Document:

Exhibit 4.3

 

INVESTOR RIGHTS AGREEMENT

 

INVESTOR RIGHTS AGREEMENT,
dated as of December 21, 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 544,671shares 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 $64,942,500 aggregate principal amount of 13% 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 21, 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 December
30, 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 $7.50 for each

 

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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 1.9740 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 December 30, 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

 

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under the Securities Act covering the securities issuable by the
Company in all Exchange 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 December
30, 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) December
30, 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 December 30, 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

 

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Section 3.1 if such demand registration is for the remaining shares of
Registrable Securities of 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

 

10

 

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 to such 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.

 

23

 

(a)           If to the Company, to:

 

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:

  	
    /s/ Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael D. Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CEA
  CAPITAL PARTNERS USA, L.P.

  
	
   

  	
   

  
	
   

  	
  By: Seaport Associates,
  LLC

  its authorized representative

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stephen McCall

  	
   

  
	
   

  	
   

  	
  Name:
  Stephen McCall

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
  CEA
  CAPITAL PARTNERS USA CI, L.P.

  
	
   

  	
   

  
	
   

  	
  By: Seaport Associates,
  LLC

  its authorized representative

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stephen McCall

  	
   

  
	
   

  	
   

  	
  Name:
  Stephen McCall

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
  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:

  	
  /s/
  Stephen McCall

  	
   

  
	
   

  	
   

  	
  Name:
  Stephen McCall

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
  SEAPORT
  INVESTMENTS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stephen McCall

  	
   

  
	
   

  	
   

  	
  Name:
  Stephen McCall

  
	
   

  	
   

  	
  Title:
  Vice President

  

 

29

 

	
   

  	
  BANCBOSTON VENTURES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lars A. Swanson

  	
   

  
	
   

  	
   

  	
  Name: Lars A. Swanson

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MID-MISSOURI PARENT LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Denise M. Day

  	
   

  
	
   

  	
   

  	
  Name: Denise M. Day

  
	
   

  	
   

  	
  Title: Co-President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Michael D. Weaver

  	
   

  
	
   

  	
  Michael D. Weaver

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Sean Reilly

  	
   

  
	
   

  	
  Sean Reilly

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Kevin Reilly

  	
   

  
	
   

  	
  Kevin Reilly

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STERNBERG CONSULTING INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ H. J. Sternberg

  	
   

  
	
   

  	
   

  	
  Name: H. J. Sternberg

  
	
   

  	
   

  	
  Title: CEO

  

 

30Exhibit 10.1

 

EXECUTION COPY

 

CREDIT AGREEMENT

 

Dated as of December 21,
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

 

	
  1

  	
  AMOUNT AND TERMS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Credit Facilities

  	
   

  
	
   

  	
  1.2

  	
  [Intentionally Omitted]

  	
   

  
	
   

  	
  1.3

  	
  Prepayments

  	
   

  
	
   

  	
  1.4

  	
  Use of Proceeds

  	
   

  
	
   

  	
  1.5

  	
  Interest and
  Applicable Margins

  	
   

  
	
   

  	
  1.6

  	
  [Intentionally Omitted]

  	
   

  
	
   

  	
  1.7

  	
  [Intentionally Omitted]

  	
   

  
	
   

  	
  1.8

  	
  Cash Management Systems

  	
   

  
	
   

  	
  1.9

  	
  Fees

  	
   

  
	
   

  	
  1.10

  	
  Receipt of Payments

  	
   

  
	
   

  	
  1.11

  	
  Application and
  Allocation of Payments

  	
   

  
	
   

  	
  1.12

  	
  Loan Account and Accounting

  	
   

  
	
   

  	
  1.13

  	
  Indemnity

  	
   

  
	
   

  	
  1.14

  	
  Access

  	
   

  
	
   

  	
  1.15

  	
  Taxes

  	
   

  
	
   

  	
  1.16

  	
  Capital
  Adequacy; Increased Costs; Illegality

  	
   

  
	
   

  	
  1.17

  	
  Single Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2

  	
  CONDITIONS
  PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Conditions to the
  Initial Loans

  	
   

  
	
   

  	
  2.2

  	
  Further Conditions to
  Each Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Corporate
  Existence; Compliance with Law

  	
   

  
	
   

  	
  3.2

  	
  Executive
  Offices, Collateral Locations, FEIN

  	
   

  
	
   

  	
  3.3

  	
  Corporate
  Power, Authorization, Enforceable Obligations

  	
   

  
	
   

  	
  3.4

  	
  Financial
  Statements and Projections

  	
   

  
	
   

  	
  3.5

  	
  Material Adverse Effect

  	
   

  
	
   

  	
  3.6

  	
  Ownership of Property;
  Liens

  	
   

  
	
   

  	
  3.7

  	
  Labor Matters

  	
   

  
	
   

  	
  3.8

  	
  Ventures,
  Subsidiaries and Affiliates; Outstanding Stock and Indebtedness

  	
   

  
	
   

  	
  3.9

  	
  Government Regulation

  	
   

  
	
   

  	
  3.10

  	
  Margin Regulations

  	
   

  
	
   

  	
  3.11

  	
  Taxes

  	
   

  
	
   

  	
  3.12

  	
  ERISA

  	
   

  
	
   

  	
  3.13

  	
  No Litigation

  	
   

  
	
   

  	
  3.14

  	
  Brokers

  	
   

  
	
   

  	
  3.15

  	
  Intellectual Property

  	
   

  
	
   

  	
  3.16

  	
  Full Disclosure;
  Perfection of Liens

  	
   

  

 

i

 

	
   

  	
  3.17

  	
  Environmental Matters

  	
   

  
	
   

  	
  3.18

  	
  Insurance

  	
   

  
	
   

  	
  3.19

  	
  Accounts

  	
   

  
	
   

  	
  3.20

  	
  Government Contracts

  	
   

  
	
   

  	
  3.21

  	
  Customer and Trade
  Relations

  	
   

