Document:

Lockup Agreement, dated July 11, 2002

   
 Exhibit 10.2
 LOCK-UP AGREEMENT
          This LOCK-UP AGREEMENT, dated as of July 11, 2002, is entered into by and among: 

	 	(a)	 	Knology, Inc. (“Knology”), a Delaware corporation; 
	 	 	 
	 	(b)	 	Knology Broadband, Inc. (formerly Knology Holdings, Inc.) (“Broadband”), a Delaware corporation; 
	 	 	 
	 	(c)	 	Valley Telephone Co., Inc. (“Valley”), an Alabama corporation; 
	 	 	 
	 	(d)	 	SCANA Communications Holdings, Inc. (“SCANA”), a Delaware corporation; 
	 	 	 
	 	(e)	 	The Burton Partnership, Limited Partnership and The Burton Partnership (QP), Limited Partnership (collectively, the “Burton Partnerships” and each individually a
“Burton Partnership”), each a Wyoming limited partnership; 
	 	 	 
	 	(f)	 	ITC Telecom Ventures, Inc. (“ITC”), a Delaware corporation; 
	 	 	 
	 	(g)	 	Wachovia Bank, National Association (“Wachovia”), a national banking association; 
	 	 	 
	 	(h)	 	CoBank, ACB (“CoBank” and, collectively with Wachovia, the “Banks”); 
	 	 	 
	 	(i)	 	the undersigned holders of the capital stock of Knology identified as “Other Stockholders” on Schedule A to this Agreement on the date of this Agreement and each
other holder of the capital stock of Knology that executes a counterpart signature page to this Agreement after the date of this Agreement, as provided in Section 29 (collectively, the “Other Stockholders” and each individually an “Other Stockholder”; SCANA, the Burton Partnerships, ITC and the Other Stockholders are collectively referred to as the “Stockholders” and each individually as a “Stockholder”); 
	 	 	 
	 	(j)	 	the undersigned beneficial owners (or investment managers or advisors for the beneficial owners) of the Old Notes identified as “Other Noteholders” on Schedule B to
this Agreement on the date of this Agreement and each other beneficial owner (or investment managers or advisors for the beneficial owners) of Old Notes that executes a counterpart signature page to this Agreement after the date of this Agreement as
provided in Section 29 (collectively, the “Other Noteholders,” and each, individually, an “Other Noteholder”; SCANA, the Burton
Partnerships and the Other Noteholders are collectively referred to as the “Noteholders” and each individually as a “Noteholder”);
and
	 	 	 
	 	(k)	 	the undersigned subsidiaries of Broadband who have become parties to this Agreement as provided in Section 35. 

          For purposes hereof, all references in this Agreement to Noteholders, Stockholders or parties that are “signatories to this Agreement” shall mean, as of any date of determination, those Noteholders, Stockholders or parties, as the
case may be, who executed and delivered this Agreement as an original signatory on or before the date of this Agreement, together with those additional Noteholders, Stockholders or parties, as the case may be, who after the date of this Agreement
but, on or before such date of determination, become party to this Agreement by executing and delivering counterpart signature
  

    pages as provided in Section 29. After the date of this Agreement, when Other Stockholders and Other Noteholders become signatories to this Agreement, Schedule A and Schedule B to this Agreement, as applicable, shall be updated to include the shares of Knology’s capital stock or the Old Notes, as applicable, held by
such Other Stockholder or Other Noteholder.
 RECITALS:
          Knology, Broadband, Valley, Wachovia, CoBank, the
Stockholders, and the Noteholders have engaged in good faith negotiations with the objective of restructuring the debt and equity capital structures of Knology and its subsidiaries (the “Restructuring”), substantially as set forth in the Restructuring Term Sheet (as defined below) and the Bank Term Sheets (as defined below) and the Bank Loan Documents (as defined below), which set forth the terms and conditions of (i) the Exchange
Offer, (ii) the Pre-Packaged Plan (as defined below), (iii) the Consent Solicitation and the Old Indenture Amendments, (iv) the consensual modification of the Wachovia Credit Facility (as defined below), (v) the consensual modification of the CoBank
Credit Facility (as defined below), (vi) the Charter Amendment, (vii) the Private Placement, and (viii) the Stockholders Agreement Amendment.
          Knology,
Broadband, Valley, Wachovia, CoBank, the Stockholders, and the Noteholders desire that Knology conduct the Exchange Offer as soon as practicable on the terms described in the Restructuring Term Sheet to accomplish the Restructuring, or, if necessary
under the terms of the Restructuring Term Sheet, that Broadband commence a case under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Georgia to accomplish the Restructuring through the
confirmation of the Pre-Packaged Plan (the “Pre-Packaged Proceeding”).
          Therefore, in consideration
of the premises and the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties signatory to this Agreement hereby
agrees as follows:
          1.       Definitions.
          As used in this Agreement, the terms defined in this Agreement shall have the meaning ascribed to such terms in this Agreement, terms defined in the Restructuring Term
Sheet unless otherwise defined in this Agreement shall have the meaning ascribed to such terms in the Restructuring Term Sheet, and the following terms shall have the following meanings:
          “Agreement” means this Agreement, including the Schedules, Annexes and Exhibits hereto (including any agreements
incorporated herein or therein), all of which are incorporated by reference herein.
          “Bank Term Sheets” means, collectively, the CoBank Term Sheet attached hereto as Annex B-1 (the “CoBank Term Sheet”) and the Wachovia Term Sheet
attached hereto as Annex C-1 (the “Wachovia Term Sheet”), which set forth the material terms and conditions of the consensual modification to the
CoBank Credit Facility and the Wachovia Credit Facility, respectively, and which summarize generally the terms and conditions of the CoBank Loan Documents and the Wachovia Loan Documents, respectively.
          “Bank Loan Documents” means, collectively, (i) the CoBank Loan Documents attached hereto as Annex B-2 (the “CoBank Loan Documents”), which are the definitive operative documents to be executed and delivered by the parties thereto to effect the
consensual modification of the CoBank Credit Facility, and (ii) the Wachovia Loan Documents listed in Annex C-2 (the “Wachovia Loan Documents”),
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    which will reflect the terms set forth in the Wachovia Term Sheet and will be the definitive operative documents to be executed and delivered by the parties thereto to
effect the consensual modification of the Wachovia Credit Facility. 
          “CoBank Credit Facility” means
that certain existing $40 million, 10-year senior secured credit facility by and among Globe Communications, Inc., Interstate Telephone Company and Valley, as borrowers, and CoBank, as lender, to be modified and as more particularly described in
Annex B-1 attached hereto and the CoBank Loan Documents included in Annex B-2 attached hereto.
          “Eligible Offeree” means a holder of Old Notes, other than Valley, that is an “Accredited Investor,” a
“qualified institutional buyer” or a person other than a “U.S. Person,” in each case as such terms are defined in the Securities Act. 
          “Informal Noteholders’ Committee” means the informal committee of beneficial owners of the Old Notes that have negotiated the terms of the Restructuring with Knology, the names and
addresses of such beneficial owners and the principal amount at maturity of the Old Notes collectively owned by the committee members being set forth in Schedule C to this Agreement. 
          “Joinder Agreement” means the agreement to be entered into by and among Knology and each holder of Old Notes who
receives New Notes in the Restructuring pursuant to which such holder of Old Notes shall become party to the Stockholders Agreement, dated as of February 7, 2000, as amended as of January 12, 2001, and as it may be further amended as contemplated by
the Restructuring Term Sheet, by and among Knology and the other stockholders party thereto. 
          “Material Adverse
Change” means any change in the business or operations of Knology and its subsidiaries, taken as a whole (whether financial or otherwise) that would have a material adverse effect on the ability of Knology, Valley or
Broadband, as applicable, to perform fully and punctually its obligations under and in respect of (i) this Agreement and the Restructuring, (ii) the Wachovia Loan Documents, or (iii) the CoBank Loan Documents; provided that the filing of the
Pre-Packaged Proceeding shall not constitute a Material Adverse Change.
          “Minimum Tender Condition”
means there being validly tendered and not withdrawn 100% of the Old Notes held by Eligible Offerees in order to complete the Exchange Offer.
          “Old Indenture” means the indenture (as amended, modified or supplemented from time to time), dated as of October 22, 1997, between Broadband, as issuer, and United States Trust Company
of New York, a bank and trust company organized under New York law, as indenture trustee.
          “Old Indenture
Amendments” means an amendment to the Old Indenture, which, among other things, deletes substantially all of the covenants contained in the Old Indenture.
          “Old Notes” means the 11-7/8% Senior Discount Notes
due 2007 in the aggregate principal amount at maturity of $444.1 million issued by Broadband pursuant to the Old Indenture.
          “Person” means any individual, partnership, corporation, limited liability company, association, trust, joint venture, unincorporated organization or other entity.
          “Required Noteholders” means (i) the Other Noteholders holding, beneficially or of record, at least 75% in
aggregate principal amount at maturity of the Old Notes held by Other Noteholders, and (ii) SCANA.
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              “Registration Rights Agreement” means the agreement to
be entered into by and among Knology and the holders of the Old Notes who tender such Old Notes in the Exchange Offer, pursuant to which Knology has agreed to use best efforts to exchange notes (substantially similar to the New Notes) registered
under the Securities Act, for unregistered New Notes issued in the Exchange Offer, as more fully set forth in the Restructuring Term Sheet and to grant certain registration rights to holders of New Notes who are affiliates (within the meaning of
Rule 144 under the Securities Act) of Knology.
          “Restructuring Term Sheet” means that certain
Restructuring Term Sheet attached hereto as Annex A which sets forth the material terms and conditions of the Restructuring.
          “Securities Act” means the Securities Act of 1933, as amended.
          “Special Committee of the Board of Directors” means the special committee of the Board of Directors of Knology
formed to evaluate the Restructuring and consisting of Richard S. Bodman, William Laverack, Jr. and Campbell B. Lanier III.
          “Transfer” means to directly or indirectly (i) sell, pledge, assign, encumber, grant an option with respect to, transfer or dispose of any participation or interest (voting or otherwise) in or (ii) enter into an
agreement, commitment or other arrangement to sell, pledge, assign, encumber, grant an option with respect to, transfer or dispose of any participation or interest (voting or otherwise) in, or the act thereof.
          “Wachovia Credit Facility” means that certain existing $15,465,000 senior secured credit facility by and among
Wachovia, as lender, Broadband, as guarantor, and the subsidiaries of Broadband, as borrowers, to be amended and restated as more particularly described in Annex C-1 attached hereto and the
Wachovia Loan Documents included in Annex C-2 attached hereto. 
          2.       Agreement to Complete the Restructuring.
          Subject to the
terms and conditions of this Agreement, the parties to this Agreement agree to use reasonable efforts to complete the Restructuring through the Exchange Offer, the Consent Solicitation, the execution and delivery of the CoBank Loan Documents, the
Wachovia Loan Documents, the Charter Amendment, the Private Placement and the Stockholders Agreement Amendment, as each is described in the Restructuring Term Sheet, the CoBank Term Sheet and the Wachovia Term Sheet; or, alternatively, if the
Minimum Tender Condition is not satisfied or waived or Knology is otherwise not able to consummate the Exchange Offer but the required consents of holders of Old Notes, Wachovia and Knology are received to confirm the Pre-Packaged Plan, then through
the Pre-Packaged Plan in accordance with the terms of the Restructuring Term Sheet, the CoBank Term Sheet and the Wachovia Term Sheet. Notwithstanding the foregoing, (a) neither Wachovia nor any affiliate thereof shall have (i) any obligation
to provide any financing or arrange any financing other than the Wachovia Credit Facility or (ii) to provide any further advances under the Wachovia Credit Facility as in effect on the date hereof, (b) neither CoBank nor any affiliate thereof
shall have any obligation to provide any financing or arrange any financing other than the CoBank Credit Facility, and (c) neither ITC nor SCANA nor any of their respective affiliates shall have any obligation to provide any financing or arrange any
financing (including, without limitation, any financing contemplated by Section 14 hereof) other than the New Notes and the payment of the purchase price for the Private Placement Shares in exchange for delivery of such Private Placement Shares at
the consummation of the Exchange Offer or pursuant to the Pre-Packaged Plan, as applicable. Moreover, the obligations of all parties hereunder are several and not joint nor joint and several and no party hereto shall be responsible for the failure
of any other party hereto to perform its obligations hereunder.
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             3.       Knology’s and Broadband’s Obligations
to Support the Restructuring.
                        (a)   Knology and Broadband agree to use their respective best efforts to commence the Exchange Offer by July 19, 2002 and to use their respective best efforts to complete the same within 30
business days of the date of commencement of the Exchange Offer in accordance with the terms set forth in the Restructuring Term Sheet, the CoBank Term Sheet and the Wachovia Term Sheet. 
                        (b)   Knology agrees that it
will not waive the Minimum Tender Condition without the consent of the Special Committee of the Board of Directors and the Required Noteholders. 
                        (c)   If all of the conditions to the Exchange Offer cannot be satisfied
and/or waived by October 2, 2002, but the required consents of holders of Old Notes, Wachovia and Knology are received to confirm the Pre-Packaged Plan, then on such date (or such later date as the Required Noteholders and each Bank may agree),
Broadband shall file the Pre-Packaged Proceeding and seek confirmation of the Pre-Packaged Plan. 
                        (d)   Neither Knology nor Broadband shall, without the prior written consent of the Required Noteholders and each Bank: (i) initiate any exchange offer for Old Notes except the Exchange Offer
described in the Restructuring Term Sheet; or (ii) otherwise seek to restructure Knology or Broadband except through the Restructuring in accordance with the Restructuring Term Sheet.
                        (e)   Subject to the terms and conditions set forth in this Agreement,
Knology and Broadband shall perform all their respective obligations hereunder and under the Restructuring Term Sheet, the CoBank Term Sheet and the Wachovia Term Sheet, including:

	 	              (i)         submitting the Charter Amendment for adoption by Knology’s stockholders, recommending
its adoption, and submitting the adopted Charter Amendment to the Secretary of State of the State of Delaware in connection with and conditioned upon the consummation of the Restructuring;

	 	              (ii)         consummating the Private Placement in connection with and conditioned upon the
consummation of Restructuring on the terms set forth in the Restructuring Term Sheet;

	 	              (iii)         using all reasonable efforts to, and to cause the subsidiaries of Knology and Broadband
to, consummate the consensual modification of the Wachovia Credit Facility and the consensual modification of the CoBank Credit Facility, in each case in connection with and conditioned upon the consummation of Restructuring on the terms set forth
in the Restructuring Term Sheet, the CoBank Term Sheet, the Wachovia Term Sheet, and the CoBank Loan Documents and the Wachovia Loan Documents.

                        (f)   Knology and Broadband further agree that they will not object to,
or otherwise commence any proceeding to oppose, the Restructuring and shall not take any action that is inconsistent with, or that would unreasonably delay the consummation of, the Restructuring.
          4.       Valley’s Obligations to Support the Restructuring.
                        (a)   Subject to the terms and conditions set forth in this Agreement,
Valley agrees with Knology, Broadband, CoBank, Wachovia and each Noteholder to: (i) tender for cancellation all of the Old Notes held by Valley at the closing of the Exchange Offer in consideration for receipt from Broadband of a limited guaranty of
the CoBank Credit Facility; (ii) within ten business days following the 
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    commencement of the Exchange Offer, vote to accept the Pre-Packaged Plan and (iii) vote to reject any plan of reorganization for Broadband that does not contain the
terms of the Restructuring substantially as set forth in the Restructuring Term Sheet. 
                        (b)   Valley may not revoke or withdraw the tender for cancellation of the Old Notes held by Valley.
                        (c)   Valley agrees that (i) it will not vote for, consent to, provide
any support for, participate in the formulation of, or solicit or encourage others to formulate any other tender offer, settlement offer, or exchange offer for the Old Notes other than the Exchange Offer; and (ii) it will permit public disclosure,
including in a press release, of the contents of this Agreement, including, but not limited to, the commitments given in this Section 4.
                        (d)   Valley further agrees that it will not object to, or otherwise
commence any proceeding to oppose, the Restructuring and shall not take any action that is inconsistent with, or that would unreasonably delay the consummation of, the Restructuring.
                        (e)   Valley further agrees that any Old Notes acquired by Valley
following the date of this Agreement shall be subject to the terms hereof and shall be subject to the same treatment in the Restructuring as the Old Notes held by Valley as of the date hereof.
          5.       Noteholders’ Obligations to Support the Restructuring. Subject to the terms
and conditions set forth in this Agreement, including paragraph 5(g):
                        (a)   Each Noteholder agrees with Knology, Broadband, Valley, CoBank, Wachovia and each other Noteholder, in connection with and conditioned upon consummation of the Restructuring upon the terms
set forth in the Restructuring Term Sheet, to: (i) use its reasonable efforts to tender its Old Notes pursuant to and in accordance with the Exchange Offer and the other terms and conditions of the Restructuring Term Sheet within ten business days
following the commencement of the Exchange Offer but in no event later than five business days prior to the original expiration date of the Exchange Offer; (ii) grant its consent pursuant to the Consent Solicitation and agree to the Old Indenture
Amendments; (iii) use its reasonable efforts to vote to accept the Pre-Packaged Plan within ten business days following the commencement of the Exchange Offer but in no event later than five business days prior to the original expiration date of the
Exchange Offer; (iv) support and otherwise consent to the restructuring and amendment of the CoBank Credit Facility and the Wachovia Credit Facility in accordance with the CoBank Term Sheet, the Wachovia Term Sheet, and the CoBank Loan Documents and
the Wachovia Loan Documents; and (v) vote to reject any plan of reorganization for Broadband or Knology that does not contain the terms of the Restructuring substantially as set forth in the Restructuring Term Sheet. Each Noteholder acknowledges
that by tendering its Old Notes in the Exchange Offer, it will be deemed to have delivered the consents required in the Consent Solicitation for the Old Indenture Amendments, and to have executed the Joinder Agreement and the Registration Rights
Agreement, all as more fully described in the Restructuring Term Sheet.
                        (b)   Each of the Other Noteholders hereby agrees that it shall not Transfer any of the Old Notes unless the transferee agrees in writing to be bound by all of the terms and conditions of this
Agreement by executing a counterpart signature page of this Agreement and such Noteholder provides a copy of such executed signature page to the Noteholders’ counsel and Knology’s counsel as set forth in this Agreement. Any Transfer of the
Old Notes that does not comply with the foregoing shall be deemed ineffective to Transfer any right to accept or reject the Exchange Offer, to consent to the Old Indenture Amendments, or to accept the Pre-Packaged Plan, which right shall remain with
and be exercised only by the purported transferor.
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                           (c)   Each of
Valley, SCANA and the Burton Partnerships hereby agrees that it shall not Transfer any of the Old Notes. Any Transfer of the Old Notes in violation of the foregoing shall be deemed ineffective to Transfer any right to accept or reject the Exchange
Offer, to consent to the Old Indenture Amendments, or to accept the Pre-Packaged Plan, which right shall remain with and be exercised only by the purported transferor. 
                        (d)   No Noteholder may revoke or withdraw any tender made by such
Noteholder of such Noteholder’s Old Notes pursuant to the Exchange Offer or revoke or modify any consent thereby delivered by such Noteholder pursuant to the Consent Solicitation.
                        (e)   Each Noteholder agrees that (i) it will not vote for, consent to,
provide any support for, participate in the formulation of, or solicit or encourage others to formulate any other tender offer, settlement offer, or exchange offer for the Old Notes other than the Exchange Offer; (ii) it will use its reasonable and
appropriate efforts to cause the Informal Noteholders’ Committee to take all actions deemed advisable in order to cause the consummation of the Exchange Offer; and (iii) it will permit public disclosure, including in a press release, of the
contents of this Agreement, including, but not limited to, the commitments given in this Section 5 and the Restructuring Term Sheet, but not including information with respect to such Noteholder’s specific ownership of Old Notes.
                        (f)   Each Noteholder further agrees that it will not object to, or
otherwise commence any proceeding to oppose, the Restructuring and shall not take any action that is inconsistent with, or that would unreasonably delay the consummation of, the Restructuring.
                        (g)   Nothing in this Agreement shall be deemed to prevent any
Noteholder from taking any action that it is obligated to take in the performance of any fiduciary or similar duty which the Noteholder owes to any other Person, including any duties that may arise as a result of any Noteholder’s appointment to
any committee in the Pre-Packaged Proceeding or any other bankruptcy or insolvency proceeding.
                        (h)   Each Noteholder acknowledges and agrees with Knology, Broadband, Valley and each other Noteholder that the principal amount of the New Notes and the number of shares of New Preferred Stock to
be received by each of SCANA and the Burton Partnerships in the Restructuring in exchange for each Old Note that each of SCANA and the Burton Partnerships owns, as set forth in the Restructuring Term Sheet, will be different from the principal
amount of the New Notes and the number of shares of New Preferred Stock to be received by each Other Noteholder in the Restructuring in exchange for each Old Note each Other Noteholder owns, as set forth in the Restructuring Term Sheet. 

