Document:

Indemnity, Subrogation and Contribution Agreement, dated December 1, 2004

 Exhibit 10.4 
  
 EXECUTION COPY 
  

 
 INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT 
  
 dated as of 
  
 December 1, 2004 
  
 among 
  
 LEVEL 3 COMMUNICATIONS, INC., 
  
 LEVEL 3 FINANCING, INC., 
  
 the
Subsidiaries of LEVEL 3 COMMUNICATIONS, INC. identified herein, 
  
 and 
  
 MERRILL LYNCH CAPITAL CORPORATION, 
 as Collateral Agent 
  

  

  
 TABLE OF CONTENTS

  

			
	 	  	Page

	ARTICLE I	  	 
		
	Definitions	  	 
		
	 SECTION 1.01. Credit Agreement
	  	2
		
	 SECTION 1.02. Other Defined Terms
	  	2
		
	ARTICLE II	  	 
		
	Indemnity, Subrogation and Subordination	  	 
		
	 SECTION 2.01. Indemnity and Subrogation
	  	4
		
	 SECTION 2.02. Contribution and Subrogation
	  	4
		
	 SECTION 2.03. Subordination
	  	4
		
	ARTICLE III	  	 
		
	Miscellaneous	  	 
		
	 SECTION 3.01. Notices
	  	5
		
	 SECTION 3.02. Survival of Agreement
	  	5
		
	 SECTION 3.03. Severability
	  	5
		
	 SECTION 3.04. Applicable Law
	  	5
		
	 SECTION 3.05. Waivers; Amendment
	  	5
		
	 SECTION 3.06. Counterparts
	  	6
		
	 SECTION 3.07. Termination
	  	6
		
	 SECTION 3.08. Additional Grantors
	  	6

  
  
 SCHEDULE I — Subsidiary Guarantors 
  
  
 EXHIBIT A – Form of Supplement 
  

  
 INDEMNITY, SUBROGATION AND
CONTRIBUTION AGREEMENT dated as of December 1, 2004, among LEVEL 3 FINANCING, INC., a Delaware corporation (the “Borrower”), LEVEL 3 COMMUNICATIONS, INC., a Delaware corporation (“Level 3”), the Subsidiaries of
Level 3 identified herein and MERRILL LYNCH CAPITAL CORPORATION (“MLCC”), as administrative agent and collateral agent (in such capacity, the “Agent”). 
  
 PRELIMINARY STATEMENT 
  
 Reference is made to the Credit Agreement dated as of December 1, 2004 (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among the Borrower, Level 3, the lenders from time to time party thereto and the Agent. The Lenders have agreed to extend credit to the Borrower pursuant to, and upon the terms and conditions specified in, the
Credit Agreement. The Guarantors have guaranteed and granted security interests in certain of their assets to secure the Loans and other Obligations of the Borrower under the Credit Agreement pursuant to the Guarantee Agreement and the Collateral
Agreement, respectively. The obligations of the Lenders to extend credit to the Borrower under the Credit Agreement are conditioned upon, among other things, the execution and delivery of this Agreement by Level 3, the Borrower and the Guarantors.
Level 3 and the other Guarantors are affiliates of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce
the Lenders to extend such credit. 
  
 Accordingly, the parties
hereto agree as follows: 
  
 ARTICLE I 
  
 Definitions 
  
 SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this
Agreement (including the preamble hereto) and not otherwise defined herein have the meanings set forth in the Credit Agreement. 
  
 (b) The rules of construction specified in Section 1.02 of the Credit Agreement also apply to this Agreement. 
  
 Other Defined Terms. As used in this Agreement, the following terms
have the meanings specified below: 
  
 “Claiming
Guarantor” has the meaning assigned to such term in Section 2.02. 
  

 2 

 “Contributing Guarantor” has the meaning assigned to such term in Section 2.02.

  
 “Credit Agreement” has the meaning assigned
to such term in the preliminary statement of this Agreement. 
  
 “Guarantee Agreement” means the Guarantee Agreement dated as of December 1, 2004 among the Guarantors listed therein and the Collateral Agent. 
  
 “Guarantors” means Level 3 and the Subsidiary Guarantors. 
  
 “Level 3” has the meaning assigned to such term in the
preamble of this Agreement. 
  
 “MLCC” has the
meaning assigned to such term in the preamble of this Agreement. 
  
 “Obligations” means (a) the due and punctual payment 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 any Loans pursuant to an Additional Tranche), 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 to any of the Secured Parties 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 under or pursuant to the Credit Agreement and each of the other Loan Documents, and (c) 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. 
  
 “Secured Parties” means (a) the Lenders, (b) the Administrative Agent, (c) the Collateral Agent, (d) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (e) the
successors and assigns of each of the foregoing. 
  
