Document:

Exhibit 4.1

 

CUSIP Number: Deal
# 429067AA9

Revolving Credit CUSIP #429067AB7

Term Loan B CUSIP #429067AC5

Term Loan C CUSIP #429067AD3

 

EXECUTION VERSION

 

 

$160,000,000

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT 

 

dated as of December 30, 2005,

 

by and among 

 

HICKORY TECH CORPORATION, 

 

as Borrower, 

 

the Lenders referred to herein, 

 

and

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent and Issuing Lender, 

 

COBANK,

as
Syndication Agent,

 

and

 

U.S. BANK,
NATIONAL ASSOCIATION,

as Documentation Agent

 

WACHOVIA CAPITAL MARKETS, LLC 

as Lead Arranger and Bookrunner 

 

 

 

Table
of Contents

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I
  DEFINITIONS

  	
  1

  
	
  SECTION
  1.1

  	
  Definitions

  	
  1

  
	
  SECTION
  1.2 

  	
  Other
  Definitions and Provisions

  	
  20

  
	
  SECTION
  1.3

  	
  Accounting
  Terms

  	
  20

  
	
  SECTION
  1.4 

  	
  UCC
  Terms

  	
  21

  
	
  SECTION
  1.5 

  	
  Rounding

  	
  21

  
	
  SECTION
  1.6 

  	
  References
  to Agreement and Laws

  	
  21

  
	
  SECTION
  1.7 

  	
  Times
  of Day

  	
  21

  
	
  SECTION
  1.8 

  	
  Letter
  of Credit Amounts

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE II REVOLVING
  CREDIT FACILITY

  	
  21

  
	
  SECTION
  2.1 

  	
  Revolving
  Credit Loans

  	
  21

  
	
  SECTION
  2.2 

  	
  Procedure
  for Advances of Revolving Credit Loans

  	
  22

  
	
  SECTION
  2.3 

  	
  Repayment
  of Revolving Credit Loans

  	
  22

  
	
  SECTION
  2.4 

  	
  Intentionally
  Omitted

  	
  24

  
	
  SECTION
  2.5

  	
  Permanent
  Reduction of the Revolving Credit Commitment

  	
  24

  
	
  SECTION
  2.6 

  	
  Termination
  of Revolving Credit Facility

  	
  25

  
	
  SECTION
  2.7 

  	
  Use
  of Proceeds

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE III LETTER OF
  CREDIT FACILITY

  	
  25

  
	
  SECTION
  3.1 

  	
  L/C
  Commitment

  	
  25

  
	
  SECTION
  3.2 

  	
  Procedure
  for Issuance of Letters of Credit

  	
  26

  
	
  SECTION
  3.3 

  	
  Commissions
  and Other Charges

  	
  26

  
	
  SECTION
  3.4 

  	
  L/C
  Participations

  	
  26

  
	
  SECTION
  3.5 

  	
  Reimbursement
  Obligation of the Borrower

  	
  27

  
	
  SECTION
  3.6 

  	
  Obligations
  Absolute

  	
  28

  
	
  SECTION
  3.7 

  	
  Effect
  of Application

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV TERM LOAN
  FACILITY

  	
  29

  
	
  SECTION
  4.1

  	
  Term
  Loans

  	
  29

  
	
  SECTION
  4.2

  	
  Procedure
  for Advance of Term Loans

  	
  29

  
	
  SECTION
  4.3

  	
  Repayment
  of Term Loans

  	
  29

  
	
  SECTION
  4.4

  	
  Incremental
  Term Loans

  	
  30

  
	
  SECTION
  4.5

  	
  Prepayments
  of Term Loans and Incremental Term Loans

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE V GENERAL LOAN
  PROVISIONS

  	
  34

  
	
  SECTION
  5.1 

  	
  Interest

  	
  34

  
	
  SECTION
  5.2  

  	
  Notice
  and Manner of Conversion or Continuation of Loans

  	
  38

  
	
  SECTION
  5.3 

  	
  Conversion
  of Term Loan Interest Rate

  	
  38

  
	
  SECTION
  5.4 

  	
  Fees

  	
  39

  
	
  SECTION
  5.5 

  	
  Manner
  of Payment; Evidence of Indebtedness

  	
  40

  
	
  SECTION
  5.6 

  	
  Crediting
  of Payments and Proceeds

  	
  41

  
	
  SECTION 5.7 

  	
  Adjustments

  	
  42

  

 

i

 

	
  SECTION
  5.8

  	
  Nature of Obligations of Lenders Regarding
  Extensions of Credit; Assumption by the Administrative Agent

  	
  42

  
	
  SECTION 5.9 

  	
  Changed
  Circumstances

  	
  43

  
	
  SECTION 5.10 

  	
  Indemnity

  	
  45

  
	
  SECTION 5.11 

  	
  Capital Requirements

  	
  46

  
	
  SECTION 5.12 

  	
  Taxes

  	
  46

  
	
  SECTION 5.13 

  	
  Mitigation Obligations;
  Replacement of Lenders

  	
  48

  
	
  SECTION 5.14 

  	
  Security

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI CLOSING;
  CONDITIONS OF CLOSING AND BORROWING

  	
  49

  
	
  SECTION
  6.1 

  	
  Closing

  	
  49

  
	
  SECTION
  6.2 

  	
  Conditions
  to Closing and Initial Extensions of Credit

  	
  49

  
	
  SECTION
  6.3 

  	
  Conditions
  to All Extensions of Credit

  	
  55

  
	
  SECTION
  6.4 

  	
  Post-Closing
  Agreements

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII
  REPRESENTATIONS AND WARRANTIES OF THE BORROWER

  	
  56

  
	
  SECTION
  7.1 

  	
  Representations
  and Warranties

  	
  56

  
	
  SECTION 7.2 

  	
  Survival of
  Representations and Warranties, Etc

  	
  64

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII FINANCIAL
  INFORMATION AND NOTICES

  	
  65

  
	
  SECTION 8.1 

  	
  Financial Statements and
  Projections

  	
  65

  
	
  SECTION 8.2 

  	
  FCC and PUC Matters

  	
  66

  
	
  SECTION 8.3 

  	
  Officer’s Compliance
  Certificate

  	
  66

  
	
  SECTION 8.4 

  	
  Accountants’ Certificate

  	
  66

  
	
  SECTION 8.5 

  	
  Other Reports

  	
  67

  
	
  SECTION 8.6 

  	
  Notice of Litigation and
  Other Matters

  	
  67

  
	
  SECTION 8.7 

  	
  Accuracy of Information

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX AFFIRMATIVE COVENANTS

  	
  68

  
	
  SECTION 9.1  

  	
  Preservation of Corporate
  Existence and Related Matters

  	
  68

  
	
  SECTION 9.2 

  	
  Maintenance of Property

  	
  68

  
	
  SECTION 9.3 

  	
  Insurance

  	
  68

  
	
  SECTION 9.4 

  	
  Accounting Methods and
  Financial Records

  	
  68

  
	
  SECTION 9.5 

  	
  Payment and Performance of
  Obligations

  	
  69

  
	
  SECTION 9.6 

  	
  Compliance With Laws and
  Approvals

  	
  69

  
	
  SECTION 9.7 

  	
  Environmental Laws

  	
  69

  
	
  SECTION 9.8 

  	
  Compliance with ERISA

  	
  69

  
	
  SECTION 9.9 

  	
  Compliance With Agreements

  	
  70

  
	
  SECTION 9.10 

  	
  Conduct of Business

  	
  70

  
	
  SECTION 9.11 

  	
  Visits and Inspections

  	
  70

  
	
  SECTION 9.12 

  	
  Additional Subsidiaries

  	
  70

  
	
  SECTION 9.13 

  	
  Further Assurances

  	
  71

  
	
  SECTION 9.14 

  	
  CoBank Participation
  Certificates

  	
  71

  
	
  SECTION 9.15 

  	
  RTFC Eligibility

  	
  71

  
	
  SECTION 9.16 

  	
  Interest Rate Contracts

  	
  71

  
	
   

  	
   

  	
   

  
	
  ARTICLE X FINANCIAL
  COVENANTS

  	
  72

  
	
  SECTION
  10.1 

  	
  Maximum
  Leverage Ratio

  	
  72

  

 

ii

 

	
  SECTION 10.2 

  	
  [Reserved.]

  	
  72

  
	
  SECTION
  10.3 

  	
  Interest
  Coverage Ratio

  	
  72

  
	
  SECTION
  10.4 

  	
  Maximum
  Capital Expenditure

  	
  72

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI NEGATIVE
  COVENANTS

  	
  73

  
	
  SECTION 11.1 

  	
  Limitations on Debt

  	
  73

  
	
  SECTION
  11.2 

  	
  Limitations
  on Liens

  	
  74

  
	
  SECTION
  11.3

  	
  Limitations
  on Loans, Advances, Investments and Acquisitions

  	
  75

  
	
  SECTION 11.4 

  	
  Limitations on Mergers and
  Liquidation

  	
  77

  
	
  SECTION 11.5 

  	
  Limitations on Sale of
  Assets

  	
  77

  
	
  SECTION 11.6 

  	
  Limitations on Dividends
  and Distributions

  	
  78

  
	
  SECTION 11.7  

  	
  Limitations on Exchange
  and Issuance of Capital Stock

  	
  78

  
	
  SECTION 11.8 

  	
  Transactions with
  Affiliates

  	
  79

  
	
  SECTION 11.9 

  	
  Certain Accounting Changes

  	
  79

  
	
  SECTION 11.10

  	
  Amendments; Payments and
  Prepayments of Subordinated Debt

  	
  79

  
	
  SECTION 11.11 

  	
  Restrictive
  Agreements

  	
  79

  
	
  SECTION 11.12 

  	
  Nature of Business

  	
  80

  
	
  SECTION 11.13 

  	
  Impairment of Security
  Interests

  	
  80

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII DEFAULT AND
  REMEDIES

  	
  80

  
	
  SECTION
  12.1 

  	
  Events
  of Default

  	
  80

  
	
  SECTION
  12.2 

  	
  Remedies

  	
  83

  
	
  SECTION
  12.3 

  	
  Rights
  and Remedies Cumulative; Non-Waiver; etc

  	
  83

  
	
  SECTION
  12.4 

  	
  Administrative
  Agent May File Proofs of Claim

  	
  84

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII THE
  ADMINISTRATIVE AGENT

  	
  84

  
	
  SECTION 13.1

  	
  Appointment and Authority

  	
  84

  
	
  SECTION 13.2 

  	
  Rights as a Lender

  	
  85

  
	
  SECTION 13.3 

  	
  Exculpatory Provisions

  	
  85

  
	
  SECTION 13.4 

  	
  Reliance by the
  Administrative Agent

  	
  86

  
	
  SECTION 13.5 

  	
  Delegation of Duties

  	
  86

  
	
  SECTION 13.6 

  	
  Resignation of
  Administrative Agent

  	
  86

  
	
  SECTION 13.7  

  	
  Non-Reliance on
  Administrative Agent and Other Lenders

  	
  87

  
	
  SECTION 13.8 

  	
  No Other Duties, etc

  	
  87

  
	
  SECTION
  13.9 

  	
  Collateral
  and Guaranty Matters

  	
  88

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV MISCELLANEOUS

  	
  88

  
	
  SECTION 14.1 

  	
  Notices

  	
  88

  
	
  SECTION 14.2 

  	
  Expenses; Indemnity

  	
  89

  
	
  SECTION 14.3 

  	
  Set-off

  	
  91

  
	
  SECTION 14.4 

  	
  Governing Law

  	
  91

  
	
  SECTION 14.5 

  	
  Intentionally Omitted

  	
  92

  
	
  SECTION 14.6 

  	
  Binding Arbitration;
  Waiver of Jury Trial

  	
  92

  
	
  SECTION 14.7 

  	
  Reversal of Payments

  	
  93

  
	
  SECTION 14.8 

  	
  Injunctive Relief;
  Punitive Damage

  	
  94

  
	
  SECTION
  14.9 

  	
  Accounting
  Matters

  	
  94

  

 

iii

 

	
  SECTION 14.10 

  	
  Successors and Assigns;
  Participations

  	
  94

  
	
  SECTION
  14.11 

  	
  Amendments,
  Waivers and Consents

  	
  97

  
	
  SECTION
  14.12 

  	
  Confidentiality

  	
  98

  
	
  SECTION
  14.13 

  	
  Performance
  of Duties

  	
  99

  
	
  SECTION
  14.14 

  	
  All
  Powers Coupled with Interest

  	
  99

  
	
  SECTION
  14.15 

  	
  Survival
  of Indemnities

  	
  99

  
	
  SECTION
  14.16 

  	
  Titles
  and Captions

  	
  99

  
	
  SECTION
  14.17 

  	
  Severability
  of Provisions

  	
  99

  
	
  SECTION
  14.18 

  	
  Counterparts

  	
  100

  
	
  SECTION
  14.19 

  	
  Term
  of Agreement

  	
  100

  
	
  SECTION 14.20  

  	
  Inconsistencies with Other
  Documents; Independent Effect of Covenants

  	
  100

  
	
  SECTION 14.21 

  	
  Integration

  	
  100

  
	
  SECTION
  14.22 

  	
  Advice
  of Counsel, No Strict Construction

  	
  100

  
	
  SECTION
  14.23 

  	
  USA
  Patriot Act

  	
  101

  
	
  SECTION 14.24 

  	
  Amendment and Restatement;
  No Novation

  	
  101

  

 

iv

 

	
  EXHIBITS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  A-1

  	
  -

  	
  Form of
  Third Amended and Restated Revolving Credit Note

  	
   

  
	
  Exhibit
  A-2

  	
  -

  	
  Form of
  Term Loan B Note

  	
   

  
	
  Exhibit
  A-3

  	
  -

  	
  Form of
  Amended and Restated Term Loan C Note

  	
   

  
	
  Exhibit
  A-4

  	
  -

  	
  Form of
  Incremental Term Loan Note

  	
   

  
	
  Exhibit B

  	
  -

  	
  Form of
  Notice of Borrowing

  	
   

  
	
  Exhibit C

  	
  -

  	
  Form of
  Notice of Prepayment

  	
   

  
	
  Exhibit D

  	
  -

  	
  Form of
  Notice of Conversion/Continuation

  	
   

  
	
  Exhibit E

  	
  -

  	
  Form of
  Officer’s Compliance Certificate

  	
   

  
	
  Exhibit F

  	
  -

  	
  Form of
  Assignment and Assumption

  	
   

  
	
  Exhibit G

  	
  -

  	
  Form of
  Notice of Account Designation

  	
   

  
	
  Exhibit H

  	
   

  	
  Form of
  Collateral Agreement

  	
   

  
	
  Exhibit I

  	
   

  	
  Form of
  Guaranty Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  1.1(a)

  	
  -

  	
  Revolving
  Credit Commitments

  	
   

  
	
  Schedule
  1.1(b)

  	
  -

  	
  Term Loan
  C Commitment

  	
   

  
	
  Schedule
  1.1(c)

  	
  -

  	
  Existing
  Letters of Credit

  	
   

  
	
  Schedule
  7.1(a)

  	
  -

  	
  Jurisdictions
  of Organization and Qualification

  	
   

  
	
  Schedule
  7.1(b)

  	
  -

  	
  Subsidiaries
  and Capitalization

  	
   

  
	
  Schedule
  7.1(i)

  	
  -

  	
  ERISA
  Plans

  	
   

  
	
  Schedule
  7.1(l)

  	
  -

  	
  Material
  Contracts

  	
   

  
	
  Schedule
  7.1(m)

  	
  -

  	
  Labor and
  Collective Bargaining Agreements

  	
   

  
	
  Schedule
  7.1(q)

  	
  -

  	
  Real
  Property

  	
   

  
	
  Schedule
  7.1(s)

  	
  -

  	
  Debt and
  Guaranty Obligations

  	
   

  
	
  Schedule
  7.1(t)

  	
  -

  	
  Litigation

  	
   

  
	
  Schedule
  7.1(w)

  	
   

  	
  Network
  Agreements, FCC Licenses and PUC Authorizations

  	
   

  
	
  Schedule
  11.2

  	
  -

  	
  Existing
  Liens

  	
   

  
	
  Schedule
  11.3

  	
  -

  	
  Existing
  Loans, Advances and Investments

  	
   

  

 

v

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 30th day of December, 2005 by and among HICKORY TECH CORPORATION, a
Minnesota corporation (the “Borrower”), the Lenders who are or may
become a party to this Agreement, and WACHOVIA BANK, NATIONAL ASSOCIATION, a
national banking association, as Administrative Agent for the Lenders. 

STATEMENT OF PURPOSE

 

The Borrower, certain financial institutions (the “Prior Lenders”)
and Wachovia (formerly known as First Union, National Bank), as administrative
agent therefor, are party to that certain Second Amended and Restated Credit
Agreement dated as of September 21, 2000 (as amended, restated, supplemented or
otherwise modified prior to the date hereof, the “Prior Credit Agreement”)
under the terms of which the Prior Lenders provided the Borrower with a
$125,000,000 revolving credit facility and a $100,000,000 term loan facility.

 

The Borrower has requested, and, subject to the terms and conditions
hereof, the Administrative Agent and the Lenders have agreed to refinance the
existing indebtedness under the Prior Credit Agreement on the terms and
conditions of this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such
parties hereby agree as follows:

 

ARTICLE I 

 

DEFINITIONS

 

SECTION 1.1       Definitions.  The following terms when used in this
Agreement shall have the meanings assigned to them below: 

 

“Administrative Agent” means Wachovia in its capacity as
Administrative Agent hereunder, and any successor thereto appointed pursuant to
Section 13.6. 

 

“Administrative Agent’s Office” means the office of the
Administrative Agent specified in or determined in accordance with the
provisions of Section 14.1. 

 

“Affiliate” means, with respect to any Person, any other Person
(other than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its Subsidiaries. 
The term “control” means (a) the power to vote ten percent (10%) or more
of the securities or other equity interests of a Person having ordinary voting
power, or (b) the possession, directly or indirectly, of any other power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise. 

 

“Aggregate Commitment” means the aggregate amount of the
Lenders’ Commitments hereunder, as such amount may be reduced or modified at
any time or from time to time pursuant to the terms hereof.  On the Closing Date, the Aggregate Commitment
shall be One Hundred Sixty Million Dollars ($160,000,000). 

 

 

“Agreement” means this Third Amended and Restated Credit
Agreement, as further amended, restated, supplemented or otherwise modified
from time to time. 

 

“Applicable Law” means all applicable provisions of
constitutions, laws, statutes, ordinances, rules, treaties, regulations,
permits, licenses, approvals, interpretations and orders of courts or
Governmental Authorities and all orders and decrees of all courts and
arbitrators. 

 

“Applicable Margin” shall have the meaning assigned thereto in Section
5.1(c). 

 

“Application” means an application, in the form specified by the
Issuing Lender from time to time, requesting the Issuing Lender to issue a
Letter of Credit. 

 

“Approved Fund” means any Person (other than a natural Person),
including, without limitation, any special purpose entity, that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business; provided,
that such Approved Fund must be administered, managed or underwritten by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender. 

 

“Arbitration Rules” shall have the meaning assigned thereto in Section
14.6(a). 

 

“Assignment and Assumption” means an assignment and assumption
entered into by a Lender and an Eligible Assignee (with the consent of any
party whose consent is required by Section 14.10), and accepted by the
Administrative Agent, in substantially the form of Exhibit F or any
other form approved by the Administrative Agent. 

 

“Authorizations” means all applications, filings, reports,
documents, recordings and registrations with, and all validations, exemptions,
franchises, waivers, approvals, orders or authorizations, consents, licenses,
certificates and permits from, a Governmental Authority.  

 

“Available Commitment” means, as to any Lender at any time, an
amount equal to the excess, if any, of (a) such Lender’s Commitment less (b)
such Lender’s Extensions of Credit. 

 

“Base Rate” means, at any time, the higher of (a) the Prime Rate
or (b) the Federal Funds Rate plus 1/2 of 1%; each change in the Base
Rate shall take effect simultaneously with the corresponding change or changes
in the Prime Rate or the Federal Funds Rate. 

 

“Base Rate Loan” means any Loan bearing interest at a rate based
upon the Base Rate as provided in Section 5.1(a). 

 

“Borrower” means Hickory Tech Corporation in its capacity as
borrower hereunder. 

 

“Business
Day” means (a) for all purposes other than as set forth in clause (b)
below, any day (other than a Saturday, Sunday or legal holiday) on which banks
in Charlotte, North Carolina and New York, New York, are open for the conduct
of their commercial banking business, and (b) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
any LIBOR Rate Loan, any day that is a Business Day described in clause (a)

 

2

 

and
that is also a day for trading by and between banks in Dollar deposits in the
London interbank market. 

 

“Calculation Date” shall have the meaning assigned thereto in Section
5.1(c). 

 

“Capital Asset” means, with respect to the Borrower and its
Subsidiaries, any asset that should, in accordance with GAAP, be classified and
accounted for as a capital asset on a Consolidated balance sheet of the
Borrower and its Subsidiaries. 

 

“Capital Expenditures” means, with respect to the Borrower and
its Subsidiaries’ for any period, the aggregate cost of all Capital Assets
acquired by any such Person during such period, as determined in accordance
with GAAP; provided that for purposes of this definition, (a) the
purchase price of assets that are purchased simultaneously with the trade-in or
exchange of existing assets of a similar type and nature or with the
application of Net Cash Proceeds from the sale or disposition of assets (to the
extent permitted hereunder) or from any payment under an insurance policy or in
connection with a condemnation policy shall be included in Capital Expenditures
only to the extent of the gross amount of such purchase price less the
credit granted by the seller of such assets for the assets being traded in at
such time or the amount of such Net Cash Proceeds, as the case may be and (b)
Permitted Acquisitions shall be excluded from Capital Expenditures. 

 

“Capital Lease” means any lease of any property by the Borrower
or any of its Subsidiaries, as lessee, that should, in accordance with GAAP, be
classified and accounted for as a capital lease on a Consolidated balance sheet
of the Borrower and its Subsidiaries. 

 

“Change in Control” shall have the meaning assigned thereto in Section
12.1(i). 

 

“Closing Date” means the date of this Agreement or such later
Business Day upon which each condition described in Section 6.2 shall be
satisfied or waived in all respects in a manner acceptable to the
Administrative Agent, in its sole discretion. 

 

“CoBank” shall have the meaning assigned thereto in Section
9.14. 

 

“Code” means the Internal Revenue Code of 1986, and the rules
and regulations thereunder, each as amended, supplemented or otherwise modified
from time to time. 

 

“Collateral” means the collateral security for the Obligations
or the Guaranteed Obligations pledged or granted pursuant to the Security
Documents. 

 

“Collateral Agreement” means the Amended and Restated Collateral
Agreement of even date herewith executed by the Borrower and the Guarantors
named therein in favor of the Administrative Agent for the benefit of itself
and the Lenders, substantially in the form of Exhibit H, as amended,
restated, supplemented, or modified from time to time. 

 

“Commitment” means, as to any Lender the sum of such Lender’s
Revolving Credit Commitment, its Term Loan B Commitment, its Term Loan C
Commitment and its Incremental Term Loan Commitment, each as applicable and as
set forth opposite such Lender’s name on 

 

3

 

Schedule
1.1.(a), Schedule 1.1(b) or the Register, as applicable, as the same may be
reduced or modified at any time or from time to time pursuant to the terms
hereof. 

 

“Commitment Percentage” means, as to any Lender at any time, the
ratio of (a) the amount of the Commitment of such Lender to (b) the Aggregate
Commitment of all the Lenders. 

 

“Consolidated” means, when used with reference to financial
statements or financial statement items of the Borrower and its Subsidiaries,
such statements or items on a consolidated basis in accordance with applicable
principles of consolidation under GAAP. 

 

“Credit Facility” means the collective reference to the
Revolving Credit Facility, the L/C Facility, the Term Loan Facility and the
Incremental Term Loan Facility. 

 

“Current Management Group” shall have the meaning set forth in Section
12.1(i). 

 

“Debt”
means, with respect to the Borrower and its Subsidiaries at any date and
without duplication, the sum of the following calculated in accordance with
GAAP: (a) all liabilities, obligations and indebtedness for borrowed money,
including but not limited to obligations evidenced by bonds, debentures, notes
or other similar instruments of any such Person, (b) all obligations to pay the
deferred purchase price of property or services of any such Person, except
trade payables arising in the ordinary course of business not more than ninety
(90) days past due, (c) all obligations of any such Person as lessee under
Capital Leases, (d) all Debt of any other Person secured by a Lien on any asset
of any such Person, (e) all Guaranty Obligations of any such Person, (f) all
obligations, contingent or otherwise, of any such Person relative to the face
amount of letters of credit, whether or not drawn, including without limitation
any Reimbursement Obligation, and banker’s acceptances issued for the account of
any such Person, (g) all obligations of any such Person to redeem, repurchase,
exchange, defease or otherwise make payments in respect of capital stock or
other securities or partnership interests of such Person, and (h) all net
payment obligations incurred by any such Person pursuant to Hedging Agreements.

 

“Debt Service” means, with respect to the Borrower and its
Subsidiaries for any period, the sum of the following, each calculated for such
period on a Consolidated basis without duplication in accordance with GAAP: (a)
Interest Expense plus (b) all scheduled principal payments or similar
amounts required to be paid with respect to Total Debt (other than mandatory
prepayments required pursuant to Section 4.5(b)). 

 

“Default” means any of the events specified in Section 12.1
which with the passage of time, the giving of notice or any other condition,
would constitute an Event of Default. 

 

“Defaulting Lender” means any Lender that (a) has failed to fund
any portion of the Revolving Credit Loans, the Term Loan B, the Term Loan C or
participations in L/C Obligations required to be funded by it hereunder within
one Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Administrative Agent or any other Lender
any other amount required to be paid by it hereunder within one Business Day of
the date when due, unless such amount is the subject of a good faith dispute,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding. 

 

4

 

“Disputes” shall have the meaning set forth in Section 14.6.

 

“Dollars” or “$” means, unless otherwise qualified, dollars in
lawful currency of the United States. 

 

“Domestic Subsidiary” means any Subsidiary organized under the
laws of any political subdivision of the United States. 

 

“EBITDA”
means, with respect to the Borrower and its Subsidiaries for any period, the
sum of the following, calculated on a Consolidated basis without duplication,
in accordance with GAAP: (a) Net Income for such period plus (b) the sum
of the following, to the extent deducted in determining Net Income (i) Interest
Expense, (ii) income, franchise and excess profit taxes paid or payable, (iii)
depreciation, amortization and other similar non-cash charges and (iv)
extraordinary losses (for purposes hereof, such extraordinary losses to include
any losses attributable to the sale or other disposition of any (A) Wholly
Owned Subsidiary, (B) Investment Ownership Interest or (C) any other asset) less
(c) any extraordinary gains (for purposes hereof, any extraordinary gains to
include any gains attributable to the sale or other disposition of any (A)
Wholly Owned Subsidiary, (B) Investment Ownership Interest or (C) any other
asset), to the extent added in determining Net Income.  For any Permitted Acquisition or sale by the
Borrower or any Subsidiary during any period of calculation, EBITDA shall be
adjusted in a manner reasonably satisfactory to the Administrative Agent to
give effect to such Permitted Acquisition or sale, as if such Permitted
Acquisition or sale occurred on the first day of the period.

 

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a
Lender, (c) an Approved Fund, and (d) any other Person (other than a natural
person) approved by (i) the Administrative Agent, (ii) in the case of any
assignment of a Revolving Credit Commitment, the Issuing Lender, and (iii)
unless a Default or Event of Default has occurred and is continuing, the
Borrower (each such approval not to be unreasonably withheld or delayed); provided
that notwithstanding the foregoing, “Eligible Assignee” shall not include the
Borrower or any of the Borrower’s Affiliates or Subsidiaries. 

 

“Employee Benefit Plan” means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (a) is maintained for employees of
any Loan Party or any ERISA Affiliate or (b) has at any time within the
preceding six years been maintained for the employees of any Loan Party or any
current or former ERISA Affiliate. 

 

“Engagement Letter” means that certain engagement letter dated
July 22, 2005 among the Borrower, Wachovia and Wachovia Capital Markets, LLC. 

 

“Enventis” means Enventis Telecom, Inc., a Minnesota corporation
and a Wholly Owned subsidiary of Minnesota Power Enterprises, Inc. 

 

“Enventis Acquisition” means the acquisition by the Borrower of
the issued and outstanding capital stock of Enventis. 

 

5

 

“Enventis Purchase Agreement” means that certain Stock Purchase
Agreement dated as of November 9, 2005 between Allete, Inc., as “Parent”,
Minnesota Power Enterprises, Inc., as “Shareholder” and the Borrower, as
“Purchaser.” 

 

“Environmental Claims” means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
accusations, allegations, notices of noncompliance or violation, investigations
(other than internal reports prepared by any Person in the ordinary course of
business and not in response to any third party action or request of any kind)
or proceedings relating in any way to any actual or alleged violation of or
liability under any Environmental Law or relating to any permit issued, or any
approval given, under any such Environmental Law, including, without
limitation, any and all claims by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages, contribution,
indemnification cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to human
health or the environment. 

 

“Environmental Laws” means any and all federal, foreign, state,
provincial and local laws, statutes, ordinances, codes, rules, standards and
regulations, permits, licenses, approvals, interpretations and orders of courts
or Governmental Authorities, relating to the protection of human health or the
environment, including, but not limited to, requirements pertaining to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of Hazardous Materials.   

 

“ERISA” means the Employee Retirement Income Security Act of
1974, and the rules and regulations thereunder, each as amended, supplemented
or otherwise modified. 

 

“ERISA Affiliate” means any Person who together with any Loan
Party is treated as a single employer within the meaning of Section 414(b),
(c), (m) or (o) of the Code or Section 4001(b) of ERISA. 

 

“Eurodollar Reserve Percentage” means, for any day, the
percentage (expressed as a decimal and rounded upwards, if necessary, to the
next higher 1/100th of 1%) which is in effect for such day as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) in respect of eurocurrency
liabilities or any similar category of liabilities for a member bank of the Federal
Reserve System in New York City.   

 

“Event of Default” means any of the events specified in Section
12.1, provided that any requirement for passage of time, giving of notice,
or any other condition, has been satisfied. 

 

“Excess Proceeds” shall have the meaning assigned thereto in Section
4.5(b)(v). 

 

“Existing Interest Rate Contracts” shall mean the collective
reference to (a) that certain interest rate agreement of the Borrower dated as
of June 13, 2003 in the amount of $60,000,000 which matures on June 23, 2008
and (b) that certain interest rate agreement of the Borrower dated as of June
17, 2005 in the amount of $10,000,000 which matures on June 23, 2008. 

 

6

 

“Existing Letters of Credit” shall mean all letters of credit
issued under the Prior Credit Agreement and outstanding on the Closing Date and
set forth on Schedule 1.1(c) attached hereto. 

 

“Extensions of Credit” means, as to any Lender at any time (a)
an amount equal to the sum of (i) the aggregate principal amount of all
Revolving Credit Loans made by such Lender then outstanding, (ii) such Lender’s
Revolving Credit Commitment Percentage of the L/C Obligations then outstanding,
(iii) the aggregate principal amount of all Term Loans made by such Lender then
outstanding, and (iv) the aggregate principal amount of all Incremental Term
Loans made by such Lender then outstanding or (b) the making of any Loan or
participation in any Letter of Credit by any Lender, as the context requires. 

 

“FCC” means the Federal Communications Commission and any
successor governmental agency performing functions similar to those performed
by the Federal Communications Commission on the date hereof. 

 

“FCC License” means any cellular, mobile telecommunications,
specialized mobile radio, microwave or other license, permit, consent,
certificate of compliance, franchise, approval, waiver or authorization granted
or issued by the FCC. 

 

“FDIC” means the Federal Deposit Insurance Corporation, or any
successor thereto. 

 

“Federal Funds Rate” means, the rate per annum (rounded upwards,
if necessary, to the next higher 1/100th of 1%) representing the daily
effective federal funds rate as quoted by the Administrative Agent and
confirmed in Federal Reserve Board Statistical Release H.15 (519) or any
successor or substitute publication selected by the Administrative Agent.  If, for any reason, such rate is not
available, then “Federal Funds Rate” shall mean a daily rate which is
determined, in the opinion of the Administrative Agent, to be the rate at which
federal funds are being offered for sale in the national federal funds market
at 9:00 a.m.  Rates for weekends or
holidays shall be the same as the rate for the most immediate preceding Business
Day.   

 

“Fiscal Year” means the fiscal year of the Borrower and its
Subsidiaries ending on December 31. 

 

“Fixed Charges” means, with respect to the Borrower and its
Subsidiaries, as of any date, the sum of the following, each calculated on a
Consolidated basis, without duplication, in accordance with GAAP for the period
of four consecutive fiscal quarters ending on or immediately prior to such
date: (a) Debt Service plus (b) Capital Expenditures, plus (c)
income, and excess profit taxes paid or payable plus (d) dividends paid
or payable by the Borrower pursuant to Section 11.6(b).

 

“Foreign Subsidiary” means any Subsidiary that is not a Domestic
Subsidiary. 

 

“GAAP” means generally accepted accounting principles, as
recognized by the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board, consistently applied and maintained on a
consistent basis for the Borrower and its Subsidiaries throughout the period
indicated (subject to Section 14.9) and consistent with the prior
financial practice of the Borrower and its Subsidiaries. 

 

7

 

“Governmental Approvals” means all Authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all Governmental Authorities.  

 

“Governmental Authority” means any nation, province, state or
political subdivision thereof, and any government or any Person exercising
executive, legislative, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing. 

 

“Guaranteed Obligations” shall have the meaning assigned thereto
in the Guaranty Agreement. 

 

“Guarantor” means the collective reference to each Person
executing the Guaranty Agreement. 

 

“Guaranty Agreement” means the Amended and Restated Guaranty
Agreement of even date herewith executed by the Guarantors in favor of the
Administrative Agent for the ratable benefit of itself and the Lenders, substantially
in the form of Exhibit I as amended, restated, supplemented or otherwise
modified from time to time. 

 

“Guaranty Obligation” means, with respect to the Borrower and
its Subsidiaries, without duplication, any obligation, contingent or otherwise,
of any such Person pursuant to which such Person has directly or indirectly
guaranteed any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of any such Person (a) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to keep
well, to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement condition or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, that the term Guaranty
Obligation shall not include endorsements for collection or deposit in the
ordinary course of business. 

 

“Hazardous Materials” means any substances or materials (a)
which are or become defined as hazardous wastes, hazardous substances,
pollutants, contaminants, chemical substances or mixtures or toxic substances
under any Applicable Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental or Common Law, (d) the discharge or emission or release of
which requires a permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to constitute a nuisance or a
trespass or which pose a health or safety hazard to Persons or neighboring
properties, (f) which consist of underground or aboveground storage tanks,
whether empty, filled or partially filled with any substance, or (g) which
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas. 

 

8

 

“Hedging Agreement” means any agreement with respect to any
Interest Rate Contract, forward rate agreement, commodity swap, forward foreign
exchange agreement, currency swap agreement, cross-currency rate swap
agreement, currency option agreement or other agreement or arrangement designed
to alter the risks of any Person arising from fluctuations in interest rates, currency
values or commodity prices, all as amended, restated, supplemented or otherwise
modified from time to time. 

 

“Incremental Term Lender” means any Lender holding any portion
of the Incremental Term Loan Commitment. 

 

“Incremental Term Loan” shall mean any incremental term loan
made to the Borrower pursuant to Section 4.4. 

 

“Incremental Term Loan Agreement” shall mean each agreement
executed pursuant to Section 4.4 by the Borrower and one or more
existing Lenders or New Term Lenders not theretofore Lenders, as applicable,
and acknowledged by the Administrative Agent and the Borrower, providing for an
Incremental Term Loan hereunder; it being understood and agreed that any New
Term Lender not theretofore a Lender shall be, as of the relevant Incremental
Term Loan Effective Date, a party hereto as a Lender and have the rights and
obligations of a Lender hereunder, and such agreement shall set forth the
Incremental Term Loan Commitment of such Lender. 

 

“Incremental Term Loan Commitment” shall mean (a) as to any
Lender, the obligation of such Lender to make Incremental Term Loans, as
applicable, to the Borrower in an aggregate principal amount not to exceed the
amount described in the relevant Incremental Term Loan Agreement and as set
forth opposite such Lender’s name in the Register, as such amount may be
increased, reduced or otherwise modified at any time or from time to time
pursuant to the terms hereof and (b) as to all Lenders, the aggregate
obligations of all Lenders to make the Incremental Term Loans, as such amount
may be increased, reduced or otherwise modified at any time or from time to
time.  The Incremental Term Loan
Commitment of all Lenders as of the Closing Date shall be $0. 

 

“Incremental Term Loan Effective Date” shall mean, with respect to
any Incremental Term Loan, the date, which shall be a Business Day, on or
before the applicable Incremental Term Loan Maturity Date, but no earlier than
thirty (30) days after the date of delivery of the applicable Incremental Term
Loan Notification, on which each of the applicable Lenders shall make such
Incremental Term Loan to the Borrower pursuant to Section 4.4. 

 

“Incremental Term Loan Facility” shall mean the incremental term
loan facility established pursuant to Section 4.4. 

 

“Incremental Term Loan Maturity Date” with respect to any
Incremental Term Loan, shall have the meaning set forth in the applicable
Incremental Term Loan Notification, or such earlier date as payment of the
remaining outstanding principal amount of such Incremental Term Loan or of all
remaining outstanding Obligations (excluding Hedging Obligations) shall be due
(whether by acceleration or otherwise) in accordance with this Agreement. 

 

9

 

“Incremental Term Loan Note” shall mean a promissory note made
by the Borrower in favor of a Lender evidencing the portion of the Incremental
Term Loans made by such Lender, substantially in the form of Exhibit A-4,
as such promissory note may be amended, modified, restated, supplemented, extended,
renewed or replaced from time to time. 

 

“Incremental
Term Loan Notification” shall have the meaning assigned thereto in Section
4.4.

 

“Incremental Term Loan Percentage” means, as to any Lender
making an Incremental Term Loan, (a) prior to making the Incremental Term
Loans, the ratio of (i) the Incremental Term Loan Commitment of such Lender to
(ii) the Incremental Term Loan Commitments of all Lenders making the
Incremental Term Loans and (b) after the Incremental Term Loans are made, the
ratio of

(i) the outstanding principal balance of the Incremental Term Loan of such
Lender to (ii) the aggregate outstanding principal balance of the Incremental
Term Loans of all Term Loan Lenders. 

 

“Insurance Proceeds” shall have the meaning assigned thereto in Section
4.5(b)(iv). 

 

“Interest Expense” means, with respect to the Borrower and its
Subsidiaries for any period, aggregate interest expense thereof with respect to
Total Debt (and, to the extent not included therein, interest expense
attributable to Capital Leases, the commitment fees payable hereunder and any
fees and charges with respect to any other Debt, and any fees, charges and
other net obligations payable with respect to any Hedging Agreements),
calculated on a Consolidated basis, without duplication, in accordance with
GAAP.  

 

“Interest Rate Contract” means any interest rate swap agreement,
interest rate cap agreement, interest rate floor agreement, interest rate
collar agreement, interest rate option or any other agreement regarding the
hedging of interest rate risk exposure executed in connection with hedging the
interest rate exposure of any Person and any confirming letter executed
pursuant to such agreement, all as amended, restated, supplemented or otherwise
modified from time to time. 

 

“ISP98” means the International Standby Practices (1998
Revision, effective January 1, 1999), International Chamber of Commerce
Publication No. 590. 

 

“Investment Ownership Interests” means, with regard to any
Person that is not directly or indirectly a Wholly Owned Subsidiary of the
Borrower, any shares of stock of any class or any other equity ownership
interest of such Person that is owned by the Borrower and/or one or more of its
Subsidiaries. 

 

“Issuing Lender” means Wachovia, in its capacity as issuer of
any Letter of Credit, or any successor thereto. 

 

“Joinder Agreement” means, collectively, each joinder agreement
executed in favor of the Administrative Agent for the ratable benefit of itself
and the Lenders, in form and substance reasonably satisfactory to the
Administrative Agent. 

 

10

 

“L/C Commitment” means the lesser of (a) Ten Million Dollars
($10,000,000) and (b) the Revolving Credit Commitment. 

 

“L/C Facility” means the letter of credit facility established
pursuant to Article III hereof. 

 

“L/C Obligations” means at any time, an amount equal to the sum
of (a) the aggregate undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to Section 3.5. 

 

“L/C Participants” means the collective reference to all the
Revolving Credit Lenders other than the Issuing Lender. 

 

“Lenders” means each Person executing this Agreement as a Lender
(including, without limitation, the Issuing Lender unless the context otherwise
requires) set forth on the signature pages hereto, each Person that hereafter
becomes a party to this Agreement as a Lender pursuant to Section 14.10
and any New Term Lenders. 

 

“Lending Office” means, with respect to any Lender, the office
of such Lender maintaining such Lender’s Revolving Credit Commitment
Percentage, Term Loan B Commitment Percentage, Term Loan C Commitment
Percentage or Incremental Term Loan Percentage, as applicable, of the
Extensions of Credit. 

 

“Letters of Credit” shall have the meaning assigned thereto in Section
3.1. 

 

“Leverage Ratio” shall have the meaning assigned thereto in Section
10.1. 

 

“LIBOR” means the rate of interest per annum determined on the
basis of the rate for deposits in Dollars in minimum amounts of at least
$500,000 for a period equal to the applicable LIBOR Interest Period which
appears on the Telerate Page 3750 at approximately 11:00 a.m. (London time) two
(2) Business Days prior to the first day of the applicable LIBOR Interest
Period (rounded upward, if necessary to the nearest 1/100th of 1%).  If, for any reason, such rate does not appear
on Telerate Page 3750, then “LIBOR” shall be determined by the Administrative
Agent to be the arithmetic average of the rate per annum at which deposits in
Dollars in minimum amounts of at least $500,000 would be offered by first class
banks in the London interbank market to the Administrative Agent at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of the applicable LIBOR Interest Period for a period equal to such LIBOR
Interest Period. Each calculation by the Administrative Agent of LIBOR shall be
conclusive and binding for all purposes, absent manifest error. 

 

“LIBOR Interest Period” shall have the meaning assigned thereto
in Section 5.1(b). 

 

“LIBOR Rate” means a rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) determined by the Administrative
Agent pursuant to the following formula:  

 

	
  LIBOR Rate =

  	
  LIBOR

  	
   

  
	
   

  	
  1.00-Eurodollar Reserve Percentage

  	
   

  

 

11

 

“LIBOR Rate Loan” means any Loan bearing interest at a rate
based upon the LIBOR Rate as provided in Section 5.1(a). 

 

“Lien” means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, hypothecation or encumbrance of any kind in
respect of such asset.  For the purposes
of this Agreement, a Person shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, Capital Lease or other title retention
agreement relating to such asset. 

 

“Loan Documents” means, collectively, this Agreement, the Notes,
the Applications, the Security Documents, all Incremental Term Loan
Notifications and each other document, instrument and agreement executed and
delivered by the Borrower, its Subsidiaries or their counsel in connection with
this Agreement or otherwise referred to herein (excluding any Hedging
Agreement), all as may be amended, restated or otherwise modified. 

 

“Loans” means the collective reference to the Revolving Credit
Loans, the Term Loans and, as applicable, the Incremental Term Loans, and
“Loan” means any of such Loans.   

 

“Loan Parties” means, collectively, the Borrower and each of its
Subsidiaries who are executing the Guaranty Agreement; “Loan Party” means any
one of such Persons. 

 

“Make-Whole Premium” means the excess, if any, of (i) the
present value of the amount of interest that would have accrued during the
applicable Term Interest Period on that portion of the Term Loan C to be
prepaid or converted over (ii) the present value of the amount of
interest RTFC would earn if that portion of the Term Loan C to be prepaid or
converted was reinvested for the remainder of the applicable Term Interest
Period in U.S. Treasury obligations with a maturity comparable to the remaining
term of the applicable Term Interest Period. 
For purposes of calculating the present value in (i) and (ii) above, the
discount rate will be the rate of interest accruing on the U.S. Treasury
obligations in (ii) above. 

 

“Material Adverse Effect” means, with respect to the Borrower or
any of its Subsidiaries, a material adverse effect (a) on the properties,
business, prospects, operations or condition (financial or otherwise) of the
Borrower and its Subsidiaries, taken as whole (b) on the ability of the
Borrower to perform its obligations under, any Loan Document or Material
Contracts, in each case, to which it is a party, or (c) on the validity or
enforceability of any Loan Document. 

 

“Material Contract” means (a) any contract or other agreement,
written or oral, of the Borrower or any of its Subsidiaries involving monetary
liability of or to any such Person in an amount in excess of $1,000,000 per
annum, or (b) any other contract or agreement, written or oral, of the Borrower
or any of its Subsidiaries the failure to comply with which could reasonably be
expected to have a Material Adverse Effect. 

 

“Mortgages” means the collective reference to the mortgages
executed by the Borrower or any of its Subsidiaries in favor of the
Administrative Agent, for the benefit of itself and the Lenders, encumbering
certain real property of the Borrower identified on Schedule 7.1(q). 

 

12

 

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, or has accrued an obligation to
make contributions within the preceding six years. 

 

“Net Cash Proceeds” means, as applicable, (a) with respect to
any sale or other disposition of assets, the gross cash proceeds received by
the Borrower or any of its Subsidiaries from such sale less the sum (i)
all income and excess profit taxes assessed by a Governmental Authority as a
result of such sale and any other reasonable fees and expenses, sales
commissions and reasonable attorney’s fees and expenses actually incurred in
connection therewith and (ii) the principal amount of, premium, if any, and
interest on any Debt secured by a Lien on the asset (or a portion thereof)
sold, which Debt is required to be repaid in connection with such sale, (b)
with respect to any offering of capital stock or issuance of Debt, the gross
cash proceeds received by the Borrower or any of its Subsidiaries therefrom less
all reasonable legal, underwriting and other fees and expenses actually
incurred in connection therewith, and (c) with respect to any payment under an
insurance policy or in connection with a condemnation proceeding, the amount of
cash proceeds received by the Borrower or its Subsidiaries from an insurance
company or Governmental Authority, as applicable, net of all reasonable legal
and other fees and expenses of collection actually incurred. 

 

“Net Income” means, with respect to the Borrower and its
Subsidiaries for any period, calculated on a Consolidated basis without
duplication, in accordance with GAAP, the net income (or loss) thereof for such
period.  

 

“Network Agreement” means an agreement pursuant to which the
Borrower or any Subsidiary connects one or more of its Telecommunications
Systems to one or more Telecommunications Systems operated by any other Person,
excluding any roaming agreements to which the Borrower is a party. 

 

“New Term Lender” shall have the meaning assigned thereto in Section
4.4(b). 

 

“Notes” means the collective reference to the Revolving Credit
Notes, the Term Notes and the Incremental Term Loan Notes, and “Note” means any
of such Notes.   

 

“Notice of Account Designation” shall have the meaning assigned
thereto in Section 2.2(b). 

 

“Notice of Borrowing” shall have the meaning assigned thereto in
Section 2.2(a). 

 

“Notice
of Conversion/Continuation” shall have the meaning assigned thereto in Section
5.2.

 

“Notice of Prepayment” shall have the meaning assigned thereto
in Section 2.3(c). 

 

“Obligations” means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the Loans, (b)
the L/C Obligations, (c) all existing or future payment and other obligations
owing by the Borrower under any Hedging Agreement (which such Hedging

 

13

 

Agreement
is permitted hereunder) with any Person that is a Lender hereunder or an
Affiliate of a Lender at the time such Hedging Agreement is executed (all such
obligations with respect to any such Hedging Agreement, “Hedging Obligations”)
and (d) all other fees and commissions (including attorney’s fees), charges,
indebtedness, loans, liabilities, financial accommodations, obligations,
covenants and duties owing by the Borrower to the Lenders or the Administrative
Agent, of every kind, nature and description, direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or
unliquidated under or in respect of this Agreement, any Note, any Letter of Credit
or any of the other Loan Documents, whether or not evidenced by any note, and
whether or not for the payment of money. 

 

“OFAC” means the U.S. Department of the Treasury’s Office of
Foreign Assets Control. 

 

“Officer’s
Compliance Certificate” shall have the meaning assigned thereto in Section
8.3.

 

“Other Taxes” shall
have the meaning assigned thereto in Section 5.12(b). 

 

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

 

“Participation Certificates” shall have the meaning assigned
thereto in Section 9.14. 

 

“Pension Plan” means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of the
Borrower or any ERISA Affiliates or (b) has at any time within the preceding
six years been maintained for the employees of the Borrower or any of their
current or former ERISA Affiliates. 

 

“Permitted Acquisitions” mean any acquisition by the Borrower
permitted by Section 11.3(c). 

 

“Permitted Liens” means those Liens permitted by Section 11.2.

 

“Person” means an individual, corporation, limited liability
company, partnership, association, trust, business trust, joint venture, joint
stock company, pool, syndicate, sole proprietorship, unincorporated
organization, Governmental Authority or any other form of entity or group
thereof. 

 

“Prime Rate” means, at any time, the rate of interest per annum
publicly announced from time to time by Wachovia as its prime rate.  Each change in the Prime Rate shall be
effective as of the opening of business on the day such change in such prime
rate occurs.  The parties hereto
acknowledge that the rate announced publicly by Wachovia as its prime rate is
an index or base rate and shall not necessarily be its lowest or best rate
charged to its customers or other banks. 

 

“Prior Lenders” shall have the meaning assigned thereto in the
preamble hereto. 

 

“Proposed Issuance” means any issuance of common capital stock
of the Borrower; provided that (a) such capital stock is not, by its
terms (or by the terms of any security into which 

 

14

 

it
is convertible, or for which it is exchangeable, in any such case at the option
of the holder of such capital stock), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder of such capital stock, in
whole or in part and (b) such capital stock does not, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in any such case at the option of the holder of such capital
stock), or upon the happening of any event, require the payment of any cash dividends
or other distributions. 

 

“PUC” means any state regulatory agency or body that exercises
jurisdiction over the rates or services or the ownership, construction or
operation of any Telecommunications Systems. 

 

“Register” shall have the meaning assigned thereto in Section
14.10(c). 

 

“Reimbursement Obligation” means the obligation of the Borrower
to reimburse the Issuing Lender pursuant to Section 3.5 for amounts
drawn under Letters of Credit. 

 

“Related Parties” means, with respect to any Person, such
Person’s Affiliates and the directors, officers, employees, agents and advisors
of such Person and of such Person’s Affiliates. 

 

“Required Lenders” means, at any date, (i) any combination of
Lenders the sum of whose Term Loan B Commitment Percentage and Incremental Term
Loan Percentage, if any, aggregate more than fifty percent (50%) of the sum of
the Term Loan B Commitment plus the Incremental Term Loan Commitment and
(ii) any combination of Lenders the sum of whose Revolving Credit Commitment
Percentage plus Term Loan C Commitment Percentage aggregate more than
fifty percent (50%) of the sum of the Revolving Credit Commitment plus
the Term Loan C Commitment; or, if the Credit Facility has been terminated
pursuant to Section 12.2, any combination of Lenders holding more than
fifty percent (50%) of the aggregate Extensions of Credit; provided that
the applicable Commitment Percentage of, and the portion of the Extensions of
Credit, as applicable, held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Required Lenders. 

 

“Responsible Officer” means any of the following: the chief
executive officer or chief financial officer of the Borrower or any other
officer of the Borrower reasonably acceptable to the Administrative Agent. 

 

“Revolving Credit Commitment” means (a) as to any Revolving
Credit Lender, the obligation of such Revolving Credit Lender to make Revolving
Credit Loans to the account of the Borrower hereunder in an aggregate principal
amount at any time outstanding not to exceed the amount set forth opposite such
Revolving Credit Lender’s name on Schedule 1.1(a) as such amount may be
reduced or modified at any time or from time to time pursuant to the terms
hereof and (b) as to all Revolving Credit Lenders, the aggregate commitment of
all Revolving Credit Lenders to make Revolving Credit Loans, as such amount may
be reduced at any time or from time to time pursuant to the terms hereof.  The Revolving Credit Commitment of all
Revolving Credit Lenders on the Closing Date shall be $30,000,000. 

 

15

 

“Revolving Credit Commitment Percentage” means, as to any
Revolving Credit Lender at any time, the ratio of (a) the amount of the
Revolving Credit Commitment of such Revolving Credit Lender to (b) the
Revolving Credit Commitments of all Revolving Credit Lenders. 

 

“Revolving Credit Facility” means the revolving credit facility
established pursuant to Article II hereof. 

 

“Revolving Credit Lender” means any Lender holding any portion
of the Revolving Credit Commitment.   

 

“Revolving Credit Loans” means any revolving loan made to the
Borrower pursuant to Section 2.1, and all such revolving loans
collectively as the context requires. 

 

“Revolving Credit Notes” means the collective reference to the
Revolving Credit Notes made by the Borrower payable to the order of each
Revolving Credit Lender, substantially in the form of Exhibit A-1
hereto, evidencing the Revolving Credit Facility, and any amendments and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part; “Revolving
Credit Note” means any of such Revolving Credit Notes. 

 

“Revolving
Credit Maturity Date” means the earliest of the dates referred to in Section
2.6.

 

“RSA” shall mean any “rural service area” as defined and
modified by the FCC for the purpose of licensing Telecommunications Systems. 

 

“RTFC” means Rural Telephone Finance Cooperative in its capacity
as a Lender hereunder. 

 

“RTFC Fixed Rate” means a rate per annum equal to RTFC’s rate as
available pursuant to RTFC policies and procedures in effect at the time for
fixed rate elections on a term loan made by RTFC with a 10% SCC to term loan
ratio requirement and for the Term Interest Period selected. 

 

“RTFC Patronage” means a patronage capital refund made by RTFC
to the Borrower pursuant to RTFC policies and procedures in effect from time to
time based on the percentage that the Borrower’s interest payments on the Term
Loan C during any period have contributed to RTFC’s net margins for such
period.  RTFC Patronage Distributions do
not include amortization payments made by RTFC from time to time in respect of
its SCCs. 

 

“RTFC Variable Rate” means a rate per annum equal to RTFC’s
monthly quoted long-term variable interest rate per annum in effect from time
to time as available pursuant to RTFC policies and procedures in effect from
time to time for loans made by RTFC with a 10% SCC to loan ratio requirement. 

 

“Sanctioned Entity” shall mean (a) an agency of the government
of, (b) an organization directly or indirectly controlled by, or (c) a person
resident in a country that is subject to a 

 

16

 

sanctions
program identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html, or as
otherwise published from time to time as such program may be applicable to such
agency, organization or person. 

 

“Sanctioned Person” shall mean a person named on the list of
Specially Designated Nationals or Blocked Persons maintained by OFAC available
at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as
otherwise published from time to time. 

 

“SCC” means a non-interest bearing, amortizing subordinated
capital certificate of RTFC. 

 

“Security Documents” means the collective reference to the
Collateral Agreement, the Guaranty Agreement, the Mortgages and each other
agreement or writing pursuant to which the Borrower or any Subsidiary thereof
purports to pledge or grant a security interest in any property or assets
securing the Obligations or any such Person purports to guaranty the payment
and/or performance of the Obligations.  

 

“Solvent” means, as to the Borrower and its Subsidiaries on a
particular date, that any such Person (a) has capital sufficient to carry on
its business and transactions and all business and transactions in which it is
about to engage and is able to pay its debts as they mature, (b) owns property
having a value, both at fair valuation and at present fair saleable value,
greater than the amount required to pay its probable liabilities (including
contingencies), and (c) does not believe that it will incur debts or
liabilities beyond its ability to pay such debts or liabilities as they mature.

 

“Stockholders’ Equity” means Consolidated stockholders’ equity
as determined in accordance with GAAP, including without limitation the sum of
common stock, additional paid-in-capital and retained earnings. 

 

“Stock Repurchases” shall have the meaning assigned thereto in Section
11.6(b). 