                       (i)         Each Noteholder further
agrees that any Old Notes acquired by such Noteholder following the date of this Agreement shall be subject to the terms and conditions of this Agreement and shall be subject to the same treatment in the Restructuring as the Old Notes held by such
Noteholder as of the date hereof.
          6.       Stockholders’ Obligations to Support the
Restructuring.
                        (a)   Subject to
the terms and conditions set forth in this Agreement, the Stockholders agree, with each other Stockholder and with the Noteholders, in connection with and conditioned upon consummation of the Restructuring upon the terms set forth in the
Restructuring Term Sheet, at every meeting of the stockholders of Knology called, and at every adjournment or postponement thereof, and on every action or approval by written consent of the stockholders of Knology, to vote in favor of the adoption
of the Charter Amendment. Subject to the terms and conditions set forth in this Agreement, the 
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    Stockholders agree, in connection with and conditioned upon consummation of the Restructuring upon the terms set forth in the Restructuring Term Sheet, to (i) execute
the Stockholders Agreement Amendment, and (ii) waive any preemptive rights they may have pursuant to the Stockholders Agreement or otherwise with respect to the Private Placement, the Exchange Offer or the Pre-Packaged Plan.
                        (b)   Subject to the terms and conditions set forth in this
Agreement:

	 	              (i)         Each of the Other Stockholders and ITC hereby agrees that it shall not Transfer any of the
shares of Knology’s capital stock unless (w) such Stockholder provides written notice, at the addresses set forth in Section 22, of the Transfer to the Noteholders’ counsel and Knology’s counsel; (x) such notice identifies the
transferee, identifies the number of shares of Knology’s capital stock that is subject to the Transfer and confirms that the transferee has agreed to be bound by all of the terms and conditions of this Agreement; (y) the transferee agrees in
writing to be bound by all of the terms and conditions of this Agreement by executing a counterpart signature page of this Agreement; and (z) such Stockholder provides a copy of such executed signature page to the Noteholders’ counsel and
Knology’s counsel as set forth in this Agreement; provided, however, that in the event the shares of Knology’s capital stock held by ITC are distributed to the stockholders of ITC Holding Company, Inc. on a pro rata basis, then ITC shall
be able to effect such Transfer so long as ITC complies with (w), (x), (y) and (z) above with respect to the transferees receiving in the aggregate at least 75% of the shares so distributed. Any Transfer of the shares of Knology’s capital stock
that does not comply with the foregoing shall be ineffective.

	 	              (ii)         Each of SCANA and the Burton Partnerships hereby agrees that it shall not Transfer any of
the shares of Knology’s capital stock.

                        (c)   Each Stockholder further agrees that it will not object to, or otherwise commence any proceeding to oppose, the Restructuring and shall not take any action that is inconsistent with, or that
would unreasonably delay the consummation of, the Restructuring.
                        (d)   Nothing in this Agreement shall be deemed to prevent any Stockholder from taking any action that it is obligated to take in the performance of any fiduciary or similar duty which the
Stockholder owes to any other Person, including any duties that may arise as a result of any Stockholder’s appointment to any committee in the Pre-Packaged Proceeding or any other bankruptcy or insolvency proceeding.
          7.       Obligations with Respect to CoBank Credit Facility
                        (a)   Subject to the terms and conditions of this Agreement,
simultaneously with the consummation of the Exchange Offer, or upon effectiveness of the Pre-Packaged Plan, CoBank and the other applicable parties thereto shall consummate the consensual modification of the CoBank Credit Facility on the terms set
forth in the CoBank Term Sheet and shall execute the CoBank Loan Documents. Further, the parties to the CoBank Loan Documents shall use all reasonable efforts to satisfy all conditions precedent to the effectiveness of the CoBank Loan Documents
including the execution and delivery of all required certificates, opinions, and all other closing conditions. Further, the parties to the CoBank Loan Documents shall execute such other security or other closing documents, and take such further
actions, as may be reasonably requested by CoBank to give further effect or otherwise implement the consensual modification of the CoBank Credit Facility as contemplated by the CoBank Term Sheet.
                        (b)   CoBank agrees that it shall not Transfer any of its right, title
or interest in and to the CoBank Credit Facility unless (w) CoBank provides written notice, to the address set forth in Section 22,
 8

    of the Transfer to Knology; (x) such notice identifies the transferee, identifies the portion of the CoBank Credit Facility that is subject to the Transfer and confirms
that the transferee has agreed to be bound by all of the terms and conditions of this Agreement; (y) the transferee agrees in writing to be bound by all of the terms and conditions of this Agreement by executing a counterpart signature page of this
Agreement; and (z) CoBank provides a copy of such executed signature page to Knology; provided that nothing herein shall prohibit CoBank from pledging or assigning all or any portion of the CoBank
Credit Facility to any Federal Reserve Bank in accordance with applicable law or in connection with any financing by CoBank. Any Transfer of the CoBank Credit Facility that does not comply with the foregoing shall be deemed ineffective to Transfer
any interest in the CoBank Credit Facility and any right to accept or reject the Exchange Offer, to consent to the modification of the CoBank Loan Document, or to accept the Pre-Packaged Plan, which right shall remain with and be exercised only by
the purported transferor.
                        (c)   CoBank agrees that (i) it
will not vote for, consent to, provide any support for, participate in the formulation of, or solicit or encourage others to formulate, any other tender offer, settlement offer or exchange offer for the Old Notes other than the Exchange Offer or any
other modification or amendment to the CoBank Credit Facility other than pursuant to the CoBank Term Sheets and the CoBank Loan Document and (ii) it will permit the public disclosure, including a press release, of the contents of this Agreement,
including, but not limited to, the commitments in this Section 7 and the contents of the CoBank Term Sheet.
                        (d)   CoBank agrees that it will not object to, or otherwise commence any proceeding to oppose, the Restructuring and shall not take any action that is inconsistent with, or that would unreasonably
delay the consummation of, the Restructuring.
                        (e)   Nothing in this Agreement shall be deemed to prevent CoBank from taking any action that it is obligated to take in the performance of any fiduciary or similar duty which CoBank owes to any
other Person.
          8.       Obligations with Respect to Wachovia Credit Facility.
                        (a)   Subject to the terms and conditions of this
Agreement, simultaneously with the consummation of the Exchange Offer, or upon effectiveness of the Pre-Packaged Plan, Wachovia and the other applicable parties thereto shall consummate the consensual modification of the Wachovia Credit Facility on
the terms set forth in the Wachovia Term Sheet and shall execute the Wachovia Loan Documents. Further, the parties to the Wachovia Loan Documents shall use all reasonable efforts to satisfy all conditions precedent to the effectiveness of the
Wachovia Loan Documents including the execution and delivery of all required certificates, opinions, and all other closing conditions. Further, the parties to the Wachovia Loan Documents shall execute such other security or other closing documents,
and take such further actions, as may be reasonably requested by Wachovia to give further effect or otherwise implement the consensual modification of the Wachovia Credit Facility as contemplated by the Wachovia Term Sheet.
                        (b)   Wachovia agrees that it shall not Transfer any of its right, title
or interest in and to the Wachovia Credit Facility, respectively, unless (w) Wachovia provides written notice, to the address set forth in Section 22, of the Transfer to Knology; (x) such notice identifies the transferee, identifies the portion of
the Wachovia Credit Facility that is subject to the Transfer and confirms that the transferee has agreed to be bound by all of the terms and conditions of this Agreement; (y) the transferee agrees in writing to be bound by all of the terms and
conditions of this Agreement by executing a counterpart signature page of this Agreement; and (z) Wachovia provides a copy of such executed signature page to Knology; provided that nothing herein shall
prohibit Wachovia from pledging or assigning all or any portion of the Wachovia Credit Facility, as applicable, to any Federal Reserve Bank in accordance with
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    applicable law. Any Transfer of the Wachovia Credit Facility that does not comply with the foregoing shall be deemed ineffective to Transfer any interest in the
Wachovia Credit Facility as the case may be, and any right to accept or reject the Exchange Offer, to consent to the modification of the Wachovia Loan Documents, or to accept the Pre-Packaged Plan, which right shall remain with and be exercised only
by the purported transferor.
                        (c)   Wachovia agrees that
(i) it will not vote for, consent to, provide any support for, participate in the formulation of, or solicit or encourage others to formulate, any other tender offer, settlement offer or exchange offer for the Old Notes other than the Exchange Offer
or any other modification or amendment to the Wachovia Credit Facility other than pursuant to the Wachovia Term Sheet and the Wachovia Loan Documents and (ii) it will not object to the public disclosure, including a press release, of the contents of
this Agreement, including, but not limited to, the commitments in this Section 8 and the contents of the Wachovia Term Sheet.
                        (d)   Wachovia agrees that it will not object to, or otherwise commence
any proceeding to oppose, the Restructuring and shall not take any action that is inconsistent with, or that would unreasonably delay the consummation of, the Restructuring.
                        (e)   Nothing in this Agreement shall be deemed to prevent Wachovia from
taking any action that it is obligated to take in the performance of any fiduciary or similar duty which such Person owes to any other Person, including any duties that may arise as a result of Wachovia’s appointment to any committee in the
Pre-Packaged Proceeding.
                        (f)   By executing this
Agreement, Wachovia agrees to temporarily waive compliance by Broadband and its subsidiaries with the financial covenants set forth in Section 9.4(a) and Section 9.4(b) of the Wachovia Credit Facility for the periods ending June 30, 2002 and
September 30, 2002 (the “Temporary Waiver”). The Temporary Waiver shall immediately expire and be of no further force or effect if this Agreement is terminated as provided in Section 13. Upon
the expiration of the Temporary Waiver, Wachovia shall have and shall be permitted to exercise any rights and remedies under the Wachovia Credit Facility or under applicable law with respect to any breach of Section 9.4(a) or Section 9.4(b) of the
Wachovia Credit Facility that occurred during the Temporary Waiver. The agreements of Wachovia in this Agreement are not, and should not be construed either (i) as a commitment or any other undertaking or expression of any willingness to engage in
any other waiver, amendment, modification or other change to any provision of the Wachovia Credit Facility (including, without limitation, any extension of the maturity date thereof) other than the amendment and restatement described in the
preceding three sentences and in the Wachovia Term Sheet or (b) to prejudice any rights or remedies that Wachovia, as Lender, may now have or may have in the future under or in connection with the Wachovia Credit Facility or the other Loan Documents
(as defined in the Wachovia Credit Facility).
          9.       Obligations of All Parties to Support the
Restructuring. Subject to the terms and conditions of this Agreement, simultaneously with the consummation of the Exchange Offer, or upon effectiveness of the Pre-Packaged Plan, the applicable parties thereto agree as
follows:
                        (a)   Subject to Section 2 of this Agreement,
each party to this Agreement agrees that so long as it is the legal owner or beneficial owner of all or any portion of either a referenced “claim” or referenced “interest” within the meaning of 11 U.S.C. §§ 101, et seq.
(each a “Claim”), it will: (i) take all reasonable steps to support the Pre-Packaged Plan, defend the adequacy of pre-petition disclosure and solicitation procedures in connection with the
Pre-Packaged Plan, the Exchange Offer, the CoBank Term Sheet, the Wachovia Term Sheet, the CoBank Loan Documents and the Wachovia Loan Documents and, to the extent necessary, support the adequacy of any post-petition disclosure statement that may be
required by the bankruptcy court and circulated in connection herewith or therewith; (ii) support
 10

    confirmation of the Pre-Packaged Plan including, but not limited to, filing the appropriate pleadings and taking such other actions as Broadband may reasonably request
to obtain confirmation of the Pre-Packaged Plan and the execution of the CoBank Loan Documents and the Wachovia Loan Documents in connection therewith; (iii) from and after the date hereof, not agree to, consent to, provide any support to,
participate in the formulation of, or vote for any plan of reorganization or liquidation of Knology or Broadband, other than the Pre-Packaged Plan; and (iv) agree to permit disclosure in the Pre-Packaged Plan or any document ancillary thereto
(hereinafter a “Reorganization Document”) or any necessary filings by Knology or Broadband with the Securities and Exchange Commission (the “Commission”) of the contents of this Agreement (excluding information with respect to any Noteholder’s specific ownership of Old Notes).
                        (b)   Each party to this Agreement agrees that so long as it is a holder
of all or any portion of a Claim, it shall not object to or otherwise commence any proceeding to oppose or alter the Pre-Packaged Plan or any other Reorganization Document and shall not take any action which is inconsistent with, or that would
unreasonably delay or impede approval or confirmation of the Pre-Packaged Plan or any of the Reorganization Documents. Without limiting the generality of the foregoing, no party may directly or indirectly seek, solicit, support or encourage any
other plan, sale, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of any of Knology or Broadband that could reasonably be expected to prevent, delay or impede the confirmation of the Pre-Packaged
Plan or approval of any Reorganization Document.
                        (c)   In
furtherance of paragraphs 9(a) and (b) above, no party hereto, either prior to or during the pendency of the Pre-Packaged Proceeding, shall challenge or contest the validity, binding nature, due authorization or enforceability of any document or
instrument evidencing the CoBank Credit Facility or the Wachovia Credit Facility or any CoBank Loan Document or any Wachovia Loan Document or any term or condition thereof and no party shall, either prior to or during the pendency of the
Pre-Packaged Proceeding, seek to alter, amend or supplement any CoBank Loan Document or any Wachovia Loan Document without the prior written consent of CoBank and/or Wachovia, as applicable. Further, no party hereto, either prior to or during the
pendency of the Pre-Packaged Proceeding, shall challenge or contest the validity, enforceability, perfection or priority of (or shall seek to alter the priority of) any existing lien or security interest in favor of CoBank and/or Wachovia or any
lien or security interest granted to CoBank and/or Wachovia pursuant to the CoBank Loan Documents or the Wachovia Loan Documents.
                        (d)   Each of CoBank and Wachovia agree that, notwithstanding anything
contained in the existing documents and instruments evidencing the CoBank Credit Facility and the Wachovia Credit Facility or in the Bank Loan Documents to the contrary, the filing by Broadband of the Pre-Packaged Proceeding alone shall not
constitute a “material adverse change” (or like phrase) thereunder and in and of itself shall not in any event give rise to the ability of CoBank and/or Wachovia, as the case may be, to accelerate the indebtedness evidenced thereby or
cease making advances thereunder; provided, however, except as expressly provided otherwise in this Agreement, this Agreement shall not otherwise interfere with the enforcement or administration by CoBank of the CoBank Credit Facility. In reliance
upon the representations, warranties and covenants of Knology and Broadband contained in this Agreement, and subject to the terms and conditions of this Agreement, (i) Wachovia agrees to forbear from exercising its rights and remedies under the
Wachovia Credit Facility and related loan documents or applicable law in respect of or arising out of any “Default” (as defined in the Wachovia Credit Facility) or “Event of Default” (as defined in the Wachovia Credit Facility)
arising under (A) Section 12.1(a) of the credit agreement evidencing the Wachovia Credit Facility resulting from the failure, if any, of Broadband and its subsidiaries to repay the Wachovia Credit Facility in full on November 15, 2002 so long as
Broadband and its subsidiaries continue to pay interest in accordance with the terms of the Wachovia Credit Facility or (B) Section 12.1(j) of the credit agreement evidencing the Wachovia Credit Facility resulting from the
 11

    filing by Broadband of the Pre-Packaged Proceeding (any such “Default” or “Event of Default” described in the foregoing clauses (A) and (B), a
“Forbearance Default”) subject to the terms and conditions of this Agreement until this Agreement is terminated provided in Section 13. If this Agreement is terminated as provided in Section 13, the agreement of Wachovia to forbear shall
automatically and without further action terminate and be of no force and effect, it being expressly agreed that the effect of such termination will be to permit Wachovia to exercise such rights and remedies immediately; provided however, that
nothing herein shall be construed as a waiver by Knology or Broadband of any right it may have as a “debtor” under the Pre-Packaged Proceeding or other bankruptcy proceeding. The parties hereto agree and acknowledge that Wachovia has not
waived, is not by this Agreement waiving, and has no intention of waiving, any “Defaults” or “Events of Default” which have occurred and may be continuing on the date hereof or any “Defaults” or “Events of
Default” (including any Forbearance Default) which may occur after the date hereof, and Wachovia has not agreed to forbear with respect to any of its rights or remedies concerning any “Default” or “Event of Default” (other
than, prior to the termination of this Agreement as provided in Section 13, any Forbearance Default to the extent expressly set forth herein), which may have occurred or are continuing as of the date hereof or which may occur after the date hereof.
Moreover, subject to the provisions of this Section 9(d) (solely with respect to any Forbearance Default), Wachovia reserves the right, in its discretion, to exercise any or all of its rights and remedies under the Wachovia Credit Facility and the
related loan documents and applicable law as a result of any “Default” or “Event of Default” which may have occurred and be continuing on the date hereof or any “Default” or “Event of Default” which may occur
after the date hereof, and Wachovia has not waived any of such rights or remedies, and nothing in this Agreement, and no delay on its part in exercising any such rights or remedies, should be construed as a waiver of any such rights or remedies;
provided, however, that as of the date of this Agreement, Wachovia has no knowledge that any “Default” or “Event of Default” exists. Without limiting the generality of the foregoing, the neither Knology nor any subsidiary thereof
(including Broadband and its subsidiaries) will claim that any prior action or course of conduct by the Wachovia constitutes an agreement or obligation to continue such action or course of conduct in the future. Nothing in this Agreement shall be
construed as an amendment to the Wachovia Credit Facility or any related loan document and, conversely, nothing in this Agreement should constitute a waiver of any rights Broadband or Knology may have as a “debtor” in the Pre-Packaged
Proceeding or any other bankruptcy proceeding. The Wachovia Credit Facility and the related loan documents are in full force and effect, and shall remain in full force and effect unless and until an agreement modifying such documents is executed and
delivered by the applicable parties, and then only to the extent such agreement actually modifies such documents.
          10.      Obligations of SCANA and ITC to Participate in the Private Placement.
                        (a)   Subject to the terms and conditions set forth in this Agreement,
SCANA agrees to subscribe for and purchase 6,500,000 shares of Knology’s Series C Preferred Stock at $3.00 per share in the Private Placement.
                        (b)   Subject to the terms and conditions set forth in this Agreement,
ITC agrees to subscribe for and purchase 6,500,000 shares of Knology’s Series C Preferred Stock at $3.00 per share in the Private Placement.
          11.      Effectiveness of this Agreement.
          The effectiveness of this
Agreement, and the respective obligations of the parties under this Agreement, are conditioned upon the receipt of the consent and signature of Knology, Broadband, Valley, SCANA, the Burton Partnerships, ITC, the Banks, the Other Stockholders and
Other Noteholders holding 60% of the aggregate principal amount at maturity of the Old Notes held by holders of Old Notes, other than Valley, SCANA or the Burton Partnerships.
 12

             12.      Amendments to the Restructuring.
          Knology shall not alter the material terms of the Restructuring without the prior written consent of the Required Noteholders, the Banks, J. H.
Whitney IV, L.P. and Blackstone CCC Capital Partners L.P., except that Knology may amend the terms of the Exchange Offer to: (i) extend the expiration date of the Exchange Offer to any date not later than September 30, 2002, if at the time of
any such extension the conditions to closing set forth in the Exchange Offer shall not have been satisfied or waived as provided in this Agreement; and (ii) comply with any legal requirement binding on Knology, Broadband, Valley or their
respective officers, directors or stockholders; provided that any amendment made pursuant to this clause (ii) that is a material alteration of the terms of the Restructuring must be approved by the Required Noteholders.
          13.      Termination of Agreement.
          Notwithstanding anything to the contrary set forth in this Agreement, unless the Restructuring has been consummated as provided in this Agreement, this Agreement and all
of the obligations and undertakings of the various parties set forth in this Agreement shall terminate and expire upon the earliest to occur of: (i) October 2, 2002 (provided that if a Pre-Packaged Proceeding is filed as set forth in Section
3(c), such date shall be December 31, 2002); (ii) written notice from the Other Noteholders of the vote to terminate this Agreement by Other Noteholders holding, beneficially or of record, at least 75% in aggregate principal amount at maturity
of the Old Notes held by Other Noteholders upon the occurrence of a Material Adverse Change; (iii) written notice from Wachovia of its intent to terminate this Agreement upon the occurrence of a Material Adverse Change; (iv) written notice from
CoBank of its intent to terminate this Agreement upon the occurrence of a Material Adverse Change; (v) written notice from ITC or SCANA of its intent to terminate this Agreement upon the occurrence of a Material Adverse Change; (vi) a material
alteration by Knology of the terms of the Restructuring not permitted under Section 12; (vii) a material breach by Knology, Broadband or Valley of their respective obligations, representation or warranties under this Agreement; (viii) the day
preceding the filing of any bankruptcy or insolvency proceeding involving Broadband or Knology other than the Pre-Packaged Proceeding contemplated by this Agreement; (ix) the occurrence of any “Default” or “Event of Default” (as
defined in the Wachovia Credit Facility) other than a Forbearance Default under the Wachovia Credit Facility; (x) the occurrence of any “Default” or “Event of Default” (as defined in the CoBank Credit Facility); (xi) failure to
satisfy the conditions precedent described in the Wachovia Term Sheet by October 2, 2002 (or, if a Pre-Packaged Proceeding is filed as set forth in Section 3(c), December 31, 2002); (xii) the failure of the Bankruptcy Court to permit (on a
post-petition basis) Broadband and its subsidiaries to make and receive intercompany advances in accordance with the DIP Financing and the Cash Collateral Order; and (xiii) the failure of Knology to advance funds to Broadband upon Broadband’s
request as provided Section 14 of this Agreement.
          14.      Pre-Closing Funding; Debtor-in-Possession
Financing.
                        (a)   All parties
hereto agree that, prior to the consummation of the Exchange Offer, Broadband may continue borrowing, and Knology will, upon Broadband’s request, continue making advances of up to $10.0 million of additional loans pursuant to, and under the
terms and conditions of, that certain Subordinated Intercompany Credit Agreement Promissory Note, dated January 1, 2002, executed and delivered by Broadband in favor of Knology (the “Intercompany Loan
Facility” and together with all pledge agreements, security agreements, guaranty agreements, mortgages and deeds to secure debt delivered by Broadband or any subsidiary thereof in connection with the Intercompany Loan
Facility, collectively, the “Intercompany Loan Facility Documents”), the terms of which are summarized in Annex D attached hereto. To fund the
Intercompany Loan Facility, at any time prior to, in the case of the Exchange Offer, October 2, 2002, or, in the case of a Pre-Packaged Proceeding, December 31, 2002,
 13

