Exhibit 10.4
Execution Copy
 
 
 
CREDIT AGREEMENT
among
FAIRPOINT COMMUNICATIONS, INC.,
NORTHERN NEW ENGLAND SPINCO INC.,
VARIOUS LENDING INSTITUTIONS,
BANK OF AMERICA, N.A.,
as SYNDICATION AGENT,
MORGAN STANLEY SENIOR FUNDING, INC.
and
DEUTSCHE BANK SECURITIES INC.,
as CO-DOCUMENTATION AGENTS,
and
LEHMAN COMMERCIAL PAPER INC.,
as ADMINISTRATIVE AGENT
 
Dated as of March 31, 2008
 
 
 
LEHMAN BROTHERS INC.
and
BANC OF AMERICA SECURITIES LLC,
as JOINT LEAD ARRANGERS,
and
LEHMAN BROTHERS INC.,
BANC OF AMERICA SECURITIES LLC,
and
MORGAN STANLEY SENIOR FUNDING, INC.,
as JOINT BOOK RUNNING MANAGERS

 

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

 

TABLE OF CONTENTS

              Page  
 
       
SECTION 1. Amount and Terms of Credit
    1  
1.01 Commitments
    1  
1.02 Minimum Borrowing Amounts, etc
    4  
1.03 Notice of Borrowing
    4  
1.04 Disbursement of Funds
    5  
1.05 Notes
    6  
1.06 Conversions
    7  
1.07 Pro Rata Borrowings
    9  
1.08 Interest
    9  
1.09 Interest Periods
    10  
1.10 Increased Costs, Illegality, etc
    11  
1.11 Compensation
    12  
1.12 Change of Lending Office
    13  
1.13 Replacement of Lenders
    13  
SECTION 1A. Letters of Credit
    15  
1A.01 Letters of Credit
    15  
1A.02 Minimum Stated Amount
    16  
1A.03 Letter of Credit Requests; Notices of Issuance
    16  
1A.04 Agreement to Repay Letter of Credit Drawings
    17  
1A.05 Letter of Credit Participations
    18  
1A.06 Increased Costs
    20  
SECTION 2. Fees
    21  
2.01 Fees
    21  
2.02 Voluntary Reduction of Commitments
    22  
2.03 Mandatory Adjustments of Commitments, etc
    23  
SECTION 3. Payments
    24  
3.01 Repayment of Term Loans
    24  
3.02 Voluntary Prepayments
    26  
3.03 Mandatory Prepayments
    27  

(i)

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

 

              Page    
3.04 Method and Place of Payment
    30  
3.05 Net Payments
    31  
SECTION 4. Conditions Precedent
    33  
4.01 Conditions Precedent to Closing Date and the Initial Incurrence of Loans
    33  
4.02 Conditions Precedent to All Loans
    37  
SECTION 5. Representations, Warranties and Agreements
    37  
5.01 Company Status
    38  
5.02 Company Power and Authority
    38  
5.03 No Violation
    38  
5.04 Litigation
    38  
5.05 Use of Proceeds; Margin Regulations
    38  
5.06 Governmental Approvals
    39  
5.07 Investment Company Act
    40  
5.08 True and Complete Disclosure
    40  
5.09 Financial Condition; Financial Statements
    40  
5.10 Security Interests
    42  
5.11 Compliance With Statutes
    42  
5.12 Tax Returns and Payments
    42  
5.13 Compliance with ERISA
    42  
5.14 Subsidiaries
    43  
5.15 Intellectual Property
    44  
5.16 Environmental Matters
    44  
5.17 Labor Relations
    44  
5.18 Subordination
    44  
5.19 Capitalization
    45  
SECTION 6. Affirmative Covenants
    45  
6.01 Information Covenants
    45  
6.02 Books, Records and Inspections
    47  
6.03 Insurance
    47  
6.04 Payment of Taxes
    47  
6.05 Company Franchises
    47  

(ii)

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

 

              Page    
6.06 Compliance with Statutes, etc
    47  
6.07 ERISA
    48  
6.08 Good Repair
    49  
6.09 End of Fiscal Years; Fiscal Quarters; Etc
    49  
6.10 Permitted Acquisitions
    49  
6.11 Margin Stock
    51  
6.12 Special Covenant Regarding Cash Management Policy
    51  
6.13 PIK Requirements
    52  
6.14 Interest Rate Protection
    52  
6.15 Maintenance of Company Separateness
    52  
6.16 Further Assurances
    52  
6.17 CoBank Capital
    52  
6.18 Post-Closing Security Perfection
    52  
SECTION 7. Negative Covenants
    53  
7.01 Changes in Business
    53  
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc
    53  
7.03 Liens
    54  
7.04 Indebtedness
    56  
7.05 Capital Expenditures
    58  
7.06 Advances, Investments and Loans
    59  
7.07 Limitation on Creation of Subsidiaries
    61  
7.08 Modifications
    62  
7.09 Restricted Payments, Etc
    63  
7.10 Transactions with Affiliates
    66  
7.11 Interest Coverage Ratio
    66  
7.12 Leverage Ratio
    66  
7.13 Limitation On Issuance of Equity Interests
    66  
7.14 Designated Senior Debt
    67  
SECTION 8. Events of Default
    67  
8.01 Payments
    67  
8.02 Representations, etc
    67  
8.03 Covenants
    68  

(iii)

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

 

              Page    
8.04 Default Under Other Agreements
    68  
8.05 Bankruptcy, etc
    68  
8.06 ERISA
    68  
8.07 Pledge Agreement
    69  
8.08 Subsidiary Guaranty
    69  
8.09 Judgments
    69  
8.10 Change of Control
    70  
SECTION 9. Definitions
    70  
SECTION 10. The Agents
    106  
10.01 Appointment
    106  
10.02 Nature of Duties
    107  
10.03 Certain Rights of the Agents
    108  
10.04 Reliance by Agents
    108  
10.05 Notice of Default, etc
    108  
10.06 Nonreliance on Agents and Other Lenders
    108  
10.07 Indemnification
    109  
10.08 Agents in their Individual Capacities
    109  
10.09 Holders
    110  
10.10 Resignation of the Agents
    110  
10.11 Collateral Matters
    111  
10.12 Delivery of Information
    112  
10.13 Posting of Approved Electronic Communications
    112  
SECTION 11. Miscellaneous
    113  
11.01 Payment of Expenses, etc
    113  
11.02 Right of Setoff
    114  
11.03 Notices
    115  
11.04 Benefit of Agreement
    115  
11.05 No Waiver; Remedies Cumulative
    117  
11.06 Payments Pro Rata
    118  
11.07 Calculations; Computations
    118  
11.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial
    118  

(iv)

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

 

              Page    
11.09 Counterparts
    119  
11.10 Headings Descriptive
    119  
11.11 Amendment or Waiver
    119  
11.12 Survival
    121  
11.13 Domicile of Loans
    121  
11.14 Confidentiality
    121  
11.15 Lender Register
    122  
11.16 Patriot Act Notice
    1  

(v)

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

 

          CREDIT AGREEMENT, dated as of March 31, 2008, among FAIRPOINT
COMMUNICATIONS, INC., a Delaware corporation (“FairPoint”), NORTHERN NEW ENGLAND
SPINCO INC., a Delaware corporation (“Spinco”), the Lenders from time to time
party hereto, BANK OF AMERICA, N.A., as Syndication Agent (in such capacity, the
“Syndication Agent”), MORGAN STANLEY SENIOR FUNDING, INC. and DEUTSCHE BANK
SECURITIES INC., as Co-Documentation Agents (in such capacity, each, a
“Co-Documentation Agent” and, collectively, the “Co-Documentation Agents”), and
LEHMAN COMMERCIAL PAPER INC., as Administrative Agent (in such capacity, the
“Administrative Agent” and, together with the Syndication Agent and the
Co-Documentation Agents, collectively, the “Agents”). As used herein, the term
“Borrower” shall mean (i) prior to the Merger, each of FairPoint and Spinco and
(ii) from and after the Merger, FairPoint.
WITNESSETH:
          WHEREAS, subject to and upon the terms and conditions set forth
herein, the Lenders are willing to make available to the Borrower the respective
credit facilities provided for herein;
          NOW, THEREFORE, IT IS AGREED:
          SECTION 1. Amount and Terms of Credit.
          1.01 Commitments. Subject to and upon the terms and conditions set
forth in this Agreement, each Lender severally agrees to make and/or continue a
loan or loans (each, a “Loan” and, collectively, the “Loans”) to the Borrower,
as set forth below:
          (a) Loans under the A Term Facility (each, an “A Term Loan” and,
collectively, the “A Term Loans”) (i) shall be made by each Lender with an A
Term Commitment pursuant to two separate drawings on the Closing Date,
consisting of (A) a drawing by Spinco of A Term Loans in an amount not to exceed
the Initial Term Loan Draw less any amounts made available to Spinco pursuant to
Section 1.01(b)(i)(A) and (B) a drawing by FairPoint of A Term Loans in an
amount not to exceed the amount of the A Term Facility less any amounts made
available to Spinco pursuant to Section 1.01(a)(i)(A), and (ii) except as
hereinafter provided, may, at the option of the Borrower, be incurred and
maintained as, and/or converted into or continued as, Base Rate Loans or
Eurodollar Loans; provided that all A Term Loans made as part of the same
Borrowing shall, unless specifically provided herein, consist of A Term Loans of
the same Type and (y) unless the Administrative Agent has determined that the
Syndication Date has occurred (at which time this clause (y) shall no longer be
applicable), no more than three Borrowings of A Term Loans to be maintained as
Eurodollar Loans may be incurred prior to the 90th day after the Closing Date
(or, if later, the last day of the Interest Period applicable to the third
Borrowing of Eurodollar Loans referred to below), each of which Borrowings of
Eurodollar Loans may only have an Interest Period of one month. Once prepaid or
repaid, A Term Loans may not be reborrowed.
          (b) Loans under the Initial B Term Facility (each, an “Initial B Term
Loan” and, collectively, the “Initial B Term Loans”) (i) shall be made by each
Lender with an Initial B Term Commitment pursuant to two separate drawings on
the Closing Date, consisting of (A) a

 

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

 

drawing by Spinco of Initial B Term Loans in an amount not to exceed the Initial
Term Loan Draw less any amounts made available to Spinco pursuant to
Section 1.01(a)(i)(A) and (B) a drawing by FairPoint of Initial B Term Loans in
an amount not to exceed the amount of the Initial B Term Loan Facility less any
amounts made available to Spinco pursuant to Section 1.01(b)(i)(A), and (ii)
except as hereinafter provided, may, at the option of the Borrower, be incurred
and maintained as, and/or converted into or continued as, Base Rate Loans or
Eurodollar Loans; provided that all Initial B Term Loans made as part of the
same Borrowing shall, unless specifically provided herein, consist of Initial B
Term Loans of the same Type and (y) unless the Administrative Agent has
determined that the Syndication Date has occurred (at which time this clause
(y) shall no longer be applicable), no more than three Borrowings of Initial B
Term Loans to be maintained as Eurodollar Loans may be incurred prior to the
90th day after the Closing Date (or, if later, the last day of the Interest
Period applicable to the third Borrowing of Eurodollar Loans referred to below),
each of which Borrowings of Eurodollar Loans may only have an Interest Period of
one month. Once prepaid or repaid, Initial B Term Loans may not be reborrowed.
          (c) Loans under the Delayed-Draw B Term Facility (each, a
“Delayed-Draw B Term Loan” and, collectively, the “Delayed-Draw B Term Loans”)
(i) shall be made to the Borrower by each Lender with a Delayed-Draw B Term
Commitment pursuant to one or more drawings during the period commencing on the
Closing Date and ending on the first anniversary of the Closing Date for the
purposes described in Section 5.05(d), (ii) except as hereinafter provided,
shall, at the option of the Borrower, be initially incurred as Eurodollar Loans
or Base Rate Loans and, immediately after such incurrence, be converted into,
continued as and included within the definition of Initial B Term Loans under
this Agreement in accordance with the requirements of Section 1.06(b) and
subject to the provisions of Section 1.01(b)(ii) and (iii) shall not exceed in
aggregate principal amount for any Lender in respect of any incurrence of
Delayed-Draw B Term Loans the Delayed-Draw B Term Commitment, if any, of such
Lender as in effect immediately prior to such incurrence. Once prepaid or
repaid, Delayed-Draw B Term Loans may not be reborrowed.
          (d) Loans under the Revolving Facility (each, an “RF Loan” and,
collectively, the “RF Loans”) (i) shall be made to the Borrower at any time and
from time to time on and after the Closing Date and prior to the RF Maturity
Date, (ii) except as hereinafter provided, may, at the option of the Borrower,
be incurred and maintained as, and/or converted into or continued as, Base Rate
Loans or Eurodollar Loans; provided that (x) all RF Loans made as part of the
same Borrowing shall, unless otherwise specifically provided herein, consist of
RF Loans of the same Type and (y) unless the Administrative Agent has determined
that the Syndication Date has occurred (at which time this clause (y) shall no
longer be applicable), no more than three Borrowings of RF Loans to be
maintained as Eurodollar Loans may be incurred prior to the 90th day after the
Closing Date (or, if later, the last day of the Interest Period applicable to
the third Borrowing of Eurodollar Loans referred to below), each of which
Borrowings of Eurodollar Loans may only have an Interest Period of one month,
(iii) may be repaid and reborrowed in accordance with the provisions hereof, and
(iv) shall not exceed (giving effect to any incurrence thereof and the use of
the proceeds of such incurrence) for any Lender in aggregate principal amount at
any time outstanding that amount which, when added to such Lender’s Percentage
of the sum of (x) the Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid

2

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

 

with the proceeds of, and simultaneously with the incurrence of, the respective
incurrence of RF Loans) at such time and (y) the outstanding principal amount of
Swingline Loans (exclusive of Swingline Loans which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of RF
Loans) at such time, equals the Available Revolving Commitment, if any, of such
Lender at such time.
          (e) Subject to and upon the terms and conditions herein set forth, the
Swingline Lender agrees to make at any time and from time to time after the
Closing Date and prior to the Swingline Expiry Date, a loan or loans to the
Borrower (each, a “Swingline Loan,” and, collectively the “Swingline Loans”),
which Swingline Loans (i) shall be made and maintained as Base Rate Loans,
(ii) may be repaid and reborrowed in accordance with the provisions hereof,
(iii) shall not exceed in aggregate principal amount at any time outstanding,
when combined with the aggregate principal amount of all RF Loans then
outstanding (exclusive of RF Loans which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of Swingline
Loans) and the Letter of Credit Outstandings (exclusive of Unpaid Drawings which
are repaid with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Swingline Loans) at such time, an amount equal to the
Total Revolving Commitment then in effect and (iv) shall not exceed in aggregate
principal amount at any time outstanding the Maximum Swingline Amount.
Notwithstanding anything to the contrary contained in this Section 1.01(e),
(i) the Swingline Lender shall not be obligated to make or maintain any
Swingline Loans at a time when a Lender Default exists with respect to an RF
Lender unless the Swingline Lender has entered into arrangements satisfactory to
it and the Borrower to eliminate the Swingline Lender’s risk with respect to the
Defaulting Lender’s or Defaulting Lenders’ participation in such Swingline
Loans, including by cash collateralizing such Defaulting Lender’s or Defaulting
Lenders’ Percentage of the outstanding Swingline Loans, and (ii) the Swingline
Lender shall not make any Swingline Loan after it has received written notice
from the Borrower, any other Credit Party or the Required Lenders stating that a
Default or an Event of Default exists and is continuing until such time as the
Swingline Lender shall have received written notice (A) of rescission of all
such notices from the party or parties originally delivering such notice or
notices or (B) of the waiver of such Default or Event of Default by the Required
Lenders.
          (f) On any Business Day, the Swingline Lender may, in its sole
discretion, give notice to the RF Lenders that its outstanding Swingline Loans
shall be funded with a Borrowing of RF Loans (provided that each such notice
shall be deemed to have been automatically given upon the occurrence of an Event
of Default under Section 8.05 or upon the exercise of any of the remedies
provided in the last paragraph of Section 8), in which case a Borrowing of RF
Loans constituting Base Rate Loans (each such Borrowing, a “Mandatory
Borrowing”) shall be made on the immediately succeeding Business Day by all RF
Lenders pro rata based on each RF Lender’s Percentage, and the proceeds thereof
shall be applied directly to repay the Swingline Lender for such outstanding
Swingline Loans. Each RF Lender hereby irrevocably agrees to make Base Rate
Loans upon one Business Day’s notice pursuant to each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the date
specified in writing by the Swingline Lender notwithstanding: (i) that the
amount of the Mandatory Borrowing may not comply with the Minimum Borrowing
Amount otherwise required hereunder, (ii) whether any conditions specified in
Section 4.02 are then satisfied, (iii)

3

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

 

whether a Default or an Event of Default has occurred and is continuing,
(iv) the date of such Mandatory Borrowing and (v) the amount of the Total
Revolving Commitment at such time. In the event that any Mandatory Borrowing
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code in respect of the Borrower), each RF Lender (other than the
Swingline Lender) hereby agrees that it shall forthwith purchase from the
Swingline Lender (without recourse or warranty) such assignment of the
outstanding Swingline Loans as shall be necessary to cause the RF Lenders to
share in such Swingline Loans ratably based upon their respective Percentages;
provided that (x) all interest payable on the Swingline Loans shall be for the
account of the Swingline Lender until the date as of which the respective
participation is required to be purchased and, to the extent attributable to the
purchased participation, shall be payable to the RF Lender purchasing same from
and after such date and (y) at the time any purchase of participations pursuant
to this sentence is actually made, the purchasing RF Lender shall be required to
pay the Swingline Lender interest on the principal amount of participation
purchased for each day from and including the day upon which the Mandatory
Borrowing would otherwise have occurred to but excluding the date of payment for
such participation, at the overnight Federal Funds Effective Rate for the first
three days and at the interest rate otherwise applicable to RF Loans maintained
as Base Rate Loans hereunder for each day thereafter.
          1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount of
each Borrowing shall not be less than the Minimum Borrowing Amount. More than
one Borrowing may be incurred on any day; provided that at no time shall there
be outstanding more than twelve Borrowings of Eurodollar Loans.
          1.03 Notice of Borrowing. (a) Whenever a Borrower desires to incur
Loans under any Facility (excluding Swingline Loans and RF Loans made pursuant
to a Mandatory Borrowing), it shall give the Administrative Agent at its Notice
Office, (x) prior to 12:00 Noon (New York time), at least three (or with respect
to Borrowings made on the Closing Date, one) Business Days’ prior written notice
(or telephonic notice promptly confirmed in writing) of each proposed incurrence
of Eurodollar Loans and (y) prior to 12:00 Noon (New York time) on the proposed
date thereof, written notice (or telephonic notice promptly confirmed in
writing) of each proposed incurrence of Base Rate Loans. Each such notice (each,
a “Notice of Borrowing”) shall be in the form of Exhibit A-1 and shall be
irrevocable and shall specify (i) the Facility pursuant to which such incurrence
is being made, (ii) the aggregate principal amount of the Loans to be made
pursuant to such incurrence, (iii) the date of incurrence (which shall be a
Business Day) and (iv) whether the respective Borrowing shall consist of Base
Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the Interest Period to
be initially applicable thereto. The Administrative Agent shall promptly give
each Lender written notice (or telephonic notice promptly confirmed in writing)
of each proposed incurrence of Loans of such Lender’s proportionate share
thereof and of the other matters covered by the Notice of Borrowing.
          (b) (i) Whenever the Borrower desires to make a Borrowing of Swingline
Loans hereunder, it shall give the Swingline Lender, prior to 12:00 Noon (New
York time) on the day such Swingline Loan is requested, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan
requested to be made hereunder. Each such notice shall be irrevocable and shall
specify in each case (x) the date of such Borrowing (which shall be

4

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

 

a Business Day) and (y) the aggregate principal amount of the Swingline Loan to
be made pursuant to such Borrowing.
          (ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(f), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section 1.01(f).
          (c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent, the Swingline Lender and any Letter of Credit Issuer,
prior to receipt of written confirmation may act without liability upon the
basis of and consistent with such telephonic notice, believed by the
Administrative Agent, the Swingline Lender or such Letter of Credit Issuer, as
the case may be, in good faith to be from an Authorized Officer. In each such
case, the Borrower hereby waives the right to dispute the Administrative
Agent’s, the Swingline Lender’s or such Letter of Credit Issuer’s record of the
terms of such telephonic notice, unless such record reflects gross negligence or
willful misconduct on the part of the Administrative Agent, the Swingline Lender
or such Letter of Credit Issuer, as the case may be (as determined by a court of
competent jurisdiction in a final and nonappealable decision).
          1.04 Disbursement of Funds. (a) No later than 1:00 P.M. (New York
time) (3:00 P.M. (New York time) in the case of Base Rate Loans made pursuant to
same day notice) on the date specified in each Notice of Borrowing (or, where
applicable, each notice described in Section 1.03(b)(i) or (ii)), each Lender
with a Commitment under the respective Facility will make available its pro rata
share of each Borrowing requested to be made on such date (or in the case of
Swingline Loans, the Swingline Lender will make available the full amount
thereof); provided that on the Closing Date, Borrowings shall be made available
for immediate funding or funded no later than 9:00 A.M. (New York time). All
such amounts shall be made available to the Administrative Agent in Dollars and
immediately available funds at the Payment Office and, except in the case of RF
Loans made pursuant to a Mandatory Borrowing, the Administrative Agent promptly
will make available to the Borrower by depositing to its account at the Payment
Office or as otherwise directed in the applicable Notice of Borrowing the
aggregate of the amounts so made available in the type of funds received. Unless
the Administrative Agent shall have been notified by any Lender prior to the
date of the proposed incurrence that such Lender does not intend to make
available to the Administrative Agent its portion of the Borrowing or Borrowings
to be made on such date, the Administrative Agent may assume that such Lender
has made such amount available to the Administrative Agent on such date, and the
Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Lender and the Administrative Agent has made
available same to the Borrower, the Administrative Agent shall be entitled to
recover such corresponding amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent’s demand
therefor, the Administrative Agent may notify the Borrower, and, upon receipt of
such notice, the Borrower shall promptly pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
on demand from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such

5

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

 

corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (x) if paid by such Lender,
the overnight Federal Funds Effective Rate or (y) if paid by the Borrower, the
then applicable rate of interest, calculated in accordance with Section 1.08,
for the respective Loans.
          (b) Nothing in this Section 1.04 shall be deemed to relieve any Lender
from its obligation to fulfill its commitments hereunder or to prejudice any
rights which the Borrower may have against any Lender as a result of any default
by such Lender hereunder.
          1.05 Notes. (a) The Borrower’s obligation to pay the principal of, and
interest on, the Loans made by each Lender shall be set forth in the Lender
Register maintained by the Administrative Agent pursuant to Section 11.15 and,
subject to the provisions of Section 1.05(g), shall be evidenced (if requested
by Lenders) (i) if A Term Loans, by a promissory note substantially in the form
of Exhibit B-1 with blanks appropriately completed in conformity herewith (each,
a “A Term Note” and, collectively, the “A Term Notes”), (ii) if B Term Loans, by
a promissory note substantially in the form of Exhibit B-2 with blanks
appropriately completed in conformity herewith (each, a “B Term Note” and,
collectively, the “B Term Notes”), (iii) if RF Loans, by a promissory note
substantially in the form of Exhibit B-3 with blanks appropriately completed in
conformity herewith (each, an “RF Note” and, collectively, the “RF Notes”) and
(iv) if Swingline Loans, by a promissory note substantially in the form of
Exhibit B-4 with blanks appropriately completed in conformity herewith (the
“Swingline Note”).
          (b) Each A Term Note, if any, issued to a Lender that makes an A Term
Loan shall (i) be executed by the Borrower, (ii) be payable to the order of such
Lender and be dated as of the Closing Date (or, if issued after the Closing
Date, be dated as of the date of the issuance thereof), (iii) be in a stated
principal amount equal to the A Term Commitment of such Lender on the Closing
Date and be payable in the principal amount of A Term Loans evidenced thereby,
(iv) mature on the A Term Loan Maturity Date, (v) bear interest as provided in
the appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
mandatory repayment as provided in Section 3.03 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
          (c) Each B Term Note, if any, issued to a Lender that makes a B Term
Loan shall (i) be executed by the Borrower, (ii) be payable to the order of such
Lender and be dated as of the Closing Date (or, if issued after the Closing
Date, be dated as of the date of the issuance thereof), (iii) be in a stated
principal amount equal to the Initial B Term Commitment of such Lender on the
Closing Date (or, if issued after the Closing Date, be in a stated principal
amount equal to the outstanding principal amount of B Term Loans of such Lender
at such time) and be payable in the principal amount of B Term Loans evidenced
thereby, (iv) mature on the B Term Loan Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base Rate
Loans and Eurodollar Loans, as the case may be, evidenced thereby, (vi) be
subject to mandatory repayment as provided in Section 3.03 and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
          (d) Each RF Note, if any, issued to an RF Lender shall (i) be executed
by the Borrower, (ii) be payable to the order of such RF Lender and be dated the
Closing Date (or, in

6

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

 

the case of any RF Note issued after the Closing Date, the date of issuance
thereof), (iii) be in a stated principal amount equal to the Revolving
Commitment of such RF Lender and be payable in the principal amount of the RF
Loans evidenced thereby, (iv) mature on the RF Maturity Date, (v) bear interest
as provided in the appropriate clause of Section 1.08 in respect of the Base
Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby, (vi) be
subject to mandatory repayment as provided in Section 3.03 and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
          (e) Each Swingline Note, if any, issued to the Swingline Lender shall
(i) be executed by the Borrower, (ii) be payable to the order of the Swingline
Lender and be dated the Closing Date (or, in the case of any Swingline Note
issued after the Closing Date, the date of issuance thereof), (iii) be in a
stated principal amount equal to the Maximum Swingline Amount and be payable in
the principal amount of Swingline Loans evidenced thereby, (iv) mature on the
Swingline Expiry Date, (v) bear interest as provided in Section 1.08 in respect
of the Base Rate Loans evidenced thereby, (vi) be subject to mandatory
prepayment as provided in Section 3.03 and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents.
          (f) Each Lender will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make (or any
error in making) any such notation shall not affect the Borrower’s obligations
in respect of such Loans.
          (g) Notwithstanding anything to the contrary contained above or
elsewhere in this Agreement, Notes shall only be delivered to Lenders that at
any time specifically request the delivery of such Notes. No failure of any
Lender to request or obtain a Note evidencing its Loans to the Borrower shall
affect or in any manner impair the obligations of the Borrower to pay the Loans
(and all related Obligations) which would otherwise be evidenced thereby in
accordance with the requirements of this Agreement, and shall not in any way
affect the security or guaranties therefor provided pursuant to the various
Credit Documents. Any Lender that does not have a Note evidencing its
outstanding Loans shall in no event be required to make the notations otherwise
described in preceding clause (f). At any time when any Lender requests the
delivery of a Note to evidence any of its Loans, the Borrower shall promptly
execute and deliver to the respective Lender the requested Note or Notes in the
appropriate amount or amounts to evidence such Loans.
          1.06 Conversions. (a) The Borrower shall have the option to convert on
any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Loans (other than
Swingline Loans, which at all times shall be maintained as Base Rate Loans)
owing pursuant to a single Facility into a Borrowing or Borrowings pursuant to
such Facility of another Type of Loan; provided that (i) no partial conversion
of a Borrowing of Eurodollar Loans shall reduce the outstanding principal amount
of the Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans may not be converted
into Eurodollar Loans when a Default under Section 8.01 or an Event of Default
is in existence on the date of the proposed conversion if the Administrative
Agent or the Required Lenders shall have determined in its or their sole
discretion not to permit such conversion, (iii) unless the Administrative Agent

7

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

 

has determined that the Syndication Date has occurred (at which time this clause
(iii) shall no longer be applicable), prior to the 90th day after the Closing
Date, conversions of Base Rate Loans into Eurodollar Loans may only be made if
any such conversion is effective on the first day of the first, second or third
Interest Period referred to in clause (y) of the proviso appearing in each of
Sections 1.01(a)(ii) and 1.01(b)(ii) and so long as such conversion does not
result in a greater number of Borrowings of Eurodollar Loans prior to the 90th
day after the Closing Date as are permitted under Sections 1.01(a)(ii) and
1.01(b)(ii) and (iv) Borrowings of Eurodollar Loans resulting from this
Section 1.06 shall be limited in number as provided in Section 1.02. Each such
conversion shall be effected by the Borrower giving the Administrative Agent at
its Notice Office, prior to 12:00 Noon (New York time), at least three Business
Days’ (or one Business Day’s, in the case of a conversion into Base Rate Loans)
prior written notice (or telephonic notice promptly confirmed in writing) (each,
a “Notice of Conversion/Continuation”) in the form of Exhibit A-3, appropriately
completed to specify the Loans to be so converted (including the relevant
Facility), the Type of Loans to be converted into and, if to be converted into a
Borrowing of Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Administrative Agent shall give each Lender prompt notice of any
such proposed conversion affecting any of its Loans.
          (b) On the date (each, a “DDTL Conversion Date”) of each incurrence of
Delayed-Draw B Term Loans (immediately after giving effect thereto), all
Delayed-Draw B Term Loans outstanding on such date shall be automatically (and
without further action) converted into, and thereafter constitute, Initial B
Term Loans for all purposes of this Agreement and the other Credit Documents
(other than for purposes of Sections 1.01(b)(i) and 5.05(b)), with such
conversion to be effected in accordance with the following rules (each, a “DDTL
Conversion”):
          (i) the Delayed-Draw B Term Loans incurred on a given DDTL Conversion
Date (immediately prior to giving effect to the DDTL Conversion on such date)
shall, upon the occurrence of the DDTL Conversion, be proportionately added to
(and thereafter be deemed to constitute a part of) each then existing Borrowing
of Initial B Term Loans, even though as a result thereof such newly-converted
Initial B Term Loans may (x) if initially incurred as Eurodollar Loans,
effectively have a shorter Interest Period than the then existing Borrowings of
outstanding Initial B Term Loans to which they are added and (y) if initially
incurred as Base Rate Loans, bear interest at a different rate than the existing
Borrowing or Borrowings of Initial B Term Loans to which they are added;
          (ii) if requested by any Lender, the Borrower shall pay to such Lender
(x) if the Delayed-Draw B Term Loans incurred pursuant to a given DDTL
Conversion were initially incurred as Eurodollar Loans, such amounts necessary,
as reasonably determined by such Lender, to compensate such Lender for “making”
(by way of conversion) such Initial B Term Loans during an existing Interest
Period (rather than at the beginning of the respective Interest Period
applicable to the existing Borrowings of Initial B Term Loans, based upon the
rates then applicable thereto) and (y) if the Delayed-Draw B Term Loans incurred
pursuant to a given DDTL Conversion were incurred as Base Rate Loans, such
amounts necessary, as reasonably determined by such Lender, to equalize the
interest rate applicable to the existing Borrowings of

8

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

 

Initial B Term Loans of such Lender and the interest rate applicable to the
newly-converted Initial B Term Loans converted pursuant to such DDTL Conversion;
and
          (iii) the Administrative Agent shall (and is hereby authorized to)
take all appropriate actions in connection with the DDTL Conversion to ensure
that all Lenders with outstanding Initial B Term Loans (after giving effect to
the DDTL Conversion) participate in each Borrowing of Initial B Term Loans on a
pro rata basis.
          1.07 Pro Rata Borrowings. All A Term Loans, Initial B Term Loans,
Delayed-Draw B Term Loans and RF Loans under this Agreement shall be made by the
Lenders pro rata on the basis of their A Term Commitments, Initial B Term
Commitments, Delayed-Draw B Term Commitments or Revolving Commitments, as the
case may be, if any. It is understood that no Lender shall be responsible for
any default by any other Lender in its obligation to make Loans hereunder and
that each Lender shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to fulfill its
commitments hereunder.
          1.08 Interest. (a) The unpaid principal amount of each Base Rate Loan
shall bear interest from the date of the Borrowing thereof until the earlier of
repayment or conversion thereof and maturity (whether by acceleration or
otherwise) at a rate per annum which shall at all times be the Applicable Base
Rate Margin plus the Base Rate in effect from time to time.
          (b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until the earlier of repayment
or conversion thereof and maturity (whether by acceleration or otherwise) at a
rate per annum which shall at all times be the Applicable Eurodollar Margin plus
the relevant Eurodollar Rate.
          (c) Interest in respect of any overdue amount payable hereunder shall
accrue at a rate per annum equal to the Base Rate in effect from time to time
plus the sum of (i) 2% and (ii) the Applicable Base Rate Margin; provided that
principal in respect of Eurodollar Loans shall bear interest from the date the
same becomes due (whether by acceleration or otherwise) until the end of the
Interest Period then applicable to such Eurodollar Loan at a rate per annum no
less than one which is equal to 2% in excess of the rate of interest applicable
thereto on such date.
          (d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof and shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on the last Business Day of
each March, June, September and December, (ii) in respect of each Eurodollar
Loan, on the last day of each Interest Period applicable thereto and, in the
case of an Interest Period in excess of three months, on each date occurring at
three month intervals after the first day of such Interest Period, and (iii) in
respect of each such Loan, on any prepayment or conversion (on the amount
prepaid or converted), at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand.
          (e) All computations of interest hereunder shall be made in accordance
with Section 11.07(b).

9

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

 

          (f) The Administrative Agent, upon determining the interest rate for
any Borrowing of Eurodollar Loans for any Interest Period shall promptly notify
the Borrower and, upon their written request, the Lenders thereof; provided that
a failure to give such notice shall not result in any liability to the
Administrative Agent.
          1.09 Interest Periods. (a) At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion/Continuation in respect of the making of, or
conversion into, a Borrowing of Eurodollar Loans (in the case of the initial
Interest Period applicable thereto) or prior to 12:00 Noon (New York time) on
the third Business Day prior to the expiration of an Interest Period applicable
to a Borrowing of Eurodollar Loans, it shall have the right to elect by giving
the Administrative Agent written notice (or telephonic notice promptly confirmed
in writing) of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower (but otherwise subject to clause
(y) of the provisos appearing in Sections 1.01(a)(ii) and 1.01(b)(ii) and clause
(iii) of the proviso appearing in Section 1.06(a)), be a one, two, three, six
or, to the extent available to, or agreed to by, all applicable Lenders with a
Commitment and/or outstanding Loans under the respective Facility, nine or
twelve month period (or, in the case of the initial Interest Period for
Delayed-Draw B Term Loans, such other period (not to exceed one-month)
acceptable to the Administrative Agent). Notwithstanding anything to the
contrary contained above:
          (i) the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day on
which the immediately preceding Interest Period expires;
          (ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of such calendar
month;
          (iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided that if any Interest Period would otherwise expire on a
day which is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the
immediately preceding Business Day;
          (iv) no Interest Period with respect to a Borrowing of A Term Loans,
RF Loans, B Term Loans or Delayed-Draw B Term Loans shall extend beyond the
Maturity Date for the respective Facility of Loans; and
          (v) no Eurodollar Loans may be elected at any time when a Default
under Section 8.01 or an Event of Default is then in existence if the
Administrative Agent or the Required Lenders shall have determined in its or
their sole discretion not to permit such election.
          (b) If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar

10

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

 

Loans as provided above, the Borrower shall be deemed to have elected to convert
such Borrowing into a Borrowing of Base Rate Loans effective as of such
expiration.
          1.10 Increased Costs, Illegality, etc. (a) In the event that (x) in
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender shall have determined (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto):
          (i) on any date for determining the Eurodollar Rate for any Interest
Period that, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Eurodollar Rate or the making or continuance of any Eurodollar Loan has become
impracticable as a result of a contingency occurring after the Closing Date;
          (ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to any
Eurodollar Loans because of (x) any change since the Closing Date in any
applicable law, governmental rule, regulation, guideline or order (or in the
interpretation or administration thereof and including the introduction of any
new law or governmental rule, regulation, guideline or order) (including, but
not limited to, a change in the basis of taxation of payments to a Lender of the
principal of or interest on the Loans or any other amounts payable hereunder
(except for (i) changes in the rate of tax on, or determined by reference to,
the net income or net profits of such Lender imposed by the jurisdiction in
which its principal office or applicable lending office is located and (ii) any
taxes for which the Borrower is not liable to pay under Section 3.05) or a
change in official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation of the
Eurodollar Rate) and/or (y) other circumstances affecting the interbank
Eurodollar market or the position of such Lender in such market; or
          (iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Lender in good faith with any
law, governmental rule, regulation, guideline or order (or would conflict with
any such governmental rule, regulation, guideline or order not having the force
of law but with which such Lender customarily complies even though the failure
to comply therewith would not be unlawful);
then, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) on such date and (y) within ten Business
Days of the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrower and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Lenders). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion/Continuation given by
the Borrower with respect to Eurodollar Loans which have not yet been incurred
shall be deemed rescinded by the Borrower, (y) in the case of clause (ii) above,
the Borrower shall pay to such Lender, within 10 Business Days after the
Borrower’s receipt of written demand therefor, such additional amounts (in the
form of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its reasonable discretion shall determine after
consultation with the Borrower) as shall be required to

11

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

 

compensate such Lender for such increased costs or reductions in amounts
receivable hereunder (a written notice as to the additional amounts owed to such
Lender, describing the basis for such increased costs and showing the
calculation thereof, submitted to the Borrower by such Lender shall, absent
manifest error, be final and conclusive and binding upon all parties hereto) and
(z) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in Section 1.10(b) as promptly as possible and, in any event,
within the time period required by law.
          (b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii), the Borrower may (and in the
case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii), the
Borrower shall within the time period required by law) either (x) if the
affected Eurodollar Loan is then being made pursuant to a Borrowing, cancel said
Borrowing by giving the Administrative Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrower was notified by
a Lender pursuant to Section 1.10(a)(ii) or (iii), or (y) if the affected
Eurodollar Loan is then outstanding, upon at least three Business Days’ notice
to the Administrative Agent, require the affected Lender to convert each such
Eurodollar Loan into a Base Rate Loan (which conversion, in the case of the
circumstances described in Section 1.10(a)(iii), shall occur no later than the
last day of the Interest Period then applicable to such Eurodollar Loan (or such
earlier date as shall be required by applicable law)); provided, that if more
than one Lender is affected at any time, then all affected Lenders must be
treated the same pursuant to this Section 1.10(b).
          (c) If any Lender shall have determined that the adoption or
effectiveness of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, in each case
after the Closing Date, or compliance by such Lender or its parent corporation
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency first
made after the Closing Date, has or would have the effect of reducing the rate
of return on such Lender’s or its parent corporation’s capital or assets as a
consequence of its commitments or obligations hereunder to a level below that
which such Lender or its parent corporation could have achieved but for such
adoption, effectiveness, change or compliance (taking into consideration such
Lender’s or its parent corporation’s policies with respect to capital adequacy),
then from time to time, within 10 Business Days after demand by such Lender
(with a copy to the Administrative Agent), the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender or its parent
corporation for such reduction. Each Lender, upon determining in good faith that
any additional amounts will be payable pursuant to this Section 1.10(c), will
give prompt written notice thereof to the Borrower, which notice shall describe
the basis for such claim and set forth in reasonable detail the calculation of
such additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower’s obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
          1.11 Compensation. (a) The Borrower shall, without duplication,
compensate each Lender, upon its written request (which request shall set forth
the basis for requesting such compensation and reasonably detailed calculations
thereof), for all reasonable losses, expenses

12

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

 

and liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Lender to fund its Eurodollar Loans but excluding in any event
the loss of anticipated profits) which such Lender may sustain: (i) if for any
reason (other than a default by any Lender or the Administrative Agent) a
Borrowing of Eurodollar Loans by the Borrower does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion/Continuation (whether
or not withdrawn by the Borrower or deemed withdrawn pursuant to
Section 1.10(a)); (ii) if any prepayment, repayment or conversion of any of its
Eurodollar Loans occurs on a date which is not the last day of an Interest
Period applicable thereto; (iii) if any prepayment of any of its Eurodollar
Loans is not made on any date specified in a notice of prepayment given by the
Borrower; or (iv) as a consequence of (w) a DDTL Conversion, (x) any other
default by the Borrower to repay its Eurodollar Loans when required by the terms
of this Agreement or(y) an election made pursuant to Section 1.10(b).
          (b) Notwithstanding anything in this Agreement to the contrary, to the
extent any notice or request required by Section 1.10, 1.11, 1A.06 or 3.05 of
this Agreement is given by any Lender more than 120 days after such Lender
obtained, or reasonably should have obtained, knowledge of the occurrence of the
event giving rise to the additional costs, reductions in amounts, losses, taxes
or other additional amounts of the type described in such Section, such Lender
shall not be entitled to compensation under Section 1.10, 1.11, 1A.06 or 3.05 of
this Agreement for any amounts incurred or accruing prior to the giving of such
notice to the Borrower.
          1.12 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 1A.06 or 3.05 with respect to such Lender, it will, if requested
by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
affected by such event; provided that such designation is made on such terms
that such Lender and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 1.12 shall
affect or postpone any of the obligations of the Borrower or the right of any
Lender provided in Section 1.10, 1A.06 or 3.05.
          1.13 Replacement of Lenders. (x) Upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
Section 1A.06 or Section 3.05 with respect to any Lender which results in such
Lender charging to the Borrower increased costs in a material amount in excess
of those being generally charged by the other Lenders, (y) if any Lender becomes
a Defaulting Lender, or (z) in the case of a refusal by a Lender to consent to a
proposed change, waiver, discharge or termination of or to any of the provisions
of this Agreement as contemplated by clauses (i) through (vii), inclusive, of
the first proviso to Section 11.11(a) of this Agreement or clause (1) or (2) of
the second proviso to Section 11.11(a) of this Agreement which has been approved
by the Super-Majority Lenders as provided in Section 11.11(b), the Borrower
shall have the right in accordance with Section 11.04(b), if no Default under
Section 8.01 or Event of Default then exists or would exist after giving effect
to such replacement, to replace such Lender (the “Replaced Lender”) with one or
more other Eligible Transferee or Eligible Transferees, none of whom shall
constitute a Defaulting Lender at the