 

“Subordinated Debt” means the collective reference to any Debt
of the Borrower or any Subsidiary subordinated in right and time of payment to
the Obligations and containing such other terms and conditions, in each case as
are satisfactory to the Required Lenders. 

 

“Subsidiary” means as to any Person, any corporation,
partnership, limited liability company or other entity of which more than fifty
percent (50%) of the outstanding capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other managers of such corporation, partnership, limited liability company or
other entity is at the time, directly or indirectly, owned by or the management
is otherwise controlled by such Person (irrespective of whether, at the time,
capital stock or other ownership interests of any other class or classes of
such corporation, partnership, limited liability company or other entity shall
have or might have voting power by reason of the happening of any contingency).
Unless otherwise qualified references to “Subsidiary” or “Subsidiaries” herein
shall refer to those of the Borrower. 

 

17

 

“Taxes” shall have the meaning assigned thereto in Section
5.12(a). 

 

“Telecommunications Systems” means any local exchange and long
distance telephone systems (including without limitation any network of digital
or analog facilities), any cellular and personal communications systems, any
cable television distribution system, and any other telecommunications systems
owned, leased, operated or managed by the Borrower or any Subsidiary. 

 

“Term Interest Period” shall have the meaning assigned thereto
in Section 5.1(b)(ii). 

 

“Term Loan B” shall mean, collectively, the amounts advanced by
the Term Loan Lenders to the Borrower under the Term Loan B Commitment pursuant
to Section 4.1(a). 

 

“Term Loan B Commitment” means (a) as to any Term Loan Lender,
the obligation of such Lender to make a Term Loan B in an aggregate principal
amount not to exceed the amount set forth opposite such Term Loan Lender’s name
on the Register, as such amount may be reduced or modified at any time or from
time to time pursuant to the terms hereof and (b) as to all Term Loan Lenders,
the aggregate commitment to make the Term Loan B.  The Term Loan B Commitment of all Term Loan
Lenders as of the Closing Date shall be $110,000,000. 

 

“Term Loan B Commitment Percentage” means, as to any Term Loan
Lender, (a) prior to making the Term Loan B, the ratio of (i) the Term Loan B
Commitment of such Term Loan Lender to (ii) the sum of the Term Loan B
Commitments of all Term Loan Lenders and (b) after the Term Loan B is made, the
ratio of (i) the outstanding principal balance of the Term Loan B of such Term
Loan Lender to (ii) the aggregate outstanding principal balance of the Term
Loan B of all Term Loan Lenders. 

 

“Term Loan B Maturity Date” means the first to occur of (a) June
30, 2012 or (b) the date of termination by the Administrative Agent on behalf
of the Lenders pursuant to Section 12.2(a). 

 

“Term Loan C” shall mean, collectively, the amounts advanced by
the Term Loan Lenders to the Borrower under the Term Loan C Commitment pursuant
to Section 4.1(b). 

 

“Term Loan C Commitment” means (a) as to any Term Loan Lender,
the obligation of such Lender to make a Term Loan C in an aggregate principal
amount not to exceed the amount set forth opposite such Term Loan Lender’s name
on Schedule 1.1(b), as such amount may be reduced or modified at any
time or from time to time pursuant to the terms hereof and (b) as to all Term
Loan Lenders, the aggregate commitment to make the Term Loan C.  The Term Loan C Commitment of all Term Loan
Lenders as of the Closing Date shall be $20,000,000. 

 

“Term Loan C Commitment Percentage” means, as to any Term Loan
Lender, (a) prior to making the Term Loan C, the ratio of (i) the Term Loan C
Commitment of such Term Loan Lender to (ii) the sum of the Term Loan C
Commitments of all Term Loan Lenders and (b) after the Term Loan C is made, the
ratio of (i) the outstanding principal balance of the Term Loan C of such Term
Loan Lender to (ii) the aggregate outstanding principal balance of the Term
Loan C of all Term Loan Lenders. 

 

18

 

“Term Loan C Maturity Date” means the first to occur of (a) June
30, 2013 or (b) the date of termination by the Administrative Agent on behalf
of the Lenders pursuant to Section 12.2(a). 

 

“Term Loan Facility” means the term loan facility established
pursuant to Article IV. 

 

“Term Loan Lender” means any Lender holding any portion of the
Term Loan B Commitment or the Term Loan C Commitment, as applicable.

 

“Term Loans” shall mean, collectively, the amounts advanced by
the Term Loan Lenders to the Borrower under each of the Term Loan B Commitment
and the Term Loan C Commitment. 

 

“Term Notes” means the collective reference to (a) the Term Loan
B Notes made by the Borrower payable to the order of each of the Term Loan
Lenders with a Term Loan B Commitment, substantially in the form of Exhibit
A-2 hereto, and (b) the Term Loan C Notes made by the Borrower payable to
the order of each of the Term Loan Lenders with a Term Loan C Commitment,
substantially in the form of Exhibit A-3 hereto, in each case,
evidencing the Debt incurred by the Borrower pursuant to the respective Term
Loan Facility, and any amendments, modifications and supplements thereto, any
substitute therefor, and any replacement, restatements, renewals or extensions
thereof, in whole or in part. 

 

“Termination
Event” means except for any such event or condition that could not
reasonably be expected to have a Material Adverse Effect:  (a) a “Reportable Event” described in Section
4043 of ERISA for which the notice requirement has not been waived by the PBGC,
or (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension
Plan during a plan year in which it was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA, or (c) the termination of a Pension Plan, the
filing of a notice of intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination under Section 4041 of ERISA, if the
plan assets are not sufficient to pay all plan liabilities, or (d) the institution
of proceedings to terminate, or the appointment of a trustee with respect to,
any Pension Plan by the PBGC, or (e) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan, or (f) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA, or (g) partial or complete withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan if withdrawal liability is asserted by such
plan, or (h) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i)
any event or condition which results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.

 

“Total Capitalization” means at any date with respect to the
Borrower and its Subsidiaries at any date of determination, Total Debt plus
Stockholders’ Equity, determined on a Consolidated basis in accordance with
GAAP. 

 

“Total Debt” means, with respect to the Borrower and its
Subsidiaries, at any date of determination and without duplication, all
outstanding Debt thereof on a Consolidated basis. 

 

19

 

“Uniform Customs” means the Uniform Customs and Practice for
Documentary Credits (1993 Revision), effective January, 1994, International
Chamber of Commerce Publication No. 500. 

 

“UCC” means the Uniform Commercial Code as in effect in the
State of North Carolina, as amended, restated or otherwise modified from time
to time.  

 

“United States” means the United States of America. 

 

“Wachovia” means Wachovia Bank, National Association, a national
banking association, and its successors. 

 

“Wholly Owned” means, with respect to a Subsidiary, that all of
the shares of capital stock or other ownership interests of such Subsidiary
are, directly or indirectly, owned or controlled by the Borrower and/or one or
more of its Wholly Owned Subsidiaries (except for directors’ qualifying shares
or other shares required by Applicable Law to be owned by a Person other than
the Borrower). 

 

SECTION 1.2       Other
Definitions and Provisions. With reference to this
Agreement and each other Loan Document, unless otherwise specified herein or in
such other Loan Document:  (a) the
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined, (b) whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms, (c) the
words “include”, “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”, (d) the word “will” shall be construed to have
the same meaning and effect as the word “shall”, (e) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (f) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (g) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (h) all
references herein to Articles, Sections, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Exhibits and Schedules to, this
Agreement, (i) the words “asset” and “property” shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights, (j) the term “documents” includes any and all instruments,
documents, agreements, certificates, notices, reports, financial statements and
other writings, however evidenced, whether in physical or electronic form, (k)
in the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including”, and (l) Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document. 

 

SECTION 1.3       Accounting
Terms. All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including 

 

20

 

financial
ratios and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent
basis, as in effect from time to time, applied in a manner consistent with that
used in preparing the audited financial statements required by Section
8.1(b), except as otherwise specifically prescribed herein. 

 

SECTION 1.4       UCC
Terms. Terms defined in the UCC in effect on the Closing
Date and not otherwise defined herein shall, unless the context otherwise
indicates, have the meanings provided by those definitions.  Subject to the foregoing, the term “UCC”
refers, as of any date of determination, to the UCC then in effect. 

 

SECTION 1.5       Rounding. Any financial
ratios required to be maintained by the Borrower pursuant to this Agreement
shall be calculated by dividing the appropriate component by the other
component, carrying the result to one place more than the number of places by
which such ratio is expressed herein and rounding the result up or down to the
nearest number (with a rounding-up if there is no nearest number). 

 

SECTION 1.6       References
to Agreement and Laws. Unless otherwise expressly provided herein,
(a) references to formation documents, governing documents, agreements
(including the Loan Documents) and other contractual instruments shall be
deemed to include all subsequent amendments, restatements, extensions,
supplements and other modifications thereto, but only to the extent that such
amendments, restatements, extensions, supplements and other modifications are
not prohibited by any Loan Document; and (b) references to any Applicable Law
shall include all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such Applicable Law. 

 

SECTION 1.7       Times
of Day. Unless otherwise specified, all references herein
to times of day shall be references to Eastern time (daylight or standard, as
applicable). 

 

SECTION 1.8       Letter
of Credit Amounts. Unless otherwise specified, all references
herein to the amount of a letter of credit (including, without limitation, any
Letter of Credit) at any time shall be deemed to mean the maximum amount of
such Letter of Credit after giving effect to all increases thereof contemplated
by such Letter of Credit or the Application therefor, whether or not such
maximum amount is in effect at such time (as such amount may be reduced by (i)
any permanent reduction of such Letter of Credit or (ii) any amount which is
drawn, reimbursed and no longer available under such Letter of Credit). 

 

ARTICLE II 

 

REVOLVING
CREDIT FACILITY 

 

SECTION 2.1       Revolving
Credit Loans. Subject to the terms and conditions of this
Agreement, and in reliance upon the representations and warranties set forth
herein, each Revolving Credit Lender severally agrees to make Revolving Credit
Loans to the Borrower from time to time from the Closing Date through, but not
including, the Revolving Credit Maturity Date as requested by the Borrower in
accordance with the terms of Section 2.2; provided, that (a) 

 

21

 

the
aggregate principal amount of all outstanding Revolving Credit Loans (after
giving effect to any amount requested) shall not exceed the Revolving Credit
Commitment less the sum of all outstanding L/C Obligations and (b) the
principal amount of outstanding Revolving Credit Loans from any Revolving
Credit Lender to the Borrower shall not at any time exceed such Lender’s
Revolving Credit Commitment less such Lender’s Revolving Credit
Commitment Percentage of the L/C Obligations. Each Revolving Credit Loan by a
Revolving Credit Lender shall be in a principal amount equal to such Lender’s
Revolving Credit Commitment Percentage of the aggregate principal amount of
Revolving Credit Loans requested on such occasion.  Subject to the terms and conditions hereof,
the Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder
until the Revolving Credit Maturity Date. 

 

SECTION 2.2       Procedure
for Advances of Revolving Credit Loans. 

 

(a)           Requests
for Borrowing. The Borrower shall give the Administrative Agent irrevocable
prior written notice in the form attached hereto as Exhibit B (a “Notice
of Borrowing”) not later than 11:00 a.m. (i) at least one (1) Business Day
before each Base Rate Loan and (ii) at least three (3) Business Days before
each LIBOR Rate Loan, of its intention to borrow, specifying (A) the date of
such borrowing, which shall be a Business Day, (B) the amount of such
borrowing, which shall be (x) with respect to Base Rate Loans in an aggregate
principal amount of $250,000 or a whole multiple of $100,000 in excess thereof
and (y) with respect to LIBOR Rate Loans in an aggregate principal amount of
$500,000 or a whole multiple of $500,000 in excess thereof, and (C) in the case
of a LIBOR Rate Loan, the duration of the LIBOR Interest Period applicable
thereto.  A Notice of Borrowing received
after 11:00 a.m. shall be deemed received on the next Business Day.  The Administrative Agent shall promptly
notify the Revolving Credit Lenders of each Notice of Borrowing. 

 

(b)           Disbursement
of Revolving Credit Loans. Not later than 2:00 p.m. on the proposed
borrowing date, (i) each Revolving Credit Lender will make available to the
Administrative Agent, for the account of the Borrower, at the office of the
Administrative Agent in funds immediately available to the Administrative Agent,
such Lender’s Revolving Credit Commitment Percentage of the Revolving Credit
Loans to be made on such borrowing date. 
The Borrower hereby irrevocably authorizes the Administrative Agent to
disburse the proceeds of each borrowing requested pursuant to this Section
2.2 in immediately available funds by crediting or wiring such proceeds to
the deposit account of the Borrower identified in the most recent notice
substantially in the form of Exhibit G hereto (a “Notice of Account
Designation”) delivered by the Borrower to the Administrative Agent or as
may be otherwise agreed upon by the Borrower and the Administrative Agent from
time to time.  Subject to Section 5.7
hereof, the Administrative Agent shall not be obligated to disburse the portion
of the proceeds of any Revolving Credit Loan requested pursuant to this Section
2.2 to the extent that any Revolving Credit Lender has not made available
to the Administrative Agent its Revolving Credit Commitment Percentage of such
Loan.  

 

SECTION 2.3       Repayment
of Revolving Credit Loans.

 

22

 

(a)           Repayment on
Termination Date. The Borrower shall repay the outstanding principal amount
of all Revolving Credit Loans in full on the Revolving Credit Maturity Date,
together, with all accrued but unpaid interest thereon and all other unpaid
Obligations with respect to the Revolving Credit Facility. 

 

(b)           Mandatory
Repayments of Revolving Credit Loans. 

 

(i)            Excess
Loans. If at any time the outstanding principal amount of all Revolving
Credit Loans exceeds the Revolving Credit Commitment less the sum of all
outstanding L/C Obligations, the Borrower shall repay immediately upon notice
from the Administrative Agent, by payment to the Administrative Agent for the
account of the Revolving Credit Lenders, Revolving Credit Loans in an amount
equal to such excess with each such repayment applied first to the
principal amount of outstanding Revolving Credit Loans and second, with
respect to any Letters of Credit then outstanding, to the deposit of cash
collateral into a cash collateral account opened by the Administrative Agent
and administered thereby in accordance with Section 12.2(b). Each such
repayment shall be accompanied by any amount required to be paid pursuant to Section
5.10 hereof.

 

(ii)           RTFC Patronage
Distributions. The Borrower shall, on the date of receipt of any Net Cash
Proceeds from any RTFC Patronage Distribution, prepay an aggregate principal
amount of the Revolving Credit Loans equal to 100% of such Net Cash Proceeds. 

 

(iii)          SCC Amortization
Payments. The Borrower shall, on each date of receipt of any Net Cash
Proceeds in respect of any amortization payments made by RTFC on any SCCs,
prepay an aggregate principal amount of the Revolving Credit Loans equal to
100% of the amount of such Net Cash Proceeds. 

 

(iv)          Commitment
Reductions. Each permanent reduction permitted or required pursuant to Section
2.5 or this Section 2.3 shall be accompanied by a payment of
principal sufficient to reduce the aggregate outstanding Revolving Credit Loans
and L/C Obligations, as applicable, after such reduction to the Revolving
Credit Commitment as so reduced and if the Revolving Credit Commitment as so
reduced is less than the aggregate amount of all outstanding Letters of Credit,
the Borrower shall be required to deposit an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit in a cash collateral
account opened by the Administrative Agent and administered thereby in
accordance with Section 12.2(b). Any reduction of the Revolving Credit
Commitment to zero shall be accompanied by payment of all outstanding Revolving
Credit Loans (and furnishing of cash collateral satisfactory to the
Administrative Agent for all L/C Obligations) and, shall result in the termination
of the Revolving Credit Commitment and Revolving Credit Facility.  Such cash collateral shall be applied in
accordance with Section 12.2(b). If the reduction of the Revolving
Credit Commitment requires the repayment of any LIBOR Rate Loan, such repayment
shall be accompanied by any amount required to be paid pursuant to Section
5.10 hereof.

 

23

 

(c)           Optional
Repayments. The Borrower may at any time and from time to time repay the
Revolving Credit Loans, in whole or in part, upon at least three (3) Business
Days’ irrevocable notice to the Administrative Agent with respect to LIBOR Rate
Loans and one (1) Business Day irrevocable notice with respect to Base Rate
Loans, in the form attached hereto as Exhibit C (a “Notice of
Prepayment”) specifying the date and amount of repayment and whether the
repayment is of LIBOR Rate Loans, Base Rate Loans, or a combination thereof,
and, if of a combination thereof, the amount allocable to each. Upon receipt of
such notice, the Administrative Agent shall promptly notify each Revolving
Credit Lender.  If any such notice is
given, the amount specified in such notice shall be due and payable on the date
set forth in such notice.  Partial
repayments shall be in an aggregate amount of $250,000 or a whole multiple of
$100,000 in excess thereof with respect to Base Rate Loans and $500,000 or a
whole multiple of $500,000 in excess thereof with respect to LIBOR Rate Loans.
Each such repayment shall be accompanied by any amount required to be paid
pursuant to Section 5.10 hereof. 

 

(d)           Limitation
on Repayment of LIBOR Rate Loans. The Borrower may not repay any LIBOR Rate
Loan on any day other than on the last day of the LIBOR Interest Period
applicable thereto unless such repayment is accompanied by any amount required
to be paid pursuant to Section 5.10 hereof. 

 

(e)           Hedging
Agreements. No repayment or prepayment pursuant to this Section 2.3
shall affect any of the Borrower’s obligations under any Hedging Agreement. 

 

(f)            Prepayment
of Excess Proceeds.  In the event
proceeds remain after the prepayments of Term Loans pursuant to Section
4.5(b), the amount of such excess proceeds shall be used on the date of the
required prepayment under Section 4.5(b) to prepay the outstanding
principal amount of the Revolving Credit Loans, without a corresponding
reduction of the Revolving Credit Commitments. 

 

SECTION 2.4       Intentionally Omitted. 

 

SECTION 2.5       Permanent Reduction of the Revolving Credit Commitment. 

 

(a)           Optional.  The Borrower shall have the right at any time
and from time to time, upon at least five (5) Business Days prior written
notice to the Administrative Agent, to permanently reduce, without premium or
penalty, (i) the entire Revolving Credit Commitment at any time or (ii) portions
of the Revolving Credit Commitment, from time to time, in an aggregate
principal amount not less than $2,500,000. The amount of each partial permanent
reduction shall permanently reduce the Revolving Credit Lenders’ Revolving
Credit Commitments pro  rata in accordance with their respective
Revolving Credit Commitment Percentages. 

 

(b)           Corresponding
Payment. Each permanent reduction permitted or required pursuant to this
Section shall be accompanied by a payment of principal sufficient to reduce the
aggregate outstanding Revolving Credit Loans and L/C Obligations, as
applicable, after such reduction to the Revolving Credit Commitment as so
reduced and if the Revolving Credit Commitment as so reduced is less than the
aggregate amount of all outstanding Letters of Credit, the Borrower shall be
required to deposit cash collateral in a cash collateral account opened by 

 

24

 

the
Administrative Agent in an amount equal to the aggregate then undrawn and
unexpired amount of such Letters of Credit. 
Such cash collateral shall be applied in accordance with Section
12.2(b). Any reduction of the Revolving Credit Commitment to zero shall be
accompanied by payment of all outstanding Revolving Credit Loans (and
furnishing of cash collateral satisfactory to the Administrative Agent for all
L/C Obligations) and shall result in the termination of the Revolving Credit
Commitment and the Revolving Credit Facility. 
Such cash collateral shall be applied in accordance with Section
12.2(b). If the reduction of the Revolving Credit Commitment requires the
repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any
amount required to be paid pursuant to Section 5.10 hereof. 

 

SECTION 2.6       Termination
of Revolving Credit Facility. The Revolving Credit
Facility shall terminate on the earliest of (a) December 30, 2011 (b) the date
of termination by the Borrower pursuant to Section 2.5(a), and (c) the
date of termination by the Administrative Agent on behalf of the Lenders pursuant
to Section 12.2(a). 

 

SECTION 2.7       Use
of Proceeds. The Borrower shall use the proceeds of the
Extensions of Credit (a) to finance the Enventis Acquisition, (b) to refinance
the Debt outstanding under the Prior Credit Agreement, (c) to pay to RTFC the
cash consideration for the SCCs and (d) for working capital and general
corporate requirements of the Borrower and its Subsidiaries, including the
financing of Permitted Acquisitions and the payment of certain fees and
expenses incurred in connection with the transactions contemplated hereunder. 

 

ARTICLE III

 

LETTER OF
CREDIT FACILITY 

 

SECTION 3.1       L/C Commitment. Subject to
the terms and conditions hereof, the Issuing Lender, in reliance on the
agreements of the other Lenders set forth in Section 3.4(a), agrees to
issue standby letters of credit (“Letters of Credit”) for the account of
the Borrower on any Business Day from the Closing Date through but not
including the Revolving Credit Maturity Date in such form as may be approved
from time to time by the Issuing Lender; provided, that the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (a) the L/C Obligations would exceed the L/C
Commitment or (b) the aggregate principal amount of outstanding Revolving
Credit Loans, plus the aggregate amount of L/C Obligations would exceed the
Revolving Credit Commitment.  Each Letter
of Credit shall (i) be denominated in Dollars in a minimum amount of
$1,000,000, or in such other amount as agreed to by the Administrative Agent,
(ii) be a standby letter of credit issued to support obligations of the
Borrower or any of its Subsidiaries, contingent or otherwise, incurred in the
ordinary course of business, (iii) expire on a date no more than one (1) year
from the issuance thereof, which date shall be no later than five (5) business
days prior to the Revolving Credit Maturity Date and (iv) be subject to the
Uniform Customs and/or ISPA 98, as set forth in the Application or as to be
determined by the Issuing Lender and, to the extent not inconsistent therewith,
the laws of the State of North Carolina. 
The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
Applicable Law. References herein to “issue” and derivations thereof with
respect to Letters of Credit shall also 

 

25

 

include
extensions or modifications of any Existing Letters of Credit, unless the
context otherwise requires. The Existing Letters of Credit shall be, from and
after the Closing Date, Letters of Credit hereunder. 

 

SECTION 3.2       Procedure
for Issuance of Letters of Credit. The Borrower may from time
to time request that the Issuing Lender issue a Letter of Credit by delivering
to the Issuing Lender at the Administrative Agent’s Office an Application
therefor, completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing Lender
may request.  Upon receipt of any
Application, the Issuing Lender shall process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall,
subject to Section 3.1 and Article VI hereof, promptly issue the
Letter of Credit requested thereby (but in no event shall the Issuing Lender be
required to issue any Letter of Credit earlier than three (3) Business Days
after its receipt of the Application therefor and all such other certificates,
documents and other papers and information relating thereto) by issuing the
original of such Letter of Credit to the beneficiary thereof or as otherwise
may be agreed by the Issuing Lender and the Borrower.  The Issuing Lender shall promptly furnish to
the Borrower a copy of such Letter of Credit and promptly notify each Lender of
the issuance and upon request by any Lender, furnish to each Lender a copy of
such Letter of Credit and the amount of such Lender’s L/C Participation
therein. 

 

SECTION 3.3       Commissions
and Other Charges. 

 

(a)           The
Borrower shall pay to the Administrative Agent, for the account of the Issuing
Lender and the L/C Participants, a letter of credit commission with respect to
each Letter of Credit in an amount equal to the amount of such Letter of Credit
multiplied by the Applicable Margin with respect to LIBOR Rate Loans
(determined on a per annum basis).  Such
commission shall be payable quarterly in arrears on the last Business Day of
each calendar quarter and on the Revolving Credit Maturity Date. The
Administrative Agent shall, promptly following its receipt thereof, distribute
to the Issuing Lender and the L/C Participants all commissions received
pursuant to this Section 3.3(a) in accordance with their respective
Revolving Credit Commitment Percentages. 

 

(b)           In
addition to the foregoing commission, the Borrower shall pay to the
Administrative Agent, for the account of the Issuing Lender, an issuance fee
with respect to each Letter of Credit in an amount equal to one-eighth percent
(.125%) per annum multiplied by the amount of each Letter of Credit, payable
quarterly in arrears on the last Business Day of each calendar quarter and on
the Revolving Credit Maturity Date. 

 

(c)           In
addition to the foregoing fees and commissions, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses
as are incurred or charged by the Issuing Lender in issuing, effecting payment
under, amending or otherwise administering any Letter of Credit. 

 

SECTION 3.4       L/C
Participations.

 

26

 

(a)           The
Issuing Lender irrevocably agrees to grant and hereby grants to each L/C
Participant, and, to induce the Issuing Lender to issue Letters of Credit
hereunder, each L/C Participant irrevocably agrees to accept and purchase and
hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant’s own account and risk
an undivided interest equal to such L/C Participant’s Revolving Credit
Commitment Percentage in the Issuing Lender’s obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by the Borrower through
a Revolving Credit Loan or otherwise in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender’s address for notices specified herein an amount equal to
such L/C Participant’s Revolving Credit Commitment Percentage of the amount of
such draft, or any part thereof, which is not so reimbursed. 

 

(b)           Upon
becoming aware of any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit,
the Issuing Lender shall notify each L/C Participant of the amount and due date
of such required payment and such L/C Participant shall pay to the Issuing
Lender the amount specified on the applicable due date.  If any such amount is paid to the Issuing
Lender after the date such payment is due, such L/C Participant shall pay to
the Issuing Lender on demand, in addition to such amount, the product of (i)
such amount, times (ii) the daily average Federal Funds Rate as
determined by the Administrative Agent during the period from and including the
date such payment is due to the date on which such payment is immediately
available to the Issuing Lender, times (iii) a fraction the numerator of
which is the number of days that elapse during such period and the denominator
of which is 360. A certificate of the Issuing Lender with respect to any
amounts owing under this Section shall be conclusive in the absence of manifest
error.  With respect to payment to the
Issuing Lender of the unreimbursed amounts described in this Section 3.4(b),
if the L/C Participants receive notice that any such payment is due (A) prior
to 1:00 p.m. on any Business Day, such payment shall be due that Business Day,
and (B) after 1:00 p.m. on any Business Day, such payment shall be due on the
following Business Day.

 

(c)           Whenever,
at any time after the Issuing Lender has made payment under any Letter of
Credit and has received from any L/C Participant its Revolving Credit
Commitment Percentage of such payment in accordance with this Section 3.4,
the Issuing Lender receives any payment related to such Letter of Credit
(whether directly from the Borrower or otherwise), or any payment of interest
on account thereof, the Issuing Lender will distribute to such L/C Participant
its pro  rata share thereof; provided, that in the event
that any such payment received by the Issuing Lender shall be required to be
returned by the Issuing Lender, such L/C Participant shall return to the
Issuing Lender the portion thereof previously distributed by the Issuing Lender
to it. 

 

SECTION 3.5       Reimbursement
Obligation of the Borrower. In the event of any
drawing under any Letter of Credit, the Borrower agrees to reimburse (either
with the proceeds of a Revolving Credit Loan as provided for in this Section
3.5 or with funds from other sources), 

 

27

 

in
same day funds, the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft paid under any Letter
of Credit for the amount of (a) such draft so paid and (b) any amounts referred
to in Section 3.3(c) incurred by the Issuing Lender in connection with
such payment.  Unless the Borrower shall
immediately notify the Issuing Lender that the Borrower intends to reimburse
the Issuing Lender for such drawing from other sources or funds, the Borrower
shall be deemed to have timely given a Notice of Borrowing to the Administrative
Agent requesting that the Revolving Credit Lenders make a Revolving Credit Loan
bearing interest at the Base Rate on such date in the amount of (a) such draft
so paid and (b) any amounts referred to in Section 3.3(c) incurred by
the Issuing Lender in connection with such payment, and the Revolving Credit
Lenders shall make a Revolving Credit Loan bearing interest at the Base Rate in
such amount, the proceeds of which shall be applied to reimburse the Issuing
Lender for the amount of the related drawing and costs and expenses. Each
Revolving Credit Lender acknowledges and agrees that its obligation to fund a
Revolving Credit Loan in accordance with this Section 3.5 to reimburse
the Issuing Lender for any draft paid under a Letter of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, non-satisfaction of the conditions set forth in Section
2.2(a) or Article VI. If the Borrower has elected to pay the amount of such
drawing with funds from other sources and shall fail to reimburse the Issuing
Lender as provided above, the unreimbursed amount of such drawing shall bear
interest at the rate which would be payable on any outstanding Base Rate Loans
which were then overdue from the date such amounts become payable (whether at
stated maturity, by acceleration or otherwise) until payment in full. 

 

SECTION 3.6       Obligations Absolute. The Borrower’s obligations
under this Article III (including without limitation the Reimbursement
Obligation) shall be absolute and unconditional under any and all circumstances
and irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of
a Letter of Credit. The Borrower also agrees with the Issuing Lender that the
Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement
Obligation under Section 3.5 shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of a Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Issuing Lender’s gross negligence or willful
misconduct, as determined by a court of competent jurisdiction by final
nonappealable judgment.  The Borrower
agrees that any action taken or omitted by the Issuing Lender under or in
connection with any Letter of Credit or the related drafts or documents, if
done in the absence of gross negligence or willful misconduct shall be binding
on the Borrower and shall not result in any liability of the Issuing Lender or
any L/C Participant to the Borrower. The responsibility of the Issuing Lender
to the Borrower in connection with any draft presented for payment under any
Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit. 

 

28

 

SECTION 3.7       Effect
of Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Article III, the provisions of this Article III shall apply. 

 

ARTICLE IV 

 

TERM LOAN
FACILITY 

 

SECTION 4.1       Term
Loans. 

 

(a)           Subject
to the terms and conditions of this Agreement, each Term Loan Lender with a
Term Loan B Commitment severally agrees to make a Term Loan B to the Borrower on
the Closing Date.  The Term Loan B shall
be funded by each such Term Loan Lender in a principal amount equal to such
Lender’s Term Loan B Commitment Percentage of the aggregate principal amount of
the Term Loan B made on the Closing Date, which aggregate principal amount
shall equal the total Term Loan B Commitment. 

 

(b)           Subject
to the terms and conditions of this Agreement, each Term Loan Lender with a
Term Loan C Commitment severally agrees to make a Term Loan C to the Borrower
on the Closing Date.  The Term Loan C
shall be funded by each such Term Loan Lender in a principal amount calculated
as set forth in Section 6.2(i) of this Agreement. 

 

SECTION 4.2       Procedure
for Advance of Term Loans. The Borrower shall give
the Administrative Agent an irrevocable Notice of Borrowing prior to 11:00 a.m.
on the Closing Date requesting that the Term Loan Lenders make the Term Loan B
as a Base Rate Loan (provided that the Borrower may request, no later than
three (3) Business Days prior to the Closing Date, that the Term Loan Lenders
make the Term Loan B as a LIBOR Rate Loan if the Borrower has delivered to the
Administrative Agent a letter in form and substance reasonably satisfactory to
the Administrative Agent indemnifying the Term Loan Lenders in the manner set forth
in Section 5.10 of this Agreement) and the Term Loan C as a RTFC
Variable Rate Loan, as applicable, on such date. Upon receipt of such Notice of
Borrowing from the Borrower, the Administrative Agent shall promptly notify
each Term Loan Lender thereof.  Not later
than 2:00 p.m. on the Closing Date, each Term Loan Lender will make available
to the Administrative Agent for the account of the Borrower, at the office of
the Administrative Agent in immediately available funds, the amount of such
Term Loan B and Term Loan C, as applicable, to be made by such Term Loan Lender
on the Closing Date. The Borrower hereby irrevocably authorizes the
Administrative Agent to disburse the proceeds of the Term Loans in immediately
available funds by wire transfer to such Person or Persons as may be designated
by the Borrower in writing.

 

SECTION 4.3       Repayment
of Term Loans. The Borrower shall repay the aggregate outstanding
principal amount of each of the Term Loan B and Term Loan C in consecutive
quarterly installments on the last Business Day of each of March, June,
September, and December commencing March 31, 2006 as set forth below, except as
the amounts of individual installments may be adjusted pursuant to Section
4.5 hereof: 

 

29

 

	
  PAYMENT DATE

  	
   

  	
  TERM LOAN B -

  PRINCIPAL

  INSTALLMENT

  	
   

  	
  TERM LOAN C –

  PRINCIPAL

  INSTALLMENT

  	
   

  
	
   

  	
   

  	
  ($)

  	
   

  	
  ($)

  	
   

  
	
  3/31/2006

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  6/30/2006

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  9/30/2006

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  12/31/2006

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  3/31/2007

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  6/30/2007

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  9/30/2007

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  12/31/2007

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  3/31/2008

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  6/30/2008

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  9/30/2008

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  12/31/2008

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  3/31/2009

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  6/30/2009

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  9/30/2009

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  12/31/2009

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  3/31/2010

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  6/30/2010

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  9/30/2010

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  12/31/2010

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  3/31/2011

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  6/30/2011

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  9/30/2011

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  12/31/2011

  	
   

  	
  275,000

  	
   

  	
  50,000

  	
   

  
	
  3/31/2012

  	
   

  	
  51,700,000

  	
   

  	
  50,000

  	
   

  
	
  6/30/2012

  	
   

  	
  51,700,000

  	
   

  	
  50,000

  	
   

  
	
  9/30/2012

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  
	
  12/31/2012

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  
	
  3/31/2013

  	
   

  	
   

  	
   

  	
  9,300,000

  	
   

  
	
  6/30/2013

  	
   

  	
   

  	
   

  	
  9,300,000

  	
   

  

 

If not sooner paid, the Term
Loan B shall be paid in full, together with accrued interest thereon and all
other Obligations with respect to the Term Loan B, on the Term Loan B Maturity
Date. If not sooner paid, the Term Loan C shall be paid in full, together with
accrued interest thereon and all other Obligations with respect to the Term
Loan C, on the Term Loan C Maturity Date

 

SECTION 4.4       Incremental Term Loans. 

 

(a)           Subject to the
conditions set forth below, at any time prior to the Term Loan B Maturity Date,
the Borrower shall have the right, upon not less than thirty (30) days’ prior
written notice (an “Incremental Term Loan Notification”) to the
Administrative Agent (which 

 

30

 

shall promptly advise each
Lender of its receipt and the contents thereof) to request up to three (3)
Incremental Term Loans in a total aggregate principal amount of up to
$30,000,000 during the term of this Agreement. 
Such Incremental Term Loan Notification shall specify the applicable
Incremental Term Loan Effective Date.

 

(b)           Each
existing Lender shall have the right, but not the obligation, to commit to a pro
rata portion of each Incremental Term Loan.  The Borrower may also solicit commitments
from third party banks and financial institutions, reasonably acceptable to the
Administrative Agent, to participate in each Incremental Term Loan (each such
other bank or financial institution, a “New Term Lender”); provided,
however, that all allocations of the Incremental Term Loan Commitment shall be
subject to the Administrative Agent’s reasonable determination.  The failure by any existing Lender to respond
to an Incremental Term Loan Notification within ten (10) days of such Lender’s
receipt thereof shall be deemed to be a refusal of such request by such
existing Lender. 

 

(c)           The
following terms and conditions shall apply to each Incremental Term Loan:   

 

(i)            such
Incremental Term Loan shall constitute an Obligation and shall be secured and
guaranteed with the other Obligations on a pari  passu basis; 

 

(ii)           the
principal amount of each such Incremental Term Loan shall not be less than
$2,000,000, or if less, shall be the remaining amount permitted pursuant to
clause (a) above; 

 

(iii)          each Incremental
Term Loan will mature and amortize in a manner reasonably acceptable to the
Administrative Agent, the Lenders making such Incremental Term Loan and the
Borrower, but shall not in any event be permitted to have a shorter average
life than the Term Loan B or a maturity date earlier than the Term Loan B
Maturity Date; 

 

(iv)          the
Borrower shall execute and deliver an Incremental Term Loan Note to each Lender
making an Incremental Term Loan to reflect such Lender’s Incremental Term Loan;

 

(v)           the
Administrative Agent and the Lenders shall have received a Officer’s Compliance
Certificate of the chief financial officer of the Borrower demonstrating that,
as of the applicable Incremental Term Loan Effective Date and after giving
effect thereto (including the use of proceeds thereof) and to any Incremental
Term Loans made or to be made in connection therewith, the Borrower is in pro
forma compliance with each of the financial covenants set forth in Article
X; 

 

(vi)          no Default
or Event of Default shall have occurred and be continuing as of the applicable
Incremental Term Loan Effective Date or after giving effect to the making of
any such Incremental Term Loan (including the use of proceeds thereof);  

 

(vii)         the Borrower and
each Lender making an Incremental Term Loan shall execute and deliver one or
more Incremental Term Loan Agreements to the Administrative Agent, for
acknowledgment by the Administrative Agent and the Borrower and shall be in
form and substance reasonably satisfactory to the Administrative Agent and the
Borrower; 

 

31

 

(viii)                        the
Applicable Margin and pricing grid, if applicable, for any proposed Incremental
Term Loan shall be determined on the applicable Incremental Term Loan Effective
Date; provided that the all-in-yield, after giving effect to any
offering of such proposed Incremental Term Loan at a discount from par or any
fees paid to the Lenders in connection with such proposed Incremental Term
Loan, shall not exceed the all-in-yield (as reasonably determined by the
Administrative Agent) with respect to the Term Loan B or any existing
Incremental Term Loan;

 

(ix)                                the
terms and conditions applicable to such Incremental Term Loan shall, except to
the extent otherwise provided in this Section 4.4, be substantially
similar to the terms and conditions applicable to the Term Loan B and any prior
Incremental Term Loan; and

 

(x)                                   the
Administrative Agent shall have received any documents or information,
including, without limitation, resolutions and opinions of counsel, in
connection with such Incremental Term Loan as and to the extent it may
reasonably request.

 

(d)                                 Upon
the execution, delivery, acceptance and recording of the applicable Incremental
Term Loan Agreement, from and after the applicable Incremental Term Loan
Effective Date, each Lender making an Incremental Term Loan shall have an
Incremental Term Loan Commitment as set forth in the Register and all the
rights and obligations of a Lender with such an Incremental Term Loan
Commitment hereunder.  The applicable
Lenders shall make the Incremental Term Loan to the Borrower on the applicable
Incremental Term Loan Effective Date in an amount equal to the Incremental Term
Loan Commitment of each such Lender with respect to such Incremental Term Loan
pursuant to clause (ii) above.

 

SECTION 4.5                     Prepayments of Term Loans and
Incremental Term Loans.

 

(a)                                  Optional
Prepayment of Term Loans and Incremental Term Loans.

 

(i)                                     Optional
Prepayment of Term Loan B and Incremental Term Loans. The Borrower shall
have the right at any time and from time to time to repay the Term Loan B, and,
if applicable, any Incremental Term Loans, in whole or in part, upon delivery
to the Administrative Agent of a Notice of Prepayment at least three (3)
Business Days prior to repayment with respect to LIBOR Rate Loans and one (1)
Business Day prior to repayment with respect to Base Rate Loans, specifying the
date and amount of repayment, whether the repayment is of the Term Loan B or
any Incremental Term Loan, if applicable, and whether the repayment if of LIBOR
Rate Loans, Base Rate Loans, or a combination thereof, and, if a combination
thereof, the amount allocable to each. 
If any such notice is given, the amount specified in such notice shall
be due and payable on the date set forth in such notice.  Partial repayments pursuant to this Section
4.5(a)(i) shall be in an aggregate amount of $1,000,000 and shall be
applied as follows: first, to reduce, in direct order, the next four
scheduled principal installments of the Term Loan B set forth in Section 4.3
and any Incremental Term Loans, as applicable (on a pro  rata
basis among such Loans), following the date of such prepayment and second,
to reduce, in the inverse order of maturity, the remaining scheduled principal
installments of the Term Loan B set forth in Section 4.3 and any
Incremental Term Loan, as applicable, (on a pro  rata basis

 

32

 

among such
Loans).  Each repayment shall be
accompanied by any amount required to be paid pursuant to Section 5.10
hereof. Any portion of the Term Loan B or Incremental Term Loan prepaid
pursuant to this Section 4.5(a)(i) may not be reborrowed.

 

(ii)                                  Optional
Prepayment of Term Loan C.  The
Borrower shall have the right at any time and from time to time, upon delivery
to the Administrative Agent of a Notice of Prepayment at least three (3)
Business Days prior to any repayment, to prepay the Term Loan C, in whole or in
part, which prepayment shall be subject to the provisions of Section 5.10.
Each optional prepayment of the Term Loan C hereunder shall be in an aggregate principal
amount of at least $1,000,000 and shall be applied as follows: first, to
reduce, in direct order, the next four scheduled principal installments of the
Term Loan C set forth in Section 4.3 following the date of such
prepayment and second, to reduce, in the inverse order of maturity, the
remaining scheduled principal installments of the Term Loan C set forth in Section
4.3. Each repayment shall be accompanied by any amount required to be paid
pursuant to Section 5.10 hereof. Any portion of the Term Loan C prepaid
pursuant to this Section 4.5(a)(ii) may not be reborrowed.

 

(b)                                 Mandatory
Prepayment of Term Loans and Incremental Term Loans.

 

(i)                                     Debt
Proceeds.  The Borrower shall prepay
the Term Loans and, if applicable, any Incremental Term Loans, in the manner
set forth in Section 4.5(b)(v) below in amounts equal to one hundred
percent (100%) of the aggregate Net Cash Proceeds from any incurrence of Debt
(other than Debt permitted under Section 11.1) by the Borrower or any of
its Subsidiaries.  Such prepayment shall
be made within three (3) Business Days after the date of receipt of Net Cash
Proceeds of any such transaction.

 

(ii)                                  Equity
Proceeds.  The Borrower shall prepay
the Term Loans and, if applicable, any Incremental Term Loans, in the manner set
forth in Section 4.5(b)(v) below in an amount equal to fifty percent
(50%) of the aggregate Net Cash Proceeds from any offering of equity securities
by the Borrower or any of its Subsidiaries; provided that so long as no
Event of Default has occurred and is continuing, no prepayments shall be
required from the Net Cash Proceeds from the Proposed Issuance which are used
to finance or refinance a Permitted Acquisition; provided further that
such Net Cash Proceeds are so applied to finance or refinance a Permitted
Acquisition within sixty (60) days following the Borrower’s receipt of the Net
Cash Proceeds of the Proposed Issuance. 
Such prepayment shall be made within three (3) Business Days after the
date of receipt of Net Cash Proceeds of any such transaction.

 

(iii)                               Asset
Sale Proceeds.  No later than two
hundred seventy (270) days following the receipt by the Borrower or any of its
Subsidiaries of any Net Cash Proceeds which have not been reinvested as of such
date in similar assets, the Borrower shall prepay the Term Loans and any
Incremental Term Loans in the manner set forth in Section 4.5(b)(v)
below in an amount equal to one hundred percent (100%) of the aggregate Net
Cash Proceeds from the sale or other disposition or series of related sales or
other dispositions of assets by the Borrower or any of its Subsidiaries
permitted pursuant to Section 11.5(e).

 

33

 

(iv)                              Insurance
Proceeds.  No later than one hundred
twenty (120) days following the date of receipt by the Borrower or any of its
Subsidiaries of any Net Cash Proceeds under any of the insurance policies
maintained pursuant to Section 9.3 (“Insurance Proceeds”) which
have not been reinvested as of such date in similar assets, the Borrower shall
prepay the Term Loans and, if applicable, any Incremental Term Loans in the
manner set forth in Section 4.5(b)(v) below in an amount equal to one
hundred percent (100%) of the aggregate amount of such Insurance Proceeds
received by the Borrower or any of its Subsidiaries. Notwithstanding any of the
foregoing to the contrary, upon and during the continuance of an Event of
Default and upon notice from the Administrative Agent, all Insurance Proceeds
received by the Borrower and its Subsidiaries shall be applied to prepay the
Term Loans and, if applicable, any Incremental Term Loans, such prepayments to
be made within three (3) Business Days after the Borrower’s or any such
Subsidiary’s receipt of such Insurance Proceeds.

 

(v)                                 Notice;
Manner of Payment.  Upon the occurrence
of any event triggering the prepayment requirement under Sections 4.5(b)(i)
through 4.5(b)(iv), the Borrower shall promptly deliver a Notice of
Prepayment to the Administrative Agent and upon receipt of such notice, the
Administrative Agent shall promptly so notify the Lenders. Each prepayment
under this Section 4.5(b) shall be applied as follows: first, to
reduce in inverse order of maturity the remaining scheduled principal
installments of the Term Loans pursuant to Section 4.3 and any
Incremental Term Loans (on a pro rata basis among such Loans) and (ii) second,
to the extent of any excess (the “Excess Proceeds”), to repay the
Revolving Loans pursuant to Section 2.3(f).

 

Amounts
prepaid under either of the Term Loans pursuant to this Section may not be
reborrowed.  Each prepayment shall be
accompanied by any amount required to be paid pursuant to Section 5.10
hereof.

 

ARTICLE V

 

GENERAL LOAN PROVISIONS 

 

SECTION
5.1                     Interest.

 

(a)                                  Interest
Rate Options.  Subject to the
provisions of this Section 5.1, at the election of the Borrower, (i)
Revolving Credit Loans and the Term Loan B shall bear interest at the Base Rate
or the LIBOR Rate plus, in each case, the Applicable Margin as set forth
in Section 5.1(c) below; provided that (A) the LIBOR Rate shall not
be available for Revolving Credit Loans until three (3) Business Days after the
Closing Date and (B) the LIBOR Rate shall not be available for the Term Loan B
until three (3) Business Days after the Closing Date unless the Borrower has
delivered to the Administrative Agent a letter in form and substance
satisfactory to the Administrative Agent indemnifying the Term Loan Lenders in
the manner set forth in Section 5.10 of this Agreement and (ii) the Term
Loan C shall bear interest at the RTFC Variable Rate or the RTFC Fixed Rate; provided
that the RTFC Fixed Rate shall not be available until five (5) days after the
Closing Date plus, in each case the Applicable Margin as set forth
below.  The Borrower shall select the
rate of interest and LIBOR Interest Period or Term Interest Period, if

 

34

 

any,
applicable to any Loan at the time a Notice of Borrowing is given pursuant to Section
2.2 or at the time a Notice of Conversion/Continuation is given pursuant to
Section 5.2. Each Revolving Credit Loan, Term Loan B or portion thereof
bearing interest based on the Base Rate shall be a “Base Rate Loan”, and each
Revolving Credit Loan, Term Loan B or portion thereof bearing interest based on
the LIBOR Rate shall be a “LIBOR Rate Loan.” Any Revolving Credit Loan, any
Term Loan B or any portion thereof as to which the Borrower has not duly
specified an interest rate as provided herein shall be deemed a Base Rate
Loan.  The portion of the Term Loan C
bearing interest based on the RTFC Variable Rate shall be a “RTFC Variable Rate
Loan”, and the portion thereof bearing interest based on the RTFC Fixed Rate
shall be a “RTFC Fixed Rate Loan.” Any portion of the Term Loan C as to which
the Borrower has not duly specified an interest rate as provided herein shall
be deemed a RTFC Variable Rate Loan.

 

(b)                                 (i)                                     LIBOR
Interest Periods.  In connection with
each LIBOR Rate Loan, the Borrower, by giving notice at the times described in Section
5.1(a), shall elect an interest period (each, a “LIBOR Interest Period”)
to be applicable to such Loan, which LIBOR Interest Period shall be a period of
one (1), two (2), three (3), or six (6) months with respect to each LIBOR Rate
Loan; provided that:

 

(A)                              the
LIBOR Interest Period shall commence on the date of advance of or conversion to
any LIBOR Rate Loan and, in the case of immediately successive LIBOR Interest
Periods, each successive LIBOR Interest Period shall commence on the date on
which the next preceding LIBOR Interest Period expires;

 

(B)                                if
any LIBOR Interest Period would otherwise expire on a day that is not a
Business Day, such LIBOR Interest Period shall expire on the next succeeding
Business Day; provided, that if any LIBOR Interest Period with respect
to a LIBOR Rate Loan would otherwise expire on a day that is not a Business Day
but is a day of the month after which no further Business Day occurs in such
month, such LIBOR Interest Period shall expire on the next preceding Business
Day;

 

(C)                                any
LIBOR Interest Period with respect to a LIBOR Rate Loan that begins on the last
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 Interest
Period) shall end on the last Business Day of the relevant calendar month at
the end of such LIBOR Interest Period;

 

(D)                               no
LIBOR Interest Period shall extend beyond the Revolving Credit Maturity Date,
the Term Loan B Maturity Date, or if pursuant to Section 5.3(c) the Term
Loan C becomes a LIBOR Rate Loan, the Term Loan C Maturity Date, each as
applicable, and LIBOR Interest Periods shall be selected by the Borrower so as
to permit the Borrower to make mandatory reductions of the Revolving Credit
Commitment pursuant to Section 2.5(b) without payment of any amounts pursuant
to Section 5.10;

 

(E)                                 there
shall be no more than eight (8) LIBOR Interest Periods outstanding at any time;
and

 

35

 

(F)                                 notwithstanding
anything to the contrary, the initial LIBOR Interest Periods immediately
following the Closing Date may, with the consent of the Administrative Agent,
be for periods shorter than the periods specified above to the extent necessary
to permit the Borrower to match such LIBOR Interest Periods to its Existing
Interest Rate Contracts.

 

(ii)                                  Term
Interest Periods.  In connection with
each RTFC Fixed Rate Loan, the Borrower, by giving notice at the times
described in Section 5.1(a), shall elect an interest period (each, a “Term
Interest Period”) to be applicable to the Term Loan C, which Term Interest
Period shall, in the case of a RTFC Fixed Rate Loan, be a period of one (1),
two (2), three (3), four (4), five (5), six (6) or seven (7) years; provided
that:

 

(A)                              the
Term Interest Period shall commence on the date of advance of the Term Loan C; provided,
however that the Term Interest Period for any conversion of any RTFC Variable
Rate Loan to a RTFC Fixed Rate Loan and, in the case of immediately successive
Term Interest Periods, each successive Term Interest Period shall commence on
the date on which the next preceding Term Interest Period expires;

 

(B)                                if
any Term Interest Period would otherwise expire on a day that is not a Business
Day, such Term Interest Period shall expire on the next succeeding Business
Day; provided, that if any Term Interest Period with respect to a RTFC
Fixed Rate Loan would otherwise expire on a day that is not a Business Day but
is a day of the month after which no further Business Day occurs in such month,
such Term Interest Period shall expire on the next preceding Business Day;

 

(C)                                any
Term Interest Period with respect to a RTFC Fixed Rate Loan that begins on the
last 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 Term
Interest Period) shall end on the last Business Day of the relevant calendar
month at the end of such Term Interest Period; and

 

(D)                               no
Term Interest Period shall extend beyond the Term Loan C Maturity Date.

 

(c)                                  Applicable
Margin.  The Applicable Margin
provided for in Section 5.1(a) with respect to any Loan (the “Applicable
Margin”) shall be based upon the table set forth below (or, with respect to
Incremental Term Loans, as set forth in the Incremental Term Loan Notification)
and shall be determined and adjusted quarterly on the date (each a “Calculation
Date”) ten (10) Business Days after the date by which the Borrower is
required to provide an Officer’s Compliance Certificate for the most recently
ended fiscal quarter of the Borrower; provided, however, that (a)
from the Closing Date until the first date thereafter by which the Borrower is
required to provide an Officer’s Compliance Certificate as required by Section
8.3 for the most recently ended fiscal quarter of the Borrower, the
Applicable Margin shall be based on Pricing Level I and (b) if the Borrower
fails to provide the Officer’s Compliance Certificate as required by Section
8.3 for the most recently ended fiscal quarter of the Borrower preceding
the applicable Calculation Date, the Applicable Margin from such Calculation
Date shall be based on Pricing Level I (as shown below) until such time as an
appropriate Officer’s Compliance

 

36

 

Certificate is
provided, at which time the Pricing Level shall be determined by reference to
the Leverage Ratio as of the last day of the most recently ended fiscal quarter
of the Borrower preceding such Calculation Date, such adjustment to occur ten
(10) Business Days after the receipt of such certificate.  The Applicable Margin shall be effective from
one Calculation Date until the next Calculation Date.  Any adjustment in the Applicable Margin shall
be applicable to all Extensions of Credit then existing or subsequently made or
issued. 

 

	
  Pricing

  Level

  	
   

  	
  Leverage Ratio

  	
   

  	
  Revolver/Term 

  Loan B 

  LIBOR

  	
   

  	
  Revolver/Term 

  Loan B 

  Base Rate

  	
   

  	
  Term 

  Loan C

  	
   

  
	
  I

  	
   

  	
  Greater
  than or equal to 3.00 to 1.00

  	
   

  	
  1.750

  	
  %

  	
  0.750

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Greater
  than or equal to 2.00 to 1.00, but less than 3.00 to 1.00

  	
   

  	
  1.500

  	
  %

  	
  0.500

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Less
  than 2.00 to 1.00

  	
   

  	
  1.250

  	
  %

  	
  0.250

  	
  %

  	
  0.00

  	
  %

  

 

(d)                                 Default
Rate.  Subject to Section 12.3,
(i) immediately upon the occurrence and during the continuance of an Event of
Default under Section 12.1(a), (b), (j) or (k), or (ii) at the
discretion of the Administrative Agent or as directed by the Required Lenders,
upon the occurrence and during the continuance of any other Event of Default,
(i) the Borrower shall no longer have the option to request LIBOR Rate Loans or
Letter of Credit, (ii) all outstanding LIBOR Rate Loans shall bear interest at
a rate per annum two percent (2%) in excess of the rate then applicable to
LIBOR Rate Loans, as applicable, until the end of the applicable LIBOR Interest
Period and thereafter at a rate equal to two percent (2%) in excess of the rate
then applicable to Base Rate Loans, (iii) all outstanding Base Rate Loans shall
bear interest at a rate per annum equal to two percent (2%) in excess of the
rate then applicable to Base Rate Loans, (iv) all outstanding RTFC Variable
Rate Loans shall bear interest at a rate per annum equal to two percent (2%) in
excess of the rate then applicable to RTFC Variable Rate Loans and (v) all
outstanding RTFC Fixed Rate Loans shall bear interest at a rate per annum equal
to two percent (2%) in excess of the rate then applicable to RTFC Fixed Rate
Loan.  Interest shall continue to accrue
on the Obligations after the filing by or against the Borrower of any petition
seeking any relief in bankruptcy or under any act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign.

 

(e)                                  Interest
Payment and Computation.  Interest on
each Base Rate Loan, RTFC Variable Rate Loan and RTFC Fixed Rate Loan shall be
payable in arrears on the last Business Day of each calendar quarter commencing
December 31, 2005; and interest on each LIBOR Rate Loan shall be payable on the
last day of each LIBOR Interest Period applicable thereto, and if such LIBOR
Interest Period extends over three (3) months, in addition to such date, at the
end of each three (3) month interval during such LIBOR Interest Period.  Other than calculations made in respect of
interest at the Base Rate and the RTFC Variable Rate (which shall be made on
the basis of actual number of days elapsed in a 365/366 day year), (i) all
interest rates, fees and commissions provided hereunder shall be computed on
the basis of a 360-day year and assessed for the actual number of days elapsed
and (ii) the RTFC Fixed Rate shall be computed on the basis of a 360 day year
with thirty (30) day months.

 

37

 

(f)                                    Maximum
Rate.  In no contingency or event
whatsoever shall the aggregate of all amounts deemed interest hereunder or
under any of the Notes charged or collected pursuant to the terms of this
Agreement or pursuant to any of the Notes exceed the highest rate permissible
under any Applicable Law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. 
In the event that such a court determines that the Lenders have charged
or received interest hereunder in excess of the highest applicable rate, the
rate in effect hereunder shall automatically be reduced to the maximum rate
permitted by Applicable Law and the Lenders shall at the Administrative Agent’s
option (i) promptly refund to the Borrower any interest received by Lenders in
excess of the maximum lawful rate or (ii) shall apply such excess to the
principal balance of the Obligations.  It
is the intent hereof that the Borrower not pay or contract to pay, and that
neither the Administrative Agent nor any Lender receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be paid by the Borrower under Applicable Law.