    Knology may (i) request, and ITC may (but shall not be obligated to) provide either an advance on the Private Placement in the form of debt issued to ITC or (ii) obtain
bridge financing from a third-party lender (in either case, the “Bridge Financing”). As collateral security for the obligations of Knology under any such interim funding arrangement, ITC or
such third-party lender may obtain a collateral assignment of the Intercompany Loan Facility and the collateral security of Knology granted by Broadband in connection therewith; provided that any such assignee of the Intercompany Loan Facility
Documents shall expressly agree in writing to be subordinated to the Wachovia Credit Facility pursuant to the terms of the Subordination Agreement (as defined below). Upon consummation of the Exchange Offer or effectiveness of Pre-Packaged Plan, (i)
all indebtedness and obligations of Broadband under the Intercompany Loan Facility, and all liens and security interests granted by Broadband and its subsidiaries in favor of Knology thereunder (whether assigned to any other party as described
herein or otherwise), shall be automatically discharged, extinguished and released in consideration for receipt from Broadband of a limited guaranty of the CoBank Credit Facility and (ii) all indebtedness and obligations of Knology under the Bridge
Financing will be either (x) in the event the Bridge Financing was provided by ITC, automatically converted into Private Placement Shares or (y) in the event the Bridge Financing is provided by a third-party lender, repaid in full on the date of the
consummation of the Exchange Offer or effectiveness of Pre-Packaged Plan with a portion of the proceeds of the Private Placement. 
                        (b)   In the event Broadband commences the Pre-Packaged Proceeding,
Broadband may continue to obtain financing from Knology pursuant to the Intercompany Loan Facility without any modification or amendment, except that such financing shall now constitute
debtor-in-possession financing (the “DIP Financing”). Each party hereto hereby consents to the DIP Financing and no party hereto shall seek to amend the terms of the DIP Financing or seek to
prohibit Broadband from obtaining the DIP Financing on the terms and conditions set forth on Annex D. Knology, or an assignee thereof pursuant to the Bridge Financing, acknowledges that the DIP
Financing shall continue to be subordinated to the Wachovia Credit Facility pursuant to the terms of that certain Intercreditor and Subordination Agreement dated as of January 1, 2002 (the “Subordination Agreement”) by and among Broadband,
Knology and Wachovia, as Administrative Agent and that the DIP Financing shall constitute “Junior KNOLOGY Debt” for purposes of the Subordination Agreement (which such acknowledgement by any lender not a party to this Agreement shall be
evidenced by writing). By entering into this Agreement, Wachovia has consented to the exercise by Knology of its voting rights referred to in Section 4.1 of the Subordination Agreement in a manner consistent with the terms of this Agreement unless
and until this Agreement is terminated as provided in Section 13. Upon the effectiveness of the Pre-Packaged Plan, (i) all indebtedness and obligations of Broadband under the Intercompany Loan Facility, and all liens and security interests granted
by Broadband and its subsidiaries in favor of Knology thereunder (whether assigned to any other party as described herein or otherwise), shall be automatically discharged, extinguished and released in consideration for receipt from Broadband of a
limited guaranty of the CoBank Credit Facility and (ii) all indebtedness and obligations of Knology under the Bridge Financing will be either (x) in the event the Bridge Financing was provided by ITC, automatically be converted into Private
Placement Shares or (y) in the event the Bridge Financing is provided by a third-party lender, repaid in full on the date of the consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan with a portion of the proceeds of the
Private Placement.
                        (c)   Immediately upon the filing of
the Pre-Packaged Proceeding, Broadband shall seek to obtain, and no party hereto shall object to the entry of, a cash collateral order (the “Cash Collateral Order”) which will permit Broadband to use cash collateral of the Wachovia Credit
Facility and the Intercompany Loan Facility to fund the operational requirements of Broadband and the subsidiaries of Broadband in accordance with the projections attached to the Cash Collateral Order; provided,
however, that (i) the projections attached to the Cash Collateral Order shall be prepared using the good faith business judgment of Broadband in a manner consistent with past practice and shall be in form and substance
reasonably satisfactory to Wachovia, (ii) such Cash Collateral Order shall contain other
 14

    customary terms and conditions and shall otherwise be in form and substance satisfactory to the parties hereto and (iii) the Cash Collateral Order shall not expressly
find, and Wachovia’s consent to its entry shall not be deemed Wachovia’s agreement, that the terms and conditions of the Cash Collateral Order provide “adequate protection” of Wachovia’s interest in the cash
collateral.
          15.      Representations and Warranties.
                        (a)   Each of the signatories to this Agreement represents and warrants
to the other signatories to this Agreement that:

	 	              (i)         if an entity, it is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization and has all requisite corporate, partnership or other power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its respective obligations under, this
Agreement;

	 	              (ii)         the execution and delivery of this Agreement and the performance of its obligations
hereunder have been duly authorized by all necessary corporate, partnership or other action on its part;

	 	              (iii)         the execution, delivery and performance by it of this Agreement do not and shall not
(A) violate any provision of law, rule or regulation applicable to it or any of its affiliates or its certificate of incorporation or bylaws or other organizational documents or those of any of its subsidiaries or (B) conflict with, result
in the breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligations to which it or any of its affiliates is a party or under its certificate of incorporation, bylaws or other governing
instruments;

	 	              (iv)         the execution, delivery and performance by it of this Agreement do not and shall not
require any registration or filing with, the consent or approval of, notice to, or any other action with respect to, any Federal, state or other governmental authority or regulatory body, except such filings as may be necessary or required for
disclosure by the Securities and Exchange Commission;

	 	              (v)         this Agreement is the legally valid and binding obligation of it, enforceable against it in
accordance with the Agreement’s terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or at law); and

	 	              (vi)         it has been represented by counsel in connection with this Agreement and the transactions
contemplated by this Agreement.

                        (b)   Each of the Other Noteholders further represents and warrants to the other signatories to this Agreement that:

	 	              (i)         as of the date of this Agreement, such Other Noteholder is the beneficial owner of, or the
investment adviser or manager for the beneficial owners of, the principal amount at maturity of the Old Notes, as represented to the financial advisor and counsel to the Informal Noteholders Committee with the power and authority to vote and dispose
of such Old Notes;

 15

  
 
	 	              (ii)         such Other Noteholder has reviewed, or has had the opportunity to review, with the
assistance of professional and legal advisors of its choosing, sufficient information necessary for such Noteholder to decide to tender its Old Notes pursuant to the Exchange Offer and to accept the proposed terms of the Pre-Packaged Plan as set
forth in the Restructuring Term Sheet;

	 	              (iii)         such Other Noteholder is an “Accredited Investor” as defined in Rule 501 of
Regulation D under the Securities Act; and

	 	              (iv)         as of the date of this Agreement, such Other Noteholder does not owe any fiduciary or
similar duty to any other Person that would prevent it from taking any action required of it under this Agreement.

                        (c)   Each of SCANA and the Burton Partnerships further represents to
the other signatories to this Agreement that:

	 	              (i)         as of the date of this Agreement it is the owner of that amount of Old Notes set forth on
its signature page to this Agreement with the power and authority to vote and dispose of such Old Notes; 

	 	              (ii)         it has reviewed, or has had the opportunity to review, with the assistance of professional
and legal advisors of its choosing, sufficient information necessary for it to decide to tender for cancellation all of the Old Notes it holds pursuant to the Restructuring and to accept the proposed terms of the Pre-Packaged Plan as set forth in
the Restructuring Term Sheet;

	 	              (iii)         it is an “Accredited Investor” as defined in Rule 501 of Regulation D under the
Securities Act; and

	 	              (iv)         as of the date of this Agreement, it does not owe any fiduciary or similar duty to any
other Person that would prevent it from taking any action required of it under this Agreement.

                        (d)   Each of the Stockholders further represents and warrants to the
other signatories to this Agreement that:

	 	              (i)         as of the date of this Agreement, such Stockholder is the beneficial owner of all of the
shares of Knology’s capital stock identified on its signature page to this Agreement; and

	 	              (ii)         as of the date of this Agreement, it does not owe any fiduciary or similar duty to any
other Person that would prevent it from taking any action required of it under this Agreement.;

	 	              (iii)         it is an “Accredited Investor” as defined in Rule 501 of Regulation D under the
Securities Act.

                        (e)   Valley further
represents and warrants to the other signatories to this Agreement that:

	 	              (i)         as of the date of this Agreement, it is the owner of all of the outstanding capital stock
of Broadband and the owner of that amount of Old Notes set forth on its signature page to this Agreement;

 16

  
 
	 	              (ii)         it has reviewed, or has had the opportunity to review, with the assistance of professional
and legal advisors of its choosing, sufficient information necessary for it to decide to tender for cancellation all of the Old Notes it holds pursuant to the Restructuring and to accept the proposed terms of the Pre-Packaged Plan as set forth in
the Restructuring Term Sheet;

	 	              (iii)         it is an “Accredited Investor” as defined in Rule 501 of Regulation D under the
Securities Act; and

	 	              (iv)         as of the date of this Agreement, it does not owe any fiduciary or similar duty to any
other Person that would prevent it from taking any action required of it under this Agreement.

                        (f)   Each of CoBank and Wachovia further represents and warrants to the
other signatories to this Agreement that:

	 	              (i)         as of the date of this Agreement, it is the owner of all the outstanding indebtedness owing
under the CoBank Credit Facility and Wachovia Credit Facility, respectively;

	 	              (ii)         it has reviewed, or has had the opportunity to review, with the assistance of professional
and legal advisors of its choosing, sufficient information necessary for it to decide to enter into this Agreement pursuant to the Restructuring and to accept the Pre-Packaged Plan;

	 	              (iii)         it is an “Accredited Investor” as defined in Rule 501 of Regulation D under the
Securities Act; and

	 	              (iv)         as of the date of this Agreement, it does not owe any fiduciary or similar duty to any
other Person that would prevent it from taking any action required of it under this Agreement.

                        (g)   Broadband further represents and warrants to the other signatories
to this Agreement that (i) that each of the representations and warranties set forth in the Wachovia Credit Facility is true and correct as of the date hereof as if fully set forth herein (other than representations and warranties which speak as of
a specific date pursuant to the terms thereof, which representations and warranties shall have been true and correct as of such specific dates) and that as of the date hereof no “Default” or “Event of Default” (as defined in the
Wachovia Credit Facility) has occurred and is continuing under the Wachovia Credit Facility as of the date hereof and (ii) that each of the representations and warranties set forth in the CoBank Credit Facility is true and correct as of the date
hereof as if fully set forth herein (other than representations and warranties which speak as of a specific date pursuant to the terms thereof, which representations and warranties shall have been true and correct as of such specific dates) and that
as of the date hereof no “Default” or “Event of Default” (as defined therein in the CoBank Credit Facility) has occurred and is continuing under the CoBank Credit Facility as of the date hereof.
          16.      Preparation of Restructuring Documents. 
          Notwithstanding anything to the contrary contained in this Agreement, the obligations of the signatories to this Agreement shall be subject to the preparation of
definitive documents (in form and substance reasonably satisfactory to each of the parties hereto and their respective counsel) relating to the transactions contemplated by this Agreement, including, without limitation, the documents relating to the
Exchange Offer, the Pre-Packaged Plan, the Consent Solicitation, the Old Indenture Amendments, the Cash Collateral Order, and each Reorganization Document, which documents shall be in all respects consistent with this Agreement (including the
Restructuring Term Sheet, the CoBank Term Sheet and the Wachovia Term Sheet). Without limiting the generality of the foregoing, the obligations of SCANA and ITC referred to in Section 10 shall be conditioned upon the execution and delivery by
Knology and
 17

    SCANA and Knology and ITC, respectively, of such documents as are customary for transactions such as the investments referred to in Section 10, including, without
limitation, a stock purchase agreement containing customary representations, warranties, covenants and closing conditions, including, without limitation, as a condition to SCANA’s and ITC’s respective obligations to close, the consummation
of the other transactions contemplated by the Restructuring Term Sheet, the CoBank Term Sheet and the Wachovia Term Sheet on substantially the same terms set forth therein.
          17.      Good Faith.
          Each of the signatories to this Agreement agrees to cooperate in good faith with each other to facilitate the performance by the parties of their respective obligations
hereunder and the purposes of this Agreement. Each of the signatories to this Agreement further agrees to negotiate the Reorganization Documents in good faith and, in any event, in all respects consistent with the Restructuring Term
Sheet.
          18.      Amendments and Modifications. 
          Except as otherwise expressly provided in this Agreement, this Agreement shall not be amended, modified or supplemented, except in writing signed by Knology, Broadband,
Valley, the Banks, the Stockholders and the Required Noteholders.
          19.      No Waiver. 
          Each of the signatories to this Agreement expressly acknowledges and agrees that, except as expressly provided in this Agreement, nothing in this
Agreement is intended to, or does, in any manner waive, limit, impair or restrict the ability of any party to this Agreement to protect and preserve all of its rights, remedies and interests, including, without limitation, with respect to its claims
against and interests in Knology or Broadband.
          20.      Further Assurances.
          Each of the signatories to this Agreement hereby further covenants and agrees to execute and deliver all further documents, agreements and take all
further action that may be reasonably necessary or desirable, or that Knology may reasonably request, in order to enforce and effectively implement the terms and conditions of this Agreement. 
          21.      Complete Agreement.
          This Agreement, including the Schedules, Annexes and Exhibits hereto, constitutes the complete agreement between the parties to this Agreement with respect to the subject
matter hereof and supersedes all prior and contemporaneous negotiations, agreements and understandings with respect to the subject matter hereof. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intent of
the parties to this Agreement. In the event that any provision of this Lock-Up Agreement conflicts with the Schedules, Annexes or Exhibits hereto, the provisions of this Lock-Up Agreement shall be controlling.
          22.      Notices.
          All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be (a) transmitted by hand delivery, or (b) mailed by first class,
registered or certified mail, postage prepaid, or (c) transmitted by overnight courier, or (d) transmitted by telecopy, and in each case, if to Knology or Valley, at the address set forth below:
 18

  
 
	 		Knology, Inc.
1241 O.G. Skinner Drive
West Point, GA 31833
Telephone: (706) 634-2663
Fax: (706) 645-0148
Attention: Chad S. Wachter, General Counsel

	 		with a copy to Knology’s and Valley’s counsel:

	 		Alston & Bird LLP
601 Pennsylvania Avenue, NW
North Building, 10th Floor
Washington, DC 20004
Telephone: (202) 756-3000

Fax: (202) 756-3333
Attention: David E. Brown, Jr.

 if to Broadband, at the addresses set forth below:

	 		Knology Broadband, Inc.
1241 O.G. Skinner Drive
West Point, GA 31833
Telephone: (706) 634-2663
Fax: (706)
645-0148
Attention: Chad S. Wachter, General Counsel

	 		with a copy to Broadband’s counsel:

	 		Smith, Gambrell & Russell
Suite 3100, Promenade II
1230 Peachtree Street, N.E.
Atlanta, GA 30309
Telephone: (404)
815-3500
Fax: (404) 815-3509
Attention: Ronald E. Barab

 if to SCANA the Burton Partnerships, ITC, the Other Stockholders, Wachovia or CoBank, to
the address set forth on the applicable signature pages to this Agreement; and
 if to an Other Noteholder, to the address set forth on the signature pages to this Agreement, with a copy to the Other
Noteholders’ counsel: 

	 		Milbank, Tweed, Hadley & McCloy LLP
601 South Figueroa Street
30th Floor
Los Angeles, CA 90017
Telephone: (213)
892-4377
Fax: (213) 629-5063
Attention: Deborah Ruosch and Thomas Kreller

 19

    Notices mailed or transmitted in accordance with the foregoing shall be deemed to have been given upon receipt.
          23.      Governing Law.
          This Agreement shall be governed in all respects by the laws of the State of Georgia as such laws are applied to agreements between Georgia residents entered into and
performed entirely in Georgia, except that the General Corporation Law of the State of Delaware shall govern as to matters of stockholder approval and other corporate matters.
          24.      Jurisdiction.
          By its execution and delivery of this Agreement, each of the signatories to this Agreement irrevocably and unconditionally agrees that any legal action, suit or proceeding
against it with respect to any matter under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, shall be brought (a) in the United States
Bankruptcy Court for the Northern District of Georgia if Knology has commenced a case under Chapter 11 of the Bankruptcy Code or (b) in a federal or state court of competent jurisdiction in the State of Georgia if Knology has not commenced a case
under Chapter 11 of the Bankruptcy Code. By its execution and delivery of this Agreement, each of the signatories to this Agreement irrevocably accepts and submits itself to the jurisdiction of the United States Bankruptcy Court for the Northern
District of Georgia or a court of competent jurisdiction in the State of Georgia, as applicable under the preceding sentence, with respect to any such action, suit or proceeding.
          25.      Consent to Service of Process.
          Each party to this Agreement irrevocably consents to service of process by mail at the address listed with the signature of each such party on the signature pages to this
Agreement. Each party agrees that its submission to jurisdiction and consent to service of process by mail is made for the express benefit of each of the other parties to this Agreement.
          26.      Specific Performance.
          It is understood and agreed by each of the signatories to this Agreement that money damages would not be a sufficient remedy for any breach of this Agreement by any party
and each non-breaching party shall be entitled to specific performance, injunctive, rescissionary or other equitable relief as remedy for any such breach.
          27.      Headings.
          The headings of the sections, paragraphs and
subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof.
          28.      Successors and Assigns.
          This Agreement is intended to bind and
inure to the benefit of the parties to this Agreement and their respective successors, permitted assigns, heirs, executors, administrators and representatives. The agreements, representations and obligations of the undersigned parties under this
Agreement are, in all respects, several and not joint.
          29.      Counterparts.
 20

             This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page by telecopier shall be effective as delivery of a manually executed counterpart. Any Other Stockholder or Other Noteholder may become party to
this Agreement on or after the date of this Agreement by executing a signature page to this Agreement.
          30.      No Third-Party Beneficiaries.
          Unless expressly stated in this Agreement, this Agreement shall be solely for the benefit of the
parties to this Agreement, and no other Person or entity shall be a third-party beneficiary hereof.
          31.      No Solicitations.
          This Agreement is not intended to be, and each party to this Agreement acknowledges that it is not, a
solicitation of the acceptance or rejection of any Pre-Packaged Plan of reorganization for Knology pursuant to Section 1125 of the Bankruptcy Code. 
          32.      Consideration. 
          It is hereby acknowledged by each of the parties
that no consideration (other than the obligations of the other parties under this Agreement) shall be due or paid to the parties for their agreement to support the Pre-Packaged Plan in accordance with the terms and conditions of this Agreement,
other than Broadband’s agreement to use reasonable efforts to obtain approval of confirmation of the Pre-Packaged Plan in accordance with the terms and conditions of this Agreement. The parties hereto agree and acknowledge that this Section 32
shall not limit the right of Wachovia and CoBank to receive, nor the obligation of Knology, Broadband or Valley, as applicable, to pay, the reasonable and customary fees and expenses previously agreed to in connection with the agreement of Wachovia
to commit to provide the Wachovia Credit Facility in accordance with the terms of the Wachovia Term Sheet or the agreement of CoBank to commit to provide the CoBank Credit Facility in accordance with the terms of the CoBank Term Sheet. 

