Company and is not a controlled foreign corporation related to the Company
(within the meaning of Section 864(d)(4) of the Code), and such Non-U.S. Lender
agrees that it shall promptly notify the Collateral Agent in the event any such
representation is no longer accurate. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of a Transferee that is a participation holder, on or before the
date such participation holder becomes a Transferee hereunder) and on or before
the date, if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a “New Lending Office”). In addition,
such Investor (or Transferee) shall deliver such forms within 30 days after
receipt of a reasonable written request therefor from the Administrative
Borrower or the applicable Borrower , the assigning Investor or the Investor
granting a participation, as applicable. Notwithstanding any other provision of
this Section 2.13, a Non-U.S. Lender shall not be required to deliver any form
pursuant to this Section 2.13(f) that such Non-U.S. Lender is not legally able
to deliver.

 

(ii)         Any Investor (or Transferee) claiming any indemnity payment or
additional payment amounts payable pursuant to this Section 2.13 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document reasonably requested in writing by the
Administrative Borrower if the making of such a filing would avoid the need for
or reduce the amount of any such indemnity payment or Additional Amount that may
thereafter accrue, would not require such Investor (or Transferee) to disclose
any information such Investor (or Transferee) deems confidential and would not,
in the sole determination of such Investor (or Transferee), be otherwise
disadvantageous to such Investor (or Transferee).

 

(iii)        If a payment made to an Investor (or Transferee) under any Loan
Document would be subject to U.S. Federal withholding Tax imposed by FATCA if
such Investor (or Transferee) were to fail to comply with the applicable
reporting requirements of FATCA (including those contained in Section 1471(b) or
1472(b) of the Code, as applicable), such Investor (or Transferee) shall deliver
to the applicable Borrower and the Administrative Borrower at the time or times
prescribed by law and at such time or times reasonably requested by the
applicable Borrower or the Administrative Borrower such documentation prescribed
by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the
Code) and such additional documentation reasonably requested by the applicable
Borrower and the Administrative Borrower as may be necessary for the applicable
Borrower and the Administrative Borrower to comply with their obligations under
FATCA and to determine that such Investor (or Transferee) has complied with its
obligations under FATCA or to determine the amount to deduct and withhold from
such payment. Solely for purposes of this clause (f), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement. Any forms,
certifications or other documentation under this clause (f) shall be delivered
by each Investor (or Transferee).

 

(g)          Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 2.13 (including by
the payment of Additional Amounts pursuant to this Section 2.13), it shall pay
to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under this Section with respect to the

 

 -32- 

 

 

Taxes giving rise to such refund), net of all out-of-pocket expenses (including
Taxes) of such indemnified party and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of such indemnified party, shall repay to
such indemnified party the amount paid over pursuant to this paragraph (g) (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (g), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (g) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or Additional Amounts with
respect to such Tax had never been paid. This paragraph shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

 

(h)          Tax Documents. If the Company requests, each Investor shall deliver
to the Company on or prior to the date on which such Investor becomes a party to
this this Agreement (and from time to time thereafter upon the reasonable
request of the Company), executed copies of IRS Form W-9 certifying that such
Investor is exempt from U.S. federal backup withholding Tax.

 

(i)          Survival. Each party’s obligations under this Section 2.13 shall
survive any assignment of rights by, or the replacement of, any Investor and the
repayment, satisfaction or discharge of all the Obligations under any Loan
Document.

 

Section 2.14.         Mitigation Obligations; Replacement of Investors.

 

(a)          If any Investor requires the Borrowers to pay any Additional
Amounts under Section 2.13 or requests compensation under Section 2.12, then
such Investor shall (at the request of the Administrative Borrower) use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Investor, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.12 or 2.13 in the future, and (ii) would not
subject such Investor to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Investor. The Borrowers hereby agree to pay
all reasonable costs and expenses incurred by any Investor in connection with
any such designation or assignment.

 

(b)          If any Investor requires the Borrowers to pay any Additional
Amounts under Section 2.13 or requests compensation under Section 2.12 and, in
each case, such Investor has declined or is unable to designate a different
lending office in accordance with Section 2.14(a) above, then the Administrative
Borrower may, at its sole expense and effort, upon notice to such Investor and
the consent of the Collateral Agent (which consent shall not be unreasonably
withheld), require such Investor to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents
required by, Section 12.2), all of its interests, rights and obligations under
this Agreement and the other Loan

 

 -33- 

 

 

Documents to an assignee that shall assume such obligations (which assignee may
be another Investor, if an Investor accepts such assignment); provided that:

 

(iv)        such Investor shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 2.13) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts);

 

(v)         in the case of any such assignment resulting from payments required
to be made pursuant to Section 2.13 or a claim for compensation under Section
2.12, such assignment will result in a reduction in such compensation or
payments thereafter; and

 

(vi)        such assignment does not conflict with applicable law.

 

Prior to the effective date of such assignment, the assigning Investor shall
execute and deliver an assignment and assumption agreement in accordance with
Section 12.2, subject only to the conditions set forth above. If the assigning
Investor shall refuse or fail to execute and deliver any such assignment and
assumption agreement prior to the effective date of such assignment, the
assigning Investor shall be deemed to have executed and delivered such
assignment and assumption agreement. Any such assignment shall be made in
accordance with the terms of Section 12.2.

 

(c)          An Investor shall not be required to make any such assignment or
delegation if, prior thereto, as a result of a waiver by such Investor or
otherwise, the circumstances entitling the Administrative Borrower to require
such assignment and delegation cease to apply.

 

Section 2.15.         AHYDO Catch-Up Payments. Notwithstanding any provision
contained herein, on or before the end of each accrual period (within the
meaning of Section 163(i)(2)(A) of the Code) that ends after the fifth
anniversary of the Loan’s issuance, the applicable Borrowers shall pay in cash
to the applicable recipient such amount as shall be necessary to ensure that the
Loan shall not be considered an “applicable high yield discount obligation”
within the meaning of Section 163(i) of the Code or any successor provision (an
“AHYDO Catch-Up Payment”).

 

Article 3

Representations and Warranties of the Borrowers

 

Each Borrower hereby represents and warrants to each Investor, as of the date
hereof, as follows:

 

Section 3.1.          Organization, Good Standing, Etc. Each member of the
Company Group is (i) a legal entity of the type set forth on Schedule 3.1, duly
incorporated (or otherwise formed), validly existing and in good standing under
the laws of the jurisdiction in which it was organized as set forth on Schedule
3.1, (ii) has all requisite power and authority to conduct its business as now
conducted and as presently contemplated and to make the borrowings hereunder,
and to execute and deliver each Loan Document to which it is a party, and to

 

 -34- 

 

 

consummate the transactions contemplated thereby, and (iii) is duly qualified to
do business and is in good standing in each jurisdiction in which the character
of the properties owned or leased by it or in which the transaction of its
business makes such qualification necessary, except (solely for the purposes of
this subclause (iii)) where the failure to be so qualified and in good standing
could reasonably be expected to have a Material Adverse Effect.

 

Section 3.2.          Authorization, Etc. The execution, delivery and
performance by each Borrower of each Loan Document to which it is or will be a
party, (i) have been duly authorized by all necessary action, (ii) do not and
will not contravene (A) any of its Governing Documents, (B) any applicable
material Requirement of Law or (C) any material Contractual Obligation binding
on or otherwise affecting it or any of its properties, (iii) do not and will not
result in or require the creation of any Lien (other than pursuant to any Loan
Document) upon or with respect to any of its properties, and (iv) do not and
will not result in any default, noncompliance, suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to its operations or any of its properties, except, in the
case of this subclause (iv), to the extent where such contravention, default,
noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal
could not reasonably be expected to have a Material Adverse Effect.

 

Section 3.3.          Governmental Approvals. Subject to the specific
representations with respect to the Telecommunications Approvals set forth
below, no authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority is required in connection with the due
execution, delivery and performance by any Borrower of any Loan Document to
which it is or will be a party other than (x) the authorizations and approvals
to be obtained on or before the Funding Date, (y) filings and recordings with
respect to Collateral to be made, or otherwise delivered to the Collateral Agent
for filing or recordation, on the Funding Date and (z) any consents or approvals
of any Person other than a Governmental Authority where the failure to obtain
such consents or approvals of any such Person, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. Except as
set forth on Schedule 3.3, each Loan Party has all Communications Licenses and
Governmental Authorizations and has filed all required federal and state
applications and notifications, in each case necessary for the operation of the
Telecommunications Businesses in the United States respectively conducted by the
Borrowers (the Communications Licenses, Governmental Authorizations and federal
and state applications and notifications necessary for the operation of the
Telecommunications Businesses in the United States respectively conducted by the
Loan Parties, the “Telecommunications Approvals”), except for those
Telecommunications Approvals the absence of which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
As of the Funding Date, Schedule 3.3 correctly lists (i) all such Communications
Licenses and Governmental Authorizations; (ii) the geographical area to which
each of such Communications Licenses and Governmental Authorizations relates;
(iii) the Governmental Authority that issued each of such Communications
Licenses and Governmental Authorizations; (iv) the expiration date, if any, of
each of such Communications Licenses and Governmental Authorizations; and (v) if
not issued in the name of a Borrower, the name of the Person in whose name such
Communications Licenses and Governmental Authorizations are nominally issued. As
of the Funding Date, all Telecommunications Approvals granted to the Borrowers
remain in full force and effect, except to the extent the failure thereof to be
in full force and effect, individually or in the aggregate, could not reasonably
be expected to have a

 

 -35- 

 

 

Material Adverse Effect, and have not been revoked, suspended, canceled or
modified in any adverse way, that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, and are not subject to
any conditions or requirements that are not generally imposed by the FCC, any
PUC, any Franchising Authority or any other Governmental Authority upon the
holders of such Telecommunications Approvals that, individually or in the
aggregate, could reasonably be expected to result in Material Adverse Effect.
Except as set forth in Schedule 3.3, each Borrower has filed all required
reports, applications and statements of account with the FCC, the Copyright
Office, any PUC and any Franchising Authority, as the case may be, and has paid
all Franchise, license, regulatory, copyright royalty or other fees and charges
which have become due pursuant to any Telecommunications Approvals, except for
fees or charges the failure to pay, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Schedule 3.3, no Borrower is in violation of, or in default of, in a manner
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, any applicable Communications Law or the provisions,
terms and conditions of any Telecommunications Approval. There are no pending
or, to the knowledge of any Loan Party, threatened formal complaints,
proceedings, letters of inquiry, notices of apparent liability, investigations,
protests, petitions or other written objections against any Borrower at the FCC
or the PUC or Franchising Authority of any jurisdiction in which any Borrower
operates, except for matters which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

 

Section 3.4.          Enforceability of Loan Documents. This Agreement is, and
each other Loan Document to which any Borrower is or will be a party, when
delivered hereunder, will be, a legal, valid and binding obligation of such
Person, enforceable against such Person in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity.

 

Section 3.5.          Capitalization. On the Effective Date, after giving effect
to the transactions contemplated hereby, the authorized Equity Interests of the
Company and each of its Subsidiaries and the issued and outstanding Equity
Interests of the Company and each of its Subsidiaries are as set forth on
Schedule 3.5. All of the issued and outstanding shares of Equity Interests of
the Company and each of its Subsidiaries have been validly issued and are fully
paid and nonassessable, and the holders thereof are not entitled to any
preemptive, first refusal or other similar rights. All Equity Interests of such
Subsidiaries of the Company are owned by the Company free and clear of all Liens
(other than Permitted Specified Liens). Except as described on Schedule 3.5,
there are no outstanding debt or equity securities of the Company or any of its
Subsidiaries and no outstanding obligations of the Company or any of its
Subsidiaries convertible into or exchangeable for, or warrants, options or other
rights for the purchase or acquisition from the Company or any of its
Subsidiaries, or other obligations of the Company or any of its Subsidiaries to
issue, directly or indirectly, any shares of Equity Interests of the Company or
any of its Subsidiaries.

 

Section 3.6.          Litigation. Except as set forth in Schedule 3.6, there is
no pending or, to the best knowledge of any Loan Party, threatened action, suit
or proceeding affecting any Loan Party or any of its properties before any court
or other Governmental Authority or any arbitrator that (i) if adversely
determined, could reasonably be expected to have

 

 -36- 

 

 

a Material Adverse Effect or (ii) relates to this Agreement or any other Loan
Document or any transaction contemplated hereby or thereby.

 

Section 3.7.          Financial Statements.

 

(a)          The Financial Statements, copies of which have been delivered to
the Collateral Agent and the Investors, fairly present the consolidated
financial condition of the Company and its Subsidiaries as at the respective
dates thereof and the consolidated results of operations of the Company and its
Subsidiaries for the fiscal periods ended on such respective dates, all in
accordance with GAAP. All material indebtedness and other liabilities
(including, without limitation, Indebtedness, liabilities for taxes, long-term
leases and other unusual forward or long-term commitments), direct or
contingent, of the Company and its Subsidiaries are set forth in the Financial
Statements. Since December 31, 2014 no event or development has occurred that
has had or could reasonably be expected to have a Material Adverse Effect.

 

(b)          The Company has heretofore furnished to Collateral Agent and the
Investors (A) projected monthly balance sheets, income statements and statements
of cash flows of the Company and its Subsidiaries for the period from January 1,
2016, through December 31, 2016, and (B) projected quarterly balance sheets,
income statements and statements of cash flows of the Company and its
Subsidiaries for the period from January 1, 2017 through December 31, 2020,
which projected financial statements shall be updated from time to time pursuant
to Section 7.1(e).

 

Section 3.8.          Compliance with Law, Etc. No Loan Party or any of its
Subsidiaries is in violation of (i) any of its Governing Documents, (ii) any
material Requirement of Law, or (iii) any term of any Contractual Obligation
(including, without limitation, any Material Contract) binding on or otherwise
affecting it or any of its properties, except, in the case of this clause (iii),
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect, and no default or event of default has occurred and is
continuing thereunder.

 

Section 3.9.          ERISA. Except as set forth on Schedule 3.9, (i) each
Employee Plan is in substantial compliance with ERISA and the Code, (ii) no
Termination Event has occurred nor is reasonably expected to occur with respect
to any Employee Plan, (iii) the most recent annual report (Form 5500 Series)
with respect to each Employee Plan, including any required Schedule B (Actuarial
Information) thereto, copies of which have been filed with the IRS and delivered
to the Investors, is complete and correct and fairly presents the funding status
of such Employee Plan, and since the date of such report there has been no
material adverse change in such funding status, (iv) copies of each agreement
entered into with the PBGC, the U.S. Department of Labor or the IRS with respect
to any Employee Plan have been delivered to the Investors, (v) no Employee Plan
had an accumulated or waived funding deficiency or permitted decrease which
would create a deficiency in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code at any time during the previous 60 months, and (vi) no Lien imposed under
the Code or ERISA exists or is likely to arise on account of any Employee Plan
within the meaning of Section 412 of the Code. Except as set forth on Schedule
3.9, no Loan Party or any of its ERISA Affiliates has incurred any withdrawal
liability under ERISA with respect to any Multiemployer

 

 -37- 

 

 

Plan, or is aware of any facts indicating that it or any of its ERISA Affiliates
may in the future incur any such withdrawal liability. No Loan Party or any of
its ERISA Affiliates nor any fiduciary of any Employee Plan has (i) engaged in a
nonexempt prohibited transaction described in Sections 406 of ERISA or 4975 of
the Code, (ii) failed to pay any required installment or other payment required
under Section 412 of the Code on or before the due date for such required
installment or payment, (iii) engaged in a transaction within the meaning of
Section 4069 of ERISA or (iv) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums, and there are no premium
payments which have become due which are unpaid. There are no pending or, to the
best knowledge of any Loan Party, threatened claims, actions, proceedings or
lawsuits (other than claims for benefits in the normal course) asserted or
instituted against (i) any Employee Plan or its assets, (ii) any fiduciary with
respect to any Employee Plan, or (iii) any Loan Party or any of its ERISA
Affiliates with respect to any Employee Plan. Except as required by
Section 4980B of the Code, no Loan Party or any of its ERISA Affiliates
maintains an employee welfare benefit plan (as defined in Section 3(1) of ERISA)
which provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employee of any Loan Party or any of its
ERISA Affiliates or coverage after a participant’s termination of employment.

 

Section 3.10.         No Violation. No Loan Party or any of its Subsidiaries is
in violation of (i) any of its Governing Documents, (ii) any material
Requirement of Law, or (iii) any term of any Contractual Obligation (including,
without limitation, any Material Contract) binding on or otherwise affecting it
or any of its properties, except, in the case of this clause (iii), where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect, and no default or event of default has occurred and is continuing
thereunder.

 

Section 3.11.         Regulations T, U and X. No Loan Party is or will be
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation T, U or X), and no
proceeds of any Loan will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock or for any purpose that violates, or is inconsistent with, the provisions
of Regulations T, U and X.

 

Section 3.12.         Nature of Business.

 

(a)          No Loan Party is engaged in any business other than as set forth on
Schedule 3.12 and business ancillary or incidental thereto.

 

(b)          The Company does not have any material liabilities (other than
liabilities arising under the Loan Documents and the Senior Debt Loan
Documents), own any material assets (other than the Equity Interests of its
Subsidiaries) or engage in any operations or business (other than the ownership
of its Subsidiaries and operations incidental thereto).

 

Section 3.13.         Adverse Agreements, Etc. No Loan Party or any of its
Subsidiaries is a party to any Contractual Obligation or subject to any
restriction or limitation in any Governing Document or any judgment, order,
regulation, ruling or other requirement of a court or other Governmental
Authority, which (either individually or in the aggregate) has, or in

 

 -38- 

 

 

the future could reasonably be expected (either individually or in the
aggregate) to have, a Material Adverse Effect.

