Document:

Exhibit 4.3

 

 

INVESTOR RIGHTS AGREEMENT

 

INVESTOR RIGHTS AGREEMENT, dated as of
December     , 2004 (this “Agreement”),
among Otelco Inc., a Delaware corporation (the “Company”), Seaport
Capital Partners II, L.P., a Delaware limited partnership (“Seaport Capital”),
Seaport Investments, LLC, a Delaware limited liability company (“Seaport
Investments”, and together with Seaport Capital, “Seaport”), CEA
Capital Partners USA, L.P., a Delaware limited partnership (“CEA Capital”),
CEA Capital Partners USA CI, L.P., a Delaware limited partnership (“CEA
Capital CI”, and together with CEA Capital, “CEA”), BancBoston
Ventures Inc., a Massachusetts corporation (“BancBoston”), Mid-Missouri
Parent LLC, a Delaware limited liability company (“Mid-Missouri Parent”),
Michael D. Weaver, Sean Reilly, Kevin Reilly and Sternberg Consulting Inc., a
Louisiana corporation (“Sternberg Consulting”).

BACKGROUND

WHEREAS, Seaport, CEA,
BancBoston, Mid-Missouri Parent, Michael D. Weaver, Sean Reilly, Kevin Reilly
and Sternberg Consulting (collectively, the “Holders”) are the
beneficial holders of            shares
of Class B Common Stock of the Company, par value $0.01 per share (“Class B
Common Stock”);

WHEREAS, the Company
and certain selling stockholders of the Company have effected an initial public
offering of Income Deposit Securities (“IDSs”), each IDS representing
one share of the Company’s Class A Common Stock, par value $0.01 per share (“Class
A Common Stock”) and $        
aggregate principal amount of     
% senior subordinated notes due 2019 of the Company (“Subordinated
Notes”) pursuant to an effective registration statement under the
Securities Act (as defined herein) in the United States and pursuant to a long
form prospectus or any amendment or supplement thereto, in the English
language, in Canada; and

WHEREAS, the Company
has agreed to provide certain exchange rights to the Holders with respect to
their shares of Class B Common Stock and certain registration rights with
respect to any IDSs they hold upon the terms and subject to the conditions set
forth herein.

NOW
THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:

ARTICLE I

 

DEFINITIONS

1.1           Definitions.  As used in this Agreement, the following
terms shall have the following respective meanings:

“Additional Notes” shall have the
meaning specified in the Indenture.

“Adjusted EBITDA” shall have the meaning
specified in the Indenture.

 

 

 

“Agreement”
shall have the meaning specified in the introductory paragraph hereto.

“BancBoston”
shall have the meaning specified in the introductory paragraph hereto.

“Board”
shall mean the board of directors of the Company.

“Canadian
Prospectus” shall mean a prospectus (including a short form prospectus)
prepared in accordance with applicable Canadian Securities Laws for the
purposes of qualifying securities for distribution or distribution to the
public, as the case may be, in any province or territory of Canada.

“Canadian
Securities Law” shall mean the statutes and regulations applicable to the
trading of securities in any province or territory of Canada including
applicable rules, policy statements and blanket rulings and orders promulgated
by Canadian securities regulatory authorities.

“CEA”
shall have the meaning specified in the introductory paragraph hereto.

“CEA
Capital” shall have the meaning specified in the introductory paragraph
hereto.

“CEA
Capital CI” shall have the meaning specified in the introductory paragraph
hereto.

“Class
A Common Stock” shall have the meaning specified in the Recitals hereto.

“Class
B Common Stock” shall have the meaning specified in the Recitals hereto.

“Common  Stock” means the Class A Common Stock
and the Class B Common Stock of the Company and any securities issued or
distributed in respect thereof, or in substitution therefor, in connection with
any stock split, dividend, spin-off or combination, or any reclassification,
recapitalization, merger, consolidation, exchange or other similar
reorganization or business combination.

“Common
Stock Equivalents” means any stock, warrants, rights, calls, options, debt
or other securities exchangeable or exercisable for or convertible into Common
Stock.

“Company”
shall have the meaning specified in the introductory paragraph hereto.

“Company
Offering” shall have the meaning specified in Section 3.6 hereto.

“Consolidated
Net Income” shall have the meaning specified in the Indenture.

“Delay
Notice” shall have the meaning specified in Section 3.6(b) hereto.

 

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“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, as then in
effect.

“Exchange
Shelf Registration”  shall have the
meaning specified in Section 2.4 hereto.

“Exchange
Transaction”  shall have the meaning
specified in Section 2.1 hereto.

“Governmental
Entity” shall mean any court, department, body, board, bureau,
administrative agency or commission or other governmental authority or
instrumentality, whether in the United States or, if applicable, Canada.

“Guarantee”
shall have the meaning specified in the Indenture.

“Guarantor”
shall have the meaning specified in the Indenture.

“Holder
Exchange”  shall have the meaning specified
in Section 2.1 hereto.

“Holders”
shall have the meaning specified in the Recitals hereto.

“IDSs”
shall have the meaning specified in the Recitals hereto.

“Indenture”
shall mean the Indenture, dated as of December         , 2004, among the Company, certain of its subsidiaries, as
guarantors, and Wells Fargo Bank, National Association, as trustee, relating to
the Subordinated Notes, as it may be amended, supplemented, restated or
otherwise modified from time to time.

“Information
Delay Notice” shall have the meaning specified in Section 3.6(b) hereto.

“Inspectors”
shall have the meaning specified in Section 6.1(l) hereto.

“Majority
Holders” shall mean the Holders of a majority of the voting power of all
such securities (including IDSs) held by such Holders; provided that all
such securities shall be treated as having the voting rights of any underlying
securities.

“Majority
Sellers” means a majority (based on 
the number of Registrable Securities owned) of the Holders eligible to
sell pursuant to this Agreement.

“Mid-Missouri
Parent” shall have the meaning specified in the introductory paragraph
hereto.

“NASD”
shall mean the National Association of Securities Dealers, Inc.

“Net
Income” shall have the meaning specified in the Indenture.

“Person”
means an individual, corporation, limited liability company, association,
partnership, group (as defined in Section 13(d)(3) of the Exchange Act), trust,
joint venture, 

 

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business
trust or unincorporated organization, Governmental Entity or any other entity
of any nature whatsoever.

“Pro
Forma Adjusted EBITDA” means the Adjusted EBITDA of the Company for the
test period plus the Adjusted EBITDA of any Person that becomes a Restricted
Subsidiary of the Company to the extent that the Company’s Consolidated Net
Income does not include the Net Income of such Person less the Adjusted EBITDA
of any Restricted Subsidiary sold, conveyed, transferred or otherwise disposed
of by the Company to the extent that the Company’s Consolidated Net Income
includes the Net Income of such Restricted Subsidiary.

“register,”
“registered” and “registration” refer to a registration effected
by preparing and filing a registration statement in compliance with the
Securities Act and the effectiveness of such registration statement.  In addition, unless inconsistent with the
context: (i) the term “registration” and any references to the act
of registering include the qualification under Canadian Securities Laws of a
Canadian Prospectus in respect of a distribution or distribution to the public,
as the case may be, of securities; (ii) the term “registered” as
applied to any securities includes a distribution or distribution to the
public, as the case may be, of securities so qualified; (iii) the term “registration
statement” includes a Canadian Prospectus; (iv) and reference to a
registration statement having become effective, or similar references, shall
include a Canadian Prospectus for which a final receipt has been obtained from
the relevant Canadian securities regulatory authorities; and (v) the
provisions of this Agreement shall be applied, mutatis mutandis, to any proposed distribution of securities
hereunder in any province or territory of Canada or to which the prospectus
requirements under any of the Canadian Securities Laws shall otherwise apply.

“Registrable
Securities” shall mean IDSs, Class A Common Stock and Subordinated Notes
now or hereafter owned by the Holders or any Transferee thereof.  As to any particular Registrable Securities,
once issued, such Registrable Securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale by
the applicable Holder of such securities has become effective under the
Securities Act or, if applicable, when a prospectus has been receipted under
the applicable Canadian Securities Laws, and such securities have been disposed
of in accordance with such registration statement or prospectus, as the case
may be, (ii) such securities have been distributed to the public pursuant
to Rule 144 (or any successor provision) under the Securities Act or
equivalent provisions under Canadian Securities Laws, as applicable,
(iii) such securities have been otherwise transferred, new certificates
for such securities not bearing a legend restricting further transfer have been
delivered by the Company and subsequent disposition of such securities does not
require registration or qualification of such securities under the Securities
Act, applicable Canadian Securities Laws or any state securities or blue sky
law then in force, or (iv) such securities have ceased to be outstanding.

“Registration
Expenses” shall mean all expenses incident to the Company’s performance of
or compliance with this Agreement, including all SEC, stock exchange or
quotation system, NASD, Canadian securities regulatory authorities and Canadian
stock exchange registration and filing fees and expenses, fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters in connection with blue sky
qualifications of the Registrable Securities), rating 

 

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agency
fees, printing expenses, messenger, telephone and delivery expenses, the fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities exchange or quotation system, fees and
disbursements of counsel for the Company and all independent certified public
accountants (including the expenses of any annual audit, special audit and
“cold comfort” letters required by or incident to such performance and
compliance), the fees and disbursements of underwriters (including all fees and
expenses of any “qualified independent underwriter” required by the rules of
the NASD) customarily paid by issuers or sellers of securities, the expenses
customarily borne by the issuers of securities in a “road show” presentation to
potential investors, the reasonable fees and disbursements of one legal counsel
for the selling Holders in each registration (as selected by the Majority
Sellers), the reasonable fees and expenses of any special experts retained by
the Company in connection with such registration, and fees and expenses of
other persons retained by the Company (but not including any underwriting
discounts or commissions (which shall be paid or borne by the selling Holder)
or transfer taxes, if any, attributable to the sale of Registrable Securities)
and other reasonable out-of-pocket expenses of the Holders.

“Requesting
Party” shall have the meaning specified in Section 3.1 hereto.

“Restricted
Subsidiary” shall have the meaning specified in the Indenture.

“Seaport”
shall have the meaning specified in the introductory paragraph hereto.

“Seaport
Capital” shall have the meaning specified in the introductory paragraph
hereto.

“Seaport
Investments” shall have the meaning specified in the introductory paragraph
hereto.

“SEC”
shall mean the Securities and Exchange Commission or any other federal agency
at the time administering the Securities Act or the Exchange Act.

“Securities
Act” shall mean the Securities Act of 1933, as amended, then in effect.

“Separation
Exchange” shall have the meaning specified in Section 2.1 hereto.

“Shelf
Registration” shall have the meaning specified in Section 3.4 hereto.

“Sternberg
Consulting” shall have the meaning specified in the introductory paragraph
hereto.

“Subordinated
Note Guarantees” shall have the meaning specified in the Indenture.

“Subordinated
Notes” shall have the meaning specified in the Recitals hereto.

“Subsidiary
Guarantors” shall have the meaning specified in the Indenture.

 

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“Threshold
Level” means $30,150,000 plus the Adjusted EBITDA of any Person that
becomes a Restricted Subsidiary of the Company less the Adjusted EBITDA of any
Restricted Subsidiary sold, conveyed, transferred or otherwise disposed of by
the Company, in each case for the four full fiscal quarters preceding the date
of acquisition or disposition.

“Transaction
Delay Notice” shall have the meaning specified in Section 3.6(a) hereto.

“Transferee”
means any Person to whom any Holder or any Transferee thereof transfers
Registrable Securities, including any Person who purchases shares of Class B
Common Stock from the Holders and receives IDSs from the Company in exchange
for the Class B Common Stock purchased from the Holders.

“Transfer
Exchange”  shall have the meaning
specified in Section 2.1 hereto.

“Trustee”
shall have the meaning specified in the Indenture.

ARTICLE II

 

EXCHANGE RIGHT

2.1           Exchange
Right.  The parties to this
Agreement hereby agree that, except as set forth below, shares of the Class B
Common Stock shall not be (A) exchangeable for IDSs or (B) transferred, sold,
assigned, pledged, hypothecated or otherwise disposed of except (1) transfers
as a gift or gifts to such Holder’s spouse, lineal descendant, father, mother,
brother or sister (“immediate family”) or to a trust the beneficiary of
which is exclusively the Holder and/or a member or members of his or her
immediate family, provided that the donee thereof agrees in writing to
be bound by the terms of this Agreement or (2) distributions to such Holder’s
shareholders, partners or members, provided that such shareholders,
partners or members agree in writing to be bound by the terms of this
Agreement.  Any Holder may:

(i)            exchange shares of
Class B Common Stock for IDSs on and
after                ,
2006, with the initial exchange rate being one IDS for each share of Class B
Common Stock (such exchange rate being subject to customary adjustment for
adjustments specified in the definition of “Common Stock” set forth above) (a “Holder
Exchange”);

(ii)           in connection with
a sale of shares of Class B Common Stock on and after
               ,
2006, cause the shares of Class B Common Stock proposed to be sold to be
exchanged for IDSs, with the initial exchange rate being one IDS for each share
of Class B Common Stock (such exchange rate being subject to customary
adjustment for adjustments specified in the definition of “Common Stock” set
forth above) (a “Transfer Exchange”); and/or

(iii)          effective
immediately prior to any automatic separation of the IDSs, exchange shares of
Class B Common Stock for Class A Common Stock of the Company and Subordinated
Notes, with the initial exchange rate being one share of Class A Common Stock
and a Subordinated Note in the principal amount of $7.52 for each

 

6

 

share
of Class B Common Stock (such exchange rate subject to customary adjustment for
adjustments specified in the definition of “Common Stock” set forth above); provided,
however, that if the Subordinated Notes are not outstanding at the time
of any such exchange, the Class B Common Stock that would otherwise be exchanged
for Class A Common Stock and Subordinated Notes shall instead be exchanged for
1.8868 shares of Class A Common Stock (such exchange rate subject to customary
adjustment for adjustments specified in the definition of “Common Stock” set
forth above). (a “Separation Exchange” and together with a Holder
Exchange and a Transfer Exchange, an “Exchange Transaction”).

2.2           Exchange
Conditions.  (a)   The parties hereto agree that, prior to any
Exchange Transaction, the following conditions must be met:

(i)            such Exchange Transaction shall
comply with applicable laws, including, without limitation, securities laws,
laws relating to the redemption of common stock and laws relating to the
issuance of debt;

 

(ii)           such Exchange
Transaction shall occur pursuant to an effective registration statement in the
United States and, if necessary, a receipted prospectus for all the provinces
(other than the province of Quebec) or territories of Canada;

(iii)          such Exchange
Transaction will not conflict with or cause a default under the Company’s
Certificate of Incorporation or any material financing agreement of the Company
or any of its subsidiaries;

(iv)          such Exchange
Transaction shall not cause a mandatory suspension of dividends or deferral of
interest under any material financing agreement of the Company or any of its
subsidiaries as of the measurement date immediately following the proposed
Exchange Transaction;

(v)           only if the shares
of Class B Common Stock are to be exchanged for IDSs, the Company delivers to
the Trustee prior to or simultaneously with such Exchange Transaction an
opinion of tax counsel to the effect that the Subordinated Notes underlying the
IDSs for which the Class B Common Stock is exchanged should be treated as debt
for U.S. federal income tax purposes; provided, however, that
this condition need only be met to the extent required by the Indenture in
connection with an issuance of Additional Notes;

(vi)          only if the shares
of Class B Common Stock are to be exchanged for IDSs, the Company delivers to
the Trustee prior to or simultaneously with such Exchange Transaction an
opinion of counsel, subject to exceptions and assumptions customary for such
opinions, to the effect that the Subordinated Notes underlying the IDSs for
which the Class B Common Stock is exchanged and the related Guarantees
constitute valid and binding obligations of the Company and the respective
Guarantors and are enforceable against the Company and the respective
Guarantors in accordance with their terms; provided, however,
that this condition need only be met to the extent required by the Indenture in
connection with an issuance of Additional Notes; and

 

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(vii)         only if the shares
of Class B Common Stock are to be exchanged for IDSs, if an issuance of
Subordinated Notes underlying the IDSs for which the Class B Common Stock is
exchanged in an Exchange Transaction would trigger the automatic exchange
provisions of the Indenture, the Company delivers to the Trustee prior to or
simultaneously with such issuance a certificate from its principal financial
officer to the effect that on the date the Subordinated Notes underlying the
IDSs for which the Class B Common Stock is exchanged are issued, after giving
pro forma effect to the issuance of such Subordinated Notes and the related
Subordinated Note Guarantees, the Company and each of the Subsidiary Guarantors
are solvent; provided, however, that this condition need only be
met to the extent required by the Indenture in connection with an issuance of
Additional Notes.

(b) In addition to the foregoing, the parties hereto agree that the
following additional conditions must be met prior to any Holder Exchange or
Transfer Exchange:

(i)            the Company shall have generated Pro
Forma Adjusted EBITDA (as certified by the Chief Financial Officer of the
Company) equal to or greater than the Threshold Level over the most recent four
consecutive fiscal quarters immediately prior to such Holder Exchange or
Transfer Exchange, as applicable (the “test period”); provided, however,
that the condition contained in this subsection (i) shall only be applicable to
Holder Exchanges or Transfer Exchanges occurring on or prior to
             ,
2009;

 

(ii)           no event of default
or deferral of interest shall have occurred and be continuing under the
Indenture; and

(iii)          the Holder shall
have given the Company at least 30 but not more than 60 days advance notice of
its desire to effect such Holder Exchange or Transfer Exchange (as applicable);
provided that such minimum advance notice period may be increased from
time to time to the extent necessary, in the determination of the Board, to
comply with the rules, regulations and protocols, as then in effect, of the
SEC, the principal stock exchange on which the relevant securities of the Company
are then listed or admitted to trading, the Depository Trust Company, or the
transfer agent with respect to such securities.

2.3           Adjustment
in the Event of OID Upon Sale or Exchange. 
Notwithstanding anything to the contrary in this Agreement, if the
Exchange Transaction would result in the issuance of IDSs that include
Subordinated Notes that are issued with “original issue discount” for U.S.
income tax purposes, holders of Subordinated Notes outstanding prior to such
Exchange Transaction and holders of Class B Common Stock exchanging shares of
Class B Common Stock will automatically exchange among themselves a portion of
the Subordinated Notes they each hold so that immediately following such
automatic exchange, each holder will own a pro rata portion of the new
Subordinated Notes and the old Subordinated Notes, as more fully set forth in,
and subject to the terms and provisions of, the Indenture.

2.4           Exchange
Shelf Registration.  The Company
shall file with the SEC a registration statement for an offering to be made on
a continuous basis pursuant to Rule 415 under the Securities Act covering the
securities issuable by the Company in all Exchange

 

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Transactions (an “Exchange Shelf Registration”).  The Exchange Shelf Registration shall be on
Form S-3 under the Securities Act or another appropriate form permitting
registration of such securities.  The
Company shall use its commercially reasonable efforts to cause the Exchange
Shelf Registration to be declared effective by the SEC no later
than             ,
2006, and to keep the Exchange Shelf Registration continuously effective,
supplemented and amended so that the Exchange Shelf Registration will be
available for an Exchange Transaction until the earliest of (i) the date all
shares of Class B Common Stock have been exchanged in an Exchange Transaction
and (ii)
             ,
2008.  The Company shall pay all
Registration Expenses in connection with the Exchange Shelf Registration.

ARTICLE III

 

DEMAND REGISTRATION

3.1           Request
for Registration.  After compliance
with the procedures set forth herein, upon the written request of any Holder
(the “Requesting Party”), at any time after
             ,
2006 (and subject to the procedures of this paragraph), requesting that the
Company effect the registration under the Securities Act and/or applicable
Canadian Securities Laws of all or part of the Registrable Securities and
specifying the intended method of disposition thereof, the Company will use its
commercially reasonable efforts to effect the registration under the Securities
Act and, if requested, applicable Canadian Securities Laws of such Registrable
Securities (which registration shall also include any Registrable Securities
requested by the other Holders to be included in such registration request made
by the Requesting Party).  Upon
receiving the request from the Requesting Party, the Company shall give written
notice to the Holders of Registrable Securities of the intent to register
Registrable Securities under the Securities Act and, if applicable, the
Canadian Securities Laws and such Holder’s right to participate in such
registration at least 30 days prior to the anticipated filing date of the
registration pursuant to this Article III. 
Upon the written request of any Holder made within 15 days after the
receipt of the Company’s notice (which request shall specify the number of
Registrable Securities intended to be disposed of by such Holder), the Company
shall use its commercially reasonable efforts to effect the proposed
registration under the Securities Act and, if applicable, Canadian Securities
Laws of all Registrable Securities which the Company has been so requested to
register by such Holders to the extent requisite to permit the disposition of the
Registrable Securities so to be registered. 
If a registration pursuant to this Section 3.1 involves an underwritten
public offering, any such Holder may elect, in writing no less than five
business days prior to the effective date of the registration statement filed
in connection with such registration, not to register such securities in
connection with such registration.  The
Company will pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to this Article III.

 

                                Notwithstanding
the foregoing, in no event shall the Company have any obligation to effect a
registration under this Section 3.1 unless the amount of the Registrable
Securities requested to be included in such offering would result in initial
aggregate proceeds (determined at the time of the time of the initial filing of
the registration statement relating thereto) of at least $3,000,000; provided, however, that if the Holders have
at least one demand registration right remaining, the Holders may make a demand
registration pursuant to this Section 3.1 if such demand registration is for
the remaining shares of Registrable Securities of 

 

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such Holders, even if such offering would result in initial aggregate
proceeds (determined at the time of the time of the initial filing of the
registration statement relating thereto) less than $3,000,000.

Notwithstanding
anything in this Article III to the contrary, in no event will the Holders
collectively be entitled to more than three registrations pursuant to this
Section 3.1, except that the following shall not constitute a registration for
this purpose: a registration so requested (i) that is not deemed to have been
effected pursuant to Section 3.3 or (ii) where the number of Registrable
Securities included by the Holders in such registration and sold pursuant
thereto is less than 75% of the number of shares of Registrable Securities
sought to be included by the Holders in such registration.

3.2           Effective
Registration Statement.  A
registration requested pursuant to this Article III shall not be deemed to have
been effected:

(i)            unless a
registration statement with respect thereto has become effective and remained
effective in compliance with the provisions of the Securities Act and, if
applicable, Canadian Securities Laws for at least six months with respect to
the disposition of all Registrable Securities covered by such registration
statement or, if earlier, until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition
thereof set forth in such registration statement, other than primarily as a
result of acts or omissions of any participating Holder or any authorized agent
thereof;

(ii)           if after it has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC, the applicable Canadian
securities regulatory authorities or other Governmental Entity for any reason
not attributable to any participating Holder or any authorized agent thereof
and has not thereafter become effective; or

(iii)          if the conditions
to closing specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived.

3.3           Shelf
Registration.  If the Company has
used and is then permitted to use registration statements pursuant to Rule 415
under the Securities Act and, if applicable, pursuant to an equivalent
provision under Canadian Securities Laws, including National instrument 44-102,
as applicable (the “Shelf Registration”) for the sale of IDSs or Common
Stock, the Majority Sellers shall be permitted to request that any registration
under this Article III be made under a Shelf Registration.  The Company shall use its commercially
reasonable efforts to keep such Shelf Registration continuously effective for
the period beginning on the date on which the Shelf Registration is declared
effective and ending on the first date that there are no Registrable Securities
covered by such registration.  During
the period during which the Shelf Registration is effective, the Company shall
supplement or make amendments to the Shelf Registration, if required by the
Securities Act or Canadian Securities Laws or if reasonably requested by the
Majority Sellers or an underwriter of Registrable Securities, including to
reflect any specific plan 

 

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of distribution or method of sale, and shall use its
commercially reasonable efforts to have such supplements and amendments
declared effective, if required, as soon as practicable after filing.

3.4           Priority
in Requested Registrations.  If a
requested registration pursuant to this Article III involves an underwritten
offering and the managing underwriter (in consultation with the underwriter
appointed by the Majority Sellers pursuant to Section 3.7 below) advises the
Company and the Holders in writing that, in its opinion, the number of
securities requested to be included in such registration by all Holders, the
Company and other holders (including securities of the Company which are not
Registrable Securities and which the holder thereof has the right to include in
any such registration) exceeds the largest number of securities which can be
sold without reasonably expecting to have an adverse effect on such offering,
including the price at which such securities can be sold, the number of such
securities to be included in such registration shall be reduced tosuch extent,
and the Company shall include in such registration such maximum number of
securities as follows: (a) first, all the Registrable Securities requested
to be included in such registration by the Holders, (b) second, to the
extent that the number of Registrable Securities which the Holders have
requested to be included in such registration is less than the number of
securities which the Company has been advised can be sold in such offering
without having the adverse effect referred to above, all the securities which
the Company proposes to sell for its own account and (c) third, to the
extent that the number of securities which the Holders have requested to be
included in such registration and the number of securities which the Company
proposes to sell for its own account is, in the aggregate, less than the number
of securities which the Company has been advised can be sold in such offering
without having the adverse effect referred to above, the number of securities
requested to be included in such registration by all other holders thereof
which number shall be limited to such extent, and, subject to any rights of
such other holders, shall be allocated pro rata among all such holders on the
basis of the relative number of such securities then held by each such holder; provided
that any such amount thereby allocated to any such holder that exceeds such
holder’s request shall be reallocated among the remaining requesting holders in
like manner.  If any Holder advises the
managing underwriter of any underwritten offering that the Registrable
Securities and other securities covered by the registration statement cannot be
sold in such offering within a price range acceptable to such Holder, then such
Holder shall have the right to exclude all or any portion of its Registrable Securities
from registration.

3.5           Postponements
in Requested Registrations. 
(a) If, upon receipt of a registration request pursuant to Section
3.1, the Company is advised in writing by a nationally recognized investment
banking firm in the United States or Canada selected by the Company that, in
such firm’s opinion, a registration by the Company at the time and on the terms
requested would adversely affect any public offering of securities of the
Company (other than in connection with employee benefit and similar plans) (a “Company
Offering”) with respect to which the Company has commenced preparations for
a registration prior to the receipt of a registration request pursuant to
Section 3.1 and the Company furnishes the Holders with a certificate signed by
the Chief Executive Officer or Chief Financial Officer of the Company to such
effect (the “Transaction Delay Notice”) promptly after such request, the
Company shall not be required to effect a registration pursuant to Section 3.1
until the earliest of (i) 30 days after the completion of such Company
Offering, (ii) promptly after the abandonment of such Company Offering or
(iii) 90 days after the date of the Transaction Delay Notice; provided that in any event the
Company shall not be required to effect any registration prior to the
termination,

 

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waiver or reduction of any “blackout period”
required by the underwriters to be applicable to the Holders in connection with
any Company Offering; provided
further that in no event shall the Company delay such registration
for more than 180 days.

(b)           If
upon receipt of a registration request pursuant to Section 3.1 or while a
registration request pursuant to Section 3.1 is pending, the Company determines
in its good faith judgment that the filing of a registration statement or any
amendment thereto would require disclosure of material information which the
Company has a bona fide business purpose for preserving as confidential and the
Company provides the Holders written notice (the “Information Delay Notice”
and, together with the Transaction Delay Notice, the “Delay Notice”)
thereof promptly after the Company makes such determination, which shall be
made promptly after the receipt of any request, the Company shall not be
required to comply with its obligations under Section 3.1 until the earlier of
(i) the date upon which such material information is disclosed to the
public or ceases to be material or (ii) 30 days after the Holders’ receipt
of such Information Delay Notice.

(c)           Notwithstanding
the foregoing provisions of this Section 3.5, the Company shall be entitled to
serve only one Delay Notice (A) within any period of 180 consecutive days
or (B) with respect to any two consecutive registrations requested
pursuant to Section 3.1.

3.6           Expenses.  The Company will pay all Registration
Expenses in connection with the registrations requested pursuant to Section
3.1.

3.7           Selection
of Underwriters.  If in any
requested registration pursuant to this Article III the Majority Sellers
request that such registration shall be in the form of an underwritten
offering, such offering shall be an underwritten offering and the Company, in
consultation with the Majority Sellers, shall have the right to select any
investment banker and manager or co-managers to administer the offering.  The Company and all participating Holders
shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting, as well as all
other documents customary in similar offerings, including underwriting
agreements, custody agreements, powers of attorney, and indemnification
agreements.

 

12

 

ARTICLE IV

 

INCIDENTAL
REGISTRATION

4.1           Right to Include
Registrable Securities.  If the
Company proposes to register any of its IDSs or Common Stock under the
Securities Act (other than: (i) a registration in connection with an
employee stock option or other benefit plan; (ii) a registration on Form S-4 or
any successor or similar form; (iii) an Exchange Shelf Registration; or
(iv) a similar registration under Canadian Securities Laws) and applicable
Canadian Securities Laws (or under the Securities Act or applicable Canadian
Securities Laws if the offering will not be registered under both the
Securities Act and applicable Canadian Securities Laws), whether or not for
sale for its own account (and including any registration pursuant to a request
or demand registration right of any other person), at any time, then the Company
will each such time, subject to the provisions of Section 4.2 hereof, give
written notice to the Holders of its intention to do so and of the Holders’
rights under this Article IV, at least 30 days prior to the anticipated filing
date of the registration statement relating to such registration.  Such notice shall offer the Holders the
opportunity to include in such registration statement such number of
Registrable Securities as each Holder may request.  Upon the written request of any Holder made within 15 days after
the receipt of the Company’s notice (which request shall specify the number of
Registrable Securities intended to be disposed of by such Holder), the Company
shall use its commercially reasonable efforts to effect the proposed
registration under the Securities Act and, if applicable, Canadian Securities
Laws of all Registrable Securities which the Company has been so requested to
register by such Holder to the extent requisite to permit the disposition of
the Registrable Securities so to be registered; provided that (i) if such registration involves an
underwritten offering, any such Holder must sell its Registrable Securities to
the underwriters selected by the Company on the same terms and conditions as
apply to the Company (except that indemnification obligations of any such
Holder shall be limited to those obligations set forth in Article VII
hereof) and (ii) if, at any time after giving written notice of its
intention to register any securities pursuant to this Section 4.1 and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company shall give written notice to each such Holder and,
thereupon, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration.  If a registration pursuant to this Section 4.1 involves an
underwritten public offering, any such Holder may elect, in writing no less
than five business days prior to the effective date of the registration
statement filed in connection with such registration, not to register such
securities in connection with such registration.  No registration effected under this Article IV shall relieve the
Company of its obligations to effect registrations upon request under Article
III hereof.  The Company will pay all
Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Article IV.

4.2           Priority
in Incidental Registrations.  If a
registration pursuant to this Article IV involves an underwritten offering and
the managing underwriter advises the Company in writing that, in its opinion,
the number of securities (including IDSs and all Registrable Securities) which
the Company, the Holders and any other persons intend to include in such
registration exceeds the largest number of securities which can be sold without
reasonably expecting to have an adverse effect on such offering, including the
price at which such securities can be sold, the number of such securities to be
included in such registration shall be reduced to

 

13

 

such extent, and the Company will include in such
registration such maximum number of securities as follows: first, all the
securities the Company proposes to sell for its own account pursuant to Section
4.1 in such registration and second, to the extent that the number of
securities which the Company proposes to sell for its own account pursuant to
Section 4.1 hereof is less than the number of securities which the Company has
been advised can be sold in such offering without having the adverse effect
referred to above, the aggregate of the number of Registrable Securities
requested to be included in such registration by the Holders and the number of
any other such securities requested to be included in such registration by
other holders shall be limited to such extent, and shall be allocated pro rata
among the Holders and all such holders on the basis of the relative number of
such securities then held by each Holder and each such holder; provided that any such amount
thereby allocated to each Holder or any such other holder that exceeds such
Holder’s or such holder’s request, respectively, shall be reallocated among the
Holders and the remaining requesting holders in like manner, as applicable.

ARTICLE V

 

HOLDBACK AGREEMENTS

5.1           Restrictions
on Public Sale by the Company and Others. 
If any registration of Registrable Securities shall be made in
connection with an underwritten public offering, the Company agrees
(i) not to effect any public sale or distribution of any IDSs, Common
Stock, Common Stock Equivalents, or other securities or of any security
convertible into or exchangeable or exercisable for any IDSs, Common Stock,
Common Stock Equivalents, or other securities of the Company (other than in
connection with an employee stock option or other benefit plan) during the 30
days prior to, and during the 90-day period beginning on, the closing date of
the sale of the Registrable Securities pursuant to an effective registration
statement (except as part of such registration) and (ii) that any agreement
entered into on or after the date of this Agreement pursuant to which the
Company issues or agrees to issue any privately placed IDSs, Common Stock,
Common Stock Equivalents, or other securities shall contain a provision under
which holders of such securities agree not to effect any public sale or
distribution of any such securities during the period referred to in the
foregoing clause (i), including any sale pursuant to Rule 144 under the
Securities Act and the equivalent provisions under Canadian Securities Laws,
including OSC Rule 45-501 (except as part of such registration, if permitted).

ARTICLE VI

 

REGISTRATION PROCEDURES

6.1           Registration
Procedures.  If and whenever the
Company is required to use its commercially reasonable efforts to effect or
cause the registration of any Registrable Securities under the Securities Act
and, if applicable, Canadian Securities Laws as provided in this Agreement,
other than an Exchange Shelf Registration, the Company will, as expeditiously
as possible:

(a)           use
its commercially reasonable efforts to prepare and file with the SEC and, if
applicable, Canadian securities regulatory authorities within 90 days (or, for
registration

 

14

 

on a Form S-3 or any similar short-form registration
statement, 60 days), after receipt of a request for registration with respect
to such Registrable Securities, a registration statement or prospectus on any
form for which the Company then qualifies or which counsel for the Company
shall deem appropriate, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended methods of distribution
thereof, and use its commercially reasonable efforts to cause such registration
statement to become and remain effective as promptly as practicable, subject to
the Majority Holders’ right to defer the Company’s request for the acceleration
of effectiveness of any such registration statement as may be necessary to
accommodate the anticipated timetable for such offering; provided that before filing with
the SEC and, if applicable, Canadian securities regulatory authorities a
registration statement or prospectus or any amendments or supplements thereto,
the Company will (i) furnish to the selling Holders copies of the form of
prospectus (including the preliminary prospectus) proposed to be filed and
furnish to counsel for the selling Holders copies of all such documents
proposed to be filed, which documents will be subject to the review of such
counsel and shall not be filed without the approval of such counsel (which
approval shall not be unreasonably withheld) and (ii) notify the selling
Holders of any stop order issued or threatened by the SEC and/or applicable
Canadian securities regulatory authorities and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered;

(b)           subject
to Section 3.3 in the case of a Shelf Registration, prepare and file with the
SEC and, if applicable, Canadian securities regulatory authorities such
amendments and supplements to such registration statement and the prospectus
(including each preliminary prospectus) used in connection therewith as may be
necessary to keep such registration statement effective for a period of not
less than 180 days or such shorter period which will terminate when all
Registrable Securities covered by such registration statement have been sold
(but not before the expiration of the 90-day period referred to in Section 4(3)
of the Securities Act and Rule 174 thereunder and the equivalent provision
under Canadian Securities Laws), and comply with the provisions of the
Securities Act and the Canadian Securities Laws applicable to it with respect
to the disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of disposition by
the sellers thereof set forth in such registration statement;

(c)           promptly
furnish to each Holder and each underwriter, if any, of Registrable Securities
covered by such registration statement such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in such registration
statement (including each preliminary prospectus), in conformity with the
requirements of the Securities Act and, if applicable, Canadian Securities
Laws, copies of any correspondence with the SEC and/or the applicable Canadian
securities regulatory authorities or their staff relating to the registration
statement and such other documents as any Holder or underwriter may reasonably
request in order to facilitate the disposition of the Registrable Securities by
such Holder;

(d)           use
its commercially reasonable efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions
as any Holder or each underwriter, if any, reasonably requests and do any and
all other acts and things which may be reasonably necessary or advisable to
enable such Holder and each underwriter, if any, to consummate the disposition
in such jurisdictions of the Registrable Securities; provided 

 

15

 

that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this paragraph (d),
(ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such jurisdiction;

(e)           use
its commercially reasonable efforts to cause the Registrable Securities covered
by such registration statement to be registered with or approved by such other
Governmental Entities as may be necessary by virtue of the business and
operations of the Company to enable the selling Holders to consummate the
disposition of such Registrable Securities;

(f)            immediately
notify the selling Holders at any time when a prospectus relating thereto is
required to be delivered under the Securities Act and/or Canadian Securities
Laws of the happening of any event which comes to the Company’s attention if as
a result of such event the prospectus included in such registration statement
contains an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading and the
Company will promptly prepare and furnish to the selling Holders a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;

(g)           use
its commercially reasonable efforts to prevent the issuance of and obtain the
withdrawal of any stop order suspending the effectiveness of a registration
statement relating to the Registrable Securities or of any order preventing or
suspending the use of any preliminary or final prospectus at the earliest practicable
moment;

(h)           if
requested by the managing underwriter or underwriters or any selling Holder,
immediately incorporate in a prospectus supplement or post-effective amendment
such information as the managing underwriters and each applicable selling Holder
agree and reasonably request should be included therein relating to the plan of
distribution with respect to such Registrable Securities, including information
with respect to the number of Registrable Securities being sold to such
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment;

(i)            cooperate
with the selling Holders and the managing underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and enable such
Registrable Securities to be in such denominations and registered in such names
as the managing underwriters may request at least three business days prior to
any sale of the Registrable Securities to the underwriters;

(j)            use
its commercially reasonable efforts to cause all such Registrable Securities to
be listed on each securities exchange or quotation system on which the same 

 

16

 

securities issued by the Company are then listed,
and enter into such customary agreements including a listing application and
indemnification agreement in customary form if the applicable listing
requirements are satisfied, and to provide a transfer agent and registrar for
such Registrable Securities covered by such registration statement no later
than the effective date of such registration statement;

(k)           enter
into such customary agreements (including an underwriting agreement in
customary form) and take all such other actions as the Majority Sellers or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities, including customary indemnification
and making appropriate members of senior management of the Company available
(subject to consulting with them in advance as to schedule) for customary
participation in “road show” presentations to potential investors;

(l)            make
available for inspection by the Holders, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any Holder or underwriter (collectively,
the “Inspectors”), all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries, if any, as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s and its subsidiaries’ officers,
directors and employees to supply all information and respond to all inquiries
reasonably requested by any such Inspector in connection with such registration
statement;

(m)          in
an underwritten offering, use its commercially reasonable efforts to obtain
(i) an opinion or opinions of counsel to the Company and (ii) a “cold
comfort” letter or letters from the Company’s independent public accountants in
customary form and covering such matters of the type customarily covered by
opinions and “cold comfort” letters (provided that the term
“customarily” as applied to any Registrable Securities shall be deemed to
include, without limitation, letters and opinions delivered to the Company in
the IPO) as the underwriter reasonably requests;

(n)           otherwise
use its commercially reasonable efforts to comply with all applicable rules and
regulations of the SEC and, if applicable, Canadian securities regulatory
authorities, and make available to its security holders, within the required
time periods, an earning statement covering the required periods, which earning
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder or any successor provisions thereto and, if applicable,
the equivalent provisions under Canadian Securities Laws;

(o)           promptly
prior to the filing of any document which is to be incorporated by reference
into the registration statement or the prospectus (after the initial filing of
the registration statement) and, if applicable, the Canadian Prospectus (including
each preliminary prospectus), provide copies of such document to counsel to the
selling Holders and to the managing underwriters, if any, make the Company’s
representatives available for discussion of such document and make such changes
in such document prior to the filing thereof as counsel for the selling Holders
may reasonably request;

(p)           promptly
notify the selling Holders, counsel for the selling Holders, and the managing
underwriter or agent and provide them with copies of such relevant documents,

 

17

 

(i) when the registration statement, or any
post-effective amendment to the registration statement, shall have become
effective, or any supplement to the prospectus or any amendment to the prospectus
shall have been filed, (ii) of the receipt of any comments from the SEC or
applicable Canadian securities regulatory authorities, (iii) of any
request of the SEC or applicable Canadian securities regulatory authorities to
amend the registration statement or amend or supplement the prospectus or for
additional information, and (iv) of the issuance by the SEC or applicable
Canadian securities regulatory authorities of any stop order suspending the
effectiveness of the registration statement or of any order preventing or
suspending the use of any prospectus, or of the suspension of the qualification
of the registration statement for offering or sale in any jurisdiction, or of
the institution or threatening of any proceedings for any of such purposes; and

(q)           cooperate
with the selling Holders and each underwriter or agent participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with any securities exchange
and/or the NASD.

It
shall be a condition precedent to the obligation of the Company to take any
action pursuant to this Agreement in respect of the securities which are to be
registered at the request of any Holder that such Holder shall furnish to the
Company such information regarding the securities held by such Holder and the
intended method of disposition thereof as the Company shall reasonably request
in connection with such registration.

Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in clause (f) of Section 6.1 hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such Holder receives the copies of the prospectus supplement or amendment
contemplated by clause (f) of Section 6.1 hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at the Company’s expense)
all copies, other than permanent file copies, then in such Holder’s possession,
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any such notice,
the period mentioned in clause (b) of Section 6.1 hereof shall be extended
by the greater of (i) three months or (ii) the number of days during
the period from and including the date of the giving of such notice pursuant to
clause (f) of Section 6.1 hereof to and including the date when such
Holder shall have received the copies of the prospectus supplement or amendment
contemplated by clause (f) of Section 6.1 hereof.

ARTICLE VII

 

INDEMNIFICATION

7.1           Indemnification
by the Company.  In the event of any
registration of any Registrable Securities under the Securities Act and, if
applicable, Canadian Securities Laws pursuant to Article III or IV hereof, the
Company will, and it hereby does, indemnify and hold harmless, to the full
extent permitted by law, each selling Holder, their directors and officers,
employees, stockholders, general partners, limited partners, members, advisory
directors and managing directors (and directors, officers, stockholders,
general partners, limited partners, members, advisory directors, managing
directors and controlling persons thereof), each other

 

18

 

person who participates as an underwriter in the offering or sale of
such securities and each other person, if any, who controls, is controlled by
or is under common control with any such Holder or any such underwriter within
the meaning of the Securities Act and, if applicable, Canadian Securities Laws,
against any and all losses, claims, damages or liabilities, joint or several,
and expenses (including any amounts paid in any settlement effected with the
Company’s consent) to which such Holder, any such director, or officer,
employee, stockholder, general or limited partner, member, or advisory or
managing director or any such underwriter or controlling person may become
subject under the Securities Act and, if applicable, Canadian Securities Laws,
state securities or blue sky laws, common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) or expenses arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained, on the
effective date thereof, in any registration statement under which such
Registrable Securities were registered under the Securities Act and, if
applicable, Canadian Securities Laws, any prospectus (including each
preliminary prospectus) contained therein, or any amendment or supplement
thereto or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of a prospectus (including each preliminary
prospectus), in light of the circumstances under which they are made), and the
Company will reimburse each such Holder and each such director, officer,
employee, general partner, limited partner, advisory director, managing
director or underwriter and controlling person for any legal or any other
expenses reasonably incurred by them as such expenses are incurred in
connection with investigating or defending such loss, claim, liability, action
or proceeding; provided
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
prospectus (including each preliminary prospectus) in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such Holder or such director, officer, employee,
general or limited partner, managing director or underwriter specifically
stating that it is for use in the preparation thereof; provided,  further,
that the Company shall not be required to indemnify any such person if such
untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the final
prospectus or any amendment or supplement thereto and the final prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and any such loss, liability, claim, damage or expense suffered or
incurred by such indemnified person resulted from any action, claim or suit by
any person who purchased Registrable Securities which are the subject thereof
from such indemnified person and it is established in the related proceeding
that such indemnified person failed to deliver or provide a copy of the final
prospectus (as amended or supplemented) to such person with or prior to the
confirmation of the sale of such Registrable Securities sold to such person if
required by applicable law, unless such failure to deliver or provide a copy of
the final prospectus (as amended or supplemented) was a result of noncompliance
by the Company with this Agreement or as a result of the failure of the Company
to provide such final prospectus.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of each Holder or any such director, officer, employee,
general partner, limited partner, managing

 

19

 

director, underwriter or controlling person and shall survive the
transfer of such securities by any Holder.

7.2           Indemnification
by Holders and Underwriters.  The
Company may require, as a condition to including Registrable Securities in any
registration statement filed in accordance with Article III or IV hereof, that
the Company will have received an undertaking reasonably satisfactory to it
from any selling Holder or any underwriter to indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section 7.1) the
Company and its directors, officers, employees, controlling persons and all
other prospective sellers and their respective directors, officers, general and
limited partners, managing directors, and their respective controlling persons,
against any and all losses, claims, damages or liabilities, joint or several,
and expenses (including any amounts paid in any settlement effected with the
consent of the applicable Holder and underwriter) to which the Company and its
directors, officers, employees, controlling persons or any other prospective
sellers and their respective directors, officers, general and limited partners,
managing directors, and their respective controlling persons may become subject
under the Securities Act and, if applicable, Canadian Securities Laws, state
securities or blue sky laws, common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
or expenses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which such Registrable Securities
were registered under the Securities Act or applicable Canadian Securities
Laws, any prospectus (including each preliminary prospectus) contained therein,
or any amendment or supplement thereto or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of a
prospectus (including each preliminary prospectus), in light of the
circumstances under which they are made), and the applicable Holder and
underwriter will reimburse the Company and its directors, officers, employees,
controlling persons and all other prospective sellers and their respective
directors, officers, general and limited partners, managing directors, and
their respective controlling persons for any legal or any other expenses reasonably
incurred by them as such expenses are incurred in connection with investigating
or defending such loss, claim, liability, action or proceeding; provided
that any Holder and any underwriter shall only be liable in any such case if
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
prospectus (including each preliminary prospectus) in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such Holder or any such underwriter specifically
stating that it is for use in the preparation thereof; provided, further, that such Holder or
underwriter shall not be required to indemnify the Company if such untrue
statement or omission or alleged untrue statement or omission was contained or
made in any preliminary prospectus and corrected in the final prospectus or any
amendment or supplement thereto and the final prospectus does not contain any
other untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and is
covered by such Holder’s or underwriter’s obligation under this Section 7.2 and
any such loss, liability, claim, damage or expense suffered or incurred by the
Company resulted from any action, claim or suit by any person who purchased
Registrable Securities or other securities of the Company which are the subject
thereof from the Holder or the Company or another holder and it is established
in

 

20

 

the related proceeding that a copy of the final
prospectus (as amended or supplemented) was delivered or provided to such
person with or prior to the confirmation of the sale of such Registrable
Securities sold to such Person if required by applicable law.  Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, employee or controlling person or other
indemnified person.  No Holder shall be
liable under any indemnity provided pursuant to this Article VII for any
amounts exceeding the product of the purchase price per Registrable Security
and the number of Registrable Securities being sold pursuant to such
registration statement or prospectus by such Holder.

7.3           Notices
of Claims, Etc.  Promptly after
receipt by an indemnified party hereunder of written notice of the commencement
of any action or proceeding with respect to which a claim for indemnification
may be made pursuant to this Article VII, such indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party, promptly
give written notice to the latter of the commencement of such action; provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding Sections of this
Article VII, except to the extent that the indemnifying party is actually
materially prejudiced by such failure to give notice.  In case any such action is brought against an indemnified party,
unless in such indemnified party’s reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party will be entitled to participate in and, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, to the extent that it may wish, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof, unless in such indemnified party’s reasonable judgment a
conflict of interest between such indemnified and indemnifying parties arises
in respect of such claim after the assumption of the defense thereof or a court
of competent jurisdiction determines that the indemnifying party is not
vigorously defending such action or proceeding.  An indemnifying party will not be subject to any liability for
any settlement made without its consent (which consent shall not be
unreasonably withheld).  No indemnifying
party will consent to entry of any judgment or enter into any settlement of any
pending or threatened proceeding which (i) does not include as an
unconditional term thereof the giving by the claimant or plaintiff to all
indemnified parties of a release from all liability in respect to such claim or
litigation, (ii) involves the imposition of equitable remedies or the
imposition of any non-financial obligations on such indemnified party or
(iii) otherwise adversely affects such indemnified party, other than as a
result of the imposition of financial obligations for which such indemnified
party will be indemnified hereunder. 
Notwithstanding anything to the contrary contained herein, an
indemnifying party will not be obligated to pay the fees and expenses of more
than one counsel (together with local counsel) for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to
such claim, in which event the indemnifying party shall be obligated to pay the
fees and expenses of such additional counsel or counsels (together with the
fees of local counsel).

 

21

 

7.4           Contribution.  If the indemnification provided for in this
Article VII is unavailable to an indemnified party under Section 7.1 or Section
7.2 hereof (other than by reason of exceptions provided in those Sections) in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or expenses
in such proportion as is appropriate to reflect the relative benefits received
by the indemnifying party on the one hand and the indemnified party on the
other, and the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.  The relative fault of the indemnifying
party, on the one hand, and of the indemnified party, on the other hand, shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.  The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 7.1 or Section 7.2, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.

The
Company and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 7.4 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph.  Notwithstanding the
provisions of this Section 7.4, no Holder shall be required to contribute any
amount in excess of the amount by which the total price at which the
Registrable Securities sold by such Holder and distributed to the public were
offered to the public exceeds the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.

7.5           Other
Indemnification.  Indemnification
similar to that specified in Section 7.1 and Section 7.2 (with appropriate
modifications) shall be given by the Company and each Holder with respect to
any required registration or other qualification of securities under any law or
with any Governmental Entity other than as required by the Securities Act or
applicable Canadian Securities Laws.

7.6           Non-Exclusivity.  The obligations of the parties under this
Article VII shall be in addition to any liability which any party may otherwise
have to any other party.

7.7           Indemnification
Payments.  The indemnification and
contribution required by Sections 7.1, 7.2 and 7.4 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or any expense, loss, damage or
liability is incurred.

 

22

 

ARTICLE VIII

 

MISCELLANEOUS

8.1           Remedies.  The Company and each Holder acknowledge and
agree that in the event of any breach of this Agreement by any of them, the
Holders and the Company would be irreparably harmed and could not be made whole
by monetary damages.  Each party
accordingly agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate and that the parties, in addition to any
other remedy to which they may be entitled at law or in equity, shall be
entitled to compel specific performance of this Agreement.

