Document:

Exhibit 10.1

 

Execution Copy

 

WAIVER

TO

CREDIT AGREEMENT

 

This WAIVER to CREDIT AGREEMENT, dated
as of April 16, 2009 (this “Waiver”), is entered into among HUNTSMAN
INTERNATIONAL LLC, a Delaware limited liability company (the “Borrower”),
and the Revolving Lenders party hereto.

 

W I T N E S S E
T H:

 

WHEREAS, the Borrower,
Deutsche Bank AG New York Branch, as administrative agent, and the financial
institutions party thereto as lenders (the “Lenders”), are party to that
certain Credit Agreement, dated as of August 16, 2005 (as the same has
been heretofore amended, restated, supplemented or otherwise modified, the “Credit
Agreement”);

 

WHEREAS, capitalized
terms used herein and not otherwise defined herein shall have the meaning set
forth in the Credit Agreement;

 

WHEREAS, Section 9.1
of the Credit Agreement requires that, unless compliance is waived by the
Majority Lenders of the Revolving Facility (the “Majority Revolving Facility
Lenders”), the Borrower will not permit for any Test Period ending on the
last date of any Fiscal Quarter, the Senior Secured Leverage Ratio to exceed
3.75 to 1.00;

 

WHEREAS, the Borrower has
requested that the Revolving Lenders waive the Borrower’s compliance with Section 9.1
of the Credit Agreement for a specified period of time; and

 

WHEREAS, the Borrower and
the Majority Revolving Facility Lenders agree, subject to the limitations and
conditions set forth herein, to such waiver request;

 

NOW, THEREFORE,  in consideration of the premises and the covenants and
obligations contained herein the parties hereto agree as follows:

 

Section 1.              Waiver

 

Subject to the
satisfaction (or due waiver) of the conditions set forth in  Section 2  hereof, the Revolving Lenders party hereto, constituting
the Majority Revolving Facility Lenders, hereby waive the Borrower’s
compliance with Section 9.1 for the period commencing on the Waiver
Effective Date (as defined below) to and including the Revolver Termination
Date (the “Waiver Period”); provided, however, that during
the Waiver Period, at any time when Revolving Loans or LC Obligations are
outstanding (and for this purpose, the term “LC Obligations” shall exclude the
Stated Amount of any outstanding and undrawn Letter of Credit for which the
Borrower or any Affiliate thereof has provided cash collateral to the
Administrative Agent (or the applicable Facing Agent) as security therefor in
an amount not less than the Stated Amount of such Letter of Credit), and unless
compliance herewith is further waived by the Majority Revolving Facility
Lenders, the Borrower will not permit, for any Test Period ending on the last
day of any Fiscal Quarter ending during the Waiver Period, the Senior Secured
Leverage Ratio to exceed 5.00 to 1.00; provided  further that,
solely for the purpose of determining compliance with the financial covenant
contained in this proviso:

 

 

(a)           Consolidated EBITDA of the Borrower
for any Test Period shall be increased by the sum (without duplication) of any
lost profits that are attributable to Hurricanes Gustav and Ike that  occurred in 2008 in an
amount not to exceed (1) $49,000,000 for the third Fiscal Quarter of 2008
and (2) $18,000,000 for the fourth Fiscal Quarter of 2008 (in each case,
to the extent such Fiscal Quarters are included in such Test Period); and

 

(b)           the definition of “Permitted Non-Cash
Impairment and Restructuring Charges” shall be modified by replacing the
reference to $100,000,000 in clause (ii) thereof with $200,000,000.

 

Section 2.              Conditions Precedent to the
Effectiveness of this Waiver

 

This Waiver shall become effective as of the date first written above
(the “Waiver Effective Date”) when, and only when, each of the following conditions precedent shall
have been satisfied:

 

(a)           Citigroup Global Markets Inc. (together
with any of it affiliates, “Citi”) shall have received
(i) this
Waiver, duly executed by the Borrower and the Revolving Lenders
constituting the Majority Revolving Facility Lenders and (ii) the Consent and Agreement, in the form
attached hereto as Exhibit A executed by each of the Subsidiary
Guarantors; and

 

(b)           the payment of all fees, costs and
expenses as required by clauses (a) and (c) of  Section 4 of this Waiver shall
have been received by Citi on or prior to the Waiver Effective Date.

 

Citi shall
promptly notify the Borrower and the Revolving Lenders upon the receipt of (i) this
Waiver and the Consent and Agreement as required by clause (a) of this Section 2
and (ii) such fees, costs and expenses as required by clause (b) of
this Section 2.

 

Section 3.              Representations and Warranties

 

On and as of the Waiver
Effective Date, after giving effect to this Waiver, the Borrower hereby
represents and warrants to each Revolving Lender as follows:

 

(a)           this Waiver has been duly authorized,
executed and delivered by the Borrower and each Subsidiary Guarantor, as
applicable, and constitutes a legal, valid and binding obligation of the
Borrower and each Subsidiary Guarantor, as applicable, enforceable against the
Borrower and each Subsidiary Guarantor, as applicable, in accordance with its
terms, and the Credit Agreement after giving effect to this Waiver, constitutes
the legal, valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms (in each case, except to the extent that
the enforceability hereof or thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws generally affecting
creditors’ rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law));

 

(b)           each of the representations and
warranties contained in Article VI  of the Credit
Agreement and in the other Loan Documents are true and correct as of the Waiver
Effective Date, except to the extent such representations and warranties are
expressly made as of a specific date, in which event such representations and
warranties are true and correct as of such specified date; provided, however,
that references therein to the “Credit Agreement” shall be deemed to refer to
the Credit Agreement after giving effect to this Waiver; and

 

(c)           no Default or Unmatured Event of
Default has occurred and is continuing.

 

2

 

Section 4.              Fees, Interest and Expenses, etc.

 

(a)           As
consideration for the execution of this Waiver, the Borrower agrees to pay to
Citi for the account of each Revolving Lender for which Citi shall have
received (by facsimile or otherwise) an executed Waiver (or a release from
escrow of an executed Waiver previously delivered in escrow for this Waiver) by
12:00 noon (New York time) on April 16, 2009 (or such later date or time
as Citi and the Borrower may agree), a waiver fee equal to 0.50% of such
Revolving Lender’s Commitment then in effect; provided, that (i) Citi
shall have received on or prior to the Waiver Effective Date from each
Revolving Lender executing this Waiver an administrative questionnaire in a
form acceptable to Citi and (ii) each Revolving Lender executing this
Waiver acknowledges and consents to the payment of such waiver fee to Citi.

 

(b)           As
consideration for the execution of this Waiver, the Borrower agrees that during
the Waiver Period, (i) the Commitment Fee required to be paid by the
Borrower pursuant to Section 3.2(a) of the Credit Agreement shall be
based on an Applicable Commitment Fee Percentage that is 0.25% per annum in
excess of the Applicable Commitment Fee Percentage otherwise payable pursuant
to, and in accordance with, Section 3.2(a) of the Credit Agreement, (ii) with
respect to Letters of Credit outstanding at any time, the LC Commission
required to be paid by the Borrower pursuant to Section 2.9(e)(ii) of
the Credit Agreement shall be based on an Applicable Eurocurrency Margin for
Revolving Loans at a rate that is 2.25% per annum in excess of the Applicable
Eurocurrency Margin otherwise payable pursuant to, and in accordance with, Section 2.9(e)(ii) of
the Credit Agreement, (iii) with respect to Revolving Loans that are Base
Rate Loans, interest required to be paid by the Borrower pursuant to Section 3.1(a) of
the Credit Agreement shall be based on an Applicable Base Rate Margin that is
2.25% per annum in excess of the Applicable Base Rate Margin otherwise payable
pursuant to, and in accordance with, Section 3.1(a) of the Credit
Agreement and (iv) with respect to Revolving Loans that are Eurocurrency
Loans, interest required to be paid by the Borrower pursuant to Section 3.1(b) of
the Credit Agreement shall be based on an Applicable Eurocurrency Margin that
is 2.25% per annum in excess of the Applicable Eurocurrency Margin otherwise
payable pursuant to, and in accordance with, Section 3.1(b) of the
Credit Agreement.

 

(c)           The Borrower agrees
to pay on demand all costs and expenses of Citi in connection with the
preparation, reproduction, execution and delivery of this Waiver and all other
Loan Documents entered into in connection herewith (including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for Citi
with respect thereto).

 

(d)           As consideration for the execution of
this Waiver, the Borrower agrees that during the Waiver Period, unless
compliance therewith is waived by the Majority Revolving Facility Lenders:

 

(i)  if at
the end of any Fiscal Quarter, (A) the Assigned Dollar Value of all
outstanding Revolving Loans and Swing Line Loans is $0, (B) the Borrower
has cash collateralized LC Obligations under the Credit Agreement and (C) the
Borrower would not have been in compliance with the Senior Secured Leverage
Ratio set forth in the first proviso of Section 1 of this Waiver
had there been a Revolving Loan of at least $1 outstanding, the Borrower shall
not request a Borrowing for a Revolving Loan and/or Swing Line Loan in the next
succeeding Fiscal Quarter under the Revolving Facility;

 

(ii)  the
Borrower shall not repay or make any payment of principal or interest under that
certain promissory note with an effective date of May 30, 2008, as amended
and restated effective as of January 6, 2009, issued by the Borrower to
Huntsman Corporation (the “Huntsman Corporation Note”), at any time on
which the Assigned Dollar Value of all outstanding Revolving Loans and Swing
Line Loans exceeds $0;

 

3

 

(iii)  the
Borrower shall not repay or make any payment of principal or interest under the
Huntsman Corporation Note, if such repayment or payment, on a pro forma basis,
would reduce the aggregate principal amount outstanding under the Huntsman
Corporation Note to an amount less than $525,000,000; and

 

(iv) 
notwithstanding the terms of Section 8.4(b) of the Credit Agreement,
neither the Borrower nor any Subsidiary of the Borrower will make Restricted
Payments pursuant to Section 8.4(b) of the Credit Agreement after the
Waiver Effective Date in an aggregate amount greater than the sum of (a) $100,000,000
plus (b) Available Equity Proceeds.

 

Section 5.              Reference to the Effect on the
Loan Documents

 

(a)           Each reference in the Credit
Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of
like import, and each reference in the other Loan Documents to the Credit
Agreement (including, without limitation, by means of words like “thereunder”, “thereof”
and words of like import), shall mean and be a reference to the Credit
Agreement after giving effect to this Waiver; and this Waiver and the Credit
Agreement shall be read together and construed as a single instrument.

 

(b)           Except as expressly waived hereby,
all of the terms and provisions of the Credit Agreement and all other Loan
Documents are and shall remain in full force and effect and are hereby ratified
and confirmed.

 

(c)           The execution, delivery and
effectiveness of this Waiver shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of the Lenders or the
Administrative Agent under any of the Loan Documents, nor constitute a waiver
of any other provision of any of the Loan Documents or for any purpose except
as expressly set forth herein.

 

(d)           This Waiver is a Loan Document.

 

Section 6.              Execution in Counterparts

 

This
Waiver may be executed in any number of counterparts and by different parties
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.  Signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are attached to the same
document.  Delivery of an executed
counterpart by telecopy shall be effective as delivery of a manually executed
counterpart of this Waiver.

 

Section 7.              Governing Law

 

This
Waiver shall be governed by, and construed and interpreted in accordance with,
the law of the State of New York without regard to principles of conflicts of
laws.

 

Section 8.              Titles

 

The
section titles contained in this Waiver are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto, except when used to reference a section.  Any reference to the number of a clause,
sub-clause or subsection of any Loan Document immediately followed by a
reference in parenthesis to the title of the section of such Loan Document
containing such clause, sub-clause or subsection is a reference to such clause,
sub-clause or subsection and not to the entire section; provided, however,
that, in case of direct conflict between the 

 

4

 

reference to the title and
the reference to the number of such section, the reference to the title shall
govern absent manifest error.  If any
reference to the number of a section (but not to any clause, sub-clause or
subsection thereof) of any Loan Document is followed immediately by a reference
in parenthesis to the title of a section of any Loan Document, the title
reference shall govern in case of direct conflict absent manifest error.

 

Section 9.                  Notices

 

All
communications and notices hereunder shall be given as provided in the Credit
Agreement.

 

Section 10.                Severability

 

The
fact that any term or provision of this Waiver is held invalid, illegal or
unenforceable as to any person in any situation in any jurisdiction shall not
affect the validity, enforceability or legality of the remaining terms or
provisions hereof or the validity, enforceability or legality of such offending
term or provision in any other situation or jurisdiction or as applied to any
person.

 

Section 11.                Successors

 

The
terms of this Waiver shall be binding upon, and shall inure to the benefit of,
the parties hereto and their respective successors and assigns.

 

Section 12.                Consent to Jurisdiction; Waiver of
Jury Trial

 

(a)           EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS WAIVER, AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT TO SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH UNITED STATES FEDERAL OR NEW YORK STATE COURT AND THE BORROWER AND EACH
REVOLVING LENDER IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

 

(b)           EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TRIAL
BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS WAIVER OR ANY OTHER
LOAN DOCUMENT.

 

[SIGNATURE
PAGES FOLLOW]

 

5

 

IN
WITNESS WHEREOF, the parties hereto have caused this Waiver to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.

 

	
   

  	
  HUNTSMAN INTERNATIONAL LLC,

  
	
   

  	
  as Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sean Douglas

  
	
   

  	
   

  	
  Name:  Sean Douglas

  
	
   

  	
   

  	
  Title:    Vice President and
  Treasuer

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT
A

FORM OF CONSENT AND
AGREEMENT OF SUBSIDIARY GUARANTORS

 

The
undersigned hereby consents to a Waiver to the Credit Agreement, dated as of
the date hereof (the “Waiver”; capitalized terms used herein but not
defined herein are used with the meanings given them in the Waiver), entered
into among HUNTSMAN INTERNATIONAL LLC, a Delaware limited liability company,
and the Revolving Lenders party thereto.

 

The
undersigned further agrees that the terms of this Waiver shall not affect in
any way its obligations and liabilities under the Loan Documents (as amended
and otherwise expressly modified by the Waiver), all of which obligations and
liabilities shall remain in full force and effect and each of which is hereby
reaffirmed.

 

This
Consent and Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same consent. 
Signature pages may be detached from multiple separate counterparts
and attached to a single counterpart so that all signature pages are
attached to the same document.  Delivery
of an executed counterpart by telecopy shall be effective as delivery of a
manually executed counterpart of this Consent and Agreement.  Notices to parties hereto shall be given as
provided in the Waiver.

 

The
terms of this Consent and Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors and assigns.

 

This
Consent and Agreement shall be governed by and construed in accordance with the
law of the State of New York.

 

[SIGNATURE PAGES FOLLOW]

 

[Signature Page to
Consent of Subsidiary Guarantors]

 

 

IN
WITNESS WHEREOF, the undersigned has caused this Consent and Agreement to be
duly executed and delivered as of April 16, 2009.

 

	
   

  	
   

  	
  HUNTSMAN FUELS, L.P.

  
	
   

  	
   

  	
  PETROSTAR FUELS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Samuel D. Scruggs

  
	
   

  	
   

  	
  Name: Samuel D. Scruggs

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTED
  as a deed by

  
	
   

  	
   

  	
  TIOXIDE
  AMERICAS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ L. Russell Healy

  
	
   

  	
   

  	
  Name: L. Russell Healy

  
	
   

  	
   

  	
  Title:Vice President and
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Witnessed by:

  	
  /s/ Jodi Russell

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Executed
  and delivered as a deed on behalf of TIOXIDE GROUP acting by:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  J. Kimo Esplin

  	
  Director
  

  
	
   

  	
   

  	
  J.
  Kimo Esplin

  	
  Name

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  L. Russell Healy

  	
  Director
  

  
	
   

  	
   

  	
  L.
  Russell Healy

  	
  Name

  
							

 

[Signature Page to
Consent of Subsidiary Guarantors]

 

 

AIRSTAR CORPORATION

EUROFUELS LLC

EUROSTAR INDUSTRIES LLC

HUNTSMAN ADVANCED MATERIALS AMERICAS INC.

HUNTSMAN ADVANCED MATERIALS LLC

HUNTSMAN AUSTRALIA INC.

HUNTSMAN CHEMICAL COMPANY LLC

HUNTSMAN CHEMICAL FINANCE CORPORATION

HUNTSMAN CHEMICAL PURCHASING CORPORATION

HUNTSMAN EA HOLDINGS LLC

HUNTSMAN ENTERPRISES, INC.

HUNTSMAN ETHYLENEAMINES LTD.

HUNTSMAN EXPANDABLE POLYMERS COMPANY, LC

By:     Huntsman International Chemicals Corporation, its Sole Member
and Manager

HUNTSMAN GROUP INTELLECTUAL PROPERTY HOLDINGS CORPORATION

HUNTSMAN HEADQUARTERS CORPORATION

HUNTSMAN INTERNATIONAL CHEMICALS CORPORATION

HUNTSMAN INTERNATIONAL FINANCIAL LLC

HUNTSMAN INTERNATIONAL FUELS, L.P.

HUNTSMAN INTERNATIONAL TRADING CORPORATION

HUNTSMAN MA INVESTMENT CORPORATION

HUNTSMAN MA SERVICES CORPORATION

HUNTSMAN PETROCHEMICAL CORPORATION

HUNTSMAN PETROCHEMICAL FINANCE CORPORATION

HUNTSMAN PETROCHEMICAL PURCHASING CORPORATION

HUNTSMAN PROCUREMENT CORPORATION

HUNTSMAN PROPYLENE OXIDE HOLDINGS LLC

HUNTSMAN PROPYLENE OXIDE LTD.

HUNTSMAN PURCHASING, LTD.

By:     Huntsman Procurement Corporation, its General Partner

HUNTSMAN TEXAS HOLDINGS LLC

JK HOLDINGS CORPORATION

PETROSTAR INDUSTRIES LLC

POLYMER MATERIALS INC.

 

	
  By:

  	
  /s/ Sean Douglas

  	
   

  
	
  Name: Sean Douglas

  	
   

  
	
  Title:   Vice President

  	
   

  

 

[Signature Page to Consent of Subsidiary Guarantors]Exhibit 10.1

 

EXECUTION COPY

 

AMENDMENT AGREEMENT dated as of April 16, 2009 (this “Agreement”),
to the Credit Agreement dated as of March 13, 2007 (the “Original
Credit Agreement”), among LEVEL 3 COMMUNICATIONS, INC. (“Level 3”),
LEVEL 3 FINANCING, INC., as Borrower (the “Borrower”), the LENDERS party
thereto, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Joint
Lead Arranger and Joint Bookrunner, MORGAN STANLEY & CO. INCORPORATED,
as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, CITIGROUP
GLOBAL MARKETS, INC., CREDIT SUISSE SECURITIES (USA) LLC and WACHOVIA BANK,
N.A., as Co-Documentation Agents, and MERRILL LYNCH CAPITAL CORPORATION, as
Administrative Agent and Collateral Agent.

 

Capitalized terms used but not
otherwise defined herein have the meanings assigned to them in the Original
Credit Agreement or the Restated Credit Agreement (as defined below), as the
context may require.

 

Pursuant to Section 9.02(d) of
the Original Credit Agreement, (a) the Original Credit Agreement and the
other Loan Documents may be amended to establish, among other things, one or
more additional classes of term loans by an agreement in writing entered into
by Level 3, the Borrower, the Administrative Agent, the Collateral Agent and
each person (including any Lender) agreeing to make such additional term loans,
but without the consent of any other Lender, (b) the Borrower has
requested that the Tranche B Term Lenders make Tranche B Term Loans to the
Borrower in an aggregate principal amount of $220,0000,000, the net proceeds of
which, as well as additional funds of the Borrower, will be advanced by the
Borrower to Level 3 LLC on the Restatement Effective Date (as defined below) in
an amount equal to the aggregate principal amount of the Tranche B Term Loans issued,
against delivery of the Loan Proceeds Note (as increased by the amount of
$220,000,000 to evidence such loan made by the Borrower to Level 3 LLC on the
Restatement Effective Date), and (c) the Tranche B Term Lenders are
willing to become parties hereto and to the Restated Credit Agreement, and to
extend Tranche B Term Loans having the terms and conditions provided for herein
and in the Restated Credit Agreement.

 

Accordingly, in consideration
of the mutual agreements herein contained and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged,
the parties hereto hereby agree as follows:

 

SECTION 1.  Amendment and Restatement of the Original
Credit Agreement.  (a) 
Effective as of the Restatement Effective Date, the Original Credit Agreement
(excluding, except as expressly set forth herein, any schedule or exhibit thereto,
each of which shall remain as in effect immediately prior to the Restatement
Effective Date) is hereby amended and restated to be in the form attached as
Annex I

 

 

hereto (the Original Credit Agreement, as so
amended and restated, being referred to as the “Restated Credit Agreement”).

 

(b)  Effective as of the
Restatement Effective Date, Schedule 2.01 to the Original Credit Agreement is
hereby amended to include the information on Schedule 2.01(a) attached
hereto.

 

(c)  Effective as of the
Restatement Effective Date, Exhibits A, D, G-1 and H to the Original Credit
Agreement are hereby amended and restated to be in the form of Exhibits A,
D, G-1 and H, respectively, attached hereto.

 

(d)  Effective as of the
Restatement Effective Date, the Loan Proceeds Note Collateral Agreement is
hereby amended and restated to be in the form attached hereto as Exhibit G-1,
and the Loan Proceeds Note is hereby amended and restated to be in the form
attached hereto as Exhibit H.

 

SECTION 2.  Collateral and Guarantees.  (a)  Notwithstanding anything to the
contrary in the Restated Credit Agreement or any other Loan Document, solely
with respect to any Regulated Guarantor Subsidiary or any Regulated Grantor
Subsidiary, (i) any Guarantee provided by any Regulated Guarantor
Subsidiary under any Security Document shall initially be deemed not to
Guarantee the Tranche B Term Obligations, (ii) any Liens on, or other security
interests in or pledges of, assets granted by such Regulated Grantor Subsidiary
under any Security Document shall initially be deemed not to secure the Tranche
B Term Obligations and (iii) the Guarantee and Collateral Requirement,
insofar as it relates to the Tranche B Term Obligations, shall initially not be
required to be satisfied in respect of such Regulated Guarantor Subsidiary or
Regulated Grantor Subsidiary, as the case may be.  At such time as the General Counsel, the
Chief Legal Officer, any Assistant Chief Legal Officer or any Assistant General
Counsel of Level 3 shall have delivered to the Administrative Agent written
notice that the Tranche B Guarantee Permit Condition shall have been satisfied
with respect to any Regulated Guarantor Subsidiary, (x) clause (i) of
the immediately preceding sentence shall become inoperative with respect to
such Regulated Guarantor Subsidiary and such Regulated Guarantor Subsidiary
shall automatically be deemed to Guarantee the Tranche B Term Obligations as provided
in the Security Documents, and (y) the Guarantee and Collateral
Requirement, insofar as it relates to Guarantees by such Regulated Guarantor
Subsidiary of the Tranche B Term Obligations, shall be required to be satisfied
in respect of such Regulated Guarantor Subsidiary.  At such time as the General Counsel, the
Chief Legal Officer, any Assistant Chief Legal Officer or any Assistant General
Counsel of Level 3 shall have delivered to the Administrative Agent written
notice that the Tranche B Collateral Permit Condition shall have been satisfied
with respect to any Regulated Grantor Subsidiary, (x) clause (ii) of
the immediately preceding sentence shall become inoperative with respect to
such Regulated Grantor Subsidiary and such Regulated Grantor Subsidiary shall
automatically be deemed to grant Liens on, security interests in and pledges of
its assets to secure the Tranche B Term Obligations as provided in the Security
Documents and (y) the Guarantee and Collateral Requirement, insofar as it
relates to the granting of Liens, security interests and pledges to secure the
Tranche B

 

2

 

Term Obligations shall be required to be
satisfied in respect of such Regulated Grantor Subsidiary.

 

(b)  Each of Level 3 and
the Borrower (i) will endeavor, and cause each Regulated Guarantor
Subsidiary and Regulated Grantor Subsidiary to endeavor, in good faith using
commercially reasonable efforts, to (A) cause the Tranche B Guarantee
Permit Condition and the Tranche B Collateral Permit Condition to be satisfied
with respect to each Regulated Guarantor Subsidiary and Regulated Grantor
Subsidiary at the earliest practicable date and (ii) will cause the
General Counsel, the Chief Legal Officer, any Assistant Chief Legal Officer or
any Assistant General Counsel of Level 3 to deliver to the Administrative Agent
the applicable notice referred to in paragraph (a) of this Section promptly
(and in any event within 5 Business Days) following satisfaction of the Tranche
B Guarantee Permit Condition or the Tranche B Collateral Permit Condition in
respect of any Regulated Guarantor Subsidiary or Regulated Grantor Subsidiary,
each of which is a Guarantor and/or Grantor with respect to the Tranche A Term
Loans.  For purposes of this Section, the
requirement that Level 3, the Borrower or any Subsidiary of Level 3 use “commercially
reasonable efforts” shall not be deemed to require it to make material payments
in excess of normal fees and costs to or at the direction of Governmental
Authorities or to change the manner in which it conducts its business in any
respect that the management of Level 3 shall determine in good faith to be
adverse or materially burdensome.  Upon
the reasonable request of Level 3 or the Borrower, the Administrative Agent and
the Tranche B Term Lenders will cooperate with Level 3 and the Borrower as
necessary to enable them to comply with their obligations under this Section.

 

(c)  For purposes of this
Section, the following terms have the meanings specified below:

 

“Regulated Grantor
Subsidiary” means Level 3 Communications, LLC, WilTel Communications Group,
LLC, WilTel Communications, LLC, C III Communications, LLC, Broadwing
Communications, LLC and TelCove Operations, LLC.

 

“Regulated Guarantor
Subsidiary” means Level 3 Communications, LLC, WilTel Communications, LLC,
Broadwing Communications, LLC and TelCove Operations, LLC.

 

“Tranche B Collateral Permit
Condition” means, with respect to any Regulated Grantor Subsidiary, that
such Regulated Grantor Subsidiary has obtained all material (as determined in
good faith by the General Counsel of Level 3) authorizations and consents of
Federal and State Governmental Authorities, if any, required in order for it to
become a Grantor in respect of the Tranche B Term Obligations under the
Collateral Agreement and to satisfy the Guarantee and Collateral Requirement
with respect to the Tranche B Term Obligations, insofar as the authorizations
and consents so permit.

 

“Tranche B Guarantee Permit
Condition” means, with respect to any Regulated Guarantor Subsidiary, that
such Regulated Guarantor Subsidiary has obtained all material (as determined in
good faith by the General Counsel of Level 3)

 

3

 

authorizations and consents of Federal and
State Governmental Authorities, if any, 
required, in order for it to become a Guarantor in respect of the
Tranche B Term Obligations under the Guarantee Agreement and to satisfy the
Guarantee and Collateral Requirement with respect to the Tranche B Term Obligations,
insofar as the authorizations and consents so permit.

 

SECTION 3.  Benefits of Loan Documents.  The Tranche B Term Loans shall be entitled to
all the benefits afforded by the Restated Credit Agreement and the other Loan
Documents and shall benefit equally and ratably (except as provided in Section 2
above) from the Guarantees created by the Guarantee Agreement and the security
interests created by the Collateral Agreement and the other Security Documents.

 

SECTION 4.  Representations and Warranties.  Each of Level 3 and the Borrower represents
and warrants to the Lenders that:

 

(a)  the execution, delivery, and performance by each of Level 3,
the Borrower and the other Loan Parties of this Agreement, and the consummation
of the transactions contemplated hereby by each Loan Party on the Restatement
Effective Date, are within the powers of Level 3, the Borrower or such other
Loan Party, as applicable, and have been duly authorized by all necessary
corporate or other action and, if required, stockholder or member action;

 

(b)  this Agreement has been duly executed and delivered by Level
3, the Borrower and each other Loan Party and constitutes, and each other Loan
Document to which any Loan Party is a party constitutes, a legal, valid and
binding obligation of such Loan Party, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in
equity or at law;

 

(c)  the representations and warranties of (i) Level 3 and
the Borrower contained in Article III of the Original Credit Agreement and
(ii) each Loan Party contained in any other Loan Document are true and
correct in all material respects on and as of the date hereof, except to the
extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct in all material
respects as of such earlier date, and except that (A) the representations
and warranties contained in Section 3.04(a) of the Original Credit
Agreement shall be deemed to refer to the most recent financial statements
furnished pursuant to Section 5.01(a) of the Original Credit Agreement,
(B) references in such representations and warranties and the definition
of “Disclosed Matters” to the “Effective Date” shall be deemed to be references
to the “Restatement Effective Date”, (C) references to “January 1,
2007” and “March 12, 2007” in the definition of “Disclosed Matters” and Section 3.04(c) shall
be deemed to be references to “January 1, 2009” and “April 16, 2009”,
respectively, (D) Section 3.06(a) shall be deemed to include the
following phrase in the parenthetical after the words “Disclosed Matters”: “and
as disclosed on Schedule 3.06 attached to the Amendment Agreement”, and (E) references
in

 

4

 

such
representations and warranties to “Schedule 3.12” and “Schedule 3.13” shall be
deemed to be references to Schedule 3.12 and Schedule 3.13, respectively,
attached hereto; and

 

(d)  no Default has occurred and is continuing on the date hereof.

 

SECTION 5.  Effectiveness.  The amendment and restatement of the Original
Credit Agreement and certain schedules and exhibits thereto as set forth in Section 1
hereof, and the obligations of the Tranche B Term Lenders to make the
Tranche B Term Loans hereunder, shall become effective on the first date
(the “Restatement Effective Date”) on which each the following
conditions shall have been satisfied (or waived in accordance with Section 9.02
of the Restated Credit Agreement):

 

(a)  The Administrative Agent (or its counsel) shall have received
from Level 3, the Borrower, each other Loan Party, the Administrative Agent and
each Tranche B Term Lender either (i) counterparts of this Agreement
signed on behalf of each such party or (ii) written evidence satisfactory
to the Administrative Agent (which may include a telecopy transmission of a
signed signature page of this Agreement) that each such party has signed a
counterpart of this Agreement.

 

(b)  The Administrative Agent shall have received favorable
written opinions (addressed to the Administrative Agent and the Tranche B Term
Lenders and dated the Restatement Effective Date) of (i) Willkie Farr &
Gallagher LLP, counsel for the Borrower, (ii) the Chief Legal Officer or
an Assistant General Counsel of Level 3, (iii) Potter Anderson &
Corroon LLP, Delaware local counsel, and (iv) Bingham McCutchen LLP,
regulatory counsel for the Borrower, covering such matters relating to the Loan
Parties, the Loan Documents or the transactions contemplated by this Agreement
as the Administrative Agent shall reasonably request.

 

(c)  The Administrative Agent shall have received such documents
and certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each Loan
Party, the authorization by the Loan Parties of the transactions contemplated
hereby and any other legal matters relating to the Loan Parties, the Loan
Documents or the transactions contemplated hereby, all in form and substance
reasonably satisfactory to the Administrative Agent and its counsel.

 

(d)  The Administrative Agent shall have received a certificate
signed by a Financial Officer of Level 3, dated the Restatement Effective Date,
certifying that the representations and warranties set forth in Section 4
hereof (in each case, substituting all references in Section 4 to the “Original
Credit Agreement” (other than the second reference to the “Original Credit
Agreement” in clause (A) of Section 4(c)) with references to the “Restated
Credit Agreement” and all references in Section 4 to the “date hereof”
with references to the “Restatement Effective Date”) are true and correct as of
the Restatement Effective Date.

 

5

 

(e)  The Guarantee and Collateral Requirement shall have been
satisfied.

 

(f)  The Administrative Agent, Banc of America Securities LLC, as
sole lead arranger and sole bookrunner, and the Tranche B Term Lenders shall
have received all fees and other amounts due and payable to them on or prior to
the Restatement Effective Date, including the reimbursement or payment of all
reasonable out-of-pocket expenses for which reasonably detailed invoices have
been presented (including the reasonable fees, charges and disbursements of
Cravath, Swaine & Moore LLP, counsel for the Administrative Agent)
incurred in connection with this Agreement.

 

(g)  The Administrative Agent shall have received (i) a
completed (A) perfection certificate in the form of Annex II hereto (the “Restatement
Effective Date Perfection Certificate”) and (B) perfection certificate
in the form of Annex III hereto (the “Restatement Effective Date Loan
Proceeds Note Perfection Certificate”), each dated the Restatement
Effective Date and signed by a Financial Officer, in each case, together with
all attachments contemplated thereby, and (ii) the results of a search of
the Uniform Commercial Code (or equivalent) filings made with respect to the
Loan Parties in the jurisdictions contemplated by the Restatement Effective
Date Perfection Certificate and copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably satisfactory to the
Administrative Agent that the Liens indicated by such financing statements (or
similar documents) are permitted by Section 6.05 or have been released.

 

The Administrative Agent shall notify Level
3, the Borrower and the Lenders of the Restatement Effective Date, and such
notice shall be conclusive and binding.

 

SECTION 6.  Effect of Amendment and Restatement; No
Novation.  (a)  Except as
expressly set forth herein and in the Restated Credit Agreement, this Agreement
shall not by implication or otherwise limit, impair, constitute a waiver of, or
otherwise affect the rights and remedies of the Agent or the Lenders under any
Loan Document, and shall not alter, modify, amend or in any way affect any of
the terms, conditions, obligations (including, for the avoidance of doubt, any
guarantee obligations and indemnity obligations of the Guarantors), covenants
or agreements contained in any Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle any
Loan Party to a consent to, or a waiver, amendment, modification or other
change of, any of the terms, conditions, obligations, covenants or agreements
contained in any Loan Document in similar or different circumstances.

 

(b)  From and after the
Restatement Effective Date, the terms “Agreement”, “this Agreement”, “herein”, “hereinafter”,
“hereto”, “hereof” and words of similar import, as used in the Restated Credit
Agreement, shall refer to the Original Credit Agreement as amended and restated
in the form of the Restated Credit Agreement, and the term “Credit Agreement”,
as used in any Loan Document, shall mean the 

 

6

 

Restated Credit Agreement.  This Agreement shall constitute a “Loan
Document” for all purposes of the Restated Credit Agreement and the other Loan
Documents.

 

(c)  Neither this
Agreement nor the effectiveness of the Restated Credit Agreement shall
extinguish the obligations for the payment of money outstanding under the
Original Credit Agreement or discharge or release any Guarantee thereof.  Nothing herein contained shall be construed
as a substitution or novation of the Obligations outstanding under the Original
Credit Agreement or the Guarantee Agreement, which shall remain in full force
and effect, except as modified hereby and by the Restated Credit
Agreement.  Nothing expressed or implied
in this Agreement, the Restated Credit Agreement or any other document contemplated
hereby or thereby shall be construed as a release or other discharge of the
Borrower under the Original Credit Agreement or any Loan Party under any Loan
Document (as defined in the Original Credit Agreement) from any of its
obligations and liabilities thereunder.

 

SECTION 7.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS OTHER THAN SECTIONS 5-1401 AND 5-1402 OF
THE GENERAL OBLIGATIONS LAW.

 

SECTION 8.  Counterparts.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. 
Delivery of an executed counterpart of a signature page of this
Agreement by facsimile or other electronic means shall be effective as delivery
of a manually executed counterpart of this Agreement.

 

SECTION 9.  Headings. The headings of this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.

 

[Signature pages follow.]

 

7

 

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed by their respective
authorized officers as of the date first above written.

 

 

	
   

  	
  LEVEL 3 COMMUNICATIONS, INC.,

  
	
   

  	
   

  
	
   

  	
  by

  
	
   

  	
   

  	
   /s/ Robin Grey

  
	
   

  	
   

  	
   Name:

  	
  Robin Grey

  
	
   

  	
   

  	
   Title:

  	
  Senior Vice President & Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LEVEL 3 FINANCING, INC.,

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   /s/ Robin Grey

  
	
   

  	
   

  	
   Name:

  	
  Robin Grey

  
	
   

  	
   

  	
   Title:

  	
  Senior Vice President & Treasurer

  

 

 

	
   

  	
  BROADWING, LLC,

  
	
   

  	
  BROADWING COMMUNICATIONS, LLC,

  
	
   

  	
  BROADWING FINANCIAL SERVICES, INC.,

  
	
   

  	
  BTE EQUIPMENT, LLC,

  
	
   

  	
  C III COMMUNICATIONS, LLC,

  
	
   

  	
  ELDORADO EQUIPMENT, INC.,

  
	
   

  	
  ICG COMMUNICATIONS, INC.,

  
	
   

  	
  LEVEL 3 COMMUNICATIONS, LLC,

  
	
   

  	
  LEVEL 3 ENHANCED SERVICES, LLC,

  
	
   

  	
  LEVEL 3 INTERNATIONAL, INC.,

  
	
   

  	
  TELCOVE OPERATIONS, LLC,

  
	
   

  	
  WILTEL COMMUNICATIONS GROUP, LLC,

  
	
   

  	
  WILTEL COMMUNICATIONS, LLC,

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   /s/ Robin Grey

  
	
   

  	
   

  	
   Name:

  	
  Robin Grey

  
	
   

  	
   

  	
   Title:

  	
  Senior Vice President & Treasurer

  

 

 

	
   

  	
  MERRILL LYNCH CAPITAL CORPORATION,

  
	
   

  	
  Individually, and as Administrative Agent and Collateral Agent,

  
	
   

  	
   

  
	
   

  	
  by:

  	
   /s/ Scott Tolchin

  
	
   

  	
   

  	
  Name:

  	
  Scott Tolchin

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

SIGNATURE PAGE
TO AMENDMENT AGREEMENT

AMENDING AND
RESTATING

THE CREDIT
AGREEMENT OF LEVEL 3 COMMUNICATIONS, INC.

 

 

	
   

  	
  TRANCHE B TERM LENDER:

  	
  Bank of America, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by:

  	
  /s/ John M. Rote

  
	
   

  	
   

  	
   

  	
  Name:

  	
  John M. Rote

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by: 

  	
   

  	
  *

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
						

 

 

* For Lenders requiring a second signature
line.

 

 

ANNEX I

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

dated as of

 

April 16, 2009

 

among

 

LEVEL 3 COMMUNICATIONS, INC.

 

LEVEL 3 FINANCING, INC.

 

The Lenders Party hereto

 

and

 

MERRILL LYNCH CAPITAL CORPORATION

as Administrative Agent and Collateral Agent

 

 

MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED

as Joint Lead Arranger and Joint Bookrunner

 

MORGAN STANLEY & CO. INCORPORATED

Joint Lead Arranger, Joint Bookrunner and
Syndication Agent

 

and

CITIGROUP GLOBAL MARKETS, INC.,

 

CREDIT SUISSE SECURITIES (USA) LLC

 

and

 

WACHOVIA BANK, NATIONAL ASSOCIATION

as Co-Documentation Agents

 

[CS&M Ref. No. 4408-174]

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  
	
  Definitions

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  Defined Terms

  	
  2

  
	
  SECTION 1.02.

  	
  Terms Generally

  	
  45

  
	
  SECTION 1.03.

  	
  Accounting Terms; GAAP

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  
	
  The Credits

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  Commitments; Loans and
  Borrowings

  	
  46

  
	
  SECTION 2.02.

  	
  Funding of Loans

  	
  46

  
	
  SECTION 2.03.

  	
  Interest Elections

  	
  47

  
	
  SECTION 2.04.

  	
  Repayment of Loans; Evidence of
  Debt

  	
  48

  
	
  SECTION 2.05.

  	
  Prepayments

  	
  49

  
	
  SECTION 2.06.

  	
  Fees

  	
  51

  
	
  SECTION 2.07.

  	
  Interest

  	
  51

  
	
  SECTION 2.08.

  	
  Alternate Rate of Interest

  	
  52

  
	
  SECTION 2.09.

  	
  Increased Costs

  	
  52

  
	
  SECTION 2.10.

  	
  Break Funding Payments

  	
  53

  
	
  SECTION 2.11.

  	
  Taxes

  	
  54

  
	
  SECTION 2.12.

  	
  Payments Generally; Pro Rata
  Treatment; Sharing of Set-offs

  	
  55

  
	
  SECTION 2.13.

  	
  Mitigation Obligations;
  Replacement of Lenders

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  
	
  Representations
  and Warranties

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Organization; Powers

  	
  57

  
	
  SECTION 3.02.

  	
  Authorization; Enforceability

  	
  57

  
	
  SECTION 3.03.

  	
  Governmental Approvals; No
  Conflicts

  	
  58

  
	
  SECTION 3.04.

  	
  Financial Condition; No Material
  Adverse Change

  	
  58

  
	
  SECTION 3.05.

  	
  Properties

  	
  58

  
	
  SECTION 3.06.

  	
  Litigation and Environmental
  Matters

  	
  59

  
	
  SECTION 3.07.

  	
  Compliance with Laws and
  Agreements

  	
  59

  
	
  SECTION 3.08.

  	
  Investment Company Status

  	
  59

  
	
  SECTION 3.09.

  	
  Taxes

  	
  59

  
	
  SECTION 3.10.

  	
  ERISA

  	
  59

  
	
  SECTION 3.11.

  	
  Disclosure

  	
  60

  
	
  SECTION 3.12.

  	
  Subsidiaries

  	
  60

  
	
  SECTION 3.13.

  	
  Insurance

  	
  60

  

 

i

 

	
  SECTION 3.14.

  	
  Labor Matters

  	
  60

  
	
  SECTION 3.15.

  	
  Intellectual Property

  	
  60

  
	
  SECTION 3.16.

  	
  Security Interests

  	
  60

  
	
  SECTION 3.17.

  	
  FCC Compliance

  	
  61

  
	
  SECTION 3.18.

  	
  Qualified Credit Facility;
  Senior Indebtedness

  	
  62

  
	
  SECTION 3.19.

  	
  Solvency

  	
  62

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  
	
  Conditions

  
	
   

  
	
  SECTION 4.01.