 

Section 3.14.         Permits, Etc. Except for the Governmental Approvals
described in Section 3.3, each Loan Party has, and is in compliance with, all
other permits, licenses, authorizations, approvals, entitlements and
accreditations (required for such Person lawfully to own, lease, manage or
operate, or to acquire, each business and Facility currently owned, leased,
managed or operated, or to be acquired, by such Person, except to the extent the
failure to have or be in compliance therewith could not reasonably be expected
to have a Material Adverse Effect. No condition exists or event has occurred
which, in itself or with the giving of notice or lapse of time or both, would
result in the suspension, revocation, impairment, forfeiture or non-renewal of
any such permit, license, authorization, approval, entitlement or accreditation,
and there is no claim that any thereof is not in full force and effect.

 

Section 3.15.         Properties.

 

(a)          Each Loan Party has good and marketable title to, valid leasehold
interests in, or valid licenses to use, all property and assets (other than the
Loan Parties’ Facilities) material to its business, free and clear of all Liens,
except Permitted Liens.

 

(b)          All such properties and assets are in good working order and
condition, ordinary wear and tear excepted. As of the Effective Date, (i) all
Material Facilities are listed on Schedule 1.01(B), under the heading “Material
Facilities” and constitutes all of the Material Facilities owned, leased or
subleased by any Loan Party and (ii) the other real property listed in Schedule
1.01(B) under the heading “Other Facilities” and constitutes, to the best of
each Loan Party’s knowledge after due inquiry, all of the other real property
owned, leased or subleased by any Loan Party. Each Loan Party owns good and
marketable fee simple title to all of its owned Facilities, and valid and
marketable leasehold interests in all of its leased Facilities, all as described
on Schedule 1.01(B), and copies of all such leases or a summary of terms thereof
reasonably satisfactory to the Collateral Agent have been delivered or otherwise
made available to the Collateral Agent. Schedule 1.01(B) further describes (i)
any Material Facility with respect to which any Loan Party is a lessor,
sublessor or assignor as of the Effective Date and (ii) to the best of each Loan
Party’s knowledge after due inquiry, any other Material Facility with respect to
which any Loan Party is a lessor, sublessor or assignor as of the Effective
Date. Each Loan Party also has good and, as applicable, marketable title to,
valid leasehold interests in, or other valid rights to use, all of its personal
property and assets as of the Effective Date. None of the Facilities of any Loan
Party are subject to any Liens other than Permitted Liens, and there are no
facts, circumstances or conditions known to any Loan Party that may result in
any Liens (including Liens arising under Environmental Laws) other than
Permitted Liens. Each Loan Party has received all deeds, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills of sale and
other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Loan Party’s right, title and
interest in and to all such Facilities and other properties and assets. Schedule
1.01(B) also describes any purchase options, rights of first refusal or other
similar contractual rights in effect as of the Effective Date pertaining to any
Facility owned by any Loan Party. Schedule 1.01(B) also describes any purchase
options, rights of first refusal or other similar contractual rights in effect
on the Effective Date pertaining to any Loan Party’s leasehold interest (1) in
any Facility

 

 -39- 

 

 

leased by such Loan Party which was created or granted by any Loan Party or any
Person claiming by, through or under a Loan Party and (2) in any Material
Facility leased by such Loan Party which was created or, to the knowledge the
Loan Parties, granted by any other Person. As of the Effective Date, no portion
of any Loan Party’s Facilities has suffered any material damage by fire or other
casualty loss that has not heretofore been repaired and restored in all material
respects to its original condition or otherwise remedied. As of the Effective
Date, all permits required to have been issued or appropriate to enable the
Facilities to be lawfully occupied and used for all of the purposes for which it
is currently occupied and used have been lawfully issued and are in full force
and effect, except for those permits the absence of which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

 

Section 3.16.         Employee and Labor Matters. There is (i) no unfair labor
practice complaint pending or, to the best knowledge of any Loan Party,
threatened against any Loan Party before any Governmental Authority and no
grievance or arbitration proceeding pending or threatened against any Loan Party
which arises out of or under any collective bargaining agreement, (ii) no
strike, labor dispute, slowdown, stoppage or similar action or grievance pending
or threatened against any Loan Party or (iii) to the best knowledge of each Loan
Party, no union representation question existing with respect to the employees
of any Loan Party and no union organizing activity taking place with respect to
any of the employees of any Loan Party. No Loan Party or any of its ERISA
Affiliates has incurred any liability or obligation under the Worker Adjustment
and Retraining Notification Act (“WARN”) or similar state law, which remains
unpaid or unsatisfied. The hours worked and payments made to employees of any
Loan Party have not been in violation of the Fair Labor Standards Act or any
other applicable legal requirements, except to the extent such violations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. All material payments due from any Loan Party on account of
wages and employee health and welfare insurance and other benefits have been
paid or accrued as a liability on the books of such Loan Party.

 

Section 3.17.         Environmental Matters. Except as set forth on Schedule
3.17, (i) the operations of each Loan Party are in compliance in all material
respects with all Environmental Laws; (ii) there has been no Release at any of
the properties owned or operated by any Loan Party or a predecessor in interest,
or at any disposal or treatment facility which received Hazardous Materials
generated by any Loan Party or any predecessor in interest which could
reasonably be expected to have a Material Adverse Effect; (iii) no Environmental
Action has been asserted against any Loan Party or, to the knowledge of any Loan
Party, any predecessor in interest nor does any Loan Party have knowledge or
notice of any threatened or pending Environmental Action against any Loan Party
or any predecessor in interest which could reasonably be expected to have a
Material Adverse Effect; (iv) no Environmental Actions have been asserted
against any facilities that may have received Hazardous Materials generated by
any Loan Party or, to the knowledge of any Loan Party, any predecessor in
interest which could reasonably be expected to have a Material Adverse Effect;
(v) no property now or formerly owned or operated by a Loan Party has been used
as a treatment or disposal site for any Hazardous Material; (vi) no Loan Party
has failed to report to the proper Governmental Authority any Release which is
required to be so reported by any Environmental Laws which could reasonably be
expected to have a Material Adverse Effect; (vii) each Loan Party holds all
licenses, permits and approvals required under any Environmental Laws in
connection with the operation of the business carried on by it, except for such
licenses, permits and approvals as to

 

 -40- 

 

 

which a Loan Party’s failure to maintain or comply with could not reasonably be
expected to have a Material Adverse Effect; and (viii) no Loan Party has
received any notification pursuant to any Environmental Laws that (A) any work,
repairs, construction or Capital Expenditures are required to be made in respect
as a condition of continued compliance with any Environmental Laws, or any
license, permit or approval issued pursuant thereto or (B) any license, permit
or approval referred to above is about to be reviewed, made, subject to
limitations or conditions, revoked, withdrawn or terminated, in each case,
except as could not reasonably be expected to have a Material Adverse Effect.

 

Section 3.18.         Insurance. Each Loan Party maintains the insurance and
required services and financial assurance as required by law and as required by
Section 7.8. Schedule 3.18 sets forth a list of all insurance maintained by each
Loan Party on the Effective Date.

 

Section 3.19.         Use of Proceeds. The amounts borrowed pursuant to this
Agreement shall be used: (i) to repay existing Indebtedness of the members of
the Company Group; (ii) for working capital and general business purposes of the
members of the Company Group; and (iii) to fund transaction related expenses.

 

Section 3.20.         Solvency. After giving effect to the transactions
contemplated by this Agreement and before and after giving effect to each Loan,
each Loan Party is, and the Loan Parties on a consolidated basis are, Solvent.
No transfer of property is being made by any Loan Party and no obligation is
being incurred by any Loan Party in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of such Loan Party.

 

Section 3.21.         Intellectual Property. Except as set forth on
Schedule 3.21, each Loan Party owns or licenses or otherwise has the right to
use all Intellectual Property rights that are necessary for the operation of its
business, without infringement upon or conflict with the rights of any other
Person with respect thereto, except for such infringements and conflicts which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. Set forth on Schedule 3.21 is a complete and accurate
list as of the Effective Date of (i) each item of Registered Intellectual
Property owned by each Loan Party; (ii) each material work of authorship owned
by each Loan Party and which is not Registered Intellectual Property; and
(iii) each material Intellectual Property Contract to which each Loan Party is
bound. No trademark or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by any Loan Party infringes upon or conflicts with any rights owned by
any other Person, and no claim or litigation regarding any of the foregoing is
pending or threatened, except for such infringements and conflicts which could
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. To the knowledge of each Loan Party, no patent, invention,
device, application, principle or any statute, law, rule, regulation, standard
or code pertaining to Intellectual Property is pending or proposed, which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

Section 3.22.         Material Contracts. Set forth on Schedule 3.22 is a
complete and accurate list as of the Effective Date of all Material Contracts of
each Loan Party,

 

 -41- 

 

 

showing the parties and subject matter thereof and amendments and modifications
thereto. Each such Material Contract (i) is in full force and effect and is
binding upon and enforceable against each Loan Party that is a party thereto
and, to the best knowledge of such Loan Party, all other parties thereto in
accordance with its terms, (ii) has not been otherwise amended or modified,
except as otherwise permitted in accordance with the terms of this Agreement and
(iii) is not in material breach due to the action of any Loan Party or, to the
best knowledge of any Loan Party, any other party thereto.

 

Section 3.23.         Governmental Regulation. None of the Loan Parties is (i)
an “investment company” or an “affiliated person” or “promoter” of, or
“principal underwriter” of or for, an “investment company”, as such terms are
defined in the Investment Company Act of 1940, as amended, or (ii) subject to
regulation under any Requirement of Law that limits in any respect its ability
to incur Indebtedness except as set forth on Schedule 3.23 or which may
otherwise render all or a portion of the Obligations unenforceable. No Loan
Party is subject to regulation under the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder.

 

Section 3.24.         Customers and Suppliers. There exists no actual or, to the
knowledge of any Loan Party, threatened termination, cancellation or limitation
of, or modification to or change in, the business relationship between (i) any
Loan Party, on the one hand, and any customer or any group thereof, on the other
hand, whose agreements with any Loan Party are individually or in the aggregate
material to the business or operations of the Loan Parties, taken as a whole, or
(ii) any Loan Party, on the one hand, and any supplier or any group thereof, on
the other hand, whose agreements with any Loan Party are individually or in the
aggregate material to the business or operations of the Loan Parties, taken as a
whole; and there exists no present state of facts or circumstances that could
give rise to or result in any such termination, cancellation, limitation,
modification or change.

 

Section 3.25.         SBA Forms and Representations. Each of the
representations, statements and certifications made in each of the SBA Forms
delivered to the Collateral Agent and the Investors pursuant to Section 5.2(w)
is accurate and complete and does not fail to state a material fact necessary to
make such representations, statements and certifications not misleading. Company
is a “small business concern” as defined in the Small Business Investment Act of
1958, as amended (the “SBA Act”), and the rules and regulations of the U.S.
Small Business Administration (the “SBA”) issued or promulgated thereunder.
There exists no agreement, expressed or implied, and no condition, statement of
facts or relationship between Company and any other entity or entities which
would prevent it from qualifying as a “small business concern” under the SBA
Act. At the Effective Date, at least fifty-one percent (51%) of the employees
(which term, for purposes of this Section 3.25 shall include independent
contractors) and assets of the members of the Company Group are located in the
U.S.

 

Section 3.26.         Statements and Other Documents Not Misleading. No
provision of this Agreement (including the schedules and exhibits hereto), or of
any other Loan Document, when taken together with all related or similar
provisions, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact required to be stated in order to
make the statement, in light of the circumstances in which it is made, not
misleading.

 

 -42- 

 

 

Section 3.27.         Foreign Assets Control Regulations, Etc.

 

(a)          No member of the Company Group, any Affiliate thereof, or any
respective officers, or directors of such members of the Company Group or
Affiliates: (i) has violated any Anti-Terrorism Laws or (ii) has engaged in any
transaction, investment, undertaking or activity that conceals the identity,
source or destination of the proceeds from any category of prohibited offenses
designated by the Organization for Economic Co-operation and Development’s
Financial Action Task Force on Money Laundering.

 

(b)          No member of the Company Group, any Affiliate thereof, or
respective officers, or directors of such members of the Company Group or
Affiliates is: (i) a Sanctioned Person; (ii) controlled by or acting on behalf
of a Sanctioned Person; (iii) located, organized or resident in a country or
territory that is, or whose government is, the subject of Sanctions, including,
without limitation, currently, Cuba, Iran, North Korea, Sudan and Syria;

 

(c)          No member of the Company Group, any Affiliate thereof, or
respective officers, or directors of such members of the Company Group or
Affiliates acting or benefiting in any capacity in connection with the Loan: (i)
conducts any business or engages in making or receiving any contribution of
goods, services or money to or for the benefit of any Person, or in any country
or territory, that is the target of any Sanctions, (ii) deals in, or otherwise
engages in any transaction related to, any property or interests in property
blocked pursuant to any Anti-Terrorism Law or (iii) engages in or conspires to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.

 

(d)          No member of the Company Group, any Affiliate thereof, or
respective officers, or directors of such member of the Company Group or
Affiliate: (i) is under investigation by any Governmental Authority for, or has
been charged with, or convicted of, a violation of any Anti-Terrorism Law, (ii)
has been assessed civil penalties under any Anti-Terrorism Laws or (iii) has had
any of its funds seized or forfeited in an action under any Anti-Terrorism Laws.
The Company has taken reasonable measures appropriate to the circumstances (in
any event as required by applicable law) to ensure that each member of the
Company Group is and will continue to be in compliance with all applicable
current and future Anti-Terrorism Laws.

 

Section 3.28.         Full Disclosure.

 

(a)          Each Loan Party has disclosed to the Collateral Agent and the
Investors all agreements, instruments and corporate or other restrictions to
which it is subject, and all other matters known to it, that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
None of the reports, financial statements, certificates or other information
furnished by or on behalf of any Loan Party to the Agent and the Investors
(other than forward-looking information and projections and information of a
general economic nature and general information about Borrowers’ industry) in
connection with the negotiation of this Agreement or delivered hereunder (taken
as a whole and as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any

 

 -43- 

 

 

material fact necessary to make the statements therein, in the light of the
circumstances under which it was made, not misleading in any material respect.

 

(b)          The Projections have been prepared on a reasonable basis and in
good faith based on assumptions, estimates, methods and tests that are believed
by the Loan Parties to be reasonable at the time such Projections were prepared
and information believed by the Loan Parties to have been accurate based upon
the information available to the Loan Parties at the time such Projections were
furnished to the Investors, and Company is not be aware of any facts or
information that would lead it to believe that such Projections are incorrect or
misleading in any material respect; it being understood that (A) Projections are
by their nature subject to significant uncertainties and contingencies, many of
which are beyond the Loan Parties’ control, (B) actual results may differ
materially from the Projections and such variations may be material and (C) the
Projections are not a guarantee of performance.

 

Section 3.29.         Anti-Bribery and Anti-Corruption Laws.  

 

(a)          The Loan Parties are in compliance with the U.S. Foreign Corrupt
Practices Act of 1977, as amended (the “FCPA”), and the anti-bribery and
anti-corruption laws of those jurisdictions in which they do business
(collectively, the “Anti-Corruption Laws”).

 

(b)          None of the Loan Parties has at any time:

 

(i)          offered, promised, paid, given, or authorized the payment or giving
of any money, gift or other thing of value, directly or indirectly, to or for
the benefit of any employee, official, representative, or other person acting on
behalf of any foreign (i.e., non-U.S.) Governmental Authority thereof, or of any
public international organization, or any foreign political party or official
thereof, or candidate for foreign political office (collectively, “Foreign
Official”), for the purpose of: (1) influencing any act or decision of such
Foreign Official in his, her, or its official capacity; or (2) inducing such
Foreign Official to do, or omit to do, an act in violation of the lawful duty of
such Foreign Official, or (3) securing any improper advantage, in order to
obtain or retain business for, or with, or to direct business to, any Person; or

 

(ii)         acted or attempted to act in any manner which would subject any of
the Loan Parties to liability under any Anti-Corruption Law.

 

(c)          There are, and have been, no allegations, investigations or
inquiries with regard to a potential violation of any Anti-Corruption Law by any
of the Loan Parties or any of their respective current or former directors,
officers, employees, stockholders or agents, or other persons acting or
purporting to act on their behalf.  

 

(d)          The Loan Parties have adopted, implemented and maintain
anti-bribery and anti-corruption policies and procedures that are reasonably
designed to ensure compliance with the Anti-Corruption Laws.

 

Section 3.30.         Taxes. (a) All Federal and material state and local tax
returns and other reports required by applicable Requirements of Law to be filed
by any Loan

 

 -44- 

 

 

Party have been filed, or extensions have been obtained, and (b) all taxes,
assessments and other governmental charges imposed upon any Loan Party or any
property of any Loan Party in an aggregate amount for all such taxes,
assessments and other governmental charges exceeding $100,000 and which have
become due and payable on or prior to the date hereof have been paid, except to
the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment thereof
and with respect to which adequate reserves have been set aside for the payment
thereof on the Financial Statements in accordance with GAAP.

 

Section 3.31.        Senior Credit Facility.  Borrowers have delivered to the
Investors complete and correct copies of the Senior Debt Loan Documents,
including all schedules and exhibits thereto.  The Senior Debt Loan Documents
set forth the entire agreement and understanding of the parties thereto relating
to the Senior Debt Credit Facility, and there are no other agreements,
arrangements or understandings, written or oral, relating to the matters covered
thereby.  The execution, delivery and performance of the Senior Debt Loan
Documents have been duly authorized by all necessary action (including, without
limitation, the obtaining of any consent of stockholders or other holders of
Equity Interests required by law or by any applicable corporate or other
organizational documents) on the part of each such Person.  No authorization or
approval or other action by, and no notice to filing with or license from, any
Governmental Authority is required other than those already obtained as of the
Effective Date or as contemplated in Section 5.2 or Section 5.3.  The Senior
Debt Loan Documents are legal, valid and binding obligations of the parties
thereto, enforceable against such parties in accordance with its terms.  On the
Funding Date all conditions precedent contained in the Senior Debt Loan
Agreement have been fulfilled or waived.