  
	
   

  	
  3.22

  	
  Agreements and Other
  Documents

  	
   

  
	
   

  	
  3.23

  	
  Solvency

  	
   

  
	
   

  	
  3.24

  	
  Mid-Missouri
  Acquisition Agreement

  	
   

  
	
   

  	
  3.25

  	
  [Intentionally Omitted]

  	
   

  
	
   

  	
  3.26

  	
  Subordinated Debt

  	
   

  
	
   

  	
  3.27

  	
  Capitalization

  	
   

  
	
   

  	
  3.28

  	
  OFAC

  	
   

  
	
   

  	
  3.29

  	
  Patriot Act

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  FINANCIAL
  STATEMENTS AND INFORMATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Reports and Notices

  	
   

  
	
   

  	
  4.2

  	
  Communication with
  Accountants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  AFFIRMATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Maintenance
  of Existence and Conduct of Business

  	
   

  
	
   

  	
  5.2

  	
  Payment of Charges

  	
   

  
	
   

  	
  5.3

  	
  Books and Records

  	
   

  
	
   

  	
  5.4

  	
  Insurance;
  Damage to or Destruction of Collateral

  	
   

  
	
   

  	
  5.5

  	
  Compliance with Laws

  	
   

  
	
   

  	
  5.6

  	
  Supplemental Disclosure

  	
   

  
	
   

  	
  5.7

  	
  Intellectual Property

  	
   

  
	
   

  	
  5.8

  	
  Environmental Matters

  	
   

  
	
   

  	
  5.9

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

  	
   

  
	
   

  	
  5.10

  	
  Interest Rate Protection

  	
   

  
	
   

  	
  5.11

  	
  CoBank Capital

  	
   

  
	
   

  	
  5.12

  	
  Further Assurances

  	
   

  
	
   

  	
  5.13

  	
  Subsidiaries and Collateral

  	
   

  
	
   

  	
  5.14

  	
  Change
  of Law Applicable to Mid-Missouri Telephone

  	
   

  
	
   

  	
  5.15

  	
  Post Closing Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  NEGATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Mergers, Subsidiaries, Etc.

  	
   

  
	
   

  	
  6.2

  	
  Investments; Loans and
  Advances

  	
   

  
	
   

  	
  6.3

  	
  Indebtedness

  	
   

  
	
   

  	
  6.4

  	
  Employee
  Loans and Affiliate Transactions

  	
   

  
	
   

  	
  6.5

  	
  Capital Structure and
  Business

  	
   

  
	
   

  	
  6.6

  	
  Guaranteed
  Indebtedness

  	
   

  
	
   

  	
  6.7

  	
  Liens

  	
   

  
	
   

  	
  6.8

  	
  Sale
  of Stock and Assets

  	
   

  
	
   

  	
  6.9

  	
  ERISA

  	
   

  

 

ii

 

	
   

  	
  6.10

  	
  Financial
  Covenants

  	
   

  
	
   

  	
  6.11

  	
  Hazardous
  Materials

  	
   

  
	
   

  	
  6.12

  	
  Sale/Leasebacks

  	
   

  
	
   

  	
  6.13

  	
  Cancellation of
  Indebtedness

  	
   

  
	
   

  	
  6.14

  	
  Restricted
  Payments

  	
   

  
	
   

  	
  6.15

  	
  Change
  of Corporate Name or Location; Change of Fiscal Year

  	
   

  
	
   

  	
  6.16

  	
  No Impairment
  of Intercompany Transfers

  	
   

  
	
   

  	
  6.17

  	
  No Speculative Transactions

  	
   

  
	
   

  	
  6.18

  	
  [Intentionally
  Omitted]

  	
   

  
	
   

  	
  6.19

  	
  Changes
  Relating to Subordinated Debt; Material Contracts

  	
   

  
	
   

  	
  6.20

  	
  Holding Companies

  	
   

  
	
   

  	
  6.21

  	
  Designated
  Senior Debt

  	
   

  
	
   

  	
  6.22

  	
  Limitations on
  Accumulation of Funds

  	
   

  
	
   

  	
  6.23

  	
  Limitations on
  Creation of Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  TERM

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Termination

  	
   

  
	
   

  	
  7.2

  	
  Survival
  of Obligations Upon Termination of Financing Arrangements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  EVENTS OF
  DEFAULT; RIGHTS AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Events of
  Default

  	
   

  
	
   

  	
  8.2

  	
  Remedies

  	
   

  
	
   

  	
  8.3

  	
  Waivers
  by Credit Parties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  ASSIGNMENT
  AND PARTICIPATIONS; APPOINTMENT OF AGENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Assignment and
  Participations

  	
   

  
	
   

  	
  9.2

  	
  Appointment
  of Agent

  	
   

  
	
   

  	
  9.3

  	
  Agent’s Reliance, Etc.

  	
   

  
	
   

  	
  9.4

  	
  GE
  Capital and Affiliates

  	
   

  
	
   

  	
  9.5

  	
  Lender
  Credit Decision

  	
   

  
	
   

  	
  9.6

  	
  Indemnification

  	
   

  
	
   

  	
  9.7

  	
  Successor Agent

  	
   

  
	
   

  	
  9.8

  	
  Setoff and Sharing of
  Payments

  	
   

  
	
   

  	
  9.9

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10

  	
  SUCCESSORS
  AND ASSIGNS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Successors and Assigns

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Complete
  Agreement; Modification of Agreement

  	
   

  
	
   

  	
  11.2

  	
  Amendments
  and Waivers; Joinder Agreement

  	
   

  
	
   

  	
  11.3

  	
  Fees and
  Expenses

  	
   

  
	
   

  	
  11.4

  	
  No Waiver

  	
   

  

 

iii

 

	
   

  	
  11.5

  	
  Remedies

  	
   

  
	
   

  	
  11.6

  	
  Severability

  	
   

  
	
   

  	
  11.7

  	
  Conflict of
  Terms

  	
   