8.2           Agreements;
Restrictive Legends.  A copy of this
Agreement shall be filed with the secretary of the Company and kept with the
records of the Company.  Each
certificate representing Class B Common Stock or Registrable Securities subject
to this Agreement shall bear the following legend on the face thereof (in
addition to any legend required by state securities or “blue sky” laws):

“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE AND ARE SUBJECT TO AN
INVESTOR RIGHTS AGREEMENT.  A COPY OF
THE INVESTOR RIGHTS AGREEMENT IS AVAILABLE FOR INSPECTION AT THE COMPANY’S
PRINCIPAL OFFICES.  NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF THE INVESTOR RIGHTS AGREEMENT. 
THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND BY ALL OF THE
PROVISIONS OF SUCH INVESTOR RIGHTS AGREEMENT.”

The
Company agrees to promptly remove (or cause to be removed) the legend set
forth above and to take such further action to remove any restrictions on the
Registrable Securities in connection with a transfer that is pursuant to a
registration statement effective under the Securities Act and, if applicable, a
receipted prospectus under applicable Canadian securities laws, or exempt from
such registration or filing both in the United States and, if applicable,
Canada.

8.3           Notices.  Any notice, request, instruction or other
document to be given hereunder by any party hereto to another party hereto
shall be in writing, shall be delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested, or by Federal
Express or other delivery service, to the address of the party set forth below or
to such other address as the party to whom notice is to be given may provide in
a written notice to the Company, a copy of which written notice shall be
maintained on file with the Secretary of the Company.

(a)           If
to the Company, to:

 

23

 

	
   

  	
  Otelco Inc.

  	
   

  	
   

  
	
   

  	
  505 Third Avenue East

  	
   

  	
   

  
	
   

  	
  Oneonta, Alabama 35121

  	
   

  	
   

  
	
   

  	
  Phone:  (205) 625-3574

  	
   

  	
   

  
	
   

  	
  Facsimile:  (205) 625-3523

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with a copy (which shall
  not constitute notice) to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  O’Melveny & Myers LLP

  	
   

  	
   

  
	
   

  	
  7 Time Square

  	
   

  	
   

  
	
   

  	
  New York, NY  10036

  	
   

  	
   

  
	
   

  	
  Attention:  Adam Weinstein, Esq.

  	
   

  	
   

  
	
   

  	
  Facsimile:  (212) 326-2061

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
  If
  to Seaport, to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  c/o Seaport Capital

  	
   

  	
   

  
	
   

  	
  199 Water Street

  	
   

  	
   

  
	
   

  	
  20th Floor

  	
   

  	
   

  
	
   

  	
  New York, NY 10038

  	
   

  	
   

  
	
   

  	
  Attention:  Steve McCall

  	
   

  	
   

  
	
   

  	
  Phone:  (212) 847-8900

  	
   

  	
   

  
	
   

  	
  Facsimile:  (212) 425-1420

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with a copy (which shall
  not constitute notice) to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  O’Melveny & Myers LLP

  	
   

  	
   

  
	
   

  	
  Times Square Tower

  	
   

  	
   

  
	
   

  	
  7 Times Square

  	
   

  	
   

  
	
   

  	
  New York, New York  10036

  	
   

  	
   

  
	
   

  	
  Attention:  Adam Weinstein, Esq.

  	
   

  	
   

  
	
   

  	
  Facsimile:  (212) 326-2061

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
  If
  to CEA, to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  c/o Seaport Capital

  	
   

  	
   

  
	
   

  	
  199 Water Street

  	
   

  	
   

  
	
   

  	
  20th Floor

  	
   

  	
   

  
	
   

  	
  New York, NY 10038

  	
   

  	
   

  
	
   

  	
  Attention:  Steve McCall

  	
   

  	
   

  
	
   

  	
  Phone:  (212) 847-8900

  	
   

  	
   

  
	
   

  	
  Facsimile:  (212) 425-1420

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
  If
  to BancBoston, to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BancBoston Ventures Inc.

  	
   

  	
   

  
	
   

  	
  175 Federal Street

  	
   

  	
   

  
	
   

  	
  Mailstop MA DE 10210A

  	
   

  	
   

  

 

24

 

	
   

  	
  Boston, MA  02110

  	
   

  	
   

  
	
   

  	
  Phone: (617) 434-5146

  	
   

  	
   

  
	
   

  	
  Facsimile: (617) 434-1153

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
  If
  to Sternberg, to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Hans Sternberg

  	
   

  	
   

  
	
   

  	
  c/o Starmount Life Ins.
  Co.

  	
   

  	
   

  
	
   

  	
  The Starmount Building

  	
   

  	
   

  
	
   

  	
  7800 Office Park Blvd.

  	
   

  	
   

  
	
   

  	
  Baton Rouge, LA 70809

  	
   

  	
   

  
	
   

  	
  Phone: (225) 924-4267

  	
   

  	
   

  
	
   

  	
  Facsimile: (225) 926-6292

  	
   

  	
   

  

 

(g)           If
to any individual Holder, to the address of such individual Holder set forth on
the signature page hereto.

Any
notice, request, instruction or document shall be deemed to have been received
on the date of delivery thereof.

8.4           Applicable
Law.  This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of New
York.

8.5           Jurisdiction.  The courts of the State of New York in New
York County and the United States District Court for the Southern District of
New York shall have jurisdiction over the parties with respect to any dispute
or controversy between them arising under or in connection with this agreement
and, by execution and delivery of this Agreement, each of the parties to this
Agreement submits to the non-exclusive jurisdiction of those courts, including
but not limited to the in personam and subject matter
jurisdiction of those courts, waives any objections to such jurisdiction on the
grounds of venue or forum non conveniens, the absence of in personam
or subject matter jurisdiction and any similar grounds, consents to service of
process by mail (in accordance with Section 8.3) or any other manner permitted
by law, and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement.

8.6           MUTUAL
WAIVER OF JURY TRIAL.  THE PARTIES
HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING
BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.

8.7           Severability.  The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.

 

25

 

8.8           Other
Agreements.  Nothing contained in
this Agreement shall be deemed to be a waiver of, or release from, any
obligations any party hereto may have under, or any restrictions on the
transfer of Registrable Securities or other securities of the Company imposed
by, any other agreement.

8.9           Successors;
Assigns; Transferees.  The
provisions of this Agreement shall be binding upon and accrue to the benefit of
the parties hereto and their respective heirs, personal representatives,
successors and permitted assigns.  In
addition, and whether or not any express assignment shall have been made, the
provisions of this Agreement which are for the benefit of the Holders shall
also be for the benefit of and enforceable by any Transferee or subsequent
holder of Registrable Securities, subject to the provisions contained herein; provided that the Company is
given written notice at the time or within 30 days of said transfer, stating
the name and address of the Transferee and identifying the securities with
respect to which the rights under this Agreement are being transferred; and provided, further, that the Transferee or
assignee of such rights assumes in writing the obligations of such Holder under
this Agreement (in which case such Holder shall be released from such
obligations).  Each Holder shall have the
exclusive option to determine which rights and obligations shall be assigned to
any Transferee.

8.10         Information
to be Furnished by the Holders. 
Each Holder shall furnish to the Company such information as the Company
may reasonably request and as shall be required in connection with the
registration and related proceedings referred to herein.

8.11         Amendments,
Waivers.  This Agreement may not be
amended, modified or supplemented and no waivers of or consents to departures
from the provisions hereof may be given unless consented to in writing by the
Company and the Majority Holders; provided, however, that any
amendment, modification, supplement or waiver of or to this Agreement that
treats any Holder differently than any other Holder shall require the consent
of the Majority Holders of each group of similarly treated Holders.

8.12         Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same Agreement.

8.13         Limited
Liability.  Notwithstanding any
other provision of this Agreement neither the stockholders, members, general
partners, limited partners, advisory directors or managing directors, or any
directors or officers of any stockholders, members, general partners, limited
partners, advisory directors or managing directors, nor any future
stockholders, members, general partners, limited partners, advisory directors
or managing directors, if any, of any Holder shall have any personal liability
for performance of any obligation of such Holder under this Agreement.

8.14         Adjustments
Affecting Registrable Securities. 
The Company will not take any action, or permit any change to occur,
with respect to the Registrable Securities which would (i) adversely
affect the ability of any Holder to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or (ii) adversely
affect the marketability of such Registrable Securities in any such
registration.

 

26

 

8.15         Rule
144.  If the Company is subject to
the requirements of Section 13, 14 or 15(d) of the Exchange Act, the Company
covenants that it will file with the SEC and, if applicable, Canadian
securities regulatory authorities in a timely manner any reports required to be
filed by it under the Securities Act, the Exchange Act and Canadian Securities
Laws (or, if the Company is not required to file such reports, it will, upon
the request of any Holder, make publicly available such information) and it
will take such further action as any Holder may reasonably request, so as to
enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by
(i) Rule 144 under the Securities Act, as such Rule may be amended from
time to time, (ii) any similar rule or regulation hereafter adopted by the
SEC or (iii) an equivalent prospectus exemption under Canadian Securities
Laws, including OSC Rule 45-501.  Upon
the request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.

8.16         Other
Registration Rights.  (a) The
Company covenants that it will not grant any right of registration under the
Securities Act or applicable Canadian Securities Laws relating to any of its
IDSs, shares of Common Stock, Subordinated Notes, Common Stock Equivalents, or
other securities to any person unless the Holders shall be entitled to have
included in any registration effected (i) pursuant to Article III hereof,
all Registrable Securities requested by it to be so included prior to the
inclusion of any securities requested to be registered by the persons entitled
to any such other registration rights pursuant to any provision providing
incidental registration rights comparable to those contained in Article IV
hereof and (ii) pursuant to Article IV hereof, pro rata with the inclusion
of any securities requested to be registered by the persons entitled to any
such other registration rights pursuant to any provision providing incidental
registration rights comparable to those contained in Article IV hereof.

(a)           If
the Company at any time grants to any other holders of IDSs, Common Stock,
Subordinated Notes, Common Stock Equivalents, or other securities of the
Company any rights to request the Company to effect the registration (whether
requested or incidental) under the Securities Act or applicable Canadian
Securities Laws of any such securities on any terms more favorable to such
holders than the terms set forth in this Agreement, the terms of this Agreement
shall, at the request of the Majority Holders, be deemed amended or
supplemented to the extent necessary to provide the Holders such more favorable
rights and benefits.

(b)           The
Company covenants that it will not enter into, or cause or permit any of its
subsidiaries to enter into, any agreement which conflicts with or limits or
prohibits the exercise of the rights granted to the Holders in this Agreement.

8.17         Limitation
on Separate Registration of Common Stock. 
Notwithstanding anything in this Agreement to the contrary, nothing
herein shall require the Company to separately register the Common Stock (not
in the form of IDSs) at any time that the Common Stock is not then actively
traded on the New York Stock Exchange, American Stock Exchange, Toronto Stock
Exchange or any other national securities exchange, or Nasdaq.

8.18         Headings.  The headings and captions contained herein
are for convenience of reference only and shall not control or affect the meaning
or construction of any provision hereof.

 

27

 

8.19         Currency.  All references herein to “$” or “dollars”
refer to United States currency.  Any
determination herein as to price shall be made in (or converted into) U.S.
dollars.

 

28

 

IN WITNESS
WHEREOF, each of the parties hereto have duly executed this
Agreement as of the date and time first above written.

	
   

  	
  OTELCO INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SEAPORT CAPITAL PARTNERS II, L.P.

  
	
   

  	
  By:

  	
   

  	
  CEA Investment Partners
  II, LLC,

  
	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  Seaport Associates, LLC,

  
	
   

  	
   

  	
   

  	
  its Member and authorized
  representative

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SEAPORT INVESTMENTS, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CEA CAPITAL PARTNERS USA, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

 

29

 

	
   

  	
  CEA CAPITAL PARTNERS USA CI, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANCBOSTON VENTURES INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MID-MISSOURI PARENT LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Michael D. Weaver

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Sean Reilly

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Kevin Reilly

  
	
   

  	
  Address for Notices:

  

 

 

30

 

	
   

  	
  STERNBERG CONSULTING INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

 

31Exhibit 10.1

 

 

 

CREDIT AGREEMENT

 

Dated as of December
     , 2004

 

among

 

OTELCO INC.,

 

as Borrower,

 

THE OTHER CREDIT PARTIES
SIGNATORY HERETO,

 

as Credit Parties,

 

THE LENDERS SIGNATORY
HERETO

 

FROM TIME TO TIME,

 

as Lenders,

 

and

 

GENERAL ELECTRIC CAPITAL
CORPORATION,

 

as Administrative Agent,
Agent and Lender

 

 

COBANK, ACB

 

as Syndication Agent and
Lender

 

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  1

  	
  AMOUNT AND TERMS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Credit Facilities.

  	
  1

  
	
   

  	
  1.2

  	
  [Intentionally Omitted]

  	
  5

  
	
   

  	
  1.3

  	
  Prepayments.

  	
  5

  
	
   

  	
  1.4

  	
  Use of Proceeds

  	
  8

  
	
   

  	
  1.5

  	
  Interest and Applicable
  Margins.

  	
  8

  
	
   

  	
  1.6

  	
  [Intentionally Omitted].

  	
  10

  
	
   

  	
  1.7

  	
  [Intentionally Omitted].

  	
  10

  
	
   

  	
  1.8

  	
  Cash Management Systems

  	
  10

  
	
   

  	
  1.9

  	
  Fees.

  	
  10

  
	
   

  	
  1.10

  	
  Receipt of Payments

  	
  11

  
	
   

  	
  1.11

  	
  Application and
  Allocation of Payments.

  	
  12

  
	
   

  	
  1.12

  	
  Loan Account and Accounting

  	
  12

  
	
   

  	
  1.13

  	
  Indemnity.

  	
  13

  
	
   

  	
  1.14

  	
  Access

  	
  14

  
	
   

  	
  1.15

  	
  Taxes.

  	
  15

  
	
   

  	
  1.16

  	
  Capital
  Adequacy; Increased Costs; Illegality.

  	
  15

  
	
   

  	
  1.17

  	
  Single Loan

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  2

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Conditions to the
  Initial Loans

  	
  17

  
	
   

  	
  2.2

  	
  Further Conditions to
  Each Loan

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Corporate
  Existence; Compliance with Law

  	
  20

  
	
   

  	
  3.2

  	
  Executive Offices, Collateral
  Locations, FEIN

  	
  21

  
	
   

  	
  3.3

  	
  Corporate Power, Authorization,
  Enforceable Obligations

  	
  22

  
	
   

  	
  3.4

  	
  Financial Statements
  and Projections

  	
  22

  
	
   

  	
  3.5

  	
  Material Adverse Effect

  	
  23

  
	
   

  	
  3.6

  	
  Ownership of Property;
  Liens

  	
  24

  
	
   

  	
  3.7

  	
  Labor Matters

  	
  24

  
	
   

  	
  3.8

  	
  Ventures,
  Subsidiaries and Affiliates; Outstanding Stock and Indebtedness

  	
  25

  
	
   

  	
  3.9

  	
  Government Regulation

  	
  25

  
	
   

  	
  3.10

  	
  Margin Regulations

  	
  25

  
	
   

  	
  3.11

  	
  Taxes

  	
  26

  
	
   

  	
  3.12

  	
  ERISA

  	
  26

  
	
   

  	
  3.13

  	
  No Litigation

  	
  27

  
	
   

  	
  3.14

  	
  Brokers

  	
  28

  
	
   

  	
  3.15

  	
  Intellectual Property

  	
  28

  
	
   

  	
  3.16

  	
  Full Disclosure;
  Perfection of Liens

  	
  28

  

 

i

 

	
   

  	
  3.17

  	
  Environmental Matters.

  	
  29

  
	
   

  	
  3.18

  	
  Insurance

  	
  30

  
	
   

  	
  3.19

  	
  Deposit and
  Disbursement Accounts

  	
  30

  
	
   

  	
  3.20

  	
  Government Contracts

  	
  30

  
	
   

  	
  3.21

  	
  Customer and Trade
  Relations

  	
  30

  
	
   

  	
  3.22

  	
  Agreements and Other
  Documents

  	
  30

  
	
   

  	
  3.23

  	
  Solvency

  	
  30

  
	
   

  	
  3.24

  	
  Mid-Missouri
  Acquisition Agreement

  	
  31

  
	
   

  	
  3.25

  	
  [Intentionally Omitted]

  	
  31

  
	
   

  	
  3.26

  	
  Subordinated Debt

  	
  31

  
	
   

  	
  3.27

  	
  Capitalization

  	
  32

  
	
   

  	
  3.28

  	
  OFAC

  	
  32

  
	
   

  	
  3.29

  	
  Patriot Act

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  FINANCIAL
  STATEMENTS AND INFORMATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Reports and Notices.

  	
  33

  
	
   

  	
  4.2

  	
  Communication with
  Accountants

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Maintenance
  of Existence and Conduct of Business

  	
  34

  
	
   

  	
  5.2

  	
  Payment of Charges.

  	
  34

  
	
   

  	
  5.3

  	
  Books and Records

  	
  34

  
	
   

  	
  5.4

  	
  Insurance;
  Damage to or Destruction of Collateral.

  	
  34

  
	
   

  	
  5.5

  	
  Compliance with Laws

  	
  37

  
	
   

  	
  5.6

  	
  Supplemental Disclosure

  	
  37

  
	
   

  	
  5.7

  	
  Intellectual Property

  	
  37

  
	
   

  	
  5.8

  	
  Environmental Matters

  	
  37

  
	
   

  	
  5.9

  	
  Landlords’ Agreements, Mortgagee
  Agreements, Bailee Letters and Real Estate Purchases

  	
  38

  
	
   

  	
  5.10

  	
  Interest Rate Protection

  	
  39

  
	
   

  	
  5.11

  	
  CoBank Capital

  	
  39

  
	
   

  	
  5.12

  	
  Further Assurances

  	
  40

  
	
   

  	
  5.13

  	
  Subsidiaries and Collateral

  	
  40

  
	
   

  	
  5.14

  	
  Change
  of Law Applicable to Mid-Missouri Telephone.

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Mergers,
  Subsidiaries, Etc.

  	
  41

  
	
   

  	
  6.2

  	
  Investments; Loans and
  Advances

  	
  45

  
	
   

  	
  6.3

  	
  Indebtedness.

  	
  46

  
	
   

  	
  6.4

  	
  Employee
  Loans and Affiliate Transactions.

  	
  49

  
	
   

  	
  6.5

  	
  Capital Structure and
  Business

  	
  50

  
	
   

  	
  6.6

  	
  Guaranteed Indebtedness

  	
  51

  
	
   

  	
  6.7

  	
  Liens

  	
  51

  
	
   

  	
  6.8

  	
  Sale of Stock and Assets

  	
  52

  
	
   

  	
  6.9

  	
  ERISA

  	
  53

  
	
   

  	
  6.10

  	
  Financial Covenants

  	
  54

  

 

ii

 

	
   

  	
  6.11

  	
  Hazardous Materials

  	
  54

  
	
   

  	
  6.12

  	
  Sale/Leasebacks

  	
  54

  
	
   

  	
  6.13

  	
  Cancellation of
  Indebtedness

  	
  54

  
	
   

  	
  6.14

  	
  Restricted Payments

  	
  54

  
	
   

  	
  6.15

  	
  Change
  of Corporate Name or Location; Change of Fiscal Year

  	
  57

  
	
   

  	
  6.16

  	
  No Impairment
  of Intercompany Transfers

  	
  57

  
	
   

  	
  6.17

  	
  No Speculative Transactions

  	
  57

  
	
   

  	
  6.18

  	
  [Intentionally Omitted]

  	
  57

  
	
   

  	
  6.19

  	
  Changes
  Relating to Subordinated Debt; Material Contracts

  	
  57

  
	
   

  	
  6.20

  	
  Holding Companies

  	
  58

  
	
   

  	
  6.21

  	
  Designated Senior Debt

  	
  58

  
	
   

  	
  6.22

  	
  Limitations on
  Accumulation of Funds

  	
  59

  
	
   

  	
  6.23

  	
  Limitations on
  Creation of Subsidiaries

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  TERM

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Termination

  	
  59

  
	
   

  	
  7.2

  	
  Survival
  of Obligations Upon Termination of Financing Arrangements

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  EVENTS OF
  DEFAULT; RIGHTS AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Events of Default

  	
  60

  
	
   

  	
  8.2

  	
  Remedies.

  	
  62

  
	
   

  	
  8.3

  	
  Waivers by Credit Parties

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  ASSIGNMENT
  AND PARTICIPATIONS; APPOINTMENT OF AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Assignment and Participations.

  	
  63

  
	
   

  	
  9.2

  	
  Appointment of Agent

  	
  66

  
	
   

  	
  9.3

  	
  Agent’s Reliance, Etc.

  	
  66

  
	
   

  	
  9.4

  	
  GE Capital and Affiliates

  	
  67

  
	
   

  	
  9.5

  	
  Lender Credit Decision

  	
  67

  
	
   

  	
  9.6

  	
  Indemnification

  	
  68

  
	
   

  	
  9.7

  	
  Successor Agent

  	
  68

  
	
   

  	
  9.8

  	
  Setoff and Sharing of
  Payments

  	
  69

  
	
   

  	
  9.9

  	
  Advances;
  Payments; Non-Funding Lenders; Information; Actions in Concert.

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  10

  	
  SUCCESSORS AND ASSIGNS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Successors and Assigns

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Complete
  Agreement; Modification of Agreement

  	
  72

  
	
   

  	
  11.2

  	
  Amendments
  and Waivers; Joinder Agreement

  	
  72

  
	
   

  	
  11.3

  	
  Fees and Expenses

  	
  75

  
	
   

  	
  11.4

  	
  No
  Waiver

  	
  76

  
	
   

  	
  11.5

  	
  Remedies

  	
  77

  

 

iii

 

	
   

  	
  11.6

  	
  Severability

  	
  77

  
	
   

  	
  11.7

  	
  Conflict of Terms

  	
  77

  
	
   

  	
  11.8

  	
  Confidentiality

  	
  77

  
	
   

  	
  11.9

  	
  GOVERNING LAW

  	
  77

  
	
   

  	
  11.10

  	
  Notices

  	
  78

  
	
   

  	
  11.11

  	
  Section Titles

  	
  79

  
	
   

  	
  11.12

  	
  Counterparts

  	
  79

  
	
   

  	
  11.13

  	
  WAIVER OF JURY TRIAL

  	
  79

  
	
   

  	
  11.14

  	
  Press Releases and
  Related Matters

  	
  79

  
	
   

  	
  11.15

  	
  Reinstatement

  	
  80

  
	
   

  	
  11.16

  	
  Advice of Counsel

  	
  80

  
	
   

  	
  11.17

  	
  No Strict Construction

  	
  80

  

 

iv

 

INDEX OF
APPENDICES

 

	
  Annex A (Recitals)

  	
  -

  	
  Definitions

  
	
  Annex B (Section
  1.2)

  	
  -

  	
  [Intentionally
  Omitted]

  
	
  Annex C (Section
  1.8)

  	
  -

  	
  Cash Management
  System

  
	
  Annex D (Section
  2.1(a))

  	
  -

  	
  Closing Checklist

  
	
  Annex E (Section
  4.1(a))

  	
  -

  	
  Financial Statements
  and Projections -- Reporting

  
	
  Annex F (Section
  4.1(b))

  	
  -

  	
  Collateral Reports

  
	
  Annex G (Section
  6.10)

  	
  -

  	
  Financial Covenants

  
	
  Annex H (Section
  9.9(a))

  	
  -

  	
  Lenders’ Wire
  Transfer Information

  
	
  Annex I (Section
  11.10)

  	
  -

  	
  Notice Addresses

  
	
  Annex J (from Annex
  A- Commitments definition)

  	
  -

  	
  Commitments as of
  Closing Date

  
	
   

  	
   

  	
   

  
	
  Exhibit 1.1(a)(i)

  	
  -

  	
  Form of Notice of
  Revolving Credit Advance

  
	
  Exhibit 1.1(a)(ii)

  	
  -

  	
  Form of Revolving Note

  
	
  Exhibit 1.1(b)

  	
  -

  	
  Form of Term Note

  
	
  Exhibit 1.1(c)(i)

  	
  -

  	
  Form of Notice of Swing
  Line Advance

  
	
  Exhibit 1.1(c)(ii)

  	
  -

  	
  Form of Swing Line Note

  
	
  Exhibit 1.5(e)

  	
  -

  	
  Form of Notice of
  Conversion/Continuation

  
	
  Exhibit 5.13

  	
   

  	
  Form of Joinder
  Agreement

  
	
  Exhibit 6.3(a)(viii)

  	
   

  	
  Form of Subordinated
  Intercompany Note

  
	
  Exhibit 9.1(a)

  	
  -

  	
  Form of Assignment
  Agreement

  
	
   

  	
   

  	
   

  
	
  Schedule A

  	
   

  	
  Pre-Closing EBITDA

  
	
  Schedule 1.1

  	
  -

  	
  Agent’s Representatives

  
	
  Disclosure Schedule 1.4

  	
  -

  	
  Sources and Uses; Funds
  Flow Memorandum

  
	
  Disclosure Schedule 3.1

  	
  -

  	
  Type of Entity; State
  of Organization; Telecommunications Approvals

  
	
  Disclosure Schedule 3.2

  	
  -

  	
  Executive Offices,
  Collateral Locations, FEIN

  
	
  Disclosure Schedule
  3.4(a)

  	
  -

  	
  Financial Statements

  
	
  Disclosure Schedule
  3.4(b)

  	
  -

  	
  Pro Forma

  
	
  Disclosure Schedule
  3.4(c)

  	
  -

  	
  Projections

  
	
  Disclosure Schedule
  3.4(d)

  	
  -

  	
  Fair Salable Balance
  Sheet

  
	
  Disclosure Schedule 3.6

  	
  -

  	
  Real Estate and Leases

  
	
  Disclosure Schedule 3.7

  	
  -

  	
  Labor Matters

  
	
  Disclosure Schedule 3.8

  	
  -

  	
  Ventures, Subsidiaries
  and Affiliates; Outstanding Stock

  
	
  Disclosure Schedule
  3.11

  	
  -

  	
  Tax Matters

  
	
  Disclosure Schedule
  3.12

  	
  -

  	
  ERISA Plans

  
	
  Disclosure Schedule
  3.13

  	
  -

  	
  Litigation

  
	
  Disclosure Schedule
  3.14

  	
  -

  	
  Brokers

  
	
  Disclosure Schedule
  3.15

  	
  -

  	
  Intellectual Property

  
	
  Disclosure Schedule
  3.17

  	
  -

  	
  Hazardous Materials

  
	
  Disclosure Schedule
  3.18

  	
  -

  	
  Insurance

  
	
  Disclosure Schedule
  3.19

  	
  -

  	
  Deposit and Disbursement
  Accounts

  
	
  Disclosure Schedule
  3.20

  	
  -

  	
  Government Contracts

  

 

v

 

	
  Disclosure Schedule
  3.22

  	
  -

  	
  Material Agreements

  
	
  Disclosure Schedule 5.1

  	
  -

  	
  Trade Names

  
	
  Disclosure Schedule 6.2

  	
  -

  	
  Investments

  
	
  Disclosure Schedule 6.3

  	
  -

  	
  Indebtedness

  
	
  Disclosure Schedule
  6.4(a)

  	
  -

  	
  Transactions with
  Affiliates

  
	
  Disclosure Schedule 6.6

  	
   

  	
  Guaranteed Indebtedness

  
	
  Disclosure Schedule 6.7

  	
  -

  	
  Existing Liens

  

 

vi

 

This CREDIT AGREEMENT (this “Agreement”), dated
as of December        , 2004 among OTELCO
INC., a Delaware corporation (“Borrower”); the other Credit Parties
signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
(in its individual capacity, “GE Capital”), for itself, as Lender, and
as Agent for Lenders, and the other Lenders signatory hereto from time to time.

 

RECITALS

 

WHEREAS, Borrower has requested that Lenders extend
revolving and term credit facilities to Borrower of up to Ninety-Five Million
Dollars ($95,000,000) in the aggregate for the purpose of refinancing certain
indebtedness of Borrower and to provide (a) working capital financing for
Borrower, (b) funds for other general corporate purposes of Borrower and
(c) funds for other purposes permitted hereunder; and for these purposes,
Lenders are willing to make certain loans and other extensions of credit to
Borrower of up to such amount upon the terms and conditions set forth herein;
and

 

WHEREAS, Borrower has agreed to secure all of its
obligations under the Loan Documents by granting to Agent, for the benefit of
Agent and Lenders, a security interest in and lien upon substantially all of
its existing and after-acquired personal and real property; and

 

WHEREAS, each of the Guarantors is willing to guarantee
all of the obligations of Borrower to Agent and Lenders under the Loan
Documents and to grant to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon substantially all of its existing and
after-acquired personal and real property to secure such guaranty; and

 

WHEREAS, capitalized terms used in this Agreement
shall have the meanings ascribed to them in Annex A and, for purposes of
this Agreement and the other Loan Documents, the rules of construction set
forth in Annex A shall govern. 
All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, “Appendices”) hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together with this
Agreement, shall constitute but a single agreement.  These Recitals shall be construed as part of the Agreement.

 

NOW, THEREFORE, in consideration of the premises and
the mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:

 

1                                         AMOUNT AND TERMS OF CREDIT

 

1.1           Credit Facilities.

 

(a)           Revolving
Credit Facility.

 

(i)            Subject
to the terms and conditions hereof, each Revolving Lender agrees to make
available to Borrower from time to time until the Commitment Termination Date
its Pro Rata Share of advances (each, a “Revolving Credit Advance”).

 

 

The Pro
Rata Share of the Revolving Loan of any Revolving Lender shall not at any time
exceed its separate Revolving Loan Commitment. 
The obligations of each Revolving Lender hereunder shall be several and
not joint.  Until the Commitment
Termination Date and subject to the terms and conditions hereof, Borrower may
from time to time borrow, repay and reborrow under this Section 1.1(a); provided,
that the amount of any Revolving Credit Advance to be made at any time shall
not exceed Borrowing Availability at such time.  Each Revolving Credit Advance shall be made on notice by Borrower
to one of the representatives of Agent identified in Schedule 1.1 at the
address specified therein.  Any such
notice must be given no later than (1) 1:00 p.m. (New York time) on the
Business Day of the proposed Revolving Credit Advance, in the case of an Index
Rate Loan, or (2) 11:00 a.m. (New York time) on the date which is three (3)
Business Days prior to the proposed Revolving Credit Advance, in the case of a
LIBOR Loan.  Each such notice (a ”Notice
of Revolving Credit Advance”) must be given in writing (by telecopy or
overnight courier) substantially in the form of Exhibit 1.1(a)(i), and
shall include the information required in such Exhibit and such other
information as may be required by Agent. 
If Borrower desires to have the Revolving Credit Advances bear interest
by reference to a LIBOR Rate, it must comply with Section 1.5(e).

 

(ii)           Except
as provided in Section 1.12, Borrower shall execute and deliver to each
Revolving Lender a note to evidence the Revolving Loan Commitment of that
Revolving Lender.  Each note shall be in
the principal amount of the Revolving Loan Commitment of the applicable Revolving
Lender, dated the Closing Date and substantially in the form of Exhibit
1.1(a)(ii) (each a “Revolving Note” and, collectively, the “Revolving
Notes”).  Each Revolving Note shall
represent the obligation of Borrower to pay the amount of the applicable
Revolving Lender’s Revolving Loan Commitment or, if less, such Revolving
Lender’s Pro Rata Share of the aggregate unpaid principal amount of all
Revolving Credit Advances to Borrower together with interest thereon as
prescribed in Section 1.5.  The
entire unpaid balance of the Revolving Loan and all other non-contingent
Obligations shall be immediately due and payable in full in immediately
available funds on the Commitment Termination Date.

 

(b)           Term
Loan.

 

(i)            Subject
to the terms and conditions hereof, each Term Lender agrees to make a term loan
(collectively, the “Term Loan”) on the Closing Date to Borrower in the
original principal amount of its Term Loan Commitment.  The obligations of each Term Lender
hereunder shall be several and not joint. 
The Term Loan shall be evidenced by promissory notes substantially in
the form of Exhibit 1.1(b) (each a “Term Note” and collectively
the “Term Notes”), and, except as provided in Section 1.12,
Borrower shall execute and deliver each Term Note to the applicable Term
Lender.  Each Term Note shall represent
the obligation of Borrower to pay the amount of the applicable Term Lender’s
Term Loan Commitment, together with interest thereon as prescribed in Section
1.5.

 

(ii)           [Intentionally
Omitted]

 

2

 

(iii)          The
entire unpaid balance of the Term Loan shall be due and payable in full in
immediately available funds on the Commitment Termination Date, if not sooner
paid in full.  No payment with respect
to the Term Loan may be reborrowed.

 

(iv)          Each
payment of principal with respect to the Term Loan made pursuant to this Section
1.1(b) shall be paid to Agent for the ratable benefit of each Term Lender,
ratably in proportion to each such Term Lender’s respective Term Loan Commitment.

 

(c)           Swing
Line Facility.

 

(i)            Subject
to the terms and conditions hereof, the Swing Line Lender shall make available
from time to time until the Commitment Termination Date advances (each, a “Swing
Line Advance”) in accordance with this Section 1.1(c).  The aggregate amount of Swing Line Advances
outstanding shall not exceed at any time the lesser of (A) the Swing Line
Commitment and (B) the Maximum Amount less the sum of the outstanding balance
of the Revolving Loan at such time and the Reserves in effect at such time (“Swing
Line Availability”).  Until the
Commitment Termination Date, Borrower may from time to time borrow, repay and
reborrow under this Section 1.1(c). 
Each Swing Line Advance shall be made pursuant to a notice of Swing Line
Advance (a “Notice of Swing Line Advance”) in writing substantially in
the form of Exhibit 1.1(c)(i), delivered by Borrower to the Swing Line
Lender and Agent in accordance with this Section 1.1(c).  Any such notice must be given no later than
1:00 p.m. (New York time) on the Business Day of the proposed Swing Line
Advance.  Unless the Swing Line Lender
has received at least one Business Day’s prior written notice from Requisite
Revolving Lenders instructing it not to make a Swing Line Advance, the Swing
Line Lender shall, notwithstanding the failure of any condition precedent set
forth in Section 2.2, be entitled to fund that Swing Line Advance, and
to have such Revolving Lender make Revolving Credit Advances in accordance with
Section 1.1(c)(iii) or purchase participating interests in accordance
with Section 1.1(c)(iv). 
Notwithstanding any other provision of this Agreement or the other Loan
Documents, the Swing Line Loan shall constitute an Index Rate Loan.  Borrower shall repay the aggregate
outstanding principal amount of the Swing Line Loan upon demand therefor by
Agent.

 

(ii)           Borrower
shall execute and deliver to the Swing Line Lender a promissory note to
evidence the Swing Line Commitment. 
Such note shall be in the principal amount of the Swing Line Commitment
of the Swing Line Lender, dated the Closing Date and substantially in the form
of Exhibit 1.1(c)(ii) (the “Swing Line Note”).  The Swing Line Note shall represent the
obligation of Borrower to pay the amount of the Swing Line Commitment or, if
less, the aggregate unpaid principal amount of all Swing Line Advances made to
Borrower together with interest thereon as prescribed in Section 1.5.  The entire unpaid balance of the Swing Line
Loan and all other noncontingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date if not sooner paid in full.

 

3

 

(iii)          The
Swing Line Lender, at any time and from time to time but no less frequently than
once weekly, shall on behalf of Borrower (and Borrower hereby irrevocably
authorizes the Swing Line Lender to so act on its behalf) request each
Revolving Lender (including the Swing Line Lender) to make a Revolving Credit
Advance to Borrower (which shall be an Index Rate Loan) in an amount equal to
that Revolving Lender’s Pro Rata Share of the principal amount of the Swing
Line Loan (the “Refunded Swing Line Loan”) outstanding on the date such
notice is given.  Unless any of the
events described in Sections 8.1(h) or 8.1(i) has occurred (in
which event the procedures of Section 1.1(c)(iv) shall apply) and
regardless of whether the conditions precedent set forth in this Agreement to
the making of a Revolving Credit Advance are then satisfied, each Revolving
Lender shall disburse directly to Agent, its Pro Rata Share of a Revolving
Credit Advance on behalf of the Swing Line Lender, prior to 3:00 p.m. (New York
time), in immediately available funds on the Business Day next succeeding the
date that notice is given.  The proceeds
of the Revolving Credit Advances referred to in the immediately preceding
sentence shall be immediately paid to the Swing Line Lender and applied to
repay the Refunded Swing Line Loan.

 

(iv)          If,
prior to refunding a Swing Line Loan with a Revolving Credit Advance pursuant
to Section 1.1(c)(iii), one of the events described in Sections
8.1(h) or 8.1(i) has occurred, then, subject to the provisions of Section
1.1(c)(v) below, each Revolving Lender shall, on the date such Revolving
Credit Advance was to have been made for the benefit of Borrower, purchase from
the Swing Line Lender an undivided participation interest in the Swing Line
Loan in an amount equal to its Pro Rata Share of such Swing Line Loan.  Upon request, each Revolving Lender shall
promptly transfer to the Swing Line Lender, in immediately available funds, the
amount of its participation interest.

 

(v)           Each
Revolving Lender’s obligation to make Revolving Credit Advances in accordance
with Section 1.1(c)(iii) and to purchase participation interests in
accordance with Section 1.1(c)(iv) shall be absolute and unconditional
and shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right that such Revolving Lender may
have against the Swing Line Lender, Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of any Default or Event of
Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement at any time or (D) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.  If any Revolving Lender
does not make available to Agent or the Swing Line Lender, as applicable,  the amount required pursuant to Sections
1.1(c)(iii) or 1.1(c)(iv), as the case may be, the Swing Line Lender
shall be entitled to recover such amount on demand from such Revolving Lender,
together with interest thereon for each day from the date of non-payment until
such amount is paid in full at the Federal Funds Rate for the first two
Business Days and at the Index Rate thereafter.

 

(d)           Reliance
on Notices.  Agent shall be entitled
to rely upon, and shall be fully protected in relying upon, any Notice of
Revolving Credit Advance, Notice of Swing Line Advance, Notice of
Conversion/Continuation or similar notice believed by Agent to be genuine.  Agent may assume that each Person executing
and delivering any

 

4

 

notice
in accordance herewith was duly authorized, unless the responsible individual
acting thereon for Agent has actual knowledge to the contrary.

 

1.2           [Intentionally
Omitted].

 

1.3           Prepayments.

 

(a)           Voluntary
Prepayments.  Borrower may at any
time on at least three (3) days’ prior notice to Agent and Lenders voluntarily
prepay all of the Term Loan.  In
addition, subject to the following sentence, Borrower may at any time on at
least three (3) days’ prior written notice to Agent and Lenders voluntarily
prepay part of the Term Loan; provided that any such partial prepayment
shall be in a minimum amount of $500,000 and integral multiples of $250,000 in
excess of such amount.  Notwithstanding
the preceding sentence, if Borrower has given notice of a voluntary partial
prepayment of the Term Loan (such notice, a “Voluntary Partial Prepayment
Notice”), any Term Lender holding a portion of the Term Loan may elect, by
notice to Agent prior to the prepayment date, to decline the amount of such
voluntary partial prepayment of the Term Loan to the extent it would be applied
to prepay the portion of the Term Loan held by such declining Term Lender
assuming none of the Term Lenders declined such prepayment (the aggregate
amount, if any, so declined by the declining Term Lenders in respect of a Voluntary
Partial Prepayment Notice, the “Declined Voluntary Prepayment Amount”),
in which case (i) in respect of a Voluntary Partial Prepayment Notice Borrower
may only prepay the Term Loan, and shall prepay the Term Loan, in each case in
an amount equal to the amount of the voluntary partial prepayment specified in
such Voluntary Partial Prepayment Notice less the Declined Voluntary Prepayment
Amount in respect thereof and (ii) the amount prepaid shall be applied to the
Term Loan pursuant to Section 1.11(a) for the ratable benefit of each
Term Lender that did not decline such prepayment.  In addition, Borrower may at any time on at least 10 days’ prior
written notice to Agent terminate the Revolving Loan Commitment; provided
that upon such termination, all Loans and other Obligations shall be
immediately due and payable in full. 
Any such voluntary prepayment and any such termination of the Revolving
Loan Commitment must be accompanied by the payment of the Fee required by Section
1.9(c), if any, plus the payment of any LIBOR funding breakage costs in
accordance with Section 1.13(b). 
Upon any such termination of the Revolving Loan Commitment, Borrower’s
right to request Revolving Credit Advances shall simultaneously be terminated.

 

(b)           Mandatory
Prepayments.

 

(i)            If
at any time the sum of the outstanding balances of the Revolving Loan and the
Swing Line Loan exceed the Maximum Amount less the Reserves as then in effect,
Borrower shall immediately repay the aggregate outstanding Revolving Credit
Advances to the extent required to eliminate such excess.

 

(ii)           No
later than the Business Day following receipt by any Credit Party of Net Cash
Proceeds of any Disposition (other than Excluded Disposition Proceeds),
Borrower shall prepay the Loans in amount equal to the Net Cash Proceeds of
such Disposition; provided, however, that so long as (a) no
Default or Event of Default

 

5

 

has
occurred and is continuing, (b) the Net Cash Proceeds of all Dispositions
(other than Excluded Disposition Proceeds) from the first day of the then
current Fiscal Year through the applicable date of determination do not exceed
$1,000,000 in the aggregate for all Credit Parties combined and (c) the
applicable Credit Party shall have delivered to Agent written notice on or
prior to the fifth Business Day after such Disposition (if such Disposition is
a Condemnation) or on or prior to the third Business Day prior to the
consummation of such Disposition (if such Disposition is not a Condemnation) of
its election to allocate all or a portion of the Net Cash Proceeds of such
Disposition to reinvest in capital assets used or to be used in the businesses
of the Credit Parties of the type engaged in by the Credit Parties as of the
Closing Date or businesses reasonably related thereto (a “Reinvestment
Transaction”), the applicable Credit Party may apply all or a portion of
such Net Cash Proceeds to such Reinvestment Transaction within 180 days
following such Disposition; provided, further, that (1) any portion
of such Net Cash Proceeds that Borrower does not so elect in such written
notice to allocate to such Reinvestment Transaction shall be applied to prepay
the Loans in accordance with this Section 1.3(b)(ii) no later than the
Business Day following receipt thereof by Agent; (2) until such Reinvestment
Transaction is consummated, the amount of such Net Cash Proceeds allocated to
such Reinvestment Transaction shall either be (x) deposited in a cash
collateral account held by Agent or (y) applied to reduce the outstanding
principal balance of the Revolving Loan (which application shall not result in
a permanent reduction of the Revolving Loan Commitment) and upon such
application to the Revolving Loan Agent shall establish a reserve against the
Borrowing Availability in an amount equal to the amount of such proceeds so
applied; (3) Borrower may request a Revolving Credit Advance or release from
such cash collateral account, as applicable, to fund such Reinvestment
Transaction and so long as the conditions in Section 2.2 have been met,
Revolving Lenders shall make such Revolving Credit Advance or Agent shall
release funds from such cash collateral account to fund such Reinvestment
Transaction; (4) in the event such Net Cash Proceeds have been applied against
the Revolving Loan, the Reserve established with respect to such Net Cash
Proceeds shall be reduced by the amount of such Revolving Credit Advance; and
(5) if such Reinvestment Transaction is not consummated within 180 days
following such Disposition or to the extent any portion of such Net Cash
Proceeds allocated to such Reinvestment Transaction are not applied to such
Reinvestment Transaction within 180 days following such Disposition, (A) such
Net Cash Proceeds then held in such account shall immediately be applied to
prepay the Loans in accordance with this Section 1.3(b)(ii) and (B) any
Reserve allocated to such Reinvestment Transaction shall be immediately
utilized through the borrowing by Borrower of a Revolving Credit Advance, the
proceeds of which shall be applied to the prepayment of the Loans in accordance
with this Section 1.3(b)(ii).

 

(iii)          No
later than the Business Day following receipt by any Credit Party of Net Cash
Proceeds of any Debt Issuance (other than Excluded Debt Issuance Proceeds) or
any Stock Issuance (other than Excluded Stock Issuance Proceeds), Borrower
shall prepay the Loans in an amount equal to such Net Cash Proceeds.

 

(iv)          On
each IDS Payment Date on which the payment of cash interest on one or more
series or issues of IDS Subordinated Notes is then prohibited pursuant to Section
6.14 (such one or more series or issues of IDS Subordinated Notes,

 

6

 

the “Subject
IDS Subordinated Notes”), Borrower shall prepay the Loans in an aggregate
amount equal to the lesser of:

 

(A) 100% of the amount of
(I) Distributable Cash as of such IDS Payment Date minus (II) the aggregate
amount of cash dividends paid by Borrower on its common stock and cash interest
payments made by Borrower on the Subordinated Debt in accordance with Sections
6.14(e) and (f) during the period from January 1, 2005 through the
end of the Fiscal Quarter most recently ended prior to such IDS Payment Date,
and

 

(B) 60% of the
Consolidated Interest Expense (excluding any PIK Amounts) accrued to and
including such IDS Payment Date from the immediately preceding IDS Payment Date
which is attributable to such Subject IDS Subordinated Notes.

 

(v)           On
each IDS Payment Date on which the payment of cash dividends on Borrower’s
Class A common stock is then prohibited pursuant to Section 6.14,
Borrower shall prepay the Loans in an aggregate amount equal to:

 

(A) 75% of the amount of
Excess Cash as of such IDS Payment Date, minus

 

(B) the sum of (1) the
aggregate amount of cash dividends paid by Borrower on its Class A common stock
in accordance with Section 6.14(e) during the period from January 1,
2005 through the end of the Fiscal Quarter most recently ended prior to such
IDS Payment Date and (2) the amount, if any, of any mandatory prepayment of the
Loans on such IDS Payment Date pursuant to Section 1.3(b)(iv).

 

(vi)          Borrower
shall prepay the Loans from insurance and condemnation proceeds in accordance
with Section 5.4(c) and the Mortgages, respectively.

 

The
Agent shall give prompt notice to each Lender of the amount of each mandatory
prepayment made by Borrower under this Section 1.3(b).  Notwithstanding the foregoing, if the amount
of any mandatory prepayment made by Borrower under this Section 1.3(b)
(other than Section 1.3(b)(i)) shall be for less than all of the Term
Loan (a “Mandatory Partial Term Prepayment” and the amount thereof the “Mandatory
Partial Term Prepayment Amount”), any Term Lender holding a portion of the
Term Loan may elect, by notice to Agent promptly following such Lender’s
receipt of notice thereof pursuant to the preceding sentence, to decline to
receive its ratable share of such Mandatory Partial Term Prepayment Amount, in
which case the Mandatory Partial Term Prepayment Amount shall be applied to the
Term Loan pursuant to Section 1.11(a) for the ratable benefit of each
Term Lender that did not decline such prepayment.

 

(c)           Application
of Certain Mandatory Prepayments. 
Any prepayments made by Borrower pursuant to Sections 1.3(b)(ii),
(b)(iii), (b)(iv) or (b)(v) above, and any prepayments from insurance and
condemnation proceeds in accordance with Section 5.4(c)

 

7

 

and the
Mortgage(s), respectively, shall be applied as follows:  first, to Fees and reimbursable
expenses of Agent then due and payable pursuant to any of the Loan Documents; second,
to interest then due and payable on the Loans, ratably in proportion to the
interest accrued as to each Loan; and third, to prepay the outstanding
principal balance of the Loans, ratably in proportion to the outstanding
principal balance of each Loan.  Neither
the Revolving Loan Commitment nor the Swing Line Commitment shall be
permanently reduced by the amount of any such prepayments.

 

(d)           Intentionally
Omitted.

 

(e)           No
Implied Consent.  Nothing in this Section
1.3 shall be construed to constitute Agent’s or any Lender’s consent to any
transaction that is not permitted by other provisions of this Agreement or the
other Loan Documents.

 

1.4           Use of
Proceeds.  Borrower shall
utilize the proceeds of the Term Loan, the Revolving Loan and the Swing Line
Loan solely for the Refinancing (and to pay any related transaction expenses),
and for the financing of Borrower’s ordinary working capital and general
corporate purposes, including Permitted Acquisitions, Restricted Payments and
Consolidated Capital Expenditures, in each case to the extent not prohibited by
this Agreement.  Disclosure Schedule
(1.4) contains a description of Borrower’s sources and uses of funds as of
the Closing Date, including Loans to be made on that date, and a funds flow
memorandum detailing how funds from each source are to be transferred to
particular uses.

 

1.5           Interest and Applicable Margins.

 

(a)           Borrower
shall pay interest to Agent, for the ratable benefit of Lenders in accordance
with the various Loans being made by each Lender, in arrears on each applicable
Interest Payment Date, at the following rates: 
(i) with respect to the Revolving Credit Advances, the Index Rate plus
the Applicable Revolver Index Margin per annum or, at the election of Borrower,
the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum,
based on the aggregate Revolving Credit Advances outstanding from time to time;
(ii) with respect to the Term Loan, the Index Rate plus the Applicable Term
Loan Index Margin per annum or, at the election of Borrower, the applicable
LIBOR Rate plus the Applicable Term Loan LIBOR Margin per annum; and (iii) with
respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver Index
Margin per annum.

 

The Applicable Margins are as follows:

 

	
  Applicable
  Revolver Index Margin

  	
   

  	
  3.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable
  Revolver LIBOR Margin

  	
   

  	
  4.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable Term
  Loan Index Margin

  	
   

  	
  3.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable Term
  Loan LIBOR Margin

  	
   

  	
  4.00

  	
  %

  

 

8

 

(b)           If
any payment on any Loan becomes due and payable on a day other than a Business
Day, the maturity thereof will be extended to the next succeeding Business Day
(except as set forth in the definition of LIBOR Period) and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension.