         33.      Independent Due Diligence and Decision-Making. 
                        (a)   Each of the parties hereby confirms that its decision to execute
this Agreement has been based upon its independent investigation of the operations, businesses, financial and other conditions and prospects of Knology and Broadband.
                        (b)   Each of the Noteholders and the Stockholders acknowledges that all
documents, records and books pertaining to Knology and Broadband requested by such Noteholders and Stockholders have been made available for inspection by it, its attorneys, financial advisors and accountants, and that it understands that all such
documents, books and records will continue to be made available to it and its attorneys, financial advisors and accountants for inspection upon reasonable notice, during reasonable business hours, at Alston & Bird LLP, One Atlantic Center, 1201
West Peachtree Street, Atlanta, Georgia 30309-3424. Each of the Noteholders and the Stockholders and their respective advisors have had a reasonable opportunity to ask questions of and receive answers from the officers of Knology and Broadband, or a
person or persons acting on their behalf, concerning Knology and Broadband and the terms and conditions of the offering of the Restructuring, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or
expense by the officers of Knology and Broadband, necessary to confirm the accuracy of the information provided by, or on behalf of, Knology and Broadband. All such questions have been answered to the full satisfaction of such Noteholder or such
Stockholder, as applicable.
 21

                           (c)   Each of
the Noteholders and the Stockholders has such knowledge and experience in financial and business matters as to enable it (i) to utilize the information made available to it in connection with the Restructuring, (ii) to evaluate the merits
and risks associated with the Restructuring, and (iii) to make an informed decision with respect thereto.
                        (d)   Each of the Noteholders and the Stockholders has the capacity to protect its own interests in connection with the Restructuring and has obtained, in such Noteholder’s and such
Stockholder’s judgment, sufficient information relating to Knology and Broadband and their businesses to evaluate the merits and risks of this investment.
                        (e)   Each of the Noteholders and the Stockholders understands that
(i) neither the New Notes, the Series C Preferred Stock to be issued in the Private Placement or the New Preferred Stock to be issued in the Restructuring, nor the common stock or non-voting common stock issuable upon conversion of the Series C
Preferred Stock and the New Preferred Stock, have been registered under the Securities Act or any applicable state securities laws in reliance upon exemptions from the registration provisions of such laws, (ii) the New Notes, the shares of
Series C Preferred Stock and the shares of New Preferred Stock must be held by such Noteholder or Stockholder, as applicable indefinitely unless the sale or transfer thereof is subsequently registered under the Securities Act and any applicable
state securities laws, or an exemption from such registration is available, and the New Notes and the certificates representing the shares of Series C Preferred Stock and the New Preferred Stock will be legended to reflect such restrictions,
(iii) other than as set forth in the Registration Rights Agreement with respect to the New Notes and the Stockholders Agreement with respect to the Series C Preferred Stock and the New Preferred Stock, Knology is under no obligation, and has no
current intention, to register the New Notes, the Series C Preferred Stock or the New Preferred Stock, or the common stock or non-voting common stock issuable upon conversion of the Series C Preferred Stock or the New Preferred Stock, on such
Noteholder’s or Stockholder’s behalf, as applicable or to assist such Noteholder or Stockholder in complying with any exemption from registration, and (iv) the officers of Knology will rely upon the representations and warranties made
by each Noteholder and each Stockholder in this Agreement in order to establish such exemptions from the registration provisions of the Securities Act and any applicable state securities laws. 
                        (f)   Each of the Noteholders and each of the Stockholders acknowledges
that there is no assurance that any exemption from registration under the Securities Act or applicable state securities laws will be available to it to transfer the New Notes, the shares of Series C Preferred Stock, the shares of New Preferred Stock
or the common stock issuable upon conversion of the Series C Preferred Stock or the New Preferred Stock and that, even if available, such exemptions may not allow such Noteholder or such Stockholder to transfer all or any portion of such New Notes
or such shares under the circumstances, in the amounts or at the times such Noteholder or such Stockholder might propose.
                        (g)   Each of the Noteholders and each of the Stockholders understands
that any and all financial forecasts provided by, or on behalf of, Knology or Broadband are based on various estimates and assumptions of the officers of Knology and Broadband and their respective advisors and are subject to the caveats set forth in
such materials. 
          34.      Public Disclosures. Prior to the issuance of any
public disclosures regarding the Restructuring, including those referred to in Sections 4(c), 5(d), 7(c) and 8(c), Knology and Broadband shall consult with the Banks, the Noteholders and the Stockholders as to the form and substance of such public
disclosures materially related to this Agreement or any other transaction contemplated hereby; provided, that nothing in this Section 34 shall be deemed to prohibit Knology or Broadband from making any
disclosure which their respective counsels deem necessary or advisable in order to satisfy their respective disclosure obligations imposed by law.
 22

             35.      Subsidiary Acknowledgement.
Each subsidiary of Broadband hereby acknowledges and consents to the terms of this Agreement and confirms that its respective obligations under any Guaranty (as defined in the Wachovia Credit Facility) and the other Loan Documents (as defined in the
Wachovia Credit Facility) shall remain in full force and effect notwithstanding the restructuring of the Wachovia Credit Facility in accordance with the terms of the Wachovia Term Sheet, whether pursuant to the Exchange Offer or the Pre-Packaged
proceeding.
 [SIGNATURES BEGIN ON NEXT PAGE]
 23

             IN WITNESS WHEREOF, each of the parties to this Agreement has caused this Agreement to be executed and delivered
by its duly authorized officers as of the date first written above.

		 	KNOLOGY, INC.
	
	 	By: 	
/s/ RODGER L. JOHNSON
				

	 	 	 	Name:  Rodger L. Johnson
Title:  President and CEO

		 	KNOLOGY BROADBAND, INC.
	
	 	By: 	
/s/ RODGER L. JOHNSON
				

	 	 	 	Name: Rodger L. Johnson
Title:  President and CEO

		 	VALLEY TELEPHONE COMPANY, INC.
	
	 	By: 	
/s/ RODGER L. JOHNSON
				

	 	 	 	Name: Rodger L. Johnson
Title: President and CEO

Principal Amount of Old Notes:
$ 64,206,000

		 	KNOLOGY OF COLUMBUS, INC.
KNOLOGY OF MONTGOMERY, INC.
KNOLOGY OF PANAMA CITY, INC.
KNOLOGY OF AUGUSTA,
INC.
KNOLOGY OF CHARLESTON, INC.
KNOLOGY OF HUNTSVILLE, INC.
KNOLOGY OF SOUTH CAROLINA, INC.
KNOLOGY OF ALABAMA, INC.
KNOLOGY OF
FLORIDA, INC.
KNOLOGY OF TENNESSEE, INC.
KNOLOGY OF GEORGIA, INC.
	
	 	By: 	
/s/ RODGER L. JOHNSON
				

	 	 	 	Name: Rodger L. Johnson
Title: President and CEO

		 	SCANA COMMUNICATIONS HOLDINGS, INC.
	
	 	By: 	
/s/ PETER J. WINNINGTON
				

	 	 	 	Name: Peter J. Winnington
Title: Assistant Secretary/Assistant Treasurer
Address:
300 Delaware Avenue
                   Suite 510
                   Wilmington, DE 19801

Principal Amount of Old Notes: $ 118,071,000

 24

  
 
		 	 	Number of Shares of:
    Series A Preferred Stock            7,234,271        
    Series B Preferred Stock                                    
    Series C Preferred Stock            8,333,333        
    Common Stock                                        
            

		 	THE BURTON PARTNERSHIP, LIMITED PARTNERSHIP
	
	 	By: 	
/s/ DONALD W. BURTON
				

	 	 	 	Name: Donald W. Burton
Title:
Address:

565 Pine Drive
Jackson, Wyoming
83001-4643

Principal Amount of Old Notes: $ 3,125,000

Number of Shares of:
    Series A Preferred Stock
            29,446         
    Series B Preferred Stock             52,631         
    Series C Preferred Stock            166,667         
    Common Stock                                        
         

		 	THE BURTON PARTNERSHIP (QP), LIMITED PARTNERSHIP
	
	 	By: 	
/s/ DONALD W. BURTON
				

	 	 	 	Name:
Title:
Address:

565 Pine Drive
Jackson, Wyoming 83001-4643

Principal Amount of Old Notes: $ 9,375,000

Number of Shares of:
    Series A Preferred Stock              88,338         
    Series B Preferred Stock             157,895         
    Series C Preferred Stock             500,000         
    Common Stock                                        
           

  
  25
  

  
 
		 	ITC TELECOM VENTURES, INC.
	
	 	By: 	
/s/ WILLIAM H. SCOTT,III
				

	 	 	 	Name: William H. Scott, III
Title: President
Address:

3300 20th
Avenue
Valley, Alabama 36854

Number of Shares of:
    Series A Preferred Stock                                  
    Series B Preferred Stock                                   
    Series C Preferred Stock             8,333,333      
    Common Stock                                        
           

		 	WACHOVIA BANK,
   NATIONAL ASSOCIATION
	
	 	By: 	
/s/ FRANKLIN M. WESSINGER
				

	 	 	 	Name:     Franklin N. Wessinger
Title:       Managing
Director
Address: 301 South College Street
                Charlotte,
NC 28288-0760

		 	COBANK, ACB
	
	 	By: 	
/s/ RICK FREEMAN
				

	 	 	 	Rick Freeman
Vice President
Address:

900 Circle 75 Parkway
Suite 1400
Atlanta, Georgia 30339

		 	J. H. WHITNEY IV, L.P.

By: J. H. Whitney Equity Partners IV, L.L.C.,
      Its General
Partner
	
	 	By: 	
/s/ WILLIAM LAVERACK,JR.
				

	 	 	 	William Laverack, Jr.
Managing Member
Address:

c/o Whitney & Co.
177 Broad
Street, 15th Floor
Stamford, CT 06901

  26

  
 
		 	 	Number of Shares of:
    Series A Preferred Stock                                 
    Series B Preferred Stock            8,421,053      
    Series C Preferred
Stock            3,333,333      
    Common Stock                                        
          

		 	Blackstone CCC Capital Partners L.P.

By: Blackstone Management Associates III L.L.C.,
      Its General
Partner
	
	 	By: 	
/s/ BRET PEARLMAN
				

	 	 	 	Bret Pearlman
Managing Member
Address:

345 Park Avenue, 31st Floor
New York, New York
10154

Number of Shares of:
    Series A Preferred Stock                                 
    Series B Preferred Stock          5,029,244       
    Series C Preferred Stock
         2,123,459       
    Common Stock                                        
         

		 	Blackstone CCC Offshore Capital Partners L.P.

By: Blackstone Management Associates III L.L.C.,
      Its General Partner
	
	 	By: 	
/s/ BRET PEARLMAN
				

	 	 	 	Bret Pearlman
Managing Member
Address:

345 Park Avenue, 31st Floor
New York, New York
10154

Number of Shares of:
    Series A Preferred Stock                                 
    Series B Preferred Stock          907,598           
    Series C Preferred Stock          383,208           
    Common Stock                                        
          

		 	Blackstone Family Investment Partnership III L.P.
By: Blackstone Management Associates III L.L.C.,
      Its General Partner
	
	 	By: 	
/s/ BRET PEARLMAN
				

	 	 	 	Bret Pearlman

  27

  
 
		 	 	Managing Member
Address:

345 Park Avenue, 31st Floor 
New York, New York 10154

Number of
Shares of:
    Series A Preferred Stock                                 
    Series B Preferred Stock             378,947        
    Series C Preferred Stock             160,000        
    Common Stock                                        
          

		 	South Atlantic Venture Fund II, Limited Partnership

By: South Atlantic Venture Partners II, Limited
      Partnership
	
	 	By: 	
/s/ DONALD W. BURTON
				

	 	 	 	Donald W. Burton
Managing Partner
Address:

614 W. Bay Street
Tampa, Florida
33606

Number of Shares of:
   Series A Preferred Stock         206,674     
   Series B Preferred Stock                           
   Series C Preferred Stock                           
   Common Stock                                        
  

		 	South Atlantic Venture Fund III, Limited Partnership

By: South Atlantic Venture Partners III, Limited
      Partnership
	
	 	By: 	
/s/ DONALD W. BURTON
				

	 	 	 	Donald W. Burton
Managing Partner
Address:

614 W. Bay Street
Tampa, Florida
33606

Number of Shares of:

 28

  
 
		 	 	   Series A Preferred Stock          1,685,251      

   Series B Preferred Stock                                 
    Series C Preferred Stock                                 
    Common Stock                                        
        

		 	South Atlantic Private Equity Fund IV, Limited
Partnership

By: South Atlantic Private Equity Fund IV, Inc.,
      Its General Partner
	
	 	By: 	
/s/ DONALD W. BURTON
				

	 	 	 	Donald W. Burton
Chairman and Managing Director
Address:

614 W. Bay Street
Tampa,
Florida 33606

Number of Shares of:
   Series A Preferred Stock         592,268     
   Series B Preferred Stock         663,158     
   Series C Preferred Stock          280,000    
   Common Stock                                        
  

		 	South Atlantic Private Equity Fund IV (QP), Limited
Partnership

By: South Atlantic Private Equity Fund IV, Inc.,
      Its General Partner
	
	 	By: 	
/s/ DONALD W. BURTON
				

	 	 	 	Donald W. Burton
Chairman and Managing Director
Address:

614 W. Bay Street
Tampa,
Florida 33606

Number of Shares of:
   Series A Preferred Stock         872,250     
   Series B Preferred Stock         915,789     
   Series C Preferred Stock          386,667    
   Common Stock                                        
  

	
	 	 	
/s/ CAMPBELL B. LANIER III
				

	 	 	 	Campbell B. Lanier III
Address:

3300 20th Avenue

 29

  
 
		 	 	Valley, Alabama36854

Number of Shares of:
   Series A Preferred Stock         8,920,794    
   Series B Preferred Stock                             
   Series C Preferred Stock
          333,333      
   Common Stock                                        
    

		 	AT&T VENTURE FUND II, LP

By: Venture Management LLC
      Its General Partner
	
	 	By: 	
/s/ RICHARD S. BODMAN
				

	 	 	 	Richard S. Bodman
Manager
Address:

2 Wisconsin Circle
Suite 610
Chevy Chase, Maryland 20815

Number of Shares of:
   Series A Preferred Stock         2,931,600   
   Series B Preferred Stock            185,684   
   Series C Preferred Stock                            
   Common Stock                                        
  

		 	SPECIAL PARTNERS FUND INTERNATIONAL, LP

By: Venture Management III LLC
      Its General
Partner
	
	 	By: 	
/s/ RICHARD S. BODMAN
				

	 	 	 	Richard S. Bodman
Manager
Address:

2 Wisconsin Circle
Suite 610
Chevy Chase, Maryland 20815

Number of Shares of:

 30

  
 
		 	 	   Series A Preferred Stock         856,800      
   Series B Preferred Stock         182,059      
   Series C Preferred Stock
                           
   Common Stock
                                       
   

		 	Satellite Asset Management
	
	 	By: 	
/s/ MATTHEW HECKLER
				

	 	 	 	Name: Matthew Heckler
Title:
Address:

10 East 50th Street
New York, NY
10022

		 	BLACKROCK FINANCIAL MANAGEMENT, INC.,
as Investment Advisor to various accounts holding or
beneficially owning the Securities
	
	 	By: 	
/s/ DENNIS M. SCHANEY
				

	 	 	 	Name: Dennis M. Schaney
Title: Managing Director
Address:

BlackRock
40 East 52nd Street
New York, NY 10022
Attention: Mark Glass
Facsimile: (212) 754-8756

		 	BOND STREET CAPITAL, L.L.C.
	
	 	By: 	
/s/ SAM S. KIM
				

	 	 	 	Name: Sam S. Kim
Title: Managing Member
Address:

Bond Street
Investors, L.L.C.
700 Palisade Avenue
Englewood Cliffs, NJ 07052
Attention: Sam Kim
Facsimile: (201) 567-5055

		 	MORGAN STANLEY INVESTMENT
MANAGEMENT, as Investment Advisor
	
	 	By: 	
/s/ DEANNA L. LOUGHNANE
				

 31

  
 
		 	 	Name: Deanna L. Loughnane
Title: Executive Director
Address:

Morgan
Stanley Investment Management
1 Tower Bridge
100 Front Street
West Conshiohocken, PA 19428

		 	LAZARD DEBT RECOVERY MASTER ACCOUNT,
L.P.

By: Lazard Debt Recovery Management, LLC, its
      investment adviser
	
	 	By: 	
/s/ DAVID L. TASHIJAN
				

	 	 	 	Name: David L. Tashijan
Title: Managing Director
Address:

30
Rockefeller Plaza, 48th Floor
New York, NY 10020
Attention: Ivan Nedds
Facsimile: (212) 632-6655

 32

    Schedule A
 Stockholders

	Stockholder		Series A		Series B		Series C	
	
		
		
		
	
	SCANA Communications Holdings, Inc.	 	 	7,234,271	 	 	 	 	 	8,333,333	 
	The Burton Partnership, Limited Partnership	 	 	117,784	 	 	52,631	 	 	166,667	 
	The Burton Partnership (QP), Limited Partnership	 	 	 	 	 	157,895	 	 	500,000	 
	ITC Telecom Ventures, Inc.	 	 	 	 	 	 	 	 	8,333,333	 
		 	 	 	 	 	 	 	 	 	 
	Other Stockholders:	 	 	 	 	 	 	 	 	 	 
	J. H. Whitney IV, L.P.	 	 	 	 	 	8,421,053	 	 	3,333,333	 
	Blackstone CCC Capital Partners L.P.	 	 	 	 	 	5,029,244	 	 	2,123,459	 
	Blackstone CCC Offshore Capital Partners L.P.	 	 	 	 	 	907,598	 	 	383,208	 
	Blackstone Family Limited Investment Partnership III L.P.	 	 	 	 	 	378,947	 	 	160,000	 
	South Atlantic Venture Fund II, Limited Partnership	 	 	206,674	 	 	 	 	 	 	 
	South Atlantic Venture Fund III, Limited Partnership	 	 	1,685,251	 	 	 	 	 	 	 
	South Atlantic Private Equity Fund IV, Limited Partnership	 	 	592,268	 	 	663,158	 	 	280,000	 
	South Atlantic Private Equity Fund IV (QP), Limited Partnership	 	 	872,250	 	 	915,789	 	 	386,667	 
	Campbell B. Lanier III	 	 	8,920,794	 	 	 	 	 	333,333	 
	AT&T Venture Fund II, LP	 	 	2,931,600	 	 	185,684	 	 	 	 
	Special Partners Fund International, LP	 	 	856,800	 	 	182,059	 	 	 	 
	   Total	 	 	23,417, 692	 	 	16,894,058	 	 	24,333,333	 

  Schedule A-1 

    Schedule B
 Noteholders
 SCANA Communications Holdings,
Inc.
The Burton Partnership, Limited Partnership
The Burton Partnership (QP), Limited Partnership
 Other Noteholders:
 Satellite Asset Management
Blackrock Financial Management, Inc.
Bond Street Capital, L.L.C.
Morgan Stanley Investment Management
Lazard Debt Recovery
Master Account, L.P.
  
  Schedule B-1 

    Schedule C
 Members of the Informal Noteholders’ Committee and Aggregate
Principal Amount of Old Notes Held
 Satellite Asset Management
10 East 50th Street
New York, NY 10022
 BlackRock
Financial Management, Inc.
40 East 52nd Street
New York, NY 10022
Attention: Mark Glass
Facsimile: (212) 754-8756
 Bond
Street Capital, L.L.C.
Bond Street Investors, L.L.C.
700 Palisades Avenue
Englewood Cliffs, NJ 07052
 Morgan Stanley Investment
Management
1 Tower Bridge
100 Front Street
West Conshiohocken, PA 19428
 Lazard Debt Recovery Master Account, L.P.
30
Rockefeller Plaza, 48th Floor
New York, NY 10020
Attention: Ivan Nedds
Facsimile: (212) 632-6655
 Aggregate Principal Amount of Old Notes
Held 
by the Members of the Informal Noteholders’ Committee:   $157,656,000            

 Schedule C-1 

    Annex A
 Restructuring Term Sheet

		 
	Purpose	The purpose of the recapitalization plan is to effect a reorganization of the capital structure of Knology, Inc. (“Knology”) and its subsidiaries (collectively, the “Company”) via a
debt-for-debt-and-equity exchange offer and consent solicitation, a restructuring of certain credit facilities and certain outstanding equity securities and certain related transactions and/or consents described herein and contemplated hereby, with
a view to enable the Company to continue as an adequately capitalized going concern. Accordingly, the recapitalization plan is designed to ensure the Company’s long-term financial stability and economic viability for the benefit of all
stakeholders.
	 	 
	Transaction	The Company proposes to exchange (the “Exchange Offer”) the 11 7/8% Senior Discount Notes due 2007 (the “Old Notes”) issued by
Knology Broadband, Inc. (formerly Knology Holdings, Inc.) (“Broadband”) for 12% Senior Unsecured Notes due 2009 issued by Knology (the “New Notes”) and shares of a new Series D non-cumulative, convertible preferred stock (the
“New Series D Preferred Stock”) or shares of a new Series E non-cumulative, non-voting convertible preferred stock (“New Series E Preferred Stock”) to be issued by Knology (the New Series D Preferred Stock together with New
Series E Preferred Stock are collectively referred to as “New Preferred Stock”). As with Knology’s existing Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (collectively, the “Existing Preferred
Stock”), the New Preferred Stock would not have a stated maturity date and would share ratably, on an as-converted basis, in any dividends declared on Knology’s Common Stock. 
	 	 
	 	Concurrently with consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan (as defined below) as applicable, (1) the Amended and Restated Certificate of Incorporation of Knology will be
amended to authorize the New Preferred Stock and a new class of Non-Voting Common Stock, to increase the authorized shares of Common Stock and to amend the terms of the Existing Preferred Stock as described below and as set forth in Exhibit A hereto (the “Charter Amendment”); (2) the existing Stockholders Agreement will be amended in certain respects described below (the “Stockholders Agreement Amendment”); and (3) subject to
the terms and conditions of the Lock-Up Agreement to which this Restructuring Term Sheet is attached, certain existing Knology stockholders will contribute approximately $39.0 million in cash (the “Private Placement”) in 

 Annex A-1

  
 
		exchange for Series C Preferred Stock (the “Private Placement Shares”).
	 	 
	 	Also concurrently with consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan, as applicable, certain of the Company’s secured credit facilities will be restructured as described
further herein.
	 	 
	 	The outstanding debt issued pursuant to the intercompany loan facility between Knology and Broadband will be extinguished and forgiven.
	 	 
	Old Notes Outstanding	Of the $444.1 million face amount of Old Notes that are currently outstanding:

		 	•	$64.2 million are held by Valley Telephone Co., Inc., a subsidiary of Knology (“Valley”).

		 	•	$130.6 million are held by SCANA Communications Holdings, Inc., The Burton Partnership, Limited Partnership and The Burton Partnership (QP), Limited Partnership (collectively the
“Affiliated Holders”).

		 	•	$249.3 million are held by holders other than Valley and the Affiliated Holders (collectively the “Non-Affiliated Holders”).

	Implementation	The Exchange Offer will be conducted as a private placement, pursuant to Rule 506 under the Securities Act and under the Section 4(2) exemption, to be consummated no later than September 30, 2002. Concurrently
with the Exchange Offer, Broadband will conduct a consent solicitation (the “Consent Solicitation”) to remove substantially all covenants in the Old Indenture governing the Old Notes (the “Old Indenture Amendments”). In addition,
approval of the stockholders of Knology will be required to effect the Charter Amendment, Stockholders Agreement Amendment, Exchange Offer and Private Placement.
	 	 
	 	Consummation of the Exchange Offer will be conditioned upon the satisfaction of the Minimum Tender Condition (as defined in the Lock-Up Agreement); provided that Knology can waive the Minimum Tender Condition
only with the approval of (i) a special committee of Knology’s board of directors, (ii) Other Noteholders (as defined in the Lock-Up Agreement) holding beneficially or of record at least 75% in aggregate principal amount at maturity of the Old
Notes held by the Other Noteholders and (iii) SCANA.
	 	 