  
	
   

  	
  11.8

  	
  Confidentiality

  	
   

  
	
   

  	
  11.9

  	
  GOVERNING LAW

  	
   

  
	
   

  	
  11.10

  	
  Notices

  	
   

  
	
   

  	
  11.11

  	
  Section Titles

  	
   

  
	
   

  	
  11.12

  	
  Counterparts

  	
   

  
	
   

  	
  11.13

  	
  WAIVER
  OF JURY TRIAL

  	
   

  
	
   

  	
  11.14

  	
  Press Releases and
  Related Matters

  	
   

  
	
   

  	
  11.15

  	
  Reinstatement

  	
   

  
	
   

  	
  11.16

  	
  Advice of
  Counsel

  	
   

  
	
   

  	
  11.17

  	
  No
  Strict Construction

  	
   

  

 

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

  	
   

  	
   

  	
   

  	
  Consolidated
  EBITDA - 2004

  
	
  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 3.6

  	
   

  	
  -

  	
   

  	
  Real Property

  
	
  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

  	
   

  	
  -

  	
   

  	
  Accounts

  
	
  Disclosure Schedule 3.20

  	
   

  	
  -

  	
   

  	
  Government
  Contracts

  
	
  Disclosure Schedule 3.22

  	
   

  	
  -

  	
   

  	
  Material
  Agreements

  
	
  Disclosure Schedule 6.2

  	
   

  	
  -

  	
   

  	
  Investments

  

 

v

 

	
  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 21, 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 Obligations in amount
equal to the Net Cash Proceeds of such Disposition; provided, however,
that so long as (a) no Default or Event 

 

5

 

of Default 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 Obligations in an amount equal to
such Net Cash Proceeds.  No later than
the Business Day following the ninetieth (90th) day following receipt by any
Credit Party of Net Cash Proceeds of any Debt Issuance referred to in clause
(c) or (d) of the definition of Excluded Debt Issuance Proceeds, Borrower shall
prepay the Obligations in an amount equal to the amount (if any) of the Net
Cash Proceeds from 

 

6

 

such Debt Issuance that have not been applied as provided in subclause
(i) or (ii) of such clause (c) or (d), as applicable.  No later than the Business Day following the
ninetieth (90th) day following receipt by any Credit Party of Net Cash Proceeds
of any Stock Issuance referred to in clause (c) of the definition of Excluded
Stock Issuance Proceeds, Borrower shall prepay the Obligations in an amount
equal to the amount (if any) of the Net Cash Proceeds from such Stock Issuance
that have not been applied as provided in subclauses (i), (ii), (iii) or (iv)
of such clause (c).

 

(iv)                              On each IDS Payment Date occurring on or
after June 30, 2005 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, the “Subject
IDS Subordinated Notes”), Borrower shall prepay the Obligations 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 occurring on or
after June 30, 2005 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 Obligations 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 Obligations 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)

 

7

 

(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)
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 

 

8

 

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

  	
  %

  

 

(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 

 

9

 

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, 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].

 

10

 

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 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.

 

11

 

(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.

 

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 

 

12

 

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 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.

 

13

 

(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
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, 

 

14

 

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.

 

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.

 

15

 

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 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 

 

16

 

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 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 

 

17

 

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 its Subsidiaries in favor of Prior Lender Agent or any Prior
Lender shall be terminated by Prior Lender Agent or such Prior Lender, as the
case may be, 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 PSC 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

 

18

 

Documents.  On
the Closing Date, Borrower shall have issued Initial IDS Securities having an
aggregate issue price of not less than $ 131.6 million and Initial
Non-IDS-Linked Subordinated Notes having an aggregate issue price of not less
than $ 8.5 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.

 

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.

 

19

 

(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 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 

 

20

 

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 the aggregate, could not reasonably be expected
to have a Material Adverse Effect.  Except
as set forth in Disclosure Schedule (3.1), each Credit Party has
all Communications Licenses and Governmental Authorizations and has filed all required federal and state
applications and notifications, in each case necessary for the operation of the
Telecommunications Businesses in the United States respectively conducted by
the Credit Parties (the Communications Licenses, Governmental Authorizations
and federal and state applications and notifications necessary for the
operation of the Telecommunications Businesses in the United States
respectively conducted by the Credit Parties, the “Telecommunications Approvals”),
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 Communications Licenses and Governmental Authorizations; (ii) the
geographical area to which each of such Communications Licenses and
Governmental Authorizations relates; (iii) the Governmental Authority that
issued each of such Communications Licenses and Governmental Authorizations;
(iv) the expiration date, if any, of each of such Communications Licenses and
Governmental Authorizations; and (v) if not issued in the name of a Credit
Party, the name of the Person in whose name such Communications Licenses and
Governmental Authorizations are 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 PSC, 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. 
Except as set forth in Disclosure Schedule (3.1), 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.  Except as set forth in Disclosure
Schedule (3.1), no Credit Party is in violation of, or in default of,
in a manner that, individually or in the aggregate, could reasonably be 

 

21

 

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 PSC, 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 PSC 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 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, except as may be limited by bankruptcy, insolvency, 

 

22

 

reorganization,
moratorium or other similar laws relating to or limiting creditors rights
generally or by general principles of equity, regardless of whether considered
in a proceeding in equity or at law.

 

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 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 

 

23

 

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 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 or circumstance has occurred, that alone or together with
other events or circumstances, 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 

 

24

 

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 any Real
Estate owned by any Credit Party.   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 any Credit Party’s
leasehold interest (1) in any Real Estate leased by such Credit Party which was
created or granted by any Credit Party or any Person claiming by, through or
under a Credit Party and (2) to the knowledge the Credit Parties, in any
Material Real Estate leased by such Credit Party which was created or granted
by any other Person. 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 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).

 

25

 

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 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.