  	
  Effective Date

  	
  62

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  
	
  Affirmative
  Covenants

  
	
   

  
	
  SECTION 5.01.

  	
  Financial Statements and Other
  Information

  	
  64

  
	
  SECTION 5.02.

  	
  Notices of Material Events

  	
  66

  
	
  SECTION 5.03.

  	
  Information Regarding Collateral

  	
  66

  
	
  SECTION 5.04.

  	
  Existence; Conduct of Business

  	
  67

  
	
  SECTION 5.05.

  	
  Payment of Taxes

  	
  67

  
	
  SECTION 5.06.

  	
  Maintenance of Properties

  	
  67

  
	
  SECTION 5.07.

  	
  Insurance

  	
  67

  
	
  SECTION 5.08.

  	
  Casualty and Condemnation

  	
  67

  
	
  SECTION 5.09.

  	
  Annual Information Meeting

  	
  68

  
	
  SECTION 5.10.

  	
  Compliance with Laws

  	
  68

  
	
  SECTION 5.11.

  	
  Use of Proceeds

  	
  68

  
	
  SECTION 5.12.

  	
  Guarantee and Collateral
  Requirement; Further Assurances

  	
  68

  
	
  SECTION 5.13.

  	
  Guarantee Permit Condition and
  Collateral Permit Condition

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  
	
  Negative
  Covenants

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Limitation on Consolidated Debt

  	
  69

  
	
  SECTION 6.02.

  	
  Limitation on Indebtedness of
  the Borrower and Borrower Restricted Subsidiaries

  	
  74

  
	
  SECTION 6.03.

  	
  Limitation on Restricted
  Payments

  	
  78

  
	
  SECTION 6.04.

  	
  Limitation on Dividend and Other
  Payment Restrictions Affecting Restricted Subsidiaries

  	
  82

  
	
  SECTION 6.05.

  	
  Limitation on Liens

  	
  84

  
	
  SECTION 6.06.

  	
  Limitation on Sale and Leaseback
  Transactions

  	
  86

  
	
  SECTION 6.07.

  	
  Limitation on Asset Dispositions

  	
  86

  

 

ii

 

	
  SECTION 6.08.

  	
  Limitation on Issuance and Sales
  of Capital Stock of Restricted Subsidiaries

  	
  90

  
	
  SECTION 6.09.

  	
  Transactions with Affiliates

  	
  91

  
	
  SECTION 6.10.

  	
  Limitation on Designations of
  Unrestricted Subsidiaries

  	
  92

  
	
  SECTION 6.11.

  	
  Limitation on Actions with
  respect to Existing Intercompany Obligations

  	
  93

  
	
  SECTION 6.12.

  	
  Covenant Suspension

  	
  95

  
	
  SECTION 6.13.

  	
  Consolidation, Merger,
  Conveyance, Transfer or Lease

  	
  96

  

 

ARTICLE VII

Events of Default

 

ARTICLE VIII

The Agent

 

ARTICLE IX

Miscellaneous

 

	
  SECTION 9.01.

  	
  Notices

  	
  106

  
	
  SECTION 9.02.

  	
  Waivers; Amendments; Addition of
  Term or Revolving Tranches

  	
  107

  
	
  SECTION 9.03.

  	
  Expenses; Indemnity; Damage
  Waiver

  	
  110

  
	
  SECTION 9.04.

  	
  Successors and Assigns

  	
  111

  
	
  SECTION 9.05.

  	
  Survival

  	
  115

  
	
  SECTION 9.06.

  	
  Counterparts; Integration;
  Effectiveness

  	
  115

  
	
  SECTION 9.07.

  	
  Severability

  	
  115

  
	
  SECTION 9.08.

  	
  Right of Setoff

  	
  115

  
	
  SECTION 9.09.

  	
  Governing Law; Jurisdiction;
  Consent to Service of Process

  	
  116

  
	
  SECTION 9.10.

  	
  WAIVER OF JURY TRIAL

  	
  116

  
	
  SECTION 9.11.

  	
  Headings

  	
  117

  
	
  SECTION 9.12.

  	
  Confidentiality

  	
  117

  
	
  SECTION 9.13.

  	
  Interest Rate Limitation

  	
  117

  
	
  SECTION 9.14.

  	
  Release of Subsidiary Loan
  Parties and Collateral

  	
  118

  
	
  SECTION 9.15.

  	
  Senior Debt Status

  	
  119

  
	
  SECTION 9.16.

  	
  No Fiduciary Relationship

  	
  119

  

 

 

SCHEDULES:

 

	
  Schedule 2.01

  	
  — Commitments

  
	
  Schedule 3.12

  	
  — Subsidiaries

  
	
  Schedule 3.13

  	
  — Insurance

  
	
  Schedule 4.01(i)

  	
  — Lien Searches

  

 

iii

 

EXHIBITS:

 

	
  Exhibit A

  	
  — Form of Assignment and Assumption

  
	
  Exhibit B-1

  	
  — Form of Effective Date Perfection
  Certificate

  
	
  Exhibit B-2

  	
  — Form of Effective Date Loan Proceeds
  Note Perfection Certificate

  
	
  Exhibit C-1

  	
  — Form of Guarantee Agreement

  
	
  Exhibit C-2

  	
  — Form of Collateral Agreement

  
	
  Exhibit C-3

  	
  — Form of Indemnity, Subrogation and
  Contribution Agreement

  
	
  Exhibit D

  	
  — Form of Promissory Note

  
	
  Exhibit E-1

  	
  — Form of Opinion of Willkie Farr &
  Gallagher LLP, counsel for the Borrower

  
	
  Exhibit E-2

  	
  — Form of Opinion of the Chief Legal
  Officer or an Assistant General Counsel of the Borrower

  
	
  Exhibit E-3

  	
  — Form of Opinion of Potter
  Anderson & Corroon LLP, local counsel for the Borrower

  
	
  Exhibit E-4

  	
  — Form of Opinion of Bingham McCutchen
  LLP, regulatory counsel for the Borrower

  
	
  Exhibit F

  	
  — Omnibus Offering Proceeds Note Subordination Agreement

  
	
  Exhibit G-1

  	
  — Form of Loan Proceeds Note Collateral Agreement

  
	
  Exhibit G-2

  	
  — Form of Loan Proceeds Note Guarantee Agreement

  
	
  Exhibit H

  	
  — Form of Loan Proceeds Note

  

 

iv

 

AMENDED AND RESTATED CREDIT AGREEMENT dated
as of April 16, 2009 (this “Agreement”) among LEVEL 3
COMMUNICATIONS, INC., LEVEL 3 FINANCING, INC., as Borrower, the LENDERS party
hereto, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Joint
Lead Arranger and Joint Bookrunner, MORGAN STANLEY & CO. INCORPORATED,
as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, BANC OF AMERICA
SECURITIES LLC, as Sole Lead Arranger and Sole Bookrunner for the
Tranche B Term Loans (as defined below), CITIGROUP GLOBAL MARKETS, INC.,
CREDIT SUISSE SECURITIES (USA) LLC and WACHOVIA BANK, N.A., as Co-Documentation
Agents, and MERRILL LYNCH CAPITAL CORPORATION, as Administrative Agent and
Collateral Agent.

 

WHEREAS, the Borrower is party
to that certain Credit Agreement dated as of March 13, 2007 (the “Original
Credit Agreement”), among Level 3 (such term and each other capitalized
term used but not otherwise defined herein having the meaning given it in Article I),
the Borrower, the lenders party thereto, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as joint lead arranger and joint bookrunner, Morgan Stanley &
Co. Incorporated, as joint lead arranger, joint bookrunner and syndication
agent, Citigroup Global Markets, Inc., Credit Suisse Securities (USA) LLC
and Wachovia Bank, N.A., as co-documentation agents, and Merrill Lynch Capital
Corporation, as administrative agent and collateral agent.

 

WHEREAS, under the Original
Credit Agreement, the Borrower requested that the Tranche A Term Lenders make
Tranche A Term Loans to the Borrower in an aggregate principal amount of
$1,400,000,000, the proceeds of which were (a) used to refinance the
Existing Term Loans and (b) to the extent of the remaining proceeds,
advanced by the Borrower to Level 3 LLC against delivery of the Loan Proceeds
Note.

 

WHEREAS, pursuant to Section 9.02(d) of
the Original Credit Agreement, (a) the Original Credit Agreement and the
other Loan Documents may be amended to establish one or more additional classes
of term loans by an agreement in writing entered into by Level 3, the Borrower,
the Administrative Agent, the Collateral Agent and each person (including any
Lender) agreeing to make such additional term loans, but without the consent of
any other Lender and (b) the Borrower has requested that the Tranche B
Term Lenders make Tranche B Term Loans to the Borrower in an aggregate
principal amount of $220,000,000, the net proceeds of which, as well as
additional funds of the Borrower, will be advanced by the Borrower to Level 3
LLC on the Restatement Effective Date in an amount equal to the aggregate
principal amount of the Tranche B Term Loans issued, against delivery of the
Loan Proceeds Note (as increased by the amount of $220,000,000 to evidence such
loan made by the Borrower to Level 3 LLC on the Restatement Effective Date).

 

 

WHEREAS, (a) Level 3, the
Borrower, the Agent and the Tranche B Term Lenders have entered into an Amendment
Agreement dated as of April 16, 2009 (the “Amendment Agreement”),
pursuant to which the Original Credit Agreement has been amended and restated
to be in the form hereof, and (b) the Tranche B Term Lenders are willing
to extend Tranche B Term Loans having the terms and conditions provided for
herein and in the Amendment Agreement.

 

Accordingly, the parties hereto
agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01.  Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

 

“ABR”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.

 

“Accreted Value” of any
Indebtedness issued at a price less than the principal amount at stated
maturity, means, as of any date of determination, an amount equal to the sum of
(a) the issue price of such Indebtedness as determined in accordance with Section 1273
of the Code or any successor provisions plus (b) the aggregate of the
portions of the original issue discount (the excess of the amounts considered
as part of the “stated redemption price at maturity” of such Indebtedness
within the meaning of Section 1273(a)(2) of the Code or any successor
provisions, whether denominated as principal or interest, over the issue price
of such Indebtedness) that shall theretofore have accrued pursuant to Section 1272
of the Code (without regard to Section 1272(a)(7) of the Code) from
the date of issue of such Indebtedness to the date of determination, minus all
amounts theretofore paid in respect of such Indebtedness, which amounts are
considered as part of the “stated redemption price at maturity” of such
Indebtedness within the meaning of Section 1273(a)(2) of the Code or
any successor provisions (whether such amounts paid were denominated principal
or interest).

 

“Acquired Debt” means,
with respect to any specified Person, (i) Indebtedness of any other Person
existing at the time such Person merges with or into or consolidates with or
becomes a Subsidiary of such specified Person and (ii) Indebtedness
secured by a Lien encumbering any Property acquired by such specified Person,
which Indebtedness was not incurred in anticipation of, and was outstanding
prior to, such merger, consolidation or acquisition.

 

“Additional Tranche”
means any tranche of commitments established or loans made under this Agreement
pursuant to Section 9.02(d).

 

2

 

“Administrative Agent”
means Merrill Lynch Capital Corporation, in its capacity as administrative
agent for the Lenders hereunder.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Administrative Agent.

 

“Affiliate” of any Person
means any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such Person.  For the purposes of this definition, “control”
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms “controlling”
and “controlled” have meanings correlative to the foregoing.  For purposes of Sections 6.07 and 6.09
and the definition of “Telecommunications/IS Assets” only, “Affiliate” shall
also mean any beneficial owner of shares representing 10% or more of the total
voting power of the Voting Stock (on a fully diluted basis) of Level 3 or
of rights or warrants to purchase such Voting Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.

 

“Affiliate Transaction”
has the meaning specified in Section 6.09.

 

“Agent” means Merrill
Lynch Capital Corporation, in its capacities as Administrative Agent and
Collateral Agent.

 

“Agreement” has the
meaning specified in the preliminary statement hereto.

 

“Alternate Base Rate”
means, for any day, a rate per annum equal to:

 

(a) in the case of a
Tranche A Term Loan, the greater of (i) the Prime Rate in effect on such
day and (ii) the Federal Funds Effective Rate in effect on such day
plus 1⁄2 of 1%; and

 

 (b) in the case of a Tranche B Term Loan,
the greater of (i) the Prime Rate in effect on such day, (ii) the
Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1% and (iii) the
sum of (A) the higher of (x) the LIBO Rate for a one month Interest
Period on such day (or if such day is not a Business Day, the immediately
preceding Business Day) plus 1% and (y) 3.00%, plus (B) 1.00%; provided
that, for the avoidance of doubt, the LIBO Rate for any day shall be based on
the rate appearing on Bloomberg’s British Banker’s Association rate page (or
on any successor or substitute page) at approximately 11:00 a.m., London
time, on such day; and provided  further that if the
Administrative Agent shall have given notice to Level 3 pursuant to Section 2.08
that adequate and reasonable means do not exist for ascertaining such LIBO Rate,
clause (iii) shall be deemed to read “4.00%” until the Administrative
Agent notifies Level 3 and the Lenders that the circumstances giving rise
to such notice under Section 2.08 no longer exist.

 

3

 

Any change in the Alternate
Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate
or the LIBO Rate shall be effective from and including the effective date of
such change in the Prime Rate, the Federal Funds Effective Rate or the LIBO
Rate, respectively.

 

“Amendment Agreement” has the meaning
specified in the recitals hereto.

 

“Annual Loan Proceeds Note Perfection
Certificate” has the meaning specified in the Loan Proceeds Note Collateral
Agreement.

 

“Annual Perfection Certificate” has
the meaning specified in the Collateral Agreement.

 

“Applicable Margin” means (a) in
respect of any Tranche A Term Loan, (i) 1.25% per annum in the case of any
Tranche A ABR Loan and (ii) 2.25% per annum in the case of any Tranche A
Eurodollar Loan and (b) in respect of any Tranche B Term Loan, (i) 7.50%
per annum in the case of any Tranche B ABR Loan and (ii) 8.50% per annum
in the case of any Tranche B Eurodollar Loan.

 

“Approved Fund” means (a) with
respect to any Lender, a CLO managed by such Lender or by an Affiliate of such
Lender and (b) with respect to any Lender that is a fund which invests in
bank loans and similar extensions of credit, any other fund that invests in
bank loans and similar extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.

 

“Asset Disposition” means any
transfer, conveyance, sale, lease, issuance or other disposition by
Level 3 or any Restricted Subsidiary in one or more related transactions
(including a consolidation or merger or other sale of any such Restricted
Subsidiary with, into or to another Person in a transaction in which such
Restricted Subsidiary ceases to be a Restricted Subsidiary, but excluding a
disposition by a Restricted Subsidiary to Level 3 or a Restricted
Subsidiary or by Level 3 to a Restricted Subsidiary) of (i) shares of
Capital Stock or other ownership interests of a Restricted Subsidiary (other
than as permitted by clause (v), (vi), (vii) or (ix) of Section 6.08),
(ii) substantially all of the assets of Level 3 or any Restricted
Subsidiary representing a division or line of business or (iii) other
Property of Level 3 or any Restricted Subsidiary outside of the ordinary
course of business (excluding any transfer, conveyance, sale, lease or other
disposition of equipment or real estate (including fixtures appurtenant
thereto) that is obsolete or no longer used by or useful to Level 3); provided
in each case that the aggregate consideration for such transfer, conveyance,
sale, lease or other disposition is equal to $5,000,000 or more in any 12-month
period.  The following shall not be Asset
Dispositions: (i) Permitted Telecommunications Capital Asset Dispositions
that comply with clause (i) of the first paragraph of Section 6.07, (ii) when
used with respect to Level 3, any Asset Disposition permitted pursuant to Section 6.13
which constitutes a disposition of all or substantially all of the assets of
Level 3 and the Restricted Subsidiaries taken as a whole, (iii) Receivables
sales constituting Indebtedness under Qualified Receivables Facilities
permitted to be Incurred pursuant to Section 6.01 or 

 

4

 

Section 6.02 and (iv) any
disposition that constitutes a Permitted Investment or a Restricted Payment
permitted by Section 6.03.

 

“Assignment and Assumption” means an
assignment and assumption entered into by a Lender and an assignee in the form
of Exhibit A or any other form approved by the Administrative
Agent.

 

“Attributable Value” means, as to any
particular lease under which any Person is at the time liable other than a
Capital Lease Obligation, and at any date as of which the amount thereof is to
be determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof (including any period for
which such lease has been extended) as determined in accordance with GAAP,
discounted from the last date of such remaining term to the date of
determination at a rate per annum equal to the discount rate which would be
applicable to a Capital Lease Obligation with like term in accordance with
GAAP.  The net amount of rent required to
be paid under any such lease for any such period shall be the aggregate amount
of rent payable by the lessee with respect to such period after excluding
amounts required to be paid on account of insurance, taxes, assessments,
utility, operating and labor costs and similar charges.  In the case of any lease which is terminable
by the lessee upon the payment of penalty, such net amount shall also include
the lesser of the amount of such penalty (in which case no rent shall be
considered as required to be paid under such lease subsequent to the first date
upon which it may be so terminated) or the rent which would otherwise be
required to be paid if such lease is not so terminated.  “Attributable Value” means, as to a Capital
Lease Obligation, the principal amount thereof.

 

“Board” means the Board of Governors
of the Federal Reserve System of the United States of America.

 

“Board of Directors” of any Person
means the board of directors of such Person or the executive committee or
similar body of such Person.

 

“Board Resolution” of any Person means
a copy of a resolution certified by the Secretary or an Assistant Secretary of
such Person to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the
Administrative Agent.

 

“Borrower” means Level 3
Financing, Inc., a Delaware corporation.

 

“Borrower Debt Ratio” means the ratio
of (a) the aggregate consolidated principal amount (or, in the case of
Indebtedness issued at a discount, the then-Accreted Value) of Indebtedness of
the Borrower and the Borrower Restricted Subsidiaries (other than Indebtedness
owed to Level 3 or a Sister Restricted Subsidiary that is subordinated to
the Loan Proceeds Note (if Level 3 LLC is the obligor of such
Indebtedness) or the Loan Proceeds Note Guarantee or the Guarantee of the
Obligations by the obligor on such Indebtedness), on a consolidated basis,
outstanding as of the most recent available quarterly or annual balance sheet,
after giving pro forma effect to the proposed Incurrence of Indebtedness giving
rise to such calculation and any other Indebtedness 

 

5

 

Incurred or repaid since
such balance sheet date and the receipt and application of the net proceeds
thereof, to (b) the sum of, without duplication, (x) Consolidated
Cash Flow Available for Fixed Charges of the Borrower and the Borrower
Restricted Subsidiaries for the four full fiscal quarters next preceding such
proposed Incurrence of Indebtedness for which consolidated financial statements
are available and (y) Consolidated Cash Flow Available for Fixed Charges of
Level 3 and the Sister Restricted Subsidiaries to the extent such
Consolidated Cash Flow Available for Fixed Charges is attributable to Sister
Restricted Subsidiaries that are Guarantors for such four full fiscal quarters;
provided, however, that if (A) since the beginning of such
four full fiscal quarter period the Borrower, any Borrower Restricted
Subsidiary, Level 3 or any Sister Restricted Subsidiary shall have made
one or more Asset Dispositions or an Investment (by merger or otherwise) in any
Borrower Restricted Subsidiary or Sister Restricted Subsidiary (or any Person
which becomes a Borrower Restricted Subsidiary or a Sister Restricted
Subsidiary) or an acquisition, merger or consolidation of Property which
constitutes all or substantially all of an operating unit of a business or a
line of business, or (B) since the beginning of such period any Person
(that subsequently became a Borrower Restricted Subsidiary or a Sister
Restricted Subsidiary or was merged with or into the Borrower, any Borrower Restricted
Subsidiary or any Sister Restricted Subsidiary since the beginning of such
period) shall have made such an Asset Disposition, Investment, acquisition,
merger or consolidation, then Consolidated Cash Flow Available for Fixed
Charges for such four full fiscal quarter period shall be calculated after
giving pro forma effect to such Asset Dispositions, Investments, acquisitions,
mergers or consolidations as if such Asset Dispositions, Investments,
acquisitions, mergers or consolidations occurred on the first day of such
period.  For purposes of this definition,
whenever “pro forma” effect is to be given to any Asset Disposition,
Investment, acquisition, merger or consolidation, the calculations shall be
performed in accordance with Article 11 of Regulation S-X promulgated
under the Securities Act, as interpreted in good faith by the chief financial
officer of Level 3, except that any such pro forma calculation may include
operating expense reductions for such period attributable to the transaction to
which pro forma effect is being given (including, without limitation, operating
expense reductions attributable to execution or termination of any contract,
reduction of costs related to administrative functions, the termination of any
employees or the closing (or the approval by the Board of Directors of
Level 3 of the closing) of any facility) that have been realized or for
which all steps necessary for the realization of which have been taken or are
reasonably expected to be taken within twelve months following such
transaction, provided, that such adjustments are set forth in an Officer’s
Certificate which states (i) the amount of such adjustment or adjustments
and (ii) that such adjustment or adjustments are based on the reasonable
good faith beliefs of the officers executing such Officers’ Certificate.

 

“Borrower Restricted Subsidiary
Supplemental Indenture” means any supplemental indenture to the 10.75%
Notes Indenture, the 2011 Floating Rate Notes Indenture, the 12.25% Notes
Indenture, the 9.25% Notes Indenture, the 2015 Floating Rate Notes Indenture or
the 8.75% Notes Indenture in substantially the form of the Level 3 LLC 10.75%
Notes Supplemental Indenture, the Level 3 LLC 2011 Floating Rate Notes
Supplemental Indenture, the Level 3 LLC 12.25% Notes Supplemental Indenture,
the Level 3 LLC 9.25% Notes Supplemental Indenture, the Level 3 LLC 2015
Floating 

 

6

 

Rate Notes Supplemental
Indenture or the Level 3 LLC 8.75% Notes Supplemental Indenture, as the case
may be, among the Borrower, Level 3, any Borrower Restricted Subsidiary (other
than Level 3 LLC) and the Trustee under the 10.75% Notes Indenture, the 2011
Floating Rate Notes Indenture, the 12.25% Notes Indenture, the 9.25% Notes
Indenture, the 2015 Floating Rate Notes Indenture or the 8.75% Notes Indenture,
as the case may be.

 

“Borrower Restricted Subsidiaries”
means the Subsidiaries of the Borrower that are Restricted Subsidiaries.

 

“Borrowing” means Loans of the same Class made,
converted or continued on the same date and, in the case of Eurodollar Loans,
as to which a single Interest Period is in effect.

 

“Business Day” means any day that is
not a Saturday, Sunday or other day on which commercial banks in New York City
are authorized or required by law to remain closed; provided that, when
used in connection with a Eurodollar Loan, the term “Business Day” shall also
exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.

 

“Capital Lease Obligation” of any
Person means the obligation of such Person to pay rent or other payment amount
under any lease of (or other Indebtedness arrangement conveying the right to
use) Property of such Person which obligation is required to be classified and
accounted for as a capital lease or a liability on a balance sheet of such
Person under GAAP (a “Capital Lease”). 
The stated maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.  The principal amount of such
obligation shall be the capitalized amount thereof that would appear on the
face of a balance sheet of such Person in accordance with GAAP.

 

“Capital Stock” of any Person means
any and all shares, interests, participations or other equivalents (however
designated) of corporate stock or other equity participations, including
partnership interests, whether general or limited, of such Person and any rights
(other than debt securities convertible or exchangeable into an equity
interest), warrants or options to acquire an equity interest in such Person.

 

“Cash Equivalents” means (i) Government
Securities maturing, or subject to tender at the option of the holder thereof,
within two years after the date of acquisition thereof, (ii) time
deposits and certificates of deposit of any commercial bank organized in the
United States having capital and surplus in excess of $500,000,000 or a
commercial bank organized under the law of any other country that is a member
of the OECD having total assets in excess of $500,000,000 (or its foreign
currency equivalent at the time) with a maturity date not more than one year
from the date of acquisition, (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in
clause (i) above entered into with (x) any bank meeting the
qualifications specified in clause (ii) above or (y) any primary
government securities dealer reporting to 

 

7

 

the Market Reports Division
of the Federal Reserve Bank of New York, (iv) direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing, or subject to tender
at the option of the holder thereof, within 180 days after the date of
acquisition thereof; provided, however, that at the time of
acquisition, the long-term debt of such state, political subdivision or public
instrumentality has a rating of A- (or higher) from S&P or A-3 (or higher)
from Moody’s (or, if at any time neither S&P nor Moody’s shall be rating
such obligations, then an equivalent rating from such other nationally
recognized rating service acceptable to the Administrative Agent), (v) commercial
paper issued by the parent corporation of any commercial bank organized in the
United States having capital and surplus in excess of $500,000,000 or a
commercial bank organized under the laws of any other country that is a member
of the OECD having total assets in excess of $500,000,000 (or its foreign
currency equivalent at the time), and commercial paper issued by others having
one of the two highest ratings obtainable from either S&P or Moody’s (or,
if at any time neither S&P nor Moody’s shall be rating such obligations,
then from such other nationally recognized rating service acceptable to the
Administrative Agent) and in each case maturing within one year after the date
of acquisition, (vi) overnight bank deposits and bankers’ acceptances at
any commercial bank organized in the United States having capital and surplus
in excess of $500,000,000 or a commercial bank organized under the laws of any
other country that is a member of the OECD having total assets in excess of
$500,000,000 (or its foreign currency equivalent at the time), (vii) deposits
available for withdrawal on demand with a commercial bank organized in the
United States having capital and surplus in excess of $500,000,000 or a commercial
bank organized under the laws of any other country that is a member of the OECD
having total assets in excess of $500,000,000 (or its foreign currency
equivalent at the time), (viii) debt obligations issued by any Person;
provided, however, that at the time of acquisition, any such debt obligation
has a rating of A (or higher) from S&P or A-2 (or higher) from Moody’s (or,
if at any time neither S&P nor Moody’s shall be rating such debt
organizations, then an equivalent rating from such other nationally recognized
rating service acceptable to the Administrative Agent) and in each case
maturing within one year after the date of acquisition, and (ix) investments
in money market funds substantially all of whose assets comprise securities of
the types described in clauses (i) through (viii).

 

“Change of Control” means the
occurrence of any of the following events:

 

(a) if any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act
or any successor provisions to either of the foregoing), including any group
acting for the purpose of acquiring, holding, voting or disposing of securities
within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other
than any one or more of the Permitted Holders, becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act, except that a person
will be deemed to have “beneficial ownership” of all shares that any such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of 35% or more of
the total voting power of the Voting Stock of Level 3; provided, however,
that the Permitted Holders are the “beneficial owners” (as defined in Rule 13d-3
under the 

 

8

 

Exchange Act, except that a
person will be deemed to have “beneficial ownership” of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, in the
aggregate of a lesser percentage of the total voting power of the Voting Stock
of Level 3 than such other person or group (for purposes of this
clause (a), such person or group shall be deemed to beneficially own any
Voting Stock of a corporation (the “specified corporation”) held by any other
corporation (the “parent corporation”) so long as such person or group
beneficially owns, directly or indirectly, in the aggregate a majority of the
total voting power of the Voting Stock of such parent corporation); or

 

(b) the sale, transfer, assignment,
lease, conveyance or other disposition, directly or indirectly, of all or
substantially all the assets of (i) Level 3 and the Restricted
Subsidiaries or (ii) the Borrower and the Borrower Restricted Subsidiaries,
in each case considered as a whole (other than a disposition of such assets as
an entirety or virtually as an entirety to a Wholly Owned Restricted Subsidiary
or Level 3 or the Borrower, respectively, or one or more Permitted
Holders) shall have occurred; or

 

(c) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of Level 3 (together with any new
directors whose election or appointment by such board or whose nomination for
election by the shareholders of Level 3 was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of Level 3 then in office; or

 

(d) the shareholders of Level 3 or
the Borrower shall have approved any plan of liquidation or dissolution of
Level 3 or the Borrower, respectively.

 

“Change of Control Triggering Event”
means the occurrence of both a Change of Control and a Rating Decline with
respect to the Loans within 30 days of each other.

 

“Change in Law” means (a) the
adoption of any law, rule or regulation after the Effective Date, (b) any
change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the Effective Date or (c) compliance
by any Lender (or, for purposes of Section 2.09(c), by any lending office
of such Lender or by such Lender’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the Effective Date.

 

“Class”, when used in reference to (a) any
Loan or Borrowing, refers to whether such Loan, or the Loans comprising such
Borrowing, are Tranche A Term Loans or Tranche B Term Loans and (b) any
Commitment, refers to whether such Commitment is a Tranche A Term Commitment or
a Tranche B Term Commitment.

 

9

 

“CLO” means any entity (whether a
corporation, partnership, trust or otherwise) that is engaged in making,
purchasing, holding or otherwise investing in bank loans and similar extensions
of credit in the ordinary course of its business and is administered or managed
by a Lender or an Affiliate of such Lender.

 

“Code” means the Internal Revenue Code
of 1986, as amended from time to time.

 

“Co-Documentation Agents” means,
collectively, Citigroup Global Markets, Inc., Credit Suisse Securities
(USA) LLC and Wachovia Bank, N.A., or any one of them.

 

“Collateral” means any and all “Collateral”,
as defined in any applicable Security Document. It is understood that the
Collateral shall not include Excluded Collateral (as defined in the Collateral
Agreement).

 

“Collateral Agent” means Merrill Lynch
Capital Corporation in its capacity as collateral agent for the Secured Parties
hereunder.

 

“Collateral Agreement” means the
Collateral Agreement substantially in the form of Exhibit C-2.

 

“Collateral Permit Condition” means,
with respect to any Regulated Grantor Subsidiary , that such Regulated Grantor
Subsidiary has obtained all material (as determined in good faith by the
General Counsel of Level 3) authorizations and consents of Federal and State
Governmental Authorities required, if any, in order for it to become a Grantor
under the Collateral Agreement and to satisfy the Guarantee and Collateral
Requirement insofar as the authorizations and consents so permit.

 

“Collateral Release Amount” has the
meaning specified in Section 6.07(d).

 

“Commitment” means a Tranche A Term
Commitment or a Tranche B Term Commitment and, with respect to any Additional
Tranche, the commitments of the Lenders providing such Additional Tranche.

 

“Common Stock” of any Person means
Capital Stock of such Person that does not rank prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital Stock
of any other class of such Person.

 

“Communications Act” means the
Communications Act of 1934 and any similar or successor Federal statute and the
rules, regulations and published policies of the FCC thereunder, all as amended
and as the same may be in effect from time to time.

 

“Consolidated Capital Ratio” means as
of the date of determination the ratio of (i) the aggregate amount of
Indebtedness of Level 3 and its Restricted Subsidiaries on a consolidated
basis as at the date of determination to (ii) the sum of 

 

10

 

(a) $2,024,000,000, (b) the
aggregate net proceeds to Level 3 from the issuance or sale of any Capital
Stock (including Preferred Stock) of Level 3 other than Disqualified Stock
subsequent to the Measurement Date, (c) the aggregate net proceeds from
the issuance or sale of Indebtedness of Level 3 or any Restricted
Subsidiary subsequent to the Measurement Date convertible or exchangeable into
Capital Stock of Level 3 other than Disqualified Stock, in each case upon
conversion or exchange thereof into Capital Stock of Level 3 subsequent to
the Measurement Date and (d) the after-tax gain on the sale, subsequent to
the Measurement Date, of Special Assets to the extent such Special Assets have
been sold for cash, Cash Equivalents, Telecommunications/IS Assets or the
assumption of Indebtedness of Level 3 or any Restricted Subsidiary (other
than Indebtedness that is subordinated to the Loans or any applicable Loan
Proceeds Note Guarantee or any Guarantee of the Obligations) and release of
Level 3 and all Restricted Subsidiaries from all liability on the
Indebtedness assumed; provided, however, that, for purposes of
calculation of the Consolidated Capital Ratio, the net proceeds from the
issuance or sale of Capital Stock or Indebtedness described in clause (b) or
(c) above shall not be included to the extent (x) such proceeds have
been utilized to make a Permitted Investment under clause (i) of the
definition thereof or a Restricted Payment or (y) such Capital Stock or
Indebtedness shall have been issued or sold to Level 3, a Subsidiary of
Level 3 or an employee stock ownership plan or trust established by
Level 3 or any such Subsidiary for the benefit of their employees.

 

“Consolidated Cash Flow Available for
Fixed Charges” for Level 3 and its Restricted Subsidiaries or for the
Borrower and the Borrower Restricted Subsidiaries for any period means the
Consolidated Net Income of Level 3 and its Restricted Subsidiaries or the
Borrower and the Borrower Restricted Subsidiaries, as applicable, for such
period increased by the sum of, to the extent reducing such Consolidated Net
Income for such period, (i) Consolidated Interest Expense of Level 3
and its Restricted Subsidiaries or the Borrower and the Borrower Restricted
Subsidiaries, as applicable, for such period, plus (ii) Consolidated
Income Tax Expense of Level 3 and its Restricted Subsidiaries or the
Borrower and the Borrower Restricted Subsidiaries, as applicable, for such
period, plus (iii) consolidated depreciation and amortization expense and
any other non-cash items (other than any such non-cash item to the extent that
it represents an accrual of or reserve for cash expenditures in any future
period) for Level 3 and its Restricted Subsidiaries or for the Borrower
and the Borrower Restricted Subsidiaries, as applicable; provided, however,
that there shall be excluded therefrom the Consolidated Cash Flow Available for
Fixed Charges (if positive) of any Restricted Subsidiary or Borrower Restricted
Subsidiary, as applicable (calculated separately for such Restricted Subsidiary
or Borrower Restricted Subsidiary in the same manner as provided above for
Level 3 or the Borrower, as applicable) that is subject to a restriction
which prevents the payment of dividends or the making of distributions to
Level 3 or another Restricted Subsidiary or to the Borrower or another
Borrower Restricted Subsidiary, as applicable, to the extent of such
restrictions.

 

“Consolidated Income Tax Expense” for
Level 3 and its Restricted Subsidiaries or for the Borrower and the
Borrower Restricted Subsidiaries for any period means the aggregate amounts of
the provisions for income taxes of Level 3 and its 

 

11

 

Restricted Subsidiaries or
the Borrower and the Borrower Restricted Subsidiaries, as applicable, for such
period calculated on a consolidated basis in accordance with GAAP.

 

“Consolidated Interest Expense” for
Level 3 and its Restricted Subsidiaries or the Borrower and the Borrower
Restricted Subsidiaries for any period means the interest expense included in a
consolidated income statement (excluding interest income) of Level 3 and
its Restricted Subsidiaries or the Borrower and the Borrower Restricted
Subsidiaries, as applicable, for such period in accordance with GAAP, including
without limitation or duplication (or, to the extent not so included, with the
addition of), (i) the amortization of Indebtedness discounts and issuance
costs, including commitment fees; (ii) any payments or fees with respect
to letters of credit, bankers’ acceptances or similar facilities; (iii) net
costs with respect to interest rate swap or similar agreements or foreign
currency hedge, exchange or similar agreements (including fees); (iv) Preferred
Stock Dividends (other than dividends paid in shares of Preferred Stock that is
not Disqualified Stock) declared and paid or payable; (v) accrued
Disqualified Stock Dividends, whether or not declared or paid; (vi) interest
on Indebtedness guaranteed by Level 3 and its Restricted Subsidiaries or
the Borrower and the Borrower Restricted Subsidiaries, as applicable; (vii) the
portion of any Capital Lease Obligation or Sale and Leaseback Transaction paid
during such period that is allocable to interest expense; (viii) interest
Incurred in connection with investments in discontinued operations; and (ix) the
cash contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or
fees to any Person (other than Level 3 or a Restricted Subsidiary or the
Borrower or a Borrower Restricted Subsidiary, as applicable) in connection with
Indebtedness Incurred by such plan or trust.

 

“Consolidated Net Income” for
Level 3 and its Restricted Subsidiaries or the Borrower and the Borrower
Restricted Subsidiaries for any period means the net income (or loss) of
Level 3 and its Restricted Subsidiaries or the Borrower and the Borrower
Restricted Subsidiaries, as applicable, for such period determined on a consolidated
basis in accordance with GAAP; provided, however, that there
shall be excluded therefrom (a) for purposes of Section 6.03 only,
the net income (or loss) of any Person acquired by Level 3 or a Restricted
Subsidiary or the Borrower or a Borrower Restricted Subsidiary, as applicable,
in a pooling-of-interests transaction for any period prior to the date of such
transaction, (b) the net income (or loss) of any Person that is not a
Restricted Subsidiary or a Borrower Restricted Subsidiary, as applicable, except
to the extent of the amount of dividends or other distributions actually paid
to Level 3 or a Restricted Subsidiary or to the Borrower or a Borrower
Restricted Subsidiary, as applicable, by such Person during such period
(except, for purposes of Section 6.03 only, to the extent such dividends
or distributions have been subtracted from the calculation of the amount of
Investments to support the actual making of Investments), (c) gains or
losses realized upon the sale or other disposition of any Property of
Level 3 or its Restricted Subsidiaries or the Borrower or the Borrower
Restricted Subsidiaries, as applicable, that is not sold or disposed of in the
ordinary course of business (it being understood that Permitted
Telecommunications Capital Asset Dispositions shall be considered to be in the
ordinary course of business), (d) gains or losses realized upon the sale
or other disposition of any Special Assets, (e) all extraordinary gains
and 

 

12

 

extraordinary losses,
determined in accordance with GAAP, (f) the cumulative effect of changes
in accounting principles, (g) non-cash gains or losses resulting from
fluctuations in currency exchange rates, (h) any non-cash expense related
to the issuance to employees or directors of Level 3 or any Restricted
Subsidiary or the Borrower or any Borrower Restricted Subsidiary, as
applicable, of (1) options to purchase Capital Stock of Level 3 or
such Restricted Subsidiary or the Borrower or such Borrower Restricted Subsidiary,
as applicable, or (2) other compensatory rights; provided, in
either case, that such options or rights, by their terms can be redeemed at the
option of the holder of such option or right only for Capital Stock, (i) with
respect to a Restricted Subsidiary or a Borrower Restricted Subsidiary, as
applicable, that is not a Wholly Owned Subsidiary any aggregate net income (or
loss) in excess of Level 3’s or any Restricted Subsidiary’s or the
Borrower’s or any Borrower Restricted Subsidiary’s, as applicable, pro rata
share of the net income (or loss) of such Restricted Subsidiary or Borrower
Restricted Subsidiary, as applicable, that is not a Wholly Owned Subsidiary and
(j) for purposes of calculating Pro Forma Consolidated Cash Flow Available
for Fixed Charges in Section 6.01(a), Section 6.01(b), Section 6.02(a) and
Section 6.02(b) only, ordinary losses or gains (including related
fees and expenses) on early extinguishment of Indebtedness and Permitted
Hedging Agreements; provided further that there shall further be
excluded therefrom the net income (but not net loss) of any Restricted
Subsidiary or any Borrower Restricted Subsidiary, as applicable, that is
subject to a restriction which prevents the payment of dividends or the making
of distributions to Level 3 or another Restricted Subsidiary or to the
Borrower or another Borrower Restricted Subsidiary, as applicable, to the
extent of such restriction.

 

“Consolidated Net Worth” of any Person
means the stockholders’ equity of such Person, determined on a consolidated
basis in accordance with GAAP, less amounts attributable to Disqualified Stock
of such Person.

 

“Consolidated Tangible Assets” of any
Person means the total amount of assets (less applicable reserves and other
properly deductible items) which under GAAP would be included on a consolidated
balance sheet of such Person and its Subsidiaries after deducting therefrom all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, which in each case under GAAP would be
included on such consolidated balance sheet.

 

“Credit Facilities” means one or more
credit agreements, loan agreements or similar facilities (including any
Additional Tranche), secured or unsecured, providing for revolving credit
loans, term loans and/or letters of credit, including any Qualified Receivable
Facility, entered into from time to time by Level 3 and its Restricted
Subsidiaries, or Purchase Money Debt, or Indebtedness Incurred pursuant to
Capital Lease Obligations, Sale and Leaseback Transactions, or senior secured
note issuances, and including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, as the
same may be amended, supplemented, modified, restated or replaced from time to
time.

 

13

 

“Default” means any event, act or
condition which constitutes an Event of Default or which upon the notice
specified in Article VII, the lapse of time specified in Article VII
or both would, unless cured or waived, become an Event of Default.

 

“Designated Grantor Subsidiary” means (a) any
Unregulated Grantor Subsidiary and (b) at such time as it shall have
satisfied the Collateral Permit Condition, any Regulated Grantor Subsidiary; provided,
however, that, with respect to the Tranche B Term Loans, this definition
shall be subject to Section 2 of the Amendment Agreement.  No Foreign Subsidiary shall at any time
constitute a Designated Grantor Subsidiary.

 

“Designated Guarantor Subsidiary”
means (a) any Unregulated Guarantor Subsidiary and (b) at such time
as it shall have satisfied the Guarantee Permit Condition, any Regulated
Guarantor Subsidiary; provided, however, that, with respect to
the Tranche B Term Loans, this definition shall be subject to Section 2
of the Amendment Agreement.  No Foreign
Subsidiary shall at any time constitute a Designated Guarantor Subsidiary.

 

“Designation” and “Designation
Amount” have the respective meanings specified in Section 6.10.

 

“Disclosed Matters” means the actions,
suits and proceedings and the environmental matters disclosed in Level 3’s
reports and filings under the Exchange Act filed or furnished since January 1,
2007 and prior to March 12, 2007 and available on the Securities and
Exchange Commission’s website on the internet at www.sec.gov prior to the
Effective Date.

