Document:

exv10w1

 

Exhibit 10.1

EXECUTION COPY

 

SHARE EXCHANGE AGREEMENT

BY AND AMONG

WINDSTREAM CORPORATION,

WELSH, CARSON, ANDERSON & STOWE VIII, L.P.,

WELSH, CARSON, ANDERSON & STOWE IX, L.P.,

WCAS CAPITAL PARTNERS III, L.P.,

REGATTA HOLDING I, L.P.,

REGATTA HOLDING II, L.P.

AND

REGATTA HOLDING III, L.P.

 

 

DATED AS OF DECEMBER 12, 2006

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	ARTICLE I EXCHANGE
	 	 	3	 
	 
	 	 	 	 
	1.1 Transfer of Holdings Shares
	 	 	3	 
	1.2 Transfer of Exchanged WIN Shares
	 	 	3	 
	1.3 Closing
	 	 	3	 
	1.4 Deliveries by WIN
	 	 	3	 
	1.5 Deliveries by the WCAS Subs
	 	 	4	 
	1.6 Net Working Capital Calculation and Adjustment
	 	 	5	 
	1.7 Second Closing
	 	 	7	 
	 
	 	 	 	 
	ARTICLE II RELATED MATTERS
	 	 	9	 
	 
	 	 	 	 
	2.1 Ancillary Agreements
	 	 	9	 
	2.2 Intercompany Obligations; Affiliate Agreements; Certain Other
Intercompany Matters
	 	 	10	 
	2.3 Resignations
	 	 	11	 
	2.4 Guaranties
	 	 	11	 
	2.5 Related Transactions
	 	 	12	 
	2.6 Coordination of Holdings Financing and Debt Exchange
	 	 	12	 
	2.7 Private Letter Rulings
	 	 	14	 
	2.8 Termination of Forward Underwriting Commitment
	 	 	15	 
	2.9 Repayment of Division Indebtedness
	 	 	15	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF WIN
	 	 	15	 
	 
	 	 	 	 
	3.1 Authority
	 	 	15	 
	3.2 Title to Holdings Shares
	 	 	16	 
	3.3 Organization and Qualification
	 	 	16	 
	3.4 Capitalization of Holdings
	 	 	16	 
	3.5 Capitalization of the Division Subsidiaries
	 	 	17	 
	3.6 No Violation; Consents and Approvals
	 	 	17	 
	3.7 Financial Statements; Undisclosed Liabilities
	 	 	18	 
	3.8 Absence of Certain Changes or Events
	 	 	19	 
	3.9 Title to Personal Property
	 	 	19	 
	3.10 Title to Real Property
	 	 	19	 
	3.11 Intellectual Property
	 	 	20	 
	3.12 Litigation
	 	 	21	 
	3.13 Employee Benefit Plans
	 	 	21	 
	3.14 Taxes
	 	 	23	 
	3.15 Material Contracts and Commitments
	 	 	25	 
	3.16 Compliance with Laws
	 	 	27	 
	3.17 Labor Matters
	 	 	28	 

i

 

	 	 	 	 	 
	 	 	Page	 
	 
	3.18 Environmental.
	 	 	28	 
	3.19 Transactions with Affiliates
	 	 	29	 
	3.20 Insurance
	 	 	29	 
	3.21 Assets of the Division
	 	 	29	 
	3.22 Newly Formed Entity
	 	 	30	 
	3.23 Brokers
	 	 	30	 
	3.24 NO OTHER REPRESENTATIONS
	 	 	30	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENTS AND WCAS SUBS
	 	 	30	 
	 
	 	 	 	 
	4.1 Organization; Authority
	 	 	30	 
	4.2 No Violation; Consents and Approvals
	 	 	31	 
	4.3 Title to Exchanged WIN Shares
	 	 	31	 
	4.4 Litigation
	 	 	32	 
	4.5 Capitalization of Division
	 	 	32	 
	4.6 Acquisition of the Holdings Shares for Investment
	 	 	33	 
	4.7 Investigation by the WCAS Subs
	 	 	33	 
	4.8 Brokers
	 	 	33	 
	 
	 	 	 	 
	ARTICLE V COVENANTS OF THE PARTIES
	 	 	33	 
	 
	 	 	 	 
	5.1 Conduct of the Division
	 	 	33	 
	5.2 Access to Information Prior to the Closing; Confidentiality; Cooperation
	 	 	36	 
	5.3 Commercially Reasonable Efforts
	 	 	37	 
	5.4 Consents
	 	 	37	 
	5.5 Antitrust Notification
	 	 	38	 
	5.6 Public Announcements
	 	 	39	 
	5.7 Supplemental Disclosure; Notice
	 	 	39	 
	5.8 Records
	 	 	40	 
	5.9 Financial Statements
	 	 	41	 
	 
	 	 	 	 
	ARTICLE VI ADDITIONAL AGREEMENTS
	 	 	41	 
	 
	 	 	 	 
	6.1 Continuing Division Employees; Employee Benefits
	 	 	41	 
	6.2 Certain Agreements
	 	 	44	 
	6.3 Workers’ Compensation
	 	 	44	 
	6.4 Use of WIN’s Name and Logo
	 	 	44	 
	6.5 ALLTEL NonSolicitation
	 	 	45	 
	6.6 Termination of WCAS Securityholders Agreement
	 	 	45	 
	 
	 	 	 	 
	ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
	 	 	46	 
	 
	 	 	 	 
	7.1 Mutual Conditions
	 	 	46	 
	7.2 Conditions to the Obligations of WIN
	 	 	47	 
	7.3 Conditions to the Obligations of the WCAS Subs
	 	 	48	 

ii

 

	 	 	 	 	 
	 	 	Page	 
	 
	ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
	 	 	49	 
	 
	 	 	 	 
	8.1 Termination
	 	 	49	 
	8.2 Procedure and Effect of Termination
	 	 	50	 
	8.3 Amendment and Modification
	 	 	51	 
	 
	 	 	 	 
	ARTICLE IX SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
	 	 	51	 
	 
	 	 	 	 
	9.1 Survival of Representations
	 	 	51	 
	9.2 WIN’s Agreement to Indemnify
	 	 	52	 
	9.3 WIN’s Limitation of Liability
	 	 	52	 
	9.4 WCAS Subs’ Agreement to Indemnify
	 	 	52	 
	9.5 WCAS Subs’ Limitation of Liability
	 	 	53	 
	9.6 Procedures for Indemnification With Respect to ThirdParty Claims
	 	 	53	 
	9.7 Other Claims
	 	 	54	 
	9.8 Sole Remedy
	 	 	55	 
	9.9 Exclusivity of Tax Sharing Agreement
	 	 	56	 
	 
	 	 	 	 
	ARTICLE X MISCELLANEOUS
	 	 	56	 
	 
	 	 	 	 
	10.1 Fees and Expenses
	 	 	56	 
	10.2 Further Assurances
	 	 	56	 
	10.3 Notices
	 	 	56	 
	10.4 Entire Agreement
	 	 	57	 
	10.5 Severability
	 	 	58	 
	10.6 Binding Effect; Assignment
	 	 	58	 
	10.7 No ThirdParty Beneficiaries
	 	 	58	 
	10.8 Counterparts
	 	 	58	 
	10.9 Interpretation
	 	 	58	 
	10.10 Jurisdiction; Waiver of Jury Trial
	 	 	58	 
	10.11 Governing Law
	 	 	59	 
	10.12 Specific Performance
	 	 	59	 
	10.13 Waivers
	 	 	59	 
	10.14 The Parents’ Guaranty
	 	 	60	 
	10.15 Defined Terms
	 	 	60	 
	 
	 	 	 	 
	SCHEDULE I RESTRUCTURING TRANSACTIONS
	 	 	I-1	 
	 
	 	 	 	 
	SCHEDULE II EXCHANGED WIN SHARES
	 	II-1	 
	 
	 	 	 	 
	EXHIBIT A PUBLISHING AGREEMENT
	 	 	A-1	 
	EXHIBIT B WIN TRANSITION SERVICES AGREEMENT
	 	 	B-1	 
	EXHIBIT C BILLING AGREEMENT
	 	 	C-1	 
	EXHIBIT D1 LEASE AGREEMENT (MATTHEWS, NORTH CAROLINA)
	 	 	D1-1	 
	EXHIBIT D2 LEASE AGREEMENT (LINCOLN, NEBRASKA)
	 	 	D2-1	 
	EXHIBIT E TAX SHARING AGREEMENT
	 	 	E-1	 
	EXHIBIT F HOLDINGS EXCHANGE DEBT
	 	 	F-1	 

iii

 

SHARE EXCHANGE AGREEMENT

     SHARE EXCHANGE AGREEMENT, dated as of December 12, 2006 (the “Agreement”), by and
among WINDSTREAM CORPORATION, a Delaware corporation (“WIN”), WELSH, CARSON, ANDERSON &
STOWE VIII, L.P., a Delaware limited partnership, WELSH, CARSON, ANDERSON & STOWE IX, L.P., a
Delaware limited partnership, WCAS CAPITAL PARTNERS III, L.P., a Delaware limited partnership (each
a “Parent” and collectively, the “Parents”), REGATTA HOLDING I, L.P., a Delaware
limited partnership, REGATTA HOLDING II, L.P., a Delaware limited partnership, REGATTA HOLDING III,
L.P., a Delaware limited partnership (each a “WCAS Sub” and together the “WCAS
Subs”).

RECITALS

     WHEREAS, WIN is engaged through its indirect wholly-owned subsidiary, Windstream Yellow Pages,
Inc., an Ohio corporation (the “Company”), and the Company’s wholly-owned subsidiary,
Windstream Listing Management, Inc., a Pennsylvania corporation (“WLM” and, together with
the Company, the “Division Subsidiaries”) in the business of designing, publishing,
marketing, distributing and selling advertising in print, Internet and other directories in the
United States (the “Division”);

     WHEREAS, WIN is the record and beneficial owner of all of the shares of common stock, par
value $0.01 per share (the “Holdings Shares”), of Windstream Regatta Holdings, Inc., a
Delaware corporation newly formed by WIN for the purpose of engaging in the transactions
contemplated hereby (“Holdings”);

     WHEREAS, at or prior to the Closing (as defined herein) of the transactions contemplated
hereby, (i) pursuant to certain restructuring transactions, as more fully described in Schedule
I attached hereto, including one or more distributions and/or contributions of assets and/or
equity securities, WIN will contribute, or cause to be contributed, to the Division Subsidiaries
certain assets and liabilities related to the business of the Division and will cause the stock of
the Company to be held directly by WIN (collectively, the “Restructuring Transactions”),
and (ii) WIN will contribute, or cause to be contributed, to Holdings all of the issued and
outstanding capital stock of the Company and certain other assets such that, from and after
consummation of such restructuring transactions and contributions, all of the right, title and
interest in and to all of the (1) assets, properties and rights primarily used by or primarily held
for use in and (2) liabilities primarily associated with, in each case, the operation of the
business of the Division, will be held, directly or indirectly, by Holdings, and in exchange for
the contribution to Holdings, directly or indirectly, of all of the issued and outstanding capital
stock of the Company, Holdings will issue to WIN the Holdings Shares, distribute to WIN the
Holdings Exchange Debt (as defined herein) and pay to WIN the Special Dividend (as defined herein)
(which WIN intends to distribute to stockholders and/or transfer to creditors in pursuance of the
plan of reorganization that includes the Contribution) all upon the terms and subject to the
conditions set forth herein (the transactions described in this clause (ii) are collectively
referred to herein as the “Contribution”);

 

 

     WHEREAS, following the consummation of the Restructuring Transactions and the Contribution,
upon the terms and subject to the conditions set forth in this Agreement, at the Closing each WCAS
Sub will transfer to WIN the number of shares of common stock, par value $0.0001 per share, of WIN
(“WIN Common Stock”) set forth opposite such WCAS Sub’s name on Schedule II
attached hereto and designated as being transferred by such WCAS Sub to WIN at the Closing in
exchange for the number of Holdings Shares set forth opposite such WCAS Sub’s name on Schedule
II attached hereto and designated as being transferred by WIN to such WCAS Sub at the Closing;

     WHEREAS, subject to the terms and provisions of Section 1.7 hereof, at the Second Closing (as
defined herein), each WCAS Sub will transfer to WIN the number of additional shares of WIN Common
Stock set forth opposite such WCAS Sub’s name on Schedule II attached hereto and designated
as being transferred by such WCAS Sub to WIN at the Second Closing in exchange for the number of
Holdings Shares set forth opposite such WCAS Sub’s name on Schedule II attached hereto and
designated as being transferred by WIN to such WCAS Sub at the Second Closing;

     WHEREAS, in excess of 80% of the shares of WIN Common Stock held by the WCAS Subs will be
exchanged at the Closing for a corresponding percentage of the Holdings Shares held by WIN, and the
remaining shares of WIN Common Stock held by the WCAS Subs will be exchanged at the Second Closing
for the remaining Holdings Shares held by WIN;

     WHEREAS, the Parties intend that the exchanges of WIN Common Stock for Holdings Shares at the
Closing and the Second Closing constitute a single, integrated transaction for all income tax
purposes;

     WHEREAS, the parties to this Agreement intend that the Contribution, together with the Debt
Exchange (as defined herein), will qualify as a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended (the “Code”), that the exchange of the shares of
WIN Common Stock held by each WCAS Sub for the Holdings Shares at the Closing will constitute a
tax–free distribution of securities pursuant to Section 355 of the Code, and that this Agreement,
together with all Ancillary Agreements, will constitute a “plan of reorganization” within the
meaning of Sections 361 and 368 of the Code;

     WHEREAS, the respective boards of directors or comparable authorized Person or body of WIN and
each WCAS Sub have approved this Agreement and the respective boards of directors of WIN, Holdings
and each WCAS Sub have approved the transactions contemplated hereby, and all necessary approvals
of WIN, as the sole stockholder of Holdings have been obtained; and

     WHEREAS, capitalized terms used herein and not otherwise defined shall have the respective
meanings ascribed to such terms in Section 10.15 hereof.

2

 

TERMS

ARTICLE I

EXCHANGE

     1.1 Transfer of Holdings Shares. Upon the terms and subject to the conditions of this
Agreement, at the closing provided for in Section 1.3 hereof (the “Closing”), WIN shall
convey, assign, transfer and deliver to each WCAS Sub, and each such WCAS Sub shall receive and
accept from WIN, all of WIN’s right, title and interest in and to the Holdings Shares set forth
opposite such WCAS Sub’s name on Schedule II attached hereto and designated as being
transferred by WIN to such WCAS Sub at the Closing, free and clear of all liens, encumbrances,
security interests, mortgages, pledges, claims and options (collectively, “Liens”).

     1.2 Transfer of Exchanged WIN Shares. Upon the terms and subject to the conditions of this
Agreement, in consideration of the aforesaid conveyance, assignment, transfer and delivery of the
Holdings Shares at the Closing, each WCAS Sub shall convey, assign, transfer and deliver to WIN all
of such WCAS Sub’s right, title and interest in and to the number of shares of WIN Common Stock set
forth opposite such WCAS Sub’s name on Schedule II attached hereto and designated as being
transferred by such WCAS Sub to WIN at the Closing, free and clear of all Liens (such shares of WIN
Common Stock, together with the shares of WIN Common Stock to be transferred at the Second Closing
pursuant to Section 1.7 hereof, being collectively referred to herein as the “Exchanged WIN
Shares”).

     1.3 Closing. The Closing of the transactions contemplated by this Agreement shall take place
at the offices of WIN at 4001 Rodney Parham Road, Little Rock, AR 72212, at 10:00 a.m., local time,
on the date designated in writing by the Parents and the WCAS Subs pursuant to Section 2.6(a)
hereof, which date shall not be prior to April 15, 2007 and shall be no later than sixty (60) days
after the latest to occur of (i) the receipt by Holdings, WIN and the WCAS Subs of the Private
Letter Rulings and the satisfaction of the conditions set forth in Sections 7.1(g), 7.1(h), 7.1(i),
and 7.1(j) and (ii) the date on which WIN delivers to the WCAS Subs Audited Financial Statements
for fiscal year 2006, as contemplated by Sections 1.4(f) and 5.9 hereof; provided
that all other conditions set forth in Article VII are already satisfied or are capable of
being satisfied at the Closing (subject to the satisfaction or waiver of all such conditions at the
Closing), or at such other place, date and time as shall be agreed upon in writing by the parties
hereto (the date on which the Closing is so scheduled to occur, the “Closing Date”).
Notwithstanding the foregoing, the parties hereto intend that such Closing shall be deemed to be
effective, and the transactions contemplated by this Agreement shall be deemed to occur
simultaneously, at 11:59 p.m. on the Business Day immediately prior to the date on which the
Closing actually occurs (the “Effective Time”).

     1.4 Deliveries by WIN. Prior to or at the Closing, WIN shall deliver or cause to be delivered
to each WCAS Sub the following:

3

 

          (a) stock certificate(s) representing the Holdings Shares designated on Schedule II
attached hereto as being transferred by WIN to the WCAS Subs at the Closing, duly endorsed or
accompanied by stock powers duly executed in blank;

          (b) any cash payment required to be made by WIN pursuant to Section 1.6(a) hereof, by wire
transfer of immediately available funds to an account designated by the WCAS Subs at least two (2)
Business Days prior to the Closing Date;

          (c) each of the Ancillary Agreements, duly executed by WIN or an Affiliate of WIN;

          (d) the resignations of the officers and directors of Holdings and the Division Subsidiaries
specified by the WCAS Subs in the notice delivered by the WCAS Subs pursuant to Section 2.3 hereof;

          (e) evidence that all Liens (other than Permitted Liens) on all properties and assets of the
Division Subsidiaries have been terminated;

          (f) audited consolidated balance sheets of the Division as of December 31, 2006, December 31,
2005 and December 31, 2004, and related audited consolidated statements of income and cash flows of
the Division for the twelve-month periods then ended (collectively, the “Audited Financial
Statements”);

          (g) the officer’s certificate referred to in Section 7.3(c) hereof; and

          (h) all other documents, certificates, instruments or writings required to be delivered by WIN
at or prior to the Closing pursuant to this Agreement.

     1.5 Deliveries by the WCAS Subs. Prior to or at the Closing, the WCAS Subs shall deliver or
cause to be delivered to WIN the following:

          (a) stock certificate(s) representing the Exchanged WIN Shares designated on Schedule
II attached hereto as being transferred by the WCAS Subs to WIN at the Closing, duly endorsed
or accompanied by stock powers duly executed in blank;

          (b) any cash payment required to be made by Holdings pursuant to Section 1.6(a) hereof, by
wire transfer of immediately available funds to an account designated by WIN at least two (2)
Business Days prior to the Closing Date;

4

 

          (c) each of the Ancillary Agreements to which each WCAS Sub is a party, duly executed by each
WCAS Sub;

          (d) the officer’s certificate referred to in Section 7.2(c) hereof; and

          (e) all other documents, certificates, instruments or other writings required to be delivered
by the WCAS Subs at or prior to the Closing pursuant to this Agreement.

     1.6 Net Working Capital Calculation and Adjustment.

          (a) WIN shall, at least two (2) Business Days prior to the Closing Date, cause to be prepared
and delivered to Holdings, with a copy to the WCAS Subs, a statement setting forth WIN’s good faith
estimate as of the Effective Time of (i) the Net Working Capital of the Division (the
“Estimated Net Working Capital”) and the components and calculation thereof; and (ii) the
Division Indebtedness (the “Estimated Division Indebtedness”). As used herein, “Net
Working Capital” shall mean (A) the sum of all current assets (other than (i) unbilled
receivables, (ii) intercompany accounts receivable and (iii) directories in process) of the
Division, as well as any Holdings Financing Expenses that have been incurred or paid by or on
behalf of WIN or any of its Subsidiaries or Affiliates prior to the Effective Time, other than any
such Holdings Financing Expenses that will remain liabilities or obligations of Holdings or the
Division Subsidiaries after the Effective Time, less (B) the sum of all current liabilities (other
than (i) all affiliates payable, including dividends accrued, (ii) publishing rights, and (iii)
other deferred revenue), including any WIN Transaction Expenses that will remain liabilities or
obligations of Holdings or the Division Subsidiaries after the Effective Time, but excluding any
Holdings Financing Expenses that will remain liabilities or obligations of Holdings or the Division
Subsidiaries after the Effective Time), of the Division, in each case determined in all respects in
accordance with GAAP and in a manner consistent with all accounting principles, practices,
methodologies and policies used in the preparation of the Financial Statements. For the avoidance
of doubt, Net Working Capital shall be calculated prior to the application of any purchase
accounting adjustments. If the Estimated Net Working Capital is greater than the Target Net
Working Capital, then Holdings shall pay to WIN an amount in cash at the Closing equal to such
excess; or (B) if the Estimated Net Working Capital is less than the Target Net Working Capital,
then WIN shall pay to Holdings an amount in cash at the Closing equal to such
deficit. WIN shall also pay to Holdings an amount in cash at the Closing equal to the
Estimated Division Indebtedness.

          (b) Within sixty (60) days after the Closing Date, Holdings shall cause to be prepared and
delivered to WIN, with a copy to the WCAS Subs, a statement (the “Statement”) setting forth
(i) the Net Working Capital, as of the Effective Time (the “Actual Net Working Capital”)
and the amount by which the Actual Net Working Capital (A) exceeds the Estimated Net Working
Capital (any such excess amount, the “Working Capital Excess Amount”) or (B) is less than
the Estimated Net Working Capital (any such deficiency amount,

5

 

the “Working Capital Deficiency
Amount”); and (ii) the Division Indebtedness, as of the Effective Time (the “Actual
Division Indebtedness”) and the amount by which the Actual Division Indebtedness (A) exceeds
the Estimated Division Indebtedness (any such excess amount, the “WIN Division Indebtedness
Excess Amount”) or (B) are less than the Estimated Division Indebtedness (any such deficiency
amount, the “WIN Division Indebtedness Deficiency Amount”). Subject to Sections 1.6(c),
(d) and (e) hereof, (i) Holdings shall, and the WCAS Subs shall cause Holdings to, pay to WIN the
amount of any Working Capital Excess Amount and/or WIN Division Indebtedness Deficiency Amount and
(ii) WIN shall pay to Holdings the amount of any Working Capital Deficiency Amount or any WIN
Division Indebtedness Excess Amount, in each case, as finally determined pursuant to this Section
1.6. To the extent that netting the payments referenced in the preceding sentence results in a net
payment by Holdings to WIN, the amount of such net payment shall be referred to herein as the
“Excess Amount” and, to the extent that netting the payments referenced in the preceding
sentence results in a net payment by WIN to Holdings, the amount of such net payment shall be
referred to herein as the “Deficiency Amount.” The Statement shall be prepared in
accordance with GAAP utilizing the accounting principles, practices, methodologies and policies
used in the preparation of the Financial Statements.

          (c) After receipt of the Statement, WIN shall have twenty (20) Business Days to review the
Statement together with the workpapers used in its preparation. The Statement shall become final,
conclusive and binding upon the parties on the twentieth Business Day following receipt thereof by
WIN unless WIN gives written notice of its disagreement (a “Notice of Disagreement”) to
Holdings prior to such date. Holdings shall, and the WCAS Subs shall cause Holdings to, give WIN
and its representatives reasonable access, during normal business hours of Holdings, to all
personnel, books and records of the Division as reasonably requested by WIN to assist it in its
preparation of the Notice of Disagreement. Any Notice of Disagreement shall (i) specify in
reasonable detail the nature and amount of any disagreement so asserted, (ii) WIN’s calculation of
the Net Working Capital as of the Effective Time, and (iii) WIN’s calculation of the amount of
Division Indebtedness as of the Effective Time. In the event that WIN delivers a Notice of
Disagreement to Holdings within the foregoing twenty (20) Business Day period, then the Statement
shall become final, conclusive and binding upon the parties hereto on the date such parties resolve
in writing any differences they have with respect to any matter properly included in the Notice of
Disagreement pursuant to the dispute resolution procedures set forth herein or by mutual agreement
of the parties. During the twenty (20) Business Days immediately following the receipt by Holdings
of a Notice of Disagreement, the respective Chief Financial Officers of Holdings and WIN shall
negotiate in good faith to resolve
any issues properly included in a Notice of Disagreement. During such period, Holdings shall
have full access to the work papers of WIN prepared in connection with WIN’s preparation of the
Notice of Disagreement. At the end of such 20-Business Day period, at the request of WIN or
Holdings, any and all matters which remain in dispute and which were included in the Notice of
Disagreement shall be submitted to KPMG LLP (the “Accounting Firm”) for a binding
resolution. The fees and expenses of the Accounting Firm shall be paid one-half by WIN and
one-half by Holdings and the WCAS Subs.

6

 

          (d) The Accounting Firm shall determine and report in writing to WIN and Holdings, with a copy
to the WCAS Subs, as to the resolution of all disputed matters submitted to the Accounting Firm and
the effect of such determinations on the Statement within ten (10) Business Days after such
submission or such longer period as the Accounting Firm may reasonably require, and such
determinations shall be final, conclusive and binding as to WIN, Holdings and their respective
Affiliates, including the WCAS Subs. In resolving any disputed item, the Accounting Firm, acting
in the capacity of an expert and not as an arbitrator: (i) shall limit its review to matters
specifically set forth in such Notice of Disagreement delivered pursuant to Section 1.6(c) as a
disputed item (other than matters thereafter resolved by mutual written agreement of WIN and
Holdings), (ii) shall further limit its review to whether the calculation of any such disputed item
is mathematically accurate and has been prepared in accordance with GAAP utilizing the accounting
principles, practices, methodologies and policies used in preparation of the Financial Statements,
and (iii) shall not assign a value to any item greater than the greatest value for such item
claimed by any party or less than the smallest value for such item claimed by any other party in
the Statement or the Notice of Disagreement delivered pursuant to Section 1.6(c). WIN and Holdings
shall, and the WCAS Subs shall cause Holdings to, each furnish to the Accounting Firm such
workpapers and other documents and information relating to the disputed issues, and shall provide
interviews and answer questions, as the Accounting Firm may reasonably request.

          (e) At such time as the Statement becomes final, conclusive and binding upon WIN, Holdings and
their respective Affiliates, including the WCAS Subs, in accordance with this Section 1.6, the
Statement shall become the “Conclusive Statement”. If the Conclusive Statement contains a
Deficiency Amount, then WIN shall pay to Holdings an amount in cash equal to such Deficiency
Amount. If the Conclusive Statement contains an Excess Amount, then Holdings shall, and the WCAS
Subs shall cause Holdings to, pay to WIN an amount in cash equal to such Excess Amount. All
payments to be made pursuant to this Section 1.6 shall be made on the second Business Day following
the date on which the Statement becomes the Conclusive Statement pursuant to this Section 1.6. Any
payment required to be made by WIN or Holdings pursuant to this Section 1.6 shall bear interest
from the date such payment is finally determined pursuant to Section 1.6(c) or (e), as applicable,
through the date of payment at the Interest Rate, and shall be payable by wire transfer of
immediately available funds to an account or accounts designated by the party entitled to receive
such funds prior to the date when such payment is due.

          (f) For purposes of this Agreement, Taxes (including deferred Tax assets and liabilities)
shall not be included as assets or liabilities for purposes of determining Estimated Net Working
Capital or Actual Net Working Capital. Liabilities, assets, pre-payments, refunds and credits with
respect to Taxes shall be governed by and allocated solely in accordance with the Tax Sharing
Agreement.

7

 

     1.7 Second Closing.

          (a) Subject only to the prior consummation of the Closing and the satisfaction, as of the
Second Closing Date, of the condition set forth in Section 7.1(a) hereof (provided that, for this
purpose, references in Section 7.1(a) to the Closing Date shall be deemed to be references to the
Second Closing Date), as soon as practicable after the date on which WIN has Sufficient RP Capacity
to transfer to the WCAS Subs the additional Holdings Shares designated on Schedule II
attached hereto as being transferred by WIN to the WCAS Subs at the Second Closing, but in any
event no later than December 31, 2008 (or such other time period not earlier than October 15, 2007
as may be specified in the Private Letter Rulings), WIN shall convey, assign, transfer and deliver
to each WCAS Sub, and each such WCAS Sub shall receive and accept from WIN, all of WIN’s right,
title and interest in and to the Holdings Shares set forth opposite such WCAS Sub’s name on
Schedule II attached hereto and designated as being transferred by WIN to such WCAS Sub at
the Second Closing, free and clear of all Liens. Subject only to the prior consummation of the
Closing and the satisfaction, as of the Second Closing Date, of the condition set forth in Section
7.1(a) hereof (provided that, for this purpose, references in Section 7.1(a) to the Closing Date
shall be deemed to be references to the Second Closing Date), in consideration of the aforesaid
conveyance, assignment, transfer and delivery of the Holdings Shares at the Second Closing, each
WCAS Sub shall convey, assign, transfer and deliver to WIN all of such WCAS Sub’s right, title and
interest in and to the number of shares of WIN Common Stock set forth opposite such WCAS Sub’s name
on Schedule II attached hereto and designated as being transferred by such WCAS Sub to WIN
at the Second Closing, free and clear of all Liens.

          (b) The closing of the transactions contemplated by this Section 1.7 (the “Second
Closing”) shall take place at the offices of WIN at 4001 Rodney Parham Road, Little Rock, AR
72212, at 10:00 a.m., local time, on the date designated in writing by WIN, which date shall be no
later than the earlier to occur of (i) five (5) Business Days after the date on which WIN
reasonably determines that it has Sufficient RP Capacity and (ii) December 31, 2008 (or such other
time period not earlier than October 15, 2007 as may be specified in the Private Letter Rulings);
provided that the condition set forth in Section 7.1(a) is satisfied at that time
(provided that, for this purpose, references in Section 7.1(a) to the Closing Date shall be deemed
to be references to the Second Closing Date), or at such other place, date and time as shall be
agreed upon in writing by the Parties hereto. The Parties hereby acknowledge and agree that, with
the exception of the condition set forth in Section 7.1(a) hereof, all other conditions set forth
in Article VII hereof shall no longer be applicable after the Closing, and such conditions shall
not be applicable for purposes of determining whether or when the Second Closing shall occur.