 “Subsidiary Guarantors” means (a) the Subsidiaries identified on Schedule I1 and (b) each
other Subsidiary (other than the Borrower) that becomes a party to this Agreement as a Subsidiary Guarantor. 

	1	The listed Subsidiaries will not include the Borrower. 

  

 3 

  
 ARTICLE II 
  
 Indemnity, Subrogation and Subordination 
  
 SECTION 2.01. Indemnity and Subrogation. In addition to all such
rights of indemnity and subrogation as the Subsidiary Guarantors may have under applicable law (but subject to Section 3.03), Level 3 and the Borrower agree, jointly and severally, that (a) in the event a payment shall be made by any Subsidiary
Guarantor under the Guarantee Agreement, Level 3 and the Borrower shall indemnify such Subsidiary Guarantor for the full amount of such payment and such Subsidiary Guarantor shall be subrogated to the rights of the person to whom such payment shall
have been made to the extent of such payment and (b) in the event any assets of any Subsidiary Guarantor shall be sold pursuant to the Collateral Agreement or any other Security Document to satisfy in whole or in part a claim of any Secured Party,
Level 3 and the Borrower shall indemnify such Subsidiary Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold. 
  
 SECTION 2.02. Contribution and Subrogation. Each Subsidiary Guarantor (a “Contributing Guarantor”)
agrees (subject to Section 3.03) that, in the event a payment shall be made by any other Subsidiary Guarantor under the Guarantee Agreement in respect of any Obligation or assets of any other Subsidiary Guarantor shall be sold pursuant to the
Collateral Agreement or any other Security Document to satisfy any Obligation owed to any Secured Party and such other Subsidiary Guarantor (the “Claiming Guarantor”) shall not have been fully indemnified by Level 3 and the Borrower
as provided in Section 1.01, the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such assets, as the case may be, in each
case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Guarantor on the date hereof and the denominator shall be the aggregate net worth of all the Subsidiary Guarantors on the date hereof (or, in the case of
a Contributing Guarantor or any other Subsidiary Guarantor becoming a party hereto pursuant to Section 3.08, the date of the Supplement hereto executed and delivered by such Contributing Guarantor or other Subsidiary Guarantor). Any Contributing
Guarantor making any payment to a Claiming Guarantor pursuant to this Section 2.02 shall be subrogated to the rights of such Claiming Guarantor under Section 2.01 to the extent of such payment. 
  
 SECTION 2.03. Subordination. (a) Notwithstanding any provision of this
Agreement to the contrary, all rights of the Subsidiary Guarantors under Sections 2.01 and 2.02 and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the indefeasible payment
in full in cash of the Obligations. No failure on the part of Level 3, the Borrower or any Subsidiary Guarantor to make the payments required by Sections 2.01 and 2.02 (or any other payments required under applicable law or otherwise) shall in any
respect limit the obligations and liabilities of any Subsidiary Guarantor with respect to its obligations hereunder, and each Subsidiary Guarantor shall remain liable for the full amount of the obligations of such Subsidiary Guarantor hereunder.

  

 4 

 (b) Level 3, the Borrower and each Subsidiary Guarantor hereby agrees that all Indebtedness and other
monetary obligations owed by it to the Borrower or any other Subsidiary shall be fully subordinated to the indefeasible payment in full in cash of the Obligations. 
  
 ARTICLE III 
  
 Miscellaneous 
  
 SECTION 3.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Subsidiary Guarantor shall be given to it in care of the Borrower as provided in Section 9.01 of the Credit Agreement. 
  
 SECTION 3.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have
been relied upon by the Agent, the other Secured Parties and each Guarantor 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 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 under the Credit Agreement, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under any Loan Document is outstanding. 
  
 SECTION 3.03. Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. 
  
 SECTION 3.04. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

  
 SECTION 3.05. Waivers; Amendment. (a) No failure or
delay by any Person in exercising any right or power hereunder 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 

  

 5 

 
exercise thereof or the exercise of any other right or power. No waiver of any provision of this Agreement or consent to any departure 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. 
  
 (b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into by Level 3, the Borrower, the Agent and the Subsidiary Guarantors with respect to which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.02 of the Credit Agreement. 
  
 SECTION 3.06. 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, and shall become effective with respect to any party hereto when a counterpart bearing the signature of such party shall have been delivered to the Collateral Agent. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement. 
  
 SECTION 3.07. Termination. (a) This Agreement shall terminate when all the Obligations (other than wholly contingent indemnification obligations)
then due and owing have been indefeasibly paid in full. This Agreement and the obligations hereunder shall terminate as to any particular Guarantor under the circumstances, at the times and in the manner set forth in Section 6.07, 6.08, 6.10 or 9.14
of the Credit Agreement, as applicable. 
  