 

(c)           All
computations of Fees calculated on a per annum basis and interest shall be made
by Agent on the basis of a 360-day year (or, in the case of interest on Index
Rate Loans, a 365 or 366 day year, as applicable), in each case for the actual
number of days occurring in the period for which such interest and Fees are
payable.  The Index Rate is a floating
rate determined for each day.  Each
determination by Agent of an interest rate and Fees hereunder shall be final,
binding and conclusive on Borrower, absent manifest error.

 

(d)           So
long as an Event of Default has occurred and is continuing, the interest rates
applicable to the Loans shall be increased by two percentage points (2%) per
annum above the rates of interest otherwise applicable hereunder (“Loan
Default Rate”), and all outstanding Loans shall bear interest at the Loan
Default Rate applicable to such Loans. 
Interest at the Loan Default Rate shall accrue from the initial date of
such Event of Default until that Event of Default is cured or waived and shall
be payable upon demand.  Any other
amounts payable hereunder (other than the Loans) or the other Loan Documents
that are not paid when due shall bear interest, from the date when due until
paid in full, at a rate per annum equal to the Index Rate plus the Applicable
Term Loan Index Margin plus two percentage points (2%).

 

(e)           So
long as no Event of Default has occurred and is continuing, Borrower shall have
the option to (i) request that any Revolving Credit Advance be made as a LIBOR
Loan, (ii) convert at any time all or any part of outstanding Loans (other than
the Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert any
LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs in
accordance with Section 1.13(b) if such conversion is made prior to the
expiration of the LIBOR Period applicable thereto, or (iv) continue all or any
portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan upon the
expiration of the applicable LIBOR Period and the succeeding LIBOR Period of
that continued Loan shall commence on the first day after the last day of the
LIBOR Period of the Loan to be continued. 
Any Loan or group of Loans having the same proposed LIBOR Period to be
made or continued as, or converted into, a LIBOR Loan must be in a minimum
amount of $1,000,000 and integral multiples of $500,000 in excess of such
amount.  Any such election must be made
by 11:00 a.m. (New York time) on the third Business Day prior to (1) the
date of any proposed Advance which is to bear interest at the LIBOR Rate, (2)
the end of each LIBOR Period with respect to any LIBOR Loans to be continued as
such, or (3) the date on which Borrower wishes to convert any Index Rate
Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in such
election.  If no election is received
with respect to a LIBOR Loan by 11:00 a.m. (New York time) on the third
Business Day prior to the end of the LIBOR Period with respect thereto (or an
Event of Default has occurred and is continuing), that LIBOR Loan shall be
converted to an Index Rate Loan at the end of its LIBOR Period.  Borrower must make such election by notice
to Agent in writing,

 

9

 

by
telecopy or overnight courier.  In the
case of any conversion or continuation, such election must be made pursuant to
a written notice (a “Notice of Conversion/Continuation”) in the form of Exhibit
1.5(e).

 

(f)            Notwithstanding
anything to the contrary set forth in this Section 1.5, if a court
of competent jurisdiction determines in a final order that the rate of interest
payable hereunder exceeds the highest rate of interest permissible under law
(the “Maximum Lawful Rate”), then so long as the Maximum Lawful Rate
would be so exceeded, the rate of interest payable hereunder shall be equal to
the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had
the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of interest and in the manner provided in Sections 1.5(a)
through (e), unless and until the rate of interest again exceeds the
Maximum Lawful Rate, and at that time this paragraph shall again apply.  In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate.  If the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made.  If,
notwithstanding the provisions of this Section 1.5(f), a court of
competent jurisdiction shall finally determine that a Lender has received
interest hereunder in excess of the Maximum Lawful Rate, Agent shall, to the
extent permitted by applicable law, promptly apply such excess in the order
specified in Section 1.11 and thereafter shall refund any excess to
Borrower or as a court of competent jurisdiction may otherwise order.

 

1.6           [Intentionally Omitted].

 

1.7           [Intentionally Omitted].

 

1.8           Cash
Management Systems.  On or prior
to the Closing Date, Borrower will establish and will maintain until the
Termination Date, the cash management systems described in Annex C (the
“Cash Management Systems”).

 

1.9           Fees.

 

(a)           Borrower
shall pay to GE Capital, individually, the Fees specified in the GE Capital Fee
Letter at the times specified for payment therein. On the Closing Date,
Borrower shall pay to each Lender the Fees specified in the Lender Fee Letter.

 

(b)           As
additional compensation for the Revolving Lenders, Borrower shall pay to Agent,
for the ratable benefit of such Lenders, in arrears, on each Interest Payment
Date for Index Rate Loans prior to the Commitment Termination Date and on

 

10

 

the
Commitment Termination Date, a Fee for Borrower’s non-use of available funds in
an amount equal to either:

 

(i)            where
the average daily closing principal balances of the Revolving Loan and Swing
Line Loan outstanding during such period is less than fifty percent (50%) of
the Maximum Amount, three-fourths of one percent (0.75%) per annum (calculated
on the basis of a 360 day year for actual days elapsed) of the difference
between (x) the Maximum Amount (as in effect from time to time) and (y) the
average for the period of the daily closing balance of the Revolving Loan and
Swing Line Loan outstanding during the period for which such Fee is due;

 

(ii)           where
the average daily closing principal balances of the Revolving Loan and Swing
Line Loan outstanding during such period is equal to or greater than fifty
percent (50%) of the Maximum Amount, one-half of one percent (0.50%) per annum
(calculated on the basis of a 360 day year for actual days elapsed) of the
difference between (x) the Maximum Amount (as in effect from time to time) and
(y) the average for the period of the daily closing balances of the Revolving
Loan and Swing Line Loan outstanding during the period for which such Fee is
due.

 

(c)           If
Borrower voluntarily prepays all or any portion of the Term Loan pursuant to Section
1.3(a), Borrower shall pay to Agent, for the benefit of the Term Lenders
being prepaid, as liquidated damages and compensation for the costs of being
prepared to make funds available hereunder an amount equal to the Applicable
Percentage (as defined below) multiplied by the principal amount of the Term
Loan so prepaid.  As used herein, the
term “Applicable Percentage” shall mean (x) three percent (3%), in the
case of a prepayment on or prior to the first anniversary of the Closing Date,
(y) two percent (2%), in the case of a prepayment after the first anniversary
of the Closing Date but on or prior to the second anniversary thereof, and (z)
one percent (1%), in the case of a prepayment after the second anniversary of
the Closing Date but on or prior to the third anniversary thereof.  After the third anniversary of the Closing Date,
the Applicable Percentage shall mean zero percent.  The Credit Parties agree that the Applicable Percentages are a
reasonable calculation of Lenders’ lost profits in view of the difficulties and
impracticality of determining actual damages resulting from an early
termination of the Commitments.

 

(d)           [Intentionally
Omitted]

 

1.10         Receipt of
Payments.  Borrower shall
make each payment under this Agreement not later than 2:00 p.m. (New York time)
on the day when due in immediately available funds in Dollars to the Collection
Account.  For purposes of computing
interest and Fees and determining Borrowing Availability as of any date, all
payments shall be deemed received on the Business Day on which immediately
available funds therefor are received in the Collection Account prior to 2:00
p.m. New York time.  Payments received
after 2:00 p.m. New York time on any Business Day or on a day that is not a
Business Day shall be deemed to have been received on the following Business
Day.

 

11

 

1.11         Application and Allocation of
Payments.

 

(a)           So
long as no Event of Default has occurred and is continuing, (i) payments
matching specific scheduled payments then due shall be applied to those
scheduled payments; (ii) voluntary prepayments shall be applied in accordance
with the provisions of Section 1.3(a); and (iii) mandatory prepayments
shall be applied as set forth in Section 1.3(c).  All payments and prepayments applied to a
particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its applicable Pro Rata Share, except as otherwise
provided in Section 1.3(a) and Section 1.3(b) if a Term Lender
declines a partial prepayment of the Term Loan.  As to any other payment, and as to all payments made when an
Event of Default has occurred and is continuing or following the Commitment
Termination Date, Borrower hereby irrevocably waives the right to direct the
application of any and all payments received from or on behalf of Borrower and
unless expressly stated otherwise in this Agreement, payments shall be applied
to amounts then due and payable in the following order:  (1) to Fees and Agent’s expenses
reimbursable hereunder; (2) to interest on the Loans, ratably in proportion to
the interest accrued as to each Loan; (3) to principal payments on the Loans,
ratably in proportion to the outstanding principal balance of each Loan; and
(4) to all other Obligations including expenses of Lenders to the extent
reimbursable under Section 11.3.

 

(b)           Agent
is authorized to, and at its sole election may, charge to the Revolving Loan
balance on behalf of Borrower and cause to be paid all Fees, expenses, Charges,
costs (including insurance premiums in accordance with Section 5.4(a))
and interest and principal, other than principal of the Revolving Loan, owing
by Borrower under this Agreement or any of the other Loan Documents if and to
the extent Borrower fails to pay promptly any such amounts as and when due,
even if the amount of such charges would exceed Borrowing Availability at such
time.  At Agent’s option and to the
extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.

 

1.12         Loan
Account and Accounting. 
Agent shall maintain a loan account (the “Loan Account”) on its
books to record:  all Advances and the
Term Loan, all payments made by Borrower, and all other debits and credits as
provided in this Agreement with respect to the Loans or any other Obligations.  All entries in the Loan Account shall be
made in accordance with Agent’s customary accounting practices as in effect
from time to time. The balance in the Loan Account, as recorded on Agent’s most
recent printout or other written statement, shall, absent manifest error, be
presumptive evidence of the amounts due and owing to Agent and Lenders by
Borrower; provided that any failure to so record or any error in so
recording shall not limit or otherwise affect Borrower’s duty to pay the
Obligations.  Agent shall render to
Borrower a monthly accounting of transactions with respect to the Loans setting
forth the balance of the Loan Account for the immediately preceding month.  Unless Borrower notifies Agent in writing of
any objection to any such accounting (specifically describing the basis for
such objection), within 30 days after the date thereof, each and every such
accounting shall, absent manifest error, be deemed final, binding and
conclusive on Borrower in all respects as to all matters reflected
therein.  Only those items expressly
objected to in such notice shall be deemed to be disputed by Borrower.  Notwithstanding any provision

 

12

 

herein contained to the contrary, any Lender may elect
(which election may be revoked) to dispense with the issuance of Notes to that
Lender and may rely on the Loan Account as evidence of the amount of
Obligations from time to time owing to it.

 

1.13         Indemnity.

 

(a)           Each
Credit Party that is a signatory hereto shall jointly and severally indemnify
and hold harmless each of Agent, Lenders and their respective Affiliates, and
each such Person’s respective officers, directors, employees, attorneys, agents
and representatives (each, an “Indemnified Person”), from and against
any and all suits, actions, proceedings, claims, damages, losses, liabilities
and expenses (including reasonable attorneys’ fees and disbursements and other
costs of investigation or defense, including those incurred upon any appeal)
that may be instituted or asserted by any third party or by any Credit Party
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the
other Loan Documents and the administration of such credit, and in connection
with or arising out of the transactions contemplated hereunder and thereunder
and any actions or failures to act in connection therewith, including any and
all Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, “Indemnified Liabilities”); provided,
that no such Credit Party shall be liable for any indemnification to an
Indemnified Person to the extent that any such suit, action, proceeding, claim,
damage, loss, liability or expense results from (i) that Indemnified Person’s
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction or (ii) any dispute among any of Agent and the Lenders
which dispute does not involve any Credit Party.  NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY
OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.

 

(b)           To
induce Lenders to provide the LIBOR Rate option on the terms provided herein,
if (i) any LIBOR Loans are repaid in whole or in part prior to the last day of
any applicable LIBOR Period (whether that repayment is made pursuant to any
provision of this Agreement or any other Loan Document or occurs as a result of
acceleration, by operation of law or otherwise); (ii) Borrower shall default in
payment when due of the principal amount of or interest on any LIBOR Loan;
(iii) Borrower shall refuse to accept any borrowing of, or shall request a
termination of, any borrowing of, conversion into or continuation of, LIBOR
Loans after Borrower has given notice requesting the same in accordance
herewith; or (iv) Borrower shall fail to make any prepayment of a LIBOR Loan after
Borrower has given a notice thereof in accordance herewith, then Borrower shall
indemnify and hold harmless each Lender from and against all losses, costs and
expenses resulting from or arising from any of the foregoing.  Such

 

13

 

indemnification
shall include any loss (excluding loss of margin) or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate deposits
from which such funds were obtained. 
For the purpose of calculating amounts payable to a Lender under this Section
1.13(b), each Lender shall be deemed to have actually funded its relevant
LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate
in an amount equal to the amount of that LIBOR Loan and having a maturity
comparable to the relevant LIBOR Period; provided, that each Lender may
fund each of its LIBOR Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this subsection.  As promptly as
practicable under the circumstances, each Lender shall provide Borrower with
its written calculation of all amounts payable pursuant to this Section
1.13(b), and such calculation shall be binding on the parties hereto unless
Borrower shall object in writing within ten (10) Business Days of receipt
thereof, specifying the basis for such objection in detail.

 

1.14         Access. 
Each Credit Party that is a party hereto shall, during normal business
hours, from time to time upon reasonable prior notice as frequently as Agent
reasonably determines to be appropriate: 
(a) provide Agent and any of its officers, employees and agents access
during normal business hours to its properties, facilities and senior
management employees (including officers) of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to
inspect and make extracts from any Credit Party’s books and records and to
audit in scope and manner consistent with lending industry practices any Credit
Party’s books and records, and (c) permit Agent, and its officers, employees
and agents, to inspect, review, evaluate and make test verifications and counts
of the Accounts, Inventory and other Collateral of any Credit Party (collectively,
an “Inspection”); provided that Borrower shall be obligated to
reimburse Agent for its costs and expenses incurred in connection with an
Inspection only (i) for each Inspection commenced while an Event of Default has
occurred and is continuing and (ii) for one Inspection per year commenced while
no Event of Default has occurred and is continuing.  If an Event of Default has occurred and is continuing or if
access is necessary to preserve or protect the Collateral as reasonably
determined by Agent, each such Credit Party shall provide such access to Agent
and to each Lender at all times and without advance notice.  Furthermore, so long as any Event of Default
has occurred and is continuing, Borrower shall provide Agent and each Lender
with access to its suppliers and customers. Each Credit Party shall make
available to Agent and its counsel, as promptly as reasonably practical under
the circumstances, originals or copies of all books and records that Agent may
reasonably request.  Each Credit Party
shall deliver any document or instrument necessary for Agent, as it may from
time to time reasonably request, to obtain records from any service bureau or
other Person that maintains records for such Credit Party, and shall maintain
duplicate records or supporting documentation on media, including computer
tapes and discs owned by such Credit Party. 
Agent will give Lenders at least five (5) days’ prior written notice of
regularly scheduled audits. 
Representatives of other Lenders may accompany Agent’s representatives
on regularly scheduled audits at no charge to Borrower.

 

14

 

1.15         Taxes.

 

(a)           Any
and all payments by Borrower hereunder or under the Notes shall be made, in
accordance with this Section 1.15, free and clear of and without
deduction for any and all present or future Taxes.  If Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder or under the Notes, (i) the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 1.15) Agent or Lenders, as applicable, receive an
amount equal to the sum they would have received had no such deductions been
made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay
the full amount deducted to the relevant taxing or other authority in
accordance with applicable law.  Within
thirty (30) days after the date of any payment of Taxes, Borrower shall furnish
to Agent the original or a certified copy of a receipt evidencing payment
thereof.  Agent and Lenders shall not be
obligated to return or refund any amounts received pursuant to this Section.

 

(b)           Each
Credit Party that is a signatory hereto shall jointly and severally indemnify
and, within ten (10) days of demand therefor, pay Agent and each Lender for the
full amount of Taxes (including any Taxes imposed by any jurisdiction on
amounts payable under this Section 1.15) paid by Agent or such Lender,
as appropriate, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted.

 

(c)           Each
Lender organized under the laws of a jurisdiction outside the United States (a
“Foreign Lender”) as to which payments to be made under this Agreement
or under the Notes are exempt from United States withholding tax under an
applicable statute or tax treaty shall provide to Borrower and Agent a properly
completed and executed IRS Form W-8ECI or Form W-8BEN or other applicable form,
certificate or document prescribed by the IRS or the United States certifying
as to such Foreign Lender’s entitlement to such exemption (a “Certificate of
Exemption”).  Any foreign Person
that seeks to become a Lender under this Agreement shall provide a Certificate
of Exemption to Borrower and Agent prior to becoming a Lender hereunder.  No foreign Person may become a Lender
hereunder if such Person fails to deliver a Certificate of Exemption in advance
of becoming a Lender.

 

1.16         Capital Adequacy; Increased Costs;
Illegality.

 

(a)           If
any Lender shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital adequacy,
reserve requirements or similar requirements or compliance by any Lender with
any request or directive from any Governmental Authority charged with the
administration or interpretation thereof or otherwise having jurisdiction in
respect thereof regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted
after the Closing Date, increases or would have the effect of increasing the
amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender’s capital as a
consequence of its obligations hereunder, then Borrower shall from time to time
upon demand by such Lender (with a copy of such demand to Agent) pay to Agent,
for the account of such Lender, additional amounts sufficient to compensate
such Lender

 

15

 

for such reduction. 
A certificate as to the amount of that reduction and showing the basis
of the computation thereof submitted by such Lender to Borrower and to Agent
shall, absent manifest error, be final, conclusive and binding for all
purposes.

 

(b)           If,
due to either (i) the introduction of or any change in any law or
regulation (or any change in the interpretation thereof by any Governmental
Authority charged with the administration or interpretation thereof or
otherwise having jurisdiction in respect thereof) or (ii) the compliance
with any guideline or request from any Governmental Authority (whether or not
having the force of law), in each case adopted after the Closing Date, there
shall be any increase in the cost to any Lender of agreeing to make or making,
funding or maintaining any LIBOR Loan, then Borrower shall from time to time,
upon demand by such Lender (with a copy of such demand to Agent), pay to Agent
for the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost.  A
certificate as to the amount of such increased cost, submitted to Borrower and
to Agent by such Lender, shall be conclusive and binding on Borrower for all
purposes, absent manifest error.  Each
Lender agrees that, as promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any such increased cost,
the affected Lender shall, to the extent not inconsistent with such Lender’s
internal policies of general application, use reasonable commercial efforts to
minimize costs and expenses incurred by it and payable to it by Borrower pursuant
to this Section 1.16(b).  In no
event shall Borrower be obligated to compensate any Lender pursuant to this Section
1.16(b) for any increased cost incurred by such Lender more than 180 days
prior to the date that such Lender notifies Borrower of such Lender’s intention
to claim compensation under this Section 1.16(b) (except that, if
the circumstances referred to above which would result in any such increased
cost is retroactive, then the 180 day period referred to above shall be
extended to include the period of retroactive effect thereof).

 

(c)           Notwithstanding
anything to the contrary contained herein, if the introduction of or any change
in any law or regulation (or any change in the interpretation thereof by any
Governmental Authority charged with the administration or interpretation
thereof or otherwise having jurisdiction in respect thereof) shall make it
unlawful, or any Governmental Authority shall assert that it is unlawful, for
any Lender to agree to make or to make or to continue to fund or maintain any
LIBOR Loan, then, unless that Lender is able to make or to continue to fund or
to maintain such LIBOR Loan at another branch or office of that Lender without,
in that Lender’s opinion, adversely affecting it or its Loans or the income
obtained therefrom, on notice thereof and demand therefor by such Lender to
Borrower through Agent, (i) the obligation of such Lender to agree to make
or to make or to continue to fund or maintain LIBOR Loans shall terminate and
(ii) Borrower shall forthwith (but not earlier than the last day of the
applicable LIBOR Period, except if required by law) prepay in full all
outstanding LIBOR Loans owing to such Lender, together with interest accrued
thereon, unless Borrower, within five (5) Business Days after the
delivery of such notice and demand, converts all LIBOR Loans into Index Rate
Loans.

 

(d)           Within
fifteen (15) days after receipt by Borrower of written notice and demand from
any Lender (an “Affected Lender”) for payment of additional amounts

 

16

 

or increased costs as provided in Sections 1.15(a),
1.16(a) or 1.16(b), Borrower may, at its option, notify Agent and such
Affected Lender of its intention to replace the Affected Lender.  So long as no Default or Event of Default
has occurred and is continuing, Borrower, with the consent of Agent, may
obtain, at Borrower’s expense, a replacement Lender (“Replacement Lender”)
for the Affected Lender, which Replacement Lender must be reasonably
satisfactory to Agent.  If Borrower
obtains a Replacement Lender within 90 days following notice of its intention
to do so, the Affected Lender must sell and assign its Loans and Commitments to
such Replacement Lender for an amount equal to the principal balance of all
Loans held by the Affected Lender and all accrued interest and Fees with
respect thereto through the date of such sale; provided, that Borrower
shall have reimbursed such Affected Lender for the additional amounts or
increased costs that it is entitled to receive under this Agreement through the
date of such sale and assignment. 
Notwithstanding the foregoing, Borrower shall not have the right to
obtain a Replacement Lender if the Affected Lender rescinds its demand for
increased costs or additional amounts within five (5) Business Days following
its receipt of Borrower’s notice of intention to replace such Affected
Lender.  Furthermore, if Borrower gives
a notice of intention to replace and does not so replace such Affected Lender
within ninety (90) days thereafter, Borrower’s rights under this Section
1.16(d) shall terminate and Borrower shall promptly pay all increased costs
or additional amounts demanded by such Affected Lender pursuant to Sections
1.15(a), 1.16(a) and 1.16(b).

 

1.17         Single Loan. 
All Loans to Borrower and all of the other Obligations of Borrower
arising under this Agreement and the other Loan Documents shall constitute one
general obligation of Borrower secured, until the Termination Date, by all of
the Collateral.

 

2                                         CONDITIONS PRECEDENT

 

2.1           Conditions to the Initial Loans.  No Lender shall be obligated to make any
Loan on the Closing Date, or to take, fulfill, or perform any other action
hereunder, until the following conditions have been satisfied or provided for
in a manner satisfactory to Agent and Lenders, or waived in writing by Agent
and Lenders:

 

(a)           Credit
Agreement; Loan Documents.  This
Agreement or counterparts hereof shall have been duly executed by, and
delivered to, Borrower, each other Credit Party, Agent and Lenders; and Agent
and Lenders shall have received such documents, instruments, agreements and
legal opinions as Agent or any Lender shall reasonably request in connection
with the transactions contemplated by this Agreement and the other Loan
Documents, including all those listed in the Closing Checklist attached hereto
as Annex D, each in form and substance reasonably satisfactory to Agent
and Lenders.

 

(b)           Repayment
of Prior Lender Obligations; Satisfaction of Outstanding L/Cs.  (i) Agent and Lenders shall have received a
fully executed original of a pay-off letter reasonably satisfactory to Agent
confirming that all of the Prior Lender Obligations will be repaid in full from
the proceeds of the Term Loan and the initial Revolving Credit Advance and all
Liens upon any of the property of Borrower or any of

 

17

 

its Subsidiaries in favor of Prior Lender shall be
terminated by Prior Lender immediately upon such payment; and (ii) all letters
of credit, if any, issued or guaranteed by Prior Lender shall have been cash
collateralized.

 

(c)           Approvals.  Agent and Lenders shall have received (i)
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons including all requisite Governmental
Authorities, including the FCC, any applicable PUC and any applicable
Franchising Authority, to the execution, delivery and performance of this
Agreement and the other Loan Documents and the consummation of the Related
Transactions or (ii) an officer’s certificate in form and substance reasonably
satisfactory to Agent affirming that no such consents or approvals are
required.

 

(d)           [Intentionally
Omitted]

 

(e)           Payment
of Fees.  Borrower shall have paid
the Fees required to be paid on the Closing Date in the respective amounts
specified in Section 1.9 (including the Fees specified in the Fee
Letters), and shall have reimbursed Agent for all fees, costs and expenses of
closing presented as of the Closing Date.

 

(f)            Capital
Structure; Other Indebtedness.  The
capital structure of each Credit Party and the terms and conditions of all
Indebtedness of each Credit Party shall be as described in the Registration
Statement or otherwise acceptable to Agent and Lenders in their reasonable
discretion.

 

(g)           Due
Diligence.  Agent shall have
completed its business and legal due diligence, including a roll forward of its
previous Collateral audit with results reasonably satisfactory to Agent.

 

(h)           Consummation
of Related Transactions.  Agent and
Lenders shall have received fully executed copies of the Mid-Missouri
Acquisition Agreement and each of the Related Transactions Documents, each of
which shall be in form and substance reasonably satisfactory to Agent and
Lenders. The Mid-Missouri Acquisition and the other Related Transactions shall
have been consummated in accordance with the terms of the Mid-Missouri
Acquisition Agreement and the other Related Transactions Documents.  On the Closing Date, Borrower shall have
issued Initial IDS Securities having an aggregate issue price of not less than
$[               ]
million and Initial Non-IDS-Linked Subordinated Notes having an aggregate issue
price of not less than $[             ]
million.

 

(i)            Consolidated
Senior Leverage Ratio and Consolidated Total Leverage Ratio.   As of the Closing Date and on a Pro Forma
Basis after giving effect to the Related Transactions, the Consolidated Senior
Leverage Ratio shall not exceed 2.76 to 1.00 and the Consolidated Total
Leverage Ratio shall not exceed 5.70 to 1.00, and Agent and Lenders shall have
received a certificate of Borrower certifying thereto as required by paragraph
CC of Annex D.

 

18

 

2.2           Further Conditions to Each Loan.

 

(a)           Except
as otherwise expressly provided herein, no Revolving Lender shall be obligated
to fund any Advance, if, as of the date thereof:

 

(i)            any
representation or warranty by any Credit Party contained herein or in any other
Loan Document is untrue or incorrect as of such date (A) as stated if such
representation or warranty contains an express materiality qualification or (B)
in any material respect if such representation or warranty does not contain
such a qualification, except to the extent that such representation or warranty
expressly relates to an earlier date (in which case such representation or
warranty shall not have been untrue or incorrect as of such earlier date (A) as
stated if such representation or warranty contains an express materiality
qualification or (B) in any material respect if such representation or warranty
does not contain such a qualification) and except for changes therein expressly
permitted or expressly contemplated by this Agreement, and Requisite Revolving
Lenders have determined not to make such Advance (or have instructed the Swing
Line Lender not to make such Advance) as a result of the fact that such
representation or warranty is untrue or incorrect as aforesaid;

 

(ii)           any
event or circumstance having a Material Adverse Effect has occurred since the
date hereof and Requisite Revolving Lenders have determined not to make such
Advance (or have instructed the Swing Line Lender not to make such Advance) as
a result of the fact that such event or circumstance has occurred;

 

(iii)          any
Default or Event of Default has occurred and is continuing or would result from
the funding of such Advance, and Requisite Revolving Lenders shall have
determined not to make such Advance (or have instructed the Swing Line Lender
not to make such Advance) as a result of that Default or Event of Default; or

 

(iv)          after
giving effect to any Revolving Advance, the outstanding principal amount of the
Revolving Loan would exceed the Maximum Amount less the sum of the then
outstanding principal amount of the Swing Line Loan and the Reserves then in
effect, or after giving effect to any Swing Line Advance, the outstanding
principal amount of the Swing Line Loan would exceed the lesser of (A) the
Swing Line Commitment and (B) the Maximum Amount less the sum of the then
outstanding principal amount of the Revolving Loan and the Reserves then in
effect.

 

(b)           Except
as otherwise expressly provided herein, no Term Lender shall be obligated to
fund the Term Loan if, as of the date thereof:

 

(i)            any
representation or warranty by any Credit Party contained herein or in any other
Loan Document is untrue or incorrect as of such date (A) as stated if such
representation or warranty contains an express materiality qualification or (B)
in any material respect if such representation or warranty does not contain
such a qualification, except to the extent that such representation or warranty
expressly relates to an earlier date (in which case such representation or
warranty shall not have been untrue or incorrect as of such earlier date (A) as
stated if such representation or warranty contains an express materiality
qualification or (B) in any material respect if such representation or warranty
does not contain such a qualification) and except for changes

 

19

 

therein expressly permitted or expressly contemplated
by this Agreement, and Requisite Term Lenders have determined not to fund the
Term Loan as a result of the fact that such representation or warranty is
untrue or incorrect as aforesaid;

 

(ii)           any
event or circumstance having a Material Adverse Effect has occurred since the
date hereof and Requisite Term Lenders have determined not to fund the Term
Loan as a result of the fact that such event or circumstance has occurred; or

 

(iii)         
any Default or Event of Default has occurred and is continuing and Requisite
Term Lenders shall have determined not to fund the Term Loan as a result of
that Default or Event of Default.

 

The
request and acceptance by Borrower of the proceeds of any Advance or the Term
Loan shall be deemed to constitute, as of the date thereof, (i) a
representation and warranty by Borrower that the conditions in this Section
2.2 have been satisfied and (ii) a reaffirmation by Borrower of the
granting and continuance of Agent’s Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.

 

3                                         REPRESENTATIONS AND WARRANTIES

 

To induce Lenders
to make the Loans, the Credit Parties executing this Agreement, jointly and
severally, make the following representations and warranties to Agent and each
Lender with respect to all Credit Parties, each and all of which shall survive
the execution and delivery of this Agreement.

 

3.1           Corporate Existence; Compliance
with Law.  Each Credit Party (a)
is a corporation, limited liability company or limited partnership duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization, and, in the case of
the entities that are Credit Parties as of the Closing Date, their respective
jurisdiction of incorporation or organization are as set forth in Disclosure
Schedule (3.1); (b) is duly qualified to conduct business and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, except where the failure
to be so qualified could not reasonably be expected to have a Material Adverse
Effect; (c) has the requisite power and authority and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease and to conduct its business as now, heretofore
and proposed to be conducted; (d) subject to specific representations regarding
Environmental Laws, has all licenses, permits, consents or approvals from or
by, and has made all filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct, in each case except where the failure to do
so, individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect; (e) is in compliance with its charter and bylaws or
partnership or operating agreement, as applicable; and (f) subject to specific
representations set forth herein regarding ERISA, Environmental Laws, FCC, tax
and other laws, is in compliance with all applicable provisions of law and
regulation, except where the failure to comply, individually or in

 

20

 

the aggregate, could not
reasonably be expected to have a Material Adverse Effect.  Each Credit Party has all Communications
Licenses and Governmental Authorizations and has filed all required federal and
state applications and notifications (together with the Communications Licenses
and Governmental Authorizations, the “Telecommunications Approvals”)
necessary for the operation of their respective currently conducted
Telecommunications Businesses in the United States, except for those
Telecommunications Approvals the absence of which, individually or in the
aggregate, could not reasonably be expect to have a Material Adverse
Effect.  As of the Closing Date, Disclosure
Schedule (3.1) correctly lists (i) all such Telecommunications Approvals;
(ii) the geographical area to which each such Telecommunications Approval relates;
(iii) the Governmental Authority that issued each such Telecommunications
Approval; (iv) the expiration date, if any, of each such Telecommunications
Approval; and (v) if not issued in the name of a Credit Party, the name of the
Person in whose name such Telecommunications Approval is nominally issued.  All Telecommunications Approvals granted to
the Credit Parties remain in full force and effect, except to the extent the
failure thereof to be in full force and effect, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
and have not been revoked, suspended, canceled or modified in any adverse way,
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, and are not subject to any conditions or requirements
that are not generally imposed by the FCC, any PUC, any Franchising Authority
or any other Governmental Authority upon the holders of such Telecommunications
Approvals that, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.  Each
Credit Party has paid all Franchise, license, regulatory or other fees and
charges which have become due pursuant to any Telecommunications Approvals,
except for fees or charges the failure to pay, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.  No Credit Party is in violation
of, or in default of, in a manner that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, any applicable
telecommunications statute of the United States or any state in which it
operates, or any applicable rule, regulation or requirement of the FCC, any
PUC, any Franchising Authority, any other Governmental Authority or any
Telecommunications Approval.  There are
no pending or, to the knowledge of any Credit Party, threatened formal
complaints, proceedings, letters of inquiry, notices of apparent liability,
investigations, protests, petitions or other written objections against any
Credit Party at the FCC or the PUC or Franchising Authority of any jurisdiction
in which any Credit Party operates, except for matters which, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

3.2           Executive Offices, Collateral Locations,
FEIN.  As of the Closing Date, Disclosure
Schedule (3.2) sets forth (i) each Credit Party’s name as it appears in
official filings in the state of its incorporation or other organization, (ii)
the type of entity of each Credit Party, (iii) the organizational
identification number issued by each Credit Party’s state of incorporation or
organization or a statement that no such number has been issued, and (iv) each
Credit Party’s state of organization or incorporation.  As of the Closing Date, the current location
of each Credit Party’s chief executive office and the warehouses and premises
at which any Collateral is located are set forth in Disclosure Schedule
(3.2), and none of such locations has changed within 12 months preceding
the

 

21

 

Closing Date.  In addition, Disclosure Schedule (3.2)
lists the federal employer identification number of each Credit Party.

 

3.3           Corporate Power, Authorization, Enforceable Obligations.  The execution, delivery and performance by
each Credit Party of the Loan Documents to which it is a party and the creation
of all Liens provided for therein:  (a)
are within such Person’s power; (b) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action; (c) do not
contravene any provision of such Person’s charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any law or regulation, or
any order or decree of any court or other Governmental Authority except where
such violation, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect; (e) do not conflict with or result
in the breach or termination of, constitute a default under or accelerate or
permit the acceleration of any performance required by, any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which such
Person is a party or by which such Person or any of its property is bound; (f) do
not result in the creation or imposition of any Lien upon any of the property
of such Person other than those in favor of Agent, on behalf of itself and
Lenders, pursuant to the Loan Documents; and (g) do not require the consent or
approval of any Governmental Authority or any other Person, except (i) those
referred to in Section 2.1(c), all of which will have been duly
obtained, made or complied with prior to the Closing Date and (ii) any consents
or approvals of any Person other than a Governmental Authority where the
failure to obtain such consents or approvals of any such Person, individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.  Each of the Loan
Documents shall be duly executed and delivered by each Credit Party that is a
party thereto and each such Loan Document shall constitute a legal, valid and
binding obligation of such Credit Party enforceable against it in accordance
with its terms.

 

3.4           Financial Statements and Projections.  Except for the Projections, all Financial
Statements concerning Borrower and its Subsidiaries that are referred to below
have been prepared in accordance with GAAP consistently applied throughout the
periods covered (except as disclosed therein and except, with respect to unaudited
Financial Statements, for the absence of footnotes and normal year-end audit
adjustments) and present fairly in all material respects the financial position
of the Persons covered thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.

 

(a)           Financial
Statements.  The following Financial
Statements attached hereto as Disclosure Schedule (3.4(a)) have been
delivered to Agent and Lenders on the date hereof:

 

(i)            The
audited consolidated balance sheets of Borrower and its Subsidiaries as of
December 31, 2002 and 2003 and the related consolidated statements of
operations, members’ equity and cash flows for each of the three Fiscal Years
in the period ended December 31, 2003, certified by BDO Seidman, LLP, and the
audited consolidated balance sheet of Mid-Missouri Holding and its Subsidiaries
as of

 

22

 

December 31, 2003 and the related consolidated
statements of operations, stockholder’s equity and cash flows for the year then
ended, certified by BDO Seidman, LLP.

 

(ii)           The
unaudited consolidated balance sheet of Borrower and its Subsidiaries as of
September 30, 2004 and the related consolidated statements of operation,
members’ equity and cash flows for the previous three Fiscal Quarters then
ended.

 

(iii)          The
unaudited consolidated balance sheet of Mid-Missouri Holding and its
Subsidiaries as of September 30, 2004 and the related consolidated statements
of operations, stockholder’s equity and cash flows for the previous three
Fiscal Quarters then ended.

 

(b)           Pro
Forma.  The Pro Forma delivered on
the date hereof and attached hereto as Disclosure Schedule (3.4(b)) (i)
was prepared by Borrower giving pro forma effect to the Related Transactions,
(ii) was based on (A) the unaudited consolidated balance sheet of Borrower and
its Subsidiaries as of September 30, 2004 and (B) the unaudited consolidated
balance sheet of Mid-Missouri Holding and its Subsidiaries as of September 30,
2004, (iii) was prepared based upon substantially the same accounting
principles as those used in the preparation of the financial statements
described above and (iv) on a pro forma basis, presents fairly in all material
respects the financial position of the Persons covered thereby as at the date
thereof.

 

(c)           Projections.
The Projections included in the Confidential Information Memorandum previously
delivered to the Lenders have been prepared by Borrower in light of the past
operations of its businesses, but including future payments of known contingent
liabilities, and reflect projections giving effect to the Related Transactions
for the five (5) year period beginning on the Closing Date on a year-by-year
basis.  The Projections are based upon substantially
the same accounting principles as those used in the preparation of financial
statements described above and the estimates and assumptions stated therein,
all of which Borrower believes to be reasonable in light of then-current
conditions and then-current facts known to Borrower at the time prepared and as
of the Closing Date and, as of the Closing Date, reflect Borrower’s good faith
and reasonable estimates of the future financial performance of Borrower and of
the other information projected therein for the period set forth therein.

 

3.5           Material Adverse Effect.  Between December 31, 2003 and the Closing
Date, (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Pro Forma and
that, alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, (b) no contract, lease or other agreement or
instrument has been entered into by any Credit Party or has become binding upon
any Credit Party’s assets, and no law or regulation known by the Credit Parties
to be applicable to any Credit Party has been adopted that, individually or in
the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect, and (c) no Credit Party is in default and to the best of each
Credit Party’s knowledge no third party is in default under any material
contract, lease or other

 

23

 

agreement or instrument,
that alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect.  Between December 31,
2003 and the Closing Date no event has occurred, that alone or together with
other events, could reasonably be expected to have a Material Adverse Effect.

 

3.6           Ownership of Property; Liens.  As of the Closing Date, the real property
listed in Disclosure Schedule (3.6) constitutes all of the real property
owned, leased or subleased by any Credit Party.  Each Credit Party owns good and marketable fee simple title to
all of its owned Real Estate, and valid and marketable leasehold interests in
all of its leased Real Estate, all as described on Disclosure Schedule (3.6),
and copies of all such leases or a summary of terms thereof reasonably
satisfactory to Agent have been delivered or otherwise made available to Agent.
As of the Closing Date, all Material Real Estate is listed on Disclosure
Schedule (3.6) under the heading “Material Real Estate.”  Disclosure Schedule (3.6) further
describes any Real Estate with respect to which any Credit Party is a lessor,
sublessor or assignor as of the Closing Date. 
Each Credit Party also has good and, as applicable, marketable title to,
valid leasehold interests in, or other valid rights to use, all of its personal
property and assets.  As of the Closing
Date, none of the properties and assets of any Credit Party are subject to any
Liens other than Permitted Encumbrances, and there are no facts, circumstances
or conditions known to any Credit Party that may result in any Liens (including
Liens arising under Environmental Laws) other than Permitted Encumbrances.  Each Credit Party has received all deeds,
assignments, waivers, consents, nondisturbance and attornment or similar
agreements, bills of sale and other documents, and has duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect such Credit Party’s right, title and interest in and to all such Real
Estate and other properties and assets. 
Disclosure Schedule (3.6) also describes any purchase options,
rights of first refusal or other similar contractual rights in effect on the
Closing Date pertaining to (i) any Real Estate owned by any Credit Party or
(ii) any Credit Party’s leasehold interest in any Real Estate leased by such
Credit Party. As of the Closing Date, no portion of any Credit Party’s Real
Estate has suffered any material damage by fire or other casualty loss that has
not heretofore been repaired and restored in all material respects to its
original condition or otherwise remedied. 
As of the Closing Date, all permits required to have been issued or
appropriate to enable the Real Estate to be lawfully occupied and used for all
of the purposes for which it is currently occupied and used have been lawfully
issued and are in full force and effect, except for those permits the absence
of which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

3.7           Labor Matters. 
Except as set forth in Disclosure Schedule (3.7), as of the Closing
Date: (a) no strikes or other material labor disputes against any Credit Party
are pending or, to any Credit Party’s knowledge, threatened; (b) hours worked
by and payment made to employees of each Credit Party comply with the Fair
Labor Standards Act and each other federal, state, local or foreign law
applicable to such matters; (c) all payments due from any Credit Party for
employee health and welfare insurance have been paid or accrued as a liability
on the books of such Credit Party; (d) no Credit Party is a party to or bound
by any collective bargaining agreement, management agreement, consulting
agreement, employment agreement, bonus, restricted

 

24

 

stock, stock option, or
stock appreciation plan or agreement or any similar plan, agreement or
arrangement (and true and complete copies of any agreements described on Disclosure
Schedule (3.7) have been delivered to Agent); (e) there is no organizing
activity involving any Credit Party pending or, to any Credit Party’s
knowledge, threatened by any labor union or group of employees; (f) there are
no representation proceedings pending or, to any Credit Party’s knowledge,
threatened with the National Labor Relations Board, and no labor organization
or group of employees of any Credit Party has made a pending demand for
recognition; and (g) there are no complaints or charges against any Credit
Party pending or, to the knowledge of any Credit Party, threatened to be filed
with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by any Credit Party of any individual, except any of the foregoing
that, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

3.8           Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness.  Except as
set forth in Disclosure Schedule (3.8), as of the Closing Date, no
Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person.  As of the Closing Date, all of the issued
and outstanding Stock of each Credit Party (other than Borrower) is owned by
each of the Stockholders and in the amounts set forth in Disclosure Schedule
(3.8).  Except as set forth in Disclosure
Schedule (3.8), there are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which any Credit Party
(other than Borrower) may be required to issue, sell, repurchase or redeem any
of its Stock or other equity securities or any Stock or other equity securities
of its Subsidiaries.  All outstanding
Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing
Date (except for the Obligations) is described in Section 6.3 (including
Disclosure Schedule (6.3)).  None
of the Holding Companies has engaged in any trade or business, or has any
assets (other than Stock of its Subsidiaries and assets incidental to the
ownership thereof), or has Incurred any Indebtedness or Guaranteed Indebtedness
(other than Indebtedness permitted under Section 6.3 and Guaranteed
Indebtedness permitted under Section 6.6).

 

3.9           Government Regulation.  No Credit Party is an “investment company”
or an “affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company,” as such terms are defined in the Investment Company Act
of 1940.  No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any other federal or state statute that restricts or limits its
ability to incur Indebtedness or to perform its obligations hereunder. The
making of the Loans by Lenders to Borrower, the application of the proceeds
thereof and repayment thereof and the consummation of the Related Transactions
will not violate any provision of any such statute or any rule, regulation or
order issued by the Securities and Exchange Commission.

 

3.10         Margin Regulations.  No Credit Party is engaged, nor will it engage, principally or as
one of its important activities, in the business of extending credit for the
purpose of “purchasing” or “carrying” any “margin stock” as such terms are

 

25

 

defined in Regulation U
of the Federal Reserve Board as now and from time to time hereafter in effect
(such securities being referred to herein as “Margin Stock”).  No Credit Party owns any Margin Stock as of
the Closing Date.  None of the proceeds
of the Loans or other extensions of credit under this Agreement will be used,
directly or indirectly, for the purpose of purchasing or carrying any Margin
Stock, for the purpose of reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any Margin Stock or for any other
purpose that could reasonably be expected to cause any of the Loans or other
extensions of credit under this Agreement to be considered a “purpose credit”
within the meaning of Regulations T, U or X of the Federal Reserve Board.  No Credit Party will take or permit to be
taken any action that could reasonably be expected to cause any Loan Document
to violate any regulation of the Federal Reserve Board.

 

3.11         Taxes.  All
Federal, state and other material tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and
all Charges have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof, excluding
Charges or other amounts being contested in accordance with Section 5.2(b).  Proper and accurate amounts have been
withheld by each Credit Party from its respective employees for all periods in full
and complete compliance with all applicable federal, state, local and foreign
laws and such withholdings have been timely paid to the respective Governmental
Authorities.  Disclosure Schedule
(3.11) sets forth as of the Closing Date those taxable years for which any
Credit Party’s tax returns are currently being audited by the IRS or any other
applicable Governmental Authority and any assessments or threatened assessments
in connection with such audit, or otherwise currently outstanding.  Except as described in Disclosure
Schedule (3.11), as of the Closing Date no Credit Party has executed or
filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for
assessment or collection of any Charges. 
None of the Credit Parties and their respective predecessors are liable
for any Charges:  (a) under any
agreement (including any tax sharing agreements) or (b) to each Credit Party’s
actual knowledge, as a transferee.  As
of the Closing Date, no Credit Party has agreed or been requested to make any
adjustment under IRC Section 481(a), by reason of a change in accounting method
or otherwise, which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

3.12         ERISA.

 

(a)           Disclosure
Schedule (3.12) lists all Plans and separately identifies all Pension
Plans, including Title IV Plans, Multiemployer Plans, ESOPs and Welfare Plans,
including all Retiree Welfare Plans in effect as of the Closing Date.  Copies of all such listed Plans, together
with a copy of the latest IRS/DOL 5500-series form for each such Plan (other
than any Multiple Employer Plan or any Multiemployer Plan) have been delivered
to Agent.  Except with respect to Multiple Employer
Plans and Multiemployer Plans, each Qualified Plan has been determined by the
IRS to qualify under Section 401 of the IRC, the trusts created thereunder have
been determined to be exempt from tax under the provisions of Section 501 of
the IRC, and nothing has occurred that would cause the loss of such
qualification or tax-exempt status except where the failure to so qualify or
the loss of such qualification, individually or in the aggregate, could not

 

26

 

reasonably be expected to have a Material Adverse
Effect.  Each Plan is in compliance with
the applicable provisions of ERISA and the IRC, including the timely filing of
all reports required under the IRC or ERISA, including the statement required
by 29 CFR Section 2520.104-23 except for any noncompliance that, individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.  Neither any Credit
Party nor ERISA Affiliate has failed to make any material contribution or pay any
material amount due as required by either Section 412 of the IRC or Section 302
of ERISA or the terms of any such Plan. 
Neither any Credit Party nor ERISA Affiliate has engaged in a
“prohibited transaction,” as defined in Section 406 of ERISA and Section 4975
of the IRC, in connection with any Plan, that would subject any Credit Party to
a material tax on prohibited transactions imposed by Section 502(i) of ERISA or
Section 4975 of the IRC.

 

(b)           Except
as set forth in Disclosure Schedule (3.12):  (i) no Title IV Plan has any Unfunded Pension Liability; (ii) no
ERISA Event or event described in Section 4062(e) of ERISA with respect to any
Title IV Plan has occurred or is reasonably expected to occur in either case
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; (iii) there are no pending, or to the knowledge of any
Credit Party, threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted against any
Plan (other than a Multiple Employer Plan or a Multiemployer Plan) or any
Person as fiduciary or sponsor of any Plan (other than a Multiple Employer Plan
or a Multiemployer Plan) that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any material
liability as a result of a complete or partial withdrawal from a Multiemployer
Plan; (v) within the last five years no Title IV Plan of any Credit Party or
ERISA Affiliate has been terminated, whether or not in a “standard termination”
as that term is used in Section 404(b)(1) of ERISA, nor has any Title IV Plan
of any Credit Party or ERISA Affiliate (determined at any time within the past
five years) with Unfunded Pension Liabilities been transferred outside of the
“controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any
Credit Party or ERISA Affiliate except for any Transfer or transaction that, individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect; (vi) except in the case of any ESOP, as of the Closing Date,
Stock of all Credit Parties and their ERISA Affiliates makes up, in the
aggregate, no more than 10% of fair market value of the assets of any Plan
(other than a Multiple Employer Plan or a Multiemployer Plan) measured on the
basis of fair market value as of the latest valuation date of any Plan; and
(vii) as of the Closing Date, no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor’s Corporation or an equivalent rating by
another nationally recognized rating agency.

 

3.13         No Litigation. 
No action, claim, lawsuit, demand, investigation or proceeding is now
pending or, to the knowledge of any Credit Party, threatened against any Credit
Party, before any Governmental Authority or before any arbitrator or panel of
arbitrators (collectively, “Litigation”), (a) that challenges any
Credit Party’s right or power to enter into or perform any of its obligations
under the Loan Documents to which

 

27

 

it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) that has a reasonable risk of being determined adversely to any Credit
Party and that, if so determined, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.  Except as set forth on Disclosure
Schedule (3.13), as of the Closing Date there is no Litigation pending or
threatened that seeks damages in excess of $500,000 or injunctive relief
against, or alleges criminal misconduct of, any Credit Party.

 

3.14         Brokers.  Except
as set forth on Disclosure Schedule (3.14), no broker or finder acting
on behalf of any Credit Party or Affiliate thereof brought about the obtaining,
making or closing of the Loans or the Related Transactions, and no Credit Party
or Affiliate thereof has any obligation to any Person in respect of any
finder’s or brokerage fees in connection therewith.

 

3.15         Intellectual Property.  As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to conduct
its business as now or heretofore conducted by it or proposed to be conducted
by it, and each Patent, Trademark and registered Copyright and each License
with respect to any such Patent, Trademark or registered Copyright, is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15).  Each Credit Party
conducts its business and affairs without infringement of or interference with
any Intellectual Property of any other Person except for any such infringement
or interference that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. 
Except as set forth in Disclosure Schedule (3.15), no Credit
Party is aware of any infringement claim by any other Person with respect to
any Intellectual Property except for any infringement or interference that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

3.16         Full Disclosure; Perfection of Liens.  The information contained in this Agreement,
any of the other Loan Documents, the Financial Statements, the Collateral
Reports and the other written reports from time to time delivered hereunder or
any written statement furnished by or on behalf of any Credit Party to Agent or
any Lender pursuant to the terms of this Agreement do not contain and will not
contain any untrue statement of a material fact or omit to state a material
fact known to any Credit Party and necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made.  Projections from time to
time delivered hereunder are or will be based in all material respects upon the
estimates and assumptions stated therein, all of which Borrower believed at the
time of delivery to be reasonable in light of then current conditions and then
current facts known to Borrower as of such delivery date, and reflect
Borrower’s good faith and reasonable estimates of the future financial
performance of Borrower and of the other information projected therein for the
period set forth therein, it being understood that the Projections are not
facts and the actual performance of the entities covered by the Projections may
differ significantly from that projected. 
The Liens granted to Agent, on behalf of itself and Lenders, pursuant to
the Collateral Documents will at all times be fully perfected first priority
Liens in and to the Collateral described therein, subject, as to priority, only
to Permitted Encumbrances.