 

26

 

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
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 (other than the NTCA
Retirement and Security Program (the “NTCA Plan”)) has any Unfunded Pension
Liability that, in the aggregate for all such Title IV Plans combined, exceeds
$100,000 and the liability of the Credit Parties and ERISA Affiliates with
respect to the Unfunded Pension Liability under the NTCA Plan is not material;
(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 

 

27

 

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 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 

 

28

 

Patent, Trademark or
registered Copyright, is listed, together with application or registration
numbers, as applicable, and together with each owner thereof, 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.

 

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 

 

29

 

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.

 

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                           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 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, the
complete account number therefor and, if such account is a deposit account, whether
such account is (a) a “Blocked Account”, “Excluded Account” or “Disbursement
Account” for the purposes of Annex C or (b) a “Mid-Missouri Account”.

 

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 

 

30

 

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 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 

 

31

 

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 Mid-Missouri Parent, LLC thereunder
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 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 

 

32

 

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 9,652,951 shares are issued and outstanding (and of which 8,659,000 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 544,671 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 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.

 

33

 

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:

 

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, 

 

34

 

personal or mixed) and all Charges with respect to
tax, social security and unemployment withholding with respect to its
employees, except such unpaid Charges which will not cumulatively in the
aggregate for all unpaid Charges of all Credit Parties result in more than
$100,000 in liabilities for all Credit Parties combined, (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 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 minus” 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 

 

35

 

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 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 

 

36

 

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 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 PSC, any Franchising Authority and any other Governmental Authority
and all Telecommunications Approvals, except to the extent that 

 

37

 

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 permitted or required
by Annex C and changes otherwise 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, 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 

 

38

 

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
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 

 

39

 

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 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.

 

40

 

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 PSC 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 PSC 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 PSC in the State of Missouri in
order for its Stock to be pledged to Agent under the Pledge Agreement.

 

(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 

 

41

 

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.

 

5.15                           Post
Closing Covenants.

 

  Each
Credit Party executing this Agreement agrees that it shall and shall cause each
other Credit Party to:

 

(a)                                  (i)
no later than February 22, 2005, deliver to Agent title policies and
surveys on the Real Estate identified as “Material Real Estate” on Disclosure
Schedule (3.6), in each case,
in form and substance reasonably satisfactory in all respects to Agent in its
sole discretion and (ii) at the request of Agent, promptly correct, remove or
cause to be corrected or removed, as applicable, any title or survey matter
objectionable to Agent;

 

(b)                                 no later than January 20, 2005, to the
extent not delivered on the Closing Date, for each Credit Party formed in
Alabama, verification that such Person is in tax good standing in Alabama, in
each case dated as of a recent date and certified by the Alabama Secretary of
State or other authorized Governmental Authority;

 

(c)                                  no later than March 21, 2005, to the
extent not delivered on the Closing Date, for each Credit Party formed in
Missouri, verification that such Person is in tax good standing in Missouri, in
each case dated as of a recent date and certified by the Missouri Secretary of
State or other authorized Governmental Authority;

 

(d)                                 no later than March 21, 2005, deliver to
Agent (i) a legal opinion addressed to Agent and Lenders from Lathrop &
Gage L.C., special Missouri counsel to Borrower, opining as to the
capitalization of Imagination and (ii) a legal opinion addressed to Agent and
Lenders from Wilkerson & Bryan, P.C., special Alabama counsel to Borrower, opining
as to the capitalization of each Credit Party incorporated in Alabama, in each
case reasonably satisfactory to Agent; and

 

(e)                                  no later than January 5, 2005, (i) amend
or cause the amendment of the Amended and Restated Certificate of Incorporation
of Mid-Missouri Holding to delete Article Eighth thereof and (ii) deliver
to the Agent an updated opinion from O’Melveny & Myers LLP, special New
York counsel to Borrower, reflecting deletion of the reference to such
Certificate of Incorporation in paragraph 9 of the opinion of such special
counsel delivered on the Closing Date.

 

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) 

 

42

 

merge with, consolidate
with, acquire all or substantially all of any division, unit or business of,
acquire all or substantially all of the assets of, acquire all or a substantial
portion of the 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 organized under the laws of the United States 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 substantially all 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:

 

(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 

 

43

 

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) contingent obligations
and contingent liabilities that do not exceed $500,000 for each such Permitted
Acquisition, (D) Guaranteed Indebtedness permitted by Section 6.6, and (E)
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 balance sheet of
Borrower and Target) shall not exceed $25,000,000 in any Fiscal Year for all
Credit Parties combined;

 

(vi)                              on a Pro Forma Basis, after giving effect
to such Permitted Acquisition, the Target shall not have incurred an operating
loss 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;

 

44

 

(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);

 

(B)                                updated versions of the most recently
delivered Projections covering the three (3) 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

 

45

 

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 the then current draft of the acquisition agreement, in form and
substance reasonably satisfactory to Agent (it being agreed that an acquisition
agreement reflecting commercially reasonable terms otherwise acceptable to a
prudent purchaser of such assets or Stock in such industry shall be reasonably
satisfactory to Agent) and, upon request of Agent, related agreements and
instruments, and all opinions, certificates, lien search results and other
documents reasonably requested by Agent or any Lender (collectively, the “Related
Documents”), including those specified in the last two sentences of Section 5.9,
(B) at least two (2) Business Days prior to the date of such
Permitted Acquisition, Agent and Lenders shall have received, a copy of the
substantially final acquisition agreement and, upon request of Agent, Related
Documents and all such documentation shall not differ in any material respect
from the previous draft provided to Agent and Lenders, unless in each case
changes to the previous draft are reasonably satisfactory to Agent (it being
agreed that changes reflecting commercially reasonable terms otherwise
acceptable to a prudent purchaser of such assets or Stock in such industry
shall be reasonably satisfactory to Agent) and (C) on or prior to two (2) Business
Days after the closing of such Permitted Acquisition, Agent and Lenders shall
have received a copy of the final acquisition agreement and, upon request of
Agent, Related Documents;

 