          (c) At the Second Closing, (i) WIN shall deliver or cause to be delivered to each WCAS Sub the
stock certificate(s) representing the Holdings Shares designated on Schedule II attached
hereto as being transferred by WIN to the WCAS Subs at the Second Closing, duly endorsed or
accompanied by stock powers duly executed in blank, and (ii) the WCAS Subs shall deliver or cause
to be delivered to WIN the stock certificate(s) representing the Exchanged WIN Shares designated on
Schedule II attached hereto as being transferred by the WCAS Subs to WIN at the Second
Closing, duly endorsed or accompanied by stock powers duly executed in blank. In addition to the
foregoing, at the Second Closing, WIN, the Parents and the WCAS Subs shall deliver all other
documents, certificates, instruments or other writings, if any, required to be delivered by each of
them at or prior to the Second Closing pursuant to this Agreement.

8

 

          (d) As used in this Agreement, the term (i) “RP Capacity” means, as of any date of
determination, the amount available pursuant to Sections 4.07(a) and 4.07(b)(12) of the WIN
Indenture for the payment of permitted Restricted Payments (as defined in the WIN Indenture), with
such amount to be reduced by the amount of any Restricted Payments made in reliance on Section
4.07(b)(9) of the WIN Indenture; and (ii) “Sufficient RP Capacity” means the amount of RP
Capacity necessary for WIN to (x) transfer to the WCAS Subs the Exchanged WIN Shares designated on
Schedule II attached hereto as being transferred by WIN to the WCAS Subs at the Second
Closing, and (y) declare and pay its regular quarterly dividends consistent with past practice for
the fiscal quarter in which the Second Closing occurs and the next succeeding fiscal quarter;
provided, however, that in determining whether Sufficient RP Capacity exists for
purposes of this Section 1.7, WIN need only take into account up to $25 million of the RP Capacity
available under Section 4.07(b)(12) of the WIN Indenture.

          (e) WIN shall use its reasonable best efforts to cause the Second Closing to take place as
soon as practicable after the Closing.

ARTICLE II

RELATED MATTERS

     2.1 Ancillary Agreements. Prior to or at the Closing, WIN and the WCAS Subs (or the respective
Subsidiaries or Affiliates of WIN and the WCAS Subs identified in the clauses below) shall enter
into the following ancillary agreements, substantially in the form of the agreements set forth in
Exhibit A, Exhibit B, Exhibit C, Exhibits D1 and D2 and Exhibit
E, respectively, it being acknowledged and agreed that certain exhibits and schedules to, and
terms and provisions of (including the list of transition services to be provided under the WIN
Transition Services Agreement), the forms of Ancillary Agreements attached to this Agreement, as
and to the extent noted in such Exhibits, are preliminary in nature and the Parties shall use their
respective reasonable best efforts to develop and agree upon definitive versions of such exhibits,
schedules, terms and provisions within sixty (60) days from and after the date hereof:

          (a) Publishing Agreement among WIN, the WCAS Subs and the Company, substantially in the form
of the agreement set forth in Exhibit A attached hereto, pursuant to which, among other
things, WIN will name the Company as its exclusive official print directory publisher of print
listings and classified advertisements of its wireline telephone customers in the geographic areas
in which WIN or its Affiliates are the incumbent telecom provider as of the date of this Agreement
for a period of 50 years, all upon the terms and subject to the conditions set forth therein (the
“Publishing Agreement”);

9

 

          (b) Transition Services Agreement between WIN (or one or more of its designated Affiliates)
and one or more of the Division Subsidiaries, substantially in the form of the agreement set forth
in Exhibit B attached hereto, pursuant to which, among other things, WIN will provide, or
cause to be provided, to the Division certain transition services, as set forth therein, for the
time periods set forth therein, upon the terms and subject to the conditions set forth therein (the
“WIN Transition Services Agreement”);

          (c) Billing and Collection Agreement between Windstream Communications, Inc. and one or more
of the Division Subsidiaries, substantially in the form of the agreement set forth in Exhibit
C attached hereto, pursuant to which, among other things, WIN will provide, or cause to be
provided, to the Division certain billing services (including certain limited pre-delinquency
collection services), as set forth therein, for the time periods set forth therein, upon the terms
and subject to the conditions set forth therein (the “Billing Agreement”);

          (d) Lease Agreements between WIN (or one or more of its designated Affiliates) and one or more
of the Division Subsidiaries, substantially in the form of the agreements set forth in Exhibits
D1 and D2 attached hereto, pursuant to which, among other things, WIN will lease to the
Division certain Real Property (the “Lease Agreements”); and

          (e) Tax Sharing Agreement among WIN, Holdings and the WCAS Subs, substantially in the form of
the agreement set forth in Exhibit E attached hereto, pursuant to which, among other
things, WIN, Holdings and the WCAS Subs will agree upon the allocation of responsibility for
certain Taxes arising before and after the Effective Time, agree to indemnify each other for
certain related liabilities and provide for certain covenants and agreements relating to Taxes (the
“Tax Sharing Agreement” and, collectively with the Publishing Agreement, the WIN Transition
Services Agreement, the Billing Agreement and the Lease Agreements, the “Ancillary
Agreements”).

     2.2 Intercompany Obligations; Affiliate Agreements; Certain Other Intercompany
Matters.

          (a) Except as set forth on Section 2.2(a) of the disclosure letter delivered by WIN to the
WCAS Subs contemporaneously with the execution of this Agreement
and attached hereto and made a part hereof (the “Disclosure Letter”), as of the
Closing Date, WIN, Holdings and any Division Subsidiaries shall cause all Intercompany Agreements
to be terminated in all respects such that there is no cost or liability thereunder on the part of
Holdings or any Division Subsidiary.

          (b) In furtherance and not in limitation of subsection (a) of this Section 2.2 or any other
provision of this Agreement, all Intercompany Indebtedness outstanding on the date hereof and not
repaid at or prior to the Closing or incurred after the date hereof and

10

 

not repaid at or prior to
Closing shall be cancelled, or, at WIN’s election, contributed to Holdings or one of the Division
Subsidiaries, immediately prior to the Closing such that, at the Effective Time, no such
Intercompany Indebtedness shall be outstanding. As used herein, the term “Intercompany
Indebtedness” shall mean, without duplication, (a) the aggregate principal amount of all
indebtedness for borrowed money, including all indebtedness evidenced by a note, bond, debenture or
similar instrument, together with accrued and unpaid interest thereon, and (b) all accounts
payable, in each case, between Holdings or any Division Subsidiary, on the one hand, and WIN or any
of its Subsidiaries or Affiliates (other than Holdings or any Division Subsidiary), on the other
hand.

          (c) Except as provided in the Ancillary Agreements or as set forth on Section 2.2(c) of the
Disclosure Letter, on or prior to the Closing Date, all data processing, accounting, insurance,
banking, personnel, legal, tax, communications and other products or services provided to Holdings
or any Division Subsidiary (i) by WIN or any of its Subsidiaries or Affiliates (other than Holdings
or any Division Subsidiary), (ii) pursuant to any contract between WIN or any of its Subsidiaries
or Affiliates (other than Holdings or any Division Subsidiary) and any third party under which
goods or services are provided to any Division Subsidiary and which would constitute a Material
Contract if any Division Subsidiary were a party to or bound by such contract as of the date
hereof, or (iii) by Holdings or either Division Subsidiary to WIN or any of its Subsidiaries or
Affiliates (other than Holdings or any other Division Subsidiary), including any agreements or
understandings (written or oral) with respect thereto, will terminate or (in the case of clause
(ii) above), subject to receiving any required consents, be assigned in whole (in the case of
contracts relating solely to the business of the Division Subsidiaries) or in part (in the case of
contracts not relating solely to the business of the Division Subsidiaries) to one or more of the
Division Subsidiaries. On and after the Closing Date, the WCAS Subs shall be solely responsible
for the operation of the Division, except as otherwise specifically provided in the WIN Transition
Services Agreement or any of the other Ancillary Agreements.

     2.3 Resignations. At the Closing, to the extent requested in writing by the WCAS Subs at least
five (5) Business Days prior to the Closing Date, WIN shall cause to be delivered to the WCAS Subs
and the Company duly executed resignations from the officers and directors of Holdings and each
Division Subsidiary specified by the WCAS Subs, effective as of the Closing, and shall take such
other action as is necessary to accomplish the foregoing.

     2.4 Guaranties. WIN shall use its commercially reasonable efforts to cause the release in respect of all
obligations of Holdings or the Division Subsidiaries under each of the guaranties, letters of
credit and similar obligations of Holdings or the Division Subsidiaries (including leases of real
and personal property) for the benefit of WIN or any of its Subsidiaries or Affiliates (other than
Holdings or the Division Subsidiaries) or any supplements, amendments or modifications thereto in
accordance with this Agreement (collectively, the “Guaranties”), all of which Guaranties
are set forth in Section 2.4 of the Disclosure Letter. WIN shall take all actions that are
necessary to comply with this Section 2.4 as promptly as practicable after the date hereof and
shall keep the WCAS Subs reasonably informed of any developments associated therewith. Section 2.4
of the Disclosure Letter sets forth a list of all Guaranties of Holdings or the Division
Subsidiaries.

11

 

     2.5 Related Transactions.

          (a) At or prior to the Effective Time, WIN shall, or shall cause its Subsidiaries to,
consummate the following related transactions:

               (i) WIN shall consummate the Restructuring Transactions and the Contribution;

               (ii) In consideration of the Contribution, WIN shall cause Holdings to issue to WIN
certain debt obligations of Holdings, having substantially the terms set forth in
Exhibit F attached hereto (the “Holdings Exchange Debt”), in an aggregate
principal amount equal to Two-Hundred Fifty Million Five Hundred Thousand Dollars
($250,500,000) less the amount of the Special Dividend paid by Holdings to WIN
pursuant to Section 2.5(a)(iii) hereof; and

               (iii) WIN shall cause Holdings to distribute to WIN, as a special dividend (the
“Special Dividend”), cash in an amount not in excess of WIN’s tax basis in the
Division Subsidiaries as of the date of such Special Dividend (which WIN intends to
distribute to its stockholders and/or transfer to creditors in pursuance of the plan of
reorganization that includes the Contribution), as set forth in a written notice to be
delivered by WIN to Holdings and the WCAS Subs not less than 40 days prior to the Closing.

          (b) At or prior to the Effective Time, but after completion of the actions contemplated in
Section 2.5(a) hereof, WIN shall use its reasonable best efforts to: (i) enter into all necessary
or appropriate arrangements regarding the exchange of, and, provided an exchange agreement is
entered into among WIN and holders of outstanding WIN Debt, effect the exchange of, the Holdings
Exchange Debt for outstanding WIN debt obligations (the “WIN Debt”) held by one or more
creditors of WIN (the “Debt Exchange”); (ii) enter into all necessary or appropriate
arrangements regarding the sale of, and effect the sale of, the WIN Debt expected to be received by
WIN in the Debt Exchange for cash in an amount equal to the aggregate Fair
Market Value of the WIN Debt as of the date of such sale; and (iii) immediately thereafter use
the cash proceeds expected to be received by WIN pursuant to clause (ii) immediately above to
retire such WIN Debt.

     2.6 Coordination of Holdings Financing and Debt Exchange.

          (a) WIN and the WCAS Subs shall, and the Parents shall cause the WCAS Subs to, cooperate with
respect to and use their respective reasonable best efforts to effect the issuance and expected
subsequent sale by creditors of WIN of the Holdings Exchange Debt, the implementation of a new
senior credit agreement for Holdings pursuant to which the

12

 

Holdings Exchange Debt may be incurred
(the “Holdings Credit Agreement”) and/or the issuance and sale of certain Senior
Subordinated Notes of Holdings, in each case, substantially on the terms set forth in Exhibit
F attached hereto, and the issuance and sale of such Indebtedness of Holdings as may be
necessary or desirable in order to enable Holdings to pay the Special Dividend and WIN to
consummate the Debt Exchange (collectively, the “Holdings Financing”). The WCAS Subs shall
be responsible for the selection of the lenders under the Holdings Credit Agreement, the
syndication and placement of the Holdings Exchange Debt or, if applicable, the selection of the
initial purchasers for the offering and placement of the Holdings Exchange Debt and the negotiation
of all related documentation, including the preparation of all offering memoranda, private
placement memoranda, prospectuses and similar documents deemed reasonably necessary by the WCAS
Subs to be used in connection with consummating the Holdings Financing and the expected sale of the
Holdings Exchange Debt. WIN shall be responsible, in coordination with the WCAS Subs, for the
identification and selection of the WIN creditors with which any Debt Exchange shall be effected
and the preparation of all related documentation; provided, however, that the terms
of the Debt Exchange, including all related documentation, the aggregate principal amount of WIN
Indebtedness to be received by WIN in exchange for the Holdings Exchange Debt and all other
material terms and conditions of the Debt Exchange shall be negotiated solely by WIN; and
provided further, that the Debt Exchange shall be effected in all respects in a
manner consistent with the terms of the Private Letter Rulings; and provided
further that the WCAS Subs shall not be deemed to act as agents of WIN in connection with
the Debt Exchange. WIN, each of the Parents and each of the WCAS Subs hereby acknowledge and agree
that (i) Holdings shall incur the Holdings Exchange Debt, in consideration of the Contribution, on
such date as the WCAS Subs shall designate following the latest to occur of (A) receipt by WIN,
Holdings and the WCAS Subs of the Private Letter Rulings and the satisfaction of the conditions set
forth in Sections 7.1(g), 7.1(h), 7.1(i), and 7.1(j) hereof and (B) the date on which WIN delivers
to the WCAS Subs Audited Financial Statements for fiscal year 2006, as contemplated by Sections
1.4(f) and 5.9 hereof, but in any event within sixty (60) days thereafter (with the Parents and the
WCAS Subs to notify WIN in writing of the projected Closing Date not less than five (5) Business
Days prior thereto, provided, however, that, notwithstanding the foregoing, the Closing shall not
take place prior to April 15, 2007), and (ii) the Holdings Exchange Debt shall be issued on such
terms as will enable WIN, upon receipt of the Holdings Exchange Debt, to exchange such Holdings
Exchange Debt for an equivalent Fair Market Value of WIN Indebtedness held by WIN’s creditors.
Without limiting the generality of this Section 2.6(a), WIN shall, and WIN shall cause Holdings to,
issue the Holdings Exchange Debt in accordance with the immediately preceding sentence, subject to
the responsibilities of the WCAS Subs set forth in the second sentence of this Section 2.6(a).
The parties hereto further acknowledge and agree that Holdings shall issue the Holdings Exchange
Debt on such prevailing terms, including with respect to applicable interest rate and covenants, as
are then available, and adverse changes in such prevailing terms shall not excuse any of the
parties from proceeding with the issuance of the Holdings Exchange Debt in accordance with this
Section 2.6(a).

          (b) WIN shall, and shall cause Holdings and each of the Division Subsidiaries to, use its
reasonable best efforts to cause the respective employees, accountants, counsel and other
representatives of WIN and Holdings to reasonably cooperate with the WCAS Subs and their
representatives in carrying out the transactions contemplated by the Holdings

13

 

Financing and in delivering all documents and instruments deemed reasonably necessary by the WCAS Subs (including
providing standard accountants’ “comfort” letters and legal opinions and otherwise cooperating and
assisting in satisfying the conditions to the Holdings Financing and assisting with the
consummation of the Holdings Financing, including by (i) participating in meetings, drafting
sessions, due diligence sessions, management presentation sessions, “road shows” and sessions with
rating agencies in connection with the syndication or marketing of the Holdings Credit Agreement
and the expected consummation of the placement and sale of the Holdings Exchange Debt received by
the exchanging creditors in the Debt Exchange and any other debt securities of Holdings that may be
issued or sold to finance the payment of the Special Dividend (collectively, the “Holdings Debt
Offering”), (ii) providing direct contact between prospective lenders and the officers and
directors of each of WIN and Holdings, (iii) preparing business projections and financial
statements, (iv) assisting in the preparation by the WCAS Subs of offering memoranda, private
placement memoranda, prospectuses and similar documents deemed reasonably necessary by the WCAS
Subs to be used in connection with consummating the Holdings Financing, (v) executing and
delivering all documents and instruments deemed reasonably necessary by the WCAS Subs, including
any underwriting or placement agreements, pledge and security documents, other definitive financing
documents, including any indemnity agreements, or other requested certificates or documents, legal
opinions, engineering reports, environmental assessment reports, surveys and title insurance as may
be reasonably requested by the WCAS Subs, providing that Holdings and the Division Subsidiaries,
and not WIN, shall enter into the agreements and instruments contemplated by this clause (v), (vi)
disclosing the Holdings Financing, as required under the Securities Act and the Exchange Act, in
any registration statement and any other filings to be made with the Securities and Exchange
Commission, and (vii) taking all other actions reasonably necessary in connection with the Holdings
Financing). Notwithstanding anything to the contrary contained herein, the expected sale by WIN
creditors of the Holdings Exchange Notes shall be in a transaction exempt from the registration
requirements of the Securities Act and, prior to the Effective Time, Holdings shall not be required
to, and WIN shall have no obligation to cause Holdings to, register the WIN Exchange Notes or any
other Holdings Debt Securities under the Securities Act.

     2.7 Private Letter Rulings. WIN shall, and WIN shall cause Holdings and the Division
Subsidiaries to, and the WCAS Subs shall, use their respective reasonable best efforts to obtain
the Private Letter Rulings,
substantially on the terms set forth in, and otherwise in accordance with, the Tax Sharing
Agreement, as soon as practicable after the date of this Agreement. WIN and Holdings shall be
responsible in the first instance for the preparation of all memoranda, ruling requests,
correspondence and other submissions to the IRS in connection with obtaining the Private Letter
Rulings; provided that the WCAS Subs shall be responsible in the first instance for the preparation
of all memoranda, ruling requests, correspondence and other submissions to the IRS that relate
principally to those portions of the Private Letter Rulings that pertain principally to the WCAS
Subs. Each party shall have the right to be provided a reasonable period in advance of submission,
to review, and to approve, materials prepared by the other party, such approval not to be
unreasonably withheld, delayed or conditioned. Each party shall provide the other party with
copies of all memoranda, ruling requests, correspondence or other submissions as filed with the IRS
promptly following the filing thereof. Each of WIN and the WCAS Subs shall have the right to
participate fully in the process of obtaining the Private Letter Rulings, including attending
meetings and participating in conference calls with the IRS.

14

 

Each of WIN, on the one hand, and the
WCAS Subs, on the other hand, shall use its reasonable best efforts to cause its respective
employees, accountants, counsel and other representatives reasonably to cooperate with the other
party and its representatives in obtaining the Private Letter Rulings, including by (i)
participating in meetings and conference calls with the IRS, (ii) assisting in the preparation of
all memoranda, ruling requests, correspondence and other submissions that are deemed reasonably
necessary or desirable by either party in connection with obtaining the Private Letter Rulings,
(iii) executing and delivering customary documents and instruments (such as penalties of perjury
statements) that are deemed reasonably necessary by either party in connection with obtaining the
Private Letter Rulings, and (iv) taking other actions reasonably necessary in connection with
obtaining the Private Letter Rulings.

     2.8 Termination of Forward Underwriting Commitment. In the event that the IRS determines
pursuant to, or in connection with its consideration of, one or more of the Private Letter Rulings
requested from the IRS pursuant to Section 2.7 that the Forward Underwriting Commitment
contemplated under the Commitment Letter is inconsistent with such Private Letter Ruling(s) or that
the IRS will not be able to issue any or all of the Private Letter Rulings to the extent that the
Forward Underwriting Commitment is in effect, then the WCAS Subs shall terminate, and the Parents
shall cause the WCAS Subs to terminate, the Commitment Letter effective immediately, such that the
Parties will proceed with the transactions contemplated by this Agreement without the benefit of
the Forward Underwriting Commitment.

     2.9 Repayment of Division Indebtedness. Prior to or at the Effective Time, WIN shall repay, or
cause to be repaid, or assume, or cause to be assumed, all Indebtedness of Holdings and the
Division Subsidiaries other than the Holdings Exchange Debt and any other Indebtedness incurred by
Holdings in order to enable Holdings to pay the Special Dividend.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF WIN

          Except as set forth in the Disclosure Letter (as updated pursuant to Section 5.7 hereof) (with
specific reference to the particular Section or subsection of this Agreement to which the
information set forth in such disclosure letter relates; provided, that any information set
forth in one section of the Disclosure Letter shall be deemed to apply to each other Section or
subsection thereof or hereof to which its relevance is readily apparent on its face), WIN hereby
represents and warrants to the WCAS Subs and the Parents as of the date of this Agreement (except
to the extent any such representation or warranty is made as of an earlier date, in which case, as
of such earlier date) and as of the Closing Date (as though then made and as though the Closing
Date were substituted for the date of this Agreement throughout this Article III, except to the
extent any such representation or warranty is made as of an earlier date, in which case, as of such
earlier date) as follows:

     3.1 Authority. WIN has all requisite corporate power and corporate authority to enter into
this Agreement, and WIN, Holdings and each of the Division Subsidiaries have all requisite
corporate power and authority to enter into such of the Ancillary Agreements to which

15

 

they are respectively party and to perform their obligations hereunder and thereunder and WIN, Holdings and
each of the Division Subsidiaries have all requisite corporate power and authority to consummate
the transactions contemplated hereby and thereby. The execution, delivery and performance by WIN
of this Agreement and by WIN, Holdings and each of the Division Subsidiaries of such Ancillary
Agreements to which they are respectively a party, and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary corporate action on the
part of WIN, Holdings and each such Division Subsidiary, as applicable. This Agreement has been
(and each such Ancillary Agreement upon execution and delivery will be) duly executed and delivered
by each such party thereto and constitutes (and each such Ancillary Agreement, upon execution and
delivery, will constitute) a valid and binding obligation of WIN, Holdings and the Division
Subsidiary party thereto, as applicable, enforceable against WIN, Holdings or such Division
Subsidiary, as applicable, in accordance with its and their respective terms, except that (i) such
enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other Laws, now or hereafter in effect, relating to or limiting creditors’ rights
generally and (ii) the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

     3.2 Title to Holdings Shares. WIN has good and valid title to the Holdings Shares, free and
clear of all Liens, and upon delivery to the WCAS Subs at the Closing and the Second Closing of
certificates representing the Holdings Shares, duly endorsed by WIN for transfer to the WCAS Subs
or accompanied by stock powers duly executed in blank, and upon receipt by WIN of the Exchanged WIN
Shares and any cash payment required to be made by the WCAS Subs pursuant to Section 1.6(a) hereof,
good and valid title to the Holdings Shares will pass to each WCAS Sub, respectively, free and
clear of any Liens. Other than this Agreement, the Holdings Shares are not subject to any voting
trust agreement or other contract, agreement, arrangement, commitment or understanding, including
any such contract, agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rights or disposition of the Holdings Shares.

     3.3 Organization and Qualification. WIN, Holdings and each of the Division Subsidiaries are,
in all material respects, duly organized, validly existing and in good standing under the Laws of
the jurisdiction listed as its jurisdiction of incorporation in Section 3.3 of the Disclosure
Letter and has all requisite corporate power and authority to own, lease and operate the properties
it owns, leases or operates and to conduct its business as conducted on the date hereof. WIN,
Holdings and each of the Division Subsidiaries is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes such qualification
necessary, except in those jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not, individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect.

     3.4 Capitalization of Holdings. The authorized capital stock of Holdings consists of 10,000
shares of common stock, par value $0.01 per share, of which 1,000 shares, constituting the Holdings
Shares, are validly issued and outstanding, fully paid and nonassessable. The

16

 

Holdings Shares are owned of record and beneficially by WIN. Such Holdings Shares have not been issued in violation
of, and are not subject to, any preemptive, subscription or similar rights. Except for the
Holdings Shares, there are no shares of capital stock or other equity securities of Holdings
outstanding. There are no outstanding warrants, options, “phantom” stock rights, agreements,
convertible or exchangeable securities or other commitments pursuant to which WIN or any of its
Affiliates (including Holdings) is or may become obligated to issue, sell, purchase, return or
redeem any shares of capital stock or other securities of Holdings, or which give any Person the
right to receive any benefits or rights similar to any rights enjoyed by or accruing to the holders
of shares of capital stock of Holdings. There are no outstanding bonds, debentures, notes or other
indebtedness having the right to vote on any matters which stockholders of Holdings may vote upon.

     3.5 Capitalization of the Division Subsidiaries. The authorized capital stock of the Company
consists of 750 shares of common stock, par value $0.10 per share, of which 100 shares are validly
issued and outstanding, fully paid and nonassessable (the “Company Shares”) and the
authorized capital stock of WLM consists of 750 shares of capital stock, of which 100 shares are
validly issued and outstanding, fully paid and nonassessable (the “WLM Shares” and,
collectively with the Company Shares, the “Subsidiary Shares”). Immediately prior to the
Closing, the Subsidiary Shares will be owned of record and beneficially by Holdings, in the case of
the Company Shares, and the Company, in the case of the WLM Shares. Such Subsidiary Shares have
not been issued in violation of, and are not
subject to, any preemptive, subscription or similar rights. There are no outstanding warrants,
puts, calls, options, “phantom” stock rights, agreements, convertible or exchangeable securities or
other commitments pursuant to which WIN or any of its Affiliates is or may become obligated to
issue, sell, purchase, return or redeem any shares of capital stock or other securities of the
Company or WLM or which give any Person the right to receive any benefits or rights similar to any
rights enjoyed by or accruing to the holders of the Subsidiary Shares. With respect to the
Division Subsidiaries, there are no outstanding bonds, debentures, notes or other indebtedness
having the right to vote on any matters which stockholders of any of the Division Subsidiaries may
vote.

     3.6 No Violation; Consents and Approvals.

          (a) Assuming receipt of those approvals and consents set forth in Section 3.6(b) of the
Disclosure Letter, the execution and delivery by WIN of this Agreement and by WIN, Holdings and the
Division Subsidiaries of such of the Ancillary Agreements to which WIN, Holdings and each such
Division Subsidiary is a party do not in any material respect, and the performance of their
respective obligations hereunder and thereunder and compliance with the terms hereof and thereof
will not in any material respect, conflict with, or result in any violation of or default under, or
give rise to a right of termination or cancellation, or result in the creation of any Lien upon any
of the material properties or assets of WIN, Holdings or the Division Subsidiaries under, (i) any
provision of the certificate of incorporation or bylaws of WIN, Holdings or any of the Division
Subsidiaries, (ii) any material judgment, order or decree, or Law applicable to WIN, Holdings or
any of the Division Subsidiaries, or (iii) any material note, bond, indenture, Real Property Lease,
permit, franchise or other instrument or obligation, or any Material Contract, to which WIN,
Holdings or any of the Division Subsidiaries

17

 

is a party or by or to which WIN, Holdings or any of
the Division Subsidiaries or any of their respective properties or assets is bound or subject, but
excluding any contracts, agreements or arrangements as are listed in Section 6.2 of the Disclosure
Letter.

          (b) Other than those arising under any contracts, agreements or arrangements as are listed in
Section 6.2 of the Disclosure Letter, no material consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, or any third party, is required
to be obtained or made by or with respect to WIN, Holdings or any of the Division Subsidiaries in
connection with the execution and delivery of this Agreement or such of the Ancillary Agreements to
which WIN, Holdings or each such Division Subsidiary is a party, or the consummation by WIN,
Holdings or each such Division Subsidiary of the transactions contemplated hereby, except: (i)
compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the “HSR Act”) and (ii) compliance with and filings under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).

     3.7 Financial Statements; Undisclosed Liabilities.

          (a) Section 3.7 of the Disclosure Letter contains the unaudited consolidated balance sheets
of the Division as of December 31, 2005 and as of December 31, 2004 (the “Balance Sheets”),
and the related unaudited consolidated statements of income and cash flows of the Division for the
twelve-month periods then ended (collectively, with the Balance Sheets, the “Annual Financial
Statements”). Section 3.7 of the Disclosure Letter also contains the unaudited interim
consolidated balance sheets of the Division as of September 30, 2005 and September 30, 2006 (the
“Interim Balance Sheets”) and the related unaudited interim consolidated statements of
income and cash flows for the nine-month periods then ended (collectively, with the Interim Balance
Sheets, the “Interim Financial Statements” and, collectively with the Annual Financial
Statements, the “Financial Statements”). The Financial Statements (i) have been prepared
from and are consistent with the books and records of the Division Subsidiaries, (ii) have been
prepared in accordance with GAAP, consistently applied, throughout the periods presented (except
for adjustments or other matters disclosed therein and for the absence of footnotes, and, in the
case of the Interim Financial Statements, subject to normal year-end adjustments) and (iii) present
fairly in all material respects the financial condition and results of operations and cash flows of
the Division as of such dates and for the periods presented.

          (b) Except for liabilities or obligations (i) disclosed in the Financial Statements or the
notes thereto, (ii) incurred in the ordinary course of business and consistent with past practice
since the date of the most recent Interim Balance Sheet or (iii) disclosed in the Disclosure Letter
(none of which is a liability resulting from breach of contract, breach of warranty, tort,
infringement, claim or lawsuit and which would be material to the business of the Division taken as
a whole, either individually or in the aggregate), neither Holdings nor any of the Division
Subsidiaries has incurred any liabilities (whether accrued, contingent, absolute, determined,
determinable or otherwise) of a nature required to be set forth or reflected in a consolidated
balance sheet of the Division prepared in accordance with GAAP.

18

 

          (c) When delivered pursuant to Section 1.4(f) hereof, the Audited Financial Statements (i)
will have been prepared from the books and records of the Division Subsidiaries, (ii) will have
been prepared in accordance with GAAP, consistently applied, throughout the periods presented
(except for adjustments or other matters disclosed therein) and (iii) will present fairly in all
material respects the financial condition and results of operations of the Division as of such
dates and for the periods presented.

     3.8 Absence of Certain Changes or Events. Except as otherwise contemplated by this
Agreement, during the period from September 30, 2006 to the date of this Agreement, (a) WIN has
operated the Division in the ordinary course of business, consistent with past practice, (b) there
have not been any changes in the business, assets, liabilities, results of operations or financial
condition of the Division Subsidiaries which in the aggregate have had or are reasonably likely to
have a Company Material Adverse Effect, and (c) neither Holdings nor the Division Subsidiaries have
engaged in or taken any action which, if taken between the date hereof and the Closing Date, would
be prohibited by Sections 5.1(a), (e), (f), (g), (h), (j), (l), (o), (q), (r) or (t) hereof.