 

28

 

3.17         Environmental Matters.

 

(a)           Except
as set forth in Disclosure Schedule (3.17), as of the Closing Date:  (i) the Real Estate is free of contamination
from any Hazardous Material except for such contamination that would not
materially and adversely impact any Credit Party’s ability to use such Real
Estate in the operation of its business and that would not result in
Environmental Liabilities that, individually or in the aggregate, could
reasonably be expected to exceed $500,000; (ii) no Credit Party has caused or
suffered to occur any Release of Hazardous Materials on, at, in, under, above,
to, from or about any of its Real Estate that would result in Environmental
Liabilities that, individually or in the aggregate, could reasonably be
expected to exceed $500,000; (iii) the Credit Parties are in compliance with
all Environmental Laws, except for such noncompliance that would not result in
Environmental Liabilities which, individually or in the aggregate, could
reasonably be expected to exceed $500,000; (iv) the Credit Parties have
obtained, and are in compliance with, all Environmental Permits required by
Environmental Laws for the operations of their respective businesses as
presently conducted or as proposed to be conducted, except where the failure to
so obtain or comply with such Environmental Permits would not result in
Environmental Liabilities that, individually or in the aggregate, could
reasonably be expected to exceed $500,000, and to the knowledge of the Credit Parties
all such Environmental Permits are valid, uncontested and in good standing; (v)
no Credit Party has actual knowledge of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of any Credit Party which, individually or in the
aggregate, could reasonably be expected to exceed $500,000, and no Credit Party
has knowingly permitted any current or former tenant or occupant of the Real
Estate to engage in any such operations; (vi) there is no Litigation arising
under or related to any Environmental Laws, Environmental Permits or Hazardous
Material that seeks damages, penalties, fines, costs or expenses in excess of
$500,000 or injunctive relief against, or that alleges criminal misconduct by,
any Credit Party; (vii) no written notice has been received by any Credit Party
identifying it as a “potentially responsible party” or requesting information
under CERCLA or analogous state statutes, and to the actual knowledge of the
Credit Parties, there are no facts, circumstances or conditions that may result
in any Credit Party being identified as a “potentially responsible party” under
CERCLA or analogous state statutes; and (viii) the Credit Parties have provided
to Agent copies of all environmental reports, reviews and audits and all
material written information pertaining to actual or potential Environmental
Liabilities, in each case if prepared by or at the instruction of, or otherwise
in the possession or control of, any Credit Party, in each case relating to any
Credit Party.

 

(b)           Each
Credit Party hereby acknowledges and agrees that none of the Lenders or Agent
(i) is now, or has ever been, in control of any of the Real Estate or any
Credit Party’s affairs, and (ii) has the capacity through the provisions of the
Loan Documents or otherwise to influence any Credit Party’s conduct with
respect to the ownership, operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental Permits.

 

29

 

3.18         Insurance.  Disclosure
Schedule (3.18) lists all insurance policies of any nature maintained, as
of the Closing Date, for current occurrences by each Credit Party, as well as a
summary of the terms of each such policy. 
As of the Closing Date, each Credit Party is in compliance with its
obligations under Section 5.4.

 

3.19         Deposit and Disbursement Accounts.  Disclosure Schedule (3.19) lists all
banks and other financial institutions at which any Credit Party maintains
deposit or other accounts as of the Closing Date, including any Disbursement
Accounts, and such Schedule correctly identifies the name, address and
telephone number of each depository, the name in which the account is held, a
description of the purpose of the account, and the complete account number
therefor.

 

3.20         Government Contracts.  Except as set forth in Disclosure
Schedule (3.20), as of the Closing Date, no Credit Party is a party to any
contract or agreement with any Governmental Authority and no Credit Party’s
Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section
3727) or any similar state or local law.

 

3.21         Customer and Trade Relations.  As of the Closing Date, there exists no
actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in the business
relationship of any Credit Party with any customer or supplier that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

3.22         Agreements and Other Documents.  As of the Closing Date, each Credit Party
has provided to Agent or its counsel, on behalf of Lenders, accurate and
complete copies (or summaries) of all of the following agreements or documents
to which it is subject as of the Closing Date and each of which is listed in Disclosure
Schedule (3.22):  (i) supply
agreements and purchase agreements not terminable by such Credit Party within
60 days following written notice issued by such Credit Party and involving
transactions in excess of $1,000,000 per annum; (ii) leases of Equipment having
a remaining term of one year or longer and requiring aggregate rental and other
payments in excess of $500,000 per annum; 
(iii) licenses and permits held by the Credit Parties, the absence of
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; (iv) instruments and documents evidencing any
Indebtedness or Guaranteed Indebtedness of such Credit Party and any Lien
granted by such Credit Party with respect thereto; and (v) instruments and
agreements evidencing the issuance of any equity securities, warrants, rights
or options to purchase equity securities of such Credit Party.  Except as set forth on Disclosure
Schedule (3.22), as of the Closing Date, no Credit Party is a party to or
bound by any surety bond agreement or bonding requirement with respect to
products or services sold by it or any trademark or patent license agreement
with respect to products sold by it.

 

3.23         Solvency.  Both
before and after giving effect to (a) the Loans to be made on the Closing Date
or such other date as Loans requested hereunder are made, (b) the disbursement
of the proceeds of such Loans pursuant to the instructions of Borrower, (c) the
Refinancing and the consummation of the other Related Transactions

 

30

 

and (d) the payment and
accrual of all transaction costs in connection with the foregoing, each Credit
Party is and will be Solvent.

 

3.24         Mid-Missouri Acquisition Agreement.  As of the Closing Date, Borrower has
delivered to Agent and Lenders a complete and correct copy of the Mid-Missouri
Acquisition Agreement (including all schedules, exhibits, amendments,
supplements, modifications, assignments and all other documents delivered
pursuant thereto or in connection therewith). 
No Credit Party and no other Person party thereto is in default in any
material respect in the performance or compliance with any provisions thereof.  The Mid-Missouri Acquisition Agreement
complies in all material respects with, and the Mid-Missouri Acquisition has
been consummated in accordance in all material respects with, all applicable
laws.  The Mid-Missouri Acquisition
Agreement is in full force and effect as of the Closing Date and has not been
terminated, rescinded or withdrawn.  All
requisite approvals by Governmental Authorities having jurisdiction over the
seller (or sellers) under the Mid-Missouri Acquisition Agreement, any Credit
Party and other Persons referenced therein, with respect to the transactions
contemplated by the Mid-Missouri Acquisition Agreement, have been obtained, and
no such approvals imposed any conditions to the consummation of the
transactions contemplated by the Mid-Missouri Acquisition Agreement or to the
conduct by any Credit Party of its business thereafter.  To each Credit Party’s actual knowledge,
none of the representations or warranties in the Mid-Missouri Acquisition Agreement
made by the seller or sellers thereunder, in either case, contain any untrue
statement of a material fact or omit any fact necessary to make the statements
therein not misleading.  As of the
Closing Date, each of the representations and warranties given by each
applicable Credit Party in the Mid-Missouri Acquisition Agreement is true and
correct in all material respects. 
Notwithstanding anything contained in the Mid-Missouri Acquisition
Agreement to the contrary, such representations and warranties of the Credit
Parties are incorporated into this Agreement by this Section 3.24 and
shall, solely for purposes of this Agreement and the benefit of Agent and
Lenders, survive the consummation of the Mid-Missouri Acquisition.

 

3.25         [Intentionally Omitted]

 

3.26         Subordinated Debt.  As of the Closing Date, Borrower has delivered to Agent and
Lenders a complete and correct copy of the Initial IDS Subordinated Notes
Documents (including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant thereto
or in connection therewith).  Borrower
has the corporate power and authority to incur the Indebtedness evidenced by
the Initial IDS Subordinated Notes.  The
subordination provisions contained in the Initial IDS Subordinated Notes
Documents and, on and after the execution, delivery and/or Incurrence thereof,
any Subsequent IDS Subordinated Notes Documents and any Additional Subordinated
Debt Documents, are enforceable against Borrower, the Guarantors party thereto
and the holders of such Indebtedness by Agent and Lenders.  All Obligations constitute “Senior Lender
Indebtedness”, “Designated Senior Indebtedness” and “Senior Indebtedness” or
like term under and as defined in (i) the Initial IDS Subordinated Notes
Documents, entitled to the

 

31

 

benefits of the
subordination provisions contained in the Initial IDS Subordinated Notes
Documents and, (ii) on and after the execution, delivery and/or Incurrence
thereof, any Subsequent IDS Subordinated Notes Documents and any Additional
Subordinated Debt Documents, entitled to the benefits of the subordination
provisions contained in any Subsequent IDS Subordinated Notes Documents and any
Additional Subordinated Debt Documents. 
This Agreement and the other Loan Documents constitute “Senior Credit
Documents” or like term as defined in the Initial IDS Subordinated Notes
Documents and, on and after the execution, delivery and/or Incurrence thereof,
any Subsequent IDS Subordinated Notes Documents and any Additional Subordinated
Debt Documents.  The Incurrence of the
Obligations does not violate the Initial IDS Subordinated Notes Documents and,
on and after the execution, delivery and/or Incurrence thereof, any Subsequent
IDS Subordinated Notes Documents and any Additional Subordinated Debt
Documents.  The Incurrence of the
Revolving Credit Commitment on the Closing Date and any Revolving Credit
Advance on the date of borrowing hereunder does not and would not violate the
Initial IDS Subordinated Notes Documents and, on after the execution, delivery
and/or Incurrence thereof, any Subsequent IDS Subordinated Notes Documents and
any Additional Subordinated Debt Documents. 
Borrower acknowledges that Agent and each Lender are entering into this
Agreement and are extending the Commitments in reliance upon this Section
3.26 and the subordination provisions of the Initial IDS Subordinated Notes
Documents and, on and after the execution, delivery and/or Incurrence thereof,
of any Subsequent IDS Subordinated Notes Documents and any Additional
Subordinated Debt Documents.

 

3.27         Capitalization. 
On the Closing Date, after giving effect to the Loans and the Related
Transactions, the authorized Stock of Borrower shall consist of (a) 2,000,000
shares of preferred stock, par value $0.01 per share, none of which are issued
or outstanding, (b)  20,000,000 shares
of Class A common stock, par value $0.01 per share (such authorized shares of
Class A common stock, together with any subsequently authorized shares of such
common stock, the “Class A Common Stock”) of which
[            ]
shares are issued and outstanding (and of which
[        ] shall be included in the
Initial IDS Securities) and (c) 800,000 shares of Class B common stock,
par value $0.01 per share (such authorized shares of Class B common stock,
together with any subsequently authorized shares of such common stock, the “Class
B Common Stock”) of which
[          ] shares are
issued and outstanding.   All such
outstanding shares have been duly and validly issued, are fully paid and
nonassessable and are free of preemptive rights.  Except as disclosed in the Registration Statement, on the Closing
Date, Borrower does not have outstanding any Stock convertible into or
exchangeable for its Stock or outstanding any rights to subscribe for or to
purchase, or any options for the purchase of, or any agreement providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its Stock or any Stock appreciation or similar
rights.

 

3.28         OFAC.  No Credit
Party (i) is a person whose property or interest in property is blocked or
subject to blocking pursuant to Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii)
engages in any dealings or transactions prohibited by such executive order, or
is

 

32

 

otherwise associated with
any such person in any manner violative of such executive order, or (iii) is a
person on the list of Specially Designated Nationals and Blocked Persons or
subject to the limitations or prohibitions under any other U.S. Department of
Treasury’s Office of Foreign Assets Control regulation or executive order.

 

3.29         Patriot Act. 
Each Credit Party is in compliance with (i) the Trading with the Enemy
Act, as amended, and each of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any other enabling legislation or executive order relating thereto, and
(ii) the Uniting And Strengthening America By Providing Appropriate Tools
Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001).  No part of the proceeds of the Loans will be
used, directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.

 

4                                         FINANCIAL STATEMENTS AND INFORMATION

 

4.1           Reports and Notices.

 

(a)           Each
Credit Party executing this Agreement hereby agrees that from and after the
Closing Date and until the Termination Date, it shall deliver to Agent or to
Agent and Lenders, as required, the Financial Statements, Compliance
Certificates, notices, Projections and other information at the times, to the
Persons and in the manner set forth in Annex E.

 

(b)           Each
Credit Party executing this Agreement hereby agrees that from and after the
Closing Date and until the Termination Date, it shall deliver to Agent or to
Agent and Lenders, as required, the various Collateral Reports at the times, to
the Persons and in the manner set forth in Annex F.

 

4.2           Communication with Accountants.  Each Credit Party executing this Agreement
authorizes (a) Agent and (b) so long as an Event of Default has occurred and is
continuing, each Lender, to communicate directly with its independent certified
public accountants, including BDO Seidman LLP, and authorizes and shall request
those accountants to disclose and make available to Agent and each Lender any
and all Financial Statements and other supporting financial documents,
schedules and information relating to any Credit Party (including copies of any
issued management letters) with respect to the business, results of operations,
financial condition and other affairs of any Credit Party, provided that
an officer of Borrower will be given the reasonable opportunity to participate
in any direct communication with the Credit Parties’ independent public
accountants.

 

5                                         AFFIRMATIVE COVENANTS

 

Each Credit Party
executing this Agreement jointly and severally agrees as to all Credit Parties
that from and after the date hereof and until the Termination Date:

 

33

 

5.1           Maintenance of Existence and Conduct
of Business.  Each Credit Party shall:  do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate or organizational
existence (except to the extent permitted by Section 6.1) and its
material rights and franchises; continue to conduct its business substantially
as now conducted or as otherwise permitted hereunder; and at all times
maintain, preserve and protect all of its material assets and properties used
or useful in the conduct of its business, and keep the same in reasonable
repair, working order and condition in all material respects (taking into
consideration ordinary wear and tear) and from time to time make, or cause to
be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices.

 

5.2           Payment of Charges.

 

(a)           Subject
to Section 5.2(b), each Credit Party shall pay and discharge or cause to
be paid and discharged promptly all Charges payable by it, including
(i) Charges imposed upon it, its income and profits, or any of its material
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees,
(ii) lawful claims for labor, materials, supplies and services or
otherwise, and (iii) all storage or rental charges payable to warehousemen
and bailees, in each case, before any thereof shall become past due, except in
the case of clauses (ii) and (iii) where the failure to pay or discharge such
Charges, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

(b)           Each
Credit Party may in good faith contest, by appropriate proceedings, the
validity or amount of any Charges, Taxes or claims described in Section
5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP, (ii) no Lien shall be imposed to secure payment of such Charges (other
than payments to warehousemen and/or bailees) that is superior to any of the
Liens securing payment of the Obligations and such contest is maintained and
prosecuted continuously and with diligence and operates to suspend collection
or enforcement of such Charges, (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, and (iv) such Credit Party
shall promptly pay or discharge such contested Charges, Taxes or claims and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence reasonably acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no
longer met.

 

5.3           Books and Records.  Each Credit Party shall keep adequate books and records with
respect to its business activities in which proper entries, reflecting all
financial transactions, are made in order to permit the preparation of
financial statements in accordance with GAAP.

 

5.4           Insurance; Damage to or Destruction
of Collateral.

 

(a)           The
Credit Parties shall, at their sole cost and expense, maintain (i) the policies
of insurance described on Disclosure Schedule (3.18) as in effect on the
date

 

34

 

hereof or (ii) casualty insurance on all real and
personal property on an all risks basis (including the perils of flood and
quake), covering the repair and replacement cost of all such property and
coverage for business interruption and public liability insurance (including
products/completed operations liability coverage) in each case of the kinds
customarily carried or maintained by Persons of established reputation engaged
in similar businesses and in each case with insurers and in amounts reasonably
acceptable to Agent (it being agreed that any insurer having an A.M. Best
policy holders rating of at least “A” shall be acceptable to Agent). Such
policies of insurance (or the loss payable and additional insured endorsements
delivered to Agent) shall contain provisions pursuant to which the insurer
agrees to provide 30 days (or, in the case of cancellation for nonpayment of
premium, 10 days’) prior written notice to Agent in the event of any
non-renewal, cancellation or amendment of any such insurance policy.  If any Credit Party at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above or to pay all premiums relating thereto, Agent may at any time
or times thereafter obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto that Agent reasonably
deems advisable.  Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums
therefor.  By doing so, Agent shall not
be deemed to have waived any Default or Event of Default arising from any
Credit Party’s failure to maintain such insurance or pay any premiums
therefor.  All sums so disbursed,
including reasonable attorneys’ fees, court costs and other charges related
thereto, shall be payable on demand by Borrower to Agent and shall be
additional Obligations hereunder secured by the Collateral.

 

(b)           Agent
reserves the right at any time upon any change in any Credit Party’s insurance
risk profile (including any change in the product mix maintained by any Credit
Party or any laws affecting the potential liability of such Credit Party) to
require additional forms and limits of insurance to, in Agent’s opinion,
adequately protect both Agent’s and Lenders’ interests in all or any portion of
the Collateral and to ensure that each Credit Party is protected by insurance
in amounts and with coverage customary for its industry; provided that
so long as no Event of Default has occurred and is continuing, the Credit
Parties shall be required to obtain such additional forms and limits of
insurance only on the annual renewal date of the applicable insurance policy
(or on a date reasonably selected by Agent if there is no such annual renewal
date).  If reasonably requested by
Agent, each Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker, reasonably satisfactory to Agent, with respect to
its insurance policies.

 

(c)           Each
Credit Party shall deliver to Agent, in form and substance reasonably
satisfactory to Agent, endorsements to all general liability and other
liability policies naming Agent, on behalf of itself and Lenders, as additional
insured. Each Credit Party (other than Mid-Missouri Telephone) shall deliver to
Agent, in form and substance reasonably satisfactory to Agent, endorsements to
all “All Risk” and business interruption insurance naming Agent, on behalf of
itself and Lenders, as lender’s loss payee. 
Each Credit Party (other than Mid-Missouri Telephone) irrevocably makes,
constitutes and appoints Agent (and all officers, employees or agents
designated by Agent), so long as any Default or Event of Default has occurred
and is continuing or the anticipated insurance proceeds exceed $500,000, as
each such Credit Party’s true and lawful agent

 

35

 

and attorney-in-fact for the purpose of making,
settling and adjusting claims under such “All Risk” policies of insurance,
endorsing the name of each such Credit Party on any check or other item of
payment for the proceeds of such “All Risk” policies of insurance and for
making all determinations and decisions with respect to such “All Risk”
policies of insurance.  Agent shall have
no duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney.  Borrower
shall promptly notify Agent and Lenders of any loss, damage or destruction to
the Collateral in the amount of $500,000 or more, whether or not covered by
insurance, and if any Credit Party receives insurance proceeds in respect of
any such loss, damage or destruction to the Collateral, it shall immediately
pay them to Agent for application in accordance with this Section 5.4(c)
(it being understood that proceeds of business interruption insurance shall be
retained by the applicable Credit Party except during the occurrence and
continuance of a Default or an Event of Default).  After deducting from such proceeds the expenses, if any, incurred
by Agent in the collection or handling thereof, Agent may, at its option, apply
such proceeds to the reduction of the Obligations of Borrower in accordance
with Section 1.3(c) or permit or require each Credit Party to use
such money, or any part thereof, to promptly begin and diligently pursue the
replacement, repair, restoration or rebuilding of the Collateral with materials
and workmanship of substantially the same quality as existed before the loss,
damage or destruction.  Notwithstanding
the foregoing, if the casualty giving rise to such insurance proceeds could not
reasonably be expected to have a Material Adverse Effect and such insurance
proceeds do not exceed $500,000 in the aggregate, Agent shall permit the
applicable Credit Party either to replace, restore, repair or rebuild the
property or to reinvest such proceeds in revenue producing capital assets used
in the businesses of the Credit Parties of the type engaged in by the Credit
Parties as of the Closing Date or businesses reasonably related thereto; provided
that if such Credit Party has not completed or entered into binding agreements
to complete such replacement, restoration, repair or rebuilding within 180 days
following such casualty or has not consummated such reinvestment within 180
days following such casualty, Agent may apply such insurance proceeds to the
Obligations of Borrower in accordance with Section 1.3(c).  All insurance proceeds that are to be made
available to any Credit Party to replace, repair, restore or rebuild such
Collateral or to fund such reinvestment shall either be (x) deposited in a cash
collateral account held by Agent or (y) applied by Agent to reduce the
outstanding principal balance of the Revolving Loan (which application shall
not result in a permanent reduction of the Revolving Loan Commitment) and upon
such application, Agent shall establish a reserve against the Borrowing Availability
in an amount equal to the amount of such proceeds so applied.  Thereafter, such funds shall be made
available to Borrower to provide funds to replace, repair, restore or rebuild
such Collateral or to fund such reinvestment as follows:  (i) Borrower shall request a Revolving
Credit Advance or release from such cash collateral account be made to fund
such replacement, repair, restoration or rebuilding or to fund such
reinvestment in the amount requested to be released; (ii) so long as the conditions
in Section 2.2 have been met, Revolving Lenders shall make such
Revolving Credit Advance or Agent shall release funds from such cash collateral
account; and (iii) in the case of insurance proceeds applied against the
Revolving Loan, the Reserve established with respect to such insurance proceeds
shall be reduced by the amount of such Revolving Credit Advance.  To the extent not used to replace, repair,
restore or rebuild the Collateral or to

 

36

 

fund such reinvestment, such insurance proceeds shall
be applied in accordance with Section 1.3(c) and such Reserve shall be
immediately utilized through the borrowing by Borrower of a Revolving Credit
Advance, the proceeds of which shall be applied to prepay the Loans in
accordance with Section 1.3(c).

 

5.5           Compliance with Laws.  Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including those relating to ERISA and labor matters and Environmental Laws and
Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.  Each Credit
Party shall duly and timely comply in all respects with any applicable
telecommunications statutes of the United States or any state in which it
operates, or any applicable rule, regulation or requirement of the FCC, any
PUC, any Franchising Authority and any other Governmental Authority and all
Telecommunications Approvals, except to the extent that such failure,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

5.6           Supplemental Disclosure.  From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), the Credit Parties shall supplement each Disclosure Schedule hereto,
or any representation herein or in any other Loan Document, with respect to any
matter hereafter arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or that is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered materially inaccurate thereby (and, in
the case of any supplements to any Disclosure Schedule, such Disclosure
Schedule shall be appropriately marked to show the changes made therein); provided
that (a) no such supplement to any such Disclosure Schedule or representation
shall (x) amend, supplement or otherwise modify any Disclosure Schedule or
representation, or (y) be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein, except as consented to by Agent
and Requisite Lenders in writing and in the case of clause (x) except for
changes constituting matters expressly permitted or expressly contemplated by
this Agreement and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date.

 

5.7           Intellectual Property.  Each Credit Party will conduct its business
and affairs without infringement of or interference with any Intellectual
Property of any other Person and shall comply with the terms of its Licenses,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

 

5.8           Environmental Matters.  Each Credit Party shall and shall cause each
Person within its control to:  (a)
conduct its operations and keep and maintain its Real Estate in compliance with
all Environmental Laws and Environmental Permits other than noncompliance that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; (b) implement any and all investigation,

 

37

 

remediation, removal and
response actions that are appropriate or necessary to operate the Real Estate
in the manner presently operated or to otherwise materially comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Agent promptly after such Credit Party has actual knowledge
of any violation of Environmental Laws or Environmental Permits or any Release
on, at, in, under, above, to, from or about any Real Estate that is reasonably
likely to result in Environmental Liabilities in excess of $500,000; and (d)
promptly forward to Agent a copy of any written order, notice, request for
information or any communication or report received by such Credit Party in
connection with any such violation or Release or any other matter relating to
any Environmental Laws or Environmental Permits that could reasonably be
expected to result in Environmental Liabilities in excess of $500,000, in each
case whether or not the Environmental Protection Agency or any other
Governmental Authority has taken or threatened any action in connection with
any such violation, Release or other matter. 
If Agent at any time has a reasonable basis to believe that there is a
violation of any Environmental Laws or Environmental Permits by any Credit
Party or any Environmental Liability arising thereunder, or a Release of
Hazardous Materials on, at, in, under, above, to, from or about any of its Real
Estate, that, in each case, could reasonably be expected to have a Material
Adverse Effect, then each Credit Party shall, upon Agent’s written request (i)
cause the performance of such environmental audits relating to the suspected
violation or Release, including subsurface sampling of soil and groundwater,
and preparation of such environmental reports, at Borrower’s expense, as Agent
may from time to time reasonably request, which shall be conducted by reputable
environmental consulting firms reasonably acceptable to Agent and shall be in
form and substance reasonably acceptable to Agent, and (ii) permit Agent or its
representatives to have access to all Real Estate for the purpose of conducting
such environmental audits and testing as Agent deems reasonably appropriate relating
to the suspected violation or Release, including subsurface sampling of soil
and groundwater.  Borrower shall
reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.

 

5.9           Landlords’ Agreements, Mortgagee
Agreements, Bailee Letters and Real Estate Purchases.  Each Credit Party shall obtain a landlord’s
agreement, mortgagee agreement or bailee letter, as applicable, from the lessor
of each leased property, mortgagee of owned property or bailee with respect to
any warehouse, processor or converter facility or other location where
Collateral having a value, individually or in the aggregate, in excess of
$250,000 is stored or located, which agreement or letter shall contain a waiver
or subordination of all Liens or claims that the landlord, mortgagee or bailee
may assert against the Collateral at that location, and shall otherwise be
reasonably satisfactory in form and substance to Agent.  After the Closing Date, no real property or
warehouse space shall be leased having annual rental payments in excess of
$50,000 by any Credit Party and no Inventory (other than Inventory of
Mid-Missouri Telephone) shall be shipped to a processor or converter under
arrangements established after the Closing Date without the prior written
consent of Agent, unless and until a satisfactory landlord agreement or bailee
letter, as appropriate, shall first have been obtained with respect to such
location.  To the extent permitted
hereunder, if any

 

38

 

Credit Party (other than
Mid-Missouri Telephone) proposes to acquire a fee ownership interest or
leasehold interest in any Material Real Estate after the Closing Date, it shall
concurrently provide to Agent a mortgage or deed of trust or leasehold mortgage
or deed of trust, as applicable, granting Agent a first priority Lien on such
Real Estate or leasehold interest therein, as applicable, together with
environmental audits, mortgage title insurance commitment, real property
survey, local counsel opinion(s), and, if required by Agent, supplemental
casualty insurance and flood insurance, and such other documents, instruments
or agreements, in each case, reasonably requested by Agent, and in each case,
in form and substance reasonably satisfactory to Agent.  In addition, if any Real Property owned or
leased by any Credit Party (other than Mid-Missouri Telephone) shall
subsequently become or be determined to be Material Real Estate, promptly
following a request from Agent, such Credit Party shall provide to Agent a
mortgage or deed of trust or leasehold mortgage or deed of trust, as
applicable, granting Agent a first priority Lien on such Real Estate, or
leasehold interest therein, as applicable, together with environmental audits,
mortgage title insurance commitment, real property survey, local counsel
opinion(s), and, if required by Agent, supplemental casualty insurance and
flood insurance, and such other documents, instruments or agreements, in each
case, reasonably requested by Agent, and in each case, in form and substance
reasonably satisfactory to Agent.

 

5.10         Interest Rate Protection.  Within 30 days after the Closing Date and at
all times thereafter prior to the Commitment Termination Date, Borrower shall
enter into and maintain interest rate cap, swap or collar agreements, or other
agreements or arrangements designed to provide protection against fluctuations
in interest rates, which shall be on terms, for periods and with counterparties
reasonably acceptable to Agent, and pursuant to which Borrower is protected
against increases in interest rates from and after the date of such contracts
as to a notional amount of not less than fifty percent (50%) and no greater
than one hundred percent (100%) of all Loans outstanding from time to time for
an initial term of at least two years.

 

5.11         CoBank Capital. 
So long as CoBank is a Lender hereunder, Borrower will acquire or
maintain ownership of non-voting participation certificates in CoBank in such
amounts and at such times as CoBank may require in accordance with CoBank’s
Bylaws and Capital Plan (as each may be amended from time to time), except that
the maximum amount of non-voting participation certificates that Borrower may
be required to purchase in CoBank in connection with the Loans may not exceed
the maximum amount permitted by the Bylaws at the time this Agreement is
entered into. The rights and obligations of the parties with respect to such
non-voting participation certificates and any distributions made on account thereof
or on account of Borrower’s patronage with CoBank shall be governed by CoBank’s
Bylaws. Borrower hereby consents and agrees that the amount of any
distributions with respect to its patronage with CoBank that are made in
qualified written notices of allocation (as defined in 26 U.S.C. § 1388) and
that are received by Borrower from CoBank, will be taken into account by
Borrower at the stated dollar amounts whether the distribution is evidenced by
a participation certificate or other form of written notice that such
distribution has been made and recorded in the name of Borrower on the records
of CoBank. CoBank’s Pro Rata Share of the Loans and other Obligations due to
CoBank shall be secured by a

 

39

 

statutory first lien on
all equity which Borrower may now own or hereafter acquire in CoBank.  Such equity shall not, however, constitute
security for the Obligations due to any other Lender.  CoBank shall not be obligated to set off or otherwise apply such
equities to Borrower’s obligations to CoBank.

 

5.12         Further Assurances.  Each Credit Party executing this Agreement agrees that it shall
and shall cause each other Credit Party to, at such Credit Party’s expense and
upon request of Agent or Requisite Lenders, duly execute and deliver, or cause
to be duly executed and delivered, to Agent and Lenders such further
instruments and do and cause to be done such further acts as may be necessary
or proper in the reasonable opinion of Agent or Requisite Lenders to carry out
more effectively the provisions and purposes of this Agreement and each other
Loan Document.

 

5.13         Subsidiaries and Collateral.  The Credit Parties will take such action
from time to time as shall be necessary to ensure that (i) all Subsidiaries of Borrower
are Credit Parties hereunder, (ii) all Subsidiaries of Borrower (other than
Mid-Missouri Telephone) are Guarantors under the Subsidiary Guaranty, (iii)
Borrower and all Subsidiaries of Borrower (other than Mid-Missouri Telephone)
are Grantors under the Security Agreement and Agent (for the benefit of itself
and the Lenders) has first priority perfected Liens (subject to Permitted
Encumbrances), in substantially all the assets of Borrower and such
Subsidiaries, consistent with the provisions of the Security Agreement, and
(iv) Borrower and all Subsidiaries of Borrower (other than Mid-Missouri
Holdings) are Pledgors under the Pledge Agreement and Agent (for the benefit of
itself and the Lenders) has first priority perfected Liens in one hundred percent
(100%) of the outstanding Stock of each of the Subsidiaries of Borrower (other
than the Stock of Mid-Missouri Telephone) consistent with the provisions of the
Pledge Agreement.  

 

5.14         Change of Law Applicable to
Mid-Missouri Telephone.

 

(a)           Mid-Missouri
Telephone shall execute and deliver to Agent (i) a guaranty substantially in
the form of the Subsidiary Guaranty (or a Joinder Agreement in respect of the
Subsidiary Guaranty) not later than 30 days after Mid-Missouri Telephone shall
have obtained knowledge that Mid-Missouri Telephone shall not be required by
applicable law to obtain consent from the PUC in the State of Missouri in order
to execute and deliver such a guaranty and (ii) a security agreement
substantially in the form of the Security Agreement (or a Joinder Agreement in
respect of the Security Agreement) not later than 30 days after Mid-Missouri
Telephone shall not be required by applicable law to obtain consent from the
PUC in the State of Missouri in order to execute and deliver such a security
agreement.

 

(b)           Mid-Missouri
Holding shall execute and deliver to Agent a Joinder Agreement in respect of
the Pledge Agreement and shall pledge all of the Stock of Mid-Missouri
Telephone pursuant to the terms of the Pledge Agreement not later than 30 days
after Mid-Missouri Telephone shall have obtained knowledge that Mid-Missouri
Telephone shall not be required by applicable law to obtain consent from the
PUC in the State of Missouri in order for its Stock to be pledged to Agent
under the Pledge Agreement.

 

40

 

(c)           Upon
(i) the execution and delivery by Mid-Missouri Telephone of (A) the guaranty
(or Joinder Agreement) referred to in paragraph (a) of this Section 5.14
and (B) the security agreement (or Joinder Agreement) referred to in paragraph
(a) of this Section 5.14 and (ii) the execution and delivery by
Mid-Missouri Holding of a Joinder Agreement in accordance with paragraph (b) of
this Section 5.14, any provision in the Loan Documents that specifically
excludes Mid-Missouri Telephone shall, mutatis
mutandis, be deemed to also apply to Mid-Missouri Telephone.

 

(d)           The
Credit Parties shall notify Agent and the Lenders promptly upon obtaining
knowledge that Mid-Missouri Telephone and Mid-Missouri Holding will be required
to execute and deliver documents pursuant to the foregoing clauses of this Section
5.14.  In such event, if and to the
extent reasonably requested by Agent or Requisite Lenders, Mid-Missouri
Telephone and Mid-Missouri Holding will cause to be delivered to Agent and
Lenders all other relevant documentation of the type described in Section 2 and
the Closing Checklist with respect thereto.

 

6                                         NEGATIVE COVENANTS

 

Each Credit Party
executing this Agreement jointly and severally agrees as to all Credit Parties
that from and after the date hereof until the Termination Date:

 

6.1           Mergers, Subsidiaries, Etc.  (a) No Credit Party shall directly or
indirectly, by operation of law or otherwise, (x) form or acquire any
Subsidiary, or (y) merge with, consolidate with, acquire all or a substantial
portion of any division, unit or business of, acquire all or a substantial
portion of the assets or Stock of, or otherwise combine with or acquire, any
Person, whether in a single transaction or a series of related transactions,
individually or together with any other Credit Parties, except (i) as permitted
by Section 6.1(b) below, (ii) so long as no Default or Event of Default
has occurred and is continuing or would result therefrom, (A) any Subsidiary of
Borrower may merge or consolidate with or convey all or substantially all of
its assets to Borrower provided that Borrower is the surviving entity from any
such transaction, (B) any Subsidiary of Borrower may merge or consolidate with
or convey all or substantially all of its assets to a Subsidiary Guarantor
provided that such Subsidiary Guarantor is the surviving entity from any such
transaction and (C) Borrower or any Subsidiary of Borrower may form a
Subsidiary so long as contemporaneously therewith such Subsidiary becomes a
Credit Party, becomes a Subsidiary Guarantor and grants a Lien on its assets to
Agent in accordance with Section 5.13, and (iii) the Mid-Missouri
Acquisition consummated on the Closing Date.

 

(b)           Notwithstanding Section 6.1(a),
after the Closing Date, (x) Borrower or any Subsidiary Guarantor may
acquire all or a substantial portion of any division, unit or business of or
all or substantially all of the assets of, or (y) Borrower or any Subsidiary of
Borrower that is a Credit Party may acquire all of the Stock of, any Person
(the “Target”) (in each case, a “Permitted Acquisition”) subject
to the satisfaction of each of the following conditions:

 

41

 

(i)            Agent
shall receive at least thirty (30) Business Days’ prior written notice (or such
shorter period as Agent may agree) of such proposed Permitted Acquisition,
which notice shall include a reasonably detailed description of such proposed
Permitted Acquisition;

 

(ii)           such
Permitted Acquisition shall only involve (A) assets located in the United
States and comprising a business, or those assets of a business, of the type
engaged in by the Credit Parties as of the Closing Date or, as applicable, a
business, or those assets of a business, reasonably related thereto or (B) the
Stock of a Person organized in the United States whose assets comprise such a
business, and in each case which business would not subject Agent or any Lender
to regulatory or third party approvals in connection with the exercise of its
rights and remedies under this Agreement or any other Loan Documents other than
types of approvals applicable to the exercise of such rights and remedies with
respect to the Guarantors prior to such Permitted Acquisition;

 

(iii)          such
Permitted Acquisition shall be consensual and shall have been approved by the
Target’s board of directors (or other governing body);

 

(iv)          no
additional Indebtedness, Guaranteed Indebtedness, contingent obligations or
other contingent liabilities shall be Incurred or otherwise be reflected on a
consolidated balance sheet of Borrower and Target after giving effect to such
Permitted Acquisition, except (A) Loans made hereunder, (B) Indebtedness
secured by purchase money Liens and Capital Leases entered into in the ordinary
course of Target’s business, provided that (1) the principal amount of
such Indebtedness and Capital Lease Obligations with respect to such Capital
Leases, together with the aggregate amount of all other outstanding purchase
money Indebtedness and Capital Lease Obligations of the Credit Parties, shall
not exceed $1,000,000 at any one time, (2) such purchase money Liens and
Capital Leases are not created in contemplation of such Permitted Acquisition
and secure only those principal obligations and any charges or interest
accruing thereon which such purchase money Liens or Capital Leases secure on
the date that such Permitted Acquisition is consummated, (3) such Indebtedness
does not exceed 100% of the purchase price of the subject assets, and (4) such
purchase money Liens or Capital Leases do not extend to any asset other than
the assets being purchased or acquired with such purchase money Indebtedness or
the assets being leased in connection with such Capital Leases, (C) ordinary
course trade payables and accrued expenses, and (D) Indebtedness of Borrower
Incurred to finance such Permitted Acquisition to the extent such Indebtedness
is expressly permitted under Section 6.3(a)(vii), (xv) or (xvi) and to
the extent that no Default or Event of Default has occurred and is continuing
or would result after giving effect to such Permitted Acquisition;

 

(v)           the
sum of all amounts payable in connection with all Permitted Acquisitions made
after the Closing Date (including all deferred payments, all non-compete
payments, all transaction costs, the fair market value of all Stock issued in
connection therewith and all Indebtedness and any earn out payments or similar
obligations Incurred in connection therewith or otherwise reflected on a
consolidated

 

42

 

balance sheet of Borrower and Target) shall not exceed
$25,000,000 in any Fiscal Year for all Credit Parties combined;

 

(vi)          the
Target shall not have incurred an operating loss (disregarding nonrecurring
charges or credits directly attributable to such Permitted Acquisition) for the
trailing twelve-month period preceding the date of such Permitted Acquisition,
as determined based upon the Target’s financial statements for its most
recently completed fiscal year and its most recent interim financial period
completed within sixty (60) days prior to the date of consummation of such
Permitted Acquisition;

 

(vii)         the
business and assets acquired in such Permitted Acquisition shall be free and
clear of all Liens (other than Permitted Encumbrances);

 

(viii)        the
Borrower shall be the surviving entity of any merger or consolidation involving
Borrower in connection with any Permitted Acquisition, and at or prior to the
closing of any Permitted Acquisition, Agent will be granted a first priority
perfected Lien (subject to Permitted Encumbrances) in substantially all the
assets acquired pursuant thereto, consistent with the provisions of the
Security Agreement, and in the outstanding Stock of the Target, and the
applicable Credit Parties and the Target shall have executed such documents
(including a Joinder Agreement, if applicable) and taken such actions as may be
reasonably requested by Agent in connection therewith;

 

(ix)           concurrently
with delivery of the notice referred to in clause (i) above, Borrower shall
have delivered to Agent and Lenders, in form reasonably satisfactory to Agent:

 

(A)          a pro forma consolidated balance
sheet, income statement and cash flow statement of Borrower and its
Subsidiaries (the “Acquisition Pro Forma”), based on recent financial
statements, which shall fairly present in all material respects the assets,
liabilities, financial position and results of operations and cash flows of
Borrower and its Subsidiaries in accordance with GAAP consistently applied
(subject to normal year end audit adjustments and the absence of footnotes),
but taking into account such Permitted Acquisition and the funding of all Loans
in connection therewith, and such Acquisition Pro Forma shall reflect that on a
Pro Forma Basis, no Default or Event of Default has occurred and is continuing
or would result after giving effect to such Permitted Acquisition and the
Credit Parties would have been in compliance with the Financial Covenants for
the Test Period reflected in the Compliance Certificate most recently delivered
to Agent pursuant to Section 4.1 prior to consummation of such
Permitted Acquisition (after giving effect to such Permitted Acquisition and
all Advances funded in connection therewith as if made on the first day of such
period);

 

43

 

(B)           updated versions of the most recently
delivered Projections covering the one (1) year period commencing on the date
of such Permitted Acquisition and otherwise prepared in accordance with the
Projections (the “Acquisition Projections”) and based upon historical
financial data of a recent date reasonably satisfactory to Requisite Lenders,
taking into account such Permitted Acquisition; and

 

(C)           a certificate of the chief financial
officer of Borrower to the effect that: 
(w) Borrower (after taking into consideration all rights of contribution
and indemnity each Credit Party has against each other Credit Party) will be
Solvent upon the consummation of such Permitted Acquisition; (x) the
Acquisition Pro Forma fairly presents in all material respects the financial
position of Borrower and its Subsidiaries (on a consolidated basis) as of the
date thereof after giving effect to such Permitted Acquisition; (y) the
Acquisition Projections are reasonable estimates of the future financial
performance of Borrower and its Subsidiaries subsequent to the date thereof
based upon the historical performance of the Credit Parties and the Target and
show that the Credit Parties shall continue to be in compliance with the Financial
Covenants for the 3-year period thereafter; and (z) the Credit Parties have
completed their due diligence investigation with respect to the Target and such
Permitted Acquisition, which investigation was conducted in a manner similar to
that which would have been conducted by a prudent purchaser of a comparable
business and the results of which investigation were delivered to Agent and
Lenders;

 

(x)            (A)
at least five (5) days prior to the date of such Permitted Acquisition, Agent
and Lenders shall have received, in form and substance reasonably satisfactory
to Agent, substantially final copies of the acquisition agreement and related
agreements and instruments, and all opinions, certificates, lien search results
and other documents reasonably requested by Agent or any Lender, including
those specified in the last two sentences of Section 5.9, and (B)
at least two (2) Business Days prior to the date of such Permitted Acquisition,
Agent and Lenders shall have received, copies of the final acquisition agreement
and related agreements and all such agreements shall not differ in any material
respect from the substantially final agreements provided to Agent and Lenders,
unless Agent shall have approved of such differences (which approval shall not
be unreasonably withheld);

 

(xi)           at
the time of such Permitted Acquisition and after giving effect thereto, no
Default, Event of Default, Interest Deferral Period or Dividend Suspension
Period has occurred and is continuing; and

 

44

 

(xii)          Agent
and Lenders shall have received reasonably satisfactory evidence of compliance
with all regulatory requirements with respect to such Permitted Acquisition.

 

6.2           Investments; Loans and Advances.  Except as otherwise expressly permitted by
this Section 6, no Credit Party shall make or permit to exist any
Investment in any Person, except:

 

(a)           Investments
comprised of (i) notes payable, or stock or other securities issued by Account
Debtors to the Credit Parties pursuant to negotiated agreements with respect to
settlement of such Account Debtor’s Accounts in the ordinary course of business
and (ii) Investments received in connection with the bankruptcy or
reorganization of suppliers or customers and in settlement of delinquent
obligations of, and other disputes with, suppliers or customers arising in the
ordinary course of business;

 

(b)           Investments
existing on the Closing Date and listed on (Disclosure Schedule 6.2);

 

(c)           so
long as Agent has not delivered an Activation Notice, Borrower may make
Investments, subject to Control Letters in favor of Agent for the benefit of
Lenders or otherwise subject to a perfected security interest in favor of Agent
for the benefit of Lenders, in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency
thereof maturing within one year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (iii)
certificates of deposit maturing no more than one year from the date of
creation thereof issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $300,000,000 and having a senior unsecured rating of
“A” or better by a nationally recognized rating agency (an “A Rated Bank”),
(iv) time deposits maturing no more than 30 days from the date of creation
thereof with A Rated Banks, (v) mutual funds that invest substantially all
their assets in one or more of the Investments described in clauses (i)
through (iv) above, and (vi) others approved by Agent in its reasonable
discretion;

 

(d)           any
Credit Party may make capital contributions to any other Credit Party; provided
that the aggregate amount of all capital contributions to, intercompany loans
to and other Investments in Mid-Missouri Telephone, together with intercompany
loans by Mid-Missouri Telephone, shall not at any time exceed $2,000,000 for
all Credit Parties combined;

 

(e)           intercompany
loans and advances by any Credit Party to any other Credit Party to the extent
permitted by Section 6.3(a)(viii);

 

(f)            Permitted
Acquisitions and Investments of a Person existing at the time such Person
becomes a Subsidiary of a Credit Party in connection with a Permitted
Acquisition or at the time such Person is merged or consolidated with or into a
Credit

 

45

 

Party in connection with a Permitted Acquisition, provided
that such Investments are not made in contemplation of such Permitted
Acquisition and, upon giving effect to such Permitted Acquisition, such
Investments are permitted by the other clauses of this Section 6.2;

 

(g)           Investments
consisting of deferred payment obligations received as consideration from Asset
Sales effected in accordance with the requirements of Section 6.8, so
long as such Investments do not in the aggregate exceed $250,000 at any time
for all Credit Parties combined;

 

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

 

(i)            Guaranteed
Indebtedness permitted by Section 6.6;

 

(j)            Hedging
Obligations of Borrower required by Section 5.10;

 

(k)           Loans
and advances to employees of any Credit Party in the ordinary course of
business, in each case to the extent permitted by Section 6.4(b);

 

(l)            the
Mid-Missouri Acquisition consummated on the Closing Date; and

 

(m)          other
Investments by the Credit Parties not exceeding $1,000,000 in the aggregate at
any time outstanding for all Credit Parties combined, provided that this
Section 6.2(m) shall not be applicable to Investments in Mid-Missouri
Telephone.

 

6.3           Indebtedness.

 

(a)           No
Credit Party shall create, incur, assume or permit to exist any Indebtedness,
except (without duplication):

 

(i)            Indebtedness
secured by purchase money security interests and Capital Leases permitted in Section
6.7(c) and refinancings thereof or amendments or modifications thereof that
do not have the effect of increasing the principal amount thereof or changing
the amortization thereof (other than to extend the same) and that are otherwise
on terms and conditions no less favorable to any Credit Party, Agent or any
Lender, as determined by Agent, than the terms of the Indebtedness or Capital
Lease being refinanced, amended or modified;

 

(ii)           the
Loans and the other Obligations;

 

(iii)          unfunded
pension fund and other employee benefit plan obligations and liabilities to the
extent they are permitted to remain unfunded under applicable law;

 

46

 

(iv)          [existing
Indebtedness described in Disclosure Schedule (6.3) and refinancings
thereof or amendments or modifications thereof that do not have the effect of
increasing the principal amount thereof or changing the amortization thereof
(other than to extend the same) and that are otherwise on terms and conditions
no less favorable to any Credit Party, Agent or any Lender, as determined by
Agent, than the terms of the Indebtedness being refinanced, amended or
modified; provided, however, 
that this Section 6.3(a)(iv) shall not be applicable to
Subordinated Debt;]

 

(v)           unsecured,
subordinated Indebtedness of Borrower evidenced by the Initial IDS Subordinated
Notes issued on the Closing Date as a part of the Related Transactions, in an
aggregate principal amount that does not exceed at any time $[85,000,000] (less
the amount of any repayments of principal thereof after the Closing Date);

 

(vi)          unsecured,
subordinated Indebtedness of Borrower evidenced by any Initial IDS-Linked
Subordinated Notes issued after the Closing Date as part of Initial IDS
Securities required to be issued upon conversion of any Class B common stock of
Borrower issued on the Closing Date as a part of the Related Transactions so
long as (A) no Default, Event of Default, Interest Deferral Period or Dividend
Suspension Period has occurred and is continuing or would result as of the date
of issuance thereof, (B) on a Pro Forma Basis after giving effect to the
Incurrence of such Indebtedness, the Credit Parties shall (I) have a
Consolidated Total Leverage Ratio of not more than 6.0 to 1.0 and (II) be in
compliance with the Financial Covenants and (C) Borrower shall have furnished
to Agent and Lenders prior to the Incurrence thereof a certificate from a
Responsible Officer of Borrower certifying as to compliance with the
requirements of the preceding clauses (A) and (B) and containing the
calculations demonstrating compliance with the preceding clause (B);

 

(vii)         Permitted
Additional Subordinated Debt of Borrower, so long as (A) the aggregate outstanding
principal amount thereof (excluding any PIK Amounts in respect thereof) does
not exceed $25,000,000 at any time, (B) no Default, Event of Default, Interest
Deferral Period or Dividend Suspension Period has occurred and is continuing or
would result as of the date of issuance thereof, (C) on a Pro Forma Basis after
giving effect to the Incurrence of such Indebtedness, the Credit Parties shall
(I) have a Consolidated Total Leverage Ratio of not more than 6.0 to 1.0 and
(II) be in compliance with the Financial Covenants, (D) the terms of such
Indebtedness otherwise comply with the provisions of the definition of
Permitted Additional Subordinated Debt, (E) all of the proceeds thereof shall
be applied (I) concurrently with the issuance thereof, to refinance Permitted
Additional Subordinated Debt of Borrower or (II) not later than 90 days after
the date of issuance thereof, (x) to finance a Permitted Acquisition, (y) to
finance permitted Consolidated Capital Expenditures or (z) to prepay the Loans,
and (F) Borrower shall have furnished to Agent and Lenders prior to the
Incurrence thereof a certificate from a Responsible Officer of Borrower
certifying as to compliance with the requirements of the preceding clauses (A),
(B), (C) and (D) and containing the calculations demonstrating compliance with
the preceding clause (C);

 

47

 

(viii)        Indebtedness
consisting of intercompany loans and advances made by Borrower to any other
Credit Party or by any Credit Party to Borrower; provided, that: (A)
Borrower shall have executed and delivered to each such Credit Party, and each
such Credit Party shall have executed and delivered to Borrower, a demand note
in the form of Exhibit 6.3(a)(viii) (an “Intercompany Note”) to
evidence any such intercompany Indebtedness owing at any time by Borrower to
such Credit Party or by such Credit Party to Borrower, which Intercompany Note
shall be pledged and delivered to Agent pursuant to the applicable Pledge
Agreement or Security Agreement as additional collateral security for the
Obligations (except for any such Intercompany Note executed and delivered to
Mid-Missouri Telephone); (B) Borrower and each such Credit Party shall record
all intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; (C) the obligations of Borrower or any other Credit
Party under any such Intercompany Note shall be subordinated to the Obligations
of Borrower and such other Credit Party hereunder in accordance with the terms of
the Intercompany Note; (D) at the time any such intercompany loan or advance is
made by Borrower or any other Credit Party and after giving effect thereto,
Borrower and such other Credit Party shall be Solvent; (E) Agent has not
delivered a notice to Borrower prohibiting such intercompany loans and advances
following the occurrence and during the continuance of a Default or Event of
Default; and (F) the aggregate amount of intercompany loans to, capital
contributions to and other Investments in Mid-Missouri Telephone, together with
intercompany loans by Mid-Missouri Telephone, shall not at any time exceed
$2,000,000 for all Credit Parties combined;

 

(ix)           [Intentionally
Omitted];

 

(x)            Indebtedness
constituting Hedging Obligations of Borrower required by Section 5.10;

 

(xi)           Guaranteed
Indebtedness permitted by Section 6.6;

 

(xii)          Indebtedness
of Borrower or any of its Subsidiaries which may be deemed to exist in
connection with agreements providing for indemnification, purchase price
adjustments and similar obligations in connection with Permitted Acquisitions
or sales of assets permitted by this Agreement (so long as any such obligations
are those of the Person making the respective acquisition or sale, and are not
guaranteed by any other Person);

 

(xiii)         Indebtedness
constituting temporary bank overdrafts in the ordinary course of business that
are promptly repaid;

 

(xiv)        [Intentionally
Omitted];

 

(xv)         unsecured,
subordinated Indebtedness of Borrower evidenced by any Subsequent IDS
Subordinated Notes issued after the Closing Date under any Subsequent IDS
Subordinated Notes Indenture, so long as (A) no Default, Event of Default,
Interest Deferral Period or Dividend Suspension Period has occurred and is
continuing or would result as of the date of issuance thereof, (B) on a Pro
Forma

 

48

 

Basis after giving effect to the Incurrence of such
Indebtedness, the Credit Parties shall (I) have a Consolidated Total Leverage
Ratio of not more than 6.0 to 1.0 and (II) be in compliance with the Financial
Covenants, (C) the terms of such Indebtedness otherwise comply with the
provisions of the definitions of Subsequent IDS-Linked Subordinated Notes and
Subsequent Non-IDS-Linked Subordinated Notes, (D) all of the proceeds thereof shall
be applied (I) concurrently with the issuance thereof, to refinance IDS
Subordinated Notes or Permitted Additional Subordinated Debt of Borrower or
(II) not later than 90 days after the date of issuance thereof, (x) to finance
a Permitted Acquisition, (y) to finance permitted Consolidated Capital
Expenditures or (z) to prepay the Loans, and (E) Borrower shall have furnished
to Agent and Lenders prior to the Incurrence thereof a certificate from a
Responsible Officer of Borrower certifying as to compliance with the
requirements of the preceding clauses (A), (B) and (C) and containing the
calculations demonstrating compliance with the preceding clause (B); and

 

(xvi)        additional
unsecured Indebtedness of Borrower, so long as (A) the aggregate outstanding principal
amount thereof (excluding any PIK Amounts in respect thereof) does not exceed
$5,000,000 at any time, (B) no Default, Event of Default, Interest Deferral
Period or Dividend Suspension Period has occurred and is continuing or would
result as of the date of issuance thereof, (C) on a Pro Forma Basis after
giving effect to the Incurrence of such Indebtedness, the Credit Parties shall
(I) have a Consolidated Total Leverage Ratio of not more than 6.0 to 1.0 and
(II) be in compliance with the Financial Covenants, and (D) Borrower shall
have furnished to Agent and Lenders prior to the Incurrence thereof a
certificate from a Responsible Officer of Borrower certifying as to compliance
with the requirements of the preceding clauses (A), (B) and (C) and containing
the calculations demonstrating compliance with the preceding clause (C).