 

Article 4
Representations and Warranties of the Investors

 

Section 4.1.          Investor Loan Representations and Warranties.  Each
Investor represents and warrants to each Borrower as follows: Such Investor has
all necessary power to enter into this Agreement.  The execution, delivery and
performance by such Investor of this Agreement has been duly authorized by all
requisite action by such Investor; and this Agreement, has been duly executed
and delivered by the Investor and constitutes the legal, valid and binding
obligation of such Investor, enforceable in accordance with its respective
terms, subject to the Legal Reservations.

 

Section 4.2.          Non-Contravention.  The execution, delivery and
performance of this Agreement will not violate any provision of applicable Law,
or any provision of any indenture, agreement or other instrument to which such
Investor or any of its Property is bound, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
Property of such Investor.

 

Section 4.3.          No Conflict of Interest.  Such Investor has not loaned
(and will not loan during the term hereof) any money to and has not made (and
will not make during the term hereof) any investment in any Person that competes
with the Borrowers in their business, and to

 

 -45- 

 

 

the knowledge of such Investor, the exercise by such Investor of its rights set
forth in this Agreement do not create and will not create any conflict of
interest.  

 

Section 4.4.          Investment Representations.  Such Investor is an
“Accredited Investor” as defined in Rule 501 of Regulation D under the
Securities Act.  Such Investor has such knowledge and experience in financial
and business matters, and with respect to transactions of the kind and scope
contemplated by this Agreement, that such Investor is capable of evaluating the
merits and risks of an investment in the applicable Note and of making an
informed investment decision.  

 

Article 5
Conditions Precedent to Closing

 

Section 5.1.          Conditions Precedent to Execution.  This Agreement shall
become effective as of the Business Day (the “Execution Date”) when each of the
following conditions precedent shall have been satisfied in a manner
satisfactory to the Investors:

 

(a)          Agreement.  The Borrowers shall deliver this Agreement to the
Investor, duly executed by the Borrowers;

 

(b)         Certificate of Company.  Company shall deliver to the Investors a
certificate, executed by an Authorized Officer of the Company, dated the
Execution Date, certifying to the fulfillment of the conditions specified in
this Section 5.1, and further certifying that: (i) no Event of Default or
Default shall have occurred and be continuing or shall exist; (ii) that the
representations and warranties of each Borrower contained in this Agreement are
true and correct in all material respects on and as of the Execution Date
(except to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct in all material
respects as of such earlier date); and (iii) the aggregate principal amount of
Indebtedness outstanding under the Senior Loan Agreement on the Execution Date
does not exceed $85,000,000;

 

(c)          Secretary Certificates.  Each Borrower shall deliver to the
Investors a certificate of the secretary of such Borrower attaching:

 

(A)         copies of such Borrower’s Governing Documents, certified by the
secretary of such Borrower as being in full force in such form as of the
Execution Date;

 

(B)         copies of resolutions adopted by the Board of Directors (or similar
governing body) of such Borrower authorizing and approving this Agreement, the
issuance of the Note, and the consummation of all other transactions
contemplated hereby and any shareholder consent if required;

 

(C)         a good standing certificate or the equivalent for such Borrower from
its state of formation, and from each jurisdiction where the Borrower is
required to be qualified, except where the failure to be so qualified could not
reasonably be expected to result in a Material Adverse Effect, dated within a
recent date prior to the Execution Date and satisfactory to the Collateral
Agent’s counsel; and

 

 -46- 

 

 

(D)         certificates of incumbency certifying the names, titles and
signatures of such Borrower’s officers executing the Loan Documents;

 

(d)          Opinion Letter(s).  Each Borrower shall deliver to the Investors
and Collateral Agent opinion letter(s) from legal counsel acceptable to the
Collateral Agent, in form and substance reasonably satisfactory to the
Collateral Agent, and shall include, without limitation, opinions on regulatory
matters;

 

(e)          Cerberus Intercreditor Agreement.  The Borrowers, Collateral Agent
and Senior Agent shall have executed and delivered an intercreditor agreement in
form and substance acceptable to the Required Investors and Collateral Agent in
their sole discretion (as it may be amended, restated or modified from time to
time as permitted under the terms thereof, the “Cerberus Intercreditor
Agreement”);

 

(f)          Senior Loan Agreement.  The Senior Loan Agreement is in form and
substance acceptable to the Investor, is valid and existing, and all rights of
the Borrowers, including the right to draw advances, are available
thereunder.  The Investors shall have received a fully executed copy of the
documents evidencing the Senior Debt through the date hereof, together with the
Senior Lenders’ consent to the Borrowers’ entering into the Loan Documents, in
form and substance acceptable to the Investor;

 

(g)         Capital Structure.  The capital structure of the members of the
Company Group shall be satisfactory to the Investor;

 

(h)         Payment of Amounts Due.  The Borrowers shall pay all fees (including
the closing fees described in Section 6.3.1), expenses and other obligations of
each Borrower which are then due to the Investors and Collateral Agent in
accordance with this Agreement;

 

(i)          Corporate Proceedings; Consents; Etc.  All proceedings (corporate
or otherwise) to be taken and all waivers and consents to be obtained in
connection with the transactions contemplated by the Loan Documents have been
taken or obtained and all documents incident thereto shall be satisfactory in
form and substance to the Required Investors and their counsel, each of whom
shall have received all such originals or certified or other copies of such
documents as it may reasonably request;

 

(j)          Compliance with Securities Laws.  The offering and sale of the
Notes to the Investors shall have complied with all applicable requirements of
federal and state securities laws;

 

(k)         No Adverse Legislation, Action or Decision, Etc.  No legislation
shall have been enacted by Congress, no other formal action shall have been
taken by any Governmental Authority, whether by order, regulation, rule, ruling
or otherwise, and no action shall exist and no decision shall have been rendered
by any court of competent jurisdiction, which could materially and adversely
affect the Notes being purchased by the Investors hereunder;

 

(l)          No Material Adverse Effect.  There shall have occurred no event or
circumstance that has had or could reasonably be expected to result in a
Material Adverse Effect;

 

 -47- 

 

 

(m)          Representations and Warranties.  The representations and warranties
set forth in Section 3 are true and correct as of the Execution Date, including
without limitation the representations and warranties in Section 3.16
(Litigation).

 

(n)          Other Document or Action.  The Borrowers shall deliver such other
documents or perform such other actions relating to the transactions set forth
in this Agreement as any Investor or the Collateral Agent may reasonably
request.

 

Section 5.2.          Conditions Precedent to Funding.  The obligation of the
Collateral Agent and any Investor to make the initial Loan after the Execution
Date (the date of the making of such Loan, which shall be a Business Date,
hereinafter, the “Funding Date”) is subject to the fulfillment, in a manner
satisfactory to the Investors, of each of the following conditions precedent on
or before February 29, 2016:

 

(a)          Security Documents.  The Borrowers shall deliver the Security
Documents (excluding any Security Documents required to be delivered to the
Collateral Agent and the Investors pursuant to Section 5.3) to the Collateral
Agent for the benefit of the Investors, duly executed by the Borrowers;

 

(b)         Certificate of Company.  Company shall deliver to the Investors a
certificate, executed by an Authorized Officer of the Company, dated the Funding
Date, certifying to the fulfillment of the conditions specified in this Section
5.2, and further certifying that: (i) no Event of Default or Default shall have
occurred and be continuing or shall exist; (ii) that the representations and
warranties of each Borrower contained in this Agreement are true and correct in
all material respects on and as of the Funding Date (except to the extent such
representations and warranties expressly refer to a date, in which case they
shall be true and correct in all material respects as of such earlier date); and
(iii) the aggregate principal amount of Indebtedness outstanding under the
Senior Loan Agreement on the Funding Date does not exceed $85,000,000;

 

(c)          Secretary Certificates.  Each Borrower shall deliver to the
Investors a certificate of the secretary of such Borrower certifying:

 

(A)         That there have been no amendments to the Governing documents since
the Execution Date;

 

(B)         As to copies of resolutions adopted by the Board of Directors (or
similar governing body) of such Borrower authorizing and approving the
consummation of all other transactions contemplated hereby and any shareholder
consent if required;

 

(C)         a good standing certificate or the equivalent for such Borrower from
its state of formation, and from each jurisdiction where the Borrower is
required to be qualified, except where the failure to be so qualified could not
reasonably be expected to result in a Material Adverse Effect, dated within a
recent date prior to the Funding Date and satisfactory to the Collateral Agent’s
counsel; and

 

(D)         certificates of incumbency certifying the names, titles and
signatures of such Borrower’s officers executing the Loan Documents;

 

 -48- 

 

 

(d)          Opinion Letter(s).  Each Borrower shall deliver to the Investors
and Collateral Agent opinion letter(s) from legal counsel acceptable to the
Collateral Agent, in form and substance reasonably satisfactory to the
Collateral Agent, and shall include, without limitation, opinions on regulatory
matters;

 

(e)          Insurance.  The Investors and Collateral Agent shall have received
insurance certificates and endorsements satisfying the requirements of Section
7.8 below;

 

(f)          Capital Structure.  There has been no material adverse change in
the capital structure of the members of the Company Group since the Execution
Date;

 

(g)         Financial Statements.  The Borrowers shall deliver the following to
the Collateral Agent and the Investors, all of which shall be in form and
satisfactory to the Collateral Agent and the Investors: (i) the Financial
Statements and Projections; (ii) a pro forma balance sheet for the Company and
its Subsidiaries on a consolidated basis as of the Funding Date;

 

(h)         Flow of Funds.  The Borrowers shall deliver to the Investors a flow
of funds for the Funding Date, including all legal, accounting and other soft
costs payable by the Borrowers in connection with the closing, which funds are
to be approved by and reasonably satisfactory to the Investor;

 

(i)          Governmental Consents.  The Borrowers shall deliver to the
Investors all consents, authorizations and approvals of, and filings and
registrations with, and all other actions in respect of, any Governmental
Authority (including, without limitation, the FCC, any applicable PUC and any
applicable Franchising Authority) or other Person required in connection with
the making of the Loans or the conduct of the Loan Parties' business shall have
been obtained and shall be in full force and effect.

 

(j)          Payoff of Existing Indebtedness; Lien Releases.  The Borrowers
shall provide the Collateral Agent with evidence of payoff of Indebtedness and
release of any existing Liens requested by the Collateral Agent in a form
satisfactory to the Collateral Agent (including, without limitation, the
Existing Credit Facility);

 

(k)          Payment of Amounts Due.  The Borrowers shall pay all fees
(including the closing fees described in Section 6.3.1), expenses and other
obligations of each Borrower which are then due to the Investors and Collateral
Agent in accordance with this Agreement;

 

(l)          Corporate Proceedings; Consents; Etc.  All proceedings (corporate
or otherwise) to be taken and all waivers and consents to be obtained in
connection with the transactions contemplated by the Loan Documents have been
taken or obtained and all documents incident thereto shall be satisfactory in
form and substance to the Required Investors and their counsel, each of whom
shall have received all such originals or certified or other copies of such
documents as it may reasonably request;

 

(m)        Compliance with Securities Laws.  The offering and sale of the Notes
to the Investors shall have complied with all applicable requirements of federal
and state securities laws;

 

 -49- 

 

 

(n)          No Adverse Legislation, Action or Decision, Etc.  No legislation
shall have been enacted by Congress, no other formal action shall have been
taken by any Governmental Authority, whether by order, regulation, rule, ruling
or otherwise, and no action shall exist and no decision shall have been rendered
by any court of competent jurisdiction, which could materially and adversely
affect the Notes being purchased by the Investors hereunder;

 

(o)         No Material Adverse Effect.  There shall have occurred no event or
circumstance that has had or could reasonably be expected to result in a
Material Adverse Effect;

 

(p)         Representations and Warranties.  The representations and warranties
set forth in Section 3 are true and correct as of the Funding Date, including
without limitation the representations and warranties in Section 3.16
(Litigation).

 

(q)         Other Document or Action.  The Borrowers shall deliver such other
documents or perform such other actions relating to the transactions set forth
in this Agreement as any Investor or the Collateral Agent may reasonably
request.

 

(r)          Closing Total Leverage Ratio.  The Collateral Agent and the
Investors shall have received satisfactory evidence that the Leverage Ratio of
the Company and its Subsidiaries for the most recently completed twelve month
period ending on the last day of the most recent fiscal month ending prior to
the Funding Date for which financial statements are then available (calculated
on a pro forma basis to give effect to all Loans and the Senior Debt loans made
on the Funding Date, the other transactions contemplated hereunder, and the
payment of all fees, costs and expenses in connection with this Agreement, the
other Loan Documents and the Senior Debt Loan Documents) does not exceed 4.00 to
1.00.

 

(s)          UCC Filing Authorization Letter.  The Borrowers shall deliver to
the Collateral Agent the UCC Filing Authorization Letter, together with evidence
satisfactory to the Collateral Agent of the filing of appropriate financing
statements on Form UCC-1 in such office or offices as may be necessary or, in
the opinion of the Collateral Agent, desirable to perfect the security interests
purported to be created by each Security Agreement and each Mortgage;

 

(t)          Intercompany Subordination Agreement. The Borrowers shall deliver
the Intercompany Subordination Agreement to the Collateral Agent for the benefit
of the Investors, duly executed by the Borrowers.

 

(u)         Notes.  The Borrowers shall deliver the Notes to the Investors, duly
executed by the Borrowers.

 

(v)         ACH Debit Authorization.  The Borrowers shall deliver to the
Investors completed ACH Debit Authorizations in the form of Exhibit B hereto.

 

(w)        SBA Documentation.  The Borrowers shall deliver to the Investors the
fully executed documents required by the SBA to be executed by each Borrower in
connection with the Loan (including, without limitation, the SBA Forms), and
shall evidence compliance with the Small Business Investment Company Act of
1958, as amended, together with all rules, regulations and guidance promulgated
thereunder;

 

 -50- 

 

 

Section 5.3.          Conditions Subsequent to Effectiveness.  As an
accommodation to the Borrowers, the Collateral Agent and the Investors have
agreed to execute this Agreement and to make the Loans on the Funding Date
notwithstanding the failure by the Borrowers to satisfy the conditions set forth
below on or before the Funding Date.  In consideration of such accommodation,
the Borrowers agree that, in addition to all other terms, conditions and
provisions set forth in this Agreement and the other Loan Documents, including,
without limitation, those conditions set forth in Section 5.1, the Borrowers
shall satisfy each of the conditions subsequent set forth below on or before the
date applicable thereto (it being understood that (i) the failure by the
Borrowers to perform or cause to be performed any such condition subsequent on
or before the date applicable thereto shall constitute an Event of Default and
(ii) to the extent that the existence of any such condition subsequent would
otherwise cause any representation, warranty or covenant in this Agreement or
any other Loan Document to be breached, the Required Investors hereby waive such
breach for the period from the Execution Date until the date on which such
condition subsequent is required to be fulfilled pursuant to this Section 5.3):

 

(a)          Regulatory Notices. Not later than thirty (30) days after the
Funding Date (or such later date as the Collateral Agent shall agree in its
reasonable discretion), Granby Telephone Company LLC shall deliver to the
Massachusetts Department of Telecommunications and Cable one or more written
notices (and shall deliver copies of such notices to the Administrative Agent)
stating that (i) this Agreement is effective and has been entered into by Granby
Telephone Company LLC and (ii) any pledge or security interest in assets owned
by Granby Telephone Company LLC in favor of General Electric Capital Corporation
has been replaced with one or more pledges or security interests granted by
Granby Telephone Company LLC in favor of the Collateral Agent and the Senior
Agent.

 

(b)          Landlord Waivers; Collateral Access Agreements. Not later than
thirty (30) days after the Funding Date (or such later date as the Collateral
Agent shall agree in its reasonable discretion), the Loan Parties shall deliver
to the Collateral Agent and the Investors, (i) solely with respect to any
location at which any Collateral with a book value in excess of $250,000 is
located, a landlord waiver, in form and substance satisfactory to the Collateral
Agent and which may be included as a provision contained in the relevant Lease,
executed by each landlord with respect to each of the Leases set forth on
Schedule III to the Security Agreement and (ii) a collateral access agreement,
in form and substance satisfactory to the Collateral Agent, executed by each
Person who possesses Inventory of any Loan Party with a book value in excess of
$250,000.

 

(c)         Control Agreements. Not later than thirty (30) days after the
Funding Date (or such later date as the Collateral Agent shall agree in its
reasonable discretion), the Loan Parties shall deliver to the Collateral Agent
and the Investors all Control Agreements that, in the reasonable judgment of the
Collateral Agent and the Required Investors, are required for the Loan Parties
to comply with the Loan Documents as of the Funding Date, each duly executed by,
in addition to the applicable Loan Party, the applicable financial institution.

 

(d)         Mortgages; Real Property Deliverables. Not later than 30 days after
the Funding Date (or such later date as the Collateral Agent shall agree in its
reasonable discretion), the Loan Parties shall deliver to the Collateral Agent
each of the Real Property Deliverables with

 

 -51- 

 

 

respect to each Material Facility owned in fee by the Loan Parties (including,
without limitation, evidence satisfactory to the Collateral Agent of the filing
of appropriate financing statements on Form UCC-1 in such office or offices as
may be necessary or, in the opinion of the Collateral Agent, desirable to
perfect the security interests purported to be created by each Mortgage).