 

SECTION
5.2                     Notice
and Manner of Conversion or Continuation of Loans.  Provided that no Default or Event of Default
has occurred and is then continuing, the Borrower shall have the option to (a)
convert at any time following the third Business Day after the Closing Date all
or any portion of its outstanding Base Rate Loans in a principal amount equal
to $500,000 or any whole multiple of $500,000 in excess thereof into one or
more LIBOR Rate Loans and (b) upon the expiration of any LIBOR Interest Period,
(i) convert all or any part of its outstanding LIBOR Rate Loans in a principal
amount equal to $250,000 or a whole multiple of $100,000 in excess thereof into
Base Rate Loans or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans.
Whenever the Borrower desires to convert or continue Loans as provided above,
the Borrower shall give the Administrative Agent irrevocable prior written
notice in the form attached as Exhibit D (a “Notice of
Conversion/Continuation”) not later than 11:00 a.m. three (3) Business Days
before the day on which a proposed conversion or continuation of such Loan is
to be effective specifying (A) the Loans to be converted or continued, and, in
the case of any LIBOR Rate Loan to be converted or continued, the last day of
the LIBOR Interest Period therefor, (B) the effective date of such conversion
or continuation (which shall be a Business Day), (C) the principal amount of
such Loans to be converted or continued, and (D) the LIBOR Interest Period to
be applicable to such converted or continued LIBOR Rate Loan.  The Administrative Agent shall promptly
notify the Lenders of such Notice of Conversion/Continuation.

 

SECTION
5.3                     Conversion
of Term Loan Interest Rate.

 

(a)                                  Optional
Conversion.  Provided that no Default
or Event of Default has occurred and is then continuing, the Borrower may, on
any Business Day, (i) convert a RTFC Variable Rate Loan into a RTFC Fixed Rate
Loan or convert a RTFC Fixed Rate Loan of one Term Interest Period into a RTFC
Fixed Rate Loan of another Term Interest Period, or (ii) convert a RTFC Fixed
Rate Loan into a RTFC Variable Rate Term Loan; provided that

 

(A)                              any
conversion of a RTFC Fixed Rate Loan into a RTFC Variable Rate Term Loan, in
each case, shall be made only on the last day of a Term Interest Period for
such RTFC Fixed Rate Loan; and

 

38

 

(B)                                any
conversion of a RTFC Variable Rate Loan into a RTFC Fixed Rate Loan shall be
made only if no Default or Event of Default shall have occurred and be
continuing and shall be in an amount not less than $250,000 and additional
increments of $250,000 in excess thereof.

 

Whenever the
Borrower desires to convert or continue the interest rate applicable to the
Term Loan C, as provided above, the Borrower shall give the Administrative Agent
irrevocable prior written notice in the form attached as Exhibit D not
later than 11:00 a.m. on (x) the fifth (5th) Business
Day prior to the date upon which those conversions permitted in subsection
(a)(i) above are to be effective or (y) the Business Day immediately preceding
the date on which those conversions permitted in subsection (a)(ii) above are
to be effective, in each case specifying (i) the portion of the Term Loan C to
be converted or continued, and, in the case of any RTFC Fixed Rate Loan to be
converted or continued, the last day of the Term Interest Period therefor, (B)
the effective date of such conversion or continuation (which shall be a
Business Day), (C) the principal amount of the portion of the Term Loan C to be
converted or continued, and (D) the Term Interest Period to be applicable to
such converted or continued RTFC Fixed Rate Loan. The Administrative Agent
shall promptly notify the Term Loan Lenders of such Notice of
Conversion/Continuation.

 

(b)                                 Mandatory
Conversion.

 

(i)                                     If
the Borrower shall fail to select the duration of any Term Interest Period for
any RTFC Fixed Rate Loan, the Administrative Agent will forthwith so notify the
Borrower and the Term Loan Lenders, whereupon each such RTFC Fixed Rate Loan
will automatically, on the last day of the then existing Term Interest Period
therefor, convert to a RTFC Variable Rate Term Loan.

 

(ii)                                  Upon
the occurrence and during the continuance of any Default, (A) each RTFC Fixed
Rate Loan will automatically, on the last day of the then existing Term
Interest Period therefor, convert to a RTFC Variable Rate Loan, and (B) the
obligation of the Term Loan Lenders to convert all or any portion of the Term
Loan C into a RTFC Fixed Rate Loan shall be suspended.

 

(c)                                  Conversion
of Term Loan C to LIBOR Rate.  If
RTFC ceases to be the sole Term Loan Lender with a Term Loan C Commitment, then
the RTFC Fixed Rate and the RTFC Variable Rate shall no longer be available and
the interest rate applicable to all outstanding RTFC Fixed Rate Loans and RTFC
Variable Rate Loans shall immediately be converted to LIBOR Rate Loans with the
interest rate and interest period applicable thereto to be determined in
accordance with Section 5.1(b).

 

SECTION
5.4                     Fees.

 

(a)                                  Commitment
Fee.  Commencing on the Closing Date,
the Borrower shall pay to the Administrative Agent, for the account of the
Revolving Credit Lenders, a non-refundable commitment fee at a rate per annum
equal to 0.35% on the average daily unused portion of the Revolving Credit
Commitment.  The commitment fee shall be
payable in arrears on the last

 

39

 

Business Day
of each calendar quarter during the term of this Agreement commencing December
31, 2005, and on the Revolving Credit Maturity Date.  Such commitment fee shall be distributed by
the Administrative Agent to the Revolving Credit Lenders pro  rata
in accordance with such Lenders’ respective Revolving Credit Commitment
Percentages.

 

(b)                                 Administrative
Agent’s and Other Fees.  To
compensate the Administrative Agent for structuring and syndicating the Loans
and for its obligations hereunder and the other Lenders obligations hereunder,
the Borrower agrees to pay to the Administrative Agent, the fees set forth in
the Engagement Letter.

 

SECTION
5.5                     Manner
of Payment; Evidence of Indebtedness.

 

(a)                                  Manner
of Payment.  Each payment by the
Borrower on account of the principal of or interest on the Loans or of any fee,
commission or other amounts (including the Reimbursement Obligation) payable to
the Lenders under this Agreement or any Note shall be made not later than 1:00
p.m. on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent’s Office for the account of
the Lenders (other than as set forth below) pro  rata in
accordance with their respective Revolving Credit Commitment Percentages, Term
Loan B Commitment Percentages, Term Loan C Commitment Percentages or
Incremental Term Loan Percentages, as applicable, (except as specified below),
in Dollars, in immediately available funds and shall be made without any
set-off, counterclaim or deduction whatsoever. 
Any payment received after such time but before 2:00 p.m. on such day
shall be deemed a payment on such date for the purposes of Section 12.1,
but for all other purposes shall be deemed to have been made on the next
succeeding Business Day.  Any payment
received after 2:00 p.m. shall be deemed to have been made on the next
succeeding Business Day for all purposes. Upon receipt by the Administrative
Agent of each such payment, the Administrative Agent shall distribute to each
Lender at its address for notices set forth herein its pro  rata
share of such payment in accordance with such Lender’s Revolving Credit
Commitment Percentage, Term Loan B Commitment Percentage, Term Loan C
Commitment Percentage or Incremental Term Loan Commitment Percentage, as
applicable (except as specified below) and shall wire advice of the amount of
such credit to each Lender.  Each payment
to the Administrative Agent of the Issuing Lender’s fees or L/C Participants’
commissions shall be made in like manner, but for the account of the Issuing
Lender or the L/C Participants, as the case may be.  Each payment to the Administrative Agent of
Administrative Agent’s fees or expenses shall be made for the account of the
Administrative Agent and any amount payable to any Lender under Sections
5.9, 5.10, 5.11, 5.12 or 14.2 shall be paid
to the Administrative Agent for the account of the applicable Lender.  Subject to Section 5.1(b)(ii), if any
payment under this Agreement or any Note shall be specified to be made upon a
day which is not a Business Day, it shall be made on the next succeeding day
which is a Business Day and such extension of time shall in such case be
included in computing any interest if payable along with such payment.

 

(b)                                 Evidence
of Indebtedness.

 

(i)                                     The
Extensions of Credit made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender and by the Administrative Agent

 

40

 

in the
ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Extensions of Credit made by the Lenders to the Borrower
and the interest and payments thereon. 
Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Obligations. 
In the event of any conflict between the accounts and records maintained
by any Lender and the accounts and records of the Administrative Agent in
respect of such matters, the accounts and records of the Administrative Agent
shall control in the absence of manifest error. 
Upon the request of any Lender made through the Administrative Agent,
the Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a Revolving Credit Note and/or Term Note, as applicable,
which shall evidence such Lender’s Revolving Credit Loans, Term Loan B and/or
Term Loan C, as applicable, in addition to such accounts or records. Each
Lender may attach schedules to its Notes and endorse thereon the date, amount
and maturity of its Loans and payments with respect thereto.

 

(ii)                                  Participations.
 In addition to the accounts and records
referred to in subsection (a), each Lender and the Administrative Agent shall
maintain in accordance with its usual practice accounts or records evidencing
the purchases and sales by such Lender of participations in Letters of
Credit.  In the event of any conflict
between the accounts and records maintained by the Administrative Agent and the
accounts and records of any Lender in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of manifest
error.

 

SECTION
5.6                     Crediting
of Payments and Proceeds.  In the
event that the Borrower shall fail to pay any of the Obligations when due and
the Obligations have been accelerated pursuant to Section 12.2, all
payments received by the Lenders upon the Obligations and all net proceeds from
the enforcement of the Obligations shall be applied:

 

First,
to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts, including reasonable attorney fees, payable to the
Administrative Agent in its capacity as such and the Issuing Lender in its
capacity as such (ratably among the Administrative Agent and the Issuing Lender
in proportion to the respective amounts described in this clause First
payable to them);

 

Second,
to payment of that portion of the Obligations constituting fees, indemnities
and other amounts (other than principal and interest) payable to the Lenders,
including reasonable attorney fees (ratably among the Lenders in proportion to
the respective amounts described in this clause Second payable to them);

 

Third,
to payment of that portion of the Obligations constituting accrued and unpaid
interest on the Loans and Reimbursement Obligations and any Hedging Obligations
(including any termination payments and any accrued and unpaid interest
thereon) (ratably among the Lenders in proportion to the respective amounts
described in this clause Third payable to them);

 

41

 

Fourth,
to payment of that portion of the Obligations constituting unpaid principal of
the Loans and Reimbursement Obligations (ratably among the Lenders in
proportion to the respective amounts described in this clause Fourth
held by them);

 

Fifth,
to the Administrative Agent for the account of the Issuing Lender, to cash
collateralize any L/C Obligations then outstanding; and

 

Last,
the balance, if any, after all of the Obligations have been indefeasibly paid
in full, to the Borrower or as otherwise required by Law.

 

SECTION
5.7                     Adjustments.
 If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Loans or other obligations hereunder
resulting in such Lender’s receiving payment of a proportion of the aggregate
amount of its Loans and accrued interest thereon or other such obligations
(other than pursuant to Sections 5.9, 5.10, 5.12 or 14.2
hereof) greater than its pro  rata share thereof as provided
herein, then the Lender receiving such greater proportion shall (a) notify the
Administrative Agent of such fact, and (b) purchase (for cash at face value)
participations in the Loans and such other obligations of the other Lenders, or
make such other adjustments as shall be equitable, so that the benefit of all
such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and other amounts owing them; provided that

 

(a)                                  if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest,
and

 

(b)                                 the
provisions of this paragraph shall not be construed to apply to (x) any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or (y) any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in Letters of Credit to any assignee or participant, other than to the Borrower
or any Subsidiary thereof (as to which the provisions of this paragraph shall
apply).

 

Each Loan
Party consents to the foregoing and agrees, to the extent it may effectively do
so under Applicable Law, that any Lender acquiring a participation pursuant to
the foregoing arrangements may exercise against each Loan Party rights of
setoff and counterclaim with respect to such participation as fully as if such
Lender were a direct creditor of each Loan Party in the amount of such
participation.

 

SECTION
5.8                     Nature
of Obligations of Lenders Regarding Extensions of Credit; Assumption by the
Administrative Agent.  The
obligations of the Lenders under this Agreement to make the Loans and issue or
participate in Letters of Credit are several and are not joint or joint and
several.  Unless the Administrative Agent
shall have received notice from a Lender prior to a proposed borrowing date that
such Lender will not make available to the Administrative Agent such Lender’s
ratable portion of the amount to be borrowed on such date (which notice shall
not release such Lender of its obligations hereunder), the Administrative

 

42

 

Agent may
assume that such Lender has made such portion available to the Administrative
Agent on the proposed borrowing date in accordance with Section 2.2(b)
and 4.2, and the Administrative Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount.  If such amount is made available to the
Administrative Agent on a date after such borrowing date, such Lender shall pay
to the Administrative Agent on demand an amount, until paid, equal to the
product of (a) the amount of such Lender’s Revolving Credit Commitment
Percentage, Term Loan B Commitment Percentage, Term Loan C Commitment
Percentage or Incremental Term Loan Percentage, as applicable, of such
borrowing, times (b) the daily average Federal Funds Rate during such
period as determined by the Administrative Agent, times (c) a fraction
the numerator of which is the number of days that elapse from and including
such borrowing date to the date on which such Lender’s Revolving Credit
Commitment Percentage, Term Loan B Commitment Percentage, Term Loan C
Commitment Percentage or Incremental Term Loan Percentage, as applicable, of
such borrowing shall have become immediately available to the Administrative
Agent and the denominator of which is 360. A certificate of the Administrative
Agent with respect to any amounts owing under this Section shall be conclusive,
absent manifest error.  If such Lender’s
Revolving Credit Commitment Percentage, Term Loan B Commitment Percentage, Term
Loan C Commitment Percentage or Incremental Term Loan Percentage, as
applicable, of such borrowing is not made available to the Administrative Agent
by such Lender within three (3) Business Days of such borrowing date, the
Administrative Agent shall be entitled to recover such amount made available by
the Administrative Agent with interest thereon at the rate per annum applicable
to Base Rate Loans hereunder, on demand, from the Borrower.  The failure of any Lender to make its
Revolving Credit Commitment Percentage, Term Loan B Commitment Percentage, Term
Loan C Commitment Percentage or Incremental Term Loan Percentage, as
applicable, of any Loan available shall not relieve it or any other Lender of
its obligation, if any, hereunder to make its Revolving Credit Commitment
Percentage, Term Loan B Commitment Percentage, Term Loan C Commitment
Percentage or Incremental Term Loan Percentage, as applicable, of such Loan
available on such borrowing date, but no Lender shall be responsible for the
failure of any other Lender to make its Revolving Credit Commitment Percentage,
Term Loan B Commitment Percentage, Term Loan C Commitment Percentage or
Incremental Term Loan Percentage, as applicable, of such Loan available on the
borrowing date.

 

SECTION 5.9                     Changed Circumstances.

 

(a)                                  Circumstances
Affecting LIBOR Rate Availability.  If
with respect to any LIBOR Interest Period the Administrative Agent or any
Lender (after consultation with Administrative Agent) shall determine that, by
reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in eurodollars, in the applicable amounts are not being
quoted via Telerate Page 3750 or offered to the Administrative Agent or such
Lender for such LIBOR Interest Period, then the Administrative Agent shall
forthwith give notice thereof to the Borrower. Thereafter, until the
Administrative Agent notifies the Borrower that such circumstances no longer
exist, the obligation of the Lenders to make LIBOR Rate Loans and the right of
the Borrower to convert any Loan to or continue any Loan as a LIBOR Rate Loan
shall be suspended, and the Borrower shall repay in full (or cause to be repaid
in full) the then outstanding principal amount of each such LIBOR Rate Loans
together with accrued interest thereon, on the last day of the then current
LIBOR Interest Period applicable to such LIBOR

 

43

 

Rate Loan or
convert the then outstanding principal amount of each such LIBOR Rate Loan to a
Base Rate Loan as of the last day of such LIBOR Interest Period.

 

(b)                                 Laws
Affecting LIBOR Rate Availability.  If,
after the date hereof, the introduction of, or any change in, any Applicable
Law or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
of its Lending Offices) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank or
comparable agency, shall make it unlawful or impossible for any of the Lenders
(or any of their respective Lending Offices) to honor its obligations hereunder
to make or maintain any LIBOR Rate Loan, such Lender shall promptly give notice
thereof to the Administrative Agent and the Administrative Agent shall promptly
give notice to the Borrower and the other Lenders.  Thereafter, until the Administrative Agent
notifies the Borrower that such circumstances no longer exist, (i) the obligations
of the Lenders to make LIBOR Rate Loans and the right of the Borrower to
convert any Loan or continue any Loan as a LIBOR Rate Loan shall be suspended
and thereafter the Borrower may select only Base Rate Loans hereunder, and (ii)
if any of the Lenders may not lawfully continue to maintain a LIBOR Rate Loan
to the end of the then current LIBOR Interest Period applicable thereto as a
LIBOR Rate Loan, the applicable LIBOR Rate Loan shall immediately be converted
to a Base Rate Loan for the remainder of such LIBOR Interest Period.

 

(c)                                  Increased
Costs.  If, after the date hereof,
the introduction of, or any change in, any Applicable Law, or in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any of the Lenders (or any of their respective
Lending Offices) with any request or directive (whether or not having the force
of law) of such Governmental Authority, central bank or comparable agency:

 

(i)                                     shall
subject any of the Lenders (or any of their respective Lending Offices) to any
tax, duty or other charge with respect to any Note, Letter of Credit or
Application or shall change the basis of taxation of payments to any of the
Lenders (or any of their respective Lending Offices) of the principal of or
interest on any Note, Letter of Credit or Application or any other amounts due
under this Agreement in respect thereof (except for changes in the rate of tax
on the overall net income of any of the Lenders or any of their respective
Lending Offices imposed by the jurisdiction in which such Lender is organized
or is or should be qualified to do business or such Lending Office is located);
or

 

(ii)                                  shall
impose, modify or deem applicable any reserve (including, without limitation,
any imposed by the Board of Governors of the Federal Reserve System), special
deposit, insurance or capital or similar requirement against assets of,
deposits with or for the account of, or credit extended by any of the Lenders
(or any of their respective Lending Offices) or shall impose on any of the
Lenders (or any of their respective Lending Offices) or the foreign exchange
and interbank markets any other condition affecting any Note; and the result of
any of the foregoing is to increase the costs to any of the Lenders of making,
converting into or maintaining any LIBOR Rate Loan (or of maintaining its
obligation to make such a Loan) or issuing, participating in or maintaining any
Letter of Credit or to reduce the yield or amount of

 

44

 

any sum
received or receivable by any of the Lenders under this Agreement or under the
Notes in respect of a LIBOR Rate Loan or Letter of Credit or Application, then
such Lender shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify the Borrower of such fact and demand
compensation therefor and, within fifteen (15) days after such notice by the
Administrative Agent, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or Lenders for such increased
cost or reduction. The Administrative Agent will promptly notify the Borrower
of any event of which it has knowledge which will entitle such Lender to
compensation pursuant to this Section 5.8(c); provided, that the
Administrative Agent shall incur no liability whatsoever to the Lenders or the
Borrower in the event it fails to do so. 
The amount of such compensation shall be determined, in the applicable
Lender’s sole discretion, based upon the assumption that such Lender funded its
Commitment Percentage of the LIBOR Rate Loans in the London interbank market
and using any reasonable attribution or averaging methods which such Lender
deems appropriate and practical. A certificate of such Lender setting forth the
basis for determining such amount or amounts necessary to compensate such
Lender shall be forwarded to the Borrower through the Administrative Agent and
shall be conclusively presumed to be correct save for manifest error; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Lender pursuant to this Section for any increased costs incurred or reductions
suffered more than nine (9) months prior to the date that such Lender or the
Issuing Lender, as the case may be, notifies the Borrower of the circumstances
giving rise to such increased costs or reductions and of such Lender’s or the
Issuing Lender’s intention to claim compensation therefor (except that, if the
circumstances giving rise to such increased costs or reductions is retroactive,
then the nine-month period referred to above shall be extended to include the
period of retroactive effect thereof).

 

SECTION 5.10              Indemnity.

 

(a)                                  The
Borrower hereby indemnifies each of the Lenders against any loss or expense
which may arise or be attributable to each Lender’s obtaining, liquidating or
employing deposits or other funds acquired to effect, fund or maintain any Loan

 

(i)                                     as
a consequence of any failure by the Borrower to make any payment when due of
any amount due hereunder in connection with a LIBOR Rate Loan,

 

(ii)                                  due
to any failure of the Borrower to borrow on a date specified therefor in a
Notice of Borrowing or Notice of Continuation/Conversion, or

 

(iii)                               due
to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other
than the last day of the LIBOR Interest Period. 
The amount of such loss or expense shall be determined, in the
applicable Lender’s sole discretion, based upon the assumption that such Lender
funded its Commitment Percentage of the LIBOR Rate Loans in the London
interbank market, and using any reasonable attribution or averaging methods
which such Lender deems appropriate and practical.  A certificate of such Lender setting forth
the basis for determining such amount or amounts necessary to compensate such
Lender shall be forwarded to the Borrower through the Administrative Agent and
shall be conclusively presumed to be correct save for manifest error.

 

45

 

(b)                                 The
Borrower hereby indemnifies RTFC against any loss or expense which may arise or
be attributable to RTFC’s obtaining, liquidating or employing commercial paper,
or other funds acquired to effect, fund or maintain the Term Loan C

 

(i)                                     as
a consequence of any failure by the Borrower to make any payment when due of
any amount due hereunder in connection with the Term Loan C,

 

(ii)                                  due
to any failure of the Borrower to borrow on a date specified therefor in a
Notice of Borrowing or Notice of Continuation/Conversion, or

 

(iii)                               due
to any payment, prepayment or conversion of any RTFC Variable Rate Loan or RTFC
Fixed Rate Loan on a date other than the last day of the applicable Term
Interest Period and, in such event, shall pay, for the account of RTFC, the
applicable Make-Whole Premium, if any.  A
certificate of RTFC setting forth the basis for determining such amount, or
amounts, necessary to compensate RTFC shall be forwarded to the Borrower
through the Administrative Agent and shall be conclusively presumed to be
correct save manifest error.

 

SECTION 5.11              Capital Requirements.  If either (a) the introduction of, or any
change in, or in the interpretation of, any Applicable Law or (b) compliance
with any guideline or request from any central bank or comparable agency or
other Governmental Authority (whether or not having the force of law), has or
would have the effect of reducing the rate of return on the capital of, or has
affected or would affect the amount of capital required to be maintained by,
any Lender or any corporation controlling such Lender as a consequence of, or
with reference to the Commitments and other commitments of this type, below the
rate which the Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within five (5) Business Days
after written demand by any such Lender, the Borrower shall pay to such Lender
from time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction.  A certificate as to such amounts submitted to
the Borrower and the Administrative Agent by such Lender, shall, in the absence
of manifest error, be presumed to be correct and binding for all purposes; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Lender pursuant to this Section for any increased costs incurred or reductions
suffered more than nine (9) months prior to the date that such Lender or the
Issuing Lender, as the case may be, notifies the Borrower of the circumstances
giving rise to such increased costs or reductions and of such Lender’s or the
Issuing Lender’s intention to claim compensation therefor (except that, if the
circumstances giving rise to such increased costs or reductions is retroactive,
then the nine-month period referred to above shall be extended to include the
period of retroactive effect thereof)..

 

SECTION 5.12              Taxes.

 

(a)                                  Payments
Free and Clear.  Any and all payments
by the Borrower hereunder or under the Notes or the Letters of Credit shall be
made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholding, and all liabilities
with respect thereto excluding, (i) in the case of each Lender and the
Administrative Agent, income and franchise taxes imposed by the jurisdiction
under the laws of which such

 

46

 

Lender or the
Administrative Agent (as the case may be) is organized or is or should be
qualified to do business or any political subdivision thereof and (ii) in the
case of each Lender, income and franchise taxes imposed by the jurisdiction of
such Lender’s Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as “Taxes”).  If the Borrower shall be required by law to
deduct or withhold any Taxes from or in respect of any sum payable hereunder or
under any Note or in respect of any Letter of Credit to any Lender or the
Administrative Agent, (A) the sum payable shall be increased as may be
necessary so that after making all required deductions or withholdings
(including deductions or withholdings applicable to additional sums payable
under this Section 5.12) such Lender or the Administrative Agent (as the
case may be) receives an amount equal to the amount such party would have
received had no such deductions or withholdings been made, (B) the Borrower
shall timely make such deductions or withholdings, (C) the Borrower shall pay
the full amount deducted to the relevant taxing authority or other authority in
accordance with Applicable Law, and (D) the Borrower shall deliver to the
Administrative Agent evidence of such payment to the relevant Governmental
Authority or other authority in the manner provided in Section 5.12(d).

 

(b)                                 Stamp
and Other Taxes.  In addition, the
Borrower shall pay any present or future stamp, registration, recordation or
documentary taxes or any other similar fees or charges or excise or property
taxes, levies of the United States or any state or political subdivision
thereof or any applicable foreign jurisdiction which arise from any payment
made hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement, the Loans, the Letters of Credit, the other
Loan Documents, or the perfection of any rights or security interest in respect
thereof (hereinafter referred to as “Other Taxes”).

 

(c)                                  Indemnity.
 The Borrower shall indemnify each Lender
and the Administrative Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes and Other Taxes imposed by any
jurisdiction on amounts payable under this Section 5.12) paid by such
Lender or the Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted.  Such indemnification shall be
made within thirty (30) days from the date such Lender or the Administrative
Agent (as the case may be) makes written demand therefor.

 

(d)                                 Evidence
of Payment.  Within thirty (30) days
after the date of any payment of Taxes or Other Taxes, the Borrower shall
furnish to the Administrative Agent, at its address referred to in Section
14.1, the original or a certified copy of a receipt evidencing payment thereof
or other evidence of payment satisfactory to the Administrative Agent.

 

(e)                                  Delivery
of Tax Forms.  Each Lender organized
under the laws of a jurisdiction other than the United States or any state
thereof shall deliver to the Borrower, with a copy to the Administrative Agent,
on the Closing Date or concurrently with the delivery of the relevant
Assignment and Assumption, as applicable, (i) two United States Internal
Revenue Service Forms W-8ECI or Forms 8BEN, as applicable (or successor forms)
properly completed and certifying in each case that such Lender is entitled to
a complete exemption from withholding or deduction for or on account of any
United States federal income taxes, and (ii) an Internal

 

47

 

Revenue
Service Form W-8BEN or W-8ECI or successor applicable form, as the case may be,
to establish an exemption from United States backup withholding taxes.  Each such Lender further agrees to deliver to
the Borrower, with a copy to the Administrative Agent, a Form W-8BEN or W-8ECI,
or successor applicable forms or manner of certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower, certifying in the case of a Form
W-8BEN or W-8ECI that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes (unless in any such case an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders such forms
inapplicable or the exemption to which such forms relate unavailable and such
Lender notifies the Borrower and the Administrative Agent that it is not
entitled to receive payments without deduction or withholding of United States
federal income taxes) and, in the case of a Form W-8BEN or W-8ECI, establishing
an exemption from United States backup withholding tax.

 

(f)                                    Survival.
 Without prejudice to the survival of any
other agreement of the Borrower hereunder, the agreements and obligations of
the Borrower contained in this Section 5.12 shall survive the payment in
full of the Obligations and the termination of the Commitments.

 

SECTION
5.13              Mitigation
Obligations; Replacement of Lenders.

 

(a)                                  Designation
of a Different Lending Office.  If
any Lender requests compensation under Section 5.9(c) or 5.11, or
requires the Borrower to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section
5.12, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to
assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
5.9(c), 5.11 or 5.12, as the case may be, in the future and (ii)
would not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

(b)                                 Replacement
of Lenders.  If any Lender requests
compensation under Section 5.9(c) or 5.11, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 5.12, or if
any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 14.10), all of its interests, rights and
obligations under this Agreement and the related Loan Documents to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that

 

48

 

(A)                              the
Borrower shall have paid to the Administrative Agent the assignment fee
specified in Section 14.10,

 

(B)                                such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in Letters of Credit, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder
and under the other Loan Documents (including any amounts under Section 5.10)
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts),

 

(C)                                in
the case of any such assignment resulting from a claim for compensation under Section
5.9(c) or 5.11 or payments required to be made pursuant to Section
5.12, such assignment will result in a reduction in such compensation or
payments thereafter, and

 

(D)                               such
assignment does not conflict with Applicable Law.

 

A Lender shall
not be required to make any such assignment or delegation if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling
the Borrower to require such assignment and delegation cease to apply.

 

SECTION
5.14              Security.
 The Obligations of the Borrower and the
Guaranteed Obligations of the Guarantors shall be secured as provided in the
Security Documents.

 

ARTICLE VI

 

CLOSING; CONDITIONS OF CLOSING AND BORROWING 

 

SECTION
6.1                     Closing.
 The closing shall take place at the offices
of Kennedy, Covington, Lobdell & Hickman, L.L.P. at 10:00 a.m. on December
30, 2005, or on such other date as the parties hereto shall mutually agree.

 

SECTION
6.2                     Conditions
to Closing and Initial Extensions of Credit.  The obligation of the Lenders to close this
Agreement and to make the initial Loan or issue the initial Letter of Credit is
subject to the satisfaction of each of the following conditions:

 

(a)                                  Executed
Loan Documents.  This Agreement, a
Revolving Credit Note in favor of each Revolving Credit Lender requesting a
Revolving Credit Note, a Term Note in favor of each Term Lender requesting a
Term Note, the Security Documents, together with any other applicable Loan
Documents shall have been duly authorized, executed and delivered to the Administrative
Agent by the parties thereto, shall be in full force and effect and no default
shall exist hereunder or thereunder.

 

(b)                                 Closing
Certificates; etc. 

 

(i)                                     Officer’s
Certificate of the Borrower.  The
Administrative Agent shall have received a certificate from a Responsible
Officer, in form and substance satisfactory to the Administrative Agent, to the
effect that all representations and warranties of the Loan Parties

 

49

 

contained in
this Agreement and the other Loan Documents are true, correct and complete;
that the Loan Parties are not in violation of any of the covenants contained in
this Agreement and the other Loan Documents; that, after giving effect to the
transactions contemplated by this Agreement, no Default or Event of Default has
occurred and is continuing; and that the Loan Parties have satisfied each of
the closing conditions.

 

(ii)                                  Certificate
of Secretary of the Loan Parties.  The Administrative Agent shall have received a
certificate of the secretary or assistant secretary of each of the Loan Parties
certifying as to the incumbency and genuineness of the signature of each
officer of such Loan Party executing the Loan Documents to which it is a party
and certifying that attached thereto is a correct and complete copy of (A) the
articles of incorporation of such Loan Party and all amendments thereto,
certified as of a recent date by the appropriate Governmental Authority in its
jurisdiction of incorporation, (B) the bylaws of such Loan Party as in effect
on the date of such certifications, (C) the resolutions duly adopted by the
board of directors of such Loan Parties authorizing the borrowings contemplated
hereunder and the execution, delivery and performance of this Agreement and the
other Loan Documents to which it is a party, and (D) each certificate required
to be delivered pursuant to Section 6.2(b)(iii).

 

(iii)                               Certificates
of Good Standing.  The Administrative
Agent shall have received certificates as of a recent date of the good standing
of each of the Loan Parties under the laws of its jurisdiction of organization
and to the extent requested by the Administrative Agent each other jurisdiction
where any such Loan Party is qualified to do business.

 

(iv)                              Opinions
of Counsel.  The Administrative Agent
shall have received favorable opinions of counsel to the Loan Parties addressed
to the Administrative Agent and the Lenders with respect to the Loan Parties,
the Loan Documents and FCC and PUC matters.

 

(v)                                 Tax
Forms.  The Administrative Agent
shall have received copies of the United States Internal Revenue Service forms
required by Section 5.12(e) hereof.

 

(vi)                              Insurance
Certificate.  The Administrative
Agent shall have received certificates of insurance evidencing procurement and
maintenance of insurance policies required pursuant to the Security Documents.

 

(c)                                  Enventis
Acquisition.

 

(i)                                     All
regulatory and third-party approvals necessary for the consummation of the
Enventis Acquisition shall have been obtained and remain in effect;

 

(ii)                                  The
Enventis Acquisition shall have been consummated in all material respects in
accordance with the terms and conditions of the Enventis Purchase Agreement and
no provision of the Enventis Purchase Agreement shall have been amended or
waived by any party thereto without the prior written consent of the
Administrative Agent;

 

(iii)                               The
Administrative Agent shall have received legal opinion(s) of Dorsey &
Whitney, LLP, counsel to the Loan Parties, addressed to the Administrative
Agent and the Lenders and dated as of the Closing Date, which shall be in form
and substance reasonably

 

50

 

acceptable to
the Administrative Agent, as to the due authorization, execution, delivery and
enforceability of the Enventis Purchase Agreement and such other matters as
reasonably requested by the Administrative Agent;

 

(iv)                              The
Administrative Agent shall have received an Officer’s Compliance Certificate
dated as of the Closing Date and executed by a Responsible Officer of the Borrower
which demonstrates that, after giving pro  forma effect to the
Enventis Acquisition and the transactions contemplated by this Agreement, (A)
EBITDA of the Borrower and its Subsidiaries for the twelve (12) consecutive
calendar month period ending September 30, 2005 is not less than $38,000,000; (provided
that for purposes of this Section 6.2(c)(iv) only, EBITDA of Enventis shall be
calculated based upon an annualization of the information contained in the
interim unaudited financial statements of Enventis and its Subsidiaries for the
month of November, 2005 described in Section 6.2(c)(v)) and (B) the Leverage
Ratio for such period is less than or equal to 3.75 to 1.00, in each case as if
the Enventis Acquisition and the transactions contemplated by this Agreement
had occurred on such date;

 

(v)                                 The
Administrative Agent shall have received, in form and substance reasonably
satisfactory to the Administrative Agent, (A) the financial audit of Enventis
and its Subsidiaries for fiscal year 2004, (B) the unaudited financial
statements of Enventis and its Subsidiaries for the fiscal quarter ended
September 30, 2005 and (C) the unaudited financial statements of Enventis and
its Subsidiaries for the months of October, 2005 and November, 2005;

 

(vi)                              The
Administrative Agent shall have received evidence, in form and substance
satisfactory to the Administrative Agent, that (i) any and all outstanding Debt
of Enventis and its Subsidiaries shall have been repaid in full and all
security interests and liens associated therewith shall have been terminated or
(ii) the entire amount necessary to pay in full and discharge such outstanding
Debt of Enventis and its Subsidiaries and all instruments and documents
necessary to terminate such liens and security interests is being held in
escrow upon terms and conditions acceptable to the Administrative Agent such
that such Debt shall be paid in full and discharged and such liens and security
interests terminated within two (2) Business Days following the Closing Date;

 

(vii)                           The
Administrative Agent shall have completed its legal and business due diligence
review of Enventis and the Enventis Acquisition and shall be satisfied with the
results thereof; and

 

(viii)                        The
Borrower shall have provided to the Administrative Agent copies of such
additional documents and information relating to the Enventis Acquisition and
the Enventis Purchase Agreement as the Administrative Agent shall reasonably
request, each in form and substance satisfactory to the Administrative Agent,
including, without limitation, certain employment agreements between Enventis
and its employees and certain non-competition agreements in favor of Enventis.

 

51

 

(d)                                 Collateral.

 

(i)                                     Filings
and Recordings.  All filings and recordations
that are necessary to perfect the Liens of the Lenders in the collateral
described in the Security Documents shall have been forwarded for filing in all
appropriate locations and the Administrative Agent shall have received evidence
satisfactory to the Administrative Agent that upon such filings and
recordations such Liens will constitute valid and perfected first priority
Liens therein.

 

(ii)                                  Pledged
Collateral.  The Administrative Agent
shall have received (A) with respect to all Subsidiaries other than Enventis,
original stock certificates or other certificates evidencing the Pledged Stock
(as defined in the Collateral Agreement) or other ownership interests pledged
pursuant to the Collateral Agreement, together with an undated stock power for
each such certificate duly executed in blank by the registered owner thereof,
(B) with respect to Enventis, the Administrative Agent shall have received
either (i) original stock certificates or other certificates evidencing the
Pledged Stock (as defined in the Collateral Agreement) or other ownership
interests pledged pursuant to the Collateral Agreement, together with an
undated stock power for each such certificate duly executed in blank by the
registered owner thereof or (ii) evidence in form and substance acceptable to
the Administrative Agent that the foregoing stock certificates and stock powers
described in clause (i) are being held in escrow upon terms and conditions
acceptable to the Administrative Agent such that such stock certificates and stock
powers shall be released from escrow within two (2) Business Days following the
Closing Date, and (C) each original promissory note pledged pursuant to the
Collateral Agreement.

 

(iii)                               Lien
Search.  The Administrative Agent
shall have received the results of a Lien search (including a search as to
judgments, pending litigation and tax matters) made against the Borrower under
the Uniform Commercial Code (or applicable judicial docket) as in effect in any
state in which any of its assets are located, indicating among other things
that its assets are free and clear of any Lien except for Permitted Liens
hereunder.

 

(iv)                              Hazard
and Liability Insurance.  The
Administrative Agent shall have received certificates of insurance, evidence of
payment of all insurance premiums for the current policy year of each (naming
the Administrative Agent as loss payee (and mortgagee, as applicable) on all
certificates for property hazard insurance and as additional insured on all
certificates for liability insurance), and, if requested by the Administrative
Agent, copies (certified by a Responsible Officer) of insurance policies in the
form required under the Security Documents and otherwise in form and substance
reasonably satisfactory to the Administrative Agent.

 

(e)                                  Consents;
Defaults.

 

(i)                                     Governmental
and Third Party Approvals.  The Loan
Parties shall have received all material governmental, shareholder and third
party consents and approvals necessary (or any other material consents as
determined in the reasonable discretion of the Administrative Agent) in
connection with the transactions contemplated by this Agreement and the other
Loan Documents and the other transactions contemplated hereby and all
applicable waiting periods shall have expired without any action being taken by
any Person that could reasonably be expected to restrain, prevent or impose any
material adverse conditions on any of the Loan Parties or such other
transactions or that could seek or threaten any of the foregoing, and no law

 

52

 

or regulation
shall be applicable which in the reasonable judgment of the Administrative
Agent could reasonably be expected to have such effect.

 

(ii)                                  No
Injunction, Etc.  No action,
proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any Governmental Authority to enjoin,
restrain, or prohibit, or to obtain substantial damages in respect of, or which
is related to or arises out of this Agreement or the other Loan Documents or
the consummation of the transactions contemplated hereby or thereby, or which,
in the Administrative Agent’s reasonable discretion, would make it inadvisable
to consummate the transactions contemplated by this Agreement and such other
Loan Documents.

 

(iii)                               No
Event of Default.  No Default or
Event of Default shall have occurred and be continuing.

 

(f)                                    Financial
Matters.

 

(i)                                     Financial
Statements.  The Administrative Agent
shall have received (i) the most recent audited Consolidated financial
statements of the Borrower and its Subsidiaries and (ii) the Borrower’s most
recent annual report on Form 10-K and most recent quarterly report on Form
10-Q, in each case as filed with the Securities and Exchange Commission, all in
form and substance satisfactory to the Administrative Agent.

 

(ii)                                  Financial
Condition Certificate.  The Borrower
shall have delivered to the Administrative Agent a certificate, in form and
substance satisfactory to the Administrative Agent, and certified as accurate
by a Responsible Officer, that (A) the Borrower and each of its Subsidiaries
are each Solvent; provided that with respect to each Guarantor and the
application of the Guaranteed Obligations hereunder, this representation is
subject to the proviso set forth in Section 2.2 of the Guaranty
Agreement, (B) each of the Loan Party’s payables are current and not past due,
(C) attached thereto are calculations evidencing compliance on a pro forma
basis with the covenants contained in Article X hereof, (D)  the financial projections previously
delivered to the Administrative Agent represent the good faith estimates
(utilizing reasonable assumptions) of the financial condition and operations of
the Borrower and its Subsidiaries and (E) attached thereto is a calculation of
the Applicable Margin pursuant to Section 5.1(c).

 

(iii)                               Payment
at Closing; Engagement Letter.  The
Borrower shall have paid the fees set forth or referenced in Section 5.4
and any other accrued and unpaid fees or commissions due hereunder (including,
without limitation, legal fees and expenses) to the Administrative Agent and
Lenders, and to any other Person such amount as may be due thereto in
connection with the transactions contemplated hereby, including all taxes, fees
and other charges in connection with the execution, delivery, recording, filing
and registration of any of the Loan Documents. 
The Administrative Agent shall have received duly authorized and
executed copies of the Engagement Letter.

 

(g)                                 Mortgages.
 The Borrower shall have provided to the
Administrative Agent, for the benefit of itself and the other Lenders,
Mortgages on each of the properties identified as such on Schedule 7.1(q),
and the following related documentation:

 

53

 

(i)                                     Title
Opinion.  A favorable opinion of
local counsel to the Loan Parties in form and substances satisfactory to the
Administrative Agent and opining to the recordation of the Mortgage, the
Lenders’ first priority Lien resulting from such recordation, and showing no
Liens prior to Lenders’ Liens other than for ad valorem taxes not yet due and
payable.

 

(ii)                                  Matters
Relating to Flood Hazard Properties.  A certification from the National Research
Center, or any successor agency thereto, regarding each parcel of real property
securing any portion of the Obligations identifying whether such property lies
within any flood plain. If such property does lie within a flood plain, then
the Borrower shall procure flood insurance for such property.

 

(iii)                               Other
Real Property Information.  Such other
certificates, documents and information as are reasonably requested by the
Lenders, including, without limitation, engineering and structural reports,
permanent certificates of occupancy and evidence of zoning compliance, each in
form and substance satisfactory to the Administrative Agent.

 

(h)                                 Miscellaneous.

 

(i)                                     Notice
of Borrowing.  The Administrative
Agent shall have received a Notice of Borrowing from the Borrower in accordance
with Section 2.2(a) and Section 4.2, and a Notice of Account
Designation specifying the account or accounts to which the proceeds of any
Loans made after the Closing Date are to be disbursed.

 

(ii)                                  Proceedings
and Documents.  All opinions,
certificates and other instruments and all proceedings in connection with the
transactions contemplated by this Agreement shall be satisfactory in form and
substance to the Lenders.  The Lenders
shall have received copies of all other instruments and other evidence as the
Lender may reasonably request, in form and substance satisfactory to the
Lenders, with respect to the transactions contemplated by this Agreement and
the taking of all actions in connection therewith.

 

(iii)                               Due
Diligence.  The Administrative Agent
and Lenders shall have completed their customary legal and business due diligence
review of the Borrower and its Subsidiaries.

 

(iv)                              Termination
of Outstanding Commitments.  The
Borrower and its Subsidiaries shall have terminated all existing lines of
credit.

 

(v)                                 System
Documents.  If requested by the
Administrative Agent, the Borrower shall deliver to the Administrative Agent
copies of all FCC Licenses, PUC Authorizations, Network Agreements in existence
as of the date of this Agreement.

 

(i)                                     Refinancing.
 On the Closing Date, (i) all extensions
of credit under the Prior Credit Agreement (“Existing Extensions of Credit”)
made by any Prior Lender who is not a Lender hereunder shall be repaid in full
and the commitments and other obligations and rights (except as expressly set
forth in the Prior Credit Agreement) of such Prior Lender shall be terminated,
(ii) all outstanding Existing Extensions of Credit (other than Existing
Extensions of Credit consisting of the existing balance of the term loan) shall
have been paid in cash in full,

 

54

 

(iii) the
outstanding balance of all Existing Extensions of Credit with respect to the
term loan under the Prior Credit Agreement shall be deemed to be converted into
a Term Loan C under this Agreement (the “Term Loan C Conversion Amount”)
and each Term Loan Lender with a Term Loan C Commitment shall fund in cash the
difference between (A) such Lenders’ Term Loan C Commitment Percentage of the
aggregate amount of the Term Loan C on the Closing Date and (B) the amount of
such Lenders’ Existing Extension of Credit with respect to the term loan under
the Prior Credit Agreement, the aggregate amount of such funding, together with
the aggregate Term Loan C Conversion Amount shall equal the total Term Loan C
Commitment, (iv) there shall have been paid in cash in full all accrued but
unpaid interest due on the Existing Extensions of Credit to the Closing Date,
(v) there shall have been paid in cash in full all accrued but unpaid fees
under the Prior Credit Agreement due to the Closing Date and all other amounts,
costs and expenses then owing to any of the Prior Lenders and/or Wachovia, as
administrative agent under the Prior Agreement and (vi) all outstanding
promissory notes issued by the Borrower to the Prior Lenders under the Prior
Credit Agreement shall be deemed canceled and the originally executed copies
thereof shall be promptly returned to the Administrative Agent who shall
forward such notes to the Borrower.

 

SECTION
6.3                     Conditions
to All Extensions of Credit.  The
obligations of the Lenders to make any Extensions of Credit (including the
initial Extension of Credit, but excluding any conversion or continuation of an
existing Loan that does not increase the aggregate amount of the outstanding
Extensions of Credit) and/or the Issuing Lender to issue or extend any Letter
of Credit are subject to the satisfaction of the following conditions precedent
on the relevant borrowing, continuation, conversion, issuance or extension
date:

 

(a)                                  Continuation
of Representations and Warranties.  The
representations and warranties contained in Article VII shall be true and
correct on and as of such borrowing, continuation, conversion, issuance or
extension date with the same effect as if made on and as of such date; except
for any representation and warranty made as of an earlier date, which
representation and warranty shall remain true and correct as of such earlier
date.

 

(b)                                 No
Existing Default.  No Default or
Event of Default shall have occurred and be continuing (i) on the borrowing,
continuation, conversion, issuance or extension date with respect to such Loan
or after giving effect to the Loans to be made, continued or converted on such
date or (ii) on the issuance or extension date with respect to such Letter of
Credit or after giving effect to the issuance or extension of such Letter of
Credit on such date.

 

(c)                                  Notices.
 The Administrative Agent shall have
received a Notice of Borrowing or Notice of Continuation/Conversion, as
applicable, from the Borrower in accordance with Section 2.2(a), Section
4.2 or Section 5.2.

 

(d)                                 Additional
Documents.  The Administrative Agent
shall have received each additional document, instrument, legal opinion (with
respect to any Incremental Term Loan) or other item reasonably requested by it.

 

55

 

SECTION
6.4                     Post-Closing
Agreements.

 

(a)                                  Within
sixty (60) days of the Closing Date, as such date may be extended by the
Administrative Agent in its sole discretion, the Administrative Agent shall
have received deposit account control agreements executed by the applicable
Loan Party, the depositary bank and the Administrative Agent with respect to
all Deposit Accounts, other than Excluded Deposit Accounts (in each case as
defined in the Collateral Agreement), of the Loan Parties.

 

(b)                                 Within
sixty (60) days of the Closing Date, as such date may be extended by the
Administrative Agent in its sole discretion, the Administrative Agent shall
have received releases of all liens and encumbrances on the assets of
Mid-Communications, Inc. in favor of Rural Electrification Administration.

 

(c)                                  Within
seven (7) days of the Closing Date, as such date may be extended by the
Administrative Agent in its sole discretion, the Administrative Agent shall
have received releases of all liens and encumbrances on the assets of Enventis
in favor of GE Commercial Distribution Finance Corporation and Deutsche
Financial Services Corporation.

 

ARTICLE VII

 

REPRESENTATIONS AND WARRANTIES OF THE
BORROWER 

 

SECTION
7.1                     Representations
and Warranties.  To induce the
Administrative Agent and Lenders to enter into this Agreement and to induce the
Lenders to make the Extensions of Credit, the Borrower hereby represents and
warrants to the Administrative Agent and Lenders, both before and after giving
effect to the transactions contemplated hereunder, that:

 

(a)                                  Organization;
Power; Qualification.  Each of the
Borrower and its Subsidiaries (i) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
formation, (ii) has the power and authority to own its properties and to carry
on its business as now being and hereafter proposed to be conducted and (iii)
is duly qualified and authorized to do business in each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification and authorization except where the failure to obtain such
qualification or authorization could not reasonably be expected to have a
Material Adverse Effect.  The
jurisdictions in which the Borrower and its Subsidiaries are organized and
qualified to do business as of the Closing Date are described on Schedule
7.1(a).

 

(b)                                 Ownership.
 Each Subsidiary of the Borrower as of
the Closing Date is listed on Schedule 7.1(b). As of the Closing Date,
the capitalization of the Borrower and its Subsidiaries consists of the number
of shares, authorized, issued and outstanding, of such classes and series, with
or without par value, described on Schedule 7.1(b). All outstanding
shares have been duly authorized and validly issued and are fully paid and
nonassessable.  The shareholders of the
Subsidiaries of the Borrower and the number of shares owned by each as of the
Closing Date are described on Schedule 7.1(b). As of the Closing Date,
there are no outstanding stock purchase warrants, subscriptions, options,
securities, instruments or other rights of any type or nature whatsoever, which
are convertible into, exchangeable for or otherwise provide for or permit the

 

56

 

issuance of
capital stock of the Borrower or its Subsidiaries, except as described on Schedule
7.1(b).

 

(c)                                  Authorization
of Agreement, Loan Documents and Borrowing.  Each of the Borrower and its Subsidiaries has
the right, power and authority and has taken all necessary corporate and other
action to authorize the execution, delivery and performance of this Agreement
and each of the other Loan Documents to which it is a party in accordance with
their respective terms.  This Agreement
and each of the other Loan Documents have been duly executed and delivered by
the duly authorized officers of the Borrower and each of its Subsidiaries party
thereto, and each such document constitutes the legal, valid and binding
obligation of the Borrower or its Subsidiary party thereto, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar state or federal
debtor relief laws from time to time in effect which affect the enforcement of
creditors’ rights in general and the availability of equitable remedies.

 

(d)                                 Compliance
of Agreement, Loan Documents and Borrowing with Laws, Etc.  The execution, delivery and performance by
the Borrower and its Subsidiaries of the Loan Documents to which each such
Person is a party, in accordance with their respective terms, the Extensions of
Credit hereunder and the transactions contemplated hereby do not and will not,
by the passage of time, the giving of notice or otherwise, (i) require any
Governmental Approval or violate any Applicable Law relating to the Borrower or
any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute a default under (A) the articles of incorporation, bylaws or other
organizational documents of the Borrower or any of its Subsidiaries, (B) any
indenture, agreement or other instrument to which such Person is a party or by
which any of its properties may be bound except where such conflict, breach or
default could not reasonably be expected to have a Material Adverse Effect or (C)
any Governmental Approval relating to such Person except where such conflict,
breach or default could not reasonably be expected to have a Material Adverse
Effect, (iii) result in or require the creation or imposition of any Lien upon
or with respect to any property now owned or hereafter acquired by such Person
other than Liens arising under the Loan Documents, or (iv) require any consent
or authorization of, filing with, or other act in respect of, an arbitrator or
Governmental Authority and no consent of any other Person is required in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement (other than those consents that have been
obtained).

 

(e)                                  Compliance
with Law; Governmental Approvals.  Each
of the Borrower and its Subsidiaries (i) has all Governmental Approvals
required by any Applicable Law for it to conduct its business, each of which is
in full force and effect, is final and not subject to review on appeal and is
not the subject of any pending or, to the best of its knowledge, threatened
attack by direct or collateral proceeding, (ii) is in compliance with each
Governmental Approval applicable to it and in compliance with all other
Applicable Laws relating to it or any of its respective properties, and (iii)
has timely filed all material reports, documents and other materials required
to be filed by it under all Applicable Laws with any Governmental Authority and
has retained all material records and documents required to be retained by it
under Applicable Law, except where failure to do so could not reasonably be
expected to have a Material Adverse Effect.

 

57

 

(f)                                    Tax
Returns and Payments.  Each of the
Borrower and its Subsidiaries has duly filed or caused to be filed all federal,
state, local and other tax returns required by Applicable Law to be filed, and
has paid, or made adequate provision for the payment of, all federal, state,
local and other taxes, assessments and governmental charges or levies upon it
and its property, income, profits and assets which are due and payable, except
any taxes, assessments and governmental charges or levies which the Borrower or
any Subsidiary is contesting in good faith and with respect to which adequate
reserves have been established and maintained in accordance with GAAP. Such
returns accurately reflect in all material respects all liability for taxes of
the Borrower and its Subsidiaries for the periods covered thereby.  There is no ongoing audit or examination or,
to the knowledge of the Borrower, other investigation by any Governmental
Authority of the tax liability of the Borrower and its Subsidiaries.  No Governmental Authority has asserted any
Lien or other claim against the Borrower or any Subsidiary thereof with respect
to unpaid taxes which has not been discharged or resolved.  The charges, accruals and reserves on the
books of the Borrower and any of its Subsidiaries in respect of federal, state,
local and other taxes for all Fiscal Years and portions thereof since the
organization of the Borrower and any of its Subsidiaries are in the judgment of
the Borrower adequate, and the Borrower does not anticipate any additional
taxes or assessments for any of such years.

 

(g)                                 Intellectual
Property Matters.  Each of the
Borrower and its Subsidiaries owns or possesses rights to use all franchises,
licenses, copyrights, copyright applications, patents, patent rights or
licenses, patent applications, trademarks, trademark rights, service mark,
service mark rights trade names, trade name rights, copyrights and rights with
respect to the foregoing which are required to conduct its business.  No event has occurred which permits, or after
notice or lapse of time or both would permit, the revocation or termination of
any such rights, and neither the Borrower nor any Subsidiary thereof is liable
to any Person for infringement under Applicable Law with respect to any such
rights as a result of its business operations.

 

(h)                                 Environmental
Matters.

 

(i)                                     The
properties owned, leased or operated by the Borrower and its Subsidiaries now
or in the past do not contain, and to the knowledge of the Borrower or any such
Subsidiary have not previously contained, any Hazardous Materials in amounts or
concentrations which (A) constitute or constituted a violation of applicable
Environmental Laws or (B) could give rise to liability under applicable
Environmental Laws;

 

(ii)                                  The
Borrower, each Subsidiary and such properties and all operations conducted in
connection therewith are in compliance, and have been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under or about
such properties or such operations which could interfere with the continued
operation of such properties or impair the fair saleable value thereof, except
for any such noncompliance or contamination that could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;

 

(iii)                               Neither
the Borrower nor any Subsidiary thereof has received any notice of violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters, Hazardous Materials, or compliance with Environmental
Laws, nor does

 

58

 

the Borrower
or any Subsidiary thereof have knowledge or reason to believe that any such
notice will be received or is being threatened;

 

(iv)                              Hazardous
Materials have not been transported or disposed of to or from the properties
owned, leased or operated by the Borrower and its Subsidiaries in violation of,
or in a manner or to a location which could give rise to liability under,
Environmental Laws, nor have any Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of such properties in violation of, or
in a manner that could give rise to liability under, any applicable
Environmental Laws, except where such violation or liability could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect;

 

(v)                                 No
judicial proceedings or governmental or administrative action is pending, or,
to the knowledge of the Borrower, threatened, under any Environmental Law to
which the Borrower or any Subsidiary thereof is or will be named as a
potentially responsible party with respect to such properties or operations
conducted in connection therewith, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Borrower, any Subsidiary or such properties or such
operations; and

 

(vi)                              There
has been no release, or to the best of the Borrower’s knowledge, threat of
release, of Hazardous Materials at or from properties owned, leased or operated
by the Borrower or any Subsidiary, now or in the past, in violation of or in
amounts or in a manner that could give rise to liability under Environmental
Laws, except where such violation or liability could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

 

(i)                                     ERISA.