     3.9 Title to Personal Property. The Division Subsidiaries have, in all material
respects, good and valid title to, or a valid and enforceable right to use, all material personal
property (whether tangible or intangible, but excluding Intellectual Property Rights) which is
necessary for the operation of the Division substantially as operated on the date hereof (the
“Personal Property”) (except such as have been sold or otherwise disposed of after the date
hereof in the ordinary course of business or in accordance with Section 5.1 hereof), in each case,
free and clear of all Liens, other than Permitted Liens.

     3.10
Title to Real Property. (a) Section 3.10 of the Disclosure Letter sets forth: (i) a
true and complete list of all Owned Real Property and (ii) a true and complete list of all Real
Property Leases (including all amendments, extensions, renewals, guaranties and other agreements
with respect thereto) including the expiration of the lease term, the names of the parties thereto
and the address of each parcel of Leased Real Property.

          (b) With respect to each Owned Real Property: (A) the Division Subsidiaries have indefeasible
fee simple title to such Owned Real Property, free and clear of all Liens and encumbrances, except
Permitted Liens, (B) except as set forth in Section 3.10 of the Disclosure Letter, the Division
Subsidiaries have not leased or otherwise granted to any Person the right to use or occupy such
Owned Real Property or any portion thereof; and (C) other than the right of the WCAS Subs pursuant
to this Agreement, there are no outstanding options, rights of first offer or rights of first
refusal to purchase such Owned Real Property or any portion thereof or interest therein.

          (c) With respect to the Leased Real Property, the Division Subsidiaries have delivered to the
WCAS Subs a true and complete copy of each such Real Property Lease. Except as set forth in
Section 3.10 of the Disclosure Letter, with respect to each of the Real Property Leases: (i) such
lease is in full force and effect, (ii) the transactions contemplated by this Agreement do not
require the consent of any other party to such lease, will not result in a

19

 

material breach of or
material default under such lease, or otherwise cause such lease to cease to be legal, valid,
binding, enforceable and in full force and effect on identical terms following the Closing, (iii)
to the Knowledge of WIN, the Division Subsidiaries’ possession and quiet enjoyment of the Leased
Real Property under such lease has not been disturbed and there are no material disputes with
respect to such lease, (iv) neither the Division Subsidiaries nor any other party to the Real
Property Leases is in material breach or default under such lease, and no event has occurred or
circumstance exists which, with the delivery of notice, the passage of time or both, would
constitute such a breach or default, or permit the termination, modification or
acceleration of rent under such lease, (v) to the Knowledge of WIN, no security deposit or
portion thereof deposited with respect to such lease has been applied in respect of a breach or
default under such lease which has not been redeposited in full, (vi) the Division Subsidiaries do
not owe, nor will the Division Subsidiaries owe in the future, any material brokerage commissions
or finder’s fees with respect to such lease; (vii) the other party to such lease is not an
Affiliate of the Division Subsidiaries, (viii) the Division Subsidiaries are not, in any material
respect, currently subleasing, licensing or otherwise granting any Person the right to use or
occupy such Leased Real Property or any portion thereof, (ix) the Division Subsidiaries are not, in
any material respect, currently assigning or granting any other security interest in such lease or
any interest therein; and (x) there are no Liens or encumbrances on the estate or interest created
by such lease.

     3.11 Intellectual Property.

          (a) The Division Subsidiaries own or possess, or will upon execution of the Ancillary
Agreements prior to or at Closing own or possess, all right, title and interest in and to, free and
clear of all Liens, or valid and enforceable and adequate licenses or other legal rights to use,
all Intellectual Property Rights (other than those arising under any contracts, agreements or
arrangements as are listed in Section 6.2 of the Disclosure Letter) as are necessary to permit the
operation of the Division substantially as operated on the date hereof (collectively, the
“Division Intellectual Property Rights”).

          (b) Section 3.11(b) of the Disclosure Letter sets forth a list of all U.S., foreign and
multi-national: (i) patents and patent applications; (ii) registrations and applications for
registrations of Marks (including Internet domain name registrations) and material unregistered
Marks; (iii) copyright registrations and copyright applications filed or issued during the period
from July 1, 2005 through June 30, 2006; and (iv) material software products, in each case, owned
by any of the Division Subsidiaries. The material Intellectual Property Rights required to be set
forth in Section 3.11(b) of the Disclosure Letter are, to the Knowledge of WIN, valid, subsisting
and enforceable.

          (c) Section 3.11(c) of the Disclosure Letter lists all material agreements to which any of the
Division Subsidiaries is a party or otherwise bound and pursuant to which any of the Division
Subsidiaries have granted or obtained any Intellectual Property Rights (excluding any such
agreements for software that is commercially available to consumers for a combined license and
maintenance fee of less than Fifty Thousand Dollars ($50,000) per year or subject to “shrink-wrap”
or “click-through” license agreements or listed in Section 6.2 of the Disclosure Letter) the
“Material IP Agreements”).

20

 

          (d) (i) No claims, or, to the Knowledge of WIN, threat of claims, have been asserted by any
Person related to the use in the operation of the Division of any Intellectual Property Rights or
challenging or questioning the validity, effectiveness, ownership, or enforceability of any
material Division Intellectual Property Rights, (ii) to the Knowledge of
WIN, the operation of the Division, as operated as of the date hereof, does not infringe on,
misappropriate or otherwise conflict with the Intellectual Property Rights of any Person in any
material respect, and neither WIN nor the Division Subsidiaries have received any notice relating
to any of the foregoing, (iii) to the Knowledge of WIN, no Person has infringed, misappropriated or
otherwise conflicted with the Division Intellectual Property Rights in any material respect, and
(iv) all filings, registrations and issuances pertaining to the material Intellectual Property
Rights owned by the Division Subsidiaries, including any and all patents, registered Marks and
copyright registrations, are in full force and effect and one of the Division Subsidiaries has good
and marketable title thereto. None of the Division Intellectual Property Rights are subject to any
outstanding consent, settlement, order, decree, injunction, judgment or ruling restricting the use
thereof.

          (e) All of the Division Intellectual Property Rights shall be owned or available for use by
the Division Subsidiaries immediately after the Closing on terms and conditions substantially
similar to those under which the Division Subsidiaries owned or used the Division Intellectual
Property Rights immediately prior to the Closing.

     3.12
Litigation. There are no actions, suits, proceedings, investigations and
inquiries (“Litigation”) pending, asserted or, to the Knowledge of WIN, threatened in
writing to be asserted by or before any Governmental Entity or arbitration panel, by or on behalf
of any third party, against Holdings or any of the Division Subsidiaries or against WIN relating to
the Division. No Litigation contemplated in the preceding sentence, if adversely determined,
individually or in the aggregate, would reasonably be expected to: (a) result in a Company Material
Adverse Effect or (b) prevent or materially impair or delay the ability of Holdings or any of the
Division Subsidiaries to consummate the transactions contemplated by this Agreement and the
Ancillary Agreements. There are no material outstanding judgments, decrees or orders of any court,
arbitration panel or Governmental Entity, affecting Holdings, any of the Division Subsidiaries or
against WIN relating to the Division or the assets of the Division.

     3.13 Employee Benefit Plans.

          (a) Section 3.13(a) of the Disclosure Letter sets forth a true and complete list of: each
material deferred compensation and each bonus or other incentive compensation, stock purchase,
stock option and other equity compensation plan, program, agreement or arrangement; each material
severance or termination pay, medical, surgical, hospitalization, life insurance and other
“welfare” plan, fund or program (within the meaning of section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”));

21

 

each material profit-sharing, stock
bonus or other “pension” plan, fund or program (within the meaning of section 3(2) of ERISA); each
employment, termination or severance agreement; and each other material employee benefit plan,
fund, program, agreement or arrangement, in each case, that is sponsored, maintained or contributed
to or required to be contributed to by WIN or by any trade or business, whether or not incorporated
(an “ERISA Affiliate”), that together with
WIN, Holdings or any Division Subsidiary at any relevant time would be deemed a “single
employer” within the meaning of section 4001(b) of ERISA or section 414 of the Code, or to which
WIN, Holdings or any Division Subsidiary or an ERISA Affiliate is party, whether written or oral,
for the benefit of any current or former employee, officer, director, or contractor of Holdings or
the Division Subsidiaries who will be a Continuing Division Employee under this Agreement (the
“WIN Plans”). There are no WIN Plans in which only Holdings and/or any of the Division
Subsidiaries participates or which cover only current or former employees, officers, directors or
contractors of Holdings and/or any Division Subsidiary or with respect to which Holdings and/or any
Division Subsidiary will have any liability or obligation at or after the Effective Time.

          (b) With respect to each WIN Plan in which Continuing Division Employees participate, WIN has
heretofore delivered or made available to the WCAS Subs true and complete copies of the WIN Plan
and any amendments thereto, or the applicable Summary Plan Description.

          (c) No liability or obligation under (i) Title IV or section 302 of ERISA or section 412 of
the Code, (ii) any “multiple employer welfare arrangement” as defined in section 3(40) of ERISA or
(iii) any “multiple employer plan” within the meaning of section 210 of ERISA or section 413(c) of
the Code, in any case, has been or could be incurred by WIN or any ERISA Affiliate which could
reasonably be expected to result in a material liability or obligation to the WCAS Subs, Holdings
or any Division Subsidiary.

          (d) There has been no material failure of a WIN Plan that is a group health plan (as defined
in section 5000(b)(1) of the Code) to meet the requirements of section 4980B(f) of the Code with
respect to a qualified beneficiary (as defined in section 4980B(g) of the Code) which could
reasonably be expected to result in a material liability to the WCAS Subs or Holdings or any
Division Subsidiary. None of Holdings or any Division Subsidiary has any current or potential
liability or obligation to provide post-employment or post-termination welfare or welfare-type
benefits to any current or former employee of Holdings and/or any Division Subsidiary, except as
required by COBRA.

          (e) Neither WIN nor any ERISA Affiliate of WIN has incurred or could incur a withdrawal
liability with respect to any “multiemployer pension plan,” as defined in section 3(37) of ERISA,
which could reasonably be expected to result in a material liability or obligation to the WCAS
Subs, Holdings or any Division Subsidiary.

22

 

          (f) The consummation of the transactions contemplated by this Agreement will not, either alone
or in combination with another event, (i) entitle any current or former employee, officer, director
or contractor of Holdings or the Division Subsidiaries to severance pay, unemployment compensation
or any other payment, or (ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer, director or contractor.

          (g) There are no pending or, to the Knowledge of WIN, threatened claims, actions, proceedings,
hearings, audits, examinations, investigations, or suits by or on behalf of any WIN Plan in which
Continuing Division Employees participate, by any employee or beneficiary covered under any such
WIN Plan, or otherwise involving any such WIN Plan (other than routine claims for benefits).

     3.14 Taxes.

          (a) All material federal, state, local, and foreign Tax Returns relating to the Division
required to be filed by or on behalf of Holdings or the Division Subsidiaries, and each
consolidated, combined, unitary, affiliated or aggregate group of which Holdings or any of the
Division Subsidiaries are a member (an “Affiliated Group”) has been timely filed (taking
into account applicable extensions), and each such Tax Return was complete and correct in all
material respects.

          (b) All material Taxes relating to the Division due and owing by Holdings or the Division
Subsidiaries, or any Affiliated Group have been paid, and all material Taxes relating to Holdings
and the Division Subsidiaries for any taxable period (or portion thereof) beginning on or prior to
the Closing Date (which are not yet due and payable) have been properly reserved for in the books
and records of Holdings.

          (c) No audits or other administrative proceedings or proceedings before any taxing authority
are presently pending with regard to any Taxes or Tax Return of Holdings or any Division
Subsidiary, as to which any taxing authority has asserted (in writing) any claim which, if
adversely determined, would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, and, to the Knowledge of WIN, no taxing authority is now asserting
(in writing) any deficiency or claim for Taxes or any adjustment to Taxes with respect to which
Holdings or any Division Subsidiary may be liable with respect to income or other material Taxes
which has not been fully paid or finally settled.

          (d) Holdings and each Division Subsidiary have duly and timely withheld all material Taxes
required to be withheld and such withheld Taxes have either been duly and timely paid to the proper
taxing authority or properly set aside in accounts for such purpose and will be duly and timely
paid to the proper taxing authority.

23

 

          (e) Neither Holdings nor any of the Division Subsidiaries (i) are party to or bound by or has
any obligation under any Tax separation, sharing or similar agreement or arrangement, (ii) are or
has been a member of any consolidated, combined or unitary group for purposes of filing Tax Returns
or paying Taxes (other than a group of which WIN or ALLTEL Corporation, a Delaware corporation, is
the common parent corporation) or (iii) has entered into
a closing agreement pursuant to Section 7121 of the Code, or any predecessor provision or any
similar provision of State or local law.

          (f) There are no Liens relating to Taxes upon the assets of Holdings or the Division
Subsidiaries other than Liens relating to Taxes not yet due and payable.

          (g) There are no outstanding agreements or waivers or other documents having the effect of
waiving or extending the statutory period of limitation applicable to any Tax Return of the
Affiliated Group or Holdings or any of the Division Subsidiaries, and no power of attorney has been
filed with any taxing authority.

          (h) Neither Holdings nor any Division Subsidiary are party to any listed transactions, the
principal purpose of which was tax avoidance, within the meaning of Sections 6011, 6111 and 6112 of
the Code.

          (i) Neither Holdings nor any Division Subsidiary has agreed to make or is required to make any
adjustment for a taxable period ending after the Effective Time under Section 481(a) of the Code by
reason of a change in accounting method or otherwise, except where such adjustments have not had,
and could not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.

          (j) The federal income Tax Returns of the Affiliated Group, Holdings and the Divisions
Subsidiaries have been examined, and such examinations have been resolved, or the statute of
limitations has expired, for all taxable years through 2000.

          (k) For purposes of this Agreement (i) “Tax” (and, with correlative meaning,
“Taxable”) shall mean (A) any and all U.S. federal, state, local and foreign taxes,
including income, alternative or add-on minimum, gross receipts, profits, lease, service, service
use, wage, employment, workers compensation, business occupation, environmental, estimated, excise,
sales, use, transfer, license, payroll, franchise, severance, stamp, occupation, windfall profits,
withholding, social security, unemployment, disability, ad valorem, capital stock, paid in capital,
recording, registration, property, real property gains, value added, business license, custom
duties and other taxes, charges, fees, levies, imposts, duties or assessments of any kind
whatsoever, imposed or required to be withheld by any Taxing Authority, including any interest,
additions to Tax or penalties applicable or related thereto, (B) any liability for the Taxes of any
Person under Treasury Regulation Section 1.1502-6 (or similar provision of state or local law), and
(C) any liability for the payment of any amount of a type described in clause (A) or clause

24

 

(B) as a result of any obligation to indemnify or otherwise assume or succeed to the liability of any
other Person, and (ii) “Tax Return” means any return, report or similar statement
(including the attached schedules) required to be filed with respect to any Tax, including any
information return, claim for refund, amended return or declaration of estimated Tax.

     3.15 Material Contracts and Commitments.

          (a) Section 3.15 of the Disclosure Letter sets forth a complete and correct list of the
following oral and written contracts or arrangements pursuant to which Holdings or any of the
Division Subsidiaries is a party to or bound by or which relate to the operation of the Division or
the assets of the Division, other than any such contracts or arrangements that involve obligations
of Holdings or the Division Subsidiaries in any twelve-month period of $100,000 or less or which
are listed in Section 6.2 of the Disclosure Letter (individually, a “Material Contract”
and, collectively, the “Material Contracts”):

               (i) any contract that provides for payment to Holdings or any Division Subsidiary for
the performance of services in an amount in excess of $250,000 annually;

               (ii) any contract to be performed relating to capital expenditures in excess of
$100,000 in any calendar year, or in the aggregate requiring capital expenditures in excess
of $500,000 (except for any such contract referenced in clause (xii) below);

               (iii) any contract not entered into the ordinary course of business, requiring
payments by or to Holdings or any Division Subsidiary in excess of $500,000;

               (iv) any contract which contains restrictions with respect to payment of dividends or
any other distribution in respect of the capital stock or other equity interest of Holdings
or any Division Subsidiary;

               (v) any guarantee in respect of any indebtedness or obligation of any Person in an
amount in excess of $500,000 (other than with respect to any indebtedness or obligation of
Holdings or any Division Subsidiary);

               (vi) any contract limiting, in any material respect, the ability of Holdings or any
Division Subsidiary to operate the Division, engage in any line of business, operate in any
geographical area or to compete with any Person or to use any assets of the Division
(including the Intellectual Property Rights);

25

 

               (vii) any contract under which Holdings or any Division Subsidiary has borrowed or
loaned money in excess of $500,000 (excluding Intercompany Indebtedness), or any mortgage,
note, bond, indenture or other evidence of Indebtedness or guaranteed any other
Indebtedness under which it has imposed a Lien on
any of its assets, tangible or intangible or any guarantee of Indebtedness to
non-affiliated third parties;

               (viii) any material joint venture, jointly owned partnership or other similar joint
ownership agreements;

               (ix) contracts or consent decrees of Governmental Entities to which Holdings or any of
the Division Subsidiaries are bound;

               (x) any employment, collective bargaining, severance or change of control contract of
a Continuing Division Employee.

               (xi) any agreement (or group of related agreements) for the lease of real or personal
property to or from any Person providing for lease payments in excess of $100,000 per
annum;

               (xii) any agreement (or group of related agreements) for the purchase or sale of
materials, commodities, supplies, products, or other personal property, or for the
furnishing or receipt of services, the performance of which will extend over a period of
more than one (1) year and involve consideration in excess of $500,000;

               (xiii) any material agreement concerning obligations of confidentiality other than
those in the ordinary course of business or entered into prior to the date of this
Agreement with potential purchasers of the Division Subsidiaries;

               (xiv) any outstanding powers of attorney granting broad power on behalf of Holdings or
any of the Division Subsidiaries;

               (xv) any agreement for the employment of any employee on a full-time, part-time,
consulting, or other basis providing annual compensation in excess of $150,000 (other than
non-executive employees in the sales group);

               (xvi) any agreement under which it has advanced or loaned any amount to any employee
in excess of $10,000; and

26

 

               (xvii) any settlement, co-existence conciliation or similar agreement, the performance
of which will involve payment or other obligations after the Closing Date.

          (b) (i) Each of the Material Contracts is, in all material respects, in full force and effect,
except that (a) enforcement of any Material Contract may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other Laws, now or hereafter in effect, relating
to or limiting creditors’ rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought; (ii) there is no
pending material default under or material breach of any Material Contract by Holdings, any
Division Subsidiary of WIN or any of its Affiliates party thereto, and no event has occurred that,
with the lapse of time or the giving of notice or both, would constitute a material default
thereunder by Holdings, any Division Subsidiary of WIN or any of its Affiliates party thereto, and
(iii) no party to any such Material Contract has given written notice to Holdings, any Division
Subsidiary or any of its Affiliates of, or made a written claim against Holdings, any Division
Subsidiary of WIN or any of its Affiliates with respect to, any material breach or default
thereunder.

          (c) To the Knowledge of WIN, no other contracting party to any Material Contract is now in
material breach thereof or has breached the same in any material respect within the twelve-month
period prior to the date hereof.

          (d) None of Holdings, the Division Subsidiaries, WIN nor any of its Affiliates have received
written notice that any party to any Material Contract intends to cancel or terminate any such
Material Contract or to exercise or not to exercise any option or extension right thereunder
whether as a result of this transaction or otherwise.

     3.16
Compliance with Laws. Holdings and each of the Division Subsidiaries are,
and, to the Knowledge of WIN, have been since December 31, 2004, in compliance in all material
respects with all applicable laws, statutes, ordinances, rules, regulations and orders
(collectively, “Laws”) of all Governmental Entities with respect to the Division;
provided, however, that the provisions of Section 3.16 shall not apply to: (a) Laws
regarding intellectual property, which are addressed in Section 3.11 hereof; ERISA and other Laws
applicable to the WIN Plans, which are addressed in Section 3.13 hereof; (c) Laws regarding the
payment of Taxes, which are addressed in Section 3.14 hereof; (d) Laws regarding employment and
employment practices, which are addressed in Section 3.17 hereof; and (e) Environmental Laws, which
are addressed in Section 3.18 hereof. The Division Subsidiaries possess all material permits,
certificates, licenses, approvals, governmental franchises and other authorizations required under
applicable Laws (other than those referred to in clauses (a)-(e) above) in connection with the
operation of the Division as operated on the date hereof and the ownership of their respective
assets and properties and all such permits, certificates, licenses, approvals,
governmental franchises and other authorizations are validly held and in full force and
effect.

27

 

The Division Subsidiaries are now and since December 31, 2004 have been in all material
respects in compliance with the terms and conditions thereof.

     3.17
Labor Matters. With respect to the Division, (a) each of the Division
Subsidiaries is and, to the Knowledge of WIN, has been since December 31, 2004, in compliance with
all applicable Laws regarding employment and employment practices; (b) there are no unfair labor
practice charges or complaints against the Division Subsidiaries brought before the National Labor
Relations Board nor is there any material grievance nor any material arbitration proceeding arising
out of or under collective bargaining agreements with respect to the business of the Division
Subsidiaries, nor, to the Knowledge of WIN, is any such charge, complaint, grievance or proceeding
threatened; (c) there is no, and since December 31, 2004 there has not been any, labor strike or
work stoppage pending or, to the Knowledge of WIN, threatened against the Division Subsidiaries;
and (d) there is no charge or complaint pending or, to the Knowledge of WIN, threatened against the
Division Subsidiaries before the Equal Employment Opportunity Commission or any similar state,
local or foreign agency responsible for the prevention of unlawful employment practices, except, in
each of (a) through (d) herein, as would not, individually or in the aggregate, reasonably be
expected to result in a Company Material Adverse Effect. To the Knowledge of WIN and with respect
to the Division, no Division Subsidiary has received written notice of the intent of any federal,
state, local or foreign Governmental Entity responsible for the enforcement of employment Laws to
conduct an investigation of or relating to the Division Subsidiaries, and no such investigation is
in progress, except as would not, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect.

     3.18 Environmental.

          (a) Since December 31, 2004, Holdings and the Division Subsidiaries have at all times been,
and are, in compliance, in all material respects, with all applicable Environmental Laws,
including, but not limited to, possessing and complying, in all material respects, with all permits
and other governmental authorizations required for their operations under applicable Environmental
Laws.

          (b) There is no pending or threatened material claim, complaint, investigation, lawsuit, or
administrative proceeding against Holdings or the Division Subsidiaries under or pursuant to any
Environmental Law.

          (c) None of Holdings or the Division Subsidiaries has received written notice from any Person,
including but not limited to any Governmental Entity, alleging that Holdings or said Division
Subsidiary has been or is in material violation or potentially in material violation of any
applicable Environmental Law or otherwise may be materially liable under any applicable
Environmental Law, other than violations or liabilities or alleged violations or liabilities that
have been resolved.

28

 

          (d) None of Holdings or the Division Subsidiaries is a party or subject to any material
administrative or judicial order or decree pursuant to the Environmental Laws.

          (e) With respect to Real Property that currently is or has been owned, leased or operated by
Holdings or any Division Subsidiary or, to the Knowledge of WIN, any related offsite disposal
location, there have been no Releases of Hazardous Substances on or underneath any of such Real
Property that individually or in the aggregate would reasonably be expected to result in a Company
Material Adverse Effect.

          (f) The representations and warranties set forth in this Section 3.18 are the sole and
exclusive representations relating to Environmental Laws and environmental matters in this
Agreement.

     3.19 Transactions with Affiliates. With respect to the Division, Section 3.19 of
the Disclosure Letter sets forth a true and complete list as of the date hereof of all written and
oral contracts, agreements, leases, arrangements, inter-company accounts and obligations (including
Intercompany Indebtedness) to which Holdings or the Division Subsidiaries, on the one hand, and WIN
or any of its Subsidiaries or Affiliates (other than Holdings or the Division Subsidiaries), on the
other hand, are a party (“Intercompany Agreements”) that are in effect as of the date
hereof, including such contracts, agreements or arrangements as will be terminated at or prior to
the Closing without any liability to Holdings or the Division Subsidiaries, but excluding any
contracts, agreements or arrangements as are listed in Section 6.2 of the Disclosure Letter.

     3.20 Insurance. With respect to the Division, Section 3.20 of the Disclosure
Letter sets forth a true and complete list as of the date hereof of all material insurance policies
maintained by WIN, Holdings and the Division Subsidiaries. All such insurance policies are in full
force and effect on the date hereof and each such policy will be in full force and effect as of the
Closing Date or a substituted policy shall have been obtained therefore. To WIN’s Knowledge, none
of WIN, Holdings or the Division Subsidiaries are in material default with respect to its
obligations under any such insurance policies. To WIN’s Knowledge, none of WIN, Holdings or the
Division Subsidiaries have received a notice of cancellation or non-renewal of any such policy or
binder.

     3.21 Assets of the Division. Each of the Division Subsidiaries has, or will have
upon transfer to such Division Subsidiary in connection with the Restructuring Transactions, good
and marketable title to the material assets and properties reflected in the Interim Balance Sheet
(except assets or properties sold or otherwise disposed of in the ordinary course of business),
owned by it (or to be transferred to it pursuant to the Restructuring Transactions). The delivery
to the WCAS Subs of the instruments of transfer of ownership contemplated by this Agreement will at
the time of the Closing Date vest good and marketable title to the Holding Shares in the WCAS Subs.
Except for the services to be provided under the WIN Transition Services Agreement or the other
Ancillary Agreements or such assets or services as are governed by the agreements set forth in
Section 6.2 of the Disclosure Letter, the assets of the Division Subsidiaries constitute all of the
assets necessary to operate the Division in substantially the same manner as it is operated as of
the date hereof. The Division Subsidiaries are the only Subsidiaries of WIN that presently are active and primarily engaged in the operation of the
Division.

29

 

     3.22 Newly Formed Entity. Holdings is a Delaware corporation, newly formed by WIN
solely for the purpose of engaging in the transactions contemplated by this Agreement. Holdings
has no other purpose other than holding all of the Subsidiary Shares.

     3.23 Brokers. Except for Goldman, Sachs & Co. and Stephens Inc., no broker,
finder or financial advisor or other Person is entitled to any brokerage fees, commissions,
finders’ fees or financial advisory fees in connection with the transactions contemplated hereby by
reason of any action taken by WIN, Holdings or any Division Subsidiary. Such fees and expenses of
Goldman, Sachs & Co. and Stephens Inc. shall be borne by WIN.

     3.24 NO OTHER REPRESENTATIONS. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
EXPRESSLY SET FORTH IN THIS ARTICLE III, WIN HAS NOT MADE AND DOES NOT HEREBY MAKE ANY EXPRESS OR
IMPLIED REPRESENTATIONS OR WARRANTIES, STATUTORY OR OTHERWISE, OF ANY NATURE, INCLUDING WITH
RESPECT TO ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AS TO THE MERCHANTABILITY, QUALITY,
QUANTITY, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE ASSETS AND PROPERTIES OF OR THE
RESULTS TO BE OBTAINED BY THE DIVISION. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY
SET FORTH IN THIS ARTICLE III, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, STATUTORY, COMMON LAW OR
OTHERWISE, OF ANY NATURE, INCLUDING WITH RESPECT TO THE MERCHANTABILITY, QUALITY, QUANTITY,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE ASSETS AND PROPERTIES OF OR THE RESULTS TO
BE OBTAINED BY THE DIVISION SUBSIDIARIES, ARE HEREBY DISCLAIMED BY WIN.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENTS AND WCAS SUBS

     Except as set forth in the Disclosure Letter, each of the Parents and each of the WCAS Subs
represents and warrants to WIN as follows as of the date of this Agreement and as of the Closing
(except to the extent made as of an earlier date, in which case, as of such earlier date):

     4.1 Organization; Authority. Each Parent and each WCAS Sub is a limited partnership duly
organized, validly existing and in good standing under the Laws of the State of Delaware. The
Parents and the WCAS Subs each have all requisite limited partnership power and authority to enter
into this Agreement and such of the Ancillary Agreements to which the Parents and each WCAS Sub is
a party, to perform their respective obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and performance by the
Parents and each WCAS Sub of this Agreement, and the consummation of the transactions contemplated
hereby and thereby, have been duly

30

 

authorized by all necessary action, corporate or otherwise, on the part of the Parents and each
WCAS Sub. This Agreement has been (and each such Ancillary Agreement to which any Parent or any
WCAS Sub is a party upon execution and delivery will be) duly executed and delivered by the Parents
and each WCAS Sub, as applicable, and constitutes (and each such Ancillary Agreement to which any
Parent or any WCAS Sub, as applicable, is a party, upon execution and delivery, will constitute) a
valid and binding obligation of the Parents or any WCAS Sub, as applicable, enforceable against the
Parents or any WCAS Sub in accordance with its and their respective terms, except that (i) such
enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other Laws, now or hereafter in effect, relating to or limiting creditors’ rights
generally and (ii) the remedy of specific performance and injunctive and other forms of equitable
relief, may be subject to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

     4.2 No Violation; Consents and Approvals. The execution and delivery by the WCAS Subs of
this Agreement and each of the Ancillary Agreements to which each Parent and each WCAS Sub is a
party, and the performance of their respective obligations hereunder and thereunder and compliance
with the terms hereof and thereof will not (with or without written notice or lapse of time, or
both), conflict with, or result in any violation of or default under, or give rise to a right of
termination or cancellation, or result in the creation of any Lien upon any of the properties or
assets of the Parents or the WCAS Subs, as applicable, under, (a) any provision of the certificate
of limited partnership, operating agreement or similar organizational documents of the Parents or
the WCAS Subs, (b), subject to the consents and approvals set forth in the last sentence of this
Section 4.2, any judgment, order or decree, or statute, law, ordinance, rule or regulation
applicable to the Parents or the WCAS Subs or (c) any material note, bond, mortgage, indenture,
license, agreement, lease or other instrument or obligation to which any Parent or any WCAS Sub is
a party or by which any Parent or any WCAS Sub or their respective assets may be bound, other than
any such items as to which requisite waivers or consents have been obtained or which would not,
individually or in the aggregate, reasonably be expected to prevent or materially impair or delay
the Parents’ or the WCAS Subs’ ability to consummate the transactions contemplated hereby and
thereby. No consent, approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with respect to the Parents
or any WCAS Sub or their Affiliates in connection with the execution and delivery of this Agreement
or such of the Ancillary Agreements to which each Parent and each WCAS Sub is a party, or the
consummation by the Parents or the WCAS Subs of the transactions contemplated hereby and thereby,
other than, in each case, compliance with and filings under the HSR Act, except for any such
consents, approvals, orders or authorizations of or registrations, declarations or filings, the
failure of which to be obtained or made would not, individually or in the aggregate, reasonably be
expected to prevent or materially impair or delay the Parents’ or the WCAS Subs’ ability to
consummate the transactions contemplated by this Agreement and the Ancillary Agreements.

