-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JFQKjX25FmBquF+LHDk49kBKGglCYrxb/PDYQ+MeKrUHmOxVHqjdB9pvJM7RLusT 9UwYNyipdZgewmPZHG0/rQ== 0001019056-02-000656.txt : 20020905 0001019056-02-000656.hdr.sgml : 20020905 20020905160137 ACCESSION NUMBER: 0001019056-02-000656 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20020904 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020905 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QWEST COMMUNICATIONS INTERNATIONAL INC CENTRAL INDEX KEY: 0001037949 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 841339282 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15577 FILM NUMBER: 02757566 BUSINESS ADDRESS: STREET 1: 1801 CALIFORNIA ST CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3039921400 MAIL ADDRESS: STREET 1: 1801 CALIFORNIA ST CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: QUEST COMMUNICATIONS INTERNATIONAL INC DATE OF NAME CHANGE: 19970416 8-K 1 qwest_8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 4, 2002 QWEST COMMUNICATIONS INTERNATIONAL INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware ---------------------------------------------- (State or other jurisdiction of incorporation) 000-22609 84-1339282 ----------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 1801 California Street Denver, Colorado 80202 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 303-992-1400 ------------ Not applicable ------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. Other Events. On September 4, 2002 Qwest Communications International Inc. ("Qwest") announced that it had reached unanimous agreement with the 29 lenders in its syndicated credit facility to amend Qwest's $3.4 billion credit facility. In addition, Qwest has completed a new $750 million term loan at its Qwest Dex, Inc. ("Dex") subsidiary. Both agreements are effective immediately. A copy of the amended and restated credit agreement ("ARCA") is attached as Exhibit 10.1 to this Current Report on Form 8-K. A copy of the Dex term loan agreement (the "Dex Loan") is attached as Exhibit 10.2 to this Current Report on Form 8-K. A copy of the Security and Pledge Agreement (the "Security Agreement") related to the ARCA and the Dex Loan is attached as Exhibit 10.3 to this Current Report on Form 8-K. A copy of the press release announcing these transactions is attached as Exhibit 99.1 to this Current Report on Form 8-K. This description is qualified in its entirety by reference to these agreements. Under the ARCA, Qwest Services Corporation ("QSC") has become the borrower and has assumed all of the currently outstanding debt under the previous credit facility. Qwest Capital Funding, Inc. and Qwest Corporation, the borrowers under the previous facility, are not obligated under the ARCA. The ARCA is a revolving credit facility. In addition, the maturity of the credit facility has been extended from May 2003 to May 2005, and the financial covenants have been revised, including increasing Qwest's maximum debt to consolidated EBITDA ratio from 4.0 at the end of 2002 to 6.0 throughout the term of the agreement and adding a new debt to consolidated EBITDA test of 2.5 at the Qwest Corporation level. QSC's obligations are guaranteed by Qwest, Dex and Qwest Dex Holdings, Inc. ("Dex Holdings"). Under the Security Agreement, QSC's obligations are secured principally by a first priority pledge of the stock of Qwest's subsidiary, Qwest Corporation, a second priority pledge of the stock of Dex and Dex Holdings and a second priority pledge of certain assets of Dex. The maximum amount of the revolving credit facility will remain at $3.4 billion, the current amount outstanding. Qwest must reduce the credit facility with the net proceeds of asset sales and capital markets events, subject to certain exceptions, and, in any event, it must be reduced to $2.0 billion by December 31, 2003, $1.5 billion by June 1, 2004 and $1.25 billion by December 1, 2004. Qwest paid certain one-time fees and will pay an interest rate of LIBOR plus 3.50% per annum on the outstanding amounts under the ARCA. Under the terms of the Dex Loan, Dex, the borrower, has obtained a $750 million term loan due in September 2004. The Dex Loan is guaranteed by Dex Holdings and QSC and, under the Security Agreement, the obligations are secured by a first priority pledge of the stock of Dex and Dex Holdings, a first priority pledge of certain assets of Dex and a second priority pledge of the stock of Qwest Corporation. The Dex Loan provides for financial covenants for Dex that include a ratio of consolidated EBITDA of Dex Holdings and its subsidiaries to senior debt (which includes the Dex Loan and any other senior debt (other than Dex's guarantee of the ARCA)) of 1.25 (increased to 1.75 after the sale of the first phase of Dex), a consolidated EBITDA of Dex Holdings and its subsidiaries to interest coverage ratio (excluding intercompany interest) of 8.75 (reduced to 4.75 after the sale of the first phase of Dex) and a minimum net worth test requiring that the consolidated net worth of Dex Holdings and its subsidiaries may not fall more than $150 million below its net worth as of June 30, 2002. The parties have agreed to adjust the minimum net worth test after the previously announced sale of the first phase of the Dex business, with the understanding that the permitted decrease in net value after such readjustment will remain at 1 least at the same proportion to net worth as the initial test. The Dex Loan is not required to be repaid on the sale of the first phase of Dex, but must be paid in full upon the sale of the second phase of Dex, expected in 2003. Qwest has previously announced an agreement to sell the entire Dex business in two stages. The closing of the first stage is subject to several conditions, including, among others, the termination or expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the consummation of the debt financing pursuant to which the buyer intends to fund the purchase, no material adverse effect occurring with respect to the first portion of the Dex business or of Qwest and its subsidiaries, and the receipt of certain consents. The Dex Loan consists of a fixed interest rate component, at a rate of 14% per annum, and a floating interest rate component, at a rate of LIBOR plus 11.50%. Dex also paid certain one-time fees in connection with the Dex Loan. Both facilities cross-default to each other and contain covenants limiting additional debt, additional liens, certain investments, dividends, and other transactions, subject in each case to certain negotiated exceptions. Both facilities permit the sale of Dex as currently contemplated. Forward Looking Statements Warning - ---------------------------------- This Current Report on Form 8-K contains projections and other forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by us with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: the duration and extent of the current economic downturn in our 14-state local service area, including its effect on our customers and suppliers; the effects of our anticipated restatement of historical financial statements including delays in or restrictions on our ability to access the capital markets or other adverse effect to our business or financial position; our substantial indebtedness, and our inability to complete any efforts to de-lever our balance sheet through asset sales or other transactions; any adverse outcome of the SEC's current investigation into our accounting policies, practices and procedures; any adverse outcome of the current investigation by the U.S. Attorney's Office in Denver into certain matters relating to us; adverse results of increased review and scrutiny by Congress, regulatory authorities, media and others (including any internal analyses) of financial reporting issues and practices or otherwise; the failure of our chief executive and chief financial officers to provide certain certifications relating to certain public filings; rapid and significant changes in technology and markets; failure to achieve the projected synergies and financial results expected to result from the acquisition of U S WEST, and difficulties in combining the operations of the combined company; our future ability to provide interLATA services within our 14-state local service area; potential fluctuations in quarterly results; volatility of our stock price; intense competition in the markets in which we compete; changes in demand for our products and services; dependence on new product development and acceleration of the deployment of advanced new services, such as broadband data, wireless and video services, which could require substantial expenditure of financial and other resources in excess of contemplated levels; higher than anticipated employee levels, capital expenditures and operating expenses; adverse changes in the regulatory or legislative environment affecting our business; adverse developments in commercial disputes or legal proceedings; and changes in the outcome of future events from the assumed outcome included in our significant accounting policies. 2 The information contained in this Current Report on Form 8-K is a statement of Qwest's present intention, belief or expectation and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and Qwest's assumptions. Qwest may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in Qwest's assumptions or otherwise. The cautionary statements contained or referred to in this Current Report on Form 8-K should be considered in connection with any subsequent written or oral forward-looking statements that Qwest or persons acting on its behalf may issue. This Current Report on Form 8-K may include analysts' estimates and other information prepared by third parties for which Qwest assumes no responsibility. Qwest undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. By including any information in this Current Report on Form 8-K, Qwest does not necessarily acknowledge that disclosure of such information is required by applicable law or that the information is material. Item 7. Financial Statements and Exhibits. Exhibit 10.1 Second Amended and Restated Credit Agreement dated as of May 4, 2001, as amended and restated as of March 21, 2002 and further amended and restated as of August 30, 2002, by and among Qwest Services Corporation, Qwest Communications International Inc., Qwest Dex, Inc., Qwest Dex, Inc., the Banks listed therein, and Bank of America, N.A., as Agent. Exhibit 10.2 Term Loan Agreement dated as of August 30, 2002, by and among Qwest Services Corporation, Qwest Dex Holdings, Inc., Qwest Dex, Inc., the Lenders listed therein, and Bank of America, N.A., as Agent. Exhibit 10.3 Security and Pledge Agreement dated as of August 30, 2002, by and among Qwest Services Corporation, Qwest Dex Holdings, Inc., Qwest Dex, Inc., and Bank of America, N.A., as Collateral Agent. Exhibit 99.1 Press Release dated September 4, 2002. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Qwest has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. QWEST COMMUNICATIONS INTERNATIONAL INC. DATE: September 4, 2002 By: /s/ YASH A. RANA --------------------- Name: Yash A. Rana Title: Vice President 4 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- Exhibit 10.1 Second Amended and Restated Credit Agreement dated as of May 4, 2001, as amended and restated as of March 21, 2002 and further amended and restated as of August 30, 2002, by and among Qwest Services Corporation, Qwest Communications International Inc., Qwest Dex, Inc., Qwest Dex, Inc., the Banks listed therein, and Bank of America, N.A., as Agent. Exhibit 10.2 Term Loan Agreement dated as of August 30, 2002, by and among Qwest Services Corporation, Qwest Dex Holdings, Inc., Qwest Dex, Inc., the Lenders listed therein, and Bank of America, N.A., as Agent. Exhibit 10.3 Security and Pledge Agreement dated as of August 30, 2002, by and among Qwest Services Corporation, Qwest Dex Holdings, Inc., Qwest Dex, Inc., and Bank of America, N.A., as Collateral Agent. Exhibit 99.1 Press Release dated September 4, 2002. 5 EX-10.1 3 ex10_1.txt EXHIBIT 10.1 [EXECUTION COPY] - -------------------------------------------------------------------------------- $3,354,302,016 SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 4, 2001 amended and restated as of March 12, 2002 and further amended and restated as of August 30, 2002 among Qwest Services Corporation Qwest Communications International Inc. Qwest Dex Holdings, Inc. Qwest Dex, Inc. The Banks Listed Herein and Bank of America, N.A., as Administrative Agent - -------------------------------------------------------------------------------- Banc of America Securities LLC J.P. Morgan Securities Inc. Co-Lead Arrangers Banc of America Securities LLC J.P. Morgan Securities Inc. Wachovia Securities, Inc. Joint Bookrunners J.P. Morgan Securities Inc. Wachovia Securities, Inc. Co-Syndication Agents
TABLE OF CONTENTS ----------------- PAGE ---- ARTICLE 1 --------- DEFINITIONS ----------- Section 1.01. The Definitions..................................................................1 Section 1.02. Accounting Terms and Determinations.............................................20 Section 1.03. Types of Borrowings.............................................................21 ARTICLE 2 --------- THE CREDITS ----------- Section 2.01. Commitments to Lend.............................................................21 Section 2.02. Notice of Borrowing.............................................................21 Section 2.03. [Intentionally Deleted].........................................................22 Section 2.04. Notice to Banks; Funding of Loans...............................................22 Section 2.05. Notes...........................................................................23 Section 2.06. Maturity of Loans...............................................................24 Section 2.07. Interest Rates..................................................................24 Section 2.08. Commitment Fees.................................................................26 Section 2.09. Termination or Reduction of Commitments.........................................26 Section 2.10. Method of Electing Interest Rates...............................................28 Section 2.11. Prepayments.....................................................................29 Section 2.12. General Provisions as to Payments...............................................30 Section 2.13. Funding Losses..................................................................31 Section 2.14. Computation of Interest and Fees................................................31 Section 2.15. Change of Control...............................................................31 Section 2.16. Notice of Prepayment Events.....................................................32 ARTICLE 3 --------- CONDITIONS ---------- Section 3.01. Closing.........................................................................32 Section 3.02. All Borrowings..................................................................34 Section 3.03. Effect of Occurrence of Closing Date............................................35 ARTICLE 4 --------- REPRESENTATIONS AND WARRANTIES ------------------------------ Section 4.01. Corporate Existence and Power...................................................35 Section 4.02. Corporate and Governmental Authorization; No Contravention......................36
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Section 4.03. Binding Effect..................................................................36 Section 4.04. Financial Information...........................................................36 Section 4.05. Litigation......................................................................37 Section 4.06. Compliance with ERISA...........................................................37 Section 4.07. Environmental Matters...........................................................38 Section 4.08. Taxes...........................................................................38 Section 4.09. Subsidiaries....................................................................39 Section 4.10. Not an Investment Company.......................................................39 Section 4.11. Full Disclosure.................................................................39 Section 4.12. Solvency........................................................................39 ARTICLE 5 --------- COVENANTS --------- Section 5.01. Information.....................................................................40 Section 5.02. Maintenance of Property; Insurance..............................................45 Section 5.03. Maintenance of Existence........................................................45 Section 5.04. Compliance with Laws............................................................45 Section 5.05. Inspection of Property, Books and Records.......................................46 Section 5.06. Debt Coverage...................................................................46 Section 5.07. Negative Pledge.................................................................46 Section 5.08. Consolidations, Mergers and Sales of Assets.....................................48 Section 5.09. Use of Proceeds.................................................................49 Section 5.10. Restricted Payments and Payments of Certain Other Debt..........................49 Section 5.11. Limitations on Restrictions Affecting Subsidiaries..............................51 Section 5.12. Limitations on Debt.............................................................52 Section 5.13. Limitations on Investments; Loans, Advances, Guarantees and Acquisitions........54 Section 5.14. Further Assurances Regarding Collateral and Guaranty Requirement................55 ARTICLE 6 --------- DEFAULTS -------- Section 6.01. Events of Default...............................................................56 Section 6.02. Notice of Default...............................................................58 ARTICLE 7 --------- THE AGENT --------- Section 7.01. Appointment and Authorization...................................................59 Section 7.02. Agent and Affiliates............................................................59 Section 7.03. Action by Agent.................................................................59 Section 7.04. Consultation with Experts.......................................................59