(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

 

(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);

 

46

 

(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 (i) all capital contributions to, intercompany loans to and
other Investments in Mid-Missouri Telephone shall not at any time exceed
$2,000,000 for all Credit Parties combined and (ii) all intercompany loans
by Mid-Missouri Telephone shall not at any time exceed such amounts permitted
under Section 6.3(a)(viii)(F);

 

(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 Party in connection with a
Permitted Acquisition, provided that such Investments are not made in
contemplation of such Permitted Acquisition;

 

(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
or permitted by Section 5.10;

 

47

 

(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;

 

(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
pursuant to the Investor Rights Agreement upon exchange 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

 

48

 

Default, Interest Deferral Period or Dividend Suspension Period has
occurred and is continuing or would result as of the date of issuance thereof
and all the Exchange Conditions (as defined in the Initial IDS Subordinated
Notes Indenture) are satisfied at the time of such issuance and exchange, (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 (excluding PIK Amounts in respect thereof
payable after the initial 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);

 

(viii)                        Indebtedness consisting of intercompany loans and
advances made by a Credit Party to any other Credit Party; provided,
that: (A) the Credit Party that is the recipient of any intercompany loan
or advance (for purposes of this paragraph, the “Obligor”) shall have
executed and delivered 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 to the Credit Party providing such intercompany loan or
advance (for purposes of this paragraph, the “Holder”), 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, the applicable
Obligor and the applicable Holder shall record all intercompany transactions on
its respective books and records in a manner reasonably satisfactory to Agent; (C) the
obligations of the applicable Obligor and the applicable Holder under any such
Intercompany Note shall be subordinated to the Obligations of Borrower and each
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 any
Credit Party and after giving effect thereto, Borrower and such Credit Party
shall be Solvent; (E) Agent has not

 

49

 

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 (I) intercompany loans to,
capital contributions to and other Investments in Mid-Missouri Telephone shall
not at any time exceed $2,000,000 for all Credit Parties combined and (II)
intercompany loans by Mid-Missouri Telephone shall not at any time exceed
$2,000,000;

 

(ix)                                [Intentionally Omitted];

 

(x)                                   Indebtedness constituting Hedging
Obligations of Borrower required or permitted 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 Basis after giving effect to the
Incurrence of such Indebtedness (excluding PIK Amounts in respect thereof
payable after the initial 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

 

50

 

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 (excluding PIK Amounts in respect thereof
payable after the initial 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 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.

 

51

 

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 pursuant to the
Investor Rights Agreement upon exchange 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).

 

(b)                                 No Credit Party
shall amend its charter, bylaws, operating agreement 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).  Each Credit Party that is a limited
liability company agrees that at all times (i) the limited liability
company interests, membership interests, units or other interests in such
Credit Party shall be represented by one or more certificates and (ii) such
certificates and such Credit Party’s operating agreement or other
organizational documents shall expressly provide that it is a security governed
by Article 8-102 of the Code.

 

52

 

(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:

 

(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

 

53

 

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;

 

(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;

 

54

 

(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 (j) and (k)) shall be for fair market value and (other than
Section 6.8(i)) 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 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

 

55

 

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 remains unpaid under any Subordinated Debt and (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

 

56

 

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) hereof 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));

 

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) hereof 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

 

57

 

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 pursuant
to the Investor Rights Agreement upon exchange 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) hereof 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 would result, Borrower may pay current interest
on the Initial IDS Subordinated Notes in an aggregate amount not to exceed
$2,958,000.00 and Borrower may pay cash dividends on its Class A common
stock in an aggregate amount not to exceed $1,706,000.00.

 

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

 

58

 

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, and (b) restrictions imposed by applicable
law or any applicable rule, regulation or order.

 

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 or permitted 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 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 (or
Mid-Missouri Telephone) that becomes a Subsidiary Guarantor, a subordinated
guaranty by such new Subsidiary or Mid-Missouri Telephone issued after such new
Subsidiary or Mid-Missouri Telephone becomes a Subsidiary Guarantor and 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

 

59

 

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 the following material contract: the M&A Software License.

 

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
“Designated Senior 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 PSC without seeking Missouri PSC 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

 

60

 

Holding or, to the extent
permitted by Section 6.2(d) and Section 6.3(a)(viii),
intercompany loans to Borrower 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
the Credit Party of which it is a Subsidiary or, to the extent permitted by Section 6.2(d) and
Section 6.3(a)(viii), intercompany loans 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 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

 

61

 

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),
5.15 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 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

 

62

 

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.

 

(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

 

63

 

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, PSC 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 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

 

64

 

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 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

 

65

 

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
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

 

66

 

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.

 

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

 

67

 

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
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

 

68

 

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.

 

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

 

69

 

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.

 

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

 

70

 

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 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

 

71

 

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 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.

 

72

 

(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 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.

 

73

 

(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 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,

 

74

 

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 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

 

75

 

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 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

 

76

 

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 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

 

77

 

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.

 

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

 

78

 

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 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

 

79

 

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 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.

 

80

 

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.

 

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

 

81

 

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.