     4.3 Title to Exchanged WIN Shares. At the Closing, each WCAS Sub will have good and valid
title to its respective Exchanged WIN Shares, free and clear of all Liens, and upon delivery to WIN
at the Closing and the Second Closing of certificates representing the Exchanged WIN Shares, duly
endorsed by each WCAS Sub for transfer to WIN or accompanied by stock powers duly executed in
blank, and upon receipt by the WCAS Subs of the Holdings Shares and any cash payment required to be
made by WIN pursuant to Section 1.6(a) hereof,

31

 

good and valid title to the Exchanged WIN Shares will pass to WIN, free and clear of any Liens.
Other than this Agreement, the Exchanged WIN Shares are not subject to any voting trust agreement
or other contract, agreement, arrangement, commitment or understanding, including any such
agreement, arrangement, commitment or understanding restricting or otherwise relating to the
voting, dividend rights or disposition of the Exchanged WIN Shares.

     4.4 Litigation. (a) There is no Litigation pending or, to the Knowledge of the Parents or
the WCAS Subs, threatened in writing against any Parent or any WCAS Sub, by or before any
Governmental Entity, or by or on behalf of any third party, which, if adversely determined, would
reasonably be expected to prevent or materially impair or delay the ability of any Parent or any
WCAS Sub to consummate the transactions contemplated by this Agreement and the Ancillary
Agreements, and (b) there are no outstanding judgments, decrees or orders of any court or
Governmental Entity, affecting any Parent or any WCAS Sub or their respective assets, which would
reasonably be expected to prevent or materially impair or delay the ability of any Parent or any
WCAS Sub to consummate the transactions contemplated by this Agreement and the Ancillary
Agreements.

     4.5 Capitalization of Division. The WCAS Subs will at the Closing have sufficient capital
to fund any amounts required to be paid hereunder (including applicable expenses). Assuming the
accuracy of the representations and warranties of WIN set forth in Article III hereof, after giving
effect to the transactions contemplated hereunder, (x) each of the WCAS Subs, Holdings and the
Division Subsidiaries will be “solvent” as of the Effective Time and (y) the Present Fair Saleable
Value of the respective assets of each of the WCAS Subs, Holdings and the Division Subsidiaries
will, as of the Effective Time, exceed (i) the value of all respective “liabilities of each of the
WCAS Subs, Holdings and the Division Subsidiaries, including contingent and other liabilities,” as
of the Effective Time, as such quoted terms are generally determined in accordance with applicable
federal Laws governing determinations of the insolvency of debtors, and (ii) the amount that will
be required to pay the probable respective liabilities of each of the WCAS Subs, Holdings and the
Division Subsidiaries on their debts as of the Effective Time (including contingent liabilities
known to the WCAS Subs) as such debts become absolute and matured. For purposes of this Agreement,
“Solvent,” when used with respect to the WCAS Subs, Holdings and the Division Subsidiaries,
means that (i) the Present Fair Saleable Value of the WCAS Subs’, Holdings’, and each Division
Subsidiary’s respective assets will exceed all of its respective liabilities, contingent or
otherwise, (ii) none of the WCAS Subs, Holdings or the Division Subsidiaries will have an
unreasonably small amount of capital for the business in which it is engaged and (iii) the WCAS
Subs, Holdings and each of the Division Subsidiaries will be able to pay their respective debts as
they become absolute and mature, taking into account the timing of and amounts of cash to be
received by them and the timing of and amounts of cash to be payable on or in respect to its
Indebtedness, in each case after giving effect to the transactions contemplated hereunder. The
term “Solvency” shall have a correlative meaning. For purposes of the definition of
“Solvent”, (A) “debt” means liability on a “claim”; and (B) “claim” means
(i) any 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 right to payment, whether or not such equitable remedy is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured. “Present Fair Saleable 

32

 

Value” means the amount that may be realized if the aggregate assets of the WCAS Subs,
Holdings and the Division Subsidiaries (including goodwill), as applicable, are sold as an entirety
with reasonable promptness in an arm’s length transaction under present conditions for the sale of
comparable business enterprises.

     4.6 Acquisition of the Holdings Shares for Investment. The WCAS Subs are acquiring the
Holdings Shares for investment purposes only and not with any present intention of distributing or
selling the Holdings Shares in violation of any federal, state or other United States securities
Laws.

     4.7 Investigation by the WCAS Subs. The Parents and the WCAS Subs have conducted their own
independent investigation, review and analysis of the business, operations, assets, liabilities,
results of operations, financial condition, software, technology and prospects of Holdings and the
Division Subsidiaries, which investigation, review and analysis was done by the Parents and the
WCAS Subs and their respective Affiliates and, to the extent the Parents or the WCAS Subs deemed
appropriate, by the Parents’ or the WCAS Subs’ representatives. The Parents and the WCAS Subs
acknowledge that WIN has provided the Parents and the WCAS Subs with access to the properties,
premises, contracts and records of Holdings and the Division Subsidiaries for this purpose. Except
as and to the extent expressly set forth herein and subject to the limitations and restrictions
contained herein, the Parents and the WCAS Subs (i) acknowledge that, except for those
representations or warranties expressly set forth in this Agreement, they shall not be entitled to
rely on any representation or warranty, either express or implied, previously made by WIN or its
agents, representatives, employees or Affiliates as to the accuracy or completeness of any of the
information provided or made available to the Parents or the WCAS Subs or their respective agents
or representatives, and (ii) agree that none of WIN, Holdings nor the Division Subsidiaries or any
of their respective agents, representatives, employees or Affiliates has or shall have any
liability or responsibility whatsoever to the Parents or the WCAS Subs or any of their respective
agents or representatives on any basis (including in contract or tort, under federal or state
securities Laws) based upon any information provided or made available, or statements made, to the
Parents or the WCAS Subs or their respective agents or representatives prior to the date hereof,
other than pursuant to this Agreement with regard to representations and warranties made herein.

     4.8 Brokers. Except for Wachovia Securities, LLC, no broker, finder or financial advisor
or other Person is entitled to any brokerage fees, commissions, finders’ fees or financial advisory
fees in connection with the transactions contemplated hereby or by the Ancillary Agreements by
reason of any action taken by the Parents or the WCAS Subs. Such fees and expenses of Wachovia
Securities, LLC shall be borne by the WCAS Subs.

ARTICLE V

COVENANTS OF THE PARTIES

     5.1 Conduct of the Division. Except as contemplated by the terms of this Agreement, as
required in connection with the Restructuring Transactions, the Contribution, the Debt Exchange or
the Holdings Financing or as set forth in Section 5.1 of the Disclosure Letter,

33

 

during the period from the date hereof to the Closing Date, WIN shall, and shall cause Holdings and
the Division Subsidiaries to, operate the Division only in the ordinary course of business,
consistent with past practice. For the avoidance of doubt, each WCAS Sub acknowledges that WIN may
cause Holdings and the Division Subsidiaries to pay dividends or other distributions, and incur,
repay, cancel or forgive Intercompany Indebtedness, at any time and from time to time prior to the
Closing Date; provided that WIN shall reduce the amount of the Special Dividend to
reflect any dividends or distributions paid by Holdings and the Division Subsidiaries from the date
hereof prior to the Closing Date to the extent those dividends or distributions reduce WIN’s tax
basis in the Division Subsidiaries. Without limiting the generality of the foregoing, except as
expressly contemplated by this Agreement, as required in connection with the Restructuring
Transactions, the Contribution, the Debt Exchange or the Holdings Financing or as set forth in
Section 5.1 of the Disclosure Letter, during the period from the date of this Agreement to the
Closing Date, without the prior written consent of the WCAS Subs (which will not be unreasonably
conditioned, withheld or delayed), WIN, with respect to the Division, shall not permit Holdings or
the Division Subsidiaries to:

          (a) amend their respective certificates of incorporation or bylaws;

          (b) split, combine or reclassify any of their capital stock or other equity interests or issue
or authorize the issuance of any other securities in respect of, in lieu of or in substitution for
shares of their capital stock or other equity interests;

          (c) issue, sell, deliver, pledge or otherwise encumber any shares of capital stock of Holdings
or the Division Subsidiaries or any securities convertible into or exchangeable for any shares of
capital stock of Holdings or the Division Subsidiaries, or grant or enter into any options,
warrants, rights, agreements or commitments with respect to the issuance of such capital stock, or
amend any terms of any such securities or agreements;

          (d) issue any note, bond or other debt security or created, incurred, assumed or guaranteed
any Indebtedness;

          (e) impose any Lien upon any of its assets, tangible or intangible;

          (f) increase the rate of compensation of, or pay or agree to pay any benefit to, any
Continuing Division Employee, except as may be required by any existing plan, including, any WIN
Plan, agreement or arrangement, and except in the ordinary course of business, consistent with past
practice, including as part of the Division Subsidiaries’ normal periodic performance reviews and
related compensation and benefit increases;

          (g) enter into, adopt or amend in any material respect any employment (not terminable at
will), severance or change of control agreement, except as required by Law;

34

 

          (h) enter into, adopt, amend or terminate any collective bargaining agreement, other than any
adoption, amendment or termination (i) required by the terms of any existing agreements or (ii)
required by Law;

          (i) sell, lease, license, transfer, abandon, permit to lapse or otherwise dispose of any
properties or assets, real, personal or mixed (including material Intellectual Property Rights)
other than in the ordinary course of business consistent with past practice;

          (j) acquire by merging or consolidating with, or by purchasing the stock or a substantial
portion of the assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise acquire any assets
(other than inventory in the ordinary course of business of the Division Subsidiaries and other
than as permitted by clause (i) above) for consideration having a fair value in excess of $500,000,
for any single transaction or series of related transactions, or $1,000,000 in the aggregate;

          (k) except in the ordinary course of business consistent with past practice, enter into, amend
or modify in any material respect or terminate any Material Contract, Material IP Agreement or
material Real Property Lease;

          (l) delay or postpone the payment of accounts payable and other liabilities or accelerate the
payment of any of its receivables outside the ordinary course of business;

          (m) enter into any joint venture, jointly owned partnership or other similar joint ownership
agreements other than such agreements entered into in the ordinary course of business consistent
with past practice;

          (n) make or incur any capital expenditure involving more than $100,000, except in the ordinary
course of business, consistent with past practice;

          (o) make, change or rescind any election (including elections for any and all joint ventures,
partnerships and limited liability companies or other investments of Holdings or any Division
Subsidiary for which Holdings or any Division Subsidiary has the capacity to make such election),
change an annual accounting period, adopt or change any accounting method for Tax purposes, file
any amended material Tax Return, enter into any closing agreement, settle or compromise any Tax
claim or assessment relating to Holdings or any of the Division Subsidiaries, consent to any
extension or waiver of the limitation period applicable to any Tax claim or assessment relating to
Holdings or any of the Division Subsidiaries, or change in any material respect any of its methods
of reporting income or deductions for United States federal income tax purposes from those expected
to be employed in

35

 

the preparation of its United States federal income tax purposes for the taxable year ending
December 31, 2006, if such election, adoption, change, amendment, agreement, settlement, consent or
other action would have the effect of materially increasing the Tax liability of Holdings or any of
the Division Subsidiaries for any period ending after the Closing Date or materially decreasing any
Tax attribute of Holdings or any of its Subsidiaries existing on the Closing Date (except to the
extent that any such election, adoption, change, amendment, agreement, settlement, consent or other
action is required by Law);

          (p) cancel, forgive, settle or compromise, waive, or release any right or claim (or series of
related rights and claims) or any Litigation or Indebtedness other than such cancellation,
forgiveness, settlement, compromise or release; (i) involving less than $500,000 or (ii)
effectuated in connection with the termination of the Intercompany Agreements pursuant to Section
2.2(a) hereof or Intercompany Indebtedness pursuant to Section 2.2(b) hereof;

          (q) settle or compromise any material Tax liability, except in the ordinary course of
business;

          (r) make any change in their cash management practices or any method of accounting or
accounting practice or policy other than those required by GAAP or change in Law;

          (s) dissolve, wind-up or liquidate, other than such dissolution, winding-up or liquidation
which is in process on the date hereof;

          (t) make any loans or advances of money other than advances to WIN or its Subsidiaries in
accordance with its cash management practices, consistent with past practice;

          (u) engage in any non-recurring or unusual transactions within its affiliates accounts payable
account or other intercompany accounts (except in the ordinary course of business consistent with
past practice) or as otherwise contemplated in this Agreement; or

          (v) agree to do any of the foregoing or not to take any action required by this Agreement.

     5.2 Access to Information Prior to the Closing; Confidentiality; Cooperation.

          (a) During the period from the date of this Agreement through the Closing Date, WIN shall, and
shall cause Holdings and the Division Subsidiaries to, give the

36

 

WCAS Subs and its authorized employees, accountants, counsel, financing sources and other
representatives (such entities and representatives other than the WCAS Subs being referred to as
“WCAS Sub Representatives”) reasonable access during regular business hours to all offices,
personnel, facilities, books and records of WIN, Holdings and the Division Subsidiaries as they may
reasonably request, and shall furnish or cause to be furnished to the WCAS Subs such financial and
operating data and other information with respect to the business and properties of the Division as
the WCAS Subs may from time to time reasonably request; provided, however, (i) that
the WCAS Subs and WCAS Sub Representatives shall take such action as is deemed necessary in the
reasonable judgment of WIN to schedule such access and visits through only those representatives of
WIN set forth in Section 5.2 of the Disclosure Letter, and in such a way as to avoid unreasonably
disrupting the normal business of Holdings and the Division Subsidiaries, (ii) that Holdings and
the Division Subsidiaries shall not be required to take any action which would constitute (based on
the advice of counsel) a waiver of the attorney-client or other privilege, (iii) that WIN, Holdings
and the Division Subsidiaries need not supply the WCAS Subs or WCAS Sub Representatives with any
information which, based on the advice of counsel, Holdings or the Division Subsidiaries, they are
under a legal obligation not to supply and (iv) that WIN, Holdings and the Division Subsidiaries
shall not be required to supply WCAS Subs or WCAS Sub Representatives with any information that
does not relate primarily to the Division.

          (b) The WCAS Subs shall hold and shall cause the WCAS Sub Representatives to hold any
information which it or they receive in connection with the activities and transactions
contemplated by this Agreement and the Ancillary Agreements in strict confidence in accordance with
and subject to the terms of the Confidentiality Agreement, dated as of September 19, 2006, between
WIN and WCAS (the “Confidentiality Agreement”), which shall survive the execution and
delivery of this Agreement, and any termination of this Agreement pursuant to Article VIII hereof,
but shall not apply to any information regarding Holdings or the Division Subsidiaries upon
completion of the transaction contemplated hereby; provided that each WCAS Sub
acknowledges that any and all other information provided to it by WIN or WIN’s representatives
concerning WIN shall remain subject to the terms and conditions of the Confidentiality Agreement
after the Closing Date.

     5.3 Commercially Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto shall use all commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate the transactions contemplated by this Agreement and
the Ancillary Agreements at the earliest practicable date.

     5.4 Consents. Without limiting the generality of Section 5.3 hereof, each of the parties
hereto shall use commercially reasonable efforts to obtain all consents and approvals of all third
parties required under Material Contracts and Material IP Agreements (but without any payment of
money by WIN, its Subsidiaries or Affiliates) and all material licenses, permits, authorizations
and approvals of all Governmental Entities necessary in connection with the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements prior to the Closing.
Each of the Parties hereto shall make or cause to be made all filings and submissions under Laws
applicable to it as may be required for the consummation of

37

 

the transactions contemplated by this Agreement and the Ancillary Agreements. Each WCAS Sub and
WIN shall coordinate and cooperate with each other in exchanging such information and assistance as
any of the parties hereto may reasonably request in connection with the foregoing. Except for
those consents and approvals set forth in Section 7.1(d) of the Disclosure Letter or Section 7.1(d)
of this Agreement, the failure to obtain any consent or approval pursuant to this Section 5.4 shall
not result in a delay of the Closing or be deemed to be a failure to satisfy any of the conditions
set forth in Section 7.1 of this Agreement. If any consent or approval required in connection with
the assignment or transfer of any contract or agreement (including any such contract or agreement
referred in Section 2.2(c)) is not obtained, or would be ineffective, violate any applicable Law or
would adversely affect the rights of WIN or its Subsidiaries thereunder such that the Division
Subsidiaries would not in fact receive all rights under such contract or agreement, WIN and the
WCAS Subs shall cooperate in a mutually agreeable arrangement under which the WCAS Subs (directly
or indirectly through the Division Subsidiaries) would obtain the benefits and assume the
obligations thereunder in accordance with this Agreement, including sub-contracting, sub-licensing,
or sub-leasing to the WCAS Subs or the Division Subsidiaries, or under which WIN and its
Subsidiaries would enforce for the benefit of the WCAS Subs, with the WCAS Subs assuming WIN’s or
such Subsidiary’s obligations, any and all rights of WIN and its Subsidiaries against a third party
thereto; provided, however, that WIN or its Subsidiaries shall not be materially
and adversely affected as a result of providing such benefits.

     5.5 Antitrust Notification. Subject to Section 8.2(b) hereof, each WCAS Sub and WIN shall
use their respective commercially reasonable efforts to obtain all authorizations or waivers
required under the HSR Act to consummate the transactions contemplated hereby and by the Ancillary
Agreements, including (a) making all filings with the Federal Trade Commission (“FTC”) and
the Antitrust Division of the Department of Justice (the “DOJ”) required in connection
therewith (the initial filing to occur no later than ten (10) Business Days following the execution
and delivery of this Agreement), (b) responding as promptly as practicable to all inquiries
received from the FTC or DOJ for additional information or documentation, and (c) resolving any
objections that may be asserted by any Governmental Entity with respect to the transactions
contemplated by this Agreement in connection with any filings made in accordance with this Section
5.5. Each WCAS Sub and WIN shall furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any filing or submission
which is necessary under the HSR Act. WIN and each WCAS Sub shall keep each other apprised of the
status of any communications with, and any inquiries or requests for additional information from,
the FTC or DOJ. Notwithstanding anything to the contrary in this Agreement, each WCAS Sub and WIN
will use their respective commercially reasonable efforts to offer to take, or cause to be taken,
all other actions and do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement and the Ancillary
Agreements, including taking all such further action as reasonably may be necessary to resolve such
objections, if any, as the FTC or DOJ or state antitrust enforcement authorities or any other
person may assert under the HSR Act with respect to the transactions contemplated hereby, and to
avoid or eliminate each and every impediment under any Law that may be asserted by any Governmental
Entity with respect to the transactions contemplated hereby so as to enable the Closing to occur as
soon as expeditiously possible, including, without limitation, (i) proposing, negotiating,
committing to and effecting, by consent decree, hold separate order or otherwise, the sale,
divestiture or

38

 

disposition of such assets of the Division or of any WCAS Sub or any of their respective
Subsidiaries, and (ii) otherwise taking or committing to take actions that after the Closing Date
would limit the freedom of the Division or of any WCAS Sub or any of their respective Subsidiaries
with respect to, or its ability to retain, one or more of its or its Subsidiaries’ assets, in each
case, as may be required in order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any suit or proceeding which would
otherwise have the effect of preventing or materially delaying the Closing, provided,
however, that nothing in this Section 5.5 shall require or be construed to require any WCAS
Sub or any of their respective Subsidiaries to take any action, propose or make any divestiture or
other undertaking, or propose or enter into any consent decree, except for those that would not,
individually or in the aggregate, reasonably be expected to result in a Company Material Adverse
Effect following the Closing.

     5.6 Public Announcements. WIN and each WCAS Sub shall not, and WIN shall cause Holdings
and the Division Subsidiaries not to, issue any public report, statement or press release or
otherwise make any public statement with respect to this Agreement or the Ancillary Agreements and
the transactions contemplated hereby or thereby, from the date hereof through the Closing Date,
without prior consultation with and approval of the other party (which approval shall not be
unreasonably conditioned, withheld or delayed), except as may be required by Law or securities
exchange regulations applicable to any such party, in which case such party shall advise the other
party and discuss the contents of the disclosure before issuing any such report, statement or press
release. In addition, none of the WCAS Subs shall make any general communication to suppliers,
lenders, creditors, distributors, employees, customers or others having business or financial
relationships with Holdings or the Division Subsidiaries pertaining to this Agreement or the
Ancillary Agreements and the transactions contemplated hereby or thereby, without the prior written
approval of WIN (which approval will not be unreasonably conditioned, withheld or delayed).
Immediately following the execution and delivery of this Agreement, WIN and each WCAS Sub shall
issue a press release to be mutually agreed upon with respect to this Agreement and the
transactions contemplated hereby.

     5.7 Supplemental Disclosure; Notice.

          (a) WIN shall from time to time prior to the Closing promptly supplement or amend the
Disclosure Letter with respect to (i) any matter that existed as of the date of this Agreement and
should have been set forth or described in the Disclosure Letter and (ii) any matter hereafter
arising which, if existing as of the date of this Agreement, would have been required to be set
forth or described in the Disclosure Letter; provided, however, that, with respect
to clause (i) above, any such supplemental or amended disclosure shall not be deemed to have been
disclosed as of the date of this Agreement unless expressly consented to in writing by the WCAS
Subs; provided further, that, with respect to clause (ii) above, any such
supplement or amended disclosure shall, for purposes of this Agreement and the Ancillary Agreements
(other than for the purposes of determining whether the conditions set forth in Section 7.3 are
satisfied), be deemed to have been disclosed as of the date of this Agreement, but only to the
extent that the matters disclosed are (A) of a nature and order of magnitude comparable to the
matters disclosed in the Disclosure Letter as of the date hereof and (B) not as a result of a breach of the
covenants set forth in Section 5.1 hereof.

39

 

          (b) WIN shall promptly notify the WCAS Subs of, and furnish the WCAS Subs any information it
may reasonably request with respect to, the occurrence, to the Knowledge of WIN, of any event or
condition or the existence, to the Knowledge of WIN, of any fact that would cause any of the
conditions to any WCAS Sub’s obligation to consummate the exchange of the Exchanged WIN Shares for
the Holdings Shares not to be fulfilled.

     5.8 Records.

          (a) On the Closing Date or as soon as practicable thereafter, WIN shall deliver or cause to be
delivered to the WCAS Subs to the extent reasonably practicable all original agreements, documents,
books, records and files (collectively, “Records”), if any, in the possession of WIN
relating primarily to Holdings, the Division and the Division Subsidiaries to the extent not then
in the possession of Holdings or the Division Subsidiaries, subject to the following exceptions:

               (i) Each WCAS Sub recognizes that certain Records may contain incidental information
relating to Holdings or the Division Subsidiaries or may relate primarily to Subsidiaries
or divisions of WIN other than Holdings or the Division Subsidiaries, and that WIN may
retain such Records and shall, to the extent requested to do so, provide copies of the
relevant portions thereof to the WCAS Subs; and

               (ii) WIN may retain all Records prepared in connection with the exchange of the
Holdings Shares, including bids received from other parties and analyses relating to the
Division Subsidiaries.

          (b) Except for books and records relating to Taxes, which are addressed in the Tax Sharing
Agreement, following the Closing, each WCAS Sub shall permit WIN and its authorized
representatives, during normal business hours and upon reasonable notice, to have reasonable access
to, and examine and make copies of, all books, records and personnel of the Company which relate to
transactions or events occurring prior to the Closing (“Pre-Closing Transactions”) or
transactions or events occurring subsequent to the Closing which are related to or arise out of
Pre-Closing Transactions, to the extent such Pre-Closing Transactions relate to liabilities
retained by WIN pursuant to this Agreement or as necessary to comply with applicable financial
reporting obligations. Each WCAS Sub agrees that Holdings shall retain all such books and records
for a period of seven (7) years following the Closing, or for such longer period following the
Closing as may be required by Law.

40

 

     5.9 Financial Statements. WIN covenants and agrees that during the period beginning on the
date of this Agreement and ending immediately prior to the Closing Date, it shall provide the WCAS
Subs (i) within 30 days of the end of each calendar month, the unaudited consolidated balance
sheets of the Division as of the end of such month and the related unaudited interim consolidated
statements of income and cash flows for such monthly period in such forms as have been prepared for
internal management purposes, and (ii) within thirty (30) days of the end of each fiscal quarter,
unaudited consolidated balance sheets of the Division as of the end of such quarter and the related
unaudited interim consolidated statements of income and cash flows for such quarterly period
setting forth in each case in comparative form the figures for the corresponding fiscal quarter of
the previous fiscal year in such forms as have been prepared for internal management purposes. WIN
shall use its commercially reasonable efforts to deliver to the WCAS Subs Audited Financial
Statements for fiscal years 2004, 2005 and 2006 as soon as practicable after the date hereof.

ARTICLE VI

ADDITIONAL AGREEMENTS

     6.1 Continuing Division Employees; Employee Benefits.

          (a) Continuation of Employment; Compensation. Effective as of, and for a period of
one year following the Closing, each WCAS Sub shall, and shall cause its Affiliates (including but
not limited to Holdings and the Division Subsidiaries) to, continue the employment of Continuing
Division Employees on terms and conditions with respect to salary, wages and bonus opportunities
that are substantially similar to those terms and conditions in effect as of immediately prior to
the Closing. Until the first anniversary of the Effective Time, each WCAS Sub shall cause the
Division Subsidiaries to provide (or cause to be provided) to Continuing Division Employees
benefits (excluding for this purpose equity-based plans or arrangements, incentives, defined
benefit pension plans, retiree welfare benefits and non-qualified deferred compensation plans) from
time to time that are no less favorable, in the aggregate, than the benefits provided to Continuing
Division Employees immediately prior to the Effective Time under the WIN Plans (other than any
equity-based plans or arrangements, incentives, defined benefit pension plans, retiree welfare
benefits and non-qualified deferred compensation plans). Nothing in this Agreement shall be
construed as prohibiting any WCAS Sub and its Affiliates (including but not limited to, Holdings
and the Division Subsidiaries) from terminating the employment of any Continuing Division Employee
at any time following the Closing Date and for any or no reason. If any WCAS Sub or their
Affiliates terminates, or causes any Division Subsidiary to terminate, the employment of any
Continuing Division Employee at any time on or after the Closing Date, the WCAS Subs or their
Affiliates shall be responsible for the severance costs, if any, of any such termination. For a
period of one year following the Closing, the WCAS Subs and their Affiliates (including but not
limited to Holdings and the Division Subsidiaries) shall pay severance benefits to the Continuing
Division Employees no less favorable than the terms set forth in Section 6.1(a) of the Disclosure
Letter.

41

 

          (b) Benefits. To the extent that a Continuing Division Employee commences
participation in an employee benefit plan, program or arrangement maintained by any WCAS Sub or any
Division Subsidiary (an “Applicable WCAS Sub Plan”) following the Closing Date, each WCAS
Sub shall, or shall cause the Division Subsidiaries and the Applicable WCAS Sub Plan to, (i)
credit each Continuing Division Employee’s service with the Division Subsidiaries, or any
predecessor employers to the Division Subsidiaries, to the extent credited under the analogous WIN
Plan as of the Closing Date, as service with such WCAS Sub for all purposes under such Applicable
WCAS Sub Plan, provided, however, that in no event shall the Continuing Division
Employees be entitled to such service credit to the extent that it would result in duplication of
benefits with respect to the same period of service or benefit accruals under a defined benefit
pension plan and except as otherwise provided in any employment agreement, (ii) cause any and all
pre-existing condition limitations, eligibility waiting periods, active employment requirements and
requirements to show evidence of good health under such Applicable WCAS Sub Plan, to the extent
that such conditions, exclusions and waiting periods would have been waived or satisfied under the
analogous WIN Plan in which such Continuing Division Employee participated immediately prior to the
Effective Time, to be waived in the plan year in which the Closing Date occurs with respect to such
Continuing Division Employee and such individual’s spouse and eligible dependents who become
participants in such Applicable WCAS Sub Plan and (iii) give credit for or otherwise take into
account under such Applicable WCAS Sub Plan the out-of-pocket expenses and annual expense
limitation amounts paid by each Continuing Division Employee under the analogous WIN Plan for the
plan year in which the Closing Date occurs.

          (c) Benefit Plan Liabilities. All WIN Plan liabilities and obligations accrued by WIN
with respect to Continuing Division Employees prior to the Closing shall be the liability of and
paid by WIN, and WIN shall assume, retain and be solely responsible for all other obligations and
liabilities relating to or at any time arising under or in connection with any WIN Plan or any
other “employee benefit plan” (as defined in section 3(3) of ERISA) or other benefit plan, program
or arrangement of any kind at any time maintained, sponsored or contributed or required to be
contributed to by WIN, Holdings, the Division Subsidiaries, or any ERISA Affiliate, or with respect
to which WIN, Holdings, any Division Subsidiary or any ERISA Affiliate has any current or potential
liability or obligation.

          (d) Vacation and Holiday Entitlements. The WCAS Subs shall (i) for the calendar year
in which the Closing Date occurs, cause the Division Subsidiaries to continue to provide to the
Continuing Division Employees the vacation and holiday entitlements set forth on Section 6.1(e) of
the Disclosure Letter (“Vacation Entitlements”) that are substantially equivalent to the
Vacation Entitlements of the Continuing Division Employees under the applicable Vacation
Entitlement policy in effect immediately prior to the Closing Date and (ii) assume all obligations
to Continuing Division Employees with respect to the accrued Vacation Entitlements, as and to the
extent accrued through the Closing Date in accordance with WIN Plan documents and set forth in
Actual Net Working Capital.