 SECTION 3.08.
Additional Guarantors. Upon the execution and delivery by the Agent and a Subsidiary of a supplement in the form of Exhibit A hereto, such Subsidiary shall become a Subsidiary Guarantor hereunder with the same force and effect as if
originally named as a Subsidiary Guarantor herein. The execution and delivery of any such instrument shall not require the consent of any other Subsidiary Guarantor hereunder. The rights and obligations of each Subsidiary Guarantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Subsidiary Guarantor as a party to this Agreement. 
  
 SECTION 3.09. Conflicts. In the event that there is a conflict between this Agreement and the Credit Agreement, the Credit Agreement shall govern.

  

 6 

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

							
	 LEVEL 3 COMMUNICATIONS, INC.,
 SOFTWARE SPECTRUM, INC.,
 ELDORADO MARKETING, INC.,
 LEVEL 3 INTERNATIONAL, INC.,
 LEVEL 3 ENHANCED SERVICES, LLC,
 BTE EQUIPMENT, LLC, and
 (i)STRUCTURE LLC,

			
	 	 	by	 	/s/ Neil J. Eckstein
	 	 	 	 	 Name:
	 	 Neil J. Eckstein

	 	 	 	 	 Title:
	 	 Senior Vice President and
 Assistant General Counsel

	
	MERRILL LYNCH CAPITAL CORPORATION, as Agent,
			
	 	 	by	 	/s/ Cecile Baker
	 	 	 	 	 Name:
	 	 Cecile Baker

	 	 	 	 	 Title:
	 	 Vice PresidentOffering Proceeds Note Subordination Agreement, dated December 1, 2004

 Exhibit 10.5 
  
 OFFERING PROCEEDS NOTE SUBORDINATION AGREEMENT dated as of December 1, 2004 among LEVEL 3 COMMUNICATIONS, INC. (“Level
3”), LEVEL 3 FINANCING, INC. (the “Borrower”), LEVEL 3 COMMUNICATIONS, LLC (“Level 3 LLC”), each Restricted Subsidiary (as defined in the Credit Agreement described below) that becomes party hereto as
provided in Section 4.12 hereof (each such Subsidiary and Level 3 LLC individually, a “Subordinated Borrower”, and collectively, the “Subordinated Borrowers”), the BORROWER in its capacity as obligee of the Offering
Proceeds Note (as defined below), and each Subsidiary that becomes party hereto as provided in Section 4.13 hereof (each such Subsidiary, Level 3 and the BORROWER in its capacity as obligee of the Offering Proceeds Note individually, a
“Subordinated Lender”, and collectively, the “Subordinated Lenders”). 
  
 Reference is made to (a) the Credit Agreement dated as of December 1, 2004 (the “Credit Agreement”), among the Borrower, Level 3 the
Lenders party thereto and Merrill Lynch Capital Corporation, as Administrative Agent and Collateral Agent (in such capacity, the “Administrative Agent”), (b) 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, as it may be amended from time to time pursuant to Sections 301 and 1020 of the Indenture dated as of October 1, 2003, among Level 3, the Borrower and The Bank of New
York, as trustee (the “Offering Proceeds Note”), (c) the intercompany demand note dated the date hereof, in an initial principal amount equal to $730,000,000, issued by Level 3 LLC to the Borrower, as it may be amended from time to
time pursuant to Sections 9.02 and 6.11 of the Credit Agreement (such note, together with any additional loan proceeds note issued pursuant to Section 9.02 of the Credit Agreement the “Loan Proceeds Note”) and (d) the Subordination
Agreement, dated as of October 1, 2003, among the Borrower, Level 3 LLC and Level 3 (the “Existing Subordination Agreement”). Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in
the Credit Agreement. 
  
 Pursuant to Section 4.14 of the Existing
Subordination Agreement, the Borrower, Level 3 LLC, any other Subordinated Borrower and Level 3 may enter into an agreement which subordinates in any bankruptcy, liquidation or winding up proceeding the obligations of a Subordinated Borrower under
the Offering Proceeds Note and any guarantee thereof to such Subordinated Borrower’s obligations under a Qualified Credit Facility. 
  