 

82

 

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

 

	
   

  	
  OTELCO
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Michael D. Weaver

  	
   

  
	
   

  	
  Name:
  Michael Dan Weaver

  
	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
  OTELCO
  TELECOMMUNICATIONS

  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  OTELCO
  TELEPHONE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  HOPPER
  HOLDING COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  HOPPER
  TELECOMMUNICATIONS

  COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  BRINDLEE
  HOLDINGS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
								

 

[Signature Page - Credit Agreement]

 

 

	
   

  	
  BRINDLEE
  MOUNTAIN TELEPHONE

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  PAGE &
  KISER COMMUNICATIONS,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  BLOUNTSVILLE
  TELEPHONE

  COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  MID-MISSOURI
  HOLDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  MID-MISSOURI
  TELEPHONE

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  IMAGINATION,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael D. Weaver

  	
   

  
	
   

  	
   

  	
   Name: Michael Dan Weaver

  
	
   

  	
   

  	
   Title: Chief Executive Officer

  
								

 

 

	
   

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION, as Agent and a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew A. Toth III

  	
   

  
	
   

  	
   

  	
  Duly Authorized Signatory

  

 

 

	
   

  	
  AIG ANNUITY INSURANCE

  COMPANY, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher F. Ochs

  	
   

  
	
   

  	
  Name:

  	
    Christopher F. Ochs

  	
   

  
	
   

  	
  Title:

  	
    Vice President

  	
   

  
						

 

 

	
   

  	
  COBANK,
  ACB, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rick Freeman

  	
   

  
	
   

  	
  Name:

  	
    Rick Freeman

  	
   

  
	
   

  	
  Title:

  	
    Vice President

  	
   

  
						

 

 

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 Account”
means each deposit account designated as a “Blocked Account” on Disclosure Schedule (3.19),
as amended from time to time in accordance with paragraph (d) of 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

 

A-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 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 21, 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 21, 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 PSC, 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 PSC 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.

 

“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) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers’ acceptance financing, (vi) net
costs 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

 

A-7

 

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 January 1, 2005
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 January 1, 2005.

 

“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.

 

“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

 

A-8

 

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.

 

“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.

 

A-9

 

“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 (including interest on Deferred 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.

 

“Disbursement Account”
means each deposit account designated as a “Disbursement Account” on Disclosure
Schedule (3.19), as amended from time to time in accordance with
paragraph (d) of Annex C.

 

“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 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

 

A-10

 

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 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

 

A-11

 

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

 

A-12

 

“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 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

 

A-13

 

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 Account”
means each deposit account designated as an “Excluded Account” on Disclosure
Schedule (3.19), as amended from time to time in accordance with
paragraph (d) of Annex C.

 

“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

 

A-14

 

applied (x) to finance a
Permitted Acquisition or (y) to finance permitted Consolidated Capital Expenditures.

 

“Excluded
Disposition Proceeds” means (I) the Net Cash Proceeds of any Disposition
permitted by Section 6.8(a), (d), (f), (g) (h),
(i) or (j), (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.

 

A-15

 

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

 

“Final Maturity Date”
means December 21, 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,

 

A-16

 

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 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 PSC 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 PSC 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

 

A-17

 

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 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.

 

A-18

 

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

 

“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

 

A-19

 

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 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 pursuant to the
Investor Rights Agreement upon exchange 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 pursuant to the Investor Rights Agreement upon exchange 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 December 21,
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.

 

A-20

 

“Initial
Non-IDS-Linked Subordinated Notes” means 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 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, each March 21, June 21, September 21
and December 21; and (b) as to any LIBOR Loan, 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 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.

 

“Investor Rights
Agreement” means the Investor Rights Agreement dated as of December 21,
2004 among Borrower and the holders of Borrower’s Class B common stock on
the Closing Date.

 

“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

 

A-22

 

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.

 

“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

 

A-23

 

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.

 

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 Fee Letters 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 the group consisting of the directors, executive officers and other
personnel of Borrower on the Closing Date.

 

A-24

 

“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 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/or (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 December 21, 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.

 

A-25

 

“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.

 

“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.

 

A-26

 

“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.

 

“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.

 

A-27

 

“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 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 Agent (it being understood that documentation substantially identical to the
Initial IDS Subordinated Notes Documents shall be reasonably satisfactory to
Agent); 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

 

A-28

 

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
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, (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, and (c) in
respect of any Indebtedness Incurred pursuant to Section 6.3(a)(xvi)
as to which the documentation governing such Indebtedness provides that
payments of interest due and owing in respect of such Indebtedness 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 Indebtedness
an amount equal to the accrued, and unpaid, interest on such Indebtedness, the
amount equal to the aggregate of all paid payment-in-kind interest that is
added to the outstanding principal of such Indebtedness.

 

“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 Credit
Agreement” means that certain Amended and Restated Credit Agreement dated
as of June 30, 2003 among Borrower (as successor in interest to

 

A-29

 

Rural LEC
Acquisition LLC), the Subsidiary Borrowers referred to therein, CoBank, ACB, as
Administrative Agent, and each of the lenders party thereto from time to time,
as amended, modified or supplemented.

 

“Prior Credit
Agreement Documents” means the Prior Credit Agreement, together with each
other agreement, instrument or document executed and delivered in connection
therewith or pursuant thereto (including the “Loan Documents” as defined in the
Prior Credit Agreement).

 

“Prior Lender Agent”
means CoBank, ACB as administrative agent under the Prior Credit Agreement.

 

“Prior Lenders”
means CoBank, ACB and any other lender party to the Prior Credit Agreement
and/or the Prior Master Loan Agreement.

 

“Prior Lender
Obligations” means all obligations of Borrower and the other Credit Parties
arising under or in connection with any of the Prior Credit Agreement Documents
and/or the Prior Master Loan Agreement Documents.

 

“Prior Master Loan
Agreement” means that certain Master Loan Agreement dated as of November 17,
1999 between Mid-Missouri Holding and CoBank, ACB, as amended, modified or
supplemented.

 

“Prior Master Loan
Agreement Documents” means the Prior Master Loan Agreement, together with
each other agreement, instrument or document executed and delivered in
connection therewith or pursuant thereto (including the “Loan Documents” as
defined in the Prior Master Loan Agreement).

 

“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, 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.

 

A-30

 

“Pro Forma” means
the unaudited consolidated balance sheet of Borrower and its Subsidiaries as of
September 30, 2004  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, provided that any adjustments
made that are not permitted pursuant to Regulation S-X under the Securities Act
of 1933 shall be subject to the consent of Agent, (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 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.

 

A-31

 

“PSC” 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 PSC of Alabama and the PSC of Missouri.

 

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

 

“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.

 

“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 December 15, 2004, and dated
December 16, 2004

 

A-32

 

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.