13

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

 

time of such replacement (collectively, the “Replacement Lender”) and each of
which shall be reasonably acceptable to the Administrative Agent or, at the
option of the Borrower, and subject to the consent of the Administrative Agent,
not to be unreasonably withheld, to replace only (a) the Revolving Commitment
(and outstandings pursuant thereto) of the Replaced Lender with an identical
Revolving Commitment provided by the Replacement Lender or (b) in the case of a
replacement as provided in Section 11.11(b) where the consent of the respective
Lender is required with respect to less than all Facilities, the Commitments
and/or outstanding Loans of such Lender in respect of each Facility where the
consent of such Lender would otherwise be individually required, with identical
Commitments and/or Loans of the respective Facility provided by the Replacement
Lender; provided that:
          (i) at the time of any replacement pursuant to this Section 1.13, the
Replacement Lender shall enter into one or more Assignment Agreements pursuant
to Section 11.04(b) (and with all fees payable pursuant to said Section 11.04(b)
to be paid by the Replacement Lender and/or the Replaced Lender (as agreed
between them)) pursuant to which the Replacement Lender shall acquire all of the
Commitments and outstanding Loans (or, in the case of the replacement of only
(a) the Revolving Commitment, the Revolving Commitment and outstanding Revolving
Loans and participations in Letter of Credit Outstandings and/or (b) the
Commitments and/or outstanding Term Loans under a given Facility of Term Loans,
the Commitment and outstanding Term Loans under the Facility with respect to
which such Lender is being replaced) of, and in each case (except for the
replacement of only the outstanding Commitments and/or Term Loans of any or all
of the Facilities of Term Loans of the respective Lender) participations in
Letters of Credit by, the Replaced Lender and, in connection therewith, shall
pay to (x) the Replaced Lender in respect thereof an amount equal to the sum of
(A) an amount equal to the principal of, and all accrued interest on, all
outstanding Loans (or of the Loans of the respective Facility being replaced) of
the Replaced Lender, (B) an amount equal to all Unpaid Drawings (unless there
are no Unpaid Drawings with respect to the Facility being replaced) that have
been funded by (and not reimbursed to) such Replaced Lender, together with all
then unpaid interest with respect thereto at such time and (C) an amount equal
to all accrued, but theretofore unpaid, Fees owing to the Replaced Lender (but
only with respect to the relevant Facility, in the case of the replacement of
less than all Facilities of Loans then held by the respective Replaced Lender)
pursuant to Section 2.01, (y) except in the case of the replacement of only the
Commitments and/or outstanding Term Loans of one or more Facilities of Term
Loans of a Replaced Lender, each Letter of Credit Issuer an amount equal to such
Replaced Lender’s Percentage of any Unpaid Drawing relating to Letters of Credit
issued by such Letter of Credit Issuer (which at such time remains an Unpaid
Drawing) to the extent such amount was not theretofore funded by such Replaced
Lender and (z) in the case of any replacement of Revolving Commitments, the
Swingline Lender an amount equal to such Replaced Lender’s Percentage of any
Mandatory Borrowing to the extent such amount was not theretofore funded by such
Replaced Lender; and
          (ii) all obligations of the Borrower then owing to the Replaced Lender
(other than those (a) specifically described in clause (i) above in respect of
which the assignment purchase price has been, or is concurrently being, paid,
but including all amounts, if any, owing under Section 1.11 or (b) relating to
any Facility of Loans and/or Commitments of the respective

14

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

 

Replaced Lender which will remain outstanding after giving effect to the
respective replacement) shall be paid in full to such Replaced Lender
concurrently with such replacement.
          Upon the execution of the respective Assignment Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, recordation of the
assignment on the Lender Register by the Administrative Agent pursuant to
Section 11.15 and, if so requested by the Replacement Lender, delivery to the
Replacement Lender of the appropriate Note or Notes executed by the Borrower,
(x) the Replacement Lender shall become a Lender hereunder and, unless the
respective Replaced Lender continues to have outstanding Term Loans and/or a
Commitment hereunder, the Replaced Lender shall cease to constitute a Lender
hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 1.10, 1.11, 1A.06, 3.05,
11.01 and 11.06), which shall survive as to such Replaced Lender and (y) except
in the case of the replacement of only Commitments and/or outstanding Term Loans
under one or more Facilities of Term Loans, the Percentages of the RF Lenders
shall be automatically adjusted at such time to give effect to such replacement.
          SECTION 1A. Letters of Credit.
          1A.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request that a Letter of Credit
Issuer, at any time and from time to time on or after the Closing Date and prior
to the date which is thirty Business Days prior to the RF Maturity Date, issue,
for the account of the Borrower and in support of such obligations of the
Borrower and/or its Subsidiaries that are incurred in the ordinary course of
business or are acceptable to the Administrative Agent and, subject to and upon
the terms and conditions herein set forth, such Letter of Credit Issuer agrees
to issue from time to time, irrevocable standby letters of credit (each such
letter of credit, a “Letter of Credit” and, collectively, the “Letters of
Credit”) denominated in Dollars and issued on a sight basis, in such form as may
be approved by such Letter of Credit Issuer and the Administrative Agent.
          (b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued if after giving effect thereto (x) the Letter of Credit Outstandings
would exceed $30,000,000 or (y) the sum of all Letter of Credit Outstandings
(less any portion thereof subject to Section 1A.01(c) Arrangements) and the
aggregate principal amount of all RF Loans and all Swingline Loans then
outstanding would exceed the Total Revolving Commitment at such time, (ii) each
Letter of Credit shall by its terms terminate on or before the earlier of
(A) the date which occurs 12 months after the date of the issuance thereof
(although any such standby Letter of Credit may be automatically extendable for
successive periods of up to 12 months, but, in each case, not beyond the tenth
Business Day prior to the RF Maturity Date, so long as such Letter of Credit
provides that the respective Letter of Credit Issuer retains an option,
reasonably satisfactory to such Letter of Credit Issuer, to terminate such
Letter of Credit within a specified period of time prior to each scheduled
extension date) and (B) ten Business Days prior to the RF Maturity Date and
(iii) no Letter of Credit Issuer shall be under any obligation to issue any
Letter of Credit of the types described above if at the time of such issuance:
     (w) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter of
Credit Issuer from issuing such Letter of Credit or any requirement of law
applicable to such Letter of Credit Issuer

15

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

 

or any request or directive (whether or not having the force of law) from any
governmental authority with jurisdiction over such Letter of Credit Issuer shall
prohibit, or request that such Letter of Credit Issuer refrain from, the
issuance of letters of credit generally or such Letter of Credit in particular
or shall impose upon such Issuing Lender with respect to such Letter of Credit
any restriction or reserve or capital requirement (for which such Letter of
Credit Issuer is not otherwise compensated under Section 1A.06) not in effect
with respect to such Letter of Credit Issuer on the Closing Date, or any
unreimbursed loss, cost or expense which was not applicable or in effect with
respect to such Letter of Credit Issuer as of the date hereof and which such
Letter of Credit Issuer in good faith deems material to it;
     (x) the issuance of such Letter of Credit would violate one or more
policies of the Letter of Credit Issuer applicable to letters of credit
generally;
     (y) such Letter of Credit contains any provisions for automatic
reinstatement of the stated amount after any drawing thereunder; or
     (z) such Letter of Credit Issuer shall have received from the Borrower, any
other Credit Party, the Administrative Agent or the Required Lenders prior to
the issuance of such Letter of Credit notice of the type described in the second
sentence of Section 1A.03(c).
          (c) Notwithstanding the foregoing, in the event a Lender Default
exists, the respective Letter of Credit Issuer shall not be required to issue
any Letter of Credit unless such Letter of Credit Issuer has entered into
arrangements satisfactory to it and the Borrower (“Section 1A.01(c)
Arrangements”) to eliminate such Letter of Credit Issuer’s risk with respect to
the participation in Letters of Credit of the Defaulting Lender or Lenders,
which may include requiring that the Borrower cash collateralize such Defaulting
Lender’s or Lenders’ Percentage of the Letter of Credit Outstandings.
          (d) Annex VII hereto contains a description of certain letters of
credit issued pursuant to the Existing Credit Agreement and outstanding on the
Closing Date. Each such letter of credit, including any extension thereof (each,
as amended from time to time in accordance with the terms hereof and thereof, an
“Existing Letter of Credit”) shall constitute a “Letter of Credit” for all
purposes of this Agreement, issued, for purposes of Sections 1A.04(a) and 1A.05,
on the Closing Date.
          1A.02 Minimum Stated Amount. The initial Stated Amount of each Letter
of Credit shall be not less than $100,000 or such lesser amount as is acceptable
to the respective Letter of Credit Issuer.
          1A.03 Letter of Credit Requests; Notices of Issuance. (a) Whenever it
desires that a Letter of Credit be issued, the Borrower shall give the
Administrative Agent and the respective Letter of Credit Issuer written notice
(which may include by way of facsimile transmission) in the form of Exhibit A-2
hereto prior to 1:00 P.M. (New York time) at least three Business Days (or such
shorter period as may be acceptable to such Letter of Credit Issuer in any given
case) prior to the proposed date of issuance (which shall be a Business Day)
(each, a

16

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

 

“Letter of Credit Request”), which Letter of Credit Request shall include any
documents that such Letter of Credit Issuer customarily requires in connection
therewith.
          (b) Each Letter of Credit Issuer shall, promptly after the issuance
of, or amendment to, a Letter of Credit, give the Administrative Agent and the
Borrower written notice of such issuance or amendment, as the case may be, and
such notice shall be accompanied by a copy of such Letter of Credit or such
amendment, as the case may be. The Administrative Agent shall notify each
Participant, including by posting such information on the Approved Electronic
Platform, of such issuance or amendment and if any Participant shall so request,
the Administrative Agent shall furnish said Participant with a copy of such
Letter of Credit or such amendment, as the case may be.
          (c) The making and amendment of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrower to the respective
Letter of Credit Issuer and the Lenders that such Letter of Credit may be issued
or amended in accordance with, and will not violate the requirements of,
Section 1A.01(a) or (b). Unless the respective Letter of Credit Issuer has
received notice from the Borrower, any other Credit Party, the Administrative
Agent or the Required Lenders before it issues or amends a Letter of Credit that
one or more of the conditions specified in Section 4 are not then satisfied, or
that the issuance or amendment of such Letter of Credit would violate
Section 1A.01(a) or (b), then such Letter of Credit Issuer shall, subject to the
terms and conditions of this Agreement, issue or amend the requested Letter of
Credit for the account of the Borrower in accordance with such Letter of Credit
Issuer’s usual and customary practices.
          1A.04 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
hereby agrees to reimburse the respective Letter of Credit Issuer, by making
payment to the Administrative Agent at the Payment Office, for any payment or
disbursement made by such Letter of Credit Issuer under any Letter of Credit
(each such amount so paid or disbursed until reimbursed, an “Unpaid Drawing”)
immediately after, and in any event within two Business Days of the date on
which the Borrower is notified by such Letter of Credit Issuer of, such payment
or disbursement with interest on the amount so paid or disbursed by such Letter
of Credit Issuer, to the extent not reimbursed prior to 3:00 P.M. (New York
time) on the date of such payment or disbursement, from and including the date
paid or disbursed to but not including the date such Letter of Credit Issuer is
reimbursed therefor at a rate per annum which shall be the Applicable Base Rate
Margin plus the Base Rate as in effect from time to time (plus an additional 2%
per annum if not reimbursed by the third Business Day after the date of such
notice of payment or disbursement), such interest also to be payable on demand.
          (b) The Borrower’s obligation under this Section 1A.04 to reimburse
the respective Letter of Credit Issuer with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower may have or have had against any Letter of
Credit Issuer, the Administrative Agent or any Lender, including, without
limitation, any defense based upon the failure of any drawing under a Letter of
Credit to conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such drawing; provided,
however, that the Borrower shall not be obligated to reimburse such Letter of
Credit Issuer for any wrongful payment made by such

17

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

 

Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of
such Letter of Credit Issuer as determined by a final judgment issued by a court
of competent jurisdiction.
          1A.05 Letter of Credit Participations. (a) Immediately upon the
issuance by any Letter of Credit Issuer of any Letter of Credit, such Letter of
Credit Issuer shall be deemed to have sold and transferred to each other RF
Lender, and each such RF Lender (each, a “Participant”) shall be deemed
irrevocably and unconditionally to have purchased and received from such Letter
of Credit Issuer, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant’s Percentage, in such Letter of
Credit, each substitute letter of credit, each drawing made thereunder and the
obligations of the Borrower under this Agreement with respect thereto (although
the Letter of Credit Fee shall be payable directly to the Administrative Agent
for the account of the RF Lenders as provided in Section 2.01(c) and the
Participants shall have no right to receive any portion of any Facing Fees) and
any security therefor or guaranty pertaining thereto. Upon any change in the
Revolving Commitments pursuant to Section 1.13 or 11.04(b), it is hereby agreed
that, with respect to all outstanding Letters of Credit and Unpaid Drawings,
there shall be an automatic adjustment to the participations pursuant to this
Section 1A.05 to reflect the new Percentages of the RF Lenders.
          (b) In determining whether to pay under any Letter of Credit, the
applicable Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by any Letter of Credit Issuer under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct as determined by a final judgment issued by a
court of competent jurisdiction shall not create for such Letter of Credit
Issuer any resulting liability.
          (c) In the event that any Letter of Credit Issuer makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to such Letter of Credit Issuer pursuant to Section 1A.04(a),
such Letter of Credit Issuer shall promptly notify the Administrative Agent, and
the Administrative Agent shall promptly notify each Participant of such failure,
and each Participant shall promptly and unconditionally pay to the
Administrative Agent for the account of such Letter of Credit Issuer, the amount
of such Participant’s Percentage of such payment in Dollars and in same day
funds; provided, however, that no Participant shall be obligated to pay to the
Administrative Agent its Percentage of such unreimbursed amount for any wrongful
payment made by such Letter of Credit Issuer under a Letter of Credit as a
result of acts or omissions constituting willful misconduct or gross negligence
on the part of such Letter of Credit Issuer as determined by a final judgment
issued by a court of competent jurisdiction. If the Administrative Agent so
notifies any Participant required to fund an Unpaid Drawing under a Letter of
Credit prior to 1:00 P.M. (New York time) on any Business Day, such Participant
shall make available to the Administrative Agent for the account of the
respective Letter of Credit Issuer such Participant’s Percentage of the amount
of such payment on such Business Day in same day funds. If and to the extent
such Participant shall not have so made its Percentage of the amount of such
Unpaid Drawing available to the Administrative Agent for the account of the
respective Letter of Credit Issuer, such Participant

18

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

 

agrees to pay to the Administrative Agent for the account of such Letter of
Credit Issuer, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the
Administrative Agent for the account of such Letter of Credit Issuer at the
overnight Federal Funds Effective Rate. The failure of any Participant to make
available to the Administrative Agent for the account of the respective Letter
of Credit Issuer its Percentage of any Unpaid Drawing under any Letter of Credit
shall not relieve any other Participant of its obligation hereunder to make
available to the Administrative Agent for the account of such Letter of Credit
Issuer its Percentage of any payment under any Letter of Credit on the date
required, as specified above, but no Participant shall be responsible for the
failure of any other Participant to make available to the Administrative Agent
for the account of such Letter of Credit Issuer such other Participant’s
Percentage of any such payment.
          (d) Whenever any Letter of Credit Issuer receives a payment of a
reimbursement obligation (including interest on Unpaid Drawings) as to which the
Administrative Agent has received for the account of such Letter of Credit
Issuer any payments from any Participant pursuant to clause (c) above, such
Letter of Credit Issuer shall pay to the Administrative Agent and the
Administrative Agent shall promptly pay to each Participant which has paid its
Percentage thereof, in Dollars and in same day funds, an amount equal to such
Participant’s Percentage of the amount of the payment of such reimbursement
obligation, including interest paid thereon to the extent accruing after the
purchase of the respective participations.
          (e) The obligations of the Participants to make payments to the
Administrative Agent for the account of the respective Letter of Credit Issuer
with respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever (provided that no Participant shall be required to make payments
resulting from the Administrative Agent’s gross negligence or willful misconduct
as determined by a final judgment issued by a court of competent jurisdiction)
and shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
          (i) any lack of validity or enforceability of this Agreement or any of
the other Credit Documents;
          (ii) the existence of any claim, set-off, defense or other right which
the Borrower or any of its Subsidiaries (or the Participant or any of its
Subsidiaries) may have at any time against a beneficiary named in a Letter of
Credit, any transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Administrative Agent, any Letter of Credit
Issuer, any Lender or other Person, whether in connection with this Agreement,
any Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower and the
beneficiary named in any such Letter of Credit);
          (iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;

19

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

 

          (iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
          (v) the occurrence of any Default or Event of Default.
          (f) To the extent the respective Letter of Credit Issuer is not
indemnified by the Borrower, the Participants will reimburse and indemnify such
Letter of Credit Issuer, in proportion to their respective Percentages, for and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or disbursements of whatsoever kind
or nature which may be imposed on, asserted against or incurred by such Letter
of Credit Issuer in performing its respective duties in any way relating to or
arising out of its issuance of Letters of Credit; provided that no Participants
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Letter of Credit Issuer’s gross negligence or willful
misconduct.
          (g) The Letter of Credit Issuer shall act on behalf of the Lenders
with respect to any Letters of Credit issued by it and the documents associated
therewith, and the Letter of Credit Issuer shall have all of the benefits and
immunities (A) provided to the Administrative Agent in Section 10 with respect
to any acts taken or omissions suffered by the Letter of Credit Issuer in
connection with Letters of Credit issued by it or proposed to be issued by it as
fully as if the term “Administrative Agent” as used in Section 10 included the
Letter of Credit Issuer with respect to such acts or omissions, and (B) as
additionally provided herein with respect to the Letter of Credit Issuer.
          (h) Unless otherwise expressly agreed by the Letter of Credit Issuer
and the Borrower, when a Letter of Credit is issued (including any such
agreement applicable to an existing Letter of Credit), (i) the rules of the
International Standby Practices, as promulgated by the Institute for
International Banking Law and Practice and the International Chamber of Commerce
at the time of issuance, shall apply to each standby Letter of Credit, and
(ii) the rules of the Uniform Customs and Practice for Documentary Credits, as
most recently published by the International Chamber of Commerce at the time of
issuance, shall apply to each commercial Letter of Credit.
          (i) Notwithstanding that a Letter of Credit issued or outstanding
hereunder is in support of any obligations of, or is for the account of, a
Subsidiary, the Borrower shall be obligated to reimburse the Letter of Credit
Issuer hereunder for any and all drawings under such Letter of Credit. The
Borrower hereby acknowledges that the issuance of Letters of Credit for the
account of Subsidiaries inures to the benefit of the Borrower, and that the
Borrower’s business derives substantial benefits from the businesses of such
Subsidiaries.
          1A.06 Increased Costs. If at any time after the Closing Date, the
adoption or effectiveness of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central lender or comparable agency charged with the
interpretation or administration thereof, or compliance by any Letter of Credit
Issuer or any Participant with any request or directive (whether or not having
the force of law) by any such authority, central lender or comparable agency
shall either (i)

20

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

 

impose, modify or make applicable any reserve, deposit, capital adequacy or
similar requirement against Letters of Credit issued by any Letter of Credit
Issuer or such Participant’s participation therein, or (ii) impose on any Letter
of Credit Issuer or any Participant any other conditions affecting this
Agreement, any Letter of Credit or such Participant’s participation therein; and
the result of any of the foregoing is to increase the cost to any Letter of
Credit Issuer or such Participant of issuing, maintaining or participating in
any Letter of Credit, or to reduce the amount of any sum received or receivable
by any Letter of Credit Issuer or such Participant hereunder (other than, in the
case of a change in the basis of taxation of payments to a Letter of Credit
Issuer or Participant of the principal of or interest on the Loans or any other
amounts payable hereunder, changes in the rate of tax on, or determined by
reference to, the net income or net profits of such Letter of Credit Issuer or
Participant imposed by the jurisdiction in which its principal office or
applicable lending office is located), then, upon demand to the Borrower by any
Letter of Credit Issuer or such Participant (a copy of which notice shall be
sent by such Letter of Credit Issuer or such Participant to the Administrative
Agent), the Borrower shall pay to such Letter of Credit Issuer or such
Participant such additional amount or amounts as will compensate such Letter of
Credit Issuer or such Participant for such increased cost or reduction. A
certificate submitted to the Borrower by such Letter of Credit Issuer or such
Participant, as the case may be (a copy of which certificate shall be sent by
such Letter of Credit Issuer or such Participant to the Administrative Agent),
setting forth the basis for the determination of such additional amount or
amounts necessary to compensate such Letter of Credit Issuer or such Participant
as aforesaid shall be conclusive and binding on the Borrower absent manifest
error, although the failure to deliver any such certificate shall not release or
diminish any of the Borrower’s obligations to pay additional amounts pursuant to
this Section 1A.06 upon the subsequent receipt thereof.
          SECTION 2. Fees; Voluntary Reduction of Commitments and Mandatory
Adjustments of Commitments, etc.
          2.01 Fees. (a) The Borrower agrees to pay to the Administrative Agent
a commitment commission (the “RF Commitment Commission”) for the account of each
RF Lender that is a Non-Defaulting Lender for the period from and including the
Closing Date to but not including the date upon which the Total Revolving
Commitment has been terminated, computed for each day at the rate per annum
equal to (a) through the date on which financial statements are delivered for
the first full fiscal quarter following the Closing Date, 0.375% and
(b) thereafter the RF Commitment Commission Rate, in each case for such day on
the Unutilized Revolving Commitment of such Lender on such day. Such Commitment
Commission shall be due and payable quarterly in arrears on the last Business
Day of each calendar quarter and on the date upon which the Total Revolving
Commitment is terminated.
          (b) The Borrower agrees to pay to the Administrative Agent a
commitment commission (the “DDTF Commitment Commission” and, together with the
RF Commitment Commission, the “Commitment Commission”) for the account of each
Lender with a Delayed- Draw B Term Commitment that is a Non-Defaulting Lender
for the period from and including the Closing Date to but not including the date
upon which the Total Delayed-Draw B Term Commitment has been terminated,
computed for each day at the rate per annum equal to (a) for the period
beginning on the Closing Date to and including the six-month anniversary of the

21

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

 

Closing Date, 0.75% and (b) thereafter, 1.25% for such day on the undrawn
portion of the Delayed-Draw B Term Commitment of such Lender on such day. Such
DDTF Commitment Commission shall be due and payable quarterly in arrears on the
last Business Day of each calendar quarter and on the date upon which the Total
Delayed-Draw B Term Commitment is terminated.
          (c) So long as any Letter of Credit is outstanding and has not been
fully collateralized pursuant to Section 3.03(A)(a) and/or Section 8, the
Borrower agrees to pay to the Administrative Agent, for the account of each
Non-Defaulting Lender, pro rata on the basis of their respective Percentages, a
fee in respect of each Letter of Credit (the “Letter of Credit Fee”) computed
for each day at a per annum rate equal to (i) for all standby Letters of Credit,
the Applicable Eurodollar Margin for RF Loans on such day multiplied by the
Stated Amount of all standby Letters of Credit outstanding on such day (less any
amount thereof as to which Section 1A.01(c) Arrangements are in place) or
(ii) for all trade Letters of Credit, one-half of the Applicable Eurodollar
Margin for RF Loans on such day multiplied by the Stated Amount of all trade
Letters of Credit outstanding on such day (less any amount thereof as to which
Section 1A.01(c) Arrangements are in place), in each case less any Facing Fees
paid pursuant to clause (d) below. Accrued Letter of Credit Fees shall be due
and payable quarterly in arrears on the last Business Day of each calendar
quarter.
          (d) So long as any Letter of Credit is outstanding and has not been
fully collateralized pursuant to Section 3.03(A)(a) and/or Section 8, the
Borrower agrees to pay to the respective Letter of Credit Issuer a fee in
respect of each Letter of Credit issued by it (the “Facing Fee”) computed for
each day at the rate of 0.125% per annum on the Stated Amount of all such
Letters of Credit outstanding on such day; provided that there will be a minimum
Facing Fee per year for each Letter of Credit of $500 (which is not an
additional fee). Accrued Facing Fees shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter.
          (e) The Borrower agrees to pay directly to the respective Letter of
Credit Issuer upon each issuance, renewal or extension of, payment under, and/or
amendment of, a Letter of Credit such amount, if any, as shall at the time of
such issuance, renewal, extension, payment or amendment be the sum of all
administrative charges, fees and expenses which such Letter of Credit Issuer
then customarily charges for issuances of, payments under or amendments of,
letters of credit issued by it.
          (f) The Borrower shall pay to (x) each Agent on the Closing Date, for
its own account and/or for distribution to the Lenders, such fees as heretofore
agreed by the Borrower and the Agents and (y) the Administrative Agent, for its
own account, such other fees as agreed to between the Borrower and the
Administrative Agent, when and as due.
          (g) All computations of Fees shall be made in accordance with
Section 11.07(b).
          2.02 Voluntary Reduction of Commitments. (a) Upon at least three
Business Days’ prior written notice (or telephonic notice confirmed in writing)
to the Administrative Agent at its Notice Office (which notice shall be deemed
to be given on a certain day only if

22

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

 

given before 2:00 P.M. (New York time) on such day and shall be promptly
transmitted by the Administrative Agent to each of the Lenders), the Borrower
shall have the right, without premium or penalty, to reduce, in whole or in
part, the Total Unutilized Revolving Commitment or the Total Delayed-Draw B Term
Commitment; provided that (w) any such partial reduction shall apply to
proportionately and permanently reduce the Revolving Commitments or Delayed-
Draw B Term Commitments, as the case may be, of each Lender with such a
Commitment, (x) in the case of any reduction to the Total Unutilized Revolving
Commitment, no such reduction shall reduce any Lender’s Revolving Commitment by
an amount greater than the then Unutilized Revolving Commitment of such Lender,
and (y) any partial reduction pursuant to this Section 2.02 shall be in integral
multiples of $1,000,000.
          (b) In the event of refusals by a Lender to consent to proposed
changes, waivers, discharges or terminations of or to any of the provisions of
this Agreement as contemplated by clauses (i) through (vii), inclusive, of the
first proviso to Section 11.11(a) of this Agreement or clause (1) or (2) of the
second proviso to Section 11.11(a) which have been approved by the
Super-Majority Lenders as provided in Section 11.11(b), the Borrower shall have
the right, subject to obtaining the consents required by Section 11.11(b), upon
two Business Days’ prior written notice to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Lenders), to terminate the entire Delayed-Draw B Term Commitment
and/or Revolving Commitment of such Lender, so long as all Loans, together with
accrued and unpaid interest, Fees and all other amounts, owing to such Lender
(including all amounts, if any, owing pursuant to Section 1.11 but excluding
amounts owing in respect of Loans of any Facility maintained by such Lender, if
such Loans are not being repaid pursuant to Section 11.11(b)) are repaid
concurrently with the effectiveness of such termination (at which time Annex I
shall be deemed modified to reflect such changed amounts) and at such time,
unless the respective Lender continues to have outstanding Commitments and/or
Loans hereunder, such Lender shall no longer constitute a “Lender” for purposes
of this Agreement, except with respect to indemnifications under this Agreement
(including, without limitation, Sections 1.10, 1.11, 1A.06, 3.05, 11.01 and
11.06), which shall survive as to such repaid Lender.
          2.03 Mandatory Adjustments of Commitments, etc. (a) The Total A Term
Commitment (and the A Term Commitment of each A Term Lender) shall terminate in
its entirety on the Closing Date (after giving effect to the making of A Term
Loans on such date).
          (b) The Total Initial B Term Commitment (and the Initial B Term
Commitment of each Initial B Term Lender) shall terminate in its entirety on the
Closing Date (after giving effect to the making of Initial B Term Loans on such
date).
          (c) The Total Delayed-Draw B Term Commitment (and the Delayed-Draw B
Term Commitment of each Lender with such a Commitment) shall terminate in its
entirety (to the extent not theretofore reduced to zero or terminated) on the
Delayed-Draw B Term Commitment Termination Date (after giving effect to any
incurrence of Delayed-Draw B Term Loans on such date).
          (d) The Total Delayed-Draw B Term Commitment shall (i) be reduced on
each date on which Delayed-Draw B Term Loans are incurred (after giving effect
to the making

23

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

 

of Delayed-Draw B Term Loans on such date) in an amount equal to the aggregate
principal amount of the Delayed-Draw B Term Loans incurred on such date and
(ii) prior to the termination of the Total Delayed-Draw B Term Commitment as
provided in Section 2.03(c) and the immediately preceding clause (i) of this
Section 2.03(d), be reduced on each date on which both (x) no B Term Loans are
outstanding (after giving effect to the application on or prior to such date of
the provisions of Section 3.03(A)) and (y) B Term Loans, had there been any
still outstanding, would have been required to be repaid pursuant to any of
Sections 3.03(A)(b), (c), (d), (e) or (f), by the amount, if any, by which the
amount required to be applied pursuant to said Sections as a result of the
events described therein (determined as if an unlimited amount of B Term Loans
were actually outstanding) exceeds the aggregate principal amount of B Term
Loans being repaid as a result of such events.
          (e) The Total Revolving Commitment (to the extent outstanding) shall
be reduced on each date on which both (x) no Term Loans are outstanding (after
giving effect to the application on or prior to such date of the provisions of
Sections 3.03(A)) and the Total Delayed-Draw B Term Commitment has terminated
(after giving effect to the application on or prior to such date of the
provisions of Sections 2.03(b) and (c)) and (y) Term Loans, had there been any
still outstanding, would have been required to be repaid pursuant to any of
Sections 3.03(A)(b), (c), (d), (e) or (f), by the amount, if any, by which the
amount required to be applied pursuant to said Sections as a result of the
events described therein (determined as if an unlimited amount of Term Loans
were actually outstanding) equals or exceeds the sum of the Delayed-Draw B Term
Commitments being terminated and the aggregate principal amount of Term Loans
being repaid, in either case as a result of such events; provided, however, that
in no event shall the Total Revolving Commitment be reduced below $100,000,000
as a result of the application of this Section 2.03(e).
          (f) The Total Revolving Commitment shall terminate in its entirety on
the earlier of (x) the RF Maturity Date and (y) the date on which a Change of
Control occurs.
          (g) Each partial reduction of the Commitments under a Facility
pursuant to this Section 2.03 shall apply proportionately to reduce the
Commitment of each Lender under such Facility.
          SECTION 3. Payments.
          3.01 Repayment of Term Loans.
          (a) The Borrower promises to repay the A Term Loans on the dates and
in the amounts set forth below:

                  DATE     AMOUNT            
March 31, 2008 through
March 31, 2009, inclusive
  $ 0          
June 30, 2009
  $ 6,250,000          
September 30, 2009
  $ 6,250,000          
December 31, 2009
  $ 6,250,000          
March 31, 2010
  $ 6,250,000          
June 30, 2010
  $ 6,250,000          

24

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

 

                  DATE     AMOUNT            
September 30, 2010
  $ 6,250,000          
December 31, 2010
  $ 6,250,000          
March 31, 2011
  $ 6,250,000          
June 30, 2011
  $ 12,500,000          
September 30, 2011
  $ 12,500,000          
December 31, 2011
  $ 12,500,000          
March 31, 2012
  $ 12,500,000          
June 30, 2012
  $ 12,500,000          
September 30, 2012
  $ 12,500,000          
December 31, 2012
  $ 12,500,000          
March 31, 2013
  $ 12,500,000          
June 30, 2013
  $ 87,500,000          
September 30, 2013
  $ 87,500,000          
December 31, 2013
  $ 87,500,000          
A TERM LOAN MATURITY DATE
  100% of amount of outstanding A Term Loans        

          (b) The Borrower promises to repay the Initial B Term Loans on the
dates and in the amounts set forth below:

          DATE   AMOUNT March 31, 2008 through
March 31, 2009, inclusive   $ 0  
June 30, 2009
  $ 2,825,000  
September 30, 2009
  $ 2,825,000  
December 31, 2009
  $ 2,825,000  
March 31, 2010
  $ 2,825,000  
June 30, 2010
  $ 2,825,000  
September 30, 2010
  $ 2,825,000  
December 31, 2010
  $ 2,825,000  
March 31, 2011
  $ 2,825,000  
June 30, 2011
  $ 2,825,000  
September 30, 2011
  $ 2,825,000  
December 31, 2011
  $ 2,825,000  
March 31, 2012
  $ 2,825,000  
June 30, 2012
  $ 2,825,000  
September 30, 2012
  $ 2,825,000  
December 31, 2012
  $ 2,825,000  
March 31, 2013
  $ 2,825,000  
June 30, 2013
  $ 2,825,000  
September 30, 2013
  $ 2,825,000  
December 31, 2013
  $ 2,825,000  
March 31, 2014
  $ 2,825,000  
June 30, 2014
  $ 2,825,000  
September 30, 2014
  $ 2,825,000  
December 31, 2014
  $ 2,825,000  
B TERM LOAN MATURITY DATE
  100% of amount of outstanding Initial Term Loans

25

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

 

          (c) The Borrower promises to repay the Delayed-Draw B Term Loans
(i) in an annual amount equal to 0.00% of the amount drawn in the first year
after the Closing Date, (ii) in an annual amount equal to 1.00% of the amount
drawn, thereafter, payable quarterly in arrears on the last Business Day of each
quarter, and (iii) in an amount equal to 100% of the amount of the outstanding
Delayed-Draw B Term Loans at the B Term Loan Maturity Date.
          3.02 Voluntary Prepayments. The Borrower shall have the right to
prepay Loans, in whole or in part, upon payment of the Applicable Payment Fee,
from time to time on the following terms and conditions: (i) the Borrower shall
give the Administrative Agent at the Payment Office written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay the
Loans, whether such Loans are A Term Loans under the A Term Facility, B Term
Loans under the B Term Facility, RF Loans or Swingline Loans each under the
Revolving Facility, the amount of such prepayment and (in the case of Eurodollar
Loans) the specific Borrowing(s) pursuant to which made, which notice shall be
given by the Borrower prior to 12:00 Noon (New York time) at least one Business
Day prior to the date of such prepayment with respect to Base Rate Loans (other
than Swingline Loans, with respect to which notice shall be given by the
Borrower on the date of prepayment) and at least three Business Days prior to
the date of such prepayment with respect to Eurodollar Loans, and which notice
(except in the case of a prepayment of Swingline Loans) shall promptly be
transmitted by the Administrative Agent to each of the Lenders; (ii) each
partial prepayment of any Borrowing shall be in an aggregate principal amount of
at least $1,000,000 (or $100,000, in the case of a partial prepayment of any
Borrowing of Swingline Loans); provided that no partial prepayment of Eurodollar
Loans made pursuant to a Borrowing shall reduce the aggregate principal amount
of the Loans outstanding pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount applicable thereto; (iii) except as provided in clause
(v) below, the Borrower may designate the Types of Loans which are to be
prepaid, the specific Borrowing(s) under the affected Facility pursuant to which
made and the maturities under Section 3.01 to which applied; provided that at
the Borrower’s election in connection with any prepayment of RF Loans pursuant
to this Section 3.02, such prepayment shall not be applied to any RF Loans of a
Defaulting Lender; (iv) at the time of any prepayment of Eurodollar Loans
pursuant to this Section 3.02 on any date other than the last day of the
Interest Period applicable thereto, the Borrower shall pay the amounts required
pursuant to Section 1.11; and (v) in the event of certain refusals by a Lender
to consent to certain proposed changes, waivers, discharges or terminations of
or to any of the provisions of this Agreement as contemplated by clauses (i)
through (vii), inclusive, of the first proviso to Section 11.11(a) of this
Agreement or clause (1) or (2) of the second proviso to Section 11.11(a) of this
Agreement which have been approved by the Super-Majority Lenders as provided in
Section 11.11(b), the Borrower may, upon two Business Days’ prior written notice
to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), repay all
Loans of such Lender (including all amounts, if any, owing pursuant to
Section 1.11), together with accrued and unpaid interest, Fees and all other
amounts then owing to such Lender (or owing to such Lender with respect to each
Facility which gave rise to the need to obtain such Lender’s individual consent)
in accordance with said Section 11.11(b), so long as (A) in the case of the
repayment of RF Loans of any Lender pursuant to this clause (v), the Revolving
Commitment of

26

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

 

such Lender is terminated concurrently with such repayment (at which time Annex
I shall be deemed modified to reflect the changed Revolving Commitments) and
(B) the consents required by Section 11.11(b) in connection with the repayment
pursuant to this clause (v) shall have been obtained.
          3.03 Mandatory Prepayments.
          (A) Requirements:
          (a) (i) If on any date (and after giving effect to all other
repayments on such date) the sum of (I) the aggregate outstanding principal
amount of RF Loans made by Non-Defaulting Lenders, (II) the aggregate
outstanding principal amount of all Swingline Loans and (III) the Letter of
Credit Outstandings (less any amount thereof as to which Section 1A.01(c)
Arrangements are in place) exceeds the Adjusted Total Available Revolving
Commitment as then in effect, the Borrower shall repay on such date the
principal of outstanding Swingline Loans and, after all Swingline Loans have
been repaid in full or if no Swingline Loans are outstanding, the principal of
outstanding RF Loans of Non-Defaulting Lenders in an aggregate amount equal to
such excess. If, after giving effect to such repayment or repayments, the Letter
of Credit Outstandings (less any amount thereof as to which Section 1A.01(c)
Arrangements are in place) exceeds the Adjusted Total Available Revolving
Commitment then in effect, the Borrower shall pay to the Collateral Agent an
amount in cash and/or Cash Equivalents equal to such excess and the Collateral
Agent shall hold such payment as security for the obligations of the Borrower in
respect of Letters of Credit owing to Non-Defaulting Lenders pursuant to a cash
collateral agreement to be entered into in form and substance reasonably
satisfactory to the Collateral Agent (which shall permit certain investments in
Cash Equivalents reasonably satisfactory to the Collateral Agent, until all
proceeds are applied to such secured obligations or until all Letters of Credit
so secured expire undrawn, at which time such amount shall be returned to the
Borrower).
          (ii) On any date on which the aggregate outstanding principal amount
of the RF Loans made by any Defaulting Lender exceeds the Available Revolving
Commitment of such Defaulting Lender, the Borrower shall prepay on such date
principal of outstanding RF Loans of such Defaulting Lender in an amount equal
to such excess.
          (b) On the fifth Business Day following the date of receipt thereof on
or after the Closing Date by the Borrower and/or any of its Subsidiaries of the
Net Cash Proceeds from any Asset Sale (excluding Excluded Asset Sales for
purposes of this Section 3.03(A)(b)), an amount equal to 100% of the Net Cash
Proceeds shall be paid by the Borrower as a mandatory repayment of principal of
the then outstanding Term Loans, unless to the extent any such funds are
utilized pursuant to a Reinvestment Election (defined below). The Borrower may
elect, by delivering, within 10 days of the receipt of such Net Cash Proceeds a
notice of such election (a “Reinvestment Election”), as hereinafter provided, to
designate up to 100% of the Net Cash Proceeds from Asset Sales that would
otherwise be required to repay the Term Loans pursuant to the immediately
preceding sentence as financing for Consolidated Capital Expenditures or
Permitted Acquisitions acquired within the 120 days preceding the receipt of
such Net Cash Proceeds or to be applied within the 360 days following receipt of
such Net Cash Proceeds (provided that such 360-day period shall be extended to
540 days if the Borrower delivers a

27

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

 