 

(i)                                     As
of the Closing Date, neither the Borrower nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plans other
than those identified on Schedule 7.1(i);

 

(ii)                                  the
Borrower and each ERISA Affiliate is in compliance with all applicable
provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans except for any required
amendments for which the remedial amendment period as defined in Section 401(b)
of the Code has not yet expired.  Each
Employee Benefit Plan that is intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service to be so qualified,
and each trust related to such plan has been determined to be exempt under
Section 501(a) of the Code except for such plans that have not yet received
determination letters but for which the remedial amendment period for
submitting a determination letter has not yet expired.  No liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer Plan;

 

(iii)                               No
Pension Plan has been terminated, nor has any accumulated funding deficiency
(as defined in Section 412 of the Code) been incurred (without regard to any
waiver

 

59

 

granted under
Section 412 of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested with respect to any Pension Plan, nor has
the Borrower or any ERISA Affiliate failed to make any contributions or to pay
any amounts due and owing as required by Section 412 of the Code, Section 302
of ERISA or the terms of any Pension Plan prior to the due dates of such
contributions under Section 412 of the Code or Section 302 of ERISA, nor has
there been any event requiring any disclosure under Section 4041(c)(3)(C) or
4063(a) of ERISA with respect to any Pension Plan;

 

(iv)                              Neither
the Borrower nor any ERISA Affiliate has: 
(A) engaged in a nonexempt prohibited transaction described in Section
406 of the ERISA or Section 4975 of the Code, (B) incurred any liability to the
PBGC which remains outstanding other than the payment of premiums and there are
no premium payments which are due and unpaid, (C) failed to make a required
contribution or payment to a Multiemployer Plan, or (D) failed to make a
required installment or other required payment under Section 412 of the Code;

 

(v)                                 No
Termination Event has occurred or is reasonably expected to occur; and

 

(vi)                              No
proceeding, claim, lawsuit and/or investigation is existing or, to the best
knowledge of the Borrower after due inquiry, threatened concerning or involving
any (A) employee welfare benefit plan (as defined in Section 3(1) of ERISA)
currently maintained or contributed to by the Borrower or any ERISA Affiliate,
(B) Pension Plan or (C) Multiemployer Plan.

 

(j)                                     Margin
Stock.  Neither the Borrower nor any
Subsidiary thereof is engaged principally or as one of its activities in the
business of extending credit for the purpose of “purchasing” or “carrying” any
“margin stock” (as each such term is defined or used, directly or indirectly,
in Regulation U of the Board of Governors of the Federal Reserve System).  No part of the proceeds of any of the Loans
or Letters of Credit will be used for purchasing or carrying margin stock or
for any purpose which violates, or which would be inconsistent with, the
provisions of Regulation T, U or X of such Board of Governors.

 

(k)                                  Government
Regulation.  Neither the Borrower nor
any Subsidiary thereof is an “investment company” or a company “controlled” by
an “investment company” (as each such term is defined or used in the Investment
Company Act of 1940, as amended) and neither the Borrower nor any Subsidiary
thereof is, or after giving effect to any Extension of Credit will be, subject
to regulation under the Public Utility Holding Company Act of 1935 or the Interstate
Commerce Act, each as amended, or any other Applicable Law which limits its
ability to incur or consummate the transactions contemplated hereby.

 

(l)                                     Material
Contracts.  Schedule 7.1(l) sets
forth a complete and accurate list of all Material Contracts of the Borrower
and its Subsidiaries in effect as of the Closing Date not listed on any other
Schedule hereto; other than as set forth in Schedule 7.1(l), each such
Material Contract is, and after giving effect to the consummation of the
transactions contemplated by the Loan Documents will be, in full force and
effect in accordance with the terms thereof. The Borrower and its Subsidiaries
have delivered to the Administrative Agent a true and complete

 

60

 

copy of each
Material Contract required to be listed on Schedule 7.1(l) or any other
Schedule hereto. Neither the Borrower nor any Subsidiary (nor, to the knowledge
of the Borrower, any other party thereto) is in breach of or in default under
any Material Contract in any material respect.

 

(m)                               Employee
Relations.  Each of the Borrower and
its Subsidiaries has a stable work force in place and is not, as of the Closing
Date, party to any collective bargaining agreement nor has any labor union been
recognized as the representative of its employees except as set forth on Schedule
7.1(m). The Borrower knows of no pending, threatened or contemplated
strikes, work stoppage or other collective labor disputes involving its
employees or those of its Subsidiaries.

 

(n)                                 Burdensome
Provisions.  Neither the Borrower nor
any Subsidiary thereof is a party to any indenture, agreement, lease or other
instrument, or subject to any corporate or partnership restriction,
Governmental Approval or Applicable Law which is so unusual or burdensome as in
the foreseeable future could be reasonably expected to have a Material Adverse
Effect. The Borrower and its Subsidiaries do not presently anticipate that
future expenditures needed to meet the provisions of any statutes, orders,
rules or regulations of a Governmental Authority will be so burdensome as to
have a Material Adverse Effect.  No
Subsidiary is party to any agreement or instrument or otherwise subject to any
restriction or encumbrance that restricts or limits its ability to make
dividend payments or other distributions in respect of its capital stock to the
Borrower or any Subsidiary or to transfer any of its assets or properties to
the Borrower or any other Subsidiary in each case other than existing under or
by reason of the Loan Documents or Applicable Law.

 

(o)                                 Financial
Statements.  The (i) Consolidated
balance sheets of the Borrower and its Subsidiaries as of December 31, 2004 and
the related statements of income and retained earnings and cash flows for the
Fiscal Years then ended, are complete and correct and fairly present the
assets, liabilities and financial position of the Borrower and its Subsidiaries
as at such dates, and the results of the operations and changes of financial
position for the periods then ended and (ii) unaudited Consolidated balance
sheet of the Borrower and its Subsidiaries as of September 30, 2005, and
related unaudited interim statements of revenue and retained earnings, copies
of which have been furnished to the Administrative Agent and each Lender.  All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with
GAAP, subject to year-end audit adjustments and the absence of footnotes in the
case of the financial statements described in clause (ii) of this Section
7.1(o).  The Borrower and its
Subsidiaries have no Debt, obligation or other unusual forward or long-term
commitment which is not fairly reflected in the foregoing financial statements
or in the notes thereto.

 

(p)                                 Solvency.
 As of the Closing Date and after giving
effect to each Extension of Credit made hereunder, the Borrower and each of its
Subsidiaries will be Solvent; provided that with respect to each
Guarantor and the application of the Guaranteed Obligations hereunder, this
representation is subject to the proviso set forth in Section 2 of the
Guaranty Agreement.

 

(q)                                 Titles
to Properties.  Each of the Borrower
and its Subsidiaries has such title to the real property listed on Schedule
7.1(q) owned by it as is necessary or desirable to the conduct of its
business and valid and legal title to all of its personal property and assets,
including, but not

 

61

 

limited to,
those reflected on the balance sheets of the Borrower and its Subsidiaries
delivered pursuant to Section 7.1(o), except those which have been
disposed of by the Borrower or its Subsidiaries subsequent to such date which
dispositions have been in the ordinary course of business or as otherwise
expressly permitted hereunder.

 

(r)                                    Liens.
 None of the properties and assets of the
Borrower or any Subsidiary thereof is subject to any Lien, except Liens
permitted pursuant to Section 11.2. No financing statement under the
Uniform Commercial Code of any state which names the Borrower or any Subsidiary
thereof or any of their respective trade names or divisions as debtor and which
has not been terminated, has been filed in any state or other jurisdiction and
neither the Borrower nor any Subsidiary thereof has signed any such financing
statement or any security agreement authorizing any secured party thereunder to
file any such financing statement, except to perfect those Liens permitted by Section
11.2 hereof.

 

(s)                                  Debt
and Guaranty Obligations.  Schedule
7.1(s) is a complete and correct listing of all Debt and Guaranty
Obligations of the Borrower and its Subsidiaries as of the Closing Date in
excess of $500,000. The Borrower and its Subsidiaries have performed and are in
compliance with all of the terms of such Debt and Guaranty Obligations and all
instruments and agreements relating thereto, and no default or event of
default, or event or condition which with notice or lapse of time or both would
constitute such a default or event of default on the part of the Borrower or
its Subsidiaries exists with respect to any such Debt or Guaranty Obligation.

 

(t)                                    Litigation.
 As of the Closing Date, there are no
actions, suits or proceedings pending nor, to the knowledge of the Borrower,
threatened against or in any other way relating adversely to or affecting the
Borrower or any Subsidiary thereof or any of their respective properties in any
court or before any arbitrator of any kind or before or by any Governmental
Authority which could reasonably be expected to have a Material Adverse Effect,
except, in each case, as set forth on Schedule 7.1(t).

 

(u)                                 Absence
of Defaults.  No event has occurred
or is continuing which constitutes a Default or an Event of Default, or which
constitutes, or which with the passage of time or giving of notice or both
would constitute, a default or event of default by the Borrower or any
Subsidiary thereof under any Material Contract or judgment, decree or order to
which the Borrower or its Subsidiaries is a party or by which the Borrower or
its Subsidiaries or any of their respective properties may be bound or which
would require the Borrower or its Subsidiaries to make any payment thereunder
prior to the scheduled maturity date therefor.

 

(v)                                 Accuracy
and Completeness of Information.  All
written information, reports and other papers and data produced by or on behalf
of the Borrower or any Subsidiary thereof and furnished to the Lenders were, at
the time the same were so furnished, complete and correct in all respects to
the extent necessary to give the recipient a true and accurate knowledge of the
subject matter.  No document furnished or
written statement made to the Administrative Agent or the Lenders by the
Borrower or any Subsidiary thereof in connection with the negotiation,
preparation or execution of this Agreement or any of the Loan Documents
contains or will contain any untrue statement of a fact material to the
creditworthiness of the Borrower or its Subsidiaries or omits or will omit to
state a fact necessary in order to make the statements

 

62

 

contained
therein not misleading in light of the circumstances under which they were
made.  The Borrower is not aware of any
facts which it has not disclosed in writing to the Administrative Agent having
a Material Adverse Effect, or insofar as the Borrower can now foresee, could
reasonably be expected to have a Material Adverse Effect.

 

(w)                               Regulatory
Matters.

 

(i)                                     Network
Agreements, etc.  Each Network
Agreement which qualifies as a Material Contract hereunder, to which the
Borrower or any Subsidiary is a party is set forth on Part 1 of Schedule
7.1(w) hereto. Except for Network Agreements so designated on Part 1 of
such Schedule, neither the Borrower nor any Subsidiary is a party to (i) any
management or similar agreements with respect to the FCC Licenses held by any
such Person or (ii) any agreement pursuant to which any such Person has agreed
to share with others any portion of the revenues derived from any such FCC
Licenses, or pursuant to which such FCC Licenses shall be subject to any right
on the part of any other Person to require the Borrower or any Subsidiary to
sell any such FCC Licenses. The terms of all Network Agreements to which the
Borrower or any Subsidiary is a party, and the operation of each Cellular Communications
System pursuant thereto, comply with the Communications Act of 1934, as
amended, and all rules, regulations and policies of the FCC, any PUC and of any
other Governmental Authority.  Each
Network Agreement has been duly executed and delivered by the respective
parties thereto, is in full force and effect and neither the Borrower nor any
Subsidiary is in default of any of the provisions thereof.

 

(ii)                                  License
Information.  To the extent requested
by the Administrative Agent, Part 2 of Schedule 7.1(w) hereto sets forth, as of
the date hereof (or as of the dates specified on such Schedule with respect to
particular information), a true and complete list of the following information
for each FCC License or PUC Authorization issued to the Borrower or any
Subsidiary:

 

(1)                                  for
each FCC License issued to the Borrower or any Subsidiary, the call sign, the
name of the licensee, the transmitter location, the type of service, the
frequency or frequencies authorized, the site name or location and the expiration
dates; and

 

(2)                                  for
each PUC Authorization issued to the Borrower or any Subsidiary, the geographic
area covered by such Authorization, the services that may be provided
thereunder and the expiration date, if any.

 

(iii)                               Condition
of Systems.  All of the material
properties, equipment and systems owned, leased or managed by the Borrower or
any Subsidiary, and constituting part of the Telecommunications Systems are,
and all such property, equipment and systems to be a acquired or added in
connection with any contemplated system expansion or construction will be in
compliance with all terms and conditions of their respective FCC Licenses and
PUC Authorizations, and other Applicable Laws.

 

63

 

(iv)                              Fees.
 The Borrower and each Subsidiary has
paid all franchise, license or other fees and charges which have become due in
respect of the Telecommunications Systems and has made appropriate provision as
is required by GAAP for any such fees and charges which have accrued, except
for such fees an charges being contested in good faith by appropriate
proceedings.

 

(v)                                 License
Compliance.  Except as specifically
set forth in Part 2 of Schedule 7.1(w) hereto, the Borrower and its
Subsidiaries have secured all material FCC Licenses, and, if applicable, any
PUC and any other Governmental Authority exercising jurisdiction over the
Telecommunications Systems of any such Person (or the construction of delivery
systems therefor) required for the conduct of the business and operations of
such business as currently conducted.

 

(vi)                              The
FCC Licenses and PUC Authorizations specified on Part 2 of Schedule 7.1(w)
hereto are valid and in full force and effect without conditions except for
such conditions as are generally applicable to holders of FCC Licenses and such
Authorizations.  No event has occurred
and is continuing which could (i) result in the imposition of a forfeiture or
the revocation, termination or adverse modification of any FCC License or PUC
Authorization specified in Part 2 of Schedule 7.1(w) hereto or (ii)
materially and adversely affect any rights of the Borrower or any Subsidiary;
neither the Borrower nor any Subsidiary has reason to believe and has knowledge
that the FCC Licenses and PUC Authorizations specified in Part 2 of Schedule
7.1(w) hereto will not be renewed in the ordinary course; and the Borrower
and its Subsidiaries have sufficient time, materials, equipment, contract
rights and other required resources to complete, in a timely fashion and in
full, construction of any Cellular Communications System in compliance with all
Applicable Laws.

 

(x)                                   No
Material Adverse Change.  Since
December 31, 2004, there has been no material adverse change in the properties,
business, operations, prospects, or condition (financial or otherwise) of the
Borrower and its Subsidiaries and no event has occurred or condition arisen
that could reasonably be expected to have a Material Adverse Effect.

 

(y)                                 Insurance.
 The properties of the Borrower and its
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of the Borrower, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in locations where
the Borrower or the applicable Subsidiary operates.

 

(z)                                   OFAC.
 None of the Borrower, any Subsidiary of
the Borrower or any Affiliate of the Borrower: (i) is a Sanctioned Person, (ii)
has a substantial portion of its assets in Sanctioned Entities, or (iii)
derives a substantial portion of its operating income from investments in, or
transactions with Sanctioned Persons or Sanctioned Entities.  The proceeds of any Loan will not be used and
have not been used to fund any operations in, finance any investments or
activities in, or make any payments to, a Sanctioned Person or a Sanctioned
Entity.

 

SECTION
7.2                     Survival
of Representations and Warranties, Etc.  All representations and warranties set forth
in this Article VII and all representations and warranties

 

64

 

contained in
any certificate, or any of the Loan Documents (including but not limited to any
such representation or warranty made in or in connection with any amendment
thereto) shall constitute representations and warranties made under this
Agreement.  All representations and
warranties made under this Agreement shall be made or deemed to be made on and
as of the Closing Date, shall survive the Closing Date, shall be reasserted as
provided in Section 6.3, and shall not be waived by the execution and
delivery of this Agreement, any investigation made by or on behalf of the
Lenders or any borrowing hereunder.

 

ARTICLE VIII

 

FINANCIAL
INFORMATION AND NOTICES

 

Until all the
Obligations (other than contingent indemnification obligations not yet due and
payable) have been paid and satisfied in full and the Commitments terminated,
unless consent has been obtained in the manner set forth in Section 14.11
hereof, the Borrower will furnish or cause to be furnished to the
Administrative Agent at the Administrative Agent’s Office at the address set
forth in Section 14.1, and to the Lenders at their respective addresses
as set forth on the Register, or such other office as may be designated by the
Administrative Agent and Lenders from time to time:

 

SECTION
8.1                     Financial
Statements and Projections.

 

(a)                                  Quarterly
Financial Statements.  As soon as
practicable and in any event within forty-five (45) days after the end of each
of the first three fiscal quarters of any Fiscal Year, an unaudited
Consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated
and consolidating statements of income, retained earnings and cash flows and a report
containing management’s discussion and analysis of such financial statements
for the fiscal quarter then ended and that portion of the Fiscal Year then
ended, including the notes thereto, all in reasonable detail setting forth in
comparative form the corresponding figures for the preceding Fiscal Year and
prepared by the Borrower in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of operations of
any change in the application of accounting principles and practices during the
period, and certified by the chief financial officer of the Borrower to present
fairly in all material respects the financial condition of the Borrower and its
Subsidiaries as of their respective dates and the results of operations of the
Borrower and its Subsidiaries for the respective periods then ended, subject to
the absence of footnotes and normal year end adjustments.

 

(b)                                 Annual
Financial Statements.  As soon as
practicable and in any event within ninety (90) days after the end of each
Fiscal Year, an audited Consolidated balance sheet of the Borrower and its
Subsidiaries as of the close of such Fiscal Year and audited Consolidated
statements of income, retained earnings and cash flows for the Fiscal Year then
ended, including the notes thereto, all in reasonable detail setting forth in
comparative form the corresponding figures for the preceding Fiscal Year and
prepared by an independent certified public accounting firm acceptable to the
Administrative Agent in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of operation of
any change

 

65

 

in the
application of accounting principles and practices during the year, and
accompanied by a report thereon by such certified public accountants that is
not qualified with respect to scope limitations imposed by the Borrower or any
of its Subsidiaries or with respect to accounting principles followed by the
Borrower or any of its Subsidiaries not in accordance with GAAP.

 

(c)                                  Annual
Business Plan and Financial Projections.  As soon as practicable and in any event within
ninety (90) days after the end of each Fiscal Year, a business plan of the
Borrower and its Subsidiaries for the ensuing four (4) fiscal quarters, such
plan to include, on a quarterly basis, the following: a quarterly operating and
capital budget, a projected income statement, statement of cash flows and
balance sheet and a report containing management’s discussion and analysis of
such projections, accompanied by a certificate from the chief financial officer
of the Borrower to the effect that, to the best of such officer’s knowledge,
such projections are good faith estimates of the financial condition and
operations of the Borrower and its Subsidiaries for such four (4) quarter
period.

 

SECTION
8.2                     FCC
and PUC Matters.  As soon as
available and in any event within 45 days after the end of each fiscal quarter
of the Borrower, an updated Schedule 7.1(w) hereto accompanied by a
report identifying any Network Agreement previously scheduled, FCC License or
PUC Authorization terminated, lost, surrendered or cancelled during such
period, and within 10 Business Days of the receipt by the Borrower or any Subsidiary
of notice that any Network Agreement previously scheduled, FCC License or PUC
Authorization has been terminated, lost or cancelled, copies of any such notice
accompanied by a report describing the measures undertaken by the Borrower and
its Subsidiaries to prevent such termination, loss or cancellation (and the
anticipated impact, if any, that such termination, loss or cancellation will
have upon the business of the Borrower and its Subsidiaries).

 

SECTION
8.3                     Officer’s
Compliance Certificate.  At each
time financial statements are delivered pursuant to Sections 8.1 (a) or (b)
and at such other times as the Administrative Agent shall reasonably request, a
certificate of the chief financial officer or the treasurer of the Borrower in
the form of Exhibit E attached hereto (an “Officer’s Compliance
Certificate”).

 

SECTION
8.4                     Accountants’
Certificate.  At each time
financial statements are delivered pursuant to Section 8.1(b), a
certificate of the independent public accountants certifying such financial statements
addressed to the Administrative Agent for the benefit of the Lenders:

 

(a)                                  stating
that in making the examination necessary for the certification of such
financial statements, they obtained no knowledge of any Default or Event of
Default or, if such is not the case, specifying such Default or Event of
Default and its nature and period of existence; and

 

(b)                                 including
the calculations prepared by such accountants required to establish whether or
not the Borrower and its Subsidiaries are in compliance with the financial
covenants set forth in Article X hereof as at the end of each respective
period.

 

66

 

SECTION 8.5                     Other Reports.

 

(a)                                  Promptly
upon receipt thereof, copies of all reports, if any, submitted to the Borrower
or its board of directors by its independent public accountants in connection
with their auditing function, including, without limitation, any management
report and any management responses thereto; and

 

(b)                                 Such
other information regarding the operations, business affairs and financial
condition of the Borrower or any of its Subsidiaries as the Administrative
Agent or any Lender may reasonably request.

 

SECTION 8.6                     Notice of Litigation and Other
Matters.  Prompt (but in no event
later than ten (10) days after an officer of the Borrower obtains
knowledge thereof) telephonic and written notice of:

 

(a)                                  the
commencement of all proceedings and investigations by or before any
Governmental Authority and all actions and proceedings in any court or before
any arbitrator against or involving the Borrower or any Subsidiary thereof or
any of their respective properties, assets or businesses;

 

(b)                                 any
notice of any violation received by the Borrower or any Subsidiary thereof from
any Governmental Authority including, without limitation, any notice of
violation of Environmental Laws;

 

(c)                                  any
labor controversy that has resulted in, or threatens to result in, a strike or
other work action against the Borrower or any Subsidiary thereof;

 

(d)                                 any
attachment, judgment, lien, levy or order exceeding $500,000 that may be
assessed against or threatened against the Borrower or any Subsidiary thereof;

 

(e)                                  any
Default or Event of Default, or any event which constitutes or which with the
passage of time or giving of notice or both would constitute a default or event
of default under any Material Contract to which the Borrower or any of its
Subsidiaries is a party or by which the Borrower or any Subsidiary thereof or
any of their respective properties may be bound;

 

(f)                                    (i)                                     any
unfavorable determination letter from the Internal Revenue Service regarding
the qualification of an Employee Benefit Plan under Section 401(a) of
the Code (along with a copy thereof), (ii) all notices received by the
Borrower or any ERISA Affiliate of the PBGC’s intent to terminate any Pension
Plan or to have a trustee appointed to administer any Pension Plan, (iii) all
notices received by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA and (iv) the Borrower obtaining
knowledge or reason to know that the Borrower or any ERISA Affiliate has filed
or intends to file a notice of intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c) of ERISA;
and

 

67

 

(g)                                 any
event which makes any of the representations set forth in Section 7.1
inaccurate in any respect.

 

SECTION 8.7                     Accuracy of Information.         All
written information, reports, statements and other papers and data furnished by
or on behalf of the Borrower to the Administrative Agent or any Lender (other
than financial forecasts) whether pursuant to this Article VIII or any
other provision of this Agreement, shall, at the time the same is so furnished,
comply with Section 7.1(v).

 

ARTICLE IX

 

AFFIRMATIVE COVENANTS

 

Until all of the Obligations (other than contingent indemnification
obligations not yet due and payable) have been paid and satisfied in full and
the Commitments terminated, unless consent has been obtained in the manner
provided for in Section 14.11, the Borrower will, and will cause
each of its Subsidiaries to:

 

SECTION 9.1                     Preservation of Corporate
Existence and Related Matters. Except as permitted by Section 11.4,
preserve and maintain its separate corporate existence and all rights,
franchises, licenses and privileges necessary to the conduct of its business,
and qualify and remain qualified as a foreign corporation and authorized to do
business in each jurisdiction where the nature and scope of its activities
require it to so qualify under Applicable Law, except where a failure to obtain
such qualification or authorization could not reasonably be expected to have a
Material Adverse Effect.

 

SECTION 9.2                     Maintenance of Property.
In addition to the requirements of any of the Security Documents, protect and
preserve all properties useful in and material to its business, including
copyrights, patents, trade names and trademarks; maintain in good working order
and condition all buildings, equipment and other tangible real and personal
property; and from time to time make or cause to be made all renewals,
replacements and additions to such property necessary for the conduct of its
business, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.

 

SECTION 9.3                     Insurance. In addition
to the requirements set forth in the Security Documents, maintain insurance
with financially sound and reputable insurance companies against such risks and
in such amounts as are customarily maintained by similar businesses and as may
be required by Applicable Law and as are required by any Security Documents
(including, without limitation, hazard and business interruption insurance),
and on the Closing Date and from time to time thereafter deliver to the
Administrative Agent upon its request a detailed list of the insurance then in
effect, stating the names of the insurance companies, the amounts and rates of
the insurance, the dates of the expiration thereof and the properties and risks
covered thereby.

 

SECTION 9.4                     Accounting Methods and
Financial Records. Maintain a system of accounting, and keep such
books, records and accounts (which shall be true and complete in

 

68

 

all material
respects) as may be required or as may be necessary to permit the preparation
of financial statements in accordance with GAAP and in compliance with the
regulations of any Governmental Authority having jurisdiction over it or any of
its properties.

 

SECTION 9.5                     Payment and Performance of
Obligations. Pay and perform all Obligations under this Agreement and
the other Loan Documents, and pay or perform (a) all material taxes,
assessments and other governmental charges that may be levied or assessed upon
it or any of its property, and (b) all other material indebtedness,
obligations and liabilities in accordance with customary trade practices; provided,
that the Borrower or such Subsidiary may contest any item described in clauses (a) or
(b) of this Section 9.5 in good faith so long as adequate
reserves are maintained with respect thereto in accordance with GAAP.

 

SECTION 9.6                     Compliance With Laws and
Approvals. Observe and remain in compliance with all Applicable Laws
and maintain in full force and effect all Governmental Approvals, in each case
applicable to the conduct of its business, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.

 

SECTION 9.7                     Environmental Laws. In
addition to and without limiting the generality of Section 9.6, (a) comply
with, and use all commercially reasonable efforts to ensure such compliance by
all tenants and subtenants with all applicable Environmental Laws and obtain
and comply with and maintain, and use all commercially reasonable efforts to
ensure that all tenants and subtenants obtain and comply with and maintain, any
and all licenses, approvals, notifications, registrations or permits required
by applicable Environmental Laws except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, (b) conduct and
complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws, and promptly
comply with all lawful orders and directives of any Governmental Authority
regarding Environmental Laws except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, and (c) defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, Administrative Agents,
officers and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the presence of Hazardous Materials, or the violation of,
noncompliance with or liability under any Environmental Laws applicable to the
operations of the Borrower or such Subsidiary, or any orders, requirements or
demands of Governmental Authorities related thereto, including, without
limitation, reasonable attorney’s and consultant’s fees, investigation and
laboratory fees, response costs, court costs and litigation expenses, except to
the extent that any of the foregoing directly result from the gross negligence
or willful misconduct of the party seeking indemnification therefor.

 

SECTION 9.8                     Compliance with ERISA.
In addition to and without limiting the generality of Section 9.6, (a) comply
with all applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans, (b) not
take any action or fail to take action the result of which could be a liability
to the PBGC or to a Multiemployer Plan, (c) not participate in any
prohibited transaction that could result in any civil penalty under ERISA or
tax under the Code, (d) operate each Employee Benefit Plan in such a

 

69

 

manner that
will not incur any tax liability under Section 4980B of the Code or any
liability to any qualified beneficiary as defined in Section 4980B of the
Code and (e) furnish to the Administrative Agent upon the Administrative
Agent’s request such additional information about any Employee Benefit Plan as
may be reasonably requested by the Administrative Agent.

 

SECTION 9.9                     Compliance With Agreements.
Comply in all respects with each term, condition and provision of all leases,
agreements and other instruments entered into in the conduct of its business
including, without limitation, any Material Contract, except where the failure
to so comply with respect to such leases, agreements and other instruments
could not reasonably be expected to have a Material Adverse Effect; provided,
that the Borrower or such Subsidiary may contest any such lease, agreement or
other instrument, including without limitation, any Material Contract, in good
faith through applicable proceedings so long as adequate reserves are
maintained in accordance with GAAP.

 

SECTION 9.10              Conduct of Business. Engage
only in businesses in which engaged as of the date of the Prior Credit
Agreement, and businesses reasonably related thereto and in furtherance
thereof.

 

SECTION 9.11              Visits and Inspections. Permit
representatives of the Administrative Agent or any Lender, from time to time
(and so long as no Default or Event of Default shall have occurred and be
continuing, upon reasonable notice and during business hours), to visit and
inspect its properties; inspect, audit and make extracts from its books,
records and files, including, but not limited to, management letters prepared
by independent accountants; and discuss with its principal officers, and its
independent accountants, its business, assets, liabilities, financial
condition, results of operations and business prospects.

 

SECTION 9.12              Additional Subsidiaries. (a) Additional
Domestic Subsidiaries.  Within thirty
(30) days after the acquisition or creation of any Domestic Subsidiary of the
Borrower, cause to be executed and delivered to the Administrative Agent (i) a
duly executed Joinder Agreement, whereby the Borrower shall pledge the stock of
such Domestic Subsidiary and such new Domestic Subsidiary shall become a
Guarantor under the Guaranty Agreement and Grantor under the Collateral
Agreement, (ii) upon request of the Administrative Agent, favorable legal
opinions addressed to the Administrative Agent and Lenders in form and
substance satisfactory thereto with respect to such Joinder Agreement and (iii) such
other documents and closing certificates as may be reasonably requested by the
Administrative Agent which provide that such Domestic Subsidiary shall become a
Guarantor bound by all of the terms, covenants and agreements contained in the
Loan Documents and that the assets of such Domestic Subsidiary shall become
Collateral for the Guaranteed Obligations.

 

(b)                                 Additional
Foreign Subsidiaries.  Within thirty
(30) days after the acquisition or creation of any first tier Foreign
Subsidiary of the Borrower, cause to be executed and delivered to the
Administrative Agent (i) a duly executed Joinder Agreement, whereby the
Borrower shall pledge sixty-five (65%) of the total outstanding capital stock
of such Foreign Subsidiary, (ii) upon request of the Administrative Agent,
favorable legal opinions addressed to the Administrative Agent and Lenders in
form and substance satisfactory thereto with respect to such Joinder Agreement
and (iii) such other documents and closing certificates as may be

 

70

 

reasonably
requested by the Administrative Agent which provide that such Foreign
Subsidiary shall be bound by all of the terms, covenants and agreements
contained in the Loan Documents, provided that if any Foreign Subsidiary
guarantees any Debt of the Borrower or any of its Subsidiaries, the Borrower
and its Subsidiaries shall cause such Foreign Subsidiary to (A) become a
Guarantor by delivering to the Administrative Agent a duly executed supplement
to the applicable Guaranty Agreement or such other document as the
Administrative Agent shall reasonably deem appropriate for such purpose, (B) to
the extent not already required to be delivered under this subsection (b),
grant a security interest in all Collateral owned by such Foreign Subsidiary by
delivering to the Administrative Agent a duly executed supplement to each
Security Document or such other document as the Administrative Agent shall
reasonably deem appropriate for such purpose and comply with the terms of each
Security Document and (C) deliver to the Administrative Agent such other
documents and closing certificates consistent with subsection (a) above
or otherwise as may be reasonably requested by the Administrative Agent, all in
form, content and scope reasonably satisfactory to the Administrative Agent.
Notwithstanding anything in the immediately preceding proviso to the contrary,
the requirements of such proviso shall not apply to any Foreign Subsidiary to
the extent that such requirements would (a) be prohibited by applicable
law or (b) cause materially adverse tax implications for any Borrower or
any Domestic Subsidiary under Section 956 of the Code.

 

SECTION 9.13              Further Assurances.  Make, execute and deliver all such additional
and further acts, things, deeds and instruments as the Administrative Agent or
any Lender may reasonably require to document and consummate the transactions
contemplated hereby and to vest completely in and insure the Administrative
Agent and the Lenders their respective rights under this Agreement and the
other Loan Documents.

 

SECTION 9.14              CoBank Participation Certificates.  At all times during which CoBank, ACB (“CoBank”)
is a Lender hereunder, acquire and maintain non-voting participation
certificates in CoBank (the “Participation Certificates”) in such
amounts and at such times as CoBank may from time to time require in accordance
with its bylaws and capital plan (as each may be amended from time to time); provided,
however, that the maximum amount of Participation Certificates that the
Borrower may be required to purchase may not exceed the maximum amount
permitted by CoBank’s bylaws as in effect on the date hereof.  The rights and obligations of the parties
with respect to the Participation Certificates and any other patronage or other
distributions shall be governed by CoBank’s bylaws.

 

SECTION 9.15              RTFC Eligibility.  Maintain the Borrower’s eligibility to borrow
from RTFC, consistent with RTFC’s written policies set forth in its
constitutive documents with respect to borrowing eligibility in effect on the
date of this Agreement.

 

SECTION 9.16              Interest Rate Contracts.  Maintain Interest Rate Contracts with respect
to interest rate exposure under this Agreement with durations of at least three
(3) years and an aggregate notional principal amount thereunder equal to
at least fifty percent (50%) of the sum of the Term Loan B Commitment plus
the Term Loan C Commitment, and otherwise in form and substance reasonably
satisfactory to the Administrative Agent. 
The Existing Interest Rate Contracts shall be deemed to satisfy the
requirements of this Section 9.16; provided that, upon the
termination or expiration thereof, the Borrower extends or replaces such
Existing

 

71

 

Interest Rate
Contracts with Interest Rate Contracts which contain terms and conditions that
satisfy the first sentence of this Section 9.16.

ARTICLE X

 

FINANCIAL COVENANTS 

 

Until all of the Obligations (other than contingent indemnification
obligations not yet due and payable) have been paid and satisfied in full and
the Commitments terminated, unless consent has been obtained in the manner set
forth in Section 14.11 hereof, the Borrower and its Subsidiaries on
a Consolidated basis will not:

 

SECTION 10.1              Maximum Leverage Ratio. As of
the date of any fiscal quarter end during the applicable period set forth
below, permit the ratio (the “Leverage Ratio”) of (a) Total Debt as
of such fiscal quarter end to (b) EBITDA for the four consecutive fiscal
quarter period ending on such fiscal quarter end, to exceed the corresponding
ratio set forth below:

 

	
  Period

  	
   

  	
  Ratio

  	
   

  
	
  Closing Date
  through 9/30/2007

  	
   

  	
  4.25 to 1.00

  	
   

  
	
  10/01/2007
  through 9/30/2008

  	
   

  	
  4.00 to 1.00

  	
   

  
	
  10/01/2008
  through 9/30/2009

  	
   

  	
  3.75 to 1.00

  	
   

  
	
  10/01/2009
  through 9/30/2010

  	
   

  	
  3.50 to 1.00

  	
   

  
	
  10/01/2010
  and thereafter

  	
   

  	
  3.25 to 1.00

  	
   

  

 

SECTION 10.2              [Reserved.]

 

SECTION 10.3              Interest Coverage Ratio.  As of any fiscal quarter end, permit the
ratio of (a) EBITDA for the four consecutive fiscal quarter periods ending
on such fiscal quarter end to (b) Interest Expense as of such fiscal
quarter end to be less than 2.50 to 1.00.

 

SECTION 10.4              Maximum Capital Expenditure.
In any Fiscal Year, permit Capital Expenditures to exceed the amounts set forth
below:

 

	
  Fiscal Year

  	
   

  	
  Amount

  	
   

  
	
  2006

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
  2007

  	
   

  	
  $

  	
  23,500,000

  	
   

  
	
  2008 and
  thereafter

  	
   

  	
  $

  	
  22,000,000

  	
   

  

 

provided
that the maximum amount of Capital Expenditures permitted by this Section 10.4
in any Fiscal Year shall be increased by the amount of Capital Expenditures
that were permitted to be made under this Section 10.4 in the
immediately preceding Fiscal Year (without giving effect to any carryover
amount from prior Fiscal Years) over the amount of Capital Expenditures
actually made during such preceding Fiscal Year.  Notwithstanding anything to the contrary in
this Section 10.4, if, as of any fiscal quarter end, the Leverage
Ratio is less than 3.00 to 1.00, the

 

72

 

amount of
Capital Expenditures shall not be limited provided that such Leverage Ratio
remains less than 3.00 to 1.00 both before and after giving effect to such
Capital Expenditure.

ARTICLE XI

 

NEGATIVE COVENANTS

 

Until all of the Obligations (other than contingent indemnification
obligations not yet due and payable) have been paid and satisfied in full and
the Commitments terminated, unless consent has been obtained in the manner set
forth in Section 14.11 hereof, the Borrower will not and will not
permit any of its Subsidiaries to:

 

SECTION 11.1              Limitations on Debt.  Create, incur, assume or suffer to exist any
Debt except:

 

(a)                                  the
Obligations (excluding any Hedging Obligations permitted pursuant to Section 11.1(b));

 

(b)                                 Debt
incurred in connection with a Hedging Agreement with a counterparty and upon
terms and conditions (including interest rate) reasonably satisfactory to the
Administrative Agent;

 

(c)                                  Debt
existing on the Closing Date and not otherwise permitted under this Section 11.1,
as set forth on Schedule 7.1(s) and the renewal and refinancing
(but not the increase of the aggregate principal amount thereof) thereof; and

 

(d)                                 (i) Debt
incurred in connection with Capitalized Leases, (ii) Debt consisting of
Guaranty Obligations (provided that the Guaranty Obligations permitted by Section 11.1(g) shall
not be included in the calculation of the permitted maximum amount under this Section 11.1(d)),
and (iii) any other Debt, in an aggregate principal amount for all Debt
referred to in this Section 11.1(d) not to exceed $10,000,000 on
any date of determination.

 

(e)                                  Debt
of the Borrower to any Guarantor and Debt of any Guarantor to the Borrower or
any other Guarantor;

 

(f)                                    Debt
of a Person existing at the time such Person became a Subsidiary or assets were
acquired from such Person, to the extent such Debt was not incurred in
connection with or in contemplation of, such Person becoming a Subsidiary or
the acquisition of such assets, not to exceed in the aggregate at any time
outstanding $20,000,000; and

 

(g)                                 Debt
consisting of either (i) purchase money Debt of Enventis incurred after
the Closing Date to GE Commercial Distribution Finance Corporation or an
affiliated entity for wholesale inventory financing upon terms and conditions
acceptable to the Administrative Agent in an aggregate amount not to exceed
$13,000,000 on any date of determination (the “GE  Financing”) or (ii) until
such time as the GE Financing is established, Guaranty Obligations of the
Borrower in favor of Cisco Systems, Inc. (“Cisco”) on account of
trade payables of Enventis to Cisco arising in the ordinary course of business
in connection with such inventory financing.

 

73

 

SECTION 11.2              Limitations on Liens. Create,
incur, assume or suffer to exist, any Lien on or with respect to any of its
assets or properties (including without limitation shares of capital stock or
other ownership interests), real or personal, whether now owned or hereafter
acquired, except:

 

(a)                                  Liens
for taxes, assessments and other governmental charges or levies (excluding any
Lien imposed pursuant to any of the provisions of ERISA or Environmental Laws) not
yet due or as to which the period of grace (not to exceed thirty (30) days), if
any, related thereto has not expired or which are being contested in good faith
and by appropriate proceedings if adequate reserves are maintained to the
extent required by GAAP;

 

(b)                                 statutory
Liens in favor of CoBank on all equity evidenced by the Participation
Certificates which the Borrower may now own or hereafter acquire or be
allocated in CoBank;

 

(c)                                  the
claims of materialmen, mechanics, carriers, warehousemen, processors or
landlords for labor, materials, supplies or rentals incurred in the ordinary
course of business, (i) which are not overdue for a period of more than
thirty (30) days or (ii) which are being contested in good faith and by
appropriate proceedings and statutory liens of landlords with regard to any
leased property;

 

(d)                                 Liens
consisting of deposits or pledges made in the ordinary course of business (i) in
connection with, or to secure payment of, obligations under workers’
compensation, unemployment insurance or similar legislation or obligations (not
to exceed $500,000) under customer service contracts and (ii) to secure
the performance of tenders, statutory obligations, surety bonds (other than
appeal bonds), bids, leases, government contracts, performance and return of
money bonds and other similar obligations incurred in the ordinary course of
business (exclusive of obligations in respect of the payment for borrowed
money); provided that the security for such obligations is limited
solely to such deposits or to the pledge of the specific goods which are
related to the particular project or contract which is the subject of such
bond, bid, or lease;

 

(e)                                  Liens
constituting encumbrances in the nature of zoning restrictions, easements and
rights or restrictions of record on the use of real property, which in the
aggregate are not substantial in amount and which do not, in any case, detract
from the value of such property or impair the use thereof in the ordinary
conduct of business;

 

(f)                                    Liens
not otherwise permitted by this Section 11.2 and in existence on
the Closing Date and described on Schedule 11.2;

 

(g)                                 Liens
securing purchase money Debt permitted under Section 11.1(d) and Section 11.1(g) or
obligations under trade payables in the ordinary course of business not more
than ninety (90) days past due owing by Enventis to Cisco pursuant to the
arrangements decribed in Section 11.1(g); provided that (i) such
Liens shall be created substantially simultaneously with the acquisition of the
related asset, (ii) such Liens do not at any time encumber any property
other than the property financed by such Debt and with respect to the purchase
money Debt referred to in Section 11.1(g), the related accounts
receivable resulting from the sale of such

 

74

 

asset by the
Borrower, (iii) the amount of Debt secured thereby is not increased and (iv) the
principal amount of Debt secured by any such Lien shall at no time exceed one
hundred percent (100%) of the original purchase price of such property at the
time it was acquired;

 

(h)                                 Liens
in favor of the Administrative Agent for the benefit of the Administrative
Agent and the Lenders under the Loan Documents;

 

(i)                                     Liens
existing on any asset of any Person at the time such Person becomes a
Subsidiary or is merged or consolidated with or into a Subsidiary which (i) were
not created in contemplation of or in connection with such event and (ii) do
not extend to or cover any other property or assets of Borrower or any
Subsidiary, so long as any Debt related to any such Liens are permitted under Section 11.1(f);

 

(j)                                     (i) Liens
of a collecting bank arising in the ordinary course of business under Section 4-208
of the UCC in effect in the relevant jurisdiction and (ii) provided that
such depositary bank has executed and delivered a deposit account control
agreement with respect to such deposit account to the extent required pursuant
to the Collateral Agreement, Liens of any depositary bank in connection with
statutory, common law and contractual rights of set-off and recoupment with
respect to any deposit account of the Borrower or any Subsidiary thereof;

 

(k)                                  Liens
securing judgments for the payment of money not constituting an Event of
Default under Section 12.1(n) or securing appeal or other surety
bonds related to such judgments; and

 

(l)                                     Liens
not otherwise permitted hereunder securing obligations not at any time
exceeding in the aggregate $1,000,000.

 

SECTION 11.3              Limitations on Loans, Advances,
Investments and Acquisitions. Purchase, own, invest in or otherwise
acquire, directly or indirectly, any capital stock, interests in any
partnership or joint venture (including without limitation the creation or
capitalization of any Subsidiary), evidence of Debt or other obligation or
security, substantially all or a portion of the business or assets of any other
Person or any other investment or interest whatsoever in any other Person, or
make or permit to exist, directly or indirectly, any loans, advances or
extensions of credit to, or any investment in cash or by delivery of property
in, any Person except:

 

(a)                                  investments
existing on the Closing Date in Subsidiaries and the other existing loans,
advances and investments not otherwise permitted by this Section 11.3
described on Schedule 11.3;

 

(b)                                 investments
in (i) marketable direct obligations issued or unconditionally guaranteed
by the United States of America or any agency thereof maturing within 120 days
from the date of acquisition thereof, (ii) commercial paper maturing no
more than 120 days from the date of creation thereof and currently having the
highest rating obtainable from either Standard & Poor’s Ratings
Services, a division of The McGraw-Hill Companies, Inc. or Moody’s
Investors Service, Inc., (iii) certificates of deposit maturing no
more than 120 days from the date of creation thereof issued by commercial banks
incorporated under the laws of the

 

75

 

United States
of America, each having combined capital, surplus and undivided profits of not
less than $500,000,000 and having a rating of “A” or better by a nationally
recognized rating agency; provided, that the aggregate amount invested
in such certificates of deposit shall not at any time exceed $5,000,000 for any
one such certificate of deposit and $10,000,000 for any one such bank, or (iv) time
deposits maturing no more than 30 days from the date of creation thereof with
commercial banks or savings banks or savings and loan associations each having
membership either in the FDIC or the deposits of which are insured by the FDIC
and in amounts not exceeding the maximum amounts of insurance thereunder;

 

(c)                                  investments
by the Borrower or any Subsidiary in the form of (i) acquisitions of all
or substantially all of the business or a line of business (whether by the
acquisition of capital stock, assets or any combination thereof) of any other
Person or (ii) investments in Subsidiaries, so long as such acquisition or
investment has been previously approved in writing by the Required Lenders; provided,
however, that the Borrower or any Subsidiary shall be permitted to make any
one or more individual acquisitions or a series of related acquisitions (or for
any such investment) with a total consideration (or investment amount) of up to
$15,000,000 per any such acquisition or series of related acquisitions (or any
such investment) without the approval of the Required Lenders so long as (i) no
Default or Event of Default shall have occurred and be continuing or shall be
created thereby, (ii) the Borrower shall have delivered to the
Administrative Agent financial projections in form and substance reasonably
satisfactory to the Administrative Agent, evidencing compliance, on a pro
forma basis, with the covenants contained in Articles X and XI and (iii) the
total consideration for such acquisitions (or investment) does not exceed in
the aggregate $35,000,000 during the term of this Agreement; provided  further
that such acquired Subsidiary comply with Section 9.12 hereof;

 

(d)                                 investments
in Participation Certificates of CoBank to the extent required by Section 9.14;

 

(e)                                  investments
in SCCs of RTFC of not more than 10% of the Term Loan C Commitment;

 

(f)                                    Hedging
Agreements permitted pursuant to Section 11.1;

 

(g)                                 investments
in the form of loans and advances to employees in the ordinary course of
business, including, without limitation, in connection with the purchase or
retention of capital by such employees in the ordinary course of business,
which, in the aggregate do not at any time exceed $250,000;

 

(h)                                 investments
comprised of notes payable, stock or other securities issued by account debtors
to the Borrower or any Guarantor pursuant to negotiated agreements with respect
to the settlement of such account debtor’s accounts in the ordinary course of business;
provided that the aggregate amount of such accounts so settled by the
Borrower and such Guarantor does not exceed $2,500,000 in the aggregate on any
date of determination;

 

(i)                                     investments
not otherwise permitted pursuant to this Section 11.3 in an amount
not to exceed $1,000,000; and

 

76

 

(j)                                     investments
consisting of promissory notes acquired by the Borrower in connection with the
sale of assets permitted under Section 11.5(b); provided
that at least seventy-five percent (75%) of the total consideration received by
the Borrower for each such sale of assets shall be paid in cash to the Borrower
and an amount not to exceed twenty-five percent (25%) of the total
consideration received by the Borrower for each such sale of assets may be paid
by promissory note payable to the Borrower; provided further that each
such promissory in the original principal amount of $10,000 or more shall be
pledged to the Administrative Agent in accordance with the terms of the
Collateral Agreement within ten (10) Business Days after such sale.

 

SECTION 11.4              Limitations on Mergers and Liquidation.
Merge, consolidate or enter into any similar combination with any other Person
or liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution) except:

 

(a)                                  any
Wholly Owned Subsidiary of the Borrower may merge with any other Wholly Owned
Subsidiary of the Borrower or into the Borrower, as long as the Borrower is the
surviving corporation;

 

(b)                                 any
Wholly Owned Subsidiary may merge into the Person such Wholly Owned Subsidiary
was formed to acquire in connection with an acquisition permitted by Section 11.3(c);
and

 

(c)                                  any
Wholly Owned Subsidiary of the Borrower may wind-up into the Borrower or any
other Wholly Owned Subsidiary of the Borrower;

 

provided
that prior to any merger permitted under this Section 11.4, the
Borrower shall deliver to the Administrative Agent evidence reasonably
satisfactory thereto demonstrating compliance with Articles X and XI of this
Agreement, both before and after giving effect to such merger.

 

SECTION 11.5              Limitations on Sale of Assets.
Convey, sell, lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation, the sale of any receivables
and leasehold interests and any sale-leaseback or similar transaction), whether
now owned or hereafter acquired except:

 

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

 

(b)                                 the
sale of obsolete assets no longer used or usable in the business of the
Borrower or any of its Subsidiaries;

 

(c)                                  the
transfer of assets to the Borrower or any Wholly Owned Subsidiary of the
Borrower pursuant to any transaction permitted by Section 11.4;

 

(d)                                 the
sale or discount without recourse of accounts receivable arising in the
ordinary course of business in connection with the compromise or collection
thereof;

 

(e)                                  any
other sale of assets; provided that (i) after giving effect to such
asset sale, EBITDA attributable to all assets sold or to be sold (A) during
the then-current Fiscal Year does

 

77

 

not exceed ten
percent (10%) of total EBITDA for the period of twelve (12) consecutive months
ending on the month end immediately preceding the date of such proposed sale,
and (B) during the term of this Agreement, does not exceed, twenty percent
(20%) of total EBITDA for the period of four (4) consecutive fiscal
quarters ending on the quarter end immediately preceding the date of such
proposed sale and (ii) if applicable, the Net Cash Proceeds thereof are
applied to the Loans in accordance with Section 4.5(b);

 

(f)                                    the
disposition of any Hedging Agreement;

 

(g)                                 leases
and licenses of property or assets by the Borrower or any Subsidiary thereof in
the ordinary course of business (so long as such lease or license does not
create a Capitalized Lease Obligation not otherwise permitted pursuant to Section 11.2);
and

 

(h)                                 disposition
by the Borrower or any Subsidiary thereof of investments permitted pursuant to Section 11.3
to the extent the proceeds of such disposition are reinvested in other
investments permitted pursuant to Section 11.3.

 

SECTION 11.6              Limitations on Dividends and
Distributions. Declare or pay any dividends upon any of its capital
stock; purchase, redeem, retire or otherwise acquire, directly or indirectly,
any shares of its capital stock, or make any distribution of cash, property or
assets among the holders of shares of its capital stock, or make any change in
its capital structure; provided that:

 

(a)                                  the
Borrower or any Subsidiary may pay dividends in shares of its own capital
stock;

 

(b)                                 the
Borrower may (i) pay cash dividends to its equity holders and (ii) purchase,
redeem or otherwise acquire shares of its capital stock (“Stock Repurchases”);
provided that (A) the aggregate amount of such dividends and Stock
Repurchases shall not exceed in any Fiscal Year one hundred percent (100%) of
Net Income for the immediately preceding Fiscal Year, (B) the Borrower
shall have delivered to the Administrative Agent evidence reasonably
satisfactory to the Administrative Agent demonstrating compliance with Articles
X and XI hereof both before and after giving effect to such dividend
payment or Stock Repurchase, (C) each Stock Repurchase shall have been
duly authorized by the Borrower’s board of directors, and (D) in no event
shall Stock Repurchases exceed $2,500,000 in the aggregate in any Fiscal Year;
and

 

(c)                                  any
Subsidiary may pay cash dividends to the Borrower.

 

SECTION 11.7              Limitations on Exchange and Issuance of
Capital Stock. Issue, sell or otherwise dispose of any class or series
of capital stock that, by its terms or by the terms of any security into which
it is convertible or exchangeable, is, or upon the happening of an event or
passage of time would be, (a) convertible or exchangeable into Debt or (b) required
to be redeemed or repurchased, including at the option of the holder, in whole
or in part, or has, or upon the happening of an event or passage of time would
have, a redemption or similar payment due.

 

78

 

SECTION 11.8                                      Transactions
with Affiliates. Directly or indirectly (a) make any loan or
advance to, or purchase or assume any note or other obligation to or from, any
of its officers, directors, shareholders or other Affiliates, or to or from any
member of the immediate family of any of its officers, directors, shareholders
or other Affiliates, or subcontract any operations to any of its Affiliates or (b) enter
into, or be a party to, any other transaction not described in clause (a) of
this Section with any of its Affiliates other than: 

 

(A)                              transactions
permitted by Section 11.3, 11.4, 11.6 and 11.7;

 

(B)                                transactions
existing on the Closing Date and described on Schedule 11.8;

 

(C)                                compensation
and reimbursement of reasonable expenses of officers and directors consistent
with past practice of the Borrower and its Subsidiaries; and

 

(D)                               other
transactions in the ordinary course of business on terms as favorable as would
be obtained by it on a comparable arms-length transaction with an independent,
unrelated third party as determined in good faith by the board of directors of
the Borrower.

 

SECTION 11.9                                      Certain
Accounting Changes. Change its Fiscal Year end, or make any change in
its accounting treatment and reporting practices except as required by GAAP or (b) amend,
modify or change its articles of incorporation (or corporate charter or other
similar organizational documents) or amend, modify or change its bylaws (or
other similar documents) in any manner adverse in any respect to the rights or
interests of the Lenders.

 

SECTION 11.10                               Amendments; Payments
and Prepayments of Subordinated Debt.

 

(a)                                  Amend
or modify (or permit the modification or amendment of) any of the terms or
provisions of any Subordinated Debt in any respect which would materially
adversely affect the rights or interests of the Administrative Agent and
Lenders hereunder.

 

(b)                                 Cancel,
forgive, make any payment or prepayment on, or redeem or acquire for value
(including, without limitation, (i) by way of depositing with any trustee
with respect thereto money or securities before due for the purpose of paying
when due and (ii) at the maturity thereof) any Subordinated Debt, except
refinancings, refundings, renewals, extensions or exchange of any Subordinated
Indebtedness permitted by Section 11.1.

 

SECTION 11.11                               Restrictive
Agreements.  (a) Enter into
any Debt which contains any negative pledge on assets or any covenants more
restrictive than the provisions of Articles IX, X and XI hereof, or which
restricts, limits or otherwise encumbers its ability to incur Liens on or with
respect to any of its assets or properties other than the assets or properties
securing such Debt or (b) enter into any agreement which shall restrict,
limit or otherwise encumber (by covenant or otherwise) the ability of any
Subsidiary of the Borrower to make any payment to the Borrower (in the form of
dividends, intercompany advances or otherwise) for the purpose of enabling the
Borrower to pay the Obligations.

 

79

 

SECTION 11.12                               Nature of Business.
Alter in any material respect the character or conduct of the business
conducted by the Borrower and its Subsidiaries as of the Closing Date.

 

SECTION 11.13                               Impairment of Security
Interests. Take or omit to take any action, which might or would have
the result of materially impairing the Liens in favor of the Administrative
Agent with respect to the Collateral or grant to any Person (other than the
Administrative Agent for the benefit of itself and the Lenders pursuant to the
Security Documents) any interest whatsoever in the Collateral, except for Liens
permitted under Section 11.2 and asset sales permitted under Section 11.5.

 

ARTICLE XII

 

DEFAULT AND REMEDIES 

 

SECTION 12.1                                      Events of
Default. Each of the following shall constitute an Event of Default,
whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any Governmental
Authority or otherwise:

 

(a)                                  Default
in Payment of Principal of Loans and Reimbursement Obligations. The
Borrower shall default in any payment of principal of any Loan, Note or
Reimbursement Obligation when and as due (whether at maturity, by reason of
acceleration or otherwise).

 

(b)                                 Other
Payment Default. The Borrower shall default in the payment when and as due
(whether at maturity, by reason of acceleration or otherwise) of interest on
any Loan, Note or Reimbursement Obligation or the payment of any other
Obligation and such default shall continue for a period of three (3) Business
Days.

 

(c)                                  Misrepresentation.
Any representation or warranty made or deemed to be made by the Borrower or any
of its Subsidiaries under this Agreement, any Loan Document or any amendment
hereto or thereto, shall at any time prove to have been incorrect or misleading
in any material respect when made or deemed made.

 

(d)                                 Default
in Performance of Certain Covenants. The Borrower shall default in the
performance or observance of any covenant or agreement contained in Section 6.4,
Sections 10.1 through 10.4 or Articles X or XI of this Agreement.

 

(e)                                  Default
in Performance of Other Covenants and Conditions. The Borrower or any
Subsidiary thereof shall default in the performance or observance of any term,
covenant, condition or agreement contained in this Agreement (other than as
specifically provided for otherwise in this Section 12.1) or any
other Loan Document and such default shall continue for a period of thirty (30)
days after written notice thereof has been given to the Borrower by the
Administrative Agent.

 

(f)                                    Hedging
Agreement. Any termination payment shall be due by the Borrower under any
Hedging Agreement to which any Lender is a party and such amount is not paid
within thirty (30) Business Days of the due date thereof.