 

Article 6
Survival of Representations, Warranties and Agreements;
Indemnification; Fees and Expenses

 

Section 6.1.          Survival of Representations, Warranties and
Agreements.  All representations and warranties contained herein shall survive
the Effective Date and shall continue in full force and effect so long as any
Indebtedness hereunder or Obligations are outstanding or unperformed or this
Agreement otherwise remains in effect.  All statements contained in a
certificate or other instrument delivered by any Borrower pursuant to this
Agreement in connection with the transactions contemplated by this Agreement
shall constitute representations and warranties by the Borrowers under this
Agreement.  All agreements contained herein shall survive indefinitely until, by
their respective terms, they are no longer operative.

 

Section 6.2.          Indemnification.

 

6.2.1.     The Borrowers, without limitation as to time, will defend and
indemnify the Collateral Agent and the Investors and their respective officers,
directors, partners, managers, employees, attorneys and agents (each, an
“Indemnified Party”) against, and hold each Indemnified Party harmless from, all
losses, claims, damages, liabilities, costs (including the reasonable costs of
preparation and reasonable attorneys’ fees and expenses) (collectively, the
“Losses”) incurred by an Indemnified Party as a result of, or arising out of, or
relating to (A) any misrepresentation or breach of any representation or
warranty made by any Borrower herein, (B) any breach of any covenants, agreement
or Obligations of any Borrower contained in any of the Loan Documents or (C) any
investigation or proceeding against any Borrower or any Indemnified Party and
arising out of or in connection with this Agreement or any of the Loan
Documents, whether or not the transactions contemplated by this Agreement are
consummated, which investigation or proceeding requires the participation of, or
is commenced or filed against, any Indemnified Party because of this Agreement,
any other Loan Document such other documents and the transactions contemplated
hereby or thereby, other than any Losses resulting from action or omission on
the part of such Indemnified Party which is finally determined in such
proceeding to be a result of such party’s gross negligence or willful
misconduct.  Each Borrower agrees, on a joint and several basis, to reimburse
each Indemnified Party promptly for all such Losses as they are incurred by such
Indemnified Party in connection with the investigation of, preparation for or
defense of any pending or threatened claim or any action or proceeding arising
therefrom.  The obligations of the Borrowers under this paragraph will survive
any Transfer of the Note and the termination of this Agreement.

 

6.2.2.     If any action, proceeding or investigation is commenced, as to which
any Indemnified Party proposes to demand such indemnification, it shall notify
the Borrowers with reasonable promptness; provided, however, that any failure by
such Indemnified

 

 -52- 

 

 

Party to notify the Borrowers shall not relieve the Borrowers from their
obligations hereunder except to the extent the Borrowers are prejudiced thereby.

 

Section 6.3.          Fees and Expenses.

 

6.3.1.     On the Effective Date, the Borrowers shall pay: (i) a closing fee to
the Investors of one and three quarters of a percent (1.75%) of the original
principal amount of the Notes, (ii) all reasonable professional (excluding
legal) fees, costs and expenses, and other reasonable costs and expenses
incurred by the Collateral Agent in connection with the Loan, (to be reduced by
the $50,000 deposit already paid by Borrowers to NewSpring) and (iii) all
reasonable fees and costs and expenses for one primary counsel for the
Collateral Agent and the Investors (taken as a whole) in connection with the
negotiation, preparation and execution of this Agreement and the other Loan
Documents.  All amounts described in this section shall be due and payable in
full by the Borrowers on the Effective Date.

 

6.3.2.     The Borrowers shall pay, as and when due, all of the following fees
and expenses: (i) the fees and expenses of its own counsel; (ii) any
registration or qualification costs required in connection with the issuance of
the Note or otherwise required pursuant to the terms of this Agreement; (iii)
any recordation, transfer, documentary or other taxes or costs of, or incidental
to, any recording or filing of any of the Security Documents (including any
financing statements) concerning the Collateral; and (iv) the fees and expenses
incurred in connection with any amendment, modification or waiver to this
Agreement, the other Loan Documents and any other documents prepared in
connection herewith or therewith.

 

Article 7
Affirmative Covenants

 

The Borrowers covenant and agree with the Investors that until payment in full
of the Borrower Obligations:

 

Section 7.1.          Reporting Requirements.  Furnish to Collateral Agent and
the Investors:

 

(a)          as soon as available, and in any event within thirty (30) days
after the end of each fiscal month of the Company and its Subsidiaries
commencing with the first fiscal month of the Company and its Subsidiaries
ending after the Effective Date, internally prepared consolidated balance
sheets, statements of operations and retained earnings and statements of cash
flows as at the end of such fiscal month, and for the period commencing at the
end of the immediately preceding fiscal year and ending with the end of such
fiscal month, setting forth in each case in comparative form the figures for the
corresponding date or period set forth in (A) the financial statements for the
immediately preceding fiscal year, and (B) the Projections, all in reasonable
detail and certified by an Authorized Officer of the Company as fairly
presenting, in all material respects, the financial position of the Company and
its Subsidiaries as at the end of such fiscal month and the results of
operations, retained earnings and cash flows of the Company and its Subsidiaries
for such fiscal month and for such year-to-date period, in accordance with GAAP
applied in a manner consistent with that of the most recent audited

 

 -53- 

 

 

financial statements furnished to the Collateral Agent and the Investors,
subject to the absence of footnotes and normal year-end adjustments;

 

(b)          as soon as available and in any event within forty-five (45) days
after the end of each fiscal quarter of the Company and its Subsidiaries
commencing with the first fiscal quarter of the Company and its Subsidiaries
ending after the Effective Date, consolidated balance sheets, statements of
operations and retained earnings and statements of cash flows of the Company and
its Subsidiaries as at the end of such quarter, and for the period commencing at
the end of the immediately preceding fiscal year and ending with the end of such
quarter, setting forth in each case in comparative form the figures for the
corresponding date or period set forth in (A) the financial statements for the
immediately preceding fiscal year and (B) the Projections, all in reasonable
detail and certified by an Authorized Officer of the Company as fairly
presenting, in all material respects, the financial position of the Company and
its Subsidiaries as of the end of such quarter and the results of operations and
cash flows of the Company and its Subsidiaries for such quarter and for such
year-to-date period, in accordance with GAAP applied in a manner consistent with
that of the most recent audited financial statements of the Company and its
Subsidiaries furnished to the Collateral Agent and the Investors, subject to the
absence of footnotes and normal year-end adjustments;

 

(c)          as soon as available, and in any event within ninety (90) days
after the end of each fiscal year of the Company and its Subsidiaries,
consolidated balance sheets, statements of operations and retained earnings and
statements of cash flows of the Company and its Subsidiaries as at the end of
such fiscal year, setting forth in each case in comparative form the figures for
the corresponding date or period set forth in (A) the financial statements for
the immediately preceding fiscal year, and (B) the Projections, all in
reasonable detail and prepared in accordance with GAAP, and accompanied by a
report and an opinion, prepared in accordance with generally accepted auditing
standards, of independent certified public accountants of recognized standing
selected by the Company and satisfactory to the Collateral Agent and the
Required Investors (which opinion shall be without (1) a “going concern” or like
qualification or exception, (2) any qualification or exception as to the scope
of such audit, or (3) any qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with the provisions of Section 8.21),
together with a written statement of such accountants (x) to the effect that, in
making the examination necessary for their certification of such financial
statements, they have not obtained any knowledge of the existence of an Event of
Default or a Default under Section 8.21 and (y) if such accountants shall have
obtained any knowledge of the existence of an Event of Default or such Default,
describing the nature thereof;

 

(d)          simultaneously with the delivery of the financial statements of the
Company and its Subsidiaries required by clauses (a), (b) and (c) of this
Section 7.1, a certificate of an Authorized Officer of the Company (a
“Compliance Certificate”):

 

(i)          stating that such Authorized Officer has reviewed the provisions of
this Agreement and the other Loan Documents and has made or caused to be made
under his or her supervision a review of the condition and operations of the
Company and its Subsidiaries during the period covered by such financial
statements with a view to

 

 -54- 

 

 

determining whether the Company and its Subsidiaries were in compliance with all
of the provisions of this Agreement and such Loan Documents at the times such
compliance is required hereby and thereby, and that such review has not
disclosed, and such Authorized Officer has no knowledge of, the occurrence and
continuance during such period of an Event of Default or Default or, if an Event
of Default or Default had occurred and continued or is continuing, describing
the nature and period of existence thereof and the action which the Company and
its Subsidiaries propose to take or have taken with respect thereto, and

 

(ii)         in the case of the delivery of the financial statements of the
Company and its Subsidiaries required by (1) clauses (b) and (c) of this Section
7.1, attaching a schedule showing the calculation of the financial covenants
specified in Section 8.21 and (2) clauses (a) and (c) of this Section 7.1,
including a discussion and analysis of the financial condition and results of
operations of the Company and its Subsidiaries for the portion of the fiscal
year then elapsed and discussing the reasons for any significant variations from
the Projections for such period and the figures for the corresponding period in
the previous fiscal year.

 

(e)          as soon as available and in any event not later than thirty (30)
days prior to the end of each fiscal year , a certificate of an Authorized
Officer of the Company (A) attaching Projections for the Company and its
Subsidiaries, supplementing and superseding the Projections previously required
to be delivered pursuant to this Agreement, prepared on a monthly basis and
otherwise in form and substance satisfactory to the Collateral Agent, for the
immediately succeeding fiscal year for the Company and its Subsidiaries and (B)
certifying that the representations and warranties set forth in Section 6.29(b)
are true and correct with respect to the Projections;

 

(f)          promptly after submission to any Governmental Authority, all
documents and information furnished to such Governmental Authority in connection
with any investigation of any Loan Party other than routine inquiries by such
Governmental Authority;

 

(g)          as soon as possible, and in any event within three (3) Business
Days after the occurrence of an Event of Default or Default or the occurrence of
any event or development that could reasonably be expected to have a Material
Adverse Effect, the written statement of an Authorized Officer of the
Administrative Borrower setting forth the details of such Event of Default or
Default or other event or development having a Material Adverse Effect and the
action which the affected Loan Party proposes to take with respect thereto;

 

(h)          (A) promptly but in any event within ten (10) Business Days after
any Loan Party or any ERISA Affiliate thereof knows or has reason to know that
(1) any Reportable Event with respect to any Employee Plan has occurred, (2) any
other Termination Event with respect to any Employee Plan has occurred, or (3)
an accumulated funding deficiency has been incurred or an application has been
made to the Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to an Employee
Plan, a statement of an Authorized Officer of the Administrative Borrower
setting forth the details of such occurrence and the action, if any, which such
Loan Party or such ERISA Affiliate proposes to take with respect thereto, (B)
promptly and in any event within three (3) Business

 

 -55- 

 

 

Days after receipt thereof by any Loan Party or any ERISA Affiliate thereof from
the PBGC, copies of each notice received by any Loan Party or any ERISA
Affiliate thereof of the PBGC’s intention to terminate any Plan or to have a
trustee appointed to administer any Plan, (C) promptly and in any event within
ten (10) Business Days after the filing thereof with the IRS if requested by the
Collateral Agent or any Investor, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each
Employee Plan and Multiemployer Plan, (D) promptly and in any event within ten
(10) Business Days after any Loan Party or any ERISA Affiliate thereof knows or
has reason to know that a required installment within the meaning of Section 412
of the Code has not been made when due with respect to an Employee Plan, (E)
promptly and in any event within ten (10) Business Days after receipt thereof by
any Loan Party or any ERISA Affiliate thereof from a sponsor of a Multiemployer
Plan or from the PBGC, a copy of each notice received by any Loan Party or any
ERISA Affiliate thereof concerning the imposition or amount of withdrawal
liability under Section 4202 of ERISA or indicating that such Multiemployer Plan
may enter reorganization status under Section 4241 of ERISA, and (F) promptly
and in any event within ten (10) Business Days after any Loan Party or any ERISA
Affiliate thereof sends notice of a plant closing or mass layoff (as defined in
WARN) to employees, copies of each such notice sent by such Loan Party or such
ERISA Affiliate thereof;

 

(i)          promptly after the commencement thereof but in any event not later
than five (5) Business Days after service of process with respect thereto on, or
the obtaining of knowledge thereof by, any Loan Party, notice of each action,
suit or proceeding before any court or other Governmental Authority or other
regulatory body or any arbitrator which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect;

 

(j)          promptly but in any event within ten (10) Business Days after
execution, receipt or delivery thereof, copies of any material notices that any
Loan Party executes or receives in connection with any Material Contract (other
than the Subordinated Debt Loan Documents);

 

(k)         promptly and in any event within ten (10) Business Days after
execution, receipt or delivery thereof, copies of any material notices that any
Loan Party executes or receives in connection with the sale or other Disposition
of the Equity Interests of, or all or substantially all of the assets of, any
Loan Party;

 

(l)          as soon as possible and in any event within five (5) Business Days
after the delivery thereof to the Company’s or any Borrower’s Board of
Directors, copies of all reports or other information so delivered;

 

(m)         promptly after (A) the sending or filing thereof, copies of all
statements, reports and other information any Loan Party sends to any holders of
its Indebtedness or its securities or files with the SEC or any national
(domestic or foreign) securities exchange and (B) the receipt thereof, a copy of
any material notice received from any holder of its Indebtedness;

 

 -56- 

 

 

(n)          promptly upon receipt thereof, copies of all financial reports
(including, without limitation, management letters), if any, submitted to any
Loan Party by its auditors in connection with any annual or interim audit of the
books thereof;

 

(o)         promptly upon request, any certification or other evidence requested
from time to time by any Investor in its sole discretion, confirming the
Borrowers’ compliance with Section 8.20;

 

(vii)       simultaneously with the delivery of the financial statements of the
Company and its Subsidiaries required by clauses (a), (b) and (c) of this
Section 7.1, if, as a result of any change in accounting principles and policies
from those used in the preparation of the Financial Statements that is permitted
by Section 8.17, the consolidated financial statements of the Company and its
Subsidiaries delivered pursuant to clauses (a), (b) and (c) of this Section 7.1
will differ from the consolidated financial statements that would have been
delivered pursuant to such subdivisions had no such change in accounting
principles and policies been made, then, together with the first delivery of
such financial statements after such change, one or more statements of
reconciliation for all such prior financial statements in form and substance
satisfactory to the Agents;

 

(viii)      promptly upon receipt of notice of (A) any actual or threatened
forfeiture, non-renewal, cancellation, termination, revocation, suspension,
impairment or material modification of any material Telecommunications Approval
held by any Loan Party, or any notice of default or forfeiture with respect to
any such material Telecommunications Approval, or (B) any refusal by the FCC,
any PUC or any Franchising Authority to renew or extend any such material
Communications License, a certificate of an Authorized Officer specifying the
nature of such event, the period of existence thereof, and what action such Loan
Party is taking and propose to take with respect thereto;

 

(ix)         promptly upon receipt thereof, copies of any notices of default or
other material notices given or received pursuant to the Senior Debt Loan
Documents and promptly after the sending thereof, copies of all certificates and
other reports relating to financial covenants and financial tests under the
Senior Debt Loan Documents;

 

(p)          not later than August 31 of each fiscal year commencing with the
fiscal year ending December 31, 2016, a certificate of an Authorized Officer of
the Company attaching a summary of all material insurance coverage maintained as
of the date thereof by any Loan Party and all material insurance coverage
planned to be maintained by any Loan Party, together with such other related
documents and information as the Collateral Agent and the Investors may
reasonably require; and

 

(q)          promptly upon request, such other information concerning the
condition or operations, financial or otherwise, of any Loan Party as any Agent
may from time to time reasonably request.

 

Section 7.2.          Additional Borrowers, Guarantors and Collateral
Security.  Cause:

 

(x)          each Subsidiary of any Loan Party not in existence on the Effective
Date, and each Subsidiary of any Loan Party which is a PUC Restricted Subsidiary
on the

 

 -57- 

 

 

Effective Date or upon formation or acquisition but later ceases to be a PUC
Restricted Subsidiary, to execute and deliver to the Collateral Agent promptly
and in any event within ten (10) Business Days after the formation, acquisition
or change in status thereof, (A) a Joinder Agreement, pursuant to which such
Subsidiary shall be made a party to this Agreement as a Borrower or a Guarantor,
(B) a supplement to the Security Agreement, together with (1) certificates
evidencing all of the Equity Interests of any Person owned by such Subsidiary
required to be pledged under the terms of the Security Agreement, (2) undated
stock powers for such Equity Interests executed in blank with signature
guaranteed, and (3) such opinions of counsel as the Collateral Agent may
reasonably request, (C) to the extent required under the terms of this
Agreement, one or more Mortgages creating on the real property of such
Subsidiary a perfected, first priority Lien (in terms of priority, subject only
to Permitted Specified Liens) on such real property and such other Real Property
Deliverables as may be required by the Collateral Agent with respect to each
such real property and (D) such other agreements, instruments, approvals or
other documents reasonably requested by the Collateral Agent in order to create,
perfect, establish the first priority of or otherwise protect any Lien purported
to be covered by any such Security Agreement or Mortgage or otherwise to effect
the intent that such Subsidiary shall become bound by all of the terms,
covenants and agreements contained in the Loan Documents and that all property
and assets of such Subsidiary shall become Collateral for the Obligations; and

 

(a)          each owner of the Equity Interests of any such Subsidiary to
execute and deliver promptly and in any event within ten (10) Business Days
after the formation or acquisition of such Subsidiary a pledge agreement in form
and substance satisfactory to the Collateral Agent and the Investors, together
with (A) certificates evidencing all of the Equity Interests of such Subsidiary
required to be pledged under the terms of the Security Agreement, (B) undated
stock powers or other appropriate instruments of assignment for such Equity
Interests executed in blank with signature guaranteed, (C) such opinions of
counsel as the Collateral Agent may reasonably request and (D) such other
agreements, instruments, approvals or other documents requested by the
Collateral Agent.