 

“Disqualified Stock” of any Person
means any Capital Stock of such Person which, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is redeemable at the option of
the holder thereof, in whole or in part, on or prior to the Maturity Date; provided,
however, that any Preferred Stock which would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require Level 3 or the Borrower, respectively, to repurchase or redeem such
Preferred Stock upon the occurrence of (i) a change of control occurring
prior to the Maturity Date shall not constitute Disqualified Stock if the
change of control provisions applicable to such Preferred Stock are no more
favorable to the holders of such Preferred Stock than the provisions applicable
to the Loans as provided for in the definition of “Change of Control Triggering
Event” or (ii) an asset sale occurring prior to the Maturity Date shall
not constitute Disqualified Stock if the asset sale provisions applicable to
such Preferred Stock are no more favorable to the holders of such Preferred
Stock than the provisions applicable to the Loans contained in Section 6.07
and, in each case, such Preferred Stock specifically provides that Level 3 or
the Borrower, respectively, will not repurchase or redeem any such stock
pursuant to such provisions prior to the Borrower’s repayment of the Loans as
required by Sections 2.05 and 6.07(c).

 

14

 

“Disqualified Stock Dividends” means
all dividends with respect to Disqualified Stock of Level 3 held by
Persons other than a Wholly Owned Restricted Subsidiary.  The amount of any such dividend shall be
equal to the quotient of such dividend divided by the difference between one
and the maximum statutory federal income tax rate (expressed as a decimal
number between 1 and 0) applicable to Level 3 for the period during
which such dividends were paid.

 

“dollars” or “$” refers to
lawful money of the United States of America.

 

“Domestic Subsidiary” shall mean any
Subsidiary that is not a Foreign Subsidiary.

 

“Domestic Restricted Subsidiary” means
any Restricted Subsidiary other than (a) a Foreign Restricted Subsidiary
or (b) a Subsidiary of a Foreign Restricted Subsidiary.

 

“Effective Date” means the date on
which the conditions specified in Section 4.01 of the Original Credit
Agreement were satisfied (or waived in accordance with Section 9.02).

 

“Effective Date Perfection Certificate”
means a certificate in the form of Exhibit B-1 or any other form
approved by the Administrative Agent.

 

“Effective Date Loan Proceeds Note
Perfection Certificate” means a certificate in the form of Exhibit B-2
or any other form approved by the Administrative Agent.

 

“Effective Date Purchase Money Debt”
means Purchase Money Debt outstanding on the Effective Date; provided, however,
that the amount of such Purchase Money Debt when Incurred did not exceed 100%
of the cost of the construction, installation, acquisition, lease, development
or improvement of the applicable Telecommunications/IS Assets.

 

“Effective Date Rating” means B1 in
the case of Moody’s and B- in the case of S&P, which were the respective
ratings assigned to the Tranche A Term Loans by the Rating Agencies on the
Effective Date.

 

“8.75% Notes” means the Borrower’s
8.75% Senior Notes due 2017 in an aggregate principal amount outstanding on Effective
Date of $700,000,000.

 

“8.75% Notes Indenture” means the
Indenture dated as of February 14, 2007 among Level 3, the Borrower and
The Bank of New York, as trustee, governing the 8.75% Notes.

 

“8.75% Notes Supplemental Indentures”
means the Borrower Restricted Subsidiary Supplemental Indentures relating to
the 8.75% Notes and the Level 3 LLC 8.75% Notes Supplemental Indenture.

 

15

 

“8.75% Offering Proceeds Note” means
the intercompany demand note dated February 14, 2007, in an initial
principal amount equal to $700,000,000, issued by Level 3 LLC to the Borrower.

 

“Eligible Transferee” shall mean and
include (i) a commercial bank, (ii) an insurance company, a finance
company, a financial institution or any fund that invests in loans in the
ordinary course of business and has total assets in excess of $5,000,000 and (iii) any
other financial institution reasonably satisfactory to Level 3 and the
Administrative Agent.

 

“Environmental Laws” means all laws,
rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions,
notices or binding agreements issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the management, release or threatened release
of any Hazardous Material or to health and safety matters.

 

“Environmental Liability” means any
liability, contingent or otherwise (including any liability for damages, costs
of environmental remediation, fines, penalties or indemnities), of Level 3
or any Subsidiary of Level 3 directly or indirectly resulting from or
based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of
any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the environment
or (e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means shares of
capital stock, partnership interests, membership interests in a limited
liability company, beneficial interests in a trust or other equity ownership
interests in a Person.

 

“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” means any trade or
business (whether or not incorporated) that together with Level 3 is
treated as a single employer under Section 414(b) or (c) of the
Code or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the
Code.

 

“ERISA Event” means (a) any “reportable
event”, as defined in Section 4043 of ERISA or the regulations issued
thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of
an application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by Level 3 or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by Level 3 or any ERISA Affiliate from the 

 

16

 

PBGC or a plan administrator
of any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by Level 3 or
any of its ERISA Affiliates of any Withdrawal Liability; or (g) the
receipt by Level 3 or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from Level 3 or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

 

“Eurocurrency Reserve Requirements”
means the aggregate of the maximum reserve percentages (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal established
by the Board and any other banking authority to which United States commercial
banks are subject and applicable to “Eurocurrency Liabilities”, as such term is
defined in Regulation D of the Board, or any similar category of assets or
liabilities relating to eurocurrency fundings. 
Eurocurrency Reserve Requirements shall be adjusted automatically on and
as of the effective date of any change in any reserve percentage.

 

“Eurodollar”, when used in reference
to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are bearing interest at a rate determined by reference to the
LIBO Rate.

 

“Event of Default” has the meaning
specified in Article VII.

 

“Exchange Act” means the Securities
Exchange Act of 1934, as amended (or any successor act), and the rules and
regulations thereunder (or respective successors thereto).

 

“Excess Proceeds” has the meaning
specified in Section 6.07(c).

 

“Excluded Taxes” means, with respect
to the Agent, any Lender or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or
franchise Taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits Taxes imposed by the United States of America or any similar Tax
imposed by any other jurisdiction described in clause (a) above and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
Level 3 under Section 2.13(b)), any withholding Tax that (i) is in
effect and would apply to amounts payable to such Foreign Lender at the time
such Foreign Lender becomes a party to this Agreement (or designates a new
lending office), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Borrower with
respect to such withholding Tax pursuant to Section 2.11(a) or (ii) is
attributable to such Foreign Lender’s failure to comply with Section 2.11(e).

 

17

 

“Executive Officer” means the chief
executive officer, the president, the chief financial officer, the secretary or
the treasurer of Level 3.

 

“Existing Amended and Restated Credit
Agreement” means the Amended and Restated Credit Agreement dated as of June 27,
2006 among the Borrower, Level 3, the lenders from time to time party thereto
and the Administrative Agent and the Collateral Agent.

 

“Existing Notes” means (a) Level
3’s (i) 2.875% Convertible Senior Notes due 2010 in an aggregate principal
amount not to exceed $374,000,000, (ii) 11% Senior Notes due 2008 in an
aggregate principal amount not to exceed $21,000,000, (iii) 11.25% Senior
Notes due 2010 in an aggregate principal amount not to exceed $96,000,000, (iv) 12.875%
Senior Discount Notes due 2010 in an aggregate principal amount at maturity not
to exceed $488,000,000, (v) 10.75 % Senior Notes due 2008 in an aggregate
principal amount not to exceed €5,000,000, (vi) 11.25% Senior Notes due
2010 in an aggregate principal amount not to exceed €105,000,000,(vii) 6%
Convertible Subordinated Notes due 2009 in an aggregate principal amount not to
exceed $362,000,000, (viii) 6% Convertible Subordinated Notes due 2010 in
an aggregate principal amount not to exceed $514,000,000, (ix) 9%
Convertible Senior Discount Notes due 2013 in an aggregate principal amount at
maturity not to exceed $295,000,000, (x) 5.25% Convertible Senior Notes
due 2011 in an aggregate principal amount not to exceed $345,000,000, (xi) 10%
Convertible Senior Notes due 2011 in an aggregate principal amount not to
exceed $275,000,000, (xii) 11.50% Senior Notes due 2010 in an aggregate
principal amount not to exceed $18,000,000 and (xiii) 3.50% Convertible Senior
Notes due 2012 in an aggregate principal amount not to exceed $335,000,000 and (b) the
Borrower’s (i) 10.75% Senior Notes due 2011 in an aggregate principal amount
not to exceed $3,284,000, (ii) Floating Rate Senior Notes due 2011 in an
aggregate principal amount not to exceed $6,000,000, (iii) 12.25% Senior
Notes due 2013 in an aggregate principal amount not to exceed $550,000,000, (iv) 9.25%
Senior Notes due 2014 in an aggregate principal amount not to exceed
$1,250,000,000, (v) Floating Rate Senior Notes due 2015 in an aggregate
principal amount not to exceed $300,000,000 and (vi) 8.75% Senior Notes
due 2017 in an aggregate principal amount not to exceed $700,000,000.

 

“Existing Term Loans” means the term
loans in an aggregate principal amount of $730,000,000 outstanding under the
Existing Amended and Restated Credit Agreement.

 

“Fair Market Value” means, with
respect to any Property, the price that could be negotiated in an arm’s-length
free market transaction, for cash, between a willing seller and a willing
buyer, neither of whom is under pressure or compulsion to complete the
transaction.  Unless otherwise specified
herein, Fair Market Value shall be determined by the Board of Directors of
Level 3 acting in good faith and shall be evidenced by a Board Resolution of
Level 3 (except in the case of the last paragraph under Section 6.07)
delivered to the Administrative Agent.

 

“FCC” means the United States Federal
Communications Commission.

 

18

 

“Federal Funds Effective Rate” means,
for any day, the weighted average (rounded upwards, if necessary, to the next
1/100 of 1%) of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as published
on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a
Business Day, the average (rounded upwards, if necessary, to the next 1/100 of
1%) of the quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.

 

“Financial Officer” means the chief
financial officer, principal accounting officer, vice president-finance,
assistant treasurer, treasurer or controller of Level 3 or other specified
Person.

 

“Financing Inc. Indentures” means the
10.75% Notes Indenture, the 2011 Floating Rate Notes Indenture, the 12.25%
Notes Indenture, the 9.25% Notes Indenture, the 2015 Floating Rate Notes
Indenture and the 8.75% Notes Indenture.

 

“Financing Inc. Notes” means the
10.75% Notes, the 2011 Floating Rate Notes, the 12.25% Notes, the 9.25% Notes,
the 2015 Floating Rate Notes and the 8.75% Notes.

 

“Financing Inc. Notes Supplemental
Indentures” means the Borrower Restricted Subsidiary Supplemental
Indentures and the Level 3 LLC Notes Supplemental Indentures.

 

“Foreign Lender” means any Lender that
is organized under the laws of a jurisdiction other than the United States of
America.  For purposes of this
definition, the United States of America, each State thereof and the District
of Columbia shall be deemed to constitute a single jurisdiction.

 

“Foreign Restricted Subsidiary” means
any Restricted Subsidiary that is not organized under the laws of the United
States of America or any State thereof or the District of Columbia.

 

“Foreign Subsidiary” means any
Subsidiary that is organized under the laws of a jurisdiction other than the
United States of America or any State thereof or the District of Columbia.

 

“GAAP” generally accepted accounting
principals in the United States of America.

 

“Government Securities” means direct
obligations of, or obligations fully and unconditionally guaranteed or insured
by, the United States of America or any agency or instrumentality thereof for
the payment of which obligations or guarantee the full faith and credit of the
United States is pledged and which are not callable or redeemable at the issuer’s
option (unless, for purposes of the definition of “Cash Equivalents” only, the
obligations are redeemable or callable at a price not less than the 

 

19

 

purchase price paid by
Level 3 or the applicable Restricted Subsidiary, together with all accrued
and unpaid interest (if any) on such Government Securities).

 

“Governmental Authority” means the
government of the United States of America, any other nation or any political
subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Grantor” means (1) Level 3 and (2) any
other Person that becomes a Grantor pursuant to the terms of the Collateral
Agreement.  For the avoidance of doubt,
any Person who is a Grantor with respect to one Class of Loans shall be a
Grantor for purposes of this Agreement.

 

“Guarantee” by any Person means any
obligation, direct or indirect, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guaranteeing, any Indebtedness
of any other Person (the “primary obligor”) in any manner, whether directly or
indirectly, and any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness, including any such obligations arising by virtue of partnership
arrangements or by agreements to keep-well, (ii) to purchase Property or
services or to take-or-pay for the purpose of assuring the holder of such
Indebtedness of the payment of such Indebtedness, (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness or (iv) entered into for the purpose of assuring in any
other manner the obligee against loss in respect thereof, in whole or in part
(and “Guaranteed”, “Guaranteeing” and “Guarantor” shall have meanings
correlative to the foregoing); provided, however, that the
Guarantee by any Person shall not include endorsements by such Person for
collection or deposit, in either case, in the ordinary course of business.

 

“Guarantee Agreement” means the
Guarantee Agreement dated the Effective Date among Level 3, the Subsidiary Loan
Parties identified therein and the Collateral Agent substantially in the form
of Exhibit C-1.

 

“Guarantee and Collateral Requirement”
means, subject to Section 2 of the Amendment Agreement as to the Tranche B
Term Loans, at any time, the requirement that:

 

(a) the Administrative Agent shall have
received from Level 3 and each Designated Guarantor Subsidiary either (i) a
counterpart of the Guarantee Agreement duly executed and delivered on behalf of
such Person or (ii) in the case of any Person that becomes a Designated
Guarantor Subsidiary after the Effective Date, a supplement to the Guarantee
Agreement in the form specified therein or other form acceptable to the
Administrative Agent, duly executed and delivered on behalf of such Designated
Guarantor Subsidiary;

 

20

 

(b) the Administrative Agent shall have
received from Level 3, the Borrower and each Designated Grantor Subsidiary
either (i) a counterpart of the Collateral Agreement duly executed and
delivered on behalf of such Person or (ii) in the case of any Person that
becomes a Designated Grantor Subsidiary after the Effective Date, a supplement
to the Collateral Agreement in the form specified therein or other form acceptable
to the Administrative Agent, duly executed and delivered on behalf of such
Designated Grantor Subsidiary;

 

(c) the Administrative Agent shall have
received from Level 3, the Borrower, each Designated Guarantor Subsidiary
and each Designated Grantor Subsidiary either (i) a counterpart of the
Indemnity, Subrogation and Contribution Agreement duly executed and delivered
on behalf of such Person or (ii) in the case of any Person that becomes a
Designated Grantor Subsidiary or a Designated Guarantor Subsidiary after the
Effective Date, a supplement to the Indemnity, Subrogation and Contribution
Agreement in the form specified therein or other form acceptable to the
Administrative Agent, duly executed and delivered on behalf of such Designated
Guarantor Subsidiary or such Designated Grantor Subsidiary, as applicable,
unless such Person has previously duly executed and delivered such supplement
to the Collateral Agent;

 

(d) all Equity Interests of Material
Subsidiaries directly owned by or on behalf of Level 3, the Borrower or
any Designated Grantor Subsidiary (other than Equity Interests released from
the Lien of the Collateral Agreement as provided in Section 6.07, 6.08,
6.10 or 9.14) shall have been pledged pursuant to the Collateral Agreement and,
if such pledged Equity Interests are in certificated form, the Collateral Agent
shall have received the certificates representing such pledged Equity
Interests, together with undated stock powers or other instruments of transfer
with respect thereto endorsed in blank (provided that none of the
outstanding Equity Interests of any Foreign Subsidiary will be required to be
pledged other than 65% of the outstanding voting Equity Interests of
Level 3 Communications Canada Co.);

 

(e) the Loan Proceeds Note, each
Offering Proceeds Note and the Parent Intercompany Note shall have been pledged
by the Borrower and Level 3, as applicable, pursuant to the Collateral
Agreement, and the Collateral Agent shall have received such promissory notes
together with undated instruments of transfer with respect thereto endorsed in
blank; and

 

(f) all documents and instruments,
including Uniform Commercial Code financing statements, required by law or
reasonably requested by the Collateral Agent to be filed, registered or
recorded to create the Liens intended to be created by the Collateral Agreement
or to perfect such Liens to the extent and with the priority required by the
Collateral Agreement shall have been filed, registered or recorded or delivered
to the Collateral Agent for filing, registration or recording or arrangements
therefor satisfactory to the Administrative Agent shall have been made; provided,
however, that it is understood that no Grantor shall have any obligation
to (i) provide a real property description for central fixture filings or 

 

21

 

local fixture filings or (ii) other
than upon request by the Collateral Agent, file central or local fixture
filings in the state of Tennessee or any other state that implements a
substantial recordation tax for such filings.

 

The foregoing provisions shall not require
the creation or perfection of pledges of or security interests in particular
assets if and for so long as, in the good faith judgment of the Collateral
Agent, the cost of creating or perfecting such pledges or security interests in
such assets shall be excessive in view of the benefits to be obtained by the
Lenders therefrom.  Without limiting the
foregoing, the Collateral Agent may agree to forego making any filing in the
United States Patent and Trademark Office with respect to any Intellectual
Property of any Grantor if the Collateral Agent determines in good faith that
such Intellectual Property, taken together with all other Intellectual Property
as to which such filings are not made pursuant to this sentence, (a) is
not material to the operations of Level 3 and its Subsidiaries, taken as a
whole, and (b) is not a material portion of all of the Collateral based on
value.  The Collateral Agent may grant
extensions of time for the perfection of security interests in particular
assets (including extensions beyond the Effective Date for the perfection of
security interests in the assets of the Loan Parties on such date) where it
determines that perfection cannot be accomplished without undue effort or
expense by the time or times at which it would otherwise be required by this
Agreement or the Security Documents.  The
Guarantee and Collateral Requirement shall be satisfied with respect to any Initial
Guarantor Subsidiary and any Initial Grantor Subsidiary on the Effective
Date.  The Guarantee and Collateral
Requirement shall be satisfied with respect to (A)(i) any Unregulated
Guarantor Subsidiary other than an Initial Guarantor Subsidiary and (ii) any
Regulated Guarantor Subsidiary and (B)(i) any Unregulated Grantor
Subsidiary other than an Initial Grantor Subsidiary and (ii) any Regulated
Grantor Subsidiary, within 45 days after the date on which it becomes a
Designated Guarantor Subsidiary or Designated Grantor Subsidiary (or in the
case of a Material Subsidiary, 45 days from the date on which financial
statements are available that enable Level 3 to make the determination that
such Person has become a Material Subsidiary), as the case may be, but will not
be required to be satisfied prior to such time. 
Notwithstanding any provision of this definition, (i) no Foreign
Subsidiary shall be required to become a party to the Guarantee Agreement, the
Collateral Agreement or any other Security Document or to Guarantee or create
Liens on its assets to secure the Obligations, and (ii)(1) no Unregulated
Guarantor Subsidiary that is not an Initial Guarantor Subsidiary and no
Regulated Guarantor Subsidiary and (2) no Unregulated Grantor Subsidiary
that is not an Initial Grantor Subsidiary and no Regulated Grantor Subsidiary,
in each case, that is not a Designated Guarantor Subsidiary or Designated
Grantor Subsidiary, as the case may be, shall be required to become a party to
the Collateral Agreement or any other Security Document or to Guarantee or
create Liens on its assets to secure the Obligations if Level 3 shall deliver
to the Administrative Agent a certificate of a legal officer of Level 3 stating
that such actions would in the good faith belief of such officer violate any
applicable law or regulation; provided, that the Borrower covenants and
agrees that if it shall deliver a certificate pursuant to the foregoing clause (ii) with
respect to any Designated Guarantor Subsidiary or Designated Grantor
Subsidiary, it will promptly notify the Collateral Agent in the event that at
any time thereafter the circumstances preventing such Designated Guarantor
Subsidiary or Designated Grantor Subsidiary from becoming a party to the
Collateral Agreement or any 

 

22

 

other Security Document or
Guaranteeing or creating Liens on its assets to secure the Obligations shall no
longer exist, and following the delivery of such notice the provisions of this
definition will at all times apply as if no such certificate had been delivered
with respect to such Designated Guarantor Subsidiary or Designated Grantor
Subsidiary.  No Loan Party shall be
obligated to provide a lien on real property or interests in real property,
other than fixtures.

 

“Guarantee Permit Condition” means,
with respect to any Regulated Guarantor Subsidiary, that such Regulated
Guarantor Subsidiary has obtained all material (as determined in good faith by
the General Counsel of Level 3) authorizations and consents of Federal and
State Governmental Authorities required, if any, in order for it to become a
Guarantor under the Guarantee Agreement and to satisfy the Guarantee and
Collateral Requirement insofar as the authorizations and consents so permit.

 

“Guarantor” means (1) Level 3 and
(2) any Subsidiary of Level 3 that becomes a party to the Guarantee
Agreement or a Guarantor pursuant to Section 5.12, Section 6.01, Section 6.02,
Section 6.13 or any other provisions of this Agreement.  For the avoidance of doubt, any Person who is
a Guarantor with respect to one Class of Loans shall be a Guarantor for
purposes of this Agreement.

 

“Hazardous Materials” means all
explosive or radioactive substances or wastes and all hazardous or toxic
substances, wastes or other pollutants, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls, radon
gas, infectious or medical wastes and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.

 

“Hedging Agreement” means any interest
rate protection agreement, foreign currency exchange agreement, commodity price
protection agreement or other interest or currency exchange rate or commodity
price hedging arrangement.

 

“Incur” means, with respect to any
Indebtedness or other obligation of any Person, to create, issue, incur (by
conversion, exchange or otherwise), assume, Guarantee or otherwise become
liable in respect of such Indebtedness or other obligation including the
recording, as required pursuant to GAAP or otherwise, of any such Indebtedness
or other obligation on the balance sheet of such Person (and “Incurrence”, “Incurred”
and “Incurring” shall have meanings correlative to the foregoing); provided,
however, that a change in GAAP that results in an obligation of such
Person that exists at such time becoming Indebtedness shall not be deemed an
Incurrence of such Indebtedness and that neither the accrual of interest nor
the accretion of original issue discount shall be deemed an Incurrence of
Indebtedness.  Indebtedness otherwise incurred
by a Person before it becomes a Subsidiary of Level 3 shall be deemed to
have been Incurred at the time at which it becomes a Subsidiary.

 

“Indebtedness” means (without
duplication), with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed, (ii) every obligation of
such Person evidenced by bonds, debentures, notes or other similar instruments,

 

23

 

including obligations
incurred in connection with the acquisition of Property, (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers’ acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the
deferred purchase price of Property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business), (v) every Capital
Lease Obligation of such Person and all Attributable Value in respect of Sale
and Leaseback Transactions entered into by such Person, (vi) all
obligations to redeem or repurchase Disqualified Stock issued by such Person, (vii) the
liquidation preference of any Preferred Stock (other than Disqualified Stock,
which is covered by the preceding clause (vi)) issued by any Restricted
Subsidiary of such Person, (viii) every obligation under Hedging
Agreements of such Person, and (ix) every obligation of the type referred
to in clauses (i) through (viii) of another Person and all dividends
of another Person the payment of which, in either case, such Person has
Guaranteed.  The “amount” or “principal
amount” of Indebtedness at any time of determination as used herein represented
by (a) any Indebtedness issued at a price that is less than the principal
amount at maturity thereof, shall be, except as otherwise set forth herein, the
Accreted Value of such Indebtedness at such time or (b) in the case of any
Receivables sale constituting Indebtedness, the amount of the unrecovered
purchase price (that is, the amount paid for Receivables that has not been
actually recovered from the collection of such Receivables) paid by the
purchaser (other than Level 3 or a Wholly Owned Restricted Subsidiary of
Level 3) thereof.  The amount of
Indebtedness represented by an obligation under a Hedging Agreement shall be
equal to (x) zero if such obligation has been Incurred pursuant to
clause (x) of paragraph (b) of Section 6.01 or
clause (viii) of paragraph (b) of Section 6.02 or (y) the
notional amount of such obligation if not Incurred pursuant to such
clause.  A Qualified Receivable Facility
in the form of a Receivables purchase facility will be deemed to constitute
Indebtedness.

 

“Indemnified Taxes” means Taxes other
than Excluded Taxes.

 

“Indemnity, Subrogation and Contribution
Agreement” means the Indemnity, Subrogation and Contribution Agreement
among Level 3, the Borrower, the Subsidiary Loan Parties and the Collateral
Agent, substantially in the form of Exhibit C-3.

 

“Initial Grantor Subsidiary” means (a) BTE
Equipment, LLC, (b) Level 3 International, Inc., (c) Level 3
Enhanced Services, LLC and (d) each Subsidiary of Level 3 that directly or
indirectly owns any Equity Interest in any Initial Grantor Subsidiary.

 

“Initial Guarantor Subsidiary” means (a) WilTel
Communications Group, LLC, (b) Broadwing Corporation, (c) BTE
Equipment, LLC, (d) Level 3 International, Inc. (e) Level 3
Enhanced Services, LLC and (f) Broadwing Financial Services, Inc.

 

“Intellectual Property” has the
meaning specified in the Collateral Agreement.

 

“Interest Election Request” has the
meaning specified in Section 2.03.

 

24

 

“Interest Payment Date” means (a) with
respect to any Eurodollar Loan, the last day of each Interest Period applicable
to such Eurodollar Loan and, in the case of a Eurodollar Loan with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period and (b) in the case of any ABR Loan,
March 31, June 30, September 30 and December 31 in each
year.

 

“Interest Period” means, with respect
to any Eurodollar Borrowing, the period commencing on the date of such
Borrowing or the last day of the immediately preceding Interest Period
applicable to such Borrowing and ending on the numerically corresponding day in
the calendar month that is one, two, three or six months thereafter, as the
Borrower may elect; provided, that (a) if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day and (b) any Interest Period that
commences on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last calendar month
of such Interest Period.  For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.

 

“Invested Capital” means the sum of (a) $500,000,000,
(b) the aggregate net proceeds received by Level 3 from the issuance
or sale of any Capital Stock, including Preferred Stock, of Level 3 but
excluding Disqualified Stock, subsequent to the Measurement Date, and (c) the
aggregate net proceeds from the issuance or sale of Indebtedness of
Level 3 or any Restricted Subsidiary subsequent to the Measurement Date
convertible or exchangeable into Capital Stock of Level 3 other than
Disqualified Stock, in each case upon conversion or exchange thereof into
Capital Stock of Level 3 subsequent to the Measurement Date; provided,
however, that the net proceeds from the issuance or sale of Capital
Stock or Indebtedness described in clause (b) or (c) shall be
excluded from any computation of Invested Capital to the extent (i) utilized
to make a Restricted Payment or (ii) such Capital Stock or Indebtedness
shall have been issued or sold to Level 3, a Subsidiary of Level 3 or
an employee stock ownership plan or trust established by Level 3 or any
such Subsidiary for the benefit of their employees.

 

“Investment” by any Person means any
direct or indirect loan, advance or other extension of credit or capital
contribution (by means of transfers of cash or other Property to others or
payments for Property or services for the account or use of others, or
otherwise) to, purchase, redemption, retirement or acquisition of Capital
Stock, bonds, notes, debentures or other securities or evidence of Indebtedness
issued by, or Incurrence of, or payment on, a Guarantee of any obligation of,
any other Person; provided, however, that Investments shall exclude
commercially reasonable extensions of trade credit.  The amount, as of any date of determination,
of any Investment shall be the original cost of such Investment, plus the cost
of all additions, as of such date, thereto and minus the amount, as of such
date, of any portion of such Investment repaid to such Person in cash as a
repayment of principal or a return of capital, as the case may be 

 

25

 

(except to the extent such repaid amount has
been included in Consolidated Net Income of Level 3 and its Restricted
Subsidiaries to support the actual making of Restricted Payments), but without
any other adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.  In determining the amount of any Investment
involving a transfer of any Property other than cash, such Property shall be
valued at its Fair Market Value at the time of such transfer.

 

“Investment Grade Rating” means a
rating equal to or higher that Baa3 (or the equivalent) by Moody’s and BBB- (or
the equivalent) by S&P.

 

“Joint Lead Arrangers” means,
collectively, Merrill Lynch, Pierce Fenner & Smith Incorporated and
Morgan Stanley & Co. Incorporated, or any one of them.

 

“Joint Venture” means a Person in
which Level 3 or a Restricted Subsidiary holds not more than 50% of the
shares of Voting Stock.

 

“knowledge” means, when used in
reference to Level 3 or any of its Subsidiaries, the actual knowledge of
any Executive Officer or any Financial Officer.

 

“Lenders” means the Persons listed on Schedule
2.01 and any other Person that shall have become a party hereto pursuant to
an Assignment and Assumption or Section 9.02(d), other than any such
Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.

 

“Level 3” means Level 3 Communications, Inc.,
a Delaware corporation.

 

“Level 3 LLC” means Level 3
Communications, LLC, a Delaware limited liability company.

 

“Level 3 LLC 8.75% Notes Supplemental
Indenture” means a supplemental indenture substantially in the form of Exhibit G
to the 8.75% Notes Indenture among the Borrower, Level 3, Level 3 LLC and the
Trustee under the 8.75% Notes Indenture.

 

“Level 3 LLC 9.25% Notes Supplemental
Indenture” means a supplemental indenture substantially in the form of Exhibit G
to the 9.25% Notes Indenture among the Borrower, Level 3, Level 3 LLC and the
Trustee under the 9.25% Notes Indenture.

 

“Level 3 LLC Notes Supplemental Indentures”
means the Level 3 LLC 10.75% Notes Supplemental Indenture, the Level 3 LLC 2011
Floating Rate Notes Supplemental Indenture, the Level 3 LLC 12.25% Notes
Supplemental Indenture, the Level 3 LLC 9.25% Notes Supplemental Indenture, the
Level 3 LLC 2015 Floating Rate Notes Supplemental Indenture and the Level 3 LLC
8.75% Notes Supplemental Indenture.

 

26

 

“Level 3 LLC 10.75% Notes Supplemental
Indenture” means the Supplemental Indenture dated as of December 1,
2004 among the Borrower, Level 3, Level 3 LLC and the Trustee under
the 10.75% Notes Indenture.

 

“Level 3 LLC 12.25% Notes Supplemental
Indenture” means a supplemental indenture substantially in the form of Exhibit G
to the 12.25% Notes Indenture among the Borrower, Level 3, Level 3 LLC and the
Trustee under the 12.25% Notes Indenture.

 

“Level 3 LLC 2011 Floating Rate Notes
Supplemental Indenture” means a supplemental indenture substantially in the
form of Exhibit G to the 2011 Floating Rate Notes Indenture among the
Borrower, Level 3, Level 3 LLC and the Trustee under the 2011 Floating Rate
Notes Indenture.

 

“Level 3 LLC 2015 Floating Rate Notes
Supplemental Indenture” means a supplemental indenture substantially in the
form of Exhibit G to the 2015 Floating Rate Notes Indenture among the
Borrower, Level 3, Level 3 LLC and the Trustee under the 2015 Floating Rate
Notes Indenture.

 

“LIBO Rate” means, with respect to any
Eurodollar Borrowing for any Interest Period, the rate appearing on Bloomberg’s
British Banker’s Association rate page (or on any successor or substitute
page) at approximately 11:00 a.m., London time, two Business Days prior to
the commencement of such Interest Period, as the rate for dollar deposits with
a maturity comparable to such Interest Period. 
In the event that such rate is not available on such page at such
time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be determined by reference
to any analogous page of another quotation service providing quotations
comparable to those currently provided on such page for interest rates
applicable to dollar deposits in the London interbank market, as determined by
the Administrative Agent. 
Notwithstanding the foregoing, solely for purposes of calculating
interest in respect of any Tranche B Term Loan that is a Eurodollar Loan, the “LIBO
Rate” in respect of any applicable Interest Period will be deemed to be
3.00% per annum if the LIBO Rate for such Interest Period calculated pursuant
to the foregoing provisions would otherwise be less than 3.00% per annum.

 

“License” means any license granted by
the FCC or any foreign telecommunications regulatory body.

 

“Lien” means, with respect to any
Property, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property (including any Capital
Lease Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing and any Sale and
Leaseback Transaction).  For purposes of
this definition the sale, lease, conveyance or other transfer by Level 3
or any of its Subsidiaries of, including the grant of indefeasible rights of
use or equivalent 

 

27

 

arrangements with respect to, dark or lit
communications fiber capacity or communications conduit shall not constitute a
Lien.  For the sake of clarity,
subordination and setoff rights do not constitute Liens and the filing of a
financing statement under the Uniform Commercial Code, without more, does not
constitute a Lien.

 

“Loan Documents” means this Agreement,
any promissory notes issued hereunder and the Security Documents.

 

“Loan Parties” means Level 3, the
Borrower and the Subsidiary Loan Parties.

 

“Loan Proceeds Note” means the amended
and restated intercompany demand note dated the Effective Date, as further
amended and restated as of the Restatement Effective Date, in a principal
amount of $1,620,000,000 issued by Level 3 LLC to the Borrower to evidence (a) the
Indebtedness of Level 3 LLC to the Borrower under the “Loan Proceeds Note”, as
defined in the Existing Amended and Restated Credit Agreement, (b) the
loan made by the Borrower to Level 3 LLC with the proceeds of the Tranche A
Term Loans made on the Effective Date remaining after the discharge of the
principal amount of the loans outstanding under the Existing Amended and
Restated Credit Agreement and (c) the loan made by the Borrower to Level 3
LLC with the proceeds of the Tranche B Term Loans, as well as additional funds
of the Borrower, on the Restatement Effective Date in an amount equal to the
aggregate principal amount of the Tranche B Term Loans made on the Restatement
Effective Date.

 

“Loan Proceeds Note Collateral Agreement”
means the Amended and Restated Loan Proceeds Note Collateral Agreement,
substantially in the form of Exhibit G-1.

 

“Loan Proceeds Note Guarantee” means
an unconditional Guarantee of the due and punctual payment of the principal of
and premium, if any, and interest on the Loan Proceeds Note, when and as due,
whether on demand, at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and all other monetary obligations of Level 3 LLC
under the Loan Proceeds Note, in substantially the form set forth in Exhibit G-2.

 

“Loan Proceeds Note Guarantor” means
any Restricted Subsidiary that provides a Loan Proceeds Note Guarantee pursuant
to Section 6.01, Section 6.02 or any other provision of this
Agreement.

 

“Loans” means the loans made by the
Lenders to the Borrower pursuant to this Agreement.

 

“Make-Whole Amount” means, with
respect to any principal amount of Tranche B Term Loans that is prepaid
pursuant to Section 2.05(a)(i), as of the date of such prepayment, an
amount equal to the sum of the present value as of such date of (a) the
prepayment fee with respect to such principal amount of Tranche B Term Loans
that would have been payable pursuant to Section 2.05(a) if such
principal amount of Tranche B Term Loans had been prepaid on the day following
the No-Call Date plus 

 

28

 

(b) the amount of interest that would
have been payable in respect of such principal amount of Tranche B Term Loans
from the date of such prepayment through the No-Call Date if such prepayment
had not been made, computed using a discount rate equal to the Treasury Rate as
of such date of prepayment plus 0.50% and discounting in accordance with
accepted financial practice applying the discount rate on a quarterly
basis.  For purposes of clause (b) of
this definition, the amount of interest shall be calculated using the interest
rate in effect as of the date of such prepayment for the Tranche B Term Loans
so prepaid.

 

“Material Adverse Effect” means (a) a
material adverse effect on the business, assets, operations or condition,
financial or otherwise, of Level 3 and the Restricted Subsidiaries taken
as a whole that materially increases the likelihood of a default in the payment
of the Obligations when due or (b) a material adverse effect on the rights
of or benefits available to the Lenders under any Loan Document.

 

“Material Indebtedness” means
Indebtedness of any one or more of Level 3, the Borrower or any other
Restricted Subsidiary having an outstanding principal amount of no less than
$25,000,000 or its foreign currency equivalency at the time individually or in
the aggregate.

 

“Material Subsidiary” means, at any
time, any Restricted Subsidiary engaged in the Telecommunications/IS Business
(other than a Subsidiary (including, on the Effective Date, Eldorado Marketing, Inc.
(now known as Technology Spectrum, Inc.)) engaged primarily in the
business of (i) constructing, creating, developing or marketing software
or (ii) computer outsourcing, data center management, computer systems
integration, or reengineering of software for any purpose, as determined in
good faith by the Board of Directors of Level 3) accounting, or holding assets
that accounted, for more than 5% of Pro Forma Consolidated Cash Flow Available
for Fixed Charges for Level 3 and its Restricted Subsidiaries for the period of
four fiscal quarters most recently ended or more than 5% of Consolidated
Tangible Assets at the end of such period; provided that if at any time
all Restricted Subsidiaries that are not Material Subsidiaries shall account
for more than 10% of Pro Forma Consolidated Cash Flow Available for Fixed
Charges for Level 3 and its Restricted Subsidiaries for the period of four
fiscal quarters most recently ended or more than 10% of Consolidated Tangible
Assets at the end of such period, Level 3 shall designate sufficient
Restricted Subsidiaries as “Material Subsidiaries” to eliminate such excess
(or, if Level 3 shall have failed to designate such Restricted
Subsidiaries within 10 Business Days, Restricted Subsidiaries shall
automatically be deemed designated as Material Subsidiaries in descending order
based on the amounts of their contributions to Consolidated Tangible Assets
until such excess shall have been eliminated), and the Restricted Subsidiaries
so designated or deemed designated shall for all purposes of this Agreement constitute
Material Subsidiaries.  Notwithstanding
the foregoing, Level 3 Holdings, Inc. and its Subsidiaries shall not
constitute Material Subsidiaries unless they would otherwise satisfy the
foregoing test and they are engaged to any material extent in the Telecommunications/IS
Business, as determined in good faith by the Board of Directors of
Level 3.

 

“Maturity Date” means March 13,
2014.

 

29

 

“Measurement Date” means April 28,
1998.

 

“Moody’s” means Moody’s Investors
Service, Inc. or, if Moody’s Investors Service, Inc. shall cease
rating debt securities having a maturity at original issuance of at least one
year and such ratings business shall have been transferred to a successor
Person, such successor Person; provided, however, that if Moody’s Investors Service Inc. ceases rating debt
securities having a maturity at original issuance of at least one year and its
ratings business with respect thereto shall not have been transferred to any
successor Person, then “Moody’s” shall mean any other nationally recognized
rating agency (other than S&P) that rates debt securities having a maturity
at original issuance of at least one year and that shall have been designated
by the Administrative Agent by a written notice given to the Borrower.

 

“Multiemployer Plan” means a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Net Available Proceeds” from any
Asset Disposition by any Person means cash or cash equivalents received
(including amounts received by way of sale or discounting of any note,
installment receivable or other receivable, but excluding any other
consideration received in the form of assumption by the acquirer of
Indebtedness or other obligations relating to such Property) therefrom by such
Person, net of (i) all legal, title and recording taxes, expenses and
commissions and other fees and expenses (including appraisals, brokerage
commissions and investment banking fees) Incurred and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability as a
consequence of such Asset Disposition, (ii) all payments made by such
Person or its Subsidiaries on any Indebtedness which is secured by such
Property in accordance with the terms of any Lien upon or with respect to such
Property or which must by the terms of such Lien, or in order to obtain a
necessary consent to such Asset Disposition or by applicable law, be repaid out
of the proceeds from such Asset Disposition, (iii) all distributions and
other payments required to be made to minority interest holders in Subsidiaries
or Joint Ventures of such Person as a result of such Asset Disposition and (iv) appropriate
amounts to be provided by such Person or any Subsidiary thereof, as the case
may be, as a reserve in accordance with GAAP against any liabilities associated
with such Property and retained by such Person or any Subsidiary thereof, as
the case may be, after such Asset Disposition, including liabilities under any
indemnification obligations and severance and other employee termination costs
associated with such Asset Disposition, in each case as determined by the Board
of Directors of such Person, in its reasonable good faith judgment evidenced by
a Board Resolution delivered to the Administrative Agent; provided, however,
that any reduction in such reserve within twelve months following the
consummation of such Asset Disposition will be, for all purposes of this
Agreement, treated as a new Asset Disposition at the time of such reduction
with Net Available Proceeds equal to the amount of such reduction; provided
further, however, that, in the event that any consideration for a
transaction (which would otherwise constitute Net Available Proceeds) is
required to be held in escrow pending determination of whether a purchase price
adjustment will be made, at such time as such portion of the consideration is
released to such Person or its Restricted Subsidiary from escrow, such portion
shall be treated for all purposes of this Agreement as a new Asset 

 

30

 

Disposition at the time of such release from
escrow with Net Available Proceeds equal to the amount of such portion of
consideration released from escrow.

 

“9.25% Notes” means the Borrower’s
9.25% Senior Notes due 2014 in an aggregate principal amount outstanding on the
Effective Date of $1,250,000,000.

 

“9.25% Notes Indenture” means the
Indenture dated as of October 30, 2006 among Level 3, the Borrower and The
Bank of New York, as trustee, governing the 9.25% Notes.

 

“9.25% Notes Supplemental Indentures”
means the Borrower Restricted Subsidiary Supplemental Indentures relating to
the 9.25% Notes and the Level 3 LLC 9.25% Notes Supplemental Indenture.

 

“9.25% Offering Proceeds Note” means
the amended and restated intercompany demand note dated December 28, 2006,
in an initial principal amount equal to $1,250,000,000, issued by Level 3 LLC
to the Borrower.

 

“No-Call Date” means October 16,
2011.

 

“Non-Telecommunications Subsidiary”
means any Borrower Restricted Subsidiary not engaged in any material respect in
the Telecommunications/IS Business.

 

“Obligations” means (a) the due
and punctual payment by the Borrower of (i) the principal of and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans (including Loans pursuant to
Additional Tranches), when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise and (ii) all other
monetary obligations of the Borrower under the Credit Agreement and each of the
other Loan Documents, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), (b) the due and punctual performance of all
obligations of any Loan Party, monetary or otherwise, under each Specified
Hedging Agreement, (c) the due and punctual performance of all other
obligations of the Borrower under or pursuant to the Credit Agreement and each
of the other Loan Documents, and (d) the due and punctual payment and
performance of all the obligations of each other Loan Party under or pursuant
to this Agreement and each of the other Loan Documents.

 

“OECD” means the Organization for
Economic Cooperation and Development.