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Section 7.05. Delegation of Duties............................................................60 Section 7.06. Liability of Agent..............................................................60 Section 7.07. Indemnification.................................................................60 Section 7.08. Credit Decision; Disclosure of Information by Agent.............................60 Section 7.09. Successor Agent.................................................................61 Section 7.10. Agent's Fee.....................................................................62 ARTICLE 8 --------- CHANGES IN CIRCUMSTANCES ------------------------ Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair........................62 Section 8.02. Illegality......................................................................62 Section 8.03. Increased Cost and Reduced Return...............................................63 Section 8.04. Taxes...........................................................................64 Section 8.05. Domestic Loans Substituted for Affected Euro-Dollar Loans.......................66 Section 8.06. Substitution of Bank............................................................67 ARTICLE 9 --------- GUARANTEES ---------- Section 9.01. The Guaranty....................................................................67 Section 9.02. Guaranty Unconditional..........................................................67 Section 9.03. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances.....68 Section 9.04. Waiver by Each Guarantor........................................................68 Section 9.05. Subrogation.....................................................................69 Section 9.06. Stay of Acceleration............................................................69 Section 9.07. Limit of Liability..............................................................69 Section 9.08. Subordination To QwestDex Senior Debt...........................................70 ARTICLE 10 ---------- MISCELLANEOUS ------------- Section 10.01. Notices........................................................................74 Section 10.02. No Waivers.....................................................................74 Section 10.03. Expenses; Indemnification......................................................74 Section 10.04. Sharing of Set-offs............................................................75 Section 10.05. Amendments and Waivers; Release of Liens.......................................76 Section 10.06. Successors and Assigns.........................................................77 Section 10.07. Governing Law; Submission to Jurisdiction......................................80 Section 10.08. Counterparts; Integration......................................................80 Section 10.09. WAIVER OF JURY TRIAL...........................................................80 Section 10.10. Confidentiality................................................................80 Section 10.11. No Reliance on Margin Stock....................................................81 Section 10.12. Co-Lead Arrangers, Joint Bookrunners and Co-Syndication Agents.................81
iii SECOND AMENDED AND RESTATED CREDIT AGREEMENT AGREEMENT dated as of May 4, 2001, amended and restated as of March 12, 2002 and further amended and restated as of August 30, 2002, among QWEST SERVICES CORPORATION, QWEST COMMUNICATIONS INTERNATIONAL INC., QWEST DEX HOLDINGS, INC., QWEST DEX, INC., the BANKS listed on the signature pages hereof and BANK OF AMERICA, N.A., as Administrative Agent. WHEREAS, Qwest Capital Funding, Inc., Qwest Corporation, Qwest Communications International Inc., the banks party thereto and Bank of America, N.A., as administrative agent, are parties to an Amended and Restated Credit Agreement dated as of May 4, 2001 and amended and restated as of March 12, 2002 (as in effect immediately prior to the Closing Date (as defined below), the "Existing Agreement"); and WHEREAS, the parties thereto wish to amend and restate the Existing Agreement in its entirety as set forth herein in order to, among other things, reinstate the revolving commitments of the banks thereunder and extend the maturity date of the credit facility evidenced thereby; NOW, THEREFORE, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS Section 1.01. The Definitions. The following terms, as used herein, have the following meanings: "Additional Permitted Secured Obligations" has the meaning set forth in the Security and Pledge Agreement. "Adjusted London Interbank Offered Rate" has the meaning set forth in Section 2.07. "Administrative Questionnaire" means, with respect to each Bank, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent (with a copy to the Company) duly completed by such Bank. "Affiliate", as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. "Agent" means Bank of America, N.A., in its capacities as administrative agent and collateral agent for the Banks under the Loan Documents, and its successors in such capacity. "Agent-Related Person" has the meaning set forth in Section 7.08. "Agreement" means this Second Amended and Restated Credit Agreement dated as of August 30, 2002, as the same may from time to time be further amended, amended and restated, modified or supplemented. "Applicable Lending Office" means, with respect to any Bank, (i) in the case of its Domestic Loans, its Domestic Lending Office and (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office. "Asset Sale" means, with respect to any Person, any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property of such Person, except (i) sales of inventory, customer premises equipment and other equipment, conduit, fiber and capacity (including indefeasible rights of use), Permitted Investments and sales or licenses of technology, in each case in the ordinary course of business, (ii) write-offs of accounts receivable or settlements of accounts receivable for less than the total unpaid balance thereof, in each case in the ordinary course of business and consistent with such Person's historical collection practices, (iii) sales or dispositions of shares of Equity Interests in any of its Subsidiaries in order to qualify members of the governing body of the Subsidiary, if required by applicable laws and in such amounts as required by applicable laws, (iv) any transfer of assets pursuant to any merger or consolidation permitted by 15, (v) any sale, transfer or other disposition of assets from any Subsidiary of the Company (other than the Borrower, a QwestDex Company or a Corp. Company (other than Wireless)) to any other Subsidiary of the Company other than to a QwestDex Company or a Corp. Company and (vi) any QwestDex Sale Asset Transfer. Nothing in this definition shall be construed to limit or modify any restriction contained in Sections 15, 5.08(a) or 5.08(c). "Asset Swap" means any Asset Sale or portion thereof the sole consideration for which is substantially similar assets used in the same line of business as the assets being sold, transferred or otherwise disposed pursuant thereto and of substantially equivalent fair market value. 2 "Assignee" has the meaning set forth in Section 10.06(b). "Bank" means each lender listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 10.06(b), and their respective successors. "Bank Affiliate" means, (a) with respect to any Bank, (i) an Affiliate of such Bank or (ii) an entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Bank or an Affiliate of such Bank and (b) with respect to any Bank that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Bank or by an affiliate of such investment advisor. "Base Rate" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day. "Base Rate Margin" has the meaning set forth in Section 2.07. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group. "Borrower" means Qwest Services Corporation, a Colorado corporation (including in its capacity as assignee of Capital Funding pursuant to the Qwest Assignment and Assumption Agreement), and its successors. "Borrowing" has the meaning set forth in Section 1.03. "Capital Funding" means Qwest Capital Funding, Inc., a Colorado corporation, and its successors. "Capital Market Event" means a Prepayment Event described in clause (ii), (iii) or (iv) of the definition of Prepayment Event. "Closing Date" means the date on which the Agent shall have received the documents or evidence specified in or pursuant to Section 3.01. "Collateral" means any and all "Collateral", as defined in any Collateral Document. 3 "Collateral Agent" has the meaning set forth in the Security and Pledge Agreement. "Collateral and Guaranty Requirement" means the requirement that: (a) the Collateral Agent shall have received from each Lien Grantor either 1. a counterpart of the Security and Pledge Agreement duly executed and delivered on behalf of such Lien Grantor or 2. in the case of any Person that becomes a Lien Grantor after the Closing Date, a supplement to the Security and Pledge Agreement, in the form specified therein, duly executed and delivered on behalf of such Lien Grantor; (b) all outstanding Equity Interests constituting Collateral shall have been pledged pursuant to the Security and Pledge Agreement and the Collateral Agent shall have received all certificates or other instruments representing all outstanding Equity Interests of Corp., all outstanding Equity Interests of QwestDex and all outstanding Equity Interests of QwestDex, Inc., in each case together with stock powers or other instruments of transfer with respect thereto endorsed in blank: (c) all Instruments constituting Collateral shall have been pledged pursuant to the Security and Pledge Agreement and the Collateral Agent shall have received all such Instruments (subject to any limitations set forth in the Security and Pledge Agreement) , together with instruments of transfer with respect thereto endorsed in blank; (d) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Collateral Agent to be filed, registered or recorded to create the Liens intended to be created by the Security and Pledge Agreement and perfect or record such Liens to the extent, and with the priority, required by the Security and Pledge Agreement, shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or recording; and (e) each Lien Grantor shall have obtained all consents and approvals required to be obtained by it in connection with (i) the execution and delivery of the Security and Pledge Agreement and (ii) subject to any limitations set forth in the Security and Pledge Agreement, the performance of its obligations thereunder and the granting of the Liens purported to be granted by it thereunder.. "Collateral Documents" means the Security and Pledge Agreement and each other security agreement, pledge agreement, instrument or document executed and 4 delivered pursuant to Section 5.14 to secure any of the Revolver Secured Obligations. "Commitment" means, with respect to each Bank, the amount set forth opposite the name of such Bank on the Commitment Schedule attached hereto or in the applicable Assignment and Assumption Agreement, as such amount may be reduced from time to time pursuant to Section 2.09. "Company" means Qwest Communications International Inc., a Delaware corporation, and its successors. "Company Indentures" means the Indenture dated as of November 27, 1998 between the Company and Bankers Trust Company, as Trustee, the Indenture dated as of November 4, 1998 between the Company and Bankers Trust Company, as Trustee, the Indenture dated as of August 28, 1997 between the Company and Bankers Trust Company, as Trustee, as supplemented by First Supplemental Indenture dated as of February 16, 2001, the Indenture dated as of October 15, 1997 between the Company and Bankers Trust Company, as Trustee, as supplemented by First Supplemental Indenture dated as of February 16, 2001, and the Indenture dated as of January 29, 1998 between the Company and Bankers Trust Company, as Trustee, as supplemented by First Supplemental Indenture dated as of February 16, 2001. "Company Qualifying Asset Sale" means any Asset Sale by the Company or any of its Subsidiaries, except (i) any Corp. Qualifying Asset Sale, (ii) any Asset Sale to the Company or to any of its Subsidiaries (other than a Corp. Company) and (iii) any other single disposition or series of related dispositions resulting in aggregate Net Proceeds not exceeding $30,000,000 for any single disposition or series of related dispositions or $150,000,000 in the aggregate (including for purposes of calculating such $150,000,000, all Asset Sales consummated by the Company or any of its Subsidiaries, other than an Asset Sale described in clause (ii) of this definition or clause (i) of the definition of Corp. Qualifying Asset Sale). "Company's 2001 Form 10-K" means the Company's annual report on Form 10-K for 2001, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. "Consolidated Company EBITDA" means, for any period, the net income of the Company and its Consolidated Subsidiaries determined on a consolidated basis for such period (adjusted to exclude the effect of (w) any non-cash losses as a result of impairment of goodwill as required by Statement of Financial Accounting Standards No. 142, (x) equity gains or losses in unconsolidated Persons, (y) any preferred dividend income and any extraordinary or other 5 non-recurring non-cash gain or loss or (z) any gain or loss on the disposition of investments), plus, to the extent deducted in determining such adjusted net income, the aggregate amount of (i) interest expense, (ii) fees paid in connection with this Agreement, (iii) income tax expense, (iv) depreciation, amortization, reserves and other non-cash charges and (v) transaction costs incurred in connection with this Agreement and minus, to the extent included in determining such adjusted net income, the aggregate amount of (1) interest income and (2) income tax benefit, provided that, for any period or portion thereof during which the operations of QwestDex and its Consolidated Subsidiaries have been classified as discontinued operations for purposes of determining the net income of the Company and its Consolidated Subsidiaries (any such period or portion thereof, a "Discontinued Period"), the amounts described in each of clauses (w), (x), (y), (z), (i), (ii), (iii) (iv), (v), (1) and (2) above shall include, without duplication, any such amounts with respect to QwestDex and its Consolidated Subsidiaries for such Discontinued Period. "Consolidated Corp. EBITDA" means, for any period, the net income of Corp. and its Consolidated Subsidiaries determined on a consolidated basis for such period (adjusted to exclude the effect of (w) any non-cash losses as a result of impairment of goodwill as required by Statement of Financial Accounting Standards No. 142, (x) equity gains or losses in unconsolidated Persons, (y) any preferred dividend income and any extraordinary or other non-recurring non-cash gain or loss or (z) any gain or loss on the disposition of investments), plus, to the extent deducted in determining such adjusted net income, the aggregate amount of (i) interest expense, (ii) income tax expense, (iii) depreciation, amortization, reserves and other non-cash charges, and (iv) transaction costs incurred in connection with this Agreement and minus, to the extent included in determining such adjusted net income, the aggregate amount of (1) interest income and (2) income tax benefit. "Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of the Company, the Borrower or Corp., as applicable, in its consolidated financial statements if such statements were prepared as of such date. "Corp." means Qwest Corporation, a Colorado corporation, and its successors. "Corp. Company" means Corp. or any of its Subsidiaries. "Corp. Qualifying Asset Sale" means any Asset Sale by a Corp. Company, except (i) any Asset Sale to any Corp. Company, and (ii) any other single disposition or series of related dispositions resulting in aggregate Net Proceeds not exceeding $30,000,000 for any single disposition or series of 6 related dispositions or $150,000,000 in the aggregate (including, for purposes of calculating such $150,000,000, all Asset Sales consummated by the Company or any of its Subsidiaries, other than an Asset Sale described in clause (i) of this definition or in clause (ii) of the definition of Company Qualifying Asset Sale). "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles, (v) all Debt secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person, and (vi) all Debt of others Guaranteed by such Person. Notwithstanding the foregoing, for purposes of Section 5.06 Debt shall in no event include the following: (x) Debt of Persons which are not Consolidated Subsidiaries ("Joint Ventures") (i) which is secured by a Lien on the assets or capital stock of a Minor Subsidiary or the equity interests in such Joint Ventures or is Guaranteed by a Minor Subsidiary, which Lien or Guaranty is incurred in connection with the operations of the Company and its Subsidiaries, and (ii) for the payment of which no other recourse may be had to the Company or any of its Subsidiaries; (y) Debt of the Company or the Borrower issued in connection with the issuance of Trust Originated Preferred Securities or substantially similar securities, so long as such Debt is subordinated and junior in right of payment to substantially all liabilities of the Company or the Borrower, as the case may be, including, without limitation, the Loans; and (z) any mandatorily convertible equity-linked securities issued by the Company, so long as any such securities satisfy each of the following conditions: (i) the terms thereof require no repayments or prepayments and no mandatory redemptions or repurchases, in each case prior to at least 91 days after the later of the termination of the Commitments and the repayment in full of the Loans and all other amounts due under the Loan Documents, and (ii) such securities are subordinated and junior in right of payment to all obligations of the Company, as the case may be, for or in respect of borrowed money (unless the instrument governing such obligations expressly provides that such obligations are not senior or superior to such securities or are subordinated or junior in right of payment to them), including, without limitation, to all obligations under the Loan Documents. 7 "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Dexter Assets" means any assets of any QwestDex Company other than Rodney Assets. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City, New York or Dallas, Texas are authorized by law to close. "Domestic Lending Office" means, as to each Bank, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank may hereafter designate as its Domestic Lending Office by notice to the Company and the Agent. "Domestic Loan" means (i) a Loan which bears interest at the Base Rate pursuant to the applicable Notice of Borrowing or Notice of Interest Rate Election or the provisions of Article 8 or (ii) an overdue amount which was a Domestic Loan immediately before it became overdue. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to the environment, the effect of the environment on human health or to emissions, discharges or releases of pollutants, contaminants, Hazardous Substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, Hazardous Substances or wastes or the clean-up or other remediation thereof. "Equity Interests" means (i) shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person or (ii) any warrants, options or other rights to acquire such shares or interests. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. "ERISA Group" means the Company, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any 8 Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code. "Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London. "Euro-Dollar Lending Office" means, as to each Bank, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or affiliate of such Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Company and the Agent. "Euro-Dollar Loan" means (i) a Loan which bears interest at a Euro-Dollar Rate pursuant to the applicable Notice of Borrowing or Notice of Interest Rate Election or (ii) an overdue amount which was a Euro-Dollar Loan before it became overdue. "Euro-Dollar Margin" has the meaning set forth in Section 2.07. "Euro-Dollar Rate" means a rate of interest determined pursuant to Section 2.07 on the basis of an Adjusted London Interbank Offered Rate. "Euro-Dollar Reserve Percentage" has the meaning set forth in Section 2.07. "Event of Default" has the meaning set forth in Section 6.01. "Existing Agreement" has the meaning set forth in the first WHEREAS clause. "Existing Debt" means Debt of the Company or any Subsidiary existing on the Closing Date, as in effect on the Closing Date and listed in Schedule 5.12. "Facility Liens" has the meaning set forth in Section 5.07(i). "Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day, and (ii) if no such rate is so published 9 on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Bank of America, N.A., on such day on such transactions as determined by the Agent. "Foreign Subsidiary" means any Subsidiary of the Borrower (other than a Corp. Company or a QwestDex Company) that is not incorporated or organized in the United States or any State thereof. "Fraudulent Transfer Laws" has the meaning set forth in 20. "Group of Loans" means at any time a group of Loans consisting of (i) all Loans which are Domestic Loans at such time or (ii) all Loans which are Euro-Dollar Loans having the same Interest Period at such time; provided that, if a Loan of any particular Bank is converted to or made as a Domestic Loan pursuant to Section 8.02 or 8.05, such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been in if it had not been so converted or made. "Guaranteed Obligations" means, with respect to each Guarantor, all advances to, and debts, liabilities (including without limitation the Loans), obligations, covenants and duties of, the Borrower, arising under any Loan Document, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after, or would accrue but for, the commencement of an insolvency proceeding, whether or not allowed or allowable in such proceeding. "Guarantor" means the Company and each QwestDex Company. "Guaranty" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guaranty shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. 10 "Hazardous Substances" means any toxic, radioactive, caustic or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics. "Indemnitee" has the meaning set forth in Section 10.03(a). "Interest Period" means, with respect to each Euro-Dollar Loan, a period commencing on the date of borrowing specified in the applicable Notice of Borrowing or the date specified in the applicable Notice of Interest Rate Election and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and (c) any Interest Period beginning prior to the Termination Date which would otherwise end after the Termination Date shall end on the Termination Date. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. For the purposes of this Agreement, the Company or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Lien Grantor" has the meaning set forth in the Security and Pledge Agreement. 11 "Loan" means a loan made or to be made by a Bank pursuant to Section 2.01; provided that if any such loan or loans are combined or subdivided pursuant to a Notice of Interest Rate Election, the term "Loan" shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. "Loan Documents" means this Agreement, the Notes, the Collateral Documents, and the Qwest Assignment and Assumption Agreement. "Loan Party" means the Company, the Borrower and each of their respective Subsidiaries that is party to a Loan Document. "London Interbank Offered Rate" has the meaning set forth in Section 2.07. "Margin Stock" means "margin stock" as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Material Debt" means Debt (other than the Notes) of the Company and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal amount exceeding $100,000,000. "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $100,000,000. "Minor Subsidiary" means, for purposes of the last sentence of the definition of Debt and of Section 5.07(f) (the "Relevant Provisions"), any Subsidiary (other than the Borrower or Wireless) which, at the time of the issuance of a Guaranty or grant of a Lien referred to in the Relevant Provisions, had assets which, when taken together with all assets of Subsidiaries at any earlier time when such Subsidiaries were deemed to be Minor Subsidiaries pursuant to this definition, did not exceed $250,000,000. "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period. "Net Proceeds" means, with respect to any event, the cash proceeds received in respect of such event including, without limitation, any cash received in respect of any non-cash proceeds, but only as and when received, in each case net of the sum of (1) all reasonable fees and out-of-pocket costs and expenses paid (or reasonably estimated to be payable) by a Prepayment Party to 12 third parties (other than Affiliates) in connection with such event, (2) in the case of a sale, transfer or other disposition of an asset (including, without limitation, pursuant to a sale and leaseback transaction), the amount of all payments required to be made by a Prepayment Party as a result of such event to repay Debt secured by such asset or otherwise subject to mandatory prepayment as a result of such event (but excluding (x) the Loans and (y) any Debt secured by such asset if such Debt or the Lien securing such Debt is subordinated (or is required to be subordinated) to the Loans, and (3) the amount of all taxes paid (or reasonably estimated to be payable) by a Prepayment Party, the amount of any reserves established by a Prepayment Party to fund contingent liabilities reasonably estimated to be payable and the amount of capital and operating expenditures that would not otherwise have been incurred and are required in writing or by application of policy by a public utility commission to be incurred as a condition to its consent, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by the chief financial officer of the Company); provided that "Net Proceeds" shall not include (a) the cash proceeds of any Asset Sale by a QwestDex Company (other than any such Asset Sale that constitutes a Qualifying Dexter Asset Sale) so long as any QwestDex Term Debt is outstanding and such cash proceeds are applied to prepay the QwestDex Term Debt pursuant to the mandatory prepayment provisions applicable thereunder, (b) any cash payment received by a Prepayment Party and constituting a deposit or advance with respect to an Asset Sale that has not been consummated on or prior to the date of receipt thereof (it being understood that upon consummation of such Asset Sale such cash payment shall constitute "Net Proceeds" with respect thereto) and (c) any cash proceeds received by any Foreign Subsidiary from any Asset Sale to the extent relating to assets held by Foreign Subsidiaries. "Notes" means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Loans made to it or assumed by it pursuant to the Qwest Assignment and Assumption Agreement, and "Note" means any one of such promissory notes issued hereunder. "Notice of Borrowing" has the meaning set forth in Section 2.02. "Outside Date" means the date that falls 90 days after the Termination Date. "Outstanding UPO" has the meaning set forth in Section 5.12(i). "Parent" means, with respect to any Bank, any Person controlling such Bank. 13 "Participant" has the meaning set forth in Section 10.06(a). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Permitted Investments" means investments in: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States), in each case maturing within one year from the date of acquisition thereof; (b) commercial paper maturing within one year from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from Standard & Poor's or from Moody's Investors Service, Inc.; (c) certificates of deposit, banker's acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States or any State thereof which has a combined capital and surplus and undivided profits of at least $500,000,000; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; (e) in the case of any foreign Subsidiary, (i) marketable direct obligations issued by, or unconditionally guaranteed by, the sovereign nation in which such Person is organized and is conducting business or issued by any agency of such sovereign nation and backed by the full faith and credit of such sovereign nation, in each case maturing within one year from the date of acquisition, so long as the indebtedness of such sovereign nation is rated at least A by Standard & Poor's, A2 by Moody's Investors Service, Inc. or A mid by Dominion Bond Rating Service Limited or carries an equivalent rating from a comparable foreign rating agency or (ii) investments of the type and maturity described in clauses (b) through (d) above of foreign obligors, which investments or obligors have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies; and 14 (f) any other Investments made in compliance with the Cash Management Investment Policy of the cash management group of the Borrower with respect to cash investments, substantially as in effect on the Closing Date. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group. "Prepayment Event" means: (i) any Corp. Qualifying Asset Sale or any Company Qualifying Asset Sale; (ii) the issuance by any Prepayment Party of any Equity Interests, or the receipt by any of them of any capital contribution, other than any such issuance of an Equity Interest to, or receipt of any such capital contribution from, any Prepayment Party or directors, employees, consultants or contractors of the Company or any of its Subsidiaries; provided that (1) any such issuance by a Corp. Company to the Company or any Subsidiary of the Company that is not a Corp. Company, and (2) the receipt of any capital contribution by a Corp. Company from the Company or any Subsidiary of the Company that is not a Corp. Company shall each constitute a "Prepayment Event" (except, in the case of clause (2), to the extent such capital contribution has been made by the Company or any Subsidiary of the Company with the Net Proceeds of an event that otherwise constitutes a Prepayment Event and the Borrower has complied with the provisions of Section 2.11(c) with respect thereto); (iii) the issuance or incurrence by any Prepayment Party of any Debt (including, without limitation, any such Debt issued in any registered offering or pursuant to any private placement and any such Debt incurred pursuant to any syndicated line of credit or other credit facility), other than (1) the Loans, (2) Purchase Money Debt and (3) Debt permitted by Sections 5.12(c), 5.12(d), 5.12(e), 5.12(f), 5.12(g) and 5.12(i); and 15 (iv) to the extent not included in any of the foregoing clauses, any receivables securitization consummated by any Prepayment Party. "Prepayment Party" means the Company, the Borrower or any of their respective Subsidiaries. "Prime Rate" means the rate of interest publicly announced by Bank of America, N.A., from time to time as its Prime Rate. "Purchase Money Debt" means Debt of any Person incurred for the purpose of financing all or any part of the cost of the acquisition of any asset by such Person, so long as the proceeds of any such Debt are applied by such Person upon receipt thereof (and in any event within ten (10) Business Days after receipt thereof) to acquire such asset. "Purchase Money Obligor" has the meaning set forth in Section 5.07(c). "QCC" means Qwest Communications Corporation, a Delaware corporation, and its successors. "Qualifying Dexter Asset Sale" means any Company Qualifying Asset Sale so long as (i) it is consummated by a QwestDex Company, and (ii) the assets transferred pursuant thereto consist of Dexter Assets. "Qualifying Terms" means, with respect to any Debt, each of the following terms: (i) such Debt does not mature prior to the Outside Date, (ii) no payments with respect to such Debt (including without limitation scheduled amortization payments and mandatory prepayments) are required to be made prior to the Outside Date (other than regularly scheduled interest payments with respect thereto), (iii) the terms and conditions governing such Debt (including without limitation covenants and events of default) are no more restrictive in any material respect than the terms and conditions applicable to the Loans and (iv) such Debt is subordinated to the Loans (or the Guaranty thereof pursuant to Article 9, as applicable) in an insolvency proceeding to the prior payment in full of the Loans (or the payment in full of the Guaranty of the Loans, as the case may be) and is otherwise subordinated to the Loans (or to the Guaranty thereof pursuant to Article 9, as applicable), pursuant to subordination arrangements reasonably satisfactory to the Agent. "Qwest Assignment and Assumption Agreement" means the Qwest Assignment and Assumption Agreement, substantially in the form of Exhibit B, dated as of the Closing Date among Capital Funding and the Borrower. "QwestDex" means Qwest Dex Holdings, Inc., a Delaware corporation, and its successors. 16 "QwestDex Agent" has the meaning set forth in the QwestDex Term Loan Agreement. "QwestDex Asset Collateral" has the meaning set forth in the Security and Pledge Agreement. "QwestDex Company" means QwestDex or any of its Subsidiaries. "QwestDex Dexter Purchase Agreement" means the Purchase Agreement between the Company, the Borrower, QwestDex Inc. and the QwestDex Purchaser with respect to the Dexter Assets, as amended, amended and restated, modified or supplemented from time to time. "QwestDex Guarantor" has the meaning set forth in 20. "QwestDex Guaranty" has the meaning set forth in Section 9.08. "QwestDex Inc." means Qwest Dex, Inc., a Colorado corporation, and its successors. "QwestDex Inc. Intercompany Note" means the Loan Agreement dated January 15, 2002 governing borrowings by QwestDex Inc. from Capital Funding and the Debt outstanding thereunder. "QwestDex Intercompany Note" means the Loan Agreement dated January 15, 2002 governing borrowings by QwestDex from Capital Funding and the Debt outstanding thereunder. "QwestDex Purchase Agreements" means the QwestDex Dexter Purchase Agreement and the QwestDex Rodney Purchase Agreement. "QwestDex Purchaser" means Dex Holdings LLC, a Delaware limited liability company, and its successors and, with respect to either QwestDex Purchase Agreement, its permitted assignees pursuant to Section 10.5 of such QwestDex Purchase Agreement. "QwestDex Rodney Purchase Agreement" means the Purchase Agreement between the Company, the Borrower, QwestDex Inc. and the QwestDex Purchaser with respect to the Rodney Assets, as amended, amended and restated, modified or supplemented from time to time. "QwestDex Senior Debt" has the meaning set forth in Section 9.08. "QwestDex Senior Debt Default" has the meaning set forth in Section 9.08(a)(ii). 17 "QwestDex Sale Asset Transfer" means (i) the formation of, and transfer of assets to, newly formed wholly-owned Subsidiaries of QwestDex Inc. contemplated by the QwestDex Purchase Agreements substantially simultaneously with the consummation of the respective Asset Sales contemplated thereby and (ii) in the event that the respective sales of the Dexter Assets and the Rodney Assets pursuant to the QwestDex Purchase Agreements are not consummated, any similar transfer of assets to one or more wholly-owned Subsidiaries of QwestDex Inc. required in connection with, and effected substantially simultaneously with the consummation of, any Asset Sale of the Dexter Assets or the Rodney Assets, as the case may be. "QwestDex Term Debt" means (i) Debt of QwestDex Inc., Guaranteed by QwestDex, incurred pursuant to the QwestDex Term Loan Agreement and (ii) any refinancings of the Debt (and the Guarantee thereof by QwestDex) described in clause (i) on terms no less favorable to the Banks; provided that the aggregate principal or face amount of QwestDex Term Debt (calculated without duplication of the Guarantee thereof by QwestDex) shall not exceed the lesser of (x) the aggregate principal amount of Debt incurred in reliance on clause (i) and $750,000,000. "QwestDex Term Loan Agreement" means the Term Loan Agreement dated as of August 30, 2002 among the QwestDex Companies, the Borrower, the institutions listed therein and Bank of America, N.A., as Administrative Agent, as amended, amended and restated, supplemented or otherwise modified from time to time. "Qwest Entity" has the meaning set forth in Section 7.02. "Required Banks" means at any time Banks having more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding more than 50% of the aggregate unpaid principal amount of the Loans. "Restatement Date" means the first date after the Closing Date on which the Company, the Borrower or Corp. files a restatement of a Form 10-Q or Form 10-K with the Securities and Exchange Commission. "Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property, including without limitation pursuant to a "spin-off" or other distribution to equity holders generally) with respect to any Equity Interest of the Company or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest. 18 "Revolver Lender Obligations" has the meaning set forth in the Security and Pledge Agreement. "Revolving Credit Period" means the period from and including the Closing Date to but excluding the Termination Date. "Rodney Assets" means any assets of any QwestDex Company which are to be sold pursuant to the QwestDex Rodney Purchase Agreement, which assets constitute assets located in Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming or are used by such QwestDex Company primarily in the conduct of its business in any of the foregoing states. "Security and Pledge Agreement" means the Security and Pledge Agreement, substantially in the form of Exhibit C, dated as of the Closing Date among the Borrower and the QwestDex Companies party thereto and the Agent, as amended from time to time. "66 2/3% Banks" means at any time Banks having at least 66 2/3% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding at least 66 2/3% of the aggregate unpaid principal amount of the Loans. "Significant Subsidiary" means any Subsidiary which would meet the definition of "significant subsidiary" contained as of the date hereof in Regulation S-X of the Securities and Exchange Commission. "Subject Debt" means (i) Existing Debt and (ii) any Debt permitted to be incurred pursuant to Section 5.12(c). "Subsidiary" means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Company. It is understood that KPNQwest N.V. shall not be considered to be a Subsidiary solely as a result of charter or contractual arrangements in effect on the date hereof, which may temporarily result in designees of the Company constituting a majority of the board of directors of KPNQwest N.V. "Super-Majority Banks" means at any time Banks having at least 85% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding at least 85% of the aggregate unpaid principal amount of the Loans. "Supplemental Information" has the meaning set forth in Section 4.04(a). 19 "Term Secured Obligations" has the meaning set forth in the Security and Pledge Agreement. "Termination Date" means May 3, 2005, or, if such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day. "2003 Corp. Debt" has the meaning specified in Section 5.10(a). "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. "Wireless" means Qwest Wireless LLC, a Delaware limited liability company, and its successors. "Wireless Assets" means any Equity Interests in Wireless and any assets held by Wireless. "Wireless/Borrower Debt" has the meaning set forth in Section 5.12(e). "Wireless Capital Market Event" means any Capital Market Event if (i) any Equity Interests of Wireless are issued pursuant thereto or Wireless is the recipient of the capital contribution being made pursuant thereto, (ii) any Debt is issued or incurred by Wireless pursuant thereto, (iii) any accounts receivables of Wireless are transferred pursuant thereto or (iv) the terms of such Capital Markets Event otherwise provide for a Guarantee by Wireless, a Lien of any Wireless Assets or any other credit support or recourse to Wireless. "Wireless Note" means the $3,000,000,000 Loan Agreement dated as of January 15, 2002 governing borrowings from Capital Funding to Wireless and the Debt outstanding thereunder. Section 1.02. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with 20 generally accepted accounting principles as in effect from time to time in the United States, applied on a basis consistent (except for changes concurred in by the Company's independent public accountants) with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries or Corp. and its Consolidated Subsidiaries, as the case may be, in each case delivered to the Banks; provided that, if the Company notifies the Agent that the Company wishes to amend any covenant in Article 5 to eliminate the effect of any change in such generally accepted accounting principles on the operation of such covenant (or if the Agent notifies the Company that the Required Banks wish to amend Article 5 for such purpose), then compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect in the United States immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Banks. Section 1.03. Types of Borrowings. The term "Borrowing" denotes the aggregation of Loans of one or more Banks to be made to the Borrower pursuant to Article 2 on a single date, all of which Loans are of the same type (subject to Article 8) and, except in the case of Domestic Loans, have the same Interest Period or initial Interest Period. Borrowings are classified for purposes of this Agreement by reference to the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans). ARTICLE 2 THE CREDITS Section 2.01. Commitments to Lend. During the Revolving Credit Period each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans to the Borrower from time to time in amounts such that the aggregate principal amount of Loans by such Bank at any one time outstanding shall not exceed the amount of its Commitment. Each Borrowing under this Section shall be in an aggregate principal amount of $25,000,000 or any larger multiple of $5,000,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02(c)) and shall be made from the several Banks ratably in proportion to their respective Commitments. Within the foregoing limits, the Borrower may borrow, repay, or to the extent permitted by Section 2.11, prepay Loans and reborrow at any time prior to the Termination Date. The Commitments shall terminate at the close of business on the Termination Date. Section 2.02 . Notice of Borrowing. The Borrower shall give the Agent notice, substantially in the form of Exhibit G (a "Notice of Borrowing"), not 21 later than 10:30 A.M. (New York City time) on (x) the date of each Domestic Borrowing, and (y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying: (i) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing, (ii) the aggregate amount of such Borrowing, (iii) whether the Loans comprising such Borrowing bear interest initially at the Base Rate or at a Euro-Dollar Rate, and (iv) in the case of a Euro-Dollar Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. Section 2.03. [Intentionally Deleted]. Section 2.04. Notice to Banks; Funding of Loans. 3. Upon receipt of a Notice of Borrowing, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's share of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower. (a) Not later than 1:00 P.M. (New York City time) on the date of each Borrowing, each Bank shall (except as provided in subsection (c) of this Section) make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 10.01. Unless any applicable condition specified in Article 3 has not been satisfied, as determined by the Agent in accordance with Article 3, the Agent will make the funds so received from the Banks immediately available to the Borrower at the Agent's aforesaid address. (b) If any Bank makes a new Loan hereunder on a day on which the Borrower is to repay all or any part of an outstanding Loan from such Bank, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed by the Borrower and the amount being repaid shall be made available by such Bank to the Agent as provided in subsection (b) of this Section, or remitted by the Borrower to the Agent as provided in Section 2.12, as the case may be. (c) Unless the Agent shall have received notice from a Bank prior to the date of any Borrowing (or, in the case of a Base Rate Borrowing, prior to Noon (New York City time) on the date of such Borrowing) that such Bank will not make available to the Agent such Bank's share of such Borrowing, the Agent may 22 assume that such Bank has made such share available to the Agent on the date of such Borrowing in accordance with subsections (b) and (c) of this Section 2.04 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have so made such share available to the Agent, such Bank and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan included in such Borrowing for purposes of this Agreement. If the Borrower shall have repaid such corresponding amount of such Bank, such Bank shall reimburse the Borrower for any loss on account thereof incurred by the Borrower. Nothing contained in the foregoing shall be construed as relieving a Bank of its obligation to fund a Loan when required under the terms of this Agreement. Section 2.05. Notes. 4. The Loans of each Bank may, at the request of such Bank, be evidenced by a single Note payable to the order of such Bank for the account of its Applicable Lending Office in an amount equal to the aggregate unpaid principal amount of such Bank's Loans. (a) Each Bank may, by notice to the Borrower and the Agent, request that its Loans of a particular type be evidenced by a separate Note in an amount equal to the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of Exhibit A hereto with appropriate modifications to reflect the fact that it evidences solely Loans of the relevant type. Each reference in this Agreement to a "Note" or the "Notes" of such Bank shall be deemed to refer to and include any or all of such Notes, as the context may require. (b) Upon receipt of each Bank's Notes pursuant to Section 3.01, the Agent shall forward such Notes to such Bank. Each Bank shall record the date, amount and type of each Loan made by it and the date and amount of each payment of principal made with respect thereto, and may, if such Bank so elects in connection with any transfer or enforcement of its Note, endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding; provided that the failure of any Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Notes or any other Loan Document. Each Bank is hereby irrevocably authorized by the Borrower so to 23 endorse its Notes and to attach to and make a part of any Note a continuation of any such schedule as and when required. (c) Loans made by each Bank and not evidenced by a Note shall be evidenced by one or more accounts or records maintained by such Bank and by the Agent in the ordinary course of business. The accounts or records maintained by the Agent and each Bank shall be conclusive absent manifest error of the amount of the Loans made by the Banks to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Loans. Section 2.06. Maturity of Loans. Each Loan shall mature, and the principal amount thereof shall be due and payable, together with accrued interest thereon, on the Termination Date. Section 2.07. Interest Rates. 5. Each Domestic Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the sum of the Base Rate Margin plus the Base Rate for such day. Such interest shall be payable quarterly in arrears on the last day of each calendar quarter and, with respect to the principal amount of any Domestic Loan converted to a Euro-Dollar Loan, on each date a Domestic Loan is so converted. Any overdue principal of or interest on any Domestic Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Domestic Loans for such day. "Base Rate Margin" means a rate per annum equal to 2.50%. (a) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin plus the applicable Adjusted London Interbank Offered Rate. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. The "Adjusted London Interbank Offered Rate" applicable to any Interest Period means a rate per annum equal to the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage. "Euro-Dollar Margin" means a rate per annum equal to 3.50%. The "London Interbank Offered Rate" applicable to any Interest Period means: 24 (i) the rate per annum equal to the rate determined by the Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. (London time) two Euro-Dollar Business Days prior to the first day of such Interest Period, or (ii) if the rate referenced in the preceding clause (i) does not appear on such page or service or such page or service shall cease to be available, the rate per annum equal to the rate determined by the Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. (London time) two Euro-Dollar Business Days prior to the first day of such Interest Period, or (iii) if the rates referenced in the preceding clauses (i) and (ii) are not available, the rate per annum determined by the Agent as the rate of interest at which deposits in dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Euro-Dollar Loan being made, continued or converted by Bank of America, N.A., and with a term equivalent to such Interest Period, would be offered by Bank of America, N.A.'s London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 P.M. (London time) two Euro-Dollar Business Days prior to the first day of such Interest Period. "Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents). The Adjusted London Interbank Offered Rate shall be adjusted automatically on and as of the effective date of any change in the Euro-Dollar Reserve Percentage. 25 (b) Any overdue principal of or interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 2% plus the higher of (i) the Euro-Dollar Margin plus the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (x) the rate per annum at which one day (or, if such amount due remains unpaid more than three Euro-Dollar Business Days, then for such other period of time not longer than six months as the Agent may select) deposits in dollars in an amount approximately equal to such overdue payment due to Bank of America, N.A. are offered to Bank of America, N.A., in the London interbank market for the applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the rate applicable to Domestic Loans for such day) and (ii) the sum of the Euro-Dollar Margin plus the Adjusted London Interbank Offered Rate applicable to such Loan at the date such payment was due. (c) The Agent shall determine each interest rate applicable to the Loans hereunder. The Agent shall give prompt notice to the Borrower and the Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. Section 2.08. Commitment Fees. The Company shall pay to the Agent for the account of the Banks ratably a commitment fee at a rate per annum equal to 0.25%. Such commitment fee shall accrue from and including the Closing Date to but excluding the Termination Date (or earlier date of termination of the Commitments in their entirety), on the daily actual aggregate amount of the unused Commitments, and shall be payable quarterly in arrears on the last day of each calendar quarter and upon the date of termination of the Commitments in their entirety. Section 2.09. Termination or Reduction of Commitments. 6. Optional Reductions. During the Revolving Credit Period, the Company may, upon at least three Domestic Business Days' notice to the Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at such time or (ii) ratably reduce from time to time by an aggregate amount of $25,000,000 or any larger multiple of $5,000,000, the aggregate amount of the Commitments in excess of the aggregate outstanding principal amount of the Loans. (a) Scheduled Reductions. On each Scheduled Commitment Reduction Date, the Commitments will be permanently reduced by the Commitment Reduction Amount applicable to such Scheduled Commitment Reduction Date. Each reduction pursuant to this subsection (b) shall be applied to reduce ratably the 26 Commitments of all the Banks. For purposes of this subsection (b), the following defined terms have the following meanings: "Scheduled Commitment Reduction Date" means each of December 1, 2003, June 1, 2004 and December 1, 2004. "Commitment Reduction Amount" means, with respect to each Scheduled Commitment Reduction Date, the amount set forth below opposite such Scheduled Commitment Reduction Date: - -------------------------------------------------------------------------------- Scheduled Commitment Amount Reduction Date - -------------------------------------------------------------------------------- December 1, 2003 The lesser of (i) $500,000,000 and (ii) such amount as shall be necessary such that, after giving effect to the reduction of the Commitments, the aggregate amount of the Commitments equals not more than $2,000,000,000 - -------------------------------------------------------------------------------- June 1, 2004 The lesser of (i) $500,000,000 and (ii) such amount as shall be necessary such that, after giving effect to the reduction of the Commitments, the aggregate amount of the Commitments equals not more than $1,500,000,000 - -------------------------------------------------------------------------------- December 1, 2004 The lesser of (i) $400,000,000 and (ii) such amount as shall be necessary such that, after giving effect to the reduction of the Commitments, the aggregate amount of the Commitments equals not more than $1,250,000,000 - -------------------------------------------------------------------------------- (b) Other Mandatory Reductions. 7. On the third Euro-Dollar Business Day after any date on which any Net Proceeds are received by or on behalf of any Prepayment Party in respect of any Prepayment Event, the Commitments will be permanently reduced as follows: (1) until the aggregate amount of the Commitments is less than or equal to $1,250,000,000, the Commitments will be permanently reduced by an amount equal to 66 2/3% of the Net Proceeds in respect of any Prepayment Event which is a Company Qualifying Asset Sale (other than a Company Qualifying Asset Sale which is consummated by Wireless or the 27 assets being sold, transferred or being otherwise disposed of pursuant thereto are Wireless Assets, which Asset Sale shall be governed by clause (2) below); provided that the Commitments will not be permanently reduced pursuant to this clause (1) by an amount in excess of $1,354,302,016 as a result of the receipt of the first $3,000,000,000 in Net Proceeds from a Qualifying Dexter Asset Sale; (2) (x) until the aggregate amount of the Commitments is less than or equal to $1,250,000,000, the Commitments will be permanently reduced by an amount equal to 100% of the Net Proceeds in respect of any Prepayment Event which is a Corp. Qualifying Asset Sale or a Company Qualifying Asset Sale which is consummated by Wireless or the assets being sold, transferred or being otherwise disposed of pursuant thereto are Wireless Assets and (y) thereafter, the Commitments will be permanently reduced by an amount equal to 50% of the Net Proceeds in respect of any Prepayment Event which is a Corp. Qualifying Asset Sale or a Company Qualifying Asset Sale which is consummated by Wireless or the assets being sold, transferred or being otherwise disposed of pursuant thereto are Wireless Assets; and (3) (x) until the aggregate amount of the Commitments is less than or equal to $1,250,000,000 (in the case of Capital Market Events consummated by a Corp. Company, a QwestDex Company or a Wireless Capital Markets Event) or (y) until the aggregate amount of the Commitments is less than or equal to $2,000,000,000 (in the case of any other Capital Market Events), the Commitments will be permanently reduced by an amount equal to 66 2/3% of the Net Proceeds in respect of any Prepayment Event which is a Capital Market Event. (i) Each reduction pursuant to this subsection (c) shall be applied to reduce ratably the Commitments of all the Banks. Section 2.10. Method of Electing Interest Rates. 8. The Loans included in each Borrowing shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Group of Loans (subject in each case to the provisions of Article 8), as follows: (i) if such Loans are Domestic Loans, the Borrower may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day; and 28 (ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Domestic Loans or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, in each case effective on the last day of the then current Interest Period applicable to such Loans. Each such election shall be made by delivering a notice (a "Notice of Interest Rate Election") to the Agent at least three Euro-Dollar Business Days before the conversion or continuation selected in such notice is to be effective. A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans; provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each $25,000,000 or any larger multiple of $5,000,000. (b) Each Notice of Interest Rate Election shall specify: (i) the Group of Loans (or portion thereof) to which such notice applies; (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection (a) above; (iii) if the Loans comprising such Group are to be converted, the new type of Loans and, if such new Loans are Euro-Dollar Loans, the duration of the initial Interest Period applicable thereto; and (iv) if such Loans are to be continued as Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of Interest Period. (c) Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to subsection (a) above, the Agent shall promptly notify each Bank of the contents thereof and such notice shall not thereafter be revocable by the Borrower. If the Borrower fails to deliver a timely Notice of Interest Rate Election to the Agent for any Group of Euro-Dollar Loans, such Loans shall be converted into Domestic Loans on the last day of the then current Interest Period applicable thereto. Section 2.11. Prepayments. 29 (a) Subject in the case of any Euro-Dollar Loans to Section 2.13, the Borrower may, upon at least one Domestic Business Day's notice to the Agent, prepay the Group of Domestic Loans, or, upon three Euro-Dollar Business Days' notice to the Agent, prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or from time to time in part in amounts aggregating $25,000,000 or any larger multiple of $5,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. (b) Upon receipt of a notice of prepayment pursuant to this Section or Section 2.16, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's ratable share of such prepayment and such notice shall not thereafter be revocable by the Borrower or the Company. Each such prepayment shall be applied to prepay ratably the Loans of the several Banks included in the relevant Group or Borrowing. (c) On the date of any reduction of Commitments pursuant to Section 2.09, the Borrower shall repay such principal amount (together with accrued interest thereon) of outstanding Loans, if any, as may be necessary so that after such repayment the aggregate outstanding principal amount of all outstanding Loans does not exceed the aggregate amount of the Commitments as then reduced. Each prepayment of the Loans pursuant to this subsection (c) shall be applied to prepay ratably the Loans of all the Banks, and shall be applied to prepay such Group or Groups of Loans as shall have been designated in the applicable notice (or, if no such designation shall have been made, as the Agent shall select in its discretion). Section 2.12. General Provisions as to Payments. 