	 	The Company intends to prepare a pre-packaged plan of reorganization in bankruptcy as an alternative means of effecting the reorganization of the Company’s capital structure upon the terms set forth in
this Restructuring Term Sheet (the “Pre-

 Annex A-2

  
 
		Packaged Plan”) in the event the conditions to consummation of the Exchange Offer are not met, including tenders of a requisite amount of the Old Notes. The Pre-Packaged Plan will be reflected in a
proposed plan of reorganization of Broadband. In addition to the Consent Solicitation, the Company will also be soliciting the votes of the holders of the Old Notes to accept the Pre-Packaged Plan.
	 	 
	 	Non-Affiliated Holders who collectively hold at least 60% in principal amount at maturity of Old Notes held by the Non-Affiliated Holders, all Affiliated Holders and Valley will enter into the Lock-Up Agreement
with the Company pursuant to which they will agree (subject to the terms and conditions of the Lock-Up Agreement), among other things, to tender their Old Notes, to consent to the Old Indenture Amendments, to accept the Pre-Packaged Plan, and not to
transfer their Old Notes prior to the earlier of consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan except to the extent the transferee agrees to be bound by the Lock-Up Agreement and any consents or votes already submitted
by such Holder prior to such transfer.
	 	 
	 	The Lock-Up Agreement will also be executed by: (a) Wachovia and CoBank reflecting their agreement (subject to the terms and conditions of the Lock-Up Agreement) to restructure their respective credit
facilities as contemplated herein and in the Lock-Up Agreement and to accept the Pre-Packaged Plan; (b) existing stockholders reflecting their agreement (subject to the terms and conditions of the Lock-Up Agreement) to vote in favor of, or otherwise
consent to, all matters set forth in the Lock-Up Agreement requiring stockholder approval pursuant to applicable law or otherwise, including voting in favor of or otherwise consenting to the Charter Amendment and the Stockholders Agreement Amendment
and generally not to transfer their shares of voting stock prior to the termination of the Lock-Up Agreement except to the extent the transferee agrees to be bound by the Lock-Up Agreement and any consents or votes already submitted by such
stockholder prior to such transfer; and (c) the new equity investors reflecting their support for the restructuring described herein and their commitments to participate in the Private Placement (subject to the terms and conditions of the Lock-Up
Agreement).
	 	 
	Conditions to Closing
   of Exchange Offer	The obligations of the Affiliated Holders and the Non-Affiliated Holders pursuant to the Lock-Up Agreement will be conditioned on the satisfaction of each of the following conditions: (a) Knology’s charter
shall be amended to provide that up to 12% of the outstanding Common Stock of Knology (as of the date of consummation of the Exchange Offer) on an as-converted basis (after giving effect to the Exchange Offer and the Private Placement) will be
reserved for management options, and Knology

 Annex A-3

  
 
		will commit to reprice management options, but the other terms and conditions of the existing option arrangements will remain substantially the same (the repricing shall be effected through a cancellation of
the existing options and, after six months and one day following such cancellation, grants of options for the same number of shares at the then-current fair market price of the Common Stock), (b) the Wachovia and CoBank credit facilities shall be
restructured on terms and conditions as set forth in the Bank Term Sheets (as defined in the Lock-Up Agreement), and (c) the Company shall use its best efforts to consummate the Exchange Offer no later than September 30, 2002 or, as provided in the
Lock-Up Agreement, shall use its best efforts to file the Pre-Packaged Plan no later than October 2, 2002, in each case unless extended as allowed under the Lock-Up Agreement.
	 	 
	 	The obligations of the parties under the Lock-Up Agreement shall be subject to other terms and conditions more fully described in the Lock-Up Agreement.
	 	 
	Exchange Offer    Consideration	In the aggregate Knology will issue in the Exchange Offer $193.5 million of New Notes and shares of New Preferred Stock equal to 19.3% of Knology’s issued and outstanding Common Stock as of the date of
consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan, as applicable, on an as-converted basis, after giving effect to the issuance of the New Preferred Stock in the Exchange Offer or pursuant to the Pre-Packaged Plan and the
issuance of Series C Preferred Stock in the Private Placement, but without giving effect to outstanding options and warrants to purchase equity securities of Knology issued prior to July 1, 2002. Based upon the principal amounts of Old Notes held by
Non-Affiliated Holders, Affiliated Holders and Valley as set forth above, upon consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan, as applicable:
	 	 
	 	(1) the Non-Affiliated Holders (and SCANA, in respect of Old Notes in excess of $115.1 million held by SCANA or any of its affiliates) will collectively receive:

		 	•	$148 million in aggregate principal amount of New Notes; and

		 	•	New Series D Preferred Stock (or Series E Preferred Stock in the case of SCANA) representing 5.0% of Knology’s issued and outstanding Common Stock, on the date of consummation
of the Exchange Offer or effectiveness of the Pre-Packaged Plan, as applicable, on an as-converted basis after giving effect to the Exchange Offer or the Pre-Packaged Plan, as applicable, and the Private Placement,

		not inclusive of any remaining fees payable to the financial advisor to the Informal Noteholders Committee relating to the Exchange Offer and related transactions.

 Annex A-4

  
 
		(2) the Affiliated Holders (other than in respect of Old Notes in excess of $115.1 million held by SCANA or any of its affiliates) will collectively receive:

		 	•	$45.5 million in aggregate principal amount of New Notes; and

		 	•	New Preferred Stock representing 14.3% of Knology’s issued and outstanding Common Stock, on the date of consummation of the Exchange Offer or effectiveness of the Pre-Packaged
Plan, as applicable, on an as-converted basis after giving effect to the Exchange Offer or the Pre-Packaged Plan, as applicable, and the Private Placement. SCANA will receive New Series E Preferred Stock and the Burton Partnerships will receive New
Series D Preferred Stock.

		(3) Valley will surrender the Old Notes held by it to be cancelled in consideration for receipt from Broadband of a limited guaranty of the CoBank Credit Facility. 
	 	 
	Private Placement    Consideration	Concurrently with the consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan, as applicable, in exchange for the $39.0 million in cash to be paid by the new equity investors in the Private
Placement, Knology will issue the Private Placement Shares at an issuance price of $3.00 per share.
	 	 
	Terms of New Preferred    Stock and Treatment of        Existing Preferred Stock,    Common Stock, Options    
	As mentioned above, Knology’s Existing Preferred Stock will remain outstanding after consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan, as applicable, and consummation of the
Private Placement, but pursuant to the Charter Amendment:
	   and Other Equity Related	 
	    Securities	(1) the New Preferred Stock will have an absolute liquidation preference ($1.87 per share) over the Existing Preferred Stock. The New Series D Preferred Stock and the New Series E Preferred Stock will rank pari
passu with respect to liquidation preference. The Series B and Series C Preferred Stock will retain a liquidation preference over the Series A Preferred Stock; 
	 	 
	 	(2) the New Series D Preferred Stock will vote together with the Common Stock and not as a separate class, except as specified herein or as otherwise required by law;
	 	 
	 	(3) the anti-dilution rights currently in effect for the holders of Existing Preferred Stock will be waived with respect to the Private Placement and the Exchange Offer and such anti-dilution rights will be
eliminated for all subsequent issuances of Common Stock equivalents (including the New Preferred Stock) other than stock splits, stock dividends or other similar transactions;
	 	 
	 	(4) the separate voting rights of holders of Existing Preferred Stock for all matters (other than alterations or changes to the powers, preferences, or special rights of such series) will be

 Annex A-5

  
 
		eliminated; and
	 	 
	 	(5) the definition of Qualified Public Offering will be amended to delete the minimum public offering prices and offering size.
	 	 
	 	Except as set forth in (1) above, the New Preferred Stock will be identical in every respect to the Existing Preferred Stock (as amended by the Charter Amendment), except the New Preferred Stock will have
(1) an initial conversion ratio of 1:1 and (2) a per share liquidation preference of $1.87 per share and the New Series E Preferred Stock will be non-voting and will be convertible into Non-Voting Common Stock (which will be indistinguishable
from the Common Stock except for the absence of voting rights). The New Series E Preferred Stock will be converted into Series D Preferred Stock, and the Non-Voting Common Stock will be converted into Common Stock, when transferred by SCANA or one
of its affiliates to a person other than SCANA or one of its affiliates. The holders of the Existing Preferred Stock, as well as the holders of Knology’s Common Stock, options and other equity rights, will be diluted as to their economic
ownership percentage as a result of the Private Placement and the Exchange Offer. The Charter Amendment shall provide that the terms of the New Series E Preferred Stock shall not be amended such that the amendment has the effect of establishing
rights and benefiting holders of such New Series E Preferred Stock in a manner more favorable in any material respect than the holders of the New Series D Preferred Stock, unless, in each such case, the terms of the New Series D Preferred Stock are
amended so as to give holders of New Series D Preferred Stock the same rights and benefits. The Charter Amendment shall provide that the terms of the Existing Preferred Stock shall not be amended such that the amendment has the effect of
establishing rights and benefiting holders of such Existing Preferred Stock in a manner more favorable in any material respect than the holders of the New Preferred Stock, unless, in each such case, the terms of the New Preferred Stock are amended
so as to give holders of New Preferred Stock the same rights and benefits. 
	 	 
	 	Pursuant to the Stockholders Agreement Amendment, the Stockholders Agreement will be amended to conform the definition of Qualified Public Offering to the Charter Amendment definition.
	 	 
	Proposed Terms of the 	Issuer
	   New Notes	Knology

Guarantor(s)

None

Initial Face Amount

 Annex A-6

  
 
		$193.5 million

Interest
	 	 
	 	For the first 18 months following consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan, as applicable, Knology shall pay interest semiannually either (at Knology’s option with
respect to any such semiannual period): (a) in cash at the rate of 11% per annum; or (b) in-kind at the rate of 13% per annum. Following the initial 18-month period, Knology shall pay interest in cash at the rate of 12% per annum, payable
semiannually.
	 	 
	 	Maturity
	 	 
	 	Seventh year anniversary of the consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan, as applicable.
	 	 
	 	Optional Redemption
	 	 
	 	Redeemable at the option of Knology at any time after consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan, as applicable, at a premium to the face of the then-outstanding New Notes
equal to: (a) if redeemed prior to the first anniversary of the date of issuance, 102%; (b) if redeemed after the first anniversary of the date of issuance and prior to the second anniversary of the date of issuance, 101%; and (c) if redeemed any
time after the second anniversary of the date of issuance, 100% (plus, in each case, accrued and unpaid interest to the date of redemption).
	 	 
	 	Ranking
	 	 
	 	The New Notes will be senior unsecured obligations and will rank senior in right of payment to all existing and future funded indebtedness of Knology and pari passu with all trade payables incurred in the
ordinary course of business. The New Notes will rank pari passu with the guarantee of Knology under the CoBank credit facility.
	 	 
	 	Change of Control
	 	 
	 	Upon a change of control, holders of the New Notes may require the Company to repurchase the New Notes at a repurchase price equal to 101% of the then outstanding principal amount, plus accrued and unpaid
interest to the date of purchase.
	 	 
	 	Asset Sales
	 	 
	 	The Company will be required to apply all net proceeds of asset sales (excluding the sales of customer premises equipment) made by it or any of its subsidiaries in excess of $1.0 million annually either to (a)
reinvest such proceeds in the Company’s or any of its subsidiaries’ businesses within one year, or (b) if such proceeds are not reinvested within one year, permanently reduce senior debt

 Annex A-7

  
 
		or make an offer to repurchase New Notes at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon.
	 	 
	 	Covenants

		 	•	Standard covenants to be negotiated, including payment of New Notes; maintenance of office or agency; existence; payment of taxes and other claims; maintenance of property and
insurance; notice of defaults; compliance certificates; SEC reports and reports to New Note holders; waiver of stay, extension or usury laws; limitation on sale-leaseback transactions; limitation on dividend and other payment restrictions affecting
subsidiaries; limitation on the issuance and sale of capital stock of subsidiaries; limitation on issuances of guarantees by subsidiaries; limitation on transactions with stockholders and affiliates; limitation on liens.

		 	•	Additional covenants will contain the following restrictions:

		(a) Knology shall not incur any indebtedness other than guarantees of (x) the CoBank credit facility and any permitted refinancing thereof, (y) any refinancing of the Wachovia credit facility and (z) other
indebtedness permitted to be incurred by subsidiaries after the closing date. The subsidiaries of Knology may not incur any indebtedness other than (i) indebtedness under the Wachovia and CoBank credit facilities and amendments and replacements
thereof in an amount not to exceed $55.5 million less any permanent reductions thereof required pursuant to the terms of the indenture governing the New Notes, (ii) $20 million of purchase money debt and capital leases to finance the cost (including
the cost of design, development, acquisition, construction, installation, improvement, transportation or integration) to acquire equipment, inventory or network assets, which purchase money debt and capital leases shall be without recourse to any
entity other than the subsidiary incurring such indebtedness, provided that no more than $10 million of the $20 million may be debt incurred other than in connection with government financing incurred by a subsidiary of Knology: (A) whose only
assets shall be those acquired in connection with the government financing; and (B) which government financing shall be without recourse to any entity other than such subsidiary; and (iii) permitted refinancing indebtedness of debt outstanding on
the date of issuance of the New Notes or permitted to be incurred pursuant to the terms of the indenture governing the New Notes. During the pendency of the Exchange Offer or Pre-Packaged Proceeding (as defined in the Lock-Up Agreement), as
applicable, Knology will provide Broadband, upon Broadband’s request, with up to $10 million of additional financing through the existing $34.5 million intercompany loan facility with Knology (the “Intercompany Loan Facility”) on the
existing terms and conditions. To fund this financing, at any time prior to, in the case of the Exchange Offer,

 Annex A-8

  
 
		October 2, 2002, or, in the case of a Pre-Packaged Proceeding, December 31, 2002, Knology may obtain either an advance on the Private Placement in the form of debt issued to ITC or bridge financing from a
third-party lender. As collateral security for the obligations of Knology under such interim funding arrangement, ITC or such third-party lender may obtain a collateral assignment of the Intercompany Loan Facility and the collateral security of
Knology granted by Broadband in connection therewith; it being understood, however, that the Intercompany Loan Facility and such collateral granted by Broadband in favor of Knology will continue to be subordinated to the Wachovia credit facility
pursuant to the Subordination Agreement (as defined in the Lock-Up Agreement). Upon consummation of the Exchange Offer or effectiveness of the Pre-Packaged Plan, as applicable, (i) all indebtedness and obligations of Broadband under the Intercompany
Loan Facility, and all liens and security interests granted by Broadband and its subsidiaries in favor of Knology thereunder (whether assigned to any other party as described herein or otherwise), shall be automatically discharged, extinguished and
released in consideration for receipt from Broadband of a limited guaranty of the CoBank Credit Facility and (ii) all indebtedness and obligations of Knology under the Bridge Financing will be either (x) in the event the Bridge Financing was
provided by ITC, automatically converted into Private Placement Shares on a dollar-for-dollar basis or (y) in the event the Bridge Financing is provided by a third-party lender, repaid in full on the date of the consummation of the Exchange Offer or
the effectiveness of the Pre-Packaged Plan, as applicable, with a portion of the proceeds of the Private Placement.
	 	 
	 	(b) Knology and its subsidiaries existing on the date of issuance of the New Notes shall apply revenues generated from their respective operations only to fund operating expenses and reasonable capital
expenditures of Knology and its subsidiaries and to permanently reduce the outstanding senior debt of the Company under the Wachovia credit facility or CoBank credit facility, as applicable, and New Notes
pursuant to the provisions of clause (c) below; any such permanent reductions to be made in a manner consistent with the Wachovia credit facility and CoBank credit facility. Notwithstanding the foregoing,
proceeds from the sale of equity securities of Knology (other than mandatorily redeemable stock) may be used for any purpose.
	 	 
	 	(c) At any time that Knology and its subsidiaries collectively have cash balances or cash equivalents in excess of $50 million after giving effect to the Exchange Offer and Private Placement (excluding proceeds
from the issuance of equity securities other than redeemable stock), Knology and its subsidiaries shall apply such excess cash - in a manner consistent with the Wachovia credit facility and CoBank credit facility:
first to repay and permanently reduce senior debt under the Wachovia credit facility

 Annex A-9

  
 
		or CoBank credit facility, as applicable, and then after all such senior debt has been paid in full and any commitment in respect thereof terminated to purchase the New Notes at a purchase price equal to 100%
of the principal amount thereof plus accrued and unpaid interest thereon. (d) Knology and its subsidiaries may not make capital expenditures for the operations of Knology of Knoxville in excess of the amounts set forth in the “Maximum as
Defined by Covenant” column on Schedule A hereto per year plus any amounts that the Company would have been permitted to expend in previous years pursuant to the “Budgeted Amounts” column
on Schedule A that have not been so expended; provided, however, Knology and its subsidiaries may not make network construction buildout capital expenditures for the operations of Knology of Knoxville
in excess of the amounts set forth in the “Maximum as Defined by Covenant” column on Schedule B hereto per year plus any amounts that the Company would have been permitted to expend in
previous years pursuant to the “Budgeted Amounts” column on Schedule B that have not been so expended; provided, further, that proceeds from the sale of equity securities of Knology (other
than mandatorily redeemable stock) shall not be subject to the limitations contained herein.
	 	 
	 	(e) No restricted payments or investments in non-wholly owned subsidiaries or subsidiaries that do not exist on the date of issuance of the New Notes may be made by Knology other than (i) exchanges of capital
stock (other than redeemable stock) for indebtedness, (ii) investments of proceeds from the sale of equity securities of Knology (other than redeemable stock) that are made in subsidiaries acquired or formed following the date of the issuance of the
New Notes, (iii) investments in wholly owned subsidiaries that provide services in other markets in an amount up to $1.5 million annually (plus any amounts that the Company would have been permitted to expend in previous years that have not been so
expended) and (iv) restricted payments that are otherwise permitted pursuant to the terms of the indenture governing the New Notes including any restricted payments that, in the good faith judgment of the board of directors of Knology, are necessary
to prevent the loss or secure the renewal of licenses or franchises that are necessary for the conduct of business of Knology or the applicable subsidiary.
	 	 
	 	(f) Knology shall not permit any of its executive officers to serve as an executive officer or full-time employee of any Person (other than Knology or any Subsidiary thereof) that engages in the same or
competing line of business as is conducted by Knology and its Subsidiaries in the locations it conducts business as of the date of the issuance of the New Notes, including the provision of telephone, internet or cable television
services.
	 	 
	 	(g) Upon consummation of the Exchange Offer or effectiveness

 Annex A-10

  
 
		of the Pre-Packaged Plan, as applicable, the holders of New Notes (other than SCANA and the Burton Partnerships) shall have the right to nominate one independent director to the board of directors of Knology
(provided that such director shall be reasonably acceptable to Knology’s Board of Directors and SCANA). Such director shall serve for one three-year term and shall be removable only for cause. Upon the removal for cause, resignation, disability
or death of such director, Knology’s Board of Directors shall be entitled to designate a replacement independent director.
	 	 
	Registration Rights	Subsequent to the consummation of the Exchange Offer, the Company shall (a) file a registration statement with respect to the New Notes no later than 40 days after the consummation of the Exchange Offer, (b)
cause such registration statement to be declared effective no later than 105 days following the consummation of the Exchange Offer and (c) complete a registered exchange offer of registered New Notes for the privately placed New Notes no later than
145 days after the consummation of the Exchange Offer. In the event that such registration statement has not been filed on or prior to 40 days after the consummation of the Exchange Offer or declared effective on or prior to 105 days after the
consummation of the Exchange Offer or the registered exchange pursuant to such registration statement has not been consummated on or prior to 145 days after the consummation of the Exchange Offer (each, a “Registration Default”), then the
interest rate on the New Notes will increase by an amount equal to 0.25% per annum for each 60 day period such Registration Default continues, with a maximum increase on such interest rate of 2.50% per annum.
	 	 
	 	Additionally, holders of Old Notes who receive shares of New Preferred Stock in the Exchange Offer or pursuant to the Pre-Packaged Plan will become party to Knology’s Stockholders Agreement, which provides
for demand and piggyback registration rights with respect to the underlying shares of Knology’s Common Stock, and pursuant to the Stockholders Agreement Amendment, the Stockholders Agreement shall be amended to give holders of New Preferred
Stock the same registration rights with respect to the Common Stock (and, if applicable, Non-Voting Common Stock) as the holders of the Existing Preferred Stock currently have with respect to Common Stock.
	 	 
	 	If the Restructuring is effected through the Pre-Packaged Proceeding, the issuance of the New Notes or New Preferred Stock under the Pre-Packaged Plan will be made pursuant to Section 1145 of the Bankruptcy
Code and, therefore, will not be restricted as to transfer. Such Pre-Packaged Plan will incorporate the terms of the New Notes and the New Preferred Stock as set forth in this Restructuring Term Sheet and the Lock-Up

Annex A-11

  
 
		Agreement.
	 	 
	 	Knology shall enter into an agreement providing that, to the extent that New Notes are held by an affiliate (within the meaning of Rule 144 under the Securities Act of 1933, as amended) of Knology, such holder
shall be entitled to require Knology to file a registration statement covering resales of the registered New Notes held by such affiliate for so long as such holder remains an affiliate, subject to customary blackout rights.
	 	 