42

 

          (e) WIN Retirement Plans. Following the Closing, those Continuing Division Employees
who are, as of immediately prior to the Closing Date, participants in the Windstream Pension Plan,
Windstream Profit Sharing Plan or Windstream 401(k) Plan, as amended from time to time
(collectively, the “WIN Retirement Plans”), shall be given credit for vesting purposes only
under the WIN Retirement Plans for their service with the WCAS Subs and their Affiliates (including
without limitation Holdings and the Division Subsidiaries). The WCAS Subs and WIN agree to
cooperate following the Closing for purposes of effectuating the covenant set forth in the
immediately preceding sentence. As of the Closing Date, all Continuing Division Employees shall
cease all active participation under any WIN Retirement Plan in accordance with the applicable WIN
Retirement Plan documents; provided that WIN shall as of the Closing Date make
pro-rated matching and profit sharing contributions to the Windstream 401(k) Plan and Windstream
Profit Sharing Plan on behalf of all Continuing Division Employees for the plan year or portion
thereof ending on the Closing Date, disregarding for such purpose any end-of-year or other service
requirement to receive such contributions.

          (f) Disability. Notwithstanding any other provision of this Agreement, immediately
prior to the Closing WIN shall offer employment to each employee of Holdings or any Division
Subsidiary who is on disability leave. Any such employee who is able to and does return to work
within six (6) months of the Closing Date shall be offered employment by a Division Subsidiary.
WIN hereby agrees that any employee of Holdings or any Division Subsidiary who (i) as of the
Closing Date is receiving or entitled to receive short-term disability benefits and who
subsequently becomes eligible to receive long-term disability benefits, or (ii) as of the Closing
Date is receiving or entitled to receive long-term disability benefits, shall become eligible or
continue to be eligible, as applicable, to receive long-term disability benefits under WIN’s
long-term disability plan unless and until such individual is no longer disabled.

          (g) No Implication. Nothing contained in this Agreement, express or implied: (i)
shall be construed to establish, amend or modify any benefit plan, program or arrangement, (ii)
shall alter or limit the ability of any WCAS Sub, Holdings, any Division Subsidiary or any of their
Affiliates to amend, modify or terminate any benefit plan, program, agreement or arrangement at any
time assumed, established, sponsored or maintained by any of them in accordance with the terms of
such plan, program, agreement or arrangement and applicable Law, (iii) is intended to confer upon
any current or former employee any right to employment or continued employment for any period of
time by reason of this Agreement or (iv) is intended to confer upon any Person (including
employees, retirees, or dependents or beneficiaries of employees or retirees) any other rights as a
third-party beneficiary of this Section 6.1.

          (h) Additional Information. Following the date of this Agreement, WIN shall provide
Holdings and the WCAS Subs with such information and documentation as may be reasonably requested
by Holdings or any WCAS Sub for purposes of effecting the provisions of this Section 6.1.

43

 

     6.2 Certain Agreements. Prior to the Closing, the WCAS Subs and WIN shall cooperate and
use their commercially reasonable efforts (but without any payment of money by WIN, its
Subsidiaries or Affiliates) to negotiate with parties to the agreements listed, and in the manner
set forth, in Section 6.2 of the Disclosure Letter to either (a) amend or otherwise modify such
agreements in order to, at the Closing, include one or more of the Division Subsidiaries as a party
to each such agreement and set forth the respective rights and obligations of each of WIN and all
other parties thereto or (b) cause the parties to such agreement, other than WIN, its Subsidiaries
and Affiliates, to execute a new agreement with one or more of the Division Subsidiaries on terms
substantially similar (to the extent practicable) to those applicable to WIN, its Subsidiaries or
Affiliates prior to the Closing. Except for those consents and approvals set forth in Section
7.1(d) of the Disclosure Letter or Section 7.1(d) of this Agreement, the failure to obtain any
amendment, modification or new agreement pursuant to this Section 6.2 shall not result in a delay
of the Closing or be deemed to be a failure to satisfy any of the conditions set forth in Section
7.1 of this Agreement.

     6.3 Workers’ Compensation. Prior to Closing, the WCAS Subs shall use commercially
reasonable efforts to fulfill the necessary requirements of each state in which the Division
Subsidiaries operate with respect to workers’ compensation insurance, including posting surety
bonds or purchasing insurance policies. Each WCAS Sub shall use its commercially reasonable
efforts after the Closing to obtain a release of WIN from any and all obligations of the Company
with respect to workers’ compensation insurance.

     6.4 Use of WIN’s Name and Logo. It is expressly agreed that, except as provided in the
Publishing Agreement or any of the other Ancillary Agreements, the WCAS Subs are not purchasing,
acquiring or otherwise obtaining any right, title or interest in and to the name “Windstream” or
any trade names, trademarks, Internet domain names, identifying logos or service marks related
thereto or employing the word “Windstream” or any part or variation derivation of the foregoing or
any confusingly similar trade name, trademark, Internet domain name, logo or service Mark
(collectively, the “WIN Trademarks and Logos”). Notwithstanding the foregoing, the Parties
agree that during the period from the Closing Date until 180 days after the Closing Date (the
“Wind-down Period”), each WCAS Sub, Holdings and the Division Subsidiaries shall be
entitled to continue to use, and WIN hereby grants each WCAS Sub, Holdings and the Division
Subsidiaries a license to use, the WIN Trademarks and Logos to the extent that such WIN Trademarks
and Logos exist or are contained as of the Closing Date on any business cards, schedules,
stationery, displays, signs, promotional materials, manuals, forms, computer software and other
similar material used prior to the Closing Date in the operation of the Division. The nature and
quality of all uses of the WIN Trademarks and Logos made by each WCAS Sub, Holdings and the
Division Subsidiaries shall substantially conform to the quality standards employed by WIN as of
the Closing Date set by WIN and communicated to each WCAS Sub, Holdings or the Division
Subsidiaries either directly or indirectly. None of the WCAS Subs, Holdings and the Division
Subsidiaries shall use the WIN Trademarks and Logos in any manner which might reasonably be
expected to dilute, tarnish, disparage, or reflect adversely on WIN or the WIN Trademarks and
Logos. Each WCAS Sub agrees that immediately upon termination of the Wind-down Period, except as provided in the
Publishing Agreement or other Ancillary Agreements or otherwise agreed in writing by WIN, the WCAS
Subs, Holdings and the Division Subsidiaries shall cease and desist from all further use of the WIN
Trademarks and Logos and shall adopt new trade names, trademarks, Internet domain

44

 

names, identifying logos and service marks related thereto Marks which are not confusingly similar to the
WIN’s Trademarks and Logos. Further, it is expressly agreed that, the WCAS Subs are not
purchasing, acquiring or otherwise obtaining any right, title or interest in and to the name
“Alltel” or any name confusingly similar thereto or related name any derivation thereof, or, except
as provided in the Publishing Agreement or any of the other Ancillary Agreements, any name under
which either of the Division Subsidiaries may have been operated prior to the consummation of the
merger of Alltel Holding Corp. with and into Valor Communications Group, Inc., including any trade
names, trademarks, Internet domain names, identifying logos or service marks related thereto or
employing the word “Alltel” or any such other name or any part or variation of the foregoing or any
confusingly similar trade name, trademark, Internet domain name, logo or service mark.
Notwithstanding anything in this Section 6.4 to the contrary, Buyer shall cause Holdings and each
of the Division Subsidiaries to, promptly following the Closing Date, change its name to delete any
reference to “Windstream”, “Alltel”, “Valor” or any other WIN Trademarks and Logos (and to file
with the appropriate Governmental Entities any certificates or instruments required to effect such
name change).

     6.5 ALLTEL Non-Solicitation. From and after the Closing Date, the WCAS Subs shall, and
shall cause their respective Affiliates (including Holdings and the Division Subsidiaries) to honor
the non-solicitation obligations with respect to employees of ALLTEL Corporation and certain
related entities pursuant to Section 8.8(b) of that certain Distribution Agreement, dated as of
December 8, 2005, between ALLTEL Corporation and WIN or its Affiliate for the period specified
therein, as if the WCAS Subs, Holdings and the Division Subsidiaries were parties thereto.

     6.6 Termination of WCAS Securityholders Agreement. From and after the date hereof, until
the consummation of the transactions contemplated hereby or the earlier termination of this
Agreement in accordance with its terms, each of the parties to this Agreement shall, and shall
cause its respective Affiliates to, forebear from exercising any rights pursuant to the WCAS
Securityholders Agreement, including any right to cause WIN to register the Exchanged WIN Shares or
to take any action in connection therewith. Effective as of the Effective Time, each of the
parties to this Agreement hereby waives the applicability of any provision of the WCAS
Securityholders Agreement that may be triggered in connection with the transactions contemplated by
this Agreement. For the avoidance of doubt, under no circumstance shall any party to this
Agreement have any rights under the WCAS Securityholders Agreement with respect to the transactions
contemplated hereby after the Effective Time and each of the parties hereby agrees to forebear from
exercising such rights during the term of this Agreement. Each of the parties hereby covenants and
agrees that, effective as of the Closing, the WCAS Securityholders Agreement shall terminate and be
deemed cancelled in its entirety, and effective upon the termination and cancellation thereof, each
of the parties unconditionally and forever releases and discharges
each other party to the WCAS Securityholders Agreement from all obligations and liabilities arising thereunder. The foregoing
termination of the WCAS Securityholders Agreement shall be of no force or effect unless and until
the Closing shall have occurred and such WCAS Securityholders Agreement shall remain in full force
and effect in accordance with its terms (subject to the forbearance referenced above) unless and
until such time as the Closing has occurred.

45

 

ARTICLE VII

CONDITIONS TO THE OBLIGATIONS OF THE PARTIES

     7.1 Mutual Conditions. The respective obligations of WIN and each WCAS Sub to consummate
the transactions contemplated by this Agreement are subject to the satisfaction or, to the extent
permitted by applicable Law, waiver, at or prior to the Closing of each of the following
conditions:

          (a) No Injunction or Statute. No statute, rule, regulation, executive order, decree,
injunction or other order enacted, entered, promulgated, enforced or issued by any Governmental
Entity or other legal restraint or prohibition preventing consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements shall be in effect on the Closing Date.

          (b) No Proceeding. There shall not be pending by any Governmental Entity any suit,
action or proceeding challenging or seeking to restrain or prohibit the exchange of the Holdings
Shares or any of the other transactions contemplated by this Agreement or the Ancillary Agreements.

          (c) Expiration or Termination of HSR Periods. All waiting periods applicable to the
transactions contemplated by this Agreement or the Ancillary Agreements under the HSR Act shall
have expired or been terminated.

          (d) Material Consents. The WCAS Subs and WIN shall have received the consents set
forth on Section 7.1(d) of the Disclosure Letter.

          (e) Ancillary Agreements. WIN (or one of its appropriately designated Subsidiaries or
Affiliates), and the WCAS Subs shall have executed and delivered each of the Ancillary Agreements
to which it is a party, substantially in the form of the agreements set forth on Exhibit A,
Exhibit B, Exhibit C, Exhibits D1 and D2, and Exhibit E
respectively, and, in each case, in form and substance reasonably satisfactory to WIN and the WCAS
Subs.

          (f) Related Transactions. The Restructuring Transactions and each of the Contribution
and the Debt Exchange shall have been consummated, in each case, in accordance with the Private
Letter Rulings and the WIN Tax Opinions; provided that this Section 7.1(f) shall
not be a condition to the consummation of the transactions contemplated hereby by any party whose
failure to comply with its obligations and/or covenants set forth in this Agreement gives rise to
the failure of the Restructuring Transactions, the Contribution or the Debt Exchange to have been
consummated.

46

 

          (g) Tax-Free Split-Off Private Letter Ruling and Tax Opinion. WIN and the WCAS Subs
shall have received the Tax-Free Split-Off Ruling, WIN shall have received the WIN Tax-Free
Split-Off Opinion and the WCAS Subs shall have received the WCAS Sub Tax-Free Split-Off Opinion,
each in form and substance reasonably satisfactory to WIN, Holdings and/or the WCAS Subs, as
applicable, and such Tax-Free Split-Off Ruling shall continue to be valid and in full force and
effect.

          (h) Tax-Free Reorganization and Debt Exchange Private Letter Rulings and Tax Opinions.
WIN shall have received Tax-Free Reorganization Ruling, the Tax-Free Debt Exchange Ruling, the
Tax-Free Reorganization Opinion and the Tax-Free Debt Exchange Opinion, each in form and substance
reasonably satisfactory to WIN, Holdings and the WCAS Subs, and such Tax-Free Reorganization Ruling
and Tax-Free Debt Exchange Ruling shall continue to be valid and in full force and effect.

          (i) Section 355(d) Private Letter Ruling. WIN and the WCAS Subs shall have received
the Section 355(d) Ruling, in form and substance reasonably satisfactory to WIN, Holdings and the
WCAS Subs.

          (j) Solvency and Surplus Opinions. The Boards of Directors of WIN and Holdings shall
have received customary “solvency” and “surplus” opinions (collectively, the “Solvency and
Surplus Opinions”) of a nationally recognized investment banking or appraisal firm in form and
substance reasonable satisfactory to such Boards of Directors (such opinions to be dated as of the
date the Board of Directors of Holdings declares the Special Dividend and the distribution of the
Holdings Exchange Debt to WIN for purposes of effecting the Debt Exchange, and the date on which
each such dividend or distribution is paid, and the Closing Date).

     7.2 Conditions to the Obligations of WIN. The obligations of WIN to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or prior to the
Closing of each of the following conditions (any or all of which may be waived in writing in whole
or in part by WIN):

          (a) Representations and Warranties. The representations and warranties of the WCAS
Subs contained in this Agreement shall be true and correct (without giving effect to any
“materiality” qualifiers set forth therein) as of the date of this Agreement and
at and as of the Closing Date with the same force and effect as if made at and as of the
Closing Date (other than those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time, which need only be true and
correct as of such date or with respect to such period), except where the failure of such
representations and warranties to be true and correct (without giving effect to any “materiality”
qualifiers set forth therein) would not, individually or in the aggregate, reasonably be expected
to prevent or materially impair or delay the ability of the WCAS Subs to consummate the
transactions contemplated hereby.

47

 

          (b) Performance. The WCAS Subs shall have performed and complied, in all material
respects, with all agreements and covenants required by this Agreement to be so performed or
complied with by the WCAS Subs at or prior to the Closing.

          (c) Officer’s Certificate. The WCAS Subs shall have delivered to WIN a certificate,
dated as of the Closing Date, executed by an officer of the WCAS Subs, certifying the fulfillment
of the conditions specified in subsections 7.2(a) and 7.2(b) hereof.

          (d) Closing Deliveries. WIN shall have received at the Closing the agreements,
documents and instruments referred to in Section 1.5 to be delivered to WIN by the WCAS Subs at
Closing.

     7.3 Conditions to the Obligations of the WCAS Subs. The obligations of the WCAS Subs to
consummate the transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Closing of each of the following conditions (any or all of which may be waived in
whole or in part by the WCAS Subs):

          (a) Representations and Warranties. The representations and warranties of WIN
contained in this Agreement shall be true and correct (without giving effect to any “materiality”
or “Company Material Adverse Effect” qualifiers set forth therein) as of the date of this Agreement
and at and as of the Closing Date with the same force and effect as if made at and as of the
Closing Date (other than those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time, which need only be true and
correct as of such date or with respect to such period), except where the failure of such
representations and warranties to be true and correct (without giving effect to any “materiality”
or “Company Material Adverse Effect” qualifiers set forth therein) would not, individually or in
the aggregate, reasonably be expected to result in a Company Material Adverse Effect.

          (b) Performance. WIN shall have performed or complied, in all material respects, with
all agreements and covenants required by this Agreement to be so performed or complied with by WIN
at or prior to the Closing.

          (c) Officer’s Certificate. WIN shall have delivered to the WCAS Subs a certificate,
dated as of the Closing Date, executed by an officer of WIN, certifying the fulfillment of the
conditions specified in subsections 7.3(a) and 7.3(b) hereof.

          (d) Audited Financial Statements. The financial condition and results of operations
of the Division Subsidiaries, as set forth in the Audited Financial Statements for the fiscal years
ended December 31, 2004 and December 31, 2005, delivered to the WCAS Subs at or prior to the
Closing pursuant to Section 1.4(f) hereof, shall not demonstrate a financial condition or results
of operations of the Division Subsidiaries as of and for such fiscal years that

48

 

differs in any material and adverse respect from the financial condition and results of operations of the Division
Subsidiaries as reflected in the Annual Financial Statements for such periods referenced in Section
3.7(a) hereof; provided, however, that the WCAS Subs shall be required to notify
WIN in writing within fifteen (15) Business Days following receipt by the WCAS Subs from WIN of the
Audited Financial Statements for fiscal years 2004 and 2005 in the event that the WCAS Subs
determine, based on their review of such Audited Financial Statements, that the condition set forth
in this Section 7.3(d) is not satisfied and, if no such notice is given by the WCAS Subs within
such fifteen (15) Business Day period, the condition set forth in this Section 7.3(d) shall be
deemed satisfied for all purposes under this Agreement; provided, however, that the
fifteen (15) Business Day period referenced above shall be tolled for so long as reasonably
necessary for the WCAS Subs to review and evaluate any information reasonably requested by them in
connection with their review of the Audited Financial Statements for fiscal years 2004 and 2005.

          (e) Closing Deliveries. The WCAS Subs shall have received at the Closing the
agreements, documents and instruments referred to in Section 1.4 to be delivered to the WCAS Subs
by WIN at the Closing.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

     8.1 Termination. This Agreement may be terminated and the transactions contemplated hereby
and by the Ancillary Agreements may be abandoned:

          (a) at any time, by mutual written agreement of WIN and the WCAS Subs;

          (b) at any time after the twelve-month anniversary of the date hereof (the “Termination
Date”), by either WIN or the WCAS Subs upon five Business Days’ prior written notice to the
other party, if the Closing shall not have occurred for any reason on or prior to the Termination
Date, provided, however, that the right to terminate this Agreement pursuant
to this Section 8.1(b) shall not be available to any party whose failure to perform any of its
obligations under this Agreement required to be performed by it at or prior to the Closing has been
the cause of, or resulted in, the failure of the Closing to occur; provided,
further, that this Section 8.1(b) shall not be available to any Party after consummation of
the Closing and shall not affect the Parties’ obligations to effect the Second Closing pursuant to
Section 1.7 hereof;

          (c) by WIN, if the WCAS Subs shall have breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this Agreement, which breach or
failure to perform (A) would give rise to the failure of a condition set forth in subsections
7.2(a) or 7.2(b) of this Agreement and (B) is incapable of being cured (or is not cured) by the
WCAS Subs within 30 calendar days following receipt of written notice of

49

 

such breach or failure to perform from the Company, provided, however, that the failure of any such condition
to be capable of satisfaction is not the result of a material breach of this Agreement by WIN;

          (d) by the WCAS Subs if WIN shall have breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this Agreement, which breach or
failure to perform (A) would give rise to the failure of a condition set forth in subsections
7.3(a) or 7.3(b) of this Agreement and (B) is incapable of being cured (or is not cured) by WIN
within 30 calendar days following receipt of written notice of such breach or failure to perform by
the WCAS Subs, provided, however, that the failure of any such condition to be
capable of satisfaction is not the result of a material breach of this Agreement by the WCAS Subs;

          (e) by the WCAS Subs or WIN, if any court of competent jurisdiction or any Governmental Entity
shall have issued an order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the consummation of the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final and
non-appealable; or

          (f) by the WCAS Subs or WIN, if any condition set forth in Section 7.1(g), 7.1(h), 7.1(i), or
7.1(j) has not been, and is not reasonably capable of being, satisfied on or prior to the
Termination Date.

     8.2 Procedure and Effect of Termination. In the event of the termination of this Agreement
and the abandonment of the transactions contemplated hereby and by the Ancillary Agreements
pursuant to Section 8.1 hereof, written notice thereof shall be given by the party so terminating
to the other party to this Agreement, and this Agreement shall terminate and the transactions
contemplated hereby and thereby shall be abandoned without further action by WIN or the WCAS Subs.
If this Agreement is terminated pursuant to Section 8.1 hereof:

          (a) the WCAS Subs shall return all documents, work papers and other materials (and all copies
thereof) obtained from WIN, Holdings or the Division Subsidiaries relating to the transactions
contemplated hereby and by the Ancillary Agreements, whether so obtained before or after the
execution hereof, to the party furnishing the same, and all confidential information received by
the WCAS Subs with respect to the Division shall be treated in accordance with Section 5.2 hereof
and the Confidentiality Agreement referred to in such Section;

          (b) At the option of WIN or the WCAS Subs, all filings, applications and other submissions
made pursuant to Sections 5.3, 5.4 and 5.5 hereof shall, to the extent practicable, be withdrawn
from the agency or other person to which made;

50

 

          (c) If this Agreement is terminated and the transactions contemplated hereby are abandoned as
described in this Section 8.2, this Agreement shall become null and void and of no further force or
effect, except for the obligations provided for in Sections 5.6, 8.2, and 10.1 through 10.11
hereof, the confidentiality provision contained in Section 5.2 hereof and the Confidentiality
Agreement referred to in such Section, each of which shall survive any such termination of this
Agreement without limitation; and

          (d) Such termination shall not be deemed to release and shall not relieve any party hereto
from any liability for any willful breach or violation by such party of any of its representations,
warranties, covenants or agreements contained in this Agreement, nor shall such termination impair
the rights of any party to (i) compel specific performance by any the other party of its
obligations under this Agreement or (ii) seek any other remedy under law or in equity.

     8.3 Amendment and Modification. This Agreement may be amended, modified or supplemented at
any time but only by written agreement of the parties hereto.

ARTICLE IX

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

     9.1 Survival of Representations. The representations and warranties in this Agreement and
in any certificate delivered pursuant hereto shall survive the Closing solely for purposes of this
Article IX and shall terminate on the date that is twelve (12) months after the Closing Date but
shall not survive any termination of this Agreement prior to Closing; provided,
however, that (a) the representations and warranties in Sections 3.2 (Title to Holdings
Shares), 3.4 (Capitalization of Holdings) and 3.23 (Brokers) hereof shall survive indefinitely and
(b) the representations and warranties in Section 3.13 (Employee Benefit Plans) shall survive the
Closing for a period of three (3) years (the representations and warranties set forth in clause (a) above, the “Fundamental
Representations”). To the extent applicable, the parties intend to modify the statute of
limitations and agree that no claims or causes of action may be brought against WIN or the WCAS
Subs based upon, directly or indirectly, any of the representations, warranties or agreements
contained in Articles III and IV after the applicable survival period or any termination of this
Agreement; provided that if a claim is made prior to the expiration of the
applicable survival period, then the claim shall survive until final resolution thereof. It is
agreed that, in determining whether there has been a breach of any representation or warranty under
this Agreement for purposes of this Article IX, the concepts of materiality, Company Material
Adverse Effect, “in all material respects” and other similar qualifying language contained in the
representations and warranties and certifications of or on behalf of the parties shall be given
full effect; provided, however, that, in view of the limitation arising from the
Basket, in the event that there has been a breach of any representation or warranty or
certification by a party after giving effect to such qualifying language, then for purposes of
determining whether the Basket has been exceeded with respect to such breach or breaches and the
amount of any resulting Damages to be indemnified, the concept of materiality, Company Material
Adverse Effect, “in all material respects” and other similar qualifying language contained in the
representations and warranties and certifications of or on behalf of the applicable party shall be
disregarded.

51

 

     9.2 WIN’s Agreement to Indemnify. From and after Closing, upon the terms and subject to
conditions of this Article IX, WIN shall indemnify, defend and hold harmless the Parents, the WCAS
Subs, their respective Affiliates (including Holdings and the Division Subsidiaries) and their
respective officers, directors, and employees (the “WCAS Sub Indemnified Parties”), from
and against all demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including reasonable attorneys’ fees and expenses and costs of
investigation or settlement (collectively, “Damages”), asserted against, resulting to,
imposed upon or suffered or incurred by WCAS Sub Indemnified Parties by reason of or arising from
(a) a breach of any representation or warranty of WIN contained in this Agreement; (b) a breach of
any of WIN’s covenants or agreements set forth in this Agreement; or (c) any liability or
obligation at any time arising under or in connection with any WIN Plan; (d) any liability or
obligation arising under or pursuant to section 412 of the Code or Title IV of ERISA for any time
period prior to the Effective Time; (e) any liability or obligation of WIN or its Subsidiaries or
Affiliates (other than Holdings and the Division Subsidiaries) unrelated to Holdings, the Division
Subsidiaries or the Division; (f) any liability with respect to any Guaranties that are not
released at Closing; or (g) any WIN Transaction Expenses to the extent such expenses are not
actually reflected in the Net Working Capital adjustment in Section 1.6 (collectively, “WCAS
Sub Claims”).

     9.3 WIN’s Limitation of Liability. Notwithstanding any provision in this Agreement to the
contrary, the liability of WIN to indemnify WCAS Sub Indemnified Parties pursuant to Section 9.2(a)
hereof shall be limited to WCAS Sub Claims as to which a WCAS Sub Indemnified Party has given WIN
written notice, setting forth therein in reasonable detail the basis for such WCAS Sub Claim, on or
prior to the termination of such representation or warranty pursuant to Section 9.1 hereof;
provided, however, that the provisions for indemnification contained in Section
9.2(a) (other than as a result of the breach of the Fundamental Representations) shall be effective only after the
aggregate amount of all such WCAS Sub Claims for which WIN is liable under this Agreement exceed an
amount equal to Five Million Two Hundred Fifty Thousand Dollars ($5,250,000) (the
“Basket”), and only to the extent of such excess. Notwithstanding any other provision of
this Agreement, in no event shall the aggregate amount of all WCAS Sub Claims for which WIN is
liable pursuant to: (i) Section 9.2(a) (other than as a result of the breach of the Fundamental
Representations), exceed an amount equal to Fifty Million Dollars ($50,000,000) and (ii) Section
9.2(b) or (c), exceed an amount equal to the Transaction Amount less any amounts paid pursuant to
Section 9.2(a). Notwithstanding any other provision of this Agreement, WIN shall have no
indemnification obligations under Section 9.2 for any WCAS Sub Claim or series of related WCAS Sub
Claims as to which the aggregate Damages are less than or equal to $50,000 and, further, such WCAS
Sub Claims shall be disregarded for purposes of calculating the amount by which the WCAS Sub Claims
exceed the Basket.

     9.4 WCAS Subs’ Agreement to Indemnify. From and after Closing, upon the terms and subject
to the conditions of this Article IX, the WCAS Subs, jointly and severally, shall indemnify, defend
and hold harmless WIN, its Affiliates and their respective officers, directors, and employees (the
“WIN Indemnified Parties”), from and against all Damages

52

 

asserted against, resulting to,
imposed upon or incurred by WIN Indemnified Parties by reason of or arising from: (a) a breach of
any representation or warranty of any WCAS Sub contained in this Agreement; (b) a breach of any of
the WCAS Subs’ covenants or agreements set forth in this Agreement; (c) any liability or obligation
of the Division Subsidiaries or the Division, except for those matters which are subject of WIN’s
indemnification of the WCAS Subs pursuant to the Tax Sharing Agreement or Section 9.2 hereof; or
(d) any untrue statement or alleged untrue statement of a material fact contained in any offering
memorandum, registration statement, prospectus or preliminary prospectus relating to the Holdings
Financing, except to the extent that the same are based upon information furnished by WIN, Holdings
or the Division Subsidiaries expressly for use therein; (collectively, “WIN Claims”).

     9.5 WCAS Subs’ Limitation of Liability. Notwithstanding any provision in this Agreement to
the contrary, the liability of the WCAS Subs to indemnify WIN Indemnified Parties pursuant to
Section 9.4(a) hereof, against any Damages sustained by reason of any WIN Claim with respect to the
breach of a representation or warranty (other than Sections 4.3, 4.5 and 4.8) shall be limited to
WIN Claims as to which a WIN Indemnified Party has given the WCAS Subs written notice, setting
forth therein in reasonable detail the basis for such WIN Claim, on or prior to the termination of
such representation or warranty pursuant to Section 9.1 hereof; provided, however,
that the provisions for indemnification contained in Section 9.4(a) shall be effective only after
the aggregate amount of all such WIN Claims for which the WCAS Subs are liable under this Agreement
exceed the Basket, and only to the extent of such excess. Notwithstanding any other provision of
this Agreement, in no event shall the aggregate amount of all WIN Claims for which any WCAS Sub is
liable pursuant to: (i) Section 9.4(a), exceed an amount equal to Fifty Million Dollars
($50,000,000) and (ii) Section 9.4(b), exceed an amount equal to the Transaction Amount less
any amounts paid pursuant to Section 9.4(a). Notwithstanding any other provision of this
Agreement, the WCAS Subs shall have no indemnification obligations under Section 9.4 for any WIN
Claim or series of related WIN Claims as to which the aggregate Damages are less than or equal to
$50,000 and, further, such WIN Claims shall be disregarded for purposes of calculating the amount
by which the WIN Claims exceed the Basket.