 

(b)           No
Credit Party shall, directly or indirectly, voluntarily purchase, redeem,
defease or prepay any principal of, premium, if any, interest or other amount
payable in respect of any Indebtedness, other than (i) the Obligations; (ii)
Indebtedness secured by a Permitted Encumbrance if the asset securing such
Indebtedness has been sold or otherwise disposed of in accordance with Sections
6.8(b) or (c); (iii) Indebtedness permitted by Section 6.3(a)(iv)
upon any refinancing thereof in accordance with Section 6.3(a)(iv); (iv)
Indebtedness permitted by Sections 6.3(a)(v), (vi) or (xv) upon
any refinancing thereof in accordance with Section 6.3(a)(xv); (v)
Indebtedness permitted by Section 6.3(a)(vii) upon any refinancing
thereof in accordance with Section 6.3(a)(vii); (vi) Indebtedness
permitted by Sections 6.3(a)(i) and (viii) so long as no Default
or Event of Default has occurred and is continuing or would result therefrom;
(vii) Indebtedness permitted by Section 6.3(a)(iii); and (viii) as
otherwise permitted in Section 6.14.

 

6.4           Employee Loans and Affiliate
Transactions.

 

(a)           Except
as otherwise expressly permitted in this Section 6 with respect to
Affiliates and except for transactions referred to on Disclosure Schedule
(6.4(a)), no Credit Party shall enter into or be a party to any transaction
with any other Credit Party or any Affiliate thereof except in the ordinary
course of, and pursuant to the reasonable requirements of, such Credit Party’s
business and upon fair and reasonable

 

49

 

terms that are no less favorable to such Credit Party
than would be obtained in a comparable arm’s length transaction with a Person
not an Affiliate of such Credit Party. 
In addition, if any such transaction or series of related transactions,
except for such transactions between Borrower and any Subsidiary Guarantor or
between Subsidiary Guarantors in the ordinary course of business, involves
payments in excess of $1,000,000 in the aggregate, the terms of these
transactions must be disclosed in advance to Agent and Lenders.  All such transactions existing as of the
date hereof are described in Disclosure Schedule (6.4(a)).

 

(b)           No
Credit Party shall enter into any lending or borrowing transaction with any
employees of any Credit Party, except loans to its respective employees on an
arm’s-length basis in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes and stock purchase and option financing up to a maximum of $1,000,000
in the aggregate at any one time outstanding for all Credit Parties combined.

 

6.5           Capital Structure and Business.        (a)           No
Credit Party shall:

 

(i) permit any
Person (other than Borrower or any Credit Party that is a Pledgor under the
Pledge Agreement) to own any Stock of any Subsidiary of Borrower, except that
the Stock of Mid-Missouri Telephone shall be owned by Mid-Missouri Holding; or

 

(ii) issue or sell
any Stock to any Person, except that:

 

(A)
any Subsidiary of Borrower may issue Stock to Borrower or any Pledgor (other
than Mid-Missouri Telephone) under the Pledge Agreement;

 

(B)
Mid-Missouri Telephone may issue Stock to Mid-Missouri Holding;

 

(C)
Imagination may issue Stock to Mid-Missouri Telephone;

 

(D)
Borrower may issue or sell its Class A common stock for fair market value so
long as no Change of Control occurs after giving effect thereto, no holding
company of Borrower exists after giving effect thereto and either such Class A
common stock is issued as consideration for a Permitted Acquisition or such
Class A common stock is issued for cash and not later than 90 days after the
date of issuance thereof the Net Cash Proceeds from the issuance thereof are
applied (1) to finance a Permitted Acquisition, (2) to finance a permitted
Consolidated Capital Expenditure, (3) to prepay Subordinated Debt, (4) to
prepay the Loans as required by Section 1.3(b)(iii) or (5) to make
any repurchase of shares of its common stock permitted by Section 6.14(l);
and

 

(E)
Borrower may issue Class A common stock as part of Initial IDS Securities
required to be issued upon conversion of any Class B common stock of Borrower
issued on the Closing Date as a part of the Related

 

50

 

Transactions so long as the Initial IDS-Linked
Subordinated Notes issued as part of such Initial IDS Securities are permitted
to be issued under Section 6.3(a)(vi).

 

(b)           No Credit Party shall amend its
charter, bylaws or other organizational documents, in either case in a manner
that would adversely affect Agent or Lenders or such Credit Party’s duty or
ability to repay the Obligations (it being understood that any amendment to
authorize, or increase the authorized shares of, any class of common stock of
Borrower that is not Disqualified Stock would not be prohibited).

 

(c)           No Credit Party shall engage in any
business other than the businesses engaged in by it on the Closing Date or
businesses reasonably related thereto.

 

6.6           Guaranteed Indebtedness.  No Credit Party shall create, incur, assume
or permit to exist any Guaranteed Indebtedness except:

 

(a)           Guaranteed
Indebtedness by endorsement of instruments or items of payment for deposit to
the general account of any Credit Party;

 

(b)           Guaranteed
Indebtedness incurred for the benefit of any other Credit Party if the primary
obligation of such other Credit Party is permitted by this Agreement, provided
that if the payment of such primary obligation is subordinated to the payment
of any of the Obligations, then the payment of such Guaranteed Indebtedness
shall be subordinated to the payment of the Obligations on the same basis that
such primary obligation is so subordinated;

 

(c)           Guaranteed
Indebtedness existing on the date hereof and described in Disclosure
Schedule 6.6;

 

(d)           the
Guaranties;

 

(e)           Guaranteed
Indebtedness incurred in the ordinary course of business of a Credit Party with
respect to surety and appeal bonds, performance and return-of-money bonds and
other similar obligations of such Credit Party up to $250,000 in the aggregate
for all Credit Parties combined;

 

(f)            Guaranteed
Indebtedness arising under indemnity agreements with title insurers to cause
such title insurers to issue in favor of Agent mortgagee title insurance
policies; and

 

(g)           additional
Guaranteed Indebtedness of the Credit Parties not to exceed an aggregate
outstanding principal amount of $250,000 at any time for all Credit Parties
combined.

 

6.7           Liens.  No Credit
Party shall create, incur, assume or permit to exist any Lien on or with
respect to its Accounts or any of its other properties or assets (whether now
owned or hereafter acquired) except for:

 

51

 

(a) Permitted
Encumbrances;

 

(b) Liens in
existence on the date hereof and summarized on Disclosure Schedule (6.7)
securing Indebtedness described on Disclosure Schedule (6.3) and
permitted refinancings, extensions and renewals thereof, including extensions
or renewals of any such Liens; provided that the principal amount so
secured is not increased and the Lien does not attach to any other property;

 

(c) Liens created
after the date hereof by conditional sale or other title retention agreements
(including Capital Leases) or in connection with purchase money Indebtedness
with respect to Equipment and Fixtures acquired by any Credit Party in the
ordinary course of business or in connection with purchase money Indebtedness
and Capital Leases expressly permitted to be assumed under Section
6.1(b)(iv) in connection with Permitted Acquisitions, involving the
Incurrence of an aggregate amount of purchase money Indebtedness (including any
assumed purchase money Indebtedness) and Capital Lease Obligations (including
any assumed Capital Lease Obligations) of not more than $1,000,000 outstanding
at any one time for all such Liens for all Credit Parties combined (provided
that such Liens attach only to the assets subject to such purchase money
Indebtedness and such Indebtedness is incurred within ninety (90) days
following such purchase and does not exceed 100% of the purchase price of the
subject assets);

 

(d) leases and
subleases of Real Property of a Credit Party granted to others which do not
materially interfere with the ordinary conduct of the business of Borrower or
any of its Subsidiaries; and

 

(e) Liens arising
from Uniform Commercial Code financing statement filings regarding operating
leases entered into by Borrower and its Subsidiaries in the ordinary course of
business.

 

In addition, no Credit Party shall become a party to
any agreement, note, indenture or instrument, or take any other action, that
would prohibit the creation of a Lien on any of its properties or other assets
in favor of Agent, on behalf of itself and Lenders, as additional collateral
for the Obligations, except  (i)
operating leases, Capital Leases, Licenses and agreements evidencing purchase
money Indebtedness, in each case which only prohibit Liens upon the assets that
are subject thereto, (ii) customary non-assignment clauses in agreements
entered into in the ordinary course of business, (iii) contracts for the sale
of assets permitted by Section 6.8 and (iv) restrictions imposed by
applicable law.

 

6.8           Sale of Stock and Assets.  No Credit Party shall sell, lease, license,
transfer, convey, assign or otherwise dispose of, in a single transaction or a
series of related transactions, any of its Properties or other assets,
including the Stock of any of its Subsidiaries (whether in a public or a
private offering or otherwise) or any of its Accounts (each, an “Asset Sale”),
other than:

 

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

 

52

 

(b) the sale,
transfer, conveyance or other disposition by a Credit Party of Equipment,
Fixtures or Real Estate that are obsolete, surplus or no longer used or useful
in such Credit Party’s business and having a book value not exceeding $500,000
in any single transaction or $1,000,000 in the aggregate in any Fiscal Year for
all Credit Parties combined;

 

(c) the sale of
other Equipment and Fixtures having a book value not exceeding $500,000 in any
single transaction or $1,000,000 in the aggregate in any Fiscal Year for all
Credit Parties combined;

 

(d) the sale of
Investments permitted by Section 6.2(c) in the ordinary course of
business;

 

(e) the sale of
Investments acquired in settlements or bankruptcies of customers and suppliers;

 

(f) Sale/Leaseback
Transactions permitted by and entered into in accordance with Section 6.12;

 

(g) dispositions
of customer accounts by a Credit Party in connection with compromise or
collections in the ordinary course of business;

 

(h) leases and
subleases permitted under Section 6.7(d);

 

(i) transfers of
assets by Borrower or any Subsidiary thereof to Borrower or any Subsidiary
Guarantor;

 

(j) Restricted
Payments permitted by Section 6.14;

 

(k) Condemnations
and casualties; and

 

(l) the sale of
Investments of a Person existing at the time such Person became a Subsidiary of
a Credit Party in connection with a Permitted Acquisition or at the time such
Person merged or consolidated with or into a Credit Party in connection with a
Permitted Acquisition, provided that such Investments were not made in
contemplation of such Permitted Acquisition;

 

provided
that each Asset Sale pursuant to the foregoing clauses of this Section 6.8
(other than clauses (h), (j) and (k)) shall be for fair market value and for
proceeds consisting of at least 75% cash. 
With respect to any Asset Sale permitted by this Section 6.8 (other
than Sections 6.8(h), (j) and (k)), subject to Section 1.3(b),
Agent agrees on reasonable prior written notice to release its Lien on such
assets or other properties in order to permit the applicable Credit Party to
effect such disposition and shall execute and deliver to Borrower, at
Borrower’s expense, appropriate documentation to acknowledge the release of
Lien in respect thereof as reasonably requested by Borrower.

 

6.9           ERISA.  No
Credit Party shall, or shall cause or permit any ERISA Affiliate to, cause or
permit to occur (i) an event that could result in the imposition of a

 

53

 

Lien under Section 412 of
the IRC or Section 302 or 4068 of ERISA or (ii) an ERISA Event to the extent
such ERISA Event could reasonably be expected to result in taxes, penalties or
other liability of $500,000 in the aggregate.

 

6.10         Financial Covenants.  Borrower shall not breach or fail to comply
with any of the Financial Covenants.

 

6.11         Hazardous Materials.  No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact any Credit Party’s
ability to use any of the Real Estate or any of the Collateral, in each case in
the operation of its business, other than such violations or Environmental
Liabilities that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

 

6.12         Sale/Leasebacks.  No Credit Party shall engage in any Sale/Leaseback Transaction,
synthetic lease or similar transaction involving any of its assets, except that
within ninety (90) days following the date on which any Equipment or Fixtures
are put in service by any Credit Party, such Credit Party may enter into a
Sale/Leaseback Transaction with respect to such Equipment or Fixtures to the
extent permitted by Section 6.7(c).

 

6.13         Cancellation of Indebtedness.  No Credit Party shall cancel any claim or
debt owing to it, except for reasonable consideration negotiated on an
arm’s-length basis and in the ordinary course of its business.

 

6.14         Restricted Payments.  No Credit Party shall make any Restricted
Payment, except that:

 

(a) 
intercompany loans and advances may be made by any Credit Party to any other
Credit Party to the extent permitted by Section 6.3(a)(viii);

 

(b) Subsidiaries
of Borrower may pay dividends and distributions to Borrower or any Subsidiary
Guarantor and Imagination may pay dividends and distributions to Mid-Missouri
Telephone;

 

(c) any
Credit Party may make employee loans permitted under Section 6.4(b);

 

(d) any
Credit Party may make payments of principal and interest of Intercompany Notes
issued in accordance with Section 6.3(a)(viii);

 

(e) on each
IDS Payment Date (other than March 30, 2005), so long as (i) no Default or
Event of Default has occurred and is continuing or would occur as a consequence
of the payment of such cash dividends, (ii) no Interest Deferral Period has
occurred and is continuing, (iii) no Dividend Suspension Period has occurred
and is continuing, (iv) no Deferred Interest is outstanding under any
Subordinated Debt and

 

54

 

(v) the Compliance Certificate required to be
delivered pursuant to Section 4.1 in respect of the Fiscal Quarter most
recently ended prior to such IDS Payment Date has been timely delivered, Borrower
may declare and pay quarterly cash dividends to the holders of its Class A
common stock on such IDS Payment Date in an aggregate amount which, together
with the aggregate amount of all other cash dividends paid by Borrower on its
Class A common stock (excluding cash dividends paid by Borrower on its Class A
common stock on March 30, 2005 pursuant to Section 6.14(m) and
redemptions or repurchases (excluding such redemptions or repurchases permitted
by Section 6.14(l)) by Borrower of shares of its common stock from its
officers, employees, consultants and directors in connection with the
termination of employment or engagement of any such Person after the Closing
Date, is less than the amount of Excess Cash as of such IDS Payment Date;

 

(f) on each
IDS Payment Date (other than March 30, 2005) (for these purposes, a “Subject
IDS Payment Date”), subject to Section 6.19(b) and the subordination
provisions of the applicable Subordinated Debt Documents and the other terms of
Article 10 of the applicable IDS Subordinated Notes Indenture (and the
comparable provisions of the applicable Additional Subordinated Debt Documents)
and so long as (i) no Interest Deferral Period has occurred and is continuing
and (ii) the Compliance Certificate required to be delivered pursuant to Section
4.1 in respect of the Fiscal Quarter most recently ended prior to such
Subject IDS Payment Date has been timely delivered, Borrower may pay quarterly
accrued and unpaid interest on the Subordinated Debt and prepay any Deferred
Interest in cash on such Subject IDS Payment Date in an aggregate amount not to
exceed:

 

(I)                                    Distributable
Cash as of such Subject IDS Payment Date minus

 

(II)                                the
aggregate amount of (A) cash dividends paid by Borrower on its Class A common
stock during the period from January 1, 2005 through the end of the Fiscal
Quarter most recently ended prior to such Subject IDS Payment Date (excluding
cash dividends paid by Borrower on its Class A common stock on March 30, 2005
pursuant to Section 6.14(m)), (B) cash redemptions or cash repurchases
(excluding such redemptions or repurchases permitted by Section 6.14(l))
during such period by Borrower of shares of its common stock from its officers,
employees, consultants and directors in connection with the termination of
employment or engagement of any such Person and (C) cash interest payments made
by Borrower on the Subordinated Debt during such period (excluding cash
interest payments made by Borrower on the Initial IDS Subordinated Notes on
March 30, 2005 pursuant to Section 6.14(m));;

 

55

 

provided,
however, that notwithstanding the foregoing provisions of this Section
6.14(f), if, prior to such Subject IDS Payment Date the payment of interest
on a particular series or issue of Subordinated Debt has been deferred pursuant
to the interest deferral provisions of the Subordinated Debt Documents
applicable to such particular series or issue of Subordinated Debt on eight (8)
IDS Payment Dates in the aggregate occurring prior to such Subject IDS Payment
Date, then subject to Section 6.19(b) and the subordination provisions
of such Subordinated Debt Documents and the other terms of Article 10 of the
IDS Subordinated Notes Indenture (or the comparable provisions of the
Additional Subordinated Debt Documents) applicable to such particular series or
issue of Subordinated Debt, Borrower may pay quarterly accrued and unpaid
interest on such particular series or issue of Subordinated Debt (and prepay
Deferred Interest) in cash on such Subject IDS Payment Date;

 

(g) at any time
that no Default or Event of Default has occurred and is continuing or would
result, IDS Subordinated Notes permitted by Sections 6.3(a)(v), (vi) or (xv)
may be refinanced with the proceeds of Subsequent IDS Subordinated Notes in
accordance with Section 6.3(a)(xv) and Permitted Additional Subordinated
Debt permitted by Section 6.3(a)(vii) may be refinanced with the
proceeds of Subsequent IDS Subordinated Notes in accordance with Section
6.3(a)(xv) or Permitted Additional Subordinated Debt in accordance with Section
6.3(a)(vii);

 

(h) the Credit
Parties may make the Restricted Payments on the Closing Date contemplated by
the Restructuring Documents as a part of the Related Transactions;

 

(i) Borrower may
redeem or repurchase shares of its common stock from its officers, employees,
consultants and directors in connection with the termination of employment or
engagement of any such Person, provided that  (i) no Default or Event of Default has occurred and is continuing
or would result therefrom and (ii) the aggregate amount paid in respect of all
such shares so redeemed or repurchased does not exceed $2,000,000 in any Fiscal
Year;

 

(j) Borrower may
issue Class A common stock as part of Initial IDS Securities required to be
issued upon conversion of any Class B common stock of Borrower issued on the
Closing Date as a part of the Related Transactions so long as the Initial
IDS-Linked Subordinated Notes issued as part of such Initial IDS Securities are
permitted to be issued under Section 6.3(a)(vi);

 

(k) Borrower may
pay dividends on its common stock solely in shares of common stock of Borrower;

 

(l) so long as no
Default or Event of Default has occurred and is continuing or would result,
Borrower may repurchase shares of its common stock solely in exchange for or
with cash received from an issuance of its common stock permitted by Section
6.5(a); and

 

(m) on March 30,
2005, subject to Section 6.19(b) and the subordination provisions of and
the other terms of Article 10 of the Initial IDS Subordinated Notes Indenture
and so long as no Default or Event of Default has occurred and is continuing or

 

56

 

would result, Borrower may pay current interest on the
Initial IDS Subordinated Notes in an aggregate amount not to exceed
$                   
and Borrower may pay cash dividends on its Class A common stock in an aggregate
amount not to exceed $                .

 

6.15         Change of Corporate Name or Location;
Change of Fiscal Year.  No
Credit Party shall (a) change its name as it appears in official filings in the
state of its incorporation or other organization,  (b) change its chief executive office, principal place of
business or corporate offices, (c)
change the type of entity that it is, (d) change its organization
identification number, if any, issued by its state of incorporation or other
organization, or (e) change its state of incorporation or organization, in each
case without at least 30 days prior written notice to Agent and after any action
required to be taken in accordance with Section 5.13 and any other
action reasonably requested by Agent in connection therewith, including to
continue the perfection of any Liens in favor of Agent, on behalf of Lenders,
in any Collateral, has been completed or taken, and provided that any
such new location shall be in the continental United States.  No Credit Party shall change its Fiscal
Year, except that a Subsidiary that becomes a Credit Party in connection with a
Permitted Acquisition may change its Fiscal Year to conform to that of
Borrower.

 

6.16         No Impairment of Intercompany
Transfers.  No Credit Party
shall directly or indirectly enter into or become bound by any agreement,
instrument, indenture or other obligation (other than this Agreement and the
other Loan Documents) that could directly or indirectly restrict, prohibit or
require the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Subsidiary
of Borrower to Borrower except for (a) the Loan Documents, (b) restrictions
imposed by applicable law or any applicable rule, regulation or order and [(c)
restrictions on cash or other deposits imposed by customers under contracts
entered into in the ordinary course of business].

 

6.17         No Speculative Transactions.  No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in interest rates
required by Section 5.10.

 

6.18         [Intentionally Omitted].

 

6.19         Changes Relating to Subordinated
Debt; Material Contracts.

 

(a)           No
Credit Party shall change or amend the terms of any Subordinated Debt (or any
indenture, note, guarantee, agreement or other Subordinated Debt Document in connection
therewith) if the effect of such amendment is to:  (i) increase the interest rate on such Subordinated Debt (or on
any Deferred Interest thereon) or change the manner of payment thereof
(including changes from cash interest to payment-in-kind interest); (ii) change
the dates upon which payments of principal, interest or other amounts are due
on such Subordinated Debt other than to extend such dates; (iii) change any
default or event of default other than to delete or make less restrictive any
default provision therein, or add any covenant with respect to such
Subordinated Debt; (iv) change the redemption or prepayment provisions of such
Subordinated Debt other than to extend the dates therefor or to reduce the
premiums

 

57

 

payable in connection therewith; (v) grant any
security or collateral to secure payment of such Subordinated Debt or provide
any additional guaranty with respect to such Subordinated Debt (other than,
with respect to a new Subsidiary that is a Subsidiary Guarantor, a subordinated
guaranty by such new Subsidiary in the form of the subordinated guaranty issued
in connection with the Initial IDS Subordinated Notes Documents); (vi) change
the subordination provisions thereof; (vii) change the interest deferral
provisions thereof; or (viii) change or amend any other term if such change or
amendment would materially increase the obligations of any Credit Party
thereunder or confer additional material rights on the holder of such
Subordinated Debt in a manner adverse to any Credit Party, Agent or any Lender.

 

(b)           No
Credit Party shall make any payment on any Indebtedness (other than the
Obligations) in contravention of the terms of the subordination provisions with
respect to any series or issue of Subordinated Debt or other Indebtedness or
any of the other terms of Articles 10 and 12 of the Initial IDS Subordinated
Notes Indenture or any Subsequent IDS Subordinated Notes Indenture (or the
comparable provisions of any Additional Subordinated Debt Documents),
including, without limitation, terms which prohibit payments (other than
payments of Obligations) (i) during the continuance of a default, or (ii) if
specified Indebtedness is accelerated, or (iii) if a payment blockage notice is
delivered.

 

(c)           After
the issuance thereof, no Credit Party shall change or amend the terms of any
Indebtedness (other than the Obligations) in a manner adverse to any Credit
Party, Agent or any Lender.

 

(d)           No
Credit Party shall change or amend in any manner adverse to the interests of
the Lenders the terms of its certificate of formation or organization,
operating agreement, certificate of incorporation or other organizational
documents (including by-laws) or any agreement entered into by any Credit Party
with respect to its Stock, or enter into any new agreement in any manner
adverse to the interests of the Lenders with respect to its Stock (it being
understood that any amendment to the certificate of incorporation of Borrower
to authorize, or increase the authorized shares of, any class of common stock
(other than Disqualified Stock) of Borrower would not be prohibited).

 

(e)           No
Credit Party shall change or amend the terms of any of the following material
contracts: the M&A Software License and
              .

 

6.20         Holding Companies.  None of the Holding Companies shall engage in any trade or
business, or own any assets (other than Stock of its Subsidiaries and assets
incidental to the ownership thereof) or Incur any Indebtedness or Guaranteed
Indebtedness (other than Indebtedness permitted under Section 6.3 and
Guaranteed Indebtedness permitted under Section 6.6).

 

6.21         Designated Senior Debt.  Borrower shall not designate any
Indebtedness (other than the Obligations) as “Senior Indebtedness”, “Designated
Senior

 

58

 

Indebtedness” or “Senior
Lender Indebtedness” or like term for purposes of any Subordinated Debt
Document.

 

6.22         Limitations on Accumulation of Funds.  To the extent permitted by the Missouri PUC
without seeking Missouri PUC consent, (i) Mid-Missouri Telephone shall not
accumulate cash or cash equivalents (including funds on deposit in bank
accounts and Investments of the type permitted by Section 6.2(c)) in
excess of cash balances as may be reasonably required to be maintained by it to
pay expenses incurred by it in the ordinary course of business, and (ii)
Mid-Missouri Telephone shall immediately pay cash dividends or otherwise make
cash distributions to Mid-Missouri Holding in an aggregate amount equal to all
such cash and cash equivalents then accumulated by Mid-Missouri Telephone in
excess of such cash balances.  No Credit
Party (other than Borrower and Mid-Missouri Telephone) shall accumulate cash or
cash equivalents (including funds on deposit in bank accounts and Investments
of the type permitted by Section 6.2(c)) in excess of cash balances as
may be reasonably required to be maintained by it to pay expenses incurred by
it in the ordinary course of business, and each such Credit Party shall
immediately from time to time pay cash dividends or otherwise make cash
distributions to Borrower in an aggregate amount equal to all such cash and
cash equivalents then accumulated by it in excess of such cash balances.

 

6.23         Limitations on Creation of
Subsidiaries.  No Credit Party
will establish, create or acquire after the Closing Date any Subsidiary,
provided that the Credit Parties shall be permitted to establish, create and,
to the extent permitted by Section 6.1, acquire Subsidiaries so long as
(i) each such new Subsidiary is a Wholly-Owned Subsidiary, (ii) all of the
Stock of each such new Subsidiary is pledged pursuant to the Pledge Agreement
and the certificates representing such Stock, together with stock or other
powers duly executed in blank, are delivered to Agent for the benefit of
Lenders, and (iii) each such new Subsidiary executes and delivers to Agent and
Lenders (1) a Joinder Agreement whereby such Subsidiary becomes a party to this
Agreement as a “Credit Party” hereunder, a party to the Subsidiary Guaranty as
a “Guarantor” thereunder, a party to the Security Agreement as a “Grantor”
thereunder and, if applicable, a party to the Pledge Agreement as a “Pledgor”
thereunder and (2) if and to the extent reasonably requested by Agent or
Required Lenders, all other relevant documentation of the type described in Section
2 and the Closing Checklist as such new Subsidiary would have had to
deliver if such new Subsidiary were a Credit Party on the Closing Date.

 

7                                         TERM

 

7.1           Termination. 
The financing arrangements contemplated hereby shall be in effect until
the Commitment Termination Date, and the Loans and all other Obligations (other
than contingent indemnity and expense reimbursement provisions for which no
claim has been made) shall be automatically due and payable in full on such
date.

 

7.2           Survival of Obligations Upon
Termination of Financing Arrangements. 
Except as otherwise expressly provided for herein or in any other Loan
Document, no termination or cancellation (regardless of cause or procedure) of any

 

59

 

financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders
relating to any unpaid portion of the Loans or any other Obligations, due or
not due, liquidated, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date.  Except as otherwise expressly provided
herein or in any other Loan Document, all undertakings, agreements, covenants,
warranties and representations of or binding upon the Credit Parties, and all
rights of Agent and each Lender, all as contained in the Loan Documents, shall
not terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, that the provisions of Section 11, the payment
obligations under Sections 1.15 and 1.16,  and the indemnities contained in the Loan Documents shall survive
the Termination Date.

 

8                                         EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

8.1           Events of Default.  The occurrence of any one or more of the following events (regardless
of the reason therefor) shall constitute an “Event of Default”
hereunder:

 

(a)           Borrower
(i) fails to make any payment of principal of any of the Loans when due and
payable, or (ii) fails to make any payment of interest on, or Fees owing in
respect of, any of the Loans or any of the other Obligations within three (3)
days following the due date thereof, or (iii) fails to pay or reimburse Agent
or Lenders for any expense reimbursable hereunder or under any other Loan
Document within five (5) Business Days following Agent’s demand for such
reimbursement or payment of expenses.

 

(b)           Any
Credit Party fails or neglects to perform, keep or observe any of the
provisions of Sections 1.4, 1.8, 5.4(a) or 6, or any of the provisions
set forth in Annex C or G, respectively.

 

(c)           Any
Credit Party fails or neglects to perform, keep or observe any of the
provisions of Section 4 or any provisions set forth in Annex E or F,
respectively, and the same shall remain unremedied for three (3) Business Days
or more.

 

(d)           Any
Credit Party fails or neglects to perform, keep or observe any other provision
of this Agreement or of any of the other Loan Documents (other than any
provision embodied in or covered by any other clause of this Section 8.1)
and the same shall remain unremedied for thirty (30) days or more after any
Credit Party first obtains knowledge or is notified of such failure or neglect.

 

(e)           A
default or breach occurs under any other agreement, document or instrument to
which any Credit Party is a party that is not cured within any applicable grace
period therefor, and such default or breach (i) involves the failure to make
any payment when due in respect of any Indebtedness or Guaranteed Indebtedness
(other than the Obligations and other than Guaranteed Indebtedness with respect
to which the

 

60

 

primary obligation is not itself Indebtedness) of any
Credit Party in excess of $500,000 in the aggregate (including (x) undrawn
committed or available amounts and (y) amounts owing to all creditors under any
combined or syndicated credit arrangements), or (ii) causes, or permits any
holder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause,
such Indebtedness or Guaranteed Indebtedness or a portion thereof in excess of
$500,000 in the aggregate to become due prior to its stated maturity or prior
to its regularly scheduled dates of payment, or cash collateral to be demanded
in respect thereof, in each case, regardless of whether such right is exercised
by such holder or trustee.

 

(f)            Any
representation or warranty herein or in any other Loan Document or in any
written statement, report, financial statement or certificate made or delivered
to Agent or any Lender by any Credit Party is untrue or incorrect as of the date
when made or deemed made (i) as stated if such representation or warranty
contains an express materiality qualification or (ii) in any material respect
if such representation and warranty does not contain such a qualification.

 

(g)           Assets
of any Credit Party with a fair market value of $500,000 or more are attached,
seized, levied upon or subjected to a writ or distress warrant, or come within
the possession of any receiver, trustee, custodian or assignee for the benefit
of creditors of any Credit Party and such condition continues for thirty (30)
days or more.

 

(h)           A
case or proceeding is commenced against any Credit Party seeking a decree or
order in respect of such Credit Party (i) under the Bankruptcy Code or any
other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Credit Party or for any substantial
part of any such Credit Party’s assets, or (iii) ordering the winding-up
or liquidation of the affairs of such Credit Party, and such case or proceeding
shall remain undismissed or unstayed for sixty (60) days or more or a decree or
order granting the relief sought in such case or proceeding is granted by a
court of competent jurisdiction.

 

(i)            Any
Credit Party (i) files a petition seeking relief under the Bankruptcy Code or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) consents to or fails to contest in a timely and appropriate manner to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for such
Credit Party or for any substantial part of any such Credit Party’s assets,
(iii) makes an assignment for the benefit of creditors, (iv) takes any action
in furtherance of any of the foregoing, or (v) admits in writing its inability
to, or is generally unable to, pay its debts as such debts become due.

 

(j)            A
final judgment or judgments for the payment of money in excess of $500,000 in
the aggregate at any time are outstanding against one or more of the Credit
Parties and the same are not, within thirty (30) days after the entry thereof,
discharged or execution thereof stayed or bonded pending appeal, or such
judgments are not discharged prior to the expiration of any such stay.

 

61

 

(k)           Any
material provision of any Loan Document for any reason ceases to be valid,
binding and enforceable in accordance with its terms (or any Credit Party shall
challenge the enforceability of any Loan Document or shall assert in writing,
or engage in any action or inaction based on any such assertion, that any
provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien
created under any Loan Document ceases to be a valid and perfected first
priority Lien (except as otherwise permitted herein or therein) in any of the
Collateral purported to be covered thereby.

 

(l)            Any
Change of Control occurs.

 

(m)          (i)
a notice of termination shall have been delivered under Section 4 of the
M&A Software License or under any Replacement Software Agreement and the
applicable Replacement Software Required Actions shall not have been completed
when required as set forth in the definition of Replacement Software Required
Actions; or (ii) the M&A Software License (or, if applicable, any
Replacement Software Agreement), as applicable, shall terminate or expire prior
to the completion of the applicable Replacement Software Required Actions; or
(iii) Agent shall have exercised its rights to cure a default (as set forth in
the Software Amendment and Consent or any Replacement Amendment and Consent) of
Otelco Telephone LLC or other applicable Credit Party under the M&A
Software License (or Replacement Software Agreement, if applicable) without
reimbursement within two (2) days thereof for the reasonable costs, fees and
expenses associated therewith.

 

(n)           [Intentionally
Omitted.]

 

(o)           Any
Telecommunications Approval, including any FCC License, PUC Authorization or
Franchise, of any Credit Party shall expire or terminate or be modified,
revoked or otherwise lost which in any case could reasonably be expected to
have a Material Adverse Effect.

 

(p)           Any
Event of Default (as such term is respectively defined in the Initial IDS
Subordinated Notes Indenture, any Subsequent IDS Subordinated Notes Indenture
or any Additional Subordinated Debt Document) occurs and is continuing.

 

8.2           Remedies.

 

(a)           If
any Default or Event of Default has occurred and is continuing, Agent, at the
written request of the Requisite Revolving Lenders, shall, without notice, suspend
the Revolving Loan and Swing Line Loan facilities with respect to additional
Advances, whereupon any additional Advances shall be made in the sole
discretion of the Requisite Revolving Lenders so long as such Default or Event
of Default is continuing.

 

(b)           If
any Event of Default has occurred and is continuing, Agent may (and at the
written request of the Requisite Lenders, shall), without notice:  (i) terminate the Revolving Loan
Commitment and Swing Line Commitment with respect to further Advances; (ii) declare
all or any portion of the Obligations, including all or any portion of any Loan
to be forthwith due and payable, all without presentment, demand, protest or

 

62

 

further notice of any kind, all of which are expressly
waived by Borrower and each other Credit Party; or (iii) exercise any
rights and remedies provided to Agent under the Loan Documents or at law or
equity, including all remedies provided under the Code; provided, that
upon the occurrence of an Event of Default specified in Sections 8.1(h) or
(i), the Revolving Loan Commitment and Swing Line Commitment shall be
immediately terminated and all of the Obligations, including the Revolving Loan
and the Swing Line Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.

 

8.3           Waivers by Credit Parties.  Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party waives:  (a) presentment, demand and protest and
notice of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Agent on which any Credit Party may in any way be liable, and
hereby ratifies and confirms whatever Agent may do in this regard, (b) all
rights to notice and a hearing prior to Agent’s taking possession or control
of, or to Agent’s replevy, attachment or levy upon, the Collateral or any bond
or security that might be required by any court prior to allowing Agent to
exercise any of its remedies, and (c) the benefit of all valuation, appraisal,
marshaling and exemption laws.

 

9                                         ASSIGNMENT AND PARTICIPATIONS;
APPOINTMENT OF AGENT

 

9.1           Assignment and Participations.

 

(a)           Subject to the terms of this Section 9.1,
any Lender may make an assignment to a Qualified Assignee of, or sale of
participations in, at any time or times, the Loan Documents, Loans and any
Commitment or any portion thereof or interest therein, including any Lender’s
rights, title, interests, remedies, powers or duties thereunder.  Any assignment by a Lender shall:  (i)(A) except for an assignment to an
Affiliate (as defined in clause (a) and/or (b) of the definition of “Affiliate”
in Annex A) of the assigning Lender, require the consent of Agent (which
consent shall not be unreasonably withheld or delayed with respect to a
Qualified Assignee) and (B) require the execution of an assignment agreement
(an “Assignment Agreement”) substantially in the form attached hereto as
Exhibit 9.1(a) and otherwise in form and substance reasonably
satisfactory to, and acknowledged by, Agent; (ii) be conditioned on the
assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii)
after giving effect to any such partial assignment, the assignee Lender shall
have Commitments in an amount at least equal to $2,500,000 and the assigning
Lender shall have retained Commitments in an amount at least equal to
$2,500,000; and (iv) except for an assignment to an Affiliate (as defined in
clause (a) and/or (b) of the definition of “Affiliate” in Annex A) of
the assigning Lender, include a payment to Agent of an assignment fee of
$3,500.  In the case of an assignment by
a Lender under this Section 9.1, the assignee shall have, to the extent
of such assignment, the same rights, benefits and obligations as all other
Lenders hereunder.  The

 

63

 

assigning Lender shall be relieved of its obligations
hereunder with respect to its Commitments or assigned portion thereof from and
after the date of such assignment. 
Borrower hereby acknowledges and agrees that any assignment shall give
rise to a direct obligation of Borrower to the assignee and that the assignee
shall be considered to be a “Lender”. 
In all instances, each Lender’s liability to make Loans hereunder shall
be several and not joint and shall be limited to such Lender’s Pro Rata Share
of the applicable Commitment.  In the
event Agent or any Lender assigns or otherwise transfers all or any part of the
Obligations, Agent or any such Lender shall so notify Borrower and Borrower
shall, upon the request of Agent or such Lender, execute new Notes in exchange
for the Notes, if any, being assigned. 
Notwithstanding the foregoing provisions of this Section 9.1(a),
any Lender may at any time pledge the Obligations held by it and such Lender’s
rights under this Agreement and the other Loan Documents to a Federal Reserve
Bank, and any lender that is an investment fund may assign the Obligations held
by it and such Lender’s rights under this Agreement and the other Loan
Documents to another investment fund managed by the same investment advisor; provided,
that no such pledge to a Federal Reserve Bank shall release such Lender from
such Lender’s obligations hereunder or under any other Loan Document.

 

(b)           Any
participation by a Lender of all or any part of its Commitments shall be made
with the understanding that all amounts payable by Borrower hereunder shall be
determined as if that Lender had not sold such participation, and that the
holder of any such participation shall not be entitled to require such Lender
to take or omit to take any action hereunder except actions directly affecting
(i) any reduction in the principal amount of, or interest rate or Fees payable
with respect to, any Loan in which such holder participates, (ii) any extension
of the scheduled amortization of the principal amount of any Loan in which such
holder participates or the final maturity date thereof, and (iii) any release
of all or substantially all of the Collateral (other than in accordance with
the terms of this Agreement, the Collateral Documents or the other Loan
Documents).  Solely for purposes of Sections
1.13, 1.15, 1.16 and 9.8, Borrower acknowledges and agrees that a
participation shall give rise to a direct obligation of Borrower to the
participant and the participant shall be considered to be a “Lender”.  Except as set forth in the preceding
sentence neither Borrower nor any other Credit Party shall have any obligation
or duty to any participant.  Neither
Agent nor any Lender (other than the Lender selling a participation) shall have
any duty to any participant and may continue to deal solely with the Lender
selling a participation as if no such sale had occurred.

 

(c)           Except
as expressly provided in this Section 9.1, no Lender shall, as between
Borrower and that Lender, or Agent and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.

 

(d)           Each
Credit Party executing this Agreement shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 as reasonably
required to enable the assigning or selling Lender to document any such
assignment or

 

64

 

participation, including the execution and delivery of
any and all agreements, notes and other documents and instruments as shall be
reasonably requested.

 

(e)           A
Lender may furnish any information concerning Credit Parties in the possession
of such Lender from time to time to assignees and participants (including
prospective assignees and participants); provided that such Lender shall
obtain from assignees or participants confidentiality covenants substantially
equivalent to those contained in Section 11.8.

 

(f)            Any
entity that purchases a participation in the Loans pursuant to Section
9.2(b) shall not be entitled to receive any greater payment under Section
1.16(a) with respect to capital adequacy or similar requirements, Section
1.16(b) with respect to increased costs, Section 1.16(c) with
respect to the inability to make LIBOR Loans or Section 1.15(a) with
respect to withholding taxes, than the applicable Lender would have been
entitled to receive with respect to the participation sold to such participant,
unless the sale of the participation to such participant is made with the
Borrower’s prior written consent or unless such sale is made while an Event of
Default has occurred and is continuing.

 

(g)           Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting Lender”),
may grant to a special purpose funding vehicle (an “SPC”), identified as
such in writing by the Granting Lender to Agent and Borrower, the option to
provide to Borrower all or any part of any Loans that such Granting Lender
would otherwise be obligated to make to Borrower pursuant to this Agreement; provided
that (i) nothing herein shall constitute a commitment by any SPC to make
any Loan; and (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Lender shall be
obligated to make such Loan pursuant to the terms hereof.  The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if such Loan were made by such Granting Lender.  No SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender).  Any SPC may (i) with
notice to, but without the prior written consent of, Borrower and Agent and
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions (consented to by Borrower and Agent) providing
liquidity and/or credit support to or for the account of such SPC to support
the funding or maintenance of Loans and (ii) disclose on a confidential basis
any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC.  This
Section 9.1(g) may not be amended without the prior written consent of
each Granting Lender, all or any of whose Loans are being funded by an SPC at
the time of such amendment.  For the
avoidance of doubt, the Granting Lender shall for all purposes, including
without limitation, the approval of any amendment or waiver of any provision of
any Loan Document or the obligation to pay any amount otherwise payable by the
Granting Lender under the Loan Documents, continue to be the Lender of record
hereunder.

 

65

 

9.2           Appointment of Agent. GE Capital is hereby
appointed to act on behalf of all Lenders as Agent under this Agreement and the
other Loan Documents.  The provisions of
this Section 9.2 are solely for the benefit of Agent and Lenders and no
Credit Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. 
In performing its functions and duties under this Agreement and the
other Loan Documents, Agent shall act solely as an agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Credit Party or any other
Person.  Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents.  The duties of
Agent shall be mechanical and administrative in nature and Agent shall not
have, or be deemed to have, by reason of this Agreement, any other Loan
Document or otherwise a fiduciary relationship in respect of any Lender.  Except as expressly set forth in this
Agreement and the other Loan Documents, Agent shall not have any duty to
disclose, and shall not be liable for failure to disclose, any information
relating to any Credit Party or any of their respective Subsidiaries or any
Account Debtor that is communicated to or obtained by GE Capital or any of its
Affiliates in any capacity.  Neither
Agent nor any of its Affiliates nor any of their respective officers,
directors, employees, agents or representatives shall be liable to any Lender
for any action taken or omitted to be taken by it hereunder or under any other
Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.

 

If Agent shall
request instructions from Requisite Lenders, Requisite Revolving Lenders,
Requisite Term Lenders or all affected Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any
other Loan Document (other than any action or failure to act that is the
subject of a mandatory provision of this Agreement or any Loan Documents), then
Agent shall be entitled to refrain from such act or taking such action unless
and until Agent shall have received instructions from Requisite Lenders,
Requisite Revolving Lenders, Requisite Term Lenders, or all affected Lenders,
as the case may be, and Agent shall not incur liability to any Person by reason
of so refraining.  Agent shall be fully
justified in failing or refusing to take any action hereunder or under any other
Loan Document (a) if such action would, in the opinion of Agent, be contrary to
law or the terms of this Agreement or any other Loan Document, (b) if such
action would, in the opinion of Agent, expose Agent to Environmental
Liabilities or (c) if Agent shall not first be indemnified to its satisfaction
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.  Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting hereunder or under any other Loan Document in accordance with the
instructions of Requisite Lenders, Requisite Revolving Lenders, Requisite Term
Lenders or all affected Lenders, as applicable.

 

9.3           Agent’s Reliance, Etc.  Neither Agent nor any of its Affiliates nor
any of their respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents, except for damages
caused by its or their own gross negligence or willful misconduct as finally
determined by a court of competent

 

66

 

jurisdiction.  Without limiting the generality of the
foregoing, Agent:  (a)  may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form reasonably satisfactory to
Agent; (b) may consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation
to any Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with this Agreement or
the other Loan Documents; (d) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the books and records) of
any Credit Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopy, telegram, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties.

 

9.4           GE Capital and Affiliates.  With respect to its Commitments hereunder,
GE Capital shall have the same rights and powers under this Agreement and
the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term “Lender” or “Lenders” shall, unless
otherwise expressly indicated, include GE Capital in its individual
capacity.  GE Capital and its Affiliates
may lend money to, invest in, and generally engage in any kind of business
with, any Credit Party, any of their Affiliates and any Person who may do
business with or own securities of any Credit Party or any such Affiliate, all
as if GE Capital were not Agent and without any duty to account therefor to Lenders.  GE Capital and its Affiliates may accept
fees and other consideration from any Credit Party for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.  Each Lender acknowledges the
potential conflict of interest between GE Capital as a Lender holding
disproportionate interests in the Loans and GE Capital as Agent.

 

9.5           Lender Credit Decision.  Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other
documents and information as it has deemed appropriate, made its own credit and
financial analysis of the Credit Parties and its own decision to enter into
this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement. 
Each Lender acknowledges the potential conflict of interest of each
other Lender as a result of Lenders holding disproportionate interests in the
Loans, and expressly consents to, and waives any claim based upon, such conflict
of interest.

 

67

 

9.6           Indemnification.  Lenders agree to indemnify Agent (to the extent not reimbursed by
Credit Parties and without limiting the obligations of Borrower hereunder),
ratably according to their respective Pro Rata Shares, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever that
may be imposed on, incurred by, or asserted against Agent in any way relating
to or arising out of this Agreement or any other Loan Document or any action
taken or omitted to be taken by Agent in connection therewith; provided,
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent’s gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.  Without limiting the foregoing, each Lender
agrees to reimburse Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Credit Parties.

 

9.7           Successor Agent.  Agent may resign at any time by giving not less than 30 days’
prior written notice thereof to Lenders and Borrower.  Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent.  If
no successor Agent shall have been so appointed by the Requisite Lenders and
shall have accepted such appointment within 30 days after the resigning Agent’s
giving notice of resignation, then the resigning Agent may, on behalf of
Lenders, appoint a successor Agent, which shall be a Lender, if a Lender is
willing to accept such appointment, or otherwise shall be a commercial bank or
financial institution or a subsidiary of a commercial bank or financial
institution if such commercial bank or financial institution is organized under
the laws of the United States of America or of any State thereof and has a
combined capital and surplus of at least $300,000,000.  If no successor Agent has been appointed
pursuant to the foregoing, within 30 days after the date such notice of
resignation was given by the resigning Agent, such resignation shall become
effective and the Requisite Lenders shall thereafter perform all the duties of
Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor
Agent as provided above. Any successor Agent appointed by Requisite Lenders
hereunder shall be subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided that such approval shall not
be required if a Default or an Event of Default has occurred and is
continuing.  Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Agent.  Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent’s resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue.  After any resigning Agent’s resignation hereunder, the provisions
of this Section 9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was acting as Agent under this Agreement and
the other Loan Documents.