Reinvestment Notice to the Administrative Agent prior to the end of such 360-day
period) and the Borrower does so apply such Net Cash Proceeds as set forth in
the Reinvestment Election within such 360 day or 540 day period, as applicable.
An amount equal to 100% of the Net Cash Proceeds not reinvested in accordance
with a Reinvestment Election within such 360 day or 540 day period, as
applicable, shall be paid by the Borrower as a mandatory repayment of principal
of the then outstanding Term Loans on or prior to the fifth Business Day
following the last day of such 360 day or 540 day period, as applicable.
Notwithstanding the foregoing provisions of this Section 3.03(A)(b), in no event
shall the Borrower or any of its Subsidiaries use any proceeds from any Asset
Sale to make any voluntary or mandatory repayment or prepayment of Permitted
Junior Capital and, in each case, before any such obligation to use such
proceeds to make such repayment shall arise, the Borrower or the respective
Subsidiary shall reinvest the respective amounts pursuant to a Reinvestment
Election as, and to the extent, permitted above in this Section 3.03(A)(b) or
apply such proceeds as a mandatory prepayment and/or commitment reduction in
accordance with the requirements of Section 3.03(B) or 2.03(d) or (e), as
applicable.
          (c) On the Business Day following the receipt thereof by the Borrower,
an amount equal to 100% of the Net Cash Proceeds from the issuance of Permitted
Junior Capital shall be applied as a mandatory repayment of principal of the
then outstanding Term Loans; provided, that, notwithstanding the foregoing, the
Net Cash Proceeds from any issuance of Permitted Junior Capital by the Borrower
after the Closing Date shall not be required to be applied to repay principal of
outstanding Term Loans as otherwise required above, so long as (i) no Default or
Event of Default then exists or would result from the respective issuance of
such Permitted Junior Capital, (ii) calculations are made by the Borrower
demonstrating compliance with the covenants contained in Sections 7.11 and 7.12
for the Calculation Period most recently ended prior to the date of such
issuance of Permitted Junior Capital on a Pro Forma Basis (as if the Permitted
Junior Capital had been issued on the first day of such Calculation Period),
(iii) in the case of any issuance of Permitted Junior Capital consisting of
Disqualified Preferred Stock or Permitted Unsecured Debt, calculations are made
by the Borrower demonstrating compliance with a Senior Secured Leverage Ratio of
less than 4.00:1.00 for the Calculation Period most recently ended prior to the
date of such issuance of Permitted Junior Capital on a Pro Forma Basis (as if
the respective Permitted Junior Capital had been issued on the first day of such
Calculation Period), (iv) all of the Net Cash Proceeds from such issuance of
Permitted Junior Capital shall have been used (except to the extent of any
portion thereof applied to make a concurrent prepayment of Term Loans pursuant
to, and in accordance with the requirements of, Section 3.03) to (x) effect a
Permitted Acquisition in accordance with the requirements of Section 6.10 and/or
concurrently utilized by the Borrower (I) to make a voluntary prepayment of RF
Loans pursuant to, and in accordance with the requirements of, Section 3.02 in
an aggregate principal amount equal to the aggregate principal amount of RF
Loans actually incurred by the Borrower to finance a Permitted Acquisition
and/or (II) to redeem and/or refinance Permitted Junior Capital in an amount
equal to the principal amount or aggregate liquidation preference of or the Net
Cash Proceeds from the Permitted Junior Capital actually issued to finance
Permitted Acquisition(s) or Permitted Acquisitions (and pay related accrued
interest and dividends thereon, if any), in any such case within the 364-day
period prior to such issuance of Permitted Junior Capital and/or (y) redeem
shares of Qualified Preferred Stock or Disqualified Preferred Stock and/or
repurchase or refinance any Permitted Unsecured Debt pursuant to
Section 7.09(a)(xiv), and (v) the Borrower shall have furnished to the
Administrative Agent a certificate from an

28

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

 

Authorized Officer certifying as to compliance with the requirements of
preceding clauses (i), (ii), (iii), and (iv) and containing the calculations
required by preceding clauses (ii) and (iii), as applicable.
          (d) On the Reinvestment Prepayment Date with respect to a Reinvestment
Election, an amount equal to the Reinvestment Prepayment Amount, if any, for
such Reinvestment Election shall be applied as a repayment of the principal
amount of the then outstanding Term Loans.
          (e) By 5:00 P.M. (New York time) on the day of any drawing of any
amount of A Term Loans or Initial B Term Loans by Spinco pursuant to
Sections 1.01(a)(i)(A) or 1.01(b)(i)(A), respectively, if the Merger shall not
have been consummated by such time, each Borrower shall immediately repay the
then outstanding Term Loans borrowed by it in full and Spinco and its
Subsidiaries shall not thereafter have any further obligations hereunder or
under any other Credit Documents.
          (f) On the date of delivery of each Compliance Certificate pursuant to
Section 6.01(d), beginning with the Compliance Certificate for the fiscal
quarter ended June 30, 2009, demonstrating that the Leverage Ratio as at the
last day of the preceding fiscal quarter of the Borrower covered by such
Compliance Certificate is greater than 3.50:1.00 (or if the Borrower shall have
failed to deliver a Compliance Certificate as required by Section 6.01(d) with
respect to any fiscal quarter of the Borrower, on the date of the required
delivery of such Compliance Certificate for such fiscal quarter pursuant to said
Section), an amount equal to the greater of (i) $11,250,000 and (ii) 90% of
Excess Cash Flow (calculated after the payment of any Dividends by the Borrower
on the Borrower Common Stock during such fiscal quarter as otherwise permitted
by this Credit Agreement), if any, during the preceding fiscal quarter, in each
case less the amount of any scheduled amortization payments made pursuant to
Section 3.01 (but the result of such calculation shall in no event be less than
$0), shall be applied as a mandatory repayment of principal of the then
outstanding Term Loans.
          (g) To the extent not theretofore repaid pursuant to the provisions of
this Agreement, (i) all outstanding RF Loans and Swingline Loans shall be repaid
in full upon the termination of the Total Revolving Commitment, (ii) all
outstanding Term Loans and RF Loans shall be repaid in full on the relevant
Maturity Date therefor, (iii) all outstanding Swingline Loans shall be repaid in
full on the Swingline Expiry Date and (iv) all outstanding B Term Loans shall be
repaid in full on the date a Change of Control occurs.
          (B) Application:
          With respect to each prepayment of Loans required by Section 3.03(A),
(1) payments shall first be applied to prepay the A Term Loans in full,
including any applicable fees, interest and expenses therefor and, to the extent
that no A Term Loans remain outstanding, including any applicable fees, interest
and expenses therefor, payments shall second be applied to prepay the B Term
Loans, (2) notwithstanding clause (1) hereof, the Borrower may designate the
Types of Loans which are to be prepaid and the specific Borrowing(s) under the
affected Facility pursuant to which made and (3) any amounts repaid pursuant to
Section 3.03(A) shall be applied in forward order of maturity to payments
required to be made under Section 3.01;

29

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

 

provided that (i) if any prepayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount for such
Borrowing, such Borrowing shall be immediately converted into Base Rate Loans;
(ii) except for the differing treatments of Defaulting Lenders and
Non-Defaulting Lenders as expressly provided in Section 3.03(A)(a), each
prepayment of any Loans under a Facility made pursuant to a given Borrowing
shall be applied pro rata among such Loans; (iii) repayments of Eurodollar Loans
pursuant to this Section 3.03 may only be made on the last day of an Interest
Period applicable thereto unless (x) all Eurodollar Loans of the respective
Facility with Interest Periods ending on such date of required repayment and all
Base Rate Loans of the respective Facility have been paid in full and/or (y)
concurrently with such repayment, the Borrower pays all breakage costs and other
amounts owing to each Lender pursuant to Section 1.11. In the absence of a
designation by the Borrower as described in the preceding sentence, the
Administrative Agent shall, subject to the above, make such designation in its
sole discretion with a view, but no obligation, to minimize breakage costs owing
under Section 1.11. Notwithstanding the foregoing provisions of this
Section 3.03, if at any time the mandatory repayment of Loans pursuant to this
Section 3.03 would result, after giving effect to the procedures set forth in
clause (iii) of the second preceding sentence, in the Borrower incurring
breakage costs under Section 1.11 as a result of Eurodollar Loans being repaid
other than on the last day of an Interest Period applicable thereto (any such
Eurodollar Loans, “Affected Loans”), the Borrower may (in lieu of making such
payment) elect, by written notice to the Administrative Agent, to have the
provisions of the following sentence be applicable. At the time any Affected
Loans are otherwise required to be prepaid, the Borrower may elect to deposit
100% (or such lesser percentage elected by the Borrower as not being repaid) of
the principal amounts that otherwise would have been paid in respect of the
Affected Loans with the Administrative Agent to be held as security for the
obligations of the Borrower hereunder pursuant to a cash collateral agreement to
be entered into in form and substance satisfactory to the Administrative Agent,
with such cash collateral to be released from such cash collateral account (and
applied to repay the principal amount of such Eurodollar Loans) upon each
occurrence thereafter of the last day of an Interest Period applicable to
Eurodollar Loans (or such earlier date or dates as shall be requested by the
Borrower), with the amount to be so released and applied on the last day of each
Interest Period to be the amount of such Eurodollar Loans to which such Interest
Period applies (or, if less, the amount remaining in such cash collateral
account).
          3.04 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable account of the Lenders entitled thereto,
not later than 1:00 P.M. (New York time) on the date when due and shall be made
in immediately available funds and in Dollars at the Payment Office, it being
understood that written notice by the Borrower to the Administrative Agent to
make a payment from the funds in the Borrower’s account at the Payment Office
shall constitute the making of such payment to the extent of such funds held in
such account. Any payments under this Agreement which are made later than 1:00
P.M. (New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of

30

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

 

principal, interest shall be payable during such extension at the applicable
rate in effect immediately prior to such extension.
          3.05 Net Payments. (a) All payments made by the Borrower hereunder
and/or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 3.05(b) and Section 3.05(c), and provided
Section 3.05(b) and Section 3.05(c) are complied with, all such payments will be
made free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, (i) any tax imposed on or measured by the net income or net
profits or franchise taxes (in lieu of net income taxes or net profit taxes) of
a Lender pursuant to the laws of the jurisdiction in which it is organized or
the jurisdiction in which the principal office or applicable lending office of
such Lender is located or any subdivision thereof or therein and (ii) any branch
profits taxes imposed by the United States or any similar tax imposed by any
other jurisdiction in which the Borrower is located) and all interest, penalties
or similar liabilities with respect to such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as “Taxes”). If any Taxes are so levied or imposed, the Borrower
agrees to (i) pay the full amount of such Taxes to the applicable governmental
authority, and (ii) pay such additional amounts to the Lenders as may be
necessary so that every payment of all amounts due under this Agreement and/or
under any Note, after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein or therein, provided this
clause (ii) in this Section 3.05(a) shall apply if Section 3.05(b) and
Section 3.05(c) are complied with. The Borrower will furnish to the
Administrative Agent within 45 days after the date the payment of any Taxes is
due pursuant to applicable law certified copies of tax receipts evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless each
Lender, and reimburse such Lender upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Lender (other than penalties and
interest attributable to the gross negligence or willful misconduct of the
Administrative Agent or Lender).
          (b) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes
agrees to deliver to the Borrower and the Administrative Agent on or prior to
the Closing Date, or in the case of a Lender that is an assignee or transferee
of an interest under this Agreement pursuant to Section 1.13 or 11.04 (unless
the respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Lender, or in the case of New Lending Office by a Lender, the date such New
Lending Office is designated (i) two accurate and complete original signed
copies of Internal Revenue Service Form W-8ECI or W-8BEN (with respect to a
complete exemption under an income tax treaty) (or successor form)) certifying
to such Lender’s entitlement as of such date to a complete exemption from United
States withholding tax with respect to payments to be made under this Agreement
and under any Note, or (ii) if the Lender or beneficial owner is not (A) a
“bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a 10-percent
shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the
Code, and (C) a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code and cannot deliver either Internal Revenue
Service Form W-

31

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

 

8ECI or W-8BEN (with respect to a complete exemption under an income tax treaty)
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit C (any such certificate, a “Section 3.05 Certificate”) and (y) two
accurate and complete original signed copies of Internal Revenue Service Form
W-8BEN (with respect to the portfolio interest exemption) (or successor form)
certifying to such Lender’s entitlement as of such date to a complete exemption
from United States withholding tax with respect to payments of interest to be
made under this Agreement and under any Note. In addition, each Lender agrees
that from time to time after the Closing Date, when a lapse of time or change in
circumstances renders the previous certification obsolete or inaccurate in any
material respect, it will deliver to the Borrower and the Administrative Agent
two new accurate and complete original signed copies of Internal Revenue Service
Form W-8ECI or W-8BEN (with respect to the benefits of any income tax treaty),
or Form W-8BEN (with respect to the portfolio interest exemption) and a
Section 3.05 Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the Administrative Agent of its inability to deliver any
such Form or Certificate, in which case such Lender shall not be required to
deliver any such Form or Certificate pursuant to this Section 3.05(b).
Notwithstanding anything to the contrary contained in Section 3.05(a), but
subject to Section 11.04(b) and the immediately succeeding sentence, (x) the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
Fees or other amounts payable by it hereunder for the account of any Lender
which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes to the
extent that such Lender has not provided to the Borrower U.S. Internal Revenue
Service Forms that establish a complete exemption from such deduction or
withholding and (y) the Borrower shall not be obligated pursuant to
Section 3.05(a) hereof to gross-up payments to be made by it to a Lender in
respect of income or similar taxes imposed by the United States (I) if such
Lender has not provided to the Borrower the Internal Revenue Service Forms
required to be provided to the Borrower pursuant to this Section 3.05(b) or
Section 3.05(c) or (II) in the case of a payment, other than interest, to a
Lender described in clause (ii) above, to the extent that such Forms do not
establish a complete exemption from withholding of such taxes. If the Borrower
is required to pay any additional amounts to a Lender or indemnify a Lender
pursuant to this Section 3.05 (prior to the application of this sentence),
notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 3.05 and except as set forth in Section 11.04(b), the
Borrower agrees to pay any additional amounts and to indemnify each Lender in
the manner set forth in Section 3.05(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any amounts
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes after the Closing Date (or the date a person becomes a
Lender under this Agreement, as applicable) in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of such income or similar
taxes.
          (c) Any Lender that is a United States person and that may not be
treated as an exempt recipient based on the indicators described in Treasury
Regulation Section 1.6049-4(c)(1)(ii) shall deliver to the Borrower on or prior
to the date on which such Lender becomes a

32

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

 

Lender under this Agreement (and from time to time thereafter as prescribed by
applicable law or upon the request of the Borrower), two duly executed and
properly completed copies of U.S. Internal Revenue Service Form W-9, or any
successor form that such Lender is entitled to provide at such time in order to
comply with United States back-up withholding requirements. Notwithstanding any
other provision in this Section 3.05, no amount shall be required to be paid to
any Lender under this Section 3.05 with respect to backup withholding if there
has been a notified underreporting pursuant to Section 3406(a)(1)(C) of the Code
(or similar provision or successor provision).
          (d) If the Borrower pays any additional amount under this Section 3.05
to a Lender and such Lender determines in its sole discretion (but acting in
good faith) that it has actually received or realized in connection therewith
any refund or any reduction of, or credit against, its Tax liabilities in or
with respect to the taxable year in which the additional amount is paid (or
would have been paid but for the fact that such refund was netted against any
additional Tax liability of the Lender), such Lender shall pay to the Borrower
an amount that the Lender shall, in its sole discretion (but acting in good
faith), determine is equal to such net benefit, after tax, which was obtained by
the Lender in such year as a consequence of such refund, reduction or credit.
          SECTION 4. Conditions Precedent.
          4.01 Conditions Precedent to Closing Date and the Initial Incurrence
of Loans. The obligation of the Lenders to make Loans hereunder and the
obligation of each Letter of Credit Issuer to issue Letters of Credit hereunder,
in each case on the Closing Date, are subject to the satisfaction of each of the
following conditions at such time (provided that the condition contained in
Section 4.01(h) below shall not be a condition precedent to any drawing by
Spinco of Term Loans pursuant to Sections 1.01(a)(i)(A) or 1.01(b)(i)(A)):
          (a) Certain Documents. The Administrative Agent shall have received
(and, to the extent any Borrowing of any Eurodollar Loans is requested to be
made on the Closing Date, in respect of the Notice of Borrowing for such
Eurodollar Loans, at least one Business Day prior to the Closing Date) each of
the following, each dated the Closing Date unless otherwise indicated or agreed
to by the Administrative Agent in its reasonable discretion, in form and
substance reasonably satisfactory to the Administrative Agent:
          (i) this Agreement, duly executed and delivered by the Borrower and,
for the account of each Lender requesting the same, a Note of the Borrower
conforming to the requirements set forth herein;
          (ii) the Pledge Agreement, in the form of Exhibit G (as modified,
amended, restated and/or supplemented from time to time in accordance with the
terms thereof and hereof, the “Pledge Agreement”) duly executed and delivered by
the Borrower, each First-Tier Subsidiary (other than Northern New England
Telephone Operations LLC), and each Parent Company that is a Subsidiary on the
Closing Date, together with each of the following:
          (A) all of the Collateral, if any, referred to therein and then owned
by such Persons, (x) endorsed in blank in the case of promissory notes
constituting Collateral and (y)

33

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

 

together with executed and undated transfer powers in the case of certificated
equity interests constituting Collateral; provided that with respect to any such
Collateral the security interest in which may not be perfected by filing of a
UCC financing statement, if perfection of the Collateral Agent’s security
interest in such collateral may not be accomplished on or before the Closing
Date after the Borrower and each of its Subsidiaries have used commercially
reasonable efforts to do so, then delivery of documents and instruments for
perfection of such security interest shall not constitute a condition precedent
to the initial borrowings hereunder; and shall be subject in each case to clause
(iv) of this Section 4.01(a);
          (B) the Financing Statements (Form UCC-1 or the equivalent) listed on
Annex F to the Pledge Agreement, fully executed (where required) for filing
under the UCC or other appropriate filing offices set forth in such schedule;
          (C) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, each of a recent date, listing all effective
financing statements that name any Pledge Party or any of its Subsidiaries as
debtor and that are filed in the jurisdictions referred to in clause (B) above,
together with copies of such other financing statements that name any Pledge
Party or any of its Subsidiaries as debtor (none of which shall cover any of the
Collateral, except to the extent evidencing Permitted Liens or in respect of
which the Collateral Agent shall have received termination statements (Form
UCC-3) or such other termination statements as shall be required by local law
fully executed (where required) for filing); and
          (D) subject to clause (iv) below, evidence that all other actions
necessary or, in the reasonable opinion of the Collateral Agent, desirable to
create, maintain, effect, perfect, preserve, and protect the security interests
purported to be created by the Pledge Agreement have been taken;
and the Pledge Agreement shall be in full force and effect (subject to clause
(iv) below); provided, in no event shall any grant of a security interest by
Spinco or any of its Subsidiaries, or any document executed by Spinco or any of
its Subsidiaries with respect to the grant or perfection of a security interest
in connection therewith, become effective prior to the consummation of the
distribution of all shares of Spinco common stock to a third party distribution
agent to be held for the benefit of the shareholders of Verizon Communications
Inc., as described in the Rule 424(b) Prospectus filed with the SEC in
connection with the Merger (the “Spin”);
          (iii) the Subsidiary Guaranty, in the form of Exhibit F hereto (as
modified, amended, restated and/or supplemented from time to time in accordance
with the terms hereof and thereof, the “Subsidiary Guaranty”) duly authorized
and executed by each First-Tier Subsidiary of the Borrower; and
          (iv) clause (a)(ii) of this Section 4.01 notwithstanding, to the
extent any Collateral is not provided on the Closing Date after the Borrower and
each of its Subsidiaries have used commercially reasonable efforts to do so (it
being understood that UCC financing statements shall have been provided), the
provisions of clause (a)(ii) shall be deemed to have been satisfied and the
Credit Parties shall be required to provide such Collateral in accordance with
the provisions set forth in Section 6.18.

34

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

 

          (b) Opinions of Counsel. The Administrative Agent shall have received
(i) from Paul, Hastings, Janofsky & Walker LLP, special counsel to the Credit
Parties, an opinion addressed to each Agent, the Collateral Agent and each of
the Lenders and dated the Closing Date substantially in the form of Exhibit D-1
and (ii) from local and special FCC counsel to the Pledge Parties, opinions,
each dated the Closing Date, substantially in the form of Exhibit D-2.
          (c) Company Proceedings. The Administrative Agent shall have received
a certificate, dated the Closing Date, signed by an Authorized Officer in the
form of Exhibit E with appropriate insertions and deletions, together with
(x) copies of the certificate of incorporation, by-laws or other organizational
documents of each Pledge Party and (y) the resolutions of each Pledge Party
referred to in such certificate and all of the foregoing (including each such
organizational document) shall be reasonably satisfactory to the Administrative
Agent and (z) a statement that all of the applicable conditions set forth in
Sections 4.01(d), (f) and (i) have been satisfied as of such date.
          (d) Closing Material Adverse Effect. Since September 30, 2006, there
shall not have occurred a Closing Material Adverse Effect.
          (e) Solvency. FairPoint shall have delivered to the Administrative
Agent a solvency certificate, dated the Closing Date, after giving effect to the
Transaction, and in the form of Exhibit H hereto.
          (f) Refinancing. (i) On the Closing Date and substantially
concurrently with the incurrence of Loans on such date, all outstanding
Indebtedness of the Borrower and its Subsidiaries (other than the Obligations
owed to the Lenders hereunder, the Spinco Senior Notes and other Indebtedness
permitted hereunder after the Closing Date) (collectively referred to herein as
the “Refinanced Indebtedness”) shall have been repaid in full, together with all
fees, accrued interest and other amounts owing thereon, all commitments under
the documents evidencing Refinanced Indebtedness shall have been terminated, all
letters of credit issued pursuant to the documents evidencing the Refinanced
Indebtedness shall have been terminated, cash collateralized, back-stopped, or
incorporated hereunder as Letters of Credit as contemplated by Section 1A.01(d)
and all guaranties issued in support of such Refinanced Indebtedness shall have
been terminated (the “Refinancing”).
          (ii) On the Closing Date and substantially concurrently with the
incurrence of Loans on such date, all security interests in respect of, and
Liens securing, the Refinanced Indebtedness shall have been terminated and
released, and the Administrative Agent shall have received all such releases as
may have been reasonably requested by the Administrative Agent. Without limiting
the foregoing, there shall have been delivered to the Administrative Agent
proper termination statements (Form UCC-3 or the appropriate equivalent) for
filing under the UCC of each jurisdiction where a financing statement (Form
UCC-1 or the appropriate equivalent) was filed with respect to the Borrower or
any of its Subsidiaries in connection with the security interests created with
respect to the Refinanced Indebtedness and the documentation related thereto.
          (g) Intercompany Subordination Agreement. FairPoint and each of its
Subsidiaries shall have duly authorized, executed and delivered a Subordination
Agreement

35

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

 

substantially in the form of Exhibit J hereto (as amended, restated, modified
and/or supplemented from time to time in accordance with the terms hereof and
thereof, the “Intercompany Subordination Agreement”), and the Intercompany
Subordination Agreement shall be in full force and effect.
          (h) Fees. FairPoint shall have paid to the Agents and the Lenders all
Fees and expenses agreed upon to be paid on or prior to the Closing Date (for
which, in the case of legal fees and expenses, the Borrower shall have received
in advance a written invoice in reasonable detail). For the avoidance of doubt,
the initial Borrowing by Spinco shall not be reduced by the amount of any fees
or expenses payable to the Agents, the Lenders or their respective Affiliates or
representatives. Any such fees or expenses shall be for the account of FairPoint
as a condition precedent to its initial Borrowing.
          (i) Specified Representations. The Specified Representations shall be
true and correct in all material respects.
          (j) Financial Statements. (i) The Administrative Agent and the Lenders
shall have received audited consolidated balance sheets and related statements
of income, stockholders’ equity and cash flows of each of FairPoint and the
Northern New England Business, as applicable, for the three fiscal years ended
December 31, 2005, December 31, 2006 and December 31, 2007 and such financial
statements shall be prepared in accordance with GAAP or, in the case of the
financial statements for fiscal years ended 2006 and 2007, prepared in
accordance with the Merger Agreement; and
          (ii) The Administrative Agent, the Lead Arrangers and the Lenders
shall have received (A) a pro forma consolidated balance sheet of the Borrower
as at December 31, 2007 and (B) a pro forma statement of operations of the
Borrower for the year ended December 31, 2007, in each case adjusted to give
effect to the Transaction and the other transactions related thereto and such
other adjustments as have been agreed between the Borrower and the Lead
Arrangers.
          (k) Merger and Distribution. The Lenders shall be satisfied that the
Merger and the Distribution will be consummated substantially concurrently with
the initial funding hereunder (it being understood that any condition to be
satisfied substantially concurrently with such borrowing may be satisfied after
such borrowing is made in accordance with the order of the Transaction Timeline
described in the Rule 424(b) Prospectus filed with the SEC in connection with
the Merger), substantially in accordance with the Merger Agreement and
Distribution Agreement (and no provision of the Merger Agreement or Distribution
Agreement shall have been waived, amended, supplemented or otherwise modified in
a manner material and adverse to the Lenders without the prior written consent
of the Lenders).
          (l) Patriot Act. The Administrative Agent shall have received all
documentation and other information required by bank regulatory authorities
under applicable “know-your-customer” and anti-money laundering rules and
regulations, including the Patriot Act.

36

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

 

          (m) Insurance. The Administrative Agent shall have received evidence
that all insurance policies required to be maintained pursuant to Section 6.03
are in full force and effect.
          (n) FairPoint Borrowing. With respect to the initial Borrowing by
FairPoint, the initial Borrowing by Spinco shall have been funded.
          4.02 Conditions Precedent to All Loans. The obligation of each Lender
to make Loans (excluding Loans made on the Closing Date and Mandatory Borrowings
made after the Closing Date, which shall be made as provided in
Section 1.01(f)), and of each Letter of Credit Issuer to issue Letters of
Credit, is subject, at the time of the making of each such Loan and the issuance
of each such Letter of Credit, to the satisfaction of the following conditions:
          (a) Notice of Borrowing. The Administrative Agent shall have received
a Notice of Borrowing meeting the requirements of Section 1.03 (or, in the case
of a Swingline Loan, the notice referred to in Section 1.03(b)(i)) or a Letter
of Credit Request meeting the requirements of Section 1A.03.
          (b) Representations and Warranties; No Default. At the time of each
making of Loans and each issuance of a Letter of Credit and also after giving
effect thereto, (i) each of the representations and warranties made by any
Credit Party contained herein or in the other Credit Documents shall be true and
correct in all material respects, in each case on and as of such date as if made
on and as of such date, except to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier date
and (ii) there shall exist no Default or Event of Default.
          (c) Regulation U. If at any time any Margin Stock is pledged or
required to be pledged pursuant to the Pledge Agreement, all actions required to
be taken pursuant to Section 6.11 shall have been taken to the reasonable
satisfaction of the Administrative Agent.
          The occurrence of the Closing Date and the acceptance of the benefits
or proceeds of each Borrowing by and issuance of a Letter of Credit on behalf of
the Borrower shall constitute a representation and warranty by FairPoint to each
Agent, each Letter of Credit Issuer, the Swingline Lender and each of the
Lenders that all the conditions specified in Section 4 and applicable to such
Borrowing or issuance of such Letter of Credit have been satisfied as of that
time, subject to the next succeeding sentence. The funding of each Borrowing by
and issuance of a Letter of Credit on behalf of the Borrower hereunder shall
constitute an acknowledgement by the Agents and Lenders that as of the date of
such Borrowing or issuance of such Letter of Credit the conditions contained in
Sections 4.01 and 4.02 that must be satisfied to the satisfaction of the Agents
or the Lenders have been so satisfied (or waived). All of the certificates,
legal opinions and other documents and papers referred to in Sections 4.01 and
4.02, unless otherwise specified, shall be delivered to the Administrative Agent
for the benefit of each of the Lenders and shall, to the extent provided
therein, be reasonably satisfactory in form and substance to the Agents.
          SECTION 5. Representations, Warranties and Agreements. In order to
induce the Lenders to enter into this Agreement, to make the Loans and to issue
and/or participate in

37

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

 

Letters of Credit, FairPoint makes the following representations and warranties
to, and agreements with, the Lenders, all of which shall survive the execution
and delivery of this Agreement, the making of the Loans and the issuance of the
Letters of Credit:
          5.01 Company Status. Each of the Borrower and each of its Subsidiaries
(i) is a duly organized and validly existing Company and is in good standing, in
each case under the laws of the jurisdiction of its organization and has the
Company power and authority to own its property and assets and to transact the
business in which it is engaged and (ii) is duly qualified and is authorized to
do business and, to the extent relevant, is in good standing in all
jurisdictions where it is required to be so qualified except where the failure
to be so qualified, authorized or in good standing would not be reasonably
likely to have a Material Adverse Effect.
          5.02 Company Power and Authority. Each Credit Party has the Company
power and authority to execute, deliver and carry out the terms and provisions
of the Documents to which it is a party and has taken all necessary action to
authorize the execution, delivery and performance of the Documents to which it
is a party. Each Credit Party has duly executed and delivered each Document to
which it is a party and each such Document constitutes the legal, valid and
binding obligation of such Person enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally and general equitable
principles (regardless of whether enforcement is sought in equity or at law).
          5.03 No Violation. Neither the execution, delivery or performance by
any Credit Party of the Documents to which it is a party nor compliance with the
terms and provisions thereof, (i) will contravene any applicable provision of
any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will violate, conflict or be
inconsistent with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or (other than
pursuant to the Pledge Agreement) result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the property or assets
of the Borrower or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust or other material agreement or instrument to
which the Borrower or any of its Subsidiaries is a party or by which it or any
of its property or assets are bound or to which it may be subject or (iii) will
violate any provision of the organizational documents (including by-laws) of the
Borrower or any of its Subsidiaries.
          5.04 Litigation. There are no actions, suits or proceedings pending
or, to the knowledge of the Borrower, threatened (i) with respect to any Credit
Document, (ii) with respect to the Transaction or any other Document or
(iii) with respect to the Borrower or any of its Subsidiaries that have had, or
that are reasonably likely to have, a Material Adverse Effect. Additionally,
there does not exist any judgment, order or injunction prohibiting or imposing
material adverse conditions upon the incurrence of any Credit Event.
          5.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all A
Term Loans shall be utilized to (i) finance in part the Transaction, including,
without limitation, the cash portion of the Distribution and the Refinancing and
(ii) pay related fees and expenses.

38

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

 

          (b) The proceeds of all Initial B Term Loans shall be utilized to
(i) finance in part the Transaction, including, without limitation, the cash
portion of the Distribution and the Refinancing and (ii) pay related fees and
expenses.
          (c) The proceeds of the RF Loans may be used for working capital and
other general corporate purposes of the Borrower and its Subsidiaries, including
payments under the Transition Services Agreement and financing of Permitted
Acquisitions.
          (d) The proceeds of the Delayed-Draw B Term Loans shall be used for
capital expenditures incurred in connection with the Transaction (including, but
not limited to, any capital expenditures incurred in anticipation thereof) or in
the operations of the Borrower and its Subsidiaries from and after the Closing
Date, including, but not limited to, capital expenditures referred to in
Sections 7.05(a)(ii) and (iii) and capital expenditures referenced under
subsection (A)(i) of the definition of Acquisition Adjustment set forth herein.
          (e) The proceeds of Swingline Loans may be used for the general
corporate and working capital purposes of the Borrower and its Subsidiaries;
provided that no proceeds from Swingline Loans may be used to finance the
Refinancing or to pay fees and expenses incurred in connection with the
Transaction.
          (f) The Letters of Credit shall be issued for financing arising out of
the general corporate needs and purposes of the Borrower and its Subsidiaries.
          (g) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, nor the occurrence of any other Credit Event, will violate the
provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System. No part of any Credit Event (or the proceeds thereof) will be
used to purchase or carry any Margin Stock or to extend credit for the purpose
of purchasing or carrying any Margin Stock; provided that proceeds of RF Loans
may be utilized to purchase Margin Stock (A) if such purchase (x) is pursuant to
a Permitted Acquisition of the Person issuing such Margin Stock and (y) is
effected pursuant to a friendly transaction (as determined by the Agents) not in
violation of such Regulations T, U or X and (B) to the extent otherwise
permitted by Sections 7.09(a)(ii) or (iii), subject, in each case, to the
qualifying proviso at the end of Section 7.09(a).
          (h) The fair market value of all Margin Stock owned by the Borrower
and its Subsidiaries (other than the capital stock of the Borrower held in
treasury) on the Closing Date does not exceed $5,000,000. At the time of each
Credit Event, not more than 25% of the value of the assets of the Borrower and
its Subsidiaries taken as a whole (including all capital stock of the Borrower
held in treasury) will constitute Margin Stock.
          5.06 Governmental Approvals. Except for such consents, approvals and
filings as have been obtained or made on or prior to the Closing Date and remain
in full force and effect, no order, consent, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by,
any foreign or domestic governmental or public body or authority (including,
without limitation, the FCC and applicable PUCs), or any subdivision thereof, is
required to authorize or is required in connection with (i) the execution,
delivery and

39

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

 

performance of any Document or (ii) the legality, validity, binding effect or
enforceability of any Document.
          5.07 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.
          5.08 True and Complete Disclosure. All factual information (taken as a
whole), other than the projections, any budgets, forecasts, estimates and other
forward-looking statements and any information of a general economic or industry
nature, when furnished by or on behalf of the Borrower in writing to the Lenders
for purposes of or in connection with this Agreement or any transaction
contemplated herein is, and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of any Credit Party in writing to the
Lenders hereunder does not or will not contain any untrue statement of material
fact or omit to state any material fact necessary to make such information
(taken as a whole) not misleading at such time in light of the circumstances
under which such information was provided. The projections and pro forma
financial information contained in such materials are based on good faith
estimates and assumptions believed by the Borrower to be reasonable at the time
made (it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected results
and that such assumptions and estimates may prove to be inaccurate).
          5.09 Financial Condition; Financial Statements. (a) On and as of the
Closing Date, on a pro forma basis after giving effect to the Transaction and
all Indebtedness incurred, and to be incurred (including, without limitation,
the Loans and the application of the proceeds thereof), and Liens created, and
to be created, by each Credit Party in connection therewith, with respect to the
Borrower (on a stand-alone basis) and the Borrower and its Subsidiaries (on a
consolidated basis), (x) the fair valuation of all of the tangible and
intangible assets of the Borrower (on a stand-alone basis) and the Borrower and
its Subsidiaries (on a consolidated basis) will exceed its or their debts,
(y) it has or they have not incurred nor intended to, nor believes or believe
that it or they will, incur debts beyond its or their ability to pay such debts
as such debts mature and (z) it or they will not have unreasonably small capital
with which to conduct its or their business. For purposes of this Section 5.09,
“debt” means any liability on a claim, and “claim” means (i) the right to
payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or (ii) the right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
          (b) The audited consolidated statements of financial condition of
FairPoint and its Subsidiaries at December 31, 2005, December 31, 2006 and
December 31, 2007 and the related consolidated statements of income and cash
flows and changes in shareholders’ equity of FairPoint and its Subsidiaries for
the fiscal years of FairPoint ended on such dates, in each case furnished to the
Lenders prior to the Closing Date, present fairly in all material respects the
consolidated financial position of FairPoint and its Subsidiaries at the date of
said financial

40

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

 

statements and the results for the respective periods covered thereby. All such
financial statements have been prepared in accordance with GAAP and practices
consistently applied except to the extent provided in the notes to said
financial statements. The pro forma consolidated balance sheet of FairPoint as
at December 31, 2007, a copy of which has been delivered to the Lenders,
presents a good faith estimate of the consolidated pro forma financial condition
of FairPoint (after giving effect to the Transaction and all Indebtedness
incurred or to be incurred in connection therewith) as at the date thereof.
Nothing has occurred since December 31, 2006 that has had, or is reasonably
likely to have, a Material Adverse Effect, it being understood that no
representation is made with respect to the consummation of the Transaction on
the Closing Date.
          (c) Except as reflected in the financial statements described in
Section 5.09(b) or in the footnotes thereto, there are as of the Closing Date no
liabilities or obligations with respect to FairPoint or any of its Subsidiaries
of a nature (whether absolute, accrued, contingent or otherwise and whether or
not due) which, either individually or in aggregate, are reasonably likely to be
material to FairPoint and its Subsidiaries taken as a whole, except as incurred
in the ordinary course of business consistent with past practices or as shown on
the pro forma balance sheet of the Borrower delivered pursuant to
Section 4.01(j)(ii).
          (d) The audited combined statements of financial condition of the
Northern New England Business at December 31, 2005, December 31, 2006 and
December 31, 2007 and the related combined statements of income and cash flows
and changes in shareholders’ equity of the Northern New England Business for the
fiscal years of such business ended on such dates, in each case furnished to the
Lenders prior to the Closing Date, present fairly in all material respects the
combined financial position of the Northern New England Business at the date of
said financial statements and the results for the respective periods covered
thereby. All such financial statements have been prepared in accordance with
GAAP and practices consistently applied except to the extent provided in the
notes to said financial statements.
          (e) Except as reflected in the financial statements described in
Section 5.09(d) or in the footnotes thereto, there are as of the Closing Date no
liabilities or obligations with respect to the Northern New England Business of
a nature (whether absolute, accrued, contingent or otherwise and whether or not
due) which, either individually or in aggregate, are reasonably likely to be
material to the Northern New England Business taken as a whole, except as
incurred in the ordinary course of business consistent with past practices or as
shown on the pro forma balance sheet of the Borrower delivered pursuant to
Section 4.01(j)(ii).
          (f) On and as of the Closing Date, the detailed projected consolidated
financial statements of FairPoint and its Subsidiaries on a consolidated basis
for the period from the Closing Date through the B Term Loan Maturity Date,
which projections shall reflect the forecasted consolidated financial condition
of FairPoint and its Subsidiaries on a consolidated basis after giving effect to
the Transaction (the “Projections”), delivered to the Agents prior to the
Closing Date, shall have been prepared on a basis consistent with the financial
statements referred to in Section 5.09(b) for the fiscal year of FairPoint ended
December 31, 2006 (other than with respect to GAAP assumptions that are based on
GAAP as applicable to the financial statements of Spinco), and are based on good
faith estimates and assumptions made by the management of FairPoint. On the
Closing Date, such management believed that the Projections

41

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

 

were reasonable and attainable (it being recognized by the Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results).
          5.10 Security Interests. At any time on or after the Merger, the
Pledge Agreement creates, as security for the obligations purported to be
secured thereby, a valid and enforceable Lien on all of the Collateral subject
thereto at such time, superior to and prior to the rights of all third Persons
and subject to no other Liens (except for Liens permitted under
Section 7.03(a)), in favor of the Collateral Agent for the benefit of the
Secured Creditors, which Lien has been perfected under applicable law. No
filings or recordings are required in order to perfect the Lien on the
Collateral created under the Pledge Agreement, except for filings or recordings
required in connection with the Pledge Agreement which shall have been made on
or prior to the Closing Date or as otherwise required in accordance with the
terms of the Pledge Agreement.
          5.11 Compliance With Statutes. Each of the Borrower and its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except such non-compliance as has not had, and is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect.
          5.12 Tax Returns and Payments. Each of the Borrower and its
Subsidiaries has filed all U.S. federal income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and has
paid all material taxes and assessments payable by it which have become due,
except for those contested in good faith and adequately disclosed and fully
provided for on the financial statements of the Borrower and its Subsidiaries if
and to the extent required by GAAP. Each of the Borrower and its Subsidiaries
has at all times paid, or has provided adequate reserves (in the good faith
judgment of the management of the Borrower) for the payment of, all U.S.
federal, state and foreign income taxes applicable for all prior fiscal years
which are still open for audit and for the current fiscal year to date. There is
no action, suit, proceeding, investigation, audit, or claim now pending and the
Borrower has not received any notice by a taxing authority of any future
proceeding, investigation, audit or claim, regarding any taxes relating to the
Borrower or any of its Subsidiaries which is reasonably likely to have a
Material Adverse Effect.
          5.13 Compliance with ERISA. (i) Annex IV sets forth each Plan and
Multiemployer Plan; (ii) except as set forth on Annex IV, each Plan (and each
related trust, insurance contract or fund) is in substantial compliance with its
terms and with all applicable laws, including without limitation ERISA and the
Code; each Plan which is intended to be qualified under Section 401(a) of the
Code has received a determination letter from the Internal Revenue Service to
the effect that it meets the requirements of Section 401(a) of the Code; except
as set forth on Annex IV, no Reportable Event has occurred with respect to a
Plan; to the knowledge of the Borrower, no Multiemployer Plan is insolvent or in
reorganization; except as set forth on Annex IV, no Plan has an Unfunded Current
Liability which, when added to the aggregate amount of Unfunded Current
Liabilities with respect to all other Plans, would be reasonably likely to have
a Material Adverse Effect; no Plan which is subject to Section 412 of the Code
or Section 302 of ERISA has an accumulated funding deficiency, within the
meaning of such sections of the Code or ERISA, or has applied for or received a
waiver of an

42

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

 

accumulated funding deficiency or an extension of any amortization period,
within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA;
all contributions required to be made with respect to a Plan or a Multiemployer
Plan have been timely made; neither the Borrower nor any Subsidiary nor any
ERISA Affiliate has incurred any material liability (including any indirect,
contingent or secondary liability) to or on account of a Plan or a Multiemployer
Plan pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201,
4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or
reasonably expects to incur any such liability under any of the foregoing
sections with respect to any Plan or any Multiemployer Plan; no condition exists
which presents a material risk to the Borrower or any Subsidiary or any ERISA
Affiliate of incurring a material liability to or on account of a Plan or, to
the knowledge of the Borrower, of any Multiemployer Plan pursuant to the
foregoing provisions of ERISA and the Code; no proceedings have been instituted
to terminate or appoint a trustee to administer any Plan which is subject to
Title IV of ERISA; except as would not result in any material liability, no
action, suit, proceeding, hearing, audit or investigation with respect to the
administration, operation or the investment of assets of any Plan (other than
routine claims for benefits) is pending, or to the best knowledge of the
Borrower expected or threatened; using actuarial assumptions and computation
methods consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of the Borrower and its Subsidiaries and its ERISA Affiliates to all
Multiemployer Plans in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Plan ended prior to the date
of the most recent Loan incurrence, would not exceed $500,000; except as would
not result in a material liability, each group health plan (as defined in
Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has
covered employees or former employees of the Borrower, any Subsidiary or any
ERISA Affiliate has at all times been operated in compliance with the provisions
of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code; no
Lien imposed under the Code or ERISA on the assets of the Borrower or any
Subsidiary or any ERISA Affiliate exists or is reasonably likely to arise on
account of any Plan; and the Borrower and its Subsidiaries do not maintain or
contribute to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA) which provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any Plan the obligations
with respect to which could reasonably be expected to have a Material Adverse
Effect.
          5.14 Subsidiaries. On and as of the Closing Date and after giving
effect to the consummation of the Transaction, the Borrower has no Subsidiaries
other than those Subsidiaries listed on Annex III, which correctly sets forth,
as of the Closing Date, the percentage ownership (direct and indirect) of the
Borrower in each class of capital stock or other equity interests of each of its
Subsidiaries and also identifies the direct owner thereof. All outstanding
shares of capital stock or other equity interests of each Subsidiary of the
Borrower have been duly and validly issued, are fully paid and non-assessable
and are free of preemptive rights. No Subsidiary of the Borrower has outstanding
any securities convertible into or exchangeable for its capital stock or other
equity interests or outstanding any right to subscribe for or to purchase, or
any options or warrants for the purchase of, or any agreement providing for the
issuance (contingent or otherwise) of or any calls, commitments or claims of any
character relating to, its capital stock or other equity interests or any stock
appreciation or similar rights.