	Cosale Rights	The Stockholders Agreement shall be amended by the Stockholders Agreement Amendment to provide that, for five years after the consummation of the Restructuring each Non-Affiliated Holder, or transferee thereof,
who then holds the New Series D Preferred Stock shall have the right to participate pro rata on an as-converted basis, on substantially the same terms, in any sale (in one transaction or a series of related transactions) of Common Stock or Preferred
Stock representing more than 20% of the outstanding shares of Common Stock of Knology on an as-converted basis by one or more Significant Stockholders (as defined in the Stockholders Agreement) (collectively, the “Transferring Holders”) to
any unaffiliated third party; provided however, that if the consideration to be received by the Transferring Holders in such sale consists of capital stock, bonds or other securities, either in whole or in part, only Non-Affiliated Holders, or
transferees thereof, that are accredited investors at the time of the sale to the unaffiliated third party shall have the right to participate in such sale with the Transferring Holders.
	 	 
	Bank Credit Facilities	The Wachovia credit facility will be amended as previously described in the term sheet attached to the Lock-up Agreement as Annex C-1 and the CoBank credit facility will be amended as previously described in
the term sheet attached to the Lockup Agreement as Annex B-1. 

 Annex A-12

    SCHEDULE A
 CAPITAL EXPENDITURE COVENANT – KNOLOGY OF KNOXVILLE

			Budgeted
 Amounts		Maximum as Defined
 by Covenant	
			
		
	
	6 Months Ending Dec. 31, 2002	 	$	9,307,400	 	$	9,307,400	 
	12 Months Ending Dec. 31, 2003	 	$	13,396,000	 	$	15,405,400	 
	12 Months Ending Dec. 31, 2004	 	$	12,359,000	 	$	14,212,850	 
	12 Months Ending Dec. 31, 2005	 	$	3,387,000	 	$	5,080,500	 
	12 Months Ending Dec. 31, 2006	 	$	3,379,000	 	$	5,068,500	 
	12 Months Ending Dec. 31, 2007	 	$	3,391,000	 	$	5,086,500	 
	12 Months Ending Dec. 31, 2008	 	$	3,424,000	 	$	5,136,000	 
	12 Months Ending Dec. 31, 2009	 	$	3,479,000	 	$	5,218,500	 

 Annex A-13

    SCHEDULE B
 NETWORK CONSTRUCTION BUILDOUT CAPITAL EXPENDITURE COVENANT – KNOLOGY OF  KNOXVILLE

			Budgeted
Amounts		Maximum as Defined
by Covenant	
			
		
	
	6 Months Ending Dec. 31, 2002	 	$	8,000,000	 	$	8,000,000	 
	12 Months Ending Dec. 31, 2003	 	$	10,000,000	 	$	11,000,000	 
	12 Months Ending Dec. 31, 2004	 	$	8,943,000	 	$	9,837,300	 
	12 Months Ending Dec. 31, 2005	 	$	1,000,000	 	$	1,000,000	 
	12 Months Ending Dec. 31, 2006	 	$	1,000,000	 	$	1,000,000	 
	12 Months Ending Dec. 31, 2007	 	$	1,000,000	 	$	1,000,000	 
	12 Months Ending Dec. 31, 2008	 	$	1,000,000	 	$	1,000,000	 
	12 Months Ending Dec. 31, 2009	 	$	1,000,000	 	$	1,000,000	 

 Annex A-14

    Exhibit A
 Charter Amendment
 Annex A-15

    Annex B-1
 CoBank Term Sheet
          The following sets forth, in summary form, the principal terms and conditions of an amended and restated $40 million 10-year senior secured credit facility by and among
Globe Communications, Inc., Interstate Telephone Company and Valley Telephone Co., Inc. (“Valley” and all of the foregoing collectively referred to as the “Borrowers”) and CoBank, ACB (the “Lender”). The definitive
documents evidencing the amended and restated CoBank Credit Facility are attached hereto as Exhibit A-1. The Amended and Restated First Supplement to the Master Loan Agreement, dated as of June 6, 2002,
by and among the Borrowers and the Lender has been executed by the parties thereto. The Amendment Letters, dated June 6, 2002 and July 3, 2002, by and among the Borrowers, the Lender and Knology, Inc. have been executed by the parties thereto.
Pursuant to that certain Lock-Up Agreement dated as of July 11, 2002, by and among Knology, Inc., Valley, the Lender, Wachovia Bank, National Association and certain other parties thereto, the remaining definitive documents evidencing the amended
and restated CoBank Credit Facility will be executed by parties thereto simultaneously upon the consummation of the Exchange Offer or pursuant to the Pre-Packaged Plan. 

	BORROWERS:	 	Consistent with the Existing Agreement (as defined below), Globe Communications, Inc., Interstate Telephone Company and Valley 	 
	 	 	 	 
	GUARANTORS:	 	(i) Unlimited guaranty from Knology, Inc. (“Knology”) that is secured by a pledge of the capital stock of the Borrowers	 
	 	 	 	 
	 	 	(ii) An unsecured guaranty from Knology Broadband, Inc. (“Broadband”) that is limited in an amount equal to $22.8 million and that is subordinated to the Wachovia Credit Facility	 
	 	 	 	 
	 	 	(iii) An unlimited guaranty from Knology of Knoxville, Inc. (“Knoxville”) that is secured by a lien and security interest in substantially all of the assets of Knoxville	 
	 	 	 	 
	LENDER:	 	CoBank, ACB	 
	 	 	 	 
	EXISTING AGREEMENT:	 	The Master Loan Agreement, dated as of June 29, 2001, and the Amended and Restated First Supplement to the Master Loan Agreement, dated as of June 6, 2002, each by and among the Borrowers and the Lender. The
Amended and Restated First Supplement to Master Loan Agreement has been amended and restated in substantially the form of Exhibit A-1 hereof. 	 
	 	 	 	 
	FACILITY:	 	Initially, $40 million; $1,050,000 subfacility for letters of credit. Loans and letters of credit may be drawn during the period from the date hereof through December 31, 2002. However, on June 30, 2002 and
September 30, 2002, the facility will be permanently reduced by $787,984 and $802,759 respectively. As of the date hereof, $32,482,110 has been drawn under the facility. On December 31, 2002, no additional advances may be borrowed and any then
outstanding advances shall be repaid in	 

 
 Annex B-1-1

  
 
		 	accordance with the amortization schedule attached hereto as Exhibit A-2.	 
	 	 	 	 
	COLLATERAL:	 	The obligations of the Borrowers under the CoBank Credit Facility will be secured by: 	 
	 	 	 	 
	 	 	(i) the existing first priority lien and security interest in substantially all of the assets of the Borrowers will continue; 	 
	 	 	 	 
	 	 	(ii) a first priority lien and security interest in substantially all of the assets of Knoxville; 	 
	 	 	 	 
	 	 	(iii) the existing pledge by Knology of all of the outstanding capital stock of the Borrowers will continue; and 	 
	 	 	 	 
	 	 	(iv) the guaranties referenced above	 
	 	 	 	 
	 	 	CoBank will release its lien on the Old Notes and permit their discharge and release by Valley	 
	 	 	 	 
	AMORTIZATION:	 	The facility will mature on April 20, 2011 and will amortize pursuant to the amortization schedule set forth in Exhibit A-2 hereto 	 
	 	 	 	 
	INTEREST:	 	The Borrower’s option of (a) the Variable Rate (as defined in the Existing Agreement), (b) LIBOR plus an applicable margin pricing grid based on the Borrowers’ Total Leverage Ratio (range from 1.50%
to 3.00%) and (c) a Quoted Rate Option	 
	 	 	 	 
	MANDATORY 
PREPAYMENTS:	 	
Required upon certain casualties or other asset dispositions	 
	 	 	 	 
	OPTIONAL 
PREPAYMENTS: 	 	
The CoBank Credit Facility may be prepaid at any time without penalty or premium; provided that prepayment of LIBOR loans or Quoted Rate loans prior to the end of the applicable interest period is subject
to the payment of a funding loss surcharge and for the Quoted Rate loans, a surcharge of 0.50%	 
	 	 	 	 
	 	 	 	 
	FINANCIAL
COVENANTS:	 	
Total Leverage Ratio relating to the Borrowers:	 
	 	 	 	 
	 	 	                Date
                          Leverage Ratio	 
	 	 	 	 
	 	 	Closing to 12/31/02                  5.0 : 1.0	 
	 	 	01/01/03 to 12/31/03                 4.5 : 1.0	 
	 	 	01/01/04 to 12/31/04                 4.0 : 1.0	 
	 	 	01/01/05 and thereafter            3.5 : 1.0	 
	 	 	 	 
	 	 	The Total Leverage Ratio applies only to the Borrowers and its subsidiaries (other than Broadband and its subsidiaries)	 

 
  Annex B-1-2 

  
 
		 	Debt Service Coverage Ratio relating to the Borrowers and their subsidiaries (other than Broadband and its subsidiaries) of 1.25-to-1.00 for each quarter during which the CoBank Credit Facility is
outstanding.	 
	 	 	 	 
	 	 	 	 
	AFFIRMATIVE/NEGATIVE
COVENANTS:	 	
Pursuant to the Existing Agreement, there exists a set of affirmative and negative covenants customary to a transaction of this type. However, pursuant to the amendment and restatement of the First
Supplement, the covenant regarding Restricted Payments has been amended to permit the making of a dividend by the Borrowers to Knology of the proceeds of loans borrowed under the CoBank facility, subject to the fulfillment of certain conditions set
forth therein. Knology may use such dividend for general corporate purposes including the funding of Knoxville. Pursuant to the July 3, 2002 Amendment Letter, the Borrowers are permitted to make dividends to Knology, Inc. prior to completion of the
Restructuring in an amount not to exceed $7.0 million. The affirmative and negative covenants shall apply only to the Borrowers and their subsidiaries (other than Broadband and its subsidiaries) 	 
	 	 	 	 
	EVENTS OF DEFAULT:	 	Customary for a loan transaction of this nature. The events of default apply only to the Borrowers and their subsidiaries (other than Broadband and its subsidiaries) 	 
	 	 	 	 
	CONDITIONS PRECEDENT:	 	Customary for a loan transaction of this nature including, but not limited to, the execution of the definitive documentation set forth on Exhibit A-1, delivery of various officer’s certificates and legal
opinions, satisfactory lien search results, accuracy of representations and warranties 	 

 
  Annex B-1-3 

    Exhibit A-1
 Definitive Loan Documents
 [See Annex B-2 to Lock-Up
Agreement]
 Annex B--4

    Exhibit A-2
 AMORTIZATION SCHEDULE

	Principal Payment Date		Amount	
	
		
	
		 	 	 	 
	January 20, 2003	 	$	817,811	 
	April 20, 2003	 	 	833,145	 
	July 20, 2003	 	 	848,766	 
	October 20, 2003	 	 	864,680	 
	January 20, 2004	 	 	880,893	 
	April 20, 2004	 	 	897,410	 
	July 20, 2004	 	 	914,236	 
	October 20, 2004	 	 	931,378	 
	January 20, 2005	 	 	948,842	 
	April 20, 2005	 	 	966,632	 
	July 20, 2005	 	 	984,757	 
	October 20, 2005	 	 	1,003,221	 
	January 20, 2006	 	 	1,022,031	 
	April 20, 2006	 	 	1,041,194	 
	July 20, 2006	 	 	1,060,717	 
	October 20, 2006	 	 	1,080,605	 
	January 20, 2007	 	 	1,100,867	 
	April 20, 2007	 	 	1,121,508	 
	July 20, 2007	 	 	1,142,536	 
	October 20, 2007	 	 	1,163,959	 
	January 20, 2008	 	 	1,185,783	 
	April 20, 2008	 	 	1,208,016	 
	July 20, 2008	 	 	1,230,667	 
	October 20, 2008	 	 	1,253,742	 
	January 20, 2009	 	 	1,277,249	 
	April 20, 2009	 	 	1,301,198	 
	July 20, 2009	 	 	1,325,595	 
	October 20, 2009	 	 	1,350,450	 
	January 20, 2010	 	 	1,375,771	 
	April 20, 2010	 	 	1,401,567	 
	July 20, 2010	 	 	1,427,846	 
	October 20, 2010	 	 	1,454,618	 
	January 20, 2011	 	 	1,481,892	 
	April 20, 2011	 	 	1,509,675	 
			
	
		 	 	 	 
	Total	 	$	38,409,257	 

  Annex B-1-5 

    Annex B-2
 CoBank Loan Documents
 Annex B-2-1

    Annex C-1
 Wachovia Term Sheet
 KNOLOGY BROADBAND,
INC.
SUMMARY OF PROPOSED TERMS AND CONDITIONS
AMENDMENT AND RESTATEMENT
 July 11, 2002
          The terms and conditions outlined herein are not intended to be inclusive, but rather set forth the material terms of the definitive documentation.

	BORROWERS:	 	Consistent with the Existing Agreement (as defined below) — all of the existing and hereafter formed or acquired subsidiaries (collectively, the “Borrowers”) of KNOLOGY Broadband, Inc. (“Broadband” and collectively with the Borrowers, the “Credit Parties”).	 
	 	 	 	 
	GUARANTOR:	 	Broadband.	 
	 	 	 	 
	ADMINISTRATIVE
AGENT:	 	
Wachovia Bank, National Association (“Wachovia” or the “Administrative Agent”) will act as
the sole and exclusive administrative agent.	 
	 	 	 	 
	EXISTING AGREEMENT:	 	
Credit Agreement dated as of December 22, 1998 (as amended prior to the date hereof, as amended hereby and as further amended, restated, supplemented or otherwise modified prior to the date hereof) by and
among the Borrowers, the Guarantor, the lenders party thereto and the Administrative Agent.	 
	 	 	 	 
	FACILITY:	 	A $15,465,000 million revolving credit facility (the “Facility”)	 
	 	 	 	 
	SECURITY:	 	The obligations of (a) the Borrowers under the Facility will be secured by a first priority perfected lien on all assets of the Borrowers, and (b) Broadband as Guarantor will be secured by a first priority
perfected lien on all assets of Broadband, in each case on the same terms applicable to the Existing Facility.	 
	 	 	 	 
	MATURITY/ AMORTIZATION:	 	
The Facility shall mature on the date (the “Maturity Date”) that is four (4) years from the date of closing of the Amendment and Restatement, with
mandatory quarterly reductions in the aggregate commitment of the Lenders as set forth below.	 

 

		 	Quarter End	 	Amount of Reduction	 
			
		
	
	2004	 	 	Quarter 3	 	$	773,250.00	 
		 	 	Quarter 4	 	$	773,250.00	 

 Annex C-1-1 

   
	2005	 	 	Quarter 1	 	$	1,546,500.00	 
		 	 	Quarter 2	 	$	1,933,125.00	 
		 	 	Quarter 3	 	$	2,319,750.00	 
		 	 	Quarter 4	 	$	2,706,375.00	 
		 	 	 	 	 	 	 
	2006	 	 	Quarter 1	 	$	2,706,375.00	 
		 	 	Quarter 2	 	$	2,706,375.00	 

		 	To the extent not previously repaid, all outstanding principal, accrued and unpaid interest and accrued and fees and expenses shall be immediately due and payable on the Maturity Date.	 
	 	 	 	 
	INTEREST PAYMENTS:	 	
Interest on the Facility will be due and payable quarterly in arrears.	 
	 	 	 	 
	INTEREST RATE OPTIONS:	 	
The Borrowers’ option of (a) the Base Rate (as defined in the Existing Facility) plus an Applicable Base Rate Margin, and (b) the LIBOR Rate (as defined
in the Existing Agreement) plus an Applicable LIBOR Rate Margin.	 
	 	 	 	 
	 	 	Prior to the Stage Two Effective Date (as defined below), the Applicable Base Rate Margin shall be 4.00% and the Applicable LIBOR Rate Margin shall be 5.00%. Thereafter, the Applicable Base Rate Margin and the
Applicable LIBOR Rate Margin shall be determined pursuant to the performance pricing grid (based on a leverage ratio of funded debt (including any amounts related to the CoBank Guaranty (as defined below)) to LTM EBITDA) attached hereto as
Exhibit I.	 
	 	 	 	 
	MANDATORY PREPAYMENTS:	 	
The Facility will include prepayments with 100% of the net cash proceeds of (a) asset sales, (b) issuance of debt, (c) issuance of equity of Broadband or any subsidiary thereof (excluding equity issuances
to the existing shareholders of Broadband in the form of additional paid in or contributed capital), (d) insurance and condemnation recoveries, and (e) commencing with fiscal year 2004, fifty percent (50%) of annual Excess Cash Flow (as defined on
Exhibit II hereto).	 
	 	 	 	 
	OPTIONAL PREPAYMENTS:	 	
The Facility may be prepaid at any time without penalty; provided that prepayment of LIBOR Rate Loans prior to the end of the applicable Interest Period is
subject to payment of any funding losses.	 
	 	 	 	 
	FINANCIAL COVENANTS:	 	
Financial covenants customary for facilities of this nature, and consistent with the financial covenants set forth in the Existing Facility, and including, but not limited to:	 

  Annex C-1-2 

  
 
		 	Stage One Financial Covenants:	 
	 	 	 	 	 
	 	 	(1)	Minimum Revenue: As of the end of any fiscal quarter prior to the Stage Two Effective Date, the Credit Parties will not permit their total revenue (before discounts and allowances)
for such fiscal quarter to be less than the minimum amount for such fiscal quarter end as set forth below:	 

 

	Quarter End		Minimum Revenue	
	
		
	
	June 30, 2002	 	$	25,500,000	 
	September 30, 2002	 	$	27,000,000	 

 

	 	 	(2)	Minimum Liquidity: From the Closing Date through the end of any fiscal quarter prior to the Stage Two Effective Date, the Credit Parties shall not permit the aggregate amount of all
unrestricted cash and cash equivalents of the Credit Parties, which such cash and cash equivalents are immediately available for the repayment of debt under the Facility to be less than $2,000,000.	 
	 	 	 	 	 
	 	 	Stage Two Financial Covenants:	 
	 	 	 	 	 
	 	 	(1)	Maximum Leverage Ratio: As of the fiscal quarter ending on the Stage Two Effective Date and each fiscal quarter end thereafter, the Credit Parties shall not permit the ratio of (a)
consolidated total funded debt (including any amounts related to the CoBank Guaranty (as defined below)) as of such fiscal quarter end to (b) EBITDA for the four consecutive fiscal quarters ending on or immediately prior to such date to exceed the
corresponding ratio set forth below:	 

 

	Quarter End		Maximum Leverage Ratio	
	
		
	
	December 31, 2002	 	 	2.75 to 1.00	 
	March 31, 2003	 	 	2.25 to 1.00	 
	June 30, 2003	 	 	2.00 to 1.00	 
	September 30, 2003	 	 	1.75 to 1.00	 
	December 31, 2003	 	 	1.50 to 1.00	 
	March 31, 2004	 	 	1.50 to 1.00	 
	June 30, 2004	 	 	1.50 to 1.00	 
	September 30, 2004	 	 	1.50 to 1.00	 
	December 31, 2004	 	 	1.50 to 1.00	 
	March 31, 2005	 	 	1.50 to 1.00	 
	June 30, 2005	 	 	1.50 to 1.00	 
	September 30, 2005	 	 	1.50 to 1.00	 
	December 31, 2005	 	 	1.50 to 1.00	 
	March 31, 2006	 	 	1.50 to 1.00	 
	June 30, 2006	 	 	1.50 to 1.00	 

	 	 	(2)	Minimum Quarterly EBITDA: As of the fiscal quarter ending on the Stage Two Effective Date and each fiscal quarter end prior to 	 

 
  Annex C-1-3 

  
 
	 	 	 	the fiscal quarter ending June 30, 2004, the Credit Parties shall not permit the amount of EBITDA for the single fiscal quarter ending on or immediately prior to such date to be less than the
corresponding amount set forth below:	 

 

	Quarter End		Minimum Quarterly EBITDA	
	
		
	
	December 31, 2002	 	$	5,000,000	 
	March 31, 2003	 	$	5,300,000	 
	June 30, 2003	 	$	6,600,000	 
	September 30, 2003	 	$	8,000,000	 
	December 31, 2003	 	$	9,300,000	 
	March 31, 2004	 	$	10,800,000	 

	 	 	(3)	Minimum Debt Service Coverage Ratio: As of the fiscal quarter ending on June 30, 2004 and each fiscal quarter end thereafter, the Credit Parties shall not permit the ratio
of (a) the sum of (i) EBITDA for the four consecutive fiscal quarters ending on or immediately prior to such date less (ii) taxes added back to EBITDA pursuant to the definition thereof to (b) Debt
Service to be less than the corresponding ratio set forth below:	 

 

	Quarter End		Minimum Debt Service Coverage Ratio	
	
		
	
	June 30, 2004	 	 	1.25 to 1.00	 
	September 30, 2004	 	 	1.25 to 1.00	 
	December 31, 2004	 	 	1.50 to 1.00	 
	March 31, 2005	 	 	1.50 to 1.00	 
	June 30, 2005	 	 	1.50 to 1.00	 
	September 30, 2005	 	 	1.50 to 1.00	 
	December 31, 2005	 	 	1.50 to 1.00	 
	March 31, 2006	 	 	1.50 to 1.00	 
	June 30, 2006	 	 	1.50 to 1.00	 

		 	 	Notwithstanding the foregoing, for purposes of calculating the Minimum Debt Service Coverage Ratio as of the fiscal quarters ending June 30, 2004 and September 30, 2004, the amount of the Permitted Exchange
Note Distribution shall be annualized by multiplying the actual amount of such Permitted Exchange Note Distributions by two (2).	 
	 	 	 	 	 