 The Lenders have agreed to provide to the Borrower, upon the terms set forth in the Credit Agreement, a secured term loan (the “Term
Loan” and, together with any additional loan provided pursuant to Section 9.02 of the Credit Agreement, the “Loans”) to be guaranteed on a secured unsubordinated basis by Level 3. The obligation of the Lenders to provide
such Term Loan is conditioned on, among other things, the execution and delivery by Level 3, the Borrower and Level 3 LLC of a subordination agreement in the form hereof. In order to induce the Lenders to provide the Term Loan, the Borrower has
agreed that, pursuant 

 to the Collateral Agreement, it shall pledge all its rights, title and interest in, to and under the Loan Proceeds Note
to the Collateral Agent. Additionally, upon the incurrence of certain intercompany indebtedness (including, without limitation, any guarantee of the Offering Proceeds Note), the Credit Agreement requires Restricted Subsidiaries of Level 3 (other
than the Borrower) to guarantee the Loan Proceeds Note (each such guarantee, a “Loan Proceeds Note Guarantee”, and each such Restricted Subsidiary that provides such a guarantee, a “Loan Proceeds Note Guarantor”)
and to subordinate, in any bankruptcy, liquidation or winding up proceeding, their obligations with respect to such newly incurred indebtedness to their obligations with respect to their Loan Proceeds Note Guarantee. Loan Proceeds Note Guarantors
required to provide subordination with respect to intercompany indebtedness and the creditors on such indebtedness are required to become parties to this Subordination Agreement, if they are not yet parties. In order to induce the Lenders to provide
the Term Loan, Level 3, the Borrower and Level 3 LLC are willing to execute and deliver this Agreement. Accordingly, Level 3, the Borrower (in its capacity as a Subordinated Lender as obligee of the Offering Proceeds Note), and Level 3 LLC, as a
Subordinated Borrower, hereby agree as follows: 
  
 ARTICLE I

 Subordination 
  
 SECTION 1.1. Subordination. Each Subordinated Lender hereby agrees that all obligations in respect of any Indebtedness (including, without
limitation, the Offering Proceeds Note and any guarantee of the Offering Proceeds Note) owed to such Subordinated Lender by any Subordinated Borrower, including the payment of principal, premium (if any), interest, Guarantees or all other amounts
payable thereunder (including any payment by reason of subordination of any Indebtedness owed to such Subordinated Lender to any Indebtedness subordinated hereby) (the “Subordinated Obligations”), are subordinate and junior in right
of payment, to the extent and in the manner provided in this Article I, to the prior payment in full in cash of all obligations of such Subordinated Borrower in respect of the Loan Proceeds Note, including the payment of principal, premium (if any),
interest (including interest arising after the commencement of a bankruptcy or other proceeding, whether or not such a claim is permitted in such proceeding), Loan Proceeds Note Guarantees thereof or all other amounts payable thereunder (the
“Senior Obligations”). 
  
 SECTION 1.2.
Subordination in the Event of Dissolution or Insolvency of any Subordinated Borrower. Upon any distribution of the assets of any Subordinated Borrower in connection with its dissolution or insolvency or upon any dissolution, winding up,
liquidation or reorganization of any Subordinated Borrower, whether in bankruptcy, insolvency, reorganization, arrangement or receivership or similar proceedings, or upon any assignment for the benefit of creditors or any other marshaling of the
assets and liabilities of any Subordinated Borrower: 
  
 (a) the Borrower shall first be entitled to receive payment in full in cash of the Senior Obligations of such Subordinated Borrower in accordance with the terms of such Senior Obligations before any Subordinated Lender shall be entitled to
receive any 

 payment on account of the Subordinated Obligations (including any payment by reason of subordination of any Indebtedness
to any Subordinated Obligation) owed by such Subordinated Borrower to such Subordinated Lender, whether as principal, premium (if any), interest, pursuant to a Loan Proceeds Note Guarantee or otherwise; and 
  
 (b) any payment by, or distribution of the assets of, such
Subordinated Borrower of any kind or character (including any payment by reason of subordination of any Indebtedness to any Subordinated Obligation), whether in cash, property or securities, to which any Subordinated Lender would be entitled except
for the provisions of this Agreement shall be paid or delivered by the Person making such payment or distribution (whether a trustee in bankruptcy, a receiver, custodian or liquidating trustee or otherwise) directly to the Borrower to the extent
necessary to make payment in full in cash of all Senior Obligations remaining unpaid, after giving effect to any concurrent payment or distribution to the Borrower in respect of the Senior Obligations. 
  