43

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

 

          5.15 Intellectual Property. Each of the Borrower and its Subsidiaries
owns or holds a valid transferable license to use all the patents, trademarks,
service marks, trade names, domain names, technology, know-how, copyrights,
licenses, franchises and formulas or rights with respect to the foregoing, that
are used in the operation of the business of the Borrower or such Subsidiary as
presently conducted and are material to such business where the failure to own
or hold a valid license is reasonably likely to have a Material Adverse Effect.
          5.16 Environmental Matters. Each of the Borrower and its Subsidiaries
is in material compliance with all applicable Environmental Laws governing its
business for which failure to comply is reasonably likely to have a Material
Adverse Effect, and neither the Borrower nor any of its Subsidiaries is liable
for any material penalties, fines or forfeitures for failure to comply with any
of the foregoing in the manner set forth above. All licenses, permits,
registrations or approvals required for the business of the Borrower and each of
its Subsidiaries under any Environmental Law have been secured and each of the
Borrower and its Subsidiaries is in substantial compliance therewith, except
where the failure to secure or comply with such licenses, permits, registrations
or approvals the failure to secure or to comply therewith is not reasonably
likely to have a Material Adverse Effect. There are no Environmental Claims
pending or, to the knowledge of the Borrower threatened, against the Borrower or
any of its Subsidiaries with respect to which any decision, ruling or finding is
reasonably likely to have a Material Adverse Effect.
          5.17 Labor Relations. No Credit Party is engaged in any unfair labor
practice that is reasonably likely to have a Material Adverse Effect. There is
(i) no unfair labor practice complaint pending against the Borrower or any of
its Subsidiaries or, to the Borrower’s knowledge, threatened against any of
them, before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against the Borrower or any of its Subsidiaries or, to the Borrower’s
knowledge, threatened against any of them, (ii) no strike, labor dispute,
slowdown or stoppage pending against the Borrower or any of its Subsidiaries or,
to the Borrower’s knowledge, threatened against the Borrower or any of its
Subsidiaries and (iii) no union representation question, to the Borrower’s
knowledge, existing with respect to the employees of the Borrower or any of its
Subsidiaries and no union organizing activities, to the Borrower’s knowledge,
are taking place, except with respect to any matter specified in clause (i),
(ii) or (iii) above, either individually or in the aggregate, such as is not
reasonably likely to have a Material Adverse Effect.
          5.18 Subordination. The subordination provisions contained in, on and
after the execution, delivery and/or incurrence thereof, any agreements or
instruments relating to any Permitted Unsecured Debt, and any Refinancing
Indebtedness in respect of the foregoing, are enforceable against the Borrower,
the Subsidiary Guarantors party thereto and the holders of such Indebtedness,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
generally affecting creditors’ rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law), and all Obligations
hereunder and the obligations of the Borrower and each Subsidiary Guarantor
under the other Credit Documents are within the definitions of “Senior Debt” (or
relevant similar term) and “Designated Senior Debt” or “Designated Guarantor
Senior Debt”, as applicable, included in such subordination provisions.

44

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

 

          5.19 Capitalization. On the Closing Date, after giving effect to the
Transaction, the authorized capital stock of the Borrower shall consist of
(i) 200,000,000 shares of common stock, $.01 par value per share (such
authorized shares of common stock, together with any subsequently authorized
shares of such common stock, the “Borrower Common Stock”), of which 89,025,568
shares are issued and outstanding on the Closing Date (including 429,474 shares
of restricted stock awarded under the Borrower’s 2005 Stock Incentive Plan on
the Closing Date, which are deemed outstanding for purposes of GAAP) and
(ii) 100,000,000 shares of preferred stock, $.01 per share, none of which is
issued and outstanding on the Closing Date. All such outstanding shares have
been duly and validly issued, are fully paid and nonassessable and are free of
preemptive rights. On the Closing Date, after giving effect to the Transaction,
the Borrower does not have outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any rights to subscribe for or
to purchase, or any options for the purchase of, or any agreement providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its capital stock or any stock appreciation or
similar rights (other than those agreements listed on Annex VIII).
          SECTION 6. Affirmative Covenants. The Borrower hereby covenants and
agrees that until the Commitments have terminated, no Notes or Letters of Credit
are outstanding and the Loans, together with interest, Fees and all other
Obligations (other than any indemnities described in Section 11.12 which are not
then owing) incurred hereunder, are paid in full:
          6.01 Information Covenants. The Borrower will furnish to each Lender:
          (a) Annual Financial Statements. As soon as available and in any event
within 60 days after the close of each fiscal year of the Borrower, commencing
with the first fiscal year of the Borrower ending after the Closing Date
(provided that such 60 day period shall be extended to 75 days if the Borrower
is not subject to the SEC’s large accelerated filer filing requirements and
shall be extended to 90 days if the Borrower is not subject to the SEC’s large
accelerated filer or accelerated filer filing requirements and such 60, 75 or
90 day period, as applicable, shall be extended an additional 15 days if the
Borrower has filed a Form 12b-25 with the SEC extending the date of the filing
of the Annual Report on Form 10-K due on such 60th, 75th or 90th day, as
applicable), the consolidated balance sheet of the Borrower and the consolidated
balance sheet of the Intermediary Holding Companies, as at the end of such
fiscal year and the related consolidated statements of operations and of cash
flows for such fiscal year, and in each case setting forth comparative
consolidated figures for the preceding fiscal year, and examined by independent
certified public accountants of recognized national standing whose opinion shall
not be qualified as to the scope of audit and as to the status of the Borrower
as a going concern, together with a certificate of such accounting firm stating
that in the course of its regular audit of the business of the Borrower and the
Intermediary Holding Companies, which audit was conducted in accordance with
generally accepted auditing standards, no Default or Event of Default which has
occurred and is continuing has come to their attention or, if such a Default or
Event of Default has come to their attention a statement as to the nature
thereof.
          (b) Quarterly Financial Statements. As soon as available and in any
event within 40 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Borrower (provided that such
40 day period shall be extended to 45 days if the Borrower is not subject to the
SEC’s large accelerated filer filing requirements and such 40 or 45

45

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

 

day period, as applicable, shall be extended an additional 5 days if the
Borrower has filed a Form 12b-25 with the SEC extending the date of the filing
of the Quarterly Report on Form 10-Q due on such 40th or 45th day, as
applicable), the consolidated balance sheet of the Borrower and the consolidated
balance sheet of the Intermediary Holding Companies, as at the end of such
quarterly period and the related consolidated statements of operations and of
cash flows for such quarterly period and for the elapsed portion of the fiscal
year ended with the last day of such quarterly period, and in each case setting
forth comparative consolidated figures for the related periods in the prior
fiscal year, all of which shall be in reasonable detail and certified by the
chief financial officer or controller of the Borrower, subject to changes
resulting from audit and normal year-end audit adjustments.
          (c) Budgets; etc. Not more than 30 days after the commencement of each
fiscal year of the Borrower ending after the Closing Date, commencing with the
budget to be delivered on January 30, 2009, consolidated budgets of the Borrower
and its Subsidiaries in reasonable detail for each of the twelve months of such
fiscal year as customarily prepared by management for its internal use setting
forth, with appropriate discussion, the principal assumptions upon which such
budgets are based.
          (d) Compliance Certificates. Other than with respect to the delivery
of the financial statements for the first full fiscal quarter ending after the
Closing Date, at the time of the delivery of the financial statements provided
for in Sections 6.01(a) or (b), a certificate (“Compliance Certificate”) of the
chief financial officer or other Authorized Officer of the Borrower to the
effect that no Default or Event of Default exists or, if any Default or Event of
Default does exist, specifying the nature and extent thereof, which certificate
(i) if delivered with the financial statements required by Sections 6.01(a) and
(b), shall set forth the calculations required to establish (I) the Interest
Coverage Ratio and the Leverage Ratio as at the last day of the fiscal year or
fiscal quarter, as the case may be, covered by such financial statements and
(II) whether the Borrower and its Subsidiaries were in compliance with the
provisions of Sections 7.11 and 7.12 as at the end of such fiscal period, and
(ii) if delivered with the financial statements required by Section 6.01(b),
shall set forth (I) Available Cash, Cumulative Distributable Cash and, to the
extent that the Leverage Ratio for any quarter, commencing with the fiscal
quarter ended June 30, 2009, is greater than 3.50:1.00, Excess Cash Flow, in
each case determined as at the last day of the fiscal quarter of the Borrower
covered by such financial statements and (II) the amount of Dividends, if any,
that the Borrower intends to pay on the immediately succeeding date on which the
Borrower’s dividend policy provides for Dividends to be paid by the Borrower on
the Borrower Common Stock.
          (e) Notice of Default or Litigation. Promptly, and in any event within
five Business Days after any officer of the Borrower obtains knowledge thereof,
notice of (x) the occurrence of any event which constitutes a Default or Event
of Default, which notice shall specify the nature thereof, the period of
existence thereof and what action the Borrower proposes to take with respect
thereto, and (y) the commencement of, or any significant adverse development in,
any litigation or governmental proceeding pending against the Borrower or any of
its Subsidiaries or their assets or business (i) with respect to any Document or
(ii) which has had, or is reasonably likely to have, a Material Adverse Effect
and (iii) any other event which has had, or is reasonably likely to have, a
Material Adverse Effect.

46

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

 

          (f) Other Information. Promptly upon transmission thereof, copies of
any filings and registrations with, and reports to, the Securities and Exchange
Commission or any successor thereto (the “SEC”) or holders (or any trustee,
agent or other representative therefor) of any Permitted Junior Capital by the
Borrower or any of its Subsidiaries, and with reasonable promptness, such other
information or documents (financial or otherwise) as the Administrative Agent on
its own behalf or on behalf of any Lender may reasonably request from time to
time.
          6.02 Books, Records and Inspections. The Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries in conformity with, and as required by, GAAP and
all material requirements of law shall be made of all dealings and transactions
in relation to such Person’s business and activities. The Borrower will, and
will cause its Subsidiaries to, permit, upon reasonable notice to the chief
financial officer, controller or any other Authorized Officer of the Borrower,
officers and designated representatives of the Administrative Agent or the
Required Lenders to visit and inspect any of the properties or assets of the
Borrower and any of its Subsidiaries in their possession and to examine the
books of account of the Borrower and any of its Subsidiaries and discuss the
affairs, finances and accounts of the Borrower and of any of its Subsidiaries
with, and be advised as to the same by, its and their officers and independent
accountants, all at such reasonable times and intervals during normal business
hours (with reasonable notice) and to such reasonable extent as the
Administrative Agent or the Required Lenders may desire.
          6.03 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance with
reputable and solvent insurers in such amounts, covering such risks and
liabilities and with such deductibles or self-insured retentions as are in
accordance with normal industry practice. The Borrower will, and will cause each
of its Subsidiaries to, furnish to the Administrative Agent on the Closing Date
and thereafter annually, upon request of the Administrative Agent, a summary of
the insurance carried.
          6.04 Payment of Taxes. The Borrower will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, would
become a Lien or charge upon any material properties of the Borrower or any of
its Subsidiaries; provided that neither the Borrower nor any Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings if it has maintained adequate
reserves (in the good faith judgment of the management of the Borrower) with
respect thereto in accordance with GAAP.
          6.05 Company Franchises. The Borrower will do, and will cause each
Subsidiary to do, or cause to be done, all things reasonably necessary to
preserve and keep in full force and effect its existence and to preserve its
material rights and franchises, other than those the failure to preserve which
could not reasonably be expected to have a Material Adverse Effect; provided
that any transaction permitted by Section 7.02 will not constitute a breach of
this Section 6.05.
          6.06 Compliance with Statutes, etc. The Borrower will, and will cause
each Subsidiary to, comply with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign (including all

47

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

 

Environmental Laws), in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which is not reasonably
likely to have a Material Adverse Effect.
          6.07 ERISA. As soon as possible and, in any event, within 10 days
after the Borrower knows or has reason to know of the occurrence of any of the
following, the Borrower will deliver to each of the Lenders a certificate of the
chief financial officer of the Borrower setting forth the full details as to
such occurrence and the action, if any, that the Borrower, any Subsidiary or any
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the Borrower, any
Subsidiary, any ERISA Affiliate, the PBGC, a Plan or Multiemployer Plan
participant or the Plan administrator with respect thereto: that a Reportable
Event has occurred (except to the extent that the Borrower has previously
delivered to the Lender a certificate and notices (if any) concerning such event
pursuant to the next clause hereof); that a contributing sponsor (as defined in
Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject
to the advance reporting requirement of PBGC Regulation Section 4043.61 (without
regard to subparagraph (b)(1) thereof), and an event described in subsection
.62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is
reasonably expected to occur with respect to such Plan within the following
30 days; that an accumulated funding deficiency, within the meaning of
Section 412 of the Code or Section 302 of ERISA, has been incurred or an
application may reasonably be expected to be or has been made for a waiver or
modification of the minimum funding standard (including any required installment
payments) or an extension of any amortization period under Section 412 of the
Code or Section 303 or 304 of ERISA with respect to a Plan; that any
contribution required to be made with respect to a Plan or Multiemployer Plan
has not been timely made; that a Plan or Multiemployer Plan has been or may
reasonably be expected to be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA, where a Plan has an Unfunded Current
Liability which, when added to the aggregate amount of Unfunded Current
Liabilities with respect to all other Plans, exceeds the aggregate amount of
Unfunded Current Liabilities that would be reasonably likely to have a Material
Adverse Effect; that proceedings may reasonably be expected to be or have been
instituted to terminate or appoint a trustee to administer a Plan which is
subject to Title IV of ERISA; that a proceeding has been instituted pursuant to
Section 515 of ERISA to collect a delinquent contribution to a Multiemployer
Plan; that the Borrower, any Subsidiary or any ERISA Affiliate will or may
reasonably be expected to incur any material liability (including any indirect,
contingent, or secondary liability) to or on account of the termination of or
withdrawal from a Plan or Multiemployer Plan under Section 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or
502(l) of ERISA or with respect to a group health plan (as defined in
Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B
of the Code; or that the Borrower or any Subsidiary may incur any material
liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any Plan in
addition to the liability that existed on the Closing Date pursuant to any such
plan or plans. Upon request by any Lender, the Borrower will deliver to such
Lender a complete copy of the annual report (on Internal Revenue Service Form
5500- series) of each Plan (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting statements,

48

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

 

certifications, schedules and information) required to be filed with the
Internal Revenue Service. In addition to any certificates or notices delivered
to the Lenders pursuant to the first sentence hereof, copies of any records,
documents or other information required to be furnished to the PBGC (other than
any PBGC Form 1), and any material notices received from the PBGC by the
Borrower, any Subsidiary or any ERISA Affiliate with respect to any Plan or
Multiemployer Plan shall be delivered to the Lender no later than 10 days after
the date such records, documents and/or information has been furnished to the
PBGC or such notice has been received from the PBGC by the Borrower, the
Subsidiary or the ERISA Affiliate, as applicable.
          6.08 Good Repair. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment used or
useful in its business are kept in good repair, working order and condition,
normal wear and tear excepted, and, subject to Section 7.05, that from time to
time there are made in such properties and equipment all needful and proper
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses.
          6.09 End of Fiscal Years; Fiscal Quarters; Etc. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries’, fiscal years and fourth fiscal quarters to end on December 31 of
each year and (ii) each of its, and each of its Subsidiaries’, first three
fiscal quarters to end on the last day of March, June and September of each
year.
          6.10 Permitted Acquisitions. (a) Subject to the provisions of this
Section 6.10 and the requirements contained in the definition of Permitted
Acquisition, the Borrower and any Qualified Subsidiary may from time to time
from and after the first anniversary of the Final Cutover Date (as defined in
the Transition Services Agreement) effect Permitted Acquisitions, so long as
(except to the extent the Required Lenders otherwise specifically agree in
writing in the case of a specific Permitted Acquisition): (i) no Default or
Event of Default shall be in existence at the time of the consummation of the
proposed Permitted Acquisition or immediately after giving effect thereto;
(ii) the Borrower shall have given the Administrative Agent and the Lenders at
least 5 Business Days’ written notice prior to the consummation of any Permitted
Acquisition; (iii) the Borrower provides to the Administrative Agent and the
Lenders as soon as available but not later than 5 Business Days after the
execution thereof, a copy of any executed purchase agreement or similar
agreement with respect to such Permitted Acquisition; (iv) calculations are made
by the Borrower of compliance with the covenants contained in Sections 7.11 and
7.12 for the Calculation Period most recently ended prior to the date of such
Permitted Acquisition, on a Pro Forma Basis as if the respective Permitted
Acquisition (as well as all other Permitted Acquisitions and Significant Asset
Sales theretofore consummated after the first day of such Calculation Period)
had occurred on the first day of such Calculation Period, and such calculations
shall show that such financial covenants would have been complied with if the
Permitted Acquisition had occurred on the first day of such Calculation Period
(for this purpose, if the first day of the respective Calculation Period occurs
prior to the Closing Date, calculated as if the covenants contained in said
Sections 7.11 and 7.12 had been applicable from the first day of the Calculation
Period); (v) based on good faith projections prepared by the Borrower for the
period from the date of the consummation of the Permitted Acquisition to the
date which is one year thereafter, the level of financial performance measured
by the covenants

49

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

 

set forth in Sections 7.11 and 7.12 shall be better than or equal to such level
as would be required to provide that no Default or Event of Default would exist
under the financial covenants contained in Sections 7.11 and 7.12 through the
date which is one year from the date of the consummation of the respective
Permitted Acquisition (it being understood that projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results);
(vi) all representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of
the date of such Permitted Acquisition (both before and after giving effect
thereto), unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date; (vii) after giving effect to such proposed
Permitted Acquisition and the payment of all amounts (including fees and
expenses) owing in connection therewith, the sum of (x) the Total Unutilized
Revolving Commitment then in effect plus (y) the aggregate amount of all
Unrestricted Cash and Cash Equivalents of the Borrower and the Subsidiary
Guarantors at such time shall equal or exceed the sum of (I) $25,000,000 plus
(II) an amount equal to the aggregate amount reasonably likely to be payable in
respect of all post- closing purchase price adjustments, earn-out payments,
non-compete payments and/or deferred purchase payments (or similar payments), in
each case required or which will be required in connection with such Permitted
Acquisition (and all other Permitted Acquisitions for which such purchase price
adjustments and other payments may be required to be made) as determined by the
Borrower in good faith plus (III) all Consolidated Capital Expenditures (and the
financing thereof) reasonably anticipated by the Borrower to be made in the
business acquired pursuant to such Permitted Acquisition within the 90-day
period (such period for any Permitted Acquisition, a “Post-Closing Period”)
following such Permitted Acquisition (and in the businesses acquired pursuant to
all other Permitted Acquisitions with Post-Closing Periods ended during the
Post-Closing Period of such Permitted Acquisition); (viii) in the case of the
creation or acquisition of a new Telco or Carrier Services Company pursuant to a
Permitted Acquisition in circumstances where the capital stock or other equity
interests of such Telco or Carrier Services Company are not permitted by
applicable law, rule or regulation to be pledged and are not to be pledged under
the Pledge Agreement, the Pro Forma EBITDA Test is satisfied; (ix) the aggregate
amount of Permitted Acquisitions does not exceed, in the aggregate, $500,000,000
and (x) the Borrower shall have delivered to the Administrative Agent an
officer’s certificate executed by an Authorized Officer, certifying to the best
of his knowledge, compliance with the requirements of preceding clauses
(i) through (vii), inclusive, and containing the calculations required by the
preceding clauses (iv), (v), (vii) and (viii).
          (b) Borrower and its Subsidiaries shall not consummate any Permitted
Acquisition unless all approvals necessary or appropriate to effect such
contemplated transaction, or for the continued operations of the Borrower, its
Subsidiaries and the Person to be acquired though the Permitted Acquisition,
have been obtained.
          (c) At the time of each Permitted Acquisition involving the creation
or acquisition of a Subsidiary, or the acquisition of capital stock or other
equity interests of any Person, the capital stock or other equity interests
thereof created or acquired in connection with such Permitted Acquisition shall
be pledged for the benefit of the Secured Creditors pursuant to the Pledge
Agreement as, and to the extent required by, Section 7.07.

50

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

 

          (d) The Borrower shall cause each Subsidiary which is formed to
effect, or is acquired pursuant to, a Permitted Acquisition to comply with, and
to execute and deliver, all of the documentation (if any) required by,
Section 7.07, to the reasonable satisfaction of the Administrative Agent.
          (e) The consummation of each Permitted Acquisition shall be deemed to
be a representation and warranty by the Borrower that the certifications by the
Borrower (or by one or more of its Authorized Officers) pursuant to
Section 6.10(a) are true and correct and that all conditions thereto have been
satisfied and that same is permitted in accordance with the terms of this
Agreement, which representation and warranty shall be deemed to be a
representation and warranty for all purposes hereunder, including, without
limitation, Sections 4 and 8.
          (f) Notwithstanding anything in this Section 6.10 to the contrary,
consummation of the Transaction shall be permitted.
          6.11 Margin Stock. The Borrower will take all actions so that at all
times the fair market value of all Margin Stock owned by the Borrower and its
Subsidiaries (other than capital stock of the Borrower held in treasury) shall
not exceed $5,000,000; provided that it shall not constitute a violation of this
Section 6.11 if at any time the fair market value of all Margin Stock owned by
the Borrower and its Subsidiaries (other than capital stock of the Borrower held
in treasury) exceeds $5,000,000 so long as (x) all Margin Stock owned by the
Pledge Parties (other than capital stock of the Borrower held in treasury) shall
be pledged, and delivered for pledge, pursuant to the Pledge Agreement, (y) the
Borrower will execute and deliver to the Lenders appropriate completed forms
(including, without limitation, Forms G-3 and U-l, as appropriate) establishing
compliance with Regulations T, U and X of the Board of Governors of the Federal
Reserve System, and (z) the Borrower takes appropriate actions so that the fair
market value of all Margin Stock owned by the Borrower and its Subsidiaries
(other than capital stock of the Borrower held in treasury) does not exceed
$5,000,000 within ninety (90) days (or such longer period not to exceed one year
as may be necessary to comply with Rule 144 under the Securities Act, if
applicable) of the date upon which the fair market value of the Margin Stock
owned by the Borrower and its Subsidiaries first exceeded $5,000,000. So long as
the covenant contained in the text of the first sentence of this Section 6.11
preceding the proviso contained in such sentence is complied with, all Margin
Stock at any time owned by the Borrower and its Subsidiaries will not constitute
Collateral and no security interest shall be granted therein pursuant to any
Credit Document. If at any time any Margin Stock is required to be pledged as a
result of the proviso contained in the first sentence of this Section 6.11,
repayments of outstanding Obligations shall be required, and subsequent Credit
Events shall be permitted, only in compliance with the applicable provisions of
Regulations T, U and X of the Board of Governors of the Federal Reserve System.
          6.12 Special Covenant Regarding Cash Management Policy. The Borrower
shall, and shall cause its Subsidiaries to, at all times comply with the cash
management policy of the Borrower and its Subsidiaries delivered to the
Administrative Agent on the Closing Date, without giving effect to any changes
thereto, except to the extent such changes are not adverse to the interests of
the Lenders or are otherwise required to ensure compliance with applicable law
or regulation.

51

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

 

          6.13 PIK Requirements. On and after the date of the initial issuance
of any Permitted Unsecured Debt, the Borrower shall pay interest owing on any
outstanding Permitted Unsecured Debt solely through (x) the accretion of the
principal amount thereof or (y) the issuance of additional notes evidencing
Permitted Unsecured Debt, rather than in cash.
          6.14 Interest Rate Protection. No later than the 90th day after the
Closing Date, the Borrower shall enter into, and for a minimum period of two
years thereafter maintain, Interest Rate Agreements establishing a fixed or
maximum interest rate acceptable to the Administrative Agent for an aggregate
notional amount equal to at least 50% of the initial aggregate principal amount
of both the A Term Loans and Initial B Term Loans incurred on the Closing Date.
          6.15 Maintenance of Company Separateness. (a) The Borrower will, and
will cause each of its Subsidiaries to, satisfy customary Company formalities,
including, as applicable, the holding of regular board of directors’ and
shareholders’ meetings or action by directors or shareholders without a meeting
and the maintenance of Company offices and records.
          (b) The Borrower shall not permit any Non-Pledge Party Subsidiary, on
the one hand, to have any rights to draw down, whether as a joint account party
or otherwise, on any bank account of any Pledge Party, on the other hand.
          6.16 Further Assurances. Each Credit Party shall 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 may
reasonably require from time to time in order (i) to carry out more effectively
the purposes of this Agreement and the other Credit Documents, (ii) to obtain,
maintain, continue, validate or perfect its first priority Liens on any of the
Collateral or any other property of the Credit Parties, (iii) to establish and
maintain the validity and effectiveness of any of the Credit 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 the
Collateral Agent for the ratable benefit of the Lenders the rights now or
hereafter intended to be granted to the Collateral Agent for the ratable benefit
of the Lenders under this Agreement or any other Credit Document.
          6.17 CoBank Capital. The Borrower will purchase such participation
certificates in CoBank as CoBank may require from time to time in accordance
with its bylaws. The Borrower hereby consents and agrees that the amount of any
distributions with respect to its patronage with CoBank that are made in
qualified written notices of allocation (as defined in 26 U.S.C. 1388) and that
are received by the Borrower from CoBank, will be taken into account by the
Borrower at their stated Dollar amounts whether the distribution be evidenced by
a participation certificate or other form of written notice that such
distribution has been made and recorded in the name of the Borrower on the
records of CoBank.
          6.18 Post-Closing Security Perfection. The Borrower agrees to deliver
or cause to be delivered such documents and instruments, and take or cause to be
taken such actions, as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to create,

52

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

 

maintain, effect, perfect, preserve, maintain and protect the security interests
purported to be created by the Pledge Agreement described in Section 4.01(a)(ii)
that are not so provided on the Closing Date and to satisfy each other condition
precedent that was not actually satisfied, but rather deemed satisfied, on the
Closing Date pursuant to the provisions set forth in Section 4.01, and in any
event to provide such perfected security interests and to satisfy such other
conditions within 30 days following the Closing Date.
          SECTION 7. Negative Covenants. The Borrower hereby covenants and
agrees that until the Commitments have terminated, no Notes or Letters of Credit
are outstanding and the Loans, together with interest, Fees and all other
Obligations (other than any indemnities described in Section 11.12 which are not
then owing) incurred hereunder, are paid in full:
          7.01 Changes in Business. (a) The Borrower will not permit at any time
the business activities taken as a whole conducted by the Borrower and its
Subsidiaries to be materially different from the business activities taken as a
whole (including incidental activities) conducted by the Borrower and its
Subsidiaries on the Closing Date after giving effect to the consummation of the
Transaction and businesses reasonably related thereto (the “Business”).
          (b) Notwithstanding the foregoing, no Second-Tier Holdco will engage
in any business or own any significant assets (other than its ownership of
(x) equity interests of Subsidiaries existing on the date hereof or permitted to
be created, established or acquired pursuant to the terms of this Agreement and
(y) intercompany obligations owed to it and permitted to be extended by it
pursuant to Section 7.06(c)) or have any liabilities (other than (x) those
liabilities for which it is responsible under this Agreement and the other
Credit Documents to which it is a party and (y) intercompany debt permitted to
be incurred by it pursuant to Section 7.06(c)); provided that any Second-Tier
Holdco may engage in those activities and incur related liabilities that are
incidental to (x) the maintenance of its corporate existence in compliance with
applicable law, (y) legal, tax and accounting matters in connection with any of
the foregoing activities and (z) the entering into, and performing its
obligations under, this Agreement and the other Credit Documents to which it is
a party.
          7.02 Consolidation, Merger, Sale or Purchase of Assets, etc. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or consummate any transaction of merger or consolidation
(other than the Transaction), or convey, sell, lease or otherwise dispose of all
or any part of its property or assets (other than (x) inventory or obsolete
equipment or excess equipment no longer needed in the conduct of its business in
the ordinary course of business or (y) pursuant to the Distribution Agreement)
or make any Asset Sale or purchase, lease or otherwise acquire all or any part
of the property or assets of any Person (other than purchases or other
acquisitions of inventory, leases, materials and equipment in the ordinary
course of business) or agree to do any of the foregoing at any future time
without a contingency relating to obtaining any required approval hereunder,
except that the following shall be permitted:
          (a) (i) any Subsidiary may be merged or consolidated with or into, or
be liquidated into, the Borrower or a Subsidiary Guarantor (so long as the
Borrower or such Subsidiary Guarantor is the surviving corporation), or all or
any part of its business, properties and assets may be conveyed, sold or
transferred to the Borrower or any Subsidiary Guarantor,

53

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

 

and (ii) any Subsidiary that is not a Subsidiary Guarantor may be merged or
consolidated with or into, or convey, sell or transfer its assets to, another
Subsidiary that is not a Subsidiary Guarantor; provided that if the stock or
other equity interests of either such Person were pledged pursuant to the Pledge
Agreement, the stock or other equity interests of the surviving entity or the
transferee entity, as the case may be, shall also be pledged pursuant to the
Pledge Agreement; provided, further, that no such merger or consolidation
otherwise permitted by this clause (a) between a Pledged Subsidiary and
Non-Pledged Subsidiary, and no such conveyance, sale or transfer by a Pledged
Subsidiary to a Non-Pledged Subsidiary, shall be permitted unless, after giving
effect thereto, the Pro Forma EBITDA Test is satisfied;
          (b) Consolidated Capital Expenditures to the extent within the
limitations set forth in Section 7.05;
          (c) the investments, acquisitions and transfers or dispositions of
properties, shares and assets permitted pursuant to Section 7.06;
          (d) each of the Borrower and any Subsidiary may lease (as lessee) real
or personal property in the ordinary course of business (so long as such lease
does not create a Capitalized Lease Obligation not otherwise permitted by
Section 7.04(c));
          (e) licenses or sublicenses by the Borrower and its Subsidiaries of
intellectual property in the ordinary course of business; provided, that such
licenses or sublicenses shall not interfere with the business of the Borrower or
any Subsidiary;
          (f) (i) Excluded Asset Sales and (ii) additional sales or dispositions
of assets, including Asset Sales, to the extent that the aggregate Net Cash
Proceeds received from all such sales and dispositions permitted by this clause
(f) after the Closing Date shall not exceed $10,000,000 in any fiscal year of
the Borrower; provided that (x) each such sale or disposition pursuant to this
clause (f) shall be in an amount at least equal to the fair market value thereof
and for proceeds consisting of at least 85% cash and (y) the Net Cash Proceeds
of any such sale are reinvested and/or applied as a mandatory repayment or
commitment reduction to the extent required by Section 3.03(A)(b) or
Section 2.03(d); provided, further, that the sale or disposition of the capital
stock or other equity interests of any Subsidiary of the Borrower pursuant to
this clause (f) shall be prohibited unless it is for all of the outstanding
capital stock or other equity interests of such Subsidiary owned by the Borrower
and its Subsidiaries;
          (g) Permitted Acquisitions may be consummated in accordance with the
requirements of Section 6.10;
          (h) leases and subleases permitted under Section 7.03(d) and (g); and
          (i) Permitted Swap Transactions.
          7.03 Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an

54

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

 

understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income,
except:
          (a) Liens for taxes not yet delinquent or Liens for taxes being
contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Borrower) have
been established in accordance with GAAP;
          (b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course of
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory
landlord’s Liens, and other similar Liens arising in the ordinary course of
business, and (x) which do not in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof in the
operation of the business of the Borrower or any of its Subsidiaries or
(y) which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property
or asset subject to such Lien;
          (c) Liens created by or pursuant to this Agreement or the other Credit
Documents;
          (d) Liens created pursuant to Capital Leases in respect of Capitalized
Lease Obligations permitted by Section 7.04(c);
          (e) Liens arising from judgments, decrees or attachments and Liens
securing appeal bonds arising from judgments, in each case in circumstances not
constituting an Event of Default under Section 8.09;
          (f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed money);
          (g) leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its Subsidiaries;
          (h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the business of
the Borrower or any of its Subsidiaries;
          (i) Liens arising from precautionary UCC financing statement filings
regarding operating leases entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business and statutory and common law
landlords’ liens under leases to which the Borrower or any of its Subsidiaries
is a party;

55

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

 

          (j) purchase money Liens securing payables arising from the purchase
by the Borrower or any Subsidiary Guarantor of any equipment or goods in the
normal course of business; provided that such payables shall not constitute
Indebtedness;
          (k) any interest or title of a lessor under any lease permitted by
this Agreement;
          (l) Liens in existence on, and which are to continue in effect after,
the Closing Date which are listed, and the property subject thereto described
in, Annex V, plus extensions and renewals of such Liens, provided that (x) the
aggregate principal amount of the Indebtedness, if any, secured by such Liens
does not increase from that amount outstanding at the time of any such extension
or renewal and (y) any such extension or renewal does not encumber any
additional assets or properties of the Borrower or any of its Subsidiaries;
          (m) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness representing the purchase price (or financing of
the purchase price within 90 days after the respective purchase) of assets
acquired by the Borrower or any Subsidiary after the Closing Date; provided that
(i) any such Liens attach only to the assets so acquired, (ii) the Indebtedness
secured by any such Lien does not exceed 100%, nor is less than 70%, of the
lesser of the fair market value or purchase price of the property being
purchased at the time of the incurrence of such Indebtedness and (iii) the
Indebtedness secured by such Liens is permitted by Section 7.04(e);
          (n) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Person in existence at the time such
Person is acquired pursuant to a Permitted Acquisition, in each case securing
Permitted Acquired Debt; provided that (i) such Liens do not attach to the
capital stock or other equity interests of any Subsidiary of the Borrower and
(ii) such Liens existed prior to, and were not incurred in contemplation of,
such Permitted Acquisition and do not attach to any other asset of the Borrower
or any of its Subsidiaries; and
          (o) Liens on property or assets of a Person in existence at the time
such Person is acquired pursuant to an Investment permitted under
Section 7.06(l), in each case securing Indebtedness permitted under
Section 7.04; provided that (i) such Liens do not attach to the capital stock or
other equity interests of any Subsidiary of the Borrower (other than any capital
stock or other equity interests not held by the Borrower or any of its
Subsidiaries) and (ii) such Liens existed prior to, and were not incurred in
contemplation of, such Investment and do not attach to any other asset of the
Borrower or any of its Subsidiaries.
          7.04 Indebtedness. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
          (a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
          (b) intercompany Indebtedness permitted by Section 7.06(c);

56

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

 

          (c) Capitalized Lease Obligations initially incurred after the Closing
Date; provided that the aggregate Capitalized Lease Obligations outstanding at
any time under all Capital Leases incurred in reliance on this clause (c) after
the Closing Date, when added to the aggregate outstanding amount of Indebtedness
incurred in reliance on Section 7.04(e), shall not exceed $75,000,000 at any
time;
          (d) Indebtedness of the Borrower under Interest Rate Agreements
entered into to protect it against fluctuations in interest rates in respect of
Indebtedness otherwise permitted under this Agreement, so long as the entering
into of such Interest Rate Agreements are bona fide hedging activities and are
not for speculative purposes;
          (e) Indebtedness incurred pursuant to purchase money mortgages
permitted by Section 7.03(m); provided that the aggregate outstanding amount of
Indebtedness incurred in reliance on this clause (e), when added to the
aggregate outstanding amount of all Capitalized Lease Obligations incurred in
reliance on Section 7.04(c), shall not exceed $75,000,000 at any time;
          (f) Indebtedness under the Spinco Senior Notes or any securities
issued in exchange therefor pursuant to any registered exchange offer;
          (g) Indebtedness (the “Scheduled Existing Indebtedness”) in existence
on, and which is to continue in effect after, the Closing Date (excluding
Intercompany Debt) and which is listed on Annex VI hereto, without giving effect
to any subsequent extension, renewal or refinancing thereof, except as permitted
pursuant to Section 7.04(i);
          (h) Indebtedness of the Borrower or any of its Subsidiaries which may
be deemed to exist in connection with agreements providing for indemnification,
purchase price adjustments and similar obligations in connection with Permitted
Acquisitions or sales of assets permitted by this Agreement (so long as any such
obligations are those of the Person making the respective acquisition or sale,
and are not guaranteed by any other Person);
          (i) Permitted Refinancing Indebtedness, so long as no Default or Event
of Default is in existence at the time of the incurrence thereof and immediately
after giving effect thereto;
          (j) Permitted Unsecured Debt, so long as (i) no Default or Event of
Default then exists or would result therefrom, (ii) 100% of the Net Cash
Proceeds therefrom (except to the extent of any portion thereof applied to make
a concurrent prepayment of Term Loans pursuant to, and in accordance with the
requirements of, Section 3.02) are (x) applied as a mandatory repayment and/or
commitment reduction in accordance with the requirements of Section 3.03(A)(c),
2.03(d) or 2.03(e), as the case may be (except to the extent such incurrence is
permitted without a mandatory prepayment pursuant to Section 3.03(A)(c)), as the
case may be and/or (y) concurrently used by the Borrower to make a voluntary
prepayment of RF Loans pursuant to, and in accordance with the requirements of,
Section 3.02, (iii) calculations are made by the Borrower demonstrating
compliance, on a Pro Forma Basis, with the covenants contained in Sections 7.11
and 7.12 for the Calculation Period most recently ended prior to the date of the
respective issuance of Permitted Unsecured Debt, and (iv) the Borrower shall
have furnished to