 

Section 7.3.          Compliance with Laws; Payment of Taxes.

 

(a)          Comply, and cause each of its Subsidiaries to comply, in all
material respects, with (A) all Requirements of Law (including, without
limitation, all Environmental Laws and Communications Laws), judgments and
awards (including any settlement of any claim that, if breached, could give rise
to any of the foregoing) and (B) the provisions, terms and conditions of all
Telecommunications Approvals.

 

(b)          Pay, and cause each of its Subsidiaries to pay, in full before
delinquency or before the expiration of any extension period, all Taxes,
assessments and other governmental charges imposed upon any Loan Party or any of
its Subsidiaries or any property of any Loan Party or any of its Subsidiaries in
an aggregate amount for all such Taxes, assessments and other governmental
charges exceeding $100,000, except to the extent contested in good faith by
proper proceedings which stay the imposition of any penalty, fine or Lien
resulting from the non-payment thereof and with respect to which adequate
reserves have been set aside for the payment thereof in accordance with GAAP.  

 

 -58- 

 

 

Section 7.4.          Preservation of Existence, Etc.  Maintain, preserve and
keep in full force and effect, and cause each of its Subsidiaries to maintain,
preserve and keep in full force and effect, (i) its existence, rights and
privileges, and become or remain, and cause each of its Subsidiaries to become
or remain, duly qualified and in good standing in each jurisdiction in which the
character of the properties owned or leased by it or in which the transaction of
its business makes such qualification necessary, except where such failure to be
so qualified could not reasonably be expected to have a Material Adverse Effect
and (ii) its material rights and franchises, including, without limitation, all
Telecommunications Approvals.

 

Section 7.5.          Keeping of Records and Books of Account.  Keep, and cause
each of its Subsidiaries to keep, adequate records and books of account, with
complete entries made to permit the preparation of financial statements in
accordance with GAAP.

 

Section 7.6.          Inspection Rights.  Permit, and cause each of its
Subsidiaries to permit, the agents and representatives (including any SBA
representative) of the Collateral Agent and the Investors at any time and from
time to time during normal business hours, at the expense of the Borrowers, to
examine and make copies of and abstracts from its records and books of account,
to visit and inspect its properties, to verify materials, leases, notes,
accounts receivable, deposit accounts and its other assets, to conduct audits,
physical counts, valuations, appraisals, Phase I Environmental Site Assessments
(and, if requested by the Collateral Agent based upon the results of any such
Phase I Environmental Site Assessment, a Phase II Environmental Site Assessment)
or examinations and to discuss its affairs, finances and accounts with any of
its directors, officers, managerial employees, independent accountants or any of
its other representatives.  In furtherance of the foregoing, each Loan Party
hereby authorizes its independent accountants, and the independent accountants
of each of its Subsidiaries, to discuss the affairs, finances and accounts of
such Person (independently or together with representatives of such Person) with
the agents and representatives (including any SBA representative) of the
Collateral Agent or any Investor in accordance with this Section 7.6.  Nothing
in this Section 7.6 shall in any way be deemed to limit the Investor, its
representative and the SBA’s ability to inspect any such information to the
extent that it is required to make the Loan compliant with all requirements of
investment by a Small Business Investment Company in a “small business concern”
as defined in the SBA Act, and the rules and regulations of the SBA issued or
promulgated thereunder and to the extent that this Section 7.6 conflicts with
such requirements of investment, the requirements of investment by a Small
Business Investment Company in a “small business concern” as defined in the SBA
Act, and the rules and regulations of the SBA issued or promulgated thereunder,
shall control.

 

Section 7.7.          Maintenance of Properties, Etc.  Maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, all of its
properties which are necessary or useful in the proper conduct of its business
in good working order and condition, ordinary wear and tear and casualty
excepted, and comply, and cause each of its Subsidiaries to comply, at all times
with the provisions of all leases to which it is a party as lessee or under
which it occupies property, so as to prevent any loss or forfeiture thereof or
thereunder, except to the extent the failure to so maintain and preserve or so
comply could not reasonably be expected to have a Material Adverse Effect.

 

 -59- 

 

 

Section 7.8.          Maintenance of Insurance.  Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations (including, without limitation, comprehensive general
liability, hazard, rent, worker’s compensation and business interruption
insurance) with respect to its properties (including all real properties leased
or owned by it) and business, in such amounts and covering such risks as is
required by any Governmental Authority having jurisdiction with respect thereto
or as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated and in any event in amount,
adequacy and scope reasonably satisfactory to the Collateral Agent.  All
policies covering the Collateral are to be made payable to the Collateral Agent
for the benefit of the Investors, as its interests may appear, in case of loss,
under a standard non-contributory “lender” or “secured party” clause and are to
contain such other provisions as the Collateral Agent may require to fully
protect the Investors’ interest in the Collateral and to any payments to be made
under such policies.  All certificates of insurance are to be delivered to the
Collateral Agent and the policies are to be premium prepaid, with the loss
payable and additional insured endorsement in favor of the Collateral Agent and
such other Persons as the Collateral Agent may designate from time to time, and
shall provide for not less than thirty (30) days’ (ten (10) days’ in the case of
non-payment) prior written notice to the Collateral Agent of the exercise of any
right of cancellation.  If any Loan Party or any of its Subsidiaries fails to
maintain such insurance, the Collateral Agent may arrange for such insurance,
but at the Borrowers’ expense and without any responsibility on the Collateral
Agent’s part for obtaining the insurance, the solvency of the insurance
companies, the adequacy of the coverage, or the collection of claims.  Upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent shall have the sole right, in the name of the Investors, any Loan Party
and its Subsidiaries, to file claims under any insurance policies, to receive,
receipt and give acquittance for any payments that may be payable thereunder,
and to execute any and all endorsements, receipts, releases, assignments,
reassignments or other documents that may be necessary to effect the collection,
compromise or settlement of any claims under any such insurance policies.  

 

Section 7.9.          Obtaining of Permits, Etc.

 

(a)          Obtain, maintain and preserve, and cause each of its Subsidiaries
to obtain, maintain and preserve, and take all necessary action to timely renew,
all permits, licenses, authorizations, approvals, entitlements and
accreditations (other than Telecommunications Approvals) that are necessary or
useful in the proper conduct of its business, in each case, except to the extent
the failure to obtain, maintain, preserve or take such action could not
reasonably be expected to have a Material Adverse Effect; and

 

(b)         do or cause to be done all things necessary to preserve and keep in
full force and effect its material rights and franchises, including, without
limitation, all Telecommunications Approvals.

 

Section 7.10.        Environmental.  Keep any property either owned or operated
by it or any of its Subsidiaries free of any Environmental Liens; (ii) comply in
all material respects, and cause each of its Subsidiaries to comply in all
material respects, with all Environmental Laws and provide to the Collateral
Agent any documentation of such compliance which the Collateral Agent may
reasonably request; (iii) provide the Agents written notice within five (5)

 

 -60- 

 

 

Business Days of any Release of a Hazardous Material in excess of any reportable
quantity from or onto property at any time owned or operated by it or any of its
Subsidiaries and take any Remedial Actions required to abate said Release; and
(iv) provide the Agents with written notice within ten (10) Business Days of the
receipt of any of the following: (A) notice that an Environmental Lien has been
filed against any property of any Loan Party or any of its Subsidiaries;
(B) commencement of any Environmental Action or notice that an Environmental
Action will be filed against any Loan Party or any of its Subsidiaries; and
(C) notice of a violation, citation or other administrative order which could
reasonably be expected to have a Material Adverse Effect.

 

Section 7.11.         Fiscal Year.  Cause the fiscal year of the Company and its
Subsidiaries to end on December 31 of each calendar year unless the Investors
consent to a change in such fiscal year (and appropriate related changes to this
Agreement).

 

Section 7.12.         Landlord Waivers; Collateral Access Agreements.  At any
time any Collateral with a book value in excess of $250,000 (when aggregated
with all other Collateral at the same location) is located on any real property
of a Loan Party (whether such real property is now existing or acquired after
the Funding Date) which is not owned by a Loan Party, or is stored on the
premises of a bailee, warehouseman, or similar party, use commercially
reasonable efforts to obtain written subordinations or waivers or collateral
access agreements, as the case may be, in form and substance satisfactory to the
Collateral Agent.

 

Section 7.13.         After Acquired Real Property.  Upon the acquisition by it
or any of its Subsidiaries after the date hereof of any interest in any
fee-owned real property (wherever located) (each such interest being a “New
Facility”) that is a Material Facility, immediately so notify the Collateral
Agent, setting forth with specificity a description of the interest acquired,
the location of the real property, any structures or improvements thereon and
either an appraisal or such Loan Party’s good-faith estimate of the current
value of such real property (for purposes of this Section, the “Current
Value”).  The Collateral Agent shall notify such Loan Party whether it intends
to require a Mortgage (and any other Real Property Deliverables) with respect to
such Material Facility.  Upon receipt of such notice requesting a Mortgage (and
any other Real Property Deliverables), the Person that has acquired such
Material Facility shall promptly furnish the same to the Collateral Agent.  The
Borrowers shall pay all fees and expenses, including, without limitation,
reasonable attorneys’ fees and expenses, and all title insurance charges and
premiums, in connection with each Loan Party’s obligations under this Section
7.13.

 

Section 7.14.         Anti-Bribery and Anti-Corruption Laws.  Maintain, and
cause each of its Subsidiaries to maintain, anti-bribery and anti-corruption
policies and procedures that are reasonably designed to ensure compliance with
the Anti-Corruption Laws.

 

Section 7.15.         Investor Meetings.  Upon the request of Collateral Agent
or the Required Investors (which request, so long as no Event of Default shall
have occurred and be continuing, shall not be made more than once during each
fiscal year), participate in a meeting with the Collateral Agent and the
Investors at the Borrowers’ corporate offices (or at such other location as may
be agreed to by the Administrative Borrower and the Collateral Agent or the
Required Investors) at such time as may be agreed to by the Administrative
Borrower and the Collateral Agent or the Required Investors.

 

 -61- 

 

 

Section 7.16.        Cash Management Arrangements and Other Collateral
Matters.  

 

(a)          The Loan Parties shall (i) establish and maintain cash management
services of a type and on terms reasonably satisfactory to the Agents at one or
more of the banks set forth on Schedule 7.16 (each a “Cash Management Bank”) and
(ii) except as otherwise provided under Schedule 7.16(b), deposit or cause to be
deposited promptly, and in any event no later than the next Business Day after
the date of receipt thereof, all proceeds in respect of any Collateral, all
Collections (of a nature susceptible to a deposit in a bank account) and all
other amounts received by any Loan Party (including payments made by Account
Debtors directly to any Loan Party) into a Cash Management Account.

 

(b)          Within thirty (30) days after the Funding Date (or such longer
period as agreed to in writing by the Collateral Agent), the Loan Parties shall,
with respect to each Cash Management Account (other than Excluded Accounts),
deliver to the Collateral Agent a Control Agreement with respect to such Cash
Management Account. From and after thirty (30) days after the Funding Date (or
such longer period as agreed to in writing by the Collateral Agent), the Loan
Parties shall not maintain, and shall not permit any of their Subsidiaries to
maintain, cash, Cash Equivalents or other amounts in any deposit account or
securities account, unless the Collateral Agent shall have received a Control
Agreement in respect of each such Cash Management Account (other than Excluded
Accounts).

 

(c)          Upon the terms and subject to the conditions set forth in a Control
Agreement with respect to a Cash Management Account, all amounts received in
such Cash Management Account shall at the Collateral Agent's direction be wired
each Business Day into the Collateral Agent's Account, except that, so long as
no Event of Default has occurred and is continuing, the Collateral Agent will
not direct the Cash Management Bank to transfer funds in such Cash Management
Account to the Collateral Agent's Account.

 

(d)          So long as no Default or Event of Default has occurred and is
continuing, the Borrowers may amend Schedule 7.16 to add or replace a Cash
Management Bank or Cash Management Account; provided, however, that (i) such
prospective Cash Management Bank shall be reasonably satisfactory to the
Collateral Agent and the Collateral Agent shall have consented in writing in
advance to the opening of such Cash Management Account with the prospective Cash
Management Bank, and (ii) prior to the time of the opening of such Cash
Management Account, each Loan Party and such prospective Cash Management Bank
shall have executed and delivered to the Collateral Agent a Control
Agreement.  Each Loan Party shall close any of its Cash Management Accounts (and
establish replacement cash management accounts in accordance with the foregoing
sentence) promptly and in any event within thirty (30) days of notice from the
Collateral Agent that the creditworthiness of any Cash Management Bank is no
longer acceptable in the Collateral Agent's reasonable judgment, or that the
operating performance, funds transfer, or availability procedures or performance
of such Cash Management Bank with respect to Cash Management Accounts or the
Collateral Agent's liability under any Control Agreement with such Cash
Management Bank is no longer acceptable in the Collateral Agent's reasonable
judgment.

 

 -62- 

 

 

 

Section 7.17.        Rights in Respect of Board of Directors of Company.

 

(a)          From the Funding Date through the date until the Obligations have
been irrevocably paid in full and discharged:

 

(i)          The Investor shall be entitled to one observation seat on the Board
of Directors of the Company, and

 

(ii)        The Investor representative on the Board of Directors of the Company
shall be entitled to the reimbursement of all reasonable out of pocket expenses
incurred in connection with its rights under Section 7.17(a)(i).

 

Section 7.18.         Further Assurances.  Take such action and execute,
acknowledge and deliver, and cause each of its Subsidiaries to take such action
and execute, acknowledge and deliver, at its sole cost and expense, such
agreements, instruments or other documents as the Collateral Agent or any
Investor may require from time to time in order (i) to carry out more
effectively the purposes of this Agreement and the other Loan Documents, (ii) to
subject to valid and perfected first priority Liens any of the Collateral or any
other property of any Loan Party and its Subsidiaries, (iii) to establish and
maintain the validity and effectiveness of any of the Loan Documents and the
validity, perfection and priority of the Liens intended to be created thereby,
and (iv) to better assure, convey, grant, assign, transfer and confirm unto each
Secured Party the rights now or hereafter intended to be granted to it under
this Agreement or any other Loan Document.  In furtherance of the foregoing, to
the maximum extent permitted by applicable law, each Loan Party (i) authorizes
Collateral Agent to execute any such agreements, instruments or other documents
in such Loan Party’s name and to file such agreements, instruments or other
documents in any appropriate filing office to establish and maintain the
validity, perfection and priority of the Liens intended to be created by any
Loan Document, (ii) authorizes Collateral Agent to file any financing statement
required hereunder or under any other Loan Document, and any continuation
statement or amendment with respect thereto, in any appropriate filing office
without the signature of such Loan Party, and (iii) ratifies the filing of any
financing statement, and any continuation statement or amendment with respect
thereto, filed without the signature of such Loan Party prior to the Funding
Date.

 

Article 8
Negative Covenants

 

Until the Obligations are repaid in full, each Borrower, for itself and on
behalf of each of its Subsidiaries covenants and agrees with each Investor not
to do any of the following without the prior written consent of the Investors.

 

Section 8.1.          Liens, etc.  Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien upon or with respect to any of its properties, whether now owned or
hereafter acquired; file or suffer to exist under the UCC or any Requirement of
Law of any jurisdiction, a financing statement (or the equivalent thereof) that
names it or any of its Subsidiaries as debtor; sign or suffer to exist any
security agreement authorizing any secured party thereunder to file such
financing statement (or the equivalent thereof) other than, as to all of the
above, Permitted Liens.

 

 -63- 

 

 

Section 8.2.          Indebtedness.  Create, incur, assume, guarantee or suffer
to exist, or otherwise become or remain liable with respect to, or permit any of
its Subsidiaries to create, incur, assume, guarantee or suffer to exist or
otherwise become or remain liable with respect to, any Indebtedness other than
Permitted Indebtedness.

 

Section 8.3.          Fundamental Changes; Dispositions.  

 

(a)          Wind-up, liquidate or dissolve, or merge, consolidate or amalgamate
with any Person, or permit any of its Subsidiaries to do (or agree to do) any of
the foregoing; provided, however, that (A) any Subsidiary that is not a Loan
Party may wind-up, liquidate or dissolve and (B) any wholly-owned Subsidiary of
any Loan Party may be merged into such Loan Party (other than the Company
unless, after giving effect to such merger, consolidation or amalgamation, the
Company is the surviving Loan Party)or a wholly-owned Subsidiary of such Loan
Party, or may consolidate or amalgamate with another wholly-owned Subsidiary of
such Loan Party, so long as in the case of this subclause (B) (I) no other
provision of this Agreement would be violated thereby, (II) such Loan Party
gives the Collateral Agent and the Investors at least ten (10) Business Days’
prior written notice of such merger, consolidation or amalgamation accompanied
by true, correct and complete copies of all material agreements, documents and
instruments relating to such merger, consolidation or amalgamation, including,
but not limited to, the certificate or certificates of merger or amalgamation to
be filed with each appropriate Secretary of State (with a copy as filed promptly
after such filing), (III) no Default or Event of Default shall have occurred and
be continuing either before or after giving effect to such transaction, (IV) the
Investors’ rights in any Collateral, including, without limitation, the
existence, perfection and priority of any Lien thereon, are not adversely
affected by such merger, consolidation or amalgamation and (V) except in the
case of any such merger, consolidation or amalgamation between two Subsidiaries
that are not Loan Parties, the surviving Subsidiary, if any, if not already a
Loan Party, is joined as a Loan Party hereunder pursuant to a Joinder Agreement
and is a party to a Security Agreement and the Equity Interests of such
Subsidiary is the subject of a Security Agreement, in each case, which is in
full force and effect on the date of and immediately after giving effect to such
merger, consolidation or amalgamation; and

 

(b)          Make any Disposition, whether in one transaction or a series of
related transactions, of all or any part of its business, property or assets,
whether now owned or hereafter acquired (or agree to do any of the foregoing),
or permit any of its Subsidiaries to do any of the foregoing; provided, however,
that any Loan Party and its Subsidiaries may make Permitted Dispositions.