 

68

 

9.8           Setoff and Sharing of Payments.  In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default and subject to Section
9.9(f), each Lender is hereby authorized at any time or from time to time,
without notice to any Credit Party or to any other Person, any such notice
being hereby expressly waived, to offset and to appropriate and to apply any
and all balances held by it at any of its offices for the account of Borrower
or any Guarantor (regardless of whether such balances are then due to Borrower
or any Guarantor) and any other properties or assets at any time held or owing
by that Lender or that holder to or for the credit or for the account of
Borrower or any Guarantor against and on account of any of the Obligations that
are not paid when due.  Any Lender
exercising a right of setoff or otherwise receiving any payment on account of
the Obligations in excess of its Pro Rata Share thereof shall purchase for cash
(and the other Lenders or holders shall sell) such participations in each such
other Lender’s or holder’s Pro Rata Share of the Obligations as would be
necessary to cause such Lender to share the amount so offset or otherwise
received with each other Lender or holder in accordance with their respective
Pro Rata Shares (other than offset rights exercised by any Lender with respect
to Sections 1.13, 1.15 or 1.16). 
Each Lender’s obligation under this Section 9.8 shall be in
addition to and not in limitation of its obligations to purchase a participation
in an amount equal to its Pro Rata Share of the Swing Line Loans under Section
1.1.  Borrower and each Guarantor
agrees, to the fullest extent permitted by law, that (a) any Lender may
exercise its right to offset with respect to amounts in excess of its Pro Rata
Share of the Obligations and may sell participations in such amounts so offset
to other Lenders and holders and (b) any Lender so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of offset, bankers’ lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation.  Notwithstanding the foregoing,
if all or any portion of the offset amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of offset,
the purchase of participations by that Lender shall be rescinded and the
purchase price restored without interest.

 

9.9           Advances; Payments; Non-Funding
Lenders; Information; Actions in Concert.

 

(a)           Advances;
Payments.

 

(i)            Agent
shall notify Revolving Lenders, promptly after receipt of a Notice of Revolving
Credit Advance and in any event prior to 1:00 p.m. (New York time) on the date
such Notice of Revolving Credit Advance is received, by telecopy, telephone or
other similar form of transmission. 
Each Revolving Lender shall make the amount of such Lender’s Pro Rata
Share of such Revolving Credit Advance available to Agent in same day funds by
wire transfer to Agent’s account as set forth in Annex H not later than
3:00 p.m. (New York time) on the requested funding date, in the case of an
Index Rate Loan and not later than 11:00 a.m. (New York time) on the requested
funding date in the case of a LIBOR Loan. 
After receipt of such wire transfers (or, in Agent’s sole discretion,
before receipt of such wire transfers), subject to the terms

 

69

 

hereof, Agent shall make the requested Revolving
Credit Advance to Borrower.  All
payments by each Revolving Lender shall be made without setoff, counterclaim or
deduction of any kind.

 

(ii)           Not
less than once during each calendar week or more frequently at Agent’s election
(each, a “Revolving Lender Settlement Date”), Agent shall advise each
Revolving Lender by telephone, or telecopy of the amount of such Revolving
Lender’s Pro Rata Share of principal, interest and Fees paid for the benefit of
Revolving Lenders with respect to each applicable Revolving Loan.  Provided that each Revolving Lender is not a
Non-Funding Lender as of such Revolving Lender Settlement Date, Agent shall pay
to each Revolving Lender such Revolving Lender’s Pro Rata Share of principal,
interest and Fees paid by Borrower since the previous Revolving Lender
Settlement Date for the benefit of such Revolving Lender on the Revolving Loans
held by it.  To the extent that any
Revolving Lender is a Non-Funding Lender, Agent shall be entitled to set off the
funding short-fall against that Non-Funding Lender’s Pro Rata Share of all
payments received from Borrower.  Such
payments shall be made by wire transfer to such Revolving Lender’s account (as
specified by such Lender in Annex H or the applicable Assignment
Agreement or by such Lender to Agent in a separate notice) not later than 2:00
p.m. (New York time) on the next Business Day following each Revolving Lender
Settlement Date.

 

(iii)          Provided
that each Term Lender is not a Non-Funding Lender as of the Term Lender
Settlement Date, Agent shall pay to each Term Lender such Term Lender’s Pro
Rata Share of principal, interest and Fees paid by Borrower for the benefit of
such Term Lender on the Term Loan held by it on the day Agent receives such
payments from Borrower if received by Agent prior to 2:00 p.m. (New York time)
and on the next Business Day after receipt by Agent if received after 2:00 p.m.
(New York time) (as applicable, the “Term Lender Settlement Date”).  To the extent that any Term Lender is a Non-Funding
Lender, Agent shall be entitled to set off the funding short-fall against that
Non-Funding Lender’s Pro Rata Share of all payments received from
Borrower.  Such payments shall be made
by wire transfer to such Term Lender’s account (as specified by such Term
Lender in Annex H or the applicable Assignment Agreement or by such
Lender to Agent in a separate notice).

 

(b)           Availability
of Lender’s Pro Rata Share.  Agent
may assume that each Revolving Lender will make its Pro Rata Share of each
Revolving Credit Advance available to Agent on each funding date.  If such Pro Rata Share is not, in fact, paid
to Agent by such Revolving Lender when due, Agent will be entitled to recover
such amount on demand from such Revolving Lender without setoff, counterclaim
or deduction of any kind.  If any
Revolving Lender fails to pay the amount of its Pro Rata Share forthwith upon
Agent’s demand, Agent shall promptly notify Borrower and Borrower shall
promptly (and, in any event, within one (1) Business Day after receipt of such
notice) repay such amount to Agent. 
Nothing in this Section 9.9(b) or elsewhere in this Agreement or
the other Loan Documents shall be deemed to require Agent to advance funds on
behalf of any Revolving Lender or to relieve any Revolving Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that
Borrower may have against any Revolving Lender as a result of any default by
such

 

70

 

Revolving Lender hereunder.  To the extent that Agent advances funds to Borrower on behalf of
any Revolving Lender and is not reimbursed therefor on the same Business Day as
such Advance is made, Agent shall be entitled to retain for its account all
interest accrued on such Advance until reimbursed by the applicable Revolving
Lender.

 

(c)           Return
of Payments.

 

(i)            If
Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Agent from
Borrower and such related payment is not received by Agent, then Agent will be
entitled to recover such amount from such Lender on demand without setoff,
counterclaim or deduction of any kind.

 

(ii)           If
any amount received by Agent under this Agreement must be returned to Borrower
or paid to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender.  In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent is
required to pay to Borrower or such other Person, without setoff, counterclaim
or deduction of any kind.

 

(d)           Non-Funding
Lenders.  The failure of any
Non-Funding Lender to make any Revolving Credit Advance or any payment required
by it hereunder, or to purchase any participation in any Swing Line Loan to be
made or purchased by it on the date specified therefor shall not relieve any
other Lender (each such other Revolving Lender, an “Other Lender”) of
its obligations to make such Advance or payment on such date, but neither any
Other Lender nor Agent shall be responsible for the failure of any Non-Funding
Lender to make an Advance or make any other payment required hereunder.  Notwithstanding anything set forth herein to
the contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Loan Document or constitute a “Lender” or a
“Revolving Lender” (or be (or have its Commitment) included in the calculation
of “Requisite Lenders” or “Requisite Revolving Lenders” hereunder) for any
voting or consent rights under or with respect to any Loan Document.  At Borrower’s request, Agent or a Person
acceptable to Agent shall have the right with Agent’s consent and in Agent’s
sole discretion (but shall have no obligation) to purchase from any Non-Funding
Lender, and each Non-Funding Lender agrees that it shall, at Agent’s request,
sell and assign to Agent or such Person, all of the Commitments of that
Non-Funding Lender for an amount equal to the principal balance of all Loans
held by such Non-Funding Lender and all accrued interest and fees with respect
thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment Agreement.

 

(e)           Dissemination
of Information.  Agent shall use
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by Agent from, or delivered by Agent to, any Credit Party,
with notice of any Event of Default of which Agent has actually become aware
and with notice of any action taken by Agent

 

71

 

following any Event of Default; provided, that
Agent shall not be liable to any Lender for any failure to do so, except to the
extent that such failure is attributable to Agent’s gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.  Lenders acknowledge that Borrower is
required to provide Financial Statements and Collateral Reports to Lenders in
accordance with Annexes E and F hereto and agree that Agent shall
have no duty to provide the same to Lenders.

 

(f)            Actions
in Concert.  Anything in this
Agreement to the contrary notwithstanding, each Lender hereby agrees with each
other Lender that no Lender shall take any action to protect or enforce its
rights arising out of this Agreement or the Notes (including exercising any
rights of setoff) without first obtaining the prior written consent of the
Requisite Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the Notes shall be taken in
concert and at the direction or with the consent of the Requisite Lenders.

 

10                                  SUCCESSORS AND ASSIGNS

 

10.1         Successors and Assigns.  This Agreement and the other Loan Documents
shall be binding on and shall inure to the benefit of each Credit Party, Agent,
Lenders and their respective successors and assigns (including, in the case of
any Credit Party, a debtor-in-possession on behalf of such Credit Party and any
surviving corporation in a merger to which such Credit Party is a party which
merger is permitted by this Agreement), except as otherwise provided herein or
therein.  No Credit Party may assign,
transfer, hypothecate or otherwise convey its rights, benefits, obligations or
duties hereunder or under any of the other Loan Documents without the prior
express written consent of Agent and Lenders. 
Any such purported assignment, transfer, hypothecation or other
conveyance by any Credit Party without the prior express written consent of
Agent and Lenders shall be void.  The
terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any
of the other Loan Documents.

 

11                                  MISCELLANEOUS

 

11.1         Complete Agreement; Modification of
Agreement.  The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2.  Any
letter of interest, commitment letter, fee letter (other than the GE Capital
Fee Letter and the Lender Fee Letter) or confidentiality agreement, if any,
between any Credit Party and Agent or any Lender or any of their respective
Affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.

 

11.2         Amendments and Waivers; Joinder
Agreement

 

(a)           Except
for actions expressly permitted to be taken by Agent, no amendment,
modification, termination or waiver of any provision of this Agreement or any
other Loan Document, or any consent to any departure by any Credit Party

 

72

 

therefrom, shall in any event be effective unless the
same shall be in writing and (i) in the case of this Agreement, signed by
Borrower, by Requisite Lenders, Requisite Revolving Lenders, Requisite Term
Lenders or all affected Lenders, as applicable, and by Agent (if the same affects
the rights or duties of Agent) and (ii) in the case of any other Loan Document,
signed by the parties thereto and consented to by Requisite Lenders, Requisite
Revolving Lenders, Requisite Term Lenders or all affected Lenders, as
applicable.  Except as set forth in
clauses (b) and (c) below, all such amendments, modifications, terminations or
waivers requiring the consent of any Lenders shall require the written consent
of Requisite Lenders.

 

(b)           No
amendment, modification, termination or waiver of or consent with respect to
any provision of this Agreement that waives compliance with the conditions
precedent (i) set forth in Section 2.2(a) to the funding of any Advance
shall be effective unless the same shall be in writing and signed by the
Requisite Revolving Lenders and Borrower or (ii) set forth in Section 2.2(b)
to the funding of the Term Loan shall be effective unless the same shall be in
writing and signed by the Requisite Term Lenders and Borrower.  Notwithstanding anything contained in this
Agreement to the contrary, no waiver or consent with respect to any Default or
any Event of Default shall be effective for purposes of (A) the conditions
precedent to the funding of any Advance set forth in Section 2.2(a)
unless the same shall be in writing and signed by the Requisite Revolving
Lenders and Borrower, (B) Section 1.5(e) relating to the conversion or
continuation of any Advance unless the same shall be in writing and signed by
the Requisite Revolving Lenders and Borrower, (C) the conditions precedent to
the funding of the Term Loan set forth in Section 2.2(b) unless the same
shall be in writing and signed by the Requisite Term Lenders and Borrower or
(D) Section 1.5(e) relating to the conversion or continuation of the
Term Loan unless the same shall be in writing and signed by the Requisite Term
Lenders and Borrower.

 

(c)           No
amendment, modification, termination or waiver shall, unless in writing and
signed by each Lender directly affected thereby:  (i) increase the principal amount of any Lender’s Commitment
(which action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or prepayment premiums or other Fees payable
with respect to any Loan of any affected Lender; (iii) extend any scheduled
payment date (other than payment dates of mandatory prepayments under Section
1.3(b)(ii)-(v)) or final maturity date of the principal amount of any Loan
of any affected Lender; (iv) waive, forgive, defer, extend or postpone any
payment of interest or Fees as to any affected Lender; (v) release any Guaranty
or, except as otherwise permitted herein or in the other Loan Documents,
release, or permit any Credit Party to sell or otherwise dispose of, any
Collateral with a value exceeding $5,000,000 in the aggregate (which action
shall be deemed to directly affect all Lenders); (vi) change the percentage of
the Commitments or of the aggregate unpaid principal amount of the Loans that
shall be required for Lenders or any of them to take any action hereunder; and
(vii) amend or waive this Section 11.2 or the definitions of the terms
“Requisite Lenders”, “Requisite Term Lenders” or “Requisite Revolving Lenders”
insofar as such definitions affect the substance of this Section 11.2.  Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of Agent under this
Agreement or any other Loan Document shall be effective unless in writing and
signed by Agent, in addition to Lenders

 

73

 

required hereinabove to take such action.  Each amendment, modification, termination or
waiver shall be effective only in the specific instance and for the specific
purpose for which it was given.  No
amendment, modification, termination or waiver shall be required for Agent to
take additional Collateral pursuant to any Loan Document. No amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the holder of that Note.  No notice to or demand on any Credit Party
in any case shall entitle such Credit Party or any other Credit Party to any
other or further notice or demand in similar or other circumstances.  Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 11.2 shall be
binding upon each Lender at the time such amendment, modification, termination,
waiver or consent is effected and each future Lender.

 

(d)           If,
in connection with any proposed amendment, modification, waiver or termination
(other than with respect to any waiver relating to the payment of any premium
payable in connection with any prepayment of the Loans) requiring the consent
of all affected Lenders, the consent of Requisite Lenders is obtained, but the
consent of other Lenders whose consent is required is not obtained (any such
Lender whose consent is not obtained as described in this clause being referred
to as a “Non-Consenting Lender”) then, at Borrower’s request Agent (if
Agent so agrees to purchase in its sole discretion), or a Person reasonably
acceptable to Agent (if such Person so agrees to purchase in its sole
discretion), shall have the right with Agent’s consent (but Agent shall have no
obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall sell and assign to Agent or such
Person, as applicable, all of the Commitments of such Non-Consenting Lenders
for an amount equal to the principal balance of all Loans held by the
Non-Consenting Lenders and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.

 

(e)           Upon
payment in full in cash of all of the Obligations (other than contingent
indemnity and expense reimbursement obligations for which no claim has been
made) and termination of the Commitments, and so long as no suits, actions
proceedings, or claims are pending or threatened against any Indemnified Person
asserting any damages, losses or liabilities that are Indemnified Liabilities,
Agent shall deliver to Borrower termination statements, mortgage releases and
other documents necessary or appropriate to evidence the termination of the
Liens securing payment of the Obligations.

 

(f)            Upon
the execution and delivery by any Person to Agent of a Joinder Agreement, as
applicable as provided in such Joinder Agreement, (a) such Person shall become
and be a Credit Party hereunder, and each reference in this Agreement or any
other Loan Document to a “Credit Party” shall also mean and be a reference to
such Person, (b) such Person shall become and be a Guarantor under the
Subsidiary Guaranty, and each reference in this Agreement or any other Loan
Document to a “Guarantor” shall also mean and be a reference to such Person,
(c) such Person shall become and be a Grantor under the Security Agreement, and
each reference in this Agreement or any other Loan Document to a “Grantor”
shall also mean and be a reference to such Person, (d) such Person shall become
and be a Pledgor under the Pledge Agreement, and each

 

74

 

reference in this Agreement or any other Loan Document
to a “Pledgor” shall also mean and be a reference to such Person, and (e) each
reference in this Agreement, the Subsidiary Guaranty, the Security Agreement
and the Pledge Agreement to “this Agreement”, “hereunder”, “hereof” or words of
like import, and each reference in any Loan Document to the “Credit Agreement”,
“Subsidiary Guaranty”, “Security Agreement”, “Pledge Agreement” or “thereunder”,
“thereof” or words of like import referring to the Agreement, Subsidiary
Guaranty, Security Agreement or Pledge Agreement shall mean and be a reference
to this Agreement, Subsidiary Guaranty, the Security Agreement or Pledge
Agreement, as applicable, as supplemented by such Joinder Agreement.  Each Credit Party agrees that (i) no consent
of such Credit Party is required for the execution and delivery by any other
Person of a Joinder Agreement or for such Person to become a party to this
Agreement or any other Loan Document by executing and delivering such Joinder
Agreement and (ii) its obligations under this Agreement and the other Loan
Documents shall not be affected or diminished by any other Person becoming or
failing to become a party to this Agreement or any other Loan Document.

 

11.3         Fees and Expenses.  Borrower shall reimburse Agent for all fees, costs and expenses
(including the reasonable fees and expenses of all of its counsel, advisors,
consultants (provided that such consultants were engaged with the consent (not
to be unreasonably withheld) of Borrower) and auditors) incurred in connection
with the negotiation, preparation and filing and/or recordation of the Loan
Documents.  Borrower shall reimburse
Agent (and, with respect to clauses (c), (d), (e) and (f) below, all
Lenders) for all fees, costs and expenses, including the reasonable fees, costs
and expenses of counsel or other advisors (including environmental and
management consultants and appraisers) incurred in connection with:

 

(a)           the
forwarding to Borrower or any other Person on behalf of Borrower by Agent of
the proceeds of any Loan;

 

(b)           any
amendment, modification or waiver of, or consent with respect to, or
termination of, any of the Loan Documents or Related Transactions Documents or
advice in connection with the administration of the Loans made pursuant hereto
or its rights hereunder or thereunder;

 

(c)           any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, any Lender, any Credit Party or any other Person and whether as a party,
witness or otherwise) in any way relating to the Collateral, any of the Loan
Documents or any other agreement to be executed or delivered in connection
herewith or therewith, including any litigation, contest, dispute, suit, case,
proceeding or action, and any appeal or review thereof, in connection with a
case commenced by or against any or all of the Credit Parties or any other
Person that may be obligated to Agent by virtue of the Loan Documents,
including any such litigation, contest, dispute, suit, proceeding or action
arising in connection with any work-out or restructuring of the Loans during
the pendency of one or more Events of Default; provided, that no Person
shall be entitled to reimbursement under this clause (c) in respect of any
litigation, contest, dispute, suit, proceeding or action to the extent any of
the foregoing results from such Person’s gross

 

75

 

negligence or willful misconduct as finally determined
by a court of competent jurisdiction or to the extent any of the foregoing
results from any dispute among any of Agent and the Lenders which dispute does
not involve any Credit Party;

 

(d)           any
attempt to enforce any remedies of Agent or any Lender against any or all of
the Credit Parties or any other Person that may be obligated to Agent or any
Lender by virtue of any of the Loan Documents, including any such attempt to
enforce any such remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default;

 

(e)           any
workout or restructuring of the Loans during the pendency of one or more Events
of Default; and

 

(f)            upon
the occurrence and during the continuation of any Default or Event of Default,
efforts to verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral;

 

including, as to each of clauses (a) through (f)
above, all reasonable attorneys’ and other professional and service providers’
fees arising from such services and other advice, assistance or other
representation, including those in connection with any appellate proceedings,
and all expenses, costs, charges and other fees incurred by such counsel and
others in connection with or relating to any of the events or actions described
in this Section 11.3, all of which shall be payable, on demand, by
Borrower to Agent or Lender, as applicable. 
Without limiting the generality of the foregoing, such expenses, costs,
charges and fees may include:  fees,
costs and expenses of accountants, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court
costs and expenses; photocopying and duplication expenses; court reporter fees,
costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal or other advisory services.

 

11.4         No Waiver. 
Agent’s or any Lender’s failure, at any time or times, to require strict
performance by the Credit Parties of any provision of this Agreement or any
other Loan Document shall not waive, affect or diminish any right of Agent or
such Lender thereafter to demand strict compliance and performance herewith or
therewith.  Any suspension or waiver of
an Event of Default shall not suspend, waive or affect any other Event of
Default whether the same is prior or subsequent thereto and whether the same or
of a different type.  Subject to the
provisions of Section 11.2, none of the undertakings, agreements,
warranties, covenants and representations of any Credit Party contained in this
Agreement or any of the other Loan Documents and no Default or Event of Default
by any Credit Party shall be deemed to have been suspended or waived by Agent
or any Lender, unless such waiver or suspension is by an instrument in writing
signed by an officer of or other authorized employee of Agent and the
applicable required Lenders and directed to Borrower specifying such suspension
or waiver.

 

76

 

11.5         Remedies. 
Agent’s and Lenders’ rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies that Agent or any
Lender may have under any other agreement, including the other Loan Documents,
by operation of law or otherwise. 
Recourse to the Collateral shall not be required.

 

11.6         Severability. 
Wherever possible, each provision of this Agreement and the other Loan
Documents shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement or any other Loan
Document shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement or such other Loan Document.

 

11.7         Conflict of Terms.  Except as otherwise provided in this Agreement or any of the
other Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement conflicts with any
provision in any of the other Loan Documents, the provision contained in this
Agreement shall govern and control.

 

11.8         Confidentiality.  Agent and each Lender agree to use commercially reasonable
efforts (equivalent to the efforts Agent or such Lender applies to maintain the
confidentiality of its own confidential information) to maintain as
confidential all confidential information provided to them by the Credit
Parties and designated as confidential for a period of three (3) years
following receipt thereof, except that Agent and each Lender may disclose such
information (a) to Persons employed or engaged by Agent or such Lender; (b) to
any bona fide assignee or participant or potential assignee or participant that
has agreed to comply with the covenant contained in this Section 11.8
(and any such bona fide assignee or participant or potential assignee or
participant may disclose such information to Persons employed or engaged by
them as described in clause (a) above); (c) as required or requested by
any Governmental Authority or reasonably believed by Agent or such Lender
(based on advice of Agent’s or such Lender’s counsel) to be compelled by any
court decree, subpoena or legal or administrative order or process; (d) as, on
the advice of Agent’s or such Lender’s counsel, is required by law; (e) in
connection with the exercise of any right or remedy under the Loan Documents or
in connection with any Litigation to which Agent or such Lender is a party; or
(f) that ceases to be confidential through no fault of Agent or any Lender.

 

11.9         GOVERNING LAW.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN
ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. 
EACH CREDIT PARTY HEREBY CONSENTS AND AGREES

 

77

 

THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY,
CITY OF NEW YORK, NEW YORK SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS; PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN
ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR
THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
AGENT.  EACH CREDIT PARTY EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED
IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH
CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM  NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  EACH CREDIT PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT
THE ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY’S ACTUAL
RECEIPT THEREOF OR FIVE (5) BUSINESS DAYS AFTER DEPOSIT IN THE UNITED STATES
MAILS, PROPER POSTAGE PREPAID.

 

11.10       Notices.  Except
as otherwise provided herein, whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by any other parties, or
whenever any of the parties desires to give or serve upon any other parties any
communication with respect to this Agreement, each such notice, demand,
request, consent, approval, declaration or other communication shall be in
writing and shall be deemed to have been validly served, given or delivered (a)
upon the earlier of actual receipt and five (5) Business Days after deposit in
the United States Mail, registered or certified mail, return receipt requested,
with proper postage prepaid, (b) upon transmission, when sent by telecopy or
other similar facsimile transmission (with such telecopy or facsimile promptly
confirmed by delivery of a copy by personal delivery or United States Mail as otherwise
provided in this Section 11.10); (c) one (1) Business Day after deposit
with a reputable overnight courier with all charges prepaid or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
in Annex I or to such other address (or facsimile number) as may be
substituted by notice given as herein provided.  The giving of any notice required hereunder may be waived in
writing by the

 

78

 

party entitled to receive
such notice.  Failure or delay in
delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than Borrower or Agent)
designated in Annex I to receive copies shall in no way adversely affect
the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.

 

11.11       Section Titles. 
The Section titles and Table of Contents contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.

 

11.12       Counterparts. 
This Agreement may be executed in any number of separate counterparts,
each of which shall be an original and all of which shall collectively
constitute one agreement.

 

11.13       WAIVER OF JURY TRIAL.  BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY, THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. 
THEREFORE, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

 

11.14       Press Releases and Related Matters.  Each Credit Party executing this Agreement
agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure using the name of GE Capital or any Lender
or its affiliates or referring to this Agreement, the other Loan Documents or
the Related Transactions Documents without at least 2 Business Days’ prior
notice to GE Capital (and, if such disclosure will use the name of any Lender,
to such Lender) and without the prior written consent of GE Capital (and, if
such disclosure will use the name of any Lender, such Lender) unless (and only
to the extent that) such Credit Party or Affiliate is required to do so under
law and then, in any event, such Credit Party or Affiliate will consult with GE
Capital (and, if such disclosure will use the name of any Lender, such Lender)
before issuing such press release or other public disclosure.  Each Credit Party consents to the publication
by Agent or any Lender of advertising material relating to the financing
transactions contemplated by this Agreement using any Credit Party’s name,
product photographs, logo or trademark. 
Agent or such Lender shall provide a draft of any such tombstone or
similar advertising material to each Credit Party for review and approval (such
approval not to be unreasonably withheld or delayed) prior to the publication
thereof.  Agent reserves the right to
provide to industry trade organizations information necessary and customary for
inclusion in league table measurements.

 

79

 

11.15       Reinstatement. 
This Agreement shall remain in full force and effect and continue to be
effective should any petition be filed by or against any Credit Party for
liquidation or reorganization, should any Credit Party become insolvent or make
an assignment for the benefit of any creditor or creditors or should a receiver
or trustee be appointed for all or any significant part of any Credit Party’s
assets, and shall continue to be effective or to be reinstated, as the case may
be, if at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all
as though such payment or performance had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

 

11.16       Advice of Counsel.  Each of the parties represents to each other party hereto that it
has discussed this Agreement and, specifically, the provisions of Sections
11.9 and 11.13, with its counsel.

 

11.17       No Strict Construction.  The parties hereto have participated jointly
in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Agreement.

 

80

 

IN WITNESS
WHEREOF, this Agreement has been duly executed as of the date first written
above.

 

 

	
   

  	
  OTELCO INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OTELCO TELECOMMUNICATIONS LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OTELCO TELEPHONE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOPPER HOLDING COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOPPER TELECOMMUNICATIONS

  COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
						

 

[Signature Page - Credit Agreement]

 

 

	
   

  	
  BRINDLEE HOLDINGS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BRINDLEE MOUNTAIN TELEPHONE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PAGE & KISER COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BLOUNTSVILLE TELEPHONE COMPANY INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MID-MISSOURI HOLDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

 

	
   

  	
  MID-MISSOURI TELEPHONE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IMAGINATION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

 

	
   

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION, as Agent and a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Duly Authorized Signatory

  

 

 

	
   

  	
  AIG ANNUITY INSURANCE

  COMPANY, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

	
   

  	
  COBANK, ACB, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

ANNEX A (Recitals)

 

to

 

CREDIT
AGREEMENT

 

DEFINITIONS

 

Capitalized terms
used in the Loan Documents shall have (unless otherwise provided elsewhere in
the Loan Documents) the following respective meanings and all references to
Sections, Exhibits, Schedules or Annexes in the following definitions shall
refer to Sections, Exhibits, Schedules or Annexes of or to the Agreement:

 

“Account Debtor”
means any Person who may become obligated to any Credit Party under, with
respect to, or on account of, an Account, Chattel Paper or General Intangibles
(including a payment intangible).

 

“Accounting
Changes” has the meaning ascribed thereto in Annex G.

 

“Accounts”
means all “accounts,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, including (a) all accounts receivable,
other receivables, book debts and other forms of obligations (other than forms
of obligations evidenced by Chattel Paper or Instruments), (including any such
obligations that may be characterized as an account or contract right under the
Code), (b) all of each Credit Party’s rights in, to and under all purchase
orders or receipts for goods or services, (c) all of each Credit Party’s rights
to any goods represented by any of the foregoing (including unpaid sellers’
rights of rescission, replevin, reclamation and stoppage in transit and rights
to returned, reclaimed or repossessed goods), (d) all rights to payment due to
any Credit Party for property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a secondary
obligation incurred or to be incurred, for energy provided or to be provided,
for the use or hire of a vessel under a charter or other contract, arising out
of the use of a credit card or charge card, or for services rendered or to be
rendered by such Credit Party or in connection with any other transaction
(whether or not yet earned by performance on the part of such Credit Party),
(e) all healthcare insurance receivables, and (f) all collateral security of
any kind, now or hereafter in existence, given by any Account Debtor or other
Person with respect to any of the foregoing.

 

“Activation
Event” and “Activation Notice” have the meanings ascribed thereto in
Annex C.

 

“Additional
Subordinated Debt Documents” means, for any Permitted Additional
Subordinated Debt, the loan agreement, credit agreement, note purchase
agreement, indenture or other definitive agreement for such Indebtedness to
which any 

 

A-1

 

applicable
Credit Party is a party, together with any related notes, guarantees and other
documents contemplated to be delivered by any Credit Party thereunder.

 

“Advance”
means any Revolving Credit Advance or Swing Line Advance, as the context may
require.

 

“Affiliate”
means, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian
or other fiduciary, 10% or more of the Stock having ordinary voting power in
the election of directors of such Person, (b) each Person that controls, is
controlled by or is under common control with such Person, (c) each of such
Person’s officers, directors, joint venturers and partners and (d) in the case
of Borrower, the immediate family members, including spouses and lineal
descendants of individuals who are Affiliates of Borrower.  For the purposes of this definition, “control”
of a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through
the ownership of voting securities, by contract or otherwise; provided, however,
that the term “Affiliate” shall specifically exclude Agent and each
Lender.

 

“Agent”
means GE Capital in its capacity as Agent for Lenders or its successor
appointed pursuant to Section 9.7.

 

“Agreement”
means the Credit Agreement by and among Borrower, the other Credit Parties
party thereto, GE Capital, as Agent and Lender and the other Lenders from time
to time party thereto, as the same may be amended, supplemented, restated or
otherwise modified from time to time.

 

“Appendices”
has the meaning ascribed to it in the recitals to the Agreement.

 

“Applicable
Margins” means collectively the Applicable Revolver Index Margin, the
Applicable Term Loan Index Margin, the Applicable Revolver LIBOR Margin and the
Applicable Term Loan LIBOR Margin.

 

“Applicable
Revolver Index Margin” means the per annum interest rate margin from time
to time in effect and payable in addition to the Index Rate applicable to the
Revolving Loan, as determined by reference to Section 1.5(a).

 

“Applicable
Revolver LIBOR Margin” means the per annum interest rate from time to time
in effect and payable in addition to the LIBOR Rate applicable to the Revolving
Loan, as determined by reference to Section 1.5(a).

 

“Applicable
Term Loan Index Margin” means the per annum interest rate from time to time
in effect and payable in addition to the Index Rate applicable to the Term
Loan, as determined by reference to Section 1.5(a).

 

A-2

 

“Applicable
Term Loan LIBOR Margin” means the per annum interest rate from time to time
in effect and payable in addition to the LIBOR Rate applicable to the Term
Loan, as determined by reference to Section 1.5(a).

 

“Asset Sale”
has the meaning ascribed to it in Section 6.8.

 

“Assignment
Agreement” has the meaning ascribed to it in Section 9.1(a).

 

“Bankruptcy
Code” means the provisions of Title 11 of the United States Code, 11 U.S.C.
§§ 101 et seq.

 

“Blocked
Accounts” has the meaning ascribed to it in Annex C.

 

“Borrower”
has the meaning ascribed thereto in the preamble to the Agreement.

 

“Borrowing
Availability” means as of any date of determination the Maximum Amount less
the sum of (i) the Revolving Loan and Swing Line Loan then outstanding and (ii)
the Reserves as then in effect.

 

“Brindlee
Holdings” means Brindlee Holdings LLC, a Delaware limited liability
company.

 

“Business Day”
means any day that is not a Saturday, a Sunday or a day on which banks are
required or permitted to be closed in the State of New York and in reference to
LIBOR Loans shall mean any such day that is also a LIBOR Business Day.

 

“Capital Lease”
means, with respect to any Person, any lease of any property (whether real,
personal or mixed) by such Person as lessee that, in accordance with GAAP,
would be required to be classified and accounted for as a capital lease on a
balance sheet of such Person.

 

“Capital Lease
Obligation” means, with respect to any Capital Lease of any Person, the
amount of the obligation of the lessee thereunder that, in accordance with
GAAP, would appear on a balance sheet (excluding the footnotes thereto) of such
lessee in respect of such Capital Lease.

 

“Cash
Management Systems” has the meaning ascribed to it in Section 1.8.

 

“CERCLA”
has the meaning ascribed to it in the definition of Environmental Laws.

 

“Change of
Control” means any of the following: 
(a) any person or group of persons (within the meaning of the Securities
Exchange Act of 1934), other than Permitted Holders, shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934)
of 50% or more of the issued and outstanding shares of capital

 

A-3

 

Stock
of Borrower having the right to vote for the election of directors of Borrower
under ordinary circumstances; (b) during any period of twelve consecutive
calendar months, individuals who at the beginning of such period constituted
the board of directors of Borrower (together with any new directors whose
election by the board of directors of Borrower or whose nomination for election
by the Stockholders of Borrower was approved by a vote of at least a majority
of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office; (c) Borrower ceases to
own and control all of the economic and voting rights associated with all of
the outstanding capital Stock of any of its Subsidiaries; or (d) a “change of
control” or similar event shall occur as provided in any Subordinated Debt
Document and, on and after the execution, delivery and/or Incurrence thereof,
or any other agreement governing or evidencing any other material Indebtedness
of Borrower.

 

“Charges”
means all federal, state, county, city, municipal, local, foreign or other
governmental taxes (including taxes owed to the PBGC at the time due and
payable), levies, assessments, charges or claims upon or relating to (a) the
Collateral, (b) the Obligations, (c) the employees, payroll, income or gross
receipts of any Credit Party, (d) any Credit Party’s ownership or use of
any properties or other assets, or (e) any other aspect of any Credit Party’s
business.

 

“Chattel Paper”
means any “chattel paper,” as such term is defined in the Code, including electronic
chattel paper, now owned or hereafter acquired by any Credit Party, wherever
located.

 

“Closing Date”
means December     , 2004.

 

“Closing
Checklist” means the schedule, including all appendices, exhibits or
schedules thereto, listing certain documents and information to be delivered in
connection with the Agreement, the other Loan Documents and the transactions
contemplated thereunder, substantially in the form attached hereto as Annex
D.

 

“Code”
means the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided  further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent’s or any Lender’s Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of New York, the term “Code” shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to
such provisions.

 

A-4

 

“Collateral”
means the property covered by the Security Agreement, the Mortgages, the Pledge
Agreements and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.

 

“Collateral
Documents” means the Security Agreement, the Pledge Agreements, the
Guaranties, the Mortgages, the Patent Security Agreement, the Trademark
Security Agreement, the Copyright Security Agreement and all similar agreements
entered into guaranteeing payment of, or granting a Lien upon property as
security for payment of, the Obligations.

 

“Collateral
Reports” means the reports with respect to the Collateral referred to in Annex
F.

 

“Collection
Account” means that certain account of Agent, account number  502-328-54 in the name of Agent at Deutsche
Bank Trust Company Americas in New York, New York ABA No. 021 001 033, or such
other account as may be specified in writing by Agent as the “Collection
Account.”

 

“Commitment
Termination Date” means the earliest of (a) December     ,
2009, (b) the date of termination of Lenders’ obligations to make Advances or
permit existing Loans to remain outstanding pursuant to Section 8.2(b),
and (c) the date of indefeasible prepayment in full by Borrower of the Loans
and the permanent reduction of the Commitments to zero dollars ($0).

 

“Commitments”
means (a) as to any Lender, the aggregate of such Lender’s Revolving Loan
Commitment (including without duplication the Swing Line Lender’s Swing Line
Commitment as a subset of its Revolving Loan Commitment) and Term Loan
Commitment as set forth on Annex J to the Agreement or in the most
recent Assignment Agreement executed by such Lender and (b) as to all Lenders,
the aggregate of all Lenders’ Revolving Loan Commitments (including without
duplication the Swing Line Lender’s Swing Line Commitment as a subset of its
Revolving Loan Commitment) and Term Loan Commitments, which aggregate
commitment shall be Ninety-Five Million Dollars ($95,000,000) on the Closing
Date, as to each of clauses (a) and (b), as such Commitments may be
reduced, amortized or adjusted from time to time in accordance with the
Agreement.

 

“Communications
Laws” means, collectively, the Communications Act of 1934, as amended, and
the rules, orders, regulations and other applicable requirements of the FCC
promulgated thereunder, as from time to time in effect.

 

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

 

A-5

 

“Compliance
Certificate” has the meaning ascribed to it in Annex E.

 

“Condemnation” means
any taking of Property, or any part thereof or interest therein, for public or
quasi-public use under the power of eminent domain, by reason of any public
improvement or condemnation proceeding, or in any other manner.

 

“Confidential
Information Memorandum” means the Confidential Offer Memorandum dated May,
2004 of CIBC World Markets delivered to Agent.

 

“Consolidated
Capital Expenditures” means, with respect to the Credit Parties, all
expenditures (by the expenditure of cash or the Incurrence of Indebtedness) by
the Credit Parties during any measuring period for any fixed assets or
improvements or for replacements, substitutions or additions thereto, that have
a useful life of more than one year and that are required to be capitalized
under GAAP.  Notwithstanding anything to
the contrary contained above or otherwise required by GAAP, to the extent the
amount of Consolidated Capital Expenditures is to be determined for purposes of
calculating Consolidated Fixed Charges for any period ending on or prior to the
first anniversary of the Closing Date, Consolidated Capital Expenditures shall
be deemed to equal the sum of (i) the amount of Consolidated Capital
Expenditures for the period commencing on the Closing Date and ending on the
applicable date of determination, and (ii) the product of (A) $317,000 and (B)
twelve (12) minus the number of months (including fractional representations of
partial months) occurring since the Closing Date.

 

“Consolidated
Depreciation and Amortization Expense” means with respect to the Credit
Parties for any period, the total amount of depreciation and amortization
expense of the Credit Parties for such period on a consolidated basis and
otherwise determined in accordance with GAAP.

 

“Consolidated
EBITDA” means, with respect to the Credit Parties for any period,
Consolidated Net Income for such period plus, without duplication: (i) taxes
paid and provision for taxes based on income or profits of the Credit Parties
for such period to the extent such taxes or provision for taxes were deducted
in computing Consolidated Net Income, plus (ii) Consolidated Interest Expense
for such period to the extent the same was deducted in computing Consolidated
Net Income, plus (iii) Consolidated Depreciation and Amortization Expense for
such period to the extent such Consolidated Depreciation and Amortization
Expense was deducted in computing Consolidated Net Income, plus (iv) any
non-recurring fees, expenses or charges related to any Securities Offering, any
Investment permitted pursuant to Section 6.2, acquisition or Indebtedness
permitted to be Incurred by the Agreement (in each case, whether or not
successful), deducted in such period in computing Consolidated Net Income, plus
(v) the amount of annual management and advisory fees and related expenses paid
to Seaport Capital deducted in such period in computing Consolidated Net Income
during any period prior to the Closing Date, plus (vi) any other non-cash
charges reducing Consolidated Net Income for such period (excluding any such
charge which requires an accrual of, or cash reserve for, anticipated cash
charges for any future period). 
Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization of, a Subsidiary of
Borrower shall be added to Consolidated Net Income

 

A-6

 

to
compute Consolidated EBITDA only to the extent (and in the same proportion)
that the Net Income of such Subsidiary was included in calculating Consolidated
Net Income and only if a corresponding amount would be permitted at the date of
determination to be paid as a dividend to Borrower by such Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to such Subsidiary or its
stockholders.  Notwithstanding anything
to the contrary contained above or otherwise required by GAAP, to the extent
Consolidated EBITDA is to be determined for any period that includes any of the
Fiscal Quarters ending on March 31, 2004, June 30, 2004, September 30, 2004,
and December 31, 2004, Consolidated EBITDA for such Fiscal Quarters shall be as
set forth on Schedule A. (1)

 

“Consolidated
Fixed Charges” means, with respect to the Credit Parties for any fiscal
period, (a) the aggregate of all Consolidated Interest Expense during such
period (excluding any PIK Amounts Incurred during such period) plus (b)
scheduled payments of principal with respect to Indebtedness of the Credit
Parties during such period [(excluding any such payments made prior to the
Closing Date)], plus (c) Consolidated Capital Expenditures during such period
(other than Consolidated Capital Expenditures to the extent financed with
equity proceeds, asset sale proceeds, insurance or condemnation proceeds or
Indebtedness), plus (d) all Taxes paid in cash during such period [(excluding
any such payments made in the period beginning on the Closing Date and ending
on December 31, 2005 to the extent such payments relate to Taxes incurred prior
to the Closing Date)].

 

“Consolidated
Fixed Charge Coverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated EBITDA for the period of four consecutive Fiscal
Quarters most recently ended on or prior to such date to (b) Consolidated Fixed
Charges for such period.

 

“Consolidated
Interest Expense” means, with respect to the Credit Parties for any period,
consolidated interest expense of the Credit Parties for such period, to the
extent such expense was deducted in computing Consolidated Net Income,
determined on a consolidated basis and otherwise determined in accordance with
GAAP, plus, to the extent not included in such consolidated interest expense,
and to the extent Incurred by any Credit Party, without duplication: (i)
interest expense attributable to leases constituting part of a Sale/Leaseback
Transaction and/or Capital Lease Obligations, (ii) amortization of debt
discount and debt issuance cost, (iii) capitalized interest (including, for the
avoidance of doubt, any PIK Amounts), (iv) non-cash interest expense, (v) 

 

(1)                                  Schedule
A will set forth EBITDA for each relevant pre-close month; to the extent that
amounts are not available for any pre-close month, Schedule A will provide that
such amounts will be calculated using the same methodology employed to
calculate the amounts that are set forth on Schedule A.

 

A-7

 

commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers’ acceptance financing, (vi) net costs and net benefits associated with
Hedging Obligations (including amortization of fees), (vii) interest Incurred
in connection with Investments in discontinued operations, (viii) interest in
respect of Indebtedness of any other Person to the extent such Indebtedness is
guaranteed by any Credit Party, but only to the extent that such interest is
actually paid by any Credit Party, (ix) the earned discount or yield with
respect to the sale of receivables and (x) accrued interest on Subordinated
Debt, whether or not it is deductible for tax purposes (and whether or not it
is deferred).  Notwithstanding anything
to the contrary contained above or otherwise required by GAAP, to the extent
Consolidated Interest Expense is to be determined for purposes of calculating
Consolidated Fixed Charges for any period ending on or prior to [September 30,
2005], Consolidated Interest Expense shall be deemed to equal actual
Consolidated Interest Expense for the period commencing on [December 1, 2004]
and ending on the applicable date of determination, in each case multiplied by
a fraction, the numerator of which is twelve (12) and the denominator of which
is the number of full months occurring since [December 1, 2004].

 

“Consolidated
Net Income” means, with respect to the Credit Parties for any period, the
aggregate of the Net Income of the Credit Parties for such period, on a
consolidated basis; provided, however, that: (i) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto) shall be excluded; (ii) any increase in amortization or depreciation
resulting from purchase accounting in relation to any acquisition that is
consummated after the Closing Date, net of taxes, shall be excluded; (iii) the
Net Income for such period shall not include the cumulative effect of a change
in accounting principles during such period; (iv) any net after-tax income or
loss from discontinued operations and any net after-tax gains or losses on disposal
of discontinued operations shall be excluded; (v) any net after-tax gains or
losses (less all fees and expenses relating thereto) attributable to asset
dispositions other than in the ordinary course of business (as determined in
good faith by the Board of Directors) shall be excluded; (vi) the Net Income
for such period of any Person that is not a Subsidiary of Borrower, or that is
accounted for by the equity method of accounting, shall be included only to the
extent of the amount of dividends or distributions or other payments paid in
cash (or to the extent converted into cash) to Borrower or a Subsidiary thereof
in respect of such period; (vii) the Net Income for such period of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of its Net Income is not
at the date of determination permitted without any prior governmental approval
(which has not been obtained) or, directly or indirectly, by the operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders, unless such restrictions with respect to the payment of dividends
or in similar distributions have been legally waived; provided that the
net loss of any such Subsidiary shall be included; (viii) any non-cash
compensation expenses realized for grants of performance shares, stock options
or other stock awards to officers, directors and employees of Borrower or any
Subsidiary shall be excluded and (ix) any non-cash impairment charges resulting
from the application of Statement of Financial Accounting Standards
No. 142 shall be excluded.

 

A-8

 

“Consolidated
Senior Leverage Ratio” means, as of any date of determination, the ratio of
(a) the outstanding amount of Consolidated Senior Secured Debt as of such date
to (b) Consolidated EBITDA for the period of four consecutive Fiscal Quarters
most recently ended on or prior to such date.

 

“Consolidated
Senior Secured Debt” means, as of any date of determination, the sum of (i)
the outstanding principal amount of the Loans hereunder, plus (ii) the
aggregate stated balance sheet amount of all Capital Lease Obligations of the
Credit Parties on a consolidated basis, and (iii) any other secured
Indebtedness of the Credit Parties on a consolidated basis.

 

“Consolidated
Total Debt” means, as of any date of determination, without duplication,
the sum of (a) the aggregate stated balance sheet amount of all Indebtedness of
the Credit Parties on a consolidated basis, including the outstanding principal
amount of Consolidated Senior Secured Debt and the Subordinated Notes, (b) the
stated amount of all reimbursement and other obligations of the Credit Parties
with respect to letters of credit, bankers’ acceptances, bank guaranties,
surety bonds and similar instruments, whether or not matured, and (c) the
aggregate stated balance sheet amount or the stated amount of all Guaranteed
Indebtedness (except Guaranteed Indebtedness with respect to which the primary
obligation is not itself Indebtedness) as to the Credit Parties on a
consolidated basis.

 

“Consolidated
Total Leverage Ratio” means, as of any date of determination, the ratio of
(a) the outstanding amount of Consolidated Total Debt as of such date to (b)
Consolidated EBITDA for the Test Period most recently ended on or prior to such
date.

 

“Contracts”
means all “contracts,” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, in any event, including all contracts,
undertakings, or agreements (other than rights evidenced by Chattel Paper,
Documents or Instruments) in or under which any Credit Party may now or
hereafter have any right, title or interest, including any agreement relating
to the terms of payment or the terms of performance of any Account.

 

“Control Letter”
means a letter agreement between Agent and (i) the issuer of uncertificated
securities with respect to uncertificated securities in the name of any Credit
Party, (ii) a securities intermediary with respect to securities, whether
certificated or uncertificated, securities entitlements and other financial
assets held in a securities account in the name of any Credit Party or (iii) a
futures commission merchant or clearing house, as applicable, with respect to
commodity accounts and commodity contracts held by any Credit Party, whereby,
among other things, the issuer, securities intermediary or futures commission
merchant disclaims any security interest in the applicable financial assets,
acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders
of Agent without further consent by the affected Credit Party.

 

A-9

 

“Copyright
License” means any and all rights now owned or hereafter acquired by any
Credit Party under any written agreement granting any right to use any
Copyright or Copyright registration.

 

“Copyright
Security Agreements” means the Copyright Security Agreements made in favor
of Agent, on behalf of itself and Lenders, by each applicable Credit Party.

 

“Copyrights”
means all of the following now owned or hereafter adopted or acquired by any
Credit Party:  (a) all copyrights and
General Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political
subdivision thereof, and (b) all reissues, extensions or renewals thereof.

 

“Credit Parties”
means Borrower and each of its Subsidiaries.

 

“Debt Issuance”
means the Incurrence by any Credit Party of any Indebtedness.

 

“Default”
means any event that, with the passage of time or notice or both, would, unless
cured or waived, become an Event of Default.

 

“Deferred
Interest” means accrued interest on the IDS Subordinated Notes or any other
Subordinated Debt for any period the payment of which is deferred pursuant to
the applicable IDS Subordinated Notes Indenture or other applicable Additional
Subordinated Debt Document.

 

“Deposit
Accounts” means all “deposit accounts” as such term is defined in the Code,
now or hereafter held in the name of any Credit Party.

 

“Disclosure
Schedules” means the Schedules prepared by Borrower and denominated as Disclosure
Schedules (1.4) through (6.16) in the Index to the Agreement.

 

“Disposition”
means (i) any sale, assignment, lease, transfer or other disposition (including
any Sale/Leaseback Transaction or any sale of any of Stock of any Subsidiary of
Borrower) of any Property by any Credit Party to any other Person and/or (ii)
any casualty to any Property or any Condemnation.  The term Disposition shall not include any Debt Issuance or Stock
Issuance.

 

“Disqualified
Stock” means, with respect to any Person, any Stock of such Person which,
by its terms (or by the terms of any security into which it is convertible or
for which it is redeemable or exchangeable), or upon the happening of any
event: (i) matures or is mandatorily redeemable, pursuant to a sinking fund obligation
or otherwise; (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock; or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case prior to the first anniversary of the
maturity date of the Initial IDS Subordinated Notes issued on 

 

A-10

 

the
Closing Date; provided, however, that only the portion of Stock
which so matures or is mandatorily redeemable, is so convertible or
exchangeable or is so redeemable at the option of the holder thereof prior to
such first anniversary shall be deemed to be Disqualified Stock; provided
further, however, that if such Stock is issued to any employee or
to any plan for the benefit of employees of Borrower or its Subsidiaries or by
any such plan to such employees, such Stock shall not constitute Disqualified
Stock solely because it may be required to be repurchased by Borrower in order
to satisfy applicable statutory or regulatory obligations or as a result of
such employee’s termination, death or disability.  Notwithstanding any provision to the contrary herein, Borrower’s
Class B common stock that is exchangeable for Initial IDS-Linked
Subordinated Notes shall not be Disqualified Stock.  In addition, notwithstanding clause (iii) of this definition, any
Stock that would constitute Disqualified Stock solely because the holders
thereof have the right to require Borrower to repurchase such Stock upon the
occurrence of a change of control or an asset sale shall not constitute Disqualified
Stock if the terms of such Stock provide that Borrower may not repurchase or
redeem any such Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 6.14.