	 	 	(4)	Minimum Liquidity:	 
	 	 	 	 	 
	 	 	 	(a) From the Stage Two Effective Date (as defined below) and each fiscal quarter end thereafter through December 31, 2004, the Credit Parties shall not permit the aggregate amount of all unrestricted cash and
cash equivalents of the Credit Parties, which such cash and cash equivalents are immediately available for the repayment of debt under the Facility to be less than $2,000,000; and	 

 
 Annex C-1-4 

  
 
		 	 	(b) From January 1, 2005 and each fiscal quarter end thereafter, the Credit Parties shall not permit the aggregate amount of all unrestricted cash and cash equivalents of the Credit Parties, which such cash and
cash equivalents are immediately available for the repayment of debt under the Facility to be less than $5,000,000	 
	 	 	 	 	 
	 	 	The foregoing financial covenants shall be subject to certain step-ups or step-downs (as applicable) to be determined by the Administrative Agent.	 
	 	 	 	 
	NEGATIVE
COVENANTS:	 	
Negative covenants customary for facilities of this nature (including prohibition on more restrictive agreements (and limitations on indebtedness other than the Facility, the CoBank Guaranty and
other permitted indebtedness agreed to by the Lenders)), in addition, the following negative covenants will be amended in the following manner:	 
	 	 	 	 
	 	 	Limitations on Guaranty Obligations: The Credit Parties shall be permitted to guaranty certain existing indebtedness of the subsidiaries of KNOLOGY, Inc. (other than
Broadband and its subsidiaries) in favor of CoBank (such guaranty obligations, the “CoBank Guaranty”); provided that (a) the amount of the CoBank
Guaranty shall be limited to $22.8 million, the amount necessary to fund the Note Cancellation, (b) the terms and conditions (including, without limitation, the subordination provisions applicable thereto) of the CoBank Guaranty are satisfactory to
the Administrative Agent, and (c) no default or event of default has occurred and is continuing.	 
	 	 	 	 
	RESTRICTED
PAYMENTS:	 	
The existing limitations on restricted payments set forth in the Existing Agreement shall remain in full force and effect, including the provisions that permit the Borrowers to pay dividends or
other distributions to Broadband solely to enable Broadband (or its direct or indirect corporate parents ) to make scheduled interest payments on Broadband’s existing Senior Discount Notes (including, without limitation, the Exchange Notes, as
defined below); provided, that no such dividends or distributions shall be permitted if any event of default (other than a event of default arising solely from a breach of a representation or warranty)
has occurred and is continuing; provided further, that unless an event of default consisting of (X) the failure to pay any obligations under the Facility when due, (Y) an bankruptcy or insolvency of
Broadband, or (Z) a loss of material license or government authorization has occurred and is continuing, the limitation on Restricted Payments shall not prevent the Borrowers from making the dividends or distributions described above for more than
180 days in any consecutive 360 day period.	 
	 	 	 	 
	SUBORDINATION
PROVISIONS:	 	
Subordination provisions applicable to the CoBank Guaranty: Consistent with the terms of the existing Intercreditor and Subordination Agreement, dated as of January 1,
2002, by and among Broadband, the	 

 
 Annex C-1-5 

  
 
		 	Administrative Agent and KNOLOGY, Inc., and including without limitation, the agreement by CoBank (in such capacity, the “Subordinated Creditor”) that (a) the CoBank Guaranty is and shall be subordinate in right of order and payment to the indefeasible payment in full in cash of the Facility and the termination of all commitments thereunder the Credit Agreement, (b) the
Subordinated Creditor shall not accelerate, demand, sue for, commence any collection or enforcement action or exercise any remedy with respect to the CoBank Guaranty until after the indefeasible payment in full in cash of the Facility and the
termination of all commitments thereunder, and (c) the Subordinated Creditor shall not be entitled to receive any payment, either directly or indirectly, on account of the CoBank Guaranty until after the indefeasible payment in full in cash of the
Facility and the termination of all commitments thereunder.	 
	 	 	 	 
	 	 	In furtherance of the foregoing, in the event that, notwithstanding such agreements, any payment received by the Subordinated Creditor in violation of such agreements shall be segregated and held in
trust for the benefit of and shall be promptly paid over to, the Administrative Agent for the ratable benefit of itself and the Lenders.	 
	 	 	 	 
	CONDITIONS
PRECEDENT:	 	
Customary for Amendments and Restatements of this nature, including, but not limited to, credit documentation satisfactory to the Administrative Agent; legal opinions and other closing
documentation satisfactory to the Administrative Agent; payment of all fees referred to in the Side Letter of even date and all outstanding fees and expenses of counsel to the Administrative Agent; consummation of the Recapitalization (as defined
below); and the conversion of all existing intercompany debt between any Credit Party and KNOLOGY, Inc. and any of its subsidiaries (other than Broadband and its subsidiaries) in to Qualifying Equity (as defined below).	 
	 	 	 	 
	 	 	“Qualifying Equity” means equity which (a) is not redeemable for cash, (b) is not convertible into or exchangeable for debt and (c) does not
permit any payment of cash dividends at any time prior to the date that is one hundred eighty one (181) days following the date on which all of the Borrowers’ Obligations under the Facility have been indefeasibly paid in full and all
commitments thereunder terminated.	 
	 	 	 	 
	RECAPITALIZATION:	 	The “Recapitalization” shall mean the proposed recapitalization transaction of KNOLOGY, Inc., and certain of its subsidiaries, including,
without limitation, the following transactions:	 
	 	 	 	 
	 	 	(1)	Existing holders of Broadband’s existing Senior Discount Notes ($444.1mm face) exchange such notes for: (a) $193,500,000 Senior Unsecured Notes: 12% coupon notes of KNOLOGY, Inc. (the “Exchange Notes”), which shall provide for the option to make interest payments in kind (the “PIK Option”) during any payment period occurring during the
first eighteen (18) months 	 

 
 Annex C-1-6 

  
 
		 	 	after the closing of the Amendment and Restatement (the “PIK Option Period”); provided that for any
payment period with respect to which the PIK Option has not been exercised, the interest rate applicable to the Exchange Notes for such payment period during the PIK Period shall be reduced to eleven percent (11%), and (b) equity for 19.3% of
KNOLOGY, Inc., in each case on terms and conditions set forth in the Exchange Offer Term Sheet attached hereto as Exhibit III; provided that any material modifications, additions, or supplements to the
Exchange Offer Term Sheet shall be subject to the prior approval of the Administrative Agent in its sole discretion;	 
	 	 	 	 	 
	 	 	(2)	Receipt by KNOLOGY, Inc. of net cash proceeds of at least $39 million of equity issuances on the terms and conditions set forth in the Exchange Offer Term Sheet; and	 
	 	 	 	 	 
	 	 	(3)	Broadband’s existing Senior Discount Notes owned by Valley Telephone Company, Inc. are cancelled (the “Note Cancellation”).	 
	 	 	 	 	 
	AMENDMENT AND
RESTATEMENT FEE:	 	
As set forth in the Side Letter of even date.	 
	 	 	 	 
	COUNSEL TO
ADMINISTRATIVE
AGENT:	 	

Kennedy Covington Lobdell & Hickman, L.L.P.	 
	 	 	 	 
	MISCELLANEOUS:	 	This summary of terms and conditions does not purport to summarize all the conditions, representations, warranties and other provisions which would be contained in definitive documentation for the
Amendment and Restatement contemplated hereby. Terms of the Existing Agreement not specifically identified for amendment herein shall remain in full force and effect.	 

 
  Annex C-1-7 

    EXHIBIT I
 Pricing Grid
          The Applicable Margin will be determined according to the following grid by reference to the Leverage Ratio, with each change in the Applicable Margin to be effective 10
days after delivery to the Administrative Agent of quarterly or annual financial statements and a compliance certificate showing the Leverage Ratio as of the last day of the fiscal quarter most recently ended.

	Tier	 	Leverage Ratio	 	Applicable
Margin for Base
Rate Loans	 	Applicable
Margin for
LIBOR Loans	 
	
		
		
		
	
	I	 	Greater than or equal
to 2.00 to 1.00	 	4.00%	 	5.00%	 
	II	 	Less than 2.00 to 1.00
but greater than or
equal to 1.50 to 1.00	 	3.50%	 	4.50%	 
	III	 	Less than 1.50 to 1.00	 	3.00%	 	4.00%	 

 
          Notwithstanding the foregoing, the initial Applicable Margin will be set at 5.00% for LIBOR Loans and 4.00% for Base
Rate Loans until the Stage Two Effective Date. If at any time the Borrower shall have failed to deliver the financial statements and a covenant compliance certificate as required by the definitive credit documentation, or if at any time an event of
default shall have occurred and be continuing, then at the election of the Required Lenders, at all times from and including the date on which such statements and certificate are required to have been delivered (or the date of occurrence of such
event of default, as the case may be) to the date on which the same shall have been delivered (or such event of default cured or waived, as the case may be), the Applicable Margin percentage shall be set at Tier I (notwithstanding the actual
Leverage Ratio).
  Annex C-1-8 

    EXHIBIT II
 Definitions
          “Debt Service” means, for any Credit Party, for any period, the sum of the following determined on a Consolidated
basis, without duplication, for such Credit Party and its Subsidiaries in accordance with generally accepted accounting principles, (a) the aggregate amount of all principal and interest payments in respect of senior debt (to included debt under the
Facility and any other debt that ranks pari passu with such debt) during such period plus (b) the
aggregate amount of all Permitted Exchange Note Distributions during such period.
          “EBITDA” means,
for any Credit Party, for any period, the sum of the following determined on a Consolidated basis, without duplication, for such Credit Party and its Subsidiaries in accordance with generally accepted accounting principles: (a) net income for such
period (excluding any gains or losses from the sale of assets) plus (b) the sum of the following to the extent deducted in determining net income: (i) income and franchise taxes and real, personal, and
intangible property taxes, (ii) Interest Expense (excluding all Permitted Exchange Note Distributions), and (iii) amortization, depreciation and other non-cash charges less (c) interest income and any
extraordinary gains plus (d) extraordinary losses approved by the Administrative Agent in its sole discretion.
          “Excess Cash Flow” means, for any period of determination determined in accordance with generally accepted accounting principles, the sum of (a) EBITDA of the Credit Parties and their
Subsidiaries for such period, minus (b) income taxes (to the extent such taxes are paid in cash) and Interest Expense paid in cash and deducted in the determination of net income for such period,
minus (c) all principal payments (whether scheduled payments or optional prepayments, but excluding mandatory prepayments) made in respect of debt during such period, minus (d) all capital expenditures net of the proceeds of debt used to fund such capital expenditures, plus or minus, as
applicable, (e) the net change in the working capital of the Credit Parties and their Subsidiaries during such period minus (f) cash consideration paid for permitted acquisitions net of the
proceeds of any debt used to fund any such cash consideration. 
          “Interest Expense” means, with
respect to the Credit Parties and their Subsidiaries for any period, the sum of (a) the gross interest expense (including, without limitation, interest expense attributable to capital leases and all net payment obligations pursuant to hedging
agreements) of the Credit Parties and their Subsidiaries plus (b) the amount of any Permitted Exchange Note Distribution during such period, all determined for such period on a Consolidated basis,
without duplication, in accordance with generally accepted accounting principles.
          “Permitted Exchange Note
Distribution” means any dividend or distribution for the benefit of the Parent made by the Guarantor directly to the Trustee under the Exchange Notes in order to fund the payment of scheduled interest payments on the
Exchange Notes which are due and payable or will become due and payable at the time of such dividend or distribution.
          “Stage Two
Effective Date” shall mean the fiscal quarter ending December 31, 2002.
  Annex C-1-9 

    EXHIBIT III
 Exchange Offer Term Sheet
 [See Annex A to Lock-Up
Agreement]
  Annex C-1-10 

    Annex C-2
 Wachovia Loan Documents
 Amended and Restated Credit
Agreement (including schedules and exhibits and the guaranty of
Broadband)
 Notes
Reaffirmation Agreement (including all schedules and exhibits)
 Collateral Agreement from each of Broadband and its Subsidiaries
 Secretary Certificates and other Closing Certificates
 UCC-1 Financing
Statements
 Confirmation of Title Insurance
 Deeds of Trust, Mortgages and other applicable real property collateral documents
 Such
other agreements, documents and instruments as are in good faith requested by Wachovia and are
consistent with the Wachovia Term Sheet
  Annex C-2-1 

    Annex D
 Summary of Intercompany Loan Facility/DIP Financing

	Lender:	 	Knology, Inc. (the “Lender”)	 
	 	 	 	 
	Borrower:	 	Knology Broadband, Inc. (“Broadband”)	 
	 	 	 	 
	Guarantors:	 	Subsidiaries of Broadband	 
	 	 	 	 
	Facility:	 	$34.5 million secured subordinated revolving facility; amounts outstanding under the pre-petition Knology/ Broadband facility as of the petition date will be included in determining availability under the
DIP Facility; the facility will be uncommitted and will be made at the discretion of the Lender. As of the date of the Lock-Up Agreement, $13,024,127.66 million of advances are outstanding thereunder.	 
	 	 	 	 
	Collateral:	 	Second-priority lien and security interest junior to the lien and security interest of Wachovia under the Wachovia Credit Facility in substantially all of the assets of Borrower and Guarantors.	 
	 	 	 	 
	Interest Rate:	 	LIBOR plus 5.00%; pursuant to Subordination Agreement, interest shall accrue but shall not be payable until the payment in full of the Wachovia Credit Facility.	 
	 	 	 	 
	Maturity:	 	Payable in full in a single installment on the later to occur of (i): November 15, 2003 or (ii) the date one year after the termination date of the Wachovia Credit Facility.	 
	 	 	 	 
	Subordination:	 	This facility will be subordinated to the Wachovia Credit Facility pursuant to the terms of that certain Intercreditor and Subordination Agreement dated as of January 1, 2002 by and among the Lender, the
Borrower and Wachovia, as Administrative Agent. Among other provisions under the Subordination Agreement, the Borrower may not pay, and the Lender may not accept or receive, any payment of principal or interest until the payment in full in cash of
the Wachovia Credit Facility.	 

 
 Annex D-1<PAGE>

                                                                    EXHIBIT 10.5

                 INVITROGEN CORPORATION 1997 STOCK OPTION PLAN

                                  (AS AMENDED)

1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

        1.1 ESTABLISHMENT. The Invitrogen Corporation 1997 Stock Option Plan
(the "PLAN") is hereby established effective as of May 28, 1997 (the "EFFECTIVE
DATE").

        1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Participating Company Group and its shareholders by providing an incentive to
attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group.

        1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier of
its termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued and all restrictions on
such shares under the terms of the Plan and the agreements evidencing Options
granted under the Plan have lapsed. However, all options shall be granted, if at
all, within ten (10) years from the earlier of the date the Plan is adopted by
the Board or the date the Plan is duly approved by the shareholders of the
Company.

2. DEFINITIONS AND CONSTRUCTION.

        2.1 DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:

                (a) "BOARD" means the Board of Directors of the Company. If one
        or more Committees have been appointed by the Board to administer the
        Plan, "Board" also means such Committee(s).

                (b) "CODE" means the Internal Revenue Code of 1986, as amended,
        and any applicable regulations promulgated thereunder.

                (c) "COMMITTEE" means the Compensation Committee or other
        committee of the Board duly appointed to administer the Plan and
        having,.such powers as shall be specified by the Board. Unless the
        powers of the Committee have been specifically limited, the Committee
        shall have all of the powers of the Board granted herein, including,
        without limitation, the power to amend or terminate the Plan at any
        time, subject to the terms of the Plan and any applicable limitations
        imposed by law.

                (d) "COMPANY" means Invitrogen Corporation, a California
        corporation, or any successor corporation thereto.

                (e) "CONSULTANT" means any person, including an advisor,
        engaged by a Participating Company to render services other than as
        an Employee or a Director.

                (f) "DIRECTOR" means a member of the Board or of the board of
        directors of any other Participating Company.

                (g) "EMPLOYEE" means any person treated as an employee
        (including an officer or a Director who is also treated as an employee)
        in the records of a Participating Company, and, with respect to any
        Incentive Stock Option granted to such person, who is an employee for
        purposes of Section 422 of the Code; provided, however, that neither
        service as a Director nor payment of a director's fee shall be
        sufficient to constitute employment for purposes of the Plan.

                (h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
        amended.

                (i) "FAIR MARKET VALUE" means, as of any date, the value of a
        share of Stock or other property as determined by the Board, in its sole
        discretion, or by the Company, in its sole discretion, if such
        determination is expressly allocated to the Company herein, subject to
        the following:

                        (i) If, on such date, there is a public market for the
                Stock, the Fair Market Value of a share of Stock shall be the
                closing sale price of a share of Stock (or the mean of the
                closing bid and asked prices of a share of Stock if the Stock is
                so quoted instead) as quoted on the Nasdaq National Market, the
                Nasdaq Small-Cap Market or such other national or regional
                securities exchange or market system constituting the primary
                market for the Stock, as reported in the WALL STREET JOURNAL or
                such other source as the Company deems reliable. If the relevant
                date does not fall on a day on which the Stock has traded on
                such securities exchange or market system, the date on which the
                Fair Market Value shall be established shall be the last day on
                which the Stock was so traded prior to the relevant date, or
                such other appropriate day as shall be determined by the Board,
                in its sole discretion.

                        (ii) If, on such date, there is no public market for the
                Stock, the Fair Market Value of a share of Stock shall be as
                determined by the Board without regard to any restriction other
                than a restriction which, by its terms, will never lapse.

                (j) "INCENTIVE STOCK OPTION" means an Option intended to be (as
        set forth in the Option Agreement) and which qualifies as an incentive
        stock option within the meaning of Section 422(b) of the Code.

                (k) "INSIDER" means an officer or a Director of the Company or
        any other person whose transactions in Stock are subject to Section 16
        of the Exchange Act.

                (l) "NONSTATUTORY STOCK OPTION" means an option not intended to
        be (as set forth in the Option Agreement) or which does not qualify as
        an Incentive Stock Option.

                (m) "OPTION" means a right to purchase Stock (subject to
        adjustment as provided in Section 4.2) pursuant to the terms and
        conditions of the Plan. An Option may be either an Incentive Stock
        Option or a Nonstatutory Stock Option.

                (n) "OPTION AGREEMENT" means a written agreement between the
        Company and an Optionee setting forth the terms, conditions and
        restrictions of the Option granted to the Optionee and any shares
        acquired upon the exercise thereof.

<PAGE>

                (o) "OPTIONEE" means a person who has been granted one or more
        Options.

                (p) "PARENT CORPORATION" means any present or future "parent
        corporation" of the Company, as defined in Section 424(e) of the Code.

                (q) "PARTICIPATING COMPANY" means the Company or any Parent
        Corporation or Subsidiary Corporation.

                (r) "PARTICIPATING COMPANY GROUP" means, at any point in time,
        all corporations collectively which are then Participating Companies.

                (s) "RULE 16b-3" means Rule 16b-3 under the Exchange Act, as
        amended from time to time, or any successor rule or regulation.

                (t) "STOCK" means the common stock of the Company, as adjusted
        from time to time in accordance with Section 4.2.

                (u) "SUBSIDIARY CORPORATION" means any present or future
        "subsidiary corporation" of the Company, as defined in Section 424(f) of
        the Code.

                (v) "TEN PERCENT OWNER OPTIONEE" means an Optionee who, at the
        time an Option is granted to the Optionee, owns stock possessing more
        than ten percent (10%) of the total combined voting power of all classes
        of stock of a Participating Company within the meaning of Section
        422(b)(6) of the Code.

        2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.

3. ADMINISTRATION.

        3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board. All questions of interpretation of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding upon
all persons having an interest in the Plan or such Option. Any officer of a
Participating Company shall have the authority to act on behalf of the company
with respect to any matter, right, obligation, determination or election which
is the responsibility of or which is allocated to the Company herein, provided
the officer has apparent authority with respect to such matter, right,
obligation, determination or election.

        3.2 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.

        3.3 POWERS OF THE BOARD. In addition to any other powers set forth in
the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its sole discretion:

                (a) to determine the persons to whom, and the time or times at
        which, options shall be granted and the number of shares of Stock to be
        subject to each Option;

                (b) to designate options as Incentive Stock Options or
        Nonstatutory Stock Options;

                (c) to determine the Fair Market Value of shares of Stock or
        other property;

                (d) to determine the terms, conditions and restrictions
        applicable to each option (which need not be identical) and any shares
        acquired upon the exercise thereof, including, without limitation, W the
        exercise price of the Option, (ii) the method of payment for shares
        purchased upon the exercise of the option, (iii) the method for
        satisfaction of any tax withholding obligation arising in connection
        with the Option or such shares, including by the withholding or delivery
        of shares of stock, (iv) the timing, terms and conditions of the
        exercisability of the option or the vesting of any shares acquired upon
        the exercise thereof, (v) the time of the expiration of the Option, (vi)
        the effect of the Optionee's termination of employment or service with
        the Participating Company Group on any of the foregoing, and (vii) all
        other terms, conditions and restrictions applicable to the Option or
        such shares not inconsistent with the terms of the Plan;

                (e) to approve one or more forms of Option Agreement;

                (f) to amend, modify, extend, cancel, or renew, any Option or to
        waive any restrictions or conditions applicable to any Option or any
        shares acquired upon the exercise thereof; provided, however, that
        without the approval of the Company's stockholders, the Board shall not
        reprice, replace, regrant through cancellation, or regrant by lowering
        the exercise price of any option and/or award previously granted under
        the Plans;

                (g) to accelerate, continue, extend or defer the exercisability
        of any Option or the vesting of any shares acquired upon the exercise
        thereof, including with respect to the period following an Optionee's
        termination of employment or service with the Participating Company
        Group;

                (h) to prescribe, amend or rescind rules, guidelines and
        policies relating to the Plan, or to adopt supplements to, or
        alternative versions of, the Plan, including, without limitation, as the
        Board deems necessary or desirable to comply with the laws of, or to
        accommodate the tax policy or custom of, foreign jurisdictions whose
        citizens may be granted options;

                (i) to correct any defect, supply any omission or reconcile any
        inconsistency in the Plan or any Option Agreement and to make all other
        determinations and take such other actions with respect to the Plan or
        any Option as the Board may deem advisable to the extent consistent with
        the Plan and applicable law; and

                                       2
<PAGE>

                (j) to delegate the power to grant Options to any Employee or
        Consultant who is not a Director, Insider, or other officer of the
        Company in an amount not to exceed options to purchase 25,000 shares of
        Stock (subject to adjustment to reflect changes in capital structure
        covered by Section 4.2 below); provided that any such grant shall be
        made only in accordance with a Stock Option Program or other program,
        plan, or procedure approved by the Board.