 

“Offering Proceeds Notes” means the
10.75% Offering Proceeds Note, the 2011 Floating Rate Offering Proceeds Note,
the 12.25% Offering Proceeds Note, the 9.25% Offering Proceeds Note, the 8.75%
Offering Proceeds Note and the 2015 Floating Rate Offering Proceeds Note.

 

31

 

“Offering Proceeds Note Guarantee”
means an unconditional Guarantee of the due and punctual payment of the
principal of and premium, if any, and interest on any Offering Proceeds Note,
when and as due, whether on demand, at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, and all other monetary obligations
of Level 3 LLC under any Offering Proceeds Note.

 

“Officers’ Certificate” of any Person
means a certificate signed by the Chairman of the Board of Directors of such
Person, a Vice Chairman of the Board of Directors of such Person, the President
or a Vice President, and by the Chief Financial Officer, the Chief Accounting
Officer, the Treasurer, an Assistant Treasurer, the Controller, the Secretary
or an Assistant Secretary of such Person and delivered to the Administrative
Agent, which shall comply with this Agreement.

 

“Omnibus Offering Proceeds Note
Subordination Agreement” means the Omnibus Offering Proceeds Note
Subordination Agreement dated the Effective substantially in the form of Exhibit F,
among the Borrower, Level 3, Level 3 LLC and the Administrative Agent, as
amended, restated, supplemented or otherwise modified from time to time.

 

“Opinion of Counsel” means an opinion
of counsel reasonably acceptable to the Administrative Agent (who may be
counsel to Level 3 or the Borrower, including an employee of Level 3 or the
Borrower).

 

“Original Credit Agreement” has the
meaning specified in the recitals hereto.

 

“Other Taxes” means any and all
present or future recording, stamp, documentary, excise, transfer, sales,
property or similar Taxes, charges or levies arising from any payment made
under any Loan Document or from the execution, delivery or enforcement of, or
otherwise with respect to, any Loan Document.

 

“Parent Intercompany Note” means the
intercompany demand note dated December 8, 1999, as amended and restated
on October 1, 2003, in a principal amount as of January 31, 2007,
equal to $16,004,954,537, issued by Level 3 LLC to Level 3.

 

“Parent’s Indentures” means (a) the
indenture dated as of February 29, 2000 between Level 3 and The Bank of
New York, as trustee, as amended or supplemented from time to time in
accordance therewith relating to Level 3’s 11% Senior Notes due 2008, (b) the
Euro Securities indenture dated as of February 29, 2000 between Level 3
and The Bank of New York, as trustee, as amended or supplemented from time to
time in accordance therewith relating to Level 3’s 10.75% Senior Euro Notes due
2008, (c) the indenture dated as of February 29, 2000 between Level 3
and The Bank of New York, as trustee, as amended or supplemented from time to
time in accordance therewith relating to Level 3’s 12.875% Senior Discount
Notes due 2010, (d) the indenture dated as of February 29, 2000
between Level 3 and The Bank of New York, as trustee, as amended or
supplemented from time to time in accordance therewith relating to Level 3’s
11.25% Senior Notes due 2010, (e) the Euro Securities indenture dated as
of February 29, 

 

32

 

2000 between Level 3 and The Bank of New
York, as trustee, as amended or supplemented from time to time in accordance
therewith relating to Level 3’s 11.25% Senior Euro Notes due 2010 and (f) the
indenture dated as of January 13, 2006 between Level 3 and The Bank of New
York, as trustee, as amended or supplemented from time to time in accordance
therewith relating to Level 3’s 11.50% Senior Notes due 2010.

 

“PBGC” means the Pension Benefit
Guaranty Corporation referred to and defined in ERISA and any successor entity
performing similar functions.

 

“Permitted Holders” means the members
of Level 3’s board of directors on the Measurement Date and their
respective estates, spouses, ancestors, and lineal descendants, the legal
representatives of any of the foregoing and the trustees of any bona fide
trusts of which the foregoing are the sole beneficiaries or the grantors, or
any Person of which the foregoing “beneficially owns” (as defined in Rule 13d-3
under the Securities Exchange Act of 1934) at least 662/3% of the total voting power of the Voting Stock of
such Person.

 

“Permitted Hedging Agreement” of any
Person means any Hedging Agreement entered into with one or more financial
institutions in the ordinary course of business that is designed to protect
such Person against fluctuations in interest rates or currency exchange rates
with respect to Indebtedness Incurred and not for purposes of speculation and
which, in the case of an interest rate agreement, shall have a notional amount
no greater than the principal amount at maturity due with respect to the
Indebtedness being hedged thereby.

 

“Permitted Investments” means (a) Cash
Equivalents; (b) investments in prepaid expenses; (c) negotiable
instruments held for collection and lease, utility and workers’ compensation,
performance and other similar deposits; (d) loans, advances or extensions
of credit to employees and directors made in the ordinary course of business
and consistent with past practice; (e) obligations under Permitted Hedging
Agreements; (f) bonds, notes, debentures and other securities received as
a result of Asset Dispositions pursuant to and in compliance with Section 6.07;
(g) Investments in any Person as a result of which such Person becomes a
Restricted Subsidiary; (h) Investments made prior to the Measurement Date;
(i) Investments made after the Measurement Date in Persons engaged in the
Telecommunications/IS Business in an aggregate amount not to exceed Invested
Capital; and (j) additional Investments made after the Effective Date in
an aggregate amount not to exceed $200,000,000.

 

“Permitted Liens” means (a) Liens
for taxes, assessments, governmental charges, levies or claims which are not
yet delinquent or which are being contested in good faith by appropriate
proceedings, if a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor; (b) other
Liens incidental to the conduct of Level 3’s and its Restricted
Subsidiaries’ businesses or the ownership of its Property not securing any
Indebtedness of Level 3 or a Subsidiary of Level 3, and which do not
in the aggregate materially detract from the value of Level 3’s and its
Restricted Subsidiaries’ Property when taken as a whole, or materially impair
the use thereof in the operation of its business; (c) Liens, pledges and
deposits made in the 

 

33

 

ordinary course of business in connection
with workers’ compensation, unemployment insurance and other types of statutory
obligations; (d) Liens, pledges or deposits made to secure the performance
of tenders, bids, leases, public or statutory obligations, sureties, stays,
appeals, indemnities, performance or other similar bonds and other obligations
of like nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money, the obtaining of advances or
credit or the payment of the deferred purchase price of Property and which do
not in the aggregate materially impair the use of Property in the operation of
the business of Level 3 and the Restricted Subsidiaries taken as a whole);
(e) zoning restrictions, servitudes, easements, rights-of-way,
restrictions and other similar charges or encumbrances incurred in the ordinary
course of business which, in the aggregate, do not materially detract from the
value of the Property subject thereto or materially interfere with the ordinary
conduct of the business of Level 3 or its Restricted Subsidiaries; and (f) any
interest or title of a lessor in the Property subject to any lease other than a
Capital Lease.

 

“Permitted Telecommunications Capital
Asset Disposition” means the transfer, conveyance, sale, lease or other
disposition of optical fiber and/or conduit and any related equipment used in a
Segment (as defined) of Level 3’s communications network that (i) constitute
capital assets in accordance with GAAP and (ii) after giving effect to
such disposition, would result in Level 3 retaining at least either (A) 24
optical fibers per route mile on such Segment as deployed at the time of such
disposition or (B) 12 optical fibers and one empty conduit per route mile
on such Segment as deployed at such time. 
“Segment” means (x) with respect to Level 3’s intercity
network, the through-portion of such network between two local networks (i.e.,
Omaha to Denver) and (y) with respect to a local network of Level 3
(i.e., Dallas), the entire through-portion of such network, excluding the spurs
which branch off the through-portion.

 

“Person” means any natural person,
corporation, limited liability company, trust, joint venture, association,
company, partnership, Governmental Authority or other entity.

 

“Plan” means any employee pension
benefit plan (other than a Multiemployer Plan) subject to the provisions of
Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, and in respect of which Level 3 or any ERISA Affiliate is (or, if
such plan were terminated, would under Section 4069 of ERISA be deemed to
be) an “employer” as defined in Section 3(5) of ERISA.

 

“Pledged Equity Interests” has the
meaning specified in the Collateral Agreement.

 

“Preferred Stock” of any Person means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding-up of
such Person, to shares of Capital Stock of any other class of such Person.

 

34

 

“Preferred Stock Dividends” means all
dividends with respect to Preferred Stock of Restricted Subsidiaries held by
Persons other than Level 3 or the Borrower or a Wholly Owned Restricted
Subsidiary or the Borrower, respectively. 
The amount of any such dividend shall be equal to the quotient of such
dividend divided by the difference between one and the maximum statutory
federal income rate (expressed as a decimal number between 1 and
0) applicable to the borrower of such Preferred Stock for the period during
which such dividends were paid.

 

“Prime Rate” means the rate of
interest quoted in The Wall Street Journal,
Money Rates Section as the Prime Rate (currently defined as the base rate
on corporate loans posted by at least 75% of the nation’s thirty (30) largest
banks), as in effect from time to time. 
The Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer.  The Administrative Agent or any other Lender
may make commercial loans or other loans at rates of interest at, above or
below the Prime Rate.

 

“Pro Forma Consolidated Cash Flow
Available for Fixed Charges” for Level 3 and its Restricted Subsidiaries or
for the Borrower and the Borrower Restricted Subsidiaries for any period means
Consolidated Cash Flow Available for Fixed Charges of Level 3 and its
Restricted Subsidiaries or the Borrower and the Borrower Restricted
Subsidiaries, as applicable, for such period, calculated in accordance with the
definition thereof; provided, however, that if (A) since the
beginning of the applicable period Level 3 or one of its Restricted
Subsidiaries or the Borrower or one of the Borrower Restricted Subsidiaries, as
applicable, shall have made one or more Asset Dispositions or an Investment (by
merger or otherwise) in any Restricted Subsidiary or Borrower Restricted
Subsidiary, as applicable (or any Person which becomes a Restricted Subsidiary
or Borrower Restricted Subsidiary, as applicable) or an acquisition, merger or
consolidation of Property which constitutes all or substantially all of an
operating unit of a business or a line of business, or (B) since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or Borrower Restricted Subsidiary, as applicable, or was merged with
or into Level 3 or any Restricted Subsidiary or the Borrower or any Borrower
Restricted Subsidiary, as applicable, since the beginning of such period) shall
have made such an Asset Disposition, Investment, acquisition, merger or
consolidation, then Consolidated Cash Flow Available for Fixed Charges for such
four full fiscal quarter period shall be calculated after giving pro forma
effect to such Asset Dispositions, Investments, acquisitions, mergers or
consolidations as if such Asset Dispositions, Investments, acquisitions,
mergers or consolidations occurred on the first day of such period.  For purposes of this definition, whenever “pro
forma” effect is to be given to any Asset Disposition, Investment, acquisition,
merger or consolidation, the calculations shall be performed in accordance with
Article 11 of Regulation S-X promulgated under the Securities Act, as
interpreted in good faith by the chief financial officer of Level 3, except
that any such pro forma calculation may include operating expense reductions
for such period attributable to the transaction to which pro forma effect is
being given (including, without limitation, operating expense reductions
attributable to execution or termination of any contract, reduction of costs
related to administrative functions, the termination of any employees or the
closing (or the approval by the Board of Directors of Level 3 of the closing)
of any facility) that have been realized or for which all steps 

 

35

 

necessary for the realization of which have
been taken or are reasonably expected to be taken within twelve months
following such transaction, provided that such adjustments are set forth
in an Officers’ Certificate which states (i) the amount of such adjustment
or adjustments and (ii) that such adjustment or adjustments are based on
the reasonable good faith beliefs of the Officers executing such Officers’
Certificate.

 

“Property” means, with respect to any
Person, any interest of such Person in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including Capital Stock in,
and other securities of, any other Person. 
For purposes of any calculation required pursuant to this Agreement, the
value of any Property shall be its Fair Market Value.

 

“Proportionate Interest” in any
issuance of Capital Stock of a Restricted Subsidiary means a ratio (i) the
numerator of which is the aggregate amount of all Capital Stock of such
Restricted Subsidiary beneficially owned by Level 3 and the Restricted
Subsidiaries and (ii) the denominator of which is the aggregate amount of
Capital Stock of such Restricted Subsidiary beneficially owned by all Persons
(excluding, in the case of this clause (ii), any Investment made in
connection with such issuance).

 

“Purchase Money Debt” means
Indebtedness (including Acquired Debt and Capital Lease Obligations, mortgage
financings and purchase money obligations) incurred for the purpose of
financing all or any part of the cost of construction, installation,
acquisition, lease, development or improvement by Level 3 or any
Restricted Subsidiary of any Telecommunications/IS Assets of Level 3 or
any Restricted Subsidiary and including any related notes, Guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as the same may be amended, supplemented, modified, restated or
replaced from time to time (it being understood that Indebtedness meeting the
foregoing requirements and Incurred within 90 days after the construction,
installation, acquisition, lease, development or improvement of such
Telecommunications/IS Assets by Level 3 or such Restricted Subsidiary
shall constitute Purchase Money Debt).

 

“Qualified Counterparty” means, with
respect to any Specified Hedging Agreement, any counterparty thereto that is a
Lender, the Administrative Agent, a Co-Documentation Agent, or a Joint Lead
Arranger, or an Affiliate of a Lender, the Administrative Agent, a
Co-Documentation Agent or a Joint Lead Arranger.

 

“Qualified Receivable Facility” means
Indebtedness of Level 3 or any Subsidiary of Level 3 Incurred from
time to time on customary terms (as determined by Level 3 in good faith)  pursuant to either (x) credit
facilities secured only by Receivables, collections thereof and accounts
established solely for the collection of such Receivables or (y) Receivables
purchase facilities, and including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, as the
same may be amended, supplemented, modified or restated from time to time.

 

“Rating Agencies” mean Moody’s and
S&P.

 

36

 

“Rating Date” means the earlier of the
date of public notice of the occurrence of a Change of Control or of the
intention of Level 3 to effect a Change of Control.

 

“Rating Decline” shall be deemed to
have occurred if, no later than 90 days after the Rating Date (which
period shall be extended so long as the rating of the Loans is under publicly
announced consideration for possible downgrade by any of the Rating Agencies),
either of the Rating Agencies assigns or reaffirms a rating to the Loans that
is lower than the applicable Effective Date Rating (or the equivalent thereof).  If, prior to the Rating Date, either of the
ratings assigned to the Loans by the Rating Agencies is lower than the
applicable Effective Date Rating, then a Rating Decline will be deemed to have
occurred if such rating is not changed by the 90th day following the Rating
Date.  A downgrade within rating
categories, as well as between rating categories, will be considered a Rating
Decline.  A “Rating Decline” also shall
be deemed to have occurred if a Rating Decline (as defined in any indenture
governing any of the Existing Notes) shall have occurred in respect of any of
the Existing Notes.

 

“Receivables” means receivables,
chattel paper, instruments, documents or intangibles evidencing or relating to
the right to payment of money and proceeds and products thereof in each case
generated in the ordinary course of business.

 

“refinancing” has the meaning
specified in Sections 6.01(b)(viii) and 6.02(b)(vi).

 

“Register” has the meaning specified
in Section 9.04.

 

“Regulated Grantor Subsidiary” means (a) Level
3 LLC, (b) ICG Communications, Inc., (c) WilTel Communications
Group, LLC, (d) WilTel Communications, LLC, (e) Eldorado Acquisition
Three, LLC, (f) Broadwing Corporation and (g) each Material
Subsidiary requiring material authorizations and consents of Federal and State
Governmental Authorities in order for it to become a Grantor under the
Collateral Agreement and to satisfy the Guarantee and Collateral Requirement.

 

“Regulated Guarantor Subsidiary” means
(a) Level 3 LLC, (b) ICG Communications, Inc., (c) WilTel
Communications, LLC, (d) Eldorado Acquisition Three, LLC and (e) each
Material Subsidiary requiring material authorizations and consents of Federal
and State Governmental Authorities in order for it to become a Guarantor under
the Guarantee Agreement and to satisfy the Guarantee and Collateral
Requirement.

 

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

 

“Required Lenders” means, at any time,
Lenders having Loans and unused Commitments representing at least a majority in
aggregate principal amount of the total Loans and unused Commitments
outstanding at such time.

 

37

 

“Restatement Effective Date” has the
meaning specified in the Amendment Agreement.

 

“Restricted Payment” has the meaning
specified in Section 6.03.

 

“Restricted Subsidiary” means (a) a
Subsidiary of Level 3 or a Restricted Subsidiary, including the Borrower,
that has not been designated or classified as an Unrestricted Subsidiary
pursuant to and in compliance with Section 6.10 and (b) an
Unrestricted Subsidiary that has been redesignated as a Restricted Subsidiary
pursuant to such Section.  Notwithstanding
any other provision of this Agreement, the Restricted Subsidiaries shall at all
times include the Borrower and Level 3 LLC.

 

“Reversion Date” has the meaning
specified in Section 6.12.

 

“Revocation” has the meaning specified
in Section 6.10.

 

“S&P” means Standard &
Poor’s Ratings Service or, if Standard & Poor’s Rating Service shall
cease rating debt securities having a maturity at original issuance of at least
one year and such ratings business shall have been transferred to a successor
Person, such successor Person; provided, however, that if
Standard & Poor’s Ratings Service ceases rating debt securities having
a maturity at original issuance of at least one year and its ratings business
with respect thereto shall not have been transferred to any successor Person,
then “S&P” shall mean any other nationally recognized rating agency (other
than Moody’s) that rates debt securities having a maturity at original issuance
of at least one year and that shall have been designated by the Administrative
Agent by a written notice given to the Borrower.

 

“Sale and Leaseback Transaction” of
any Person means any direct or indirect arrangement pursuant to which any
Property is sold or transferred by such Person or a Restricted Subsidiary of
such person and is thereafter leased back from the purchaser or transferee
thereof by such Person or one of its Restricted Subsidiaries.  The stated maturity of such arrangement shall
be the date of the last payment of rent or any other amount due under such
arrangement prior to the first date on which such arrangement may be terminated
by the lessee without payment of a penalty.

 

“Securities Act” means the Securities
Act of 1933, as amended.

 

“Security Documents” means the
Guarantee Agreement, the Collateral Agreement, the Indemnity, Subrogation and
Contribution Agreement, the Loan Proceeds Note Collateral Agreement, any Loan
Proceeds Note Guarantee and each other security agreement or other instrument
or document executed and delivered pursuant to Section 5.12 to secure any
of the Obligations.

 

“Security Interest” has the meaning
specified in the Collateral Agreement.

 

“Sister Restricted Subsidiary” means a
Restricted Subsidiary that is not the Borrower or a Borrower Restricted
Subsidiary.

 

38

 

“Significant Subsidiary” means any
Subsidiary that would be a “Significant Subsidiary” of Level 3 within the
meaning of Rule 1-02 under Regulation S-X promulgated by the Securities
and Exchange Commission.

 

“Special Assets” means (a) the
Capital Stock or assets of RCN Corporation (and any intermediate holding
companies or other entities formed solely for the purpose of owning such
Capital Stock or assets) owned, directly or indirectly, by Level 3 or any
Restricted Subsidiary on the Measurement Date, and (b) any Property, other
than cash, Cash Equivalents and Telecommunications/IS Assets, received as
consideration for the disposition after the Measurement Date of Special Assets
(as contemplated by the first proviso in Section 6.07).

 

“Specified Hedging Agreement” means (a) any
Permitted Hedging Agreement (i) that is in effect on the Effective Date
between any Loan Party and a Qualified Counterparty, or (ii) that is
entered into after the Effective Date between any Loan Party and a Qualified
Counterparty and (b) which has been designated by such Loan Party and such
Qualified Counterparty by written notice to the Administrative Agent not later
than 90 days after (i) the Effective Date, in the case of any agreement
referred to in clause (a)(i) or (ii) the date of the execution and
delivery thereof, in the case of any agreement referred to in clause (a)(ii),
as a Specified Hedging Agreement hereunder; provided that the
designation of any Permitted Hedging Agreement as a Specified Hedging Agreement
shall not create in favor of any Qualified Counterparty any rights in
connection with the management or release of any Collateral or of the
obligations of any Loan Party under this Agreement.

 

“Subordinated Debt” means Indebtedness
of Level 3 (a) that is not secured by any Lien on or with respect to
any Property now owned or acquired after the Measurement Date and (b) as
to which the payment of principal of (and premium, if any) and interest and
other payment obligations in respect of such Indebtedness shall be subordinate
to the prior payment in full in cash of the Guarantee of the Obligations by
Level 3 to at least the following extent: (i) no payments of
principal of (or premium, if any) or interest on or otherwise due (including by
acceleration or for additional amounts) in respect of, or repurchases,
redemptions or other retirements of, such Indebtedness (collectively, “payments
of such Indebtedness”) may be permitted for so long as any default (after
giving effect to any applicable grace periods) in the payment of principal (or
premium, if any) or interest on the Loans exists, including as a result of
acceleration; (ii) in the event that any other Default exists with respect
to the Loans, upon notice by Lenders holding 25% or more in aggregate
outstanding principal amount of the Loans to the Administrative Agent, the
Administrative Agent shall have the right to give notice to Level 3 and
the holders of such Indebtedness (or trustees or agents therefor) of a payment
blockage, and thereafter no payments of such Indebtedness may be made for a
period of 179 days from the date of such notice; provided, however,
that not more than one such payment blockage notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to the Loans during such period; (iii) if payment of such Indebtedness is
accelerated when any principal amount of the Loans is outstanding, no payments
of such Indebtedness may be made until three Business Days after the
Administrative Agent receives notice of such acceleration and, thereafter, such
payments 

 

39

 

may only be made to the extent the terms of
such Indebtedness permit payment at that time; and (iv) such Indebtedness
may not (x) provide for payments of principal of such Indebtedness at the
stated maturity thereof or by way of a sinking fund applicable thereto or by
way of any mandatory redemption, defeasance, retirement or repurchase thereof
by Level 3 (including any redemption, retirement or repurchase which is
contingent upon events or circumstances but excluding any retirement required
by virtue of acceleration of such Indebtedness upon an event of default
thereunder), in each case prior to the Maturity Date or (y) permit
redemption or other retirement (including pursuant to an offer to purchase made
by Level 3) of such Indebtedness at the option of the holder thereof prior
to the Maturity Date, other than, in the case of clause (x) or (y),
any such payment, redemption or other retirement (including pursuant to an
offer to purchase made by Level 3) which is conditioned upon (A) a
change of control of Level 3 pursuant to provisions substantially similar
to those described in the definition of “Change of Control Triggering
Event” (and which shall provide that such Indebtedness will not be repurchased
pursuant to such provisions prior to the Borrower’s repayment of the Loans
required to be repaid by the Borrower pursuant to the provisions described in
the definition of “Change of Control Triggering Event”) or (B) a sale or
other disposition of assets pursuant to provisions substantially similar to
those described in Section 6.07 (and which shall provide that such
Indebtedness will not be repurchased pursuant to such provisions prior to the
Borrower’s repayment of the Loans required to be repaid by the Borrower
pursuant to Section 6.07).

 

“Subordinated Indentures” means (a) the
indenture dated as of September 20, 1999 between Level 3 and IBJ
Whitehall Bank & Trust Company, as trustee, as supplemented by the
Supplement dated September 20, 1999 and as amended or supplemented from
time to time in accordance therewith relating to Level 3’s 6.0%
Convertible Subordinated Notes due 2009 and (b) the indenture dated as of September 20,
1999 between Level 3 and IBJ Whitehall Bank & Trust Company, as
trustee, as supplemented by the Second Supplement dated February 29, 1999
and as amended or supplemented from time to time in accordance therewith
relating to Level 3’s 6.0% Convertible Subordinated Notes due 2010.

 

“Subsidiary” of any Person means (i) a
corporation more than 50% of the combined voting power of the outstanding
Voting Stock of which is owned, directly or indirectly, by such Person or by
one or more other Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof or (ii) any other Person (other than a corporation)
in which such Person, or one or more other Subsidiaries of such Person or such
Person and one or more other Subsidiaries thereof, directly or indirectly, has
at least a majority ownership and power to direct the policies, management and
affairs thereof.

 

“Subsidiary Loan Party” means, as
applicable, any Subsidiary of Level 3 that has guaranteed the Obligations
or has assigned and pledged any of its assets to secure the Obligations
pursuant to any Security Document.

 

“Suspended Covenants” has the meaning
specified in Section 6.12.

 

“Suspension Period” has the meaning
specified in Section 6.12.

 

40

 

“Taxes” means any and all present or
future taxes, levies, imposts, duties, deductions, charges or withholdings
imposed by any Governmental Authority.

 

“Telecommunications/IS Assets” means (a) any
Property (other than cash, cash equivalents and securities) to be owned by
Level 3 or any Restricted Subsidiary and used in the Telecommunications/IS
Business; (b) for purposes of Sections 6.01, 6.02 and 6.05 only,
Capital Stock of any Person; or (c) for all other purposes of this
Agreement, Capital Stock of a Person that becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by Level 3 or another
Restricted Subsidiary from any Person other than an Affiliate of Level 3; provided,
however, that, in the case of clause (b) or (c), such Person
is primarily engaged in the Telecommunications/IS Business.

 

“Telecommunications/IS Business” means
the business of (i) transmitting, or providing (or arranging for the
providing of) services relating to the transmission of, voice, video or data
through owned or leased transmission facilities, (ii) constructing,
creating, developing or marketing communications networks, related network
transmission equipment, software and other devices for use in a communications
business, (iii) computer outsourcing, data center management, computer systems
integration, reengineering of computer software for any purpose (including,
without limitation, for the purposes of porting computer software from one
operating environment or computer platform to another or to address issues
commonly referred to as “Year 2000 issues”) or (iv) evaluating,
participating or pursuing any other activity or opportunity that is primarily
related to those identified in (i), (ii) or (iii) above; provided,
that the determination of what constitutes a Telecommunications/IS Business
shall be made in good faith by the Board of Directors of Level 3.

 

“10.75% Notes” means the Borrower’s
10.75% Senior Notes due 2011 in an aggregate principal amount outstanding on
the Effective Date of $3,000,000.

 

“10.75% Notes Indenture” means the Indenture
dated as of October 1, 2003 among Level 3, the Borrower and The Bank
of New York, as trustee, governing the 10.75% Notes.

 

“10.75% Notes Supplemental Indentures”
means the Borrower Restricted Subsidiary Supplemental Indentures relating to
the 10.75% Notes and the Level 3 LLC 10.75% Notes Supplemental Indenture.

 

“10.75% Offering Proceeds Note” means
the intercompany demand note dated October 1, 2003, in an initial
principal amount equal to $500,000,000, issued by Level 3 LLC to the Borrower.

 

“Tranche A Term Commitment” means,
with respect to each Tranche A Term Lender, the commitment of such Tranche A
Term Lender to make Tranche A Term Loans on the Effective Date, expressed as an
amount representing the maximum principal amount of the Tranche A Term Loans to
be made by such Tranche A Term Lender hereunder.  The amount of each Tranche A Term Lender’s
Tranche A Term Commitment 

 

41

 

is set forth on Schedule 2.01, as it
may be modified under Section 9.02.  The aggregate amount of the Tranche A Term
Lenders’ Tranche A Term Commitments is $1,400,000,000, subject to any increase
under Section 9.02.

 

“Tranche A Term Lender” means a Lender
with a Tranche A Term Commitment or a Tranche A Term Loan.

 

“Tranche A Term Loans” means Loans
made by the Tranche A Term Lenders pursuant to Section 2.01(a).

 

“Tranche B Term Commitment” means,
with respect to each Tranche B Term Lender, the commitment of such Tranche B
Term Lender to make Tranche B Term Loans on the Restatement Effective Date,
expressed as an amount representing the maximum principal amount of the Tranche
B Term Loans to be made by such Tranche B Term Lender hereunder.  The amount of each Tranche B Term Lender’s
Tranche B Term Commitment is set forth on Schedule 2.01, as it may be
modified under Section 9.02.  The
aggregate amount of the Tranche B Term Lenders’ Tranche B Term Commitments is
$220,000,000, subject to any increase under Section 9.02.

 

“Tranche B Term Lender” means a Lender
with a Tranche B Term Commitment or a Tranche B Term Loan.

 

“Tranche B Term Loans” means Loans
made or deemed made by the Tranche B Term Loans pursuant to Section 2.01(b).

 

“Tranche B Term Obligations” means (a) the
due and punctual payment by the Borrower of (i) the principal of and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Tranche B Term Loans, when and
as due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise and (ii) all other monetary obligations of the
Borrower in respect of Tranche B Term Loans under the Credit Agreement and each
of the other Loan Documents, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether allowed
or allowable in such proceeding), (b) the due and punctual performance of
all other obligations of the Borrower in respect of Tranche B Term Loans under
or pursuant to the Credit Agreement and each of the other Loan Documents, and (d) the
due and punctual payment and performance of all the obligations of each other
Loan Party in respect of Tranche B Term Loans under or pursuant to this
Agreement and each of the other Loan Documents.

 

“Transactions” means the execution,
delivery and performance by each Loan Party of the Loan Documents to which it
is to be a party, the borrowing of the Loans and the use of the proceeds
thereof.

 

“Treasury Rate” means, as of any
prepayment date, the yield to maturity at the time of computation of United
States Treasury securities with a constant maturity (as 

 

42

 

compiled and published in
the most recent Federal Reserve Statistical Release H.15 (519) that has become
publicly available at least two Business Days prior to such prepayment date
(or, if such Statistical Release is no longer published, any publicly available
source for similar market data)) most nearly equal to the then remaining term
of the Tranche B Term Loans to the No-Call Date; provided, however,
that if the then remaining term of the Tranche B Term Loans to the No-Call Date
is not equal to the constant maturity of a United States Treasury security for
which a weekly average yield is given, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one
year will be used.

 

“12.25% Notes” means the Borrower’s
12.25% Senior Notes due 2013 in an aggregate principal amount outstanding on
the Effective Date of $550,000,000.

 

“12.25% Notes Indenture” means the
Indenture dated as of March 14, 2006 among Level 3, the Borrower and The
Bank of New York, as trustee, governing the 12.25% Notes.

 

“12.25% Notes Supplemental Indentures”
means the Borrower Restricted Subsidiary Supplemental Indentures relating to
the 12.25% Notes and the Level 3 LLC 12.25% Notes Supplemental Indenture.

 

“12.25% Offering Proceeds Note” means
the intercompany demand note dated April 6, 2006, in an initial principal
amount equal to $550,000,000, issued by Level 3 LLC to the Borrower.

 

“2011 Floating Rate Notes” means the
Borrower’s 2011 Floating Rate Notes due 2011 in an aggregate principal amount
outstanding on the Effective Date of $150,000,000.

 

“2011 Floating Rate Notes Indenture”
means the Indenture dated as of March 14, 2006 among Level 3, the Borrower
and The Bank of New York, as trustee, governing the 2011 Floating Rate Notes.

 

“2011 Floating Rate Notes Supplemental
Indentures” means the Borrower Restricted Subsidiary Supplemental
Indentures relating to the 2011 Floating Rate Notes and the Level 3 LLC 2011
Floating Rate Notes Supplemental Indenture.

 

“2011 Floating Rate Offering Proceeds Note”
means the intercompany demand note dated March 14, 2006, in an initial
principal amount equal to $150,000,000, issued by Level 3 LLC to the Borrower.

 

“2015 Floating Rate Notes” means the
Borrower’s Floating Rate Notes due 2015 in an aggregate principal amount
outstanding on the Effective Date of $300,000,000.

 

“2015 Floating Rate Notes Indenture”
means the Indenture dated as of February 14, 2007 among Level 3, the
Borrower and The Bank of New York, as trustee, governing the 2015 Floating Rate
Notes.

 

43

 

“2015 Floating Rate Notes Supplemental
Indentures” means the Borrower Restricted Subsidiary Supplemental
Indentures relating to the 2015 Floating Rate Notes and the Level 3 LLC 2015
Floating Rate Notes Supplemental Indenture.

 

“2015 Floating Rate Offering Proceeds Note”
means the intercompany demand note dated February 14, 2007, in an initial
principal amount equal to $300,000,000, issued by Level 3 LLC to the Borrower.

 

“Type”, when used in reference to any
Loan or Borrowing, refers to whether the rate of interest on such Loan, or on
the Loans comprising such Borrowing, is determined by LIBO Rate or ABR.

 

“Unregulated Grantor Subsidiary” means
(a) each Initial Grantor Subsidiary, (b) each Material Subsidiary
(other than the Borrower or any Material Subsidiary that is a Regulated Grantor
Subsidiary) and (c) each Subsidiary of Level 3 that directly or indirectly
owns any Equity Interest in any Designated Grantor Subsidiary.

 

“Unregulated Guarantor Subsidiary”
means (a) each Initial Guarantor Subsidiary, (b) each Material
Subsidiary (other than the Borrower or any Material Subsidiary that is a
Regulated Guarantor Subsidiary) and (c) each Subsidiary of Level 3 that
directly or indirectly owns any Equity Interest in any Designated Guarantor
Subsidiary.

 

“Unrestricted Subsidiary” means (a) 91
Holding Corp., SR 91 Holding LLC, SR91 Corp., SR LP, Express Lanes, Inc.,
California Private Transportation Company LP, CPTC LLC and 85 Tenth Avenue LLC;
(b) any Subsidiary of an Unrestricted Subsidiary; and (c) any
Subsidiary designated as such pursuant to and in compliance with Section 6.10
and not thereafter redesignated as a Restricted Subsidiary as permitted
pursuant thereto.  For the sake of
clarity, actions taken by an Unrestricted Subsidiary will not be deemed to have
been taken, directly or indirectly, by Level 3 or any Restricted
Subsidiary.  No Unrestricted Subsidiary may
own any Capital Stock of a Restricted Subsidiary.

 

“Vice President”, when used with
respect to any Person, means any vice president, whether or not designated by a
number or a word or words added before or after the title “vice president”.

 

“Voting Stock” of any Person means
Capital Stock of such Person which ordinarily has voting power for the election
of directors (or persons performing similar functions) of such Person, whether
at all times or only for so long as no senior class of securities has such
voting power by reason of any contingency.

 

“Wholly Owned Restricted Subsidiary”
means a Restricted Subsidiary that is a Wholly Owned Subsidiary.

 

“Wholly Owned Subsidiary” of any
Person means a Subsidiary of such Person all of the outstanding Voting Stock or
other ownership interests (other than directors’ qualifying shares) of which
shall at the time be owned by such Person or by 

 

44

 

one or more Wholly Owned Subsidiaries of such
Person or by such Person and one or more Wholly Owned Subsidiaries such Person.

 

“Withdrawal Liability” means liability
to a Multiemployer Plan as a result of a complete or partial withdrawal from
such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.

 

SECTION 1.02.  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) 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), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (c) 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, (d) 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 and (e) 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.

 

SECTION 1.03.  Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if
the Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the Effective Date in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.

 

SECTION 1.04.  Classification of Loans and
Borrowings.  For
purposes of this Agreement, Loans may be classified and referred to by Class (e.g.,
a “Tranche A Term Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and
Type (e.g., a “Tranche A Eurodollar Loan”).  Borrowings may also be classified and
referred to by Class (e.g., a “Tranche A Borrowing”) or by Type (e.g.,
a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Tranche A
Eurodollar Borrowing”).

 

45

 

ARTICLE II

 

The Credits

 

SECTION 2.01.  Commitments; Loans and
Borrowings.  (a) 
Subject to the terms and conditions set forth herein, each Tranche A Term
Lender made a Tranche A Term Loan to the Borrower on the Effective Date in a
principal amount equal to its Tranche A Term Commitment.  The Tranche A Term Loans made on the
Effective Date were ABR Loans or Eurodollar Loans as the Borrower shall have
elected in a notice delivered to the Administrative Agent not later than 11:00 a.m.
New York City time, three Business Days prior to the Effective Date.  The Tranche A Term Commitments expired at
5:00 p.m. New York City time on the Effective Date, and amounts paid or
prepaid in respect of Tranche A Term Loans may not be reborrowed.

 

(b)  Subject to the terms and conditions set forth
herein, each Tranche B Term Lender agrees to make a Tranche B Term Loan to the
Borrower on the Restatement Effective Date in a principal amount equal to its
Tranche B Term Commitment.  The Tranche B
Term Loans made on the Restatement Effective Date shall be ABR Loans or
Eurodollar Loans as the Borrower shall have elected in a notice delivered to
the Administrative Agent not later than 11:00 a.m. New York City time,
three Business Days prior to the Restatement Effective Date.  The Tranche B Term Commitments shall expire
at 5:00 p.m. New York City time on the Restatement Effective Date, and
amounts paid or prepaid in respect of Tranche B Term Loans may not be
reborrowed.  Notwithstanding anything to
the contrary contained herein (and without affecting any other provisions
hereof), the funded portion of each Tranche B Term Loan to be made on the
Restatement Effective Date (i.e., the amount advanced to the Borrower on the
Restatement Effective Date) shall be equal to 99.00% of the principal amount of
such Tranche B Term Loan (it being agreed that the full principal amount of
each such Tranche B Term Loan will be deemed outstanding on the Restatement
Effective Date and the Borrower shall be obligated to repay 100% of the
principal amount of each such Tranche B Term Loan as provided hereunder).

 

(c)  At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $5,000,000.  At the time of the making of or conversion of
a Borrowing to an ABR Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $1,000,000 and not less than $5,000,000.  Borrowings of more than one Type may be
outstanding at one time; provided that there shall not at any time be
more than a total of ten (10) Eurodollar Borrowings outstanding at any one
time.

 

SECTION 2.02.  Funding of Loans.  (a)  Each Lender shall make each Loan to
be made by it hereunder on the proposed date of the applicable Borrowing by
wire transfer of immediately available funds by 12:00 noon, New York City time,
to the account designated by the Administrative Agent for such purpose by
notice to the applicable Lenders.  The
Administrative Agent made the Tranche A Term Loans available to the Borrower (i) by
applying the amounts so received to the payment of the Existing Term Loans and
all interest, fees and other amounts accrued or owing and not 

 

46

 

yet
paid under the Existing Amended and Restated Credit Agreement and (ii) after
such application, by crediting the remainder of the amounts so received, in
immediately available funds, to the account of the Borrower designated by it
for such purpose and previously communicated to the Administrative Agent. The
Administrative Agent will make the Tranche B Term Loans available to the
Borrower by crediting the amounts so received, in immediately available funds,
to the account of the Borrower designated by it for such purpose and previously
communicated to the Administrative Agent.

 

(b)  Unless the Administrative Agent shall have received
notice from a Lender prior to the proposed date of the applicable Borrowing
that such Lender will not make the Loan to be made by it, the Administrative
Agent may assume that such Lender has made such Loan on such date in accordance
with paragraph (a) of this Section and may, in reliance upon
such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact
made the amount of its Loan available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at (i) in
the case of such Lender, the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to the applicable Class of Loans.  If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan.

 

(c)  The failure of any Lender to make any Loan required
to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and
no Lender shall be responsible for any other Lender’s failure to make a Loan as
required.

 

SECTION 2.03.  Interest Elections.  (a)  The Borrower may elect to convert a
Borrowing to a different Type or to continue a Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section.  The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.

 

(b)  To make an election pursuant to this Section, the
Borrower shall notify the Administrative Agent of such election by telephone (a) in
the case of a request to convert or continue a Borrowing as a Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three Business
Days before the date of the proposed conversion or continuation or (b) in
the case of a request to convert or continue a Borrowing as an ABR Borrowing,
not later than 11:00 a.m., New York City time, one Business Day before the
date of the proposed conversion or continuation (each such notice being called
an “Interest Election Request”). 
Each such telephonic Interest Election Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the 

 

47

 

Administrative
Agent of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.

 

(c)  Each telephonic and written Interest Election
Request shall specify the following information in compliance with Section 2.01:

 

(i) the Borrowing,
including the Class of Borrowing, to which such Interest Election Request
applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to clauses (iii) and
(iv) below shall be specified for each resulting Borrowing);

 

(ii) the effective
date of the election made pursuant to such Interest Election Request, which
shall be a Business Day;

 

(iii) whether the
resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv) if the
resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request
requests a Eurodollar Borrowing but does not specify an Interest Period, then
the Borrower shall be deemed to have selected an Interest Period of one month’s
duration.

 

(d)  Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each affected Lender of the
details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e)  If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then at the end of such Interest Period
such Borrowing shall be converted to an ABR Borrowing.

 

(f)  Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to elect to convert or continue
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.

 

SECTION 2.04.  Repayment of Loans; Evidence
of Debt.  (a) 
The Borrower hereby unconditionally promises to pay to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each Loan on
the Maturity Date.

 

(b)  Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing the Indebtedness of the
Borrower to such Lender resulting from the Loans made by such Lender, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.

 

48

 

(c)  The Administrative Agent shall maintain accounts in
which it shall record (i) the amount of each Loan made hereunder, the Class and
Type thereof and the Interest Period applicable thereto, (ii) the amount
of any principal or interest due and payable or to become due and payable from
the Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder for the account of the Lenders
and each Lender’s share thereof.

 

(d)  The entries made in the accounts maintained pursuant
to paragraph (b) or (c) of this Section shall be prima  facie
evidence of the existence and amounts of the obligations recorded therein; provided
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein (including any failure to record the making or
repayment of any Loan) shall not in any manner affect the obligation of the
Borrower to repay the Loans in accordance with the terms of this Agreement.

 

(e)  Any Lender may request that Loans of any Class made
by it be evidenced by a promissory note. 
In such event, the Borrower shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) in substantially the
form set forth in Exhibit D. 
Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 9.04)
be represented by one or more promissory notes in such form payable to the
order of the payee named therein (or, if such promissory note is a registered
note, to such payee and its registered assigns).

 

SECTION 2.05.  Prepayments.  (a)   
The Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part without premium (but subject to Section 2.10
and except as provided in this Section). 
All voluntary prepayments of Tranche B Term Loans pursuant to this
paragraph (a) (i) on or prior to the No-Call Date shall be accompanied
by a prepayment fee equal to the Make-Whole Amount, (ii) after the No-Call
Date and on or prior to the 12-month anniversary of the No-Call Date shall be
accompanied by a prepayment fee equal to 4.00% of the aggregate principal
amount of such prepayments and (iii) after the 12-month anniversary of the
No-Call Date and on or prior to the 18-month anniversary of the No-Call Date
shall be accompanied by a prepayment fee equal to 2.00% of the aggregate
principal amount of such prepayments.