 

“Distributable
Cash” means, as of any specified date, an amount of cash equal to the
remainder of:

 

(a)                                  Consolidated
EBITDA for the period (taken as one accounting period) from January 1, 2005
through the end of the Fiscal Quarter most recently ended prior to such
specified date (for these purposes, the subject period), less

 

(b)                                 the sum of:

 

(i)
Consolidated Interest Expense (exclusive of original issue discount
amortization, non-cash interest expense (including any PIK Amounts) and current
and deferred interest payable with respect to the Subordinated Debt) for such
subject period;

 

(ii)
any mandatory prepayment during such subject period that results in a permanent
reduction to the principal amount (or commitments under a revolving facility)
of Indebtedness payable under the Loan Documents prior to its scheduled
maturity (to the extent not included in clause (i) above) for such subject
period (other than any mandatory prepayment pursuant to Section 1.3(b)(ii),
(iii) or (vi)); provided that if such Indebtedness is Incurred in
any such period that replaces such Indebtedness previously prepaid or
commitments under a revolving facility are increased to previous levels, which
prepayment (or reduction in commitments under a revolving credit facility)
resulted in a reduction to Distributable Cash pursuant to this clause,
Distributable Cash shall be increased by an amount up to such previous
reduction;

 

(iii)
Consolidated Capital Expenditures made in cash during such subject period
(except to the extent financed with (x) an Incurrence of

 

A-11

 

Indebtedness, until such Indebtedness is repaid, (y)
equity proceeds or (z) insurance proceeds) minus Net Cash Proceeds (except to the
extent such Net Cash Proceeds is included in Consolidated EBITDA) of any
Disposition applied during such subject period pursuant to the IDS Subordinated
Notes Indenture and this Agreement to finance such Consolidated Capital
Expenditures; and

 

(iv)
consolidated cash income Tax expense of the Credit Parties for income Taxes
paid in cash during such subject period minus cash income tax refunds received by
any of the Credit Parties during such subject period;

 

provided,
however, that amounts shall be included in this clause (b) for
any period only to the extent not duplicative of any cost or expense which is
reflected in Consolidated Net Income for such period and which has not been
added back to Net Income in calculating Consolidated EBITDA for such period.

 

“Dividend
Suspension Period” means, with respect to any period (for these purposes,
the “subject period”) consisting
of one or more consecutive, four-Fiscal Quarter periods of Borrower as of the
end of which either (a) the Consolidated Fixed Charge Coverage Ratio is less
than 1.20 to 1.00 or (b) the Consolidated Senior Leverage Ratio is greater than
3.10 to 1.00, the period commencing on the date Borrower is required to deliver
a Compliance Certificate pursuant to Section 4.1 in respect of the first
such four-Fiscal Quarter period in such subject period and ending on date on
which Borrower delivers a Compliance Certificate pursuant to Section 4.1
in respect of the last Fiscal Quarter of Borrower in such subject period.

 

“Documents”
means any “documents,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located.

 

“Dollars”
or “$” means lawful currency of the United States of America.

 

“Environmental
Laws” means all applicable federal, state, local and foreign laws,
statutes, ordinances, codes, rules and regulations, now or hereafter in effect,
and any applicable judicial or administrative interpretation thereof, including
any applicable judicial or administrative order, consent decree, order or
judgment, imposing liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation).  Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§
9601 et seq.) (“CERCLA”); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.);
the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.); the Toxic
Substance Control Act (15 U.S.C. §§ 2601 et seq.); the Clean Air Act (42
U.S.C. §§ 7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C. §§ 1251 et seq.); the Occupational Safety and Health Act (29
U.S.C. §§ 651 et seq.); and the Safe Drinking Water Act (42 U.S.C.
§§ 300(f) et seq.), and any and all regulations promulgated 

 

A-12

 

thereunder,
and all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.

 

“Environmental
Liabilities” means, with respect to any Person, all liabilities,
obligations, responsibilities, response, remedial and removal costs, investigation
and feasibility study costs, capital costs, operation and maintenance costs,
losses, damages, punitive damages, property damages, natural resource damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute or common law, including any
arising under or related to any Environmental Laws, Environmental Permits, or
in connection with any Release or threatened Release or presence of a Hazardous
Material whether on, at, in, under, from or about or in the vicinity of any
real or personal property.

 

“Environmental
Permits” means all permits, licenses, authorizations, certificates,
approvals or registrations required by any Governmental Authority under any
Environmental Laws.

 

“Equipment”
means all “equipment,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located and, in any event,
including all such Credit Party’s machinery and equipment, including processing
equipment, conveyors, machine tools, data processing and computer equipment,
including embedded software and peripheral equipment and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock
and other equipment of every kind and nature, trade fixtures and fixtures not
forming a part of real property, together with all additions and accessions
thereto, replacements therefor, all parts therefor, all substitutes for any of
the foregoing, fuel therefor, and all manuals, drawings, instructions,
warranties and rights with respect thereto, and all products and proceeds
thereof and condemnation awards and insurance proceeds with respect thereto.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any regulations promulgated thereunder.

 

“ERISA
Affiliate” means, with respect to any Credit Party, any trade or business
(whether or not incorporated) that, together with such Credit Party, are
treated as a single employer within the meaning of Sections 414(b), (c), (m) or
(o) of the IRC.

 

“ERISA Event”
means, with respect to any Credit Party or any ERISA Affiliate, (a) any event
described in Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the
withdrawal of any Credit Party or ERISA Affiliate from a Title IV Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (c) the complete or
partial 

 

A-13

 

withdrawal
(within the meaning of Section 4203 or 4205 of ERISA) of any Credit Party or
any ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by
any Credit Party or ERISA Affiliate to make when due required contributions to
a Multiemployer Plan or Title IV Plan unless such failure is cured within
thirty (30) days; (g) any other event or condition that could reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or for the imposition of liability under Section 4069 or
4212(c) of ERISA; (h) the termination of a Multiemployer Plan under Section
4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan
under Section 4241 or 4245 of ERISA; or (i) the loss of a Qualified Plan’s
qualification or tax exempt status; or (j) the termination of a Plan described
in Section 4064 of ERISA.

 

“ESOP”
means a Plan that is intended to satisfy the requirements of Section 4975(e)(7)
of the IRC.

 

“Event of
Default” has the meaning ascribed to it in Section 8.1.

 

“Excess
Cash” means, as of any specified date, an amount equal to the remainder of
(a) Distributable Cash for the period (taken as one accounting period) from
January 1, 2005 through the end of the Fiscal Quarter most recently ended prior
to such specified date (for these purposes, the subject period), less
(b) the sum of cash interest payments (except for payments made pursuant to Section
6.14(m)) made by Borrower in respect of the Subordinated Debt during such
subject period and on such specified date.

 

“Excluded Debt Issuance Proceeds” means (a) the Net Cash
Proceeds from the Debt Issuance pursuant to the transactions consummated on the
Closing Date which constitute Related Transactions and which are consummated in
accordance with the Related Transaction Documents as they exist on the Closing
Date, (b) the Net Cash Proceeds from any Debt Issuance by any Credit Party that
is permitted pursuant to Section 6.3(a)(i), (ii), (iv), (v), (viii), [(x)],
(xiii) or (xvi), (c) the Net Cash Proceeds from any Debt Issuance by
Borrower that is permitted pursuant to Section 6.3(a)(vii), but only to
the extent that the Net Cash Proceeds therefrom are applied (i) concurrently
with the issuance thereof, to refinance Permitted Additional Subordinated Debt
of Borrower in accordance with Section 6.3(a)(vii) or (ii) not later
than 90 days after any Debt Issuance referred to in this clause (c), the Net
Cash Proceeds therefrom are applied (x) to finance a Permitted Acquisition or
(y) to finance permitted Consolidated Capital Expenditures, and (d) the Net
Cash Proceeds from any Debt Issuance by Borrower that is permitted pursuant to Section
6.3(a)(xv), but only to the extent that the Net Cash Proceeds therefrom are
applied (i) concurrently with the issuance thereof, to refinance IDS Subordinated
Notes of Borrower in accordance with Section 6.3(a)(xv) or Permitted
Additional Subordinated Debt of Borrower in accordance with Section
6.3(a)(xv) or (ii) not later than 90 days after any Debt Issuance referred
to in this clause (d), the Net Cash Proceeds therefrom are applied (x) to
finance a Permitted Acquisition or (y) to finance permitted Consolidated
Capital Expenditures.

 

A-14

 

“Excluded Disposition Proceeds” means (I) the Net Cash Proceeds
of any Disposition permitted by Section 6.8(a), (d), (f), (g)
or (i), (II) the Net Cash Proceeds of any Condemnation to the extent the
application of such proceeds is addressed under a Mortgage and (III) the
proceeds of casualty insurance which are addressed under Section 5.4(c).

 

“Excluded Stock
Issuance Proceeds” means (a) the Net Cash Proceeds from the Stock Issuance
pursuant to the transactions consummated on the Closing Date which constitute
Related Transactions and which are consummated in accordance with the Related
Transaction Documents, (b) the Net Cash Proceeds from any Stock Issuance by any
Subsidiary of Borrower that is permitted pursuant to Section 6.5, or (c)
the Net Cash Proceeds from any Stock Issuance by Borrower that is permitted
pursuant to Section 6.5, but only to the extent that not later than 90
days after any such Stock Issuance by Borrower, such Net Cash Proceeds are
applied (i) to finance a Permitted Acquisition, (ii) to finance permitted
Consolidated Capital Expenditures, (iii) to prepay Subordinated Debt or (iv) to
repurchase shares of Borrower’s common stock permitted by Section 6.14(l).

 

“Fair Labor
Standards Act” means the Fair Labor Standards Act, 29 U.S.C. §201 et seq.

 

“Fair Market
Value” means, with respect to any asset or property, the price which could
be negotiated in an arm’s-length, free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of whom is under undue
pressure or compulsion to complete the transaction.

 

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

 

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

 

“Federal Funds
Rate” means, for any day, a floating rate equal to the federal funds
effective rate publicly quoted from time to time by The Wall Street Journal
as the federal funds “effective rate” (or, if The Wall Street
Journal ceases quoting a federal funds effective rate, the weighted average
of the rates on overnight federal funds transactions among members of the
Federal Reserve System as determined by Agent by reference to the federal funds
rate publicly quoted in a reputable business publication selected by Agent in
good faith, which determination shall be final, binding and conclusive (absent
manifest error)).

 

“Federal
Reserve Board” means the Board of Governors of the Federal Reserve System.

 

“Fee Letters”
means the GE Capital Fee Letter and the Lender Fee Letter.

 

“Fees”
means any and all fees payable to Agent or any Lender pursuant to the Agreement
or any of the other Loan Documents.

 

A-15

 

“Final Maturity
Date” means December     , 2009.

 

“Financial
Covenants” means the financial covenants set forth in Annex G.

 

“Financial
Statements” means the consolidated income statements, statements of cash
flows and balance sheets of Borrower delivered in accordance with Section
3.4 and Annex E.

 

“Fiscal Month”
means any of the monthly accounting periods of Borrower.

 

“Fiscal Quarter”
means any of the quarterly accounting periods of Borrower, ending on March 31,
June 30, September 30 and December 31 of each year.

 

“Fiscal Year”
means any of the annual accounting periods of Borrower ending on December 31 of
each year.

 

“Fixtures”
means all “fixtures” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party.

 

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

 

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

 

“GAAP”
means generally accepted accounting principles in the United States of America,
consistently applied, as such term is further defined in Annex G to the
Agreement.

 

“GE Capital”
means General Electric Capital Corporation, a Delaware corporation.

 

“GE Capital Fee
Letter” means that certain letter, dated as of the Closing Date, between GE
Capital and Borrower with respect to certain Fees to be paid from time to time
by Borrower to GE Capital.

 

“General
Intangibles” means “general intangibles,” as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including all right,
title and interest that such Credit Party may now or hereafter have in or under
any Contract, all payment intangibles, customer lists, Licenses, Copyrights,
Trademarks, Patents, and all applications therefor and reissues, extensions or
renewals thereof, rights in Intellectual Property, interests in partnerships,
joint ventures and other business associations, licenses, permits, copyrights,
trade secrets, proprietary or confidential

 

A-16

 

information,
inventions (whether or not patented or patentable), technical information,
procedures, designs, knowledge, know-how, software, data bases, data, skill,
expertise, experience, processes, models, drawings, materials and records,
goodwill (including the goodwill associated with any Trademark or Trademark
License), all rights and claims in or under insurance policies (including
insurance for fire, damage, loss and casualty, whether covering personal
property, real property, tangible rights or intangible rights, all liability,
life, key man and business interruption insurance, and all unearned premiums),
uncertificated securities, choses in action, deposit, checking and other bank
accounts, rights to receive tax refunds and other payments, rights to receive
dividends, distributions, cash, Instruments and other property in respect of or
in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.

 

“Goods”
means any “goods” as defined in the Code, now owned or hereafter acquired by
any Credit Party, wherever located, including embedded software to the extent
included in “goods” as defined in the Code, manufactured homes, standing timber
that is cut and removed for sale and unborn young of animals.

 

“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, and any agency, department, court, central bank or other
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government (including, without
limitation, the FCC, any PUC and any Franchising Authority).

 

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

 

“Guaranteed
Indebtedness” means, as to any Person, any obligation of such Person
guaranteeing, providing comfort or otherwise supporting any Indebtedness,
lease, dividend, or other obligation (“primary obligation”) of any other
Person (the “primary obligor”) in any manner, including any obligation
or arrangement of such Person to (a) purchase or repurchase any such
primary obligation, (b) advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet condition of the primary obligor,
(c) purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, (d) protect the beneficiary
of such arrangement from loss (other than product warranties given in the
ordinary course of business) or (e) indemnify the owner of such primary
obligation against loss in respect thereof. 
The amount of any Guaranteed Indebtedness at any time shall be deemed to
be an amount equal to the lesser at such time

 

A-17

 

of (x)
the stated or determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is incurred and (y) the maximum amount for which
such Person may be liable pursuant to the terms of the instrument embodying
such Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect
thereof.

 

“Guaranties”
means, collectively, the Subsidiary Guaranty and any other guaranty executed by
any Guarantor in favor of Agent and Lenders in respect of the Obligations.

 

“Guarantor”
means each Credit Party (other than Borrower and Mid-Missouri Telephone) and
each other Person, if any, that (i) executes a guaranty or other similar
agreement in favor of Agent, for itself and the ratable benefit of Lenders, in
connection with the transactions contemplated by the Agreement, or (ii) becomes
a “Guarantor” under the Subsidiary Guaranty by the execution of a Joinder
Agreement.

 

“Hazardous
Material” means any substance, material or waste that is regulated by, or
forms the basis of liability now or hereafter under, any Environmental Laws,
including any material or substance that is (a) defined as a “solid waste,”
“hazardous waste,” “hazardous material,” “hazardous substance,” “extremely
hazardous waste,”  “restricted hazardous
waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic
substance” or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB’s), or any radioactive substance.

 

“Hedging
Obligations” means, with respect to any Person, the obligations of such
Person under: (i) currency exchange, interest rate or commodity swap
agreements, currency exchange, interest rate or commodity cap agreements and
currency exchange, interest rate or commodity collar agreements; and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in currency exchange, interest rates or commodity prices.

 

“Holding
Companies” means each of Borrower, Brindlee Holdings, Hopper Holding,
Mid-Missouri Holding and Page and Kiser Communications.

 

“Hopper Holding”
means Hopper Holding Company, Inc., an Alabama corporation.

 

“IDS Payment
Date” means the 30th day of each March, June, September and December (or,
if such day is not a Business Day, the first Business Day following such day)
commencing March 30, 2005.

 

“IDS Securities”
means Initial IDS Securities and Subsequent IDS Securities.

 

“IDS
Subordinated Notes” means (i) the Initial IDS Subordinated Notes and (ii)
any Subsequent IDS Subordinated Notes.

 

A-18

 

“IDS
Subordinated Notes Documents” means the Initial IDS Subordinated Notes
Documents and any Subsequent IDS Subordinated Notes Documents.

 

“IDS
Subordinated Notes Indenture” means (i) the Initial IDS Subordinated Notes
Indenture and (ii) the Subsequent IDS Subordinated Notes Indenture.

 

“Imagination”
means Imagination, Inc., a Missouri corporation.

 

“Incur”
means issue, assume, guarantee, incur or otherwise become liable for; provided,
however, that any Indebtedness or Stock of a Person existing at the time
such Person becomes a Subsidiary (whether by merger, consolidation, acquisition
or otherwise) shall be deemed to be Incurred by such Person at the time it
becomes a Subsidiary.

 

“Indebtedness”
means, with respect to any Person: (i) the principal and premium (if any) of
any indebtedness of such Person, whether or not contingent:  (a) in respect of borrowed money, (b)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit or bankers’ acceptances (or, without duplication, reimbursement
agreements in respect thereof), (c) representing the deferred and unpaid
purchase price of any property, which purchase price is due more than six
months after the date of placing the property in service or taking delivery and
title thereto, (d) in respect of Capital Lease Obligations or (e) representing
any Hedging Obligations, if and to the extent that any of the foregoing
Indebtedness (other than letters of credit and Hedging Obligations) would
appear as a liability on a balance sheet (excluding the footnotes thereto) of
such Person prepared in accordance with GAAP; (ii) to the extent not otherwise
included, any Guaranteed Indebtedness as to such Person (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business and other than Guaranteed Indebtedness with respect to which the
primary obligation is not itself Indebtedness); and (iii) to the extent not
otherwise included, Indebtedness of another Person secured by a Lien on any
asset owned by such Person (whether or not such Indebtedness is assumed by such
Person); provided, however, that the amount of such Indebtedness
will be the lesser of (a) the Fair Market Value of such asset at such date of
determination and (b) the amount of such Indebtedness of such other Person; provided,
further, that any obligation of Borrower or any Subsidiary in respect of
account credits to participants under the LTIP or any successor or similar
compensation plan, shall be deemed not to constitute Indebtedness.

 

“Indemnified
Liabilities” has the meaning ascribed to it in Section 1.13.

 

“Indemnified
Person” has the meaning ascribed to it in Section 1.13.

 

“Index Rate”
means, for any day, a floating rate equal to the higher of (i) the rate
publicly quoted from time to time by The Wall Street Journal
as the “prime rate” (or, if The Wall Street Journal ceases
quoting a prime rate, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled “Selected Interest Rates” as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate plus 50 basis points per
annum.  Each change

 

A-19

 

in any
interest rate provided for in the Agreement based upon the Index Rate shall
take effect at the time of such change in the Index Rate.

 

“Index Rate
Loan” means a Loan or portion thereof bearing interest by reference to the
Index Rate.

 

“Initial IDS
Common Stock” means (i) the shares of the Class A common stock of Borrower
issued on the Closing Date pursuant to the Registration Statement and which
comprise a portion of the Initial IDS Securities and (ii) the shares of the
Class A common stock of Borrower issued after the Closing Date as part of the
Initial IDS Securities required to be issued upon conversion of any Class B
common stock of Borrower issued on the Closing Date as part of the Related
Transactions.

 

“Initial IDS
Documents” means the Registration Statement, the Initial IDS Securities,
the Initial IDS Subordinated Notes Documents and the other documents and
agreements entered into in connection with the issuance of Initial IDS
Securities or Initial IDS Subordinated Notes.

 

“Initial IDS
Securities” means income deposit securities of Borrower comprised of one
share of Initial IDS Common Stock and a certain principal amount of Initial
IDS-Linked Subordinated Notes.

 

“Initial
IDS-Linked Subordinated Notes” means (i) the senior subordinated notes of
Borrower issued on the Closing Date pursuant to the Initial IDS Subordinated
Notes Indenture as part of the Related Transactions and which comprise a
portion of the Initial IDS Securities and (ii) the senior subordinated notes of
Borrower issued after the Closing Date pursuant to the Initial IDS Subordinated
Notes Indenture as part of Initial IDS Securities required to be issued upon
conversion of any Class B common stock of Borrower issued on the Closing Date
as part of the Related Transactions.

 

“Initial IDS
Subordinated Notes” means (i) the Initial IDS-Linked Subordinated Notes and
(ii) the Initial Non-IDS-Linked Subordinated Notes.

 

“Initial IDS
Subordinated Notes Documents” means the Initial IDS Subordinated Notes, the
Initial IDS Subordinated Notes Indenture and each other document executed by
any Credit Party pursuant to any such document.

 

“Initial IDS
Subordinated Notes Indenture” means the Indenture dated as of
              
      , 2004, between Borrower, as issuer, the
Subsidiaries of Borrower party thereto, as guarantors, and the Initial IDS
Subordinated Notes Trustee.

 

“Initial IDS
Subordinated Notes Trustee” means Wells Fargo Bank, National Association,
as indenture trustee pursuant to the Initial IDS Subordinated Notes Indenture.

 

“Initial
Non-IDS-Linked Subordinated Notes” means the senior subordinated notes of
Borrower issued on the Closing Date pursuant to the Initial IDS

 

A-20

 

Subordinated
Notes Indenture as part of the Related Transactions but which do not comprise a
portion of Initial IDS Securities.

 

“Instruments”
means all “instruments,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, and, in any event,
including all certificates of deposit, and all promissory notes and other
evidences of indebtedness, other than instruments that constitute, or are a
part of a group of writings that constitute, Chattel Paper.

 

“Intellectual
Property” means any and all Licenses, Patents, Copyrights, Trademarks, and
the goodwill associated with such Trademarks.

 

“Intercompany
Notes” has the meaning ascribed to it in Section 6.3.

 

“Interest
Deferral Period” means, with respect to any period (for these purposes, the
“subject period”) consisting of
one or more consecutive, four-Fiscal Quarter periods of Borrower as of the end
of which either (a) the Consolidated Fixed Charge Coverage Ratio is less than
1.15 to 1.00 or (b) the Consolidated Senior Leverage Ratio is greater than 3.20
to 1.00, the period commencing on the date Borrower is required to deliver a
Compliance Certificate pursuant to Section 4.1 in respect of the first
such four-quarter period in such subject period and ending on the date on which
Borrower delivers a Compliance Certificate pursuant to Section 4.1 in
respect of the last Fiscal Quarter of Borrower in such subject period.

 

“Interest
Payment Date” means (a) as to any Index Rate Loan, (1) each March
        , June
       , September
         and December
         and (2) each day on which such
Loan (or any portion thereof) has been repaid; and (b) as to any LIBOR Loan,
(1) the last day of the applicable LIBOR Period, provided, that in the
case of any LIBOR Period greater than three months in duration, interest shall
be payable at three month intervals and on the last day of such LIBOR Period;
and (2) each day on which such Loan (or any portion thereof) has been repaid;
and provided  further that, in addition to the foregoing, each of
(x) the date upon which all of the Commitments have been terminated and the
Loans have been paid in full and (y) the Commitment Termination Date shall be
deemed to be an “Interest Payment Date” with respect to any interest
that has then accrued under the Agreement.

 

“Inventory”
means any “inventory,” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, wherever located, and in any event including
inventory, merchandise, goods and other tangible personal property that are
held by or on behalf of any Credit Party for sale or lease or are furnished or
are to be furnished under a contract of service, or that constitute raw
materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party’s business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software.

 

A-21

 

“Investment
Property” means all “investment property,” as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
including (i) all securities, whether certificated or uncertificated, including
stocks, bonds, interests in limited liability companies, partnership interests,
treasuries, certificates of deposit, and mutual fund shares; (ii) all
securities entitlements of any Credit Party, including the rights of such
Credit Party to any securities account and the financial assets held by a
securities intermediary in such securities account and any free credit balance
or other money owing by any securities intermediary with respect to that
account; (iii) all securities accounts of any Credit Party; (iv) all commodity
contracts of any Credit Party; and (v) all commodity accounts held by any
Credit Party.

 

“Investments”
means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of loans (including guarantees),
advances or capital contributions (excluding accounts receivable, trade credit
and advances to customers and commission, travel and similar advances to
officers, employees and consultants made in the ordinary course of business),
purchases or other acquisitions for consideration (including agreements
providing for the adjustment of purchase price) of Indebtedness, Stock or other
securities issued by any other Person and investments that are required by GAAP
to be classified on the balance sheet of Borrower in the same manner as the
other investments included in this definition to the extent such transactions
involve the transfer of cash or other property by such Person to such other
Person.  The amount of any Investment
shall be the original cost of such Investment plus the cost of all additions
thereto, without any adjustment for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment.

 

“IRC” means
the Internal Revenue Code of 1986, as amended, and all regulations promulgated
thereunder.

 

“IRS” means
the Internal Revenue Service.

 

“Joinder
Agreement” means a joinder agreement substantially in the form of Exhibit
5.13 to the Agreement.

 

“Lenders”
means GE Capital, the other Lenders named on the signature pages of the
Agreement, and any other Person that becomes a “Lender” hereunder pursuant to Section
1.16(d) or Section 9.1(a).

 

“Lender Fee
Letter” means that certain letter, dated as of the Closing Date, between
the initial Lenders and Borrower with respect to certain Fees to be paid on the
Closing Date by Borrower to the initial Lenders.

 

“Letter-of-Credit
Rights” means “letter-of-credit rights” as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including rights to
payment or performance under a letter of credit, whether or not such Credit
Party, as beneficiary, has demanded or is entitled to demand payment or
performance.

 

“LIBOR Business
Day” means a Business Day on which banks in the City of London are
generally open for interbank or foreign exchange transactions.

 

A-22

 

“LIBOR Loan”
means a Loan or any portion thereof bearing interest by reference to the LIBOR
Rate.

 

“LIBOR Period”
means, with respect to any LIBOR Loan, each period commencing on a LIBOR
Business Day selected by Borrower pursuant to the Agreement and ending one,
two, three or six months thereafter, as selected by Borrower’s irrevocable
notice to Agent as set forth in Section 1.5(e);  provided, that the foregoing provision relating to
LIBOR Periods is subject to the following:

 

(a)           if any LIBOR Period would otherwise
end on a day that is not a LIBOR Business Day, such LIBOR Period shall be
extended to the next succeeding LIBOR Business Day unless the result of such
extension would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding LIBOR
Business Day;

 

(b)           any LIBOR Period that would otherwise
extend beyond the Commitment Termination Date shall end two (2) LIBOR Business
Days prior to such date;

 

(c)           any LIBOR Period that begins on the
last LIBOR Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;

 

(d)           Borrower shall select LIBOR Periods
so as not to require a payment or prepayment of any LIBOR Loan during a LIBOR
Period for such Loan; and

 

(e)           Borrower shall select LIBOR Periods
so that there shall be no more than ten (10) separate LIBOR Loans in existence
at any one time.

 

“LIBOR Rate”
means for each LIBOR Period, a rate of interest determined by Agent equal to:

 

(a)           the offered rate for deposits in
United States Dollars for the applicable LIBOR Period that appears on Telerate
Page 3750 as of 11:00 a.m. (London time), on the second full LIBOR
Business Day next preceding the first day of such LIBOR Period (unless such
date is not a Business Day, in which event the next succeeding Business Day
will be used); divided by

 

(b)           a number equal to 1.0 minus the
aggregate (but without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day that is two (2) LIBOR
Business Days prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of the
Federal Reserve Board or other Governmental Authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Federal Reserve Board) that are required to be maintained by a member bank
of the Federal Reserve System.

 

A-23

 

If such interest
rates shall cease to be available from Telerate News Service, the LIBOR Rate
shall be determined from such financial reporting service or other information
as shall be acceptable to Agent.

 

“License”
means any Copyright License, Patent License, Trademark License or other license
of rights or interests now held or hereafter acquired by any Credit Party.

 

“Lien”
means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, lien, charge, security interest, easement or encumbrance, or
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of any
jurisdiction).

 

“Litigation”
has the meaning ascribed to it in Section 3.13.

 

“Loan Account”
has the meaning ascribed to it in Section 1.12.

 

“Loan Documents”
means the Agreement, the Notes, the Collateral Documents, the GE Capital Fee
Letter and all other agreements, instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor of,
Agent or any Lenders and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated thereby.

 

“Loans”
means the Revolving Loan, the Swing Line Loan and the Term Loan.

 

“LTIP”
means any long-term incentive or similar compensation plan maintained by
Borrower or its Subsidiaries.

 

“M&A
Software License” means that certain License Agreement for Software
Programs, executed by Martin and Associates, Inc. dated June 14, 1999 and by
OTELCO Telephone, LLC dated June 18, 1999.

 

“Management
Group” means
                      .

 

“Margin Stock”
has the meaning ascribed to it in Section 3.10.

 

“Material
Adverse Effect” means a material adverse effect on (a) the business,
assets, operations or financial or other condition of the Credit Parties
considered as a whole, (b) Borrower’s ability to pay any of the Loans or any of
the other Obligations in accordance with the terms of the Agreement or the
ability of any Credit Party to perform any of its other obligations under the
Loan Documents, (c) the Collateral or 

 

A-24

 

Agent’s
Liens, on behalf of itself and Lenders, on the Collateral or the priority of
such Liens, or (d) Agent’s or any Lender’s rights and remedies under the
Agreement and the other Loan Documents.

 

“Material Real
Estate” means (i) the Real Estate subject to any Mortgage, (ii) any Real
Estate having a value in excess of $250,000, (iii) any Real Estate leased,
subleased or used by any Credit Party with respect to which the aggregate
annual payments therefor exceed $50,000, and (iv) any Real Estate that the
Requisite Lenders have determined is material to the business, operations,
assets or financial condition of the Credit Parties.

 

“Maximum Amount”
means, as of any date of determination, an amount equal to the Revolving Loan
Commitment of all Lenders as of that date.

 

“Mid-Missouri
Acquisition” means the acquisition by Borrower of all of the Stock of
Mid-Missouri Holding pursuant to the terms of the Mid-Missouri Acquisition
Agreement.

 

“Mid-Missouri
Acquisition Agreement” means the Agreement and Plan of Merger dated as of
                   ,
2004 among Mid-Missouri Parent, LLC, Mid-Missouri Holding, Borrower and Otelco
Merger Subsidiary, Inc.

 

“Mid-Missouri
Entities” means Mid-Missouri Holding, Mid-Missouri Telephone and
Imagination.

 

“Mid-Missouri
Holding” means Mid-Missouri Holding Corp., a Delaware corporation.

 

“Mid-Missouri
Telephone” means Mid-Missouri Telephone Company, a Missouri corporation.

 

“Moody’s”
means Moody’s Investors Service, Inc., and any successor rating agency.

 

“Mortgaged
Properties” has the meaning assigned to it in Annex D.

 

“Mortgages”
means each of the mortgages, deeds of trust, leasehold mortgages, leasehold
deeds of trust, collateral assignments of leases or other real estate security
documents delivered by any Credit Party to Agent on behalf of itself and
Lenders with respect to the Mortgaged Properties, all in form and substance
reasonably satisfactory to Agent.

 

“Multiemployer
Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA, and to which any Credit Party or ERISA Affiliate is making, is obligated
to make or has made or been obligated to make, contributions on behalf of
participants who are or were employed by any of them.

 

A-25

 

“Multiple
Employer Plan” means a “section 413(c) plan” as defined in Treasury
Regulations Section 1.413-2 and to which any Credit Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of
them.

 

“Net Cash
Proceeds” means:

 

(a)
with respect to any Disposition, (i) the aggregate amount of cash proceeds
received by any Credit Party in respect of such Disposition (including any cash
proceeds received at any time by any Credit Party as income or other proceeds
of any noncash proceeds or other consideration in respect of any Disposition as
and when received), less (ii) the sum without duplication of the
following amounts, but only to the extent not already deducted in arriving at
the amount referred to in clause (a)(i) above: (A) commissions and other
reasonable and customary transaction costs, fees and expenses properly
attributable to such Disposition and payable by any Credit Party in connection
therewith (in each case, paid to non-Affiliates); (B) taxes payable by any
Credit Party in connection with such Disposition; (C) amounts payable by any
Credit Party to holders of senior Liens (to the extent such Liens constitute
Permitted Encumbrances hereunder), if any, on the Property that is the subject
of such Disposition and required to be, and which is, repaid by any Credit
Party under the terms thereof as a result thereof (including in order to obtain
the consent of such holders to make such Disposition); (D) an appropriate
reserve for indemnities, purchase price adjustments and other contingent
liabilities in accordance with GAAP in connection with such Disposition; and
(E) an appropriate reserve for income taxes in accordance with GAAP in
connection with respect of such Disposition; provided that the reversal
of any such reserve shall be deemed to be cash proceeds received by a Credit
Party in respect of such Disposition; and

 

(b) with respect
to any Debt Issuance or Stock Issuance, the gross amount of cash proceeds paid
to or received by any Credit Party in respect of such Debt Issuance or Stock
Issuance as the case may be (including any cash proceeds received at any time
by any Credit Party as income or other proceeds of any noncash proceeds or
other consideration in respect of any Debt Issuance or Stock Issuance as and
when received), net of underwriting discounts and commissions and other
reasonable costs and expenses directly incurred by such Credit Party and paid
to non-Affiliates in connection therewith.

 

“Net Income”
means, with respect to any Person, the net income (loss) of such Person,
determined in accordance with GAAP and before any reduction in respect of
Preferred Stock dividends.

 

“Non-Funding
Lender” means any Lender that has failed to fund all payments and Advances
required to be made by it and purchased all participations required to be
purchased by it under the Agreement and the other Loan Documents.

 

“Notes”
means, collectively, the Revolving Notes, the Swing Line Note and the Term
Notes.

 

A-26

 

“Notice of
Conversion/Continuation” has the meaning ascribed to it in Section
1.5(e).

 

“Notice of
Revolving Credit Advance” has the meaning ascribed to it in Section
1.1(a).

 

“Notice of
Swing Line Advance” has the meaning ascribed to it in Section 1.1(c).

 

“Obligations”
means all loans, advances, debts, liabilities and obligations, for the
performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or such
amounts are liquidated or determinable) owing by any Credit Party to Agent or
any Lender, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement or
other instrument, arising under the Agreement or any of the other Loan
Documents.  This term includes all
principal, interest (including all interest that accrues after the commencement
of any case or proceeding by or against any Credit Party in bankruptcy, whether
or not allowed in such case or proceeding), Fees, Charges, expenses, attorneys’
fees and any other sum chargeable to any Credit Party under the Agreement or
any of the other Loan Documents.

 

“Page and Kiser
Communications” means Page and Kiser Communications, Inc., an Alabama
corporation.

 

“Patent License”
means rights under any written agreement now owned or hereafter acquired by any
Credit Party granting any right with respect to any invention on which a Patent
is in existence.

 

“Patent
Security Agreements” means the Patent Security Agreements made in favor of
Agent, on behalf of itself and Lenders, by each applicable Credit Party.

 

“Patents”
means all of the following in which any Credit Party now holds or hereafter
acquires any interest:  (a) all letters
patent of the United States or any other country, all registrations and
recordings thereof, and all applications for letters patent of the United
States or of any other country, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State or any other country, and (b)
all reissues, continuations, continuations-in-part or extensions thereof.

 

“PBGC”
means the Pension Benefit Guaranty Corporation.

 

“Pension Plan”
means a Plan described in Section 3(2) of ERISA.

 

“Permitted
Acquisition” has the meaning ascribed to it in Section 6.1(b).

 

“Permitted Additional
Subordinated Debt” means Indebtedness of Borrower evidenced by a new issue
of unsecured, subordinated debt securities of Borrower, so long as (a) such
Indebtedness has a final maturity no earlier than two years

 

A-27

 

after the Final Maturity Date and no amortization
prior to two years after the Final Maturity Date; (b) such Indebtedness does
not (i) have guarantors that are not Subsidiary Guarantors, (ii) have
obligors other than Borrower or (iii) provide for security; (c) the
subordination provisions, standstill provisions and remedies of such
Indebtedness are identical to (or, from the perspective of the Lenders, more
favorable than) those which applied to the Initial IDS-Linked Subordinated
Notes issued on the Closing Date; (d) such Indebtedness has covenants, defaults
and other terms that are not, taken as a whole, less favorable to Borrower and
its Subsidiaries than those which applied to the Initial IDS-Linked
Subordinated Notes issued on the Closing Date; (e) the documentation governing
such Indebtedness is otherwise reasonably satisfactory to the Requisite
Lenders; and (f) such Indebtedness is issued in accordance with Section
6.3(a)(vii).

 

“Permitted
Encumbrances” means the following encumbrances:  (a) Liens for taxes or assessments or other governmental Charges
not yet due and payable or which are being contested in accordance with Section
5.2(b); (b) pledges or deposits of money securing statutory obligations
under workmen’s compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA); (c)
pledges or deposits of money securing bids, tenders, contracts (other than
contracts for the payment of money) or leases to which any Credit Party is a
party as lessee made in the ordinary course of business; (d) inchoate and
unperfected workers’, mechanics’ or similar liens arising in the ordinary
course of business, so long as such Liens attach only to Equipment, Fixtures
and/or Real Estate; (e) carriers’, warehousemen’s, suppliers’ or other similar
possessory liens arising in the ordinary course of business and securing
liabilities in an outstanding aggregate amount not in excess of $1,000,000 at
any time for all Credit Parties combined, so long as such Liens attach only to
Inventory; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment
or judgment lien not constituting an Event of Default under Section 8.1(j);
(h) zoning restrictions, easements, licenses, or other restrictions on the use
of any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (i) presently existing or hereafter created
Liens in favor of Agent, on behalf of Lenders; and (j) Liens expressly
permitted under clauses (b) and (c) of Section 6.7 of the
Agreement.

 

“Permitted
Holders” means Seaport Capital and the Management Group.

 

“Person”
means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department thereof).

 

“PIK Amounts” means,
(a) in respect of any Subsequent IDS Subordinated Notes as to which the Subsequent
IDS Subordinated Notes Documents governing such Subsequent IDS Subordinated
Notes provides that payments of interest due and owing in respect of such
Subsequent IDS Subordinated Notes are not required to be paid in cash, but may
instead be paid with a payment-in-kind by automatically adding to the 

 

A-28

 

outstanding principal amount of such Subsequent IDS
Subordinated Notes an amount equal to the accrued, and unpaid, interest on such
Subsequent IDS Subordinated Notes, the amount equal to the aggregate of all
paid payment-in-kind interest that is added to the outstanding principal of
such Subsequent IDS Subordinated Notes and (b) in respect of any Permitted
Additional Subordinated Debt as to which the Additional Subordinated Debt
Documents governing such Permitted Additional Subordinated Debt provides that payments
of interest due and owing in respect of such Permitted Additional Subordinated
Debt are not required to be paid in cash, but may instead be paid with a
payment-in-kind by automatically adding to the outstanding principal amount of
such Permitted Additional Subordinated Debt an amount equal to the accrued, and
unpaid, interest on such Permitted Additional Subordinated Debt, the amount
equal to the aggregate of all paid payment-in-kind interest that is added to
the outstanding principal of such Permitted Additional Subordinated Debt.

 

“Plan”
means, at any time, an “employee benefit plan,” as defined in Section 3(3) of
ERISA, that any Credit Party or ERISA Affiliate maintains, contributes to or
has an obligation to contribute to on behalf of participants who are or were
employed by any Credit Party.

 

“Pledge
Agreements” means (i) the Pledge Agreement of even date herewith executed
by Borrower and each other Credit Party that is a signatory thereto in favor of
Agent, on behalf of itself and Lenders, pledging all Stock of the Subsidiary of
Borrower other than Mid-Missouri Telephone and (ii) any other pledge agreement
entered into after the Closing Date by any Credit Party (as required by the
Agreement or any other Loan Document).

 

“Preferred
Stock” means any Stock with preferential right of payment of dividends or
upon liquidation, dissolution, or winding up.

 

“Prior Lender”
means
                                           .

 

“Prior Lender
Obligations” means
                                      .

 

“Proceeds”
means “proceeds,” as such term is defined in the Code, including (a) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
any Credit Party from time to time with respect to any of the Collateral, (b)
any and all payments (in any form whatsoever) made or due and payable to any
Credit Party from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
governmental authority), (c) any claim of any Credit Party against third
parties (i) for past, present or future infringement of any Patent or Patent
License, or (ii) for past, present or future infringement or dilution of any
Copyright, Copyright License, Trademark or Trademark License, or for injury to
the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral, including claims
arising out of the loss or nonconformity of, interference with the use of,
defects in, or infringement of rights in, or damage to, 

 

A-29

 

Collateral,
(e) all amounts collected on, or distributed on account of, other Collateral,
including dividends, interest, distributions and Instruments with respect to
Investment Property and pledged Stock, and (f) any and all other amounts,
rights to payment or other property acquired upon the sale, lease, license,
exchange or other disposition of Collateral and all rights arising out of
Collateral.

 

“Pro Forma”
means the unaudited consolidated balance sheet of Borrower and its Subsidiaries
as of
                ,
200    after giving pro forma
effect to the Related Transactions.

 

“Pro Forma
Basis” means, for purposes of determining compliance with any financial
covenant or test hereunder, determining whether the conditions to the
Incurrence of Indebtedness pursuant to Section 6.3 have been met and
determining whether the conditions precedent to a Permitted Acquisition have
been met, that the subject transaction shall be deemed to have occurred as of
the first day of the four consecutive fiscal quarters most recently ended for
which annual or quarterly financial statements shall have been delivered in
accordance with the provisions hereof (the “Reference Period”).  For purposes of making calculations on a
“Pro Forma Basis” hereunder, (a) any Permitted Acquisition shall be calculated
on a pro forma basis assuming that such Permitted Acquisition had occurred on
the first day of the Reference Period, taking into account factually
supportable and identifiable costs savings and expenses which would otherwise
be accounted for as an adjustment pursuant to Article 11 of Regulation S-X
under the Securities Act of 1933, as if such costs savings or expenses were
realized on the first day of the Reference Period, (b) any Indebtedness to be
Incurred by any Person in connection with the consummation of any Debt Issuance
or Permitted Acquisition will be assumed to have been Incurred on the first day
of the Reference Period, (c) the gross interest expenses, determined in
accordance with GAAP, with respect to such Indebtedness assumed to have been
Incurred on the first day of the Reference Period that bears interest at a
floating rate shall be calculated at the current rate under the agreement
governing such Indebtedness (including this Agreement if the Indebtedness is
Incurred hereunder), and (d) any gross interest expense, determined in
accordance with GAAP, Incurred during the Reference Period that was or is to be
refinanced with proceeds of Indebtedness assumed to have been Incurred as of
the first day of the Reference Period will be excluded from the calculation for
which a Pro Forma Basis is being given.

 

“Projections”
means Borrower’s forecasted consolidated: (a) balance sheets; (b) profit and
loss statements;  and (c) cash flow
statements, in each case included in the Confidential Information Memorandum
previously delivered to the Lenders.

 

“Property”
means any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible.

 

“Pro Rata Share”
means with respect to all matters relating to any Lender (a) with respect to
the Revolving Loan, the percentage obtained by dividing (i) the Revolving Loan
Commitment of that Lender by (ii) the aggregate Revolving Loan Commitments of
all Lenders, (b) with respect to the Term Loan, the percentage obtained 

 

A-30

 

by
dividing (i) the Term Loan Commitment of that Lender by (ii) the aggregate Term
Loan Commitments of all Lenders, as any such percentages may be adjusted by
assignments permitted pursuant to Section 9.1, (c) with respect to all
Loans, the percentage obtained by dividing (i) the aggregate Commitments of
that Lender by (ii) the aggregate Commitments of all Lenders, and (d) with
respect to all Loans on and after the Commitment Termination Date, the
percentage obtained by dividing (i) the aggregate outstanding principal balance
of the Loans held by that Lender, by (ii) the outstanding principal balance of
the Loans held by all Lenders.

 

“PUC” means
any state Governmental Authority that exercises jurisdiction over the rates or
services or the acquisition, ownership, construction or operation of any
telecommunications systems or over Persons who own, construct or operate a
telecommunications system, in each case by reason of the nature or type of the
business subject to regulation and not pursuant to laws and regulations of
general applicability to Persons conducting business in such state, including,
without limitation, the PUC of Alabama and the PUC of Missouri.

 

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

 

“Qualified Plan”
means a Pension Plan that is intended to be tax-qualified under Section 401(a)
of the IRC.

 

“Qualified
Assignee” means (a) any Lender, any Affiliate (as defined in clause (a)
and/or (b) of the definition of “Affiliate” in this Annex A) of any
Lender and, with respect to any Lender that is an investment fund that invests
in commercial loans, any other investment fund that invests in commercial loans
and that is managed or advised by the same investment advisor as such Lender or
by an Affiliate (as defined in clause (a) and/or (b) of the definition of
“Affiliate” in this Annex A) of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other
entity which is an “accredited investor” (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses,
including insurance companies, mutual funds, lease financing companies and
commercial finance companies, in each case, which has a rating of BBB or higher
from S&P and a rating of Baa2 or higher from Moody’s at the date that it
becomes a Lender and which, through its applicable lending office, is capable
of lending to Borrower without the imposition of any withholding or similar
taxes greater than those taxes imposed by the assigning Lender at the time of
such assignment; provided that no Person or Affiliate (as defined in
clause (a) and/or (b) of the definition of “Affiliate” in this Annex A)
of such Person (other than a Person that is already a Lender) holding
Subordinated Debt or Stock issued by any Credit Party shall be a Qualified
Assignee.

 

“Ratable Share”
has the meaning ascribed to it in Section 1.1(b).

 

“Real Estate”
means all real property owned, leased, subleased or used by any Credit Party.

 

A-31

 

“Refinancing”
means the repayment in full by Borrower of the Prior Lender Obligations on the
Closing Date.

 

“Refunded Swing
Line Loan” has the meaning ascribed to it in Section 1.1(c)(iii).

 

“Registration
Statement” means that certain Form S-1 Registration Statement, as amended,
of Borrower filed with the Securities and Exchange Commission under the
Securities Act of 1933, effective on
                  ,
2004, in respect of the Initial IDS Securities and the Initial IDS Subordinated
Notes issued and sold by Borrower on the Closing Date.

 

“Related
Transactions” means the borrowing of the Term Loan on the Closing Date, the
initial borrowing (if any) under the Revolving Loan on the Closing Date, the
Mid-Missouri Acquisition, the Restructuring, the Refinancing, the issuance by
Borrower of Initial IDS Securities and Initial IDS Subordinated Notes on the
Closing Date pursuant to the Initial IDS Documents, the payment of all fees, costs
and expenses associated with all of the foregoing and the execution and
delivery of all of the Related Transactions Documents.

 

“Related
Transactions Documents” means the Mid-Missouri Acquisition Agreement, the
Restructuring Documents, the Initial IDS Documents and the Loan Documents, and
all other agreements or instruments executed in connection with the Related
Transactions.

 

“Release”
means any release, spill, emission, leaking, pumping, pouring, emitting,
emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Material in the indoor or outdoor
environment, including the movement of Hazardous Material through or in the
air, soil, surface water, ground water or property.

 

“Replacement
Amendment and Consent” has the meaning ascribed to it in the definition of
Replacement Software Required Actions.

 

“Replacement
Software Agreement” has the meaning ascribed to it in the definition of
Replacement Software Required Actions.

 

“Replacement
Software Required Actions” means, (a) in the case of delivery of a notice
of termination under Section 4 of the M&A Software License or under any
Replacement Software Agreement, (i) no later than 60 days after delivery of
such notice of termination, the applicable Credit Party shall have (A) executed
(1) an agreement with a reputable software vendor in form and substance
reasonably satisfactory to Agent (the “Replacement Software Agreement”)
in respect of the purchase or license by such Credit Party of software with substantially
similar functionality (or enhanced functionality) as the software subject to
the M&A Software License (the “Replacement Software”) and (2) an
amendment to the Software Amendment and Consent in form and substance
reasonably satisfactory to Agent (the “Replacement Amendment and Consent”)
and (B) provided Agent with reasonably satisfactory evidence 

 

A-32

 

concerning
the proposed implementation of the Replacement Software, (ii) no later than 30
days after delivery of such notice of termination, Borrower shall have
delivered to Agent a certificate from a Responsible Officer reporting as to the
progress of the implementation of the Replacement Software and certifying that
the implementation thereof shall be completed no later than thirty (30) days
prior to the date of termination of the M&A Software License or Replacement
Software Agreement, as applicable and (iii) the Replacement Software shall have
become functionally operational in the businesses of the Credit Parties no
later than thirty (30) days prior to the date of termination of the M&A
Software License or Replacement Software Agreement, as applicable and (b) in
the case of a termination or expiry of the M&A Software License or any
Replacement Software Agreement, (i) the applicable Credit Party shall have
executed a Replacement Software Agreement and Replacement Amendment and Consent
prior to such termination or expiry and (ii) the Replacement Software shall
have become functionally operational in the businesses of the Credit Parties on
or prior to the date of such termination or expiry.

 

“Replacement
Software” has the meaning ascribed to it in the definition of Replacement
Software Required Actions.

 

“Requisite
Lenders” means Lenders having (a) more than 50% of the Commitments of
all Lenders, or (b) if the Commitments have been terminated, more than 50% of
the aggregate outstanding amount of the Loans.

 

“Requisite
Revolving Lenders” means Lenders having (a) more than 50% of the
Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, more than 50% of the aggregate outstanding
amount of the Revolving Loan.

 

“Requisite Term
Lenders” means Lenders holding more than 50% of the aggregate principal
amount of the Term Loan then outstanding.

 

“Reserves”
means, as of any date, any reserve against the Borrowing Availability
established by Agent pursuant to Section 1.3(b)(ii) or Section 5.4.

 

“Responsible
Officer” means the chief executive officer, president, chief financial
officer, principal accounting officer or treasurer of Borrower.

 

“Restricted
Payment” means (a) the declaration or payment of any dividend or the
Incurrence of any liability to make any other payment or distribution of cash
or other property or assets in respect of Stock; (b) any payment on account of
the purchase, redemption, defeasance, sinking fund or other retirement of any
Credit Party’s Stock or any other payment or distribution made in respect
thereof, either directly or indirectly; (c) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for rescission with respect to, any Subordinated
Debt or any other Indebtedness of any Credit Party subordinated to any of the
Obligations; (d) any payment made to redeem, purchase, repurchase or retire, or
to 

 

A-33

 

obtain
the surrender of, any outstanding warrants, options or other rights to acquire
Stock of any Credit Party now or hereafter outstanding; (e) any payment of a
claim for the rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any shares of any Credit Party’s Stock or
of a claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (f) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder
or Affiliate of any Credit Party other than payment of compensation in the
ordinary course of business to Stockholders who are employees of such Credit
Party; and (g) any payment of management fees (or other fees of a similar
nature) by any Credit Party to any Stockholder of any Credit Party or its
Affiliates.