 In the event of any proceeding involving any Subordinated Borrower under any
bankruptcy, insolvency, reorganization, receivership or similar law, each Subordinated Lender agrees, until the indefeasible payment in full of all monetary Senior Obligations, not to ask, demand, sue for or take or receive from any Subordinated
Borrower in cash, securities or other property or by setoff, purchase or redemption (including, without limitation, from or by way of collateral), payment of all or any part of the Subordinated Obligations owed to such Subordinated Lender (other
than payments permitted pursuant to clause (b) above) and agrees that in connection with any proceeding involving any Subordinated Borrower under any bankruptcy, insolvency, reorganization, receivership or similar law (i) the Borrower is irrevocably
authorized and empowered (in its own name or in the name of such Subordinated Borrower or otherwise), but shall have no obligation, to demand, sue for, collect and receive every payment or distribution referred to in the preceding sentence and give
acquittance therefor and to file claims and proofs of claim and take such other action (including, without limitation, voting the applicable Subordinated Obligations and enforcing any security interest or other lien securing payment of such
Subordinated Obligations) as the Borrower may deem necessary or advisable for the exercise or enforcement of any of its rights or interests and (ii) each Subordinated Lender shall duly and promptly take such action as the Borrower may reasonably
request to (A) collect amounts in respect of the applicable Subordinated Obligations for the account of the Borrower and to file appropriate claims or proofs of claim in respect of such Subordinated Obligations, (B) execute and deliver to the
Borrower such irrevocable powers of attorney, assignments or other instruments as the Borrower may reasonably request in order to enable the Borrower to enforce any and all claims with respect to, and any security interests and other liens securing
payment of, the applicable Subordinated Obligations and (C) collect and receive any and all payments or distributions which may be payable or deliverable upon or with respect to the applicable Subordinated Obligations. A copy of this Agreement may
be filed with any court as evidence of the Borrower’s right, power and authority hereunder. 

 SECTION 1.3. Certain Payments Held in Trust. In the event that any payment by, or distribution of
the assets of, any Subordinated Borrower of any kind or character (including any payment by reason of subordination of any Indebtedness to any Subordinated Obligations), whether in cash, property or securities, and whether directly or otherwise,
shall be received by or on behalf of any Subordinated Lender at a time when such payment is prohibited by this Agreement, such payment or distribution shall be held in trust for the benefit of, and shall be paid over to, the Borrower to the extent
necessary to make payment in full in cash of all Senior Obligations remaining unpaid, after giving effect to any concurrent payment or distribution to the Borrower in respect of such Senior Obligations. 
  
 SECTION 1.4. Subrogation. Subject to the prior indefeasible payment in
full in cash of the Senior Obligations, each Subordinated Lender shall be subrogated to the rights of the Borrower to receive payments or distributions in cash, property or securities of each applicable Subordinated Borrower in respect of the Senior
Obligations until all amounts owing on the applicable Subordinated Obligations shall be paid in full, and as between and among a Subordinated Borrower, its creditors (other than the Borrower) and the applicable Subordinated Lender, no such payment
or distribution made to the Borrower by virtue of this Agreement that otherwise would have been made to such Subordinated Lender shall be deemed to be a payment by such Subordinated Borrower on account of such Subordinated Obligations, it being
understood that the provisions of this Agreement are intended solely for the purpose of defining the relative rights of the Subordinated Lenders, on the one hand, and the Borrower, on the other hand. 
  
 ARTICLE II 
 Other Matters Regarding the Subordinated Obligations 
  
 SECTION 2.1. Other Creditors. Except in the limited circumstances set forth in Article I, nothing contained in this Agreement is intended to or
shall impair, as between and among a Subordinated Borrower, its creditors and any Subordinated Lender, the obligations of such Subordinated Borrower to pay to such Subordinated Lender the Subordinated Obligations of such Subordinated Borrower as and
when the same shall become payable in accordance with the terms thereof, or affect the relative rights of such Subordinated Lender and the other creditors of such Subordinated Borrower. 
  
 SECTION 2.2. Proofs of Claims. In the event of any dissolution, winding up, liquidation or reorganization of any
Subordinated Borrower, whether in bankruptcy, insolvency, reorganization, arrangement or receivership proceedings or otherwise, or any assignment for the benefit of creditors or any other marshaling of the assets and liabilities of any Subordinated
Borrower, each Subordinated Lender agrees to file proofs of claim for the Subordinated Obligations owed to it upon demand of the Borrower, in default of which the Borrower or an authorized representative of the Borrower is hereby irrevocably
authorized so to file in order to effectuate the provisions hereof. This Section shall not be construed to permit any Subordinated Lender to retain any payment received by it in respect of a Subordinated Obligation (including any payment by reason
of subordination of any Indebtedness to any Subordinated Obligation) that such Subordinated Lender is not entitled to receive and retain under any other provision of this Agreement. 