 

(b)  When the aggregate amount of Excess Proceeds exceeds
$10,000,000, the Borrower shall within 15 days notify the Administrative Agent
thereof and prepay the Loans in the amount of such Excess Proceeds without
premium (but subject to Section 2.10) (as reduced by any portion thereof
which has been rejected by Declining Lenders pursuant to clause (e) below
and specified in a notice delivered by the Administrative Agent to the
Borrower).  To the extent there are any
remaining Excess Proceeds following the completion of the prepayment required
hereunder as a result of Lender elections not to accept such prepayment, the
Borrower shall apply such Excess Proceeds to the repayment of other
Indebtedness of the Borrower or any Restricted Subsidiary that is a Subsidiary
of the Borrower, to the extent permitted or required under the terms 

 

49

 

thereof.  Any other remaining Excess Proceeds may be
applied to any use as determined by Level 3 which is not otherwise
prohibited by this Agreement, and the amount of Excess Proceeds shall be reset
to zero.

 

(c)  Not fewer than 30 days prior to any payment or
prepayment of any principal amount of the Loan Proceeds Note, the Borrower
shall notify the Administrative Agent thereof and shall, on the date of such
payment or prepayment, subject to paragraph (e) below, prepay the Loans at
a price equal to the principal amount of the Loans without premium (but subject
to Section 2.10); provided, however that (i) on the
date of such payment or prepayment of the Loan Proceeds Note, the
Administrative Agent shall notify the Borrower of the required amount of such
prepayment (as reduced by any portion thereof which has been rejected by
Declining Lenders pursuant to clause (e) below) and (ii) the Borrower
shall immediately prepay the Loans in such amount in accordance with clause (e) below.

 

(d)  Upon the occurrence of a Change of Control
Triggering Event, the Borrower shall within 30 days of such occurrence notify
the Administrative Agent thereof and prepay the Loans not later than 30
Business Days following such notification; provided, however that
(i) at the expiration of such 30 Business Day period, the Administrative
Agent shall notify the Borrower of the required amount of such prepayment (as
reduced by any portion thereof which has been rejected by Declining Lenders
pursuant to clause (e) below) and the Borrower shall immediately prepay
the Loans in such amount in accordance with clause (e) below and (ii) the
Borrower shall also pay, on the date of such prepayment, to each Lender
receiving such prepayment a fee equal to 1.00% of the principal amount of the
Loans prepaid to such Lender.

 

(e)  With respect to any proposed mandatory prepayment of
the Loans pursuant to clause (b), (c) or (d) above, any Lender may,
at its option, elect not to accept such prepayment (any Lender making such
election being a “Declining Lender”) as follows: each Declining Lender
shall give written notice thereof to the Administrative Agent not later than
10:00 a.m. New York City time on the date which is two Business Days prior
to the date on which the Administrative Agent is required to notify the
Borrower of the amount of the applicable prepayment pursuant to
clause (b), (c) or (d) above. 
On the date of prepayment, an amount equal to that portion of the Loan
then to be prepaid (less the amount thereof that would otherwise be payable to
Declining Lenders) shall be paid to the Lenders that are not Declining Lenders
in accordance with subsection (f) below.  In the event that the Administrative Agent
has not, with respect to any mandatory prepayment, received a notice from a
Lender in accordance with this clause (e),  such
Lender shall be deemed to have waived its rights under this clause (e) to
decline receipt thereof.

 

(f)  The Borrower (or Level 3 on its behalf) shall
notify the Administrative Agent by telephone (confirmed by telecopy) of any
prepayment hereunder not later than 1:00 p.m., New York City time, two
Business Days before the date of prepayment or such lesser period as may be
acceptable to the Administrative Agent. 
Each such notice shall be irrevocable and shall specify the prepayment
date, the principal amount to be prepaid and, in the case of a mandatory
prepayment, a reasonably detailed calculation of 

 

50

 

the
amount of such prepayment and, in the case of a prepayment pursuant to
clause (a) of this Section, the Class or Classes to which such
prepayment shall be applied.  Promptly
following receipt of any such notice, the Administrative Agent shall advise the
Lenders of the contents thereof. 
Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.07.  If any
prepayment pursuant to this  Section is
made by the Borrower other than on the last day of the Interest Period
applicable to any prepaid Eurodollar Loans, the Borrower shall also pay to each
Lender (other than any Declining Lender) on the date of such prepayment any
amount owing to such Lender pursuant to Section 2.10.  Prepayments of Loans (x) pursuant to
paragraph (a) of this Section shall be applied between the
Classes of Loans as directed by the Borrower and (y) pursuant to paragraph
(b), (c) or (d) of this Section shall be applied ratably between
the Classes of Loans (it being understood that, with respect to any Subsidiary
Loan Party that has not guaranteed or granted Liens on, security interests in
or pledges of its assets to secure the Tranche B Term Obligations, nothing
herein shall prohibit or limit the application of proceeds realized from the
exercise of remedies under any Security Document in respect of such Subsidiary
Loan Party solely to the Obligations in respect of the Tranche A Term Loans
owed to the Tranche A Term Lenders).

 

SECTION 2.06.  Fees.  (a)  Level 3 and the Borrower agree
to pay to the Administrative Agent, for its own account, fees payable in the
amounts and at the times separately agreed upon by the Borrower and the
Administrative Agent.

 

SECTION 2.07.  Interest.  (a)  The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate plus the Applicable
Margin.  The Loans comprising each
Eurodollar Borrowing shall bear interest at the LIBO Rate for the Interest
Period for such Borrowing plus the Applicable Margin.

 

(b)  Notwithstanding the foregoing, if any principal of
or interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration
or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue
principal of any Loan, 2.00% per annum plus the rate otherwise applicable to
such Loan as provided in paragraph (a) of this Section or (ii) in
the case of any other amount, 2.00% per annum plus the rate that would at the
time be applicable to an ABR Loan as provided in paragraph (a) of this
Section.

 

(c)  Accrued interest on the Loans shall be payable in
arrears on each Interest Payment Date; provided that (i) interest
accrued pursuant to paragraph (b) of this Section shall be payable on
demand and (ii) in the event of any repayment or prepayment of the Loans,
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment.

 

(d)  All interest hereunder shall be computed on the
basis of the actual number of days elapsed in a year of 365 days (or 366 days
in a leap year), and in each case shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).  The applicable LIBO Rate or Alternate Base
Rate shall be 

 

51

 

determined
by the Administrative Agent, and such determination shall be conclusive absent
manifest error.

 

SECTION 2.08.  Alternate Rate of Interest.  If, prior to the commencement of any Interest
Period for a Eurodollar Borrowing, the Administrative Agent determines (which
determination shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the LIBO Rate for such Interest
Period, then the Administrative Agent shall give notice thereof to Level 3
and the Lenders by telephone or telecopy as promptly as practicable thereafter,
whereupon each Eurodollar Loan shall automatically, on the last day of the
current Interest Period for such Eurodollar Loan, convert into an ABR Loan and
the obligations of the Lenders to make Eurodollar Loans shall be suspended
until the Administrative Agent notifies Level 3 and the Lenders that the
circumstances giving rise to such notice no longer exist.

 

SECTION 2.09.  Increased Costs.  (a)  If any Lender shall notify the
Administrative Agent and Level 3 at any time that Eurocurrency Reserve
Requirements are, or are scheduled to become, effective and that such Lender is
or will be generally subject to such Eurocurrency Reserve Requirements and
will, as a result, incur additional costs, then such Lender shall, for each day
from the later of the date of such notice and the date on which such
Eurocurrency Reserve Requirements become effective, be entitled to additional
interest on each Eurodollar Loan made by it at a rate per annum determined for
such day (rounded upward to the nearest 100th of 1%) equal to the remainder
obtained by subtracting (i) the LIBO Rate for such Eurodollar Loan from (ii) the
rate obtained by dividing such LIBO Rate by a percentage equal to 100% minus
the Eurocurrency Reserve Requirements then-applicable to such Lender.  Such additional interest will be payable in
arrears to the Administrative Agent, for the account of such Lender, on each
Interest Payment Date relating to such Eurodollar Loan and on any other date
when interest is required to be paid hereunder with respect to such Loan.  Any Lender giving a notice under this
paragraph (a) shall promptly withdraw such notice (by written notice
of withdrawal given to the Administrative Agent and Level 3) in the event
Eurocurrency Reserve Requirements cease to apply to it or the circumstances
giving rise to such notice otherwise cease to exist.

 

(b)  If any Change in Law shall:

 

(i) impose, modify
or deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of or credit extended by any Lender
(except any Eurocurrency Reserve Requirement); or

 

(ii) impose on any
Lender or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans of such Lender;

 

and the result of any of the foregoing shall
be to increase the cost to such Lender of making or maintaining any Eurodollar
Loan or to reduce the amount of any sum received by such Lender, then
Level 3 and the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or 

 

52

 

reduction suffered.  This Section shall not apply to any
additional costs or reductions relating to Taxes, which are governed by Section 2.11.

 

(c)  If any Lender determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender’s capital or on the capital of such Lender’s
holding company, if any, as a consequence of this Agreement or the Loans made
by such Lender to a level below that which such Lender or such Lender’s holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s policies and the policies of such Lender’s holding
company with respect to capital adequacy), then from time to time Level 3
and the Borrower will pay to such Lender such additional amount or amounts as
will compensate such Lender or such Lender’s holding company for any such
reduction suffered.

 

(d)  A certificate of a Lender setting forth the amount
or amounts necessary to compensate such Lender or its holding company, as the
case may be, as specified in paragraph (b) or (c) of this Section shall
be delivered to Level 3 and shall be conclusive absent manifest
error.  Level 3 and the Borrower, as
the case may be, shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

(e)  Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of
such Lender’s right to demand such compensation; provided that
Level 3 and the Borrower shall not be required to compensate a Lender
pursuant to this Section for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender notifies Level 3 of
the Change in Law giving rise to such increased costs or reductions and of such
Lender’s intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

 

(f)  The provisions of Section 2.09(a) and (c) shall
only be available to Lenders regulated by Federal banking authorities.

 

SECTION 2.10.  Break Funding Payments.  In the event of (a) any payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b) the
failure to borrow or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, or (c) the assignment of any Eurodollar
Loan other than on the last day of the Interest Period applicable thereto as a
result of a request by Level 3 pursuant to Section 2.13, then, in any
such event, Level 3 and the Borrower, as applicable, shall compensate each
Lender for the loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss,
cost or expense to any Lender shall be deemed not to include any lost profit
(including loss of Applicable Margin) and shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such Loan had such
event not occurred at the LIBO Rate that is or would have been applicable to
such Loan, for the 

 

53

 

period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market.  A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this Section shall
be delivered to Level 3 and shall be conclusive absent manifest
error.  Level 3 or the Borrower, as
applicable, shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

SECTION 2.11.  Taxes.  (a)  Any and all payments by or on
account of the obligations of the Borrower hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section) the Administrative Agent or Lender (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

 

(b)  In addition, the Borrower shall pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable law.

 

(c)  Level 3 and the Borrower shall indemnify the
Administrative Agent and each Lender, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent or such Lender, as the case may be, on or with respect
to any payment by or on account of any obligation of the Borrower hereunder or
under any other Loan Document (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the
amount of such payment or liability delivered to Level 3 or the Borrower
by a Lender, or by the Administrative Agent on its own behalf or on behalf of a
Lender, shall be conclusive absent manifest error.

 

(d)  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent reasonably satisfactory
evidence of such payment and the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment; provided
however in no case shall the Borrower be required to deliver documentation not
normally issued by such Governmental Authority.

 

54

 

(e)  Any Foreign Lender
that is entitled to an exemption from or reduction of withholding tax under the
law of the jurisdiction in which the Borrower is located, or any treaty to
which such jurisdiction is a party, with respect to payments under this Agreement
shall deliver to the Borrower and Level 3 (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower and Level 3 as will permit such
payments to be made without withholding or at a reduced rate.

 

SECTION 2.12.  Payments Generally; Pro Rata
Treatment; Sharing of Set-offs.  (a) 
The Borrower shall make each payment required to be made by it hereunder or
under any other Loan Document (whether of principal, interest or fees, or of
amounts payable under Section 2.09, 2.10 or 2.11, or otherwise) prior to
1:00 p.m., New York City time, on the date when due, in immediately
available funds, without set-off or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating interest
thereon.  All such payments shall be made
to the Administrative Agent at its offices at Merrill Lynch World Headquarters,
North Tower, World Financial Center, New York, New York  10281-1201, except that payments pursuant to
Sections 2.09, 2.10, 2.11 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein.  The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof.  If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension.  All payments
under each Loan Document shall be made in dollars.

 

(b)  If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, interest and fees then due hereunder, such
funds shall be applied (i) first, towards payment of interest and fees
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of interest and fees then due to such parties, and (ii) second,
towards payment of principal then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal then due to such
parties.

 

(c)  If any Lender shall,
by exercising any right of set-off or counterclaim or otherwise, obtain payment
in respect of any principal of or interest on any of its Loans resulting in
such Lender receiving payment of a greater proportion of the aggregate amount
of its Loans and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans of the other Lenders to
the extent necessary 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 (it being understood that, with
respect to any Subsidiary Loan Party that has not guaranteed or granted Liens
on, security interests in or pledges of its assets to secure the 

 

55

 

Tranche B Term Obligations, nothing herein
shall prohibit or limit, or require the purchase of participations under this
paragraph as a result of, the application of proceeds realized from the
exercise of remedies under any Security Document in respect of such Subsidiary
Loan Party solely to the Obligations in respect of the Tranche A Term Loans
owed to the Tranche A Term Lenders); provided that (i) 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 (ii) the
provisions of this paragraph shall not be construed to apply to any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to Level 3 or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation in an obligation owed by it pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

 

(d)  Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders the amount due.  In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of
the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation.

 

(e)  If any Lender shall
fail to make any payment required to be made by it hereunder, then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender’s obligations until
all such unsatisfied obligations are fully paid.

 

SECTION 2.13.  Mitigation Obligations;
Replacement of Lenders.  (a)  If
any Lender requests compensation under Section 2.09, 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 2.11, 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 2.09 or 2.11, as
the case may be, in the future and (ii) would not subject such Lender to
any unreimbursed cost or expense and 

 

56

 

would not otherwise be disadvantageous to
such Lender.  Level 3 and the
Borrower hereby agree to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.

 

(b)  If any Lender
requests compensation under Section 2.09 (other than paragraph (a) of
such Section), 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 2.11, if any Lender defaults in its obligation to fund Loans
hereunder or under the circumstances contemplated by Section 9.02(d),
Level 3 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 Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (i) Level 3
shall have received the prior written consent of the Administrative Agent,
which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or Level 3 or the Borrower (in the case of
all other amounts) and (iii) in the case of any such assignment resulting
from a claim for compensation under Section 2.09 or payments required to
be made pursuant to Section 2.11, such assignment will result in a
reduction in such compensation or payments. 
A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling Level 3 to require such assignment
and delegation cease to apply.

 

ARTICLE III

 

Representations and Warranties

 

On and as of the Effective
Date, each of Level 3 and the Borrower represents and warrants to the Lenders
that:

 

SECTION 3.01.  Organization; Powers.  Each of Level 3, the Borrower and each
Material Subsidiary of Level 3 is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, would not
constitute or result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.

 

SECTION 3.02.  Authorization;
Enforceability.  The Transactions to
be entered into by each Loan Party on the Effective Date are within such Loan
Party’s powers and have been duly authorized by all necessary corporate or
other action and, if required, stockholder or member action.  This Agreement has been duly executed and 

 

57

 

delivered by Level 3 and the Borrower and
constitutes, and each other Loan Document to which any Loan Party is to be a
party, when executed by and delivered by such Loan Party, will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.

 

SECTION 3.03.  Governmental Approvals; No
Conflicts.  The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as are contemplated to
be taken to satisfy the Guarantee Permit Condition and the Collateral Permit
Condition and such as have been obtained or made and are in full force and
effect and filings necessary to perfect Liens created under the Loan Documents,
(b) will not violate the charter, by-laws or other organizational
documents of Level 3 or any of the Loan Parties and will not violate,
except for any violation which would not constitute or result in a Material
Adverse Effect, (i) any applicable law or regulation of a type typically applicable
to transactions of the type contemplated by the Transactions, (ii) any
material order of any Governmental Authority, (c) will not violate the
Parent’s Indentures, the Subordinated Indentures or the Financing Inc.
Indentures and (d) will not result in the creation or imposition of any
Lien on any material assets of Level 3, the Borrower or any Subsidiary of
Level 3, except Liens created under the Loan Documents.

 

SECTION 3.04.  Financial Condition; No
Material Adverse Change.  (a) 
The Lenders have been given access to Level 3’s consolidated balance sheet and
statements of income, stockholders equity and cash flows as of and for the
fiscal year ended December 31, 2006, reported on by KPMG LLP, an
independent public accounting firm.  Such
financial statements present fairly in all material respects the financial
position and results of operations and cash flows of Level 3 and its
consolidated Subsidiaries as of such date and for such period in accordance
with GAAP.

 

(b)  Except for the
Disclosed Matters, after giving effect to the Transactions, none of Level 3 or
its Subsidiaries will have, as of the Effective Date, any contingent
liabilities, unusual long-term commitments or unrealized losses which would
constitute or result in a Material Adverse Effect.

 

(c)  Except as may be
disclosed in Level 3’s reports and filings under the Exchange Act filed or
furnished since January 1, 2007 and prior to March 12, 2007 and
available on the Securities and Exchange Commission’s website on the internet
at www.sec.gov prior to the Effective Date, since December 31, 2006, there
has been no material adverse change in the business, assets, operations or
condition, financial or otherwise, of Level 3 and its Subsidiaries, taken
as a whole which would constitute or result in a Material Adverse Effect.

 

SECTION 3.05.  Properties.  Each of Level 3, the Borrower and each
Subsidiary of Level 3 has good title to, or valid leasehold interests in,
all its real and personal property material to its business, except for minor
defects in title that do not 

 

58

 

interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their
intended purposes and such defects as would not constitute or result in a
Material Adverse Effect.

 

SECTION 3.06.  Litigation and Environmental
Matters.  (a)  There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Level 3 or the Borrower,
threatened against or affecting Level 3, the Borrower or any Material
Subsidiary of Level 3 (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined,
would, individually or in the aggregate, constitute or result in a Material
Adverse Effect (other than the Disclosed Matters) or (ii) that involve any
of the Loan Documents or the Transactions.

 

(b)  Except for the
Disclosed Matters and except with respect to any other matters that,
individually or in the aggregate, would not constitute or result in a Material
Adverse Effect, none of Level 3, the Borrower or any of the Subsidiaries of
Level 3 (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under
any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.

 

SECTION 3.07.  Compliance with Laws and
Agreements.  Level 3, the Borrower
and each of the Subsidiaries of Level 3 is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it
or its property, except where the failure to do so, individually or in the
aggregate, would not constitute or result in a Material Adverse Effect.  No Default has occurred and is continuing.

 

SECTION 3.08.  Investment Company Status.  Neither Level 3 nor any of the Loan Parties
is an “investment company” or is controlled by an entity that is an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940.

 

SECTION 3.09.  Taxes.  Level 3, the Borrower and each of the
Material Subsidiaries of Level 3 has timely filed or caused to be filed all tax
returns and reports required to have been filed and has paid or caused to be
paid all Taxes required to have been paid by it, except (a) Taxes that are
being contested in good faith by appropriate proceedings and for which Level 3,
the Borrower or such Subsidiary, as applicable, has set aside on its books
adequate reserves or (b) to the extent that the failure to do so would not
constitute or result in a Material Adverse Effect.

 

SECTION 3.10.  ERISA.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, would constitute or result
in a Material Adverse Effect.  The
present value of all accumulated benefit obligations under each Plan (based on
the assumptions used for purposes of Statement of Financial Accounting
Standards 

 

59

 

No. 87) did not, as of the date of the
most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan by an amount that would constitute or
result in a Material Adverse Effect, and the present value of all accumulated
benefit obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not,
as of the date of the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of all such underfunded Plans by an
amount that would constitute or result in a Material Adverse Effect.

 

SECTION 3.11.  Disclosure.  None of the reports, financial statements,
certificates or information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished), contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

 

SECTION 3.12.  Subsidiaries.  Schedule 3.12 sets forth the name
of, and the ownership interest of Level 3 in, each domestic Material
Subsidiary.

 

SECTION 3.13.  Insurance.  Schedule 3.13 sets forth a description
of all insurance maintained by or on behalf of Level 3, the Borrower and the
Material Subsidiaries of Level 3 as of the Effective Date.  To the knowledge of Level 3, such
insurance complies with the requirements of Section 5.07.

 

SECTION 3.14.  Labor Matters.  As of the Effective Date, there are no
material strikes, lockouts or slowdowns against Level 3, the Borrower or any
Subsidiary of Level 3 pending or, to the knowledge of Level 3 or the Borrower,
threatened which would constitute or result in a Material Adverse Effect.  The consummation of the Transactions will not
give rise to any right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which Level 3, the
Borrower or any Subsidiary of Level 3 is bound other than any right which would
not constitute or result in a Material Adverse Effect.

 

SECTION 3.15.  Intellectual Property.  Each of Level 3, the Borrower and the
Material Subsidiaries of Level 3 owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by Level 3, the Borrower and each Material
Subsidiary of Level 3, to the knowledge of Level 3 or the Borrower, does
not infringe upon the rights of any other Person except for any such
infringements that, individually or in the aggregate, would not constitute or
result in a Material Adverse Effect.

 

SECTION 3.16.  Security Interests.  (a)  When executed and delivered, (i)(A) the
Collateral Agreement will be effective to create in favor of the Collateral
Agent for the benefit of the Secured Parties a valid and enforceable security
interest in the Collateral (as defined in the Collateral Agreement) and (B) the
Loan Proceeds Note Collateral Agreement will be effective to create in favor of
the Secured Party (as defined 

 

60

 

in the Loan Proceeds Note Collateral
Agreement) a valid and enforceable security interest in the Collateral (as
defined in the Loan Proceeds Note Collateral Agreement), (ii) when the
portion of the Collateral (as defined in the Collateral Agreement) constituting
certificated securities (as defined in the Uniform Commercial Code), is
delivered to the Collateral Agent, together with instruments of transfer duly
endorsed in blank, the Collateral Agreement will constitute, under applicable Federal
and State law, a fully perfected first priority Lien on, and security interest
in all right, title and interest of the pledgors thereunder in such Collateral,
prior and superior in right to any other Person and (iii) when financing
statements in sufficient form are filed in the offices specified in the
Effective Date Perfection Certificate or in the Effective Date Loan Proceeds
Note Perfection Certificate, as the case may be, each of the Collateral
Agreement and the Loan Proceeds Note Collateral Agreement will constitute,
under applicable Federal and State law, a fully perfected (except with respect
to undisclosed Commercial Tort Claims (as defined in the Collateral Agreement))
Lien on, and security interest in all right, title and interest of the grantors
thereunder in such Collateral, to the extent perfection can be obtained by
filing Uniform Commercial Code financing statements, other than the
Intellectual Property (as defined in the Security Agreements) in which a
security interest may be perfected by filing, recording or registering a
security agreement, financing statement or analogous document in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, in each case (other than with respect to undisclosed Commercial
Tort Claims (as defined in the Collateral Agreement)) prior and superior in
right to any other Person to the extent perfection can be obtained by filing
Uniform Commercial Code financing statements, other than with respect to the
rights of Persons pursuant to Liens expressly permitted by Section 6.05.

 

(b)  When the Collateral
Agreement or memorandum thereof is filed in the United States Patent and
Trademark Office and the United States Copyright Office, the security interest
created thereunder shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in the
Intellectual Property (as defined in the Collateral Agreement) in which a
security interest may be perfected by filing, recording or registering a
security agreement, financing statement or analogous document in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, in each case prior and superior in right to any other Person, other
than with respect to the rights of Persons pursuant to Liens expressly
permitted by Section 6.05 (it being understood that subsequent recordings
in the United States Patent and Trademark Office and the United States
Copyright Office may be necessary to perfect a lien on registered trademarks,
trademark applications and copyrights acquired by the Loan Parties after the
Effective Date).

 

SECTION 3.17.  FCC Compliance.  (a)  Level 3, the Borrower and each
Subsidiary of Level 3 are in compliance with the Communications Act except
where the failure to be in compliance would not constitute or result in a
Material Adverse Effect.

 

(b)  To the knowledge of
Level 3, there is no investigation, notice of apparent liability,
violation, forfeiture or other order or complaint issued by or before the FCC,
or any other proceedings of or before the FCC, affecting it, the Borrower or
any Subsidiary of Level 3 which would constitute or result in a Material
Adverse Effect.

 

61

 

(c)  No event has occurred
which (i) results in, or after notice or lapse of time or both would
result in, revocation, suspension, adverse modifications, non-renewal,
impairment, restriction or termination of, or order of forfeiture with respect
to, any License in any respect which would constitute or result in a Material
Adverse Effect or (ii) affects or would reasonably be expected in the
future to affect any of the rights of Level 3, the Borrower or any
Subsidiary of Level 3 under any License held by Level 3, the Borrower
or such Subsidiary in any respect which would constitute or result in a
Material Adverse Effect.

 

(d)  Level 3, the
Borrower and each Subsidiary of Level 3 have duly filed in a timely manner
all material filings, reports, applications, documents, instruments and
information required to be filed by it under the Communications Act, and all
such filings were when made true, correct and complete in all respects except
where the failure to do so would not constitute or result in a Material Adverse
Effect.

 

SECTION 3.18.  Qualified Credit Facility;
Senior Indebtedness.  The Loans and
the other Obligations constitute a “Qualified Credit Facility” as defined in
the Financing Inc. Indentures.  The Loans
and the other Obligations constitute “Senior Indebtedness” of the Parent, the
Borrower and each other Loan Party for purposes of any Indebtedness of the
Parent, the Borrower or such other Loan Party that by its terms is subordinated
to any other Indebtedness of such Person.

 

SECTION 3.19.  Solvency.  Immediately following the making of the Loans
on the Effective Date and after giving effect to the application of the
proceeds of the Loans, (a) the fair value of the assets of Level 3
and its Subsidiaries on a consolidated basis, at a fair valuation, will exceed their
debts and liabilities, subordinated, contingent or otherwise; (b) the
present fair saleable value of the property of Level 3 and its Subsidiaries, on
a consolidated basis, will be greater than the amount that will be required to
pay the probable liability of their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute
and matured; (c) Level 3 and its Subsidiaries on a consolidated
basis, will be able to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) Level 3 and its Subsidiaries, on a consolidated
basis, will not have unreasonably small capital with which to conduct the
business in which they are engaged as such business is now conducted and is
proposed to be conducted following the Effective Date.

 

ARTICLE IV

 

Conditions

 

SECTION 4.01.  Effective Date.  The obligations of the Tranche A Term Lenders
to make Tranche A Term Loans hereunder became effective on the date on which
each of the following conditions was satisfied (or waived in accordance with Section 9.02):

 

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(a)  The Administrative
Agent (or its counsel) shall have received from Level 3, the Borrower, the
Administrative Agent and each Lender either (i) counterparts of this
Agreement signed on behalf of each such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include a telecopy
transmission of a signed signature page of this Agreement) that each such
party has signed a counterpart of this Agreement.

 

(b)  The Administrative
Agent shall have received favorable written opinions (addressed to the
Administrative Agent and the Lenders and dated the Effective Date) of (i) Willkie
Farr & Gallagher LLP, counsel for the Borrower, substantially in the
form of Exhibit E-1, (ii) the Chief Legal Officer or an
Assistant General Counsel of Level 3, substantially in the form of Exhibit E-2,
(iii) Potter Anderson & Corroon LLP, Delaware local counsel,
substantially in the form of Exhibit E-3 and (iv) Bingham
McCutchen LLP, regulatory counsel for the Borrower, substantially in the form
of Exhibit E-4, and covering such other matters relating to the
Loan Parties, the Loan Documents or the Transactions as the Administrative
Agent or the Required Lenders shall reasonably request.

 

(c)  The Administrative
Agent shall have received such documents and certificates as the Administrative
Agent or its counsel may reasonably request relating to the organization,
existence and good standing of each Loan Party, the authorization by the Loan
Parties of the Transactions and any other legal matters relating to the Loan
Parties, the Loan Documents or the Transactions, all in form and substance reasonably
satisfactory to the Administrative Agent and its counsel.

 

(d)  The representations
and warranties set forth in Article III shall be true and correct in all
material respects on and as of the Effective Date.

 

(e)  The Borrower and the
other Loan Parties shall be in compliance with all the terms and provisions set
forth herein and in the other Loan Documents on their part to be observed or
performed, and at the time of and immediately after the making of the Loans on
the Effective Date, no Default shall have occurred and be continuing.

 

(f)  The Administrative
Agent shall have received a certificate signed by a Financial Officer of Level
3 confirming the satisfaction of the conditions set forth in paragraphs (d) and
(e) above and in paragraphs (g) and (m) below.

 

(g)  The Guarantee and
Collateral Requirement shall be satisfied.

 

(h)  The Administrative
Agent shall have received all fees and other amounts due and payable on or
prior to the Effective Date, including, to the extent invoiced, reimbursement
or payment of all out of pocket expenses required to be reimbursed or paid by
the Borrower hereunder.

 

(i)  The Administrative
Agent shall have received (i) a completed (A) Effective Date
Perfection Certificate and (B) Effective Date Loan Proceeds Note Perfection
Certificate, each dated the Effective Date and signed by a Financial Officer,
in each case, together with all attachments contemplated thereby, and (ii) the
results of a 

 

63

 

search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Loan Parties in the jurisdictions
referred to in Schedule 4.01(i) hereto and copies of the financing statements
(or similar documents) disclosed by such search and evidence reasonably
satisfactory to the Administrative Agent that the Liens indicated by such
financing statements (or similar documents) are permitted by Section 6.05
or have been released.

 

(j)  The Administrative
Agent shall have received executed copies of each of the Level 3 LLC Notes
Supplemental Indentures,

 

(k)  The Administrative
Agent shall have received an executed copy of the Omnibus Offering Proceeds
Note Subordination Agreement.

 

(l)  The Borrower shall
have obtained ratings on the Loans from each of the Rating Agencies.

 

(m)  The Administrative
Agent shall have received satisfactory evidence that, after giving effect to
the transactions contemplated hereby, the Borrower shall have repaid the
Existing Term Loans, together with all interest accrued thereon and all other
amounts accrued or owing under the Existing Amended and Restated Credit
Agreement, and that all Liens securing the obligations under the Existing
Amended and Restated Credit Agreement shall have been released.

 

(n)  Level 3 LLC shall
have executed and delivered to the Agent the Loan Proceeds Note Collateral
Agreement and such other documentation reasonably satisfactory to Level 3 and
the Collateral Agent necessary to evidence the creation and perfection of Liens
to secure the Loan Proceeds Note to the extent required by Section 5.13(b).

 

The Administrative Agent
notified Level 3, the Borrower and the Lenders of the Effective Date, and such
notice shall be conclusive and binding.

 

ARTICLE V

 

Affirmative Covenants

 

Until the Commitments have
expired or been terminated and the principal of and interest on each Loan and
all fees payable hereunder shall have been paid in full, each of Level 3
and the Borrower covenants and agrees with the Lenders that:

 

SECTION 5.01.  Financial Statements and
Other Information.  Level 3 will
furnish to the Administrative Agent on behalf of the Lenders:

 

(a) within
120 days after the end of each fiscal year of Level 3, an audited
consolidated balance sheet of Level 3 and its Subsidiaries and related
statements of operations and cash flows of Level 3 and its Subsidiaries as
of the end of and 

 

64

 

for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by KPMG LLP or another independent public
accounting firm of recognized national standing (without a “going concern” or
like qualification or exception and without any qualification or exception as
to the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of Level 3 and its Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;

 

(b) within
60 days after the end of each fiscal quarter of Level 3, an unaudited
consolidated balance sheet of Level 3 and its Subsidiaries and related
statements of operations and cash flows of Level 3 and its Subsidiaries as of
the end of and for such quarter, setting forth in each case in comparative form
the figures for the corresponding quarter of the previous fiscal year, all
certified by a Financial Officer to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of Level 3 and its Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied; and

 

(c) within
120 days after the end of each fiscal year of Level 3, a certificate of a
Financial Officer stating that a review of the activities of Level 3 and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of such Financial Officer with a view to determining whether the
Borrower and the other Loan Parties have kept, observed, performed and
fulfilled their obligations under this Agreement and the other Loan Documents,
and further stating, as to the knowledge of the Officer signing such
certificate, Level 3, the Borrower and each other Loan Party has kept,
observed, performed and fulfilled each and every covenant contained in this
Agreement and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Agreement and the other Loan Documents
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Borrower or such Loan Party is taking or proposes to take with
respect thereto).

 

Whether or not required by the rules and
regulations of the Securities and Exchange Commission, the Borrower shall file
with the Securities and Exchange Commission, if permitted, all the periodic and
other reports, proxy statements and other materials it would be required to
file with the Securities and Exchange Commission by Section 13(a) or 15(d)
under the Securities Exchange Act of 1934, as amended, or any successor
provision thereto if it were subject thereto. 
The financial statements required to be delivered by Level 3
pursuant to paragraphs (a) and (b) of this Section and the reports and statements
required to be delivered by the Borrower pursuant to paragraph (c) of this
Section shall be deemed to have been delivered (i) when reports containing
such financial statements, or such other materials, are posted on Level 3’s
website on the Internet at www.level3.com (or any successor page identified
in a notice given to the Administrative Agent and the Lenders) or on the
Securities and Exchange Commission’s website on the 

 

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internet at www.sec.gov or (ii) when
such financial statements, reports or statements are delivered in accordance
with Section 9.01(a).

 

SECTION 5.02.  Notices of Material Events.  Level 3 and the Borrower will furnish to
the Administrative Agent, within 30 days, written notice of the following:

 

(a) the
occurrence of any Default; and

 

(b) if
the trustee for or the holder of any Material Indebtedness of Level 3 or
any Restricted Subsidiary gives any notice or takes any other action with
respect to a claimed default.

 

Each notice delivered under
this Section shall be accompanied by a statement of an authorized officer of
Level 3 setting forth the details of the event or development requiring
such notice and any action taken or proposed to be taken with respect thereto.

 

SECTION 5.03.  Information Regarding
Collateral.  (a)  Level 3 and
the Borrower will furnish to the Collateral Agent prompt written notice of any
change (i) in any Loan Party’s corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in any Loan Party’s identity or corporate structure or (iii) in
any Loan Party’s Federal Taxpayer Identification Number.  Each of Level 3 and the Borrower agrees
not to effect or permit any change referred to in the preceding sentence unless
all filings (or arrangements therefor satisfactory to the Collateral Agent)
have been made under the Uniform Commercial Code or otherwise that are required
in order for the Collateral Agent to continue at all times following such change
to have a valid, legal and perfected security interest in all the
Collateral.  Each of Level 3 and the
Borrower also agrees promptly to notify the Collateral Agent if any material
portion of the Collateral is damaged or destroyed.

 

(b)  Each year, at the
time of delivery of the certificate pursuant to paragraph (c) of Section 5.01,
Level 3 shall deliver to the Collateral Agent certificates of an authorized
officer of Level 3 (i) setting forth the information required pursuant to (A) the
Annual Perfection Certificate and (B) until such time as the Collateral
Permit Condition is satisfied with respect to Level 3 LLC, the Annual Loan
Proceeds Note Perfection Certificate, or confirming that there has been no
change in such information since the dates of the Effective Date Perfection
Certificate or the Effective Date Loan Proceeds Note Perfection Certificate, as
the case may be, or the date of the most recent certificates delivered pursuant
to this Section and (ii) certifying that all Uniform Commercial Code
financing statements (excluding fixture filings) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral required to be set
forth therein have been filed of record in each United States governmental,
municipal or other appropriate office in each jurisdiction identified pursuant
to clause (i) above to the extent necessary to perfect and continue the
perfection of the security interests under the applicable Security Documents
for a period of not less than 18 months after the date of such certificate
(except as noted therein with respect to any continuation statements to be
filed within such period).

 

66

 

SECTION 5.04.  Existence; Conduct of
Business.  Each of Level 3 and
the Borrower will, and will cause each Material Subsidiary of Level 3 to,
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence and its rights, charter and statutory,
except where the failure to do so would not constitute or result in a Material
Adverse Effect; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.13.

 

SECTION 5.05.  Payment of Taxes.  Each of Level 3 and the Borrower will, and
will cause each Subsidiary of Level 3 to, pay its material Tax
obligations, before the same shall become delinquent or in default, except
where the failure to pay such Tax would not constitute or result in a Material
Adverse Effect.

 

SECTION 5.06.  Maintenance of Properties.  Each of Level 3 and the Borrower shall
cause all properties owned by Level 3, the Borrower or any Restricted
Subsidiary or used or held for use in the conduct of its business or the
business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and shall cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of Level 3
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however,
that nothing in this Section shall prevent Level 3 from discontinuing the
maintenance of any of such properties if such discontinuance is, in the
judgment of Level 3, desirable in the conduct of its business or the
business of any Subsidiary of Level 3 and not disadvantageous in any
material respect to the Lenders.

 

SECTION 5.07.  Insurance.  Each of Level 3 and the Borrower will,
and will cause each of the Restricted Subsidiaries to, keep all of their
respective properties which are of an insurable nature insured with insurers,
believed by the Borrower to be responsible, against loss or damage to the
extent that property of a similar character is usually insured by companies
similarly situated and owning like properties. 
Level 3 will furnish to the Lenders, upon the reasonable request of
the Administrative Agent, but not more than once during any calendar year
unless a Default or an Event of Default has occurred and is continuing,
information in reasonable detail as to the insurance so maintained.

 

SECTION 5.08.  Casualty and Condemnation.  Level 3 (a) will furnish to the
Administrative Agent prompt written notice of any casualty or other insured
damage to any portion of any Collateral or the commencement of any action or
proceeding for the taking of any Collateral or any part thereof or interest
therein under power of eminent domain or by condemnation or similar proceeding
in each case only where Level 3 estimates in good faith that the expected
proceeds from insurance, condemnation awards or otherwise will exceed
$25,000,000 and (b) will ensure that the Net Available Proceeds of any
such event (whether in the form of insurance proceeds, condemnation awards or
otherwise) are collected and applied in accordance with the applicable
provisions of this Agreement and the Security Documents.  Level 3 will act in good faith to
collect or compromise all such amounts.

 

67

 

SECTION 5.09.  Annual Information Meeting.  The Borrower shall, at the request of the
Required Lenders, hold an annual meeting (telephonic or otherwise) at which the
Borrower will address any questions from the Lenders relating to its affairs,
finances, condition or otherwise to the extent that the relevant information is
public.

 

SECTION 5.10.  Compliance with Laws.  Each of Level 3 and the Borrower will,
and will cause each of the Restricted Subsidiaries of Level 3 to, comply
with all laws (including the Communications Act), rules, regulations and orders
of any Governmental Authority applicable to it or its property (including
obligations under Licenses), except where the failure to do so, individually or
in the aggregate, would not constitute or result in a Material Adverse Effect.

 

SECTION 5.11.  Use of Proceeds.  The proceeds of the Loans will be (a) used
to refinance the Existing Term Loans and (b) to the extent of the
remaining proceeds, advanced by the Borrower to Level 3 LLC against delivery of
the Loan Proceeds Note.  No part of the
proceeds of the Loans will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X.

 

SECTION 5.12.  Guarantee and Collateral
Requirement; Further Assurances. 
Level 3 and the Borrower will cause the Guarantee and Collateral
Requirement to be and remain satisfied at all times, provided, however,
that solely with respect to the Tranche B Term Loans this obligation shall be
subject to Section 2 of the Amendment Agreement.  Without limiting the foregoing, Level 3 and
the Borrower will, and will cause each Subsidiary of Level 3 to, execute any
and all documents, financing statements, agreements and instruments, and take
all other actions (including the filing of financing statements and other
documents), which shall be required under any applicable United States law, or
which the Collateral Agent may reasonably request, to effectuate the
transactions contemplated by the Loan Documents or to grant, preserve, protect
or perfect the Liens created or intended to be created by the Loan Documents or
the validity or priority of any such Lien, all at the expense of the Loan
Parties.  Level 3 and the Borrower
also agree to provide to the Collateral Agent, from time to time upon request,
evidence reasonably satisfactory to the Collateral Agent as to the perfection
of the Liens created or intended to be created by the Loan Documents.

 

SECTION 5.13.  Guarantee Permit Condition
and Collateral Permit Condition.  (a) 
Each of Level 3 and the Borrower will endeavor, and cause each Regulated
Grantor and each Regulated Guarantor to endeavor, in good faith using
commercially reasonable efforts to (i) (A) cause the Collateral
Permit Condition to be satisfied with respect to such Regulated Grantor and (B) cause
the Guarantee Permit Condition to be satisfied with respect to such Regulated
Guarantor, in each case at the earliest practicable date and (ii) obtain
the material (as determined in good faith by the General Counsel of Level 3)
authorizations and consents of Federal and State Authorities required to cause
any Restricted Subsidiary to become a Guarantor as required by Sections 6.01(d)
and 6.02(d).  For purposes of this
Section, the requirement that Level 3, the Borrower or any Subsidiary of
Level 3 use “commercially reasonable efforts” shall not be deemed to
require it to make material payments in excess of normal fees and costs 

 

68

 

to or at the direction of Governmental
Authorities or to change the manner in which it conducts its business in any
respect that the management of Level 3 shall determine in good faith to be
adverse or materially burdensome.  Upon
the reasonable request of Level 3 or the Borrower, the Administrative Agent and
the Lenders will cooperate with Level 3 and the Borrower as necessary to enable
them to comply with their obligations under this Section.  Solely with respect to the Tranche B Term
Loans, the obligations set forth in this Section shall be subject to Section 2
of the Amendment Agreement.