 

Section 8.4.          Change in Nature of Business.  

 

(a)          Make, or permit any of its Subsidiaries to make, any change in the
nature of its business as described in Section 3.12.

 

(b)         Permit the Company to have any material liabilities (other than
liabilities arising under the Loan Documents and the Subordinated Debt Loan
Documents), own

 

 -64- 

 

 

any material assets (other than the Equity Interests of its Subsidiaries) or
engage in any operations or business (other than the ownership of its
Subsidiaries).

 

Section 8.5.          Loans, Advances, Investments, Etc.  Make or commit or
agree to make, or permit any of its Subsidiaries make or commit or agree to
make, any Investment in any other Person except for Permitted Investments.

 

Section 8.6.          Sale and Leaseback Transactions.  Enter into, or permit
any of its Subsidiaries to enter into, any Sale and Leaseback Transaction.

 

Section 8.7.          Capital Expenditures.  Make or commit or agree to make, or
permit any of its Subsidiaries to make or commit or agree to make, any Capital
Expenditure (by purchase or Capital Lease) that would cause the aggregate amount
of all Capital Expenditures made by the Loan Parties and their Subsidiaries
exceed (a) $ 7,716,500 in each of the fiscal years ended December 31, 2016 and
December 31, 2017 or (b) $7,166,500 in any fiscal year thereafter.

 

Section 8.8.          Restricted Payments.  Make or permit any of its
Subsidiaries to make any Restricted Payment other than Permitted Restricted
Payments.

 

Section 8.9.          Federal Reserve Regulations.  Permit any Loan or the
proceeds of any Loan under this Agreement to be used for any purpose that would
cause such Loan to be a margin loan under the provisions of Regulation T, U or X
of the Board of Governors of the Federal Reserve System of the United States (or
any successor)..  

 

Section 8.10.       Transactions with Affiliates.  Enter into, renew, extend or
be a party to, or permit any of its Subsidiaries to enter into, renew, extend or
be a party to, any transaction or series of related transactions (including,
without limitation, the purchase, sale, lease, transfer or exchange of property
or assets of any kind or the rendering of services of any kind) with any
Affiliate, except (i) transactions consummated in the ordinary course of
business in a manner and to an extent consistent with past practice and
necessary or desirable for the prudent operation of its business, for fair
consideration and on terms no less favorable to it or its Subsidiaries than
would be obtainable in a comparable arm’s length transaction with a Person that
is not an Affiliate thereof, and that are fully disclosed to the Agents prior to
the consummation thereof, if they involve one or more payments by the Company or
any of its Subsidiaries in excess of $200,000 for any single transaction or
series of related transactions, (ii) transactions with another Loan Party, (iii)
transactions permitted by Section 8.5 and Section 8.6, (iv) sales of Qualified
Equity Interests of the Company to Affiliates of the Company not otherwise
prohibited by the Loan Documents and the granting of registration and other
customary rights in connection therewith, and (v) reasonable and customary
director and officer compensation (including bonuses and stock option programs),
benefits and indemnification arrangements, in each case approved by the Board of
Directors (or a committee thereof) of such Loan Party or such Subsidiary.

 

Section 8.11.       Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries.  Create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any Subsidiary of any Loan Party (i) to pay dividends
or to make any other distribution

 

 -65- 

 

 

on any shares of Equity Interests of such Subsidiary owned by any Loan Party or
any of its Subsidiaries, (ii) to pay or prepay or to subordinate any
Indebtedness owed to any Loan Party or any of its Subsidiaries, (iii) to make
loans or advances to any Loan Party or any of its Subsidiaries or (iv) to
transfer any of its property or assets to any Loan Party or any of its
Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing;
provided, however, that nothing in any of clauses (i) through (iv) of this
Section 8.11 shall prohibit or restrict compliance with:

 

(a)          this Agreement and the other Loan Documents and the Senior Debt
Loan Documents;

 

(b)          any agreement in effect on the date of this Agreement and described
on Schedule 8.11, or any extension, replacement or continuation of any such
agreement; provided, that, any such encumbrance or restriction contained in such
extended, replaced or continued agreement is no less favorable to the Agents and
the Investors than the encumbrance or restriction under or pursuant to the
agreement so extended, replaced or continued;

 

(c)          any applicable law, rule or regulation (including, without
limitation, applicable currency control laws and applicable state corporate
statutes restricting the payment of dividends in certain circumstances);

 

(d)         in the case of clause (iv), (1) customary restrictions on the
subletting, assignment or transfer of any specified property or asset set forth
in a lease, license, asset sale agreement or similar contract for the conveyance
of such property or asset and (2) instrument or other document evidencing a
Permitted Lien (or the Indebtedness secured thereby) from restricting on
customary terms the transfer of any property or assets subject thereto;

 

(e)          customary restrictions on dispositions of real property interests
in reciprocal easement agreements;

 

(f)          customary restrictions in agreements for the sale of assets on the
transfer or encumbrance of such assets during an interim period prior to the
closing of the sale of such assets; or

 

(g)         customary restrictions in contracts that prohibit the assignment of
such contract.

 

Section 8.12.         Limitations on Negative Pledges.  Enter into, incur or
permit to exist, or permit any Subsidiary to enter into, incur or permit to
exist, directly or indirectly, any agreement, instrument, deed, lease or other
arrangement that prohibits, restricts or imposes any condition upon the ability
of any Loan Party or any Subsidiary of any Loan Party to create, incur or permit
to exist any Lien upon any of its property or revenues, whether now owned or
hereafter acquired, or that requires the grant of any security for an obligation
if security is granted for another obligation, except the following: (i) this
Agreement and the other Loan Documents, (ii) restrictions or conditions imposed
by any agreement relating to secured Indebtedness permitted by Section 8.2 of
this Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness, (iii) any customary restrictions and
conditions

 

 -66- 

 

 

contained in agreements relating to the sale or other disposition of assets or
of a Subsidiary pending such sale or other disposition; provided that such
restrictions and conditions apply only to the assets or Subsidiary to be sold or
disposed of and such sale or disposition is permitted hereunder, and (iv)
customary provisions in leases restricting the assignment or sublet thereof.

 

Section 8.13.         Modifications of Indebtedness, Organizational Documents
and Certain Other Agreements; Etc.

 

(a)          Amend, modify or otherwise change (or permit the amendment,
modification or other change in any manner of) any of the provisions of any of
its or its Subsidiaries’ Indebtedness or of any instrument or agreement
(including, without limitation, the Senior Debt Loan Documents, any purchase
agreement, indenture, loan agreement or security agreement) relating to (A) any
such Indebtedness (other than Indebtedness arising under the Senior Debt Loan
Documents) if such amendment, modification or change would shorten the final
maturity or average life to maturity of, or require any payment to be made
earlier than the date originally scheduled on, such Indebtedness, would increase
the interest rate applicable to such Indebtedness, would add any covenant or
event of default, would change the subordination provision, if any, of such
Indebtedness, or would otherwise be adverse to the Investor or the issuer of
such Indebtedness in any respect or (B) any Indebtedness arising under the terms
of the Senior Debt Loan Documents, if such amendment, modification or change
would otherwise be prohibited by the Cerberus Intercreditor Agreement;

 

(b)          except for the Obligations, (A) make any voluntary or optional
payment (including, without limitation, any payment of interest in cash that, at
the option of the issuer, may be paid in cash or in kind), prepayment,
redemption, defeasance, sinking fund payment or other acquisition for value of
any of its or its Subsidiaries’ Indebtedness, including, without limitation, the
Subordinated Debt (including, without limitation, by way of depositing money or
securities with the trustee therefor before the date required for the purpose of
paying any portion of such Indebtedness when due), (B) refund, refinance,
replace or exchange any other Indebtedness for any such Indebtedness (other than
with respect to Permitted Refinancing Indebtedness), (C) make any payment,
prepayment, redemption, defeasance, sinking fund payment or repurchase of any
Subordinated Indebtedness in violation of the subordination provisions thereof
or any subordination agreement with respect thereto or (D) make any payment,
prepayment, redemption, defeasance, sinking fund payment or repurchase of any
Indebtedness as a result of any asset sale, change of control, issuance and sale
of debt or equity securities or similar event, or give any notice with respect
to any of the foregoing;

 

(c)          amend, modify or otherwise change any of its Governing Documents
(including, without limitation, by the filing or modification of any certificate
of designation, or any agreement or arrangement entered into by it) with respect
to any of its Equity Interests (including any shareholders’ agreement), or enter
into any new agreement with respect to any of its Equity Interests, except any
such amendments, modifications or changes or any such new agreements or
arrangements pursuant to this clause (c) that either individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect; or

 

(d)          agree to any amendment, modification or other change to or waiver
of any of its rights under any Material Contract if such amendment,
modification, change or waiver

 

 -67- 

 

 

would be adverse in any material respect to any Loan Party or any of its
Subsidiaries or the Collateral Agent and the Investors.

 

Section 8.14.         Investment Company Act of 1940.  Engage in any business,
enter into any transaction, use any securities or take any other action or
permit any of its Subsidiaries to do any of the foregoing, that would cause it
or any of its Subsidiaries to become subject to the registration requirements of
the Investment Company Act of 1940, as amended, by virtue of being an
“investment company” or a company “controlled” by an “investment company” not
entitled to an exemption within the meaning of such Act.

 

Section 8.15.         ERISA.  (i) Engage, or permit any ERISA Affiliate to
engage, in any transaction described in Section 4069 of ERISA; (ii) engage, or
permit any ERISA Affiliate to engage, in any prohibited transaction described in
Section 406 of ERISA or 4975 of the Code for which a statutory or class
exemption is not available or a private exemption has not previously been
obtained from the U.S. Department of Labor; (iii) adopt or permit any ERISA
Affiliate to adopt any employee welfare benefit plan within the meaning of
Section 3(1) of ERISA which provides benefits to employees after termination of
employment other than as required by Section 601 of ERISA or applicable law;
(iv) fail to make any contribution or payment to any Multiemployer Plan which it
or any ERISA Affiliate may be required to make under any agreement relating to
such Multiemployer Plan, or any law pertaining thereto; or (v) fail, or permit
any ERISA Affiliate to fail, to pay any required installment or any other
payment required under Section 412 of the Code on or before the due date for
such installment or other payment.

 

Section 8.16.         Environmental.  Permit the use, handling, generation,
storage, treatment, Release or disposal of Hazardous Materials at any property
owned or leased by it or any of its Subsidiaries, except in compliance in all
material respects with Environmental Laws.

 

Section 8.17.         Accounting Methods.  Modify or change, or permit any of
its Subsidiaries to modify or change, its method of accounting or accounting
principles from those utilized in the preparation of the Financial Statements
(other than as may be required to conform to GAAP).

 

Section 8.18.         No Excess Cash.

 

(a)          Permit any PUC Restricted Subsidiary (including, without
limitation, War Telephone LLC, a Delaware limited liability company) to
accumulate cash or Cash Equivalents (including funds on deposit in bank accounts
and Investments of the type permitted by Section 8.5 in excess of cash balances
as may be reasonably required to be maintained by it to pay expenses incurred by
it in the ordinary course of business, and the Borrowers shall cause such PUC
Restricted Subsidiary to immediately pay cash dividends or otherwise make cash
distributions to the Borrowers or, to the extent permitted by this Agreement,
intercompany loans to the Borrowers in an aggregate amount equal to all such
cash and Cash Equivalents then accumulated by such PUC Restricted Subsidiary in
excess of such cash balances, provided that the Borrowers shall not be required
to comply with this Section 8.18(a) if such compliance would require a consent
from a PUC with jurisdiction over such PUC Restricted Subsidiary.

 

 -68- 

 

 

(b)          No Loan Party (other than the Borrowers) shall accumulate cash or
Cash Equivalents (including funds on deposit in bank accounts and Investments of
the type permitted by Section 8.5 in excess of cash balances as may be
reasonably required to be maintained by it to pay expenses incurred by it in the
ordinary course of business, and each such Loan Party shall immediately from
time to time pay cash dividends or otherwise make cash distributions to the Loan
Party of which it is a Subsidiary or, to the extent permitted by Section 8.5,
intercompany loans to the Borrowers in an aggregate amount equal to all such
cash and cash equivalents then accumulated by it in excess of such cash
balances.

 

Section 8.19.         Anti-Bribery and Anti-Corruption Laws.  None of the Loan
Parties shall:

 

(a)          offer, promise, pay, give, or authorize the payment or giving of
any money, gift or other thing of value, directly or indirectly, to or for the
benefit of any Foreign Official for the purpose of: (1) influencing any act or
decision of such Foreign Official in his, her, or its official capacity; or (2)
inducing such Foreign Official to do, or omit to do, an act in violation of the
lawful duty of such Foreign Official, or (3) securing any improper advantage, in
order to obtain or retain business for, or with, or to direct business to, any
Person; or

 

(b)          act or attempt to act in any manner which would subject any of the
Loan Parties to liability under any Anti-Corruption Law.

 

Section 8.20.         Terrorism Sanctions Regulations.  Borrowers will not and
will not permit any other Borrower or Subsidiary to (a) become a Sanctioned
Person, (b) become subject to Sanctions or (c) have any investments in or engage
in any dealings or transactions with any Sanctioned Person if such investments,
dealings or transactions would cause any Investor to be in violation of any laws
or regulations that are applicable to such Investor.

 

Section 8.21.         Financial Covenants.

 

(a)          Consolidated EBITDA.  Permit Consolidated EBITDA of the Company and
its Subsidiaries for any period of twelve (12) consecutive fiscal months of the
Company and its Subsidiaries for which the last fiscal quarter ends on a date
set forth below to be less than the amount set forth opposite such date:

 

Fiscal Month End Consolidated EBITDA March 31, 2016 $22,725,000 June 30, 2016
$22,500,000 September 30, 2016 $20,925,000 December 31, 2016 $20,475,000 March
31, 2017 $20,025,000 June 30, 2017 $20,025,000 September 30, 2017 $20,025,000
December 31, 2017 $20,250,000 March 31, 2018 $19,800,000 June 30, 2018
$19,800,000 September 30, 2018 $19,800,000

 

 -69- 

 

  

Fiscal Month End Consolidated EBITDA December 31, 2018 $19,980,000 March 31,
2019 $19,350,000 June 30, 2019 $19,350,000 September 30, 2019 $19,350,000
December 31, 2019 $19,125,000 March 31, 2020 and each fiscal quarter thereafter
$18,900,000

 

(b)          Leverage Ratio.  Permit the Leverage Ratio of the Company and its
Subsidiaries for any period of twelve (12) consecutive fiscal months of the
Company and its Subsidiaries for which the last quarter ends on a date set forth
below to be greater than the ratio set forth opposite such date:

 

Fiscal Month End Leverage Ratio March 31, 2016 4.85:1.00 June 30, 2016 4.85:1.00
September 30, 2016 4.85:1.00 December 31, 2016 4.85:1.00 March 31, 2017
4.85:1.00 June 30, 2017 4.80:1.00 September 30, 2017 4.80:1.00 December 31, 2017
4.70:1.00 March 31, 2018 4.70:1.00 June 30, 2018 4.50:1.00 September 30, 2018
4.50:1.00 December 31, 2018 4.25:1.00 March 31, 2019 4.25:1.00 June 30, 2019
4.15:1.00 September 30, 2019 4.15:1.00 December 31, 2019 3.85:1.00 March 31,
2020 3.85:1.00 June 30, 2020 3.70:1.00 September 30, 2020 3.70:1.00 December 31,
2020 and each fiscal quarter thereafter 3.60:1.00

 

(c)          Fixed Charge Coverage Ratio.  Permit the Fixed Charge Coverage
Ratio of the Company and its Subsidiaries for any period of twelve (12)
consecutive fiscal months of the Company and its Subsidiaries for which the last
quarter ends on a date set forth below to be less than the ratio set forth
opposite such date:

 

Fiscal Month End Fixed Charge Coverage Ratio March 31, 2016 1.00:1.00

 

 -70- 

 

  

Fiscal Month End Fixed Charge Coverage Ratio June 30, 2016 1.00:1.00 September
30, 2016 0.95:1.00 December 31, 2016 0.95:1.00 March 31, 2017 0.95:1.00 June 30,
2017 0.95:1.00 September 30, 2017 0.95:1.00 December 31, 2017 0.95:1.00 March
31, 2018 0.95:1.00 June 30, 2018 0.95:1.00 September 30, 2018 0.95:1.00 December
31, 2018 0.95:1.00 March 31, 2019 and each fiscal quarter thereafter 1.00:1.00

 

Article 9
Default Provisions

 

The occurrence of any of the events specified below in this Article 9 (each an
“Event of Default”) shall constitute an immediate breach of, and default under
this Agreement, entitling the Collateral Agent and the Investors to exercise all
of their respective rights and remedies specified in this Agreement as provided
for herein and in any other Loan Document, and under all applicable Laws,
without the obligation to furnish any further notice or opportunity to cure
(beyond that specified in the applicable sections of this Article 9), all of
which are hereby expressly waived by the Borrowers:

 

Section 9.1.          Monetary Defaults.  Any Borrower shall fail to pay, (i)
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), all or any portion of the principal of the Loan, or (ii)
within two (2) days of the date when due, any interest on any Loan or any
Collateral Agent Advance, or any fee, indemnity or other amount payable under
this Agreement) or any other Loan Document.

 

Section 9.2.          Representations and Warranties.  Any representation or
warranty made or deemed made by or on behalf of any Loan Party or by any officer
of the foregoing under or in connection with any Loan Document or under or in
connection with any certificate or other writing delivered to any Secured Party
pursuant to any Loan Document shall have been incorrect in any material respect
(or in any respect if such representation or warranty is qualified or modified
as to materiality or “Material Adverse Effect” in the text thereof) when made or
deemed made.