 SECTION 2.3. Waivers. (a) Each Subordinated Lender waives the right to compel any assets or
property of any Subordinated Borrower or the assets or property of any Loan Proceeds Note Guarantor or any other Person to be applied in any particular order to discharge the Senior Obligations. Each Subordinated Lender expressly waives the right to
require the Borrower to proceed against any Subordinated Borrower, any Loan Proceeds Note Guarantor or any other Person, or to pursue any other remedy in the Borrower’s power which such Subordinated Lender cannot pursue and which would lighten
such Subordinated Lender’s burden, notwithstanding that the failure of the Borrower to do so may thereby prejudice such Subordinated Lender. Each Subordinated Lender agrees that it shall not be discharged, exonerated or have its obligations
hereunder to the Borrower reduced (i) by the Borrower’s delay in proceeding against or enforcing any remedy against any Subordinated Borrower, any Loan Proceeds Note Guarantor or any other Person; (ii) by the Borrower releasing any Subordinated
Borrower, any Loan Proceeds Note Guarantor or any other Person from all or any part of the Senior Obligations; or (iii) by the discharge of any Subordinated Borrower, any Loan Proceeds Note Guarantor or any other Person by operation of law or
otherwise, with or without the intervention or omission of the Borrower, in each case unless all Senior Obligations due to the Borrower have been indefeasibly paid in full in cash. The Borrower’s vote to accept or reject any plan of
reorganization relating to any Subordinated Borrower, any Loan Proceeds Note Guarantor or any other Person, or the Borrower’s receipt on account of all or part of the Senior Obligations of any cash, securities or other property distributed in
any bankruptcy, reorganization, or insolvency case, shall not discharge, exonerate, or reduce the obligations of any Subordinated Lender hereunder to the Borrower, in each case unless all Senior Obligations have been indefeasibly paid in full in
cash. 
  
 (b) Each Subordinated Lender waives all rights and
defenses arising out of an election of remedies by the Borrower, even though that election of remedies, including, without limitation, any nonjudicial foreclosure with respect to security for the Senior Obligations, has impaired the value of such
Subordinated Lender’s rights of subrogation, reimbursement, or contribution against any Subordinated Borrower, any Loan Proceeds Note Guarantor or any other Person. Each Subordinated Lender expressly waives any rights or defenses it may have by
reason of protection afforded to any Subordinated Borrower, any Loan Proceeds Note Guarantor or any other Person with respect to the Senior Obligations pursuant to any anti-deficiency laws or other laws of similar import which limit or discharge the
principal debtor’s indebtedness upon judicial or nonjudicial foreclosure of real property or personal property collateral for the Senior Obligations, if any. 
  
 (c) Each Subordinated Lender agrees that, without the necessity of any reservation of rights against it, and without notice
to or further assent by it, any demand for payment of the Senior Obligations made by the Borrower may be rescinded in whole or in part by the Borrower, and any Senior Obligation may be continued, and the Senior 

 Obligations, or the liability of any Subordinated Borrower or any Loan Proceeds Note Guarantor or any other party upon or
for any part thereof, or any Guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, waived, surrendered, or released by the Borrower, in each
case without notice to or further assent by such Subordinated Lender, which will remain bound under this Agreement and without impairing, abridging, releasing or affecting the subordination and other agreements provided for herein. 
  
 (d) Each Subordinated Lender waives any and all notice of the creation,
renewal, extension or accrual of any of the Senior Obligations and notice of or proof of reliance by the Borrower upon this Agreement. The Senior Obligations, and any of them, shall be deemed conclusively to have been created, contracted or incurred
in reliance upon this Agreement, and all dealings between any Subordinated Borrower and the Borrower shall be deemed to have been consummated in reliance upon this Agreement. Each Subordinated Lender acknowledges and agrees that the Borrower has
relied upon the subordination and other agreements provided for herein in consenting to this Agreement. Each Subordinated Lender waives notice of or proof of reliance on this Agreement and protest, demand for payment and notice of default.

  
 SECTION 2.4. Legend. Any and all instruments or records
now or hereafter creating or evidencing the Subordinated Obligations, whether upon refunding, extension, renewal, refinancing, replacement or otherwise, shall contain the following legend: 
  
 “Notwithstanding anything contained herein to the
contrary, neither the principal of nor the interest on, nor any other amounts payable in respect of, the indebtedness created or evidenced by this instrument or record shall become due or be paid or payable, except to the extent permitted under the
Subordination Agreement dated December 1, 2004, among Level 3 Communications, Inc., [any additional Subordinated Lenders,] Level 3 Communications, LLC[, any additional Subordinated Borrowers] and Level 3 Financing, Inc., which Subordination
Agreement is incorporated herein with the same effect as if fully set forth herein.” 
  
 SECTION 2.5. Transfer of Subordinated Obligations. Each Subordinated Lender agrees that it will not sell, assign, transfer or otherwise dispose of all or any part of the Subordinated Obligations owed to it
unless the Person to whom such sale, assignment, transfer or disposition is made shall acknowledge in writing (delivered to the Borrower and the Purchasers) that it shall be bound by the terms of this Agreement to the same extent as such
Subordinated Lender, including the terms of this Section 2.5, as though it is a party hereto as of the date hereof. 
  