 

80

 

(g)                                 Debt
Cross-Default. The Borrower or any of its Subsidiaries shall (i) default
in the payment of any Debt (other than the Loans or any Reimbursement
Obligation) or interest thereon, the aggregate outstanding amount of which Debt
is in excess of $1,000,000 beyond the period of grace, if any, provided in the
instrument or agreement under which such Debt was created, or (ii) default
in the observance or performance of any other agreement or condition relating
to any Debt (other than the Loans or any Reimbursement Obligation) the
aggregate outstanding amount of which Debt is in excess of $1,000,000 or
contained in any instrument or agreement evidencing, securing or relating
thereto or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Debt (or a trustee or agent on behalf of such holder or
holders) to cause, with the giving of notice if required, any such Debt to
become due prior to its stated maturity (any applicable grace period having
expired).

 

(h)                                 Other
Cross-Defaults. The Borrower or any of its Subsidiaries shall default in
the payment when due, or in the performance or observance, of any obligation or
condition of any (i) Material Contract unless, but only as long as, the
existence of any such default is being contested by the Borrower or such
Subsidiary in good faith by appropriate proceedings and adequate reserves in
respect thereof have been established on the books of the Borrower or such
Subsidiary to the extent required by GAAP or (ii) any Security Document.

 

(i)                                     Change
in Control. Any person or group of persons (within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended) other than the Current
Management Group shall obtain ownership or control in one or more series of
transactions of more than twenty percent (20%) of the common stock or twenty
percent (20%) of the voting power of the Borrower entitled to vote in the
election of members of the board of directors of the Borrower or there shall
have occurred under any indenture or other instrument evidencing any Debt in
excess of $1,000,000 any “change in control” (as defined in such indenture or
other evidence of Debt) obligating the Borrower to repurchase, redeem or repay
all or any part of the Debt or capital stock provided for therein (any such
event, a “Change in Control”). As used herein, “Current Management
Group” means any group referred to above which includes, and is under the
general direction and authority of, at least two of Robert Alton, David
Christensen, John Finke, Mary Jacobs, Jay Knauf, Lane Nordquist, F. Ernest Lombard
and Jon Anderson so long as such individuals continue to be employed in a
managerial capacity by the Borrower.

 

(j)                                     Voluntary
Bankruptcy Proceeding. The Borrower or any Subsidiary thereof shall (i) commence
a voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (ii) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or composition for adjustment of debts, (iii) consent to or
fail to contest in a timely and appropriate manner any petition filed against
it in an involuntary case under such bankruptcy laws or other laws, (iv) apply
for or consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
or liquidator of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they
become due, (vi) make a general assignment for the benefit of creditors,
or (vii) take any corporate action for the purpose of authorizing any of
the foregoing.

 

81

 

(k)                                  Involuntary
Bankruptcy Proceeding. A case or other proceeding shall be commenced
against the Borrower or any Subsidiary thereof in any court of competent
jurisdiction seeking (i) relief under the federal bankruptcy laws (as now
or hereafter in effect) or under any other laws, domestic or foreign, relating
to bankruptcy, insolvency, reorganization, winding up or adjustment of debts,
or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for the Borrower or any Subsidiary thereof or for all or any
substantial part of their respective assets, domestic or foreign, and such case
or proceeding shall continue without dismissal or stay for a period of sixty
(60) consecutive days, or an order granting the relief requested in such case
or proceeding (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.

 

(l)                                     Failure
of Agreements. Any provision of this Agreement or of any other Loan
Document shall for any reason cease to be valid and binding on the Borrower or
Subsidiary party thereto or any such Person shall so state in writing, or this
Agreement or any other Loan Document shall for any reason cease to create a
valid and perfected first priority Lien on, or security interest in, any of the
collateral purported to be covered thereby, in each case other than in
accordance with the express terms hereof or thereof.

 

(m)                               Termination
Event. The occurrence of any of the following events:  (i) the Borrower or any ERISA Affiliate
fails to make full payment when due of all amounts which, under the provisions
of any Pension Plan or Section 412 of the Code, the Borrower or any ERISA
Affiliate is required to pay as contributions thereto, (ii) an accumulated
funding deficiency in excess of $1,000,000 occurs or exists, whether or not
waived, with respect to any Pension Plan, (iii) a Termination Event or (iv) the
Borrower or any ERISA Affiliate as employers under one or more Multiemployer
Plan makes a complete or partial withdrawal from any such Multiemployer Plan
and the plan sponsor of such Multiemployer Plans notifies such withdrawing
employer that such employer has incurred a withdrawal liability requiring
payments in an amount exceeding $1,000,000.

 

(n)                                 Judgment.
A judgment or order for the payment of money which causes the aggregate amount
of all such judgments to exceed $1,000,000 in any Fiscal Year shall be entered
against the Borrower or any of its Subsidiaries by any court and such judgment
or order shall continue without discharge or stay for a period of thirty (30)
days.

 

(o)                                 Loss
of License; Material Adverse Change. Any FCC License or PUC Authorization
or other Governmental Approval of the Borrower or any of its Subsidiaries shall
be revoked, canceled, suspended, otherwise terminated, or fail to be renewed,
which in any such case could be expected (in the reasonable judgment of the
Lenders) to have a Material Adverse Effect.

 

(p)                                 Environmental.
Any one or more Environmental Claims shall have been asserted against the
Borrower or any Loan Party; the Borrower and any Loan Party would be reasonably
likely to incur liability as a result thereof; and such liability would be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect.

 

82

 

SECTION 12.2                                      Remedies.
Upon the occurrence of an Event of Default, with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower:

 

(a)                                  Acceleration;
Termination of Facilities. Terminate the Commitments and declare the
principal of and interest on the Loans, the Notes and the Reimbursement
Obligations at the time outstanding, and all other amounts owed to the Lenders
and to the Administrative Agent under this Agreement or any of the other Loan
Documents (other than any Hedging Agreement) (including, without limitation,
all L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) and
all other Obligations (other than obligations owing under any Hedging
Agreement), to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in this
Agreement or the other Loan Documents to the contrary notwithstanding, and
terminate the Credit Facility and any right of the Borrower to request
borrowings or Letters of Credit thereunder; provided, that upon the
occurrence of an Event of Default specified in Section 12.1(j) or (k),
the Credit Facility shall be automatically terminated and all Obligations
(other than obligations owing under any Hedging Agreement) shall automatically
become due and payable.

 

(b)                                 Letters
of Credit. With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding subsection (a), require the Borrower at such
time to deposit in a cash collateral account opened by the Administrative Agent
an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay the other Obligations.  After all
such Letters of Credit shall have expired or been fully drawn upon, the
Reimbursement Obligation shall have been satisfied and all other Obligations
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower.

 

(c)                                  Rights
of Collection. Exercise on behalf of the Lenders all of its other rights
and remedies under this Agreement, the other Loan Documents and Applicable Law,
in order to satisfy all of the Borrower’s Obligations.

 

SECTION 12.3                                      Rights and Remedies
Cumulative; Non-Waiver; etc. The enumeration of the rights and remedies
of the Administrative Agent and the Lenders set forth in this Agreement is not
intended to be exhaustive and the exercise by the Administrative Agent and the
Lenders of any right or remedy shall not preclude the exercise of any other
rights or remedies, all of which shall be cumulative, and shall be in addition
to any other right or remedy given hereunder or under the Loan Documents or
that may now or hereafter exist in law or in equity or by suit or
otherwise.  No delay or failure to take
action on the part of the Administrative Agent or any Lender in exercising any
right, power or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude other
or further exercise thereof or the exercise of any other right, power or
privilege or shall be construed to be a waiver of any Event of Default.  No course of dealing between the

 

83

 

Borrower, the
Administrative Agent and the Lenders or their respective agents or employees shall
be effective to change, modify or discharge any provision of this Agreement or
any of the other Loan Documents or to constitute a waiver of any Event of
Default.

 

SECTION 12.4                                      Administrative
Agent May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to any Loan
Party, the Administrative Agent (irrespective of whether the principal of any
Loan or L/C Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on the Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise:

 

(a)                                  to file and prove a claim for the
whole amount of the principal and interest owing and unpaid in respect of the
Loans, L/C Obligations and all other Obligations that are owing and unpaid and
to file such other documents as may be necessary or advisable in order to have
the claims of the Lenders and the Administrative Agent (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Lenders and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders and the Administrative Agent under Sections
3.3, 5.4 and 14.2) allowed in such judicial proceeding; and

 

(b)                                 to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;

 

and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such
judicial proceeding is hereby authorized by each Lender to make such payments
to the Administrative Agent and, in the event that the Administrative Agent
shall consent to the making of such payments directly to the Lenders, to pay to
the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents
and counsel, and any other amounts due the Administrative Agent under Sections
3.3, 5.4 and 14.2.

 

Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

 

ARTICLE XIII

 

THE ADMINISTRATIVE AGENT 

 

SECTION 13.1                                      Appointment
and Authority. Each of the Lenders and the Issuing Lender hereby
irrevocably appoints Wachovia to act on its behalf as the Administrative Agent
hereunder and under the other Loan Documents and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with such actions and powers as are reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the

 

84

 

Administrative
Agent, the Lenders and the Issuing Lender, and neither the Borrower nor any
Subsidiary thereof shall have rights as a third party beneficiary of any of such
provisions.

 

SECTION 13.2                                      Rights as a
Lender. The Person serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent and
the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or
unless the context otherwise requires, include the Person serving as the
Administrative Agent hereunder in its individual capacity. Such Person and its
Affiliates may accept deposits from, lend money to, act as the financial
advisor or in any other advisory capacity for and generally engage in any kind
of business with the Borrower or any Subsidiary or other Affiliate thereof as
if such Person were not the Administrative Agent hereunder and without any duty
to account therefor to the Lenders.

 

SECTION 13.3                                      Exculpatory
Provisions. The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents.  Without limiting the
generality of the foregoing, the Administrative Agent:

 

(a)                                  shall
not be subject to any fiduciary or other implied duties, regardless of whether
a Default has occurred and is continuing;

 

(b)                                 shall
not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative
Agent is required to exercise as directed in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents), provided that the
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or Applicable Law; and

 

(c)                                  shall
not, except as expressly set forth herein and in the other Loan Documents, have
any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Affiliates that is
communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.

 

The
Administrative Agent shall not be liable for any action taken or not taken by
it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Section 14.11 and Section 12.2)
or (ii) in the absence of its own gross negligence or willful misconduct
as determined by a court of competent jurisdiction by final nonappealable
judgment.  The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower, a
Lender or the Issuing Lender.

 

The
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or
in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document

 

85

 

delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or therein or the occurrence of any Default, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article VI or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

 

SECTION 13.4                                      Reliance by
the Administrative Agent. The Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying
thereon.  In determining compliance with
any condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or
the Issuing Lender, the Administrative Agent may presume that such condition is
satisfactory to such Lender or the Issuing Lender unless the Administrative
Agent shall have received notice to the contrary from such Lender or the
Issuing Lender prior to the making of such Loan or the issuance of such Letter
of Credit.  The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

 

SECTION 13.5                                      Delegation of
Duties. The Administrative Agent may perform any and all of its duties
and exercise its rights and powers hereunder or under any other Loan Document
by or through any one or more sub-agents appointed by the Administrative Agent.
The Administrative Agent and any such sub-agent may perform any and all of its
duties and exercise its rights and powers by or through their respective
Related Parties.  The exculpatory
provisions of this Article shall apply to any such sub-agent and to the
Related Parties of the Administrative Agent and any such sub-agent, and shall
apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative
Agent.

 

SECTION 13.6                                      Resignation of
Administrative Agent.

 

(a)                                  The
Administrative Agent may at any time give notice of its resignation to the
Lenders, the Issuing Lender and the Borrower. 
Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, in consultation with the Borrower, to appoint a
successor, which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the Issuing Lender, appoint a successor Administrative Agent
meeting the qualifications set forth above provided that if the Administrative
Agent shall notify

 

86

 

the Borrower
and the Lenders that no qualifying Person has accepted such appointment, then
such resignation shall nonetheless become effective in accordance with such
notice and (1) the retiring Administrative Agent shall be discharged from
its duties and obligations hereunder and under the other Loan Documents (except
that in the case of any collateral security held by the Administrative Agent on
behalf of the Lenders or the Issuing Lender under any of the Loan Documents,
the retiring Administrative Agent shall continue to hold such collateral
security until such time as a successor Administrative Agent is appointed) and (2) all
payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender and
the Issuing Lender directly, until such time as the Required Lenders appoint a
successor Administrative Agent as provided for above in this paragraph. Upon
the acceptance of a successor’s appointment as Administrative Agent hereunder,
such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring (or retired) Administrative
Agent, and the retiring Administrative Agent shall be discharged from all of
its duties and obligations hereunder or under the other Loan Documents (if not
already discharged therefrom as provided above in this paragraph). The fees
payable by the Borrower to a successor Administrative Agent shall be the same
as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the retiring Administrative Agent’s
resignation hereunder and under the other Loan Documents, the provisions of
this Article and Section 14.2 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.

 

(b)                                 Any
resignation by Wachovia as Administrative Agent pursuant to this Section shall
also constitute its resignation as Issuing Lender.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, (a) such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring Issuing Lender, (b) the retiring Issuing Lender
shall be discharged from all of its respective duties and obligations hereunder
or under the other Loan Documents, and (c) the successor Issuing Lender
shall issue letters of credit in substitution for the Letters of Credit, if
any, outstanding at the time of such succession or make other arrangement
satisfactory to the retiring Issuing Lender to effectively assume the
obligations of the retiring Issuing Lender with respect to such Letters of
Credit.

 

SECTION 13.7                                      Non-Reliance on
Administrative Agent and Other Lenders. Each Lender and the Issuing
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender and the Issuing Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

 

SECTION 13.8                                      No Other
Duties, etc. Anything herein to the contrary notwithstanding, none of
the syndication agents, documentation agents, co-agents, book

 

87

 

manager, lead
manager, arranger, lead arranger or co-arranger listed on the cover page or
signature pages hereof shall have any powers, duties or responsibilities
under this Agreement or any of the other Loan Documents, except in its
capacity, as applicable, as the Administrative Agent, a Lender or the Issuing
Lender hereunder.

 

SECTION 13.9                                      Collateral and
Guaranty Matters. The Lenders irrevocably authorize the Administrative
Agent, at its option and in its discretion,

 

(a)                                  to
release any Lien on any Collateral granted to or held by the Administrative
Agent, for the ratable benefit of itself and the Lenders, under any Loan
Document (i) upon repayment of the outstanding principal of and all
accrued interest on the Loans, payment of all outstanding fees and expenses
hereunder, the termination of the Lenders’ Commitments and the expiration or
termination of all Letters of Credit, (ii) that is sold or to be sold as
part of or in connection with any sale permitted hereunder or under any other
Loan Document, or (iii) subject to Section 14.11, if approved,
authorized or ratified in writing by the Required Lenders;

 

(b)                                 to
subordinate any Lien on any Collateral granted to or held by the Administrative
Agent under any Loan Document to the holder of any Lien on such Collateral that
is permitted by Section 11.2(f); and

 

(c)                                  to
release any Guarantor from its obligations under the Guaranty Agreement if such
Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder.

 

Upon request
by the Administrative Agent at any time, the Required Lenders will confirm in
writing the Administrative Agent’s authority to release or subordinate its
interest in particular types or items of property, or to release any Guarantor
from its obligations under the Guaranty Agreement pursuant to this Section.

 

ARTICLE XIV

 

MISCELLANEOUS

 

SECTION 14.1                                      Notices.

 

(a)                                  Method
of Communication. Except as otherwise provided in this Agreement, all
notices and communications hereunder shall be in writing (for purposes hereof,
the term “writing” shall include information in electronic format such as
electronic mail and internet web pages), or by telephone subsequently confirmed
in writing.  Any notice shall be
effective if delivered by hand delivery or sent via electronic mail, posting on
an internet web page, telecopy, recognized overnight courier service or
certified mail, return receipt requested, and shall be presumed to be received
by a party hereto (i) on the date of delivery if delivered by hand or sent
by electronic mail, posting on an internet web page, or telecopy, (ii) on
the next Business Day if sent by recognized overnight courier service and (iii) on
the third Business Day following the date sent by certified mail, return
receipt requested.  A telephonic notice
to the Administrative Agent as understood by the Administrative Agent will be
deemed to be the controlling and proper notice in the event of a discrepancy
with or failure to receive a confirming written notice.

 

88

 

(b)                                 Addresses
for Notices. Notices to any party shall be sent to it at the following
addresses, or any other address as to which all the other parties are notified
in writing.

 

	
  If to the
  Borrower:

  	
  Hickory Tech
  Corporation

  
	
   

  	
  221 East
  Hickory Street

  
	
   

  	
  P.O. Box
  3248

  
	
   

  	
  Mankato, MN
  56002-3248

  
	
   

  	
  Attention:
  The Office of the Chief Financial Officer,

  
	
   

  	
   

  	
  David A.
  Christensen

  
	
   

  	
  Telephone
  No.: (507) 387-1713

  
	
   

  	
  Telecopy
  No.:   (507) 625-9191

  
	
   

  	
   

  
	
  If to
  Wachovia as

  	
   

  	
  Wachovia
  Bank, National Association

  
	
  Administrative
  Agent:

  	
   

  	
  Charlotte
  Plaza, CP-15

  
	
   

  	
   

  	
  201 South
  College Street

  
	
   

  	
   

  	
  Charlotte,
  North Carolina 28288-0680

  
	
   

  	
   

  	
  Attention:
  Syndication Agency Services

  
	
   

  	
   

  	
  Telephone
  No.: (704) 374-2698

  
	
   

  	
   

  	
  Telecopy
  No.: (704) 383-0288

  
	
   

  	
   

  
	
  If to any
  Lender:

  	
  To the Address
  set forth on the Register

  

 

(c)                                  Administrative
Agent’s Office. The Administrative Agent hereby designates its office
located at the address set forth above, or any subsequent office which shall
have been specified for such purpose by written notice to the Borrower and
Lenders, as the Administrative Agent’s Office referred to herein, to which
payments due are to be made and at which Loans will be disbursed and Letters of
Credit issued.

 

SECTION 14.2                                      Expenses;
Indemnity.

 

(a)                                  Costs
and Expenses. The Borrower and any other Loan Party, jointly and severally,
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates (including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent), in connection with
the syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Lender in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment
thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, any Lender or the Issuing Lender (including the fees,
charges and disbursements of any counsel for the Administrative Agent, any
Lender or the Issuing Lender), in connection with the enforcement or protection
of its rights (A) in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or (B) in connection
with the Loans made or Letters of Credit issued hereunder, including all such

 

89

 

out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit.

 

(b)                                 Indemnification
by the Borrower. The Borrower shall indemnify the Administrative Agent (and
any sub-agent thereof), each Lender and the Issuing Lender, and each Related
Party of any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims
(including, without limitation, any Environmental Claims or civil penalties or
fines assessed by OFAC), damages, liabilities and related expenses (including
the fees, charges and disbursements of any counsel for any Indemnitee),
incurred by any Indemnitee or asserted against any Indemnitee by any third
party or by the Borrower or any other Loan Party arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the Issuing
Lender to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release
of Hazardous Materials on or from any property owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Claim related in any
way to the Borrower or any of its Subsidiaries, (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrower or any other Loan Party, and
regardless of whether any Indemnitee is a party thereto, or (v) any claim
(including, without limitation, any Environmental Claims or civil penalties or
fines assessed by OFAC), investigation, litigation or other proceeding (whether
or not the Administrative Agent or any Lender is a party thereto) and the
prosecution and defense thereof, arising out of or in any way connected with
the Loans, this Agreement, any other Loan Document, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby, including without limitation, reasonable
attorneys and consultant’s fees, provided that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses (x) are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnitee or (y)
result from a claim brought by the Borrower or any other Loan Party against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder
or under any other Loan Document, if the Borrower or such Loan Party has
obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.

 

(c)                                  Reimbursement
by Lenders. To the extent that the Borrower for any reason fails to
indefeasibly pay any amount required under clause (a) or (b) of this Section to
be paid by it to the Administrative Agent (or any sub-agent thereof), the
Issuing Lender or any Related Party of any of the foregoing, each Lender
severally agrees to pay to the Administrative Agent (or any such sub-agent),
the Issuing Lender or such Related Party, as the case may be, such Lender’s
Applicable Margin (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount, provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by

 

90

 

or asserted
against the Administrative Agent (or any such sub-agent) or the Issuing Lender
in its capacity as such, or against any Related Party of any of the foregoing
acting for the Administrative Agent (or any such sub-agent) or Issuing Lender
in connection with such capacity. The obligations of the Lenders under this
clause (c) are subject to the provisions of Section 5.8.

 

(d)                                 Waiver
of Consequential Damages, Etc.  To
the fullest extent permitted by Applicable Law, the Borrower shall not assert,
and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated hereby or thereby, any Loan
or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred
to in clause (b) above shall be liable for any damages arising from the
use by unintended recipients of any information or other materials distributed
by it through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.

 

(e)                                  Payments.
All amounts due under this Section shall be payable promptly after demand
therefor.

 

SECTION 14.3                                      Set-off.
If an Event of Default shall have occurred and be continuing, each Lender, the
Issuing Lender and each of their respective Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by Applicable
Law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender, the
Issuing Lender or any such Affiliate to or for the credit or the account of the
Borrower or any other Loan Party against any and all of the obligations of the
Borrower or such Loan Party now or hereafter existing under this Agreement or
any other Loan Document to such Lender or the Issuing Lender, irrespective of
whether or not such Lender or the Issuing Lender shall have made any demand
under this Agreement or any other Loan Document and although such obligations
of the Borrower or such Loan Party may be contingent or unmatured or are owed to
a branch or office of such Lender or the Issuing Lender different from the
branch or office holding such deposit or obligated on such indebtedness.  The rights of each Lender, the Issuing Lender
and their respective Affiliates under this Section are in addition to
other rights and remedies (including other rights of setoff) that such Lender,
the Issuing Lender or their respective Affiliates may have.  Each Lender and Issuing Lender agrees to
notify the Borrower and the Administrative Agent promptly after any such setoff
and application; provided that the failure to give such notice shall not
affect the validity of such setoff and application.

 

SECTION 14.4                                      Governing Law.

 

(a)                                  This
Agreement, the Notes and the other Loan Documents, unless otherwise expressly
set forth therein, shall be governed by, construed and enforced in accordance
with the laws of the State of North Carolina, without reference to the
conflicts or choice of law principles thereof.

 

91

 

(b)                                 Submission
to Jurisdiction. The Borrower and each other Loan Party irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the state and federal courts located in Mecklenburg County,
North Carolina, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or any other Loan
Document, or for recognition or enforcement of any judgment, and each of the
parties hereto irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
North Carolina State court or, to the fullest extent permitted by Applicable
Law, in such Federal court.  Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Agreement or in any other
Loan Document shall affect any right that the Administrative Agent, any Lender
or the Issuing Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against the Borrower or
any other Loan Party or its properties in the courts of any jurisdiction.

 

(c)                                  Waiver
of Venue. The Borrower and each other Loan Party irrevocably and
unconditionally waives, to the fullest extent permitted by Applicable Law, any
objection that it may now or hereafter have to the laying of venue of any
action or proceeding arising out of or relating to this Agreement or any other
Loan Document in any court referred to in paragraph (b) of this Section.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by Applicable Law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

 

(d)                                 Service
of Process. Each party hereto irrevocably consents to service of process in
the manner provided for notices in Section 14.1. Nothing in this
Agreement will affect the right of any party hereto to serve process in any
other manner permitted by Applicable Law.

 

SECTION 14.5                                      Intentionally
Omitted.

 

SECTION 14.6                                      Binding
Arbitration; Waiver of Jury Trial.

 

(a)                                  Binding
Arbitration. Upon demand of any party, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement or any other Loan
Document (“Disputes”), between or among parties hereto and to the other
Loan Documents shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right of
that party to demand arbitration hereunder. 
Disputes may include, without limitation, tort claims, counterclaims,
claims brought as class actions, claims arising from Loan Documents executed in
the future, disputes as to whether a matter is subject to arbitration, or
claims concerning any aspect of the past, present or future relationships
arising out of or connected with the Loan Documents.  Arbitration shall be conducted under and
governed by the Commercial Financial Disputes Arbitration Rules (the “Arbitration
Rules”) of the American Arbitration Association (the “AAA”) and the
Federal Arbitration Act.  All arbitration
hearings shall be conducted in Charlotte, North Carolina. The expedited
procedures set forth in Rule 51, et  seq. of the Arbitration Rules shall
be applicable to claims of less than $1,000,000. All applicable statutes of
limitations shall apply to any Dispute. 
A judgment upon the award may be entered in any court

 

92

 

having
jurisdiction. Notwithstanding anything foregoing to the contrary, any
arbitration proceeding demanded hereunder shall begin within ninety (90) days
after such demand thereof and shall be concluded within one hundred twenty
(120) days after such demand.  These time
limitations may not be extended unless a party hereto shows cause for extension
and then such extension shall not exceed a total of sixty (60) days.  The panel from which all arbitrators are
selected shall be comprised of licensed attorneys selected from the Commercial
Financial Dispute Arbitration Panel of the AAA. The single arbitrator selected
for expedited procedure shall be a retired judge from the highest court of
general jurisdiction, state or federal, of the state where the hearing will be
conducted. The parties hereto do not waive any applicable Federal or state
substantive law except as provided herein. 
Notwithstanding the foregoing, this paragraph shall not apply to any
Hedging Agreement that is a Loan Document.

 

(b)                                 Jury
Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND

(B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

(c)                                  Preservation
of Certain Remedies. Notwithstanding the preceding binding arbitration
provisions, the parties hereto and the other Loan Documents preserve, without
diminution, certain remedies that such Persons may employ or exercise freely,
either alone, in conjunction with or during a Dispute.  Each such Person shall have and hereby
reserves the right to proceed in any court of proper jurisdiction or by self
help to exercise or prosecute the following remedies, as applicable:  (i) all rights to foreclose against any
real or personal property or other security by exercising a power of sale
granted in the Loan Documents or under Applicable Law or by judicial
foreclosure and sale, including a proceeding to confirm the sale, (ii) all
rights of self help including peaceful occupation of property and collection of
rents, set off, and peaceful possession of property, (iii) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment, appointment of receiver and in filing an involuntary
bankruptcy proceeding, and (iv) when applicable, a judgment by confession
of judgment.  Preservation of these
remedies does not limit the power of an arbitrator to grant similar remedies
that may be requested by a party in a Dispute.

 

SECTION 14.7                                        Reversal of
Payments.  To the extent the
Borrower makes a payment or payments to the Administrative Agent for the
ratable benefit of the Lenders or the Administrative Agent receives any payment
or proceeds of the collateral which payments or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or

 

93

 

preferential,
set aside and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or proceeds repaid, the Obligations
or part thereof intended to be satisfied shall be revived and continued in full
force and effect as if such payment or proceeds had not been received by the
Administrative Agent.

 

SECTION 14.8                                        Injunctive
Relief; Punitive Damage.

 

(a)                                  The
Borrower recognizes that, in the event the Borrower fails to perform, observe
or discharge any of its obligations or liabilities under this Agreement, any
remedy of law may prove to be inadequate relief to the Lenders. Therefore, the
Borrower agrees that the Lenders, at the Lenders’ option, shall be entitled to
temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.

 

(b)                                 The
Administrative Agent, the Lenders and the Borrower (on behalf of itself and its
Subsidiaries) hereby agree that no such Person shall have a remedy of punitive
or exemplary damages against any other party to a Loan Document and each such
Person hereby waives any right or claim to punitive or exemplary damages that
they may now have or may arise in the future in connection with any Dispute,
whether such Dispute is resolved through arbitration or judicially.

 

SECTION 14.9                                        Accounting
Matters. If at any time any change in GAAP would affect the computation
of any financial ratio or requirement set forth in any Loan Document, and
either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good
faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the
Required Lenders); provided that, until so amended, (i) such ratio
or requirement shall continue to be computed in accordance with GAAP prior to
such change therein and (ii) the Borrower shall provide to the
Administrative Agent and the Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting
forth a reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.

 

SECTION 14.10                                 Successors and
Assigns; Participations.

 

(a)                                  Successors
and Assigns Generally. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither the Borrower nor
any other Loan Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee in
accordance with the provisions of paragraph (b) of this Section, (ii) by
way of participation in accordance with the provisions of paragraph (d) of
this Section or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of paragraph (f) of this Section (and
any other attempted assignment or transfer by any party hereto shall be null and
void).  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto,

 

94

 

their
respective successors and assigns permitted hereby, Participants to the extent
provided in paragraph (d) of this Section and, to the extent
expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

 

(b)                                 Assignments
by Lenders. Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided that

 

(i)                                     except
in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, the aggregate amount of the Commitment (which for this
purpose includes Loans outstanding thereunder) or, if the applicable Commitment
is not then in effect, the principal outstanding balance of the Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than $5,000,000, in the
case of any assignment in respect of the Revolving Credit Facility, or
$1,000,000, in the case of any assignment in respect of the Term Loan Facility,
unless (A) such assignment is made to an existing Lender, to an Affiliate
thereof, or (with respect to any Term Loan) to an Approved Fund, in which case
no minimum amount shall apply, or (B) each of the Administrative Agent
and, so long as no Default or Event of Default has occurred and is continuing,
the Borrower otherwise consent (each such consent not to be unreasonably
withheld or delayed);

 

(ii)                                  each
partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement with
respect to the Loan or the Commitment assigned, except that this clause (ii) shall
not prohibit any Lender from assigning all or a portion of its rights and
obligations among separate Facilities on a non-pro  rata basis;

 

(iii)                               any
assignment of a Revolving Credit Commitment must be approved by the
Administrative Agent and the Issuing Lender unless the Person that is the
proposed assignee is itself a Lender with a Revolving Credit Commitment
(whether or not the proposed assignee would otherwise qualify as an Eligible Assignee);
and

 

(iv)                              the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500 for each assignment, and
the Eligible Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

 

Subject to
acceptance and recording thereof by the Administrative Agent pursuant to
paragraph (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and

 

95

 

obligations of
a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto)
but shall continue to be entitled to the benefits of Sections 5.9, 5.10,
5.12 and 14.2 with respect to facts and circumstances occurring
prior to the effective date of such assignment. 
Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this paragraph shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (d) of this Section.

 

(c)                                  Register.
The Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at one of its offices in Charlotte, North Carolina, a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

 

(d)                                 Participations.
Any Lender may at any time, without the consent of, or notice to, the Borrower
or the Administrative Agent, sell participations to any Person (other than a
natural person or the Borrower or any of the Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this
Agreement.

 

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver or modification described
in Section 14.11 that directly affects such Participant.  Subject to paragraph (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 5.9, 5.10 and

5.12
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 14.2
as though it were a Lender, provided such Participant agrees to be subject to Section 5.7
as though it were a Lender.

 

96

 

(e)                                  Limitations
upon Participant Rights.  A
Participant shall not be entitled to receive any greater payment under Sections
5.9 and 5.12 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.

 

(f)                                    Certain
Pledges. Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

SECTION 14.11                                 Amendments, Waivers
and Consents. Except as set forth below or as specifically provided in
any Loan Document, any term, covenant, agreement or condition of this Agreement
or any of the other Loan Documents may be amended or waived by the Lenders, and
any consent given by the Lenders, if, but only if, such amendment, waiver or
consent is in writing signed by the Required Lenders (or by the Administrative
Agent with the consent of the Required Lenders) and delivered to the
Administrative Agent and, in the case of an amendment, signed by the Borrower;
provided, that no amendment, waiver or consent shall:

 

(a)                                  waive
any condition set forth in Section 6.2 without the written consent
of each Lender;

 

(b)                                 extend
or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 12.2) or the amount of Loans of any
Lender without the written consent of such Lender;

 

(c)                                  postpone
any date fixed by this Agreement or any other Loan Document for any payment or
mandatory prepayment of principal, interest, fees or other amounts due to the
Lenders (or any of them) hereunder or under any other Loan Document without the
written consent of each Lender directly affected thereby;

 

(d)                                 reduce
the principal of, or the rate of interest specified herein on, any Loan or
Reimbursement Obligation, or (subject to clause (iv) of the second proviso
to this Section) any fees or other amounts payable hereunder or under any other
Loan Document, or change the manner of computation of any financial ratio
(including any change in any applicable defined term) used in determining the
Applicable Margin that would result in a reduction of any interest rate on any
Loan or any fee payable hereunder without the written consent of each Lender
directly affected thereby; provided that only the consent of the
Required Lenders shall be necessary (i) to waive any obligation of the
Borrower to pay interest at the rate set forth in Section 5.1(d) during
the continuance of an Event of Default, or (ii) to amend any financial
covenant hereunder (or any defined term used therein) even if the effect of
such amendment would be to reduce the rate of interest on any Loan or L/C
Obligation or to reduce any fee payable hereunder;

 

97

 

(e)                                  change
Section 5.5 or Section 5.6 in a manner that would alter
the pro rata sharing of payments required thereby without the written consent
of each Lender;

 

(f)                                    change
Section 4.5(b)(v) in a manner that would alter the order of
application of amounts prepaid pursuant thereto without the written consent of
each Lender;

 

(g)                                 change
any provision of this Section or the definition of “Required Lenders” or
any other provision hereof specifying the number or percentage of Lenders
required to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender;

 

(h)                                 release
all of the Guarantors or release Guarantors comprising substantially all of the
credit support for the Obligations, in either case, from the Guaranty Agreement
(other than as authorized in Section 13.9), without the written
consent of each Lender;

 

(i)                                     release
all or a material portion of the Collateral or release any Security Document
(other than as authorized in Section 13.9 or as otherwise
specifically permitted or contemplated in this Agreement or the applicable
Security Document) without the written consent of each Lender;

 

provided
further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Lender in addition to the Lenders required
above, affect the rights or duties of the Issuing Lender under this Agreement
or any Application relating to any Letter of Credit issued or to be issued by
it; (ii) no amendment, waiver or consent shall, unless in writing and
signed by the Administrative Agent in addition to the Lenders required above,
affect the rights or duties of the Administrative Agent under this Agreement or
any other Loan Document; and (iii) the Engagement Letter may be amended,
or rights or privileges thereunder waived, in a writing executed only by the
parties thereto.  Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that
the Commitment of such Lender may not be increased or extended without the
consent of such Lender.

 

SECTION 14.12                                 Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such Information
and instructed to keep such Information confidential), (b) to the extent
requested by, or required to be disclosed to, any rating agency, or regulatory
or similar authority (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to the extent
required by Applicable Laws or regulations or by any subpoena or similar legal
process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies under this Agreement or under any other Loan Document
(or any Hedging Agreement with a Lender or the Administrative Agent) or any
action or proceeding relating to this Agreement or any other Loan Document (or
any Hedging Agreement with a Lender or the Administrative Agent) or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions

 

98

 

substantially
the same as those of this Section, to (i) any purchasing Lender, proposed
purchasing Lender, Participant or proposed Participant, or (ii) any actual
or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower and its obligations, (g) with the
consent of the Borrower, (h) to Gold Sheets and other similar bank
trade publications, such information to consist of deal terms and other
information customarily found in such publications, or (i) to the extent
such Information (x) becomes publicly available other than as a result of a
breach of this Section or (y) becomes available to the Administrative
Agent or any Lender on a nonconfidential basis from a source other than the
Borrower or (j) to governmental regulatory authorities in connection with any
regulatory examination of the Administrative Agent or any Lender or in
accordance with the Administrative Agent’s or any Lender’s regulatory
compliance policy if the Administrative Agent or such Lender deems necessary
for the mitigation of claims by those authorities against the Administrative
Agent or such Lender or any of its subsidiaries or affiliates. For purposes of
this Section, “Information” means all information received from any Loan
Party relating to any Loan Party or any of their respective businesses, other
than any such information that is available to the Administrative Agent or any
Lender on a nonconfidential basis prior to disclosure by any Loan Party.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

SECTION 14.13                                 Performance of
Duties. The Borrower’s obligations under this Agreement and each of the
Loan Documents shall be performed by the Borrower at its sole cost and expense.

 

SECTION 14.14                                 All Powers Coupled
with Interest. All powers of attorney and other authorizations granted
to the Lenders, the Administrative Agent and any Persons designated by the
Administrative Agent or any Lender pursuant to any provisions of this Agreement
or any of the other Loan Documents shall be deemed coupled with an interest and
shall be irrevocable so long as any of the Obligations remain unpaid or unsatisfied
or the Credit Facility has not been terminated.

 

SECTION 14.15                                 Survival of
Indemnities. Notwithstanding any termination of this Agreement, the
indemnities to which the Administrative Agent and the Lenders are entitled
under the provisions of this Article XIV and any other provision of this
Agreement and the Loan Documents shall continue in full force and effect and
shall protect the Administrative Agent and the Lenders against events arising
after such termination as well as before.

 

SECTION 14.16                                 Titles and Captions.
Titles and captions of Articles, Sections and subsections in this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement.

 

SECTION 14.17                                 Severability of
Provisions. Any provision of this Agreement or any other Loan Document
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without

 

99

 

invalidating
the remainder of such provision or the remaining provisions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.

 

SECTION 14.18                                 Counterparts.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and shall be binding upon all parties, their
successors and assigns, and all of which taken together shall constitute one
and the same agreement.

 

SECTION 14.19                                 Term of Agreement.
This Agreement shall remain in effect from the Closing Date through and
including the date upon which all Obligations shall have been indefeasibly and
irrevocably paid and satisfied in full.  The
Administrative Agent is hereby permitted to release all Liens on the Collateral
in favor of the Administrative Agent, for the ratable benefit of itself and the
Lenders, upon repayment of the outstanding principal of and all accrued
interest on the Loans, payment of all outstanding fees and expenses hereunder
and the termination of the Lender’s Commitments.  No termination of this Agreement shall affect
the rights and obligations of the parties hereto arising prior to such
termination or in respect of any provision of this Agreement which survives
such termination.

 

SECTION 14.20                                 Inconsistencies
with Other Documents; Independent Effect of Covenants.

 

(a)                                  The
Borrower expressly acknowledges and agrees that each covenant contained in
Articles IX, X, or XI hereof shall be given independent effect.  Accordingly, the Borrower shall not engage in
any transaction or other act otherwise permitted under any covenant contained
in Articles IX, X, or XI if, before or after giving effect to such transaction
or act, the Borrower shall or would be in breach of any other covenant
contained in Articles IX, X, or XI.

 

SECTION 14.21                                 Integration.
This Agreement, together with the other Loan Documents, comprises the complete
and integrated agreement of the parties on the subject matter hereof and
thereof and supersedes all prior agreements, written or oral, on such subject
matter. In the event of any conflict between the provisions of this Agreement
and those of any other Loan Document, the provisions of this Agreement shall control;
provided that the inclusion of supplemental rights or remedies in favor
of the Administrative Agent or the Lenders in any other Loan Document shall not
be deemed a conflict with this Agreement. 
Each Loan Document was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in favor
of any party, but rather in accordance with the fair meaning thereof.

 

SECTION 14.22                               Advice of Counsel, No
Strict Construction. Each of the parties represents to each other party
hereto that it has discussed this Agreement with its counsel.  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.

 

100

 

SECTION 14.23                                 USA Patriot Act.
The Administrative Agent and each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to
obtain, verify and record information that identifies the Borrower and
Guarantors, which information includes the name and address of the Borrower and
Guarantor and other information that will allow such Lender to identify the
Borrower or Guarantor in accordance with the Act.

 

SECTION 14.24                               Amendment and
Restatement; No Novation. This Agreement constitutes an amendment and
restatement of the Prior Credit Agreement, as amended, effective from and after
the Closing Date.  The execution and delivery
of this Agreement shall not constitute a novation of any indebtedness or other
obligations owing to the Lenders or the Administrative Agent under the Prior
Credit Agreement based on facts or events occurring or existing prior to the
execution and delivery of this Agreement. 
On the Closing Date, the credit facilities described in the Prior Credit
Agreement, as amended, shall be amended, supplemented, modified and restated in
their entirety by the facilities described herein, and all loans and other obligations
of the Borrower outstanding as of such date under the Prior Credit Agreement,
as amended, shall be deemed to be loans and obligations outstanding under the
corresponding facilities described herein, without any further action by any
Person, except that the Administrative Agent shall make such transfers of funds
as are necessary in order that the outstanding balance of such Loans, together
with any Loans funded on the Closing Date, reflect the Commitments of the
Lenders hereunder.

 

[Signature pages to follow]

 

101

 

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed under seal by their duly authorized
officers, all as of the day and year first written above.

 

	
  [CORPORATE SEAL]

  	
  HICKORY TECH CORPORATION, as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  David A. Christensen

  	
   

  
	
   

  	
  Name: David A. Christensen

  
	
   

  	
  Title: Senior Vice President, CFO,
  Treasurer and Secretary

  

 

[Third Amended and Restated Credit Agreement]

 

 

	
   

  	
  WACHOVIA BANK, NATIONAL

  
	
   

  	
  ASSOCIATION, as Administrative Agent and

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Franklin M. Wessinger

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Franklin M. Wessinger

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
					

 

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION, as

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Keith Kubota

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Keith Kubota

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
					

 

 

	
   

  	
  GENERAL ELECTRIC CAPITAL

  
	
   

  	
  CORPORATION, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Karl Kieff

  	
   

  
	
   

  	
   

  	
  Name: Karl Kieff

  
	
   

  	
   

  	
  Title: Duly Authorized Signatory

  

 

 

	
   

  	
  COBANK, ACB, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Roger Opp

  	
   

  
	
   

  	
   

  	
  Name: Roger Opp

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

	
   

  	
  RURAL TELEPHONE FINANCE

  
	
   

  	
  CORPORATIVE, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Robinson C. Reed

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robin C.
  Reed

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Secretary-TreasurerExhibit 10.1

 

ASSET
PURCHASE AGREEMENT

 

DATED
AS OF DECEMBER 31, 2005

 

BY
AND AMONG

 

AUTOMATED
LOGIC CORPORATION

 

AUTOMATED
LOGIC CONTRACTING SERVICES, INC.

 

AND

 

COMFORT
SYSTEMS USA, INC.

 

COMFORT
SYSTEMS USA (TWIN CITIES), INC.

 

UNITED
ENVIRONMENTAL SERVICES, L.P.

 

 

TABLE OF
CONTENTS

 

i

 

Schedules and Exhibits

 

	
  Schedule 1.1(a)(i)

  	
   

  	
  Twin Cities’
  Machinery and Equipment

  
	
  Schedule 1.1(a)(ii)

  	
   

  	
  Twin Cities’
  Inventories

  
	
  Schedule 1.1(a)(iii)

  	
   

  	
  Twin Cities’
  Tangible Assets

  
	
  Schedule 1.1(a)(viii)

  	
   

  	
  Twin Cities’
  Contracts

  
	
  Schedule 1.1(b)

  	
   

  	
  Twin Cities’
  Retained Assets

  
	
  Schedule 1.1(f)

  	
   

  	
  Allocation
  of Twin Cities Purchase Price

  
	
  Schedule 1.2(a)(i)

  	
   

  	
  UES’s
  Machinery and Equipment

  
	
  Schedule 1.2(a)(ii)

  	
   

  	
  UES’s
  Inventories

  
	
  Schedule 1.2(a)(iii)

  	
   

  	
  UES’s
  Tangible Assets

  
	
  Schedule 1.2(a)(viii)

  	
   

  	
  UES’s
  Contracts

  
	
  Schedule 1.2(b)

  	
   

  	
  UES’s
  Retained Assets

  
	
  Schedule 1.2(f)

  	
   

  	
  Allocation
  of UES Purchase Price

  
	
  Schedule 2.2(g)

  	
   

  	
  Key
  Employees of Seller

  
	
  Schedule 3.9

  	
   

  	
  Transferring
  Employees

  
	
  Schedule 3.10

  	
   

  	
  Non-Vested
  Balances in Defined Contribution Plans

  
	
  Schedule 4.3

  	
   

  	
  Legal
  Approvals

  
	
  Schedule 4.5

  	
   

  	
  Guarantees

  
	
  Schedule 4.6

  	
   

  	
  Undisclosed
  Liabilities

  
	
  Schedule 4.7

  	
   

  	
  Changes

  
	
  Schedule 4.8(a)

  	
   

  	
  Unpaid Taxes

  
	
  Schedule 4.8(b)

  	
   

  	
  Tax Returns

  
	
  Schedule 4.9

  	
   

  	
  Inventory

  
	
  Schedule 4.10

  	
   

  	
  Receivables

  
	
  Schedule 4.11

  	
   

  	
  Leases;
  Encumbrances; Trade Names

  
	
  Schedule 4.12

  	
   

  	
  Legal
  Proceedings

  
	
  Schedule 4.13

  	
   

  	
  Contracts

  
	
  Schedule 4.14

  	
   

  	
  Governmental
  Authorizations

  
	
  Schedule 4.16

  	
   

  	
  Real
  Property

  
	
  Schedule 4.17

  	
   

  	
  Related
  Party Transactions

  
	
  Schedule 4.18

  	
   

  	
  Labor
  Relations

  
	
  Schedule 4.19(a)

  	
   

  	
  Products
  Liability

  
	
  Schedule 4.19(b)

  	
   

  	
  Warranties

  
	
  Schedule 4.19(c)

  	
   

  	
  Insurance

  
	
  Schedule 4.20

  	
   

  	
  Intellectual
  Property

  
	
  Schedule 4.21

  	
   

  	
  Benefit
  Plans

  
	
  Schedule 4.22

  	
   

  	
  Environmental
  Matters

  
	
  Schedule 4.25

  	
   

  	
  Customer
  Relations

  
	
  Schedule 5.3

  	
   

  	
  Legal
  Approvals

  

 

2

 

	
  Exhibit A

  	
   

  	
  Twin Cities Assumption Agreement

  
	
  Exhibit B

  	
   

  	
  UES
  Assumption Agreement

  
	
  Exhibit C

  	
   

  	
  Transition
  Services Agreement

  
	
  Exhibit D

  	
   

  	
  General Warranty
  Bills of Sale and Instruments of Assignment

  
	
  Exhibit E

  	
   

  	
  Financial
  Statements

  
	
  Exhibit F

  	
   

  	
  Interim
  Balance Sheet

  

 

 

ASSET
PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”), dated as of December 31,
2005,  is among Automated Logic
Corporation, a Georgia corporation (“ALC”),
Automated Logic Contracting Services, Inc., a Delaware corporation (“Buyer”), Comfort Systems USA, Inc., a Delaware corporation (“Comfort Systems”), Comfort Systems USA
(Twin Cities), Inc., a Minnesota corporation (“Twin Cities”), and United Environmental Services, L.P., a
Texas limited partnership (“UES”).

 

Twin Cities is a wholly owned subsidiary of
Comfort Systems.  UES’s general partner
and limited partner are, respectively, Atlas-Accurate Holdings, L.L.C., a
Delaware limited liability company, and California Comfort Systems USA, Inc.,
a California corporation, each of whom is a wholly owned subsidiary of Comfort
Systems.  Buyer is a wholly owned
subsidiary of ALC.  Twin Cities is in the
business of HVAC building controls contracting and services in Minnesota (the “Twin Cities Business”), and UES is in the
business of HVAC building controls contracting and services in Texas and
Louisiana (the “UES Business”; and
collectively with the Twin Cities Business, the “Business”).

 

Twin Cities desires to sell and assign to
Buyer substantially all of Twin Cities’ Business and assets and certain of Twin
Cities’ obligations, and Buyer desires to purchase and assume such Business,
assets and obligations from Twin Cities. 
UES desires to sell and assign to Buyer substantially all of UES’s
Business and assets and certain of UES’s obligations, and Buyer desires to
purchase and assume such Business, assets and obligations from UES.

 

As used in this Agreement, “Seller” means each and both of Twin Cities
and UES, and the “Comfort Systems Group” means
each and every one of Comfort Systems, Twin Cities and UES.  As used in this Agreement, the “ALC Group” means each and both of ALC and
Buyer. Certain additional terms used in this Agreement are defined separately
in Article VII and are
integral to this Agreement.

 

The ALC Group and the Comfort Systems Group
agree as follows:

 

ARTICLE I

THE SALE AND PURCHASE TRANSACTIONS

 

1.1.                            The
Twin Cities Sale and Purchase Transaction.

 

(a)                                 Sale
and Purchase of the Twin Cities Assets. 
Subject to the conditions described in Article II,
at Closing, Twin Cities shall sell and transfer to Buyer, and Buyer shall
purchase from Twin Cities, free and clear of all Encumbrances other than
Permitted Encumbrances, all of Twin Cities’ assets and properties of every
kind, nature and description, wherever located and whether real, personal or
mixed, tangible or intangible, in electronic form or otherwise, and whether or
not having any value for accounting purposes or carried or reflected on or
specifically referred to in its books or financial statements, except for the
Twin Cities Retained Assets (collectively, the “Twin Cities Assets”). 
The Twin Cities Assets shall include the following:

 

(i)                                    all of Twin
Cities’ machinery, equipment, components, parts, tools, spare parts, supplies
and materials, including the items identified on Schedule 1.1(a)(i);

 

 

(ii)                                all of Twin
Cities’ inventories of raw materials, work-in-process, parts, subassemblies and
finished goods, and all other materials and supplies to be used or consumed by
Twin Cities in the production of finished goods, wherever located and whether
or not obsolete or carried on Twin Cities’ books of account, including the
items identified on Schedule 1.1(a)(ii);

 

(iii)                            all of Twin
Cities’ other tangible personal property (other than the corporate seal),
including office furniture, office equipment and supplies, leasehold
improvements (other than leasehold improvements constituting leased property
under leases of Real Property disclosed on Schedule 4.16),
vehicles and computers, including all hardware and software, including the
items identified on Schedule 1.1(a)(iii),
excluding those specific assets identified on Schedule 1.1(b);

 

(iv)                              all of Twin
Cities’ fixtures on the Real Property (other than fixtures constituting leased
property under leases of Real Property disclosed on Schedule 4.16), and, to the extent not described above,
all tangible personal property that is part of the Twin Cities Business and is
located at 2611 Hamlin Avenue North, Roseville, Minnesota 55113 as of the
Closing Date (other than leased property and consigned property disclosed in
the Schedules hereto and goods in transit);

 

(v)                                  all of Twin
Cities’ investments, securities, advance payments, rental deposits, including
lease deposits for leases of Real Property disclosed on Schedule 4.16, prepaid items, claims,
deferred charges, rights of offset and credits and claims for refund (other
than Tax credits and claims for Tax refunds);

 

(vi)                              all of Twin
Cities’ notes receivable, accounts receivable and other rights to payment from
customers, including trade accounts receivable from goods shipped, products
sold or services rendered (other than notes receivable, accounts receivable and
other rights to payment from any Related Party), and the full benefit to all
security for such notes receivable, accounts receivable or rights to payment;

 

(vii)                          all of Twin
Cities’ books (other than minute books), records (other than stock records and
Tax records), manuals, documents, books of account, whether inscribed on a
tangible medium or stored in an electronic or other medium, including sales and
credit reports, client and customer lists, literature, brochures, advertising
material, maintenance records, service and warranty records, referral sources,
research and development records, production records, equipment logs, operating
guides and manuals, financial and accounting records (other than Tax records),
creative materials, advertising materials, promotional materials, studies,
reports, correspondence and other similar documents, wherever located, and
copies of all personnel records (other than personnel records that Twin Cities
is required by law to retain in its possession);

 

(viii)                      all of Twin
Cities’ rights under Contracts identified on Schedule 1.1(a)(viii),
including all of Twin Cities’ vehicle leases, and all outstanding offers and solicitations made to or by Twin
Cities identified on Schedule 1.1(a)(viii) and
all Contracts, offers and solicitations made or entered into by Twin Cities
after the date hereof and on or prior to the Closing Date and not prohibited by
the terms of this Agreement;

 

2

 

(ix)                             all of Twin
Cities’ intangible rights and property, including goodwill and rights in and to
the name “Twin Cities” and in any other tradename, trademark, fictitious name
or service mark used in the Twin Cities Business (other than any such
tradename, trademark, fictitious name or service mark based on, or relating to,
the name “Comfort Systems”, the name “Comfort Systems USA” or the name of any
of Comfort Systems’ subsidiaries (other than Seller)) or any variant of any of
them, and all applications therefor or registrations thereof, and all other
forms of Twin Cities’ Intellectual Property, all research related to the Twin
Cities Business conducted by Twin Cities, all of Twin Cities’ development
facilities and inventions and work-in-process constituting a part thereof, and
all rights to Twin Cities’ Software, telephone numbers, facsimile numbers,
e-mail addresses, internet sites, internet addresses and domain names thereof
and other listings;

 

(x)                                 all of Twin
Cities’ Governmental Authorizations and all pending applications for issuance
or renewal thereof, in each case to the extent transferable;

 

(xi)                             all of Twin
Cities’ other assets that (A) are used by Twin Cities in connection with
the Twin Cities Business or (B) are reflected on the Closing Balance
Sheet;

 

(xii)                         all of Twin
Cities’ goodwill and the Twin Cities Business as a going concern in Minnesota
(but in no event including Twin Cities’ Affiliates’ businesses of engaging in
HVAC mechanical contracting or providing HVAC services as a core business, with
incidental sales, installation and servicing of HVAC controls); and

 

(xiii)                     all of Twin
Cities’ choses in action, causes of action and judgments, express and implied
warranties and existing and inchoate claims, rights and remedies related to any
of the foregoing.

 

If and to the extent that Comfort Systems has any interest in any of
the Twin Cities Assets, then, at Closing, Comfort Systems shall sell, transfer
and assign all of such interest to Buyer for no additional consideration.  At Closing, Comfort Systems shall execute and
deliver to Buyer a confirmatory general warranty bill of sale to such effect.

 

(b)                                 Twin
Cities Retained Assets. 
Notwithstanding anything to the contrary in this Agreement, Twin Cities
shall retain all of the following assets (collectively, the “Twin Cities Retained Assets”):  (i) all consideration to be delivered to
Twin Cities pursuant to, and all other rights of Twin Cities under, this
Agreement and the Other Agreements to which Twin Cities is a party; (ii) 
Twin Cities’ corporate seal and all of Twin Cities’ minute books, stock records
and Tax records; (iii) all of Twin Cities’ claims, choses in action,
causes of action and judgments, express and implied warranties and existing and
inchoate claims, rights and remedies related to any litigation matter
identified on Schedule 4.12
or any other Twin Cities Retained Liabilities; (iv) all of Twin Cities’
cash and cash equivalents, including bank accounts and mutual fund accounts; (v) all
of Twin Cities’ rights to the name “Comfort Systems”, the name “Comfort Systems
USA” or the name of any of Comfort Systems’ subsidiaries (other than Seller),
and all of Twin Cities’ rights to all tradenames, trademarks, fictitious names
and service marks based on, or relating to, the name “Comfort Systems”, the
name “Comfort Systems USA” or the name of any of Comfort Systems’ subsidiaries
(other than Seller); (vi) all of Twin Cities’ tax sharing and similar
agreements with Comfort Systems or any of its other subsidiaries and all of
Twin

 

3

 

Cities’ other Contracts with Related Parties; (vii) all of Twin
Cities’ Tax credits and claims for Tax refunds; (viii) all of Twin Cities’
notes receivable, accounts receivable and other rights to payment from any
Related Party; (ix) all shares of capital stock in Twin Cities’ treasury;
(x) all of Twin Cities’ Contracts and specific assets identified on Schedule 1.1(b); (xi) all personnel
records that Twin Cities is required by law to retain in its possession; and
(xii) all of Twin Cities’ rights to insurance proceeds in respect of Retained
Liabilities.  Notwithstanding anything to
the contrary in this Agreement, none of the Twin Cities Retained Assets shall
be included in the Twin Cities Assets.