 

Section 9.3.          Covenants.  Any Loan Party shall fail to perform or comply
with any covenant or agreement contained in Section 7.1, Section 7.3, Section
7.4, Section 7.6, Section 7.8, Section 7.11, Section 7.13, Section 7.16, Article
VIII, or any Loan Party shall fail to perform or comply with any covenant or
agreement contained in any Security Agreement to which it is a party or any
Mortgage to which it is a party.

 

 -71- 

 

 

Section 9.4.           Other Breaches.  Any Loan Party shall fail to perform or
comply with any other term, covenant or agreement contained in any Loan Document
to be performed or observed by it and, except as set forth in Section 9.1,
Section 9.2 and Section 9.3, such failure, if capable of being remedied, shall
remain unremedied for twenty (20) days after the earlier of the date a senior
officer of any Loan Party has knowledge of such failure and the date written
notice of such default shall have been given by any Agent to such Loan Party.

 

Section 9.5.          Indebtedness.  Any Loan Party shall fail to pay when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) any principal, interest or other amount payable in respect of
Indebtedness (excluding Indebtedness evidenced by this Agreement and the Senior
Debt Credit Facility) having an aggregate amount outstanding in excess of
$1,650,000, and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Indebtedness,
or any other default under any agreement or instrument, in each case relating to
any such Indebtedness, or any other event, shall occur and shall continue after
the applicable grace period, if any, specified in such agreement or instrument,
in each case if the effect of such default or event is to accelerate, or to
permit the acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), redeemed, purchased
or defeased or an offer to prepay, redeem, purchase or defease such Indebtedness
shall be required to be made, in each case, prior to the stated maturity
thereof.

 

Section 9.6.          Insolvency; Creditors’ Process; Dissolution.  

 

(a)          Any Loan Party (i) shall institute any proceeding or voluntary case
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for any such Person or for any substantial part of its
property, (ii) shall be generally not paying its debts as such debts become due
or shall admit in writing its inability to pay its debts generally, (iii) shall
make a general assignment for the benefit of creditors, or (iv) shall take any
action to authorize or effect any of the actions set forth above in subsection
(a).

 

(b)          Any proceeding shall be instituted against any Loan Party seeking
to adjudicate it a bankrupt or insolvent, or seeking dissolution, liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for any such Person or
for any substantial part of its property, and either such proceeding shall
remain undismissed or unstayed for a period of thirty (30) days or any of the
actions sought in such proceeding (including, without limitation, the entry of
an order for relief against any such Person or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property) shall occur.

 

Section 9.7.          Validity and Enforceability of Loan Documents.  Any
material provision of any Loan Document, after the execution and delivery
thereof, shall at any time for any reason (other than pursuant to the express
terms thereof) cease to be valid and binding on or

 

 -72- 

 

 

enforceable against any Loan Party intended to be a party thereto, or the
validity or enforceability thereof shall be contested by any party thereto, or a
proceeding shall be commenced by any Loan Party or any Governmental Authority
having jurisdiction over any of them, seeking to establish the invalidity or
unenforceability thereof, or any Loan Party shall deny in writing that it has
any liability or obligation purported to be created under any Loan Document.

 

Section 9.8.           Security Documents.  Any Security Agreement, any Mortgage
or any other security document, after delivery thereof pursuant hereto, shall
for any reason fail or cease to create a valid and perfected and, except to the
extent permitted by the terms hereof or thereof, first priority Lien in favor of
the Collateral Agent for the benefit of the Agents and the Investors on any
Collateral purported to be covered thereby.

 

Section 9.9.           Judgments.  One or more judgments, orders or awards (or
any settlement of any litigation or other proceeding that, if breached, could
result in a judgment, order or award) for the payment of money exceeding
$1,650,000 in the aggregate (except to the extent fully covered (other than to
the extent of customary deductibles) by insurance pursuant to which the insurer
has been notified and has not denied coverage) shall be rendered against any
Loan Party and remain unsatisfied and (i) enforcement proceedings shall have
been commenced by any creditor upon any such judgment, order, award or
settlement or (ii) there shall be a period of ten (10) consecutive days after
entry thereof during which (A) a stay of enforcement thereof is not be in effect
or (B) the same is not vacated, discharged, stayed or bonded pending appeal.

 

Section 9.10.         Discontinuation of Business.  Any Loan Party is enjoined,
restrained or in any way prevented by the order of any court or any Governmental
Authority from conducting, or otherwise ceases to conduct for any reason
whatsoever, all or any material part of its business for more than fifteen (15)
days.

 

Section 9.11.         Damage to Collateral.  Any material damage to, or loss,
theft or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of any Loan Party, if any such event or circumstance could reasonably
be expected to have a Material Adverse Effect.

 

Section 9.12.         Criminal Activity.  The indictment of any Loan Party or
any senior officer thereof under any criminal statute, or commencement of
criminal or civil proceedings against any Loan Party or any senior officer
thereof, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture to any Governmental Authority of any
material portion of the property of such Person.

 

Section 9.13.         ERISA.  

 

(a)          Any Loan Party or any of its ERISA Affiliates shall have made a
complete or partial withdrawal from a Multiemployer Plan, and, as a result of
such complete or partial withdrawal, any Loan Party or any of its ERISA
Affiliates incurs a withdrawal liability in an annual amount exceeding
$1,100,000; or a Multiemployer Plan enters reorganization status

 

 -73- 

 

 

under Section 4241 of ERISA, and, as a result thereof any Loan Party's or any of
its ERISA Affiliates' annual contribution requirements with respect to such
Multiemployer Plan increases in an annual amount exceeding $1,100,000.

 

(b)          any Termination Event with respect to any Employee Plan shall have
occurred, and, 30 days after notice thereof shall have been given to any Loan
Party by any Agent, (i) such Termination Event (if correctable) shall not have
been corrected, and (ii) the then current value of such Employee Plan's vested
benefits exceeds the then current value of assets allocable to such benefits in
such Employee Plan by more than $1,100,000 (or, in the case of a Termination
Event involving liability under Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the Internal
Revenue Code, the liability is in excess of such amount).

 

Section 9.14.       Cross-Acceleration.  (i) If any event shall occur or
condition shall exist under the Senior Debt Loan Documents if the effect of such
occurrence or condition is the acceleration of the maturity of the Senior Debt,
(ii) any holder of Subordinated Indebtedness shall fail to perform or comply
with any of the subordination provisions of the documents evidencing or
governing such Subordinated Indebtedness, or (v) the subordination provisions of
the documents evidencing or governing any Subordinated Indebtedness shall, in
whole or in part, terminate, cease to be effective or cease to be legally valid,
binding and enforceable against any holder of the applicable Subordinated
Indebtedness.

 

Section 9.15.       Loss of Subsidy or Reimbursement Revenue.  The occurrence of
a Change in Law related to federal High Cost Loop Support or Interstate Common
Line Support for rural incumbent local exchange carriers which results in, or
could reasonably be expected to result in, a Material Adverse Effect within the
next 12 months.

 

Section 9.16.       Change of Control.  a Change of Control shall have occurred.

 

Article 10
Remedies

 

Upon the occurrence of an Event of Default, the Investors and Collateral Agent
shall be entitled to exercise any or all of the rights and remedies set forth
below, in addition to such other rights and remedies as may be provided for in
the other Loan Documents or as may be available at law or in equity.

 

Section 10.1.       Acceleration.  Following the occurrence and during the
continuance of an Event of Default (except an Event of Default under Section 9.6
hereof), the Required Investors may, at their option, accelerate the maturity of
the Notes and all other monetary obligations or Obligations owed to the
Investors and demand immediate payment in full of all amounts payable under the
Notes and all of the Obligations owed to the Investors, including, without
limitation, the Prepayment Premium, if applicable, without presentment, demand,
protest, or further notice by the Investors to the Borrowers, all of which are
hereby expressly waived by the Borrowers.  Following the occurrence of an Event
of Default under Section 9.6 hereof, principal and interest outstanding under
the Notes and all other Borrower Obligations owed to the Investors, including
without limitation, the Prepayment Premium, shall

 

 -74- 

 

 

become immediately due and payable, without presentment, demand, protest or
further notice by the Investors to the Borrowers, all of which are hereby
expressly waived by the Borrowers.

 

Section 10.2.          Post Default Interest.  Following the occurrence and
during the continuation of an Event of Default, the outstanding principal
balance of the Notes shall bear interest at a rate per annum equal to two
percent (2%) in excess of the interest rate then in effect in Section 2.4(a)
hereof, payable on demand by the Required Investors.

 

Section 10.3.          Costs.  The Borrowers shall pay all reasonable expenses
of any nature, whether incurred in or out of court, and whether incurred before
or after the Notes shall become due, at the Maturity Date or otherwise
(including without limitation, reasonable attorneys’ fees and costs) which the
Investors or Collateral Agent may deem necessary or proper in connection with
the collection of any of the monetary obligations or liabilities or the
administration, supervision, preservation or protection of the Collateral
(including without limitation, the maintenance of adequate insurance), provided,
however, that, so long as no Event of Default has occurred and is continuing,
the Borrowers shall not be responsible for any such expenses until the Investors
or the Collateral Agent have provided prior written notice to the Borrowers and
a reasonable opportunity for the Borrowers to mitigate any such expenses.  The
Investors and Collateral Agent are authorized to pay at any time and from time
to time any or all of such expenses, to add the amount of such payment to the
amount of principal outstanding under the Notes, and to charge interest thereon
at the rate specified in Section 10.2, if applicable.

 

Section 10.4.          Remedies Non-Exclusive.  None of the rights, remedies,
privileges or powers of the Investors and Collateral Agent expressly provided
for herein shall be exclusive, but each of them shall be cumulative with, and in
addition to, every other right, remedy, privilege and power now or hereafter
existing in favor of the Investors and Collateral Agent, whether pursuant to the
other Loan Documents, at law or in equity, by statute or otherwise.  No failure
or delay on the part of the Investors and Collateral Agent in the exercise of
any power, right or privilege hereunder or under any other Loan Document shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege.

 

Section 10.5.          Proceeds of Remedies.  Any or all proceeds resulting from
the exercise of any or all of the foregoing remedies shall be applied as set
forth in the Loan Document(s) providing the remedy or remedies exercised, if
none is specified, or if the remedy is provided by this Agreement, then as
follows:

 

First, to the costs and expenses, including without limitation reasonable
attorneys’ fees and disbursements, incurred by the Collateral Agent and
Investors in connection with the exercise of their respective remedies.

 

Second, to the expenses of curing the Event of Default that has occurred, in the
event that the Required Investors elect, in their sole respective discretion, to
cure the Event of Default that has occurred;

 

 -75- 

 

 

Third, to the payment of the Obligations under the Loan Documents of Borrowers,
including but not limited to the payment of the principal, premium (if any) and
interest on the Indebtedness evidenced by the Notes, in such order of priority
as the Required Investors shall determine in their sole respective discretion;
and

 

Fourth, the remainder, if any, to Borrowers or to any other Person lawfully
thereunto entitled.

 

Article 11
Agency Provisions

 

Section 11.1.          Appointment and Authorization of Collateral Agent.  Each
Investor hereby irrevocably (subject to Section 11.9) appoints, designates and
authorizes the Collateral Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document, and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto.  Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Collateral Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Collateral Agent have or be deemed to have any fiduciary
relationship with any Investor or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Collateral Agent. Without limiting the generality of the foregoing sentence, the
use of the term “Collateral Agent” herein and in the other Loan Documents with
reference to the Collateral Agent is not intended to connote any fiduciary or
other implied (or express) obligations arising under agency doctrine of any
applicable law.  Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

 

Section 11.2.          Delegation of Duties.  The Collateral Agent may execute
any of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts concerning all matters pertaining to
such duties.  The Collateral Agent shall not be responsible for the negligence
or misconduct of any agent or attorney-in-fact that it selects in the absence of
gross negligence or willful misconduct

 

Section 11.3.          Liability of Collateral Agent.  Neither the Collateral
Agent nor its Affiliates shall (a) be liable for any action taken or omitted to
be taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct in connection with its duties expressly set
forth herein), or (b) be responsible in any manner to any Investor or
participant for any recital, statement, representation or warranty made by any
Borrower or any officer thereof, contained herein or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Collateral Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Borrower or any other party to any Loan
Document to perform its Obligations

 

 -76- 

 

 

hereunder or thereunder. Neither the Collateral Agent nor its Affiliates shall
be under any obligation to any Investor or participant to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of any Borrower or any Affiliate thereof.

 

Section 11.4.          Reliance by Collateral Agent.  

 

(a)          The Collateral Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to any Borrower), independent accountants and
other experts selected by the Collateral Agent. The Collateral Agent shall be
fully justified in failing or refusing to take any action under any Loan
Document unless it shall first receive such advice or concurrence of the
Required Investors as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by Investors against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.  The Collateral Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Required
Investors or all Investors, if required hereunder, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all
Investors and participants.  Where this Agreement expressly permits or prohibits
an action unless the Required Investors otherwise determine, the Collateral
Agent shall, and in all other instances, the Collateral Agent may, but shall not
be required to, initiate any solicitation for the consent or a vote of
Investors.

 

(b)          For purposes of determining compliance with the conditions
specified in Section 4.1, each Investor that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Collateral Agent to such Investor
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or accepted or satisfactory to an Investor.

 

Section 11.5.          Notice of Default.  The Collateral Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, unless the Collateral Agent shall have received written notice from an
Investor or Borrowers referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “notice of default”.  The
Collateral Agent will notify Investors of its receipt of any such notice.  The
Collateral Agent shall take such action with respect to such Default or Event of
Default as may be directed by the Required Investors in accordance with Article
10; provided, however, that unless and until the Collateral Agent has received
any such direction, the Collateral Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of Investors.

 

Section 11.6.          Investment Decisions; Disclosure of Information by
Collateral Agent.  Each Investor acknowledges that neither the Collateral Agent
nor its Affiliates has made

 

 -77- 

 

 

any representation or warranty to it, and that no act by the Collateral Agent
hereinafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Borrower or any Affiliate thereof, shall be deemed
to constitute any representation or warranty by the Collateral Agent or its
Affiliates to any Investor as to any matter, including whether the Collateral
Agent or its Affiliates have disclosed material information in their
possession.  Each Investor represents to the Collateral Agent that it has,
independently and without reliance upon the Collateral Agent or its Affiliates
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
their respective Subsidiaries, and all applicable legal requirements relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement. Each Investor also represents that it will, independently and
without reliance upon the Collateral Agent or its Affiliates and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrowers. Except for notices, reports and other documents
expressly required to be furnished to Investors by the Collateral Agent herein,
the Collateral Agent shall not have any duty or responsibility to provide any
Investor with any information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any Borrower or
any of their respective Affiliates which may come into the possession of the
Collateral Agent or its Affiliates.

 

Section 11.7.          Indemnification of Collateral Agent.  Whether or not the
transactions contemplated hereby are consummated, Investors shall indemnify upon
demand the Collateral Agent or its Affiliates (to the extent not reimbursed by
or on behalf of any Borrower and without limiting the obligation of any Borrower
to do so), pro rata based on the principal amount of the Notes then held by each
Investor, and hold harmless the Collateral Agent or its Affiliates from and
against any and all claims, damages, losses, liabilities, costs, and expenses
(including, without limitation, reasonable attorneys’ fees) that may be incurred
by or asserted or awarded against the Collateral Agent or its Affiliates, in
each case arising out of or in connection with or by reason of (including,
without limitation, in connection with any investigation, litigation, or
proceeding or preparation of defense in connection therewith) the Loan
Documents, any of the transactions contemplated herein or the actual or proposed
use of the proceeds of the Loan, except to the extent such claim, damage, loss,
liability, cost, or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from the Collateral Agent’s or
its Affiliates’ gross negligence or willful misconduct; provided, however, that
no action taken in accordance with the directions of the Required Investors
shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section. Without limitation of the foregoing, each Investor
shall reimburse the Collateral Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including reasonable attorneys’ fees and the
allocated costs of internal counsel) incurred by the Collateral Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Collateral Agent
is not reimbursed

 

 -78- 

 

 

for such expenses by or on behalf of Borrower. The undertaking in this Section
shall survive the payment of all Obligations hereunder and the resignation or
replacement of the Collateral Agent.

 

Section 11.8.          Collateral Agent in its Individual Capacity.  With
respect to its Notes, Collateral Agent shall have the same rights and powers
under this Agreement as any other Investor and may exercise such rights and
powers as though it were not the Collateral Agent, and the terms “Investor” and
“Investors” include Collateral Agent in its individual capacity.

 

Section 11.9.          Successor Collateral Agent.  The Collateral Agent may
resign as Collateral Agent upon thirty (30) days’ notice to Investors.  If the
Collateral Agent resigns under this Agreement, the Required Investors shall
appoint from among Investors a successor collateral agent for Investors.  Upon
the acceptance of its appointment as successor collateral agent hereunder, such
successor collateral agent shall succeed to all the rights, powers and duties of
the retiring Collateral Agent and the term “Collateral Agent” shall mean such
successor collateral agent and the retiring Collateral Agent’s appointment,
powers and duties as Collateral Agent shall be terminated.  After any retiring
Collateral Agent’s resignation hereunder as Collateral Agent, the provisions of
this Article 11 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Collateral Agent under this Agreement.  If no
successor collateral agent has accepted appointment as Collateral Agent by the
date which is thirty (30) days following a retiring Collateral Agent’s notice of
resignation, the retiring Collateral Agent’s resignation shall nevertheless
thereupon become effective and Investors shall perform all of the duties of the
Collateral Agent hereunder until such time, if any, as the Required Investors
appoint a successor agent as provided for above.