 SECTION 2.6. Obligations Hereunder Not Affected. (a) All rights and interests of the Borrower hereunder, and all agreements and obligations of each
Subordinated Lender hereunder, shall remain in full force and effect irrespective of: 
  
 (i) any lack of validity or enforceability of the Loan Proceeds Note, the Credit Agreement or any document contemplated thereby;

 (ii) any change in the time, manner or place of payment of, or in any other term of, all
or any of the Senior Obligations, or any other amendment or waiver of or consent to departure from the Loan Proceeds Note; 
  
 (iii) any release, amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of, or consent to
departure from, any Loan Proceeds Note Guarantee; or 
  
 (iv) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Subordinated Borrower in respect of its Senior Obligations or of any Subordinated Lender in respect of this Agreement. 
  
 (b) This Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of the Senior Obligations or any part thereof is rescinded or must otherwise be returned by the Borrower upon the insolvency, bankruptcy or reorganization of any Subordinated Borrower or otherwise, all as
though such payment had not been made. 
  
 ARTICLE III 

Representations and Warranties of the Subordinated Lenders 
  
 Each Subordinated Lender represents and warrants to the Borrower that: 
  
 (a) It is duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized. 
  
 (b) The
execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated hereby are within its powers, have been duly authorized by all necessary action on its part, require no action by or in respect of, or
filing with, any court or governmental or regulatory body or agency (other than such as have been duly taken or made) and do not contravene, or constitute a default under, any provision of applicable law or regulation or of its certificate of
incorporation or by-laws (or other organizational documents, as applicable) or of any material agreement, judgment, injunction, order, decree or other instrument binding upon it or any of its subsidiaries. 
  
 (c) This Agreement constitutes a valid and binding agreement of such
Subordinated Lender, enforceable against such Subordinated Lender in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and equitable principles of general
applicability. 

 ARTICLE IV 
 Miscellaneous 
  
 SECTION
4.1. Notices. All communications and notices hereunder shall be in writing and shall be mailed or delivered and sent by fax and confirmed at 1025 Eldorado Boulevard, Broomfield, Colorado 80021, attention: General Counsel (Telecopy No.
720-888-5127; Telephone Confirm 720-888-2505), with a copy in like manner to Merrill Lynch, Pierce, Fenner & Smith Incorporated, 4 World Financial Center, North Tower, New York, New York, 10080 (Telecopy No. 212-449-9435). 
  
 SECTION 4.2. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party. All representations, warranties, promises and agreements by or on behalf of each Subordinated Lender and each Subordinated
Borrower that are contained in this Agreement shall bind its successors and assigns and inure to the benefit of the Borrower and the successors and assigns of the Borrower. Each Subordinated Lender and each Subordinated Borrower agrees that it shall
not assign or delegate any of its obligations under this Agreement without the prior written consent of the Borrower, and any attempted assignment or delegation without such consent shall be void and of no effect. 
  
 SECTION 4.3. Governing Law; Jurisdiction; Consent to Service of
Process. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 
  
 (b) Each
Subordinated Lender 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 this Agreement, 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 shall affect any right that the Borrower may otherwise
have to bring any action or proceeding relating to this Agreement against any Subordinated Lender or its properties in the courts of any jurisdiction. 
  
 (c) Each Subordinated Lender 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 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 Subordinated Lender hereby irrevocably consents to service of process in the manner provided for notices in Section
4.1 hereto. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. 
  
 SECTION 4.4. Waivers; Amendment. No failure or delay of the Borrower in exercising any right or power hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power by the Borrower preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Borrower hereunder and instruments
creating or securing its respective Senior Obligations are cumulative and are not exclusive of any other rights or remedies provided by law. Neither this Agreement nor any provision hereof may be waived, amended or modified except in accordance with
Section 6.11 of the Credit Agreement pursuant to an agreement or agreements in writing entered into by the Borrower, each Subordinated Lender and each Subordinated Borrower intended to be bound thereby. 
  
 SECTION 4.5. Waiver of Claims. (a) To the maximum extent permitted by
law, each Subordinated Lender waives any claim it might have against the Borrower with respect to, or arising out of, any action or failure to act or any error of judgment, negligence, or mistake or oversight whatsoever on the part of the Borrower
or its directors, officers, employees, agents or affiliates with respect to any exercise of rights or remedies under the Loan Proceeds Note. Neither the Borrower nor any of its respective directors, officers, employees, agents or affiliates shall be
liable for failure to demand, collect or realize upon any Loan Proceeds Note Guarantee or for any delay in doing so or shall be under any obligation to take any other action whatsoever with regard to the Loan Proceeds Note or any part thereof.