 

(c)                                  Assumption
of Liabilities.  Subject to the
conditions described in Article II,
at Closing, Buyer shall, pursuant to an Assumption Agreement substantially in
the form of Exhibit A (the “Twin Cities Assumption Agreement”), assume
and agree to pay, perform, satisfy and discharge when due, to the extent not
theretofore paid, performed, satisfied and discharged, the following known and
identifiable liabilities of Twin Cities existing on the Closing Date, except
for the Twin Cities Retained Liabilities (collectively, the “Twin Cities Assumed Liabilities”):

 

(i)                                    all of Twin
Cities’ short-term liabilities reflected in the Interim Balance Sheet in the
amounts shown thereon;

 

(ii)                                all of Twin
Cities’ short-term liabilities incurred after the Interim Balance Sheet Date in
the ordinary course of business in accordance with past practice that are
required to be reflected in the Closing Balance Sheet in accordance with GAAP,
in the amounts shown thereon, including all short-term liabilities included in
Net Asset Value and all orders from Twin Cities’ customers (other than any
Liability in respect of any such order arising from any breach or
nonperformance thereof prior to the Closing Date);

 

(iii)                            all of Twin
Cities’ liabilities set forth in the terms of the Contracts, offers and
solicitations that are identified in Section 1.1(a)(viii) (other
than any Liability under any such Contract, offer or solicitation arising from
any breach or nonperformance thereof prior to the Closing Date);

 

(iv)                              all of Twin
Cities’ liabilities under Governmental Authorizations and all pending
applications for issuance or renewal thereof that (A) are transferable to
Buyer hereunder and (B) are either (1) listed on Schedule 4.14 or 4.22 or (2) are obtained or submitted
by Twin Cities after the date hereof and on or prior to the Closing Date (other
than any Liability under any such Governmental Authorization or application
arising from any breach or nonperformance thereof prior to the Closing Date);
and

 

(v)                                  all liabilities
of Twin Cities for all transfer, documentary, sales, use and motor vehicle
taxes that result from the sale of the Twin Cities Assets pursuant to this
Agreement.

 

(d)                                 Twin
Cities Retained Liabilities. 
Notwithstanding anything to the contrary in this Agreement, Buyer is not
assuming, and shall not assume or in any way undertake to pay, perform, satisfy
or discharge, any Liabilities of Twin Cities or any Predecessor existing
before, on or after the Closing Date or arising out of any transactions entered
into, or any state of facts existing, before, on or after the Closing Date, and
whether or not related to or arising out of any

 

4

 

of the Twin Cities Assets, except for the Twin Cities Assumed
Liabilities (the “Twin Cities Retained
Liabilities”), and Twin Cities agrees to pay, perform, satisfy and
discharge when due all Twin Cities Retained Liabilities.  Without limiting the foregoing, the term “Twin Cities Retained Liabilities” shall
include any and all:

 

(i)                                    Liabilities of
Twin Cities (A) to any Related Party, (B) for or in connection with
any dividends, distributions, redemptions or Security Rights with respect to
any security of Twin Cities, (C) to indemnify Twin Cities’ officers,
directors, employees or agents or (D) arising out of any transaction
affecting, or any obligations incurred by, Twin Cities or its officers, directors,
employees or agents, after Closing;

 

(ii)                                Liabilities
identified elsewhere in this Agreement as being the responsibility of Twin
Cities;

 

(iii)                            Liabilities of
Twin Cities and its Affiliates for any Taxes, whether or not by reason of, or
in connection with, the Contemplated Transactions (other than Liabilities for
transfer, documentary, sales, use or motor vehicle taxes that (A) result
from the sale of the Twin Cities Assets pursuant to this Agreement and (B) constitute
Twin Cities Assumed Liabilities), including (1) any Taxes arising as a
result of Twin Cities’ operation of its business or ownership of the Twin
Cities Assets prior to the Closing Date, (2) any Liability of Twin Cities
for Taxes of any person under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or
successor, by contract, or otherwise, (3) any Taxes that result from the
sale of the Twin Cities Assets pursuant to this Agreement (other than
Liabilities for transfer, documentary, sales, use or motor vehicle taxes that
(y) result from the sale of the Twin Cities Assets pursuant to this Agreement
and (z) constitute Twin Cities Assumed Liabilities), and (4) any deferred
Taxes of Twin Cities of any kind;

 

(iv)                              Liabilities
under or arising out of or relating to any discontinued operations of Twin
Cities, including any remaining Liabilities of Twin Cities or any Predecessor
under any purchase and sale agreements effecting such dispositions or
agreements ancillary or related thereto;

 

(v)                                  Liabilities
attributable to Twin Cities Retained Assets, including Liabilities (A) for
Twin Cities’ checks that are outstanding on the Closing Date and (B) that (1) are
incurred after the Interim Balance Sheet Date and (2) are outside the
ordinary course of business or not in accordance with past practice;

 

(vi)                              Liabilities to,
under or with respect to any Twin Cities Plan or any Comfort Systems Plan and
the administration of any Twin Cities Plan or Comfort Systems Plan;

 

(vii)                          Liabilities of
Twin Cities (A) relating to payroll (to the extent not previously
accrued), vacation, sick leave, paid time off, Workers’ Compensation
Liabilities, unemployment benefits, disability and occupational diseases of or
with respect to any employee or former employee of Twin Cities or any
Predecessor, (B) under any employment, severance, retention, change of
control or termination agreement with any employee of Twin Cities or any
Related Party or (C) arising out of or relating to any employee grievance
of any employee or

 

5

 

former
employee of Twin Cities, in each case whether or not the affected employee is
hired by Buyer;

 

(viii)                      Liabilities of
Twin Cities under any Contract, offer or solicitation (other than Liabilities
under Contracts, offers and solicitations that constitute Assumed Twin Cities
Liabilities);

 

(ix)                             Liabilities of
Twin Cities under any written employment agreement identified on Schedule 4.13 (other than Liabilities
under the employment agreement of Don Luhman that constitute Assumed Twin
Cities Liabilities);

 

(x)                                 Liabilities of
Twin Cities for or arising out of any Indebtedness;

 

(xi)                             Liabilities of
Twin Cities relating to Legal Proceedings that (A) exist on, or arise
after, the Closing Date and (B) relate to transactions entered into, or
any state of facts existing, on or before the Closing Date;

 

(xii)                         Liabilities of
Twin Cities (including penalties, fines, levies and assessments) arising out of
any violation or breach of, or noncompliance with, any Contracts, Governmental
Authorizations or Legal Requirements by Twin Cities or any other person acting
as agent for or on behalf of Twin Cities prior to the Closing Date;

 

(xiii)                     Liabilities of
Twin Cities:  (A) for products
liability in respect of all products (including products in work-in-process and
finished goods inventory on the Closing Date) shipped, distributed, assembled
or manufactured by, or any services provided by, Twin Cities prior to the
Closing Date (other than any such Liabilities for products liability relating
to any product assembled or manufactured by, or any service provided by, ALC or
any of its subsidiaries); (B) relating to any recalls of products
manufactured by Twin Cities prior to the Closing Date (other than any such
Liabilities relating to any product recall and resulting from any product
assembled or manufactured by ALC or any of its subsidiaries); and (C) for
all express and implied product warranties for all products shipped,
distributed, assembled or manufactured by, or any services provided by, Twin
Cities (other than any such Liabilities relating to any express or implied
product warranty for any product assembled or manufactured by, or any service
provided by, ALC or any of its subsidiaries);

 

(xiv)                       Liabilities of
Comfort Systems;

 

(xv)                           Liabilities of
Twin Cities to the extent that Twin Cities or Comfort Systems collects
insurance proceeds in respect thereof; and

 

(xvi)                       Liabilities
based on acts or omissions of Twin Cities occurring after the Closing Date.

 

Notwithstanding anything to the contrary in this Agreement, none of the
Twin Cities Retained Liabilities shall be included in the Twin Cities Assumed
Liabilities.

 

6

 

(e)                                  Purchase
Price.  The purchase price for
the Twin Cities Assets shall be $460,000 plus the assumption of the Twin Cities
Assumed Liabilities (the “Twin Cities
Purchase Price”), as adjusted by the Purchase Price Adjustment.

 

(f)                                    Allocation
of Twin Cities Purchase Price. 
The Twin Cities Purchase Price shall be allocated among the Twin Cities
Assets in accordance with the allocation set forth in IRS Form 8594
attached as Schedule 1.1(f).  Twin Cities shall timely and properly
prepare, execute, file and deliver any and all documents, forms and
authorizations (including powers of attorney) as Buyer may reasonably request
in order to prepare and report such allocation (including any amendments
thereto) to taxing authorities.  Buyer
shall prepare and deliver a final IRS Form 8594 to Twin Cities within
ninety (90) days after the Closing Date. 
Buyer and Twin Cities shall report the federal, state and local income
and other tax consequences of the purchase and sale of the Twin Cities Assets
contemplated hereby, including those required by Section 1060 of the IRC
and IRS Form 8594, in a manner consistent with such allocation and shall
not take any position inconsistent therewith upon examination of any Tax
Return, in any refund claim, in any litigation, or otherwise.  Any Purchase Price Adjustment allocated to
the Twin Cities Purchase Price shall be allocated by Buyer among the Twin
Cities Assets consistent with the allocation set forth in Schedule 1.1(f) and shall be
binding upon Twin Cities and Buyer.

 

(g)                                 Passage
of Title.  Title to all Twin
Cities Assets shall pass from Twin Cities to Buyer at Closing, subject to the
terms and conditions of this Agreement. 
Buyer assumes no risk of loss to the Twin Cities Assets prior to
Closing.

 

(h)                                 Certain
Consents.  Nothing in this
Agreement shall be construed as an attempt to assign any Contract or
Governmental Authorization (i) which is included in the Twin Cities Assets
and (ii) under which all the remedies for the enforcement thereof enjoyed
by Twin Cities would not, as a matter of law, pass to Buyer as an incident of
the assignments provided for by this Agreement without a Legal Approval or
Consent.  If any such Legal Approval or
Consent is not obtained prior to Closing, then Twin Cities shall, at the
request and under the direction of Buyer, in the name of Twin Cities or
otherwise as Buyer shall specify, take all action (including the appointment of
Buyer as attorney-in-fact for Twin Cities) and do or cause to be done all such
things as shall in the reasonable opinion of Buyer be reasonably necessary (i) to
assure that the rights of Twin Cities under such Contracts and Governmental
Authorizations shall be preserved for the benefit of Buyer, (ii) to
facilitate receipt of the consideration to be received by Twin Cities in and
under every such Contract and Governmental Authorization, which consideration
shall be held for the exclusive benefit of, and shall be delivered to, Buyer,
and (iii) continue to use its commercially reasonable efforts to obtain
such Legal Approvals and Consents as soon as reasonably possible after Closing.

 

(i)                                    Interpretation.  Notwithstanding anything to the contrary in
this Agreement, the provisions of this Section 1.1, together with the
provisions of this Agreement giving effect to the Purchase Price Adjustment,
shall not be interpreted or construed in any manner that would result in (A) any
duplication of benefits or obligations or (B) any unjust enrichment, in
each case for either the ALC Group or the Comfort Systems Group.

 

7

 

1.2.                            The
UES Sale and Purchase Transaction.

 

(a)                                 Sale
and Purchase of the UES Assets.  Subject
to the conditions described in Article II,
at Closing, UES shall sell and transfer to Buyer, and Buyer shall purchase from
UES, free and clear of all Encumbrances other than the Permitted Encumbrances,
all of UES’s assets and properties of every kind, nature and description,
wherever located and whether real, personal or mixed, tangible or intangible,
in electronic form or otherwise, and whether or not having any value for
accounting purposes or carried or reflected on or specifically referred to in
its books or financial statements, except for the UES Retained Assets
(collectively, the “UES Assets”).  The UES Assets shall include the following:

 

(i)                                    all of UES’s
machinery, equipment, components, parts, tools, spare parts, supplies and
materials, including the items identified on Schedule 1.2(a)(i);

 

(ii)                                all of UES’s
inventories of raw materials, work-in-process, parts, subassemblies and
finished goods, and all other materials and supplies to be used or consumed by
UES in the production of finished goods, wherever located and whether or not
obsolete or carried on UES’s books of account, including the items identified
on Schedule 1.2(a)(ii);

 

(iii)                            all of UES’s
other tangible personal property, including office furniture, office equipment
and supplies, leasehold improvements (other than leasehold improvements
constituting leased property under leases of Real Property disclosed on Schedule 4.16), vehicles and
computers, including all hardware and software, including the items identified
on Schedule 1.2(a)(iii),
excluding those specific assets identified on Schedule 1.2(b);

 

(iv)                              all of UES’s
fixtures on the Real Property (other than fixtures constituting leased property
under leases of Real Property disclosed on Schedule 4.16),
and, to the extent not described above, all tangible personal property that is
part of the UES Business and is located at 4107 New West Drive, Pasadena, Texas
77507 and 85 IH 10 North, Suite 112, Beaumont, Texas  77707 as of the Closing Date (other than
leased property and consigned property disclosed in the Schedules hereto and
goods in transit);

 

(v)                                  all of UES’s
investments, securities, advance payments, rental deposits, including lease
deposits for leases of Real Property disclosed on Schedule 4.16, prepaid items, claims, deferred charges,
rights of offset and credits and claims for refund (other than Tax credits and
claims for Tax refunds);

 

(vi)                              all of UES’s
notes receivable, accounts receivable and other rights to payment from customers,
including trade accounts receivable from goods shipped, products sold or
services rendered (other than notes receivable, accounts receivable and other
rights to payment from any Related Party), and the full benefit to all security
for such notes receivable, accounts receivable or rights to payment;

 

(vii)                          all of UES’s
books (other than minute books), records (other than partnership interest
records and Tax records), manuals, documents, books of account, whether
inscribed on a tangible medium or stored in an electronic or other medium,
including sales and credit reports, client and customer lists, literature,
brochures, advertising material, maintenance records, service and warranty
records, referral sources, research and development records, production records,
equipment logs, operating guides and manuals, financial and accounting

 

8

 

records
(other than Tax records), creative materials, advertising materials,
promotional materials, studies, reports, correspondence and other similar
documents, wherever located, and copies of all personnel records (other than
personnel records that UES is required by law to retain in its possession);

 

(viii)                      all of UES’s
rights under Contracts identified on Schedule 1.2(a)(viii),
including all of UES’s vehicle leases, and
all outstanding offers and solicitations made to or by UES identified on Schedule 1.2(a)(viii) and all
Contracts, offers and solicitations made or entered into by UES after the date
hereof and on or prior to the Closing Date and not prohibited by the terms of
this Agreement;

 

(ix)                             all of UES’s
intangible rights and property, including goodwill and rights in and to the
name “United Environmental Services” and in any other tradename, trademark,
fictitious name or service mark used in the UES Business (other than any such
tradename, trademark, fictitious name or service mark based on, or relating to,
the name “Comfort Systems”, the name “Comfort Systems USA” or the name of any
of Comfort Systems’ subsidiaries (other than Seller)) or any variant of any of
them, and all applications therefor or registrations thereof, and all other
forms of UES’s Intellectual Property, all research related to the UES Business
conducted by UES, all of UES’s development facilities and inventions and
work-in-process constituting a part thereof, and all rights to UES’s Software,
telephone numbers, facsimile numbers, e-mail addresses, internet sites,
internet addresses and domain names thereof and other listings;

 

(x)                                 all of UES’s
Governmental Authorizations and all pending applications for issuance or
renewal thereof, in each case to the extent transferable;

 

(xi)                             UES’s claim in
connection with services performed by UES at Houston Intercontinental Airport
(the “HIA Claim”);

 

(xii)                         all of UES’s
other assets that (A) are used by UES in connection with the UES Business
or (B) are reflected on the Closing Balance Sheet; and

 

(xiii)                     all of UES’s
goodwill and the UES Business as a going concern in Texas and Louisiana (but in
no event including UES’s Affiliates’ businesses of engaging in HVAC mechanical
contracting or providing HVAC services as a core business, with incidental
sales, installation and servicing of HVAC controls); and

 

(xiv)                       all of UES’s
choses in action, causes of action and judgments, express and implied
warranties and existing and inchoate claims, rights and remedies related to any
of the foregoing.

 

If and to the extent that Comfort Systems has any interest in any of
the UES Assets, then, at Closing, Comfort Systems shall sell, transfer and
assign all of such interests to Buyer for no additional consideration.  At Closing, Comfort Systems shall execute and
deliver to Buyer a confirmatory general warranty bill of sale to such effect.

 

(b)                                 UES
Retained Assets.  Notwithstanding
anything to the contrary in this Agreement, UES shall retain all of the
following assets (collectively, the “UES
Retained

 

9

 

Assets”):  (i) all consideration to be delivered to
UES pursuant to, and all other rights of UES under, this Agreement and the
Other Agreements to which UES is a party; (ii) UES’s minute books,
partnership interest records and Tax records; (iii) all of UES’s claims,
choses in action, causes of action and judgments, express and implied warranties
and existing and inchoate claims, rights and remedies related to any litigation
matter identified on Schedule 4.12
or any other UES Retained Liabilities; (iv) cash and cash equivalents,
including bank accounts and mutual fund accounts; (v) all of UES’s rights
to the name “Comfort Systems”, the name “Comfort Systems USA” or the name of
any of Comfort Systems’ subsidiaries (other than Seller), and all of UES’s
rights to all tradenames, trademarks, fictitious names and service marks based
on, or relating to, the name “Comfort Systems”, the name “Comfort Systems USA”
or the name of any of Comfort Systems’ subsidiaries (other than Seller); (vi) all
of UES’s tax sharing and similar agreements with Comfort Systems or any of its
other subsidiaries and all of UES’s other Contracts with Related Parties; (vii) all
of UES’s Tax credits and claims for Tax refunds; (viii) all of UES’s notes
receivable, accounts receivable and other rights to payment from any Related
Party; (ix) all partnership interests in UES’s treasury; (x) all of UES’s
Contracts and specific assets identified on Schedule 1.2(b);
(xi) all personnel records that UES is required by law to retain in its
possession; and (xii) all of UES’s rights to insurance proceeds in respect of
Retained Liabilities.  Notwithstanding
anything to the contrary in this Agreement, none of the UES Retained Assets
shall be included in the UES Assets.

 

(c)                                  Assumption
of Liabilities.  Subject to the
conditions described in Article II,
at Closing, Buyer shall, pursuant to an Assumption Agreement substantially in
the form of Exhibit B (the “UES Assumption Agreement”), assume and
agree to pay, perform, satisfy and discharge when due, to the extent not
theretofore paid, performed, satisfied and discharged, the following known and
identifiable liabilities of UES existing on the Closing Date, except the UES
Retained Liabilities (collectively, the “UES
Assumed Liabilities”):

 

(i)                                    all of UES’s
short-term liabilities reflected in the Interim Balance Sheet in the amounts
shown thereon;

 

(ii)                                all of UES’
short-term liabilities incurred after the Interim Balance Sheet Date in the
ordinary course of business in accordance with past practice that are required
to be reflected in the Closing Balance Sheet in accordance with GAAP, in the
amounts shown thereon, including all short-term liabilities included in Net
Asset Value and all orders from UES’s customers (other than any Liability in
respect of any such order arising from any breach or nonperformance thereof
prior to the Closing Date;

 

(iii)                            all of UES’s
liabilities set forth in the terms of the Contracts, offers and solicitations
that are identified in Section 1.2(a)(viii) (other
than any Liability under any such Contract, offer or solicitation arising from
any breach or nonperformance thereof prior to the Closing Date);

 

(iv)                              all of UES’s
liabilities under Governmental Authorizations and all pending applications for
issuance or renewal thereof that (A) are transferable to Buyer hereunder
and (B) are either (1) listed on Schedule 4.14
or 4.22 or (2) are obtained
or submitted by UES after the date hereof and prior to the Closing Date (other
than any Liability under any such

 

10

 

Governmental
Authorization or application arising from any breach or nonperformance thereof
prior to the Closing Date);

 

(v)                                  all liabilities
of UES and its Affiliates for all transfer, documentary, sales, use and motor
vehicle taxes that result from the sale of the UES Assets pursuant to this
Agreement; and

 

(vi)                              liabilities relating
to the HIA Claim but only to the extent such liabilities are less than
offsetting amounts received with respect to such claim (i.e., only to the
extent Buyer’s participation in the HIA Claim results in a net cash recovery
for Buyer).

 

(d)                                 UES
Retained Liabilities. 
Notwithstanding anything to the contrary in this Agreement, Buyer is not
assuming, and shall not assume or in any way undertake to pay, perform, satisfy
or discharge, any Liabilities of UES or any Predecessor existing before, on or
after the Closing Date or arising out of any transactions entered into, or any
state of facts existing, before, on or after the Closing Date, and whether or
not related to or arising out of any of the UES Assets, except the UES Assumed
Liabilities (the “UES Retained Liabilities”),
and UES agrees to pay, perform, satisfy and discharge when due all UES Retained
Liabilities.  Without limiting the
foregoing, the term “UES Retained Liabilities”
shall include any and all:

 

(i)                                    Liabilities of
UES (A) to any Related Party, (B) for or in connection with any
dividends, distributions, redemptions, or Security Rights with respect to any
security of UES, (C) to indemnify UES’s officers, directors, employees or
agents or (D) arising out of any transaction affecting, or any obligations
incurred by, UES or its officers, directors, employees or agents after Closing;

 

(ii)                                Liabilities
identified elsewhere in this Agreement as being the responsibility of UES;

 

(iii)                            Liabilities of
UES and its Affiliates for any Taxes, whether or not by reason of, or in
connection with, the Contemplated Transactions (other than Liabilities for
transfer, documentary, sales, use or motor vehicle taxes that (A) result
from the sale of the UES Assets pursuant to this Agreement and (B) constitute
UES Assumed Liabilities), including (1) any Taxes arising as a result of
UES’s operation of its business or ownership of the UES Assets prior to the
Closing Date, (2) any Liability of UES for Taxes of any person under
Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, by contract, or otherwise,
(3) any Taxes that result from the sale of the UES Assets pursuant to this
Agreement (other than Liabilities for transfer, documentary, sales, use and motor
vehicle taxes that (y) result from the sale of the UES Assets pursuant to this
Agreement and (z) constitute UES Assumed Liabilities), and (4) any
deferred Taxes of UES of any kind;

 

(iv)                              Liabilities
under or arising out of or relating to any discontinued operations of UES,
including any remaining Liabilities of UES or any Predecessor under any
purchase and sale agreements effecting such dispositions or agreements
ancillary or related thereto;

 

11

 

(v)                                  Liabilities
attributable to UES Retained Assets, including Liabilities (A) for UES’s
checks that are outstanding on the Closing Date and (B) that (1) are
incurred after the Interim Balance Sheet Date and (2) are outside the
ordinary course of business or not in accordance with past practice;

 

(vi)                              Liabilities to,
under or with respect to any UES Plan or any Comfort Systems Plan and the
administration of any UES Plan or Comfort Systems Plan, including all
Liabilities of UES to pay a Health and Life Insurance Continuance Allowance
following the retirement of employees, or to provide any other continuation of
group benefits following the retirement of employees, as described in Schedule 4.21;

 

(vii)                          Liabilities of
UES (A) relating to payroll (to the extent not previously accrued),
vacation, sick leave, paid time off, Workers’ Compensation Liabilities,
unemployment benefits, disability and occupational diseases of or with respect
to any employee or former employee of UES or any Predecessor, (B) under
any employment, severance, retention, change of control or termination
agreement with any employee of UES or any Related Party or (C) arising out
of or relating to any employee grievance of any employee or former employee of
UES, in each case whether or not the affected employee is hired by Buyer;

 

(viii)                      Liabilities of
UES under any Contract, offer or solicitation (other than Liabilities under
Contracts, offers and solicitations that constitute Assumed UES Liabilities);

 

(ix)                             Liabilities of
UES under any written employment agreement identified on Schedule 4.13 (other than Liabilities
under the employment agreement of Wayne Gary that constitute Assumed UES
Liabilities);

 

(x)                                 Liabilities of
UES for or arising out of any Indebtedness;

 

(xi)                             Liabilities of
UES relating to Legal Proceedings that (A) exist on, or arise after, the
Closing Date and (B) relate to transactions entered into, or any state of
facts existing, on or before the Closing Date (other than any such Liabilities
related to the contract and work performed in connection with the HIA claim if
and to the extent such Liabilities are equal to or less than the amount
received by Buyer as a result of the HIA claim);

 

(xii)                         Liabilities of
UES (including penalties, fines, levies and assessments) arising out of any
violation or breach of, or noncompliance with, any Contracts, Governmental
Authorizations or Legal Requirements by UES or any other person acting as agent
for or on behalf of UES prior to the Closing Date;

 

(xiii)                     Liabilities of
UES:  (A) for products liability in
respect of all products (including products in work-in-process and finished
goods inventory on the Closing Date) shipped, distributed, assembled or
manufactured by, or any services provided by, UES prior to the Closing Date
(other than any such Liabilities for products liability relating to any product
assembled or manufactured by, or any service provided by, ALC or any of its
subsidiaries); (B) relating to any recalls of products manufactured by UES
prior to the Closing Date (other than any such Liabilities relating to any
product recall and resulting from any product assembled or manufactured by ALC
or any of its subsidiaries); and (C) for all express and implied product
warranties for all products shipped, distributed, assembled or manufactured by,
or any services

 

12

 

provided
by, UES, including the Bush Airport claim identified on Schedule 4.19(b) but not
including claims for offset in the pending dispute with respect thereto (other
than any such Liabilities relating to any express or implied product warranty
for any product assembled or manufactured by, or any service provided by, ALC
or any of its subsidiaries);

 

(xiv)                       Liabilities of
Comfort Systems;

 

(xv)                           Liabilities of
UES to the extent that UES or Comfort Systems collects insurance proceeds in
respect thereof;

 

(xvi)                       Liabilities
based on acts or omissions of UES occurring after the Closing Date; and

 

(xvii)                   Liabilities of
UES related to the HIA Claim.

 

Notwithstanding anything to the contrary in this Agreement, none of the
UES Retained Liabilities shall be included in the UES Assumed Liabilities.

 

(e)                                  Purchase
Price.  The purchase price for
the UES Assets shall be $23,540,000 plus the assumption of the UES Assumed
Liabilities (the “UES Purchase Price”),
as adjusted by the Purchase Price Adjustment.

 

(f)                                    Allocation
of UES Purchase Price.  The UES
Purchase Price shall be allocated among the UES Assets in accordance with the
allocation set forth in IRS Form 8594 attached as Schedule 1.2(f).  UES shall timely and properly prepare,
execute, file and deliver any and all documents, forms and authorizations
(including powers of attorney) as Buyer may reasonably request in order to
prepare and report such allocation (including any amendments thereto) to Taxing
authorities.  Buyer shall prepare and
deliver a final IRS Form 8594 to UES within ninety (90) days after the
Closing Date.  Buyer and UES shall report
the federal, state and local income and other tax consequences of the purchase
and sale of the UES Assets contemplated hereby, including those required by Section 1060
of the IRC and IRS Form 8594, in a manner consistent with such allocation
and shall not take any position inconsistent therewith upon examination of any
tax return, in any refund claim, in any litigation, or otherwise.  Any Purchase Price Adjustment allocated to
the UES Purchase Price shall be allocated by Buyer among the UES Assets
consistent with the allocation set forth in Schedule 1.2(f) and
shall be binding upon UES.

 

(g)                                 Passage
of Title.  Title to all UES
Assets shall pass from UES to Buyer at Closing, subject to the terms and
conditions of this Agreement.  Buyer
assumes no risk of loss to the UES Assets prior to Closing.

 

(h)                                 Certain
Consents.  Nothing in this
Agreement shall be construed as an attempt to assign any Contract or
Governmental Authorization (i) which is included in the UES Assets and (ii) under
which all the remedies for the enforcement thereof enjoyed by UES would not, as
a matter of law, pass to Buyer as an incident of the assignments provided for
by this Agreement without a Legal Approval or Consent.  If any such Legal Approval or Consent is not
obtained prior to Closing, then UES shall, at the request and under the
direction of Buyer, in the name of UES or otherwise as Buyer shall specify,
take all action (including the appointment of Buyer as attorney-in-fact for
UES) and do or cause to be done all such things as shall in the reasonable

 

13

 

opinion of Buyer be reasonably necessary (i) to assure that the
rights of UES under such Contracts and Governmental Authorizations shall be
preserved for the benefit of Buyer, (ii) to facilitate receipt of the
consideration to be received by UES in and under every such Contract and
Governmental Authorization, which consideration shall be held for the exclusive
benefit of, and shall be delivered to, Buyer, and (iii) continue to use
its commercially reasonable efforts to obtain such Legal Approvals and Consents
as soon as reasonably possible after Closing.

 

(i)                                    Interpretation.  Notwithstanding anything to the contrary in
this Agreement, the provisions of this Section 1.2, together with the
provisions of this Agreement giving effect to the Purchase Price Adjustment,
shall not be interpreted or construed in any manner that would result in (A) any
duplication of benefits or obligations or (B) any unjust enrichment, in
each case for either the ALC Group or the Comfort Systems Group.

 

1.3.                            Payment
of Twin Cities Purchase Price and UES Purchase Price.

 

(a)                                 Payment
of Purchase Price at Closing.  At
Closing, Buyer (i) shall pay to Comfort Systems cash in an amount equal to
the cash portion of the Purchase Price $24
million in the aggregate, minus the Holdback and a mutually agreed
good faith estimate of the Purchase Price Adjustment equal to $400,000, and (ii) shall
assume the Assumed Liabilities pursuant to the Assumption Agreements.

 

(b)                                 Purchase
Price Adjustment.  Within five
Business Days after the Purchase Price Adjustment is finally determined, Buyer
or Seller, as the case may be, shall pay (i) the Purchase Price
Adjustment, net of the estimate used at Closing, and (ii) Interest on the
Purchase Price Adjustment, net of the estimate used at Closing, from the
Closing Date until the date of payment thereof, by wire transfer of federal
funds to an account designated by Comfort Systems or ALC, as the case may be,
within three Business Days after the Purchase Price Adjustment is finally
determined.

 

(c)                                  Holdback.  Buyer shall withhold from the Purchase Price
an amount equal to $200,000 of the
Purchase Price (the “Holdback”).  Buyer may offset and recoup against the
Holdback any amounts due by the Comfort Systems Group to the ALC Group
hereunder, including the Comfort Systems Group’s indemnification obligations under
Article VI and Seller’s
obligations to pay the Purchase Price Adjustments, if any.  Buyer shall deliver the Holdback, less any
claims for offset or recoupment, on December 31, 2006, plus Interest from
and after the Closing Date to the date of payment, to accounts to be designated
by Comfort Systems within three Business Days prior to payment.  Any offset or recoupment against the Holdback
shall be allocated between the Twin Cities Purchase Price and the UES Purchase
Price by reference to the source of such offset or recoupment.

 

1.4.                            Purchase
Price Adjustment.  The Purchase
Price shall be adjusted after Closing as follows:

 

(a)                                 Net
Asset Value Adjustment.  If the Net
Asset Value at the close of business on the Closing Date is less than
$2,700,000, then the Purchase Price shall be reduced dollar-for-dollar by the
amount of the deficiency.  If the Net
Asset Value at the close of business on the Closing Date is greater than
$2,700,000, then the Purchase Price shall be increased dollar-for-dollar

 

14

 

by the amount of the excess.  “Net Asset Value” means the total of (i) the
book value (net of accumulated depreciation, amortization, depletion and like
items) of (A) all of the tangible Assets and (B) all of the aggregate
current assets included in the Assets, minus (B) the aggregate
amount of the Assumed Liabilities, in each case without duplication and
determined solely by reference to the Closing Balance Sheet.  Notwithstanding the foregoing, no Purchase
Price Adjustment of less than $20,000 shall be made on the basis of Net Asset
Value.

 

(b)                                 Allocation
of Purchase Price Adjustment; Preservation of Rights.  The Purchase Price Adjustment shall be
allocated between the Twin Cities Purchase Price and UES Purchase Price by
reference to the sources of such adjustment in the consolidating Closing
Balance Sheet.  For purposes of making
such allocation, 3% of the amount in Section 1.4(a) shall
be deemed to be allocated to Twin Cities and 97% of the amount in Section 1.4(a) shall be deemed
to be allocated to UES.  The Purchase
Price Adjustment shall be without prejudice to (i) the ALC Group’s rights
of indemnification under Article VI
for any breach by Seller of the representations and warranties contained in Article IV (without unjust enrichment
for any duplicate damages) or (ii) the Comfort Systems Group’s rights of
indemnification under Article VI
for any breach by Buyer of the representations and warranties contained in Article V (without unjust enrichment
for any duplicate damages).

 

1.5.                            Closing
Balance Sheet.

 

(a)                                 Preparation
of Closing Balance Sheet.  After Closing,
Seller shall have reasonable access to the books and records of the Business
and all relevant personnel responsible for such books and records for the purpose
of closing the books for the Business at December 31, 2005. After Closing,
Buyer shall prepare consolidating and consolidated statements of the Assets and
the Assumed Liabilities as of the close of business on the Closing Date
(collectively, the “Closing Balance Sheet”).  The Closing Balance Sheet shall be prepared
in accordance with GAAP applied on a basis consistent with the Interim Balance
Sheet, except that:  (i) only the
Assets and the Assumed Liabilities shall be included, and no Retained Assets or
Retained Liabilities shall be included; (ii) no item shall be excluded due
to a lack of materiality, (iii) inventory shall be stated on a basis
consistent with past practice, but in no event shall the aggregate value for
inventory exceed the aggregate fair market value for inventory; (iv) $290,000
of the HIA Claim shall be recorded as an asset, and no other assets or
liabilities related to the HIA Claim, shall be included; (v) percentage of
completion liability (cost in excess of billings less billings in excess of
costs, such net amount herein “POC Liability”)
shall be recorded as a current liability; (vi) other year-end or period
end accruals in accordance with GAAP shall be recorded; (vii) all accruals
in respect of liabilities existing at the Closing Date to be paid after Closing
by Buyer shall be recorded (including the estimate of $25,000 in legal fees
with respect to the HIA Claim); and (viii) all accruals in respect of
liabilities existing at the Closing Date to be paid before, at or after Closing
by Seller shall be excluded (including the accruals with respect to bad debt,
warranty claims, paid time off, etc.). 
If the Interim Balance Sheet is not presented in accordance with GAAP
and the foregoing exceptions in all respects, the Closing Balance Sheet shall
nevertheless properly reflect GAAP and the foregoing exceptions in all respects
so that the Purchase Price Adjustment shall take into account the effect of any
non-GAAP treatment and the absence of the above exceptions in the Interim
Balance Sheet.  Buyer may conduct a
physical count of the inventory of Seller within 15 days of Closing.  Buyer shall give Comfort Systems and its
accountants at least two Business Days’ prior written notice of such inventory
count, and

 

15

 

Comfort Systems and its accountants may observe such inventory
count.  Such inventory count shall be
used to prepare the Closing Balance Sheet. 
Within 10 days of Closing, Seller will make available to Buyer all books
and records of Seller as of December 31, 2005 necessary to assist Buyer in
the preparation of the Closing Balance Sheet.

 

(b)                                 Delivery
of Closing Balance Sheet.  Buyer
shall deliver the Closing Balance Sheet to Comfort Systems within 30 days after
the Closing Date.  During the period of
30 days after Comfort Systems’ receipt of the Closing Balance Sheet (the “Objection Period”), Buyer (i) shall
provide Comfort Systems with complete access to (and, upon Comfort Systems’
reasonable request, copies of), all relevant papers, documents and information
used by Buyer in preparing the Closing Balance Sheet and (ii) shall
promptly respond in reasonable detail to reasonable inquiries by Seller with
respect to such papers, documents and information.  If, during the Objection Period, Seller does
not deliver to Buyer (A) a written notice stating in reasonable detail
Seller’s objection to Buyer’s calculation of the Purchase Price Adjustment and
the basis for such objection and (B) a signed statement that includes
Seller’s calculation of the Purchase Price Adjustment  (collectively, the “Objection Notice”), then the Closing Balance Sheet delivered
by Buyer to Comfort Systems shall be conclusive and binding on the parties for
purposes of determining the Purchase Price Adjustment.

 

(c)                                  Arbitration.  If, during the Objection Period, Seller
delivers to Buyer the Objection Notice, then Buyer and Seller will use
reasonable efforts to agree upon the calculation of the Purchase Price
Adjustment.  If Buyer and Seller fail to
agree upon the calculation of the Purchase Price Adjustment within 30 days of
Buyer’s receipt of the Objection Notice, then Buyer and Seller shall submit the
matter to KPMG in Atlanta, Georgia (the “Independent
Accountant”), for resolution applying the principles, policies and
practices set forth in Sections 1.4(a), 1.4(b) and 1.5(a). 
If the determination of the Purchase Price Adjustment is submitted to
the Independent Accountant for resolution, each of Buyer and Seller (i) shall
promptly furnish or cause to be furnished to the Independent Accountant such
work papers and other documents and information relating to the Closing Balance
Sheet and its calculation of the Purchase Price Adjustment as the Independent
Accountants may request and are available to such party or its agents and (ii) shall
be afforded the opportunity to present to, and discuss with, the Independent
Accountants any material relating to the Closing Balance Sheet and its
calculation of the Purchase Price Adjustment. 
Within 60 days following the submission of such matter to the
Independent Accountants, the Independent Accountants shall resolve the dispute
based on the principles, policies and practices set forth in Sections 1.4(a), 1.4(b) and 1.5(a). 
The fees and expenses of the Independent Accountants shall be split
evenly between Buyer and Seller.

 

1.6.                            Separate
Transactions.  The transactions
in each of Sections 1.1 and 1.2 are independent, separate and discrete
and are not integrated or combined as one or the same transaction.  Use of combined terms in this Agreement, such
as “Buyer”, “Seller”, “Assets”, “Assumed Liabilities” and “Purchase Price”, are
for convenience only in order to reduce time, costs and paper and shall have no
substantive effect on the separateness of such transactions.  Such transactions shall be treated and
reported separately for tax and accounting purposes, asset conveyance
documentation, and all other matters in this Agreement.

 

16

 

ARTICLE II

CLOSING; CONDITIONS TO CLOSING; TERMINATION

 

2.1.                            Closing.  The parties shall consummate the purchase and
sale of the Assets, the assumption of the Assumed Liabilities, and the
consummation of the other Contemplated Transactions (the “Closing”) on the earlier of (a) December 31,
2005 and (b) the third Business Day after the date on which the conditions
set forth in Sections 2.2 and 2.3 are satisfied; provided, however, that
the Closing may occur at such other date, time and place as Buyer and Seller
may agree.  Closing shall be effective,
and all references herein to “Closing” and “Closing Date” shall mean, 11:59 p.m.
EST on the Closing Date.  The
transactions in each of Sections 1.1 and
1.2, although independent,
separate and discrete, must be closed simultaneously or neither such
transaction shall close.  The rights and
obligations of the parties if there is no Closing are set forth in Section 2.5.

 

2.2.                            Conditions
Precedent to Obligation of the ALC Group.  The obligation of the ALC Group to proceed
with the Closing is subject to the fulfillment prior to or at Closing of the
conditions set forth in this Section 2.2.  Any one or more of these conditions may be
waived, in whole or in part, by the ALC Group at the ALC Group’s sole option.

 

(a)                                 Representations
and  Warranties.  The representations and warranties of the
Comfort Systems Group contained in Article IV
that contain no express materiality qualifier shall be accurate and complete,
individually and collectively, in all material respects (i) as of the date
of this Agreement and (ii) as of the Closing Date as if made on the
Closing Date (except to the extent that any such representation or warranty
refers to a specific earlier date).  The
representations and warranties of the Comfort Systems Group contained in Article IV that contain an express
materiality qualifier shall be accurate and complete, individually and
collectively, in all respects (A) as of the date of this Agreement and (B) as
of the Closing Date as if made on the Closing Date (except to the extent that
any such representation or warranty refers to a specific earlier date).

 

(b)                                 Agreements.  The Comfort Systems Group shall have complied
with and performed, individually and collectively, in all material respects all
of the covenants and agreements in this Agreement that are required by this Agreement
to be complied with or performed by the Comfort Systems Group on or before the
Closing Date.

 

(c)                                  Litigation.  No Legal Requirement shall be in effect that (i) prohibits,
or threatens to prohibit, the Contemplated Transactions or (ii) would
limit or adversely affect Buyer’s acquisition of the Assets or assumption of
the Assumed Liabilities.  No Legal
Proceeding shall be pending or threatened that (A) challenges the
lawfulness of the Contemplated Transactions, (B) seeks to prevent or delay
any of the Contemplated Transactions or (C) seeks relief by reason of the
Contemplated Transactions or that, if determined adversely to the Comfort
Systems Group, would constitute a material breach of any of the representations
and warranties of the Comfort Systems Group contained in Article IV.  Neither the Comfort Systems Group nor the ALC
Group shall have received any claim by any person (written or oral) asserting
that any person other than Seller (1) is the legal or beneficial owner of,
or has the right to acquire or obtain the legal or beneficial ownership of, the
Assets, (2) has any Encumbrance (other than

 

17

 

Permitted Encumbrances) on the Assets or (3) is entitled to all or
any portion of the Purchase Price.

 

(d)                                 No
Material Adverse Change.  Between the date of this Agreement and the
Closing Date, there shall have been no material adverse change, regardless of
insurance coverage, in the Business, Assets, financial condition or results of
operation (financial or otherwise) of Seller.

 

(e)                                  Closing
Certificate.  The Comfort Systems Group shall have
delivered a certificate, dated as of the Closing Date, certifying to the
fulfillment of the conditions set forth in clauses Sections 2.2(a), 2.2(b), 2.2(c) and 2.2(d), and the contents of such
certificate (i) shall constitute a representation and warranty of the
Comfort Systems Group as of the Closing Date and (ii) shall be deemed to
have been relied upon by the ALC Group and fully incorporated in this
Agreement.

 

(f)                                    Legal
Approvals.  Each party to this Agreement shall have
received all Legal Approvals reasonably necessary to consummate the
Contemplated Transactions.

 

(g)                                 Arrangements
with  Certain
Employees.  Buyer shall
have entered into written employment agreements with the key employees of
Seller identified on Schedule 2.2(g) satisfactory
to Buyer in its sole discretion pursuant to which any then existing employment
agreement with such employees shall have terminated, except that (i) Comfort
Systems shall have paid, or made arrangements to pay, to Don Luhman all amounts
required to be paid under section 2(b)(iv) of his employment
agreement with Twin Cities as a result of the consummation of the Contemplated
Transactions and (ii) Comfort Systems shall have paid, or made arrangements
to pay, to Wayne Gary all amounts required to be paid under section 2(b)(iv) of
his employment agreement with UES as a result of the consummation of the
Contemplated Transactions.

 

(h)                                 Transition
Services  Agreement.  Comfort Systems shall have executed and
delivered to ALC Transition Services Agreements in the forms attached as Exhibit C.

 

(i)                                    Estoppel
Certificates.  Buyer shall have received from each lessor of
Real Property leased by Seller an estoppel certificate in form and substance
reasonably satisfactory to Buyer.

 

(j)                                    Closing
Documents.  The ALC Group shall also have received the
documents referred to in Section 2.4(a),
and all such documents shall be in form and substance reasonably satisfactory
to the ALC Group.

 

2.3.                            Conditions
Precedent to Obligation of the Comfort Systems Group.  The obligation of the Comfort Systems Group
to proceed with the Closing is subject to the fulfillment prior to or at
Closing of the conditions set forth in this Section 2.3.  Any one or more of these conditions may be
waived, in whole or in part, by the Comfort Systems Group at the Comfort
Systems Group’s sole option.

 

(a)                                 Representations
and  Warranties.  The representations and warranties of the ALC
Group contained in Article V
that contain no express materiality qualifier shall be accurate and

 

18

 

complete, individually and collectively, in all material respects (i) as
of the date of this Agreement and (ii) as of the Closing Date as if made
on the Closing Date (except to the extent that any such representation or
warranty refers to a specific earlier date). The representations and warranties
of the ALC Group contained in Article V
that contain an express materiality qualifier shall be accurate and complete,
individually and collectively, in all respects (A) as of the date of this
Agreement and (B) as of the Closing Date as if made on the Closing Date
(except to the extent that any such representation or warranty refers to a
specific earlier date).

 

(b)                                 Agreements.  The ALC Group shall have complied with and
performed, individually and collectively, in all material respects all of the
covenants and agreements in this Agreement that are required by this Agreement
to be complied with or performed by the ALC Group on or before the Closing
Date.

 

(c)                                  Litigation.  No Legal Requirement shall be in effect that (i) prohibits,
or threatens to prohibit, the Contemplated Transactions or (ii) would
limit or adversely affect Seller’s assignment of the Assets or the Assumed
Liabilities.  No Legal Proceeding shall
be pending or threatened that (A) challenges the lawfulness of the
Contemplated Transactions, (B) seeks to prevent or delay any of the
Contemplated Transactions or (C) seeks relief by reason of the
Contemplated Transactions or that, if determined adversely to the ALC Group,
would constitute a material breach of any of the representations and warranties
of the ALC Group contained in Article V.

 

(d)                                 Closing
Certificate.  The ALC Group shall have delivered a
certificate, dated as of the Closing Date, certifying to the fulfillment of the
conditions set forth in Sections 2.3(a), 2.3(b) and
2.3(c), and the contents of such
certificate (i) shall constitute a representation and warranty of the ALC
Group as of the Closing Date and (ii) shall be deemed to have been relied
upon by the Comfort Systems Group and fully incorporated in this Agreement.

 

(e)                                  Legal
Approvals.  Each party to this Agreement shall have
received all Legal Approvals reasonably necessary to consummate the Contemplated
Transactions.

 

(f)                                    Arrangements
with  Certain
Employees.  The written
employment agreements with the key employees of Seller identified on Schedule 2.2(g) shall have
terminated, except that (i) Comfort Systems shall have paid, or made
arrangements to pay, to Don Luhman all amounts required to be paid under section 2(b)(iv) of
his employment agreement with Twin Cities as a result of the consummation of
the Contemplated Transactions, (ii) Comfort Systems shall have paid, or
made arrangements to pay, to Wayne Gary all amounts required to be paid under section 2(b)(iv) of
his employment agreement with UES as a result of the consummation of the
Contemplated Transactions, and (iii) Comfort Systems shall have received
from each employee party to any such employment agreement a release of all
claims in respect of such employment agreement, and each such release shall be
in form and substance satisfactory to Comfort Systems.

 

(g)                                 Transition
Services  Agreement.  ALC shall have executed and delivered to
Comfort Systems Transition Services Agreements in the forms attached as Exhibit C.

 

19

 

(h)                                 Closing
Documents.  The Comfort Systems Group shall also have
received the documents referred to in Section 2.4(b),
and all such documents shall be in form and substance satisfactory to the
Comfort Systems Group.

 

2.4.                            Deliveries
and Proceedings at Closing.

 

(a)                                 Deliveries
by  the
Comfort Systems Group.  At Closing, the
Comfort Systems Group shall deliver to the ALC Group the following documents
(each as applicable to Twin Cities, UES and Buyer, as the case may be):

 

(i)                                    general
warranty bills of sale and instruments of assignment to the Assets in forms
attached as Exhibit D, duly
executed by Twin Cities, UES or Comfort Systems, as the case may be;

 

(ii)                                assignments of
all transferable or assignable licenses, Governmental Authorizations and
warranties relating to the Assets and of any trademarks, trade names, patents
and other Intellectual Property;

 

(iii)                            title
certificates to any motor vehicles (other than leased motor vehicles) included
in the Assets, duly executed by
Seller (together with any other transfer forms necessary to transfer title to
such vehicles);

 

(iv)                              such other
deeds, bills of sale, assignments, certificates of title, documents and other
instruments of transfer and conveyance as may reasonably be requested by Buyer,
executed by Seller;

 

(v)                                  certificates of
the appropriate public officials, dated not more than 10 days prior to the
Closing Date, to the effect that Seller is a validly existing corporation or
limited partnership in good standing in its state of incorporation or
formation, as the case may be;

 

(vi)                              incumbency and
specimen signature certificates, dated as of the Closing Date, signed by
officers of Seller and certified by the secretary of Seller;

 

(vii)                          correct and
complete copies of (A) the Governing Documents (other than the bylaws) of
Seller as of the Closing Date, certified by the Secretary of State of its state
of incorporation or formation, as the case may be, and (B) the bylaws of
Seller as of the Closing Date, certified by the secretary of Seller;

 

(viii)                      certificate of
the secretary of Seller (A) setting forth all resolutions of the Board of
Directors or general partner of Seller, as the case may be, and of the
stockholders or partners of Seller, as the case may be, authorizing the
execution and delivery of this Agreement and the performance by Seller of the
Contemplated Transactions, certified by the secretary of Seller, and (B) stating
that the Governing Documents of Seller delivered under Section 2.4(a)(vii) were in
effect on the date of adoption of those resolutions, the date of execution of
this Agreement and the Closing Date;

 

20

 

(ix)                             all amendments
to UES’s Governing Documents necessary to change UES’s current name to a name
sufficiently dissimilar to UES’s current name to, in Buyer’s reasonable
judgment, avoid confusion; and

 

(x)                                 such other
agreements and documents as Buyer may reasonably request in order to consummate
the Contemplated Transactions.

 

(b)                                 Deliveries
by  the
ALC Group.  At Closing, the
ALC Group shall deliver to the Comfort Systems Group the following documents
(each as applicable to Twin Cities, UES and Buyer, as the case may be):

 

(i)                                    a wire transfer
of federal funds in accordance with Section 1.3
according to wire transfer instructions delivered by Comfort Systems (with
accompanying federal tax identification number) to Buyer in writing at least
two Business Days prior to the Closing Date;

 

(ii)                                the Assumption
Agreements;

 

(iii)                            certificates of
the appropriate public officials, dated not more than 10 days prior to the
Closing Date, to the effect that Buyer is a validly existing corporation in
good standing in its state of formation;

 

(iv)                              incumbency and
specimen signature certificates, dated as of the Closing Date, signed by
officers of Buyer and certified by the secretary of Buyer;

 

(v)                                  correct and
complete copies of (A) the Governing Documents (other than the bylaws) of
Buyer as of the Closing Date, certified by the Secretary of State of its state
of formation, and (B) the bylaws of Buyer as of the Closing Date,
certified by the secretary of Buyer;

 

(vi)                              certificate of
the secretary of Buyer (A) stating that Buyer is authorized and empowered
to consummate the Contemplated Transactions, and (B) stating that the
Governing Documents of Buyer delivered under Section 2.4(b)(v) were
in effect on the date the Contemplated Transactions were authorized, the date
of execution of this Agreement and the Closing Date; and

 

(vii)                          such other
agreements and documents as Buyer may reasonably request in order to consummate
the Contemplated Transactions.

 

2.5.                            Termination
Prior to Closing.

 

(a)                                 Events
of Termination.  This Agreement may be terminated in writing
at any time prior to the Closing by:  (i) the
mutual consent of Buyer and Seller; (ii) Buyer, if any of the conditions
specified in Section 2.2
shall not have been fulfilled (or if satisfaction becomes impossible) on or
before December 31, 2005 and shall not have been waived by Buyer; (iii) Seller,
if any of the conditions specified in Section 2.3
shall not have been fulfilled (or if satisfaction becomes impossible) on or
before December 31, 2005 and shall not have been waived by Seller; (iv) Buyer,
if a material breach of this Agreement has been committed by Seller, including
a material breach that led to the failure of any of the conditions identified
in

 

21

 

Section 2.2,
and such material breach has not been waived by Buyer; (v) Seller, if a
material breach of this Agreement has been committed by Buyer, including a
material breach that led to the failure of any of the conditions identified in Section 2.3, and such material breach
has not been waived by Seller.

 

(b)                                 Consequences
of  Termination.  If this Agreement is terminated by mutual
consent of Buyer and Seller pursuant to clause (i) of Section 2.5(a), then no party shall
have any obligation to any other party as a result of such termination.  If Buyer or Seller terminates this Agreement
pursuant to clause (ii) or (iii) of Section 2.5(a),
then no party shall have any obligation to any other party as a result of such
termination.  If Buyer or Seller
terminates this Agreement pursuant to clause (iv) or (v) of Section 2.5(a), then Buyer or Seller,
as the case may be, shall be liable to the other parties for any material
breach of this Agreement by Buyer or Seller, as the case may be, which led to
such termination.  Each party shall also
be entitled to any other remedy to which it may be entitled at law or in
equity, including injunctive relief and specific performance, in the event of a
termination of this Agreement pursuant to clause (iv) or (v) of Section 2.5(a).  If the Closing does not occur on or before December 31,
2005, and a material breach of this Agreement by Buyer or Seller was not the
cause of the failure to consummate the Contemplated Transactions by such date,
then no party shall have any liability to the other parties under this
Agreement, and this Agreement shall terminate. 
All rights and obligations of the parties set forth in Sections 3.3, 3.4, 6.2, 6.3 and 8.1
shall survive termination of this Agreement.

 

2.6.                            Casualty
Damage.  Notwithstanding anything
else in this Agreement to the contrary, if prior to Closing the Assets (or any
portion thereof) are damaged by flood, fire or any other cause, the reasonable
estimate of the losses (including business interruption losses) would be more
than $250,000, or which reasonably would be expected to interrupt Business for
more than seven days, then either party may, at its option, declare this
Agreement null and void.  If prior to
Closing the Assets (or any portion thereof) are damaged by flood, fire or any
other cause, the reasonable estimate of losses (including business interruption
losses) would be $250,000 or less, or which would not reasonably be expected to
interrupt Business for more than seven days, then such event shall not excuse
Buyer from its obligations under this Agreement, but the Purchase Price shall
be reduced by an amount equal to the amount of such loss, with respect to which
the parties shall agree to a reasonable estimate at Closing with a
reconciliation and payment based on actual losses 90 days after the Closing
Date.

 

2.7.                            Fulfillment
of Conditions and Agreements Prior to Closing; Legal Approvals and Consents.  Each party shall cooperate with the others
and use commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable, including making or obtaining any and all Legal Approvals and
Consents, to consummate and make effective the Contemplated Transactions,
including making all filings under applicable Legal Requirements; provided,
however, that neither the ALC Group nor the Comfort Systems Group shall have
any obligation to incur any Liability or pay funds in connection therewith.

 

22

 

ARTICLE III.

CERTAIN COVENANTS

 

3.1.                            Conduct
of Business Pending the Closing. 
Between the date of this Agreement and the Closing Date, unless Buyer
otherwise consents in writing, the Comfort Systems Group shall conduct the
affairs of Seller as follows:

 

(a)                                 Ordinary
Course; Compliance.  Seller shall conduct the Business only in the
ordinary course and consistent with past practice.  Seller shall maintain the Assets and Assumed
Liabilities consistent with past practice and shall comply in a timely fashion
with the provisions of all Contracts, Governmental Authorizations and Legal
Requirements.  Seller shall use
commercially reasonable efforts to keep their business organizations intact,
keep available the services of their present employees and preserve the
goodwill of their suppliers, customers and others having business relations
with them.  Seller (i) shall
maintain in full force and effect the policies of insurance disclosed on Schedule 4.19(c), subject only to
variations required by the ordinary operations of the Business or (ii) shall
obtain prior to the lapse of any such policy substantially similar coverage
with insurers of recognized standing.

 

(b)                                 Transactions.  Seller shall not: (i) enter into or
amend any Contract or Governmental Authorization, the performance of which may
extend beyond the Closing, except (A) in the ordinary course of business
and consistent with past practice or (B) with Buyer’s approval; (ii) enter
into or amend any employment or consulting Contract that is not terminable at
will and without penalty or continuing obligation; (iii) fail to pay any
Tax or any other Liability or charge when due, other than charges contested in
good faith by appropriate proceedings and brought to the attention of Buyer; (iv) make,
change or revoke any Tax election or make any agreement or settlement with any
Taxing authority; (v) take any action, or omit to take any action, that
will cause a breach or termination of any Contract or Governmental
Authorization, other than termination by fulfillment of its terms in the
ordinary course of business; (vi) allow the levels of raw materials,
parts, supplies or other materials included in the inventories to vary
materially from the levels customarily maintained; (vii) accelerate
collections of trade accounts receivable outside of customary practices; (viii) enter
into any compromise or settlement of any litigation, proceeding or governmental
investigation relating to the Business; or (ix) take any action that is
likely to result in the occurrence of any event described in Section 4.7 or cause the breach or
inaccuracy of any representation and warranty in Article IV as of the date of this Agreement or on the
Closing Date.  Seller shall confer with
Buyer prior to implementing operational decisions of a material nature, and
shall otherwise report periodically to Buyer concerning the status of Seller’s
business, operations and finances.