 

Article 12
Miscellaneous

 

Section 12.1.          Notices.  All notices required to be given to any of the
parties to this Agreement shall be in writing and shall be deemed to have been
sufficiently given, subject to the further provisions of this Section 12.1, for
all purposes when presented personally to such party or sent via facsimile,
e-mail or by certified or registered mail, return receipt requested, with proper
postage prepaid, or any national overnight delivery service, with proper charges
prepaid, to such party at its address set forth below:

 

The address of Borrowers is: : Otelco Inc.   505 3rd Avenue East   Oneonta,
Alabama 35121   Attention: President   Fax No: 205-625-3574   Telecopier:
205-274-8999   E-mail: rob.souza@ottcommunications.com     with a copy to:
Dorsey & Whitney LLP   51 West 52nd Street   New York, New York 10019-6119  
Attention:  Steven Khadavi, Esq.

 

 -79- 

 

 

 

  Telephone: 212-415-9200   Fax No: 646-390-6549   E-mail:
khadavi.steven@dorsey.com     The address of NewSpring is: NewSpring Mezzanine
Capital III, L.P., for itself as an Investor and as Collateral Agent   Radnor
Financial Center   555 Lancaster Avenue, Suite 520   Radnor, PA  19087  
Fax:  (610) 567-2388   Attention:  Steven Hobman   E-mail:
shobman@newspringcapital.com     with a copy to: Pepper Hamilton LLP   400
Berwyn Park   899 Cassatt Road   Berwyn, Pennsylvania  19312   Fax:  (610)
640-7835   Attention:  Christopher S. Miller, Esquire   E-mail:
millerc@pepperlaw.com

 

Such notice shall be deemed to be received (i) when delivered if delivered
personally, or sent via facsimile or e-mail, (ii) the next business day after
the date sent if sent by a national overnight delivery service, or (iii) three
(3) business days after the date mailed if mailed by certified or registered
mail.  Any notice of any change in such address shall also be given in the
manner set forth above.  Whenever the giving of notice is required, the giving
of such notice may be waived in writing by the party entitled to receive such
notice.

 

Section 12.2.          Binding Agreement; Assignment.  This Agreement, the Notes
and each other Loan Document shall inure to the benefit of the Investors, the
Collateral Agent, the Borrowers and all future holders of the Notes, and each of
their respective successors and assigns.  Other than as required by Law or by
the SBA, this Agreement, the Notes and each other Loan Document shall be binding
upon the Borrowers, the Investors, the Collateral Agent and all future holders
of the Notes and their respective successors and assigns, and no Borrower may
assign, delegate or transfer any Loan Document or any of its rights or
obligations thereunder without the prior written consent of the Required
Investors.  No rights are intended to be created under any Loan Document for the
benefit of any third party debtor, creditor or incidental beneficiary of any
Borrower.  Nothing contained in any Loan Document shall be construed as a
delegation to any Investor of any other Person’s duty of
performance.  NOTWITHSTANDING THE FOREGOING, EACH BORROWER ACKNOWLEDGES AND
AGREES THAT ANY INVESTOR AT ANY TIME AND FROM TIME TO TIME MAY (SUBJECT TO THE
LIMITATIONS ON, AND REQUIREMENTS FOR, THE ASSIGNMENT OR TRANSFER OF THE NOTE,
CONTAINED HEREIN OR THEREIN) SELL, ASSIGN OR TRANSFER ALL OR ANY PART OF ITS
RIGHTS OR OBLIGATIONS UNDER THE NOTE OR ANY OTHER LOAN DOCUMENT AND/OR THE
COLLATERAL TO ITS AFFILIATES (EACH SUCH TRANSFEREE, ASSIGNEE OR PURCHASER, AN
“ADDITIONAL INVESTOR”) AND

 

 -80- 

 

 

GRANT PARTICIPATING INTERESTS (“PARTICIPATIONS”) IN ALL OR ANY PART OF ITS
RIGHTS OR OBLIGATIONS UNDER SUCH NOTE OR ANY OTHER LOAN DOCUMENT AND/OR THE
COLLATERAL TO ITS AFFILIATES (EACH SUCH PERSON, A “PARTICIPANT”).  So long as no
Event of Default has occurred and is continuing, any assignment, sale or
transfer to an Additional Investor shall be subject to the prior written consent
of the Company, not to be unreasonably withheld or delayed.  Each Additional
Investor shall have all of the rights and benefits with respect to the Notes,
the Collateral and/or the other Loan Documents held by it as fully as if the
original holder thereof and shall become a party to this Agreement by signing a
counterpart of this Agreement or a joinder or similar agreement.  Each
Participant shall have only the rights granted to it by the applicable Investor;
provided, however, that (i) such Investor’s obligations under this Agreement
shall remain unchanged; (ii) such Investor shall remain solely responsible to
the Borrowers for the performance of such obligations; and (iii) the Borrowers
shall continue to deal solely and directly with such Investor in connection with
such Investor’s rights, interests and obligations under this Agreement, its Note
and the other Loan Documents and such Investor shall retain the sole right to
enforce this Agreement.  If any Investor grants a Participation, it shall,
acting solely for this purpose as a non-fiduciary agent of the Borrowers,
maintain a register on which it enters the name and address of each Participant
and the principal amounts (and stated interest) of each Participant’s interest
in the Loan or other obligations under the Loan Documents (the “Participant
Register”); provided that such Investor shall have no obligation to disclose all
or any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any
commitments, loans, letters of credit or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary
to establish that such commitment, loan, letter of credit or other obligation is
in registered form under Section 5f.103-1(c) of the United States Treasury
Regulations.  The entries in the Participant Register shall be conclusive absent
manifest error, and such Investor shall treat each Person whose name is recorded
in the Participant Register as the owner of its Participation for all purposes
of this Agreement notwithstanding any notice to the contrary.  Notwithstanding
any other provision of any Loan Document, the Investor may disclose to any
Transferee or Participant all information, reports, financial statements,
certificates and documents obtained under any provision of any Loan Document.

 

The Borrowers shall maintain at the office of the Administrative Borrower a copy
of each form of assignment and assumption and a register for the recordation of
the names and addresses of the Investors and any Transferee, and the principal
amounts (and stated interest) of the Loan owing to the Investors and any
Transferee pursuant to the terms hereof from time to time (the “Register”).  The
entries in the Register shall be conclusive absent manifest error, and the
Borrowers, the Investors and any Transferee shall treat each Person whose name
is recorded in the Register pursuant to the terms hereof as the Investors or
Transferee hereunder for all purposes of this Agreement.  The Register shall be
available for inspection by the Borrowers, the Investors and any Transferee, at
any reasonable time and from time to time upon reasonable prior notice.

 

Section 12.3.          Amendment.  Except as expressly provided herein, neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument referencing this Agreement and
signed by the Borrowers and the Required Investors.  Any such amendment, waiver,
discharge or termination effected in accordance with

 

 -81- 

 

 

this paragraph shall be binding upon each holder of the Notes acquired under
this Agreement at the time outstanding and each future holder of the Note.  

 

Section 12.4.          Consents and Waivers.  No consent or waiver, express or
implied, by any party hereto of the breach, default or violation by any other
party hereto of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach, default or violation of the same or
any other obligations of such party hereunder.  Failure on the part of any party
hereto to complain of any act of any of the other parties or to declare any of
the other parties hereto in default, irrespective or how long such failure
continues, shall not constitute a waiver by such party of its rights hereunder.

 

Section 12.5.          Governing Law; Consent to Jurisdiction; Waiver of Trial
by Jury.

 

12.5.1.     Governing Law.  This Agreement and all questions relating to its
validity, interpretation and performance shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles.

 

12.5.2.     Consent to Jurisdiction.

 

(a)          The Borrowers hereby irrevocably submit to the personal
jurisdiction of any appropriate New York State court of original jurisdiction
located in the City, County and State of New York or any appropriate federal
court of original jurisdiction for the Southern District of New York (if there
exists subject matter jurisdiction) (each such court, a “Designated Court”), and
any appellate court from any thereof, over any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the Borrowers
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State court
or, to the fullest extent permitted by applicable Law, in such Federal
court.  The Borrowers hereby irrevocably and unconditionally waive, to the
fullest extent permitted by applicable law, any objection which the Borrowers
may now have or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in any Designated Court and any claim that any such
suit, action or proceeding brought in a Designated Court has been brought in an
inconvenient forum.  Venue for the adjudication of any claim or dispute arising
out of this Agreement or any other Loan Document shall be proper only in the
Designated Courts, and the Borrowers hereby consent to such venue and agree that
it shall not be inconvenient and not subject to review by any court other than
the Designated Courts or any appellate court from any thereof.  The Borrowers
agree that, to the fullest extent permitted by applicable law, a final judgment
in any such suit, action, or proceeding brought in a Designated Court shall be
conclusive and binding upon the Borrowers, and may be enforced in any courts to
the jurisdiction of which the Borrowers are or may be subject by a suit upon
such judgment, provided that service of process is effected upon the Borrowers
in one of the manners specified in subsection (b) below or as otherwise
permitted by applicable law.  Nothing in this Agreement shall affect any right
that the Investors or Collateral Agent may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Agreement against any
Borrower or its Properties in the courts of any jurisdiction.  Each Borrower
intends and agrees that the courts of the jurisdiction in which such Borrower is
formed and in which it conducts its business should afford full faith and credit
to any judgment rendered by any Designated Court

 

 -82- 

 

 

against such Borrower under this Agreement or any other Loan Document, and such
Borrower intends and agrees that such courts should hold that the Designated
Courts have jurisdiction to enter a valid judgment against such Borrower.

 

(b)          The Borrowers hereby consent to process being served in any suit,
action or proceeding of the nature referred to in Section 12.5.2(a) above by
personal service of process or in accordance with the procedures set forth for
the giving of notice in Section 12.1 hereof.  The Borrowers hereby irrevocably
waive, to the fullest extent permitted by applicable law, all claims of error by
reason of any such service pursuant to the terms hereof (but do not waive any
right to assert lack of subject matter jurisdiction) and agree that such service
(i) shall be deemed in every respect effective service of process upon the
Borrowers in any such suit, action or proceeding and (ii) shall, to the fullest
extent permitted by applicable law, be taken and held to be valid personal
service upon the Borrowers.

 

(c)          Each Borrower expressly acknowledges and agrees that the provisions
of this section are reasonable and made for the express benefit of the Investors
and Collateral Agent.

 

12.5.3.     Waiver of Trial by Jury; Limitation of Liability.  EACH BORROWER,
INVESTOR AND THE COLLATERAL AGENT WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR
OBLIGATIONS.  Except as prohibited by law, each Borrower waives any right which
it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages.  Each Borrower:
(i) certifies that neither the Collateral Agent, the Investors nor any
representative, agent or attorney of Collateral Agent or any Investor has
represented, expressly or otherwise, that the Collateral Agent or any Investor
would not, in the event of litigation, seek to enforce the foregoing waivers or
other waivers contained in this Agreement and (ii) acknowledges that, in
entering into this Agreement and the other Loan Documents to which any Investor
or Collateral Agent is a party, such Investor and Collateral Agent are relying
upon, among other things, the waivers and certifications contained in this
Section 12.5.3.

 

Section 12.6.          Prior Agreements.  This Agreement supersedes any prior or
contemporaneous understanding or agreement among the parties respecting the
subject matter hereof.  There are no arrangements, understandings or agreements,
oral or written, among the parties hereto relating to the subject matter of this
Agreement, except those fully expressed herein or in documents executed
contemporaneously herewith.  No change or modification of this Agreement shall
be valid or binding upon the parties hereto unless such change or modification
or waiver shall be in writing and signed by the parties hereto.

 

Section 12.7.          Counting of Days; Payments on Business Days.  In
computing the number of days for purposes of this Agreement, all days shall be
counted, including Saturdays, Sundays and holidays; provided, however, that if
the final day of any time period falls on a Saturday, Sunday or holiday, then
the final day shall be deemed to be the next day which is a

 

 -83- 

 

 

Business Day.  Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest fees, as the case may be;
provided that if such extension would cause payment of any interest on or
principal of the Loan or payment of any fees to be made in the next following
calendar month, such payment shall be made on the immediately preceding Business
Day.

 

Section 12.8.          Captions.  The captions used in this Agreement are for
convenience only and shall not be construed in interpreting this
Agreement.  Whenever the context so requires, the neuter shall include the
feminine and masculine, and the singular shall include the plural, and
conversely.

 

Section 12.9.          Headings.  All section headings herein are inserted for
convenience of reference only and shall in no way modify or restrict any of the
terms or provisions hereof.

 

Section 12.10.        Counterparts.  This Agreement may be signed in any number
of counterparts, each of which shall be an original for all purposes, but all of
which taken together shall constitute only one agreement.  This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.

 

Section 12.11.        Confidentiality.  Each Investor agrees to maintain the
confidentiality of the Information, except that Information may be disclosed
(a) to its Affiliates (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential); (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including the SBA); (c) to the extent required by applicable Laws or
regulations or by any subpoena or similar legal process; (d) to any other party
to this Agreement; (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder; (f) with the consent of Company; (g) to the extent such
Information (x) becomes publicly available other than as a result of a breach of
this Section 12.11 or (y) becomes available to the Investor or any of its
respective Affiliates on a nonconfidential basis from a source other than the
Borrowers; (h) to any state, Federal or foreign authority or examiner regulating
the Investor; or (i) to any rating agency when required by it (it being
understood that, prior to any such disclosure, such rating agency shall
undertake to preserve the confidentiality of any Information relating to the
Borrowers received by it from the Investor).  For the purposes of this Section,
“Information” means all information received by the Investor relating to any of
the Company Group or their business, other than any such information that is
available to the Investor on a nonconfidential basis prior to disclosure by any
Borrower.  

 

Section 12.12.        Interest and Charges Not to Exceed Maximum Allowed by
Law.  Anything in this Agreement, the Notes or any of the other Loan Documents
to the contrary notwithstanding, in no event whatsoever, whether by reason of
advancement of proceeds of the Notes, acceleration of the maturity of the unpaid
balance of the Notes or otherwise, shall the interest and other charges agreed
to be paid to the Investors for the use of the money advanced or to be advanced
hereunder exceed the maximum amounts collectible under applicable laws
(including regulations promulgated under the SBA Act) in effect from time to
time. It is

 

 -84- 

 

 

understood and agreed by the parties that, if for any reason whatsoever the
interest or loan charges paid or contracted to be paid by Borrowers in respect
of the Indebtedness evidenced by the Notes shall exceed the maximum amounts
collectible under applicable laws in effect from time to time, then ipso facto,
the obligation to pay such interest and/or loans charges shall be reduced to the
maximum amounts collectible under applicable laws in effect from time to time,
and any amounts collected by the Investor that exceed such maximum amounts shall
be applied to the reduction of the principal balance of the Indebtedness
evidenced by the Notes and/or refunded to Borrowers so that at no time shall the
interest or loan charges paid or payable in respect of the indebtedness
evidenced by the Notes exceed the maximum amounts permitted from time to time by
applicable law.

 

[Signature Page to Follow Immediately Hereafter]

 

 -85- 

 

 

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

 

  BORROWERS:       OTELCO INC.   BLOUNTSVILLE TELEPHONE LLC   BRINDLEE MOUNTAIN
TELEPHONE LLC   CRC COMMUNICATIONS LLC   GRANBY TELEPHONE LLC   HOPPER
TELECOMMUNICATIONS LLC   I-LAND INTERNET SERVICES LLC   MID-MAINE TELECOM LLC  
MID-MAINE TELPLUS LLC   OTELCO MID-MISSOURI LLC   OTELCO TELECOMMUNICATIONS LLC
  OTELCO TELEPHONE LLC   PINE TREE TELEPHONE LLC   SACO RIVER TELEPHONE LLC  
SHOREHAM TELEPHONE LLC               By: /s/ Curtis L. Garner, Jr.   Name:
Curtis L. Garner, Jr.   Title: Chief Financial Officer and Secretary

 

(Signature Page to Subordinated Loan Agreement)

 

   

 

 

 

  Collateral Agent and iNVEstors:       NewSpring Mezzanine Capital III, L.P.,
as an Investor and as Collateral Agent       By:  NSM III GP, L.P.   Its General
Partner       By:  NSM III GP, LLC   Its General Partner               By: /s/
Steven D. Hobman   Name:  Steven D. Hobman   Title:  President

 

(Signature Page to Subordinated Loan Agreement)

 

   

 

 

APPENDIX I

 

BORROWERS

 

 

Otelco Inc., a Delaware corporation

 

CRC Communications LLC, a Delaware limited liability company

 

Saco River Telephone LLC, a Delaware limited liability company

 

Mid-Maine Telecom LLC, a Maine limited liability company

 

Mid-Maine Telplus LLC, a Maine limited liability company

 

Otelco Telephone LLC, a Delaware limited liability company

 

Brindlee Mountain Telephone LLC, an Alabama limited liability company

 

Shoreham Telephone LLC, a Delaware limited liability company

 

Pine Tree Telephone LLC, a Maine limited liability company

 

Granby Telephone LLC, a Massachusetts limited liability company

 

Otelco Mid-Missouri LLC, a Missouri limited liability company

 

Otelco Telecommunications LLC, a Delaware limited liability company

 

Hopper Telecommunications LLC, an Alabama limited liability company

 

Blountsville Telephone LLC, an Alabama limited liability company

 

I-Land Internet Services LLC, a Missouri limited liability company

 

   

 

 

APPENDIX II

 

INVESTORS AND NOTE AMOUNTS

 

 

INVESTOR   ORIGINAL PRINCIPAL NOTE AMOUNT       NEWSPRING MEZZANINE CAPITAL III,
L.P.   $15,000,000.00                 Total:  $15,000,000.00