  
 (b) Each Subordinated Lender, for itself and on behalf of its
successors and assigns, hereby waives any and all now existing or hereafter arising rights it may have to require the Borrower to marshal assets for the benefit of such Subordinated Lender, or to otherwise direct the timing, order or manner of any
enforcement of the Loan Proceeds Note. The Borrower is under no duty or obligation, and each Subordinated Lender hereby waives any right it may have to compel the Borrower, to pursue any Loan Proceeds Note Guarantor or other Person who may be liable
for the Senior Obligations. 
  
 (c) Each Subordinated Lender
hereby waives and releases all rights which a guarantor or surety with respect to the Senior Obligations could exercise. 

 (d) Each Subordinated Lender hereby waives any duty on the part of the Borrower to disclose to it any
fact known or hereafter known by the Borrower relating to the operation or financial condition of any Subordinated Borrower or any Loan Proceeds Note Guarantor, or their respective businesses. Each Subordinated Lender enters into this Agreement
based solely upon its independent knowledge of the applicable Subordinated Borrower’s results of operations, financial condition and business and such Subordinated Lender assumes full responsibility for obtaining any further or future
information with respect to the applicable Subordinated Borrower or its results of operations, financial condition or business. 
  
 SECTION 4.6. Further Assurances. Each Subordinated Lender and each Subordinated Borrower, at its own expense and at any time from time to time,
upon the written request of the Borrower, will promptly and duly execute and deliver such further instruments and documents and take such further actions as the Borrower reasonably may request for the purposes of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted. 
  
 SECTION 4.7. Provisions Define Relative Rights. This Agreement is intended solely for the purpose of defining the relative rights of the Borrower on the one hand and the Subordinated Lenders and the Subordinated Borrowers on the
other, and no other Person shall have any right, benefit or other interest under this Agreement. 
  
 SECTION 4.8. 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 OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER 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 4.9. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace any invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. 

 SECTION 4.10. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which, when taken together, shall constitute but one instrument. 
  
 SECTION 4.11. Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and are not
to affect the construction of, or to be taken into consideration in interpreting, this Agreement. 
  
 SECTION 4.12. Additional Subordinated Borrowers. Upon execution and delivery by, as applicable, any Subsidiary of Level 3 of an instrument in the
form of Annex I attached hereto or otherwise in a form acceptable to the Borrower, such Subsidiary of Level 3 shall become a Subordinated Borrower hereunder with the same force and effect as if originally named as a Subordinated Borrower herein. The
execution and delivery of any such instrument shall not require the consent of any other Subordinated Borrower hereunder. The rights and obligations of each Subordinated Borrower herein shall remain in full force and effect notwithstanding the
addition of any Subordinated Borrower as a party to this Agreement. 
  
 SECTION 4.13. Additional Subordinated Lenders. Upon execution and delivery by any Subsidiary of Level 3 of an instrument in the form of Annex II attached hereto or otherwise in a form acceptable to the Borrower, such Subsidiary of
Level 3 shall become a Subordinated Lender hereunder with the same force and effect as if originally named as a Subordinated Lender herein. The execution and delivery of any such instrument shall not require the consent of any other Subordinated
Lender hereunder. The rights and obligations of each Subordinated Lender herein shall remain in full force and effect notwithstanding the addition of any Subordinated Lender as a party to this Agreement. 

 IN WITNESS WHEREOF, Level 3, Level 3 LLC, as a Subordinated Borrower, the Borrower (in its capacity as a
Subordinated Lender as obligee of the Offering Proceeds Note) and the Borrower have caused this Agreement to be duly executed by their respective authorized representatives as of the day and year first above written. 
  

			
	LEVEL 3 COMMUNICATIONS, LLC,
		
	By	 	 /s/ Thomas C. Stortz

	Name:	 	Thomas C. Stortz
	Title:	 	Executive Vice President and
	 	 	Chief Legal Officer
	
	LEVEL 3 COMMUNICATIONS, INC.,
		
	By	 	 /s/ Thomas C. Stortz

	Name:	 	Thomas C. Stortz
	Title:	 	Executive Vice President and
	 	 	Chief Legal Officer
	
	LEVEL 3 FINANCING, INC., in its capacity as a Subordinated Lender as obligee of the Offering Proceeds Note
		
	By	 	 /s/ Neil J. Eckstein

	Name:	 	Neil J. Eckstein
	Title:	 	Senior Vice President and
	 	 	Assistant General Counsel
	
	LEVEL 3 FINANCING, INC.,
		
	By	 	 /s/ Neil J. Eckstein

	Name:	 	Neil J. Eckstein
	Title:	 	Senior Vice President and Assistant General Counsel

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