 

“Relationship Bank”
means each of the banks specified on Disclosure Schedule (3.19) on
the Closing Date and such other bank or banks reasonably acceptable to Agent.

 

“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
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

 

A-33

 

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 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,

 

A-34

 

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 (i) the conversion on the Closing Date of Rural LEC Acquisition LLC
from a Delaware limited liability company into a Delaware corporation under the
name “Otelco Inc.” and (ii) in connection with such conversion, the
conversion on the Closing Date of each membership interest in Rural LEC
Acquisition LLC to a combination of shares of Borrower’s Class B common
stock and Initial IDS Securities as provided in Section 2 of Article IV
of the certificate of incorporation of Borrower as filed with the Delaware
Secretary of State and in effect on the Closing Date.

 

“Restructuring
Documents” means (i) the Certificate of Conversion from a limited
liability company to a corporation of Rural LEC Acquisition LLC and (ii) the
certificate of incorporation of Borrower as filed with the Delaware Secretary
of State and in effect on the Closing Date.

 

“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 

 

A-35

 

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.

 

“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.

 

A-36

 

“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.

 

“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 (it being understood that documentation substantially identical to the
Initial IDS Subordinated Notes Documents shall be 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.

 

A-37

 

“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.

 

“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).

 

A-38

 

“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.

 

“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

 

A-39

 

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.

 

“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.

 

A-40

 

“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 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-41

 

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.  It is
undertstood that each reference to a “Credit Party” or a “Subsidiary” in this Annex
C only shall constitute a reference to each Credit Party or Subsidiary
other than Mid-Missouri Telephone.

 

(a)                                  On or before the Closing Date, the
applicable Credit Party shall cause each Blocked Account maintained by such
Credit Party at a Relationship Bank to become subject to a tri-party blocked
account agreement in accordance with paragraph (c) of this Annex C.  Except for such closures or replacements
expressly permitted or required by 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 permitted by paragraph (b) of this Annex C, into one or more
Excluded Accounts or Disbursement Accounts.

 

(b)                                 Each Credit Party may maintain, in its
name, at a Relationship Bank, one or more Disbursement Accounts.  No Credit Party shall accumulate or maintain
cash in Disbursement Accounts as of any date of determination in excess of (x)
checks outstanding against such accounts and paid as of such date, (y) payroll
requirements outstanding and paid as of such date, and (z) amounts necessary to
meet ordinary course minimum balance requirements of the applicable
Relationship Bank in respect thereof as of such date.  Each
Credit Party may maintain, in its name, at a Relationship Bank, one or more
Excluded Accounts.  The Credit Parties
agree that at no time shall the 
aggregate amount on deposit in all Excluded Accounts and all other
accounts of the Credit Parties (other than Disbursement Accounts or Blocked
Accounts) exceed $100,000 in the aggregate at any time for all Credit Parties
combined (the “Threshold Amount”); provided; however, that
no Event of Default shall occur solely by reason of the amount on deposit in
all Excluded Accounts and such other accounts combined exceeding the Threshold
Amount if (i) the amount in excess of the Threshold Amount is transferred
to a Blocked Account within one Business Day of such excess having occurred and
(ii) at the close of business on such Business Day the amount on deposit in
all Excluded Accounts and such other accounts combined does not exceed the
Threshold Amount.

 

C-1

 

 (c)                               On or before the Closing Date each Relationship Bank
shall have, in respect of each Blocked Account located at such Relationship
Bank, entered into a tri-party blocked account agreement 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 (b) and (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 (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.

 

(d)                                 After
the Closing Date, no Credit Party shall (i) close any deposit or other
account, (ii) establish any deposit or other account or (iii) upon a
Target becoming a Credit Party in connection with a Permitted Acquisition,
continue to maintain such Credit Party’s deposit or other accounts; provided,
however, that

 

(A) a Credit Party may (I) close a deposit
account in accordance with the final sentence of this paragraph (d), (II) close
a Disbursement Account or Excluded Account so long as all amounts on deposit
therein, if any, shall have been transferred to a Blocked Account prior to the
closure thereof and (III) with the prior written consent of Agent, close a
Blocked Account so long as all amounts on deposit therein, if any, shall have
been transferred to another Blocked Account prior to the closure thereof;

 

(B) upon a Target 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 may establish a deposit account at a
Relationship Bank subject to the satisfaction of the following conditions:

 

(I) Borrower shall have delivered to Agent (1) written
notice  setting forth the Relationship
Bank at which such account shall be established, whether the applicable account
is either a “Blocked Account”, “Disbursement Account” or “Excluded Account” for
purposes of this

 

C-2

 

Annex C and a description of the proposed use therefor
and (2) an amended Disclosure Schedule (3.19) reflecting the
information specified in the immediately preceding clause (1); and

 

(II) in the case of a Blocked Account, prior to the time
of the opening thereof, the applicable Credit Party, the Relationship Bank at
which such Blocked Account is located and Agent shall have executed and
delivered to Agent a tri-party blocked account agreement with respect to such
account, in form and substance reasonably satisfactory to Agent.

 

Borrower shall deliver to
Agent (1) a list of all deposit accounts maintained by the Credit Parties
together with the delivery of annual audited consolidated financial statements
in accordance with paragraph (b) of Annex E and (2) within five (5) Business
Days after the request of Agent, information concerning such accounts
(including deposits and withdrawals therefrom) as Agent may reasonably
request.  Borrower shall, or, as
applicable, shall cause its applicable Subsidiary to, close a deposit account
or accounts (and establish replacement deposit accounts in accordance with
clause (C) of this paragraph (d)) promptly and 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, Disbursement
Accounts and Excluded 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 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,
officers, employees, agents, directors or other Persons acting for or in
concert with the Credit Parties, 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 on behalf of itself
and each Related Person thereof acknowledges and agrees that all cash, checks
or other items of payment constituting

 

C-3

 

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 Prior Lender Agent or the applicable Prior Lender releasing all liens
of Prior Lender Agent or any 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 Agent or Prior Lender or relating to
any 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 (a) any special communications and local
counsel opinions reasonably requested by Agent and (b) reliance letters
with respect to such legal opinions delivered in connection with the Related
Transactions 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.