 

(b)  If Level 3 shall
determine that Level 3 LLC is able, consistent with applicable law, to create
Liens on any Collateral owned by it and located in any jurisdiction located in
the United States to secure the Loan Proceeds Note prior to the satisfaction by
it of the Collateral Permit Condition, it will cause Level 3 LLC promptly to
create and perfect such Liens on terms and under documentation reasonably
satisfactory to Level 3 and the Collateral Agent.

 

ARTICLE VI

 

Negative Covenants

 

Until the Commitments have
expired or terminated and the principal of and interest on each Loan and all
fees payable hereunder have been paid in full, each of Level 3, the Borrower
and each Guarantor covenants and agrees with the Lenders that:

 

SECTION 6.01.  Limitation on Consolidated
Debt.  (a)  Level 3 shall
not, and shall not permit any Restricted Subsidiary (other than to the extent
permitted by paragraph (b) of Section 6.02) to, directly or
indirectly, Incur any Indebtedness; provided, however, that
Level 3 or any Restricted Subsidiary (subject, in the case of the Borrower
and any Borrower Restricted Subsidiary, to Section 6.02) may Incur any
Indebtedness if, after giving pro forma effect to such Incurrence and the
receipt and application of the net proceeds thereof, no Default or Event of
Default would occur as a consequence of such Incurrence or be continuing
following such Incurrence and either (i) the ratio of (A) the
aggregate consolidated principal amount (or, in the case of Indebtedness issued
at a discount, the then-Accreted Value) of Indebtedness of Level 3 and its
Restricted Subsidiaries outstanding as of the most recent available quarterly
or annual balance sheet, after giving pro forma effect to the Incurrence of
such Indebtedness and any other Indebtedness Incurred or repaid since such
balance sheet date and the receipt and application of the net proceeds thereof,
to (B) Pro Forma Consolidated Cash Flow Available for Fixed Charges for
Level 3 and its Restricted Subsidiaries for the four full fiscal quarters
next preceding the Incurrence of such Indebtedness for which consolidated
financial statements are available, would be less than 5.0 to 1.0, or (ii) Level 3’s
Consolidated Capital Ratio as of the most recent available quarterly or annual
balance sheet, after giving pro forma effect to (x) the Incurrence of such
Indebtedness and any other Indebtedness Incurred or repaid since such balance
sheet date, (y) the issuance of any Capital Stock (other than Disqualified
Stock) of Level 3 since such balance sheet date, including the issuance of
any Capital Stock to be issued concurrently with the 

 

69

 

Incurrence of such Indebtedness, and (z) the
receipt and application of the net proceeds of such Indebtedness or Capital
Stock, as the case may be, is less than 2.25 to 1.0.

 

(b)  Notwithstanding the
foregoing limitation, Level 3 or any Restricted Subsidiary (other than the
Borrower or any Borrower Restricted Subsidiary, except to the extent permitted
by Section 6.02) may Incur any and all of the following (each of which
shall be given independent effect):

 

(i) Indebtedness
created under the Loan Documents (other than Indebtedness Incurred pursuant to
an Additional Tranche);

 

(ii) Indebtedness
under Credit Facilities in an aggregate principal amount outstanding or
available, when taken together with the sum of (A) the amount of any
Indebtedness outstanding or available under the Loan Documents, plus (B) the
amount of any outstanding Indebtedness Incurred pursuant to clause (ii) of
paragraph (b) of Section 6.02, plus (C) the amount of all
refinancing Indebtedness outstanding or available pursuant to clause (vi) of
paragraph (b) of Section 6.02 in respect of Indebtedness previously
Incurred pursuant to clause (ii) of paragraph (b) of Section 6.02,
plus (D) the amount of all refinancing Indebtedness outstanding or
available pursuant to clause (viii) below in respect of Indebtedness
previously Incurred pursuant to this clause (ii) at any one time not to
exceed the greater of (x) $1,400,000,000 and (y) 1.5 times Pro Forma
Consolidated Cash Flow Available for Fixed Charges of Level 3 and its
Restricted Subsidiaries for the four full quarters next preceding the
Incurrence of such Indebtedness for which financial statements have been
delivered pursuant to Section 5.01 or 5.02, as applicable, which amount
shall be permanently reduced by the amount of Net Available Proceeds used after
the Effective Date to repay Indebtedness under any Credit Facilities (including
the Loan Documents) or any refinancing Indebtedness in respect of any Credit
Facilities (including the Loan Documents) Incurred pursuant to clause (vi)
of paragraph (b) of Section 6.02 or clause (viii) below), and
not reinvested in Telecommunications/IS Assets or used to repay Indebtedness
created under the Loan Documents or repay other Indebtedness, pursuant to and
as permitted by Section 6.07;

 

(iii) Purchase
Money Debt; provided, however, that the amount of such Purchase
Money Debt does not exceed 100% of the cost of construction, installation,
acquisition, lease, development or improvement of the applicable
Telecommunications/IS Assets;

 

(iv) Subordinated
Debt of Level 3; provided, however, that the aggregate
principal amount (or, in the case of Indebtedness issued at a discount, the
Accreted Value) of such Indebtedness, together with any other outstanding
Indebtedness Incurred pursuant to this clause (iv), shall not exceed
$500,000,000 at any one time (which amount shall be permanently reduced by the
amount of Net Available Proceeds used to repay Subordinated Debt of
Level 3, and not reinvested in Telecommunications/IS Assets or used to
repay the Loan or repay other Indebtedness, pursuant to and as permitted by Section 6.07),
except to the 

 

70

 

extent such
Indebtedness in excess of $500,000,000 (A) is subordinated to all other
Indebtedness of Level 3 other than Indebtedness Incurred pursuant to this
clause (iv) in excess of such $500,000,000 limitation, (B) does not
provide for the payment of cash interest on such Indebtedness prior to the Maturity
Date and (C) (1) does not provide for payments of principal of such
Indebtedness at stated maturity or by way of a sinking fund applicable thereto
or by way of any mandatory redemption, defeasance, retirement or repurchase
thereof by Level 3 (including any redemption, retirement or repurchase
which is contingent upon events or circumstances, but excluding any retirement
required by virtue of the acceleration of any payment with respect to such
Indebtedness upon any event of default thereunder), in each case on or prior to
the Maturity Date, and (2) does not permit redemption or other retirement
(including pursuant to an offer to purchase made by Level 3 but excluding
through conversion into capital stock of Level 3, other than Disqualified
Stock, without any payment by Level 3 or its Restricted Subsidiaries to
the holders thereof) of such Indebtedness at the option of the holder thereof
on or prior to the Maturity Date or the stated maturity of any Additional
Tranche then outstanding;

 

(v) Indebtedness
outstanding on the Measurement Date;

 

(vi) Indebtedness
owed by Level 3 to any Restricted Subsidiary or Indebtedness owed by a
Restricted Subsidiary to Level 3 or a Restricted Subsidiary; provided,
however, that (A) any Person that Incurs Indebtedness owed to
Level 3 or a Sister Restricted Subsidiary pursuant to this clause (vi)
is a Guarantor and a Loan Proceeds Note Guarantor, (B) (x) upon the
transfer, conveyance or other disposition by such Restricted Subsidiary or
Level 3 of any Indebtedness so permitted to a Person other than
Level 3 or another Restricted Subsidiary or (y) if for any reason
such Restricted Subsidiary ceases to be a Restricted Subsidiary, the provisions
of this clause (vi) shall no longer be applicable to such Indebtedness and
such Indebtedness shall be deemed to have been Incurred by the issuer thereof
at the time of such transfer, conveyance or other disposition or when such
Restricted Subsidiary ceases to be a Restricted Subsidiary; and (C) the
payment obligation of (i) such Indebtedness (if clause (A) above
applies) and (ii) all obligations (if clause (A) above applies) with
respect to any Offering Proceeds Note Guarantee of such obligor is expressly
subordinated in any bankruptcy, liquidation or winding up proceeding of the
obligor to the prior payment in full in cash of all obligations with respect to
the Loan Proceeds Note Guarantee of such Loan Proceeds Note Guarantor; and provided
further, however, that a Foreign Restricted Subsidiary need not
become a Guarantor or a Loan Proceeds Note Guarantor pursuant to clause (A)
above until such time and only so long as such Foreign Restricted Subsidiary
Guarantees any other Indebtedness of Level 3 or any Domestic Restricted
Subsidiary;

 

(vii) Indebtedness
Incurred by a Person prior to the time (A) such Person became a Restricted
Subsidiary, (B) such Person merges into or consolidates with a Restricted
Subsidiary or (C) another Restricted Subsidiary merges into or
consolidates with such Person (in a transaction in which such Person becomes a 

 

71

 

Restricted
Subsidiary), which Indebtedness was not Incurred in anticipation of such
transaction and was outstanding prior to such transaction;

 

(viii) Indebtedness
Incurred to renew, extend, refinance, defease, repay, prepay, repurchase,
redeem, retire, exchange or refund (each, a “refinancing”) Indebtedness
Incurred pursuant to paragraph (a) above or clause (i), (ii), (iii),
(v), (vii) or (xii) of this paragraph (b) or this clause (viii),
in an aggregate principal amount (or if issued at a discount, the then-Accreted
Value) not to exceed the aggregate principal amount (or if issued at a
discount, the then-Accreted Value) of and accrued interest on the Indebtedness
so refinanced plus the amount of any premium required to be paid in connection
with such refinancing pursuant to the terms of the Indebtedness so refinanced
or the amount of any premium reasonably determined by the Board of Directors of
Level 3 as necessary to accomplish such refinancing by means of a tender
offer or privately negotiated repurchase, plus the expenses of Level 3
Incurred in connection with such refinancing; provided, however,
that (A) if the Person that originally Incurred the Indebtedness to be
refinanced became, or would have been required to become if not already, a
Guarantor or a Loan Proceeds Note Guarantor as a result of the Incurrence of
the Indebtedness being refinanced in accordance with this covenant, (1) the
Person that Incurs the refinancing Indebtedness pursuant to this clause (viii)
shall be a Guarantor and a Loan Proceeds Note Guarantor and (2) if the
Indebtedness to be refinanced is subordinated to the Loan Proceeds Note
Guarantee of such Loan Proceeds Note Guarantor or the Guarantee of the
Obligations of such Guarantor, the refinancing Indebtedness shall be
subordinated to the same extent to the Loan Proceeds Note Guarantee of the Loan
Proceeds Note Guarantor or the Guarantee of the Obligations of such Guarantor,
as the case may be, Incurring such refinancing Indebtedness, (B) the
refinancing Indebtedness shall not be senior in right of payment to the
Indebtedness that is being refinanced and (C) in the case of any
refinancing of Indebtedness Incurred pursuant to paragraph (a) above or
clause (i), (v), (vii) or (xii) or, if such Indebtedness previously
refinanced Indebtedness Incurred pursuant to any such clause, this
clause (viii), the refinancing Indebtedness by its terms, or by the terms
of any agreement or instrument pursuant to which such Indebtedness is issued, (x) does
not provide for payments of principal of such Indebtedness at stated maturity
or by way of a sinking fund applicable thereto or by way of any mandatory
redemption, defeasance, retirement or repurchase thereof by Level 3 or any
Restricted Subsidiary (including any redemption, retirement or repurchase which
is contingent upon events or circumstances, but excluding any retirement
required by virtue of the acceleration of any payment with respect to such
Indebtedness upon any event of default thereunder), in each case prior to the
time the same are required by the terms of the Indebtedness being refinanced
and (y) does not permit redemption or other retirement (including pursuant
to an offer to purchase made by Level 3 or any Restricted Subsidiary) of such
Indebtedness at the option of the holder thereof prior to the time the same are
required by the terms of the Indebtedness being refinanced, other than, in the
case of clause (x) or (y), any such payment, redemption or other
retirement (including pursuant to an offer to purchase made by Level 3)
which is conditioned upon a change of control 

 

72

 

pursuant to
provisions substantially similar to those described under Section 2.05(d) or
upon an asset sale pursuant to provisions substantially similar to those
described under Section 6.07(c);

 

(ix) Indebtedness
(A) in respect of performance, surety or appeal bonds, Guarantees, letters
of credit or reimbursement obligations Incurred or provided in the ordinary course
of business securing the performance of contractual, franchise, lease,
self-insurance or license obligations and not in connection with the Incurrence
of Indebtedness or (B) in respect of customary agreements providing for
indemnification, adjustment of purchase price after closing, or similar
obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any such obligations of Level 3 or any of its
Restricted Subsidiaries pursuant to such agreements, Incurred in connection
with the disposition of any business, assets or Restricted Subsidiary (other
than Guarantees of Indebtedness Incurred by any Person acquiring all or any
portion of such business, assets or Restricted Subsidiary for the purpose of
financing such acquisition) and in an aggregate principal amount not to exceed
the gross proceeds actually received by Level 3 or any Restricted
Subsidiary in connection with such disposition;

 

(x) Indebtedness
consisting of Permitted Hedging Agreements;

 

(xi) Indebtedness
not otherwise permitted to be Incurred pursuant to clauses (i) through (x) above
or clause (xii) below, which, together with any other outstanding
Indebtedness Incurred pursuant to this clause (xi), has an aggregate
principal amount not in excess of $50,000,000 at any time outstanding; and

 

(xii) (A) Effective
Date Purchase Money Debt and (B) Indebtedness outstanding on the Effective
Date under the Existing Notes and the related indentures, any Restricted
Subsidiary Guarantees or Level 3 Guarantees issued prior to the Effective Date
in accordance with such related indentures and any Guarantee of the Financing
Inc. Notes issued after the Effective Date; provided, however,
that in the case of any such Guarantee of the Financing Inc. Notes entered into
after the Effective Date, such Guarantee is Incurred in accordance with (i) the
last sentence of paragraph (d) of this Section 6.01 and (ii) Section 6.02.

 

(c)  Notwithstanding any
other provision of this Section 6.01, the maximum amount of Indebtedness
that Level 3 or any Restricted Subsidiary may Incur pursuant to this Section 6.01
shall not be deemed to be exceeded due solely to the result of fluctuations in
the exchange rates of currencies.

 

(d)  For purposes of
determining any particular amount of Indebtedness under this Section 6.01,
Guarantees, Liens or obligations with respect to letters of credit supporting
Indebtedness otherwise included in the determination of such particular amount
shall not be included and shall not be treated as Indebtedness.  For purposes of determining compliance with
this Section 6.01, in the event that an item of Indebtedness 

 

73

 

meets the criteria of more than one of the
types of Indebtedness described in the above clauses, Level 3, in its sole
discretion, shall classify, and may later reclassify, such item of Indebtedness
in any manner that complies with this Section. 
To the extent permitted under applicable laws and regulations, in the
event that any Restricted Subsidiary of Level 3 Guarantees any of the
Financing Inc. Notes, then Level 3 shall cause such Restricted Subsidiary
to (i) become a Guarantor and a Loan Proceeds Note Guarantor, (ii) if
such Restricted Subsidiary is a Borrower Restricted Subsidiary, subordinate, in
any bankruptcy, liquidation or winding up proceeding of such Borrower
Restricted Subsidiary, such Borrower Restricted Subsidiary’s Guarantee of such
Financing Inc. Notes to the Guarantee of the Obligations and the Loan Proceeds
Note Guarantee of such Borrower Restricted Subsidiary (or, in the case of Level
3 LLC, to the Loan Proceeds Note) and (iii) in the case of a Level 3 LLC
Guarantee of the 2011 Floating Rate Notes, the 12.25% Notes, the 9.25% Notes,
the 8.75% Notes or the 2015 Floating Rate Notes, cause Level 3 LLC to enter
into the Level 3 LLC 2011 Floating Rate Notes Supplemental Indenture, the Level
3 LLC 12.25% Notes Supplemental Indenture, the Level 3 LLC 9.25% Notes
Supplemental Indenture, the Level 3 LLC 8.75% Notes Supplemental Indenture or
the Level 3 LLC 2015 Floating Rate Notes Supplemental Indenture, as the case
may be.

 

SECTION 6.02.  Limitation on Indebtedness
of the Borrower and Borrower Restricted Subsidiaries.  (a)  The Borrower shall not, and shall
not permit any Borrower Restricted Subsidiary to, directly or indirectly, Incur
any Indebtedness; provided, however, that (i) the Borrower
or (ii) any Borrower Restricted Subsidiary may incur any Indebtedness if,
after giving pro forma effect to such Incurrence and the receipt and
application of the net proceeds thereof, no Default or Event of Default would
occur as a consequence of such Incurrence or be continuing following such
Incurrence and the Borrower Debt Ratio would be less than (1) 4.0 to 1.0
if such Indebtedness is Incurred on or prior to March 15, 2008 and (2) 3.75
to 1.0 if such Indebtedness is Incurred after March 15, 2008; provided,
however, that any Borrower Restricted Subsidiary that Incurs
Indebtedness pursuant to this paragraph (a) is a Guarantor and a Loan
Proceeds Note Guarantor.

 

(b)  Notwithstanding the
foregoing limitation, the Borrower or any Borrower Restricted Subsidiary may
Incur any and all of the following (each of which shall be given independent
effect):

 

(i) Indebtedness
created under the Loan Documents (other than Indebtedness Incurred pursuant to
an Additional Tranche);

 

(ii) Indebtedness
under Credit Facilities in an aggregate principal amount outstanding or
available, when taken together with the sum of (A) the amount of any
Indebtedness outstanding or available under the Loan Documents, plus (B) the
amount of any outstanding Indebtedness Incurred pursuant to clause (ii) of
paragraph (b) of Section 6.01, plus (C) the amount of all
refinancing Indebtedness outstanding or available pursuant to clause (viii) of
paragraph (b) of Section 6.01 in respect of Indebtedness previously
Incurred pursuant to clause (ii) of paragraph (b) of Section 6.01,
plus (D) the amount of all refinancing Indebtedness 

 

74

 

outstanding or
available pursuant to clause (vi) below in respect of Indebtedness
previously Incurred pursuant to this clause (ii), at any one time not to
exceed the greater of (x) $1,400,000,000 and (y) 1.5 times Pro Forma
Consolidated Cash Flow Available for Fixed Charges of the Borrower and the
Borrower Restricted Subsidiaries for the four full fiscal quarters next
preceding the Incurrence of such Indebtedness for which financial statements
have been delivered pursuant to Section 5.01 or 5.02, as applicable, which
amount shall be permanently reduced by the amount of Net Available Proceeds
used after the Effective Date to repay Indebtedness under any Credit Facilities
(including the Loan Documents) or any refinancing Indebtedness in respect of
any Credit Facilities (including the Loan Documents) Incurred pursuant to
clause (viii) of paragraph (b) of Section 6.01 or clause (vi)
below), and not reinvested in Telecommunications/IS Assets or used to repay
Indebtedness created under the Loan Documents or repay other Indebtedness,
pursuant to and as permitted by Section 6.07;

 

(iii) Indebtedness
of the Borrower or any Borrower Restricted Subsidiary outstanding on the
Measurement Date;

 

(iv) Indebtedness
owed by the Borrower to a Restricted Subsidiary, Indebtedness owed by a
Borrower Restricted Subsidiary to Level 3 or a Restricted Subsidiary (including
Indebtedness owed by a Borrower Restricted Subsidiary to another Borrower
Restricted Subsidiary), and Indebtedness with an aggregate principal amount not
in excess of $10,000,000 at any time outstanding owed by the Borrower to Level
3 or any Sister Restricted Subsidiary; provided, however, that (A) any
Borrower Restricted Subsidiary that Incurs Indebtedness owed to Level 3 or a
Sister Restricted Subsidiary pursuant to this clause (iv) is a Guarantor
and a Loan Proceeds Note Guarantor, (B)(x) upon the transfer, conveyance
or other disposition by such Borrower Restricted Subsidiary or the Borrower of
any Indebtedness so permitted to a Person other than the Borrower or another
Borrower Restricted Subsidiary or (y) if for any reason such Borrower
Restricted Subsidiary ceases to be a Borrower Restricted Subsidiary, the
provisions of this clause (iv) shall no longer be applicable to such
Indebtedness and such Indebtedness shall be deemed to have been Incurred by the
borrower thereof at the time of such transfer, conveyance or other disposition
or when such Borrower Restricted Subsidiary ceases to be a Borrower Restricted
Subsidiary and (C) the payment obligation of (i) such Indebtedness
(if clause (A) above applies) and (ii) all obligations (if
clause (A) above applies) with respect to any Offering Proceeds Note
Guarantee of such obligor is expressly subordinated in any bankruptcy,
liquidation or winding up proceeding of the obligor to the prior payment in
full in cash of all obligations of such Guarantor with respect to the Loan
Proceeds Note Guarantee of such Loan Proceeds Note Guarantor; and provided
further, however, that a Foreign Restricted Subsidiary need not
become a Guarantor or a Loan Proceeds Note Guarantor pursuant to clause (A)
above until such time and only so long as such Foreign Restricted Subsidiary
Guarantees any other Indebtedness of Level 3 or any Domestic Restricted
Subsidiary;

 

75

 

(v) Indebtedness
Incurred by a Person (other than Level 3 or any Sister Restricted
Subsidiary) prior to the time (A) such Person became a Borrower Restricted
Subsidiary, (B) such Person merges into or consolidates with a Borrower
Restricted Subsidiary or (C) a Borrower Restricted Subsidiary merges into
or consolidates with such Person (in a transaction in which such Person becomes
a Borrower Restricted Subsidiary), which Indebtedness was not Incurred in
anticipation of such transaction and was outstanding prior to such transaction;
provided, however, that after giving effect to the Incurrence of
any Indebtedness pursuant to this clause (v), the Borrower could Incur at
least $1.00 of additional Indebtedness pursuant to paragraph (a) above
computed using “5.0 to 1.0” rather than “4.0 to 1.0”  or “3.75 to 1.0,” as the case may be, as it
appears therein and such Person or the Borrower Restricted Subsidiary into
which such Person merges or consolidates is a Guarantor and a Loan Proceeds
Note Guarantor;

 

(vi) Indebtedness
of the Borrower or any Borrower Restricted Subsidiary Incurred to renew,
extend, refinance, defease, repay, prepay, repurchase, redeem, retire, exchange
or refund (each, a “refinancing”) Indebtedness of the Borrower or any Borrower
Restricted Subsidiary Incurred pursuant to paragraph (a) above or
clause (i), (ii), (iii), (v) or (x) of this paragraph (b) or
this clause (vi), in an aggregate principal amount (or if issued at a
discount, the then-Accreted Value) not to exceed the aggregate principal amount
(or if issued at a discount, the then-Accreted Value) of and accrued interest
on the Indebtedness so refinanced plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of the
Indebtedness so refinanced or the amount of any premium reasonably determined
by the Board of Directors of Level 3 as necessary to accomplish such
refinancing by means of a tender offer or privately negotiated repurchase, plus
the expenses of the Borrower Incurred in connection with such refinancing; provided,
however, that (A) if the Person that originally Incurred the
Indebtedness to be refinanced became, or would have been required to become if
not already, a Guarantor or a Loan Proceeds Note Guarantor as a result of the
Incurrence of the Indebtedness being refinanced in accordance with this
covenant, (1) the Person that Incurs the refinancing Indebtedness pursuant
to this clause (vi) (if not the Borrower) shall be a Guarantor and a Loan
Proceeds Note Guarantor and (2) if the Indebtedness to be refinanced is
subordinated to the Loan Proceeds Note Guarantee of such Loan Proceeds Note
Guarantor or the Guarantee of the Obligations of such Guarantor, the
refinancing Indebtedness shall be subordinated to the same extent to the Loan Proceeds
Note Guarantee of such Loan Proceeds Note Guarantor or the Guarantee of the
Obligations of such Guarantor, as the case may be, Incurring such refinancing
Indebtedness, (B) the refinancing Indebtedness shall not be senior in
right of payment to the Indebtedness that is being refinanced and (C) in
the case of any refinancing of Indebtedness Incurred pursuant to paragraph (a)
above or clause (i), (v) or (x) or, if such Indebtedness previously
refinanced Indebtedness Incurred pursuant to any such clause, this
clause (vi), the refinancing Indebtedness by its terms, or by the terms of
any agreement or instrument pursuant to which such Indebtedness is issued, (x) does
not provide for payments of principal of such Indebtedness at stated maturity
or by way of a sinking fund applicable thereto or by way of any 

 

76

 

mandatory
redemption, defeasance, retirement or repurchase thereof by the Borrower or any
Borrower Restricted Subsidiary (including any redemption, retirement or
repurchase which is contingent upon events or circumstances, but excluding any
retirement required by virtue of the acceleration of any payment with respect
to such Indebtedness upon any event of default thereunder), in each case prior
to the time the same are required by the terms of the Indebtedness being
refinanced and (y) does not permit redemption or other retirement
(including pursuant to an offer to purchase made by the Borrower or a Borrower
Restricted Subsidiary) of such Indebtedness at the option of the holder thereof
prior to the time the same are required by the terms of the Indebtedness being
refinanced, other than, in the case of clause (x) or (y), any such
payment, redemption or other retirement (including pursuant to an offer to
purchase made by the Borrower) which is conditioned upon a change of control
pursuant to provisions substantially similar to those described under Section 2.05(d)
or upon an asset sale pursuant to provisions substantially similar to those
described under Section 6.07(c);

 

(vii) Indebtedness
of the Borrower or any Borrower Restricted Subsidiary (A) in respect of
performance, surety or appeal bonds, Guarantees, letters of credit or
reimbursement obligations Incurred or provided in the ordinary course of business
securing the performance of contractual, franchise, lease, self-insurance or
license obligations and not in connection with the Incurrence of Indebtedness
or (B) in respect of customary agreements providing for indemnification,
adjustment of purchase price after closing, or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
such obligations of the Borrower or any Borrower Restricted Subsidiary pursuant
to such agreements, Incurred in connection with the disposition of any
business, assets or Borrower Restricted Subsidiary (other than Guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Borrower Restricted Subsidiary for the purpose of financing
such acquisition) and in an aggregate principal amount not to exceed the gross
proceeds actually received by the Borrower or any Borrower Restricted
Subsidiary in connection with such disposition;

 

(viii) Indebtedness
of the Borrower or any Borrower Restricted Subsidiary consisting of Permitted
Hedging Agreements;

 

(ix) Indebtedness
of any Foreign Restricted Subsidiary of the Borrower not otherwise permitted to
be Incurred pursuant to clause (i) through (viii) above or clause (x)
below, which, together with any other outstanding Indebtedness Incurred
pursuant to this clause (ix) has an aggregate principal amount not in
excess of $100,000,000 at any time outstanding;

 

(x) (A) Effective
Date Purchase Money Debt initially Incurred by the Borrower or any Borrower
Restricted Subsidiary or another Person that became a Borrower Restricted
Subsidiary on or before the Effective Date and (B) Indebtedness under the
Financing Inc. Notes and the related Financing Inc. Indentures, any Guarantees
of the Financing Inc. Notes issued prior to the 

 

77

 

Effective Date
in accordance with such related Financing Inc. Indentures and any Guarantee of
the Financing Inc. Notes issued after the Effective Date; provided, however,
that in the case of any such Guarantee of the Financing Inc. Notes entered into
after the Effective Date, such Guarantee is Incurred in accordance with the
last sentence of paragraph (d) of this Section 6.02; and

 

(c)  Notwithstanding any
other provision of this Section 6.02, the maximum amount of Indebtedness
the Borrower or any Borrower Restricted Subsidiary may Incur pursuant to this Section 6.02
shall not be deemed to be exceeded due solely to the result of fluctuations in
the exchange rates of currencies.

 

(d)  For purposes of
determining any particular amount of Indebtedness under this Section 6.02,
Guarantees (other than Guarantees of Indebtedness of Level 3 or any Sister
Restricted Subsidiary that are not Guarantees of Indebtedness Incurred by
Level 3 or any Sister Restricted Subsidiary pursuant to clause (ii) of
paragraph (b) of Section 6.01), Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included and shall not be
treated as Indebtedness.  For purposes of
determining compliance with this Section 6.02, in the event that an item
of Indebtedness meets the criteria of more than one of the types of
Indebtedness described in the above clauses, the Borrower, in its sole
discretion, shall classify, and may later reclassify, such item of Indebtedness
in any manner that complies with this Section. 
To the extent permitted under applicable laws and regulations, in the event
that any Borrower Restricted Subsidiary Guarantees any of the Financing Inc.
Notes, then the Borrower shall cause such Borrower Restricted Subsidiary to (i) become
a Guarantor and a Loan Proceeds Note Guarantor, (ii) to subordinate, in
any bankruptcy, liquidation or winding up proceeding of such Borrower
Restricted Subsidiary, such Borrower Restricted Subsidiary’s Guarantee of such
Financing Inc. Notes to the Guarantee of the Obligations and the Loan Proceeds
Note Guarantee of such Borrower Restricted Subsidiary (or, in the case of Level
3 LLC, to the Loan Proceeds Note) and (iii) in the case of a Level 3 LLC
Guarantee of the 2011 Floating Rate Notes, the 12.25% Notes, the 9.25% Notes,
the 8.75% Notes or the 2015 Floating Rate Notes, cause Level 3 LLC to enter
into the Level 3 LLC 2011 Floating Rate Notes Supplemental Indenture, the Level
3 LLC 12.25% Notes Supplemental Indenture, the Level 3 LLC 9.25% Notes
Supplemental Indenture, the Level 3 LLC 8.75% Notes Supplemental Indenture
or the Level 3 LLC 2015 Floating Rate Notes Supplemental Indenture, as the case
may be.

 

SECTION 6.03.  Limitation on Restricted
Payments.  (a)  Level 3:

 

(i) shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly,
declare or pay any dividend, or make any distribution, in respect of its
Capital Stock or to the holders thereof, excluding any dividends or
distributions which are made solely to Level 3 or a Restricted Subsidiary
(and, if such Restricted Subsidiary is not a Wholly Owned Subsidiary, to the
other stockholders of such Restricted Subsidiary on a pro rata basis or on a
basis that results in the receipt by Level 3 or a Restricted Subsidiary of
dividends or distributions of greater value than it would receive on a pro rata
basis) or any dividends or 

 

78

 

distributions
payable solely in shares of Capital Stock of Level 3 (other than
Disqualified Stock) or in options, warrants or other rights to acquire Capital
Stock of Level 3 (other than Disqualified Stock);

 

(ii) shall
not, and shall not permit any Restricted Subsidiary to, purchase, redeem, or
otherwise retire or acquire for value (x) any Capital Stock of
Level 3 or any Restricted Subsidiary or (y) any options, warrants or
rights to purchase or acquire shares of Capital Stock of Level 3 or any
Restricted Subsidiary or any securities convertible or exchangeable into shares
of Capital Stock of Level 3 or any Restricted Subsidiary, except, in any
such case, any such purchase, redemption or retirement or acquisition for value
(A) paid to Level 3 or a Restricted Subsidiary (or, in the case of
any such purchase, redemption or other retirement or acquisition for value with
respect to a Restricted Subsidiary that is not a Wholly Owned Subsidiary, to
the other stockholders of such Restricted Subsidiary on a pro rata basis or on
a basis that results in the receipt by Level 3 or a Restricted Subsidiary
of payments of greater value than it would receive on a pro rata basis) or (B) paid
solely in shares of Capital Stock (other than Disqualified Stock) of
Level 3;

 

(iii) shall
not make, or permit any Restricted Subsidiary to make, any Investment (other
than an Investment in Level 3 or a Restricted Subsidiary or a Permitted
Investment) in any Person, including the Designation of any Restricted
Subsidiary as an Unrestricted Subsidiary, or the Revocation of any such
Designation, according to Section 6.10;

 

(iv) shall
not, and shall not permit any Restricted Subsidiary to, redeem, defease,
repurchase, retire or otherwise acquire or retire for value, prior to any
scheduled maturity, repayment or sinking fund payment, Indebtedness of
Level 3 which is subordinate in right of payment to the Guarantee by
Level 3 of the Obligations or Indebtedness of any Restricted Subsidiary
which is subordinate in right of payment to the Loans (in the case of the
Borrower) or the Guarantee of the Obligations (in the case of Restricted
Subsidiaries other than the Borrower) by such Restricted Subsidiary (other than
any redemption, defeasance, repurchase, retirement or other acquisition or
retirement for value made in anticipation of and satisfying a scheduled
maturity, repayment or sinking fund obligation due within one year thereof);
and

 

(v) shall
not, and shall not permit any Restricted Subsidiary to, issue, transfer,
convey, sell or otherwise dispose of Capital Stock of any Restricted Subsidiary
to a Person other than Level 3 or another Restricted Subsidiary if the result
thereof is that such Restricted Subsidiary shall cease to be a Restricted
Subsidiary, in which event the amount of such “Restricted Payment” shall be the
Fair Market Value of the remaining interest, if any, in such former Restricted
Subsidiary held by Level 3 and the other Restricted Subsidiaries (each of
clauses (i) through (v) being a “Restricted Payment”)

 

79

 

if:

 

(1) an Event of Default, or an event
that with the passing of time or the giving of notice, or both, would
constitute an Event of Default, shall have occurred and be continuing, or

 

(2) upon giving effect to such
Restricted Payment, Level 3 could not Incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a) of Section 6.01, or

 

(3) upon giving effect to such
Restricted Payment, the aggregate of all Restricted Payments made on or after
Measurement Date, including Restricted Payments made pursuant to clause (A)
or (B) of the proviso at the end of this sentence, and Permitted Investments
made on or after the Measurement Date pursuant to clause (i) or (j) of the
definition thereof (the amount of any such Restricted Payment or Permitted
Investment, if made other than in cash, to be based upon Fair Market Value)
exceeds the sum of:

 

(A) 50% of cumulative Consolidated Net
Income of Level 3 and its Restricted Subsidiaries (or subtracting, in the
case that Consolidated Net Income of Level 3 and its Restricted Subsidiaries
shall be negative, 100% of such negative amount) since the end of the last full
fiscal quarter prior to the Measurement Date through the last day of the last
full fiscal quarter ending prior to the date of such Restricted Payment for
which consolidated financial statements have been delivered pursuant to Section 5.01
or 5.02, as applicable, and

 

(B) plus, in the case of any
Revocation made after the Measurement Date, an amount equal to the lesser of
the portion (proportionate to Level 3’s equity interest in the Subsidiary
to which such Revocation relates) of the Fair Market Value of the net assets of
such Subsidiary at the time of Revocation and the amount of Investments
previously made (and treated as a Restricted Payment) by Level 3 or any
Restricted Subsidiary in such Subsidiary;

 

provided, however, that Level 3 or
a Restricted Subsidiary may, without regard to the limitations in clause (3)
but subject to clauses (1) and (2), make (A) Restricted Payments in
an aggregate amount not to exceed the sum of $50,000,000 and the aggregate net
cash proceeds received after the Measurement Date (i) as capital
contributions to Level 3, from the issuance (other than to a Subsidiary or
an employee stock ownership plan or trust established by Level 3 or any
such Subsidiary for the benefit of their employees) of Capital Stock (other
than Disqualified Stock) of Level 3, and (ii) from the issuance or
sale of Indebtedness of Level 3 or any Restricted Subsidiary (other than
to a Subsidiary, Level 3 or an employee stock ownership plan or trust
established by Level 3 or any such 

 

80

 

Subsidiary for the benefit of their employees) that after the
Measurement Date has been converted into or exchanged for Capital Stock (other
than Disqualified Stock) of Level 3 and (B) Investments in Persons
engaged in the Telecommunications/IS Business in an aggregate amount not to
exceed the after-tax gain on the sale, after the Measurement Date, of Special
Assets to the extent sold for cash, Cash Equivalents, Telecommunications/IS
Assets or the assumption of Indebtedness of Level 3 or any Restricted
Subsidiary (other than Indebtedness that is subordinated to the Loans, the Loan
Proceeds Note or any applicable Guarantee of the Obligations or Loan Proceeds
Note Guarantee) and release of Level 3 and all Restricted Subsidiaries
from all liability on the Indebtedness assumed. 
The aggregate net cash proceeds referred to in the immediately preceding
clauses (A)(i) and (A)(ii) shall not be utilized to make Restricted
Payments pursuant to such clauses to the extent such proceeds have been
utilized to make Permitted Investments under clause (i) of the definition
of “Permitted Investments.”

 

(b)  Notwithstanding the
foregoing limitation,

 

(i) Level 3
may pay any dividend on Capital Stock of any class of Level 3 within
60 days after the declaration thereof if, on the date when the dividend
was declared, Level 3 could have paid such dividend in accordance with the
foregoing provisions; provided, however, that at the time of such
payment of such dividend, no other Event of Default shall have occurred and be
continuing (or result therefrom);

 

(ii) Level 3
may repurchase any shares of its Common Stock or options to acquire its Common
Stock from Persons who were formerly directors, officers or employees of
Level 3 or any of its Subsidiaries or other Affiliates in an amount not to
exceed $3,000,000 in any 12-month period;

 

(iii) Level 3
and any Restricted Subsidiary may refinance any Indebtedness otherwise
permitted by clause (viii) of paragraph (b) of Section 6.01 or
clause (vi) of paragraph (b) of Section 6.02;

 

(iv) Level 3
and any Restricted Subsidiary may retire or repurchase any Capital Stock of
Level 3 or of any Restricted Subsidiary or any Subordinated Debt of
Level 3 in exchange for, or out of the proceeds of substantially
concurrent sale (other than to a Subsidiary or an employee stock ownership plan
or trust established by Level 3 or any such Subsidiary for the benefit of
their employees) of, Capital Stock (other than Disqualified Stock) of
Level 3; provided, however, that the proceeds from any such
exchange or sale of Capital Stock shall be excluded from any calculation
pursuant to clause (A)(i) in the proviso at the end of paragraph (a) above
or pursuant to clause (b) of the definition of “Invested Capital”; and

 

81

 

(v) Level 3
may pay cash dividends in any amount not in excess of $50,000,000 in any
12-month period in respect of Preferred Stock of Level 3 (other than
Disqualified Stock).

 

The Restricted Payments
described in the foregoing clauses (i), (ii) and (v) shall be included in
the calculation of Restricted Payments; the Restricted Payments described in
clauses (iii) and (iv) shall be excluded in the calculation of Restricted
Payments.

 

(c)  The Borrower may not,
and may not permit any Borrower Restricted Subsidiary to, pay any dividend or
make any distribution in respect of shares of its Capital Stock held by
Level 3 or a Sister Restricted Subsidiary (whether in cash, securities or
other Property) or any payment (whether in cash, securities or other Property)
on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any such shares of Capital Stock (all such dividends,
distributions and payments being referred to herein as “Level 3
Transfers”), other than (i) Level 3 Transfers at such times and
in such amounts as shall be necessary to permit Level 3 to pay
administrative expenses attributable to the operations of its Restricted
Subsidiaries, (ii) Level 3 Transfers at such times and in such
amounts as are sufficient for Level 3 to make the timely payment of
interest, premium (if any) and principal (whether at stated maturity, by way of
a sinking fund applicable thereto, by way of any mandatory redemption,
defeasance, retirement or repurchase thereof, including upon the occurrence of
designated events or circumstances or by virtue of acceleration upon an event
of default, or by way of redemption or retirement at the option of the holder
of the Indebtedness of Level 3, including pursuant to offers to purchase)
according to the terms of any Indebtedness of Level 3, (iii) Level 3
Transfers (A) to permit Level 3 to satisfy its obligations in respect
of stock option plans or other benefit plans for management or employees of
Level 3 and its Subsidiaries, (B) to permit Level 3 to pay
dividends on Preferred Stock of Level 3 in an amount not to exceed the
aggregate net cash proceeds received by Level 3 (1) after September 30,
1999, from the issuance of Capital Stock, and (2) from the issuance or
sale of Indebtedness of Level 3 or any Restricted Subsidiary that after September 30,
1999, has been converted into or exchanged for Capital Stock of Level 3, (C) in
an annual amount not to exceed 50% of Level 3’s Consolidated Net Income
for the prior fiscal year and (D) Level 3 Transfers in amounts not to
exceed the amount required by Level 3 to pay accrued and unpaid interest
on any Indebtedness of Level 3 due upon the conversion, exchange or
purchase of such Indebtedness into, for or with Capital Stock of Level 3
and (iv) additional Level 3 Transfers after October 1, 2003 in
an aggregate amount not to exceed $50,000,000 in the aggregate.

 

SECTION 6.04.  Limitation on Dividend and
Other Payment Restrictions Affecting Restricted Subsidiaries.  (a)  Level 3 shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction (other than pursuant to law or regulation) on the
ability of any Restricted Subsidiary (i) to pay dividends (in cash or
otherwise) or make any other distributions in respect of its Capital Stock
owned by Level 3 or any other Restricted Subsidiary or pay any
Indebtedness or other obligation owed to Level 3 or any other Restricted
Subsidiary, (ii) to make loans or advances to 

 

82

 

Level 3 or any other Restricted
Subsidiary or (iii) to transfer any of its Property to Level 3 or any
other Restricted Subsidiary.