9. The Borrower shall make each payment of principal of, and interest on, the Loans and of fees and other amounts payable hereunder, not later than 12:00 Noon (New York City time) on the date when due, in Federal or other funds immediately available in New York City, without off set or counterclaim, to the Agent at its address referred to in Section 10.01. The Agent will promptly distribute to each Bank its ratable share of each such payment received by the Agent for the account of the Banks. Whenever any payment of principal of, or interest on, the Domestic Loans or of fees or other amounts payable hereunder shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day. 30 (a) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due from the Borrower to the Banks hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent that the Borrower shall not have so made such payment, each Bank shall repay to the Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the Federal Funds Rate. Section 2.13. Funding Losses. If the Borrower makes any payment of principal with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is converted to a Domestic Loan (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or the last day of an applicable period fixed pursuant to Section 2.07(b), or if the Borrower fails to borrow, convert, continue or prepay any Euro-Dollar Loans after notice has been given to any Bank in accordance with 3, 2.11(a) or 2.16 the Company shall reimburse each Bank within 15 days after written demand for any resulting loss or expense incurred by it (or by an existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or conversion or failure to borrow or prepay, provided that such Bank shall have delivered to the Company a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error. Any Bank requesting compensation pursuant to this Section 2.13 shall notify the Borrower of such request on or before the date that is three Euro-Dollar Business Days after the event giving rise to such request. Section 2.14. Computation of Interest and Fees. Interest based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and fees hereunder shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). Section 2.15. Change of Control. If a Change of Control shall occur, the Company will, within ten days after the occurrence thereof, give each Bank notice thereof, which notice shall describe in reasonable detail the facts and circumstances giving rise thereto and shall specify an Optional Termination Date for purposes of this Section (the "Optional Termination Date") which date shall not be less than 30 nor more than 60 days after the date of such notice. Each Bank may, by notice to the Company and the Agent given not less than three 31 Domestic Business Days prior to the Optional Termination Date, terminate its Commitment (if any), which shall thereupon be terminated, and declare the Note held by it (together with accrued interest thereon) and any other amounts payable hereunder for its account to be, and such Note and such other amounts shall thereupon become, due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company and the Borrower, in each case effective on the Optional Termination Date. A "Change of Control" shall occur if any person or group of persons (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended), other than Philip F. Anschutz, Anschutz Company or any of their Affiliates, obtain ownership or control (whether in one transaction or one or more series of transactions) of more than 50% of the outstanding shares of common stock of the Company or of the shares of the Company entitled to vote on the election of members of the board of directors of the Company. Section 2.16. Notice of Prepayment Events. The Company shall notify the Agent by telephone (confirmed by telecopy) of the proposed consummation of any Prepayment Event (and the corresponding reduction of the Commitments pursuant to Section 2.09, if any, and prepayment of the Loans pursuant to Section 2.11, if any), not later than 10:30 a.m., New York City time, on the date of the proposed consummation thereof. Each such notice shall be irrevocable and shall specify (i) the date of consummation of the applicable Prepayment Event, (ii) a reasonably detailed calculation of the Net Proceeds thereof, and (iii) the amount of the reduction of the Commitments and prepayment of the Loans as a result of such Prepayment Event. Upon receipt of a notice of a Prepayment Event pursuant to this subsection, the Agent shall promptly notify each Bank of the contents thereof. ARTICLE 3 CONDITIONS Section 3.01. Closing. The closing hereunder shall occur upon receipt by the Agent (or its counsel) of the following (in the case of any document, dated the Closing Date unless otherwise indicated): (a) duly executed counterparts hereof signed by each of the Borrower, the Guarantors, the Banks and the Agent (or, in the case of any party as to which an executed counterpart shall not have been received, written evidence satisfactory to the Agent (which may include telecopy transmission of a signed signature page) that such party has signed a counterpart hereof); 32 (b) a duly executed Note for the account of each Bank requesting a Note dated on or before the Closing Date complying with the provisions of Section 2.05; (c) (i) duly executed counterparts of the Security and Pledge Agreement and (ii) evidence satisfactory to the Agent that the Collateral and Guaranty Requirement shall have been satisfied; (d) duly executed counterparts of the Qwest Assignment and Assumption Agreement; (e) opinions of Yash Rana, associate general counsel of the Company, O'Melveny & Myers LLP, special counsel to the Loan Parties, Holme Roberts & Owen LLP, special counsel to the Loan Parties, and Hogan and Hartson, L.L.P., special regulatory counsel to the Loan Parties, covering the matters set forth in Exhibit D-1, D-2, D-3 and D-4 hereto, respectively, and such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (f) an opinion of Davis Polk & Wardwell, special counsel for the Agent, substantially in the form of Exhibit E hereto; (g) evidence satisfactory to the Agent of the payment of all fees and other amounts payable to the Agent for the account of the Banks or the Agent on or prior to the Closing Date, including, to the extent invoiced, reimbursement of all out-of-pocket expenses (including, without limitation, legal fees and expenses) required to be reimbursed or paid by the Borrower or the Company hereunder; (h) evidence satisfactory to the Agent of the retention by Davis Polk & Wardwell, special counsel to the Agent, of a financial advisor pursuant to terms and conditions reasonably acceptable to the Company, the Borrower and the Agent; (i) evidence satisfactory to the Agent of the receipt by each Bank, for its own account, of an amendment fee in an amount equal to 0.60% of such Bank's Commitment as in effect on the Closing Date; (j) a solvency certificate substantially in the form of Exhibit H; (k) (i) a copy of the QwestDex Intercompany Note, the QwestDex Inc. Intercompany Note and the Wireless Note and each other note in existence on the Closing Date evidencing Debt owed by the Company, the Borrower, any Corp. Company or any QwestDex Company to the Company or any Subsidiary and outstanding on the Closing Date, (ii) a certificate of the Assistant Treasurer of Capital Funding certifying that Capital Funding has delivered pursuant to clause (i) a 33 copy of each note described in clause (i) and that each such copy is a true, correct and complete copy of the original note as in effect on the Closing Date and (iii) evidence satisfactory to the Agent that each of the QwestDex Intercompany Note and the QwestDex Inc. Intercompany Note is subordinated to the Loans and the Guarantees hereunder on terms and conditions satisfactory to the Agent; and (l) all documents the Agent may reasonably request relating to the existence of the Company and its Subsidiaries, the corporate authority for and the validity of the Loan Documents, and any other matters relevant hereto, all in form and substance satisfactory to the Agent. The Agent shall promptly notify the Company and the Banks of the Closing Date, and such notice shall be conclusive and binding on all parties hereto. Section 3.02. All Borrowings. The obligation of any Bank to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions: (a) the fact that the Closing Date shall have occurred on or prior to September 5, 2002; (b) receipt by the Agent of a Notice of Borrowing as required by Section 2.02; (c) the fact that, immediately before and after such Borrowing, the aggregate outstanding principal amount of the Loans will not exceed the lesser of (i) the aggregate amount of the Commitments and (ii) the maximum amount of "Debt" (as defined in each of the Company Indentures) permitted under Section 1011(b)(ii) of the Company Indentures, in each case at such time; (d) the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing; and (e) the fact that the representations and warranties of the Loan Parties contained in the Loan Documents shall be true (or, with respect to any representation and warranty which is not qualified by materiality or material adverse effect, shall be true in all material respects) on and as of the date of such Borrowing, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true (or, with respect to any such representation and warranty which is not qualified by materiality or material adverse effect, shall be true in all material respects) on and as of such earlier date. 34 Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in clauses (c), (d) and (e) of this Section. Section 3.03. Effect of Occurrence of Closing Date. Effective on and as of the Closing Date: (a) without further action by any of the parties thereto, the Existing Agreement will be automatically amended and restated in its entirety to read as this Agreement reads; (b) the rights and obligations of the parties hereto shall be governed by the provisions hereof. The rights and obligations of the parties with respect to the period before the Closing Date shall continue to be governed by the provisions thereof as in effect before the Closing Date; (c) Capital Funding shall cease to be a "Borrower" under this Agreement and shall be released from all of its obligations as a borrower under the Existing Agreement and under the promissory notes issued by it pursuant to the Existing Agreement and, by executing a counterpart hereof, each Bank consents to the assignment and assumption made pursuant to the Qwest Assignment and Assumption Agreement; (d) Qwest Services Corporation shall be bound by all of the provisions of this Agreement and shall be the sole "Borrower" hereunder; and (e) each Bank shall have a Commitment in the amount set forth in the Commitment Schedule opposite its name under the heading "Commitment" and shall have Loans outstanding to the Borrower in the aggregate principal amount set forth in the Commitment Schedule opposite its name under the heading "Outstanding Loans". Promptly after the Closing Date, each Bank shall return to Capital Funding the promissory notes issued by Capital Funding to such Bank pursuant to the Existing Agreement. ARTICLE 4 REPRESENTATIONS AND WARRANTIES Each of the Loan Parties party to this Agreement represents and warrants that: Section 4.01. Corporate Existence and Power. Each Loan Party is a corporation duly incorporated, validly existing and in good standing under the 35 laws of the state of its incorporation, and has all corporate powers and all material governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted. Section 4.02. Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which it is a party are within such Person's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official except, with respect to the Security and Pledge Agreement and the transactions contemplated thereby, as set forth in the Collateral Documents, and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of such Person or of any material agreement (including in any event the Company Indentures and the Qwest Dex Purchase Agreements), judgment, injunction, order, decree or other instrument binding upon such Person or any Significant Subsidiary or result in the creation or imposition of any Lien on any material asset of such Person or any Significant Subsidiary (other than the Liens created by the Collateral Documents). Section 4.03. Binding Effect. Each Loan Document (other than the Notes) constitutes a valid and binding agreement of each Loan Party thereto, and the Notes, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the Borrower, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. Section 4.04. Financial Information. (a) 10. The consolidated balance sheet of the Company and its Consolidated Subsidiaries as of December 31, 2001 and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by Arthur Andersen LLP and set forth in the Company's 2001 Form 10-K , (ii) the consolidated balance sheet of the Company and its Consolidated Subsidiaries as of March 31, 2002 and the related consolidated statements of income and cash flows for the portion of the Company's fiscal year ended at the end of such quarter and set forth on the Company's Form 10-Q, and (iii) the financial statements set forth in the Company's Form 8-K filed on August 19, 2002, a copy of each of which has been delivered to each of the Banks, taken together, fairly present in all material respects, in conformity with generally accepted accounting principles, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date specified therein and their consolidated results of operations and cash flows for such period specified therein, except in each case as set forth in the information listed in Schedule 4.04(a) (collectively, the "Supplemental Information") or as modified by the 36 financial statements as of such date or for such period described in clause (iii) of this subsection 4.04(a) or delivered pursuant to Section 5.01(i) and subject, in the case of the financial statements described in clauses (ii) and (iii) of this subsection 4.04(a), to changes resulting from audit and year-end adjustments and the absence of footnotes. (b) The consolidated balance sheet of the Borrower as of June 30, 2002 and the relating consolidated statement of income for the portion of the Borrower's fiscal year then ended, a copy of which has been delivered to each of the Banks, fairly present in all material respects, in conformity with generally accepted accounting principles, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of the date specified therein and their consolidated results of operations for the period specified therein, except as set forth in the Supplemental Information or as modified by the financial statements as of such date or for such period described in clause (iii) of subsection 4.04(a) above or delivered pursuant to Section 5.01(i), and subject to changes resulting from audit and year-end adjustments and the absence of footnotes. (c) Since March 31, 2002, there has been no material adverse change in the financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole, except as set forth in the Supplemental Information (it being understood that (i) the restatement of the financial statements of the Company or any of its Consolidated Subsidiaries with respect to any fiscal period, or as of any date, ended on or prior to March 31, 2002 and (ii) the facts or events disclosed to the Banks prior to the Closing Date as the facts or events necessitating such restatement shall not, in and of themselves, constitute a material adverse change in the financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole). Section 4.05. Litigation. Except as disclosed in the Company's 2001 Form 10-K and as specifically identified in Schedule 4.05, there is no action, suit or proceeding pending, or to the knowledge of the Company threatened, against the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which would materially adversely affect the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity of any Loan Document. Section 4.06. Compliance with ERISA. Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan, except where failure to comply would not 37 have a material adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, in either case which has resulted or could reasonably be expected to result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. Section 4.07. Environmental Matters. 11. The operations of the Company and each of its Subsidiaries comply in all respects with all Environmental Laws except such non-compliance which would not (if enforced in accordance with applicable law) reasonably be expected to result, individually or in the aggregate, in a material adverse effect on the financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole. (a) Except as specifically identified in Schedule 4.07, the Company and each of its Subsidiaries have obtained all material licenses, permits, authorizations and registrations required under any Environmental Laws ("Environmental Permits") necessary for their respective operations, and all such Environmental Permits are in good standing, and the Company and each of its Subsidiaries is in compliance with all material terms and conditions of such Environmental Permits. (b) Except as specifically identified in Schedule 4.07, there are neither any conditions or circumstances known to the Company which may give rise to any claims or liabilities respecting any Environmental Laws or Hazardous Substances arising from the operations of the Company or its Subsidiaries (including, without limitation, off-site liabilities), nor any additional costs of compliance with Environmental Laws, which collectively have an aggregate potential liability in excess of $50,000,000. Section 4.08. Taxes. United States Federal income tax returns of the Company and its Subsidiaries have been examined and closed through the fiscal year ended December 31, 1992. The Company and its Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any Subsidiary, except for taxes the amount, applicability or validity of which is being contested in good faith by appropriate proceedings. The charges, accruals 38 and reserves on the books of the Company and its Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Company, adequate. Section 4.09. Subsidiaries. 