     9.6 Procedures for Indemnification With Respect to Third-Party Claims. Except as provided
in the Tax Sharing Agreement, the obligations and liabilities of WIN and the WCAS Subs with respect
to WCAS Sub Claims and WIN Claims, respectively, which arise or result from claims for Damages made
by third parties (“Third-Party Claims”) shall be subject to the following terms and
conditions:

          (a) The indemnified party shall give the indemnifying party prompt written notice of any such
Third-Party Claim; provided, however, that failure to give such notification shall
not affect the indemnification provided hereunder except to the extent the indemnifying party shall
have been materially prejudiced as a result of such failure; and (B) the indemnifying party shall
have the right, after it acknowledges in writing to the indemnified party its obligation to
indemnify the indemnified party hereunder, to undertake the defense thereof by counsel chosen by
it; provided, that if the indemnifying party assumes such defense, the indemnified party
shall have the right to participate in the defense thereof and to
employ counsel, at its own
expense, separate from the counsel employed by the indemnifying party, it being understood that the
indemnifying party shall control such defense;

53

 

          (b) Until the indemnifying party acknowledges in writing its obligation hereunder with respect
to, and assumes the defense of, a Third-Party Claim, the indemnified party shall (upon further
written notice to the indemnifying party) have the right to undertake the defense, compromise or
settlement of such Third-Party Claim on behalf of and for the account and risk of the indemnifying
party subject to the right of the indemnifying party to assume the defense of such Third-Party
Claim at any time prior to settlement, compromise or final determination thereof (subject to
subclause (B) of clause (i) above); and

          (c) Notwithstanding any provision in this Article IX to the contrary, without the prior
written consent of the indemnified party (which consent shall not be unreasonably conditioned,
withheld or delayed), the indemnifying party shall not admit any liability with respect to, or
settle, compromise or discharge, any Third-Party Claim or consent to the entry of any judgment with
respect thereto, except in the case of any settlement that (A) includes as an unconditional term
thereof the delivery by the claimant or plaintiff to the indemnified party of a written release
from all liability in respect of such Third-Party Claim or (B) provides solely for monetary relief
and does not otherwise involve or purport to bind or limit the indemnified party. In addition, if
the indemnifying party shall have assumed the defense of the Third-Party Claim, the indemnified
party shall not admit any liability with respect to, or settle, compromise or discharge, any
Third-Party Claim or consent to the entry of any judgment with respect thereto, without the prior
written consent of the indemnifying party (which consent shall not be unreasonably conditioned,
withheld or delayed), and the indemnifying party will not be subject to any liability for any such admission, settlement, compromise, discharge or
consent to judgment made by an indemnified party without such prior written consent of the
indemnifying party.

     9.7 Other Claims. In the event any indemnified party should have a claim against any
indemnifying party under Section 9.2 or 9.4 hereof that does not involve a Third-Party Claim being
asserted against or sought to be collected from such indemnified party, the indemnified party
shall, as promptly as practicable after discovery of such claim, deliver written notice of such
claim to the indemnifying party. The failure by any indemnified party so to notify the
indemnifying party shall not relieve the indemnifying party from any liability which it may have to
such indemnified party under Section 9.2 or 9.4 hereof, except to the extent that the indemnifying
party demonstrates that it has been materially prejudiced by such failure. If the indemnifying
party does not notify the indemnified party within thirty (30) Business Days following its receipt
of such notice that the indemnifying party disputes its liability to the indemnified party under
Section 9.2 or 9.4 hereof, such claim specified by the indemnified party in such notice shall be
conclusively deemed a liability of the indemnifying party under Section 9.2 or 9.4 hereof and the
indemnifying party shall pay the amount of such liability to the indemnified party on demand or, in
the case of any notice in which the amount of the claim (or any portion thereof) is estimated, on
such later date when the amount of such claim (or such portion thereof) becomes finally determined.
If the indemnifying party has timely disputed its liability with respect to such claim, as
provided above, the indemnifying party and the indemnified party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute
shall be resolved by litigation pursuant to Section 10.10 hereof.

54

 

     9.8 Sole Remedy.

          (a) The WCAS Subs and WIN acknowledge and agree that, if the Closing occurs, their sole and
exclusive remedy (other than for fraud or intentional misrepresentation) following the Closing with
respect to any and all claims, including WCAS Sub Claims and WIN Claims (whether Third-Party Claims
or otherwise), relating to the subject matter of this Agreement shall be pursuant to the provisions
set forth in the Tax Sharing Agreement and this Article IX; provided, however, that
nothing contained herein shall prevent an indemnified party from pursuing remedies as may be
available to such party under applicable Law in the event of an indemnifying party’s failure to
comply with its indemnification obligations hereunder.

          (b) The indemnifying party shall be subrogated to the rights of the indemnified party (to the
extent permitted by the terms of such insurance agreements) in respect of any insurance relating to
the Damages to the extent of any indemnification payments made hereunder. The WCAS Subs and WIN
shall be obligated to use commercially reasonable efforts to mitigate the amount of any Damages for
which such party is entitled to seek indemnification hereunder. Any liability for indemnification
hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a
breach of more than one representation, warranty, covenant or agreement.

          (c) Each WCAS Sub and WIN agree to treat (and cause their Affiliates to treat) any
indemnification payment under this Agreement as an adjustment to the consideration to be
transferred between WIN and Holdings in connection with the Contribution. Any indemnification
obligation under this Agreement shall be net of (i) any Tax Benefit actually realized by the
indemnified party or its Affiliates, and (ii) any insurance proceeds or any indemnity, contribution
or other similar payment received by the indemnified party or its Affiliates from any third party
with respect thereto, net of any expenses related to the recovery of such proceeds and the cost of
any insurance premiums. The indemnified party shall use commercially reasonable efforts to obtain
full recovery under all insurance policies covering any indemnification obligation to the same
extent as they would if such indemnification obligation were not subject to indemnification under
this Agreement. In the event that an insurance or other recovery is received by any indemnified
party with respect to any indemnification obligation for which any such Person has been indemnified
under this Agreement, then a refund equal to the aggregate amount of the recovery shall be made
promptly to the indemnifying party.

          (d) Notwithstanding anything in Section 9.2 to the contrary, for purposes of this Agreement,
“Damages” shall not include damages incurred directly or
indirectly as a result of lost profits or any damages that are special, consequential or punitive in nature, regardless of whether such
damages are permissible by applicable Law.

55

 

     9.9 Exclusivity of Tax Sharing Agreement. Notwithstanding anything herein to the contrary,
the Tax Sharing Agreement constitutes the complete and exclusive agreement of the parties with
respect to indemnification for Tax matters covered therein. Any conflict between the terms of the
Tax Sharing Agreement and any provision of this Agreement, or any provision of any other agreement,
shall be resolved in favor of the Tax Sharing Agreement, unless such other provision expressly
provides that it shall be given priority over the Tax Sharing Agreement.

ARTICLE X

MISCELLANEOUS

     10.1 Fees and Expenses. Except as otherwise set forth below, whether or not the
transactions contemplated hereby and by the Ancillary Agreements are consummated pursuant hereto
and thereto, each of WIN and the WCAS Subs shall pay all fees and expenses incurred by it or on its
behalf and WIN shall pay all fees and expenses incurred by or on behalf of WIN or the Division
Subsidiaries in connection with or in anticipation of this Agreement and the Ancillary Agreements,
and the consummation of the transactions contemplated hereby and thereby. For the avoidance of
doubt, all Holdings Financing Expenses shall be deemed to be expenses of the WCAS Subs,
irrespective of the party incurring such expenses and irrespective of whether or not the Closing occurs. In the event that
the transactions contemplated hereby are consummated, Holdings shall bear all Holdings Financing
Expenses. The parties acknowledge and agree that all Holdings Financing Expenses to be borne by
Holdings pursuant to the immediately preceding sentence shall either remain as liabilities or
obligations of Holdings and/or the Division Subsidiaries after the Effective Time, to be paid or
otherwise discharged by Holdings and/or the Division Subsidiaries in accordance with their terms,
or if paid or incurred by WIN or its Affiliates and such Holdings Financing Expenses do not remain
as liabilities of Holdings or the Division Subsidiaries at the Effective Time, such Holdings
Financing Expenses shall be included as a current asset in the calculation of Net Working Capital
pursuant to Section 1.6 hereof.

     10.2 Further Assurances. From time to time after the date hereof, at the request of the
other party hereto and at the expense of the party so requesting, WIN and the WCAS Subs shall
execute and deliver to such requesting party such documents, shall file with the appropriate
Governmental Entities all documents necessary or appropriate and take such other action as such
requesting party may reasonably request in order to consummate the transactions contemplated hereby
and by the Ancillary Agreements.

     10.3 Notices. All notices, requests, demands, waivers and communications required or
permitted to be given under this Agreement shall be in writing (which shall include notice by
telecopy or like transmission) and shall be deemed given (i) on the day delivered (or if that day
is not a Business Day, on the first following Business Day) when (x) delivered personally against
receipt or (y) sent by overnight courier, (ii) on the day when transmittal

56

 

confirmation is received if sent by telecopy (or if that day is not a Business Day, on the first following Business Day) and
(iii) on the third Business Day after mailed by certified or registered first-class mail to the
parties at the following addresses (or to such other addresses as a party may have specified by
notice given to the other parties hereto pursuant to this provision):

          If to any WCAS Sub or any Parent, to:

c/o Welsh, Carson, Anderson & Stowe

320 Park Avenue

Suite 2500

New York, NY 10022

Telecopy: (212) 893-9575

Attention: John Almeida

          with a copy, which shall not constitute notice to a WCAS Sub or a Parent, to:

Kirkland & Ellis LLP

153 East 53rd Street

New York, NY 10022-4611

Telecopy: (212) 446-4900

Attention: Michael Movsovich, Esq.

Heidi Bioski, Esq.

          If to WIN, to:

Windstream Corporation

4001 Rodney Parham Road

Little Rock, AR 72212

Telecopy: (501) 748-7400

Attention: John P. Fletcher, Esq.

          prior to Closing, with a copy, which shall not constitute notice to WIN, to:

Skadden, Arps, Slate, Meagher & Flom LLP

One Rodney Square

Wilmington, DE 19801

Telecopy: (302) 651-3001

Attention: Robert B. Pincus, Esq.

     10.4 Entire Agreement. This Agreement, the Ancillary Agreements, the Disclosure Letter and
the exhibits, schedules and other documents referred to herein which form a part hereof (including,
the Confidentiality Agreement referred to in Section 5.2 hereof) contain the entire understanding
of the parties hereto with respect to the subject matter hereof and supersedes all prior oral or
written agreements, understandings, statements or proposals; provided, however,
that if there is any conflict between the Confidentiality Agreement and this Agreement, the terms
of this Agreement shall govern. This Agreement supersedes all prior agreements and understandings,
oral and written, with respect to its subject matter.

57

 

     10.5 Severability. Should any provision of this Agreement for any reason be declared
invalid or unenforceable, such decision shall not affect the validity or enforceability of any of
the other provisions of this Agreement, which other provisions shall remain in full force and
effect and the application of such invalid or unenforceable provision to Persons or circumstances
other than those as to which it is held invalid or unenforceable shall be valid and be enforced to
the fullest extent permitted by law.

     10.6 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective heirs, executors,
successors and permitted assigns, except that (a) other than as contemplated herein, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or
indirectly, by WIN or the WCAS Subs without the prior written consent of the other party hereto;
and (b) that the rights and obligations of WIN may be assigned to any of its wholly-owned
subsidiaries, which at the time of such assignment owns the Holdings Shares; provided
that no such assignment shall limit or affect WIN’s obligations hereunder.

     10.7 No Third-Party Beneficiaries. This Agreement is not intended and shall not be deemed
to confer upon or give any Person except the parties hereto and their respective successors and
permitted assigns any remedy, claim, liability, reimbursement, cause of action or other right under
or by reason of this Agreement (except as set forth in the Tax Sharing Agreement and in Article IX
with respect to WCAS Sub Indemnified Parties and WIN Indemnified Parties).

     10.8 Counterparts. This Agreement may be executed in counterparts (including by
facsimile), each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

     10.9 Interpretation. The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the parties and shall not in
any way affect the meaning or interpretation of this Agreement. As used in this Agreement, the
term “including” shall mean including without limitation, the “Knowledge” of WIN shall be
deemed to be limited to the actual knowledge, subject to a duty of due inquiry, of those Persons
set forth on Section 10.9 of the Disclosure Letter; and, unless the context otherwise requires, the
word “or” is not exclusive. As used in this Agreement, the term “Person” shall mean and
include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof. All references in this
Agreement to “dollars” or “$” shall mean United States dollars.

     10.10 Jurisdiction; Waiver of Jury Trial.

               (a) Each party hereby agrees and consents to be subject to the jurisdiction of the Court of
Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks
jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter
situated in the New Castle County, Delaware, in any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby. Each party hereby

58

 

irrevocably consents to the service of any and all process in any such suit, action or
proceeding by the delivery of such process to such party at the address and in the manner provided
in Section 10.3 hereof. Each of the parties hereto irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or
the transactions contemplated hereby in the Court of Chancery of the State of Delaware in and for
New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state
or federal court having jurisdiction over the matter situated in the New Castle County, Delaware,
and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court has been brought in
an inconvenient forum.

               (b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10(b).

     10.11 Governing Law. This Agreement shall be governed by and construed in accordance with
the Laws of the State of Delaware, without regard to the principles of conflicts of law thereof (to
the extent that the application of the Laws of another jurisdiction would be required thereby).

     10.12 Specific Performance. Each party hereto acknowledges that money damages would be
both incalculable and an insufficient remedy for any breach of this Agreement by such party and
that any such breach would cause the other party hereto irreparable harm. Accordingly, each party
hereto also agrees that, in the event of any breach or threatened breach of the provisions of this
Agreement by such party, the other party hereto shall be entitled to equitable relief without the
requirement of posting a bond or other security, including in the form of injunctions and orders
for specific performance, in addition to all other remedies available to such other parties at law
or in equity.

     10.13 Waivers. Except as otherwise provided herein, no action taken pursuant to this
Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute
a waiver by the party taking such action of compliance with any representations, warranties,
covenants or agreements contained in this Agreement or in any of the Ancillary

59

 

Agreements. Any term, covenant or condition of this Agreement may be waived at any time by the
party which is entitled to the benefit thereof, but only by a written notice signed by such party
expressly waiving such term or condition. The waiver by any party hereto of a breach of any
provision hereunder shall not operate or be construed as a waiver of any prior or subsequent breach
of the same or any other provision hereunder.

     10.14 The Parents’ Guaranty. Subject to the proviso, the Parents, as primary obligors and
not merely as sureties, hereby absolutely, irrevocably and unconditionally guarantee the full and
prompt payment, performance or discharge when due of all obligations and liabilities (including,
without limitation, indemnities and fees) of the WCAS Subs now existing or hereafter incurred
under, arising out of or in connection with this Agreement (collectively, the “Guaranteed
Obligations”); provided that: (i) the Guaranteed Obligations of the Parents
shall terminate upon Closing and (ii) payments, performance and discharge of the Guaranteed
Obligations by the Parents shall be limited to and satisfied solely by the transfer of shares of
WIN Common Stock having an aggregate Fair Market Value equal to Seventy-Five Million Dollars
($75,000,000) to the WCAS Subs in order to fund any Guaranteed Obligations. The Parents hereby
waive notice of any obligation or liability to which this guaranty may apply, and waive
presentment, demand of payment, protest, notice of dishonor or non-payment of any such obligation
or liability, suit or taking of other action by WIN against, and any other notice to any party
liable thereon (other than the Parents). Except as limited in this Section 10.14, the obligations
of the Parents under this Section 10.14 are absolute and unconditional in respect of satisfying the
Guaranteed Obligations and shall be enforceable against the Parents to the extent enforceable
against any WCAS Sub under this Agreement. The provisions of this Section 10.14 shall not be
affected or impaired by any of the following: (X) the occurrence or continuance of any event of
bankruptcy, reorganization or insolvency with respect to any WCAS Sub, or the dissolution,
liquidation or winding up of any Parent or any WCAS Sub; (Y) the exercise, non-exercise or delay in
exercising, by WIN of any of its rights and remedies under this Section 10.14 or this Agreement
generally; (Z) any assignment by WIN or any WCAS Subs of their respective rights, interests or
obligations under this Agreement in accordance with the terms hereof; or (iv) any sale, transfer or
other disposition by the Parents of any direct or indirect interest they may have in the WCAS Subs.

     10.15 Defined Terms.

          “Accounting Firm” shall have the meaning ascribed to such term in Section 1.6(c)
hereof.

          “Actual Division Indebtedness” shall have the meaning ascribed to such term in Section
1.6(b) hereof.

          “Actual Net Working Capital” shall have the meaning ascribed to such term in Section
1.6(b) hereof.

          “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General
Rules and Regulations promulgated under the Exchange Act.

60

 

          “Affiliated Group” shall have the meaning ascribed to such term in Section 3.14(a)
hereof.

          “Agreement” shall have the meaning ascribed to such term in the Preamble hereto.

          “Ancillary Agreements” shall have the meaning ascribed to such term in Section 2.1
hereof.

          “Annual Financial Statements” shall have the meaning ascribed to such term in Section
3.7(a) hereof.

          “Applicable WCAS Sub Plan” shall have the meaning ascribed to such term in Section
6.1(b) hereof.

          “Audited Financial Statements” shall have the meaning ascribed to such term in Section
1.4(f) hereof.

          “Balance Sheets” shall have the meaning ascribed to such term in Section 3.7(a)
hereof.

          “Basket” shall have the meaning ascribed to such term in Section 9.3 hereof.

          “Billing Agreement” shall have the meaning ascribed to such term in Section 2.1(c)
hereof.

          “Business Day” shall mean any day on which banks located in the State of New York are
not required or authorized by law to remain closed.

          “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. §§ 9601 et seq., as amended.

          “Closing” shall have the meaning ascribed to such term in Section 1.1 hereof.

          “Closing Date” shall have the meaning ascribed to such term in Section 1.3 hereof.

          “COBRA” means section 4980B of the Code and regulations promulgated thereunder, or any
similar state statute or regulation.

          “Code” shall have the meaning ascribed to such term in the Recitals hereof.

          “Commitment Letter” shall mean the Commitment Letter to be entered into by and among
Wachovia Securities, LLC and the WCAS Subs, as referenced in Exhibit F attached hereto.

          “Company” shall have the meaning ascribed to such term in the Recitals hereof.

61

 

          “Company Material Adverse Effect” means any material adverse change, effect, event,
occurrence, state of facts or development relating to the business, assets, liabilities, results of
operations or financial condition of the Division Subsidiaries, taken as a whole; except any such
material adverse change, effect, event, occurrence, state of facts or development to the extent
attributable to (a) the pendency of the transactions contemplated by this Agreement or the
announcement thereof (including any reduction in revenues, any disruption in supplier, distributor,
partner, customer or similar relationships or any loss of employees); (b) WCAS Sub’s announcement
or other disclosure of its plans or intentions with respect to the operation of the business of the
Division (or any portion thereof); (c) changes or conditions, including changes in the economy,
financial markets, or political conditions, whether resulting from acts of terrorism or war or
otherwise, affecting the U.S. economy or the industry in which the Division operates generally to
the extent they do not disproportionately affect the Division, taken as a whole; (d) regulatory
conditions or changes in Laws affecting the industry in which the Division operates to the extent
they do not disproportionately affect the Division, taken as a whole; (e) any failure, in and of
itself, by the Division or the Division Subsidiaries to meet any internal or published projections,
forecasts or revenue or earnings predictions for any period ending on or after the date of this
Agreement (it being understood that the facts or occurrences giving rise to or contributing to such
failure may be deemed to constitute, or be taken into account in determining whether there has been
or will be, a Company Material Adverse Effect); (f) the taking of any action required by, or the
failure to take any action prohibited by, this Agreement or any of the Ancillary Agreements; (g)
any change in accounting requirements or principles required by GAAP or required by any change in
applicable Laws and any restatement of the Division’s financial statements as a result thereof or
public announcement related thereto; or (h) expenses incurred in connection with the transactions
contemplated by this Agreement.

          “Company Shares” shall have the meaning ascribed to such term in Section 3.5 hereof.

          “Conclusive Statement” shall have the meaning ascribed to such term in Section 1.6(e)
hereof.

          “Confidentiality Agreement” shall have the meaning ascribed to such term in Section
5.2(b) hereof.

          “Continuing Division Employees” means those Persons who are employed as officers or
employees of any Division Subsidiary immediately prior to or effective as of the Closing, excluding
those officers listed in Section 10.15 of the Disclosure Letter, which listed officers have been
appointed by designation of the WIN Board of Directors and shall remain employees of WIN after the
Effective Time.

          “Contribution” shall have the meaning ascribed to such term in the Recitals hereof.

          “Damages” shall have the meaning ascribed to such term in Sections 9.2 and 9.8(d)
hereof.

62

 

          “Debt Exchange” shall have the meaning ascribed to such term in Section 2.5(b) hereof.

          “Deficiency Amount” shall have the meaning ascribed to such term in Section 1.6(b)
hereof.

          “Disclosure Letter” shall have the meaning ascribed to such term in Section 2.2(a)
hereof.

          “Division” shall have the meaning ascribed to such term in the Recitals hereof.

          “Division Indebtedness” shall mean the Indebtedness of the Division other than the
Holdings Exchange Debt and any debt incurred to pay the Special Dividend.

          “Division Intellectual Property Rights” shall have the meaning ascribed to such term
in Section 3.11(a) hereof.

          “Division Subsidiaries” shall have the meaning ascribed to such term in the Recitals
hereof.

          “DOJ” shall have the meaning ascribed to such term in Section 5.5 hereof.

          “Effective Time” shall have the meaning ascribed to such term in Section 1.3 hereof.

          “Environmental Laws” shall mean all Laws, together with all common law, relating to
pollution or protection of the environment, including, without limitation, Laws or common law
relating to Releases or threatened Releases of hazardous, materials, substances or wastes, the
protection of human health as a result of exposure to hazardous materials, substances or wastes,
the storage, transport or disposal of solid and hazardous waste, discharges of substances to
surface water or groundwater, air emissions, recordkeeping, notification, disclosure and reporting
requirements respecting hazardous materials, substances or wastes, and all Laws relating to
endangered or threatened species of fish, wildlife and plants and the management or use of natural
resources

          “ERISA” shall have the meaning ascribed to such term in Section 3.13(a) hereof.

          “ERISA Affiliate” shall have the meaning ascribed to such term in Section 3.13(a)
hereof.

          “Estimated Division Indebtedness” shall have the meaning ascribed to such term in
Section 1.6(a) hereof.

          “Estimated Net Working Capital” shall have the meaning ascribed to such term in
Section 1.6(a) hereof.

          “Excess Amount” shall have the meaning ascribed to such term in Section 1.6(b) hereof.

63

 

          “Exchange Act” shall have the meaning ascribed to such term in Section 3.6(b) hereof.

          “Exchanged WIN Shares” shall have the meaning ascribed to such term in Section 1.2
hereof.

          “Fair Market Value” shall mean, as of any date of determination, (i) the average of
the closing sales price of the securities being valued on the national securities exchange on which
they are principally traded, for the immediately preceding thirty (30) day period, or (ii) if the
securities being valued are then traded in an over-the-counter market, the average of the closing
bid and asked prices for such securities in such over-the-counter market for the immediately
preceding thirty (30) day period, or (iii) if such securities are not then listed on a national
securities exchange or traded in an over-the-counter market, or if the asset to be valued is not
securities, such value as the Board of Directors of WIN, in its reasonable discretion, shall
determine.

          “Financial Statements” shall have the meaning ascribed to such term in Section 3.7(a)
hereof.

          “Forward Underwriting Commitment” means the commitment of Wachovia Securities, LLC, as
set forth in the Commitment Letter, to purchase for the Holdings Exchange Debt for its own account,
upon the terms and subject to the conditions set forth in the Commitment Letter.

          “FTC” shall have the meaning ascribed to such term in Section 5.5 hereof.

          “Fundamental Representations” shall have the meaning ascribed to such term in Section
9.1 hereof.

          “GAAP” means U.S. generally accepted accounting principles, consistently applied
throughout the periods presented in accordance with WIN’s historical accounting policies and
practices, including those set forth in Section 3.7 of the Disclosure Letter.

          “Governmental Entity” means any Federal, state, local or foreign government, any
court, administrative, regulatory or other governmental agency, commission or authority or any
non-governmental self-regulatory agency, commission or authority, including domestic or foreign
stock exchanges and securities regulatory bodies.

          “Guaranteed Obligations” shall have the meaning ascribed to such term in Section 10.14
hereof.

          “Guaranties” shall have the meaning ascribed to such term in Section 2.4 hereof.

          “Hazardous Substance” means any chemicals, materials or substances defined as or
included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”,
“hazardous constituents”, “restricted hazardous materials”, “extremely hazardous substances”,
“toxic substances”, “contaminants”,
“pollutants”, “toxic pollutants”, or words of similar meaning and regulatory effect under any applicable Environmental Law including,
without limitation, petroleum and asbestos.

64

 

          “Holdings” shall have the meaning ascribed to such term in the Recitals hereof.

          “Holdings Credit Agreement” shall have the meaning ascribed thereto in Section 2.6(a)
hereof.

          “Holdings Debt Offering” shall have the meaning ascribed thereto in Section 2.6(b)
hereof.

          “Holdings Exchange Debt” shall have the meaning ascribed to such term in Section
2.5(a)(ii) hereof.

          “Holdings Financing” shall have the meaning ascribed to such term in Section 2.6(a)
hereof.

          “Holdings Financing Expenses” shall mean the following costs and expenses incurred by,
or on behalf of, WIN or its Subsidiaries (including the Division Subsidiaries): all underwriters’
discounts, fees and expenses associated with the Holdings Financing and the Debt Exchange; and all
legal, accounting, financial advisor and other advisory fees and expenses associated with the
Holdings Financing and the Debt Exchange.

          “Holdings Shares” shall have the meaning ascribed to such term in the Recitals hereof.

          “HSR Act” shall have the meaning ascribed to such term in Section 3.6(b) hereof.

          “Indebtedness” means, with respect to any Person, at a particular time, without
duplication, (i) any obligations of such Person under any indebtedness for borrowed money, (ii) any
indebtedness of such Person evidenced by any note, bond, debenture or other debt security, (iii)
any written commitment by which such Person assures a creditor against loss (including contingent
reimbursement obligations with respect to letters of credit), (iv) any indebtedness of such Person
pursuant to a guarantee to a creditor of another Person, (v) any borrowing of money secured by a
Lien on such Person’s assets, (vi) any obligation outstanding as of the Closing Date for interest,
premiums, penalties, fees, make-whole payments, expenses, indemnities, breakage costs and bank
overdrafts with respect to items described in clauses (i) through (v) above and (viii) all
obligations of such Person for the deferred and unpaid purchase price of property or services
(other than trade payables and accrued expenses incurred in the ordinary course of business)
including capitalized leases.

          “Intellectual Property Rights” means all (i) copyrights, works of authorship, moral
rights, and all registrations, applications and renewals thereof, (ii) trade names, trademarks,
service marks, service names, trade dress, logos, slogans, and Internet domain names, together with
all registrations, applications and renewals thereof, and all goodwill associated with the
foregoing (collectively, “Marks”), (iii) inventions, patents, patent applications and
patent disclosures, together with all reissues, continuations, continuations-in-part, revisions,
divisionals, extensions, and reexaminations thereof, (iv) trade secrets, know-how, designs,
processes,

65

 

techniques, methods, software, and confidential information (including technical data,
customer and supplier lists, pricing and cost information, and business and marketing plans and
proposals), and (v) rights of privacy and publicity.

          “Intercompany Agreements” shall have the meaning ascribed to such term in Section 3.19
hereof.

          “Intercompany Indebtedness” shall have the meaning ascribed to such term in Section
2.2(b) hereof.

          “Interest Rate” shall mean the rate of interest published as the “Prime Rate” in the
“Money Rates” column of the Eastern Edition of The Wall Street Journal calculated on the basis of a
365-day year and charged for the actual number of days elapsed.

          “Interim Balance Sheet” shall have the meaning ascribed to such term in Section 3.7(a)
hereof.

          “Interim Financial Statements” shall have the meaning ascribed to such term in Section
3.7(a) hereof.

          “IRS” shall have the meaning ascribed to such term in the Tax Sharing Agreement.

          “Knowledge” shall have the meaning ascribed to such term in Section 10.9 hereof.

          “Laws” shall have the meaning ascribed to such term in Section 3.16 hereof.

          “Lease Agreement” shall have the meaning ascribed to such term in Section 2.1(d)
hereof.

          “Leased Real Property” shall mean all leasehold or subleasehold estates and other
rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest
in real property held by the Division Subsidiaries.

          “Liens” shall have the meaning ascribed to such term in Section 1.1 hereof.

          “Litigation” shall have the meaning ascribed to such term in Section 3.12 hereof.

          “Marks” shall have the meaning ascribed to such term within the definition of
“Intellectual Property Rights” in this Section 10.15.

          “Material Contracts” shall have the meaning ascribed to such term in Section 3.15(a)
hereof.

          “Material IP Agreements” shall have the meaning ascribed to such term in Section
3.11(c) hereof.

66

 

          “Net Working Capital” shall have the meaning ascribed to such term in Section 1.6(a)
hereof.

          “Notice of Disagreement” shall have the meaning ascribed to such term in Section
1.6(c) hereof.

          “Owned Real Property” shall mean, with respect to the Division, all land, together
with all buildings, structures, improvements and fixtures located thereon, and all easements and
other rights and interests appurtenant thereto owned by the Division Subsidiaries.

          “Parents” shall have the meaning ascribed to such term in the Preamble hereof.

          “Permitted Liens” means (a) mechanics’, carriers’, workmen’s, repairmen’s or similar
Liens arising or incurred in the ordinary course of business with respect to liabilities that are
not yet due; (b) Liens for Taxes, assessments and other governmental charges which are not due and
payable or which may hereafter be paid without penalty and for which adequate reserves have been
made in the Financial Statements in accordance with GAAP, consistently applied; (c) other
imperfections of title or encumbrances, if any, which imperfections of title or other encumbrances
would not, individually or in the aggregate, reasonably be expected to materially impair the use or
ownership of the property to which they relate in the operation of the Division as operated on the
date hereof or detract materially from the value of such assets; (d) zoning, building and other
similar restrictions regulating the use or occupancy of such Real Property or the activities
conducted thereon which are imposed by any governmental authority having jurisdiction over such
Real Property which are not violated in any material respect by the current use or occupancy of
such Real Property or the operation of the business of the Division thereon; and (e) easements,
covenants, rights of way or other restrictions, none of which materially impair the use of the
property to which they relate or the operation of the business of the Division as operated on the
date hereof.

          “Person” shall have the meaning ascribed to such term in Section 10.9 hereof.

          “Personal Property” shall have the meaning ascribed to such term in Section 3.9
hereof.

          “Pre-Closing Transactions” shall have the meaning ascribed to such term in Section
5.8(b) hereof.

          “Present Fair Saleable Value” shall have the meaning ascribed to such term in Section
4.5 hereof.

          “Private Letter Rulings” shall mean, collectively, the Tax-Free Split-Off Ruling, the
Tax-Free Reorganization Ruling, the Tax-Free Debt Exchange Ruling and the Section 355(d) Ruling.

          “Publishing Agreement” shall have the meaning ascribed to such term in Section 2.1(a)
hereof.

          “Real Property” shall mean all Leased Real Property and Owned Real Property.