57

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

 

the Administrative Agent a certificate from an Authorized Officer certifying as
to compliance with the requirements of preceding clauses (i), (ii) and (iii) and
containing the calculations required by preceding clause (iii);
          (k) Indebtedness arising in connection with the consummation of the
Transaction; provided any Indebtedness not required to be recorded on a
financial statement prepared in accordance with GAAP in excess of $5,000,000
shall be set forth on Annex VI;
          (l) unsecured Indebtedness of the Borrower incurred under the Existing
2010 Senior Notes and the Existing 2010 Senior Notes Indenture, and of the
Subsidiary Guarantors under guarantees of the obligations of the Borrower under
the Existing 2010 Senior Notes Documents, in an aggregate principal amount not
to exceed $2,100,000 (less the amount of any repayments of principal thereof
after the Closing Date);
          (m) additional unsecured Indebtedness of the Borrower and the
Subsidiary Guarantors not to exceed an aggregate outstanding principal amount of
$25,000,000 at any time; provided that the Borrower and the Subsidiary
Guarantors shall not be permitted to incur additional unsecured Indebtedness
pursuant to this Section 7.04(m) to the extent that any Permitted Junior Capital
is issued and remains outstanding (together with any accrued dividends or
interest, as applicable, thereon) pursuant to Section 7.04(p) below;
          (n) Permitted Acquired Debt;
          (o) Indebtedness of the Borrower consisting of Permitted Letters of
Credit; and
          (p) (i) Permitted Junior Capital issued on or after the nine-month
anniversary of the Closing Date to Capgemini, U.S. LLC to fund the payment of
expenses under the Transition Services Agreement in an aggregate amount,
excluding any accrued dividends or interest, as applicable, thereon, not to
exceed $50,000,000 and (ii) Permitted Junior Capital issued as interest or
dividends in kind in respect of the Permitted Junior Capital issued pursuant to
clause (i) above in an aggregate amount not to exceed $15,000,000, so long as,
in each of clauses (i) and (ii) above, (1) 100% of any Net Cash Proceeds thereof
are applied to fund the payment of expenses under the Transition Services
Agreement, (2) interest and dividends thereon, as applicable, shall be payable
in kind and not payable in cash, (3) the Final Cutover Date (as defined in the
Transition Services Agreement) shall not have occurred on or prior to the
nine-month anniversary of the Closing Date and (4) the Borrower shall have
furnished to the Administrative Agent a certificate from an Authorized Officer
certifying as to compliance with the requirements of preceding clauses (1),
(2) and (3); provided that, to the extent the Permitted Junior Capital issued
hereunder constitutes (a) Permitted Unsecured Debt, clauses (d) and (e)(i) of
the definition thereof shall not be applicable, (b) Qualified Preferred Stock,
clause (c) of the definition thereof shall not be applicable or (c) Disqualified
Preferred Stock, the proviso in the definition thereof shall not be applicable.
          7.05 Capital Expenditures. The Borrower will not, and will not permit
any of its Subsidiaries to, incur Consolidated Capital Expenditures in excess
of:

58

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

 

          (a) (i) $240,000,000 for recurring Consolidated Capital Expenditures
for the fiscal year ended December 31, 2008, (ii) $128,000,000 for conversion
Consolidated Capital Expenditures for the fiscal year ended December 31, 2008,
and (iii) $60,000,000 for one time DSL build-out related Consolidated Capital
Expenditures for the fiscal year ended December 31, 2008;
          (b) $240,000,000 for the fiscal year ended December 31, 2009;
          (c) $240,000,000 for the fiscal year ended December 31, 2010;
          (d) $215,000,000 for the fiscal year ended December 31, 2011; and
          (e) $200,000,000 for the fiscal year ended December 31, 2012 and for
any fiscal year of the Borrower thereafter;
provided that (1) the amount of Consolidated Capital Expenditures permitted in
each fiscal year, as provided in each clause above, shall be reduced by any
amount of any cash payments that are reclassified from capital expenditures to
operating expenses and included in the calculation of Acquisition Adjustment
pursuant to clause (B) of the definition thereof, (2) any unused amounts of
Consolidated Capital Expenditures for any given fiscal year may be carried
forward and incurred by the Borrower and its Subsidiaries prior to the end of
the next succeeding fiscal year (but only after all amounts specified above for
that succeeding fiscal year have been expended), and (3) Consolidated Capital
Expenditures not exceeding $81,000,000 shall be permitted and shall not be
applied against the amounts set forth above to the extent expended out of
Restricted cash of the Borrower and its Subsidiaries on the Closing Date
designated for such purpose.
          7.06 Advances, Investments and Loans. The Borrower will not, and will
not permit any of its Subsidiaries to, lend money or credit or make advances to
any Person (other than Excluded Intercompany Payables), or purchase or acquire
any stock, obligations or securities of, or any other interest in, or make any
capital contribution to any Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract (each of the
foregoing an “Investment” and, collectively, “Investments”), except:
          (a) the Borrower or any Subsidiary may invest in cash and Cash
Equivalents;
          (b) the Borrower and any Subsidiary may acquire and hold receivables
owing to them, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms and/or
reasonable extensions thereof;
          (c) the Borrower and its Qualified Subsidiaries may make intercompany
loans and advances between and among one another (collectively, “Intercompany
Loans”); provided that (i) each such Intercompany Loan shall be evidenced by an
Intercompany Note which, if held by a Pledge Party, shall be pledged to the
Collateral Agent as, and to the extent required by, the Pledge Agreement,
(ii) each Intercompany Loan made pursuant to this clause (c) shall be subject to
subordination as, and to the extent required by, the Intercompany Subordination
Agreement (giving effect to exceptions required by applicable law or regulation
as contemplated thereby)

59

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

 

and (iii) any Intercompany Loan made pursuant to this clause (c) shall cease to
be permitted hereunder if the obligor or obligee thereunder ceases to be the
Borrower or a Qualified Subsidiary as contemplated above;
          (d) loans and advances to officers, directors and employees in the
ordinary course of business for relocation purposes and/or the purchase from the
Borrower of the capital stock (or options or warrants relating thereto) of the
Borrower and otherwise in an aggregate principal amount not to exceed $2,500,000
at any time outstanding shall be permitted;
          (e) the Borrower and each Subsidiary may acquire and own investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in the
ordinary course of business;
          (f) Interest Rate Agreements entered in compliance with
Section 7.04(d) shall be permitted;
          (g) Investments in existence on the Closing Date (excluding
Intercompany Debt), without giving effect to any additions thereto or
replacements thereof, shall be permitted;
          (h) the Borrower and each Qualified Subsidiary may make capital
contributions (including by way of the capitalization of an Intercompany Loan)
(i) to any of their respective Subsidiaries, to the extent a Subsidiary
Guarantor and (ii) to any Qualified Subsidiary that is not a Subsidiary
Guarantor, so long as, in the case of this subclause (ii), (x) no Default or
Event of Default has occurred and is continuing at the time of the respective
contribution and (y) in the case of any contribution to a Qualified Subsidiary
of the type referred to in clause (iii) of the definition thereof, the Pro Forma
EBITDA Test is satisfied;
          (i) the Borrower and its Subsidiaries may (x) establish and/or create
Subsidiaries in accordance with the provisions of Section 7.07 and (y) make
Investments therein as otherwise provided in this Section 7.06;
          (j) Permitted Acquisitions may be consummated in accordance with the
requirements of Section 6.10;
          (k) the Borrower and its Subsidiaries may acquire and hold investments
consisting of non-cash consideration received from sales of assets effected in
accordance with the requirements of Section 7.02(f);
          (l) the Borrower and its Subsidiaries may from time to time make
additional Investments in an amount (in the case of a non-cash Investment,
taking the fair market value of the asset so invested (as determined in good
faith by the Board of Directors of the Borrower)) not to exceed the amount of
Cumulative Distributable Cash at such time (determined as of the date of the
making of such Investment, after giving effect to all prior and contemporaneous
adjustments thereto, except as a result of such Investment), so long as (i) no
Default or Event of Default is then in existence or would exist immediately
after giving effect thereto, (ii) no Dividend Suspension Period is then in
effect, (iii) on the date such Investment is made, the sum

60

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

 

of (x) the Total Unutilized Revolving Commitment then in effect plus (y) the
aggregate amount of all Unrestricted Cash and Cash Equivalents of the Borrower
and the Subsidiary Guarantors at such time shall be equal to or greater than
$25,000,000 and (iv) the Borrower shall have delivered an officer’s certificate
on the date of the proposed Investment certifying that the Cumulative
Distributable Cash on such date (after giving effect to all prior and
contemporaneous adjustments thereto, except as a result of such Investment)
exceeds the aggregate amount of the proposed Investment;
          (m) Investments made in connection with the consummation of the
Transaction;
          (n) the Borrower may make purchases of fractional shares of Borrower
Common Stock (and make related Investments) arising out of stock dividends,
splits or combinations or business combinations; and
          (o) so long as no Default or Event of Default then exists or would
exist immediately after giving effect to the respective Investment, the Borrower
and its Subsidiaries may make Investments not otherwise permitted by clauses
(a) through (n) of this Section 7.06 in an aggregate amount not to exceed
$37,500,000 (determined without regard to any write-downs or write-offs
thereof), net of cash payments of principal in the case of loans and cash equity
returns (whether as a distribution, dividend or redemption) or a return in the
form of an asset distribution (based on the fair market value of the distributed
asset as determined in good faith by senior management of the Borrower) in the
case of equity investments.
          7.07 Limitation on Creation of Subsidiaries. (a) Except as otherwise
specifically provided in immediately succeeding clause (b) and in connection
with the Transaction, the Borrower will not, and will not permit any Subsidiary
to, establish, create or acquire any Subsidiary; provided that the Borrower and
its Subsidiaries shall be permitted to establish, create or acquire Wholly-Owned
Subsidiaries (or 90%-Owned Subsidiaries in the case of Telcos or Carrier
Services Companies), so long as (i) 100% of the capital stock or other equity
interests of such new Subsidiary (if a Parent Company) or at least 90% of the
capital stock or other equity interests of such new Subsidiary (if a Telco or a
Carrier Services Company) is pledged pursuant to the Pledge Agreement (provided
that the stock or other equity interests of any new Telco or Carrier Services
Company acquired or created pursuant to a Permitted Acquisition shall not have
to be pledged if such pledge is prohibited by applicable law, rule or regulation
and, after giving effect to the acquisition or creation thereof, the Pro Forma
EBITDA Test is satisfied) and the certificates representing such stock or other
equity interests, together with transfer powers duly executed in blank, are
delivered to the Collateral Agent, (ii) such new Subsidiary executes a
counterpart of the Intercompany Subordination Agreement, the Subsidiary Guaranty
(in the case of a new First-Tier Subsidiary) and the Pledge Agreement (in the
case of a new Parent Company), in each case on the same basis (and to the same
extent) as such Subsidiary would have executed such Credit Documents if it were
a Credit Party on the Closing Date, and (iii) such new Subsidiary takes all
action in connection therewith as would otherwise have been required to be taken
pursuant to Section 4 if such new Subsidiary had been a Credit Party on the
Closing Date.

61

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

 

          (b) In addition to Subsidiaries of the Borrower created pursuant to
preceding clause (a), the Borrower and its Subsidiaries may establish, acquire
or create, and make Investments in, Non-Wholly Owned Subsidiaries after the
Closing Date as a result of Permitted Acquisitions (subject to the limitations
contained in the definition thereof) and Investments expressly permitted to be
made pursuant to Section 7.06; provided that (i) all of the capital stock or
other equity interests of each such Non-Wholly Owned Subsidiary owned by a
Pledge Party shall be pledged by any Pledge Party which owns same as, and to the
extent, required by the Pledge Agreement, (ii) such new Subsidiary executes a
counterpart of the Intercompany Subordination Agreement and (iii) in the case of
the creation or acquisition of a new Telco or Carrier Services Company pursuant
to a Permitted Acquisition in circumstances where the capital stock or other
equity interests of such Telco or Carrier Services Company are not permitted by
applicable law, rule or regulation to be pledged and are not to be pledged under
the Pledge Agreement, the Pro Forma EBITDA Test is satisfied.
          7.08 Modifications. The Borrower will not, and will not permit any of
its Subsidiaries to:
          (a) amend or modify (or permit the amendment or modification of) any
provisions of any Permitted Acquired Debt, any Existing 2010 Senior Notes
Document, any Scheduled Existing Indebtedness and, on and after the execution,
delivery and/or incurrence thereof, any Spinco Senior Notes and any agreements
or instruments relating to any other Permitted Junior Capital or any other
Permitted Refinancing Indebtedness, in any such case other than amendments or
modifications that are not in any way adverse to the interests of the Lenders;
provided that in no event shall any amendment to the foregoing (i) increase the
applicable interest rate, (ii) shorten the maturity date from that theretofore
in effect, (iii) modify or change any subordination provisions contained therein
or (iv) make any covenant more restrictive than previously existed thereunder;
          (b) amend or modify (or permit the amendment or modification of) the
Transition Services Agreement other than amendments or modifications related to
the provision of transition services where such amendments or modifications are
(i)(A) in the case of material amendments or modifications as determined by the
Borrower in its good faith judgment, furnished to the Administrative Agent no
later than four Business Days after the effectiveness thereof (it being
understood that compliance with Section 6.01(f) shall constitute compliance with
this Section 7.08(b)(i)(A)) and (B) in the case of immaterial amendments or
modifications as determined by the Borrower in its good faith judgment,
furnished to the Administrative Agent at the time of delivery of the next
Compliance Certificate pursuant to Section 6.01(d) with respect to the quarter
in which such amendment became effective and (ii) not in any way materially
adverse to the interests of the Lenders; and/or
          (c) amend, modify or change in any manner adverse to the interests of
the Lenders the organizational documents (including by-laws) of any Pledge Party
(including, without limitation, by the filing or modification of any certificate
or articles of designation, other than any certificate of designation relating
to Disqualified Preferred Stock or Qualified Preferred Stock issued as permitted
herein), any agreement entered into by the Borrower with respect to its capital
stock, or enter into any new agreement in any manner adverse to the interests of
the

62

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

 

Lenders with respect to the capital stock of the Borrower (in each case other
than an agreement governing Disqualified Preferred Stock or Qualified Preferred
Stock issued as permitted herein).
          7.09 Restricted Payments, Etc. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, make any Restricted Payment, except that:
          (i) (x) any Subsidiary of the Borrower may pay Dividends to the
Borrower or any Wholly-Owned Subsidiary of the Borrower (including by way of
conversion of intercompany payables) and (y) any Non-Wholly-Owned Subsidiary of
the Borrower may pay cash Dividends to its shareholders generally, so long as
the Borrower or its respective Subsidiary which owns the equity interest in the
Subsidiary paying such Dividends receives at least its proportionate share
thereof (based upon its relative holding of the equity interests in the
Subsidiary paying such Dividends and taking into account the relative
preferences, if any, of the various classes of equity interests of such
Subsidiary);
          (ii) the Borrower may redeem or repurchase shares of Borrower Common
Stock (or options, warrants and/or appreciation rights in respect thereof) from
shareholders, officers, employees, consultants and directors (or their estates)
upon the death, permanent disability, retirement or termination of employment of
any such Person or otherwise in accordance with any shareholder agreement, stock
option plan or any employee stock ownership plan; provided that (x) no Default
or Event of Default is then in existence or would arise therefrom and (y) the
aggregate amount of all cash paid in respect of all such shares, options,
warrants and rights so redeemed or repurchased in any calendar year, does not
exceed $5,000,000;
          (iii) the Borrower may declare and pay Dividends to the holders of
Borrower Common Stock (including by way of the repurchase of outstanding shares
of Borrower Common Stock) in an amount not to exceed the amount of Cumulative
Distributable Cash (determined as of the Dividend Calculation Date), so long as
with respect to the declaration and payment of Dividends (other than Excluded
Dividend Payments) (A) no Default or Event of Default is then in existence or
would exist immediately after giving effect thereto, (B) no Dividend Suspension
Period is then in effect, (C) the Minimum Liquidity Condition is satisfied at
such time (before and after giving effect to the respective Dividend) and
(D) the Borrower shall have delivered an officer’s certificate on the date of
the proposed Dividend certifying that the Cumulative Distributable Cash on such
date (after giving effect to all prior and contemporaneous adjustments thereto,
except as a result of such Dividend) exceeds the aggregate amount of the
proposed Dividend;
          (iv) subject to the subordination provisions of the respective
agreements governing the respective issuance of Permitted Unsecured Debt and so
long as no Default or Event of Default then exists or would result therefrom,
the Borrower may pay regularly scheduled interest on each issuance of Permitted
Unsecured Debt through the issuance of Permitted Unsecured Debt (but not in
cash) as and when due in accordance with the terms of the instruments and
agreements governing the respective Permitted Unsecured Debt;
          (v) Indebtedness may be refinanced with the proceeds of Permitted
Refinancing Indebtedness in accordance with the requirements of the definition
thereof, so long as no Default

63

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

 

or Event of Default is in existence at the time of the incurrence of such
Permitted Refinancing Indebtedness and immediately after giving effect thereto;
          (vi) the Transaction shall be permitted to be consummated in
accordance with the Merger Agreement, the Distribution Agreement and the
relevant requirements of this Agreement;
          (vii) the Borrower and its Subsidiaries may make payments with respect
to Intercompany Debt, so long as the respective payment is permitted to be made
in accordance with the terms of the Intercompany Subordination Agreement (giving
effect to the exceptions required by applicable regulatory law as contemplated
thereby);
          (viii) so long as no Default or Event of Default exists or would
result therefrom, the Borrower may pay regularly accruing Dividends on its
Disqualified Preferred Stock issued pursuant to Section 7.13(d) in cash and/or
through the issuance of additional shares of Disqualified Preferred Stock in
accordance with the terms of the documentation governing the same;
          (ix) the Borrower may pay regularly accruing Dividends with respect to
Qualified Preferred Stock through the issuance of additional shares of Qualified
Preferred Stock (but not in cash) in accordance with the terms of the
documentation governing the same;
          (x) the Borrower and each of its Subsidiaries may pay Dividends to the
Borrower and its Subsidiaries, as applicable, in accordance with tax sharing
arrangements entered into among the Borrower and its Subsidiaries;
          (xi) Existing 2010 Senior Notes not repurchased in connection with the
Tender Offer and Consent Solicitation therefor may from time to time be redeemed
in accordance with the terms of the respective indenture therefor and/or
repurchased on the open-market, so long as (I) the aggregate amount of cash
expended by the Borrower to effect such repurchases or redemptions shall not
exceed the sum of (A) the principal amount of the Indebtedness so repurchased or
redeemed plus (B) the amount of accrued but unpaid interest on the Indebtedness
so repurchased or redeemed through the respective date of repurchase or
redemption plus (C) any required premium payable in connection with such
repurchase or redemption, (II) no Default or Event of Default then exists or
would result therefrom (or, in the case of any redemption of Existing 2010
Senior Notes pursuant to the Existing 2010 Senior Notes Indenture, no Default or
Event of Default under Section 8.01 or 8.05 then exists or would result
therefrom), (III) all such Existing 2010 Senior Notes so repurchased or redeemed
are promptly cancelled by the purchaser thereof, and (IV) at the time of any
delivery of an irrevocable notice of redemption pursuant to the Existing 2010
Senior Notes Indenture, no Default or Event of Default then exists;
          (xii) the Borrower may redeem or repurchase shares of Sunflower
Telephone Company, Inc. held by third-party investors, so long as (x) no Default
or Event of Default then exists or would exist immediately after giving effect
thereto and (y) the aggregate amount of all cash paid in respect of all
redemptions and/or repurchases pursuant to this clause (xii) does not exceed
$250,000;

64

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

 

          (xiii) the Borrower may make purchases of fractional shares of
Borrower Common Stock arising out of stock dividends, splits or combinations or
business combinations;
          (xiv) the Borrower may redeem shares of Qualified Preferred Stock or
Disqualified Preferred Stock or repurchase or refinance any Permitted Unsecured
Debt with the proceeds of any issuance of Permitted Junior Capital not required
to be applied to repay Term Loans pursuant to Section 3.03(A)(c);
          (xv) the Borrower may pay, redeem or repurchase Permitted Junior
Capital issued pursuant to Section 7.04(p) at any time, so long as at the time
of such payment, redemption or repurchase, the Leverage Ratio is less than
4.50:1.00; and
          (xvi) the Borrower may pay consent or similar fees related to
amendments to the indenture governing the Spinco Senior Notes;
provided that, notwithstanding clause (iii) of this Section 7.09(a), regular
quarterly Dividends to the holders of Borrower Common Stock (by way of cash
payment and not including the repurchase of outstanding shares of Borrower
Common Stock) payable for the fiscal quarter in which the Closing Date occurs
and the first and second full fiscal quarters following the Closing Date,
consistent with past practices, shall be permitted so long as the amount of such
Dividends does not to exceed $50,000,000 in the aggregate (the “Excluded
Dividend Payments”); provided, further that the per share dividend amount
payable by the Borrower (after taking into account any stock split or stock
dividend) may not be increased except during an Applicable Leverage Ratio
Period.
          (b) The Borrower will not, and will not permit any of its Subsidiaries
to, create or otherwise cause or suffer to exist (other than as a result of a
requirement of law) any encumbrance or restriction which prohibits or otherwise
restricts (A) the ability of any Subsidiary to (a) pay dividends or make other
distributions or pay any Indebtedness owed to the Borrower or any Subsidiary,
(b) make loans or advances to the Borrower or any Subsidiary, (c) transfer any
of its properties or assets to the Borrower or any Subsidiary or (B) the ability
of any Subsidiary to create, incur, assume or suffer to exist any Lien upon its
property or assets to secure the Obligations, other than (for purposes of
clauses (A) and (B)) prohibitions or restrictions existing under or by reason
of: (i) this Agreement and the other Credit Documents; (ii) law, order,
regulation, or ruling applicable to the Borrower or such Subsidiary;
(iii) customary non-assignment provisions entered into in the ordinary course of
business and consistent with past practices; (iv) any restriction or encumbrance
with respect to a Subsidiary imposed pursuant to an agreement which has been
entered into for the sale or disposition of all or substantially all of the
capita1 stock or assets of such Subsidiary, so long as such sale or disposition
is permitted under this Agreement; (v) Liens permitted under Sections 7.03(d),
(m) and/or (n) and any documents or instruments governing the terms of any
Indebtedness or other obligations secured by any such Liens; provided that such
prohibitions or restrictions apply only to the assets subject to such Liens;
(vi) any agreement or instrument governing Permitted Acquired Debt, to the
extent such restriction or encumbrance (x) is not applicable to any Person or
the properties or assets of any Person (other than the Person or the properties
or assets of the Person acquired pursuant to the respective Permitted
Acquisition) and (y) was not created (or made more restrictive) in connection
with or in anticipation of the respective Permitted

65

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

 

Acquisition; (vii) restrictions applicable to any Non-Wholly Owned Subsidiary
existing at the time of the acquisition thereof as a result of an Investment
pursuant to Section 7.06 or a Permitted Acquisition effected in accordance with
Section 6.10; provided that the restrictions applicable to such joint venture
are not made more burdensome, from the perspective of the Borrower and its
Subsidiaries, than those as in effect immediately before giving effect to the
consummation of the respective Investment or Permitted Acquisition; and
(viii) on and after the execution and delivery thereof, any agreements or
instruments relating to any Permitted Unsecured Debt.
          7.10 Transactions with Affiliates. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction or series of transactions
after the Closing Date whether or not in the ordinary course of business, with
any of its Affiliates other than on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arm’s length transaction
with a Person other than an Affiliate; provided that the foregoing restrictions
shall not apply to (i) transactions solely among Pledge Parties and their
90%-Owned Subsidiaries, (ii) employment arrangements (including severance and
related arrangements) entered into in the ordinary course of business with
officers of the Borrower and its Subsidiaries, (iii) customary fees paid to
members of the Board of Directors of the Borrower and of its Subsidiaries,
(iv) arrangements with directors, officers and employees not otherwise
prohibited by this Agreement, (v) Restricted Payments made by the Borrower to
the extent permitted by Section 7.09(a) and (vi) the Transaction.
          7.11 Interest Coverage Ratio. The Borrower will not permit the
Interest Coverage Ratio for any Test Period ending on the last day of any fiscal
quarter of the Borrower to be less than 2.50:1.00.
          7.12 Leverage Ratio. The Borrower will not permit the Leverage Ratio
determined as at the end of any full fiscal quarter of the Borrower ending after
the Closing Date to exceed 5.50:1.00.
          7.13 Limitation On Issuance of Equity Interests. (a) The Borrower will
not, and will not permit any of its Subsidiaries to, issue (i) any Preferred
Stock or any options, warrants or rights to purchase Preferred Stock (other than
Preferred Stock issued in accordance with Section 7.13(c) or (d) below) or
(ii) any redeemable common equity interests unless, in either case, the issuance
thereof is, and all terms thereof are, satisfactory to the Required Lenders in
their sole discretion.
          (b) The Borrower will not permit any of its Subsidiaries, directly or
indirectly, to issue any shares of such Subsidiary’s capital stock, securities
or other equity interests (or warrants, rights or options to acquire shares or
other equity interests), except (i) for replacements of then outstanding shares
of capital stock or other equity interests, (ii) for stock splits, stock
dividends and similar issuances which do not decrease the percentage ownership
of the Borrower and its Subsidiaries taken as a whole in any class of the
capital stock or other equity interests of such Subsidiary, (iii) Subsidiaries
formed after the Closing Date pursuant to Section 7.07 may issue capital stock
or other equity interests in accordance with the requirements of Section 7.07
and (iv) to qualify directors to the extent required by applicable law.

66

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

 

          (c) The Borrower may issue Qualified Preferred Stock (x) in payment of
regularly accruing dividends on theretofore outstanding shares of Qualified
Preferred Stock as contemplated by Section 7.09(a)(ix) and (y) with respect to
each other issue of Qualified Preferred Stock, so long as the Borrower receives
reasonably equivalent consideration therefor (as determined in good faith by the
Borrower).
          (d) The Borrower may issue Disqualified Preferred Stock, so long as
(i) no Default or Event of Default then exists or would result from the issuance
thereof, (ii) 100% of the Net Cash Proceeds therefrom are (x) applied as a
mandatory repayment and/or commitment reduction in accordance with the
requirements of Section 3.03(A)(c) or 2.03(d) or (e), as the case may be,
(y) used to effect a Permitted Acquisition in accordance with the requirements
of Section 6.10 and/or (z) concurrently used by the Borrower (I) to make a
voluntary prepayment of RF Loans pursuant to, and in accordance with the
requirements of, Section 3.02 and/or (II) to redeem and/or refinance Permitted
Junior Capital in an aggregate principal amount or liquidation preference, as
applicable, equal to the aggregate principal amount or liquidation preference,
as applicable, of RF Loans and/or Permitted Junior Capital, as the case may be,
actually incurred or issued by the Borrower to finance a Permitted Acquisition
or Permitted Acquisitions (and pay related accrued interest and dividends
thereon, if any) in the 364-day period prior to such issuance of Disqualified
Preferred Stock, (iii) calculations are made by the Borrower demonstrating
compliance, on a Pro Forma Basis, with the covenants contained in Sections 7.11
and 7.12 for the Calculation Period most recently ended prior to the date of
such issuance of Disqualified Preferred Stock and (iv) the Borrower shall have
furnished to the Administrative Agent a certificate from an Authorized Officer
certifying as to compliance with the requirements of preceding clauses (i),
(ii) and (iii) and containing the calculations required by preceding clause
(iii).
          (e) The Borrower may issue Permitted Junior Capital in accordance with
Section 7.04(p).
          7.14 Designated Senior Debt. The Borrower shall not designate any
Indebtedness (other than the Obligations) as “Designated Senior Debt” or
“Designated Guarantor Senior Debt” for purposes of, on and after the execution,
delivery and/or incurrence thereof, any agreements or instruments relating to
any Permitted Unsecured Debt or any Permitted Refinancing Indebtedness in
respect thereof.
          SECTION 8. Events of Default. Upon the occurrence of any of the
following specified events (each, an “Event of Default”):
          8.01 Payments. The Borrower shall (i) default in the payment when due
of any principal of the Loans or (ii) default, and such default shall continue
for five or more Business Days, in the payment when due of any interest on the
Loans or any Fees or any other amounts owing hereunder or under any other Credit
Document; or
          8.02 Representations, etc. Any representation, warranty or statement
made by any Credit Party herein or in any other Credit Document or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or

67

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

 

          8.03 Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 6.05, 6.09, 6.10, 6.12 or 7, or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Section 8.01, 8.02 or clause (a) of this Section 8.03) contained in this
Agreement and such default shall continue unremedied for a period of at least
30 days after written notice to the Borrower by the Administrative Agent or the
Required Lenders; or
          8.04 Default Under Other Agreements. (a) The Borrower or any of its
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations) beyond the period of grace, if any, applicable
thereto or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause, any such
Indebtedness to become due prior to its stated maturity; or (b) any such
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable (or shall be required to be prepaid as a result of a default
thereunder or of an event of the type that constitutes an Event of Default)
prior to the stated maturity thereof; provided that it shall not constitute an
Event of Default pursuant to this Section 8.04 unless the aggregate principal
amount of all Indebtedness referred to in clauses (a) and (b) above (without
duplication) exceeds $20,000,000 in the aggregate at any one time; or
          8.05 Bankruptcy, etc. The Borrower or any Material Subsidiary shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled “Bankruptcy,” as now or hereafter in effect, or any successor
thereto (the “Bankruptcy Code”); or an involuntary case is commenced against the
Borrower or any of its Material Subsidiaries and the petition is not
controverted within 20 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
the Borrower or any of its Material Subsidiaries; or the Borrower or any of its
Material Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Borrower or any of its Material Subsidiaries; or there is
commenced against the Borrower or any of its Material Subsidiaries any such
proceeding which remains undismissed for a period of 60 days; or the Borrower or
any of its Material Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Borrower or any of its Material Subsidiaries suffers any appointment of
any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or the Borrower or
any of its Material Subsidiaries makes a general assignment for the benefit of
creditors; or any Company action is taken by the Borrower or any of its Material
Subsidiaries for the purpose of effecting any of the foregoing; or
          8.06 ERISA. An event which meets all of the requirements under (a),
(b) and (c) of this Section: (a) Any Plan or Multiemployer Plan shall fail to
satisfy the minimum funding

68

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

 

standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001 (a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(l) thereof) and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days, any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan or Multiemployer Plan which is
subject to Title IV of ERISA is, shall have been or is likely to be terminated
or to be the subject of termination proceedings under ERISA, any Plan shall have
an Unfunded Current Liability, a contribution required to be made with respect
to a Plan or Multiemployer Plan has not been timely made, the Borrower or any
Subsidiary or any ERISA Affiliate has incurred or is likely to incur any
liability to or on account of a Plan or Multiemployer Plan under Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971 or 4975 of the Code or on account of a group health
plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code)
under Section 4980B of the Code, or the Borrower or any Subsidiary has incurred
or is likely to incur liabilities pursuant to one or more employee welfare
benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to
retired employees or other former employees (other than as required by
Section 601 of ERISA) or Plans; (b) there shall result from any such event or
events the imposition of a lien, the granting of a security interest, or a
liability or a material risk of incurring a liability; and (c) such lien,
security interest or liability, individually, or in the aggregate, in the
opinion of the Required Lenders, has had, or is reasonably likely to have, a
Material Adverse Effect; or
          8.07 Pledge Agreement. (a) Except in each case to the extent resulting
from the negligent or willful failure of the Collateral Agent to continue to
hold certificated Collateral under the Pledge Agreement, the Pledge Agreement
shall cease to be, in any material respect, in full force and effect, or shall
cease, in any material respect, to give the Collateral Agent the Liens, powers
and privileges purported to be created thereby in favor of the Collateral Agent,
or
          (b) any Pledge Party shall default in the due performance or
observance of any material term, covenant or agreement on its part to be
performed or observed pursuant to the Pledge Agreement and such default shall
continue for 15 or more days after written notice to the respective Pledge Party
by the Administrative Agent; or
          8.08 Subsidiary Guaranty. The Subsidiary Guaranty of any Subsidiary
Guarantor or any material provision thereof shall cease to be in full force and
effect, or any Subsidiary Guarantor or any Person acting by or on behalf of such
Subsidiary Guarantor shall deny or disaffirm such Subsidiary Guarantor’s
obligations under the Subsidiary Guaranty; or
          8.09 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving a liability (to the
extent not paid or covered by insurance) in excess of $20,000,000 in the
aggregate for all such judgments and decrees for the Borrower and its
Subsidiaries and all such judgments and decrees in excess of such amount shall

69

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

 

not have been vacated, discharged or stayed or bonded pending appeal within
60 days from the entry thereof; or
          8.10 Change of Control. Any Change of Control occurs;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Lenders, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent, any Letter of Credit Issuer, the Swingline Lender or any
Lender to enforce its claims against any Credit Party, except as otherwise
specifically provided for in this Agreement (provided that, if an Event of
Default specified in Section 8.05 shall occur with respect to the Borrower, the
result which would occur upon the giving of written notice by the Administrative
Agent as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Total Commitment
terminated, whereupon the Commitment of each Lender shall forthwith terminate
immediately and any Fees shall forthwith become due and payable without any
other notice of any kind; (ii) declare the principal of and any accrued interest
in respect of all Loans and all Obligations owing hereunder (including Unpaid
Drawings) to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; (iii) enforce, as Collateral Agent (or direct
the Collateral Agent to enforce), any and all of the Liens and rights created
pursuant the Pledge Agreement; (iv) terminate any Letter of Credit which may be
terminated in accordance with its terms; (v) direct the Borrower to pay (and the
Borrower hereby agrees upon receipt of such notice, or upon the occurrence of
any Event of Default specified in Section 8.05 in respect of the Borrower, it
will pay) to the Collateral Agent at the Payment Office such additional amounts
of cash and/or Cash Equivalents, to be held in a cash collateral account as
security for the Borrower’s reimbursement obligations in respect of Letters of
Credit then outstanding equal to the aggregate Stated Amount of all Letters of
Credit then outstanding (less any amount thereof as to which Section 1A.01(c)
Arrangements are in place); and (vi) apply any cash collateral held by the
Administrative Agent as provided in Section 3.03(A)(a) to the repayment of the
Obligations.
          SECTION 9. Definitions. As used herein, the following terms shall have
the meanings herein specified unless the context otherwise requires. Defined
terms in this Agreement shall include in the singular number the plural and in
the plural the singular:
          “Acquired Person” shall have the meaning provided in the definition of
“Permitted Acquisition.”
          “Acquisition Adjustment” shall mean, (A) an amount, not to exceed
$61,000,000 in the aggregate, equal to the sum, without duplication (but only to
the extent deducted in determining Consolidated Net Income for such period), of
(i) training, conversion of data and any other items expensed in relation to
systems stand-up/conversion arising solely from the Transaction, (ii) one-time
expenses related to the recruitment of employees hired within three hundred and
sixty (360) days of the Closing Date and (iii) expenses related to (1) auditing,
tax and compliance with the Sarbanes-Oxley Act of 2002, (2) marketing and
community relations, (3) investor relations and (4) any other consulting,
contract services or legal expenses, for each of (1), (2), (3) and (4) above
that would not have occurred absent the Merger and accrued within

70

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

 

three hundred and sixty (360) days of the Closing Date, (B) an amount, not to
exceed $15,000,000 in the aggregate, equal to (but only to the extent deducted
in determining Consolidated Net Income for such period) any cash payments that
are reclassified from capital expenditures to operating expenses due to changes
in the Borrower’s accounting policies, and (C) an amount, not to exceed
$34,000,000 in the aggregate, equal to (but only to the extent deducted in
determining Consolidated Net Income for such period) the data conversion costs
related to the set-up of the Transition Services Agreement incurred in any one
fiscal quarter after the Closing Date.
          “Adjusted Consolidated EBITDA” shall mean, for any period,
Consolidated Net Income for such period adjusted by (A) adding thereto, an
amount equal to the sum, without duplication (but only to the extent deducted in
determining Consolidated Net Income for such period), of: (i) provisions for
taxes based on income, (ii) Consolidated Interest Expense, (iii) amortization
and depreciation expense (including any amortization or write-off related to the
write-up of any assets as a result of purchase accounting and the write-off of
deferred financing costs), (iv) losses on sales of assets (excluding sales in
the ordinary course of business) and other extraordinary losses, (v) the
non-cash portion of any retirement or pension plan expense incurred by the
Borrower or any of its Subsidiaries, (vi) all one-time cash costs and expenses
paid with respect to advisory services, financing sources and other advisors
retained prior to the Closing Date with respect to the Transaction during such
period, (vii) expenses incurred under the Transition Services Agreement during
such period, provided, that such expenses are paid on or prior to the date that
is 15 months after the Closing Date, (viii) any other non-cash charges
(including non-cash costs arising from implementation of SFAS 106 and SFAS 109)
accrued by the Borrower and its Subsidiaries during such period (except to the
extent any such charge will require a cash payment in a future period), and
(ix) the Acquisition Adjustment for such period, and (B) subtracting therefrom,
an amount equal to the sum, without duplication (but only to the extent included
in determining Consolidated Net Income for such period), of: (i) gains on sales
of assets (excluding sales in the ordinary course of business) and other
extraordinary gains and (ii) all non-cash gains and non-cash income accrued by
the Borrower and its Subsidiaries during such period, all as determined for the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.
Notwithstanding the foregoing, for purposes of determining the Leverage Ratio
and Interest Coverage Ratio, Adjusted Consolidated EBITDA shall be determined on
a Pro Forma Basis. For the avoidance of doubt, it is understood and agreed that,
to the extent any net income (or loss) of any Subsidiary is excluded from the
calculation of Consolidated Net Income in accordance with the definition thereof
contained herein, any add-backs to, or deductions from, Consolidated Net Income
in determining Adjusted Consolidated EBITDA as provided above shall be
calculated in a fashion consistent with the limitations and/or exclusions
provided in the definition of Consolidated Net Income contained herein.
          “Adjusted Total Available Revolving Commitment” shall mean, at any
time, the Total Revolving Commitment at such time less the aggregate Available
Revolving Commitments of all Defaulting Lenders at such time.
          “Administrative Agent” shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 10.10.

71

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

 

          “Affected Loans” shall have the meaning provided in Section 3.03(B).
          “Affiliate” shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control another Person if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors (or
equivalent governing body) of such Person or (ii) to direct or cause the
direction of the management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise.
          “Agents” shall have the meaning provided in the first paragraph of
this Agreement.
          “Agreement” shall mean this Credit Agreement, as modified, amended,
restated and/or supplemented.
          “Anticipated Reinvestment Amount” shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrower in connection therewith as the amount of the Net Cash Proceeds
from the related Asset Sale that the Borrower intends to use to finance one or
more Permitted Acquisitions within 540 days.
          “Applicable Base Rate Margin” shall mean (i) in the case of A Term
Loans, 1.50%, (ii) in the case of B Term Loans and the Delayed-Draw B Term
Loans, 1.75%, (iii) in the case of Swingline Loans, (A) through the date of
delivery of financial statements for the first full fiscal quarter after the
Closing Date, 1.75% and (B) thereafter, the Applicable Base Rate Margin, based
on the Leverage Ratio of the Borrower, as set forth below, and (iv) in the case
of the RF Loans (X) through the date of delivery of financial statements for the
first full fiscal quarter after the Closing Date, 1.75% and (Y) thereafter, the
Applicable Base Rate Margin, based on the Leverage Ratio of the Borrower, as set
forth below.

              Applicable Base Rate Margin for   Leverage Ratio   RF Loans and
Swingline Loans  
Greater than or equal to 3.0:1.0
    1.75%  
Less than 3.0:1.0
    1.50%  

          “Applicable Eurodollar Margin” shall mean (i) in the case of A Term
Loans, 2.50%, (ii) in the case of B Term Loans and the Delayed-Draw B Term
Loans, 2.75%, (iii) in the case of Swingline Loans, (A) through the date of
delivery of financial statements for the first full fiscal quarter after the
Closing Date, 2.75% and (B) thereafter, the Applicable Eurodollar Margin, based
on the Leverage Ratio of the Borrower, as set forth below and (iv) in the case
of

72

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

 

the RF Loans (X) through the date of delivery of financial statements for the
first full fiscal quarter after the Closing Date, 2.75% and (Y) thereafter, the
Applicable Eurodollar Margin, based on the Leverage Ratio of the Borrower, as
set forth below.

              Applicable Eurodollar Margin for   Leverage Ratio   RF Loans and
Swingline Loans  
Greater than or equal to 3.0:1.0
    2.75 %
Less than 3.0:1.0
    2.50 %

          “Applicable Leverage Ratio Period” shall mean (i) the period from the
Applicable Leverage Ratio Period Start Date until the Applicable Leverage Ratio
Period End Date, if any, and (ii) if the Applicable Leverage Ratio Period End
Date has occurred, the period from and after the fifth anniversary of the
Applicable Leverage Ratio Period Start Date.
          “Applicable Leverage Ratio Period Start Date” shall mean the first day
of the fiscal quarter in which the Borrower has delivered three consecutive
Compliance Certificates pursuant to Section 6.01(d), each demonstrating that the
Leverage Ratio as at the last day of the immediately preceding fiscal quarter of
the Borrower covered by such Compliance Certificate was less than or equal to
3.50:1.00.
          “Applicable Leverage Ratio Period End Date” shall mean the last day of
the fiscal quarter immediately preceding the fiscal quarter in which the
Borrower has delivered three consecutive Compliance Certificates pursuant to
Section 6.01(d), each demonstrating that the Leverage Ratio as at the last day
of the immediately preceding fiscal quarter of the Borrower covered by such
Compliance Certificate was greater than 4.00:1.00, so long as such third
consecutive Compliance Certificate is delivered with respect to a fiscal quarter
ending on or prior to the second anniversary of the Applicable Leverage Ratio
Period Start Date; provided that if following the Applicable Leverage Ratio
Period Start Date, the Borrower (i) shall have delivered two consecutive
Compliance Certificates pursuant to Section 6.01(d), each demonstrating that the
Leverage Ratio as at the last day of the immediately preceding fiscal quarter of
the Borrower covered by such Compliance Certificate was greater than 4.00:1.00,
and (ii) shall have failed to deliver a Compliance Certificate as required by
Section 6.01(d) with respect to the next succeeding fiscal quarter of the
Borrower thereafter, the Applicable Leverage Ratio Period End Date shall occur
on the last day of the fiscal quarter immediately preceding the date of the
required delivery of such Compliance Certificate.
          “Applicable Payment Fee” shall mean (i) in the case of the B Term
Loans an amount equal to the sum of the amount of the B Term Loans being paid at
any time multiplied by, (A) from and after the Closing Date through and
including the first anniversary of the Closing Date, 2.00%, (B) after the first
anniversary of the Closing Date through and including the second anniversary of
the Closing Date, 1.00% and (C) thereafter, 0.00%, (ii) in the case of the A
Term Loans, $0 and (iii) in the case of the RF Loans, $0.