12. Each of the Company's corporate Significant Subsidiaries (including, but not limited to, the Borrower) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted. (a) Schedule 4.09 lists each QwestDex Company that exists on the Closing Date. Each QwestDex Company is a "Guarantor" hereunder. Section 4.10. Not an Investment Company. No Loan Party is an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Section 4.11. Full Disclosure. All written information heretofore furnished by any Loan Party to the Agent or any Bank for purposes of or in connection with the Loan Documents or any transaction contemplated hereby is, and all such information hereafter furnished by any Loan Party to the Agent or any Bank will be, true and accurate in all material respects on the date as of which such information is stated or certified, in each case in light of the circumstances in which the same were made and subject to the public disclosures made in the Supplemental Information. Any projections or pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by the applicable Loan Party to be reasonable at the time they were made, it being recognized that such projections are not to be viewed as facts and that actual results may differ and such differences may be material. Section 4.12. Solvency. On the Closing Date, immediately after giving effect to the transactions contemplated herein (including without limitation the assumption of the Loans pursuant to the Qwest Assignment and Assumption Agreement and the application of the proceeds of any Loans made on the Closing Date) (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the properties of each Loan Party will exceed the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (c) each Loan Party will be able to pay its debts and other liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, and (d) no Loan Party will have unreasonably small capital with which to conduct the 39 business in which it is engaged as such business is now conducted and proposed to be conducted after the Closing Date. ARTICLE 5 COVENANTS The Company agrees that, so long as any Bank has any Commitment hereunder or any Loan or any other amount payable under any Loan Document remains unpaid: Section 5.01. Information. The Company will deliver to the Agent for distribution to each of the Banks: (a) (i) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by KPMG or other independent public accountants of nationally recognized standing, (ii) as soon as available and in any event within 90 days after the end of each fiscal year of Corp., a consolidated balance sheet of Corp. and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by KPMG or other independent public accountants of nationally recognized standing, (iii) as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by KPMG or other independent public accountants of nationally recognized standing, and (iv) as soon as available and in any event within 90 days after the end of each fiscal year of QwestDex (but only until such time as substantially all of the assets of the QwestDex Companies have been sold or otherwise disposed of to a third party), a consolidated balance sheet of QwestDex and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by KPMG or other independent public accountants of nationally recognized standing; provided 40 that, with respect to any set of financial statements required of the Company, the Borrower or Corp. to be delivered pursuant to this subsection (a) prior to the Restatement Date, the relevant Loan Party may, by notice to the Agent, elect (one time only with respect to any set of financial statements of such Loan Party) that the date on which such financial statements are required to be delivered be extended to the earlier of (x) the date on which any filing is made with the Securities and Exchange Commission which filing includes such financial statements and (y) the date specified in such notice (which date shall be no later than the date which is 135 days after the end of the relevant fiscal year of such Loan Party) and, upon receipt of such notice, such date of delivery shall be extended to the earlier of the date described in clause (x) and the date set forth in such notice (and during the period of such extension, until such financial statements are delivered in accordance with this subsection (a), no Bank shall have any obligation to make any Loan and the Borrower shall not request that any Loan be made (it being understood that upon delivery of such financial statements, each Bank shall be obligated to make Loans hereunder subject to the terms and conditions set forth herein)); (b) (i) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of the Company (beginning with the fiscal quarter ended September 30, 2002), a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of the Company, (ii) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of Corp. (beginning with the fiscal quarter ended September 30, 2002), a consolidated balance sheet of Corp. and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of Corp.'s fiscal year ended at the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the corresponding quarter and the corresponding portion of Corp's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of Corp., (iii) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of the Borrower (beginning with the fiscal quarter ended September 30, 2002), a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of 41 such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of the Borrower's fiscal year ended at the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the corresponding quarter and the corresponding portion of the Borrower's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of the Borrower and (iv) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of QwestDex (beginning with the fiscal quarter ended September 30, 2002) (but only until such time as substantially all of the assets of the QwestDex Companies have been sold or otherwise disposed of to a third party), a consolidated balance sheet of QwestDex and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of QwestDex's fiscal year ended at the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the corresponding quarter and the corresponding portion of QwestDex's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of QwestDex; provided that, with respect to any set of financial statements required of the Company, the Borrower or Corp. to be delivered pursuant to this subsection (b) prior to the Restatement Date, the relevant Loan Party may, by notice to the Agent, elect (one time only with respect to any set of financial statements of such Loan Party) that the earlier of (x) the date on which any filing is made with the Securities and Exchange Commission which filing includes such financial statements and (y) the date on which such financial statements are required to be delivered be extended to the date specified in such notice (which date shall be no later than the date which is 95 days after the end of the relevant fiscal quarter of such Loan Party) and, upon receipt of such notice, such date of delivery shall be extended to the earlier of the date described in clause (x) and the date set forth in such notice (and during the period of such extension, until such financial statements are delivered in accordance with this subsection (b), no Bank shall have any obligation to make any Loan and the Borrower shall not request that any Loan be made (it being understood that upon delivery of such financial statements, each Bank shall be obligated to make Loans hereunder subject to the terms and conditions set forth herein)); (c) (1) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the chief financial officer (or such officer's designee, designated in writing by such officer) or the chief accounting officer of the Company, Corp., the Borrower or QwestDex, as applicable (but only, with respect to QwestDex, in each case until such time as substantially all of the assets of the QwestDex Companies have been 42 sold or otherwise disposed of to a third party), (i) (x) in the case of financial statements of the Company, setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Sections 14, 5.07, 5.10, 5.12, and 5.13 on the date of such financial statements and (y) in the case of financial statements of Corp., setting forth in reasonable detail the calculations required to establish whether Corp. was in compliance with the requirements of Section 5.06(a) on the date of such financial statements, (ii) describing in reasonable detail the investments of the type described in 17 of the relevant Loan Party and its Subsidiaries outstanding on the date of such financial statements, and (iii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Company, Corp., the Borrower or QwestDex, as applicable, is taking or proposes to take with respect thereto, and (2) in any event no later than 90 days after the end of each fiscal year of the Company, Corp., the Borrower and QwestDex and 50 days after the end of each fiscal quarter of the Company, Corp., the Borrower and QwestDex (but only, with respect to QwestDex, in each case until such time as substantially all of the assets of the QwestDex Companies have been sold or otherwise disposed of to a third party), a certificate of the chief financial officer (or such officer's designee, designated in writing by such officer) or the chief accounting officer of the Company (i) setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Sections 5.07, 5.10, 5.12, and 5.13 on the last day of such fiscal year or fiscal quarter, as applicable and (ii) stating whether any Default exists on the date of such certificate (other than any Default as a result of a breach of Section 5.06, which any certificate delivered pursuant to this clause (2) shall not be required to address) and, if any Default then exists, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (d) within five Domestic Business Days after any officer of the Company or the Borrower obtains knowledge of any Default, if such Default is then continuing, a certificate of the chief financial officer or the chief accounting officer of the Company or the Borrower setting forth the details thereof and the action which the Company or the Borrower is taking or proposes to take with respect thereto; (e) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; (f) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) (other than any amendment on Form 8-K the sole purpose of which is to file exhibits relating to Existing Debt meeting the requirements of clause 43 (ii) of the definition of Debt) which the Company shall have filed with the Securities and Exchange Commission; (g) if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement, in either case which has resulted or could reasonably be expected to result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable member of the ERISA Group is required or proposes to take; (h) upon delivery of any financial statements or other financial information to the holders of any QwestDex Term Debt, without duplication of any statements or information otherwise delivered hereunder, copies of any such statements or information; (i) as soon as available, the restated consolidated financial statements of the Company and Corp., for any date, or any period, ended prior to the Closing Date, such statements to be audited by KPMG (but only if they relate to a period with respect to which audited financial statements have been previously issued) and to be reported on by KPMG in a manner acceptable to the Securities and Exchange Commission; and (j) from time to time such additional information regarding the financial position or business of the Company and its Subsidiaries and the 44 Borrower and its Subsidiaries as the Agent, at the request of any Bank, may reasonably request. Information required to be delivered pursuant to clauses 5.01(a), (b), (e) or (f) above shall be deemed to have been delivered on the date on which the Company provides notice to the Banks that such information has been posted on the Company's website on the Internet at the website address listed on the signature pages hereof, at sec.gov/edaux/searches.htm or at another website identified in such notice and accessible by the Banks without charge; provided that (i) such notice may be included in a certificate delivered pursuant to clause 5.01(c) and (ii) the Company shall deliver paper copies of the information referred to in clauses 5.01(a), (b), (e) or (f) to any Bank which requests such delivery. Section 5.02. Maintenance of Property; Insurance. 13. The Company will keep, and will cause each other Loan Party and each Significant Subsidiary to keep, all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted. (a) The Company will maintain, and will cause each other Loan Party and each Significant Subsidiary to maintain (either in the name of the Borrower or in such Loan Party's or Significant Subsidiary's own name), with financially sound and responsible insurance companies, insurance on all their respective properties in at least such amounts and against at least such risks (and with such risk retention) as are usually insured against in the same general area by companies of established repute engaged in the same or a similar business; and will furnish to the Banks, upon request from the Agent, information presented in reasonable detail as to the insurance so carried; provided that, in lieu of any such insurance, the Company and any other Loan Party and any Significant Subsidiary may maintain a system or systems of self-insurance and reinsurance which will accord with sound practices of similarly situated corporations maintaining such systems and with respect to which the Company or such other Loan Party or such Significant Subsidiary will maintain adequate insurance reserves, all in accordance with generally accepted accounting principles and in accordance with sound insurance principles and practice. Section 5.03. Maintenance of Existence. The Company will, and will cause each other Loan Party and each Significant Subsidiary to, preserve, renew and keep in full force and effect their respective corporate existence and their respective material rights, privileges, franchises and licenses necessary or desirable in the normal conduct of business. Section 5.04. Compliance with Laws. The Company will comply, and will cause each other Loan Party and each Significant Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and 45 requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA and the rules and regulations thereunder), except where the necessity of compliance therewith is contested in good faith by appropriate proceedings and for which adequate reserves in conformity with generally accepted accounting principles have been established. Section 5.05. Inspection of Property, Books and Records. The Company will keep, and will cause each other Loan Party and each Significant Subsidiary to keep, proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities; and will permit, and will cause each other Loan Party and each Significant Subsidiary to permit, representatives of any Bank at such Bank's expense to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants, all at such reasonable times and as often as may reasonably be desired. Section 5.06. Debt Coverage. 14. Consolidated Debt of the Company and its Consolidated Subsidiaries as of the last day of any fiscal quarter of the Company will not exceed 600% of Consolidated Company EBITDA for the four consecutive fiscal quarters of the Company ending on such date. (a) Consolidated Debt of Corp. and its Consolidated Subsidiaries as of the last day of any fiscal quarter of Corp. (other than (i) Debt in a principal amount up to $1,794,210,000 owed by Wireless to Capital Funding and evidenced by the Wireless Note, so long as such Debt is outstanding on the Closing Date and (ii) the Wireless/Borrower Debt) will not exceed 250% of Consolidated Corp. EBITDA for the four consecutive fiscal quarters of Corp. ending on such date. Section 5.07. Negative Pledge. Neither the Company nor the Borrower will, and the Company will not permit any Subsidiary to, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: (a) Liens existing on the Closing Date and listed in Schedule 5.07; (b) any Lien existing on any asset of any corporation at the time such corporation becomes a Subsidiary and not created in contemplation of such event; (c) any Lien on any asset of the Company or any of its Subsidiaries (other than the Borrower) (each, a "Purchase Money Obligor") securing Purchase Money Debt incurred by such Purchase Money Obligor in connection with the purchase of such asset (but not any other Purchase Money Obligor) and permitted under Section 5.12; provided that such Lien attaches to 46 such asset concurrently with or within 180 days after the incurrence of such Purchase Money Debt; (d) any Lien on any asset of any corporation existing at the time such corporation is merged or consolidated with or into the Company or a Subsidiary (to the extent any such merger or consolidation is permitted under 15) and not created in contemplation of such event; (e) any Lien existing on any asset prior to the acquisition thereof by the Company or a Subsidiary (to the extent such acquisition is permitted under this Agreement) and not created in contemplation of such acquisition; (f) any Lien on assets or capital stock of Minor Subsidiaries which secures Debt of Persons which are not Consolidated Subsidiaries in which the Company or any of its Subsidiaries has made investments ("Joint Ventures"), but for the payment of which Debt no other recourse may be had to the Company or any Subsidiaries ("Limited Recourse Debt"), or any Lien on equity interests in a Joint Venture securing Limited Recourse Debt of such Joint Venture; (g) any Lien (other than Liens on the Collateral; provided that Liens on any Collateral securing the QwestDex Term Debt shall be permitted pursuant to clauses (ii) and (iii) of subsection 5.07(i) below) arising out of the refinancing, replacement, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Debt is not increased and is not secured by any additional assets and the refinancing, replacement, extension, renewal or refunding of any such Debt is permitted pursuant to Section 5.12; (h) (x) Liens arising in the ordinary course of business which (i) do not secure Debt, (ii) do not secure any obligation in an amount exceeding $100,000,000 and (iii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business, and (y) Liens not described in clause (x) on cash and cash equivalents and securities (other than the Collateral) which Liens secure any obligation with respect to letters of credit or surety bonds, which obligation in each case does not exceed $100,000,000; (i) (i) Liens ("Facility Liens") on the Collateral pursuant to the Collateral Documents securing the Revolver Lender Obligations, (ii) Liens on the Collateral consisting of the Corp. Equity Collateral and the QSC Asset Collateral (each as defined in the Security and Pledge Agreement) securing the Term Secured Obligations so long as the Liens described in this clause (ii) shall be junior and subordinated to the Facility Liens, as provided in the Security and Pledge Agreement (or on other terms and conditions reasonably 47 approved by the Agent), (iii) Liens on the Collateral constituting the Holdings Equity Collateral, the Holdings Asset Collateral and the QwestDex Asset Collateral (each as defined in the Security and Pledge Agreement) securing the Term Secured Obligations, which Liens may be senior to the Facility Liens, as provided in the Security and Pledge Agreement (or on other terms and conditions reasonably approved by the Agent), (iv) other Liens on the Collateral securing an aggregate principal or face amount of Debt not to exceed at any time the sum of $3,000,000,000 plus the amount of Debt incurred by the Borrower in reliance on Section 5.12(h) so long as the Liens described in this clause (iv) shall secure Additional Permitted Secured Obligations and be junior and subordinated to the Facility Liens as provided in the Security and Pledge Agreement (or on other terms and conditions satisfactory to the Agent), (v) other Liens on the QwestDex Asset Collateral securing indemnity obligations of the Company, the Borrower and QwestDex Inc. under the QwestDex Purchase Agreements in an aggregate amount not to exceed $100,000,000 so long as the Liens described in this clause (v) shall secure Dex Purchaser Secured Obligations (as defined in the Security and Pledge Agreement) and be junior and subordinated to the Facility Liens and to the Liens described in clause (iii) as provided in the Security and Pledge Agreement (or on other terms and conditions reasonably approved by the Agent) and (vi) Liens on the Collateral securing Revolver Cash Management Obligations (as defined in the Security and Pledge Agreement), if any pursuant to the Security and Pledge Agreement; (j) Liens on any assets of any Subsidiary of the Company other than the Borrower, a Corp. Company or a QwestDex Company; and (k) Liens (other than Liens on any Collateral) not otherwise permitted by and in addition to the foregoing clauses of this Section 5.07 securing Debt permitted under Section 5.12 (and on terms permitted under Section 5.12). Section 5.08. Consolidations, Mergers and Sales of Assets. 