 

(c)                                  Access,
Information  and
Documents.  Seller shall give to the ALC Group and to the
ALC Group’s employees, representatives and agents (including accountants,
actuaries, financial advisors, attorneys, environmental consultants and
engineers) access during normal business hours to all of the properties, books,
Tax Returns, Contracts, commitments, records, officers, other personnel and
accountants (including independent public accountants and their audit
workpapers concerning Seller) of Seller. 
Seller shall furnish to the ALC Group copies of all such documents, and
all such information, with respect to the properties, Liabilities, financial
position and performance and affairs of Seller and the Business as the ALC
Group may reasonably request.  In
addition, the ALC Group shall have the right to have the Real Property

 

23

 

and tangible personal property of Seller inspected by the ALC Group, at
the ALC Group’s sole cost and expense, for purposes of determining the physical
condition and legal characteristics of the Real Property and such tangible
personal property.

 

3.2.                            Certain
Tax Matters.

 

(a)                                 Payment
of  Taxes
on  the
Sale of the Assets.  Except as provided in the immediately
succeeding sentence, the Comfort Systems Group shall pay in a timely manner all
Taxes resulting from or payable in connection with the sale of the Assets
pursuant to this Agreement, regardless of the person on whom such Taxes are
imposed by Legal Requirements.  All
transfer, documentary, sales, use and motor vehicle taxes incurred in
connection with consummation of the Contemplated Transactions shall be paid by
the ALC Group, and such payment shall be made when due, and the ALC Group will,
at its own expense, file all necessary Tax Returns and other documentation with
respect to all such Taxes.  Without the
prior written consent of Buyer or Seller, as the case may be, neither Buyer nor
Seller shall make or change any Tax election or undertake any action that would
have the effect of increasing the Tax liability of the other party for any Tax
period ending after the Closing Date.

 

(b)                                 Tax
Allocation  Agreements; Wage Reporting.  Any agreement among Seller and Comfort
Systems and its other Affiliates regarding allocation or payment of Taxes shall
be deemed terminated at and as of the Closing Date.  At Buyer’s request, Seller shall agree to
utilize the standard or, if Buyer so elects, the alternate procedure set forth
in the IRS Revenue Procedure 96-30 for wage reporting purposes.

 

(c)                                  Mutual
Cooperation.  The ALC Group and the Comfort Systems Group
shall each assist the other as may reasonably be requested by any of them with
the preparation of any Tax Return, any Tax audit, or any judicial or administrative
proceedings relating to any Tax.  In
addition, each party shall retain and provide the other with any records or
information that may be relevant to such Tax Return, Tax audit, proceeding or
determination.  The party requesting
assistance under this Section 3.2(c) shall
reimburse the party providing assistance for direct expenses incurred in
providing such assistance.

 

3.3.                            Publicity.  No party shall (i) issue any press
release or otherwise make any announcements to the public or the employees of
Seller regarding this Agreement or the Contemplated Transactions without
consulting with the other party, or (ii) disclose the amount of the
Purchase Price without the prior written consent of the other party, in each
case except as required by any applicable Legal Requirements.  Unless required by applicable Legal
Requirements, each party shall keep this Agreement and its contents strictly
confidential.  Seller and Buyer shall
consult concerning the means by which the employees, customers, suppliers and
others having dealings with Seller will be informed of the Contemplated
Transactions, and Buyer shall have the right to be present for, and to speak
at, information meetings with the employees of Seller.

 

3.4.                            Confidentiality;
Privilege.  From and after the
date hereof, each party shall maintain in confidence, and each party shall
cause its agents, representatives and Affiliates to maintain in confidence, and
no party shall use to the detriment or competitive disadvantage of any other
party or its Affiliates, any and all information (including all Confidential
Information,

 

24

 

information of a proprietary nature and all trade secrets under
applicable state law) exchanged in connection with this Agreement or the
Contemplated Transactions.  The foregoing
covenants shall not apply:  (a) to
any party with respect to information that (i) is already known to such
party or to others not bound by a duty of confidentiality, (ii) becomes
publicly available through no fault of such party or (iii) is
independently acquired or developed by such party without violating any of its
obligations under this Agreement; (b) to the extent necessary or
appropriate to permit any party to make any filing, or obtain any Consent or
Legal Approval, required for the consummation of the Contemplated Transactions;
or (c) to the extent necessary to permit any party to comply with
applicable law or with required legal process in any Legal Proceeding.  If a party is compelled in any Legal Proceeding
(other than between the parties hereto), or is requested by a Governmental Body
having regulatory jurisdiction over the Contemplated Transactions, to make any
disclosure that is prohibited or otherwise constrained by this Section 3.4, such party shall provide
the other party with prompt notice of such compulsion or request so that the
other party may seek an appropriate protective order or other appropriate
remedy or waive compliance with the provisions of this Section 3.4.

 

3.5.                            Notification.  Between the date of this Agreement and the
Closing Date, the Comfort Systems Group shall promptly notify the ALC Group in
writing if the Comfort Systems Group becomes aware of any fact or condition
that causes or constitutes, or would cause or constitute, a breach of any of
representations and warranties contained in Article IV,
or would cause a breach had such representation and warranty been made at the
time of such occurrence.  The Comfort
Systems Group also shall promptly notify the ALC Group of the occurrence of any
breach of any covenant of the Comfort Systems Group in this Agreement or of the
occurrence of any event that may make the satisfaction of the conditions in Article II impossible or
unlikely.  Between the date of this
Agreement and the Closing Date, the ALC Group shall promptly notify the Comfort
Systems Group in writing if the ALC Group becomes aware of any fact or
condition that causes or constitutes, or would cause or constitute, a breach of
any of representations and warranties contained in Article V, or would cause a breach had such
representation and warranty been made at the time of such occurrence.  The ALC Group also shall promptly notify the
Comfort Systems Group of the occurrence of any breach of any covenant of the
ALC Group in this Agreement or of the occurrence of any event that may make the
satisfaction of the conditions in Article II
impossible or unlikely.

 

3.6.                            Exclusivity.  Until Closing or such time as this Agreement
is terminated, the Comfort Systems Group shall not directly or indirectly
solicit, initiate, or encourage or consider any inquiries or proposals relating
to, or discuss or negotiate with or provide any non-public information to any
person (other than the ALC Group) with respect to, any transaction involving
the sale of the Assets, the Business or Seller, or any of the capital stock of
Seller, or any merger, consolidation, business combination or similar
transaction involving Seller.

 

3.7.                            Certain
Transitional Matters.

 

(a)                                 Collection
of  Accounts
Receivables.  From and after the Closing, Buyer shall have
the right and authority to collect for Buyer’s own account all Receivables and
other items included in the Assets and transferred to Buyer hereunder.  Buyer shall use commercially reasonable
efforts (excluding litigation and assignment to a collection agency) to collect
the Receivables within the time periods identified in Section 6.2(e).  Buyer shall respond reasonably

 

25

 

to all reasonable requests by Seller for information concerning the
status of Receivables collection in the aggregate within such time periods.

 

(b)                                 Endorsement
of  Checks.  From and after the Closing, Buyer shall have
the right and authority to retain and endorse without recourse the name of
Seller on any check or any other evidences of Indebtedness received by Buyer on
account of any of the Business and Assets transferred to Buyer hereunder.

 

(c)                                  Remit
Funds. 
From and after the Closing, Seller shall promptly transfer and deliver
to Buyer any cash or other property that (i) is included in the Assets
transferred to Buyer hereunder and (ii) is received by Seller.

 

(d)                                 Assumed
Liabilities  Controlled
by  Buyer.  Subject to Seller’s rights under Article VI, from and after the
Closing, Buyer shall have complete control over the payment, settlement or
other disposition of, or any dispute involving, any Assumed Liability, and
Buyer shall have the right to conduct and control all negotiations and
proceedings with respect thereto.  From
and after Closing, Seller (i) shall notify Buyer promptly of any claim
made with respect to any Assumed Liability and (ii) shall not voluntarily
make any payment of, or settle or offer to settle, or consent to any compromise
with respect to, any such Assumed Liability, except (A) as otherwise
permitted by Article VI or (B) with the prior written consent of
Buyer.  Subject to Seller’s rights under Article VI, Seller shall cooperate with Buyer in connection with any
negotiations or proceedings involving any Assumed Liability.

 

(e)                                  Insurance.  For a period of two years following the
Closing, the Comfort Systems Group shall, to the extent that the coverage under
its commercial liability and property insurance policies currently extend to
include the Business for periods prior to the Closing, (i) take no action
to eliminate or reduce such coverage, other than normal elimination or
reduction of coverage as such occurs by virtue of the filing of claims in the
ordinary course under such insurance policies and (ii) pay when due any
premiums under such policies for periods, including retrospective or
retroactive premium adjustments.

 

(f)                                    Assistance.  If, at any time after Closing, any further
action is necessary to carry out the purposes of this Agreement, each party
will take such further action (including the execution and delivery of such
further instruments and documents) as any other party may reasonably request,
all at the sole cost and expense of the requesting party (unless the requesting
party is entitled to indemnification under Article VI).  Each party will cooperate with the other
parties and their respective counsel in the contest or defense of, and make
available its personnel and provide any testimony and access to its books and
records in connection with, any Legal Proceeding involving or relating to (a) any
Contemplated Transaction or (b) any action, activity, circumstance,
condition, conduct, event, fact, failure to act, incident, occurrence, plan,
practice, situation, status or transaction on or before the Closing Date
involving Seller or the Business.  After
the Closing, no party will take any action that is designed or intended to have
the effect of discouraging any lessor, employee, regulatory authority,
licensor, customer, supplier or other business associate of Seller from
maintaining the same business relationship with Buyer after the Closing as it
maintained with Seller prior to Closing. 
From and after the Closing, Seller will refer to Buyer all inquiries
relating to the Business.

 

26

 

3.8.                            Severance,
Change of Control and Termination Payments.  Seller shall (a) pay, perform, satisfy
and discharge any and all severance payments and other Liabilities with respect
to employees of Seller that result from the transfer of the Assets hereunder
and the employment by Buyer of those employees, whether or not described as a “change
of control”, “termination” “sale by Comfort Systems or its subsidiaries of all
the capital stock of or partnership interests in Seller” or otherwise, and (b) indemnify
and hold harmless Buyer and its directors, officers and Affiliates from and
against any and all Damages that any of the aforesaid may suffer or incur by
reason of or relating to any Liabilities referred to in clause (a) above.

 

3.9.                            Seller’s
Employees.  Except as
contemplated by written employment agreements signed by Buyer on or before the
Closing Date, Buyer shall offer employment to all Employees identified in Schedule 3.9 (all of such employees
accepting employment with Buyer as of the Closing, the “Transferring Employees”).  Seller (a) shall use reasonable efforts
to cooperate with Buyer in the dissemination of such offers of employment,
together with any appropriate related documentation such as applications for
employment, tax and benefit forms and the like, and (b) shall provide
Buyer with reasonable assistance in the collection thereof.  All amounts in respect of paid time off that
are due to Seller’s employees as of the Closing Date shall be paid in full by
Seller on or before the Closing Date.

 

3.10.                     Benefit Plan
Matters.  As of the Closing Date,
each of the Transferring Employees who has an account balance in any defined
contribution plan (the “Defined Contribution
Plans”) maintained by Seller (a) shall be entitled to receive a
distribution of his or her vested account balance in accordance with the terms
of the Defined Contribution Plans; (b) shall be permitted to rollover his
or her “eligible rollover distribution” (as defined under Section 402(C)(4) of
the IRC) to a qualified retirement plan established or maintained by Buyer that
contains a cash or deferred arrangement under Section 401(k) of the
IRC.  Schedule 3.10
identifies each Transferring Employee and his or her non-vested account balance
as of November 30, 2005.  Seller
will notify each employee of his or her approximate non-vested account balance
prior to Closing, and will inform each Transferring Employee with unvested
amounts that the unvested amount will be transferred to Buyer for disbursement
to each such Employee after such amount is finally determined following the
Closing.  As soon as practicable
following the Closing, but in any event on or before January 31, 2006,
Seller will determine the final aggregate unvested amounts for the Transferring
Employees and will transfer an equivalent amount of funds to Buyer, who will
disburse them to Employees in any manner it reasonably chooses.  Seller will notify each Transferring Employee
of his or her final non-vested account balance when the final aggregate
unvested amounts for the Transferring Employees is determined.  As of the Closing Date, the Transferring
Employees shall cease to be eligible to make or receive contributions under the
Defined Contribution Plans of Seller; provided, however, that any contribution
required to be made with respect to the participation of the Transferring
Employees in such Defined Contribution Plans on or immediately prior to the
Closing Date shall be made by Seller as soon as administratively feasible
following the Closing Date, in accordance with Seller’s standard administrative
practice for such Defined Contribution Plans. 
Effective as of the Closing Date, the Transferring Employees shall
receive the benefits identified in the Transition Services Agreement pursuant
to the terms thereof.  Seller shall
retain all liability for any and all welfare benefit plans of Seller or Comfort
Systems (all of which are intended to be included in Retained Liabilities),
including plans, programs and arrangements which provide medical and dental
coverage and life and accident insurance, disability insurance

 

27

 

for the Transferring Employees (or their eligible dependents) prior to
the Closing Date (for this purpose, a claim shall be deemed to be incurred on
the date on which medical or other treatment or service was rendered and not
the date of inception of an illness or injury or the date on which a claim for
treatment or service is submitted). 
After Closing, the Comfort Systems Group shall, in the ordinary course
of business and in accordance with the terms of the Presidents’ Bonus Plan of
Comfort Systems, pay all bonuses payable to Don Luhman and Wayne Gary pursuant
to the Presidents’ Bonus Plan of Comfort Systems in respect of fiscal year
ended December 31, 2005.

 

3.11.                     Product
Liability and Product Warranties.

 

(a)                                 Products
Liability.  Except as set forth in the immediately
succeeding sentence, Seller shall be liable for all express and implied
products liability for all products shipped, distributed, assembled or sold by,
or any services provided by, Seller prior to the Closing Date.  The ALC Group shall be liable for all express
and implied products liability for all products shipped, distributed, assembled
or sold by, or any services provided by, Seller prior to the Closing Date to
the extent such products liability results from any product assembled or
manufactured, or any service provided by, ALC or any of its subsidiaries.

 

(b)                                 Products
and Service Warranties.  Except as set
forth in the last sentence of this Section 3.11(b),
Buyer shall, at Seller’s cost and expense, be responsible for all express
product and services warranty obligations made by Seller prior to Closing
(excluding OEM warranties) in excess of the product and services warranty
reserve on the Closing Balance Sheet; provided, however, that Buyer:  (i) shall invoice Seller at Buyer’s cost
for parts and materials used, and at Buyer’s usual and customary rate for
services provided, in satisfying such product and services warranty
obligations; and (ii) shall not invoice Buyer for any such parts,
materials or services unless at such time the aggregate amount owing by Seller
to Buyer in respect of such parts and services equals or exceeds $5,000.  Upon receipt by Seller from Buyer of any
invoice in respect of parts, materials and services furnished in accordance
with the immediately preceding sentence, Buyer shall promptly pay to Seller the
amount of such invoice.  The ALC Group
shall, at it’s own cost and expense, be responsible for (A) all express
OEM product and services warranty obligations made by Seller prior to Closing
and (B) all other express product and services warranty obligations made
by Seller prior to Closing if such warranty obligations result directly from
any product assembled or manufactured by, or any service provided by, ALC or
any of its subsidiaries.

 

3.12.                     Restrictive
Covenants.

 

(a)                                 Noncompetition.  For a period of five years from and after the
Closing Date, no member of the Comfort Systems Group or their Affiliates shall,
directly or indirectly, own, manage, operate, join or control, or participate
in the ownership, management, operation or control of, or be connected as a
stockholder, partner or otherwise with, any business that at any relevant time
during such period directly or indirectly engages in the Business in the states
of Minnesota, Texas or Louisiana.  “Business” for purposes of this Section 3.12 is restricted to
manufacturing, distributing, marketing or servicing HVAC controls as a core
business, and shall not include engaging in HVAC mechanical contracting or
providing HVAC services as a core business with incidental sales, installation
and servicing of HVAC controls.

 

28

 

(b)                                 Restrictions
on Hiring.  For a period of two years from and after the
Closing Date, no member of the Comfort Systems Group or their Affiliates shall
directly or indirectly:  hire, retain or
attempt to hire or retain any employee or independent contractor of Buyer in
the Business in the states of Minnesota, Texas or Louisiana, or in any way
interfere with the relationship between Buyer and any of its employees or
independent contractors in the Business in the states of Minnesota, Texas or
Louisiana.

 

(c)                                  Enforcement.  The restrictive covenant contained in this Section 3.12 is a covenant
independent of any other provision of this Agreement and the existence of any
claim that any member of the Comfort System Group or their Affiliates may
allege against Buyer, whether based on this Agreement or otherwise, shall not prevent
the enforcement of this covenant.  The
Comfort System Group agree that Buyer’s remedies at law for any breach or
threat of breach by the Comfort System Group of any of the provisions of this Section 3.12 will be inadequate, and
that Buyer shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Section 3.12
and to enforce specifically the terms and provisions hereof, in addition to any
other remedy to which Buyer may be entitled at law or equity.  In the event of litigation regarding the
covenant not to compete, the prevailing party in such litigation shall, in
addition to any other remedies the prevailing party may obtain in such
litigation, be entitled to recover from the other party its reasonable legal
fees and out of pocket costs incurred by such party in enforcing or defending
its rights hereunder.  The length of time
for which this covenant not to compete shall be in force shall not include any
period of violation or any other period required for litigation during which
Buyer seeks to enforce this covenant. 
Should any provision of this Section 3.12
be adjudged to any extent invalid by any competent tribunal, such provision
shall be deemed modified to the extent necessary to make it enforceable.

 

3.13.                     Internet
Sites.  Within 30 days after Closing, Seller shall remove
all information from internet sites owned or used by it relating to any names
that are included in the Assets.  In
addition, for a period of one year after Closing, Seller shall include in its internet
sites a link to Buyer’s internet sites in respect of such names.  Within 30 days
after Closing, Buyer shall remove all information from internet sites owned or
used by Buyer relating to any names of Comfort Systems or its subsidiaries that
are not included in the Assets.  In
addition, for a period of one year after Closing, Buyer shall include in its
internet sites a link to Seller’s internet sites in respect of such names.

 

3.14.                     Retention of
Records.  After the Closing Date,
Buyer shall retain for a period of five years after the Closing Date those
records of Seller delivered to Buyer. 
Buyer also shall provide Seller reasonable access thereto, during normal
business hours and on at least three days’ prior written notice, for any
reasonable purpose that (a) relates to the Business conducted by Seller on
or prior to the Closing Date, this Agreement or the Contemplated Transactions
and (b) is specified in such notice, including to enable Seller to prepare
financial statements or Tax Returns and to deal with Tax audits,
indemnification claims and litigation. 
After the Closing Date, Seller shall provide Buyer and its
representatives reasonable access to records that relate to the Business,
during normal business hours and on at least three days’ prior written notice,
for any reasonable purpose related to the Business specified by Buyer in such
notice.

 

3.15.                     Use of Name.  Seller grants to Buyer the non-exclusive
license to use the names “Comfort Systems USA, Inc.”, “Comfort Systems”
and any derivative or other names currently

 

29

 

used by Seller that are not owned by Seller (the “Comfort System Names”) for 180 days after
the Closing Date, as or as part of any trade name, corporate name, domain name,
trademark, service mark, logo, design or other source indicator appearing on
the Assets prior to the Closing Date. 
Buyer shall use reasonable best efforts to remove, redact, strike
through or cover the Comfort Systems Names from the Assets as soon as
practicable, and in any event within 180 days after the Closing Date, although
Buyer may continue to use the Comfort Systems Names in a neutral, non-trademark
sense to communicate the historical affiliation of Seller.

 

3.16.                     Third Party
Guaranty Arrangements.  Buyer will
use reasonable efforts to replace all Third Party Guaranty Arrangements
existing on the Closing Date within 45 days after the Closing Date.  If Buyer is unable to replace any Third Party
Guaranty Arrangement existing on the Closing Date, then Buyer will pay to
Comfort Systems a pro rated portion of the premium payable in respect of such
Third Party Guaranty Arrangement for each job secured thereby, based on the
percentage of such job that remains to be completed after the Closing Date.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES 

OF THE COMFORT SYSTEMS GROUP

 

The Comfort Systems Group jointly and
severally represents and warrants to the ALC Group as set forth in this Article IV.  All Schedule disclosures in this Article IV shall separately disclose
such matters for each of Twin Cities and UES.

 

4.1.                            Organization;
Qualification.  Twin Cities is a
corporation duly organized, validly existing and in good standing under the
laws of Minnesota.  UES is a limited
partnership duly organized, validly existing and in good standing under the
laws of Texas.  Seller has the power and
authority (a) to own or lease, and operate, its properties, (b) to
enter into this Agreement and the Other Agreements to which it is or is to
become a party, (c) to perform its obligations under this Agreement and
such Other Agreements and (d) to carry on its business as now
conducted.  Twin Cities is duly qualified
and in good standing as a foreign corporation and is duly authorized to
transact business in each jurisdiction where the character of the properties
owned or leased by it or the nature of the activities conducted by it make such
qualification and good standing necessary. 
UES is duly qualified and in good standing as a foreign limited partnership
and is duly authorized to transact business in each jurisdiction where the
character of the properties owned or leased by it or the nature of the
activities conducted by it make such qualification and good standing necessary.

 

4.2.                            Authorization;
Enforceability.  This Agreement
and each Other Agreement to which the Comfort Systems Group is a party have
been duly executed and delivered by the Comfort Systems Group and constitute
the legal, valid and binding obligations of the Comfort Systems Group,
enforceable against the Comfort Systems Group in accordance with their
respective terms.  Each Other Agreement
to which the Comfort Systems Group is to become a party, when executed and
delivered by the Comfort Systems Group, shall constitute the legal, valid and
binding obligation of the Comfort Systems Group, enforceable against the
Comfort Systems Group in accordance with its terms.  The Comfort Systems Group has duly and
validly authorized this Agreement and the Other Agreements to which it is or is
to become a party and all of the Contemplated Transactions to be taken by it.

 

30

 

4.3.                            No
Violation of Laws or Agreements; Legal Approvals; Consents.  The execution, delivery and performance by
the Comfort Systems Group of this Agreement and the Other Agreements and the
consummation of the Contemplated Transactions do not and will not directly or
indirectly (with or without notice or the lapse of time or both) (i) conflict
with or violate any provision of the Governing Documents of the Comfort Systems
Group or the resolutions adopted by the Board of Directors or other governing
body of the Comfort Systems Group, (ii) conflict with or violate any Legal
Requirement applicable to the Comfort Systems Group, (iii) violate, or
result in a breach, default or acceleration under, or give rise to any penalty
or any right of termination or modification or any other remedy under, any
Contract to which any member of the Comfort Systems Group is a party or by
which any member of the Comfort Systems Group is bound, any Governmental
Authorization held by Seller or any other Asset, or (iv) accelerate any
Assumed Liability.  Except as disclosed
on Schedule 4.3, the Comfort
Systems Group is not required to make, give or obtain any Legal Approvals or
Consents in connection with the execution, delivery or performance by the ALC
Group of this Agreement or any Other Agreement or the consummation by the ALC
Group of the Contemplated Transactions.

 

4.4.                            Subsidiaries
and Investments; SPEs.  The Assets do
not contain any shares of capital stock of, or other equity interest in, any
Subsidiary or SPE.

 

4.5.                            Records;
Financial Information; Guarantees; Long Term Contracts.

 

(a)                                 Records;
Compliance.  The books of account and related records of
Seller reflect accurately and in reasonable detail the material Assets and
Assumed Liabilities.  The books of
account of Seller represent actual, bona fide transactions and have been
maintained in accordance with sound business practices, including adequate
internal controls.  The minute books of
Seller contain accurate and complete records of all meetings held of, and
corporate or partnership action taken by, the stockholders, the Board of
Directors of Seller and committees of the Board of Directors, or partners, as
the case may be, of Seller.  No meeting
of stockholders, the Board of Directors of Seller or committees of the Board of
Directors, or of the partners, as the case may be, of Seller has been held for
which minutes have not been prepared and are not contained in the minute books
of Seller.  All minute books of Seller
have been made available to Buyer.

 

(b)                                 Financial
Statements.  Attached as Exhibit E
are the unaudited consolidated balance sheets and income statements
for each of Twin Cities and UES at December 31, 2002, December 31,
2003 and December 31, 2004, and for the years then ended, and the
unaudited interim consolidated balance sheets and income statements for each of
Twin Cities and UES at September 30, 2005, and for the periods then ended
(collectively, the “Financial Statements”).  The
Financial Statements (i) are accurate, correct and complete in all
material respects in accordance with the books of account and records of
Seller, (ii) have been prepared in accordance with GAAP on a consistent
basis throughout the indicated periods, except that they do not contain
footnotes and the interim financial statements contain no year-end adjustments
(the effect of which will not, individually or in the aggregate, be materially
adverse), and (iii) fairly present in all material respects the consolidated
financial condition, assets and liabilities and results of operation of Twin
Cities or UES, as the case may be, at the dates and for the relevant periods
indicated in accordance with GAAP on a basis consistently applied.  All

 

31

 

references in this Agreement to “Interim
Balance Sheet Date” mean September 30, 2005, and all references
in this Agreement to the “Interim Balance
Sheet” mean the respective balance sheets of Twin Cities and UES
dated September 30, 2005 attached as Exhibit F.

 

(c)                                  Guarantees,
Etc. 
Schedule 4.5
identifies all outstanding guarantees, letters of comfort, letters of
assurance, letters of credit, performance bonds, assurance bonds, surety
agreements, indemnity agreements and any other legally binding forms of
assurance or guaranty in connection with the Business, whether or not issued by
Seller, Comfort Systems, any other Related Party or any other person (“Third-Party Guaranty Arrangements”).

 

(d)                                 Long
Term Contracts. All long term customer Contracts of Seller are
identified on Schedule 4.13
and accounted for in the Financial Statements using the percentage of
completion method of accounting on a basis consistently applied using costs
based on work actually completed.  Seller
has delivered to Buyer Seller’s POC schedule as of November 30, 2005 (“Seller’s
POC Schedule”), which
contains complete work in progress information for each customer as of such
date.  Seller’s POC Schedule, in the aggregate,
fairly represents as of November 30, 2005, in all material respects, the
total estimated contract costs (taking into account man-hours required, project
duration, cost of labor and materials, including any escalation thereof,
subcontractor costs and other elements of contract costs), earned revenues to
such date, estimated gross profits (in dollars and percentages) and actual
gross profit recognized to such date (in dollars).  Seller’s POC Schedule also includes with
respect to contracts as of such date, the following information:  job number, job name, contract price, dollar
amount of pending change orders, total estimated contract price, actual
billings to date, costs to date and total estimated contract costs.  Except as disclosed on Seller’s POC Schedule or
in the Financial Statements, no member of the Comfort Systems Group has been
notified of or is aware of any dispute over amounts billed by Seller or of any
intention to hold back amounts in excess of contractually permitted
holdbacks.  During the past two years,
Seller has not changed the accounting methodology, standards or assumptions
that it uses in connection with the completion method of accounting for long
term customer Contracts or determining its POC Liability.  All reasonably foreseeable losses on all long
term customer Contracts are fully provided for in the Financial
Statements.  Except as set forth on
Seller’s POC Schedule, all reasonably foreseeable losses on all long term
customer Contracts are fully provided for in the Financial Statements.  The net of (a) billings for work not yet
performed and (b) work performed but not yet billed, is fairly and
accurately presented as of November 30, 2005 on Seller’s POC Schedule.

 

4.6.                            Undisclosed
Liabilities.  Seller has no
material Liabilities except:  (i) those
reflected or reserved against on the Interim Balance Sheet and those disclosed
in the footnotes to the Financial Statements; (ii) those not required
under GAAP to be reflected or reserved against in the Interim Balance Sheet
that are expressly quantified and set forth in the Contracts and Governmental
Authorizations (other than for breach or non-performance); (iii) those
disclosed on Schedule 4.6;
and (iv) those that have arisen in the ordinary course of business of
Seller after the Interim Balance Sheet Date (“Post-Balance
Sheet Liabilities”).  All
Post-Balance Sheet Liabilities are materially consistent in amount and
character with past practice and experience. 
No Post-Balance Sheet Liability has had or could reasonably be expected
to have a material adverse effect on the Business, Assets, financial condition
or results of operation of Buyer.  No
material Post-Balance Sheet Liability is a result of a breach by the Comfort
Systems Group of

 

32

 

contract or warranty, a tort or infringement, or violation by the
Comfort Systems Group of any property rights or Legal Requirements.

 

4.7.                            No
Changes.  Since the Interim
Balance Sheet Date, Seller has conducted the Business only in the ordinary
course, consistent with past practice. 
During the past 12 months, except as expressly disclosed on Schedule 4.7, there has been no:

 

(i)                                    material
change in the Business, financial condition or results of operations of Seller;

 

(ii)                                material
damage or destruction to the Assets, whether or not covered by insurance (other
than inventory and supply damage offset by fully collectible freight claims
against common carriers for the fair value thereof);

 

(iii)                            strike,
labor union organizing attempts or other labor trouble at Seller;

 

(iv)                              declaration
or payment of any non-cash dividend, or other non-cash distribution, redemption
or purchase of shares;

 

(v)                                  increase
in the salary, wage or bonus of any employee of Seller (other than routine
increases in the salaries, wages and bonuses of non-executive employees in the
ordinary course of business consistent with past practice), or payment of any
bonuses to any employee of Seller;

 

(vi)                              asset
acquisition or expenditure, including capital expenditure, in excess of $50,000
in the aggregate by Seller, other than the purchase of inventory in the
ordinary course of business;

 

(vii)                          change
in any method of accounting by Seller;

 

(viii)                      payment by
Seller to, or transaction by Seller with, any Related Party (including any
transfer of any non-cash assets to any Related Party), which payment or
transaction is not specifically disclosed on Schedule 4.17;

 

(x)                                 disposition
by Seller of any asset (other than inventory in the ordinary course of
business) for more than $50,000 in the aggregate or for less than fair market
value;

 

(xi)                             payment,
prepayment or discharge by Seller of any Liability other than in the ordinary
course of business, or any failure to pay any material Liability when due;

 

(xii)                         write-offs
or write-downs of any assets of Seller in excess of $25,000 in the aggregate;

 

(xiii)                     creation or
incurrence by Seller of any material Indebtedness or Encumbrance other than in
the ordinary course of Business consistent with past practice;

 

(xiv)                       termination
of any material customer Contract; or

 

33

 

(xv)                           agreement
or commitment to do any of the foregoing.

 

4.8.                            Taxes.

 

(a)                                 Tax
Returns; Payment.  The Comfort Systems Group has filed on a
timely basis all Tax Returns that are or were required to be filed by or with
respect to Seller under applicable Legal Requirements.  All such Tax Returns were correct and
complete in all respects and have been prepared in accordance with applicable
Legal Requirements.  The Comfort Systems
Group has paid all Taxes of Seller that have become due for all periods covered
by the Tax Returns or otherwise, or pursuant to any assessment received by the
Comfort Systems Group, except such Taxes, if any, as are listed on Schedule 4.8(a) and are being
contested in good faith and as to which adequate reserves (determined in
accordance with GAAP and the Comfort Systems Group’s past custom and practice)
have been provided on each balance sheet of Seller.  No unresolved claim has been made by a Taxing
authority of a jurisdiction where Seller does not file Tax Returns that it is
or may be subject to taxation by such jurisdiction.  There are no liens for Taxes on any of the
Assets that arose in connection with any failure (or alleged failure) to pay
any Tax.  Seller has no Liability for the
Taxes of any person (other than Seller) (i) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract, or (iv) otherwise.

 

(b)                                 Delivery
of  Tax
Returns  and
Information  Regarding
Audits  and
Potential  Audits.  Seller has delivered or made available to
Buyer copies of, and Schedule 4.8(b) contains
a complete and accurate list of, all Tax Returns of Seller filed since December 31,
2003.  Schedule 4.8(b) contains
a complete and accurate list of all Tax Returns of Seller that have been
audited or are currently under audit and accurately describes any deficiencies
or other amounts that were paid or are currently being contested.  All deficiencies proposed as a result of such
audits have been paid, reserved against, settled or are being contested in good
faith by appropriate proceedings as described on Schedule 4.8(b). 
Seller has delivered, or made available to Buyer, copies of any
examination reports, statements or deficiencies or similar items with respect
to such audits.  Except as set forth on Schedule 4.8(b), there is no pending,
or, to the knowledge of the Comfort Systems Group, threatened or anticipated,
assessment of any additional Tax against Seller for any taxable period for
which Tax Returns have been filed.  Schedule 4.8(b) contains a
complete and accurate list of all Tax Returns for which the applicable statute
of limitations has not run.  Except as
described on Schedule 4.8(b) Seller
has not waived any statute of limitations in respect of any Taxes or agreed to
any extension of time with respect to a Tax assessment or deficiency.

 

(c)                                  Withholding.  Seller has withheld and paid all material
Taxes required under applicable Legal Requirements to have been withheld and
paid by Seller in connection with any amounts paid or owing by Seller to any
employee, independent contractor, creditor, stockholder or other person, and
all IRS Forms W-2 and 1099 required with respect thereto have been properly and
timely filed.

 

(d)                                 Other
Matters.  Seller has made no payment, is not obligated
to make any payment, and is not a party to any agreement that under any
circumstances could obligate it to make any payment, that will not be
deductible under Section 162(m) of the IRC or would constitute, separately
or in the aggregate, any “excess parachute payment” under Section 280G

 

34

 

of the IRC.  Seller has disclosed
on its federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the meaning
of Section 6662 of the IRC.

 

4.9.                            Inventory.  The inventory included in the Assets is
valued on the books and records of Seller and in the Financial Statements
consistent with past practice and has, in the aggregate, a value that is not
less than the aggregate fair market value for such inventory.  Except as reserved in the Financial
Statements, all of the finished goods inventory included in the Assets is in
good, merchantable and usable condition and is salable in the ordinary course
of business within a reasonable time and at normal profit margins.  Except as reserved in the Financial
Statements, all of the parts, raw materials and work-in-process inventory
included in the Assets can reasonably be expected to be consumed in the
ordinary course of business within a reasonable period of time.  Except as reserved in the Financial
Statements, none of the inventory included in the Assets is obsolete,
slow-moving, has been consigned by Seller to others, or is on consignment to
Seller from, or is owned by, others. The quantities of each item of inventory
included in the Assets (whether raw materials, parts, work-in-process or
finished goods) are not excessive, but are reasonable in the present
circumstances of Seller.  All of the
inventory included in the Assets is identified on and located at the locations
identified on Schedule 4.9.  inventory shall be stated on a basis
consistent with past practice, but in no event shall the aggregate value for
inventory exceed the aggregate fair market value for inventory;

 

4.10.                     Receivables.  Schedule 4.10
identifies each trade and other account receivable of Seller included in the
Assets (collectively, “Receivables”)
outstanding as of November 30, 2005 on an aged basis by account
debtor.  All Receivables, whether
reflected on the Interim Balance Sheet, disclosed on Schedule 4.10 or created after the Interim Balance
Sheet Date, arose from bona fide sale or service transactions of Seller.  Except as set forth on Schedule 4.10, no portion of any
Receivable is subject to any counterclaim, defense or set-off, or is otherwise
in dispute.  All of the Receivables (a) are
collectible in the ordinary course of business and (b) will be fully
collected without setoff (i) in the case of Receivables designated as
retainage, within 18 months after the Closing Date and (ii) in the case of
all other Receivables, within one year after the Closing Date, in each case
subject to Buyer using commercially reasonable efforts (excluding litigation
and assignment to a collection agency) to collect the Receivables.

 

4.11.                     Condition of
Assets; Title; Business.  The
buildings, plants, structures, furniture, fixtures, machinery, equipment,
tools, improvements and other tangible personal property owned or used by
Seller and included in the Assets are (a) in all important functional
respects, structurally sound and in good operating condition and repair,
ordinary wear and tear excepted, (b) adequate for the uses to which they
are being put and (c) sufficient for the continued conduct of the Business
after Closing in substantially the same manner as conducted prior to the
Closing.  None of the Assets is in need
of maintenance or repairs except for ordinary, routine maintenance and repairs
that are not material in nature or cost. 
Seller has good, marketable and exclusive title to all of the Assets,
except those under lease identified in Schedule 4.13.  All of the Assets (i) are reflected on
the Interim Balance Sheet, (ii) are not, under GAAP, required to be
reflected thereon or (iii) have been acquired after the Interim Balance
Sheet Date in the ordinary course of business. 
The Assets, together with the services to be provided by the Transition
Services Agreement, include all assets and services that are currently used in
the operation of the Business.  Seller
does not own or lease any material assets not used in the Business.  None of the

 

35

 

Assets is subject to any Encumbrance other than the Encumbrances
identified on Schedule 4.11
(“Permitted Encumbrances”).  All of the Assets (including tooling and dies
used in the Business) are located at the locations identified on Schedules 4.9, 4.11 or 4.16.  Any
trade names used in the Business are identified on Schedule 4.11. 
Seller’s fiscal year ends on December 31.  Seller is engaged in the Business and no
other business.  Twin Cities installs and
services HVAC controls only in Minnesota, and UES installs and services HVAC
controls only in Texas and Louisiana. 
Since December 31, 2000, Seller has not (A) discontinued any
operations, (B) ceased doing business, (C) sold all or substantially
all of its operating assets, (D) operated a business not related to the
Business or (E) been involved in any merger, consolidation, combination,
amalgamation, liquidation, division, dissolution proceedings, bankruptcy or
moratorium proceeding.

 

4.12.                     Legal
Proceedings.  Except as disclosed
on Schedule 4.12, no Legal
Proceeding is pending or, to the knowledge of the Comfort Systems Group, threatened
against Seller.  Except as disclosed on Schedule 4.12, Seller does not have
pending any Legal Proceeding against any Third Party.  Seller has delivered to Buyer copies of all
pleadings, correspondence, and other documents relating to each Legal Proceeding
identified on Schedule 4.12.  To the knowledge of the Comfort Systems
Group, no event has occurred or circumstance exists that is reasonably likely
to give rise to or serve as a basis for the commencement of any material Legal
Proceeding against Seller.

 

4.13.                     Contracts;
Compliance.

 

(a)                                 Contracts.  Disclosed on Schedule 4.13
is a brief description of each Contract (other than this Agreement
and the Other Agreements), and all amendments thereto, that:  (i) is material to the Business or the
Assets or both; (ii) involves the purchase, sale or lease of any asset,
materials, supplies, inventory, services or goods in excess of $100,000; (iii) is
a reseller agreement, (iv) has an unexpired term of more than six months
from the date of this Agreement, taking into account the effect of any renewal
options; (v) relates to the borrowing or lending of any money (including
conditional sales agreements) or guarantee or surety of any obligation, or
otherwise evidences Indebtedness; (vi) limits the right of Seller (or,
after Closing, Buyer) to compete in any line of business or otherwise restricts
any right Seller (or, after Closing, Buyer) may have; (vii) is an
employment or non-customer consulting Contract involving payment of
compensation and benefits in excess of $25,000 per year; (viii) is a
contract with a labor union or other employee representative of a group of
employees relating to wages, hours and other conditions of employment; (ix) is
a contract providing for payments to or by any person based on sales, purchases
or profits, other than direct payments for goods; (x) is a contract not
denominated in U.S. dollars; (xi) is a written warranty, guaranty and/or other
similar undertaking with respect to contractual performance extended by Seller
other than in the ordinary course of business; (xii) is a lease, license,
rental, occupancy or conditional sales agreement; (xiii) is a joint venture,
partnership or other agreement involving the sharing of profits, losses, costs
or liabilities; (xiv) is a barter or similar agreement; (xv) is a power of
attorney; (xvi) is an agreement that expressly provides for the undertaking by
Seller for consequential damages (not including (A) claims for delay or (B) express
liquidated damages in customer contracts); (xvii) is an agreement pursuant to
which Seller has agreed to indemnify or exonerate any officer, director or
employee of Seller with respect to any matter; (xviii) if terminated would have
a material adverse effect on the Business; (xix) is a financial guarantee or
financial surety agreement;

 

36

 

(xx) is an agreement for the disposition of any material business or
product line of Seller or any material assets of Seller; (xxi) is a sales or
manufacturer’s representative agreement or distributor agreement; (xxii) is
with a Governmental Body; (xxiii) a Contract related to the acquisition of
Seller or the Business; or (xxiv) was not entered into by Seller in the
ordinary course of business.  Schedules 4.13 separately identifies all
outstanding material offers and solicitations made to or by Seller for customer
projects in excess of $100,000.  True and
complete copies of all Contracts (that are in writing) have been delivered to
Buyer.

 

(b)                                 Compliance.  Each Contract is a legal, valid and binding
obligation of Seller and is in full force and effect.  Except as disclosed on Schedule 4.13, no Legal Approval or
Consent is needed in order for the Contracts to continue in full force and
effect under the same terms and conditions currently in effect following
consummation of the Contemplated Transactions. 
To the knowledge of the Comfort Systems Group, each Contract is a legal,
valid and binding obligation of each other party to such Contract.  To the knowledge of the Comfort Systems Group,
no Contract will, upon completion or performance thereof, have a material
adverse effect on the Business, Assets, financial condition or results of
operation of Seller.  Each of Seller and,
to the knowledge of the Comfort Systems Group, each other party to each
Contract, has performed all obligations required to be performed by it under
such Contract and is not in breach or default under such Contract.  To the knowledge of the Comfort Systems
Group, no event has occurred, and no condition or state of facts exists (or
would exist upon the giving of notice or the lapse of time or both), under any
Contract that (A) would become or cause a material breach, default or
event of default under such Contract, (B) would give to any person the
right to terminate, or cause an acceleration of any material Liability under,
such Contract or (C) would cause any customer or distributor to terminate
or not renew such Contract.  Seller is
not currently renegotiating any material Contract other than in the ordinary
course of business.  Seller has not
received any notice of actual, alleged, possible or potential default,
violation, cancellation, non-renewal or price increase or sales or production
allocation with respect to any material customer Contract.

 

4.14.                     Governmental
Authorizations.  Schedules 4.14 and 4.22 identify all material Governmental
Authorizations that are required under applicable Legal Requirements to conduct
and operate the Business in the manner currently conducted and to own, operate
and use the Assets in the manner in which they are currently owned, operated
and used.  Each such Governmental
Authorization is valid, subsisting and in full force and effect; and no appeals
or other Legal Proceedings are pending or threatened with respect to the
issuance, terms or conditions of any such Governmental Authorization.  Seller is in full compliance in all material
respects with, and has fulfilled and performed its obligations in all material
respects under, each such Governmental Authorization.

 

4.15.                     Compliance
with Legal Requirements.  Seller
is and has been in full compliance in all material respects with all Legal
Requirements applicable to Seller and the Business.  To the knowledge of the Comfort Systems Group,
no event has occurred or condition or state of facts exists that (with or
without notice or lapse of time or both) (a) may constitute or result in a
violation by Seller of, or a failure by Seller to comply with, any Legal
Requirement, or (b) may give rise to any Liability on the part of Seller
to undertake, or to bear all or any portion of the cost of, any remedial action
of any nature (including any Environmental Remedial Action).  Seller has not received any notice or other
communication (whether oral or written) from any

 

37

 

Governmental Body or any other person regarding (i) any actual,
alleged, possible or potential violation of, or failure to comply with, any
Legal Requirement or (ii) any actual, alleged, possible, or potential
Liability on the part of Seller to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature (including any Environmental
Remedial Action).

 

4.16.                     Real
Property.  Schedule 4.16 (a) discloses all
real properties currently occupied, used or leased by Seller or in which Seller
has an interest (such real properties, including buildings, structures,
fixtures, improvements, leaseholds, privileges, rights, easements,
hereditaments, appurtenances and related rights of every nature, collectively,
the “Real Property”) and (b) identifies
the record title holder of all Real Property. 
Seller owns no real property. 
Seller has the right to quiet enjoyment of all Real Property in which it
holds a leasehold interest for the full term, including all renewal rights, of
the leasehold interest.  Schedule 4.16 identifies each lease
agreement, and all amendments and supplements thereto, for each parcel of Real
Property.  The use and operation of all
Real Property conform in all material respects to all applicable building, zoning,
safety and subdivision laws, Environmental Laws and other Legal Requirements
and all restrictive covenants and restrictions and conditions affecting
title.  Seller has not received any
written or oral notice of assessments for public improvements against any Real
Property or any written or oral notice or Order by any Governmental Body,
insurance company or board of fire underwriters or other body exercising
similar functions that (i) relates to violations of building, safety or
fire ordinances or regulations, (ii) claims any defect or deficiency with
respect to any Real Property or (iii) requests the performance of any
repairs, alterations or other work to or in any Real Property or in any streets
bounding the Real Property.

 

4.17.                     Transactions
With Related Parties.  No Related
Party is or has been during the past year a party to any material transaction,
agreement or understanding with Seller, except for (a) arrangements
disclosed on Schedule 4.17
and (b) transfer of cash made from Seller to any Related Party in the
ordinary course of business.  Schedule 4.17 separately identifies (i) all
services that Comfort Systems or its Affiliates provide to the Business, (ii) all
assets that Comfort Systems or its Affiliates own or lease that are used in the
Business and (iii) all outstanding Liabilities of Comfort Systems or its
Affiliates that are related to the Business. 
Schedule 4.17
discloses the components of any management fees paid by Seller to Comfort
Systems or its Affiliates since January 1, 2004.  Except as disclosed on Schedule 4.17, no Related Party (A) uses
any of the Assets except directly in connection with the Business, (B) owns
or has any interest in any of the Assets or any other asset used in the
Business, (C) is a party to any Contract, (D) has any financial
interest in the Business or (E) engages in any business with Seller.  Except as disclosed on Schedule 4.17, no Related Party has
any claim of any nature, including any inchoate claim, against any of the
Assets or the Business.

 

4.18.                     Labor
Relations.  Seller has complied
in all material respects with all Legal Requirements relating to employment
practices, terms and conditions of employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits and other requirements,
the payment of social security and similar Taxes and occupational safety and
health.  No employee of Seller is
represented by a union or other labor organization, and Seller is not aware of
any union organizing activities.  No
representation election, arbitration proceeding, grievance, picketing, labor
strike, dispute, slowdown, lockout, stoppage or other labor trouble is
pending or, to the knowledge of the Comfort Systems Group, threatened against
Seller.  No complaint against Seller is
pending or, to the knowledge of the Comfort Systems Group,

 

38

 

threatened before the National Labor Relations Board, the Equal
Employment Opportunity Commission or any similar state or local agency.  Except as disclosed on Schedule 4.18, as of the Interim
Balance Sheet Date, Seller has no contingent Liability for sick leave, vacation
time, severance or occupational disease pay not fully reserved on the Interim
Balance Sheet.  Schedule 4.18 contains a complete and
accurate list of the following for each employee or director of Seller,
including each employee on leave of absence or layoff status:  employer; name; job title; vacation accrued;
and service credited for purposes of vesting and eligibility to participate
under any Seller Plan.  Except as
disclosed on Schedule 4.18,
Seller has not made a commitment to increase the salaries, bonuses or other
benefits and compensation of the employees employed in the Business.  Schedule 4.18
separately discloses all employment or retention agreements that would obligate
Seller to make any form of severance or termination payment on stipulated
conditions, including discharge after a change of control.

 

4.19.                     Products
Liability; Product Warranties; Insurance.

 

(a)                                 Product
Liability.  Seller has no products liability relating to
any product manufactured, distributed or sold by Seller that does not relate to
any product assembled or manufactured by, or any services provided by, ALC or
any of its subsidiaries.  Schedule 4.19(a) identifies a
claims history for products liability against Seller during the past five
years.  Schedule 4.19(a) separately
discloses all products that Seller currently sells or previously sold that
contain asbestos or silica or other potentially hazardous or toxic materials.

 

(b)                                 Products
and Service Warranties.  Schedule 4.19(b) discloses and
describes the terms of all of Seller’s outstanding product and service
warranties for products sold or serviced prior to the Closing Date.  Schedule 4.19(b) discloses
all currently outstanding product or service warranty claims that have not been
resolved to the customer’s complete satisfaction.  During the past three years, Seller has not
satisfied any material products warranty or service claims by its customers in
excess of the stated express warranties. 
Schedule 4.19(b) discloses
the product warranty claims experience of Seller for the past three years.

 

(c)                                  Insurance.  Schedule 4.19(c) discloses
all insurance policies with respect to which Seller is the owner, insured or beneficiary.  Schedule 4.19(c) discloses
all self-insurance arrangements by Seller and all obligations by Seller to
Third Parties with respect to insurance. 
Seller has complied with all of the terms and conditions of the
insurance policies identified on Schedule 4.19(c) and
has given notice to the insurer of all claims that may be covered thereby.  Seller has paid all premiums due under each
such insurance policy and will not have any Liability after the Closing for
retrospective or retroactive premium adjustments or other experienced-based
liability.  No notice of cancellation has
been received with respect to any insurance policy identified in Schedule 4.19(c).  Schedule 4.19(c) contains
a summary of the loss experience under each liability policy of Seller for the
past five years and separately for all claims that were self insured.  Schedule 4.19(c) discloses
the manner in which Seller provides coverage for workers’ compensation.

 

4.20.                     Intellectual
Property Rights.

 

(a)                                 Identification;
Validity; Etc.  Schedule 4.20
discloses all of the trademark and service mark rights, applications and
registrations, trade names, fictitious names, service marks,

 

39

 

logos and brand names, copyrights, copyright applications, and licenses
of any of the foregoing, that (a) are owned or used by Seller in the
Business and (b) are material to the Business.  Seller has no patents or patent
applications.  Schedule 4.20 also discloses Seller’s telephone
numbers, facsimile numbers, yellow pages and other advertising, e-mail
addresses, internet sites containing Business product information and all
domain names owned by or for the benefit of Seller.  Seller has the entire right, title and
interest in and to, or has the exclusive perpetual royalty-free right to use, (i) the
intellectual property rights disclosed on Schedule 4.20
and (ii) all other processes, know-how, show-how, formulae, trade secrets,
inventions, discoveries, improvements, blueprints, specifications, drawings,
designs, moral rights, Software, technical documentation of the Software, and
other proprietary rights that are material to the Business (all of the items
described in clauses (i) and (ii) above, collectively, “Intellectual Property”).  Schedule 4.20
separately discloses all Intellectual Property under license to Seller and all
other Contracts relating to Intellectual Property owned, used or leased by
Seller.  To the knowledge of the Comfort
Systems Group, the Intellectual Property is valid and not the subject of any
interference, opposition, reexamination or cancellation.  To the knowledge of the Comfort Systems
Group, no person is infringing upon, nor has any person misappropriated, any
Intellectual Property.

 

(b)                                 Trademarks;
Copyrights; Trade Secrets.  All of the issued
registered trademarks and copyrights identified on Schedule 4.20 are currently in compliance with all
Legal Requirements (including payment of filing, examination, and maintenance
fees, proofs of working or use, the timely post-registration filing of
affidavits of use and incontestability and renewal applications), are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the Closing Date.  Seller has taken reasonable precautions to
protect the secrecy, confidentiality and value of the trade secrets.

 

4.21.                     Employee
Benefits.

 

(a)                                 Seller
Plans.  Schedule 4.21
discloses all written and unwritten Benefit Plans (other than Multiemployer
Plans), whether or not funded and whether or not terminated, (i) which are
maintained or sponsored by Seller, (ii) with respect to which Seller has
or may have Liability or is obligated to contribute, (iii) which cover any
of the current or former employees of Seller or their beneficiaries, (iv) in
which any current or former employees of Seller or their beneficiaries
participated or were entitled to participate or (v) under which any
current or former employees of Seller or their beneficiaries accrue or have
accrued any rights (each, a “Seller Plan”).

 

(b)                                 Seller
Group Matters;  Funding.  Neither Seller, nor any corporation or other
trade or business that may be aggregated with Seller under Sections 414(b),
(c), (m) or (o) of the IRC (the “Seller Group”),
has any obligation to contribute to, or any direct or indirect Liability with
respect to, any Benefit Plan of the type described in Sections 4063 and 4064 of
ERISA or Section 414(c) of the IRC. 
Seller does not have, and, after the Closing, Buyer will not have, any
Liability with respect to any Benefit Plan of any other member of Seller Group
that is not a Seller Plan, whether as a result of delinquent contributions,
distress terminations, fraudulent transfers, failure to pay premiums to the
PBGC, withdrawal liability or otherwise.

 

(c)                                  Compliance.  All Seller Plans and all related trusts,
insurance contracts and funds have been created, maintained, funded and
administered in compliance in all material respects

 

40

 

with all applicable Legal Requirements and the underlying or applicable
plan document, trust agreement, insurance policy or other writing.  No Seller Plan is, or is proposed to be,
under audit or investigation.  No
completed audit of any Seller Plan has resulted in the imposition of any Tax,
fine or penalty.  There are no actions or
proceedings (other than routine claims for benefits) pending, threatened or
anticipated with respect to Seller Plans.

 

(d)                                 Qualified
Plans. 
Schedule 4.21
separately discloses each Seller Plan that purports or is intended to be a
qualified plan under Section 401(a) of the IRC and exempt from United
States federal income Tax under Section 501(a) of the IRC (a “Qualified Plan”).  A determination letter (or opinion or
notification letter, if applicable) has been received from the IRS that each
Qualified Plan is qualified under Section 401(a) of the IRC and
exempt from federal income Tax under Section 501(a) of the IRC.  No Qualified Plan has been amended since the
date of the most recent IRS letter.  No
member of the Seller Group or, the knowledge of the Comfort Systems Group, any
fiduciary of any Qualified Plan or any agent of any member of the Seller Group
or any fiduciary of any Qualified Plan, has done or failed to do anything that
would adversely affect the qualified status of a Qualified Plan or the
qualified status of any related trust.

 

(e)                                  Defined
Benefit  Plans.  No Seller
Plan is a defined benefit plan as defined in Section 3(35) of ERISA (a “Defined Benefit Plan”).

 

(f)                                    Multiemployer
Plans. 
No Seller Plan is a multiemployer plan within the meaning of Section 3(37)
or Section 4001(a)(4) of ERISA (a “Multiemployer
Plan”).  No member of Seller
Group has withdrawn from any Multiemployer Plan or incurred any withdrawal
liability to or under any Multiemployer Plan. 
No Seller Plan covers any employees of any member of Seller Group in any
foreign country or territory.

 

(g)                                 Prohibited
Transactions; Fiduciary
Duties; Post-Retirement  Benefits.  No prohibited transaction (within the meaning
of Section 406 of ERISA and Section 4975 of the IRC) with respect to
any Seller Plan exists or has occurred that could subject Seller to any
material Liability or Tax under Part 5 of Title I of ERISA or Section 4975
of the IRC.  No member of Seller Group
or, to the knowledge of the Comfort Systems Group, any administrator or
fiduciary of any Seller Plan or any agent of any member of the Seller Group or
any fiduciary of any Seller Plan, has engaged in any transaction or acted or
failed to act in a manner that will subject Seller to any material Liability
for a breach of fiduciary or other duty under ERISA or any other applicable
Legal Requirements.  With the exception
of the requirements of Section 4980B of the IRC, no post-retirement
benefits are provided under any Seller Plan that is a welfare benefit plan as
described in Section 3(1) of ERISA.

 

4.22.                     Environmental
Matters.  Except as disclosed in Schedule 4.22:

 

(a)                                 Governmental
Authorizations.  Schedule 4.22
identifies all Governmental Authorizations that are required by, or issued
under, any applicable Environmental Law for the use or operation of the Real
Property and Assets and the operation of the Business.