 

“Restructuring”
means the transactions contemplated by the Restructuring Documents.

 

“Restructuring
Documents” means
                          .

 

“Retiree
Welfare Plan” means, at any time, a Welfare Plan that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant’s termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.

 

“Revolving
Credit Advance” has the meaning ascribed to it in Section 1.1(a)(i).

 

“Revolving
Lenders” means, as of any date of determination, Lenders having a Revolving
Loan Commitment.

 

“Revolving Loan”
means, at any time, the aggregate amount of Revolving Credit Advances
outstanding to Borrower.

 

“Revolving Loan
Commitment” means (a) as to any Revolving Lender, the aggregate commitment
of such Revolving Lender to make Revolving Credit Advances as set forth on Annex
J to the Agreement or in the most recent Assignment Agreement executed by
such Revolving Lender and (b) as to all Revolving Lenders, the aggregate
commitment of all Revolving Lenders to make Revolving Credit Advances, which
aggregate commitment shall be Fifteen Million Dollars ($15,000,000) on the
Closing Date, as such amount may be adjusted, if at all, from time to time in
accordance with the Agreement.

 

“Revolving Note”
has the meaning ascribed to it in Section 1.1(a)(ii).

 

“Sale/Leaseback
Transaction” means an arrangement relating to property now owned or
hereafter acquired by Borrower or a Subsidiary whereby Borrower or a Subsidiary
transfers such property to a Person and Borrower or such Subsidiary leases it
from such Person, other than leases between Borrower and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.

 

A-34

 

“Seaport
Capital” means Seaport Capital Partners II, L.P.

 

“Securities
Offering” means any public or private sale of IDS Securities or common
stock or Preferred Stock of Borrower (other than Disqualified Stock), other
than public offerings with respect to IDS Securities or Borrower’s Common Stock
registered on Form S-8.

 

“Security
Agreement” means the Security Agreement of even date herewith entered into
by and among Agent, on behalf of itself and Lenders, and each Credit Party that
is a signatory thereto.

 

“Software”
means all “software” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, other than software embedded in any category of
Goods, including all computer programs and all supporting information provided
in connection with a transaction related to any program.

 

“Software
Amendment and Consent” has the meaning ascribed to it in paragraph BB of
Annex D.

 

“Solvent”
means, with respect to any Person on a particular date, that on such date (a)
the fair value of the property of such Person is greater than the total amount
of liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured; (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute
an unreasonably small capital.  The
amount of contingent liabilities (such as litigation, guaranties and pension
plan liabilities) at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, represents the amount
that can be reasonably be expected to become an actual or matured liability.

 

“Stock”
means all shares, options, warrants, general or limited partnership interests,
membership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company or
equivalent entity whether voting or nonvoting, including (i) common stock,
preferred stock or any other “equity security” (as such term is defined in Rule
3a11–1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934) and (ii) common
stock represented by IDS Securities and common stock outstanding upon the
separation of IDS Securities into the securities represented thereby.

 

“Stock Issuance” means any issuance by any Credit Party of any
Stock to any Person or receipt by any Credit Party of a capital contribution
from any Person, including the issuance of Stock pursuant to the exercise of
options or warrants and the conversion of any Indebtedness to Stock.

 

A-35

 

“Stockholder”
means, with respect to any Person, each holder of Stock of such Person.

 

“Subordinated
Debt” means Indebtedness evidenced by the Initial IDS Subordinated Notes,
any Subsequent IDS Subordinated Notes and any Permitted Additional Subordinated
Debt.

 

“Subordinated
Debt Documents” means the Initial IDS Subordinated Notes Documents, any
Subsequent IDS Subordinated Notes Documents and any Additional Subordinated
Debt Documents.

 

“Subsequent IDS
Common Stock” means Class A common stock of Borrower with terms identical
to the terms of the Initial IDS Common Stock.

 

“Subsequent
IDS-Linked Subordinated Notes” means Indebtedness of Borrower evidenced by
a new issue of unsecured, subordinated notes of Borrower, so long as (a) such
Indebtedness has a final maturity no earlier than two years after the Final
Maturity Date and no required amortizations prior to two years after the Final
Maturity Date; (b) such Indebtedness does not (i) have guarantors that are not
Subsidiary Guarantors, (ii) have obligors other than Borrower or
(iii) provide for security; (c) all other terms of such Indebtedness
(including subordination provisions, standstill provisions, defaults, remedies,
covenants, redemption provisions, interest deferral mechanics and other terms
but excluding the applicable interest rate and the principal amount thereof) are
identical to (or, from the perspective of the Lenders, more favorable than)
those which applied to the Initial IDS-Linked Subordinated Notes issued on the
Closing Date; (d) such Indebtedness is incurred concurrently with the issuance
of Subsequent IDS Common Stock and results in the same proportional allocation
between equity and debt as existed after the issuance of Initial IDS Common
Stock and Initial IDS Subordinated Notes on the Closing Date; (e) the
documentation governing such Indebtedness is otherwise reasonably satisfactory
to Agent; and (f) such Indebtedness is issued in accordance with Section
6.3(a)(xv).

 

“Subsequent IDS
Securities” means income deposit securities of Borrower comprised of one
share of Subsequent IDS Common Stock and a certain principal amount of
Subsequent IDS-Linked Subordinated Notes.

 

“Subsequent IDS
Subordinated Notes” means (i) the Subsequent IDS-Linked Subordinated Notes
and (ii) the Subsequent Non-IDS-Linked Subordinated Notes.

 

“Subsequent IDS
Subordinated Notes Documents” means the Subsequent IDS Subordinated Notes,
the Subsequent IDS Subordinated Notes Indenture and each other document
executed by any Credit Party pursuant to any such document.

 

“Subsequent IDS
Subordinated Notes Indenture” means any indenture or similar agreement
entered into in connection with the issuance of Subsequent IDS Subordinated
Notes.

 

A-36

 

“Subsequent
Non-IDS-Linked Subordinated Notes” means Indebtedness of Borrower evidenced
by a new issue of unsecured, subordinated notes of Borrower issued concurrently
with an issuance of Subsequent IDS-Linked Subordinated Notes pursuant to a
Subsequent IDS Subordinated Notes Indenture in an aggregate principal amount
sufficient to satisfy applicable guidelines of tax advisors of Borrower, so
long as such Indebtedness has terms identical to such Subsequent IDS-Linked
Subordinated Notes other than not comprising a portion of Subsequent IDS
Securities.

 

“Subsidiary”
means, with respect to any Person, (a) any corporation of which an aggregate of
more than 50% of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of
whether, at the time, Stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person or one or more Subsidiaries of such Person, or with
respect to which any such Person has the right to vote or designate the vote of
50% or more of such Stock whether by proxy, agreement, operation of law or
otherwise, and (b) any partnership or limited liability company in which such
Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than 50% or of which any such Person is a general partner
or may exercise the powers of a general partner.  Unless the context otherwise requires, each reference to a
Subsidiary shall be a reference to a Subsidiary of the Borrower.

 

“Subsidiary
Guarantor” means each Credit Party that is a Guarantor under the Subsidiary
Guaranty.

 

“Subsidiary
Guaranty” means the Subsidiary Guaranty of even date herewith executed by
each Subsidiary of Borrower (other than Mid-Missouri Telephone) in favor of
Agent, on behalf of itself and Lenders.

 

“Supporting
Obligations” means all “supporting obligations” as such term is defined in
the Code, including letters of credit and guaranties issued in support of
Accounts, Chattel Paper, Documents, General Intangibles, Instruments, or
Investment Property.

 

“Swing Line
Advance” has the meaning ascribed to it in Section 1.1(c)(i).

 

“Swing Line
Availability” has the meaning ascribed to it in Section 1.1(c)(i).

 

“Swing Line
Commitment” means, as to the Swing Line Lender, the commitment of the Swing
Line Lender to make Swing Line Advances as set forth on Annex J to the
Agreement, which commitment constitutes a subfacility of the Revolving Loan
Commitment of the Swing Line Lender.

 

“Swing Line
Lender” means CoBank, ACB.

 

A-37

 

“Swing Line
Loan” means at any time, the aggregate amount of Swing Line Advances
outstanding to Borrower.

 

“Swing Line Note” has the meaning ascribed to it in Section
1.1(c)(ii).

 

“Taxes”
means taxes, levies, imposts, deductions, Charges or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on or measured by the
net income of Agent or a Lender by the jurisdictions under the laws of which
Agent and Lenders are organized or conduct business or any political
subdivision thereof.

 

“Telecommunications
Approvals” shall have the meaning ascribed to it in Section 3.1.

 

“Telecommunications
Assets” means all assets, rights (contractual or otherwise) and properties,
real or personal, whether tangible or intangible, used or intended for use in
connection with a Telecommunications Business.

 

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

 

“Termination
Date” means the date on which (a) the Loans have been indefeasibly repaid
in full, (b) all other Obligations (other than contingent indemnity and expense
reimbursement obligations for which no claim has been made) under the Agreement
and the other Loan Documents have been completely discharged, and (c) Borrower
shall not have any further right to borrow any monies under the Agreement.

 

“Term Lenders”
means those Lenders having Term Loan Commitments.

 

“Term Lender
Settlement Date” has the meaning assigned to it in Section 9.9(a)(iii).

 

“Term Loan”
has the meaning assigned to it in Section 1.1(b)(i).

 

“Term Loan
Commitment” means (a) as to any Lender with a Term Loan Commitment, the
commitment of such Lender to make its Pro Rata Share of the Term Loan as set
forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term Loan
Commitment, the aggregate commitment of all Lenders to make the Term Loan,
which aggregate commitment shall be Eighty Million Dollars ($80,000,000) on the
Closing Date.  After advancing the Term
Loan, each reference to a Lender’s Term Loan Commitment shall refer to that
Lender’s Pro Rata Share of the outstanding Term Loan.

 

A-38

 

“Term Note”
has the meaning assigned to it in Section 1.1(b)(i).

 

“Test Period”
means each period of four consecutive Fiscal Quarters ended as provided in the
relevant provision or definition in the Agreement.

 

“Title IV Plan”
means a Pension Plan (other than a Multiemployer Plan), that is covered by
Title IV of ERISA, and that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.

 

“Trademark
Security Agreements” means the Trademark Security Agreements made in favor
of Agent, on behalf of Lenders, by each applicable Credit Party.

 

“Trademark
License” means rights under any written agreement now owned or hereafter
acquired by any Credit Party granting any right to use any Trademark.

 

“Trademarks”
means all of the following now owned or hereafter adopted or acquired by any
Credit Party:  (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.

 

“Unfunded
Pension Liability” means, at any time, the aggregate amount, if any, of the
sum of (a) the amount by which the present value of all accrued benefits under
each Title IV Plan exceeds the fair market value of all assets of such Title IV
Plan allocable to such benefits in accordance with Title IV of ERISA, all
determined as of the most recent valuation date for each such Title IV Plan
using the actuarial assumptions for funding purposes in effect under such Title
IV Plan, and (b) for a period of 5 years following a transaction which might
reasonably be expected to be covered by Section 4069 of ERISA, the liabilities
(whether or not accrued) that could be avoided by any Credit Party or any ERISA
Affiliate as a result of such transaction.

 

“Welfare Plan”
means a Plan described in Section 3(i) of ERISA.

 

“Wholly Owned
Subsidiary” of any Person means a Subsidiary of such Person 100% of the
outstanding Stock or other ownership interests of which (other than directors’
qualifying shares) shall at the time be owned by such Person and/or by one or
more Wholly Owned Subsidiaries of such Person.

 

Rules of
construction with respect to accounting terms used in the Agreement or the
other Loan Documents shall be as set forth in Annex G.  All other 

 

A-39

 

undefined
terms contained in any of the Loan Documents shall, unless the context
indicates otherwise, have the meanings provided for by the Code  to the extent the same are used or defined
therein;  in the event that any
term is defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control.  Unless otherwise specified, references in
the Agreement or any of the Appendices to a Section, subsection or clause refer
to such Section, subsection or clause as contained in the Agreement.  The words “herein,” “hereof” and “hereunder”
and other words of similar import refer to the Agreement as a whole, including
all Annexes, Exhibits and Schedules, as the same may from time to time be
amended, restated, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement or any such Annex, Exhibit or
Schedule.

 

Any reference in
the Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to the Agreement or
such Loan Document as the same may be in effect at any and all times such
reference becomes operative.

 

Wherever from the
context it appears appropriate, each term stated in either the singular or
plural shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, feminine and
neuter genders.  The words “including”,
“includes” and “include” shall be deemed to be followed by the words “without
limitation”; the word “or” is not exclusive; references to Persons include
their respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all
references to statutes and related regulations shall include any amendments of
the same and any successor statutes and regulations.  Whenever any provision in any Loan Document refers to the “actual
knowledge” of any Credit Party, such words are intended to signify that such
Credit Party has actual knowledge or awareness of a particular fact or
circumstance.  Whenever any provision in
any Loan Document refers to the “knowledge” (or an analogous phrase) of any
Credit Party without the word “actual”, such words are intended to signify that
such Credit Party has actual knowledge or awareness of a particular fact or
circumstance or that such Credit Party, if it had exercised reasonable
diligence, would have known or been aware of such fact or circumstance.

 

A-40

 

ANNEX B

 

to

 

CREDIT
AGREEMENT

 

[INTENTIONALLY
OMITTED]

 

B-1

 

ANNEX C (Section
1.8)

 

to

 

CREDIT
AGREEMENT

 

CASH MANAGEMENT
SYSTEM

 

Each Credit Party
(other than Mid-Missouri Telephone) shall establish and maintain the Cash
Management Systems described below:

 

(a)           On or before the Closing Date, the
applicable Credit Party shall establish blocked deposit accounts (together with
the accounts specified as “Blocked Accounts” in the revised Disclosure
Schedule (3.19) delivered in accordance with paragraph (d) of this Annex C,
the “Blocked Accounts”) at each of the banks set forth in Disclosure
Schedule (3.19) (together with each replacement bank consented to by Agent
in accordance with clause (C)(I) of paragraph (d) of this Annex C, a “Relationship
Bank”).  Except for such closures or
replacements expressly permitted in paragraph (d) of this Annex C, the Credit
Parties shall, until the Termination Date, at all times maintain each Blocked
Account at the Relationship Bank at which such account was established.  On or before the Closing Date and until the
Termination Date, each applicable Credit Party shall (i) request in writing and
otherwise take reasonable steps to ensure that all Account Debtors forward
payment directly to one or more Blocked Accounts or to Borrower or the
applicable Subsidiary and (ii) deposit and cause its Subsidiaries to deposit or
cause to be deposited promptly, and in any event no later than the second
Business Day after the receipt thereof, all cash, checks, drafts or other
similar items of payment relating to or constituting payments made in respect
of any and all Collateral into one or more Blocked Accounts or, to the extent
the amounts relating to the foregoing do not exceed the Threshold Amount, into
one or more Excluded Accounts.

 

(b)           On or before the Closing Date,
Borrower may establish, in its name, one or more deposit accounts (each, a
“Disbursement Account” and, together with the accounts specified as a
“Disbursement Account” in the revised Disclosure Schedule (3.19)
delivered in accordance with paragraph (d) of this Annex C, collectively, the “Disbursement
Accounts”) at a bank or banks (together with each replacement bank
consented to by Agent in accordance with clause (C)(I) of paragraph (d) of this
Annex C, a “Disbursement Account Bank”) acceptable to Agent into which
(i) Agent shall, from time to time, deposit proceeds of Revolving Credit
Advances made to Borrower pursuant to Section 1.1 for use by Borrower in
accordance with the provisions of Section 1.4 and (ii) the Swing Line
Lender shall, from time to time, deposit proceeds of Swing Line Advances made
to Borrower pursuant to Section 1.1 for use by Borrower in accordance
with the provisions of Section 1.4. 
Except for such closures or replacements expressly permitted in
paragraph (d) of this Annex C, Borrower shall maintain each Disbursement
Account, if any, at the Disbursement Account Bank at which such account was
established.

 

C-1

 

(c)           On or before the Closing Date, each
Disbursement Account Bank and all Relationship Banks shall have entered into
tri-party blocked account agreements with Agent, for the benefit of itself and
Lenders, and Credit Parties, as applicable, in form and substance reasonably
acceptable to Agent, which shall become operative on or prior to the Closing
Date.  Unless Agent shall agree
otherwise, each such blocked account agreement (and each blocked account
agreement referred to in paragraph (d) of this Annex C) shall provide, among
other things, that (i) all items of payment deposited in such account are held
by such bank as agent or bailee-in-possession for Agent, on behalf of itself
and Lenders, (ii) the bank executing such agreement has no rights of setoff or
recoupment or any other claim against such account, as the case may be, other
than for payment of its service fees and other charges directly related to the
administration of such account and for returned checks or other items of
payment, and (iii) from and after the Closing Date with respect to banks at
which a Blocked Account is maintained, such bank agrees, from and after the
receipt of a notice (an “Activation Notice”) from Agent (which
Activation Notice may be given by Agent at any time at which an Event of
Default has occurred and is continuing as (an “Activation Event”)), to
forward immediately all amounts in each Blocked Account to the Collection
Account through daily sweeps from such Blocked Account into the Collection
Account. From and after the date Agent has delivered an Activation Notice to
any bank with respect to any Blocked Account(s), Borrower shall not, and shall
not cause or permit any Subsidiary thereof to, accumulate or maintain cash in
Disbursement Accounts or payroll accounts as of any date of determination in
excess of checks outstanding against such accounts as of that date and amounts
necessary to meet minimum balance requirements.

 

(d)           After the Closing Date, no Credit
Party shall (i) except upon receipt of notice in respect thereof from Agent in
accordance with the final sentence of this paragraph (d), close any deposit
account, (ii) establish any deposit account, (iii) upon becoming a Credit Party
in connection with a Permitted Acquisition, maintain such Credit Party’s
deposit accounts or (iv) add or replace a Relationship Bank or Disbursement
Account Bank; provided, however, that

 

(A) a Credit Party may close a deposit account with
the prior written consent of Agent upon Agent receiving reasonably satisfactory
assurances that the amounts on deposit therein, if any, shall, immediately
prior to the closing thereof, be transferred forthwith to a Blocked Account;

 

(B) Upon becoming a Credit Party in connection with a
Permitted Acquisition, such Credit Party may maintain its deposit accounts at
the bank or banks at which such deposit accounts were established if the
requirements of clause (C) of this paragraph (d) shall have been satisfied
concurrently with such Person becoming a Credit Party as if such Person were
establishing accounts under such clause (C);

 

(C) so long as no Event of Default has occurred and is
continuing, any Credit Party (other than Mid-Missouri Telephone) may establish
a deposit account or add or replace a Relationship Bank or Disbursement Account
Bank (each such action, an “Account Change”) subject to the satisfaction
of the 

 

C-2

 

following conditions: (I) Agent shall have consented
(such consent not to be unreasonably withheld) in writing in advance to the
applicable Account Change, (II) prior to the effectiveness of the Account
Change, Borrower or its Subsidiaries, as applicable, and the applicable bank
shall have executed and delivered to Agent and Lenders a tri-party blocked
account agreement with respect to such account, in form and substance
reasonably satisfactory to Agent and (III) Borrower shall have delivered Agent
(1) notice acknowledging that the applicable account is either a “Blocked
Account” or “Disbursement Account” for purposes of this Annex C and that the
bank is a “Relationship Bank” or “Disbursement Account Bank” for purposes of
this Annex C and (2) an amended Disclosure Schedule (3.19) to reflect
the applicable Account Change, including the information specified in the
immediately preceding clause (1); and

 

 (D) any Credit
Party (other than Mid-Missouri Telephone) may establish one or more (but not
more than [     ]) deposit accounts (each, an “Excluded
Account”) at a Relationship Bank subject to the satisfaction of the
following conditions: (I) no Default or Event of Default has occurred and is
continuing at the time of establishment thereof, (II) such Excluded Account is
established after the Closing Date, (III) the applicable Credit Party shall
have delivered Agent written notice concurrent with the establishment thereof,
such notice to include information concerning the Relationship Bank at which
such account is established and the proposed use therefor.  After an Excluded Account is established,
such account may be maintained and deposits shall be permitted to be made
therein, so long as the amount on deposit in any such Excluded Account,
together with the amount on deposit in all Excluded Accounts, does not exceed
$50,000 in the aggregate at any time for all Excluded Accounts combined (the “Threshold
Amount”); provided, however ̧ that to the extent the amount on
deposit in any Excluded Account or Excluded Accounts combined exceeds the
Threshold Amount, (X) within ten (10) Business Days of such amount on deposit
exceeding the Threshold Amount the applicable Credit Party, the Relationship
Bank at which such Excluded Account is located and Agent shall have executed
and delivered to Agent and Lenders a tri-party blocked account agreement with
respect to such account, in form and substance substantially identical to the
agreement entered into with such Relationship Bank in connection with the the
applicable Blocked Account maintained at such Relationship Bank and otherwise
in form and substance reasonably satisfactory to Agent (Y) the applicable
Credit Party shall have delivered Agent the deliveries set forth in clause
(C)(III) of this paragraph (d).

 

The Credit Parties
shall deliver to Agent a list of Excluded Accounts together with the delivery
of annual audited consolidated financial statements in accordance with
paragraph (b) of Annex E.  Within five
(5) Business Days after the request of Agent, the applicable Credit Party shall
deliver to Agent information concerning Excluded Accounts (including deposits
and withdrawals from Excluded Accounts) as Agent may reasonably request.  Borrower shall, or, as applicable, shall
cause its applicable Subsidiary to, close an account or accounts (and establish
replacement accounts in accordance with clause (C) of this paragraph (d))
promptly and 

 

C-3

 

in any event within 30 days following notice from Agent that the
creditworthiness of any bank holding the referenced account or accounts is no
longer acceptable in Agent’s reasonable judgment, or as promptly as practicable
and in any event within sixty (60) days following notice from Agent that the
operating performance, funds transfer or availability procedures or performance
with respect to accounts of the bank holding such account or accounts or
Agent’s liability under any tri-party blocked account agreement with such bank
is no longer acceptable in Agent’s reasonable judgment.

 

(e)           The Blocked Accounts and Disbursement
Accounts shall be cash collateral accounts, with all cash, checks and other
similar items of payment in such accounts securing payment of the Loans and all
other Obligations, and in which Borrower and each Subsidiary (other than
Mid-Missouri Telephone) thereof shall have granted a Lien to Agent, on behalf
of itself and Lenders, pursuant to the Security Agreement.

 

(f)            All amounts deposited in the
Collection Account shall be deemed received by Agent in accordance with Section
1.10 and shall be applied (and allocated) by Agent in accordance with Section
1.11.  In no event shall any amount
be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.

 

(g)           Borrower shall and shall cause its
Subsidiaries (other than Mid-Missouri Telephone), officers, employees, agents,
directors or other Persons acting for or in concert with the Credit Parties
(other than Mid-Missouri Telephone), each a “Related Person”) to (i)
hold in trust for Agent, for the benefit of itself and Lenders, all checks,
cash and other items of payment received by Borrower or any such Related
Person, and (ii) within two (2) Business Days after receipt by Borrower or any
such Related Person of any checks, cash or other items of payment, deposit the
same into a Blocked Account.  Borrower
and each Related Person thereof acknowledges and agrees that all cash, checks
or other items of payment constituting proceeds of Collateral are part of the
Collateral.  All proceeds of the sale or
other disposition of any Collateral, shall be deposited directly into Blocked
Accounts.

 

C-4

 

ANNEX D (Section
2.1(a))

 

to

 

CREDIT
AGREEMENT

 

CLOSING
CHECKLIST

 

In addition to,
and not in limitation of, the conditions described in Section 2.1 of the
Agreement, pursuant to Section 2.1(a), the following items must be
received by Agent and Lenders in form and substance satisfactory to Agent and
Lenders on or prior to the Closing Date (each capitalized term used but not
otherwise defined herein shall have the meaning ascribed thereto in Annex A to
the Agreement):

 

A.            Appendices.  All Appendices to the Agreement, in form and
substance satisfactory to Agent.

 

B.            Revolving Notes, Swing Line Note
and Term Notes.  Duly executed
originals of the Revolving Notes, Swing Line Note and Term Notes for each
applicable Lender, dated the Closing Date.

 

C.            Security Agreement.  Duly executed originals of the Security
Agreement, dated the Closing Date, and all instruments, documents and
agreements executed pursuant thereto.

 

D.            Insurance.  Satisfactory evidence that the insurance
policies required by Section 5.4 are in full force and effect, together
with appropriate evidence showing loss payable and/or additional insured
clauses or endorsements, as requested by Agent, in favor of Agent, on behalf of
Lenders.

 

E.             Security Interests and Code
Filings.  (a) Evidence satisfactory
to Agent that Agent (for the benefit of itself and Lenders) has a valid and
perfected first priority security interest in the Collateral, including (i)
such documents duly executed by each Credit Party (including financing
statements under the Code and other applicable documents under the laws of any
jurisdiction with respect to the perfection of Liens) as Agent may request in
order to perfect its security interests in the Collateral, (ii) copies of Code
search reports listing all effective financing statements that name any Credit
Party as debtor, together with copies of such financing statements, none of
which shall cover the Collateral, except for those relating to the Prior Lender
Obligations (all of which shall be terminated on the Closing Date) and others
approved by Agent, and (iii) a perfection certificate duly executed on behalf
of each Credit Party.

 

(b)           Evidence satisfactory to Agent,
including copies, of all UCC-1 and other financing statements filed in favor of
any Credit Party with respect to each location, if any, at which Inventory may
be consigned.

 

(c)           Control Letters from (i) all issuers
of uncertificated securities and financial assets, if any, held by any Credit
Party (other than Mid-Missouri Telephone),

 

D-1

 

(ii) all securities intermediaries with respect to all securities
accounts and securities entitlements, if any, of any Credit Party (other than
Mid-Missouri Telephone), and (iii) all futures commission agents and clearing
houses with respect to all commodities contracts and commodities accounts, if
any, held by any Credit Party (other than Mid-Missouri Telephone).

 

F.             Payoff Letter; Termination
Statements.  Copies of a duly
executed payoff letter, in form and substance reasonably satisfactory to Agent,
by and between all parties to the Prior Lender loan documents evidencing
repayment in full of all Prior Lender Obligations, together with (a) UCC–3 or
other appropriate termination statements, in form and substance satisfactory to
Agent, manually signed by the Prior Lender releasing all liens of Prior Lender
upon any of the real or personal property of each Credit Party, and (b)
termination of all blocked account agreements, bank agency agreements or other
similar agreements or arrangements or arrangements in favor of Prior Lender or
relating to the Prior Lender Obligations.

 

G.            Intellectual Property Security
Agreements.  Duly executed originals
of Trademark Security Agreements, Copyright Security Agreements and Patent
Security Agreements, each dated the Closing Date and signed by each Credit
Party (other than Mid-Missouri Telephone) which owns Trademarks, Copyrights
and/or Patents, as applicable, all in form and substance reasonably
satisfactory to Agent, together with all instruments, documents and agreements
executed pursuant thereto.

 

H.            Intentionally Omitted.

 

I.              Subsidiary Guaranties.  Guaranties executed by and each direct and
indirect Subsidiary of Borrower (other than Mid-Missouri Telephone) in favor of
Agent, for the benefit of Lenders.

 

J.             Intentionally Omitted.

 

K.            Initial Notice of Revolving
Credit Advance.  Duly executed
originals of a Notice of Revolving Credit Advance, dated the Closing Date, with
respect to any Revolving Credit Advance to be requested by Borrower on the
Closing Date.

 

L.             Letter of Direction.  Duly executed originals of a letter of
direction from Borrower addressed to Agent, on behalf of itself and Lenders,
with respect to the disbursement on the Closing Date of the proceeds of the
Term Loan and the initial Revolving Credit Advance.

 

M.           Cash Management System; Blocked
Account Agreements.  Evidence
satisfactory to Agent that, as of the Closing Date, Cash Management Systems
complying with Annex C to the Agreement have been established and are
currently being maintained in the manner set forth in such Annex C,
together with copies of duly executed tri-party blocked account agreements,
reasonably satisfactory to Agent, with the banks as required by Annex C.

 

D-2

 

N.            Charter and Good Standing.  For each Credit Party, such Person’s (a)
charter and all amendments thereto, (b) good standing certificates (including
verification of tax status) in its state of incorporation or organization and
(c) good standing certificates (including verification of tax status) and
certificates of qualification to conduct business in each jurisdiction where
its ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Closing Date and certified
by the applicable Secretary of State or other authorized Governmental
Authority.

 

O.            Bylaws and Resolutions.  For each Credit Party, (a) such Person’s
bylaws and all charter documents including partnership and/or operating
agreements, together with all amendments thereto and (b) resolutions of such
Person’s Board of Directors and partners, members and stockholders, as applicable,
approving and authorizing the execution, delivery and performance of the Loan
Documents to which such Person is a party and the transactions to be
consummated in connection therewith, each certified as of the Closing Date by
such Person’s corporate or organizational secretary or an assistant secretary
as being in full force and effect without any modification or amendment.

 

P.             Incumbency Certificates.  For each Credit Party, signature and
incumbency certificates of the officers of each such Person executing any of
the Loan Documents, certified as of the Closing Date by such Person’s corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.

 

Q.            Opinions of Counsel.  Duly executed originals of opinions of
O’Melveny & Myers LLP, counsel for the Credit Parties, and FCC and state
regulatory counsel for the Credit Parties, together with any special
communications and local counsel opinions reasonably requested by Agent, each
in form and substance reasonably satisfactory to Agent and its counsel, dated
the Closing Date and addressed to Agent and Lenders.

 

R.            Pledge Agreements.  Duly executed originals of each of the
Pledge Agreements accompanied by (as applicable) (a) share certificates
representing all of the outstanding Stock being pledged pursuant to such Pledge
Agreement and stock powers for such share certificates executed in blank and
(b) the original Intercompany Notes and other instruments evidencing
Indebtedness being pledged pursuant to such Pledge Agreement, duly endorsed in
blank.

 

S.             Accountants’ Letters.  A letter from the Credit Parties to their
independent auditors authorizing the independent certified public accountants
of the Credit Parties to communicate with Agent and Lenders in accordance with Section
4.2, and a letter from such auditors acknowledging Lenders’ reliance on the
auditor’s certification of past and future Financial Statements.

 

T.            Appointment of Agent for Service.  An appointment of CT Corporation as each
Credit Party’s agent for service of process.

 

D-3

 

U.            Solvency Certificate. Agent
shall have received a solvency certificate of Borrower satisfactory in form and
substance to Agent.

 

V.            Fee Letters.  Duly executed originals of the Fee Letters.

 

W.           Officer’s Certificate.  Agent shall have received duly executed
originals of a certificate of the chief executive officer and chief financial
officer of Borrower, dated the Closing Date, confirming compliance with the
conditions set forth in Section 2.2 at the Closing Date.

 

X.            Waivers.  Agent, on behalf of Lenders, shall have
received landlord waivers and consents, bailee letters and mortgagee agreements
in form and substance reasonably satisfactory to Agent, in each case as
required pursuant to Section 5.9.

 

Y.            Mortgages.  Mortgages covering all of the Material Real
Estate (the “Mortgaged Properties”) together with:  (a) title insurance policies, current
as-built surveys, zoning letters and certificates of occupancy, in each case
reasonably satisfactory in form and substance to Agent, in its sole discretion;
(b) evidence that counterparts of the Mortgages have been recorded in all
places to the extent necessary or desirable, in the judgment of Agent, to
create a valid and enforceable first priority lien (subject to Permitted
Encumbrances) on each Mortgaged Property in favor of Agent for the benefit of
itself and Lenders (or in favor of such other trustee as may be required or
desired under local law); and (c) an opinion of counsel in each state in which any
Mortgaged Property is located in form and substance and from counsel reasonably
satisfactory to Agent.

 

Z.            Subordination and Intercreditor
Agreements.  Agent and Lenders shall
have received any and all subordination and/or intercreditor agreements, all in
form and substance reasonably satisfactory to Agent, in its sole discretion, as
Agent shall have deemed necessary or appropriate with respect to any
Indebtedness of any Credit Party.

 

AA.        [Intentionally Omitted].

 

BB.          M&A Software License.  Agent shall have received an amendment and
consent to the M&A Software License (the “Software Amendment and Consent”)
in form and substance reasonably satisfactory to Agent.

 

CC.          Audited Financials; Financial
Condition.  Agent shall have
received the Financial Statements, Projections and other materials set forth in
Section 3.4, certified by Borrower’s chief financial officer, in each
case in form and substance satisfactory to Agent, and Agent shall be satisfied,
in its sole discretion, with all of the foregoing.  Agent shall have further received a certificate of the chief
executive officer and/or the chief financial officer of Borrower, (I) based on
such Pro Forma and Projections, to the effect that (a) Borrower will be Solvent
upon the consummation of the transactions contemplated herein; (b) the Pro
Forma fairly presents the financial condition of Borrower as of the date
thereof after giving effect to the transactions

 

D-4

 

contemplated by the Loan Documents; (c) the Projections are based upon
estimates and assumptions stated therein, all of which Borrower believes to be
reasonable in light of current conditions and current facts known to Borrower
and, as of the Closing Date, reflect Borrower’s good faith and reasonable estimates
of its future financial performance and of the other information projected
therein for the period set forth therein; and (d) containing such other
statements with respect to the solvency of Borrower and matters related thereto
as Agent shall request, and (II) certifying that as of the Closing Date and on
a Pro Forma Basis after giving effect to the Related Transactions, the
Consolidated Senior Leverage Ratio does not exceed 2.76 to 1.00 and the
Consolidated Total Leverage Ratio does not exceed 5.70 to 1.00.

 

DD.         Assignment of Representations,
Warranties, Covenants, Indemnities and Rights.  Agent shall have received a duly executed copy of an Assignment
of Representations, Warranties, Covenants, Indemnities and Rights in respect of
the rights of the Credit Parties under the Mid-Missouri Acquisition Agreement,
which assignment shall be expressly permitted under the Mid-Missouri
Acquisition Agreement or shall have been consented to in writing by the seller
thereunder.

 

EE.          Other Documents.  Such other certificates, documents and
agreements respecting any Credit Party as Agent may reasonably request.

 

D-5

 

ANNEX E (Section
4.1(a))

 

to

 

CREDIT
AGREEMENT

 

FINANCIAL STATEMENTS AND
PROJECTIONS — REPORTING

 

Borrower shall
deliver or cause to be delivered to Agent or to Agent and Lenders, as
indicated, the following:

 

(a)           [Intentionally Omitted].

 

(b)           Quarterly Financials.  To Agent and Lenders, within forty-five (45)
days after the end of each Fiscal Quarter, the following consolidated financial
statements for Borrower and its Subsidiaries, certified by the chief financial
officer of Borrower:  (i) unaudited
balance sheets as of the close of such Fiscal Quarter and the related
statements of income and cash flow for that portion of the Fiscal Year ending
as of the close of such Fiscal Quarter and (ii) unaudited statements of income
and cash flows for such Fiscal Quarter, in each case setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments and the absence of
footnotes).  Such financial statements
shall be accompanied by (A) a statement in reasonable detail (each, a “Compliance
Certificate”) signed by a Responsible Officer of Borrower (i) showing the
calculations used in determining compliance with each of the Financial
Covenants that is tested on a quarterly basis, (ii) showing the calculations of
the Consolidated Fixed Charge Coverage Ratio and Consolidated Senior Leverage
Ratio for the Credit Parties for the four-fiscal quarter period ending on the
last day of the period covered by such financial statements, (iii) certifying
whether a Dividend Suspension Period or Interest Deferral Period shall have
occurred and be continuing, (iv) certifying as to the number of access lines
operated by the Credit Parties as of the end of the prior Fiscal Quarter and
(v) showing the calculations of Distributable Cash and Excess Cash, in each
case, for the prior Fiscal Quarter  and
(B) the certification of the chief financial officer of Borrower that (i)
such financial statements present fairly in all material respects in accordance
with GAAP (subject to normal year-end adjustments and the absence of footnotes)
the financial position and results of operations and cash flows of Borrower and
its Subsidiaries, on a consolidated basis, as at the end of such Fiscal Quarter
and for that portion of the Fiscal Year then ended, (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a
Default or Event of Default has occurred and is continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of
Default.  In addition, Borrower shall
deliver to Agent and Lenders, within forty-five (45) days after the end of each
Fiscal Quarter, a management discussion and analysis that includes a comparison
to budget for that portion of the Fiscal Year ending as of the close of such
Fiscal Quarter and a comparison of performance for that portion of the Fiscal
Year ending as of the close of such Fiscal Quarter to the corresponding period
in the prior year.

 

E-1

 

(c)           Operating Plan.  To Agent and Lenders, as soon as available,
but not later than thirty (30) days after the end of each Fiscal Year, an
annual operating plan for Borrower, approved by the Board of Directors of
Borrower, for the following Fiscal Year, which (i) includes a statement of all
of the material assumptions on which such plan is based, (ii) includes a
monthly budget for the following year and (iii) integrates sales, gross
profits, operating expenses, operating profit and cash flow projections, all
prepared on the same basis and in similar detail as that on which operating
results are reported (and in the case of cash flow projections, representing
management’s good faith estimates of future financial performance based on
historical performance), and including plans for personnel, Consolidated
Capital Expenditures and facilities.

 

(d)           Annual Audited Financials. To
Agent and Lenders, within ninety (90) days after the end of each Fiscal Year,
audited Financial Statements for Borrower and its Subsidiaries on a
consolidated basis, consisting of balance sheets and statements of income and
retained earnings and cash flows, setting forth in comparative form in each
case the figures for the previous Fiscal Year, which Financial Statements shall
be prepared in accordance with GAAP and certified without qualification as to
going concern status or like qualification or scope of the audit, by an
independent certified public accounting firm of national standing or otherwise
acceptable to Agent.  Such Financial
Statements shall be accompanied by (i) a statement prepared in reasonable
detail showing the calculations used in determining compliance with each of the
Financial Covenants, (ii) a report from such accounting firm to the effect
that, in connection with their audit examination, nothing has come to their
attention to cause them to believe that a Default or Event of Default has
occurred (or specifying those Defaults and Events of Default that they became
aware of), it being understood that such audit examination extended only to
accounting matters and that no special investigation was made with respect to
the existence of Defaults or Events of Default, (iii) a letter addressed to
Agent, on behalf of itself and Lenders, in form and substance reasonably
satisfactory to Agent and subject to standard qualifications required by
nationally recognized accounting firms, signed by such accounting firm
acknowledging that Agent and Lenders are entitled to rely upon such accounting
firm’s certification of such audited Financial Statements, (iv) the annual
letters to such accountants in connection with their audit examination
detailing contingent liabilities and material litigation matters, and (v) the
certification of the chief executive officer or chief financial officer of
Borrower that all such Financial Statements present fairly in all material
respects in accordance with GAAP the financial position and results of
operations and cash flows of Borrower and its Subsidiaries on a consolidated
basis, as at the end of such Fiscal Year and for the period then ended, and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default has occurred and is continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of
Default.

 

(e)           Management Letters.  To Agent and Lenders, within five (5)
Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received by
such Credit Party from its independent certified public accountants.

 

E-2

 

(f)            Default Notices.  To Agent and Lenders, as soon as
practicable, and in any event within five (5) Business Days after an executive
officer of Borrower has actual knowledge of the existence of any Default, Event
of Default or other event that has had a Material Adverse Effect, telephonic or
telecopied notice specifying the nature of such Default or Event of Default or
other event, including the anticipated effect thereof, which notice, if given
telephonically, shall be promptly confirmed in writing on the next Business
Day.

 

(g)           SEC Filings and Press Releases.  To Agent and Lenders, promptly upon their
becoming available, copies of (or, if made publicly available on publicly
accessible electronic medium (e.g. internet, EDGAR or other another similar
medium), notice of posting to such electronic media):  (i) all Financial Statements, reports, notices and proxy
statements made publicly available by any Credit Party to its security holders
generally; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person.

 

(h)           Subordinated Debt and Equity
Notices.  To Agent and Lenders, as
soon as practicable, copies of all material written notices given or received
by any Credit Party with respect to any Subordinated Debt or Stock of such
Person, and, within two (2) Business Days after any Credit Party obtains
knowledge of any matured or unmatured event of default with respect to any
Subordinated Debt, notice of such event of default.

 

(i)            Supplemental Schedules.  To Agent and Lenders, supplemental
disclosures, if any, required by Section 5.6.

 

(j)            Litigation.  To Agent and Lenders in writing, promptly
upon learning thereof, notice of any Litigation commenced or threatened against
any Credit Party that (i) seeks damages in excess of $500,000, (ii) seeks
injunctive relief, (iii) is asserted or instituted against any Plan, its
fiduciaries or its assets or against any Credit Party or ERISA Affiliate in
connection with any Plan, (iv) alleges criminal misconduct by any Credit Party,
or (v) alleges the violation of any law regarding, or seeks remedies in
connection with, any Environmental Liabilities reasonably likely to be in
excess of $500,000.

 

(k)           Insurance Notices.  To Agent and Lenders, disclosure of losses
or casualties required by Section 5.4.

 

(l)            Lease Default Notices.  To Agent, within two (2) Business Days after
receipt thereof, copies of (i) any and all default notices received under or
with respect to any leased location or public warehouse where Collateral having
a value, individually or in the aggregate, in excess of $250,000 is stored or
located, and (ii) such other notices or documents with respect to such leased
locations or public warehouses as Agent may reasonably request.

 

E-3

 

(m)          Lease Amendments.  To Agent, within two (2) Business Days after
receipt thereof, copies of any amendment to a lease of Material Real Estate.

 

(n)           Regulatory Notices.  To Agent and Lenders, promptly upon receipt
of notice of (i) any actual or threatened forfeiture, non-renewal,
cancellation, termination, revocation, suspension, impairment or material
modification of any material Telecommunications Approval held by any Credit
Party, or any notice of default or forfeiture with respect to any such material
Telecommunications Approval, or (ii) any refusal by the FCC, any PUC or any
Franchising Authority to renew or extend any such material Communications
License, a certificate of an Responsible Officer specifying the nature of such
event, the period of existence thereof, and what action such Credit Party is
taking and propose to take with respect thereto.

 

(o)           Change of Location.  To Agent and Lenders, within ten (10)
Business Days after the change of location thereof, notice of change in
locations at which Collateral having a value, individually or in the aggregate,
in excess of $100,000, is held or stored, or the location of its records
concerning such Collateral.

 

(p)           Other Documents.  To Agent and Lenders, such other financial
and other information respecting any Credit Party’s business or financial
condition as Agent or any Lender shall, from time to time, reasonably request.

 

E-4

 

ANNEX F (Section
4.1(b))

 

to

 

CREDIT
AGREEMENT

 

COLLATERAL
REPORTS

 

Borrower shall
deliver or cause to be delivered the following:

 

(a)           [Intentionally Omitted]

 

(b)           [Intentionally Omitted]

 

(c)           [Intentionally Omitted]

 

(d)           To Agent, at the time of delivery of
each of the quarterly Financial Statements delivered pursuant to Annex E,
(i) a listing of government contracts of Borrower subject to the Federal
Assignment of Claims Act of 1940; and (ii) a list of any applications for the
registration of any Patent, Trademark or Copyright filed by any Credit Party
with the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in the prior Fiscal Quarter;

 

(e)           [Intentionally Omitted]

 

(f)            To Agent, at Borrower’s expense,
such appraisals of its assets as Agent may reasonably request at any time after
the occurrence and during the continuance of a Default or an Event of Default,
such appraisals to be conducted by an appraiser, and in form and substance
reasonably satisfactory to Agent; and

 

(g)           Such other reports, statements and
reconciliations with respect to the Collateral or Obligations of any or all
Credit Parties as Agent or any Lender shall from time to time request in its
reasonable discretion.

 

F-1

 

ANNEX G (Section
6.10)

 

to

 

CREDIT
AGREEMENT

 

FINANCIAL
COVENANTS

 

Borrower shall not
breach or fail to comply with any of the following financial covenants, each of
which shall be calculated in accordance with GAAP consistently applied:

 

 (a)          Minimum
Consolidated Fixed Charge Coverage Ratio. 
Credit Parties shall have, at the end of each Fiscal Quarter, a
Consolidated Fixed Charge Coverage Ratio for the Test Period ending with such
Fiscal Quarter of not less than 1.10 to 1.00.

 

 (b)          Maximum
Consolidated Senior Leverage Ratio. 
Credit Parties shall have, at the end of each Fiscal Quarter, a
Consolidated Senior Leverage Ratio as of the last day of such Fiscal Quarter
and for the Test Period ending with such Fiscal Quarter of not more than 3.30
to 1.00.

 

Unless otherwise
specifically provided herein, any accounting term used in the Agreement shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP
consistently applied.  That certain
items or computations are explicitly modified by the phrase “in accordance with
GAAP” shall in no way be construed to limit the foregoing.  If any “Accounting Changes” (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrower, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrower’s and its Subsidiaries’ financial condition and results of operations
shall be the same after such Accounting Changes as if such Accounting Changes
had not been made; provided, however, that the agreement of
Requisite Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders.  “Accounting
Changes” means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by Borrower’s certified public
accountants; (iii) purchase accounting adjustments under FASB 141 or 142 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any
subsequent reversal (in whole or in part) of such reserves; and (iv) the
reversal of any reserves established as a result of purchase accounting
adjustments.  All such adjustments
resulting from expenditures made subsequent to the Closing Date (including
capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be

 

G-1

 

treated as expenses in the period the expenditures are made and
deducted as part of the calculation of EBITDA in such period.  If Borrower and Requisite Lenders agree upon
the required amendments, then after appropriate amendments have been executed
and the underlying Accounting Change with respect thereto has been implemented,
any reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP,
consistently applied after giving effect to the implementation of such
Accounting Change.  If Borrower and
Requisite Lenders cannot agree upon the required amendments within thirty (30)
days following the date of implementation of any Accounting Change, then (i)
all Financial Statements shall be prepared, delivered and made after giving
effect to the underlying Accounting Change, and (ii) all calculations of
financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change.  For purposes of Section 8.1, a breach of a Financial
Covenant contained in this Annex G shall be deemed to have occurred
as of the last day of any specified measurement period, regardless of when the
Financial Statements reflecting such breach are delivered to Agent or any
Lender.

 

G-2

 

ANNEX H (Section
1.1(d))

 

to

 

CREDIT
AGREEMENT

 

LENDERS’
WIRE TRANSFER INFORMATION

 

Name:                                                                                                                                                              General
Electric Capital Corporation

Bank:                                                                                                                                                                 Deutsche
Bank Trust Company Americas

                                                                                                                                                                                               New
York, New York

ABA #:                                                                                                                                                      021001033

Account #:                                                                                                                                   50232854

Account Name:                                                                                                            GECC/CAF
Depository

Reference:                                                                                                                                       CFC
Otelco

 

H-1

 

ANNEX I (Section
11.10)

 

to

 

CREDIT
AGREEMENT

 

NOTICE
ADDRESSES

 

(A)                              If
to Agent or GE Capital, at

 

General Electric Capital Corporation

201 Merritt 7

Norwalk, CT 06851

Attention:  Jose Alberto Cepeda,
Account Manager

Telecopier No.:  203-956-4543

Telephone No.: 203-956-4751

 

with copies
to:

 

Dewey Ballantine LLP

1301 Avenue of the Americas

New York, New York 10019

Attention:  Fred Bass, Esq.

Telecopier No.:  212-259-6333

Telephone No.:  212-259-6330

 

and

 

General Electric Capital Corporation

201 Merritt 7

Norwalk, CT
06851

Attention:  Corporate Counsel-Global Media &
Communications

Telecopier No.:  203-956-4258

Telephone No.:  203-956-4785

 

(B)           If to AIG Annuity
Insurance Company,

 

Payment notices to:

 

AIG Global Investment Group

c/o The Bank of New York

Attn:  P & I Department

P.O. Box 19266

Newark, NJ  07195

Telephone:  718-315-3026

Fax:  718-315-3076

 

I-1

 

Duplicate payment notices and compliance information to:

 

AIG Annuity Reinsurance

c/o AIG Global Investment Group

2929 Allen Parkway, A36-04

Houston, Texas  77019-2155

Attn: 
Private Placement Department

Fax: 
713-831-1072

 

All other correspondence to:

 

AIG Global Investment Group

2929 Allen Parkway, A36-01

Houston, Texas  77019-2155

Attn: 
Legal Department - Investment Management

Fax:  (713) 831-2328

 

(C)           If to CoBank, ACB,
at

 

CoBank, ACB

5500 South Quebec Street

Greenwood Village, Colorado 80111

Attention: Communications and Energy

Telecopier No.:  303-224-2639

Telephone No.:

 

(D)          If to Borrower, at

 

Otelco Inc.

505 3rd Avenue East

Oneonta, Alabama 35121

Attention: President

Telecopier No.:  205-625-3528

Telephone No.:  205-625-3574

 

(E)           If to any Credit
Party, at

 

c/o Otelco Inc.

505 3rd Avenue East

Oneonta, Alabama 35121

Attention: President

Telecopier No.:  205-625-3528

Telephone No.:  205-625-3574

 

I-2

 

ANNEX J (from
Annex A - Commitments definition)

 

to

 

CREDIT
AGREEMENT

 

Lender(s):

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

Revolving Loan Commitment:                                                                            [             ]

 

Term Loan Commitment:                                                                                     [             ]

 

AIG ANNUITY INSURANCE COMPANY

 

Revolving Loan Commitment:                                                                            [             ]

 

Term Loan Commitment:                                                                                     [             ]

 

COBANK, ACB

 

Revolving Loan Commitment:                                                                            [             ]

 

(including a Swing Line Commitment 

of
$                   )

 

Term Loan Commitment:                                                                                     [             ]

 

J-1

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