 

(b)  Notwithstanding the
foregoing limitation, Level 3 may, and may permit any Restricted
Subsidiary to, create or otherwise cause or suffer to exist

 

(i) any
encumbrance or restriction in effect on the Measurement Date,

 

(ii) any
encumbrance or restriction under the Loan Documents, and any customary (as
conclusively determined in good faith by the Chief Financial Officer of
Level 3) encumbrance or restriction applicable to a Restricted Subsidiary
that is contained in an agreement or instrument governing or relating to
Indebtedness contained in any Qualified Receivable Facility or Purchase Money
Debt Incurred pursuant to clause (ii) of paragraph (b) under Section 6.01
or clause (ii) of paragraph (b) under Section 6.02 (or
refinancing Indebtedness thereof Incurred pursuant to clause (viii) of
paragraph (b) under Section 6.01 or clause (vi) of paragraph (b)
under Section 6.02); provided, however, that such
encumbrances and restrictions do not limit the ability of such Restricted
Subsidiary, directly or indirectly (including through another Subsidiary of the
Borrower) (i) to pay dividends (in cash or otherwise) or make any other
distributions in respect of its Capital Stock owned by the Borrower or any
other Borrower Restricted Subsidiary or pay any Indebtedness or other
obligation owed to the Borrower, (ii) to make loans or advances to the
Borrower or (iii) to transfer any of its Property (other than in the case
of Purchase Money Debt, the Telecommunications/IS Assets installed,
constructed, acquired, leased, developed or improved with the proceeds of such
Purchase Money Debt and any improvements or accessions thereto) to the
Borrower,

 

(iii) any
encumbrance or restriction pursuant to an agreement relating to any Acquired
Debt, which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person so acquired,

 

(iv) any
encumbrance or restriction pursuant to an agreement effecting a refinancing of
Indebtedness Incurred pursuant to an agreement referred to in clause (i), (ii)
or (iii) of this paragraph (b); provided, however, that the
provisions contained in such agreement relating to such encumbrance or
restriction are no more restrictive (as so determined) in any material respect
than the provisions contained in the agreement the subject thereof,

 

(v) in
the case of clause (iii) of paragraph (a) above, any encumbrance or
restriction contained in any security agreement (including a Capital Lease
Obligation) securing Indebtedness of Level 3 or a Restricted Subsidiary
otherwise permitted under this Agreement, but only to the extent such
restrictions restrict the transfer of the Property subject to such security
agreement,

 

83

 

(vi) in
the case of clause (iii) of paragraph (a) above, customary provisions
(A) that restrict the subletting, assignment or transfer of any Property
that is a lease, license, conveyance or similar contract, (B) contained in
asset sale or other asset disposition agreements limiting the transfer of the
Property being sold or disposed of pending the closing of such sale or
disposition or (C) arising or agreed to in the ordinary course of
business, not relating to any Indebtedness, and that do not, individually or in
the aggregate, detract from the value of Property of Level 3 or any
Restricted Subsidiary in any manner material to Level 3 or any Restricted
Subsidiary,

 

(vii) any
encumbrance or restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or Property of
such Restricted Subsidiary; provided, however, that the
consummation of such transaction would not result in a Default or an Event of
Default, that such restriction terminates if such transaction is abandoned and
that the consummation or abandonment of such transaction occurs within one year
of the date such agreement was entered into, and

 

(viii) any
encumbrance or restriction pursuant to this Agreement.

 

SECTION 6.05.  Limitation on Liens.  Level 3 shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, Incur or suffer to exist any
Lien on or with respect to any Property now owned or acquired after the
Effective Date to secure any Indebtedness other than:

 

(i) Liens
existing on the Effective Date and securing Indebtedness outstanding on the
Effective Date, which in any event shall not include Liens securing the Parent
Intercompany Note or the Existing Notes;

 

(ii) Liens Incurred on or
after the Effective Date:

 

(1) pursuant to the Loan Documents to
secure Indebtedness permitted to be Incurred pursuant to clause (ii) of
paragraph (b) under Section 6.01 or clause (ii) of paragraph (b)
under Section 6.02 (or refinancing Indebtedness in respect thereof
Incurred pursuant to clause (viii) of paragraph (b) under Section 6.01
or clause (vi) of paragraph (b) under Section 6.02);

 

(2) on Receivables, collections thereof
and accounts established solely for the collection of such Receivables to
secure Indebtedness under Qualified Receivables Facilities permitted to be
Incurred pursuant to clause (ii) of paragraph (b) under Section 6.01
or clause (ii) of paragraph (b) under Section 6.02 (or
refinancing Indebtedness thereof Incurred pursuant to clause (viii) of
paragraph (b) under Section 6.01 or clause (vi) of paragraph (b)
under Section 6.02);

 

84

 

(3) on cash to secure reimbursement
obligations in respect of letters of credit permitted to be Incurred pursuant
to clause (ii) of paragraph (b) under Section 6.01 or clause (ii)
of paragraph (b) under Section 6.02 (or refinancing Indebtedness
thereof Incurred pursuant to clause (vi) of paragraph (b) under Section 6.02
or clause (viii) of paragraph (b) under Section 6.01), provided
that the amount of such cash does not exceed 110% of the face amount of such
letters of credit; and

 

(4) on Property acquired after the
Effective Date with the proceeds of Purchase Money Debt Incurred pursuant to
clause (ii) of paragraph (b) under Section 6.01 or clause (ii)
of paragraph (b) under Section 6.02 (or refinancing Indebtedness
thereof Incurred pursuant to clause (vi) of paragraph (b) under Section 6.02
or clause (viii) of paragraph (b) under Section 6.01) to secure
such Purchase Money Debt, provided that any such Lien may not extend to
any Property other than the Telecommunications/IS Assets installed,
constructed, acquired, leased, developed or improved with the proceeds of such
Purchase Money Debt and any improvements or accessions thereto (it being
understood that all Indebtedness to any single lender or group of related
lenders or outstanding under any single credit facility, and in any case
relating to the same group or collection of Telecommunications/IS Assets
financed thereby, shall be considered a single Purchase Money Debt, whether
drawn at one time or from time to time);

 

(iii) Liens
in favor of Level 3 or any Restricted Subsidiary; provided, however,
that any subsequent issue or transfer of Capital Stock or other event that
results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary
or any subsequent transfer of the Indebtedness secured by any such Lien (except
to Level 3 or a Restricted Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Lien by the borrower thereof;

 

(iv) Liens
outstanding on the Effective Date securing Purchase Money Debt and Liens on
Property acquired after the Effective Date with the proceeds of Purchase Money
Debt Incurred pursuant to clause (iii) of paragraph (b) under Section 6.01
to secure such Purchase Money Debt, provided that any such Lien may not
extend to any Property other than the Telecommunications/IS Assets installed,
constructed, acquired, leased, developed or improved with the proceeds of such
Purchase Money Debt and any improvements or accessions thereto (it being
understood that all Indebtedness to any single lender or group of related
lenders or outstanding under any single credit facility, and in any case
relating to the same group or collection of Telecommunications/IS Assets
financed thereby, shall be considered a single Purchase Money Debt, whether drawn
at one time or from time to time);

 

(v) Liens
to secure Acquired Debt, provided that (a) such Lien attaches to
the acquired Property prior to the time of the acquisition of such Property and
(b) such Lien does not extend to or cover any other Property;

 

85

 

(vi) Liens
to secure Indebtedness Incurred to refinance, in whole or in part, Indebtedness
secured by any Lien referred to in the foregoing clauses (i), (iv) and (v) or
this clause (vi) so long as such Lien does not extend to any other
Property (other than improvements and accessions to the original Property) and
the principal amount of Indebtedness so secured is not increased except as
otherwise permitted under clause (viii) of paragraph (b) of
Section 6.01 or clause (vi) of paragraph (b) of Section 6.02;

 

(vii) Liens
on Property (A) not constituting Collateral and (B) not required to
become Collateral following the satisfaction of the Guarantee Permit Condition
and the Collateral Permit Condition, Incurred on or after the Measurement Date
not otherwise permitted by the foregoing clauses (i) through (v) (but
including in the computations of Liens permitted under this clause (vii) Liens
existing on the Effective Date which remain existing at the time of computation
which are otherwise permitted under clause (i)) securing Indebtedness of
Level 3 or any Restricted Subsidiary (other than the Borrower or any
Borrower Restricted Subsidiary) in an aggregate amount not to exceed 5% of
Level 3’s Consolidated Tangible Assets.

 

(viii) Liens
on Property of any Non-Telecommunications Subsidiary; provided, however,
that the Incurrence of such Lien does not require the Person Incurring such
Lien to secure any Indebtedness of any Person other than a
Non-Telecommunications Subsidiary;

 

(ix) Liens
to secure Indebtedness Incurred pursuant to clause (viii) of
paragraph (b) of Section 6.02; and

 

(x) Permitted
Liens.

 

SECTION 6.06.  Limitation on Sale and
Leaseback Transactions.  Level 3
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, enter into, assume, Guarantee or otherwise become liable with
respect to any Sale and Leaseback Transaction, unless (i) Level 3 or
such Restricted Subsidiary would be entitled to Incur (a) Indebtedness in
an amount equal to the Attributable Value of the Sale and Leaseback Transaction
pursuant to Section 6.01 or Section 6.02 and (b) a Lien pursuant
to Section 6.05, equal in amount to the Attributable Value of the Sale and
Leaseback Transaction, and (ii) the Sale and Leaseback Transaction is
treated as an Asset Disposition and all of the conditions of Section 6.07
(including the provisions concerning the application of Net Available Proceeds)
are satisfied with respect to such Sale and Leaseback Transaction, treating all
of the consideration received in such Sale and Leaseback Transaction as Net
Available Proceeds for purposes of such Section 6.07.

 

SECTION 6.07.  Limitation on Asset
Dispositions.  (a)  Level 3
shall not, and shall not permit any Restricted Subsidiary to, make any Asset
Disposition unless: (i) Level 3 or the Restricted Subsidiary, as the
case may be, receives consideration for such disposition at least equal to the
Fair Market Value for the Property sold or disposed of as determined by the
Board of Directors of Level 3 in good faith and evidenced by a 

 

86

 

Board Resolution of Level 3; and (ii) at
least 75% of the consideration for such disposition consists of cash or Cash
Equivalents or the assumption of Indebtedness of the Borrower or any Borrower
Restricted Subsidiary (other than Indebtedness of the Borrower that is
subordinated to the Obligations or Indebtedness of any Borrower Restricted
Subsidiary that is subordinated to the Obligations of such Borrower Restricted
Subsidiary) and release of the Borrower and all Borrower Restricted
Subsidiaries from all liability on the Indebtedness assumed (or if less than
75%, the remainder of such consideration consists of Telecommunications/IS
Assets); provided, however, that, to the extent such disposition
involves Special Assets, all or any portion of the consideration may, at
Level 3’s election, consist of Property other than cash, Cash Equivalents
or the assumption of Indebtedness or Telecommunications/IS Assets.

 

(b)  If the Net Available
Proceeds from any Asset Disposition (or any series of related Asset
Dispositions) consisting of Property that is Collateral or Property that would
be required to become Collateral following the satisfaction of the Guarantee
Permit Condition and the Collateral Permit Condition exceed $20,000,000, the
Borrower shall deposit an amount in cash or cash equivalents equal to such Net
Available Proceeds (which such amount shall thereafter constitute the Net
Available Proceeds of such Asset Disposition or related Asset Dispositions) into
a deposit account in which the Collateral Agent has a perfected security
interest in favor of the Lenders.  Prior
to the time a Notice of Default shall have been delivered to the Borrower
pursuant to Article VII, the Borrower may withdraw such Net Available
Proceeds, and the Collateral Agent, at the Request of the Borrower, shall take
all actions necessary, at the expense of the Borrower, to promptly release the
security interest in such Net Available Proceeds (i) to permit
Level 3 or a Restricted Subsidiary to reinvest such Net Available Proceeds
in Telecommunications/IS Assets, (ii) to permit the Borrower to repay the
Loans in accordance with Section 2.05(b) or (iii) following any
prepayment of the Loans as required by Section 2.05(b), with respect to any
such Net Available Proceeds that have been rejected by Declining Lenders
pursuant to Section 2.05(e), to Level 3 or any Restricted Subsidiary
for any purpose.

 

(c)  The Net Available
Proceeds (or any portion thereof) from Asset Dispositions may be applied by
Level 3 or a Restricted Subsidiary, to the extent Level 3 or such
Restricted Subsidiary elects: (1) to permanently prepay Borrowings in
accordance with Section 2.05(b) or (c) or (2) to reinvest
in Telecommunications/IS Assets (including by means of an Investment in
Telecommunications/IS Assets by a Restricted Subsidiary with Net Available
Proceeds received by Level 3 or another Restricted Subsidiary).  Level 3 shall not, and shall not permit
any Restricted Subsidiary, to acquire any Telecommunications/IS Assets with the
Net Available Proceeds of any Asset Disposition consisting of Collateral or
Property that would be required to become Collateral following the satisfaction
of the Guarantee Permit Condition and the Collateral Permit Condition unless such
Telecommunications/IS Assets are Collateral or Property that would be required
to become Collateral following the satisfaction of the Guarantee Permit
Condition and the Collateral Permit Condition. 
Any Net Available Proceeds from an Asset Disposition not applied in
accordance with paragraph (b) within 330 days (or, in the case of a
disposition of Special Assets identified in clause (a) of the definition
thereof in which the Net Available Proceeds exceed $500,000,000, 510 days)
from the date of the 

 

87

 

receipt of such Net Available Proceeds shall
constitute “Excess Proceeds.”  The
Borrower shall apply such Excess Proceeds to the extent and in the manner
required by Section 2.05.

 

(d)  (1) The Borrower
shall not, and shall not permit any Borrower Restricted Subsidiary, to sell,
transfer, lease or otherwise dispose of any Property that is Collateral or that
would be required to become Collateral following the satisfaction of the
Collateral Permit Condition to a Subsidiary of Level 3 (other than a
Subsidiary that is a Guarantor and a Grantor or that will become a Guarantor
and a Grantor following satisfaction of the Guarantee Permit Condition and the
Collateral Permit Condition), and (2) Level 3 shall not designate as
an Unrestricted Subsidiary any Borrower Restricted Subsidiary that owns,
directly or indirectly, any Property that is Collateral or that would be
required to become Collateral following the satisfaction of the Collateral
Permit Condition unless either:

 

(A) (1) in the case
of a sale, transfer, lease or other disposition, the Borrower or such Borrower
Restricted Subsidiary receives consideration for such sale, transfer, lease or
other disposition at least equal to the Fair Market Value of such Property
(which, in the case of the Offering Proceeds Notes, any other intercompany
Indebtedness or the Loan Proceeds Note, is the principal amount of such
Offering Proceeds Note, such Indebtedness or the Loan Proceeds Note, as
applicable, and any accrued and unpaid interest thereon), and

 

(2) in the case of a sale, transfer,
lease or other disposition, the consideration consists of 100% in cash or Cash
Equivalents; or

 

(B) such
transaction:

 

(1) is desirable in the conduct of the
business of Level 3 and its Subsidiaries taken as a whole (as conclusively
determined by the Board of Directors of Level 3), and

 

(2) (i) in the case of a sale,
transfer, lease or other disposition in which the consideration does not
consist of 100% cash or Cash Equivalents, the Fair Market Value of the Property
that is Collateral so sold, transferred, leased or disposed of (net of any cash
or Cash Equivalents received by the Borrower or such Borrower Restricted
Subsidiary in respect of such Collateral), or (ii) in the case of a
designation of a Borrower Restricted Subsidiary as an Unrestricted Subsidiary,
the Fair Market Value of all Property that is Collateral owned, directly or
indirectly, by such Borrower Restricted Subsidiary at the time it is designated
an Unrestricted Subsidiary, when taken together with the Collateral Release
Amount (determined prior to such sale, lease, transfer or other disposition or
designation as an Unrestricted Subsidiary), does not exceed 5.0% of
Consolidated Tangible Assets as determined at the time of such sale, lease,
transfer or other disposition or designation as an Unrestricted Subsidiary, on
the basis of the most recent consolidated 

 

88

 

balance sheet available to Level 3 (as conclusively determined in
good faith by the Chief Financial Officer of Level 3).

 

For purposes of this Section 6.07(d),
“Collateral Release Amount” means an amount equal to:

 

(1) the sum of (x) the Fair Market
Value of any Property that constituted Collateral previously sold, transferred,
leased or otherwise disposed of pursuant to this Section 6.07(d) for
consideration not consisting of 100% cash or Cash Equivalents (net of any cash
or Cash Equivalents received by the transferor in consideration for such sale,
transfer, lease or other disposition) plus (y) the Fair Market
Value of all Property that constituted Collateral held directly or indirectly
by each Borrower Restricted Subsidiary previously designated as an Unrestricted
Subsidiary pursuant to this Section 6.07(d), minus

 

(2) the sum of, without duplication, (x) the
amount of any cash or Cash Equivalents received by the Borrower or a Borrower
Restricted Subsidiary in repayment of principal or as a return of capital from
an Investment made pursuant to clause (B) of this Section 6.07(d) plus
(y) the amount of any cash or Cash Equivalents received by the Borrower or
a Borrower Restricted Subsidiary from a Borrower Restricted Subsidiary
designated as an Unrestricted Subsidiary pursuant to this Section 6.07(d) representing
a return of capital, in the case of clauses (x) and (y), to the extent
such cash or Cash Equivalents were treated as Net Available Proceeds from an
Asset Disposition, plus (z) the Fair Market Value (determined at the time
that such Property again becomes Collateral in accordance with the Security
Documents) of any Property which had ceased to be Collateral pursuant to this Section 6.07(d) and
thereafter became Collateral in accordance with the terms of the Security
Documents.

 

In the event of (a) a
transfer of Property that constitutes Collateral made in accordance with this Section 6.07(d),
such Property shall be released from any Lien to which it is subject pursuant
to the Security Documents in accordance with the procedures in Section 9.14
or (b) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary in compliance with this Section 6.07(d), such Restricted
Subsidiary shall, by delivery of documentation providing for such release in
form satisfactory to the Administrative Agent, be released from any Guarantee
(in the case of a Guarantor) and its obligations under the Collateral Agreement
(in the case of a Grantor) previously made by such Subsidiary.

 

(e)  The Borrower shall
not, and shall not permit any Borrower Restricted Subsidiary to, sell,
transfer, lease or otherwise dispose of any Property that does not constitute
Collateral to Level 3 or any Sister Restricted Subsidiary unless (i) the
Borrower or such Borrower Restricted Subsidiary receives consideration for such
sale, transfer, lease or other disposition at least equal to the Fair Market
Value of such 

 

89

 

Property and (ii) the consideration
consists of either (A) 100% in cash or Cash Equivalents or (B) Indebtedness
of Level 3 or the Restricted Subsidiary to which Property was transferred that
is secured by a Lien on such transferred Property.  Level 3 or the Restricted Subsidiary to which
Property was transferred for consideration consisting of Indebtedness that is
secured by a Lien on such Property in accordance with clause (ii)(B) of
the prior sentence may substitute the Lien on such Property with a Lien on
other Property (including any Property owned by the Borrower or a Borrower
Restricted Subsidiary) that, as determined by the Board of Directors of Level 3
in good faith and evidenced by a Board Resolution of Level 3 filed with the
Agent upon request of the Agent, has a Fair Market Value of no less than the
Fair Market Value of the Property for which the substitution is made at the
time of the substitution.  The provisions
of this paragraph do not apply to (a) dividends and distributions, (b) loans
or advances and (c) purchases of services or goods.

 

SECTION 6.08.  Limitation on Issuance and
Sales of Capital Stock of Restricted Subsidiaries.  Level 3 shall at all times own all the
issued and outstanding Capital Stock of the Borrower.  The Borrower shall at all times own all the
issued and outstanding Capital Stock of Level 3 LLC.  Level 3 shall not, and shall not permit
any Restricted Subsidiary to, issue, transfer, convey, sell or otherwise
dispose of any shares of Capital Stock of a Restricted Subsidiary or securities
convertible or exchangeable into, or options, warrants, rights or any other
interest with respect to, Capital Stock of a Restricted Subsidiary to any
Person other than Level 3 or a Restricted Subsidiary except (i) a
sale of all of the Capital Stock of such Restricted Subsidiary owned by
Level 3 and any Restricted Subsidiary that complies with the provisions of
Section 6.07 to the extent such provisions apply, (ii) in a
transaction that results in such Restricted Subsidiary becoming a Joint
Venture, provided (x) such transaction complies with the provisions
of Section 6.07 to the extent such provisions apply and (y) the
remaining interest of Level 3 or any other Restricted Subsidiary in such
Joint Venture would have been permitted as a new Restricted Payment or
Permitted Investment under the provisions of Section 6.03, (iii) the
issuance, transfer, conveyance, sale or other disposition of shares of such
Restricted Subsidiary so long as after giving effect to such transaction such
Restricted Subsidiary remains a Restricted Subsidiary and such transaction
complies with the provisions of Section 6.07 to the extent such provisions
apply, (iv) the transfer, conveyance, sale or other disposition of shares
required by applicable law or regulation, (v) if required, the issuance,
transfer, conveyance, sale or other disposition of directors’ qualifying
shares, (vi) Disqualified Stock issued in exchange for, or upon conversion
of, or the proceeds of the issuance of which are used to refinance, shares of
Disqualified Stock of such Restricted Subsidiary, provided that the
amounts of the redemption obligations of such Disqualified Stock shall not
exceed the amounts of the redemption obligations of, and such Disqualified
Stock shall have redemption obligations no earlier than those required by, the
Disqualified Stock being exchanged, converted or refinanced, (vii) in a
transaction where Level 3 or a Restricted Subsidiary acquires at the same
time not less than its Proportionate Interest in such issuance of Capital
Stock, (viii) Capital Stock issued and outstanding on the Measurement
Date, (ix) Capital Stock of a Restricted Subsidiary issued and outstanding
prior to the time that such Person becomes a Restricted Subsidiary so long as
such Capital Stock was not issued in contemplation of such Person’s becoming a
Restricted Subsidiary or otherwise being acquired by Level 3 and 

 

90

 

(x) an issuance of Preferred Stock of a
Restricted Subsidiary (other than Preferred Stock convertible or exchangeable
into Common Stock of any Restricted Subsidiary) otherwise permitted by this
Agreement.  In the event of (a) the
consummation of a transaction referred to in any of the foregoing clauses that
results in a Restricted Subsidiary that is a Guarantor or a Grantor (or both)
no longer being a Restricted Subsidiary and (b) the execution and delivery
of documentation providing for such release in form satisfactory to the
Administrative Agent, any such Guarantor or Grantor (or Guarantor and Grantor)
shall be released from all its obligations under its Guarantee (in the case of
a Guarantor) and its obligations under the Collateral Agreement (in the case of
a Grantor).

 

SECTION 6.09.  Transactions with
Affiliates.  Level 3 shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
sell, lease, transfer, or otherwise dispose of any of its Property to, or
purchase any Property from, or enter into any contract, agreement,
understanding, loan, advance, Guarantee or transaction (including the rendering
of services) with or for the benefit of, any Affiliate (each of the foregoing,
an “Affiliate Transaction”), unless (a) such Affiliate Transaction
or series of Affiliate Transactions is (i) in the best interest of Level 3
or such Restricted Subsidiary and (ii) on terms that are no less favorable
to Level 3 or such Restricted Subsidiary than those that would have been
obtained in a comparable arm’s-length transaction by Level 3 or such Restricted
Subsidiary with a Person that is not an Affiliate (or, in the event that there
are no comparable transactions involving Persons who are not Affiliates of
Level 3 or the relevant Restricted Subsidiary to apply for comparative
purposes, is otherwise on terms that, taken as a whole, Level 3 has determined
to be fair to Level 3 or the relevant Restricted Subsidiary) and (b) Level
3 obtains (i) with respect to any Affiliate Transaction or series of
Affiliate Transactions involving aggregate payments in excess of $10,000,000
but less than $15,000,000, a certificate of the chief executive, operating or
financial officer of Level 3 evidencing such officer’s determination that
such Affiliate Transaction or series of Affiliate Transactions complies with
clause (a) above and (ii) with respect to any Affiliate
Transaction or series of Affiliate Transactions involving aggregate payments
equal to or in excess of $15,000,000, a Board Resolution of Level 3
certifying that such Affiliate Transaction or series of Affiliate Transactions
complies with clause (a) above and that such Affiliate Transaction or
series of Affiliate Transactions has been approved by the Board of Directors of
Level 3, including a majority of the disinterested members of the Board of
Directors of Level 3; provided, however, that, in the event
that there shall not be at least two disinterested members of the Board of
Directors of Level 3 with respect to the Affiliate Transaction,
Level 3 shall, at the request of the Administrative Agent, in addition to
such Board Resolution, deliver to the Administrative Agent a written opinion
from an investment banking firm of national standing in the United States
which, in the good faith judgment of the Board of Directors of Level 3, is
independent with respect to Level 3 and its Affiliates and qualified to
perform such task, which opinion shall be to the effect that the consideration
to be paid or received in connection with such Affiliate Transaction is fair,
from a financial point of view, to Level 3 or such Restricted Subsidiary.

 

Notwithstanding the foregoing,
the following shall not be deemed Affiliate Transactions: (i) any
employment agreement entered into by Level 3 or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with industry 

 

91

 

practice; (ii) any
agreement or arrangement with respect to the compensation of a director or
officer of Level 3 or any Restricted Subsidiary approved by a majority of
the disinterested members of the Board of Directors of Level 3 and
consistent with industry practice; (iii) transactions between or among
Level 3 and its Restricted Subsidiaries; provided, however,
that no more than 5% of the Voting Stock (on a fully diluted basis) of any such
Restricted Subsidiary is owned by an Affiliate of Level 3 (other than a
Restricted Subsidiary); (iv) Restricted Payments and Permitted Investments
permitted by Section 6.03 (other than Investments in Affiliates that are
not Level 3 or Restricted Subsidiaries); (v) transactions pursuant to
the terms of any agreement or arrangement as in effect on the Measurement Date;
and (vi) transactions with respect to wireline or wireless transmission
capacity, the lease or sharing or other use of cable or fiber optic lines,
equipment, rights-of-way or other access rights, between Level 3 (or any
Restricted Subsidiary) and any other Person; provided, however,
that, in the case of this clause (vi), such transaction complies with
clause (a) in the immediately preceding paragraph.

 

SECTION 6.10.  Limitation on Designations
of Unrestricted Subsidiaries.  Level 3 shall not designate (1) the
Borrower or Level 3 LLC as an Unrestricted Subsidiary or (2) any
other Subsidiary (other than a newly created Subsidiary in which no Investment
has previously been made) as an “Unrestricted Subsidiary” under this Agreement
(a “Designation”) unless in the case of this clause (2):

 

(a) no
Default or Event of Default shall have occurred and be continuing at the time
of or after giving effect to such Designation;

 

(b) immediately
after giving effect to such Designation, Level 3 would be able to Incur
$1.00 of Indebtedness under paragraph (a) of Section 6.01; and

 

(c) Level 3
would not be prohibited under any provision of this Agreement from making an
Investment at the time of Designation (assuming the effectiveness of such
Designation) in an amount (the “Designation Amount”) equal to the
portion (proportionate to Level 3’s equity interest in such Restricted
Subsidiary) of the Fair Market Value of the net assets of such Restricted
Subsidiary on such date.

 

In the event of any such
Designation, Level 3 shall be deemed to have made an Investment
constituting a Restricted Payment pursuant to Section 6.03 for all
purposes of this Agreement in the Designation Amount; provided, however,
that, upon a Revocation of any such Designation of a Subsidiary, Level 3
shall be deemed to continue to have a permanent “Investment” in an Unrestricted
Subsidiary of an amount (if positive) equal to (i) Level 3’s “Investment”
in such Subsidiary at the time of such Revocation less (ii) the portion
(proportionate to Level 3’s equity interest in such Subsidiary) of the
Fair Market Value of the net assets of such Subsidiary at the time of such
Revocation.  At the time of any
Designation of any Subsidiary as an Unrestricted Subsidiary, such Subsidiary
shall not own any Capital Stock of Level 3 or any Restricted Subsidiary.  In addition, neither Level 3 nor any
Restricted Subsidiary shall at any time (x) provide credit support for, or
a Guarantee of, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness); provided,
however, 

 

92

 

that Level 3 or a
Restricted Subsidiary may pledge Capital Stock or Indebtedness of any
Unrestricted Subsidiary on a nonrecourse basis such that the pledgee has no
claim whatsoever against Level 3 other than to obtain such pledged Capital
Stock or Indebtedness, (y) be directly or indirectly liable for any
Indebtedness of any Unrestricted Subsidiary or (z) be directly or
indirectly liable for any Indebtedness which provides that the holder thereof
may (upon notice, lapse of time or both) declare a default thereon or cause the
payment thereof to be accelerated or payable prior to its final scheduled
maturity upon the occurrence of a default with respect to any Indebtedness,
Lien or other obligation of any Unrestricted Subsidiary (including any right to
take enforcement action against such Unrestricted Subsidiary), except in the
case of clause (x) or (y) to the extent permitted under
Sections 6.03 and 6.09.

 

Unless Designated as an
Unrestricted Subsidiary, any Person that becomes a Subsidiary of Level 3
will be classified as a Restricted Subsidiary; provided, however,
that such Subsidiary shall not be designated as a Restricted Subsidiary and
shall be automatically classified as an Unrestricted Subsidiary if either of the
requirements set forth in clauses (a) and (b) of the immediately
following paragraph will not be satisfied immediately following such
classification.  Except as provided in
the first sentence of this Section 6.10, no Restricted Subsidiary may be
redesignated as an Unrestricted Subsidiary.

 

A Designation
may be revoked (a “Revocation”) by a Board Resolution of Level 3
delivered to the Administrative Agent, provided that Level 3 will
not make any Revocation unless:

 

(a) no Default or Event of
Default shall have occurred and be continuing at the time of and after giving
effect to such Revocation; and

 

(b) all Liens and
Indebtedness of such Unrestricted Subsidiary outstanding immediately following
such Revocation would, if Incurred at such time, have been permitted to be
Incurred at such time for all purposes of this Agreement.

 

All Designations and
Revocations must be evidenced by Board Resolutions of Level 3 delivered to the
Administrative Agent (i) certifying compliance with the foregoing
provisions and (ii) giving the effective date of such Designation or
Revocation.  Upon Designation of a
Restricted Subsidiary as an Unrestricted Subsidiary in compliance with this Section 6.10,
such Restricted Subsidiary shall, by delivery of documentation providing for
such release in form satisfactory to the Administrative Agent, be released from
any Guarantee (in the case of a Guarantor) and its obligations under the
Collateral Agreement (in the case of a Grantor) previously made by such
Subsidiary.

 

SECTION 6.11.  Limitation on Actions with
respect to Existing Intercompany Obligations.  Without the consent of the holders of at
least two-thirds of the outstanding principal amount of the Loans:

 

(a) the
Borrower shall not forgive or waive or fail to enforce any of its rights under
any Offering Proceeds Note, the Loan Proceeds Note, any Financing 

 

93

 

Inc. Notes
Supplemental Indenture, the Omnibus Offering Proceeds Note Subordination
Agreement or any other agreement with Level 3 or any Restricted Subsidiary to
subordinate a payment obligation on any Indebtedness to the prior payment in
full in cash of all obligations with respect to the Loan Proceeds Note, a Loan
Proceeds Note Guarantee, any Offering Proceeds Note or any Offering Proceeds
Note Guarantee, and the Borrower and Level 3 LLC may not amend the Loan
Proceeds Note, a Loan Proceeds Note Guarantee, any Offering Proceeds Note or
any Offering Proceeds Note Guarantee, in a manner adverse to the Lenders; provided,
however, that that in the event of an Event of Default of Level 3 LLC as
described in clause (i) or (j) of Article VII, the principal
then outstanding together with accrued interest thereon on the Loan Proceeds
Note, each Offering Proceeds Note, the Loan Proceeds Note Guarantee and each
Offering Proceeds Note Guarantee shall automatically become due and payable
without presentment, demand, protest or other notice of any kind;

 

(b) in
the event Level 3 LLC (or any successor obligor under the Loan Proceeds Note)
repays all or a portion of the Loan Proceeds Note, the Borrower must prepay the
Loans in a principal amount equal to the principal amount of the Loan Proceeds
Note then repaid in accordance with, and if at such time permitted by, this
Agreement; provided, however, that if at any time the principal
amount of the Loan Proceeds Note is greater than the principal amount of the
Loans that remains outstanding, Level 3 LLC (or any successor obligor under the
Loan Proceeds Note) may repay or forgive or waive an amount of the Loan
Proceeds Note equal to such excess without complying with this paragraph (b);

 

(c) Level
3 shall not, and shall not permit any Restricted Subsidiary to, provide any
Lien on its Property for the benefit of, or any Guarantee (other than a
similarly subordinated Guarantee) or other form of credit enhancement in
respect of, (i) the Parent Intercompany Note or (ii) any other
intercompany note required by clause (vi) of paragraph (b) of
Section 6.01 or clause (iv) of paragraph (b) of Section 6.02
to be subordinated to the prior payment in full in cash of all obligations with
respect to the Loan Proceeds Note or a Loan Proceeds Note Guarantee, or take
any other action with the purpose or effect of making the Parent Intercompany
Note senior to or equal in right of payment with any Offering Proceeds
Note or the Loan Proceeds Note;

 

(d) Level 3
shall not, and shall not permit any Restricted Subsidiary to, provide any Lien
on its Property for the benefit of, or any Guarantee (other than a similarly
subordinated Guarantee) or other form of credit enhancement in respect of, (i) any
Offering Proceeds Note or (ii) any other intercompany note required by
clause (vi) of paragraph (b) of Section 6.01 or clause (iv) of
paragraph (b) of Section 6.02 to be subordinated to the prior payment
in full in cash of all obligations with respect to the Loan Proceeds Note or a
Loan Proceeds Note Guarantee, or take any other action with the purpose or
effect of making any Offering Proceeds Note senior to or equal in right of
payment with the Loan Proceeds Note;

 

94

 

(e) Level
3 and Level 3 LLC shall not amend the terms of the Parent Intercompany Note or
any Offering Proceeds Note in a manner adverse to the Lenders, the
determination of which shall be made by the Board of Directors of Level 3
acting in good faith and shall be evidenced by a Board Resolution of Level 3;

 

(f) Level
3, the Borrower and Level 3 LLC shall not amend any of the Financing Inc. Notes
Supplemental Indentures or the Omnibus Offering Proceeds Note Subordination
Agreement in a manner adverse to the Lenders and Level 3 or any Restricted
Subsidiary and the Borrower shall not amend any other agreement between Level 3
or any Restricted Subsidiary and the Borrower to subordinate a payment
obligation on any Indebtedness of Level 3 or any Restricted Subsidiary to the
prior payment in full in cash of all obligations with respect to the Loan
Proceeds Note, in each case, the determination of which shall be made by the
Board of Directors of Level 3 acting in good faith and shall be evidenced by a
Board Resolution of Level 3;

 

(g) unless
an Event of Default has occurred and is continuing, Level 3 shall neither
cause nor permit the Borrower to demand repayment of any Offering Proceeds Note
prior to the satisfaction of the Guarantee Permit Condition and the Collateral
Permit Condition; and

 

(h) Level
3 and the Borrower shall cause any Indebtedness of Level 3 LLC to Level 3 to be
evidenced by either the Parent Intercompany Note or another duly executed
promissory note that is pledged and delivered to the Collateral Agent within 3
Business Days of the Incurrence of such Indebtedness.

 

SECTION 6.12.  Covenant Suspension.  During any period of time (a “Suspension
Period”) that (i) the ratings assigned to all Tranche A Term Loans and
Tranche B Term Loans by both of the Rating Agencies are Investment Grade
Ratings and (ii) no Default or Event of Default has occurred and is
continuing, Level 3 and the Restricted Subsidiaries will not be subject to the
covenants set forth in Sections 6.01, 6.02, 6.03, 6.04, 6.06(i)(a), 6.07, 6.08
(other than the first two sentences thereof), 6.09, 6.13(a)(3) and (4),
6.13(c)(3) and (4) and clause (b) of the first sentence of Section 6.10
(collectively, the “Suspended Covenants”).  In the event that Level 3 and the Restricted
Subsidiaries are not subject to the Suspended Covenants for any period of time
as a result of the preceding sentence and, on any subsequent date (the “Reversion
Date”), one or both of the Rating Agencies withdraws its ratings or
downgrades the ratings assigned to the Loan below the required Investment Grade
Ratings or a Default or Event of Default occurs and is continuing, then
Level 3 and the Restricted Subsidiaries will thereafter again be subject
to the Suspended Covenants and calculations of the amount available to be made
as Restricted Payments under Section 6.03 will be made as though Section 6.03
had been in effect during the entire period of time from the Measurement
Date.  On the Reversion Date, all
Indebtedness Incurred during the Suspension Period will be classified to have
been Incurred pursuant to paragraph (a) of Section 6.01 or one of the
clauses set forth in paragraph (b) of Section 6.01 or paragraph (a) of
Section 6.02 or one of the clauses set forth in paragraph (b) of
Section 6.02 (in each case to the extent such 

 

95

 

Indebtedness would be permitted to be
Incurred thereunder as of the Reversion Date and after giving effect to Indebtedness
Incurred prior to the Suspension Period and outstanding on the Reversion
Date).  To the extent such Indebtedness
would not be permitted to be Incurred pursuant to paragraph (a) of Section 6.01
or one of the clauses set forth in paragraph (b) of Section 6.01
or paragraph (a) of Section 6.02 or one of the clauses set forth
in paragraph (b) of Section 6.02, such Indebtedness will be
deemed to have been outstanding on the Measurement Date, so that it is
classified as permitted under Section 6.01(b)(v) or Section 6.02(b)(iii).  If the Incurrence of any Indebtedness by a
Restricted Subsidiary during the Suspension Period would have been prohibited
or conditioned upon such Restricted Subsidiary entering into a Guarantee of the
Obligations and a Loan Proceeds Note Guarantee had Section 6.01 and Section 6.02
been in effect at the time of such Incurrence, such Restricted Subsidiary shall
enter into a Guarantee of the Obligations and a Loan Proceeds Note Guarantee
that are senior to or pari passu with such Indebtedness within ten days
after the Reversion Date.  For purposes
of determining compliance with Section 6.07 on the Reversion Date, the Net
Available Proceeds from all Asset Dispositions not applied in accordance with
the covenant will be deemed to be reset to zero.  Notwithstanding the foregoing, neither (a) the
continued existence, after the date of such withdrawal or downgrade, of facts
and circumstances or obligations that were Incurred or otherwise came into
existence during a Suspension Period nor (b) the performance of any such
obligations, shall constitute a breach of any covenant set forth in the
Agreement or cause a Default or Event of Default thereunder; provided, however,
that (1) Level 3 and its Restricted Subsidiaries did not Incur or
otherwise cause such facts and circumstances or obligations to exist in
anticipation of a withdrawal or downgrade below investment grade, (2) Level 3
reasonably believed that such Incurrence or actions would not result in such a
withdrawal or downgrade and (3) if so required each Restricted Subsidiary
shall have entered into a Guarantee of the Obligations and a Loan Proceeds
Note Guarantee within the specified time period.  For purposes of clauses (1) and (2) in
the preceding sentence, anticipation and reasonable belief may be determined by
Level 3 and shall be conclusively evidenced by a board resolution to such
effect adopted in good faith by the Board of Directors of Level 3.  In reaching their determination, the Board of
Directors of Level 3 may, but need not, consult with the Rating Agencies.

 

SECTION 6.13.  Consolidation,
Merger, Conveyance, Transfer or Lease.  (a)  Level 3
May Consolidate, etc., Only on Certain Terms.  Level 3 shall not, in a single
transaction or a series of related transactions, (i) consolidate with or
merge into any other Person or Persons or permit any other Person to
consolidate with or merge into Level 3 or (ii) directly or
indirectly, transfer, sell, lease, convey or otherwise dispose of all or
substantially all its assets to any other Person or Persons unless:

 

(1) in a
transaction in which Level 3 is not the surviving Person or in which
Level 3 transfers, sells, leases, conveys or otherwise disposes of all or
substantially all of its assets to any other Person, the resulting surviving or
transferee Person (the “successor entity”) is organized under the laws of the
United States of America or any State thereof or the District of Columbia and
shall expressly assume all of Level 3’s Obligations under the Loan
Documents in a form satisfactory to the Administrative Agent;

 

96

 

(2) immediately
before and after giving effect to such transaction and treating any
Indebtedness which becomes an obligation of Level 3 (or the successor
entity) or a Restricted Subsidiary as a result of such transaction as having
been Incurred by Level 3 or such Restricted Subsidiary at the time of the
transaction, no Default or Event of Default shall have occurred and be
continuing;

 

(3) immediately
after giving effect to such transaction and treating any Indebtedness which
becomes an obligation of Level 3 (or the successor entity) or a Restricted
Subsidiary as a result of such transaction as having been Incurred by
Level 3 or such Restricted Subsidiary at the time of the transaction,
Level 3 (or the successor entity) could Incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a) of Section 6.01;

 

(4) in the
case of a transfer, sale, lease, conveyance or other disposition of all or
substantially all of the assets of Level 3, such assets shall have been
transferred as an entirety or virtually as an entirety to one Person and such
Person shall have complied with all the provisions of this paragraph; and

 

(5) Level 3
and the Borrower have delivered to the Administrative Agent an Officers’
Certificate and Opinion of Counsel, each in form and substance reasonably
satisfactory to the Administrative Agent, stating that such consolidation,
merger, transfer, sale, lease, conveyance or other disposition and the
assumption by such Person of the Obligations under the Loan Documents, complies
with this Section and that all conditions precedent herein have been
complied with.

 

(b)  Successor
Level 3 Substituted.  Upon any
consolidation of Level 3 with or merger of Level 3 with or into any
other Person or any transfer, sale, lease, conveyance or other disposition of
all or substantially all the assets of Level 3 to any Person or Persons in
accordance with Section 6.13(a), the successor Person formed by such
consolidation or into which Level 3 is merged or to which such transfer,
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, Level 3 under
this Agreement with the same effect as if such successor Person had been named
as Level 3 herein, and the predecessor Level 3 (which term shall for
this purpose mean the Person named as “Level 3” in the first paragraph of
this Agreement or any successor Person which shall have become such in the
manner described in Section 6.13(a)), except in the case of a lease, shall
be released from all its obligations and covenants under this Agreement and the
other Loan Documents and may be dissolved and liquidated.