73

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

 

          “Approved Electronic Communications” shall mean each notice, demand,
communication, information, document and other material that any Credit Party is
obligated to, or otherwise chooses to, provide to the Administrative Agent
pursuant to any Credit Document or the transactions contemplated therein,
including (a) any written contractual obligation delivered or required to be
delivered in respect of any Credit Document or the transactions contemplated
therein and (b) any financial statement, financial and other report, notice,
request, certificate and other information material; provided, however, that,
“Approved Electronic Communication” shall exclude (i) any Notice of Borrowing,
Notice of Conversion/Continuation and any other notice, demand, communication,
information, document and other material relating to a request for a new, or a
conversion of an existing, Borrowing, (ii) any notice pursuant to Section 3.02
(Voluntary Prepayments) and Section 3.03 (Mandatory Prepayments) and any other
notice relating to the payment of any principal or other amount due under any
Credit Document prior to the scheduled date therefor, (iii) all notices of any
Default or Event of Default and (iv) any notice, demand, communication,
information, document and other material required to be delivered to satisfy any
of the conditions set forth in Section 4 (Conditions Precedent) or any other
condition to any Borrowing or other extension of credit hereunder or any
condition precedent to the effectiveness of this Agreement.
          “Approved Electronic Platform” shall have the meaning provided in
Section 10.13(a).
          “Asset Sale” shall mean and include (x) the sale, transfer or other
disposition by the Borrower or any Subsidiary to any Person (other than the
Borrower or any Wholly-Owned Domestic Subsidiary of the Borrower) of any asset
of the Borrower or such Subsidiary (other than sales, transfers or other
dispositions (i) in the ordinary course of business of inventory and/or obsolete
or excess equipment, or (ii) pursuant to the Distribution Agreement) and/or
(y) the receipt by the Borrower or any Subsidiary of any insurance, condemnation
or similar proceeds in connection with a casualty or taking of any of its assets
in excess of the costs incurred by the Borrower and its Subsidiaries in respect
of such event and of repairing or replacing the assets so damaged, destroyed or
taken but in all cases only to the extent that the aggregate Net Cash Proceeds
of all such sales, transfers, dispositions and receipts in any fiscal year of
the Borrower are in excess of $5,000,000; provided, that so long as no Default
or Event of Default exists at the time of a proposed Excluded Asset Sale, such
Excluded Asset Sale shall not constitute an “Asset Sale”.
          “Assignment Agreement” shall mean the Assignment Agreement in the form
of Exhibit I (appropriately completed).
          “A Term Commitment” shall mean, with respect to each A Term Lender,
the amount set forth opposite such Lender’s name on Annex I hereto directly
below the column entitled “A Term Commitment”, as the same may be (x) reduced or
terminated pursuant to Sections 1.01, 2.02, 2.03, 3.03(A) and/or 8 or
(y) adjusted from time to time as a result of assignments to or from such Lender
pursuant to Sections 1.13 and/or 11.04(b).
          “A Term Facility” shall mean the Facility evidenced by the Total A
Term Commitment and/or A Term Loans.

74

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

 

          “A Term Lender” shall mean at any time each Lender with an A Term
Commitment and/or with outstanding A Term Loans.
          “A Term Loan” shall have the meaning provided in Section 1.01(a).
          “A Term Loan Maturity Date” shall mean March 31, 2014.
          “A Term Note” shall have the meaning provided in Section 1.05(a).
          “Authorized Officer” shall mean, with respect to (i) delivering
Notices of Borrowing, Notices of Conversion/Continuation, Letter of Credit
Requests and similar notices, any officer or officers of the Borrower that has
or have been authorized by the board of directors of the Borrower to deliver
such notices pursuant to this Agreement and that has or have appropriate
signature cards on file with the Administrative Agent; (ii) delivering financial
information and officer’s certificates pursuant to this Agreement, the chief
executive officer, the president, any vice president, the chief financial
officer, any treasurer or any controller of the Borrower; and (iii) any other
matter in connection with this Agreement or any other Credit Document, any
officer (or a person or persons so designated by any two officers) of the
Borrower.
          “Available Cash” shall mean, for any Reference Period, for the
Borrower and its Subsidiaries determined on a consolidated basis for such
Reference Period, an amount of cash equal to (I) the sum (which may be negative)
of (i) $40,000,000 plus (ii) Adjusted Consolidated EBITDA for such Reference
Period, minus (II) the product of (i) 1.4 times (ii) Consolidated Interest
Expense for such Reference Period, minus (III) the cash cost of any
extraordinary losses and of any losses on sales of assets (other than in the
ordinary course of business) during such Reference Period, in any such case to
the extent included in determining Adjusted Consolidated EBITDA for such
Reference Period, plus (IV) the cash amount of any extraordinary gains and the
cash amount realized on gains on sales of assets (other than in the ordinary
course of business) during such Reference Period, in any such case to the extent
deducted in determining Adjusted Consolidated EBITDA for such Reference Period.
Notwithstanding any other provisions hereof, for the avoidance of doubt, the
proceeds from any equity issuance shall not be counted as “Available Cash.”
          “Available Revolving Commitment” of any RF Lender at any time shall
mean its Percentage of the Total Revolving Commitment at such time.
          “B Term Facility” shall mean, collectively, the Initial B Term
Facility and the Delayed-Draw B Term Facility.
          “B Term Loan” shall mean, collectively, each Initial B Term Loan
(including, after any DDTL Conversion, each Delayed-Draw B Term Loan converted
into an Initial B Term Loan pursuant to such DDTL Conversion as contemplated by
Section 1.06(b)).
          “B Term Loan Lender” shall mean each Lender that provides a B Term
Loan pursuant hereto.

75

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

 

          “B Term Loan Maturity Date” shall mean March 31, 2015.
          “B Term Note” shall have the meaning provided in Section 1.05(a).
          “Bankruptcy Code” shall have the meaning provided in Section 8.05.
          “BAS” shall mean Banc of America Securities LLC in its individual
capacity and any successor thereto by merger, consolidation or otherwise.
          “Base Rate” at any time shall mean the higher of (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
          “Base Rate Loan” shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
          “BoA” shall mean Bank of America, N.A.
          “Borrower” shall have the meaning provided in the first paragraph of
this Agreement.
          “Borrower Common Stock” shall have the meaning provided in
Section 5.19.
          “Borrowing” shall mean the incurrence of (i) Swingline Loans by the
Borrower from the Swingline Lender on a given date or (ii) Base Rate Loans or
Eurodollar Loans pursuant to a single Facility by the Borrower from the Lenders
having Commitments (and/or outstanding Loans) with respect to such Facility on a
pro rata basis on a given date (or resulting from conversions on a given date),
having in the case of Eurodollar Loans the same Interest Period; provided that
(x) Base Rate Loans incurred pursuant to Section 1.10(b) shall be considered
part of any related Borrowing of Eurodollar Loans and (y) any Delayed-Draw B
Term Loans converted into Initial B Term Loans pursuant to a DDTL Conversion
shall be considered part of the related Borrowing of the then outstanding
Initial B Term Loans to which such newly-deemed Initial B Term Loans are added
as contemplated by Section 1.06(b); it being understood and agreed, however,
that for purposes of Section 1.08, the incurrence of Delayed-Draw B Term Loans
on a given date shall be deemed to be a “Borrowing” of such Loans.
          “Business” shall have the meaning provided in Section 7.01.
          “Business Day” shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in Dollar deposits in the interbank Eurodollar market.
          “Calculation Period” shall mean, with respect to any Permitted
Acquisition, any Significant Asset Sale or any other event expressly required to
be calculated on a Pro Forma

76

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

 

Basis pursuant to the terms of this Agreement, the Test Period most recently
ended prior to the date of such Permitted Acquisition, Significant Asset Sale or
other event.
          “Capital Lease” as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
          “Capitalized Lease Obligations” shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
          “Carrier Services” shall mean the resale of long distance services.
          “Carrier Services Company” shall mean any Subsidiary of the Borrower
that is an operating company engaged in the Carrier Services business.
          “Cash Equivalents” shall mean (a) marketable direct obligations issued
by, 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 one year from the date of acquisition; (b) Dollar
denominated certificates of deposit, time deposits, bankers acceptances,
eurodollar time deposits or overnight bank deposits having maturities of six
months or less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof having combined capital and surplus of not less than $350,000,000;
(c) commercial paper of an issuer rated at least A-2 by Standard & Poor’s
Ratings Services, a division of McGraw-Hill, Inc. (“S&P”) or P-2 by Moody’s
Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within 270 days from the date of acquisition; (d) repurchase obligations of any
Lender or of any commercial bank satisfying the requirements of clause (b) of
this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities (including tax-exempt debt obligations) with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A2 by Moody’s (or
publicly traded or open-ended bond funds that invest exclusively in such
securities); (f) securities with maturities of six months or less from the date
of acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this definition;
(g) Dollar denominated debt obligations of corporations maturing within 12
months from the date of the acquisition rated at least A by S&P or A2 by
Moody’s; (h) shares of bond funds rated at least A by S&P or A2 by Moody’s
having weighted average maturities of 12 months or less; and (i) shares of money
market mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (h) of this definition.

77

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

 

          “Cash Proceeds” shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Borrower and/or any Subsidiary from such Asset
Sale.
          “CERCLA” shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq.
          “Change of Control” shall mean at any time and for any reason (a) any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act or any successor provision) is or becomes the “beneficial owner”
(as defined in Sections 13(d) and 14(d) of the Exchange Act or any successor
provision) on a fully diluted basis of more than 35% of the total voting
interest in the capital stock of the Borrower or (ii) during any period of two
consecutive years individuals who at the beginning of such period constituted
the Board of Directors of the Borrower (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Borrower was approved by a vote of a majority of the
directors of the Borrower then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Borrower then in office or (b) a “change of control”
or similar event shall occur as provided in, on and after the execution,
delivery and/or incurrence thereof, any agreements or instruments relating to
any Permitted Junior Capital or any Permitted Refinancing Indebtedness in
respect of the foregoing or any other agreement governing or evidencing any
other material Indebtedness of the Borrower. In no event shall any change of
ownership in the Borrower in connection with the Transaction or a change in the
composition of the board of directors of the Borrower in connection with the
Transaction constitute a Change of Control.
          “Closing Date” shall mean March 31, 2008.
          “Closing Material Adverse Effect” means “Material Adverse Effect” as
defined in the Merger Agreement.
          “CoBank” shall mean CoBank, A.C.B. and any successor thereto by
merger, consolidation or otherwise.
          “Co-Documentation Agent” shall have the meaning provided in the first
paragraph of this Agreement.
          “Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
          “Collateral” shall mean all of the “Collateral” as defined in the
Pledge Agreement.

78

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

 

          “Collateral Agent” shall mean the Administrative Agent acting as
collateral agent for the Lenders.
          “Commitment” shall mean, with respect to each Lender, such Lender’s A
Term Commitment, Initial B Term Commitment, Delayed-Draw B Term Commitment,
and/or Revolving Commitment.
          “Commitment Commission” shall have the meaning provided in
Section 2.01(b).
          “Company” shall mean any corporation, limited liability company,
partnership or other business entity (or the adjectival form thereof, where
appropriate).
          “Compliance Certificate” shall have the meaning set forth in
Section 6.01(d).
          “Consolidated Capital Expenditures” shall mean, for any period, the
aggregate of all cash expenditures (including in all events all amounts borrowed
for the acquisition, repair, improvement, substitution or replacement of any
capital asset and all amounts expended under Capital Leases but excluding any
amount representing capitalized interest) by the Borrower and its Subsidiaries
during that period that, in conformity with GAAP, are or are required to be
capitalized or otherwise included in the property, plant or equipment reflected
in the consolidated balance sheet of the Borrower and its Subsidiaries; provided
that Consolidated Capital Expenditures shall in any event (x) exclude the
purchase price paid in cash in connection with the acquisition of any Person
(including through the purchase of all of the capital stock or other ownership
interests of such Person or through merger or consolidation) pursuant to a
Permitted Acquisition, whether or not allocable to property, plant and equipment
(but shall include all amounts expended after the closing of such Permitted
Acquisition which amounts otherwise would have been includable hereunder) and
(y) exclude amounts expended with insurance proceeds from the loss of or damage
to property, plant or equipment or other capitalized assets reflected in the
balance sheet of the Borrower and its Subsidiaries.
          “Consolidated Debt” shall mean, as of any date of determination,
without duplication, the sum of (i) the aggregate stated balance sheet amount of
all Indebtedness of the Borrower and its Subsidiaries on a consolidated basis as
determined in accordance with GAAP plus (ii) any Indebtedness for borrowed money
of any other Person as to which the Borrower and/or any of its Subsidiaries has
created a guarantee or other Contingent Obligation (but only to the extent of
such guarantee or other Contingent Obligation) less (iii) the remainder (if
positive) of (A) the aggregate amount of Unrestricted cash and Cash Equivalents
held by the Borrower and its Subsidiaries on such date minus (B) all overdue
accounts payable of the Borrower and its Subsidiaries on such date not paid in
accordance with past practices as in effect on the Closing Date; provided that,
for purposes of this definition (and notwithstanding any contrary treatment by
GAAP), any Disqualified Preferred Stock that is issued and outstanding shall be
treated as “Indebtedness”, with an amount equal to the greater of the
liquidation preference or the maximum mandatory fixed repurchase price of any
such Disqualified Preferred Stock deemed to be a component of “Consolidated
Debt”; provided, further, that for purposes of this definition, any Permitted
Junior Capital that is issued and outstanding pursuant to Section 7.04(p) herein
shall be deemed to be excluded from the calculation of “Consolidated Debt”.

79

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

 

          “Consolidated Interest Expense” shall mean, for any period, the sum of
(i) total interest expense (including the portion that is attributable to
Capital Leases in accordance with GAAP) of the Borrower and its Subsidiaries on
a consolidated basis with respect to all outstanding Indebtedness of the
Borrower and its Subsidiaries (including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers’ acceptance financing and without duplication net costs and/or net
benefits under Interest Rate Agreements, but excluding, however, all non-cash
interest expense to the extent included in total interest expense and the
amortization of deferred financing costs) plus (ii) the product of (x) the
amount of all cash Dividend requirements (whether or not declared or paid) on
Disqualified Preferred Stock paid, accrued or scheduled to be paid or accrued
during such period multiplied by (y) a fraction, the numerator of which is one
and the denominator of which is one minus the then current effective
consolidated Federal, state, local and foreign tax rate of the Borrower as
reflected in the audited consolidated financial statements of the Borrower for
its most recently completed fiscal year, which amounts described in this clause
(ii) shall be treated as interest expense of the Borrower and its Subsidiaries
for purposes of this definition regardless of the treatment of such amounts
under GAAP; provided that, for purposes of any determination of Consolidated
Interest Expense for any Test Period ending on or prior to December 31, 2008
(other than for purposes of the definition of “Available Cash”), Consolidated
Interest Expense for such Test Period shall be Consolidated Interest Expense for
that portion of such Test Period occurring on and after the Closing Date
multiplied by a fraction the numerator of which is 365 and the denominator of
which is the number of days elapsed from the Closing Date to the last day of
such Test Period (in each case taken as one accounting period); provided,
further, that for purposes of this definition, any dividends or interest, as
applicable, payable in kind on Permitted Junior Capital that is issued and
outstanding pursuant to Section 7.04(p) herein shall be deemed to be excluded
from the calculation of “Consolidated Interest Expense”.
          “Consolidated Net Income” shall mean, for any period, the net income
(or loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period (taken as a single accounting period) determined in conformity with GAAP
(after any deduction for minority interests); provided that there shall be
excluded from the calculation thereof (without duplication) (i) the income (or
loss) of any Person (other than Subsidiaries of the Borrower) in which any other
Person (other than the Borrower or any of its Subsidiaries) has a joint
interest, except to the extent of the amount of dividends or other distributions
actually paid to the Borrower or any of its Subsidiaries by such Person during
such period, (ii) except for determinations expressly required to be made on a
Pro Forma Basis, the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary of the Borrower or is merged into or consolidated with the
Borrower or any of its Subsidiaries or that Person’s assets are acquired by the
Borrower or any of its Subsidiaries and (iii) the income of any Subsidiary of
the Borrower to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary.
          “Consolidated Tangible Assets” shall mean, at any time, the total
consolidated assets of the Borrower and its Subsidiaries as same would be shown
on a consolidated balance

80

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

 

sheet of the Borrower prepared in accordance with GAAP; provided that all
intangible assets (including goodwill) shall be excluded in making such
determination.
          “Consolidated Tax Payments” shall mean, for any period, the sum of
(a) the provision for taxes based on income or profits which was deducted from
gross income in the computation of “Consolidated Net Income”, plus (b) without
duplication, the cash amount of any taxes actually paid in excess of the
corresponding provisions, minus (c) cash tax refunds actually received by the
Borrower and its Subsidiaries during such period.
          “Contingent Obligations” shall mean as to any Person any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations (“primary obligations”) of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof; provided, however, that
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated
maximum of the Contingent Obligation or, if none, the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if there is no stated or determinable amount of the primary
obligation, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
          “Credit Documents” shall mean this Agreement, the Notes, the
Intercompany Subordination Agreement, the Pledge Agreement, the Deposit
Agreement and the Subsidiary Guaranty.
          “Credit Event” shall mean the making of a Loan or the issuance of a
Letter of Credit.
          “Credit Party” shall mean the Borrower and each Subsidiary of the
Borrower party to a Credit Document.
          “Cumulative Distributable Cash” shall mean, as of any date of
determination, an amount equal to the remainder of (i) Available Cash for the
Reference Period most recently ended prior to such date less (ii) the aggregate
amount of Restricted Payments paid by the Borrower and its Subsidiaries in cash
(and, prior to the application thereof to the payment of any Dividends and
without duplication, the aggregate amount of cash paid over to the paying agent
by the Borrower for the payment of Dividends on Borrower Common Stock) during
such Reference Period (other than (w) Excluded Dividend Payments, (x) Restricted
Payments under clauses (iii) and (iv) of the definition thereof, (y) Restricted
Payments permitted to be made

81

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

 

under Section 7.09(a)(xv) and (z) the payment of Dividends by any Subsidiary of
the Borrower to the Borrower) less (iii) the aggregate amount of Investments
made by the Borrower and its Subsidiaries during such Reference Period in
reliance on Section 7.06(l) (determined at the time of the making of the
Investment and without regard to any write-downs or write-offs thereof and, in
the case of any Investment in the form of a contribution of a non-cash asset,
taking the fair market value of the asset so contributed (as determined in good
faith by the Board of Directors of the Borrower) plus (iv) the aggregate amount
of all cash returns on Investments previously made pursuant to Section 7.06(l)
(which cash return may be made by way of repayment of principal in the case of
loans and cash equity returns (whether as a distribution, dividend or
redemption) in the case of equity investments) and all non-cash returns in the
form of an asset distribution on Investments previously made pursuant to
Section 7.06(l) (taking the fair market value of such distributed asset (as
determined in good faith by the Board of Directors of the Borrower)), in any
such case as such aggregate amount has been then last certified by an Authorized
Officer by delivery of an officers’ certificate to the Administrative Agent;
provided that the aggregate amount of increases to “Cumulative Distributable
Cash” resulting from the application of this clause (iv) shall not exceed the
value of the returned investments (in the case of a non-cash return on
investment, taking the fair market value of the distributed asset (as determined
in good faith by the Board of Directors of the Borrower)) and, in no event,
shall the amount of the increases made to “Cumulative Distributable Cash” in
respect of any Investment exceed the amount of the respective Investment
previously made pursuant to Section 7.06(l) at the time of the making thereof
(in the case of a non-cash Investment, taking the fair market value of the
Investment (as determined in good faith by the Board of Directors of the
Borrower)). Notwithstanding any other provisions hereof, for the avoidance of
doubt, the proceeds from any equity issuance shall not be counted as “Cumulative
Distributable Cash.”
          “DDTF Commitment Commission” shall have the meaning provided in
Section 2.01(b).
          “DDTL Conversion” shall have the meaning provided in Section 1.06(b).
          “DDTL Conversion Date” shall have the meaning provided in
Section 1.06(b).
          “Default” shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
          “Defaulting Lender” shall mean any Lender with respect to which a
Lender Default is in effect.
          “Delayed-Draw B Term Commitment” shall mean, with respect to each
Delayed-Draw B Term Lender, the amount set forth opposite such Lender’s name on
Annex I hereto directly below the column entitled “Delayed-Draw B Term
Commitment”, as the same may be (x) reduced or terminated pursuant to
Sections 2.02, 2.03 and/or 8 or (y) adjusted from time to time as a result of
assignments to or from such Lender pursuant to Sections 1.13 and/or 11.04(b).
          “Delayed-Draw B Term Commitment Termination Date” shall mean the
earlier to occur of (x) the date occurring one year after the Closing Date and
(y) the date on which a Change of Control occurs.

82

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

 

          “Delayed-Draw B Term Facility” shall mean the Facility evidenced by
the Total Delayed-Draw B Term Commitment and/or Delayed-Draw B Term Loans.
          “Delayed-Draw B Term Lender” shall mean at any time each Lender with a
Delayed-Draw B Term Commitment and/or with outstanding Delayed-Draw B Term
Loans.
          “Delayed-Draw B Term Loan” shall have the meaning provided in
Section 1.01(c).
          “Deposit Agreement” shall mean that certain Deposit Agreement, dated
as of March 31, 2008, among Northern New England Telephone Operations LLC,
Telephone Operating Company of Vermont LLC and the Administrative Agent.
          “Disqualified Preferred Stock” shall mean any Preferred Stock of the
Borrower (other than Qualified Preferred Stock), all terms and conditions of
which (including covenants, defaults, remedies, redemption provisions, maturity,
voting provisions, dividend rate and cash-pay limitations), and the
documentation therefor, are on market terms for a placement of preferred equity
securities and are otherwise reasonably satisfactory to the Agents; provided,
that in any event, unless the Required Lenders otherwise expressly consent in
writing prior to the issuance thereof, the terms of any such Preferred Stock
shall not contain any mandatory redemption, repayment, sinking fund or similar
provision prior to the date occurring one year following the B Term Loan
Maturity Date (except upon the occurrence of a “change of control” or similar
event (including Asset Sales), in each case so long as the provisions relating
to a “change of control” or similar event included in the documentation and
agreements governing the Disqualified Preferred Stock provide that either
(I) the consent of the Required Lenders shall have been obtained or (II) the
Obligations shall have been paid in full in cash, in either case prior to the
satisfaction of such provisions).
          “Distribution” shall mean (i) the formation by Spinco of certain
Subsidiaries, (ii) the transfer of assets to Spinco and such Subsidiaries,
(iii) the distribution of Spinco equity securities and Spinco Senior Notes, and
(iv) the special distribution by Spinco, in each case, as described in the
Distribution Agreement.
          “Distribution Agreement” shall mean that certain Distribution
Agreement, dated as of January 15, 2007, by and between Verizon Communications
Inc. and Spinco, as amended by the amendments thereto dated March 30, 2007,
June 28, 2007, July 3, 2007, February 25, 2008 and March 31, 2008.
          “Dividend” shall mean, as to any Person, the declaration or payment of
any dividends (other than dividends payable solely in capital stock or other
equity interests of such Person) or return of any capital to, its stockholders,
members and/or other owners or the authorization or the making of any other
distribution, payment or delivery of property or cash to its stockholders,
members and/or other owners as such, or the redemption, retirement, purchase or
other acquisition, directly or indirectly, for a consideration, of any shares of
any class of its capital stock or other ownership interests now or hereafter
outstanding (or any warrants for or options or stock appreciation rights in
respect of any of such shares), or the setting aside of any funds for any of the
foregoing purposes, or the purchase or other acquisition by any Subsidiary

83

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

 

of such Person for consideration of any shares of any class of the capital stock
or other ownership interests of the Borrower or any other Subsidiary, as the
case may be, now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by such Person with respect to its capital stock or
other ownership interests).
          “Dividend Calculation Date” shall mean (i) in the case of a
declaration of any Dividend, the date of the declaration of such Dividend and
(ii) in the case of a payment of any Dividend, the Business Day preceding the
date of the payment of such Dividend.
          “Dividend Suspension Period” means any period (i) commencing on the
date of delivery of a Compliance Certificate showing that the Leverage Ratio
determined as of the last day of the then most recently ended Test Period is
greater than 5.00 to 1.00 (or, on the date upon which the Borrower shall have
failed to deliver a Compliance Certificate within the time period required by
Section 6.01(d)) and (ii) ending on the date of delivery of a Compliance
Certificate showing that the Leverage Ratio determined as of the last day of the
then most recently ended Test Period is equal to or less than 5.00 to 1.00.
          “Documents” shall mean and include (i) the Credit Documents, (ii) the
Merger Agreement and (iii) the Distribution Agreement.
          “Dollars” and the sign “$” shall each mean freely transferable lawful
money of the United States.
          “Domestic Subsidiary” of any Person shall mean any Subsidiary of such
Person incorporated or organized in the U.S.
          “Eligible Transferee” shall mean and include a commercial bank, a
financial institution, a fund that regularly invests in bank loans or any other
institutional “accredited investor” as defined in SEC Regulation D.
          “Environmental Claims” means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Borrower or any of its Subsidiaries solely in the ordinary course of such
Person’s business and not in response to any third party action or request of
any kind) or proceedings relating to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, “Claims”),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials arising from alleged injury or threat of injury to health,
safety or the environment.
          “Environmental Law” means any applicable federal, state, foreign or
local statute, law, rule, regulation, ordinance, code and rule of common law now
or hereafter in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree or judgment, relating to the

84

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

 

environment or Hazardous Materials, including, without limitation, CERCLA; RCRA;
the Federal Water Pollution Control Act, as amended, 33 U.S.C. § 1251 et seq.;
the Toxic Substances Control Act, 15 U.S.C. § 7401 et seq.; the Clean Air Act,
42 U.S.C. § 2601 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300F et seq.;
the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; and any applicable
state and local or foreign counterparts or equivalents.
          “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at the
date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
          “ERISA Affiliate” shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Borrower or a Subsidiary would be deemed to be
a “single employer” within the meaning of Section 414(b) or (c) of the Code and
with respect to Sections 412 and 4971 of the Code and Section 302 of ERISA,
Section 414(b), (c), (m) or (o) of the Code; provided that, solely for the
purposes of Section 6.07 of this Agreement, the term “ERISA Affiliate” shall not
include Verizon Communications Inc. or members of its controlled group under
Code § 414, except for Spinco.
          “Eurodollar Loans” shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
          “Eurodollar Rate” shall mean with respect to each Interest Period for
a Eurodollar Loan, the greater of (a) (i) in the case of B Term Loans and
Delayed-Draw B Term Loans, (X) from the Closing Date through and including
March 31, 2011, 3.00% and (Y) thereafter, 0.00% and (ii) in the case of A Term
Loans, Swingline Loans and RF Loans, 0.00% and (b) (i) the offered quotation to
first-class banks in the interbank Eurodollar market by the Administrative Agent
for dollar deposits of amounts in same day funds comparable to the outstanding
principal amount of the Eurodollar Loans for which an interest rate is then
being determined with maturities comparable to the Interest Period to be
applicable to such Eurodollar Loans, determined as of 10:00 A.M. (New York time)
on the date which is two Business Days prior to the commencement of such
Interest Period divided (and rounded upward to the next whole multiple of 1/16
of 1%) by (ii) a percentage equal to 100% minus the then stated maximum rate of
all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
          “Event of Default” shall have the meaning provided in Section 8.
          “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.
          “Excess Cash Flow” means, for any period of the Borrower, for the
Borrower and its Subsidiaries determined on a consolidated basis for such
period, an amount of cash equal to the sum of the following, without
duplication, (A) Adjusted Consolidated EBITDA for such period minus (B) to the
extent added in the calculation of Adjusted Consolidated EBITDA for

85

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

 

such period, the sum of (i) the amount of Consolidated Interest Expense paid in
cash during such period, (ii) the amount of scheduled principal repayments in
respect of Indebtedness of the Borrower and its Subsidiaries made in cash during
such period (other than (1) repayments of RF Loans or Swingline Loans and
(2) scheduled amortization payments made pursuant to Section 3.01 during such
period, except to the extent resulting in a corresponding reduction of the Total
Revolving Commitment in an amount equal to such repayment), (iii) the amount of
Consolidated Capital Expenditures to the extent permitted to be made and made in
cash during such period, (iv) Consolidated Tax Payments paid in cash during such
period, (v) the cash cost of any extraordinary losses and of any losses on sales
of assets (other than in the ordinary course of business) during such period,
(vi) the cash payments made during such period on account of non-cash losses or
non-cash charges accrued or expensed during or prior to such period,
(vii) non-cash pension plan contributions, (viii) cash expenses paid under the
Transition Services Agreement during such period and (ix) any cash Acquisition
Adjustment for such period, plus (C) the sum of (i) the cash amount of any
extraordinary gains, and the cash amount realized on gains on asset sales other
than in the ordinary course of business, during such period, in any such case to
the extent deducted in determining Adjusted Consolidated EBITDA for such period,
(ii) the cash received during such period on account of non-cash gains or
non-cash income excluded from Adjusted Consolidated EBITDA during or prior to
such period, (iii) the net amount of any non-cash losses (including
extraordinary losses and losses on asset sales) during such period, in each case
to the extent added in the calculation of Adjusted Consolidated EBITDA for such
period and to the extent not payable in cash in a future period, (iv) the amount
of non-cash charges, non-cash expense or other non-cash losses during such
period to the extent added in the calculation of Adjusted Consolidated EBITDA
for such period and to the extent that such charges are not payable in cash in a
future period, and (v) cash received by the Borrower or any of its Subsidiaries
not in the ordinary course of business and otherwise not included in the
determination of Adjusted Consolidated EBITDA (other than amounts received as
proceeds of Asset Sales or Permitted Junior Capital subject to
Section 3.03(A)(b) or (c)) including (a) the net cash proceeds from the issuance
or exercise of any Preferred Stock, common stock, warrants, options and other
equity interests or rights, (b) the amount of all foreign, United States, state
or local tax refunds, (b) pension plan reversions, (c) proceeds of insurance
(other than insurance proceeds constituting an Asset Sale), (d) judgments,
proceeds of settlements or other cash consideration of any kind in connection
with any cause of action, (e) condemnation awards (and payments in lieu
thereof), (f) indemnity payments and (g) purchase price adjustments, dividends
and other cash received in connection with any Permitted Acquisition or
Investment.
          “Excluded Asset Sale” shall mean any other sale or other disposition
of assets made after the third anniversary of the Closing Date and identified as
an “Excluded Asset Sale” by written notice to the Administrative Agent, so long
as the Net Cash Proceeds of such other sale or disposition (determined as if
such sale or disposition were an “Asset Sale”), when combined with the aggregate
Net Cash Proceeds (determined as provided in the preceding parenthetical) of all
other sales and dispositions identified as “Excluded Asset Sales” after the
Closing Date does not exceed $100,000,000.
          “Excluded Dividend Payments” shall have the meaning provided in
Section 7.09.

86

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

 

          “Excluded Intercompany Payables” shall mean (i) any intercompany
payable incurred in the ordinary course of business by the Borrower or any of
its Wholly-Owned Subsidiaries and owing to the Borrower or a Wholly-Owned
Subsidiary of the Borrower, as applicable, so long as such payable has not
remained outstanding for more than 90 days and (ii) any payable owing by a
Subsidiary of the Borrower to its parent company (if the Borrower or another
Subsidiary of the Borrower) arising in connection with the tax sharing
arrangements entered into among the Borrower and its Subsidiaries, so long as
the amount of such payable relates to the taxes attributable to the operations
of such Subsidiary.
          “Existing Credit Agreement” shall mean the Credit Agreement, dated as
of February 8, 2005, among the Borrower, the lenders from time to time party
thereto, Bank of America, N.A., as syndication agent, CoBank and General
Electric Capital Corporation, as co-documentation agents, and Deutsche Bank
Trust Company Americas, as administrative agent, as in effect on the Closing
Date (immediately prior to giving effect thereto).
          “Existing Letter of Credit” shall have the meaning provided in
Section 1A.01(d).
          “Existing 2010 Senior Notes” shall mean the Borrower’s 11-7/8% Senior
Notes due 2010, issued pursuant to the Existing 2010 Senior Notes Indenture, as
in effect on the Closing Date and as the same may be amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.
          “Existing 2010 Senior Notes Documents” shall mean the Existing 2010
Senior Notes, the Existing 2010 Senior Notes Indenture and all other documents
executed and delivered with respect to the Existing 2010 Senior Notes or
Existing 2010 Senior Notes Indenture, as in effect on the Closing Date and as
the same may be amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
          “Existing 2010 Senior Notes Indenture” shall mean the Indenture, dated
as of March 6, 2003, among the Borrower, as issuer, certain of its Subsidiaries,
as guarantors, and the trustee therefor, as in effect on the Closing Date and as
thereafter amended, modified or supplemented from time to time in accordance
with the requirements hereof and thereof.
          “Facility” shall mean any of the credit facilities established under
this Agreement, i.e., the A Term Facility, Initial B Term Facility, the
Delayed-Draw B Term Facility or the Revolving Facility; provided that after the
conversion of Delayed-Draw B Term Loans into Initial B Term Loans pursuant to a
DDTL Conversion, such newly converted Loans shall be deemed to be a part of the
Initial B Term Facility.
          “Facing Fee” shall have the meaning provided in Section 2.01(d).
          “FairPoint” shall have the meaning provided in the first paragraph of
this Agreement.
          “FairPoint Carrier Services” shall mean FairPoint Carrier Services,
Inc. (formerly known as FairPoint Communications Solutions, Inc.), a
Wholly-Owned Subsidiary of the Borrower.

87

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

 

          “FCC” shall mean the Federal Communications Commission and any
successor regulatory body.
          “Federal Funds Effective Rate” shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the immediately preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by the Administrative Agent from
three Federal Funds brokers of recognized standing selected by the
Administrative Agent.
          “Fees” shall mean all amounts payable pursuant to, or referred to in,
Section 2.01.
          “First-Tier Subsidiary” shall mean FairPoint Broadband, Inc., MJD
Ventures, Inc., MJD Services Corp., STE, FairPoint Carrier Services, Inc.,
FairPoint Logistics, Inc., Enhanced Communications of Northern New England Inc.
and Northern New England Telephone Operations LLC and any other Subsidiary first
acquired or created after the Closing Date that is a direct Subsidiary of the
Borrower. Notwithstanding the foregoing, for purposes of clarity, neither
Enhanced Communications of Northern New England Inc. nor Northern New England
Telephone Operations, LLC shall be Subsidiary Guarantors hereunder.
          “GAAP” shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 7, including defined terms as used therein, are subject (to the
extent provided therein) to Section 11.07(a).
          “Hazardous Materials” shall mean (a) petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation, and radon gas; (b) any chemicals, materials or substance
defined as or included in the definition of “hazardous substances,” “hazardous
waste,” “hazardous materials,” “extremely hazardous substances,” restricted
hazardous waste,” “toxic substances,” “toxic pollutants,” “contaminants,” or
“pollutants,” or words of similar import, under any applicable Environmental
Law; and (c) any other chemical, material or substance, the release of which is
prohibited, limited or regulated by any governmental authority.
          “Hedging Agreement” means any and all agreements or documents,
including Interest Rate Agreements, now existing or hereafter entered into by
Borrower or any of its Subsidiaries with a Lender that provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Borrower’s or any of its Subsidiaries’ exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security, or
currency valuations or commodity prices.
          “Indebtedness” of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which

88

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

 

in accordance with GAAP would be shown on the liability side of the balance
sheet of such Person, (iii) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such indebtedness has been
assumed (to the extent of the fair market value of such property), (v) all
Capitalized Lease Obligations of such Person, (vi) all obligations of such
Person to pay a specified purchase price for goods or services whether or not
delivered or accepted, i.e., take-or-pay and similar obligations, (vii) all net
obligations of such Person under Interest Rate Agreements and (viii) all
Contingent Obligations of such Person (other than Contingent Obligations arising
from the guaranty by such Person of the obligations of the Borrower and/or its
Subsidiaries to the extent such guaranteed obligations do not constitute
Indebtedness and are otherwise permitted hereunder); provided that Indebtedness
shall not include trade payables, accrued expenses and receipt of progress and
advance payments, in each case arising in the ordinary course of business.
          “Indemnified Person” shall have the meaning provided in
Section 11.01(a).
          “Initial B Term Commitment” shall mean, with respect to each Initial B
Term Lender, the amount set forth opposite such Lender’s name on Annex I hereto
directly below the column entitled “Initial B Term Commitment”, as the same may
be (x) reduced or terminated pursuant to Sections 1.01, 2.02, 2.03, 3.03(A)
and/or 8 or (y) adjusted from time to time as a result of assignments to or from
such Lender pursuant to Sections 1.13 and/or 11.04(b).
          “Initial B Term Facility” shall mean the Facility evidenced by the
Total Initial B Term Commitment and/or Initial B Term Loans.
          “Initial B Term Lender” shall mean at any time each Lender with an
Initial B Term Commitment and/or with outstanding Initial B Term Loans.
          “Initial B Term Loan” shall have the meaning provided in
Section 1.01(b); provided that after the conversion of Delayed-Draw B Term Loans
into Initial B Term Loans pursuant to a DDTL Conversion as contemplated by
Section 1.06(b), such converted Loans shall be deemed to be Initial B Term Loans
for all purposes of this Agreement and the other Credit Documents (other than
for purposes of Sections 1.01(b)(i) and Section 4.01(f) and 5.05(a) hereof).
          “Initial Term Loan Draw” shall mean an amount of Initial B Term Loans
and A Term Loans up to an amount equal to the estimated tax basis of Spinco to
be made available to Spinco on the Closing Date pursuant to
Sections 1.01(a)(i)(A) and 1.01(b)(i)(A).
          “Intercompany Debt” shall mean any Indebtedness, payables or other
obligations (other than Excluded Intercompany Payables), whether now existing or
hereafter incurred, owed by the Borrower or any Subsidiary of the Borrower to
the Borrower or any other Subsidiary of the Borrower.
          “Intercompany Loans” shall have the meaning provided in
Section 7.06(c).

89

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

 

          “Intercompany Note” shall mean a promissory note evidencing
Intercompany Loans (other than Excluded Intercompany Payables), in each case
duly executed and delivered substantially in the form of Exhibit K, with blanks
completed in conformity therewith (or such other form as may be approved by the
Administrative Agent or the Required Lenders).
          “Intercompany Subordination Agreement” shall have the meaning provided
in Section 4.01(g).
          “Interest Coverage Ratio” for any period shall mean the ratio of
(x) Adjusted Consolidated EBITDA to (y) Consolidated Interest Expense for such
period. For each full fiscal quarter end that occurs prior to the first
anniversary after the Closing Date, “Adjusted Consolidated EBITDA” for purposes
of clause (y) of this definition shall be calculated on an annualized basis such
that the Adjusted Consolidated EBITDA shall equal (i) for the first full fiscal
quarter after the Closing Date, the sum of the Consolidated Adjusted EBITDA
otherwise applicable for such period multiplied by four (4), (ii) for the second
full fiscal quarter after the Closing Date, the sum of the Consolidated Adjusted
EBITDA otherwise applicable for both the first and second full fiscal quarters
following the Closing Date multiplied by two (2) and (iii) for the third full
fiscal quarter following the Closing Date, the sum of the Consolidated Adjusted
EBITDA otherwise applicable for the first, second and third full fiscal quarters
following the Closing Date multiplied by four thirds (4/3).
          “Interest Period” with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
          “Interest Rate Agreement” shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates.
          “Intermediary Holding Company” shall mean each First-Tier Subsidiary
and any other Subsidiary first acquired or created after the Closing Date that
is (i) not an operating company (but that owns directly or indirectly one or
more operating companies) and (ii) not subject to regulatory restrictions on
borrowings or issuances of guaranties of indebtedness for borrowed money.
          “Investment” shall have the meaning provided in the preamble to
Section 7.06.
          “Joint Book Running Managers” shall mean Lehman, BAS and Morgan
Stanley Senior Funding, Inc., each in its capacity as a “Joint Book Running
Manager.”
          “Joint Lead Arrangers” shall mean Lehman and BAS, each in its capacity
as “Joint Lead Arranger.”
          “LCPI” shall mean Lehman Commercial Paper Inc.
          “Lehman” shall mean Lehman Brothers Inc. and its affiliates.