67

 

          “Real Property Leases” shall mean all leases, subleases, licenses, concessions and
other agreements (written or oral) pursuant to which the Division or the Division Subsidiaries
holds any Leased Real Property, including the right to all security deposits and other amounts and
instruments deposited by or on behalf of the Division or the Division Subsidiaries thereunder.

          “Records” shall have the meaning ascribed to such term in Section 5.8(a) hereof.

          “Release” means any releasing, disposing, discharging, injecting, spilling, leaking,
leaching, pumping, dumping, emitting, escaping, emptying, seeping, dispersal, migration and the
like, including without limitation, the moving of any materials through, into or upon, any land,
soil, surface water, groundwater or air, or otherwise entering into the environment.

          “Restructuring Transactions” shall have the meaning ascribed to such term in the
Recitals hereof.

          “RP Capacity” shall have the meaning ascribed to such term in Section 1.7(d) hereof.

          “Second Closing” shall have the meaning ascribed to such term in Section 1.7(b)
hereof.

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

          “Section 355(d) Ruling” shall have the meaning ascribed to such term in the Tax
Sharing Agreement.

          “Solvent” shall have the meaning ascribed to such term in Section 4.5 hereof.

          “Special Dividend” shall have the meaning ascribed to such term in Section 2.5(a)(iii)
hereof.

          “Statement” shall have the meaning ascribed to such term in Section 1.6(b) hereof.

          “Subsidiary” means with respect to a specified Person, any other Person of which a
majority of the voting power of the voting equity securities or equity interests is owned, directly
or indirectly, by such specified Person.

          “Subsidiary Shares” shall have the meaning ascribed to such term in Section 3.5
hereof.

          “Sufficient RP Capacity” shall have the meaning ascribed to such term in Section
1.7(d) hereof.

68

 

          “Target Net Working Capital” means One Million Eight Hundred Thousand Dollars
($1,800,000).

          “Tax” or “Taxes” shall have the meaning ascribed to such term in Section
3.14(k) hereof.

          “Tax Benefit” shall have the meaning ascribed to such term in the Tax Sharing
Agreement.

          “Tax Opinion” shall have the meaning ascribed to such term in the Tax Sharing
Agreement.

          “Tax Return” shall have the meaning ascribed to such term in Section 3.14(k) hereof.

          “Tax-Free Debt Exchange Opinion” shall have the meaning ascribed to such term in the
Tax Sharing Agreement.

          “Tax-Free Debt Exchange Ruling” shall have the meaning ascribed to such term in the
Tax Sharing Agreement.

          “Tax-Free Reorganization Opinion” shall have the meaning ascribed to such term in the
Tax Sharing Agreement.

          “Tax-Free Reorganization Ruling” shall have the meaning ascribed to such term in the
Tax Sharing Agreement.

          “Tax-Free Split-Off Ruling” shall have the meaning ascribed to such term in the Tax
Sharing Agreement.

          “Tax Sharing Agreement” shall have the meaning ascribed to such term in Section 2.1(e)
hereof.

          “Taxing Authority” shall mean any Governmental Entity exercising any authority to
impose Taxes, or to regulate or administer the imposition or collection of Taxes.

          “Termination Date” shall have the meaning ascribed to such term in Section 8.1(b)
hereof.

          “Third-Party Claims” shall have the meaning ascribed to such term in Section 9.6
hereof.

          “Transaction Amount” means Five Hundred Twenty Five Million Dollars ($525,000,000).

          “Vacation Entitlements” shall have the meaning ascribed to such term in Section 6.1(d)
hereof.

69

 

          “WCAS Securityholders Agreement” means that certain Securityholders Agreement, dated
as of February 14, 2005, by and among WIN and the investors signatory thereto, as amended by that
certain First Amendment, dated July 17, 2006, by and among WIN, Welsh, Carson, Anderson & Stowe and
certain other signatories thereto.

          “WCAS Sub Claims” shall have the meaning ascribed to such term in Section 9.2 hereof.

          “WCAS Sub Indemnified Parties” shall have the meaning ascribed to such term in Section
9.2 hereof.

          “WCAS Sub Representatives” shall have the meaning ascribed to such term in Section
5.2(a) hereof.

          “WCAS Sub Tax-Free Split-Off Opinion” shall have the meaning ascribed to such term in
the Tax Sharing Agreement.

          “WCAS Subs” shall have the meaning ascribed to such term in the Preamble hereto.

          “WIN” shall have the meaning ascribed to such term in the Preamble hereto.

          “WIN Claims” shall have the meaning ascribed to such term in Section 9.4 hereof.

          “WIN Common Stock” shall have the meaning ascribed to such term in the Recitals
hereof.

          “WIN Debt” shall have the meaning ascribed to such term in Section 2.5(b) hereof.

          “WIN Division Indebtedness Deficiency Amount” shall have the meaning ascribed to such
term in Section 1.6(b) hereof.

          “WIN Division Indebtedness Excess Amount” shall have the meaning ascribed to such term
in Section 1.6(b) hereof.

          “WIN Indemnified Parties” shall have the meaning ascribed to such term in Section 9.4
hereof.

          “WIN Indenture” means that certain Indenture for the Issuance of
81/8% Senior Notes due 2013 and
85/8% Senior Notes due 2016, dated as of July 17, 2006, by and
between WIN, the guarantors named therein and SunTrust Bank, as supplemented and amended from time
to time.

          “WIN Plans” shall have the meaning ascribed to such term in Section 3.13(a) hereof.

70

 

          “WIN Retirement Plans” shall have the meaning ascribed to such term in Section 6.1(e)
hereof.

          “WIN Tax Opinions” shall mean the WIN Tax-Free Split-Off Opinion, the Tax-Free
Reorganization Opinion and the Tax-Free Debt Exchange Opinion.

          “WIN Tax-Free Split-Off Opinion” shall have the meaning ascribed to such term in the
Tax Sharing Agreement.

          “WIN’s Trademarks and Logos” shall have the meaning ascribed to such term in Section
6.4 hereof.

          “WIN Transaction Expenses” means all costs and expenses incurred by, or on behalf of,
WIN or its Subsidiaries (including the Division Subsidiaries) in connection with the transactions
contemplated hereby, other than the Holdings Financing Expenses, including: all legal, accounting,
financial advisor and other advisory fees and expenses associated with the Restructuring
Transactions and the Contribution; all legal, accounting, financial advisor and other advisory fees
and expenses associated with the Private Letter Rulings, the WIN Tax Opinions; all amendment,
waiver and consent fees incurred or payable under WIN’s senior credit agreement or outstanding note
indentures, as applicable, in connection with the Restructuring Transactions, the Contribution, the
Holdings Financing and the Debt Exchange; and all fees and expenses owed to Goldman, Sachs & Co.
and Stephens Inc. and any other broker engaged by WIN or its Affiliates.

          “WIN Transition Services Agreement” shall have the meaning ascribed to such term in
Section 2.1(b) hereof.

          “Wind-down Period” shall have the meaning ascribed to such term in Section 6.4 hereof.

          “WLM” shall have the meaning ascribed to such term in the Recitals hereof.

          “WLM Shares” shall have the meaning ascribed to such term in Section 3.5 hereof.

          “Working Capital Deficiency Amount” shall have the meaning ascribed to such term in
Section 1.6(b) hereof.

          “Working Capital Excess Amount” shall have the meaning ascribed to such term in
Section 1.6(b) hereof.

[SIGNATURE PAGES FOLLOW]

71

 

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

	 	 	 	 	 
	 	WINDSTREAM CORPORATION

 	 
	 	By:  	/s/
Jeffery R. Gardner	 
	 	 	Name:  	Jeffery R. Gardner	 
	 	 	Title:  	President and CEO 	 
	 

Signature Page to

Share Exchange Agreement

 

	 	 	 	 	 
	 	WCAS SUBS 
 

REGATTA HOLDING I, L.P.

By: Regatta Split-off I LLC

Its: General Partner

 	 
	 	By:  	/s/
John Almeida, Jr. 	 
	 	 	Name:  	John Almeida, Jr. 	 
	 	 	Title:  	President 	 
	 
	 	REGATTA HOLDING II, L.P.

By: Regatta Split-off II LLC

Its: General Partner

 	 
	 	By:  	/s/
John Almeida, Jr. 	 
	 	 	Name:  	John Almeida, Jr. 	 
	 	 	Title:  	President 	 
	 
	 	REGATTA HOLDING III, L.P.

By: Regatta Split-off III LLC

Its: General Partner

 	 
	 	By:  	/s/
John Almeida, Jr. 	 
	 	 	Name:  	John Almeida, Jr. 	 
	 	 	Title:  	President 	 
	 

Signature Page to

Share Exchange Agreement

 

 

	 	 	 	 	 
	 	PARENTS
 

WELSH, CARSON, ANDERSON & STOWE VIII, L.P.

By: WCAS VIII Associates LLC

Its: General Partner

 	 
	 	By:  	/s/
Jonathan M. Rather 	 
	 	 	Name:  	Jonathan M. Rather 	 
	 	 	Title:  	 	 
	 

Signature Page to

Share Exchange Agreement

 

 

	 	 	 	 	 
	 	WELSH, CARSON, ANDERSON & STOWE IX, L.P.

By: WCAS IX Associates LLC

Its: General Partner

 	 
	 	By:  	/s/
John Almeida, Jr. 	 
	 	 	Name:  	John Almeida, Jr. 	 
	 	 	Title:  	Managing Member 	 
	 

Signature Page to

Share Exchange Agreement

 

 

	 	 	 	 	 
	 	WCAS CAPITAL PARTNERS III, L.P.

By: WCAS CP III Associates, LLC

Its: General Partner

 	 
	 	By:  	/s/
Jonathan M. Rather 	 
	 	 	Name:  	Jonathan M. Rather 	 
	 	 	Title:  	 	 
	 

Signature Page to

Share Exchange Agreement

 

 

SCHEDULE I

RESTRUCTURING TRANSACTIONS

	1.	 	Windstream Nebraska, Inc. will distribute all of the stock of the Company to Windstream
Holding of the Midwest, Inc. (“WHM”).
	 
	2.	 	WHM will distribute all of the stock of the Company to WIN.
	 
	3.	 	Certain contracts will be assigned by WIN to the Company.

Capitalized terms used and not otherwise defined above have the meaning ascribed thereto in the
Share Exchange Agreement to which this Schedule is attached.

 

 

SCHEDULE II

EXCHANGED WIN SHARES*

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Regatta	 	Regatta	 	Regatta
	 	 	Holdings I, L.P.	 	Holdings II, L.P.	 	Holdings III, L.P.
	Total shares of WIN
Common Stock to be
Exchanged**
	 	 	9,153,797	 	 	 	9,201,511	 	 	 	1,219,114	 
	Closing - 80%
	 	 	7,323,038	 	 	 	7,361,209	 	 	 	975,292	 
	Second Closing - 20%
	 	 	1,830,759	 	 	 	1,840,302	 	 	 	243,822	 
	Total
	 	 	9,153,797	 	 	 	9,201,511	 	 	 	1,219,114	 

 

			
	*	 	Capitalized terms used herein and not
otherwise defined shall have the respective meanings ascribed to such terms in
the Share Exchange Agreement to which this Schedule II is attached.
The shares of WIN Common Stock reflected in this Schedule II are held
by investment funds affiliated with Welsh, Carson, Anderson & Stowe. Several
persons who are currently or who were formerly affiliated with Welsh, Carson,
Anderson & Stowe hold in the aggregate 642,284 other shares of WIN Common Stock
(the “Substitute Shares”). The WCAS Subs reserve the right
to substitute all or a portion of the Substitute Shares for an equal number of
the shares of WIN Common Stock that are contemplated by the Share Exchange
Agreement to be exchanged by the WCAS Subs for Holdings Shares at the Closing
and the Second Closing (any such substitution of shares to retain the relative
percentage of shares to be exchanged at the Closing and the Second Closing
(i.e., 80% at the Closing and 20% at the Second Closing), subject to and
conditioned on (i) the holders of any such shares that are included (either
directly or through their Power of Attorney) becoming party to the Share
Exchange Agreement to which this Schedule II is attached and making for
the benefit of WIN customary representations and warranties with respect to
ownership, authority to transfer and lack of liens on such shares, (ii) the
parties mutually and reasonably agreeing to such other modifications to the
Share Exchange Agreement that any such party reasonably determines to be
necessary in good faith in order to effectuate the inclusion of such shares and
such parties in the transactions and arrangements contemplated by the Share
Exchange Agreement (the parties hereby agreeing to work in good faith together
to implement such changes), and (iii) such inclusion not having an adverse
effect on the Tax-Free Status of the Transactions (as defined in the Tax
Sharing Agreement) or the ability of the parties to obtain the Section 355(d)
Ruling.
	 
	**	 	Upon the terms and subject ton the
conditions set forth in the Share Exchange Agreement, the Exchanged WIN
Shares set forth in this Schedule II (and any Substitute Shares
substituted therefor) will be exchanged for an equal number of Holdings
Shares at the Closing or the Second Closing, as applicable.exv10w01

 

EXHIBIT 10.01

SILICON IMAGE, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN

As Amended and Restated on December 13, 2006

     1. Establishment of Plan. Silicon Image, Inc. (the “Company”) proposes to grant options for
purchase of the Company’s Common Stock to eligible employees of the Company and its Participating
Subsidiaries (as hereinafter defined) pursuant to this Employee Stock Purchase Plan (this “Plan”).
For purposes of this Plan, “Parent Corporation” and “Subsidiary” shall have the same meanings as
“parent corporation” and “subsidiary corporation” in Sections 424(e) and 424(f), respectively, of
the Internal Revenue Code of 1986, as amended (the “Code”). “Participating Subsidiaries” are
Parent Corporations or Subsidiaries that the Board of Directors of the Company (the “Board”)
designates from time to time as corporations that shall participate in this Plan. The Company
intends this Plan to qualify as an “employee stock purchase plan” under Section 423 of the Code
(including any amendments to or replacements of such Section (“Section 423”)), and this Plan shall
be so construed. Any term not expressly defined in this Plan but defined for purposes of Section
423 shall have the same definition herein. A total of 500,000 shares of the Company’s Common Stock
is initially reserved for issuance under this Plan (after giving effect to the 2:1 stock split of
August 18, 2000). In addition, on each January 1, the aggregate number of shares of the Company’s
Common Stock reserved for issuance under the Plan shall be increased automatically by a number of
shares equal to 1% of the total number of outstanding shares of the Company Common Stock on the
immediately preceding December 31; provided, that the Board or the Committee may in its
sole discretion reduce the amount of the increase in any particular year; and, provided
further, that the aggregate number of shares issued over the term of this Plan shall not exceed
8,000,000 shares (after giving effect to the 2:1 stock split of August 18, 2000). Such number
shall be subject to adjustments effected in accordance with Section 14 of this Plan.

     2. Purpose. The purpose of this Plan is to provide eligible employees of the Company and
Participating Subsidiaries with a convenient means of acquiring an equity interest in the Company
through payroll deductions, to enhance such employees’ sense of participation in the affairs of the
Company and Participating Subsidiaries, and to provide an incentive for continued employment.

     3. Administration. This Plan shall be administered by the Compensation Committee of the
Board (the “Committee”). Subject to the provisions of this Plan and the limitations of Section 423
or any successor provision in the Code, all questions of interpretation or application of this Plan
shall be determined by the Committee and its decisions shall be final and binding upon all
participants. Members of the Committee shall receive no compensation for their services in
connection with the administration of this Plan, other than standard fees as established from time
to time by the Board for services rendered by Board members serving on Board committees. All
expenses incurred in connection with the administration of this Plan shall be paid by the Company.

     4. Eligibility. Any employee of the Company or the Participating Subsidiaries is eligible to
participate in an Offering Period (as hereinafter defined) under this Plan except the following:

          (a) employees who are not employed by the Company or a Participating Subsidiary (10) days
before the beginning of such Offering Period;

          (b) employees who are customarily employed for twenty (20) hours or less per week;

          (c) employees who are customarily employed for five (5) months or less in a calendar year;

          (d) employees who, together with any other person whose stock would be attributed to such
employee pursuant to Section 424(d) of the Code, own stock or hold options to purchase stock
possessing five percent (5%) or more of the total combined voting power or value of all classes of
stock of the Company or any of its Participating Subsidiaries or who, as a result of being granted
an option under this Plan with respect to such Offering Period, would own stock or hold options to
purchase stock possessing five percent (5%) or more of the total combined voting power or value of
all classes of stock of the Company or any of its Participating Subsidiaries; and

 

 

Silicon Image, Inc.

1999 Employee Stock Purchase Plan

          (e) individuals who provide services to the Company or any of its Participating Subsidiaries
as independent contractors who are reclassified as common law employees for any reason
except for federal income and employment tax purposes.

     5. Offering Dates. The offering periods of this Plan (each, an “Offering Period”) shall be
of approximately six (6) months duration. The first such Offering Period shall commence on
February 1, 2007, and end on the last business day to occur on or before July 31, 2007, and
subsequent Offering Periods shall commence on each August 1 and February 1 thereafter. Each
Offering Period that commences on, or after, February 1, 2007, shall consist of a single purchase
period (a “Purchase Period”) during which payroll deductions of the participants are accumulated
under this Plan. The first business day of each Offering Period is referred to as the “Offering
Date”. The last business day of each Offering Period is referred to as the “Purchase Date” (with
January 31, 2007 to be the final Purchase Date for all Offering Periods then in effect) and is the
end of the Purchase Period. The Committee shall have the power to change the duration of Offering
Periods with respect to offerings without stockholder approval if such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first Offering Period to be affected.

     6. Participation in this Plan. Eligible employees may become participants in an Offering
Period under this Plan on the first Offering Date after satisfying the eligibility requirements by
delivering a subscription agreement to the Company not later than five (5) days before such
Offering Date. Notwithstanding the foregoing, the Committee may set a later time for filing the
subscription agreement authorizing payroll deductions for all eligible employees with respect to a
given Offering Period. An eligible employee who does not deliver a subscription agreement to the
Company by such date after becoming eligible to participate in such Offering Period shall not
participate in that Offering Period or any subsequent Offering Period unless such employee enrolls
in this Plan by filing a subscription agreement with the Company not later than five (5) days
preceding a subsequent Offering Date. Once an employee becomes a participant in an Offering
Period, such employee will automatically participate in the Offering Period commencing immediately
following the last day of the prior Offering Period and is not required to file another
subscription agreement to continue participation in this Plan other than following a withdrawal
from participation as set forth in Section 11 below.

     7. Grant of Option on Enrollment. Enrollment by an eligible employee in this Plan with
respect to an Offering Period will constitute the grant (as of the Offering Date) by the Company to
such employee of an option to purchase on the Purchase Date up to that number of shares of Common
Stock of the Company determined by dividing (a) the amount accumulated in such employee’s payroll
deduction account during such Offering Period by (b) the lower of (i) eighty-five percent (85%) of
the fair market value of a share of the Company’s Common Stock on the Offering Date (but in no
event less than the par value of a share of the Company’s Common Stock), or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company’s Common Stock on the Purchase
Date (but in no event less than the par value of a share of the Company’s Common Stock), provided,
however, that the number of shares of the Company’s Common Stock subject to any option granted
pursuant to this Plan shall not exceed the lesser of (x) the maximum number of shares set by the
Committee pursuant to Section 10(c) below with respect to the applicable Purchase Date, or (y) the
maximum number of shares which may be purchased pursuant to Section 10(b) below with respect to the
applicable Purchase Date. The fair market value of a share of the Company’s Common Stock shall be
determined as provided in Section 8 below.

     8. Purchase Price. The purchase price per share at which a share of Common Stock will be
sold in any Offering Period shall be eighty-five percent (85%) of the lesser of:

          (a) The fair market value on the Offering Date; or

          (b) The fair market value on the Purchase Date.

          For purposes of this Plan, the term “Fair Market Value” means, as of any date, the value of a
share of the Company’s Common Stock determined as follows:

	 	(a)	 	if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of determination on
the principal national securities

2

 

Silicon Image, Inc.

1999 Employee Stock Purchase Plan

	 	 	 	exchange on which the Common Stock is listed or admitted to trading as
reported by The Wall Street Journal or other source designated by the
Board or Committee;
	 
	 	(b)	 	if such Common Stock is publicly traded but is not listed or
admitted to trading on a national securities exchange, the average of the closing
bid and asked prices on the date of determination as reported in The Wall
Street Journal or other source designated by the Board or Committee; or
	 
	 	(c)	 	if none of the foregoing is applicable, by the Board or Committee
in good faith.

     9. Payment Of Purchase Price; Changes In Payroll Deductions; Issuance Of Shares.

          (a) The purchase price of the shares is accumulated by regular payroll deductions made during
each Offering Period. The deductions are made as a percentage of the participant’s compensation in
one percent (1%) increments not less than one percent (1%), nor greater than fifteen percent (15%)
or such lower limit set by the Committee. Compensation shall mean all W-2 cash compensation,
including, but not limited to, base salary, wages, commissions, overtime, shift premiums and
bonuses, plus draws against commissions, provided, however, that for purposes of
determining a participant’s compensation, any election by such participant to reduce his or her
regular cash remuneration under Sections 125 or 401(k) of the Code shall be treated as if the
participant did not make such election. Payroll deductions shall commence on the first payday of
the Offering Period and shall continue to the end of the Offering Period unless sooner altered or
terminated as provided in this Plan.

          (b) A participant may prospectively increase or decrease the rate of payroll deductions for
any upcoming Offering Period by filing with the Company a new authorization for payroll deductions
not later than fifteen (15) days before the beginning of such Offering Period.

          (c) A participant may decrease, but not increase, his or her payroll deduction percentage
(including to zero) during a Purchase Period by filing with the Company a new authorization
regarding upcoming payroll deductions. Such decrease shall be effective beginning with the next
payroll period commencing more than fifteen (15) days after the Company’s receipt of the request.
Only one such change may be made effective during any Purchase Period.

          (d) All payroll deductions made for a participant are credited to his or her account under
this Plan and are deposited with the general funds of the Company. No interest accrues on the
payroll deductions. All payroll deductions received or held by the Company may be used by the
Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll
deductions.

          (e) On each Purchase Date, so long as this Plan remains in effect, and provided that the
participant has not timely submitted a signed and completed withdrawal form before that date as
provided in Section 11 below, the Company shall apply the funds then in the participant’s account
to the purchase of whole shares of Common Stock reserved under the option granted to such
participant with respect to the Offering Period to the extent that such option is exercisable on
the Purchase Date. The purchase price per share shall be as specified in Section 8 of this Plan.
Any cash remaining in a participant’s account after such purchase of shares shall be refunded to
such participant in cash, without interest; provided, however that any amount remaining in such
participant’s account on a Purchase Date which is less than the amount necessary to purchase a full
share of Common Stock of the Company shall be carried forward, without interest, into the next
Offering Period. In the event that this Plan has been oversubscribed, all funds not used to
purchase shares on the Purchase Date shall be returned to the participant, without interest. No
Common Stock shall be purchased on a Purchase Date on behalf of any employee whose participation in
this Plan has terminated prior to such Purchase Date.

          (f) As promptly as practicable after the Purchase Date, the Company shall issue shares for
the participant’s benefit representing the shares purchased upon exercise of his or her option.

          (g) A participant’s option to purchase shares hereunder is exercisable only by him or her.
The participant will have no interest or voting right in shares covered by his or her option until
such option has been exercised.

3

 

Silicon Image, Inc.

1999 Employee Stock Purchase Plan

     10. Limitations on Shares to be Purchased.

          (a) No participant shall be entitled to purchase stock under this Plan at a rate which, when
aggregated with his or her rights to purchase stock under all other employee stock purchase plans
of the Company or any Subsidiary, exceeds $25,000 in fair market value, determined as of the
Offering Date (or such other limit as may be imposed by the Code) for each calendar year in which
the employee participates in this Plan. The Company shall automatically suspend the payroll
deductions of any participant as necessary to enforce such limit provided that when the Company
automatically resumes such payroll deductions, the Company must apply the rate in effect
immediately prior to such suspension.

          (b) No more than two hundred percent (200%) of the number of shares determined by using
eighty-five percent (85%) of the fair market value of a share of the Company’s Common Stock on the
Offering Date as the denominator may be purchased by a participant on any single Purchase Date.

          (c) No participant shall be entitled to purchase more than the Maximum Share Amount (as
defined below) on any single Purchase Date. Not less than thirty (30) days prior to the
commencement of any Offering Period, the Committee may, in its sole discretion, set a maximum
number of shares which may be purchased by any employee at any single Purchase Date (hereinafter
the “Maximum Share Amount”). Until otherwise determined by the Committee, there shall be no
Maximum Share Amount. In no event shall the Maximum Share Amount exceed the amounts permitted
under Section 10(b) above. If a new Maximum Share Amount is set, then all participants must be
notified of such Maximum Share Amount prior to the commencement of the next Offering Period. The
Maximum Share Amount shall continue to apply with respect to all succeeding Purchase Dates and
Offering Periods unless revised by the Committee as set forth above.

          (d) If the number of shares to be purchased on a Purchase Date by all employees participating
in this Plan exceeds the number of shares then available for issuance under this Plan, then the
Company will make a pro rata allocation of the remaining shares in as uniform a manner as shall be
reasonably practicable and as the Committee shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of shares to be purchased under a
participant’s option to each participant affected.

          (e) Any payroll deductions accumulated in a participant’s account which are not used to
purchase stock due to the limitations in this Section 10 shall be returned to the participant as
soon as practicable after the end of the applicable Offering Period, without interest.

     11. Withdrawal.

          (a) Each participant may withdraw from an Offering Period under this Plan by signing and
delivering to the Company a written notice to that effect on a form provided for such purpose.
Such withdrawal may be elected at any time at least fifteen (15) days prior to the end of an
Offering Period.

          (b) Upon withdrawal from this Plan, the accumulated payroll deductions shall be returned to
the withdrawn participant, without interest, and his or her interest in this Plan shall terminate.
In the event a participant voluntarily elects to withdraw from this Plan, he or she may not resume
his or her participation in this Plan during the same Offering Period, but he or she may
participate in any Offering Period under this Plan which commences on a date subsequent to such
withdrawal by filing a new authorization for payroll deductions in the same manner as set forth in
Section 6 above for initial participation in this Plan.

     12. Termination of Employment. Termination of a participant’s employment for any reason,
including retirement, death or the failure of a participant to remain an eligible employee of the
Company or of a Participating Subsidiary, immediately terminates his or her participation in this
Plan. In such event, the payroll deductions credited to the participant’s account will be returned
to him or her or, in the case of his or her death, to his or her legal representative, without
interest. For purposes of this Section 12, an employee will not be deemed to have terminated
employment or failed to remain in the continuous employ of the Company or of a Participating
Subsidiary in the case of sick leave, military leave, or any other leave of absence approved by the
Board; provided that such

4

 

Silicon Image, Inc.

1999 Employee Stock Purchase Plan

leave is for a period of not more than ninety (90) days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.

     13. Return of Payroll Deductions. In the event a participant’s interest in this Plan is
terminated by withdrawal, termination of employment or otherwise, or in the event this Plan is
terminated by the Board, the Company shall deliver to the participant all payroll deductions
credited to such participant’s account. No interest shall accrue on the payroll deductions of a
participant in this Plan.

     14. Capital Changes. Subject to any required action by the stockholders of the Company, the
number of shares of Common Stock covered by each option under this Plan which has not yet been
exercised and the number of shares of Common Stock which have been authorized for issuance under
this Plan but have not yet been placed under option (collectively, the “Reserves”), as well as the
price per share of Common Stock covered by each option under this Plan which has not yet been
exercised, shall be proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock of the Company resulting from a stock split or the payment
of a stock dividend (but only on the Common Stock) or any other increase or decrease in the number
of issued and outstanding shares of Common Stock effected without receipt of any consideration by
the Company; provided, however, that conversion of any convertible securities of the Company shall
not be deemed to have been “effected without receipt of consideration”. Such adjustment shall be
made by the Committee, whose determination shall be final, binding and conclusive. Except as
expressly provided herein, no issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock subject to an option.

     In the event of the proposed dissolution or liquidation of the Company, the Offering Period
will terminate immediately prior to the consummation of such proposed action, unless otherwise
provided by the Committee. The Committee may, in the exercise of its sole discretion in such
instances, declare that this Plan shall terminate as of a date fixed by the Committee and give each
participant the right to purchase shares under this Plan prior to such termination or return each
participant’s funds on deposit without interest. In the event of (i) a merger or consolidation in
which the Company is not the surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other
transaction in which there is no substantial change in the stockholders of the Company or their
relative stock holdings and the options under this Plan are assumed, converted or replaced by the
successor corporation, which assumption will be binding on all participants), (ii) a merger in
which the Company is the surviving corporation but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges, or which owns or controls
another corporation that merges, with the Company in such merger) cease to own their shares or
other equity interest in the Company, (iii) the sale of all or substantially all of the assets of
the Company or (iv) the acquisition, sale, or transfer of more than 50% of the outstanding shares
of the Company by tender offer or similar transaction, the Plan shall terminate as of a date fixed
by the Committee and the date of such termination shall be the final Purchase Date for all Offering
Periods then in effect.

     The Committee may, if it so determines in the exercise of its sole discretion, also make
provision for adjusting the Reserves, as well as the price per share of Common Stock covered by
each outstanding option, in the event that the Company effects one or more reorganizations,
recapitalizations, rights offerings or other increases or reductions of shares of its outstanding
Common Stock, or in the event of the Company being consolidated with or merged into any other
corporation.

     15. Nonassignability. Neither payroll deductions credited to a participant’s account nor any
rights with regard to the exercise of an option or to receive shares under this Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in Section 22 below) by the participant. Any such attempt
at assignment, transfer, pledge or other disposition shall be void and without effect.

     16. Reports. Individual accounts will be maintained for each participant in this Plan. Each
participant shall receive promptly after the end of each Offering Period a report of his or her
account setting forth the total payroll deductions accumulated, the number of shares purchased, the
per share price thereof and the remaining cash balance, if any, carried forward to the next
Offering Period.

5

 

Silicon Image, Inc.