 

(c)  Borrower May Consolidate,
etc., Only on Certain Terms.  The
Borrower shall not, in a single transaction or a series of related transactions,
(i) consolidate or merge into Level 3 or permit Level 3 to
consolidate with or merge into the Borrower or (ii) except to the extent
permitted under Section 6.03, directly or indirectly, transfer, sell,
lease, convey or otherwise dispose of all or substantially all its assets to
Level 3.  Additionally, the Borrower
shall not, in a single transaction or a series of related transactions, (i) consolidate
with or merge into any other Person or Persons or 

 

97

 

permit any other Person to consolidate with
or merge into the Borrower or (ii) (other than, to the extent permitted
under Section 6.03, to a Restricted Subsidiary that is or becomes a
Guarantor and a Loan Proceeds Note Guarantor or to Level 3 so long as
Level 3 is a Guarantor) directly or indirectly, transfer, sell, lease,
convey or otherwise dispose of all or substantially all its assets to any other
Person or Persons, unless:

 

(1) in a
transaction in which the Borrower is not the surviving Person or in which the
Borrower transfers, sells, leases, conveys or otherwise disposes of all or
substantially all of its assets to any other Person, the successor entity is
organized under the laws of the United States of America or any State thereof
or the District of Columbia and shall expressly assume all of the Borrower’s
Obligations under the Loan and the Loan Documents in a form satisfactory to the
Administrative Agent;

 

(2) immediately
before and after giving effect to such transaction and treating any
Indebtedness which becomes an obligation of the Borrower (or the successor
entity) or a Borrower Restricted Subsidiary as a result of such transaction as
having been Incurred by the Borrower or such Borrower Restricted Subsidiary at
the time of the transaction, no Default or Event of Default shall have occurred
and be continuing;

 

(3) immediately
after giving effect to such transaction, the Consolidated Net Worth of the
Borrower (or the successor entity) is equal to or greater than that of the
Borrower immediately prior to the transaction;

 

(4) immediately
after giving effect to such transaction and treating any Indebtedness which
becomes an obligation of the Borrower (or the successor entity) or a Borrower
Restricted Subsidiary as a result of such transaction as having been Incurred
by the Borrower or such Borrower Restricted Subsidiary at the time of the
transaction, the Borrower (or the successor entity) could Incur at least $1.00
of additional Indebtedness pursuant to paragraph (a) of Section 6.02;

 

(5) in the
case of a transfer, sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Borrower, such assets shall have been
transferred as an entirety or virtually as an entirety to one Person and such
Person shall have complied with all the provisions of this paragraph; and

 

(6) Level 3
and the Borrower have delivered to the Administrative Agent an Officers’
Certificate and an Opinion of Counsel, each in form and substance reasonably
satisfactory to the Administrative Agent, stating that such consolidation,
merger, transfer, sale, lease, conveyance or other disposition and the
assumption by such Person of the Obligations under the Loan Documents complies
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with, and, with respect to such
Officers’ Certificate, setting forth the manner of determination of the
Consolidated Net Worth, in accordance with clause (3) of this
subsection (c), of 

 

98

 

the Borrower
or, if applicable, of the successor entity as required pursuant to the
foregoing.

 

(d)  Successor Borrower
Substituted.  Upon any consolidation
of the Borrower with or merger of the Borrower with or into any other Person or
any transfer, sale, lease, conveyance or other disposition of all or
substantially all the assets of the Borrower to any Person or Persons in
accordance with Section 6.13(c), the successor Person formed by such
consolidation or into which the Borrower is merged or to which such transfer,
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Borrower under
this Agreement and each other Loan Document with the same effect as if such
successor Person had been named as the Borrower herein, and the predecessor
Borrower (which term shall for this purpose mean the Person named as the “Borrower”
in the first paragraph of this Agreement or any successor Person which shall
have become such in the manner described in Section 6.13(c), except in the
case of a lease, shall be released from all its obligations and covenants under
this Agreement and the Tranche A Term Loans and Tranche B Term Loans and may be
dissolved and liquidated.

 

(e)  Guarantor (other
than Level 3) May Consolidate, etc., Only on Certain Terms.  A Guarantor (other than Level 3) shall
not, in a single transaction or a series of related transactions, (i) consolidate
with or merge into any other Person or Persons (other than, with respect to a
Guarantor that is a Borrower Restricted Subsidiary, the Borrower or another
Guarantor that is a Borrower Restricted Subsidiary and with respect to a
Guarantor that is a Sister Restricted Subsidiary, another Guarantor that is a
Sister Restricted Subsidiary or Level 3) or permit any other Person (other
than, with respect to a Guarantor that is a Borrower Restricted Subsidiary,
another Guarantor that is a Borrower Restricted Subsidiary, and with respect to
a Guarantor that is a Sister Restricted Subsidiary, Level 3 or another
Guarantor that is a Sister Restricted Subsidiary) to consolidate with or merge
into such Guarantor or (ii) except to another Guarantor to the extent
permitted under Section 6.03, directly or indirectly, transfer, sell,
lease, convey or otherwise dispose of all or substantially all its assets to
any other Person or Persons (other than, with respect to a Guarantor that is a
Borrower Restricted Subsidiary, the Borrower or another Guarantor that is a Borrower
Restricted Subsidiary, and with respect to a Guarantor that is a Sister
Restricted Subsidiary, another Guarantor that is a Sister Restricted Subsidiary
or Level 3), unless:

 

(1) immediately
before and after giving effect to such transaction and treating any
Indebtedness which becomes an obligation of such Guarantor as a result of such
transaction as having been Incurred by such Guarantor at the time of the
transaction, no Default or Event of Default shall have occurred and be
continuing;

 

(2) either (A) in
a transaction in which such Guarantor is not the surviving Person or in which
such Guarantor transfers, sells, leases, conveys or otherwise disposes of all
or substantially all of its assets to any other Person, the resulting surviving
or transferee Person is organized under the laws of the United States of
America or any State thereof or the District of Columbia and shall expressly 

 

99

 

assume all of such Restricted Subsidiary’s Obligations under the Loan
Documents in a form satisfactory to the Administrative Agent; or (B) such
transaction complies with Section 6.07 (or Level 3 certifies in an
Officers’ Certificate to the Administrative Agent that it will comply with the
requirements of such covenant relating to application of the proceeds of such
transaction); and

 

(3) Level 3
and the Borrower have delivered to the Administrative Agent an Officers’
Certificate and an Opinion of Counsel, each in form and substance reasonably
satisfactory to the Administrative Agent, stating that such consolidation,
merger, transfer, sale, lease, conveyance or other disposition and, if a
supplement to any Loan Document is required in connection with such
transaction, such supplement complies with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.

 

(f)  Successor
Guarantor Substituted.  Upon any
consolidation of a Guarantor with or merger of a Guarantor with or into any
other Person or any transfer, sale, lease, conveyance or other disposition of
all or substantially all the assets of a Guarantor to any Person or Persons in
accordance with subsection (e), the successor Person formed by such
consolidation or into which such Guarantor is merged or to which such transfer,
sale, lease, conveyance or other disposition is made (other than any such
transaction made in accordance with Section 6.13(e)(2)(B)) shall succeed
to, and be substituted for, and may exercise every right and power of, such
Guarantor under the Loan Documents with the same effect as if such successor
Person had been named as a Guarantor herein, and the predecessor Guarantor
(which term shall for this purpose mean the Person named as the “Guarantor” in
the first paragraph of the applicable supplement to this Agreement or any
successor Person which shall have become such in the manner described in
subsection (e)), except in the case of a lease, shall be released from all
its Obligations and covenants under the Loan Documents and may be dissolved and
liquidated.

 

(g)  Loan Proceeds Note
Guarantor May Consolidate, etc., Only on Certain Terms.  A Loan Proceeds Note Guarantor shall not, in
a single transaction or a series of related transactions, (i) consolidate
with or merge into any other Person or Persons (other than, with respect to an
Loan Proceeds Note Guarantor that is an Borrower Restricted Subsidiary, the
Borrower or another Loan Proceeds Note Guarantor that is an Borrower Restricted
Subsidiary, and with respect to an Loan Proceeds Note Guarantor that is a
Sister Restricted Subsidiary, another Loan Proceeds Note Guarantor that is a
Sister Restricted Subsidiary or Level 3) or permit any other Person (other
than, with respect to an Loan Proceeds Note Guarantor that is an Borrower
Restricted Subsidiary, another Loan Proceeds Note Guarantor that is an Borrower
Restricted Subsidiary, and with respect to an Loan Proceeds Note Guarantor that
is a Sister Restricted Subsidiary, Level 3 or another Loan Proceeds Note
Guarantor that is a Sister Restricted Subsidiary) to consolidate with or merge
into such Loan Proceeds Note Guarantor or (ii) except to another Loan
Proceeds Note Guarantor to the extent permitted under Section 6.03,
directly or indirectly, transfer, sell, lease, convey or otherwise dispose of
all or substantially all its assets to any other Person or Persons (other than,
with respect to a 

 

100

 

Loan Proceeds Note Guarantor that is a
Borrower Restricted Subsidiary, the Borrower or another Loan Proceeds Note
Guarantor that is a Borrower Restricted Subsidiary, and with respect to an Loan
Proceeds Note Guarantor that is a Sister Restricted Subsidiary, another Loan
Proceeds Note Guarantor that is a Sister Restricted Subsidiary or
Level 3), unless:

 

(1) immediately
before and after giving effect to such transaction and treating any
Indebtedness which becomes an obligation of such Loan Proceeds Note Guarantor
as a result of such transaction as having been Incurred by such Loan Proceeds
Note Guarantor at the time of the transaction, no Default or Event of Default
shall have occurred and be continuing;

 

(2) either (a) in
a transaction in which such Loan Proceeds Note Guarantor is not the surviving
Person or in which such Loan Proceeds Note Guarantor transfers, sells, leases,
conveys or otherwise disposes of all or substantially all of its assets to any
other Person, the resulting surviving or transferee Person is organized under
the laws of the United States of America or any State thereof or the district
of Columbia and shall expressly assume all of such Loan Proceed Note Guarantor’s
obligations under the Loan Proceeds Note Guarantee and any subordination
agreement between the Borrower and such Loan Proceed Note Guarantor relating to
the Loan Proceeds Note; or (b) such transaction complies with Section 6.07
(or Level 3 certifies in an Officers’ Certificate to the Administrative
Agent that it will comply with the requirements of such covenant relating to
application of the proceeds of such transaction); and

 

(3) Level 3
and the Borrower have delivered to the Administrative Agent an Officers’
Certificate and an Opinion of Counsel, each in form and substance reasonably
satisfactory to the Administrative Agent, stating that such consolidation,
merger, transfer, sale, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, complies with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.

 

ARTICLE VII

 

Events of Default

 

If any of the following events
(“Events of Default”) shall occur:

 

(a) the
Borrower shall fail to pay any principal of any Loan when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;

 

(b) the
Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in clause (a) of this Article)
payable by it under this Agreement or any other Loan Document, when and as the 

 

101

 

same shall become due and payable, and such
failure shall continue unremedied for a period of 30 days;

 

(c) the
Borrower shall fail to pay the Loans when required pursuant to Section 2.05(d);

 

(d) any
representation or warranty made or deemed made by or on behalf of Level 3,
the Borrower or any Restricted Subsidiary in or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect
in any material respect when made or deemed made and shall continue to be
material at the time tested;

 

(e) Level 3,
the Borrower or any Restricted Subsidiary shall fail to observe or perform with
the covenants contained in Sections 6.07 or 6.13(a), (c), (e) or (g);

 

(f) Level 3,
the Borrower or any Restricted Subsidiary shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other than a
covenant, condition or agreement a default in the performance of which is
elsewhere in this Article specifically dealt with) and such failure shall
continue unremedied for 60 days after written notice to the Borrower by
the Administrative Agent or the Required Lenders, which notice shall specify
the default and state that such notice is a “Notice of Default” hereunder;

 

(g) Level 3
or any Restricted Subsidiary shall default under the terms of any instrument
evidencing or securing Material Indebtedness of Level 3 or any Restricted
Subsidiary which default results in the acceleration of the payment of such
indebtedness or constitutes the failure to pay such indebtedness when due
(after expiration of any applicable grace period);

 

(h) a
judgment or judgments shall be rendered against Level 3 or any Restricted
Subsidiary in an aggregate amount in excess of $25,000,000 or its foreign
currency equivalent at the time and shall not be waived, satisfied or
discharged for any period of 45 consecutive days during which a stay of
enforcement shall not be in effect;

 

(i) an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect
of Level 3, the Borrower or any Significant Subsidiary or its debts, or of
a substantial part of its assets, under any 
Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
Level 3, the Borrower or any Significant Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition 

 

102

 

shall continue undismissed for 60 days
or an order or decree approving or ordering any of the foregoing shall be entered;

 

(j) Level 3,
the Borrower or any Significant Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to
the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (i) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for Level 3, the Borrower or
any Significant Subsidiary or for a substantial part of its assets, (iv) file
an answer admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of the
foregoing;

 

(k) Level 3,
the Borrower or any Significant Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;

 

(l) any
Lien purported to be created under this Agreement or any Security Document
shall cease to be, or shall be asserted by any Loan Party not to be, a valid
and perfected Lien on any Collateral (other than immaterial portions of the
Collateral or except as otherwise contemplated by the Security Documents), with
the priority required by this Agreement or the applicable Security Document,
except (i) as provided in Section 9.14 or (ii) as a result of
the Collateral Agent’s failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under this
Agreement or the applicable Security Document; or

 

(m) any
material provision of any Loan Document, after the delivery thereof, ceases to
be in full force and effect (other than in accordance with the terms of such
Loan Document) or Level 3, the Borrower or any Guarantor denies or
disaffirms its obligations under any material provision of a Loan Document.

 

then, and in every such event
(other than an event with respect to the Borrower or Level 3 described in
clause (i) or (j) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take any or
all of the following actions, at the same or different times: declare the
Loans then outstanding to be due and payable in whole (or in part, in which
case any principal not so declared to be due and payable may thereafter be
declared to be due and payable, provided that any partial acceleration
of the Loans must be made ratably between the Classes of Loans), and thereupon
the principal of the Loans so declared to be due and payable, together with
accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower and 

 

103

 

enforce, as Collateral Agent,
all the rights and remedies under the Security Documents; and in case of any
event with respect to Level 3 or the Borrower described in clause (i) or
(j) of this Article, the principal of the Loans then outstanding, together
with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, and the Collateral Agent may, to the extent
permitted by applicable law, exercise all rights and remedies under the
Security Documents.

 

ARTICLE VIII

 

The Agent

 

Each of the Lenders hereby irrevocably
appoints the Agent as its agent and authorizes the Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Agent by the
terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto.

 

In the event the institution
serving as the Agent hereunder shall also be a Lender, it 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 Agent, and such institution and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with Level 3, the Borrower or any Subsidiary or Affiliate
thereof as if it were not the Agent hereunder.

 

The Agent shall not have any duties
or obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the
foregoing, (a) the Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) the Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that the Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in Section 9.02),
and shall not have any duty to take any action or exercise any powers that
would result in the incurrence by it of costs or expenses unless arrangements
satisfactory to it to ensure the prompt payment of all such costs or expenses
shall have been made by the Lenders, and (c) except as expressly set forth
in the Loan Documents, the Agent shall not have any duty to disclose, and shall
not be liable for the failure to disclose, any information relating to
Level 3, the Borrower or any of the Subsidiaries of Level 3 that is
communicated to or obtained by the institution serving as Agent or any of its
Affiliates in any capacity.  The Agent
shall not be liable for any action taken or not taken by it with the consent or
at the request of the Required Lenders (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in Section 9.02)
or in the absence of its own gross negligence or willful misconduct.  The Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is 

 

104

 

given to the
Agent by Level 3, the Borrower or a Lender, and the 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 any Loan
Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness
or genuineness of any Loan Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article IV
or elsewhere in any Loan Document, other than to confirm receipt of items
expressly required to be delivered to the Agent.  As to any matters not expressly provided for
by this Agreement and the other Loan Documents (including enforcement or
collection), the Administrative Agent and the Collateral Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Requisite Lenders, and
such instructions shall be binding upon all Lenders, provided, however,
that the Administrative Agent and the Collateral Agent shall not be required to
take any action that (i) the Administrative Agent or the Collateral Agent
in good faith believes exposes it to personal liability unless it receives an
indemnification satisfactory to it from the Lenders with respect to such action
or (ii) is contrary to this Agreement or applicable law.

 

The 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
believed by it to be genuine and to have been signed or sent by the proper
Person.  The Agent also may rely upon any
statement made to it orally or by telephone and believed by it to be made by
the proper Person, and shall not incur any liability for relying thereon.  The Agent may consult with legal counsel (who
may be counsel for Level 3 or 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.

 

The Agent may perform any and
all its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Agent.  The Agent
and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of each
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 Agent.

 

Subject to the appointment and
acceptance of a successor as provided in this paragraph, the Agent may resign
at any time by notifying the Lenders and Level 3.  Upon any such resignation, the Required
Lenders shall have the right, with, so long as no Default or Event of Default
shall have occurred and be continuing, the consent of Level 3 (which
consent shall not be unreasonably withheld or delayed) to appoint a
successor.  If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor 

 

105

 

Agent which
shall be a Lender or a bank with an office in New York, New York, or an Affiliate
of such Lender or any such bank.  Upon
the acceptance of its appointment as Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder.  The fees payable by Level 3 and the
Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed with such successor.  After the Agent’s resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect
for the benefit of such retiring 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 it was acting as Agent.

 

Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other Lender
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 also acknowledges that it will,
independently and without reliance upon the Agent or any other Lender 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 related
agreement or any document furnished hereunder or thereunder.

 

ARTICLE IX

 

Miscellaneous

 

SECTION 9.01.  Notices.  Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy or Email, as follows:

 

(a) if
to Level 3 or the Borrower, to it at Level 3 Communications, Inc.,
1025 Eldorado Boulevard, Broomfield, Colorado 80021, Attention of Chief
Financial Officer and General Counsel;

 

(b) if
to the Administrative Agent, to it at Deutsche Bank, 60 Wall Street, 39th
Floor, New York, New York 10005, Attention of Adrian Cioinigel (Telephone No. 212-250-1312,
Telecopy No. 212-797-0407, Email Address: adrian.cioinigel@db.com), with a
copy to (i) Deutsche Bank, 60 Wall Street, 39th Floor, New York, New York
10005, Attention of Arvind Vairavan (Telephone No. 212-250-4184, Telecopy No. 212-797-0407,
Email Address: arvind.vairavan@db.com) and (ii) Merrill Lynch Capital
Corporation, Merrill Lynch World Headquarters, 4 World Financial Center, 22nd
Floor, New York,

 

106

 

New York 10080, Attention of
Arminee Bowler (Telephone No. 212-449-2662, Telecopy No. 212-738-1186,
Email Address: arminee_bowler@ml.com);

 

(c) if to any other Lender, to
it at its address (or telecopy number) set forth in its Administrative
Questionnaire.

 

Any party hereto may change
its address or telecopy number for notices and other communications hereunder
by notice to the other parties hereto. 
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt.

 

SECTION 9.02.  Waivers; Amendments;
Addition of Term or Revolving Tranches.  (a)  No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative
Agent and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which
given.  Without limiting the generality
of the foregoing, the making of a Loan shall not be construed as a waiver of
any Default, regardless of whether the Administrative Agent or any Lender may
have had notice or knowledge of such Default at the time.

 

(b)  Except as provided in
paragraph (d) of this Section, none of this Agreement, any other Loan
Document or any provision hereof or thereof may be waived, amended or modified
except, in the case of this Agreement, pursuant to an agreement or agreements
in writing entered into by Level 3, the Borrower and the Required Lenders
or, in the case of any other Loan Document, pursuant to an agreement or
agreements in writing entered into by the Administrative Agent and the Loan
Party or Loan Parties that are parties thereto, in each case with the consent
of the Required Lenders; provided that no such agreement shall (i) increase
the Commitment of or impose additional obligations on any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any
Loan or reduce the rate of interest thereon without the written consent of each
Lender affected thereby, (iii) postpone the scheduled date of payment of
the principal amount of any Loan or any interest thereon, or reduce the amount
of, waive or excuse any such payment, without the written consent of each
Lender affected thereby, (iv) change Section 2.12(b) or (c) in
a manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender (except as provided in paragraph (d) of
this Section), (v) change any of the provisions of this Section or
the definition of “Required Lenders” or any other provision of any Loan
Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender 

 

107

 

of
such Class, as the case may be), except as provided in paragraph (d) of
this Section, (vi) release Level 3 or any other Guarantor from its
Guarantee of the Obligations under the Guarantee Agreement (except as expressly
provided in Sections 6.07, 6.08, 6.10 or 9.14 or in the Guarantee Agreement),
or limit its liability in respect of any such Guarantee, without the written
consent of each Lender, (vii) release all or any substantial part of the
Collateral from the Liens of the Security Documents (except as expressly
provided in Sections 6.07, 6.08, 6.10 or 9.14 or in Collateral Agreement), or
subordinate such Liens, without the written consent of each Lender, (viii) except
to the extent necessary to comply with applicable law,  amend or modify Section 9.04
in a manner that would by the terms of such amendment or waiver, as applicable,
restrict the ability of the Lenders to make assignments, without the written
consent of each Lender or (ix) change any provision of any Loan Document
in a manner that by its terms directly adversely affects the rights of Lenders
holding Commitments or Loans of any Class differently than those holding
Commitments or Loans of any other Class, without the written consent of Lenders
holding a majority in interest of the unused Commitments and outstanding Loans
of the adversely affected Class, provided  further that (i) no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent, without the prior written consent of the
Administrative Agent and (ii) any waiver, amendment or modification of
this Agreement that by its terms directly affects the rights or duties under
this Agreement of one or more Classes of Lenders (but not the other Class or
Classes of Lenders) may be effected by an agreement or agreements in writing
entered into by Level 3, the Borrower and requisite percentage in interest
of the affected Class or Classes of Lenders that would be required to
consent thereto under this Section if such Class or Classes of
Lenders were the only Class or Classes of Lenders hereunder at the time.

 

(c)  If, in connection with any
proposed change, waiver, discharge or termination of any of the provisions of
this Agreement referred to in any of clauses (i) through (vii) of
the first proviso in paragraph (b) of this Section, the consent of the
Required Lenders shall be obtained but the consent of one or more other Lenders
whose consent is sought shall not be obtained, then the Borrower shall have the
right, so long as all non-consenting Lenders whose individual consents are
sought are treated as described in either clauses (A) or (B) below,
to either (A) replace each such non-consenting Lender or Lenders with one
or more replacement Lenders in accordance with the provisions of Section 2.13(b) so
long as, at the time of such replacement, each such replacement Lender consents
to the proposed change, waiver, discharge or termination or (B) repay the
outstanding Loans of each such non-consenting Lender in accordance with Sections
2.05(a) and 2.10; provided that, unless the Loans that are repaid
pursuant to preceding clause (B) are immediately replaced in full at
such time through the addition of new Lenders or the increase of the
outstanding Loans of existing Lenders (who in each case must specifically
consent thereto), then in the case of any action pursuant to preceding clause (B) each
Lender (determined after giving effect to the proposed action) shall
specifically consent thereto.

 

(d)  Notwithstanding anything in
paragraph (b) of this Section to the contrary, this Agreement and the
other Loan Documents may be amended at any time and from time to time to
establish revolving credit commitments or one or more additional classes of
term loans by an agreement in writing entered into by Level 3, the
Borrower, 

 

108

 

the
Administrative Agent, the Collateral Agent and each person (including any
Lender) that shall agree to provide such a revolving credit commitment or make
a term loan of any class so established (but without the consent of any other
Lender), and each such person that shall not already be a Lender shall, at the
time such agreement becomes effective, become a Lender with the same effect as
if it had originally been a Lender under this Agreement with the revolving
credit commitment and/or term loans set forth in such agreement; provided that the aggregate
outstanding principal amount of the revolving credit commitments and term loans
of all classes established pursuant to this paragraph shall at no time exceed
the maximum principal amount of the Indebtedness permitted to be incurred at
such time under Section 6.01(b)(ii) and 6.02(b)(ii)).  Any such agreement shall amend the provisions
of this Agreement and the other Loan Documents to set forth the terms of the
revolving credit commitments or class of term loans established thereby
(including the amount and final maturity thereof (which, in the case of any
class of term loans, shall not be earlier than the Maturity Date), any provisions
relating to amortization or mandatory prepayments or offers to prepay (it being
agreed that not more than 1% of the aggregate principal amount of the term
loans of any class shall amortize during any calendar year prior to the
Maturity Date and that provisions for mandatory prepayments of and offers to
prepay the term loans of any class may require such term loans to be prepaid or
offered the right to be prepaid ratably with the Loans but shall not include
any additional mandatory prepayment rights), the interest to accrue and be
payable thereon and any fees to be payable in respect thereof) and to effect
such other changes (including changes to the provisions of this Section, Section 2.12
and the definition of “Required Lenders” and changes to provide for a note of
Level 3 LLC evidencing the advance of the proceeds of any loans) as
Level 3, the Borrower and the Administrative Agent shall deem necessary or
advisable in connection with the establishment of any such revolving credit
commitments or class of term loans; provided
that no such agreement shall (i) effect any change described in any of
clauses (i), (ii), (iii), (vi) or (vii) of paragraph (b) of this
Section without the consent of each person required to consent to such
change under such clause (it being agreed, however, that the establishment of
any revolving commitment or class of term loans will not, of itself, be deemed
to effect any of the changes described in clauses (vi) or (vii) of
such paragraph (b)), or (ii) amend Article V, VI or VII to establish
any affirmative or negative covenant, Event of Default or remedy that by its
terms benefits any such revolving credit commitments or class of term loans but
not the Loans without the prior written consent of Lenders holding a majority
in interest of the Loans.  Without
limiting the foregoing, a Qualified Receivable Facility permitted by Sections
6.01 and 6.02 may be established pursuant to and in accordance with the
provisions of this paragraph and may have a first priority Lien on Collateral
consisting of Receivables, collections thereof and accounts established solely
for the collection of such Receivables, and the Agent is authorized and
directed to enter into all such amendments to the Loan Documents as it shall
deem necessary or advisable to establish such first priority Lien and to
subordinate to such Lien on customary terms (as determined by the Agent and
Level 3) the Liens on such Receivables securing the other
Obligations.  The loans of any class
established pursuant to this paragraph shall, to the extent provided in the
amendment entered into in connection therewith, be entitled to all the benefits
afforded by this Agreement and the other Loan Documents, and shall benefit
equally and ratably (except as provided in the 

 

109

 

next
preceding sentence) from the Guarantees created by the Guarantee Agreement and
security interests created by the Collateral Agreement and the other Security
Documents.  Level 3 and the Borrower
shall take any actions reasonably required by the Administrative Agent to
ensure and/or demonstrate that the Guarantee and Collateral Requirement
continues to be satisfied after the establishment of any such revolving credit
commitments or class of term loans. 
Notwithstanding the foregoing of this paragraph (d), no Regulated
Grantor Subsidiary shall pledge any assets as collateral in support of any
loans of any class established pursuant to this paragraph, nor shall any
Regulated Guarantor Subsidiary Guarantee any such loans, unless it has obtained
all material (as determined in good faith by the General Counsel of Level 3)
authorizations and consents of Federal and State Governmental Authorities
required in order for such loans and all other loans outstanding hereunder to be
secured by such assets and guaranteed by such Regulated Guarantor Subsidiary.

 

(e)  For each borrowing under an
Additional Tranche, the Borrower shall use the net proceeds of each such
issuance and additional funds as necessary to lend to Level 3 LLC an amount
equal to the principal amount of the Additional Tranche so issued, and the
principal amount of the Loan Proceeds Note shall be increased by such amount.

 

SECTION 9.03.  Expenses; Indemnity; Damage
Waiver.  (a)  Level 3 and the
Borrower shall pay, on a joint and several basis, (i) all reasonable
out-of-pocket expenses incurred by the Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Agent, in
connection with all ministerial activities in the administration of the Loan
Documents and any amendments, modifications or waivers of the provisions
thereof and (ii) all reasonable out-of-pocket expenses incurred by the
Agent and its Affiliates and each Lender in connection with the enforcement of
the Loan Documents, including rights under this Section, or in connection with
the Loans, but Level 3 and the Borrower shall only be liable for the fees
and expenses of counsel for the Agent and one other counsel for all such other
Persons (as well as separate local and regulatory counsel).  The Borrower also shall pay all Lien search,
filing, recording and similar fees incurred by the Collateral Agent in
connection with the creation and perfection of the security interests contemplated
by the Loan Documents (other than the filing fees in
connection with any local fixture filings and the expenses in connection
with obtaining real estate descriptions for fixture filings).

 

(b)  Level 3 and the
Borrower shall indemnify, on a joint and several basis, the Agent, each Related
Party of the Agent (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Loan Document or any other agreement or instrument
contemplated hereby or thereby, the performance by the parties to the Loan
Documents of their respective obligations thereunder or the consummation of the
Transactions or any other transactions contemplated hereby or thereby, or the
Collateral, (ii) any Loan or the use of the proceeds thereof, (iii) any
actual or alleged presence or release of Hazardous 

 

110

 

Materials
on or from any property owned or operated by Level 3, the Borrower or any
of the Subsidiaries of Level 3, or any Environmental Liability related in
any way to Level 3, the Borrower or any of the Subsidiaries of
Level 3, or (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 and regardless of whether any Indemnitee is
a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses 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.  It is agreed that the expenses for which
Level 3 and the Borrower agree to indemnify the Agent under this paragraph
shall not include expenses associated with (i) the arrangement
and syndication of the Loans, (ii) the preparation, execution and
delivery of the Loan Documents, (iii) the enforcement of the Loan
Documents or (iv) the filing fees in connection with any local fixture
filings and the expenses in connection with obtaining real estate
descriptions for fixture filings;  provided, that
nothing in this sentence shall have the effect of reducing any rights of the
Agent or its Affiliates pursuant to paragraph (a) of this Section or
of reducing the Borrower’s responsibility for expenses related to claims,
litigation, investigations or proceedings referred to in clause (iv) of
the immediately preceding sentence.

 

(c)  To the extent that
Level 3 and the Borrower fail to pay any amount required to be paid by
them to the Agent or any Related Party of the Agent under paragraph (a) or
(b) of this Section, each Lender severally agrees to pay to the Agent such
Lender’s pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought), based on the amount of
its Commitment or outstanding Loans or, if no Loans shall be outstanding, on
the amount of its Loans on the most recent date on which Loans were
outstanding, of such unpaid amount; provided that (i) the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the Agent in
its capacity as such and (ii) such indemnity shall not, as to the Agent or
any Related Party, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of the Agent or such Related Party, as
the case may be.

 

(d)  To the extent permitted by
applicable law, neither Level 3 nor the Borrower shall assert, and each
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 or any agreement or instrument contemplated hereby, the Transactions,
any Loan or the use of the proceeds thereof.

 

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

 

SECTION 9.04.  Successors and Assigns.  (a)  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto, the 

 

111

 

Indemnitees
and their respective successors and assigns permitted hereby, except that (i) the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, Indemnitees, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the Related Parties of the
Agent) any legal or equitable right, remedy or claim under or by reason of this
Agreement.

 

(b)  Any Lender may assign to one
or more assignees all or a portion of its rights under this Agreement
(including all or a portion of the Loans at the time owing to it) to an
Eligible Transferee; provided, that (i) except in the case of an
assignment to a Lender, the amount 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) shall be an integral multiple of $1,000,000 (or the entire remaining
amount of the assigning Lender’s Loans, if less than $1,000,000) unless the
Administrative Agent shall otherwise consent, provided that (A) in
the event of concurrent assignments to two or more assignees that are
Affiliates of one another, or to two or more Approved Funds managed by the same
investment advisor or by affiliated investment advisors, all such concurrent
assignments shall be aggregated in determining compliance with this subsection
and (B) in the event of concurrent assignments to or by two or more
assignors that are Affiliates of one another, or to or by two or more Approved
Funds managed by the same investment advisor or by affiliated investment
advisors, all such concurrent assignments shall be aggregated in determining
compliance with this subsection; (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; (iii) 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
(except that in the event of (A) concurrent assignments to two or more
assignees that are Affiliates of one another, or to two or more Approved Funds
managed by the same investment advisor or by affiliated investment advisors or (B) concurrent
assignments by two or more assignees that are Affiliates of one another, or by
two or more Approved Funds managed by the same investment advisor or by
affiliated investment advisors, only one such fee shall be payable); and (iv) the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire.

 

(c)  Subject to acceptance and
recording thereof pursuant to paragraph (d) of this Section, from and
after the effective date specified in each Assignment and Assumption the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of
a Lender of the applicable Class 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 

 

112

 

under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.09, 2.10, 2.11 and
9.03).  Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 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 (f) of this Section. 
Each assignment hereunder shall be deemed to be an assignment of the
related rights under the Security Documents.

 

(d)  The Administrative Agent
shall maintain at one of its offices 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 Commitment of, and principal amount of the Loans owing
to, each Lender, and the applicable Class thereof, 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.  Upon its receipt of a duly
completed Assignment and Assumption executed by an assigning Lender and an
assignee, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder) and the processing and
recordation fee referred to in paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. 
No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.

 

(e)  By executing and delivering
an Assignment and Assumption, the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and the
other parties hereto as follows: (i) such assigning Lender warrants that
it is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim and that its Commitment and the outstanding
balances of its Loans, in each case without giving effect to assignments
thereof that have not become effective, are as set forth in such Assignment and
Assumption; (ii) except as set forth in clause (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto, or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of any of the foregoing, or the financial condition of the Loan Parties
or the performance or observance by the Loan Parties of any of their
obligations under this Agreement or under any other Loan Document or any other
instrument or document furnished pursuant hereto or thereto; (iii) each of
the assignee and the assignor represents and warrants that it is legally
authorized to enter into such Assignment and Assumption; (iv) such
assignee confirms that it has received a copy of this Agreement, together with
copies of any amendments or consents entered into prior to the date of such
Assignment and Assumption and copies of the most recent financial statements
delivered pursuant to Section 5.01 and such other documents and
information as it has deemed appropriate to 

 

113

 

make
its own credit analysis and decision to enter into such Assignment and
Assumption; (v) such assignee will independently and without reliance upon
the Agents, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (vi) such assignee appoints and authorizes the Agents to take
such action as agents on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to them by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance
with their terms all the obligations that by the terms of this Agreement are
required to be performed by it as a Lender.

 

(f)  (i) Any Lender may,
without the consent of the Borrower, or the Administrative Agent, sell
participations to one or more other Persons (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 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 that
affects such Participant and that, under Section 9.02(b), would require
the consent of each affected Lender. 
Subject to paragraph (f)(ii) of this Section, the Borrower agrees
that each Participant shall be entitled to the benefits of Sections 2.09, 2.10
and 2.11 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 9.08 as
though it were a Lender, provided such Participant agrees to be subject to Section 2.12(c) as
though it were a Lender.

 

(ii) A Participant shall not be
entitled to receive any greater payment under Section 2.09, 2.10 or 2.11
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, which
consent shall specifically refer to this exception.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.11
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.11(e) as
though it were a Lender.

 

(g)  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 any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest;

 

114

 

provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

 

SECTION 9.05.  Survival.  All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitments
have not expired or terminated.  The
provisions of Sections 2.09, 2.10, 2.11 and 9.03 and Article VIII shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans or the
termination of this Agreement or any provision hereof.

 

SECTION 9.06.  Counterparts; Integration;
Effectiveness.  This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.  Delivery of an executed signature page to
this Agreement by facsimile or electronic transmission shall be effective as
delivery of a manually signed counterpart of this Agreement.  This Agreement, the other Loan Documents and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.  This Agreement shall become effective as
provided in Section 4.01.

 

SECTION 9.07.  Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing and the Loans shall have become due and payable pursuant to Article VII,
each Lender and each of its Affiliates is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other obligations at any time owing by such Lender or
Affiliate to or for the credit or the account of the Borrower against any of
and all the obligations of the Borrower now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or 

 

115

 

not
such Lender shall have made any demand under this Agreement and although such
obligations may be unmatured.  The rights
of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.

 

SECTION 9.09.  Governing Law; Jurisdiction;
Consent to Service of Process.  (a)  This Agreement shall be construed
in accordance with and governed by the law of the State of New York.

 

(b)  Each of Level 3 and the
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of
New York sitting in New York County and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to any Loan Document, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by 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 any other Loan Document shall affect any right that the
Administrative Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Document against
Level 3, the Borrower or its properties in the courts of any jurisdiction.

 

(c) 
Each of Level 3
and the Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, 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 law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(d) 
Each party to this
Agreement irrevocably consents to service of process in the manner provided for
notices in Section 9.01.  Nothing in
this Agreement or any other Loan Document will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.

 

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY 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, ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT 

 

116

 

SUCH
OTHER PARTY 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 BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11.  Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

SECTION 9.12.  Confidentiality.  The Administrative Agent and each Lender
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 any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d) to
any other party to this Agreement, (e) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to any pledgee referred to in Section 9.04(g) or
to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, (g) with
the consent of the Borrower, (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section, (ii) becomes
available to the Administrative Agent or any Lender on a nonconfidential basis
from a source other than Level 3 or the Borrower, (i) to any direct
or indirect contractual counterparty in swap agreements or such contractual
counterparty’s professional advisor (so long as such contractual counterparty
or professional advisor to such contractual counterparty agrees to be bound by
the provisions of this Section or (j) to the National Association of
Insurance Commissioners or any similar organization or any nationally
recognized rating agency that requires access to information about a Lender’s
investment portfolio in connection with ratings issued with respect to such
Lender.  For the purposes of this
Section, “Information” means all information received from Level 3
or the Borrower relating to Level 3 or the Borrower or its business (including
information obtained through the exercise of a Lender’s rights under
Sections 5.01) other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by Level 3 or the Borrower. 
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 9.13.  Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with 

 

117

 

all
fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.

 

SECTION 9.14.  Release of Subsidiary Loan
Parties and Collateral.  (a)   Notwithstanding any contrary provision herein
or in any other Loan Document, if Level 3 shall request the release under
any Security Document of (i) any of its Subsidiaries (other than the
Borrower or Level 3 LLC) or any Collateral to be sold or otherwise
disposed of (including through the sale or disposition of any Subsidiary (other
than the Borrower or Level 3 LLC) owning any such Subsidiary or
Collateral) to a Person other than Level 3 or a Subsidiary of Level 3
in a transaction permitted under the terms of this Agreement (including to the
extent permitted by Section 6.07, 6.08 or 6.10), (ii) any
Receivables, collections thereof and accounts established solely for the
collection of such Receivables to secure the Incurrence of Indebtedness
pursuant to a Qualified Receivable Facility as permitted by Section 6.01(b)(ii) or
6.02(b)(ii) or (iii) any Property that is to become subject to any
Lien permitted to be Incurred under Section 6.05(ii)(3) or (4), and
shall deliver to the Collateral Agent a certificate to the effect that such
sale or other disposition and the application of the proceeds thereof will
comply with the terms of this Agreement and that no Event of Default shall have
occurred and be continuing, the Collateral Agent, if satisfied that the
applicable certificate is correct, and if satisfied with any arrangements for
the receipt and deposit of proceeds of such transaction to the extent required
under Section 6.07(b), shall, unless an Event of Default has occurred and
is continuing, execute and deliver all such instruments, releases, financing
statements or other agreements, and take all such further actions, as shall be
necessary to effectuate the release of such Subsidiary or such Collateral substantially
simultaneously with or at any time after the completion of such sale or other
disposition; provided that if the Collateral to be sold or otherwise
disposed of is sold or otherwise disposed of by a Grantor in a transaction
permitted by the Credit Agreement to a Person other than Level 3 or a
Subsidiary of Level 3, then such Collateral shall be automatically
released from any Lien created by this Agreement or any other Loan Document
upon the effectiveness of such sale or disposition.  Any such release shall be without recourse
to, or representation or warranty by, the Collateral Agent and shall not
require the consent of any Lender.  The
Collateral Agent shall execute and deliver all such releases, termination
statements or other instruments, and take all such further actions, as shall be
necessary to effectuate or confirm any release of Collateral required by this
paragraph.

 

(b)  Without limiting the
provisions of Section 9.03, Level 3 and the Borrower shall reimburse the
Collateral Agent for all reasonable out-of-pocket costs and 

 

118

 

expenses,
including the reasonable fees, charges and disbursements of counsel, incurred
by it in connection with any action contemplated by this Section.

 

(c) 
No such termination
or cessation shall release, reduce or otherwise adversely affect the
obligations of any other Loan Party under this Agreement or any other Loan
Document, all of which obligations continue to remain in full force and effect.

 

SECTION 9.15.  Senior Debt Status.  In the event that Level 3 or any
Subsidiary of Level 3 shall at any time issue or have outstanding any
Indebtedness that by its terms is subordinated to any other Indebtedness of
Level 3 or such Subsidiary, Level 3 shall take or cause such
Subsidiary to take all such actions as shall be necessary to cause the
Obligations to constitute senior indebtedness (however denominated) in respect
of such subordinated Indebtedness and to enable the Lenders to have and
exercise any payment blockage or other remedies available or potentially
available to holders of senior indebtedness under the terms of such
subordinated Indebtedness.  Without
limiting the foregoing, the Obligations are hereby designated as “senior
indebtedness” and, if relevant, as “designated senior indebtedness” in respect
of all such subordinated Indebtedness and are further given all such other
designations as shall be required under the terms of any such subordinated
Indebtedness in order that the Lenders may have and exercise any payment
blockage or other remedies available or potentially available to holders of
senior indebtedness under the terms of such subordinated indebtedness.

 

SECTION 9.16.  No Fiduciary Relationship.  Level 3 and the Borrower, on behalf of
themselves and the Subsidiaries, agree that in connection with all aspects of
the transactions contemplated hereby and any communications in connection
therewith, Level 3, the Borrower, the Subsidiaries and their Affiliates, on the
one hand, and the Agent and the Lenders and their Affiliates, on the other
hand, will have a business relationship that does not create, by implication or
otherwise, any fiduciary duty on the part of the Agent, the Lenders, or their
Affiliates, and no such duty will be deemed to have arisen in connection with
any such transactions or communications.

 

119

 

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

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