90

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

 

          “Lender” shall mean each financial institution listed on Annex I, as
well as any Person that becomes a “Lender” hereunder pursuant to Section 1.13 or
11.04(b).
          “Lender Default” shall mean (i) the wrongful refusal (which has not
been retracted) or failure of a Lender to make available its portion of any
incurrence of Loans or a reimbursement of an Unpaid Drawing or (ii) a Lender
having notified the Administrative Agent and/or the Borrower that it does not
intend to comply with the obligations under Section 1.01 or 1A.05, in
circumstances where such non-compliance will constitute a breach of such
Lender’s obligations under the respective Section.
          “Lender Register” shall have the meaning provided in Section 11.15.
          “Letter of Credit” shall have the meaning provided in
Section 1A.01(a).
          “Letter of Credit Fee” shall have the meaning provided in
Section 2.01(c).
          “Letter of Credit Issuer” shall mean (i) any RF Lender (or affiliate
of any RF Lender) which at the request of the Borrower and with the consent of
the Administrative Agent agrees, in such RF Lender’s (or RF Lender affiliate’s)
sole discretion, to become and to continue to be a Letter of Credit Issuer for
the purpose of issuing Letters of Credit pursuant to Section 1A, and (ii) with
respect to the Existing Letters of Credit, the Lender designated as the issuer
thereof on Annex VII shall be the Letter of Credit Issuer thereof.
          “Letter of Credit Outstandings” shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
          “Letter of Credit Request” shall have the meaning provided in
Section 1A.03(a).
          “Leverage Ratio” shall mean, at any date of determination, the ratio
of (x) Consolidated Debt on such date to (y) Adjusted Consolidated EBITDA. All
calculations of the Leverage Ratio shall be made on a Pro Forma Basis. For each
full fiscal quarter end that occurs prior to the first anniversary after the
Closing Date, “Adjusted Consolidated EBITDA” for purposes of clause (y) of this
definition shall be calculated on an annualized basis such that the Adjusted
Consolidated EBITDA shall equal (i) for the first full fiscal quarter after the
Closing Date, the sum of the Consolidated Adjusted EBITDA otherwise applicable
for such period multiplied by four (4), (ii) for the second full fiscal quarter
after the Closing Date, the sum of the Consolidated Adjusted EBITDA otherwise
applicable for both the first and second full fiscal quarters following the
Closing Date multiplied by two (2) and (iii) for the third full fiscal quarter
following the Closing Date, the sum of the Consolidated Adjusted EBITDA
otherwise applicable for the first, second and third full fiscal quarters
following the Closing Date multiplied by four thirds (4/3).
          “Lien” shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).

91

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

 

          “Loan” shall have the meaning provided in Section 1.01.
          “Majority Lenders” of any Facility shall mean those Non-Defaulting
Lenders which would constitute the Required Lenders under, and as defined in,
this Agreement if all outstanding Obligations of the other Facilities under this
Agreement were repaid in full and all Commitments with respect thereto were
terminated.
          “Mandatory Borrowing” shall have the meaning provided in
Section 1.01(f).
          “Margin Stock” shall have the meaning provided in Regulation U.
          “Material Adverse Effect” shall mean (i) any state of facts, change,
development, event, effect, condition or occurrence that, individually or in the
aggregate, has had or would be reasonably likely to have a materially adverse
effect on the business, assets, properties, liabilities or condition (financial
or otherwise) of the Borrower and its Subsidiaries, taken as a whole, after
giving effect to the Transaction, (ii) a material adverse effect on the rights
or remedies of the Agents or the Lenders under any Credit Document or (iii) a
material adverse effect on the ability of the Pledge Parties taken as a whole to
perform their obligations under the Credit Documents.
          “Material Subsidiary” shall mean, at any time, any Subsidiary having
gross assets at such time with a value of at least 5% of consolidated gross
assets of the Borrower and its Subsidiaries at such time and/or gross revenues
for the Test Period last ended of at least 5% of the consolidated gross revenues
of the Borrower and its Subsidiaries for such Test Period.
          “Maturity Date” shall mean (i) with respect to A Term Loans, the A
Term Loan Maturity Date, (ii) with respect to B Term Loans, the B Term Loan
Maturity Date, (iii) with respect to RF Loans, the RF Maturity Date and
(iv) with respect to Swingline Loans, the Swingline Expiry Date.
          “Maximum Swingline Amount” shall mean $10,000,000.
          “Merger” shall mean the merger of Spinco with and into FairPoint,
pursuant to the Merger Agreement.
          “Merger Agreement” shall mean that certain Agreement and Plan of
Merger, dated as of January 15, 2007, by and among Verizon Communications, Inc.,
Spinco and FairPoint, as amended by the amendments thereto dated April 20, 2007,
June 28, 2007, July 3, 2007, November 16, 2007 and February 25, 2008.
          “Minimum Borrowing Amount” shall mean (i) in the case of Term Loans,
$1,000,000, (ii) in the case of RF Loans (x) maintained as Base Rate Loans,
$500,000 and (y) maintained as Eurodollar Loans, $1,000,000 and (iii) in the
case of Swingline Loans, $100,000.
          “Minimum Liquidity Condition” shall mean, as of any date on which a
Dividend is to be paid on the Borrower Common Stock, the condition existing on
such date if (but only if) the sum of (i) Total Unutilized Revolving Commitment
on such date (determined on a pro forma basis after giving effect to any
incurrence of RF Loans and Swingline Loans on such date to

92

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

 

make such Dividend) plus (ii) the amount of Unrestricted cash and Cash
Equivalents of the Borrower and its Subsidiaries, is equal to or greater than
$25,000,000.
          “Moody’s” shall have the meaning provided in the definition of “Cash
Equivalents”.
          “Multiemployer Plan” shall mean any multiemployer plan as defined in
section 4001(a)(3) of ERISA which is contributed to by (or to which there is an
obligation to contribute of) the Borrower or any of its Subsidiaries or an ERISA
Affiliate and each such plan for the five year period immediately following the
latest date on which the Borrower, any such Subsidiary or ERISA Affiliate
contributed to or had an obligation to contribute to such plan.
          “Net Cash Proceeds” shall mean (i) with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net (without duplication) of expenses of sale
(including payment of principal, premium and interest of Indebtedness secured by
the assets the subject of the Asset Sale and required to be, and which is,
repaid under the terms thereof as a result of such Asset Sale), and incremental
taxes paid or payable as a result thereof and (ii) with respect to any issuance
of Preferred Stock or Indebtedness, the cash proceeds received by the Borrower
from such issuance net (without duplication) of underwriting discounts and
commissions, private placement and/or initial purchaser fees and other
reasonable fees and expenses associated therewith.
          “New Lending Office” shall mean the new lending office designated by a
Lender that is not a United States person (as defined in Section 3.05).
          “90%-Owned Subsidiary” shall mean (i) any Subsidiary to the extent at
least 90% of the capital stock or other ownership interests in such Subsidiary
is owned directly or indirectly by the Borrower and (ii) STE, to the extent at
least 87.5% of the capital stock of STE is owned directly or indirectly by the
Borrower.
          “Non-Defaulting Lender” shall mean a Lender that is not a Defaulting
Lender.
          “Non-Pledge Party Subsidiary” shall mean each Subsidiary of the
Borrower which is not a Pledge Party.
          “Non-Pledged Subsidiary” shall mean any Subsidiary that is not a
Pledged Subsidiary.
          “Non-Wholly Owned Entity” shall have the meaning provided in the
definition of “Permitted Acquisition”.
          “Non-Wholly Owned Subsidiary” shall mean, as to any Person, each
Subsidiary of such Person which is not a Wholly-Owned Subsidiary of such Person.
          “Northern New England Business” means that certain business comprising
the local exchange businesses and related landline activities of Verizon
Communications Inc. in Maine, New Hampshire and Vermont, as such term is used in
the Rule 424(b) Prospectus filed with the SEC in connection with the Merger.

93

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

 

          “Note” shall mean and include each A Term Note, each B Term Note, each
RF Note and the Swingline Note.
          “Notice of Borrowing” shall have the meaning provided in
Section 1.03(a).
          “Notice of Conversion/Continuation” shall have the meaning provided in
Section 1.06(a).
          “Notice Office” shall mean the office of the Administrative Agent at
745 Seventh Avenue, New York, New York 10019, Attn: Loan Portfolio Group, Fax:
(646) 834-4825 or such other office as the Administrative Agent may designate to
the Borrower in writing from time to time.
          “Obligations” shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
any Agent, any Letter of Credit Issuer, the Collateral Agent, the Swingline
Lender or any Lender pursuant to the terms of this Agreement or any other Credit
Document or any Hedging Agreement.
          “Parent Company” shall mean at any time each Intermediary Holding
Company and each other Subsidiary of the Borrower that, in either such case,
owns, directly or indirectly, the capital stock or other equity interests of any
Subsidiary that is a Telco or a Carrier Services Company.
          “Participant” shall have the meaning provided in Section 1A.05(a).
          “Patriot Act” shall mean the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)).
          “Payment Office” shall mean the office of the Administrative Agent at
745 7th Avenue, 16th Floor, New York, New York 10019, c/o Bank Loans — Agency,
or such other office as the Administrative Agent may designate to the Borrower
and the Lenders in writing from time to time.
          “PBGC” shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
          “Percentage” shall mean at any time for each RF Lender, the percentage
obtained by dividing such Lender’s Revolving Commitment by the Total Revolving
Commitment; provided that if the Total Revolving Commitment has been terminated,
the Percentage of each RF Lender shall be determined by dividing such RF
Lender’s Revolving Commitment immediately prior to such termination by the Total
Revolving Commitment immediately prior to such termination.
          “Permitted Acquired Debt” shall mean Indebtedness of a Subsidiary
acquired after the Closing Date pursuant to a Permitted Acquisition, to the
extent such Indebtedness was outstanding prior to the consummation of the
Permitted Acquisition and remains outstanding as Indebtedness of the respective
Subsidiary after giving effect thereto; provided that (i) such Indebtedness was
not incurred in connection with or in anticipation of such Permitted

94

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

 

Acquisition or the respective Person becoming Subsidiary of the Borrower,
(ii) such Indebtedness does not constitute Indebtedness of the Borrower or any
of its Subsidiaries other than the respective Subsidiary acquired pursuant to
the respective Permitted Acquisition and shall not be secured by any assets of
any Person other than assets of the Subsidiary so acquired serving as security
therefor at the time of the respective Permitted Acquisition, (iii) no Person
(other than the respective Subsidiary or a direct parent or a Subsidiary of the
respective Subsidiary to the extent such parent or Subsidiary is acquired in
connection with such Permitted Acquisition) shall have any liability (contingent
or otherwise) with respect to any Permitted Acquired Debt and (iv) the aggregate
principal amount of all such Indebtedness shall not exceed at any time
outstanding more than 10% of the Senior Consolidated Debt at such time.
          “Permitted Acquisition” shall mean the acquisition by the Borrower or
any of its Qualified Subsidiaries of assets constituting a business, division or
product line of any Person not already a Subsidiary of the Borrower or any of
its Qualified Subsidiaries or of 100% of the capital stock or other equity
interests of any such Person; provided that (A) the consideration paid by the
Borrower or such Qualified Subsidiary consists solely of cash (including
proceeds of RF Loans), the issuance of Borrower Common Stock, the issuance of
Indebtedness otherwise permitted in Section 7.04 and the assumption/acquisition
of any Permitted Acquired Debt relating to such business, division, product line
or Person which is permitted to remain outstanding in accordance with the
requirements of Section 7.04, (B) those acquisitions that are structured as
equity acquisitions shall be effected through a purchase of 100% of the capital
stock or other equity interests of such Person by the Borrower or such Qualified
Subsidiary or through a merger between such Person and Qualified Subsidiary of
the Borrower, so that after giving effect to such merger, the surviving entity
of such merger constitutes or continues to constitute a Qualified Subsidiary of
the Borrower, (C) in the case of the acquisition of 100% of the capital stock or
other equity interests of any Person, such Person (the “Acquired Person”) shall
own no capital stock or other equity interests of any other Person unless either
(x) the Acquired Person owns 100% of the capital stock or other equity interests
of such other Person or (y) if the Acquired Person owns capital stock or equity
interests in any other Person which is not a Wholly-Owned Subsidiary of the
Acquired Person (a “Non-Wholly Owned Entity”), (1) the Acquired Person shall not
have been created or established in contemplation of, or for purposes of, the
respective Permitted Acquisition, (2) any Non-Wholly Owned Entity of the
Acquired Person shall have been non-wholly-owned prior to the date of the
respective Permitted Acquisition and not created or established in contemplation
thereof and (3) such Acquired Person and/or its Wholly-Owned Subsidiaries own at
least 80% of the consolidated assets of such Acquired Person and its
Subsidiaries taken as a whole, (D) substantially all of the business, division
or product line acquired pursuant to the respective Permitted Acquisition, or
the business of the Acquired Person and its Subsidiaries taken as a whole, is in
the U.S., (E) the assets acquired, or the business of the Acquired Person and
its Subsidiaries, shall be in the Business, and (F) all requirements of
Section 7.02 applicable to Permitted Acquisitions are satisfied. Notwithstanding
anything to the contrary contained in the immediately preceding sentence, an
acquisition which does not otherwise meet the requirements set forth above in
the definition of “Permitted Acquisition” shall constitute a Permitted
Acquisition if, and to the extent, the Required Lenders agree in writing that
such acquisition shall constitute a Permitted Acquisition for purposes of this
Agreement.

95

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

 

          “Permitted Junior Capital” shall mean and include (i) any Permitted
Unsecured Debt, (ii) any Qualified Preferred Stock and (iii) any Disqualified
Preferred Stock.
          “Permitted Letters of Credit” shall mean letters of credit issued for
the benefit of the Borrower and reimbursement obligations with respect thereto
in the maximum aggregate stated amount of $20,000,000, from time to time
outstanding.
          “Permitted Liens” shall mean Liens described in clauses (a) through
(m), inclusive, of Section 7.03.
          “Permitted Refinancing Indebtedness” shall mean any Indebtedness of
the Borrower and/or any Subsidiary of the Borrower issued or given in exchange
for, or the proceeds of which are used to, extend, refinance, renew, replace,
substitute or refund any Indebtedness of such Person permitted pursuant to
Sections 7.04(f), (g), (j) or (n) not refinanced on the Closing Date or any
Indebtedness of such Person issued to so extend, refinance, renew, replace,
substitute or refund any such Indebtedness, so long as (a) such Indebtedness has
a weighted average life to maturity greater than or equal to the weighted
average life to maturity of the Indebtedness being refinanced, (b) such
refinancing or renewal does not (i) increase the amount of such Indebtedness
outstanding immediately prior to such refinancing or renewal or (ii) add
guarantors, obligors or security from that which applied to such Indebtedness
being refinanced or renewed, (c) such refinancing or renewal Indebtedness has
substantially the same (or, from the perspective of the Lenders, more favorable)
subordination provisions, if any, as applied to the Indebtedness being renewed
or refinanced, and (d) all other terms of such refinancing or renewal
(including, without limitation, with respect to the amortization schedules,
redemption provisions, maturities, covenants, defaults and remedies), taken as a
whole, are not less favorable to the respective borrower than those previously
existing with respect to the Indebtedness being refinancing or renewed.
          “Permitted Swap Transaction” shall mean a transfer of assets by the
Borrower or any of its Subsidiaries in which at least 85% of the consideration
received therefrom consists of assets (other than cash) that will be used in the
Business; provided that (x) the fair market value (as determined in good faith
by the board of directors of the Borrower) of the assets so transferred shall
not exceed the fair market value (determined as provided in the preceding
parenthetical) of the assets so received and (y) the fair market value (as
determined in good faith by the board of directors of the Borrower) of the
assets transferred pursuant to any such transaction shall not exceed
$150,000,000 (as shown on the consolidated balance sheet of the Borrower most
recently delivered (or required to be delivered) to the Administrative Agent
pursuant to Section 6.01(a) or (b), as the case may be); provided further that
the fair market value of such assets shall be determined by an independent
appraiser satisfactory to the Administrative Agent if in excess of $50,000,000.
          “Permitted Unsecured Debt” shall mean Indebtedness of the Borrower
that (a) is not secured by any assets of the Borrower or any other Person,
(b) is not guaranteed by a Subsidiary of the Borrower or any other Person,
(c) is subordinated in right of payment and priority to the Obligations on terms
and conditions reasonably satisfactory to the Required Lenders, (d) matures at
least a year and a day after the later of the RF Maturity Date or the B Term
Loan Maturity Date and (e) is issued subject to compliance with each of the
following

96

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

 

conditions: (i) calculations are made by the Borrower demonstrating compliance
with a Leverage Ratio of less than 4.00:1.00 for the Calculation Period most
recently ended prior to the date of such issuance of Permitted Unsecured Debt on
a Pro Forma Basis (determined as if the Permitted Unsecured Debt had been issued
on the first day of such Calculation Period and after giving effect to any
concurrent prepayment of Term Loans with a portion of the Net Cash Proceeds from
the issuance thereof), (ii) all of the Net Cash Proceeds from such issuance of
Permitted Unsecured Debt shall have been used (except to the extent of any
portion thereof applied to make a concurrent prepayment of Term Loans pursuant
to, and in accordance with the requirements of, Section 3.02) to (x) effect a
Permitted Acquisition in accordance with the requirements of Section 6.10 and/or
concurrently utilized by the Borrower (I) to make a voluntary prepayment of RF
Loans pursuant to, and in accordance with the requirements of, Section 3.02 in
an aggregate principal amount equal to the aggregate principal amount of RF
Loans actually incurred by the Borrower to finance a Permitted Acquisition
and/or (II) to redeem and/or refinance Permitted Unsecured Debt in an amount
equal to the principal amount or aggregate liquidation preference of or the Net
Cash Proceeds from, as the case may be, the Permitted Unsecured Debt actually
issued to finance Permitted Acquisitions (and pay related accrued interest and
dividends thereon, if any), in any such case within the 364-day period prior to
such issuance of Permitted Unsecured Debt, (y) redeem shares of Qualified
Preferred Stock or Disqualified Preferred Stock and/or repurchase or refinance
any Permitted Unsecured Debt pursuant to Section 7.09(a)(xiv) and/or (z), solely
to the extent of Permitted Unsecured Debt issued pursuant to Section 7.04(p),
pay expenses under the Transition Services Agreement and (iii) the Borrower
shall have furnished to the Administrative Agent a certificate from an
Authorized Officer certifying as to compliance with the requirements of
preceding clauses (i) and (ii) and containing the calculations required by
preceding clause (i). Notwithstanding any other provisions hereof, for avoidance
of doubt, the Spinco Senior Notes shall not be Permitted Unsecured Debt.
          “Person” shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
          “Plan” shall mean any pension plan as defined in Section 3(2) of ERISA
(other than a multiemployer plan as defined in Section 3(37) of ERISA), which is
maintained or contributed to by (or to which there is an obligation to
contribute of) the Borrower or any of its Subsidiaries or an ERISA Affiliate and
that is subject to Title IV of ERISA, and each such plan for the five year
period immediately following the latest date on which the Borrower, any such
Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed to or
had an obligation to contribute to such plan.
          “Pledge Agreement” shall have the meaning provided in
Section 4.01(a)(ii).
          “Pledge Party” shall mean the Borrower, each Subsidiary Guarantor and
each other Subsidiary of the Borrower party to the Pledge Agreement.
          “Pledged Subsidiary” shall mean (i) each Subsidiary the capital stock
or other equity interests of which is or are pledged pursuant to the Pledge
Agreement and (ii) Telephone Operating Company of Vermont LLC.

97

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

 

          “Post-Closing Period” shall have the meaning provided in
Section 6.10(a).
          “Preferred Stock” as applied to the capital stock of any Person, shall
mean capital stock of such Person (other than common stock of such Person) of
any class or classes (however designed) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of capital
stock of any other class of such Person, and shall include any Disqualified
Preferred Stock and any Qualified Preferred Stock.
          “Prime Lending Rate” shall mean the rate which LCPI announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. LCPI may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
          “Pro Forma Basis” shall mean, in connection with any calculation of
compliance with any financial covenant or financial term, the calculation
thereof after giving effect on a pro forma basis to (x) the incurrence of any
Indebtedness (other than revolving Indebtedness, except to the extent same is
incurred to refinance other outstanding Indebtedness or to finance a Permitted
Acquisition) after the first day of the relevant Test Period or Calculation
Period as if such Indebtedness had been incurred (and the proceeds thereof
applied) on the first day of the relevant Calculation Period, (y) the permanent
repayment of any Indebtedness (other than revolving Indebtedness) after the
first day of the relevant Test Period or Calculation Period as if such
Indebtedness had been retired or repaid on the first day of the relevant Test
Period or Calculation Period and (z) any Permitted Acquisition or Significant
Asset Sale then being consummated as well as any other Permitted Acquisition or
Significant Asset Sale consummated after the first day of the relevant Test
Period or Calculation Period, as the case may be, and on or prior to the date of
the respective Permitted Acquisition or Significant Asset Sale, as the case may
be, then being effected, with the following rules to apply in connection
therewith: (i) all Indebtedness (x) (other than revolving Indebtedness, except
to the extent same is incurred to refinance other outstanding Indebtedness or to
finance Permitted Acquisitions) incurred or issued after the first day of the
relevant Test Period or Calculation Period (whether incurred to finance a
Permitted Acquisition, to refinance Indebtedness or otherwise) shall be deemed
to have been incurred or issued (and the proceeds thereof applied) on the first
day of the respective Test Period or Calculation Period and remain outstanding
through the date of determination (and thereafter in the case of projections
pursuant to Section 6.10(a)) and (y) (other than revolving Indebtedness)
permanently retired or redeemed after the first day of the relevant Test Period
or Calculation Period shall be deemed to have been retired or redeemed on the
first day of the respective Calculation Period and remain retired through the
date of determination (and thereafter in the case of projections pursuant to
Section 6.10(a)); (ii) all Indebtedness assumed to be outstanding pursuant to
preceding clause (i) shall be deemed to have borne interest at (x) the rate
applicable thereto, in the case of fixed rate indebtedness or (y) the rates
which would have been applicable thereto during the respective period when same
was deemed outstanding, in the case of floating rate Indebtedness (although
interest expense with respect to any Indebtedness for periods while same was
actually outstanding during the respective period shall be calculated using the
actual rates applicable thereto while same was actually outstanding); and
(iii) in

98

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

 

making any determination of Adjusted Consolidated EBITDA on a Pro Forma Basis,
pro forma effect shall be given to any Permitted Acquisition or Significant
Asset Sale effected during the respective Calculation Period or Test Period (or
thereafter, as provided in Section 6.10, for determinations pursuant to
Section 6.10 only) as if same had occurred on the first day of the respective
Calculation Period or Test Period, as the case may be, taking into account, in
the case of any Permitted Acquisition, factually supportable and identifiable
cost savings and expenses which would otherwise be accounted for as an
adjustment pursuant to Article 11 of Regulation S-X under the Securities Act, as
if such cost savings or expenses were realized on the first day of the
respective Test Period or Calculation Period.
          “Pro Forma EBITDA Test” shall be satisfied if, after giving effect to
(x) any merger, consolidation, conveyance, sale or transfer referred to in
Section 7.02(a), (y) the creation or acquisition of a new Telco or Carrier
Services Company pursuant to a Permitted Acquisition the capital stock or other
equity interests of which is or are not to be pledged under the Pledge Agreement
or (z) an Investment in a Qualified Subsidiary of the type referred to in clause
(iii) of the definition thereof pursuant to Section 7.06(h), Adjusted
Consolidated EBITDA for the 12 months last ended at such time (determined, in
the case of the acquisition or creation of a new Telco or Carrier Services
Company pursuant to a Permitted Acquisition, on a Pro Forma Basis, as if such
Permitted Acquisition was consummated on the first day of such 12 month period
and taking account of the adjustments described in clause (iii) of the
definition of “Pro Forma Basis” for such period) attributable to all Non-Pledged
Subsidiaries does not exceed $25,000,000.
          “Projections” shall have the meaning provided in Section 5.09(f).
          “PUC” shall mean a public utility commission, public service
commission or any similar agency or commission.
          “Qualified Preferred Stock” shall mean any Preferred Stock of the
Borrower, the express terms of which (a) shall provide for no voting rights
(except for (x) voting rights required by applicable law and (y) limited
customary voting rights on fundamental matters such as mergers, consolidations,
sales of all or substantially all of the assets of the Borrower, or liquidations
involving the Borrower) or covenants (other than customary information covenants
and inspection rights) (b) shall provide that dividends thereon shall not be
required to be paid at any time (and to the extent) that such payment would be
prohibited by the terms of this Agreement or any other agreement of the Borrower
relating to outstanding indebtedness and (c) by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable), or
upon the happening of any event (including any Change of Control), cannot mature
and is not mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, and is not redeemable, or required to be repurchased, at the sole
option of the holder thereof (including, without limitation, upon the occurrence
of a Change of Control), in whole or in part, on or prior to the date that falls
one year and one day after the date on which all Obligations are repaid in full
and all Commitments have terminated or expired.
          “Qualified Subsidiary” shall mean and include (i) each Wholly-Owned
Domestic Subsidiary of the Borrower that is a Pledged Subsidiary, (ii) each
other Pledged Subsidiary (x) that is a Domestic Subsidiary and (y) in which the
Investments of cash, property, services and/or other assets are made in each
class of equity interests of such Subsidiary by the Pledged Parties,

99

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

 

on the one hand, and the other holders of such class of equity interests, on the
other hand, in amounts which are proportional to the respective equity
percentages of the Pledged Parties, on the one hand, and such other holders, on
the other hand, for each class of equity interests of such Subsidiary (as
reasonably determined by senior management of the Borrower) and (iii) each
Wholly-Owned Domestic Subsidiary of the Borrower that is a Telco or Carrier
Services Company, the capital stock or other equity interests of which are not
permitted to be pledged pursuant to the Pledge Agreement as a result of
applicable regulatory law.
          “RCRA” shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. § 6901 et seq.
          “Reference Period” shall mean, at any date, the period commencing on
the first day of the first full fiscal quarter of the Borrower ending after the
Closing Date and ending on the last day of the last fiscal quarter for which a
Compliance Certificate has been delivered by the Borrower prior to such date.
          “Refinanced Indebtedness” shall have the meaning provided in
Section 4.01(f)(i).
          “Refinancing” shall have the meaning provided in Section 4.01(f)(i).
          “Regulation D” shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
          “Regulation T” shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
          “Regulation U” shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
          “Regulation X” shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
          “Reinvestment Election” shall have the meaning provided in
Section 3.03(A)(b).
          “Reinvestment Notice” shall mean a written notice signed by an
Authorized Officer stating that the Borrower, in good faith, intends and expects
that the Borrower and its Subsidiaries will use all or a specified portion of
the Net Cash Proceeds of an Asset Sale to finance a Permitted Acquisition within
540 days following the consummation of such Asset Sale.
          “Reinvestment Prepayment Amount” shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrower and its Subsidiaries to finance Permitted Acquisitions.

100

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

 

          “Reinvestment Prepayment Date” shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Administrative Agent, on behalf of the Required Lenders, shall have delivered a
written termination notice to the Borrower; provided that such notice may only
be given while an Event of Default under Section 8.01 exists and (ii) the date
occurring 180 days after the date of the related Reinvestment Notice.
          “Replaced Lender” shall have the meaning provided in Section 1.13.
          “Replacement Lender” shall have the meaning provided in Section 1.13.
          “Reportable Event” shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under any subsection
of PBGC Regulation Section 4043.
          “Required Lenders” shall mean Non-Defaulting Lenders the sum of whose
outstanding A Term Loans, B Term Loans (and, if prior to the termination
thereof, Delayed-Draw B Term Commitments) and Revolving Commitments (or, after
the termination thereof, outstanding RF Loans and Percentages of (x) outstanding
Swingline Loans and (y) Letter of Credit Outstandings) constitute greater than
50% of the sum of (i) all outstanding A Term Loans and B Term Loans (and, if
prior to the termination thereof, Delayed-Draw B Term Commitments) of
Non-Defaulting Lenders and (ii) the Total Revolving Commitment less the
Revolving Commitments of all Defaulting Lenders (or after the termination
thereof, the sum of then total outstanding RF Loans of Non-Defaulting Lenders
and the aggregate Percentages of all Non-Defaulting Lenders of the total
outstanding Swingline Loans and Letter of Credit Outstandings at such time).
          “Required RF Lenders” shall mean those RF Lenders which are
Non-Defaulting Lenders and which would constitute the Required Lenders under,
and as defined in, this Agreement if all outstanding Term Loans were repaid in
full and the Total Delayed-Draw B Term Commitment had terminated in its
entirety.
          “Restricted” shall mean, when referring to cash or Cash Equivalents of
the Borrower or any of its Subsidiaries, that such cash or Cash Equivalents
(i) appear (or would be required to appear) as “restricted” on a consolidated
balance sheet of the Borrower or of any such Subsidiary, (ii) are subject to any
Lien in favor of any Person other than the Collateral Agent for the benefit of
the Secured Creditors or (iii) are not otherwise generally available for use by
the Borrower or any of its Subsidiaries.
          “Restricted Payment” shall mean, with respect to the Borrower or any
of its Subsidiaries, (i) any Dividend by such Person, (ii) any payment by such
Person on account of any Indebtedness that is subordinated in right of payment
to the Obligations (including, without limitation, any Permitted Junior Capital
and guaranties thereof but excluding cash interest thereon), (iii) any payment
by the Borrower or any of its Subsidiaries with respect to any Intercompany Debt
and (iv) the making of (or giving any notice in respect of) any voluntary or
optional payment or prepayment on or redemption, repurchase or acquisition for
value of (including, without limitation, by way of depositing with the trustee
with respect thereto or any other Person money or securities before due for the
purpose of paying when due), or any

101

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

 

prepayment, repurchase, redemption or acquisition for value as a result of any
asset sale or change of control or similar event of any Permitted Acquired Debt,
any Spinco Senior Notes or any Scheduled Existing Indebtedness.
          “Revolving Commitment” shall mean, with respect to each Lender, the
amount set forth opposite such Lender’s name in Annex I hereto directly below
the column entitled “Revolving Commitment,” as the same may be (x) reduced or
terminated from time to time pursuant to Section 2.02, 2.03 and/or 8 or
(y) adjusted from time to time as a result of assignments to or from such Lender
pursuant to Section 1.13 and/or 11.04.
          “Revolving Facility” shall mean the Facility evidenced by the Total
Revolving Commitment.
          “RF Commitment Commission” shall have the meaning provided in
Section 2.01(a).
          “RF Commitment Commission Rate” shall mean a per annum rate equal to
0.375%.
          “RF Lender” shall mean at any time each Lender with a Revolving
Commitment or with outstanding RF Loans.
          “RF Loan” shall have the meaning provided in Section 1.01(d).
          “RF Maturity Date” shall mean March 31, 2014.
          “RF Note” shall have the meaning provided in Section 1.05(a).
          “Sarbanes Oxley” shall mean the Sarbanes-Oxley Act of 2002, enacted on
July 30, 2002, as now or hereafter in effect, or any successor thereto, and the
rules related thereto.
          “Scheduled Existing Indebtedness” shall have the meaning provided in
Section 7.04(g).
          “SEC” shall have the meaning provided in Section 6.01(f).
          “SEC Regulation D” shall mean Regulation D as promulgated under the
Securities Act.
          “Second-Tier Holdco” shall mean any indirect Subsidiary of the
Borrower that is a holding company formed to hold the capital stock or other
equity interests of one or more Subsidiaries (i.e., is not an operating
company).
          “Section 1A.01(c) Arrangements” shall have the meaning provided in
Section 1A.01(c).
          “Section 3.05 Certificate” shall have the meaning provided in
Section 3.05(b)(ii).

102

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

 

          “Secured Creditor” shall mean and include any “Secured Creditor” as
defined in the Pledge Agreement.
          “Securities Act” shall mean the Securities Act of 1933, as amended, as
the same may be in effect from time to time.
          “Senior Consolidated Debt” shall mean, at any time, Consolidated Debt
at such time less the amount of any Disqualified Preferred Stock deemed to be
Consolidated Debt at such time pursuant to the definition thereof.
          “Senior Secured Consolidated Debt” shall mean, at any time, (i) Senior
Consolidated Debt at such time less (ii) any such Senior Consolidated Debt that
constitutes Indebtedness under the Existing 2010 Senior Notes Documents and/or
Permitted Refinancing Indebtedness incurred to refinance the foregoing less
(iii) the aggregate amount of Debt outstanding under the Spinco Senior Notes
less (iv) the aggregate amount of Permitted Unsecured Debt at such time.
          “Senior Secured Leverage Ratio” shall mean, at any date of
determination, the ratio of (x) Senior Secured Consolidated Debt on such date to
(y) Adjusted Consolidated EBITDA for the Test Period then or last ended. All
calculations of the Senior Secured Leverage Ratio shall be made on a Pro Forma
Basis.
          “Significant Asset Sale” shall mean each Asset Sale which generates
Net Cash Proceeds of at least $15,000,000.
          “Specified Representations” means (a) the representations made by
Spinco in the Merger Agreement that are material to the interests of the
Lenders, but only to the extent that FairPoint has the right to terminate the
Merger Agreement as a result of the breach of such representations, (b) the
representations made by FairPoint in the Merger Agreement that are material to
the interests of the Lenders, but only to the extent that Verizon has the right
to terminate the Merger Agreement as a result of the breach of such
representations and (c) the representations and warranties set forth in
Sections 5.02, 5.05(g), and 5.07.
          “Spin” shall have the meaning provided in Section 4.01(a)(ii).
          “Spinco” shall have the meaning provided in the first paragraph of
this Agreement.
          “Spinco Senior Notes” shall mean up to $551,000,000 of unguaranteed
senior notes issued by the Borrower.
          “Stated Amount” shall mean, with respect to any Letter of Credit at
any time, the maximum available to be drawn thereunder at such time (regardless
of whether any conditions for drawing could then be met).
          “STE” shall mean ST Enterprises, Ltd., a Kansas corporation.

103

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

 

          “Subsidiary” of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to “Subsidiary” shall mean a
Subsidiary of the Borrower.
          “Subsidiary Guarantors” shall mean each Subsidiary party to the
Subsidiary Guaranty.
          “Subsidiary Guaranty” shall have the meaning provided in
Section 4.01(a)(iii).
          “Super-Majority Lenders” shall mean Non-Defaulting Lenders the sum of
whose outstanding A Term Loans, B Term Loans (and, if prior to the termination
thereof, Delayed-Draw B Term Commitments) and Revolving Commitments (or, after
the termination thereof, outstanding RF Loans and Percentages of (x) outstanding
Swingline Loans and (y) Letter of Credit Outstandings) constitute at least 75%
of the sum of (i) all outstanding A Term Loans and B Term Loans (and, if prior
to the termination thereof, Delayed-Draw B Term Commitments) of Non-Defaulting
Lenders and (ii) the Total Revolving Commitment less the Revolving Commitments
of all Defaulting Lenders (or after the termination thereof, the sum of then
total outstanding RF Loans of Non-Defaulting Lenders and the aggregate
Percentages of all Non-Defaulting Lenders of the total outstanding Swingline
Loans and Letter of Credit Outstandings at such time).
          “Swingline Expiry Date” shall mean that date which is five Business
Days prior to the RF Maturity Date.
          “Swingline Lender” shall mean Lehman Commercial Paper Inc. in its
individual capacity.
          “Swingline Loan” shall have the meaning provided in Section 1.01(e).
          “Swingline Note” shall have the meaning provided in Section 1.05(a).
          “Syndication Agent” shall have the meaning provided in the first
paragraph of this Agreement.
          “Syndication Date” shall mean the earlier of (i) the 90th day
following the Closing Date and (ii) the date upon which the Administrative Agent
determines (and notifies the Borrower and the Lenders) that the primary
syndication (and resultant addition of Persons as Lenders pursuant to
Section 11.04(b)) has been completed.
          “S&P” shall have the meaning provided in the definition of “Cash
Equivalents”.
          “Taxes” shall have the meaning provided in Section 3.05(a).

104

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

 

          “Telco” shall mean any Subsidiary of the Borrower that is an operating
company.
          “Term Loans” shall mean, collectively, each A Term Loan, each B Term
Loan and each Delayed-Draw B Term Loan.
          “Test Period” shall mean each period of four consecutive fiscal
quarters then last ended, in each case taken as one accounting period.
          “Total A Term Commitment” shall mean the sum of the A Term Commitments
of each of the Lenders.
          “Total Commitment” shall mean, at any time, the sum of the Total A
Term Commitment, Total Initial B Term Commitment, the Total Delayed-Draw B Term
Commitment, and the Total Revolving Commitment at such time.
          “Total Delayed-Draw B Term Commitment” shall mean the sum of the
Delayed-Draw B Term Commitments of each of the Lenders.
          “Total Initial B Term Commitment” shall mean the sum of the Initial B
Term Commitments of each of the Lenders.
          “Total Revolving Commitment” shall mean, at any time, the sum of the
Revolving Commitments of each of the Lenders at such time.
          “Total Unutilized Revolving Commitment” shall mean, at any time,
(i) the Total Revolving Commitment at such time less (ii) the sum of (x) the
aggregate principal amount of all RF Loans and Swingline Loans at such time plus
(y) the Letter of Credit Outstandings at such time.
          “Transaction” shall mean (i) the entering into of the Credit Documents
and the incurrence of all Loans and the issuance of all Letters of Credit on the
Closing Date, (ii) the Distribution, (iii) the Merger, (iv) the Refinancing, and
(v) the payment of fees and expenses in connection with the foregoing.
          “Transition Services Agreement” shall mean the Transition Services
Agreement, dated as of January 15, 2007, by and among Verizon Information
Technologies LLC, Northern New England Telephone Operations Inc., Enhanced
Communications of Northern New England Inc. and the Borrower, as amended by the
amendment thereto dated March 31, 2008 and as may be further amended or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
          “Type” shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or Eurodollar Loan.
          “UCC” shall mean the Uniform Commercial Code as in effect from time to
time in New York.