1999 Employee Stock Purchase Plan

     17. Notice of Disposition. Each participant shall notify the Company in writing if the
participant disposes of any of the shares purchased in any Offering Period pursuant to this Plan if
such disposition occurs within two (2) years from the Offering Date (the “Notice Period”). The
Company may, at any time during the Notice Period, place a legend or legends on any certificate
representing shares acquired pursuant to this Plan requesting the Company’s transfer agent to
notify the Company of any transfer of the shares. The obligation of the participant to provide
such notice shall continue notwithstanding the placement of any such legend on the certificates.

     18. No Rights to Continued Employment. Neither this Plan nor the grant of any option
hereunder shall confer any right on any employee to remain in the employ of the Company or any
Participating Subsidiary, or restrict the right of the Company or any Participating Subsidiary to
terminate such employee’s employment.

     19. Equal Rights And Privileges. All eligible employees shall have equal rights and
privileges with respect to this Plan so that this Plan qualifies as an “employee stock purchase
plan” within the meaning of Section 423 or any successor provision of the Code and the related
regulations. Any provision of this Plan which is inconsistent with Section 423 or any successor
provision of the Code shall, without further act or amendment by the Company, the Committee or the
Board, be reformed to comply with the requirements of Section 423. This Section 19 shall take
precedence over all other provisions in this Plan.

     20. Notices. All notices or other communications by a participant to the Company under or in
connection with this Plan shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person, designated by the Company for the
receipt thereof.

     21. Term; Stockholder Approval. This Plan was first adopted by the Board on July 20, 1999
and was last amended by the Board as of the date shown above. When required by applicable law or
Section 423, this Plan shall be submitted for approval by the stockholders of the Company, in any
manner required, or permitted, by applicable law. No purchase of shares that are subject to such
approval before becoming available under this Plan shall occur prior to stockholder approval of
such shares and the Board or Committee may delay any Purchase Date and postpone the commencement of
any Offering Period subsequent to such Purchase Date as deemed necessary or desirable to obtain
such approval (provided that if a Purchase Date would occur more than twenty-seven (27) months
after commencement of the Offering Period to which it relates, then such Purchase Date shall not
occur and instead such Offering Period shall terminate without the purchase of shares and
participants in such Offering Period shall be refunded their contributions without interest). This
Plan shall continue until the earlier to occur of (a) termination of this Plan by the Board (which
termination may be effected by the Board at any time), (b) issuance of all of the shares of Common
Stock reserved for issuance under this Plan, or (c) ten (10) years from the adoption of this Plan
by the Board.

     22. Designation of Beneficiary.

          (a) A participant may file a written designation of a beneficiary who is to receive any
shares and cash, if any, from the participant’s account under this Plan in the event of such
participant’s death subsequent to the end of a Purchase Period but prior to delivery to him of such
shares and cash. In addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant’s account under this Plan in the event of such
participant’s death prior to a Purchase Date.

          (b) Such designation of beneficiary may be changed by the participant at any time by written
notice. In the event of the death of a participant and in the absence of a beneficiary validly
designated under this Plan who is living at the time of such participant’s death, the Company shall
deliver such shares or cash to the executor or administrator of the estate of the participant, or
if no such executor or administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may deliver such shares or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse, dependent or relative is known to the
Company, then to such other person as the Company may designate.

     23. Conditions Upon Issuance of Shares; Limitation on Sale of Shares. Shares shall not be
issued with respect to an option unless the exercise of such option and the issuance and delivery
of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated

6

 

Silicon Image, Inc.

1999 Employee Stock Purchase Plan

thereunder, and the requirements of any stock exchange or automated quotation system upon which the
shares may then be listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.

     24. Applicable Law. The Plan shall be governed by the substantive laws (excluding the
conflict of laws rules) of the State of California.

     25. Amendment or Termination of this Plan. The Board may at any time amend, terminate or
extend the term of this Plan, except that any such termination cannot affect options previously
granted under this Plan, nor may any amendment make any change in an option previously granted
which would adversely affect the right of any participant, nor may any amendment be made without
approval of the stockholders of the Company obtained in accordance with Section 21 above within
twelve (12) months of the adoption of such amendment (or earlier if required by Section 21) if such
amendment would:

          (a) increase the number of shares that may be issued under this Plan; or

          (b) change the designation of the employees (or class of employees) eligible for participation
in this Plan.

          Notwithstanding the foregoing, the Board may make such amendments to the Plan as the Board
determines to be advisable, if the continuation of the Plan or any Offering Period would result in
financial accounting treatment for the Plan that is different from the financial accounting
treatment in effect on the date this Plan was adopted by the Board.

7

 

THE SILICON IMAGE, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR UK EMPLOYEES

	1.	 	The purpose of this Sub-Plan is to provide incentive for present and future employees in the
United Kingdom of Silicon Image’s Subsidiaries through the grant of options over Common Stock.
	 
	2.	 	This Sub-Plan is governed by the Silicon Image, Inc. 1999 Employee Stock Purchase Plan (the
“Plan”) and all its provisions shall be identical to those of the Plan SAVE THAT Section 4
shall be as stated in this Sub-Plan in order to accommodate the specific requirements of UK
law.

Section 4 for purposes of this Sub-Plan reads:

     4. Eligibility. Any employee of the Participating Subsidiaries is eligible to participate in
an Offering Period (as hereinafter defined) under this Plan except the following:

          (a) employees who are not employed by the Company or a Participating Subsidiary (10) days
before the beginning of such Offering Period;

          (b) employees who are customarily employed for five (5) months or less in a calendar year;

          (c) employees who, together with any other person whose stock would be attributed to such
employee pursuant to Section 424(d) of the Code, own stock or hold options to purchase stock
possessing five percent (5%) or more of the total combined voting power or value of all classes of
stock of the Company or any of its Participating Subsidiaries or who, as a result of being granted
an option under this Plan with respect to such Offering Period, would own stock or hold options to
purchase stock possessing five percent (5%) or more of the total combined voting power or value of
all classes of stock of the Company or any of its Participating Subsidiaries; and

          (d) individuals who provide services to the Company or any of its Participating Subsidiaries
as independent contractors who are reclassified as common law employees for any reason except
for federal income and employment tax purposes.

 

 

SILICON IMAGE, INC. 1999 EMPLOYEE STOCK PURCHASE PLAN

ENROLLMENT FORM

	 	 	 	 	 
	Check One:	 	Complete:
	 
	 	 	 	 
	 

	 	o New Enrollment or Re-enrollment
	 	Social Security No.                                                             
	 
	 	 	 	 
	 

	 	o Change
	 	Employee No.                                                             

o Change in How Shares Are to Be Held in Account

o Increase in Payroll Deduction Level  onext Offering Period

o Decrease in Payroll Deduction Level othis Purchase Period onext Offering Period

o Suspension of Payroll Deductions for Open Offering Period (Attach Completed Suspension Form)

o Withdrawal (Attach Completed Withdrawal Form)

o Beneficiary Change

	 	 	 	 	 
	1.

	 	Name of Participant	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	2.	 	Shares purchased under the Plan should be held in account with the Plan Broker in my name or

in my name together with the name(s) indicated below:

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name
	 	 	 	Social Security No.
	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Name
	 	 	 	Social Security No.	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 

There may be tax consequences for naming individuals other than your spouse on the account in
which Shares purchased under the Plan are held. If spouse (circle one): Joint Tenants/Community
Property.

Please notify the Plan Broker directly to transfer or sell your stock.

	3.	 	Payroll Deduction Level (from 1% to 15% in whole percentages):___

(the percentage deduction will be made from your W-2 compensation including base salary,
commissions, overtime, shift premiums, bonuses and draws against commissions)
	 
	4.	 	I confirm my spouse’s interest (if married) in the
community property herein (if in a community property state), and I hereby
designate the following person(s) as my beneficiary(ies) to receive all payments and/or stock
attributable to my interest under the Plan:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	*To be divided	 	 	 	 	 	 
	NAME	 	 	 	as follows:	 	ADDRESS	 	 	 	 
	 	 	 	 	 
	Last

	 	First
	 	M.I.
	 	 	 	Number
	 	Street	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Social Security No.	 	Relationship	 	 	 	City	 	State	 	Zip
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Last

	 	First
	 	M.I.
	 	 	 	Number
	 	Street	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Social Security No.	 	Relationship	 	 	 	City	 	State	 	Zip

 

			
	*	 	If more than one beneficiary: (1) insert “in equal shares”, or (2) insert percentage
to be paid to each beneficiary.

 

 

	5.	 	The information provided on this Enrollment Form will remain in effect unless and until I
complete and submit to Silicon Image, Inc. a new enrollment form.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	SILICON IMAGE, INC. OFFICE USE:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Signature:

	 	 	 	Date received by the
	 	 	 	:	 	 
	 

	 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:

	 	 	 	Date entered into system:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:	 	 	 	Please return this completed form to Silicon Image, Inc.	 	 

 

 

SILICON IMAGE, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

	1.	 	I elect to participate in the Silicon Image, Inc. (the “Company”) 1999 Employee Stock
Purchase Plan (the “Plan”) and to subscribe to purchase shares of the Company’s Common Stock
(the “Shares”) in accordance with this Subscription Agreement and the Plan.
	 
	2.	 	I authorize payroll deductions from each of my paychecks in that percentage of my base
salary, commissions, overtime, shift premiums, bonuses and draws against commissions as shown
on my Enrollment Form, in accordance with the Plan.
	 
	3.	 	I understand that such payroll deductions shall be accumulated for the purchase of Shares
under the Plan at the applicable purchase price determined in accordance with the Plan. I
further understand that except as otherwise set forth in the Plan, Shares will be purchased
for me automatically at the end of each Purchase Period unless I withdraw from the Plan or
otherwise become ineligible to participate in the Plan.
	 
	4.	 	I understand that this Subscription Agreement will automatically re-enroll me in all
subsequent Offering Periods unless I withdraw from the Plan or I become ineligible to
participate in the Plan.
	 
	5.	 	I acknowledge that I have a copy of and am familiar with the Company’s most recent Prospectus
which describes the Plan. A copy of the complete Plan and the Prospectus is on file with the
Company.
	 
	6.	 	I understand that Shares purchased for me under the Plan will be held in a personal account
with the Plan Broker unless I request otherwise and that I am obligated to notify the Company of any disqualifying disposition.
	 
	7.	 	I hereby agree to be bound by the terms of the Plan. The effectiveness of this Subscription
Agreement is dependent upon my eligibility to participate in the Plan.
	 
	8.	 	I have read and understood this Subscription Agreement.

	 	 	 	 	 
	 

	 	Signature:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

Please return this completed form to the Company.

 

 

SILICON IMAGE, INC.

UK SUB-PLAN OF THE 1999

EMPLOYEE STOCK PURCHASE PLAN

ENROLLMENT FORM

	 	 	 	 	 
	Tick One:	 	Complete:
	 
	 	 	 	 
	 

	 	o New Enrollment or Re-enrollment
	 	National Insurance No.                                                             
	 
	 	 	 	 
	 

	 	o Change
	 	Employee No.                                                             

o Increase in Payroll Deduction Level  onext Offering Period

o Decrease in Payroll Deduction Level othis Purchase Period onext Offering Period

o Suspension of Payroll Deductions for Open Offering Period (Attach Completed Suspension Form)

o Withdrawal (Attach Completed Withdrawal Form)

o Beneficiary Change

	1.	 	Name of Participant                                                                                                                         
	 
	2.	 	Shares purchased under the Sub-Plan will be held in the account with the Plan Broker in your
name.
	 
	 	 	Please notify the Plan Broker directly if you wish to transfer the shares to an account other
than your individual account. NOTE that there may be tax consequences for naming individuals
other than your spouse on the account in which Shares purchased under the Sub-Plan are held.
You should consult your tax advisor regarding this issue.
	 
	 	 	Please notify the Plan Broker directly to transfer or sell your stock.
	 
	3.	 	Payroll Deduction Level (from 1% to 15% in whole percentages):___
	 	 	(the percentage deduction will be made from your post-tax remuneration including base salary,
commissions, overtime, shift premiums, bonuses and draws against commissions)
	 
	4.	 	I confirm my spouse’s interest (if married) in the property herein, and I hereby
designate the following person(s) as my beneficiary(ies) to receive all payments and/or stock
attributable to my interest under the Sub-Plan:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	*To be divided	 	 	 	 	 	 
	NAME	 	 	 	as follows:	 	ADDRESS	 	 	 	 
	 	 	 	 	 
	Last

	 	First
	 	M.I.
	 	 	 	Number
	 	Street	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Social Security No.	 	Relationship	 	 	 	City	 	State	 	Zip
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Last

	 	First
	 	M.I.
	 	 	 	Number
	 	Street	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Social Security No.	 	Relationship	 	 	 	City	 	State	 	Zip

 

			
	*	 	If more than one beneficiary: (1) insert “in equal shares”, or (2) insert percentage
to be paid to each beneficiary.

 

 

	5.	 	The information provided on this Enrollment Form will remain in effect unless and until I
complete and submit to Silicon Image, Inc. a new enrollment form.

	 	 	 	 	 	 	 
	 	 	 	 	SILICON IMAGE, INC. OFFICE USE:
	 
	 	 	 	 	 	 
	Signature:

	 	 	 	Date received	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	 	 	Date entered into system	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 

Please return this completed form to Silicon Image, Inc. Human Resources — Fax (408) 830-9531.

 

 

SILICON IMAGE, INC.

UK SUB-PLAN OF THE 1999 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

	1.	 	I elect to participate in the UK Sub-Plan of the Silicon Image, Inc. (the “Company”) 1999
Employee Stock Purchase Plan (the “Sub-Plan”) and to subscribe to purchase shares of the
Company’s Common Stock (the “Shares”) in accordance with this Subscription Agreement and the
Sub-Plan.

	2.	 	I authorize payroll deductions from each of my post-tax remuneration in that percentage of my
base salary, commissions, overtime, shift premiums, bonuses and draws against commissions as
shown on my Enrollment Form, in accordance with the Sub-Plan.

	3.	 	I understand that such payroll deductions shall be accumulated for the purchase of Shares
under the Sub-Plan at the applicable purchase price determined in accordance with the
Sub-Plan. I further understand that except as otherwise set forth in the Sub-Plan, Shares
will be purchased for me automatically at the end of each Purchase Period unless I withdraw
from the Sub-Plan or otherwise become ineligible to participate in the Sub-Plan.

	4.	 	I understand that this Subscription Agreement will automatically re-enroll me in all
subsequent Offering Periods unless I withdraw from the Plan or I become ineligible to
participate in the Sub-Plan.

	5.	 	I acknowledge that I have a copy of and am familiar with the Company’s most recent Prospectus
which describes the Sub-Plan. A copy of the complete Sub-Plan and the Prospectus is on file
with the Company. (In the case of the initial Plan Purchase Period, the Prospectus will be on
file on the first day of the Offering Period.)

6. Taxation Indemnity.

	 	(a)	 	I agree to indemnify and keep indemnified the Company and the Company as trustee for
and on behalf of any related corporation, in respect of any liability or obligation of the
Company and/or any related corporation to account for income tax (under PAYE) or any other
taxation provisions and primary class 1 National Insurance Contributions (“NICs”) in the
United Kingdom to the extent arising from the grant, exercise, assignment, release,
cancellation or any other disposal of my option or arising out of the acquisition,
retention and disposal of the Shares acquired pursuant to the Subscription Agreement.
	 
	 	(b)	 	The Company shall not be obliged to allot and issue any Shares or any interest in
Shares to me unless and until I have paid to the Company such sum as is, in the opinion of
the Company, sufficient to indemnify the Company in full against any liability the Company
has to account to the Inland Revenue for any amount of, or representing, income tax and/or
primary NICs (the “Tax Liability”), or I have made such other arrangement as in the opinion
of the Company will ensure that the full amount of any Tax Liability will be recovered from
me within such period as the Company may then determine.
	 
	 	(c)	 	In the absence of any such other arrangement being made, the Company shall have the
right to retain out of the aggregate number of shares to which I would be otherwise
entitled upon the exercise of my option, such number of Shares as, in the opinion of the
Company, will enable the Company to sell as agent for me (at the best price which can
reasonably expect to be obtained at the time of the sale) and to pay over to the Company
sufficient monies out of the net proceeds of sale, after deduction of all fees, commissions
and expenses incurred in relation to such sale, to satisfy my liability under such
indemnity.

	7.	 	Employer’s NICs. As a consideration of the opportunity to participate in the Sub-Plan I
agree to join with the Company or, if and to the extent that there is a change in the law, any
other company or person who is or becomes a secondary contributor for NIC purposes in respect
of this option (the “Secondary Contributor”) in
making an election (in such terms and such form as provided in paragraphs 3A and 3B of Schedule
1 to the Social Security Contributions and Benefits Act 1992) which has been approved by the
Inland Revenue (the “Joint Election”), for the transfer of the whole or any liability of the
Secondary Contributor to Employer’s Class 1 NICs to me. I realize and agree that if the Company
does not have an effective Joint Election on file for me by

 

 

	 	 	the deadline for withdrawal from the
Sub-Plan for a given Purchase Date, then the absence of such Joint Election shall be treated as
an election by me to withdraw from the Sub-Plan and on such Purchase Date no purchase shall be
made for me and any deductions/contributions shall be refunded to me.

	8.	 	I understand that Shares purchased for me under the Sub-Plan will be held in a personal
account with the Plan Broker unless I request otherwise.

9. Data Protection.

	 	(a)	 	In order to facilitate the administration of the Sub-Plan, it will be necessary for
Silicon Image UK Limited (or its payroll administrators) to collect, hold and process
certain personal information about me and to transfer this data to the Company and to the
Plan Brokers. I consent to Silicon Image UK Limited collecting, holding and processing its
personal data and transferring this data to the Company or any other third parties insofar
as is reasonably necessary to implement, administer and manage the Sub-Plan.
	 
	 	(b)	 	I understand that I may, at any time, view my personal data, require any necessary
corrections to it or withdraw the consents herein in writing by contacting the Human
Resources Department of the Company (but acknowledge that without the use of such data it
may not be practicable for Silicon Image UK Limited and the Company to administer my
involvement in the Sub-Plan in a timely fashion or at all and this may be detrimental to
me.

	10.	 	I hereby agree to be bound by the terms of the Sub-Plan. The effectiveness of this
Subscription Agreement is dependent upon my eligibility to participate in the Sub-Plan.

11. I have read and understood this Subscription Agreement.

	 	 	 	 	 
	 

	 	Signature:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

Please return this completed form to Silicon Image, Inc., Human Resources

Fax (408) 830-9531.

 

 

SILICON IMAGE, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF SUSPENSION

I, ___, the undersigned participant in the Offering Period of the Silicon
Image, Inc. 1999 Employee Stock Purchase Plan (the “Plan”) which began on ___, hereby
notify Silicon Image, Inc. (the “Company”) that I wish to suspend my payroll deductions to the Plan
for the remainder of the Offering Period. I understand and agree that my request will be effective
beginning with the next payroll period commencing more than 15 days after the Company receives this
Notice of Suspension. I understand and agree that payroll deductions credited to my account prior
to the date this Notice of Suspension is effective will be used to purchase shares on the next
Purchase Date. I further understand that no additional payroll deductions will be made for the
purchase of shares in the current Offering Period, and I will be eligible to participate in
succeeding Offering Periods only by timely delivering to the Company a new Subscription Agreement
and Enrollment Form.

Name and address of Participant (please print):

	 	 	 	 	 
	Name:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Street Address or P.O. Box:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	City, State ZIP:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Signature

	 	Date	 	 

Please return this form to Human Resources.

 

 

SILICON IMAGE, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

I, ___, the undersigned participant in the Offering Period of the Silicon
Image, Inc. 1999 Employee Stock Purchase Plan (the “Plan”) which began on ___, hereby
notify Silicon Image, Inc. (the “Company”) that I wish to withdraw from the Offering Period. I
direct the Company to pay to me as promptly as practicable all payroll deductions credited to my
account with respect to such Offering Period. I understand and agree that my participation in the
Plan will terminate and no shares will be purchased for me at the end of the Purchase Period so
long as I submit this Notice of Withdrawal to the Company at least 15 days prior to the end of the
Purchase Period. I understand and agree that if I submit this Notice of Withdrawal to the Company
less than 15 days prior to the end of the Purchase Period, shares will be purchased for me
at the end of the Purchase Period, and my participation in the Plan will end at the beginning of
the next Purchase Period or Offering Period, as the case may be. I further understand that no
additional payroll deductions will be made for the purchase of shares in the current Offering
Period, and I shall be eligible to participate in succeeding Offering Periods only by timely
delivering to the Company a new Subscription Agreement and Enrollment Form.

Name and address of Participant (please print):

	 	 	 	 	 
	Name:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Street Address or P.O. Box:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	City, State ZIP:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Signature

	 	Date	 	 

Please return this form to Human Resources.

 

 

	 	 	 	 	 
	Dated:	 	 (insert date)

SILICON IMAGE, INC.

- and -

SILICON IMAGE UK LIMITED

- and -

PARTICIPANT

 

JOINT ELECTION

 

TAYLOR WESSING

Carmelite

50 Victoria Embankment

Blackfriars

London EC4Y 0DX

Tel: +44 (0)20 7300 7000

Fax: +44 (0)20 7300 7100

DX 41 London

FINAL

13/03/2006

Ref: DNK/FXB/SIL–63–10

 

 

JOINT ELECTION

BETWEEN

	(1)	 	SILICON IMAGE, INC. whose registered office is at 1060 East Arques Avenue, Sunnyvale CA
94085, USA (the “Company”); and
	 
	(2)	 	SILICON IMAGE UK LIMITED (company registration no. 05293397) whose registered office is at
Carmelite, 50 Victoria Embankment, London EC4Y 0DX (the “Employer”); and
	 
	(3)	 	«Name» of «Address» (the “Participant” which shall include his executors or administrators in
the case of his death).

INTRODUCTION

	(A)	 	The Participant may be granted, from time to time, options (each one an “Option”) to
acquire shares of common stock in the Company (the “Shares”) on terms to be set out in stock
purchase agreements to be issued to the UK Sub-Plan of the Silicon Image, Inc. 1999 Employee
Stock Purchase Plan (the “Plan”).
	 
	(B)	 	This joint election (the “Joint Election”) is in an approved format. The exercise,
cancellation, release, assignment or other disposal of an Option is subject to the Participant
entering into this Joint Election.
	 
	(C)	 	The Participant is currently an employee of the Employer.
	 
	(D)	 	The exercise, release, cancellation, assignment or other disposal of an Option (a “Trigger
Event”) (whether in whole or in part), may result in the Employer or, if and to the extent
that there is a change in law, any other company or person who becomes the secondary
contributor for National Insurance contributions (“NIC”) purposes at the time of such Trigger
Event having a liability to pay employer’s (secondary) Class I NICs (or any tax or social
security premiums which may be introduced in substitution or in addition thereto) in respect
of such Trigger Event.
	 
	(E)	 	Where the context so admits, any reference in this Joint Election:

	 	(i)	 	to the singular number shall be construed as if it referred also to the plural
number and vice versa;
	 
	 	(ii)	 	to the masculine gender shall be construed as though it referred also to the
feminine gender;
	 
	 	(iii)	 	to a statute or statutory provision shall be construed as if it referred also
to that statute or provision as for the time being amended or re-enacted;
	 
	 	(iv)	 	Shares means shares of common stock of the Company.

 

 

AGREED TERMS

	1.	 	Joint Election
	1.1	 	It is a condition of the exercise, cancellation, release, assignment or other
disposal of an Option that the Participant has entered into this Joint Election with
the Employer.

	1.2	 	The Participant, the Company and the Employer elect to transfer the liability (the
“Liability”) for all of the employer’s (Secondary) Class I NICs, referred to in (D)
above and charged on payments or other benefits arising on a Trigger Event and treated
as remuneration and earnings pursuant to section 4(4)(a) of the Social Security
Contributions and Benefit Act 1992 (“SSCBA”) to the Participant. This Joint Election
is made pursuant to an arrangement authorised by paragraph 3B, Schedule 1 of the SSCBA.

2. RESTRICTION ON REGISTRATION UNTIL LIABILITY PAID BY PARTICIPANT

     The Participant hereby agrees that no Shares shall be registered in his name until he
has met the Liability as a result of a Trigger Event in accordance with this Joint Election.

3. PAYMENT

	3.1	 	Where, in relation to an Option, the Participant is liable, or is in accordance with current
practice at the date of the Trigger Event believed by the Employer to be liable (where
it is believed that the shares under option are readily convertible assets), to account
to the Inland Revenue for the Liability, the Participant and the Employer agree that,
upon receipt of the funds to meet the Liability from the Employee, that such funds to
meet the Liability shall be paid to the Collector of Taxes or other relevant taxation
authority by the Employer on the Participant’s behalf within 14 days of the end of the
income tax month in which the gain on the Option was made (“the 14 day period”) and for
the purposes of securing payment of the Liability the Participant will on the
occurrence of a Trigger Event:

	 	(a)	 	pay to the Employer a cash amount equal to the Liability; and/or
	 
	 	(b)	 	suffer a deduction from salary or other remuneration due to the Participant such
deduction being in an amount not exceeding the Liability; and/or
	 
	 	(c)	 	at the request of the Company enter into such arrangement or
arrangements necessary or expedient with such person or persons (including the
appointment of a nominee on behalf of the Participant) to effect the sale of
Shares acquired through the exercise of the Option to cover all or any part of
the Liability and use the proceeds to pay the Employer a cash amount equal to
the Liability.

	3.2	 	The Participant hereby irrevocably appoints the Company and the Employer as his
attorney with full power in his name to execute or sign any document and do any other
thing which the Company or the Employer may consider desirable for the purpose of
giving effect to the Participant satisfying the Liability under clause 3.1 and
satisfying any penalties and interest under clause 3.4. The Participant further agrees
to ratify and confirm whatever the Company and the Employer may lawfully do as his
attorney. In particular, the Employer and/or the Company will have the right to enter
into such an arrangement (as envisaged by clause 3.1(c)) on the Participant’s behalf to
sell sufficient of the Shares issued or transferred to the Participant on the exercise
of the

 

 

	 	 	Option to meet the Liability pursuant to clause 3.1 and any penalty or interest
arising under clause 3.4.

	3.3	 	The Employer shall pass all monies it has collected from the Participant in respect
of the Liability to the Collector of Taxes by no later than 14 days after the end of
the income tax month in which the Trigger Event occurred. The Employer shall be
responsible for any penalties or interest that may arise in respect of the Liability
from any failure on its part after it has collected any monies from the Participant to
pass the Liability to the Collector of Taxes within the said 14 days period.

	3.4	 	If the Participant has failed to pay all or part of the Liability to the Employer
within the 14 day period the Participant hereby indemnifies the Employer against such
penalties or interest that the Employer would have to pay in respect of the late
payment of all or part of the Liability to the Collector of Taxes.

	4.	 	TERMINATION OF JOINT ELECTION

	4.1	 	This Joint Election shall cease to have effect on the occurrence of any of the
following:

	(a)	 	if the terms of this Joint Election are satisfied in the
reasonable opinion of the Company, the Employer and the Participant;
	 
	(b)	 	if the Company, the Employer and the Participant jointly agree in
writing to revoke this Joint Election;
	 
	(c)	 	if the Inland Revenue withdraws approval of this Joint Election so
far as it relates to share options covered by the Joint Election but not yet
granted;
	 
	(d)	 	if the Options lapse or no Option is otherwise capable of being
exercised pursuant to the Plan; and/or
	 
	(e)	 	if the Company and/or the Employer serve notice on the Participant
that the Joint Election is to cease to have effect.

5. FURTHER ASSURANCE

	5.1	 	The Company, Employer and the Participant shall do all such things and execute all
such documents as may be necessary or desirable to ensure that this Joint Election
complies with all relevant legislation and/or Inland Revenue requirements.

	5.2	 	The Participant shall notify the Employer in writing of any Trigger Event which
occurs in relation to an Option within three days of such Trigger Event.

	5.3	 	The Company intends, as soon as practicable, to notify the Employer of the
Participant’s intention of exercising an Option and shall provide the Employer with
such information available to the Company to enable the Employer to calculate the
Liability arising on the Trigger Event.

	6.	 	SECONDARY CONTRIBUTOR
	 
	 	 	The Employer enters into this Joint Election on its own behalf and on behalf of the
Company, or, if and to the extent that there is a change in law, any other company or person
who is or becomes a secondary contributor for NIC purposes in respect of an Option. It is
agreed that the Employer can enforce the terms of this Joint Election against the
Participant on behalf of any such company.

 

 

	7.	 	BINDING EFFECT

	7.1	 	The Participant agrees to be bound by the terms of this Joint Election and for the
avoidance of doubt the Participant shall continue to be bound by the terms of this
Joint Election regardless of which country the Participant is working in when the
Liability arises and regardless of whether the Participant is an employee of the
Employer when the Liability arises.

	7.2	 	The Employer and the Company agree to be bound by the terms of this Joint Election
and for the avoidance of doubt the Employer and Company shall continue to be bound by
the terms of this Joint Election regardless of which country the Participant is working
in when the Liability arises and regardless of whether the Participant is an employee
of the Employer when the Liability arises.

8. GOVERNING LAW

	8.1	 	This Joint Election shall be governed by and construed in accordance with English
law and the parties irrevocably submit to the non-exclusive jurisdiction of the English
Courts to settle any claims, disputes or issues which may arise out of this deed.

 

 

This Joint Election has been executed and delivered as a deed on the date written above.

SIGNED as a Deed

	 	 	 	 	 
	By

	 	 	 	 
	 

	 	 	 	 
	 

	 	«Name1»	 	 

in the presence of:

Witness signature:

	 	 	 
	Name:
	 	 
	 

	 	 
	 
	 	 
	Address:
	 	 
	 

	 	 
	 
	 	 
	Occupation:
	 	 
	 

	 	 

SIGNED as a DEED

by SILICON IMAGE UK LIMITED

acting by:

	 	 	 
	 

Robert Freeman

	 	 
	Director
	 	 

	 	 	 
	 

Steve Tirado

	 	 
	Director
	 	 

SIGNED as a DEED

By SILICON IMAGE, INC.

acting by the under-mentioned

person(s) acting on the authority

of the Company in accordance

with the laws of the territory of

its incorporation:

	 	 	 
	 

Name:

	 	 
	Corporate Secretary
	 	 

	 	 	 
	 

Steve Tirado

	 	 
	President and CEO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]