4. SHARES SUBJECT TO PLAN.

        4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as provided
in Section 4.2, the maximum aggregate number of shares of stock that may be
issued under the Plan shall be thirteen million four hundred eighty-five
thousand, four hundred seventy-nine (13,485,479) shares (the "SHARE RESERVE"),
and shall consist of authorized and unissued or reacquired shares of Stock or
any combination thereof. Notwithstanding the foregoing, the Share Reserve,
determined at any time, shall be reduced by (a) the number of shares issued upon
the exercise of options under the Company's 1995 Stock Option Plan (1995 PLAN
OPTIONS), and (b) the number of shares remaining subject to 1995 Plan Options.
If an outstanding option for any reason expires or is terminated or canceled, or
if the shares of Stock acquired, subject to repurchase, upon the exercise of an
Option are repurchased by the Company, the shares of Stock allocable to the
unexercised portion of such Option or such repurchased shares of Stock shall
again be available for issuance under the Plan.

        4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares subject
to the Plan and to any outstanding Options and in the exercise price per share
of any outstanding Options. If a majority of the shares which are of the same
class as the shares that are subject to outstanding options are exchanged for,
converted into, or otherwise become ,(whether or not pursuant to an Ownership
Change Event, as defined in Section 8.1) shares of another corporation (the "NEW
SHARES"), the Board may unilaterally amend the outstanding options to provide
that such Options are exercisable for New Shares. In the event of any such
amendment, the number of shares subject to, and the exercise price per share of,
the outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its sole discretion. Notwithstanding the foregoing,
any fractional share resulting from an adjustment pursuant to this Section 4.2
shall be rounded up or down to the nearest whole number, as determined by the
Board, and in no event may the exercise price of any option be decreased to an
amount less than the par value, if any, of the stock subject to the option. The
adjustments determined by the Board pursuant to this Section 4.2 shall be final,
binding and conclusive.

        4.3 INDIVIDUAL SHARE LIMIT. The maximum aggregate number of shares of
Stock with respect to which Options may be granted during any calendar year to
any Employee may not exceed 500,000 shares or, in the case of the calendar year
during which an Employee first commences employment with any Participating
Company, 1,000,000 shares (subject to adjustment to reflect changes in capital
structure covered by Section 4.2 above).

5. ELIGIBILITY AND OPTION LIMITATIONS.

        5.1 PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only to
Employees, Consultants, and Directors. For purposes of the foregoing sentence,
"Employees," "Consultants," and "Directors" shall include prospective Employees,
prospective Consultants and prospective Directors to whom options are granted in
connection with written offers of employment or other service relationship with
the Participating Company Group. Eligible persons may be granted more than one
(1) Option.

        5.2 OPTION GRANT RESTRICTIONS. Any person who is not an Employee on the
effective date of the grant of an Option to such person may be granted only a
Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee shall be deemed
granted effective on the date such person commences service as an Employee with
a Participating Company, with an exercise price determined as of such date in
accordance with Section 6.1.

        5.3 FAIR MARKET VALUE LIMITATION. To the extent that options designated
as Incentive Stock options (granted under all stock option plans of the
Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having an
aggregate Fair Market Value greater than One Hundred Thousand Dollars
($100,000), the portion of such options which exceeds such amount shall be
treated as Nonstatutory Stock Options. For purposes of this Section 5.3, options
designated as Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is granted. If
the Code is amended to provide for a different limitation from that set forth in
this Section 5.3, such different limitation shall be deemed incorporated herein
effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive
Stock option in part and as a Nonstatutory Stock option in part by reason of the
limitation set forth in this Section 5.3, the Optionee may designate which
portion of such Option the Optionee is exercising. In the absence of such
designation, the Optionee shall be deemed to have exercised the Incentive Stock
Option portion of the option first. Separate certificates representing each such
portion shall be issued upon the exercise of the Option.

6. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by option
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish. No Option or purported
option shall be a valid and binding obligation of the Company unless evidenced
by a fully executed Option Agreement. Option Agreements may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:

        6.1 EXERCISE PRICE. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
option, (b) the exercise price per share for a Nonstatutory Stock option shall
be not less than eighty-five percent (85%) of the Fair market Value of a share
of Stock on the effective date of grant of the option, and (c) no Option granted
to a Ten Percent Owner Optionee shall have an exercise price per share less than
one hundred ten percent (110%) of the Fair Market Value of a share of Stock on
the effective date of grant of the Option. Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Section 424(a) of
the Code.

        6.2 EXERCISE PERIOD. Options shall be exercisable at such time or times,
or upon such event or events, and subject to such terms, conditions, performance
criteria, and restrictions as shall be determined by the Board and set forth in
the Option Agreement evidencing such option; provided, however, that (a) no
option shall be exercisable after the expiration of ten (10) years after the
effective date of grant of such option, (b) no Incentive Stock Option granted to
a Ten Percent Owner Optionee shall be exercisable after the expiration of five
(5) years after the effective date of grant of such option, and (c) no option
granted to a prospective Employee, prospective Consultant or prospective
Director may become exercisable prior to the date on which such person commences
service with a Participating Company.

        6.3 PAYMENT OF EXERCISE PRICE.

                                       3
<PAGE>

               (a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
        provided below, payment of the exercise price for the number of shares
        of Stock being purchased pursuant to any Option shall be made (i) in
        cash, by check, or cash equivalent, (ii) by tender to the Company of
        shares of Stock owned by the Optionee having a Fair Market Value (as
        determined by the Company without regard to any restrictions on
        transferability applicable to such stock by reason of federal or state
        securities laws or agreements with an underwriter for the Company) not
        less than the exercise price, (iii) by the assignment of the proceeds of
        a sale or loan with respect to some or all of the shares being acquired
        upon the exercise of the option (including, without limitation, through
        an exercise complying with the provisions of Regulation T as promulgated
        from time to time by the Board of Governors of the Federal Reserve
        System) (a "CASHLESS EXERCISE"), (iv) by the Optionee's promissory note
        in a form approved by the Company, (v) by such other consideration as
        may be approved by the Board from time to time to the extent permitted
        by applicable law, or (vi) by any combination thereof. The Board may at
        any time or from time to time, by adoption of or by amendment to the
        standard forms of Option Agreement described in Section 7, or by other
        means,grant options which do not permit all of the foregoing forms of
        consideration to be used in payment of the exercise price or which
        otherwise restrict one or more forms of consideration.

               (b) TENDER OF STOCK. Notwithstanding the foregoing, an Option may
        not be exercised by tender to the Company of shares of Stock to the
        extent such tender of would constitute a violation of the provisions of
        any law, regulation or agreement restricting the redemption of the
        Company's stock. Unless otherwise provided by the Board, an Option may
        not be exercised by tender to the Company of shares of Stock unless such
        shares either have been owned by the Optionee for more than six (6)
        months or were not acquired, directly or indirectly, from the Company.

               (c) CASHLESS EXERCISE. The Company reserves, at any and all
        times, the right, in the Company's sole and absolute discretion, to
        establish, decline to approve or terminate any program or procedures for
        the exercise of options by means of a Cashless Exercise.

               (d) PAYMENT BY PROMISSORY NOTE. No promissory note shall be
        permitted if the exercise of an option using a promissory note would be
        a violation of any law. Any permitted promissory note shall be on such
        terms as the Board shall determine at the time the Option is granted.
        The Board shall have the authority to permit or require the Optionee to
        secure any promissory note used to exercise an Option with the shares of
        Stock acquired upon the exercise of the Option or with other collateral
        acceptable to the Company. Unless otherwise provided by the Board, if
        the Company at any time is subject to the regulations promulgated by the
        Board of Governors of the Federal Reserve System or any other
        governmental entity affecting the extension of credit in connection with
        the Company's securities, any promissory note shall comply with such
        applicable regulations, and the Optionee shall pay the unpaid principal
        and accrued interest, if any, to the extent necessary to comply with
        such applicable regulations.

        6.4 TAX WITHHOLDING. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
option or the shares acquired upon the exercise thereof. Alternatively or in
addition, in its sole discretion, the Company shall have the right to require
the Optionee, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof. The Company
shall have no obligation to deliver shares of Stock or to release shares of
Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.

        6.5 NONEMPLOYEE DIRECTOR OPTIONS

                (a) AUTOMATIC GRANT. Subject to the execution by a Nonemployee
        Director of an appropriate Option Agreement, Nonemployee Director
        Options shall be granted automatically and without further action of the
        Board, as follows:

                        (i) INITIAL OPTION. Each person who first becomes a
                Nonemployee Director on or after the date of this Amendment
                shall be granted on the date such person first becomes a
                Nonemployee Director a Nonemployee Director Option to purchase
                ten thousand (10,000) shares of Stock (an "INITIAL OPTION");
                provided, however, that an Initial Option shall not be granted
                to a Director who previously did not qualify as a Nonemployee
                Director but subsequently becomes a Nonemployee Director as a
                result of the termination of his or her status as an Employee.

                        (ii) ANNUAL OPTION. Each Nonemployee Director (including
                any Director who previously did not qualify as a Nonemployee
                Director but who subsequently becomes a Nonemployee Director)
                shall be granted on the date immediately following each annual
                meeting of the stockholders of the Company which occurs on or
                after the date of this Amendment (an "ANNUAL MEETING") a
                Nonemployee Director Option to purchase ten thousand (10,000)
                shares of Stock (an "ANNUAL OPTION"); provided, however, that a
                Nonemployee Director granted an Initial Option less than six
                months prior to date of an Annual Meeting shall not be granted
                an Annual Option pursuant to this Section on the date
                immediately following the same Annual Meeting.

                        (iii) RIGHT TO DECLINE NONEMPLOYEE DIRECTOR OPTION.
                Notwithstanding the foregoing, any person may elect not to
                receive a Nonemployee Director option by delivering written
                notice of such election to the Board no later than the day prior
                to the date such Nonemployee Director Option would otherwise be
                granted. A person so declining a Nonemployee Director option
                shall receive no payment or other consideration in lieu of such
                declined Nonemployee Director Option. A person who has declined
                a Nonemployee Director option may revoke such election by
                delivering written notice of such revocation to the Board no
                later than the day prior to the date such Nonemployee Director
                Option would be granted pursuant to Section 6.5(a)(i) or
                6.5(a)(ii), as the case may be.

                (b) EXERCISE PRICE. The exercise price per share of Stock
        subject to a Nonemployee Director option shall be the Fair Market Value
        of a share of Stock on the date the Nonemployee Director Option is
        granted.

                (c) EXERCISE PERIOD. Each Nonemployee Director Option shall
        terminate and cease to be exercisable on the date ten (10) years after
        the date of grant of the Nonemployee Director Option unless earlier
        terminated pursuant to the terms of the Plan or the Option Agreement.

                (d) RIGHT TO EXERCISE NONEMPLOYEE DIRECTOR OPTIONS.

                                       4
<PAGE>

                        (i) INITIAL OPTIONS. Except as otherwise provided in the
                Option Agreement, each initial Option shall become vested and
                exercisable cumulatively for 1/3 of the shares of Stock
                initially subject to the option on each of the first three (3)
                anniversaries of the date on which the initial Option was
                granted, provided that the Optionee's Service has not terminated
                prior to the relevant date.

                        (ii) ANNUAL OPTIONS. Except as otherwise provided in the
                option Agreement, each Annual Option shall become fully vested
                and exercisable on the first anniversary of the date of grant,
                provided the Optionee's Service has not terminated prior to such
                date.

                (e) EFFECT OF TERMINATION OF SERVICE ON NONEMPLOYEE DIRECTOR
        OPTIONS.

                        (i) OPTION EXERCISABILITY. Subject to earlier
                termination of the Nonemployee Director Option as otherwise
                provided herein, a Nonemployee Director Option shall be
                exercisable after an Optionee's termination of Service as
                follows:

                                (A) DISABILITY. If the Optionee's Service with
                        the Participating Company Group is terminated because of
                        the Disability of the Optionee, the Nonemployee Director
                        Option, to the extent unexercised and exercisable on the
                        date on which the Optionee's Service terminated, may be
                        exercised by the Optionee (or the Optionee's guardian or
                        legal representative) at any time prior to the
                        expiration of twelve (12) months after the date on which
                        the Optionee's Service terminated, but in any event no
                        later than the date of expiration of the Option
                        Expiration Date.

                                (B) DEATH. If the Optionee's Service with the
                        Participating Company Group is terminated because of the
                        death of the Optionee, the Nonemployee Director Option,
                        to the extent unexercised and exercisable on the date on
                        which the Optionee's Service terminated, may be
                        exercised by the optionee's legal representative or
                        other person who acquired the right to exercise the
                        Nonemployee Director option by reason of the Optionee's
                        death at any time prior to the expiration of twelve (12)
                        months after the date on which the Optionee's Service
                        terminated, but in any event no later than the Option
                        Expiration Date. The Optionee's Service shall be deemed
                        to have terminated on account of death if the Optionee
                        dies within six (6) months after the Optionee's
                        termination of Service.

                                (C) OTHER TERMINATION OF SERVICE. If the
                        Optionee's Service with the Participating Company Group
                        terminates for any reason, except Disability or death,
                        the Nonemployee Director Option, to the extent
                        unexercised and exercisable by the Optionee on the date
                        on which the Optionee's Service terminated, may be
                        exercised by the Optionee within six (6) months after
                        the date on which the Optionee's Service terminated, but
                        in any event no later than the Option Expiration Date.

                        (ii) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b).
                Notwithstanding the foregoing, if a sale within the applicable
                time periods set forth in section 6.5(e)(i) of shares acquired
                upon the exercise of the Nonemployee Director Option would
                subject the Optionee to suit under Section 16(b) of the Exchange
                Act, the Nonemployee Director option shall remain exercisable
                until the earliest to occur of (i) the tenth (10th) day
                following the date on which a sale of such shares by the
                Optionee would no longer be subject to such suit, (ii) the one
                hundred and ninetieth (190th) day after the Optionee's
                termination of Service, and (iii) the Option Expiration Date.

7. STANDARD FORMS OF OPTION AGREEMENT.

        7.1 INCENTIVE STOCK OPTIONS. Unless otherwise provided by the Board at
the time the Option is granted, an Option designated as an "Incentive Stock
option" shall comply with and be subject to the terms and conditions set forth
in the form of Incentive Stock option Agreement adopted by the Board
concurrently with its adoption of the Plan and as amended from time to time.

        7.2 NONSTATUTORY STOCK OPTIONS. Unless otherwise provided by the Board
at the time the option is granted, an option designated as a "Nonstatutory Stock
Option" shall comply with and be subject to the terms and conditions set forth
in the form of Nonstatutory Stock Option Agreement adopted by the Board
concurrently with its adoption of the Plan and as amended from time to time.

        7.3 STANDARD TERM OF OPTIONS. Except as otherwise provided in Section
6.2 or by the Board in the grant of an Option, any Option granted hereunder
shall have a term of ten (10) years from the effective date of grant of the
Option.

        7.4 AUTHORITY TO VARY TERMS. The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement are not
inconsistent with the terms of the Plan.

8. TRANSFER OF CONTROL.

        8.1 DEFINITIONS.

                (a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred
        if any of the following occurs with respect to the Company:

                        (i) the direct or indirect sale or exchange in a single
                or series of related transactions by the shareholders of the
                Company of more than fifty percent (50%) of the voting stock of
                the Company;

                        (ii) a merger or consolidation in which the Company is a
                party;

                        (iii) the sale, exchange, or transfer of all or
                substantially all of the assets of the Company; or

                        (iv) a liquidation or dissolution of the Company.

                (b) A "TRANSFER OF CONTROL" shall mean an Ownership Change Event
        or a series of related ownership Change Events (collectively, the
        "TRANSACTION") wherein the shareholders of the Company immediately
        before the Transaction do not retain immediately after the Transaction,
        in substantially the same proportions as their ownership of shares of
        the Company's voting stock immediately before the Transaction,

                                       5
<PAGE>

        direct or indirect beneficial ownership of more than fifty percent (50%)
        of the total combined voting power of the outstanding voting stock of
        the Company or the corporation or corporations to which the assets of
        the Company were transferred (the "TRANSFEREE CORPORATION(S)"), as the
        case may be. For purposes of the preceding sentence, indirect beneficial
        ownership shall include, without limitation, an interest resulting from
        ownership of the voting stock of one or more corporations which, as a
        result of the Transaction, own the Company or the Transferee
        Corporation(s), as the case may be, either directly or through one or
        more subsidiary corporations. The Board shall have the right to
        determine whether multiple sales or exchanges of the voting stock of the
        Company or multiple ownership Change Events are related, and its
        determination shall be final, binding and conclusive.

        8.2 EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the event of a Transfer
of Control, the percentage of the Option that has vested shall be adjusted to
100% (if not already at that percentage) on the date that the Company mails the
Optionee notice of the Transfer of Control at the last address shown on the
records of the Company for such Optionee (the "NOTICE"), unless the surviving,
continuing, successor, or purchasing corporation or parent corporation thereof,
as the case may be (the "ACQUIRING CORPORATION"), either assumes the Company's
rights and obligations under outstanding Options or substitutes for outstanding
Options substantially equivalent options for the Acquiring Corporation's stock.
Any Options which are neither assumed or substituted for by the Acquiring
Corporation in connection with the Transfer of Control nor exercised as of the
date fifteen days after the Notice of the Transfer of Control shall terminate
and cease to be outstanding effective upon the later of (i) the date of the
Transfer of Control or (ii) fifteen days after mailing of the Notice. For
purposes of this Section 8.2, an option shall be deemed assumed if, following
the Transfer of Control, the Option confers the right to purchase in accordance
with its terms and conditions, for each share of Stock subject to the Option
immediately prior to the Transfer of Control, the consideration (whether stock,
cash or other securities or property) to which a holder of a share of Stock on
the effective date of the Transfer of Control was entitled. Notwithstanding the
foregoing, shares acquired upon exercise of an Option prior to the Transfer of
Control and any consideration received pursuant to the Transfer of Control with
respect to such shares shall continue to be subject to all applicable provisions
of the Option Agreement evidencing such Option except as otherwise provided in
such Option Agreement. Furthermore, notwithstanding the foregoing, if the
corporation the stock of which is subject to the outstanding options immediately
prior to an Ownership Change Event described in Section 8.1(a)(i) constituting a
Transfer of Control is the surviving or continuing corporation and immediately
after such ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another corporation or by
other corporations that are members of an affiliated group within the meaning of
Section 1504(a) of the Code without regard to the provisions of Section 1504(b)
of the Code, the outstanding options shall not terminate unless the Board
otherwise provides in its sole discretion.

9. PROVISION OF INFORMATION. At least annually, copies of the Company's balance
sheet and income statement for the just completed fiscal year shall be made
available to each Optionee and purchaser of shares of Stock upon the exercise of
an option. The Company shall not be required to provide such information to
persons whose duties in connection with the Company assure them access to
equivalent information.

10. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, an
option shall be exercisable only by the Optionee or the Optionee's guardian or
legal representative. No Option shall be assignable or transferable by the
optionee, except by will or by the laws of descent and distribution.

11. INDEMNIFICATION. In addition to such other rights of indemnification as they
may have as members of the Board or officers or employees of the Participating
company Group, members of the Board and any officers or employees of the
Participating Company Group to whom authority to act for the Board or the
Company is delegated shall be indemnified by the Company against all reasonable
expenses, including attorneys' fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan, or
any right granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the
opportunity at its own expense to handle and defend the same.

12. TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or amend the Plan
at any time. However, without the approval of the Company's shareholders there
shall be (a) no increase in the maximum aggregate number of shares of Stock that
may be issued under the Plan (except by operation of the provisions of Section
4.2), (b) no change in the class of persons eligible to receive Incentive Stock
Options, (c) no amendment of the Plan that would provide a material increase in
the benefits to optionees, and (d) no other amendment of the Plan that would
require approval of the Company's shareholders under any applicable law,
regulation or rule. For purposes of this Section 12, the following types of
amendments would be deemed to provide a material increase in benefits to
optionees: (1) amendments to allow repricing of options; (2) amendments to allow
granting of options with exercise prices less than fair market value on the date
of grant; and (3) amendments to allow the granting of restricted stock.
Non-material amendments, such as administrative matters, changes in relevant
laws or regulations, or changes that result from stock splits and comparable
restructuring would not require shareholder approval. In any event, no
termination or amendment of the Plan may adversely affect any then outstanding
Option or any unexercised portion thereof, without the consent of the Optionee,
unless such termination or amendment is required to enable an option designated
as an Incentive Stock Option to qualify as an Incentive Stock option or is
necessary to comply with any applicable law, regulation or rule.

13. SHAREHOLDER APPROVAL. The Plan or any increase in the maximum number of
shares of Stock issuable thereunder as provided in Section 4.1 (the "MAXIMUM
SHARES") shall be approved by the shareholders of the Company within twelve (12)
months of the date of adoption thereof by the Board. Options granted prior to
shareholder approval of the Plan or in excess of the maximum Shares previously,
approved by the shareholders shall become exercisable no earlier than the date
of shareholder approval of the Plan or such increase in the Maximum Shares, as
the case may be.

                                       6

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