105

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

 

          “Unfunded Current Liability” of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year, determined in accordance
with actuarial assumptions at such time consistent with Statement of Financial
Accounting Standards No. 87, exceeds the market value of the assets allocable
thereto.
          “Unpaid Drawing” shall have the meaning provided in Section 1A.04.
          “Unrestricted” shall mean, when referring to cash or Cash Equivalents
of the Borrower or any of its Subsidiaries, that such cash or Cash Equivalents
are not Restricted.
          “Unutilized Revolving Commitment” for any Lender with a Revolving
Commitment at any time shall mean the excess of (i) the Revolving Commitment of
such Lender at such time over (ii) the sum of (x) the aggregate outstanding
principal amount of RF Loans made by such Lender at such time plus (y) an amount
equal to such Lender’s Percentage of the Letters of Credit Outstandings at such
time.
          “U.S.” shall mean the United States of America and any state or
territory thereof or the District of Columbia.
          “Wholly-Owned Domestic Subsidiary” shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
          “Wholly-Owned Subsidiary” of any Person shall mean any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in such Subsidiary, other than directors’ qualifying shares, is owned directly
or indirectly by such Person; provided, however, that for purposes of the
definitions of “Asset Sale”, “Consolidated Net Income” and “Wholly-Owned
Domestic Subsidiary” and Sections 6.10, 7.06(c), (h) and (l), 90%-Owned
Subsidiaries that are Telcos or Carrier Services Companies shall be deemed to be
“Wholly-Owned Subsidiaries”.
          “Written” or “in writing” shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.
          SECTION 10. The Agents.
          10.01 Appointment.
          (a) Each Lender hereby irrevocably designates and appoints (x) LCPI as
Administrative Agent for such Lender (for purposes of this Section 10, the term
“Administrative Agent” shall mean LCPI in its capacities as Administrative Agent
and as Collateral Agent hereunder and pursuant to the Pledge Agreement), (y) BoA
as Syndication Agent for such Lender, and (z) Deutsche Bank Securities Inc. and
Morgan Stanley Senior Funding, Inc. as Co-Documentation Agents for such Lender,
each to act as specified herein and in the other Credit Documents, and each such
Lender hereby irrevocably authorizes the Administrative Agent, the Syndication
Agent and each Co-Documentation Agent to take such action on its behalf under
the provisions of this Agreement and the other Credit Documents and to exercise
such powers and

106

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

 

perform such duties as are expressly delegated to or required of the
Administrative Agent, the Syndication Agent or such Co-Documentation Agent, as
the case may be, by the terms of this Agreement and the other Credit Documents,
together with such other powers as are reasonably incidental thereto. Each of
the Agents may perform any of their respective duties under this Agreement, the
other Credit Documents and any other instruments and agreements referred to
herein or therein by or through its respective officers, directors, agents,
employees or affiliates (it being understood and agreed, for avoidance of doubt
and without limiting the generality of the foregoing, that the Administrative
Agent and/or Collateral Agent may perform any of its duties under the Pledge
Agreement by or through one or more of its affiliates).
          (b) The provisions of this Section 10 are solely for the benefit of
the Administrative Agent, the Syndication Agent, the Co-Documentation Agents and
the Lenders, and neither the Borrower nor any of its Subsidiaries shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, each of the
Administrative Agent, the Syndication Agent and each Co-Documentation Agent
shall act solely as agent for the Lenders, and none of the Administrative Agent,
the Syndication Agent or the Co-Documentation Agents assumes (and shall not be
deemed to have assumed) any obligation or relationship of agency or trust with
or for Borrower or any of its Subsidiaries.
          10.02 Nature of Duties.
          (a) No Agent shall have any duties or responsibilities except those
expressly set forth in this Agreement and in the other Credit Documents. Neither
any Agent nor any of its officers, directors, agents, employees or affiliates
shall be liable for any action taken or omitted by it hereunder or under any
other Credit Document or in connection herewith or therewith, unless caused by
its or their gross negligence or willful misconduct (as determined by a court of
competent jurisdiction in a final and non-appealable decision). The duties of
the Agents shall be mechanical and administrative in nature; no Agent shall have
by reason of this Agreement or any other Credit Document a fiduciary
relationship in respect of any Lender or the holder of any Note and nothing in
this Agreement or in any other Credit Document, expressed or implied, is
intended to or shall be so construed as to impose upon any Agent any obligations
in respect of this Agreement or any other Credit Document except as expressly
set forth herein or therein.
          (b) Notwithstanding any other provision of this Agreement or any
provision of any other Credit Document, each of the Joint Lead Arrangers and the
Joint Book Running Managers is named as such for recognition purposes only, and
in their respective capacities as such shall have no powers, duties,
responsibilities or liabilities with respect to this Agreement or the other
Credit Documents or the transactions contemplated hereby and thereby; it being
understood and agreed that each Joint Lead Arranger and each Joint Book Running
Manager shall be entitled to all indemnification and reimbursement rights in
favor of “Agents” as, and to the extent provided for under Sections 10.07 and
11.01. Without limitation of the foregoing, none of the Joint Lead Arrangers or
the Joint Book Running Managers shall, solely by reason of this Agreement or any
other Credit Documents, have any fiduciary relationship in respect of any Lender
or any other Person.

107

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

 

          10.03 Certain Rights of the Agents. The Agents shall have the right to
request instructions from the Required Lenders at any time. If any Agent shall
request instructions from the Required Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, such Agent shall be entitled to refrain from such act or taking such
action unless and until such Agent shall have received instructions from the
Required Lenders; and such Agent shall not incur liability to any Lender by
reason of so refraining. Without limiting the foregoing, neither any Lender nor
the holder of any Note shall have any right of action whatsoever against any
Agent or any of its employees, directors, officers, agents or affiliates as a
result of such Agent or such other person acting or refraining from acting
hereunder or under any other Credit Document in accordance with the instructions
of the Required Lenders.
          10.04 Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected (and shall have no liability to any Person) in relying,
upon any note, writing, resolution, notice, statement, certificate, telex,
teletype or telecopier message, cablegram, radiogram, order, telephone message
or other document or conversation that such Agent believed, in the absence of
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision), to be the proper Person,
and, with respect to all legal matters pertaining to this Agreement and any
other Credit Document and its duties hereunder and thereunder, upon advice of
counsel selected by such Agent (which may be counsel for the Credit Parties)
and, with respect to other matters, upon advice of independent public
accountants or other experts selected by it.
          10.05 Notice of Default, etc. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative Agent has actually received written notice
from a Lender or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a “notice of
default.” In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or
such other percent of Lenders or all Lenders, to the extent required by
Section 11.11(a)); provided that, unless and until the Administrative Agent
shall have received such directions, the Administrative 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 in the
best interests of the Lenders (as determined by the Administrative Agent in its
sole discretion).
          10.06 Nonreliance on Agents and Other Lenders. Independently and
without reliance upon any Agent, each Lender and the holder of each Note, to the
extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the creditworthiness of the Borrower and its
Subsidiaries and, except as expressly provided in this Agreement, no Agent shall
have any duty or responsibility, either initially or on a continuing basis, to
provide any Lender or the holder of any Note with any credit or other
information with respect thereto, whether coming into its

108

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

 

possession before the making of the Loans or at any time or times thereafter. No
Agent or their respective affiliates nor any of their respective officers,
directors, agents or employees shall be responsible to any Lender or the holder
of any Note for, or be required or have any duty to ascertain, inquire or verify
the accuracy of, (i) any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing delivered in
connection herewith, (ii) the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document, (iii) the financial condition of the
Borrower and any of its Subsidiaries, (iv) the performance or observance of any
of the terms, provisions or conditions of this Agreement or any other Credit
Document, (v) the satisfaction of any of the conditions precedent set forth in
Section 4 (other than the delivery of certain documents to the Administrative
Agent as provided in Section 4.01(a)), or (vi) the existence or possible
existence of any Default or Event of Default.
          10.07 Indemnification. (a) To the extent any Agent (or any affiliate
thereof) is not reimbursed and indemnified by the Borrower, the Lenders will
reimburse and indemnify such Agent (and any affiliate thereof) pro rata
(determined as if there were no Defaulting Lenders), for and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by such Agent (or any affiliate
thereof) in performing its respective duties hereunder or under any other Credit
Document or in any way relating to or arising out of this Agreement or any other
Credit Document; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent’s gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision).
          (b) Any Agent shall be fully justified in failing or refusing to take
any action hereunder and under any other Credit Document (except actions
expressly required to be taken by it hereunder or under the Credit Documents)
unless it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
          (c) The agreements in this Section 10.07 shall survive the payment of
all Obligations.
          10.08 Agents in their Individual Capacities. With respect to its
obligation to make Loans, or issue or participate in Letters of Credit, under
this Agreement, each Agent shall have the rights and powers specified herein for
a “Lender” and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term “Lender”, “Majority
Lenders”, “Required Lenders”, “Required RF Lender”, “Super-Majority Lenders”,
“holders of Notes” or any similar terms shall, unless the context clearly
otherwise indicates, include each Agent in its individual capacity. Each Agent
and its affiliates may accept deposits from, lend money to, and generally engage
in any kind of banking, investment banking, trust or other business with, or
provide debt financing, equity capital or other services (including financial
advisory services) to, any Credit Party or any Affiliate of any Credit Party (or
any Person engaged in a similar business with any Credit Party or any Affiliate
thereof) as if they were not performing the duties specified herein, and may
accept fees and other consideration

109

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

 

from any Credit Party or any Affiliate of any Credit Party for services in
connection with this Agreement and otherwise without having to account for the
same to the Lenders.
          10.09 Holders. The Administrative Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person or entity who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee, assignee or
endorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
          10.10 Resignation of the Agents. (a) The Administrative Agent may
resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents (including, without limitation, its functions
and duties as Collateral Agent) at any time by giving 15 Business Days’ prior
written notice to the Lenders and, unless a Default or an Event of Default under
Section 8.05 then exists, the Borrower. Any such resignation by an Agent
hereunder shall also constitute its resignation (if applicable) as a Letter of
Credit Issuer and Swingline Lender, in which case the resigning Agent (x) shall
not be required to issue any further Letters of Credit or make any additional
Swingline Loans hereunder and (y) shall maintain all of its rights as Letter of
Credit Issuer or Swingline Lender, as the case may be, with respect to any
Letter of Credit issued by it, or Swingline Loans made by it, prior to the date
of such resignation. Such resignation shall take effect upon the appointment of
a successor Administrative Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
          (b) Upon any such notice of resignation by the Administrative Agent,
the Required Lenders shall appoint a successor Administrative Agent hereunder
and/or under the other Credit Documents who shall be a commercial bank or trust
company acceptable to the Borrower, which acceptance shall not be unreasonably
withheld or delayed (provided that the Borrower’s approval shall not be required
if an Event of Default then exists).
          (c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with the
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed; provided that the Borrower’s consent shall not be required if an Event
of Default then exists), shall then appoint a successor Administrative Agent who
shall serve as Administrative Agent hereunder and/or under the other Credit
Documents until such time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided above.
          (d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 15th Business Day after the date such notice
of resignation was given by the Administrative Agent, the Administrative Agent’s
resignation shall become effective and the Required Lenders shall thereafter
perform all the duties of the Administrative Agent hereunder and/or under any
other Credit Document until such time, if any, as the Required Lenders appoint a
successor Administrative Agent as provided above.
          (e) The Syndication Agent may resign from the performance of all its
functions and duties hereunder and/or under the other Credit Documents at any
time by giving

110

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

 

five Business Days’ prior written notice to the Borrower and the Administrative
Agent. Such resignation shall take effect at the end of such five Business Day
period.
          (f) Either Co-Documentation Agent may resign from the performance of
all its functions and duties hereunder and/or under the other Credit Documents
at any time by giving five Business Days’ prior written notice to the Borrower
and the Administrative Agent. Such resignation shall take effect at the end of
such five Business Day period.
          (g) Upon a resignation of any Agent pursuant to this Section 10.10,
such Agent shall remain indemnified to the extent provided in this Agreement and
the other Credit Documents and the provisions of this Section 10 shall continue
in effect for the benefit of such Agent for all of its actions and inactions
while serving as such Agent.
          10.11 Collateral Matters. (a) Each Lender authorizes and directs the
Collateral Agent to enter into the Pledge Agreement for the benefit of the
Lenders and the other Secured Creditors. Each Lender hereby agrees, and each
holder of any Note or participant in Letters of Credit by the acceptance thereof
will be deemed to agree, that, except as otherwise set forth herein, any action
taken by the Required Lenders (or such greater number of Lenders as required by
Section 11.11) in accordance with the provisions of this Agreement or the Pledge
Agreement, and the exercise by the Required Lenders (or such greater number of
Lenders as required by Section 11.11) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders. The Collateral Agent is hereby
authorized on behalf of all of the Lenders, without the necessity of any notice
to or further consent from any Lender, from time to time prior to an Event of
Default, to take any action with respect to any Collateral or the Pledge
Agreement which may be necessary to perfect and maintain perfected the security
interest in and liens upon the Collateral granted pursuant to the Pledge
Agreement.
          (b) The Lenders hereby authorize the Collateral Agent, at its option
and in its discretion, to release any Lien granted to or held by the Collateral
Agent upon any Collateral (i) upon termination of the Commitments and payment
and satisfaction of all of the Obligations at any time arising under or in
respect of this Agreement or the Credit Documents or the transactions
contemplated hereby or thereby, (ii) constituting property being sold or
otherwise disposed of (to Persons other than the Borrower and its Subsidiaries)
upon the sale or other disposition thereof in compliance with Sections 7.02 and
11.11(a), (iii) if approved, authorized or ratified in writing by the Required
Lenders (or such other percent of Lenders or all of the Lenders hereunder, to
the extent required by Section 11.11) or (iv) as otherwise may be expressly
provided in the Pledge Agreement. Upon request by the Administrative Agent at
any time, the Lenders will confirm in writing the Collateral Agent’s authority
to release particular types or items of Collateral pursuant to this
Section 10.11.
          (c) The Collateral Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists or is owned
by the Borrower or any of its Subsidiaries or is cared for, protected or insured
or that the Liens granted to the Collateral Agent herein or pursuant hereto have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise or to
continue exercising at all or in any manner or under any duty of care,
disclosure or fidelity any of the

111

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

 

rights, authorities and powers granted or available to the Collateral Agent in
this Section 10.11 or in the Pledge Agreement, it being understood and agreed
that in respect of the Collateral, or any act, omission or event related
thereto, the Collateral Agent may act in any manner it may deem appropriate, in
its sole discretion, given the Collateral Agent’s own interest in the Collateral
as one of the Lenders and that the Collateral Agent shall have no duty or
liability whatsoever to the Lenders, except for its gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final and
non-appealable decision).
          10.12 Delivery of Information. The Administrative Agent shall not be
required to deliver to any Lender originals or copies of any documents,
instruments, notices, communications or other information received by the
Administrative Agent from the Borrower, any Subsidiary, the Required Lenders,
any Lender or any other Person under or in connection with this Agreement or any
other Credit Document except (i) as specifically provided in this Agreement or
any other Credit Document and (ii) as specifically requested from time to time
in writing by any Lender with respect to a specific document, instrument, notice
or other written communication received by and in the possession of the
Administrative Agent at the time of receipt of such request and then only in
accordance with such specific request.
          10.13 Posting of Approved Electronic Communications.
          (a) Each of the Lenders and the Borrower agree, and the Borrower shall
cause each other Credit Party to agree, that the Administrative Agent may, but
shall not be obligated to, make the Approved Electronic Communications available
to the Lenders by posting such Approved Electronic Communications on IntraLinks™
or a substantially similar electronic platform chosen by the Administrative
Agent and reasonably approved by the Borrower to be its electronic transmission
system (the “Approved Electronic Platform”).
          (b) Although the Approved Electronic Platform and its primary web
portal are secured with generally-applicable security procedures and policies
implemented or modified by the Administrative Agent from time to time
(including, as of the Closing Date, a dual firewall and a User ID/Password
Authorization System) and the Approved Electronic Platform is secured through a
single-user-per-deal authorization method whereby each user may access the
Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders
and the Borrower acknowledges and agrees, and the Borrower shall cause each
other Credit Party to acknowledge and agree, that the distribution of material
through an electronic medium is not necessarily secure and that there are
confidentiality and other risks associated with such distribution. In
consideration for the convenience and other benefits afforded by such
distribution and for the other consideration provided hereunder, the receipt and
sufficiency of which is hereby acknowledged, each of the Lenders and the
Borrower hereby approves, and the Borrower shall cause each other Credit Party
to approve, distribution of the Approved Electronic Communications through the
Approved Electronic Platform and understands and assumes the risks of such
distribution.
          (c) The Approved Electronic Platform and the Approved Electronic
Communications are provided “as is” and “as available”. None of the
Administrative Agent or any of its Affiliates or any of their respective
officers, directors, employees, agents, advisors or representatives (the “Agent
Affiliates”) warrants the accuracy, adequacy or completeness of the

112

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

 

Approved Electronic Communications or the Approved Electronic Platform and each
expressly disclaims liability for errors or omissions in the Approved Electronic
Platform and the Approved Electronic Communications. No warranty of any kind,
express, implied or statutory, including, without limitation, any warranty of
merchantability, fitness for a particular purpose, non-infringement of third
party rights or freedom from viruses or other code defects, is made by the Agent
Affiliates in connection with the Approved Electronic Platform or the Approved
Electronic Communications.
          (d) Each of the Lenders and the Borrower agree, and the Borrower shall
cause each other Credit Party to agree, that the Administrative Agent may, but
(except as may be required by applicable law) shall not be obligated to, store
the Approved Electronic Communications on the Approved Electronic Platform in
accordance with the Administrative Agent’s generally-applicable document
retention procedures and policies.
          SECTION 11. Miscellaneous.
          11.01 Payment of Expenses, etc. (a) FairPoint agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection with
the negotiation, preparation, execution and delivery of the Credit Documents and
the documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of Sullivan & Cromwell LLP and one local counsel in each relevant
jurisdiction); provided, that, in the event that the Closing Date does not
occur, the aggregate amount of such reimbursable expenses shall not exceed
$250,000; (ii) pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent, the Collateral Agent, each Letter of Credit Issuer, the
Swingline Lender and each of the Lenders in connection with the enforcement of
the Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and disbursements of
Sullivan & Cromwell LLP and one local counsel in each material jurisdiction);
(iii) pay and hold each of the Lenders (including in its capacity as Agent,
Collateral Agent, Swingline Lender and/or Letter of Credit Issuer) harmless from
and against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Lenders harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to such Lender) to pay such
taxes; and (iv) indemnify each Lender (including in its capacity as Agent,
Collateral Agent, Swingline Lender and/or Letter of Credit Issuer) and its
affiliates, and each officer, director, trustee, employee, representative,
advisor and agent thereof (each, an “Indemnified Person”) from and hold each of
them harmless against any and all losses, liabilities, claims, damages or
expenses incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of, (a) any investigation, litigation or other
proceeding (whether or not any Agent or any Lender is a party thereto and
whether or not any such investigation, litigation or other proceeding is between
or among any Agent, any Lender, any Credit Party or any third Person or
otherwise (except to the extent between or among any Lenders in their capacity
as such)) related to the entering into and/or performance of any Credit Document
or the use of the proceeds of any Loans hereunder or the Transaction or the
consummation of any transactions contemplated in any Credit Document, or (b) the
actual or alleged presence of Hazardous Materials in the air, surface water or
ground water or on the

113

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

 

surface or subsurface of any property owned or operated at any time by Borrower
or any of its Subsidiaries or the generation, storage, transportation, handling
or disposal of Hazardous Materials by the Borrower or any of its Subsidiaries at
any location, or the noncompliance by the Borrower or any of its Subsidiaries
with any Environmental Law or any Environmental Claim in connection with the
Borrower or any of its Subsidiaries or business or operations or any property
owned or operated at any time by the Borrower or any of its Subsidiaries,
including, in each case, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses (x) of an Indemnified Person, to the extent incurred
by reason of the gross negligence or willful misconduct of such Indemnified
Person as determined by a court of competent jurisdiction in a final and
non-appealable decision and (y) for purposes of clause (b) only and without
limiting the indemnity in favor of such Indemnified Persons for purposes of
clause (a), to the extent incurred by any affiliate of an Agent, Collateral
Agent, Swingline Lender and/or Letter of Credit Issuer and any officer,
director, trustee, employee, representative, advisor and agent of any such
affiliate, if such Indemnified Person is not involved, directly or indirectly,
in any of the transactions contemplated by the Credit Documents).
          (b) To the full extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnified Person, on any
theory of liability, for special, indirect, consequential or incidental damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof. No Indemnified Person shall be liable
for any damages arising from the use by unintended recipients of any information
or other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Credit Documents or the transactions contemplated hereby or thereby,
except to the extent the liability of such Indemnified Person results from such
Indemnified Person’s gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final and non-appealable decision).
          11.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special but not trust accounts) and any
other Indebtedness at any time held or owing by such Lender (including, without
limitation, by branches and agencies of such Lender wherever located) to or for
the credit or the account of any Pledge Party against and on account of the
Obligations and liabilities of such Pledge Party to such Lender under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations of such Pledge Party purchased by such
Lender pursuant to Section 11.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Lender shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured; provided, in no event shall any rights of
setoff set forth in this

114

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

 

Section 11.02 effective against Spinco or any of its Subsidiaries become
effective prior to the consummation of the Spin.
          11.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier, facsimile or cable communication) and
mailed, telegraphed, telexed, telecopied, faxed, cabled or delivered, if to the
Borrower at the address specified opposite its signature below, if to any
Lender, at its address specified for such Lender on Annex II hereto; or, at such
other address as shall be designated by any party in a written notice to the
other parties hereto. All such notices and communications shall be mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, and
shall be effective when received.
          11.04 Benefit of Agreement. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of each of the Lenders. Each Lender may at any time grant participations
in any of its rights hereunder or under any of the Notes to another financial
institution; provided that in the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant’s rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that the participant shall be entitled to the benefits of
Sections 1.10, 1A.06 and 3.05 of this Agreement to the extent that such Lender
would be entitled to such benefits if the participation had not been entered
into or sold, and; provided, further, that no Lender shall transfer, grant or
assign any participation under which the participant shall have rights to
approve any amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (i) extend the
final scheduled maturity of any Loan or Note in which such participant is
participating (it being understood that any waiver of any prepayment of, or the
method of any application of any prepayment to, the Loans shall not constitute
an extension of the Maturity Date therefor), or reduce the rate or extend the
time of payment of interest or Fees (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant’s participating interest
in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of a mandatory reduction in
the Total Commitment or a mandatory prepayment shall not constitute a change in
the terms of any Commitment), (ii) release all or substantially all of the
Collateral, (iii) release all or substantially all of the Subsidiaries from the
Subsidiary Guaranty (except as provided therein) or (iv) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement or any other Credit Document.
          (b) Notwithstanding the foregoing, (x) any Lender may assign all or a
portion of its outstanding Term Loans, Delayed-Draw Term Commitments and/or
Revolving Commitment and its rights and obligations hereunder (which assignment
does not have to be pro rata among the Facilities) to (i)(A) its parent company
and/or any affiliate of such Lender which is at least 50% owned by such Lender
or its parent company or (B) to one or more other Lenders

115

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

 

or any affiliate of any such other Lender which is at least 50% owned by such
other Lender or its parent company (provided that any fund that invests in loans
and is managed or advised by the same investment advisor of another fund which
is a Lender (or by an affiliate of such investment advisor) shall be treated as
an affiliate of such other Lender for the purposes of this sub-clause
(x)(i)(B)), or (ii) in the case of any Lender that is a fund that invests in
loans, any other fund that invests in loans and is managed and/or advised by the
same investment advisor of such Lender or by an Affiliate of such investment
advisor and (y) with the consent of the Administrative Agent and, if no Default
under Section 8.01 or 8.05 or Event of Default exists, the Borrower (which
consents shall not be unreasonably withheld or delayed), any Lender (or any
Lender together with one or more other related Lenders) may assign all, or if
less than all, a portion equal to at least (I) in the case of Revolving
Commitments, $5,000,000 in the aggregate for the assigning Lender or Lenders of
such outstanding Loans and Commitments and its or their related rights and
obligations hereunder and (II) in the case of Term Loans and Delayed-Draw B Term
Commitments, $2,500,000 in the aggregate for the assigning Lender or Lenders of
such outstanding Loans and/or Commitments and its or their related rights and
obligations hereunder, to one or more Eligible Transferees (treating any fund
that invests in loans and any other fund that invests in loans and is managed
and/or advised by the same investment advisor of such fund or by an Affiliate of
such investment advisor of such fund or by an Affiliate of such investment
advisor as a single Eligible Transferee). If any Lender so sells or assigns all
or a part of its rights hereunder or under the Notes, any reference in this
Agreement or the Notes to such assigning Lender shall thereafter refer to such
Lender and to the respective assignee to the extent of their respective
interests and the respective assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights and benefits as
it would if it were such assigning Lender. Each assignment pursuant to this
Section 11.04(b) shall be effected by the assigning Lender and the assignee
Lender executing an Assignment Agreement and giving the Administrative Agent
written notice thereof. At the time of any such assignment, (i) either the
assigning or the assignee Lender shall pay to the Administrative Agent a
nonrefundable assignment fee of $3,500 (provided that only one assignment fee
shall be payable in respect of any reasonably contemporaneous assignment by a
Lender to any one or more funds that invest in loans and are managed and/or
advised by the same investment advisor of such Lender or by an Affiliate of such
investment advisor), (ii) Annex I shall be deemed to be amended to reflect the
Commitments and Loans of the respective assignee (which shall result in a direct
reduction to the Commitment of the assigning Lender) and of the other Lenders,
and (iii) upon surrender of the old Notes the Borrower will, at its own expense,
issue new Notes to the respective assignee and to the assigning Lender in
conformity with the requirements of Section 1.05; provided, further, that such
transfer or assignment will become effective on the date set forth in the
respective assignment agreement as recorded by the Administrative Agent on the
Lender Register pursuant to Section 11.15. To the extent of any assignment
pursuant to this Section 11.04(b) to a Person which is not already a Lender
hereunder and which is not a United States Person (as such term is defined in
Section 7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Lender shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable, a Section 3.05
Certificate) described in Section 3.05(b)(ii). To the extent that an assignment
pursuant to this Section 11.04(b) would, at the time of such assignment, result
in increased costs under Section 1.10 or 3.05 from those being charged by the
respective assigning Lender prior to such assignment, then the Borrower shall
not be obligated to pay such increased costs (although the Borrower shall be
obligated to

116

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

 

pay any other increased costs of the type described above resulting from changes
after the date of the respective assignment). Nothing in this clause (b) shall
prevent or prohibit any Lender from pledging its Notes or Loans to a Federal
Reserve Bank in support of borrowings made by such Lender from such Federal
Reserve Bank and, with prior written notice to the Administrative Agent, any
Lender which is a fund may pledge all or any portion of its Notes or Loans to
its trustee or to a collateral agent or to another creditor providing credit or
credit support to such Lender in support of its obligations to such trustee,
such collateral agent or a holder of, or any other representative of a holder
of, such obligations, or such other creditor, as the case may be; provided that
no such pledge shall release the transferor Lender from any of its obligations
hereunder or substitute any such trustee, collateral agent or other assignee for
such Lender as a party hereto.
          (c) Notwithstanding any other provisions of this Section 11.04, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower or any of its Subsidiaries to
(i) file a registration statement with the SEC, (ii) qualify the Loans under the
“Blue Sky” laws of any State or (iii) integrate such transfer or assignment with
a separate securities offering of securities of the Borrower or any of its
Subsidiaries.
          (d) Each Lender initially party to this Agreement hereby represents,
and each Person that became a Lender pursuant to an assignment permitted by this
Section 11 will, upon its becoming party to this Agreement, represent that it is
an Eligible Transferee which makes or invests in loans in the ordinary course
and that it will make or acquire Loans for its own account in the ordinary
course; provided that subject to the preceding clauses (a) and (b), the
disposition of any promissory notes or other evidences of or interests in
Indebtedness held by such Lender shall at all times be within its exclusive
control.
          (e) Any Lender which assigns all of its Commitments and/or Obligations
hereunder in accordance with Section 11.04(b) shall cease to constitute a
“Lender” hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 1.10, 1.11, 1A.06, 3.05,
11.01 and 11.06), which shall survive as to such assigning Lender.
          11.05 No Waiver; Remedies Cumulative. No failure or delay on the part
of the Administrative Agent or any Lender in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between any Credit Party and the Administrative Agent or any Lender shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights and remedies herein expressly
provided are cumulative and not exclusive of any rights or remedies which the
Administrative Agent or any Lender would otherwise have. No notice to or demand
on any Credit Party in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Administrative Agent or the Lenders to any other or
further action in any circumstances without notice or demand.

117

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

 

          11.06 Payments Pro Rata. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of any Pledge Party
in respect of any Obligations of such Pledge Party hereunder, it shall
distribute such payment to the Lenders (other than any Lender that has expressly
waived its right to receive its pro rata share thereof) pro rata based upon
their respective shares, if any, of the Obligations with respect to which such
payment was received.
          (b) Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker’s lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations of the respective Pledge Party to such Lenders in such amount as
shall result in a proportional participation by all of the Lenders in such
amount; provided that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
          (c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 11.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.
          11.07 Calculations; Computations. (a) The financial statements to be
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Lenders); provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Sections 7.11 and 7.12, including definitions used therein, shall utilize
accounting principles and policies in effect at the time of the preparation of,
and in conformity with those used to prepare, the December 31, 2007 historical
financial statements of the Borrower delivered to the Lenders pursuant to
Section 5.09(b), and (y) if at any time such computations utilize accounting
principles different from those utilized in the financial statements furnished
to the Lenders, such financial statements shall be accompanied by reconciliation
work-sheets.
          (b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days (365-366 days in the
case of interest on Base Rate Loans).
          11.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury
Trial. (a) This Agreement and the other Credit Documents and the rights and
obligations of the parties hereunder and thereunder shall be construed in
accordance with and be governed by the law of the State of New York. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York sitting in the

118

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

 

Borough of Manhattan or of the United States for the Southern District of New
York, and, by execution and delivery of this Agreement, each Credit Party hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts. Each
Credit Party further irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to each Credit
Party located outside New York City and by hand delivery to each Credit Party
located within New York City, at its address for notices pursuant to
Section 11.03, such service to become effective 30 days after such mailing.
Nothing herein shall affect the right of the Administrative Agent or any Lender
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any Credit Party in any other
jurisdiction.
          (b) Each Credit Party hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
          (c) Each of the parties to this Agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this Agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.
          11.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
          11.10 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
          11.11 Amendment or Waiver. (a) Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Lenders; provided that no
such change, waiver, discharge or termination shall, without the consent of each
Lender (other than a Defaulting Lender) (with Obligations being directly
affected thereby in the case of the following clauses (i) and (vii)), (i) extend
the final scheduled maturity of any Loan or Note (it being understood that any
waiver of any prepayment of, or the method of application of any prepayment to,
the Loans shall not constitute any such extension), or reduce the rate or extend
the time of payment of interest (other than as a result of waiving the
applicability of any post-default increase in interest rates) or Fees, or reduce
(or forgive) the principal amount thereof, or increase the Commitment of any
Lender over the amount thereof then in effect (it being understood that waivers
or modifications of conditions precedent, covenants, Defaults or Events of
Default or of a mandatory reduction in the Total Commitment shall not constitute
an increase of the Commitment of any Lender, and that an

119

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

 

increase in the available portion of any Commitment of any Lender shall not
constitute an increase in the Commitment of such Lender), (ii) amend, modify or
waive any provision of this Section 11.11 (except for technical amendments with
respect to additional extensions of credit pursuant to this Agreement which
afford the protections to such additional extensions of credit of the type
provided to the A Term Loans, Initial B Term Loans and the Revolving Commitments
on the Closing Date), (iii) reduce the percentage specified in, or (except to
give effect to any additional facilities hereunder) otherwise modify, either the
definition of Required Lenders or Super-Majority Lenders, (iv) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement, (v) release all or substantially all of the Collateral,
(vi) release all or substantially all of the Subsidiaries from the Subsidiary
Guaranty (except as provided therein) or (vii) alter the requirements set forth
in Sections 3.03(B) and 11.06 that certain payments with respect to Loans under
a given Facility be applied or distributed on a pro rata basis to the holders of
such Loans; provided, further that no such change, waiver, discharge or
termination shall, without the consent of Non-Defaulting Lenders representing at
least 95% of the sum of (X) all outstanding Term Loans (and if prior to the
termination thereof, Delayed-Draw B Term Commitments) of Non-Defaulting Lenders
and (Y) the Revolving Commitments of all Non-Defaulting Lenders (or after the
termination thereof, outstanding RF Loans and the aggregate Percentages of the
total outstanding Swingline Loans and Letter of Credit Outstandings of all
Non-Defaulting Lenders at such time), (1) amend or modify the definition of
“Change of Control” or any provision of Section 8.10 or (2) waive an Event of
Default under Section 8.10; provided, further, that no such change, waiver,
discharge or termination shall, (t) except in cases where additional extensions
of term loans and/or revolving loans are being afforded substantially the same
treatment afforded to the Term Loans and RF Loans pursuant to this Agreement as
originally in effect, without the consent of the Majority Lenders of each
Facility which is being allocated a lesser prepayment, repayment or commitment
reduction as a result of the actions described below, alter the required
application of any prepayments or repayments (or commitment reduction), as
between the various Facilities, pursuant to Sections 3.03(A)(b) through (g) and
Section 2.03(c), as applicable (it being understood, however, that the Required
Lenders may waive, in whole or in part, any such prepayment, repayment or
commitment reduction, so long as the application, as amongst the various
Facilities, of any such prepayment, repayment or commitment reduction which is
still required to be made is not altered), (u) without the consent of the
Majority Lenders of the respective Facility affected thereby, amend the
definition of Majority Lenders (it being understood that, with the consent of
the Required Lenders, additional extensions of credit pursuant to this Agreement
may be included in the determination of the Majority Lenders on substantially
the same basis as the extensions of Loans and Commitments are included on the
Closing Date), (v) without the written consent of the Required RF Lenders,
amend, modify or waive any condition precedent set forth in Section 4.02 with
respect to the making of RF Loans, Swingline Loans or the issuance of Letters of
Credit, (w) without the consent of each Letter of Credit Issuer, amend, modify
or waive any provision of Section 1A or alter its rights or obligations with
respect to Letters of Credit, (x) without the consent of the Swingline Lender,
alter its rights or obligations with respect to Swingline Loans, (y) without the
consent of the respective Agent, amend, modify or waive any provision of
Section 11 as same applies to such Agent or any other provision as same relates
to the rights or obligations of such Agent and (z) without the consent of the
Collateral Agent, amend, modify or waive any provision relating to the rights or
obligations of the Collateral Agent.

120

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

 

          (b) If, in connection with any proposed change, waiver, discharge or
termination of or to any of the provisions of this Agreement as contemplated by
clauses (i) through (vii), inclusive, of the first proviso to Section 11.11(a)
or clause (1) or (2) of the second proviso to Section 11.11(a), the consent of
the Super-Majority Lenders has been obtained, but the consent of one or more of
such other Lenders whose consent is required is not obtained, then the Borrower
shall have the right, so long as all non-consenting Lenders whose individual
consent is required are treated as described in either clause (A) or (B) below,
to either (A) replace each such non-consenting Lender or Lenders (or, at the
option of the Borrower if the respective Lender’s consent is required with
respect to less than all Facilities of Loans (or related Commitments), to
replace only the Revolving Commitments and/or Loans of the respective
non-consenting Lender which gave rise to the need to obtain such Lender’s
individual consent) with one or more Replacement Lenders pursuant to Section
1.13 so long as at the time of such replacement, each such Replacement Lender
consents to the proposed change, waiver, discharge or termination or
(B) terminate such non-consenting Lender’s Revolving Commitment (if such
Lender’s consent is required as a result of its Revolving Commitment) and/or
repay each Facility of outstanding Loans of such Lender which gave rise to the
need to obtain such Lender’s consent and/or cash collateralize its applicable
Percentage of the Letter of Credit of Outstandings, in accordance with
Section 3.03(A)(a), provided that, unless the Commitments which are terminated
and Loans which are repaid pursuant to preceding clause (B) are immediately
replaced in full at such time through the addition of new Lenders or the
increase of the Commitments and/or outstanding Loans of existing Lenders (who in
each case must specifically consent thereto), then in the case of any action
pursuant to preceding clause (B), the Required Lenders (determined after giving
effect to the proposed action) shall specifically consent thereto, provided,
further, that the Borrower shall not have the right to replace a Lender,
terminate its Commitment or repay its Loans solely as a result of the exercise
of such Lender’s rights (and the withholding of any required consent by such
Lender) pursuant to the third proviso to Section 11.11(a).
          11.12 Survival. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 3.05, 10.06 or 11.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
          11.13 Domicile of Loans. Each Lender may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Lender; provided that the Borrower shall not be responsible for costs arising
under Section 1.10 or 3.05 resulting from any such transfer (other than a
transfer pursuant to Section 1.12) to the extent not otherwise applicable to
such Lender prior to such transfer.
          11.14 Confidentiality. (a) Each of the Lenders agrees that it will use
its best efforts not to disclose without the prior consent of the Borrower
(other than to its employees, trustees, auditors, counsel or other professional
advisors, to affiliates or to another Lender if the Lender or such Lender’s
holding or parent company in its sole discretion determines that any such party
should have access to such information) any information with respect to the
Borrower or any of its Subsidiaries which is furnished pursuant to any Credit
Document and which is designated by the Borrower or the Borrower to the Lenders
in writing as confidential; provided, that any Lender may disclose any such
information (a) as has become generally available to the

121

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

 

public, (b) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal regulatory body having or
claiming to have jurisdiction over such Lender or to the Federal Reserve Board
or the Federal Deposit Insurance Corporation or similar organizations (whether
in the United States or elsewhere) or their successors or to the National
Association of Insurance Commissioners, (c) as may be required or appropriate in
response to any summons or subpoena or in connection with any litigation (notice
of which will be promptly sent to the Borrower to the extent permitted by law),
(d) in order to comply with any law, order, regulation or ruling applicable to
such Lender, and (e) to any pledgee referred to in Section 11.04(b) or any
prospective transferee that is an Eligible Transferee that is acceptable to the
Borrower in connection with any contemplated transfer of any of the Notes or any
interest therein by such Lender to the extent that such prospective transferee
is notified of the confidentiality requirements relating thereto. No Lender
shall be obligated or required to return any materials furnished by the Borrower
or any Subsidiary. The Borrower hereby agrees that the failure of a Lender to
comply with the provisions of this Section 11.14 shall not relieve the Credit
Parties of any of their obligations to such Lender under this Agreement and the
other Credit Documents.
          (b) The Borrower hereby represents and acknowledges that, to the best
of its knowledge, neither any Lender, nor any employees or agents of, or other
persons affiliated with, any Lender, have directly or indirectly made or
provided any statement (oral or written) to the Borrower or to any of its
employees or agents, or other persons affiliated with or related to the Borrower
(or, so far as the Borrower is aware, to any other person), as to the potential
tax consequences of the Transaction.
          11.15 Lender Register. The Borrower hereby designates the
Administrative Agent to serve as the Borrower’s agent, solely for purposes of
this Section 11.15, to maintain a register (the “Lender Register”) on which it
will record the Commitments from time to time of each of the Lenders, the Loans
made by each of the Lenders and each repayment in respect of the principal
amount of the Loans of each of the Lenders. Failure to make any such
recordation, or any error in such recordation shall not affect the Borrower’s
obligations in respect of such Loans. With respect to any Lender, the transfer
of the Commitments or Loans of such Lender and the rights to the principal of,
and interest on, such Loans or any Loan made pursuant to such Commitments shall
be effective on the date set forth in the respective assignment agreement as
recorded on the Lender Register maintained by the Administrative Agent with
respect to ownership of such Commitments and Loans and prior to such recordation
all amounts owing to the transferor with respect to such Commitments and Loans
shall remain owing to the transferor. The registration of assignment or transfer
of all or part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Lender Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment Agreement
pursuant to Section 11.04(b). The Borrower agrees to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this
Section 11.15 (but excluding such losses, claims, liabilities or liabilities
incurred by reason of the Administrative Agent’s gross negligence or willful
misconduct).

122

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

 

          11.16 Patriot Act Notice. Each Lender that is subject to the Patriot
Act, the Letter of Credit Issuer and the Administrative Agent (for itself and
not on behalf of any Lender) hereby notify the Borrower that, pursuant to the
requirements of the Patriot Act, each of them is required to obtain, verify and
record information that identifies each Credit Party, which information includes
the name and address of such Credit Party and other information that will allow
such Lender, the Letter of Credit Issuer or the Administrative Agent, as
applicable, to identify such Credit Party in accordance with the Patriot Act.

123

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

 

          IN WITNESS WHEREOF, each of the counterparties hereto has caused a
counterpart to this Agreement to be duly executed and delivered as of the date
first written above.

            BORROWERS

FAIRPOINT COMMUNICATIONS, INC.
      By:   /s/ Thomas Griffin         Name:   Thomas Griffin        Title:  
Treasurer        NORTHERN NEW ENGLAND SPINCO INC.
      By:   /s/ J. Goodwin Bennett         Name:   J. Goodwin Bennett       
Title:   Vice President and Assistant Secretary        ADMINISTRATIVE AGENT

LEHMAN COMMERCIAL PAPER INC.
      By:   /s/ William J. Hughes         Name:   WILLIAM J. HUGHES       
Title:   MANAGING DIRECTOR        LENDERS

LEHMAN COMMERCIAL PAPER INC.
      By:   /s/ William J. Hughes         Name:   WILLIAM J. HUGHES       
Title:   MANAGING DIRECTOR   

CREDIT AGREEMENT

 

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

 

         

            BANK OF AMERICA, N.A. , as Syndication Agent and Lender
      By:   /s/ Lisa M. Webster         Name:   Lisa M. Webster        Title:  
Vice President        DEUTSCHE BANK SECURITIES INC.,
as Co-Documentation Agent
      By:   /s/ Paul Vasilopoulos         Name:   Paul Vasilopoulos       
Title:   Managing Director        MORGAN STANLEY SENIOR FUNDING, INC. ,
as Co-Documentation Agent
      By:   /s/ Stephen King         Name:   Stephen B. King        Title:   VP 
      WACHOVIA BANK, NATIONAL ASSOCIATION
      By:   /s/ Jeffrey R. Gignac         Name:   Jeffrey R. Gignac       
Title:   Vice President        MERRILL LYNCH CAPITAL CORPORATION
      By:   /s/ Scott [illegible]         Name:   Scott [illegible]       
Title:   Vice President   

CREDIT AGREEMENT

 

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

 

         

            DEUTSCHE BANK TRUST COMPANY
AMERICAS
      By:   /s/ Anca Trifan         Name:   Anca Trifan        Title:  
Director        DEUTSCHE BANK SECURITIES INC.,
as Co-Documentation Agent
      By:   /s/ Yvonne Tilden         Name:   Yvonne Tilden        Title:  
Director        MORGAN STANLEY BANK
      By:   /s/ Steven King         Name:   Steven B. King        Title:  
Authorized Signatory        COBANK, ACB
      By:   /s/ Gloria Hancock         Name:   Gloria Hancock        Title:  
Vice President   

CREDIT AGREEMENT