 

(b)                                 Compliance.  Seller is in compliance in all material
respects with all Environmental Laws relating to or otherwise affecting the Business
and the ownership or operation of the Real Property and Assets.  Seller has been in consistent compliance in
all

 

41

 

material respects with all Environmental laws relating to or otherwise
affecting the Business and the ownership or operation of the Real Property and
Assets.  To the knowledge of the Comfort
Systems Group, there are no pending or proposed new Environmental Laws that
might adversely affect the Business, Real Property or Assets either before or
after Closing.

 

(c)                                  Environmental
Liability.  Seller is not subject to any Environmental
Liability, and Buyer will not after the Closing suffer or incur any
Environmental Liability, based on any facts, circumstances or conditions
relating to the Assets or the Business and existing on or prior to the Closing
Date.  Without limiting the foregoing,
Seller is not subject to any Environmental Liability, and Buyer will not after
Closing suffer or incur any Environmental Liability, as a result of the action
or inaction of any person, including:  (i) the
violation of, or failure to comply with, any Environmental Law by Seller, any
Predecessor or any other person for whose conduct Seller is or may be held
responsible; (ii) the ownership or operation of the Real Property and the
Assets, or any condition at the Real Property; (iii) the Release,
threatened Release or presence of any Regulated Material at, on or under any
Real Property; (iv) any Hazardous Activity conducted by Seller, any
Predecessor or by any other person for whose conduct Seller is or may be held
responsible; (v) any Release by Seller, any Predecessor or any other
person acting as agent for or on behalf of Seller on any other property; (vi) any
Environmental Remedial Action required to be taken by Seller or any
Predecessor; or (vii) the treatment, storage, transportation or disposal
of any Regulated Material at any facility, or the arrangement for treatment,
storage, transportation or disposal of any Regulated Material at any facility,
from which there is a Release or threatened Release of Regulated Material.

 

(d)                                 Treatment,
Disposal &  Releases.  Neither Seller nor any other person has
treated, stored, recycled or disposed of any Regulated Material on any Real
Property or any part of the Facilities in violation of any Environmental Law or
in a manner that could result in any Environmental Liability.  There is and has been no Release or threat of
Release of any Regulated Material to the Environment at, on or under or related
to any Real Property or Facility in violation of any Environmental Law or that
could give rise to an Environmental Liability. 
There is no Regulated Material present in the Environment at, on or
under any Real Property in violation of any Environmental Law or that could
give rise to any Environmental Liability.

 

(e)                                  Transactions
with Listed Hazardous  Sites.  Neither Seller nor any Predecessor has
arranged for the treatment or disposal of any Regulated Material generated at
the Facilities or Assets or related to the Business, or arranged for the
transportation of any such Regulated Material for treatment or disposal, at any
Listed Hazardous Site.

 

(f)                                    Status
of Real Property.  None of the Real Property is listed, or to
the knowledge of the Comfort Systems Group, proposed for listing, on (i) the
National Priorities List under CERCLA, (ii) CERCLIS or (iii) any list
established by a Governmental Body of sites potentially requiring Environmental
Remedial Action.

 

(g)                                 Existing
Claims; Certain Regulated Materials; Storage  Tanks.  Seller has not received any request for
information, notice of claim, demand or other notification or communication
that Seller is or may be potentially responsible with respect to any
Environmental Liability, Environmental Remedial Action or any threatened or
actual Release of any Regulated Material. 
There has been no past, and there is no pending or, to the knowledge of

 

42

 

the Comfort Systems Group, contemplated, claim by or against Seller
under any Environmental Law.  Seller has
not entered into any agreement with any person regarding any Environmental Law,
Environmental Remedial Action or other Environmental Liability or expense.

 

(h)                                 Storage
Tanks. 
All storage tanks located on the Real Property, whether underground or
aboveground, are disclosed on Schedule 4.22.  All tanks and associated piping have been
maintained, inspected and tested in compliance with applicable Environmental
Laws, are in sound condition and are not leaking and have not leaked.  All storage tanks on the Real Property which
were previously removed from service have been properly closed in compliance
with all applicable Environmental Laws, and with respect to each such tank,
testing and observations confirm that there were no Releases requiring Environmental
Remedial Actions, or that any required Environmental Remedial Actions have been
completed.

 

(i)                                    PCBs
and Asbestos Containing  Materials.  There is no PCB Equipment at the Real
Property.  There is no Regulated Asbestos
Containing Material at the Real Property.

 

4.23.                     Asbestos or
Silica Activity.  Neither Seller
nor, to the knowledge of the Comfort Systems Group, any Predecessor has
possessed, purchased, sold, brokered, owned, leased, used, manufactured,
fabricated, controlled, handled, encapsulated, disposed of, remediated, or
transported any asbestos or silica or any products, assets, materials, supplies
or other property (including personal property, real property and fixtures)
containing asbestos or silica (any one of the foregoing, an “Asbestos or Silica Activity”).  Neither Seller nor, to the knowledge of the
Comfort Systems Group, any Predecessor has engaged, directed or instructed by
any means or methods, including by contract, subcontract, independent
contractor, respondeat superior, arrangement or custom, any person to conduct
any Asbestos or Silica Activity.

 

4.24.                     Certain
Payments.  During the past five
years, neither Seller nor any director, officer, agent or employee of Seller,
nor any other person associated with or acting for or on behalf of Seller, has
directly or indirectly:  (a) made
any contribution, gift, bribe, rebate, payoff, influence payment, kickback or
other payment to any person, private or public, regardless of form, whether in
money, property or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions, or in respect of special concessions already
obtained, for Seller or any Affiliate of Seller or (iv) in violation of
any applicable Legal Requirements; or (b) established or maintained any
fund or asset that has not been recorded in the books and records of
Seller.  Seller has at all times been in
compliance with all Legal Requirements relating to export control and trade embargoes.

 

4.25.                     Customer
Relations.  There exists no
condition or state of facts or circumstances involving Seller’s customers,
suppliers, distributors or sales representatives that Seller can reasonably
foresee could materially adversely affect the Business or the Assets after the
Closing Date.  Except as disclosed on Schedule 4.25, no customer or
distributor has, during the past year, (a) informed Seller of the
intention of such customer or distributor to cease doing business with Seller, (b) refused
to honor a purchase commitment from Seller or (c) advised Seller or its
Affiliates that such customer or supplier may cease doing business with Seller,
or may reduce the volume of business that it does with Seller, if it is
acquired by Buyer or any of its Affiliates.

 

43

 

4.26.                     Finders’
Fees; No Existing Discussions. 
Neither Seller nor any of its officers, directors or employees has
employed any broker or finder or incurred any Liability for any brokerage fee,
commission or finders’ fee in connection with any of the Contemplated
Transactions.  Seller is not engaged,
directly or indirectly, in any discussions or negotiations with any person with
respect to any proposal to acquire, in any manner, the Assets.

 

4.27.                     Disclosure.  None of the representations or warranties of
Seller contained in this Article IV
and none of the information contained in the Schedules referred to in this Article IV is false or misleading in
any material respect or omits to state a fact necessary to make the statements
in this Article IV or in the
Schedules to this Article IV
not misleading in any material respect.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE ALC GROUP 

 

The ALC Group jointly and severally
represents and warrants to the Comfort Systems Group as set forth in this Article V.

 

5.1.                            Organization;
Qualification.  ALC is a
corporation duly organized, validly existing and in good standing under the
laws of Georgia.  Buyer is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware.  Each member of the ALC Group
has the power and authority (a) to own or lease, and operate, its
properties, (b) to enter into this Agreement and the Other Agreements to
which it is or is to become a party, (c) to perform its obligations under
this Agreement and such Other Agreements and (d) to carry on its business
as now conducted.  Buyer is duly
qualified and in good standing as a foreign corporation and is duly authorized
to transact business in each jurisdiction where the character of the properties
owned or leased by it or the nature of the activities conducted by it make such
qualification and good standing necessary.

 

5.2.                            Authorization;
Enforceability.  This Agreement
and each Other Agreement to which the ALC Group is a party have been duly
executed and delivered by the ALC Group, and constitute the legal, valid and
binding obligations of the ALC Group, enforceable against the ALC Group in
accordance with their respective terms. 
Each Other Agreement to which the ALC Group is to become a party, when
executed and delivered by the ALC Group, shall constitute the legal, valid and
binding obligation of the ALC Group, enforceable against the ALC Group in
accordance with its terms.  The ALC Group
has duly authorized this Agreement and the Other Agreements to which it is or
is to become a party and all of the Contemplated Transactions to be taken by
it.

 

5.3.                            No
Violation of Laws or Agreements; Legal Approvals; Consents.  The execution, delivery and performance by
the ALC Group of this Agreement and the Other Agreements and the consummation
of the Contemplated Transactions do not and will not directly or indirectly
(with or without notice or the lapse of time or both) (i) conflict with or
violate any provision of the Governing Documents of the ALC Group or the
resolutions adopted by the Board of Directors or other governing body of the
ALC Group, (ii) conflict with or violate any Legal Requirement applicable
to the ALC Group, or (iii) violate, or result in a breach, default or
acceleration under, or give rise to any penalty or any right of termination or

 

44

 

modification or any other remedy under, any Contract to which any
member of the ALC Group is a party or by which any member of the ALC Group is
bound.  Except as disclosed on Schedule 5.3, the ALC Group is not
required to make, give or obtain any Legal Approvals or Consents in connection
with the execution, delivery or performance by the ALC Group of this Agreement
or any Other Agreement or the consummation by the ALC Group of the Contemplated
Transactions.

 

5.4.                            Finders’
Fees.  Neither the ALC Group nor
any of its officers, directors or employees has employed any broker or finder
or incurred any Liability for any brokerage fee, commission or finders’ fee in
connection with any of the Contemplated Transactions.

 

ARTICLE VI

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

 

6.1.                            Survival
of Representations and Warranties. 
All representations, warranties, covenants and obligations made by any
party in this Agreement are several and independent legal obligations and shall
survive the Closing for the periods specified in Section 6.4(c). 
Any limitation or qualification set forth in any one representation or
warranty in Articles IV or V shall not limit or qualify any other
representation or warranty in Articles IV
or V.  Each representation and warranty included in Articles IV and V is independent and shall be interpreted without regard to
any other representation or warranty included in Articles IV or V.  The right to indemnification under this Article VI or any other remedy based
on the breach or inaccuracy of any representation or warranty in Article IV or V, or breach of, or noncompliance with,
any covenant or obligation in this Agreement, will not be affected by any
investigation conducted with respect to, or any knowledge acquired (or capable
of being acquired) at any time, whether before or after the execution and
delivery of this Agreement or the Closing Date, with respect to any such
representation, warranty, covenant or obligation.  The waiver by either party of any condition
at Closing or the breach or inaccuracy of any representation or warranty, or
breach of, or noncompliance with, any covenant or obligation in this Agreement,
will not affect the right of such party to indemnification, payment of Damages
or other remedy based on such breach, inaccuracy or noncompliance.  The Purchase Price Adjustment shall not
adversely affect any rights of the ALC Group Indemnitees or the Comfort Systems
Group Indemnitees under this Article VI.

 

6.2.                            Indemnification
by the Comfort Systems Group. 
Subject to the limitations set forth in Section 6.4,
the Comfort Systems Group shall jointly and severally indemnify, defend, save
and hold harmless the ALC Group and its officers, directors, employees, agents
and Affiliates (each, an “ALC Group
Indemnitee”) from and against, and shall reimburse the ALC Group
Indemnitees for, all Damages directly or indirectly asserted against, imposed
upon, or incurred or required to be paid by, any ALC Group Indemnitee
(collectively, “ALC Group Damages”)
and resulting from or in connection with:

 

(a)                                 any
breach or inaccuracy of any representation or warranty made by the Comfort
Systems Group in this Agreement (without giving effect to any supplement to the
Schedules) (other than any representation or warranty in the last sentence of Section 4.10) or in any certificate
or document delivered by the Comfort Systems Group in connection with this

 

45

 

Agreement or any Other Agreement to which the Comfort Systems Group is
or is to become a party;

 

(b)                                 any
breach or nonperformance of any covenant or obligation made by the Comfort
Systems Group in connection with this Agreement or any Other Agreement to which
the Comfort Systems Group is or is to become a party;

 

(c)                                  any
Environmental Liability related to or arising as a result of the actions of any
person other than Seller occurring prior to the Closing Date or during the
current term of Seller’s lease of such property as in effect on the Closing
Date, at or with respect to the Real Property located in Roseville, Minnesota
or the Real Property located in Beaumont, Texas, in each case if and to the
extent such Environmental Liability is not the responsibility of the landlord
of such Real Property;

 

(d)                                 any
Liability (i) arising out of any member of the Comfort Systems Group being
a member of a controlled group or affiliated group or combined group of
corporations of which Seller, Comforts Systems, their Affiliates or any other
person are or were a part on or prior to the Closing Date, including those
Liabilities imposed by Chapter 6 of Subtitle A of the IRC (Consolidated
Returns), ERISA Section 4201(a) (Multiemployer Withdrawal Liability),
ERISA Section 4062(a) (Single Employer Termination Liability), IRC Section 412(c)(11)
and ERISA Section 302(c)(11) (Funding Liability), ERISA Section 4971(e) (Funding
Excise Taxes) and ERISA Section 4007(e) (PBGC Premiums) and (ii) imposed
upon the ALC Group based on theories, claims or judgments that the ALC Group is a successor or
successor-in-interest;

 

(e)                                  any
Liability relating to the failure to collect in the aggregate the full amount
of (i) all Receivables designated as retainage within 18 months after the
Closing Date and (ii) all other Receivables within one year after the
Closing Date, in each case provided that the ALC Group has used commercially
reasonable efforts (excluding litigation and assignment to a collection agency)
to collect the Receivables (all such Liabilities, the “Receivables Damages”); and

 

(f)                                    all
Retained Liabilities not otherwise incorporated in this Section 6.2.

 

6.3.                            Indemnification
by the ALC Group.  Subject to the
limitations set forth in Section 6.4,
the ALC Group shall jointly and severally indemnify, defend, save and hold
harmless the Comfort Systems Group and its officers, directors, employees,
agents and Affiliates (each, a “Comfort
Systems Group Indemnitee”) from and against, and shall reimburse the
Comfort Systems Group Indemnitees for, all Damages directly or indirectly
asserted against, imposed upon, or incurred or required to be paid by, any
Comfort Systems Group Indemnitee (collectively, “Comfort Systems Group Damages”) and resulting from or in connection
with:

 

(a)                                 any
breach or inaccuracy of any representation or warranty made by the ALC Group in
this Agreement (without giving effect to any supplement to the Schedules) or in
any certificate or document delivered by the ALC Group in connection with this
Agreement or any Other Agreement to which the ALC Group is or is to become a
party;

 

46

 

(b)                                 any
breach or nonperformance of any covenant or obligation made by the ALC Group in
connection with this Agreement or any Other Agreement to which the ALC Group is
or is to become a party;

 

(c)                                  all
Assumed Liabilities not otherwise incorporated in this Section 6.3.

 

6.4.                            Limitation
of Liability.  Notwithstanding
the foregoing provisions of this Article VI,
the Comfort Systems Group’s obligations after Closing to indemnify the ALC
Group Indemnitees under Section 6.2(a),
and the ALC Group’s obligations after Closing to indemnify the Comfort Systems
Group Indemnitees under Section 6.3(a),
shall be subject to all of the following limitations:

 

(a)                                 Threshold.  No indemnification of any ALC Group
Indemnitee shall be made under Section 6.2(a) until
the aggregate amount of the ALC Group Damages (other than Receivables Damages)
exceeds $400,000, and thereafter indemnification of the ALC Group Indemnitees
under Section 6.2(a) shall
be made under this Agreement to the full extent of all ALC Group Damages (other
than the Receivables Damages) including the amount up to $400,000. No
indemnification of any Comfort Systems Group Indemnitee shall be made under Section 6.3(a) until the
aggregate amount of the Comfort Systems Group Damages exceeds $ 400,000, and
thereafter indemnification of the Comfort Systems Group Indemnitees under Section 6.3(a) shall be made
under this Agreement to the full extent of all Comfort Systems Group Damages,
including the amount up to $400,000. 

 

(b)                                 Ceiling.  No indemnification of any ALC Group
Indemnitee shall be made under Section 6.2(a) to
the extent that the ALC Group Damages (other than the Receivables Damages)
exceed in the aggregate 75% of the Purchase Price.  No indemnification of any Comfort Systems
Group Indemnitee shall be made under Section 6.3(a) to
the extent that the Comfort Systems Group Damages exceed in the aggregate 75%
of the Purchase Price.

 

(c)                                  Time
Period.  Any claim for indemnification made under Section 6.2(a) or 6.3(a) for Damages sustained by
reason of a breach or inaccuracy of any representation or warranty in Section 4.1 (Organization;
Qualification), 4.2
(Authorization; Enforceability), 5.1 (Organization;
Qualification) or 5.2 (Authorization;
Enforceability) shall be limited to Damages claimed in a written notice
delivered prior to the expiration of the applicable federal and state statutes
of limitations related to such matters. 
Any claim for indemnification made under Section 6.2(a) for Damages sustained by reason of
a breach or inaccuracy of any representation or warranty (A) as to title
to Assets or (B) in Section 4.8 (Taxes)
or 4.23 (Asbestos and Silica
Activity) shall not be limited as to time. 
Any claim for indemnification made under Section 6.2(a) for Damages sustained by reason of
a breach or inaccuracy of any representation or warranty in Section 4.22 (Environmental) shall be
limited to Damages claimed in a written notice delivered within ten years after
the Closing Date.  Any claim for
indemnification made under Section 6.2(a) or
6.3(a) for Damages sustained
by reason of a breach or inaccuracy of any representation or warranty shall be
limited to Damages claimed in a written notice delivered within two years after
the Closing Date.

 

(d)                                 Fraud.  The limitations set forth in Sections 6.4(a), 6.4(b) and 6.4(c) shall not apply to Damages arising out of fraud.

 

47

 

(e)                                  Receivables
Damages.  With respect to the indemnification
provisions of Section 6.2(e),
the parties agree that to the extent that any ALC Group Indemnitee:

 

(i)                                    collects all or
any portion of any Receivable that has been written off by Seller prior to the
Closing Date, then the amount so collected shall be credited against any
indemnification amounts owed by the Comfort Systems Group to the ALC Group
Indemnitees under this Article VI;

 

(ii)                                receives an
indemnification payment for Receivables Damages in respect of any Receivable,
such ALC Group Indemnitee shall assign to the Comfort Systems Group all rights
to such Receivable, as well as any associated Encumbrances; and

 

(iii)                            collects all or
any portion of any Receivable for which Seller has previously indemnified such
ALC Group Indemnitee or any other ALC Group Indemnitee, such ALC Group
Indemnitee shall promptly remit the amount so collected to the Comfort Systems
Group.

 

6.5.                            Notice
of Claims.  If any ALC Group
Indemnitee or any Comfort Systems Group Indemnitee (each, an “Indemnified Party”) believes that it has
suffered or incurred, or will suffer or incur, any Damage for which it is
entitled to indemnification under this Article VI,
then such Indemnified Party shall notify each party from whom indemnification
is being claimed (each, an “Indemnifying
Party”), and such notice shall specify the factual basis of the
claim in reasonable detail in light of the circumstances then existing.  If any Legal Proceeding is instituted by or
against a Third Party with respect to which any Indemnified Party intends to
claim any Damages, then such Indemnified Party shall notify each Indemnifying
Party of such action or suit.  The
failure of an Indemnified Party to give any notice required by this Section 6.5 shall not affect any of
such Indemnified Party’s rights under this Article VI
or otherwise, except and to the extent that such failure is actually
prejudicial to the rights or obligations of any Indemnifying Party.

 

6.6.                            Third
Party Claims.

 

(a)                                 Notice.  Promptly after receipt by an Indemnified
Party of notice of the assertion of a Third Party claim against it, such
Indemnified Party shall give notice to each Indemnifying Party of the assertion
of such Third Party claim; provided, however, that the failure to notify any
Indemnifying Party will not relieve such Indemnifying Party of any liability
that it may have to such Indemnified Party, except to the extent that such
Indemnifying Party demonstrates that the defense of such Third Party claim is
prejudiced by such Indemnified Party’s failure to give such notice.

 

(b)                                 Assumption
of  Defense.  If an Indemnified Party gives notice to an
Indemnifying Party pursuant to Section 6.6(a) of
the assertion of a Third Party claim, then such Indemnifying Party shall be
entitled (i) to participate in the defense of such Third Party claim or (ii) to
assume the defense of such Third Party claim with counsel reasonably
satisfactory to such Indemnified Party unless: 
(A) in the case of clause (ii), such Indemnifying Party is also a
person against whom the Third Party claim is made and such Indemnified Party
determines in good faith that joint representation would be inappropriate
because such Indemnifying Party has been

 

48

 

reasonably advised by counsel that (1) one or more legal defense
are available to it that are different from or additional to those available to
such Indemnifying Party or (2) representation by such Indemnifying Party
is inappropriate in light of an actual or potential conflict of interest
between them; or (B) such Indemnifying Party fails to provide reasonable
assurance to such Indemnified Party of its financial capacity to defend, and
provide indemnification hereunder with respect to, such Third Party claim.  After notice from such Indemnifying Party to
such Indemnified Party of its election to assume the defense of such Third
Party claim, such Indemnifying Party shall not, so long as it diligently
conducts such defense, be liable to such Indemnified Party under this Article VI for any fees of other
counsel or any other expenses with respect to the defense of such Third Party
claim, in each case subsequently incurred by such Indemnified Party in
connection with the defense of such Third Party claim, other than reasonable
costs of investigation.  If an
Indemnifying Party assumes the defense of a Third Party claim, no compromise or
settlement of such Third Party claim may be effected by such Indemnifying Party
without the applicable Indemnified Party’s consent, unless (x) there is no finding
or admission of any violation of a Legal Requirement or the rights of any
person; (y) the sole relief provided is monetary damages that are paid in full
by such Indemnifying Party; and (z) such Indemnified Party shall have no
liability with respect to any compromise or settlement of such Third Party
claims effected without its consent.  If
notice is given to an Indemnifying Party of the assertion of any Third Party
claim and the applicable Indemnifying Party does not, within 20 Business Days
after receipt of such notice from such Indemnified Party, give notice to such
Indemnified Party of its election to assume the defense of such Third Party
claim, then such Indemnifying Party will be bound by any determination made in
such Third Party claim or any compromise or settlement effected by such
Indemnified Party.

 

(c)                                  Jurisdiction.  Notwithstanding the provisions of Section 8.7, each of the ALC Group
and the Comfort Systems Group hereby (i) consents to the nonexclusive
jurisdiction of any court in which a proceeding in respect of a Third Party
claim is brought against any Indemnified Party for purposes of any claim that
such Indemnified Party may have under this Agreement with respect to such
proceeding or the matters alleged therein and (ii) agrees that process may
be served on the ALC Group or the Comfort Systems Group, as the case may be,
with respect to such a claim anywhere in the world.

 

(d)                                 Cooperation.  With respect to any Third Party claim subject
to indemnification under this Article VI,
(i) each of the Indemnified Party and the Indemnifying Party shall keep
the other person fully informed of the status of such Third Party claim and any
related proceedings at all stages thereof where such person is not represented
by its own counsel, and (ii) the parties agree (each at its own expense)
to render to each other such assistance as they may reasonably require of each
other and to cooperate in good faith with each other in order to ensure the
proper and adequate defense of any Third Party claim.

 

(e)                                  Confidential
Information; Privilege.  With respect to any Third Party claim subject
to indemnification under this Article VI,
the parties agree to cooperate in such a manner as to preserve in full (to the
extent possible) the confidentiality of all Confidential Information and the
attorney-client and work-product privileges. 
In connection therewith, each party agrees that (i) it will use its
commercially reasonable efforts, in respect of any Third Party claim in which
it has assumed or participated in the defense, to avoid production of
Confidential Information (consistent with applicable law and rules of
procedure), and (ii) all communications

 

49

 

between any party hereto and counsel responsible for or participating
in the defense of any Third Party claim shall, to the extent possible, be made
so as to preserve any applicable attorney-client or work-product privilege.

 

6.7.                            Exclusive
Remedy.  After the Closing, the
parties’ sole and exclusive recourse against each other for any Damages or
claim of Damages arising out of or relating to any breach of any
representation, warranty, covenant or agreement set forth in this Agreement,
any Other Agreement or any other certificate or document delivered in
connection herewith or therewith, except for any claim of fraud, shall be
expressly limited to the provisions of this Agreement.

 

ARTICLE VII

DEFINITIONS; CONSTRUCTION

 

7.1.                            Definitions.  The following terms have the meanings
specified below or are defined in the Sections referred to below.  All accounting terms not specifically defined
in this Agreement shall be construed in accordance with GAAP.

 

“ALC”
is defined on page one of this Agreement.

 

“ALC Group”
is defined on page one of this Agreement.

 

“ALC Group Damages”
is defined in Section 6.2.

 

“ALC Group Indemnitee”
is defined in Section 6.2.

 

“Buyer”
is defined on page one of this Agreement.

 

“Affiliate”
means, with respect to any person, any other person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such person. 
For purposes of this definition, the term “control” means the
possession, directly or indirectly, of more than 50% percent of the voting
power of a person.

 

“Agreement”
means this Asset Purchase Agreement, as it may be amended from time to time.

 

“Asbestos or Silica
Activity” is defined in Section 4.23.

 

“Assets”
means, collectively, the Twin Cities Assets and the UES Assets.

 

“Assumed Liabilities”
means, collectively, the Twin Cities Assumed Liabilities and the UES Assumed
Liabilities.

 

“Assumption Agreement”
means, collectively, the Twin Cities Assumption Agreement and UES Assumption
Agreement.

 

“Benefit Plan”
means any “employee benefit plan” within the meaning of Section 3(3) of
ERISA, and any other written or unwritten profit sharing, pension, savings,
deferred compensation, fringe benefit, insurance, medical, medical
reimbursement, life, disability,

 

50

 

accident, post-retirement health or welfare benefit, stock option,
stock purchase, sick pay, vacation, employment, severance, termination or other
plan, agreement, Contract, policy, trust fund or arrangement for the benefit of
employees.

 

“Business”
is defined on page one of this Agreement.

 

“Business Day”
means any day other than (a) Saturday or Sunday or (b) any other day
on which banks in New York, New York or Houston, Texas are permitted or
required by law to be closed.

 

“Buyer”
is defined on page one of this Agreement.

 

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

 

“CERCLIS”
means the Comprehensive Environmental Response Compensation Liability
Information System List under CERCLA.

 

“Closing”
is defined in Section 2.1.

 

“Closing Balance
Sheet” is defined in Section 1.5(a).

 

“Closing Date”
means the date on which the Closing occurs.

 

“Comfort Systems”
is defined on page one of this Agreement.

 

“Comfort Systems
Group” is defined on page one of this Agreement.

 

“Comfort Systems Name”
is defined in Section 3.16.

 

“Comfort Systems
Group Damages” is defined Section 6.3.

 

“Comfort Systems
Group Indemnitee” is defined in Section 6.3.

 

“Comfort Systems Plan”
means any Seller Plan (a) which is maintained or sponsored by Comfort
Systems, (b) with respect to which Comfort Systems has or may have
Liability or is obligated to contribute, (c) which covers any of the
current or former employees of Comfort Systems or their beneficiaries, (d) in
which any current or former employees of Comfort Systems or their beneficiaries
participated or were entitled to participate or (e) under which any
current or former employees of Comfort Systems or their beneficiaries accrue or
have accrued any rights.

 

“Confidential
Information” means all of the following information
that (a) is disclosed or exchanged in connection with the Contemplated
Transactions or (b) is owned or possessed by Seller: (i) all
information that is a trade secret under applicable trade secret or other law; (ii) all
information concerning product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current and planned research and
development, current and planned manufacturing or distribution methods and
processes, customer lists, current and anticipated customer

 

51

 

requirements, price lists, market studies, business plans, computer
hardware, Software and computer software and database technologies, systems,
structures and architectures; (iii) all information concerning the
business and affairs of the disclosing party (which includes historical and
current financial statements, financial projections and budgets, tax returns
and accountants’ materials, historical, current and projected sales, capital
spending budgets and plans, business plans, strategic plans, marketing and
advertising plans, publications, client and customer lists and files,
contracts, the names and backgrounds of key personnel and personnel training
techniques and materials, however documented), and all information obtained
from review of the disclosing party’s documents or property or discussions with
the disclosing party regardless of the form of the communication; (iv) all
proprietary information of Seller; and (v) all notes, analyses,
compilations, studies, summaries and other material prepared by the receiving
party to the extent containing or based, in whole or in part, upon any
information included in the foregoing; provided, however, that the term “Confidential
Information” shall not, with respect to any party, include any information that
(A) is already known to such party or to others not bound by a duty of
confidentiality, (B) information that is or becomes publicly available
through no fault of such party or (C) is independently acquired or
developed by such party without violating any of its obligations under this
Agreement.

 

“Consent”
means any registration, filing, declaration, application, rights of first
refusal or notice to or with any person and any consent, approval, permit,
qualification, waiver, waiting period, authorization, or action of or by any
person other than a Governmental Body, including any consent, approval, waiver,
authorization or other action required under any Contract.

 

“Contemplated
Transactions” means the sale and purchase of the
Assets, the assumption of the Assumed Liabilities, and the other transactions
contemplated by this Agreement and the Other Agreements.

 

“Contract”
means any agreement, contract, lease (relating to real or personal property),
license, indenture, mortgage, instrument, commitment, purchase or sale orders,
consensual obligation, promise or obligation or other arrangement or
understanding, oral or written, formal or informal, express or implied, whether
or not legally binding, to which Seller is a party or by which it or its assets
may be affected.

 

“Damage”
means any loss, demand, claim, allegation, assertion, action or cause of
action, assessment, damage (including incidental and consequential damages),
deficiency, cost, expense, diminution of value, fine, penalty, judgment, award
or settlement, whether or not involving a Third Party claim, including
reasonable legal fees, interest, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing.

 

“Defined Benefit Plan”
is defined in Section 4.21(e).

 

“Defined Contribution
Plans” is defined in Section 3.9.

 

“Employee” means
all of Seller’s employees who are actively employed primarily in connection
with the Business, including those employees who are on temporary leave for
purposes of jury duty, vacation, military duty, disability, workers’
compensation or sick leave.

 

52

 

“Encumbrance”
means any debt, mortgage, deed of trust, community or marital property
interest, equitable interest, pledge, security interest, encumbrance, option,
right of first option or refusal, agreement of sale, adverse claim, easement,
lien, lease, assessment, restrictive covenant, encroachment, right-of-way,
servitude, restriction on use or any other burden, charge or restriction of any
kind or nature whatsoever, legal or equitable, or any item similar or related
to the foregoing.

 

“Environment”
means soil, land, surface or subsurface strata, surface waters (including
navigable waters, ocean waters, streams, ponds, drainage basins, and wetlands),
groundwaters, drinking water supply, stream sediments, ambient air (including
indoor air), plant and animal life, and any other environmental medium or
natural resource.

 

“Environmental Law”
means all Legal Requirements that relate to (a) the protection of the
Environment, natural resources or public or employee health and safety or (b) the
production, generation, use, storage, treatment, processing, transportation,
disposal or Release of Regulated Materials, including common law trespass,
nuisance, property damage and similar common law theories.

 

“Environmental
Liabilities” means, with respect to any person, any
Liability of such person arising under any Environmental Law, including those
consisting of or relating to any:  (a) duty
imposed by, breach of, or noncompliance with, any Environmental Law; (b) environmental,
health or safety matters or conditions (including on-site or off-site
contamination, occupational safety and health and regulation of Regulated
Materials); (c) Environmental Remedial Action undertaken by any person; (d) bodily
injury (including illness, disability and death, and regardless of when any
such bodily injury occurred, was incurred, or manifested itself), property
damage (including trespass, nuisance, wrongful eviction, and deprivation of the
use of real or personal property), or other Damage of any other person
(including any employee or former employee of such person); (e) any injury
to, destruction of, or loss of natural resources, or costs of any natural
resource damage assessments; (f) Hazardous Activity conducted by such
person; and (g) the presence or Release of any Regulated Material at or on
any property.

 

“Environmental
Remedial Action” means any and all actions required (a) to
investigate, clean up, remediate, remove, treat, contain or in any other way
address any Regulated Materials in the Environment, (b) to prevent the Release
or threat of Release, or minimize the further Release, of Regulated Materials
so they do not migrate or endanger public health or welfare or the indoor or
outdoor Environment, and (c) to perform pre-remedial studies and
investigations and post-remedial monitoring, maintenance and care.  The term “Environmental Remedial Action”
includes any action which constitutes a “removal”, “remedial action” or “response”
as defined by Section 101 of CERCLA, 42 U.S.C. §9601(23), (24), and (25),
Minn. Stat. §§ 115B.02(16), (17), and (18) and the Solid Waste Disposal
Act, Tex. Health & Safety Code Ann. §§ 361.401(5), (6), and (7).

 

“ERISA”
means the U.S. Employee Retirement Income Security Act of 1974, as amended, and
the applicable rulings and regulations under that statute.

 

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

 

53

 

“Facility”
means any real property, leasehold, or other real property interest currently
or formerly owned, leased, controlled, used or operated by Seller or any
Predecessor and any building, plant, structure or equipment (including motor
vehicles, tank cars, and rolling stock) currently or formerly owned, leased,
used or operated by Seller, including the Real Property.

 

“FASB”
means the U.S. Financial Accounting Standards Board or its successor.

 

“Financial Statements”
is defined in Section 4.5(b).

 

“GAAP”
means U.S. generally accepted accounting principles.

 

“Governing Documents”
means, with respect to any person who is not a natural person, the certificate
or articles of incorporation, bylaws, deed of trust, formation or governing
agreement and other charter, organic, organization or governing documents or instruments
of such person relating to the creation, formation, organization, management or
operation of such person or relating to the rights, duties and obligations of
the equity holders of such person.

 

“Governmental
Authorization” means any permit, certificate, license,
franchise, privilege, approval, registration and authorization required under,
or otherwise made available by or under the authority of, any applicable Legal
Requirement.

 

“Governmental Body”
means any nation, state, county, city, town, borough, village, district or
other jurisdiction, court, tribunal, government, quasi-governmental authority
of any nature, department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority or instrumentality
(federal, state, local or other political subdivision) or any body similar or
related to the foregoing.

 

“Hazardous Activity”
means the distribution, generation, handling, importing, management,
manufacturing, processing, production, refinement, Release, storage, transfer,
transportation, treatment or use (including any withdrawal or other use of
groundwater) of Regulated Materials in, on, under, about, or from any Facility
or any part of any Facility into the Environment, and any other act, business,
operation, or thing that increases the danger, or risk of danger, or poses a
risk of harm to persons or property on or off any Facility, or that may
adversely affect the value of any Facility or Seller.

 

“HIA Claim”
is defined in Section 1.2(a)(xi).

 

“Holdback”
is defined in Section 1.3(c).

 

“Indebtedness”
means, with respect to any person:  (a) all
obligations of such person for borrowed money; (b) all obligations of such
person evidenced by notes, bonds (including surety or performance bonds),
debentures or similar instruments; and (c) all obligations to pay the
deferred purchase price of property (other than trade payables), including
obligations under any installment sale agreement, deferred purchase price, or
earnout payment in connection with any business acquired (regardless of whether
such acquisitions were of stock or assets or were pursuant to a merger or
reorganization or other similar transaction).

 

“Indemnified Party” is
defined in Section 6.5.

 

54

 

“Indemnifying Party”
is defined in Section 6.5.

 

“Intellectual
Property” is defined in Section 4.20.

 

“Interest”
applicable to any amount means interest on such amount until paid at an annual
rate equal to the sum of (a) the prime rate as reported by the Wall Street
Journal, plus (b) 2%, compounded annually on the basis of a 360-day
year consisting of 12 thirty-day months, such rate to change simultaneously
with changes in such prime rate.

 

“Interim Balance
Sheet” is defined in Section 4.5(b).

 

“Interim Balance
Sheet Date” is defined in Section 4.5(b).

 

“IRC”
means the U.S. Internal Revenue Code of 1986, as amended, and the applicable
rulings and regulations under that statute.

 

“IRS”
means the U.S. Internal Revenue Service and, to the extent applicable, the
United States Department of the Treasury.

 

“Legal Approval”
means any registration, filing, declaration, application, rights of first
refusal or notice to or with any person and any consent, approval, permit,
qualification, waiver, waiting period, authorization, Order or action of or by
any Governmental Body, including any consent, approval, waiver, authorization
or other action required under any Contract or Governmental Authorization.

 

“Legal Proceeding”
means any action, arbitration, audit, hearing, investigation, litigation or
suit (whether civil, criminal, administrative, investigative, or informal,
public or private) or Order commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.

 

“Legal Requirement”
means any applicable federal, state, municipal, local (or other political
subdivision) or administrative law, constitution, statute, code, ordinance,
rule, regulation, requirement, standard, policy or guidance having the force of
law, treaty, judgment or Order of any kind or nature whatsoever.

 

“Liability”
means, with respect to any person, any and all debt, liability or obligation of
such person of any nature, kind, character or description whatsoever, whether
or not due or to become due, known or unknown, accrued, unaccrued, fixed,
absolute, matured, liquidated, asserted, conditional, secondary, potential,
determined, determinable or contingent, executory, liquidated or unliquidated,
secured or unsecured, joint or several, vested or unvested and whether or not
incurred directly by such person or by any Predecessor of such person, whether
or not required to be accrued on the financial statements of such person and
whether or not arising out of any act, omission, transaction, circumstance,
sale of goods or service, setoff, recoupment, counterclaim or otherwise.

 

“Listed Hazardous
Site” means any site or facility listed or proposed
for listing on the National Priority List established pursuant to CERCLA or on
any list established by another Governmental Body of sites potentially
requiring Environmental Remedial Action.

 

55

 

“Multiemployer Plan”
is defined in Section 4.21(f).

 

“Net Asset Value”
is defined in Section 1.4(a).

 

“Occupational Safety
and Health Law” means any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any governmental program designed to provide
safe and healthful working conditions.

 

“Order”
means any order, award, decision, injunction, judgment, ruling, writ,
assessment, decree, determination, subpoena, stipulation or verdict entered,
issued, made, or rendered by any court, administrative agency or other
Governmental Body or by any arbitrator.

 

“Other Agreement”
means any other agreement or document contemplated by this Agreement to be
executed and delivered in connection with the transactions contemplated by this
Agreement on or before the Closing, including all conveyance documents and
instruments.

 

“PBGC”
means the U.S. Pension Benefit Guaranty Corporation.

 

“PCB Equipment”
means PCB equipment as defined in 40 C.F.R Part 761.

 

“Permitted
Encumbrance” is defined in Section 4.11.

 

“person”
means and includes a natural person, a corporation, an association, a
partnership, a limited liability company, a trust, a joint venture, an
unincorporated organization, a business, a Governmental Body or any other legal
entity.

 

“POC Liability”
is defined in Section 1.5(a).

 

“Post-Balance Sheet
Liability” is defined in Section 4.6.

 

“Predecessor”
means any person that may be a predecessor entity or entities to Seller by any
legal means, including (a) pursuant to any Legal Requirement, whether by
statutory merger, de facto merger, consolidation, combination, division, dissolution,
reorganization or otherwise or (b) based on any theory or doctrine of
successor liability, whether by statute or at common law.

 

“Purchase Price”
means, collectively, the Twin Cities Purchase Price and the UES Purchase Price.

 

“Purchase Price Adjustment”
means the post-closing adjustment to the Purchase Price set forth in Section 1.4.

 

“Qualified Plan”
is defined in Section 4.21(d).

 

“Real Property”
is defined in Section 4.16.

 

“Receivables”
is defined in Section 4.10.

 

56

 

“Regulated Asbestos
Containing Material” means regulated asbestos
containing material as defined by 40 C.F.R. §61.141.

 

“Regulated Material”
means:  (a) any hazardous substance
as defined by any Environmental Law; (b) any petroleum or petroleum
product, oil or waste oil; (c) any asbestos or polychlorinated byphenyls; (d) any
hazardous material, toxic substance, toxic pollutant, solid waste, municipal
waste, industrial waste, hazardous waste, flammable material, radioactive
material, pollutant or contaminant or words of similar meaning and regulatory
effect under any applicable Environmental Law; (e) any other chemical,
material, or substance to which the exposure, or of which the discharge,
emission, disposal or Release, is prohibited, limited or regulated under any
applicable Environmental Law; and (f) any mixture, solution, derivative or
synthetic substitute of the foregoing.

 

“Related Party”
means (a) Comfort Systems, (b) any Affiliate of Comfort Systems,
other than Seller and (c) any officer, director or partner of Comfort
Systems or any of its Affiliates.

 

“Release”
means any spill, leak, emission, discharge, deposit, disposal, escape, leach,
dump or other release of any Regulated Material into the Environment, whether
intentional or unintentional, including the abandonment or discarding of
barrels, containers and other receptacles containing any Regulated Material.

 

“Retained Liabilities”
means, collectively, the Twin Cities Retained
Liabilities and the UES Retained Liabilities.

 

“SEC”
means U.S. Securities and Exchange Commission.

 

“Security Right”
means, with respect to any security, any option, warrant, subscription right,
preemptive right, conversion right, exchange right, proxy, put, call, demand,
plan, commitment, agreement, understanding or arrangement of any kind relating
to such security, whether issued or unissued, or any other security convertible
into or exchangeable for any such security.

 

“Seller”
is defined on page one of this Agreement.

 

“Seller Group”
is defined in Section 4.21(b).

 

“Seller Plan”
is defined in Section 4.21(a).

 

“Seller’s POC
Schedule” is defined in Section 4.5(d).

 

“Software”
means all computer software programs and applications and subsequent versions
thereof, including source code, object, executable or binary code, objects,
comments, screens, user interfaces, report formats, templates, menus, buttons
and icons and all files, data, materials, manuals, design notes and other items
and documentation related thereto or associated therewith.

 

“SOX” means
the Sarbanes-Oxley Act of 2002.

 

57

 

“SPE”
means any entity that (a) has a limited business purpose or (b) conducts
business solely for the benefit of one entity, including a “variable interest
entity” as defined in FASB Interpretation No. 46 Consolidation of Variable
Business Entities.

 

“Subsidiary”
means any corporation, partnership, joint venture, limited liability company or
other person (a) in which Seller owns, directly or indirectly, more than
20% of the outstanding voting securities or equity interests or (b) of
which Seller has, directly or indirectly, the power to direct the business and
policies.  For purposes of this
definition, the term “indirectly” includes ownership, control or direction
through multi-tiered ownership structures (including foreign ownership and
venture arrangements), through SPEs, by contract or otherwise.

 

“Tax”
any income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental, windfall profit, customs,
vehicle, airplane, boat, vessel or other title or registration, capital stock,
franchise, employees’ income withholding, foreign or domestic withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transfer, value added, alternative, add-on minimum and other tax,
fee, assessment, levy, tariff, charge or duty of any kind whatsoever and any
interest, penalty, addition or additional amount thereon imposed, assessed or
collected by or under the authority of any Governmental Body or payable under
any tax-sharing agreement or any other Contract.

 

“Tax Return”
means any return (including any information return), report, statement,
schedule, notice, form, declaration, claim for refund or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of, or compliance with, any Legal
Requirement relating to any Tax.

 

“Third
Party” means any person or entity other than Buyer, Seller and their
respective Affiliates.

 

“Third-Party Guaranty
Arrangements” is defined in Section 4.5(c).

 

“Transferring
Employees” is defined in Section 3.9.

 

“Treasury Regulation”
means regulations by the U.S. Department of Treasury promulgated under the IRC.

 

“Twin Cities”
is defined on page one of this Agreement.

 

“Twin Cities Assets”
is defined in Section 1.1(a).

 

“Twin Cities Assumed
Liabilities” is defined in Section 1.1(c).

 

“Twin Cities
Assumption Agreement” is defined in Section 1.1(c).

 

“Twin Cities Plan”
means any Seller Plan (a) which is maintained or sponsored by Twin Cities,
(b) with respect to which Twin Cities has or may have Liability or is
obligated to

 

58

 

contribute, (c) which covers any of the current or former
employees of Twin Cities or their beneficiaries, (d) in which any current
or former employees of Twin Cities or their beneficiaries participated or were
entitled to participate or (e) under which any current or former employees
of Twin Cities or their beneficiaries accrue or have accrued any rights.

 

“Twin Cities Purchase
Price” is defined in Section 1.1(e).

 

“Twin Cities Retained
Assets” is defined in Section 1.1(b).

 

“Twin Cities Retained
Liabilities” is defined in Section 1.1(d).

 

“UES”
is defined on page one of this Agreement.

 

“UES Assets”
is defined in Section 1.2(a).

 

“UES Assumed
Liabilities” is defined in Section 1.2(c).

 

“UES Assumption
Agreement” is defined in Section 1.2(c).

 

“UES Plan”
means any Seller Plan (a) which is maintained or sponsored by UES, (b) with
respect to which UES has or may have Liability or is obligated to contribute, (c) which
covers any of the current or former employees of UES or their beneficiaries, (d) in
which any current or former employees of UES or their beneficiaries
participated or were entitled to participate or (e) under which any
current or former employees of UES or their beneficiaries accrue or have
accrued any rights.

 

“UES Purchase Price”
is defined in Section 1.2(e).

 

“UES Retained Assets”
is defined in Section 1.2(b).

 

“UES Retained
Liabilities” is defined in Section 1.2(d).

 

“Workers’
Compensation Liabilities” means all Liability for or
arising out of workers compensation from and after the date of first injury,
exposure, incidence, event or other occurrence, regardless of when claims,
expenses or medical assistance therefrom are made or incurred.  All claims of Workers’ Compensation Liability
based on reoccurrences of a previous matter shall relate back to the original
injury, exposure, incidence, event or other occurrence.

 

“Welfare Plans”
is defined in Section 3.9.

 

7.2.                            Construction.  As used in this Agreement, unless a clear
contrary intention applies:  (a) references
to “Article” or “Section” are to an article or section of this
Agreement, and references to “hereunder,” “hereof,” “hereto,” and words of
similar import are references to this Agreement as a whole and not to any
particular Article, Section or other provision hereof; (b) references
to the singular number include the plural number, and vice versa, and
references to any gender include each other gender; (c) all “Exhibits” and
“Schedules” referred to in this Agreement are to Exhibits and Schedules
attached to this Agreement and are incorporated into this Agreement by
reference and made a part of this Agreement; (d) ”include”, “includes” and

 

59

 

“including” are deemed to be followed by “without limitation” whether
or not they are in fact followed by such words or words of like import; (e) with
respect to the determination of any period of time, “from” means “from and
including” and “to” means “to but excluding”; (f) the headings of the
various Articles, Sections and other subdivisions of this Agreement are for
convenience of reference only and shall not modify, define or limit any of the
terms or provisions of this Agreement; (g) ”knowledge” of a person means
the actual knowledge of such person and the knowledge that a prudent individual
could be expected to discover or otherwise become aware of in the course of
conducting a reasonable inquiry of the individuals having responsibility for
the subject of the inquiry; (h) reference to any agreement, document or
instrument means such agreement, document or instrument as amended or modified
and in effect from time to time in accordance with the terms thereof and shall
include all addenda, exhibits and schedules thereto; and (i) reference to
any Legal Requirement means such Legal Requirement as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect from time
to time, including rules and regulations promulgated thereunder, and
reference to any section or other provision of any Legal Requirement means
that provision of such Legal Requirement from time to time in effect and
constituting the substantive amendment, modification, codification, replacement
or reenactment of such section or other provision.

 

ARTICLE VIII

MISCELLANEOUS

 

8.1.                            Costs
and Expenses.  Subject to Section 1.5(c), each of the ALC Group
and the Comfort Systems Group shall pay its respective expenses, brokers’ fees
and commissions.  All transfer,
documentary, sales, use and motor vehicle taxes incurred as a result of the
transfer of the Assets shall be paid by Buyer. 
If this Agreement is terminated, the obligation of each party to pay its
own fees and expenses will be subject to any rights of such party arising from
a breach of this Agreement by another party.

 

8.2.                            Proration
of Expenses.  All accrued
expenses associated with the Real Property included in the Assets, such as
electricity, gas, water, sewer, telephone, property Taxes, security services
and similar items, shall be prorated between Buyer and Seller as of the Closing
Date (in accordance with local custom, in the case of real property
taxes).  Buyer and Seller shall settle
such amounts within 60 days after Closing.

 

8.3.                            Bulk
Sales.  The parties hereto waive
compliance with the provisions of any bulk sales law applicable to the
Contemplated Transactions.

 

8.4.                            Further
Assurances.  After Closing,
without further consideration, each party shall execute and deliver such
additional documents and instruments as any other party may reasonably request
for the purpose of carrying out this Agreement.

 

8.5.                            Notices.  All notices given or made in connection with
this Agreement shall be in writing. 
Delivery of written notices will be effective:  (i) on the fourth Business Day after the
date of mailing, if delivered by registered or certified mail, postage prepaid;
(ii) upon delivery, if sent by hand delivery; (iii) upon delivery, if
sent by prepaid courier, with a record of receipt; or (iv) on the next day
after the date of dispatch, if sent by telecopy.  All deliveries shall be made to the following
addresses:

 

60

 

	
  (i)

  	
  if to the ALC Group or any member thereof,
  to:

  
	
   

  	
   

  
	
   

  	
  Automated Logic Corporation

  
	
   

  	
  One Carrier Place

  
	
   

  	
  Farmington, CT 06032

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Telecopy: (860) 674-3262

  
	
   

  	
   

  
	
   

  	
  with a required copy to:

  
	
   

  	
  Kirkpatrick & Lockhart Nicholson
  Graham LLP

  
	
   

  	
  Henry W. Oliver Building

  
	
   

  	
  535 Smithfield Street

  
	
   

  	
  Pittsburgh, PA 15222-2312

  
	
   

  	
  Attn: David L. Forney, Esq.

  
	
   

  	
  Telecopy: 412-355-6501

  
	
   

  	
   

  
	
  (ii)

  	
  if to the Comfort Systems Group or any
  member thereof, to:

  
	
   

  	
   

  
	
   

  	
  Comfort Systems, USA

  
	
   

  	
  777 Post Oak Boulevard, Suite 500

  
	
   

  	
  Houston, TX 77056

  
	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
  Telecopy: (713) 830-9659

  
	
   

  	
   

  
	
   

  	
  with a required copy to:

  
	
   

  	
   

  
	
   

  	
  Ropes & Gray LLP

  
	
   

  	
  One International Place

  
	
   

  	
  Boston, MA 02110

  
	
   

  	
  Attention: Collin J. Beecroft, Esq.

  
	
   

  	
  Telecopy: (617) 951-7050

  

 

Either party may change the address to which notices (or copies) to it
shall be addressed by giving notice of that change to the other parties in
accordance with this Section 8.5.

 

8.6.                            Currency.  All currency references in this Agreement are
to United States dollars.

 

8.7.                            Jurisdiction;
Service of Process.  Any action
or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement, the Other Agreements or any Contemplated
Transaction may be brought against any party in the state and federal courts in
the State of Delaware.  Each party
consents to the jurisdiction of these courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to
convenience of forum or venue laid in such courts.  Each party agrees that all claims in respect
of any proceeding arising out of this Agreement, the Other Agreements or any
Contemplated Transaction shall be heard and determined only in any such court
and agrees not to bring any such proceeding in any other court.  The parties agree that either or both of them
may file a copy of this paragraph with any court as written evidence of the
knowing, voluntary and bargained

 

61

 

agreement between the parties irrevocably to waive any objections to
venue or to convenience of forum.  Process
in any such proceeding referred to in the first sentence of this section may
be served on any party anywhere in the world.

 

8.8.                            Enforcement.  Each of Buyer and Seller acknowledges and
agrees that the other party would be irreparably damaged if any of the
provisions of this Agreement are not performed in accordance with their
specific terms and that any breach of this Agreement by Buyer or Seller, as the
case may be, could not be adequately compensated in all cases by monetary
damages alone.  Accordingly, in addition
to any other right or remedy to which Buyer or Seller may be entitled, at law
or in equity, it shall be entitled to enforce any provision of this Agreement
by a decree of specific performance and to temporary, preliminary and permanent
injunctive relief to prevent breaches or threatened breaches of any of the
provisions of this Agreement, without posting any bond or other undertaking.

 

8.9.                            Disclosure
Schedules.  The statements in the
Schedules, and those in any supplement thereto, relate only to the provisions
in the Section of this Agreement to which they expressly relate and not to
any other provision in this Agreement. 
If there is any inconsistency between the statements in this Agreement
and those in the Schedules (other than an exception expressly set forth as such
in the Schedules with respect to a specifically identified representation or
warranty), the statements in this Agreement will control.

 

8.10.                     Consideration;
Recitals; Governing Law.  The
parties acknowledge the mutual receipt and sufficiency of valuable
consideration for the formation of the legally binding contract represented by
this Agreement, which consideration includes all of the representations,
warranties, covenants and obligations contained in this Agreement.  The recitals set forth beginning on page one
of this Agreement are incorporated into this Agreement and made a part of this
Agreement.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to its conflict of laws doctrines.

 

8.11.                     Amendment and
Waiver; Cumulative Effect.  To be
effective, any amendment of this Agreement must be in writing and signed by all
the parties and any waiver must be in writing and signed by the party against
whom enforcement of the same is sought. 
Neither the failure of any party to exercise any right, power or remedy
provided under this Agreement or to insist upon compliance by any other party
with its obligations under this Agreement, nor any custom or practice of the
parties at variance with the terms of this Agreement, shall constitute a waiver
by such party of its right to exercise any such right, power or remedy or to
demand such compliance.  To the maximum
extent permitted by applicable law, (a) no waiver that may be given by a
party will be applicable except in the specific instance for which it is given
and (b) no notice to or demand on any party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

 

8.12.                     Entire
Agreement; No Third-Party Beneficiaries.  This Agreement and the Schedules and Exhibits
set forth a complete and exclusive statement of the promises, covenants,
agreements, conditions and undertakings between the parties with respect to the
subject matter of this Agreement.  This
Agreement supersedes all prior or contemporaneous agreements and
understandings, negotiations, inducements or conditions, express or implied,
oral or written,

 

62

 

between the parties.  Except for
the provisions of Sections 6.2
and 6.3 relating to ALC Group
Indemnitees and Comfort Systems Group Indemnitees, this Agreement is not
intended to confer upon any person other than the parties any rights or
remedies under this Agreement.

 

8.13.                     Severability.  If any term or other provision of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal
or incapable of being enforced under any applicable Legal Requirement in any
particular respect or under any particular circumstances, then, so long as the
economic or legal substance of the Contemplated Transactions is not affected in
any manner materially adverse to any party, (a) such term or provision
shall nevertheless remain in full force and effect in all other respects and
under all other circumstances, and (b) all other terms, conditions and
provisions of this Agreement shall remain in full force and effect.  Upon determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner so that
the Contemplated Transactions are fulfilled to the fullest extent possible.

 

8.14.                     Counterparts.  This Agreement may be executed in more than
one counterparts, each of which shall be deemed to be an original but all of
which together shall be deemed to be one and the same instrument.  The exchange of copies of this Agreement and
of signature pages by facsimile transmission shall constitute effective
execution and delivery of this Agreement as to the parties and may be used in
lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by
facsimile shall be deemed to be their original signatures for all purposes.

 

[The remainder of this page intentionally
left blank.]

 

63

 

The parties, each intending to be legally
bound by this Agreement, have executed this Agreement as of the first date
identified in the first sentence to this Agreement.

 

	
   

  	
  AUTOMATED LOGIC

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin
  Applebaum

  	
   

  
	
   

  	
   

  	
  Title: Authorized Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AUTOMATED LOGIC

  CONTRACTING SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin
  Applebaum

  	
   

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMFORT SYSTEMS USA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William
  George

  	
   

  
	
   

  	
   

  	
  Title: 
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMFORT SYSTEMS USA (TWIN CITIES), INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William
  George

  	
   

  
	
   

  	
   

  	
  Title: 
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UNITED ENVIRONMENTAL

  SERVICES, LP, by its General Partner,

  Atlas-Accurate Holdings, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William
  George

  	
   

  
	
   

  	
   

  	
  Title: 
  Vice President

  

 

64

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