 

T.                                     Appointment of Agent for Service. 
An appointment of CT Corporation (or other agent reasonably acceptable
to Agent) 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 (except for Material Real Estate owned
by Mid-Missouri Telephone) (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.                                     [Intentionally Omitted].

 

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 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

 

D-4

 

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 and Indemnities.  Agent shall
have received a duly executed copy of an Assignment of Representations,
Warranties, Covenants and Indemnities 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 PSC 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 (i) in accordance with GAAP consistently applied or (ii) to
the extent a Permitted Acquisition shall have been consummated after the first
day of the then applicable Test Period, on a Pro Forma Basis giving effect to
such Permitted Acquisition 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

 

G-1

 

reserves
established as a result of purchase accounting adjustments.  All such purchase accounting 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 treated as expenses in the period the expenditures are
made and deducted as part of the calculation of Consolidated 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 9.9(a))

 

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 Banking Group

Telecopier No.:  303-224-2639

 

(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 other 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:

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Term Loan Commitment:

  	
   

  	
  $

  	
  27,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AIG ANNUITY INSURANCE COMPANY

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Revolving Loan Commitment:

  	
   

  	
  -0-

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Term Loan Commitment:

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  COBANK, ACB

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Revolving Loan Commitment:

  	
   

  	
   

  	
   

  
	
  (including a Swing Line Commitment of $1,500,000)

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Term Loan Commitment:

  	
   

  	
  $

  	
  22,500,000

  	
   

  

 

J-1

 

Schedule A

 

Consolidated
EBITDA - 2004

 

For the purposes of
determining “Consolidated EBITDA” 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:

 

(a) Consolidated
EBITDA for the Fiscal Quarter ending on March 31, 2004 shall equal the sum
of the amounts appearing in rows 1, 2, and 3 under the heading “Consolidated
EBITDA” in the table below;

 

(b) Consolidated
EBITDA for the Fiscal Quarter ending on June 30, 2004 shall equal the sum
of the amounts appearing in rows 4, 5, and 6 under the heading “Consolidated
EBITDA” in the table below;

 

(c) Consolidated
EBITDA for the Fiscal Quarter ending on September 30, 2004 shall equal the
sum of the amounts appearing in rows 7, 8, and 9 under the heading
“Consolidated EBITDA” in the table below; and

 

(d) Consolidated
EBITDA for the Fiscal Quarter ending on December 31, 2004 shall equal the
sum of the amounts appearing in rows 10, 11, and 12 under the heading
“Consolidated EBITDA” in the table below; provided, however, that
on or prior to March 31, 2005, Borrower shall deliver to Agent an officer’s
certificate of the chief financial officer of Borrower that sets forth the
amount representing the actual Consolidated EBITDA for the month ended December 31,
2004, and upon delivery of such officer’s certificate the estimated amount
marked by an asterisk below in row 12 under the heading “Consolidated EBITDA”
in the table below shall be deemed to be the amount appearing on such officer’s
certificate.

 

	
  Row/Month

  	
   

  	
  Otelco

  Adjusted EBITDA

  	
   

  	
  Mid Missouri

  Adjusted EBITDA

  	
   

  	
  Consolidated

  EBITDA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Jan-04

  	
   

  	
  $

  	
  2,094,856

  	
   

  	
  $

  	
  478,640

  	
   

  	
  $

  	
  2,573,496

  	
   

  
	
  2. Feb-04

  	
   

  	
  $

  	
  2,137,300

  	
   

  	
  $

  	
  520,179

  	
   

  	
  $

  	
  2,657,479

  	
   

  
	
  3. Mar-04

  	
   

  	
  $

  	
  2,052,154

  	
   

  	
  $

  	
  440,464

  	
   

  	
  $

  	
  2,492,618

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4. Apr-04

  	
   

  	
  $

  	
  2,003,014

  	
   

  	
  $

  	
  438,490

  	
   

  	
  $

  	
  2,441,504

  	
   

  
	
  5. May-04

  	
   

  	
  $

  	
  2,092,524

  	
   

  	
  $

  	
  454,263

  	
   

  	
  $

  	
  2,546,787

  	
   

  
	
  6. Jun-04

  	
   

  	
  $

  	
  2,069,299

  	
   

  	
  $

  	
  478,781

  	
   

  	
  $

  	
  2,548,080

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7. Jul-04

  	
   

  	
  $

  	
  1,994,850

  	
   

  	
  $

  	
  589,414

  	
   

  	
  $

  	
  2,584,264

  	
   

  
	
  8. Aug-04

  	
   

  	
  $

  	
  2,046,157

  	
   

  	
  $

  	
  494,926

  	
   

  	
  $

  	
  2,541,083

  	
   

  
	
  9. Sep-04

  	
   

  	
  $

  	
  2,317,250

  	
   

  	
  $

  	
  532,469

  	
   

  	
  $

  	
  2,849,719

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10. Oct-04

  	
   

  	
  $

  	
  2,114,262

  	
   

  	
  $

  	
  374,064

  	
   

  	
  $

  	
  2,488,326

  	
   

  
	
  11. Nov-04

  	
   

  	
  $

  	
  2,022,878

  	
   

  	
  $

  	
  455,864

  	
   

  	
  $

  	
  2,478,742

  	
   

  
	
  12. Dec-04*

  	
   

  	
  $

  	
  2,163,306

  	
   

  	
  $

  	
  315,152

  	
   

  	
  $

  	
  2,478,458

  	
  *

  
	
   

  	
   

  	
  $

  	
  25,107,850

  	
   

  	
  $

  	
  5,572,706

  	
   

  	
  $

  	
  30,680,556

  	
   

  
														

 

J-2

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