15. No Loan Party or any of its Subsidiaries will merge or consolidate with or into any other Person; provided that (i) any Corp. Company may merge with or into any other Corp. Company (other than Wireless), (ii) any QwestDex Company may merge with or into any other QwestDex Company or any Corp. Company (other than Wireless) (so long as a Corp. Company is the Person surviving any such merger); provided that any wholly-owned Subsidiary of QwestDex formed pursuant to a QwestDex Sale Asset Transfer may be merged with and into QwestDex Inc., with QwestDex Inc. as the surviving corporation, (iii) any Foreign Subsidiary may merge or consolidate with or into any other Foreign Subsidiary and (iv) any Subsidiary (other than the Borrower, a QwestDex Company or a Corp. Company, but excluding Wireless) may merge into any other Subsidiary of the Company other than the Borrower, a QwestDex Company or a Corp. Company (other than Wireless); provided that, in the case of clause (i) and (ii), after giving effect to any such merger, no Default has occurred and is continuing. 48 (a) The Company will not sell, lease or otherwise transfer, directly or indirectly, all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any other Person; provided that nothing in this subsection (b) shall be construed to prohibit the sale of the Dexter Assets pursuant to and in accordance with the terms of the QwestDex Dexter Purchase Agreement and the Rodney Assets pursuant to and in accordance with the terms of the QwestDex Rodney Purchase Agreement. No Corp. Company will sell, lease or otherwise transfer, directly or indirectly, any of its assets (other than the Wireless Assets) to the Company or any of its Subsidiaries, other than to another Corp. Company (other than Wireless). No QwestDex Company will sell, lease or otherwise transfer, directly or indirectly, any of its assets to the Company or any of its Subsidiaries, other than to another QwestDex Company or to a Corp. Company. (b) None of the Company, the Borrower, any Corp. Company or any QwestDex Company shall consummate any Asset Sale unless at least 75% (or, solely in the case of any Asset Sale consummated by a Corp. Company, at least 85%) of the aggregate consideration therefor (other than any portion of such Asset Sale which constitutes an Asset Swap) shall consist of cash payable at closing. Any Corp. Company or QwestDex Company may consummate any Asset Sale that does not satisfy the requirements of the immediately preceding sentence to the extent such Asset Sale is an Asset Swap and, after giving effect thereto, (x) the aggregate amount of assets that have been sold, transferred or otherwise disposed of by the Corp. Companies on or after the Closing Date pursuant to Asset Swaps shall not exceed 10% of the consolidated tangible assets of the Corp. Companies and (y) the aggregate amounts of assets that have been sold, transferred or otherwise disposed of by the QwestDex Companies on or after the Closing Date pursuant to Asset Swaps shall not exceed 10% of consolidated tangible assets of the QwestDex Companies. (c) The Company will retain ownership, directly or indirectly, of 100% of the capital stock and the voting power of the Borrower and the Borrower will retain ownership, directly, of 100% of the capital stock and the voting power of Corp. Section 5.09. Use of Proceeds. The proceeds of the Loans made under this Agreement will be used by the Borrower for general corporate purposes. None of such proceeds will be used, directly or indirectly, in violation of any applicable law or regulation, and no use of such proceeds will include any use for the purpose, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock. Section 5.10. Restricted Payments and Payments of Certain Other Debt. 16. Neither the Company nor any of its Subsidiaries will declare or make, or 49 agree to pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that (i) any Subsidiary (other than the Borrower) may declare and pay dividends with respect to its Equity Interests, (ii) the Company may make Restricted Payments pursuant to and in accordance with stock or other benefit plans for management or employees of the Company and its Subsidiaries, (iii) the Company may declare and pay dividends required to be paid pursuant to the terms of Equity Interests of the Company issued in a transaction constituting a Prepayment Event and (iv) the Borrower may declare and pay dividends (x) to the extent required to permit the Company and its Subsidiaries to make mandatory interest and principal payments in respect of Subject Debt pursuant to the terms thereof, as such terms may be modified in accordance with the terms of this Agreement, (y) to the extent necessary to enable the Company to pay ordinary course corporate, overhead and operating expenses and any legal, professional and similar fees and expenses of the Company and (z) otherwise, so long as, in the case of this clause (z), after giving effect to any such dividend on any date (a "test date"), the aggregate amount of dividends declared or paid by the Borrower after June 30, 2002 does not exceed consolidated net income of the Borrower for the period starting July 1, 2002 and ending on the last day of the fiscal quarter of the Borrower most recently ended on or prior to such test date (calculated as a single accounting period); provided that, in the case of clause (z), immediately before and after giving effect to any such dividend, no Default has occurred and is continuing. (a) Neither the Company nor any of its Subsidiaries will, directly or indirectly (including without limitation through any Person that has received the proceeds of any Investment permitted by Section 5.13), refinance, redeem, retire, purchase, repurchase, acquire, defease, exchange or otherwise make any payment in respect of the principal of any Subject Debt, other than: (i) mandatory interest or principal payments, so long as such payments were required on such dates as of the Closing Date (in the case of Existing Debt) or on the date such Debt was incurred (in the case of other Subject Debt), (ii) exchanges, repurchases and tenders so long as the only consideration therefor is Debt permitted by Sections 5.12(c) and 5.12(j) and cash to the extent permitted by clauses (iv), (v), (vi) and (vii) of this subsection 5.10(a), (iii) refinancings, extensions and renewals of Subject Debt with the cash proceeds of Debt permitted to be incurred under Section 5.12(d), (h), (i), (j) and (l) and clause (ii) of the definition of QwestDex Term Debt; provided that (x) in connection therewith, the Company and its Subsidiaries may use cash (in addition to the cash proceeds of such Debt) only to the extent permitted by clauses (iv), 50 (v), (vi) and (vii) of this subsection 5.10(a) and (y) until the aggregate amount of the Commitments is $2,000,000,000 or less, any such refinancing of Existing Debt of a Corp. Company shall be permitted only at the maturity thereof, (iv) at any time after the aggregate amount of the Commitments is $2,000,000,000 or less but greater than $1,250,000,000, any payments with respect to Existing Debt of any Corp. Company that on the Closing Date is scheduled to mature no later than June 30, 2003 (the "2003 Corp. Debt"), (v) at any time after the aggregate amount of the Commitments is $2,000,000,000 or less but greater than $1,250,000,000, any payments with respect to Subject Debt (other than the 2003 Corp. Debt) in an aggregate amount not to exceed $500,000,000, (vi) at any time after the aggregate amount of the Commitments is $1,250,000,000 or less, any payments with respect to Subject Debt (other than the Subject Debt of a Corp. Company) in an aggregate amount (including payments made in reliance on clause (v) at or prior to such time) not to exceed $750,000,000, and (vii) at any time after the aggregate amount of the Commitments is $1,250,000,000 or less, any payments with respect to Subject Debt of any Corp. Company (including without limitation the 2003 Corp. Debt). Neither the Company nor any of its Subsidiaries will consent to or solicit any amendment, supplement, or other modification of any agreement or instrument evidencing or governing any Subject Debt if the effect of such amendment, supplement or modification, together with all other amendments, supplements or modifications made, is to increase materially the obligations of the obligor thereunder or to confer any additional rights on the holders thereof which would be materially adverse to the Company or its Subsidiaries (it being understood that any such modification that further restricts the ability of any Subsidiaries of the Company to agree or be subject to the types of restrictions described in Section 5.11 or that has the effect of causing the terms of such Debt to no longer comply with the provisions of Section 5.12 on the basis of which such Subject Debt was incurred shall not be a permitted modification of such terms). Section 5.11. Limitations on Restrictions Affecting Subsidiaries. Neither the Company nor any of its Subsidiaries will enter into, or suffer to exist, any agreement with any Person (other than a written agreement with, or an agreement resulting from the application of a law, policy, rule or regulation by, a public utility commission or other governmental authority) which prohibits or limits the ability of any Subsidiary to (i) pay dividends or make other 51 distributions or pay any Debt owed to the Company or any other Subsidiary, (ii) make loans or advances to the Company or any other Subsidiary, (iii) transfer any of its properties or assets to the Company or any other Subsidiary, (iv) create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or on capital stock or equity interests issued by it, or (v) create, incur assume or suffer to exist any Debt; provided that the following shall be permitted: (1) agreements governing Debt as in effect on the Closing Date, and agreements which are no more restrictive in any material respect (or, in the case of any restriction on the incurrence of Debt or Liens, in any respect) than such agreements, (2) agreements granting Liens permitted under Section 5.07 containing restrictions on the ability to transfer or grant Liens on the assets subject to such Liens, (3) restrictions contained in agreements of any Person at the time such Person becomes a Subsidiary, which restrictions are applicable solely to such Person (including to Equity Interests in such Person), (4) customary restrictions contained in stock purchase agreements, asset sale agreements limiting the transfer of assets pending the closing of the sale and customary non-assignment provisions in leases and other contracts entered into in the ordinary course of business, (5) restrictions contained in the documents evidencing the QwestDex Term Debt, (6) restrictions contained in the Loan Documents and (7) restrictions contained in the QwestDex Purchase Agreements. Section 5.12. Limitations on Debt. Neither the Company nor any Subsidiary will create, incur, assume or permit to exist any Debt, except: (a) Debt created under the Loan Documents; (b) Existing Debt; (c) Debt of the Company or Capital Funding so long as (i) the issuance thereof does not generate any cash proceeds, (ii) such Debt is issued to the holders thereof in exchange for, or as consideration for the repurchase or tender, of Existing Debt (or Subject Debt previously incurred in reliance on this subsection (c)) held by such holders, (iii) the maturity of such Debt is on or after the Outside Date, (iv) no payments with respect to such Debt (including without limitation required amortization payments and mandatory prepayments) are required to be made prior to the Outside Date (other than regularly scheduled interest payments with respect thereto) except to the same or lesser extent of required payments under the Subject Debt being exchanged, repurchased or tendered for, and (v) the terms and conditions governing such Debt (including without limitation covenants and events of default) are no more restrictive in any material respect than the terms and conditions applicable to such Debt as of the Closing Date or such terms and conditions otherwise approved by the Agent; 52 (d) Debt of any Corp. Company so long as the aggregate principal or face amount thereof does not exceed $2,100,000,000 and the proceeds thereof are applied to refinance Existing Debt of a Corp. Company scheduled on the Closing Date to mature prior to the Termination Date; (e) Debt evidenced by (i) the QwestDex Intercompany Note in an aggregate principal amount not to exceed $4,270,000,000, (ii) the QwestDex Inc. Intercompany Note in an aggregate principal amount not to exceed $100,000,000, (iii) the Wireless Note in an aggregate principal amount not to exceed $1,794,210,000 and (iv) Debt owed by Wireless to the Borrower in an aggregate principal amount not to exceed at any time $400,000,000 (the "Wireless/Borrower Debt"), so long as such Debt is evidenced by a promissory note that constitutes Collateral and ranks senior to the Wireless Note; (f) (i) Debt of any Corp. Company owed to any other Corp. Company (other than Wireless), (ii) Debt of any QwestDex Company owed to any other QwestDex Company, in each case other than Debt permitted by subsection (b) above and (iii) Debt of any Subsidiary of the Company (other than the Borrower, a Corp. Company or a QwestDex Company) to any other Subsidiary of the Company (other than the Borrower, a Corp. Company or a QwestDex Company); (g) QwestDex Term Debt; (h) Debt of any QwestDex Company, any Corp. Company or the Borrower (other than Debt permitted by subsections (a) through (g), inclusive, above, Debt of the Borrower incurred in reliance on subsections (j) and (i) below and Purchase Money Debt incurred in reliance on subsection (k) below), including without limitation Purchase Money Debt; provided that (i) the aggregate principal or face amount of Debt incurred in reliance on this subsection (h) shall not exceed $3,000,000,000, (ii) until the aggregate amount of the Commitments is $1,250,000,000 or less, any such Debt of any QwestDex Company (other than Purchase Money Debt) shall rank junior to the Loans and the Guarantees provided in Article 9 and shall be on Qualifying Terms, (iii) any such Debt of the Borrower (x) shall be on Qualifying Terms and (y) shall be incurred after the 91st day after the Liens on the Collateral securing the Revolver Secured Obligations have been perfected and (iv) with respect to any such Debt (other than Purchase Money Debt), the Borrower shall have complied with the provisions of Section 2.11(c); (i) Debt of the Borrower not otherwise permitted by the foregoing subsections, so long as (i) the aggregate principal or face amount of Debt incurred in reliance on this subsection (i) shall not exceed $750,000,000, (ii) the proceeds of such Debt do not exceed the cash consideration paid to retire unconditional purchase obligations of QCC and the Company outstanding on the Closing Date (each such obligation, an "Outstanding UPO"), and (iii) such Debt shall be on Qualifying Terms (except that (A) such Debt may provide for 53 scheduled principal payments with respect thereto in an amount not greater than the scheduled payments required to be made with respect to the Outstanding UPO that has been replaced by such Debt (as such Outstanding UPO was in effect on the Closing Date) and (B) the terms and conditions governing such Debt may be more restrictive than the Loans so long as they are no more restrictive in any material respect than the terms and conditions applicable to the Outstanding UPO being replaced by such Debt); (j) Debt of the Borrower not otherwise permitted by the foregoing subsections (including without limitation any such Debt issued to the holders thereof in exchange for, or as consideration for, the repurchase or tender of Subject Debt held by such holders), so long as (i) such Debt is incurred after the 91st day after the Liens on all of the Collateral securing the Revolver Secured Obligations have been perfected, (ii) any such Debt shall be on Qualifying Terms, (iii) the aggregate principal or face amount of Debt of the Borrower incurred in reliance on this subsection (j) does not exceed $3,000,000,000 and (iv) with respect to any such Debt, the Borrower shall have complied with the provisions of Section 2.11(c) relating thereto; (k) Purchase Money Debt of QCC or any other Subsidiary of the Company other than the Borrower in an aggregate principal amount not in excess of $250,000,000; (l) Debt of the Company not permitted by any of the foregoing subsections, so long as the Borrower shall have complied with the provisions of Section 2.11(c) relating thereto; and (m) Debt of any Subsidiary of the Company (other than the Borrower, any QwestDex Company or any Corp. Company), so long as the Borrower shall have complied with the provisions of Section 2.11(c) relating thereto. Section 5.13. Limitations on Investments; Loans, Advances, Guarantees and Acquisitions. Neither the Company nor any Subsidiary will purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary before such merger) any Equity Interest in or evidence of indebtedness or other security (including any option, warrant or other right to acquire any of the foregoing) of, make, hold or permit to exist any loan or advance to, Guarantee any obligation of, or make, hold or permit to exist any investment or other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except: (a) Permitted Investments; 54 (b) investments existing on the Closing Date and listed in Schedule 5.13; (c) investments by the Company and its Subsidiaries in Equity Interests in their respective Subsidiaries; provided that (i) any such Equity Interest of Corp. or any QwestDex Company shall be pledged pursuant to the Security and Pledge Agreement to the extent required thereunder and (ii) neither the Borrower nor any QwestDex Company may make any investment in Equity Interests of any QwestDex Company not listed on Schedule 4.09, except any such investment by QwestDex Inc. in Equity Interests in its wholly-owned Subsidiaries pursuant to a QwestDex Sale Asset Transfer; (d) investments constituting Debt permitted by Section 5.12; (e) investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; (f) 17. interest rate swap agreements, interest rate cap agreements, interest rate collar agreements or other similar agreements or arrangements or (ii) foreign exchange contracts, currency swap agreements, futures contracts, option contracts, synthetic caps or other similar agreements or arrangements, in each case designed to hedge against fluctuations in interest rates or currency values, respectively; (g) instruments or assets received as consideration for an Asset Sale as permitted by Section 5.08(b); (h) any investments subject to this Section 5.13 and not permitted by any of the foregoing clauses in an aggregate amount not to exceed at any time $250,000,000; and (i) after the aggregate amount of the Commitments is $1,250,000,000 or less, any investments subject to Section 5.13 and not permitted by any of the foregoing clauses. Nothing contained in the foregoing is intended to restrict the Company and its Subsidiaries from purchasing any assets other than those expressly prohibited above or from making any capital expenditures. Section 5.14. Further Assurances Regarding Collateral and Guaranty Requirement. Each Loan Party will execute and deliver any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), that may be 55 required under any applicable law, or that the Agent or the Required Banks may reasonably request, to cause the Collateral and Guaranty Requirement to be and remain satisfied, all at the Borrower's expense. The Company and the Borrower will provide to the Agent, from time to time upon request, evidence reasonably satisfactory to the Agent as to the perfection and priority of the Liens created or intended to be created by the Collateral Documents. ARTICLE 6 DEFAULTS Section 6.01. Events of Default. If one or more of the following events shall have occurred and be continuing: (a) any principal of any Loan shall not be paid when due, or any interest, any fees or any other amount payable hereunder shall not be paid within five days of the due date thereof; (b) any Loan Party shall fail to observe or perform any covenant contained in Section 5.01(d) or Section 5.06 to 5.13, inclusive; (c) any Loan Party shall fail to observe or perform any covenant or agreement contained in any Loan Document (other than those covered by clause (a) or (b) above) for 30 days after the earlier of a senior officer's knowledge of such failure or written notice thereof has been given to the Company by the Agent at the request of any Bank; (d) any representation, warranty, certification or statement made by any Loan Party in any Loan Document or in any certificate, financial statement or other document delivered pursuant thereto shall prove to have been incorrect in any material respect when made (or deemed made); (e) the Company or any Subsidiary shall fail to make any payment or payments, in the aggregate in excess of $100,000,000, in respect of any Material Debt when due or within any applicable grace period; (f) (i) any event or condition shall occur which results in the acceleration of the maturity of any Material Debt (other than the QwestDex Term Debt and any other Material Debt of a QwestDex Company) or (ii) any event or condition shall occur which results in the acceleration of the maturity of any QwestDex Term Debt or any other Material Debt of a QwestDex Company or enables or permits the holder thereof to accelerate the maturity thereof (other than any such event or condition which has been waived by the lenders under the QwestDex 56 Term Debt or the holders of such other Material Debt, as the case may be, in accordance with the terms thereof); (g) the Company or any Loan Party or any Significant Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize or otherwise acquiesce in any of the foregoing; (h) an involuntary case or other proceeding shall be commenced against the Company or any Loan Party or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Loan Party or any Significant Subsidiary under the federal bankruptcy laws as now or hereafter in effect; (i) any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $100,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition specified in Section 4042(a) of ERISA shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $100,000,000; (j) a judgment or order for the payment of money in excess of $100,000,000 shall be rendered against the Company or any Subsidiary and such judgment or order shall be enforceable and shall continue unsatisfied, in effect 57 and unstayed for a period of 60 days (or such longer period of time after which the judgment holder may cause the creation of Liens against or seizure of any property of the Company or such Subsidiary) (it being understood that in any event an administrative order of a public utility commission shall not constitute an "order" for purposes of this clause (j) so long as (x) no one is seeking to enforce such order in an action, suit or proceeding before a court and (y) reserves in the full amount of the cost of such order are maintained on the books of the Company and its Subsidiaries); (k) any Guarantor shall repudiate in writing any of its obligations under Article 9 or any such obligation shall be unenforceable against any Guarantor in accordance with its terms, or the Company or any of its Subsidiaries shall so assert in writing; or (l) any Lien purported to be created under any Collateral Document shall cease to be, or shall be asserted by the Company or any of its Subsidiaries not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Collateral Document, except (i) as a result of a sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents, (ii) as a result of the Administrative Agent's failure to maintain possession of any stock certificates, promissory notes or other documents delivered to it under the Security and Pledge Agreement or (iii) as a result of the operation of Section 2(k) of the Security and Pledge Agreement, so long as each Lien Grantor shall have complied with its obligations thereunder; then, and in every such event, the Agent shall (i) if requested by Banks having more than 50% in aggregate amount of the Commitments, by notice to the Company terminate the Commitments and they shall thereupon terminate, and/or (ii) if requested by Banks holding more than 50% in aggregate principal amount of the Loans, by notice to the Company declare the Notes (together with accrued interest thereon) to be, and the Notes shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company and the Borrower; provided that in the case of any of the Events of Default specified in clause (g) or (h) above with respect to the Company or the Borrower, without any notice to the Company or the Borrower or any other act by the Agent or the Banks, the Commitments shall thereupon automatically terminate and the Notes (together with accrued interest thereon) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company and the Borrower. Section 6.02. Notice of Default. The Agent shall give notice to the Company under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. 58 ARTICLE 7 THE AGENT Section 7.01. Appointment and Authorization. Each Bank irrevocably appoints and authorizes the Agent to take such action (including without limitation entering into the Security and Pledge Agreement) as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with all such powers as are reasonably incidental thereto. Section 7.02. Agent and Affiliates. Bank of America, N.A., and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Company, the Borrower or any Subsidiary or Affiliate of the Company or the Borrower (each, a "Qwest Entity") as though Bank of America, N.A., were not the Agent hereunder and without notice to or consent of the Banks. The Banks acknowledge that, pursuant to such activities, Bank of America , N.A., or its Affiliates may receive information regarding any Qwest Entity (including information that may be subject to confidentiality obligations in favor of such Qwest Entity) and acknowledge that the Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America, N.A., shall have the same rights and powers under this Agreement as any other Bank and may exercise such rights and powers as though it were not the Agent, and the terms "Bank" and "Banks" include Bank of America, N.A. in its individual capacity. Section 7.03. Action by Agent. The obligations of the Agent under the Loan Documents are only those expressly set forth therein. Without limiting the generality of the foregoing, the Agent shall not be required to take any action with respect to any Default, except as expressly provided in the Loan Documents. The Agent shall not have or be deemed to have any fiduciary relationship with any Bank or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in any Loan Document with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. Section 7.04. Consultation with Experts. The Agent may consult with legal counsel (who may be counsel for the Company or the Borrower), independent public accountants and other experts selected by it and shall not be liable for 59 any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. Section 7.05. Delegation of Duties. The Agent may execute any of its duties under the Loan Documents by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct. Section 7.06. Liability of Agent. Neither the Agent nor any of its Affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection with any Loan Document (i) with the consent or at the request of the Required Banks or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Agent nor any of its Affiliates nor any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any Loan Party; (iii) the satisfaction of any condition specified in Article 3, except receipt of items required to be delivered to the Agent; (iv) the existence or sufficiency of the Collateral or (v) the validity, effectiveness or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith. None of the Agent, its Affiliates and their respective directors, officers, agents and employees shall be under any obligation to any Bank or participant to inspect the properties, books or records of any Qwest Entity. The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties. Section 7.07. Indemnification. Each Bank shall, ratably in accordance with its Commitment, indemnify the Agent, its Affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Loan Parties) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with the Loan Documents or any action taken or omitted by such indemnitees thereunder. No action taken with the consent or at the request of the Required Banks shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Section 7.08. Credit Decision; Disclosure of Information by Agent. Each Bank acknowledges that none of the Agent, its Affiliates and their respective directors, officers, agents and employees (each, an "Agent-Related 60 Person") has made any representation or warranty to it, and that no act by the Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Qwest Entity, shall be deemed to constitute any representation or warranty by the Agent or any other Person to any Bank as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Bank represents to the Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Qwest Entities, and all applicable bank or other regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit hereunder. Each Bank also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Qwest Entities. Except for the notices, reports and other documents expressly required to be furnished to the Banks by the Agent herein, the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Qwest Entities which may come into the possession of any Agent-Related Person. Section 7.09. Successor Agent. The Agent may resign at any time by giving notice thereof to the Banks and the Company. Upon any such resignation, the Required Banks shall have the right to appoint a successor Agent (with the consent of the Company, such consent not to be unreasonably withheld). If no successor Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within 30 days after the retiring Agent gives notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent (with the consent of the Company, such consent not to be unreasonably withheld), which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $400,000,000. Upon the acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring 61 Agent's resignation shall at its election nevertheless thereupon become effective and the Banks shall perform all of the duties of the Agent hereunder until such time, if any, as the Required Banks appoint a successor agent as provided above. The Agent, if it so elects, may resign as administrative agent but not collateral agent or vice versa, and if it so elects, then the provisions of this Section and the rest of this Article shall apply separately to each of those separate capacities of the Agent. Section 7.10. Agent's Fee. The Company shall pay to the Agent for its own account fees in the amounts and at the times previously agreed upon between the Company and the Agent. ARTICLE 8 CHANGES IN CIRCUMSTANCES Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period for any Euro-Dollar Loan: (a) the Agent determines (which determination will be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted London Interbank Offered Rate for such Interest Period, or (b) in the case of Euro-Dollar Loans, Banks having 50% or more of the aggregate amount of the Euro-Dollar Loans advise the Agent that the Adjusted London Interbank Offered Rate as determined by the Agent will not adequately and fairly reflect the cost to such Banks of funding their Euro-Dollar Loans for such Interest Period, the Agent shall forthwith give notice thereof to the Company and the Banks, whereupon until the Agent notifies the Company that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Banks to make Euro-Dollar Loans or to convert outstanding Loans into Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan shall be converted into a Domestic Loan on the last day of the then current Interest Period applicable thereto. Unless the Borrower notifies the Agent at least two Domestic Business Days before the date of any Euro-Dollar Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, such Borrowing shall instead be made as a Domestic Borrowing. Section 8.02. Illegality. If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance 62 by any Bank (or its Euro-Dollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Bank shall so notify the Agent, the Agent shall forthwith give notice thereof to the other Banks and the Company, whereupon until such Bank notifies the Company and the Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro-Dollar Loans, or to convert outstanding Loans into Euro-Dollar Loans, shall be suspended. Before giving any notice to the Agent pursuant to this Section, such Bank shall designate a different Euro-Dollar Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice is given, each Euro-Dollar Loan of such Bank then outstanding shall be converted to a Domestic Loan either (a) on the last day of the then current Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Bank shall determine that it may not lawfully continue to maintain and fund such Loan to such day. Section 8.03. Increased Cost and Reduced Return. 18. If on or after the date hereof, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System with respect to any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar Reserve Percentage), special deposit, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its Applicable Lending Office) or on the United States market for certificates of deposit or the London interbank market any other condition affecting its Euro-Dollar Loans, its Note or its obligation to make Euro-Dollar Loans and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or maintaining any Euro-Dollar Loan, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under its Note with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Agent), the Company shall 63 pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. (a) If any Bank shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Bank (or its Parent) as a consequence of such Bank's obligations hereunder to a level below that which such Bank (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by such Bank (with a copy to the Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank (or its Parent) for such reduction. (b) Each Bank will promptly notify the Company and the Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. Section 8.04. Taxes. 19. Any and all payments by any Loan Party to or for the account of any Bank or the Agent under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, (x) in the case of each Bank and the Agent, taxes imposed on its income or profits, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Bank or the Agent (as the case may be) is organized or any political subdivision thereof, (y) in the case of each Bank, taxes imposed on its income or profits, and franchise or similar taxes imposed on it, by the jurisdiction of such Bank's Applicable Lending Office or any political subdivision thereof, taxes that are imposed by any jurisdiction by reason of such Bank doing or having done business in such jurisdiction other than solely as a result of the Loan Documents or any transaction contemplated thereby, and (z) in the case of each Bank and the Agent, any branch profits taxes imposed by the United States or any similar tax 64 imposed by any other jurisdiction in which such Bank or the Agent is organized or in which its Applicable Lending Office is located or any political subdivision thereof (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If any Loan Party shall be required by law to deduct any Taxes from or in respect of any sum payable under any Loan Document to any Bank or the Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.04) such Bank or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Person shall make such deductions, (iii) such Person shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) such Person shall furnish to the Agent, at its address referred to in Section 10.01, the original or a certified copy of a receipt evidencing payment thereof. (a) In addition, each Loan Party agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, or charges or similar levies which arise from any payment made under any Loan Document or from the execution or delivery of, or otherwise with respect to, any Loan Document (hereinafter referred to as "Other Taxes"). (b) Each Loan Party agrees to indemnify each Bank and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 8.04) paid by such Bank or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; provided that the indemnification obligation under this Section 8.04(b) shall be only with respect to Taxes, Other Taxes and liabilities related to payments made by a Loan Party under any Loan Document. This indemnification shall be made within 15 days from the date such Bank or the Agent (as the case may be) makes written demand therefor. (c) Each Bank organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank listed on the signature pages hereof, on or prior to the date on which it becomes a Bank in the case of each other Bank, on or prior to the date on which any such Bank grants any participating interest pursuant to Section 10.06 or otherwise ceases to act for its own account with respect to any portion of any sums payable to it under this Agreement, and from time to time thereafter if requested in writing by the Company (but only so long as such Bank remains lawfully able to do so), shall provide the Company with Internal Revenue Service form W-8BEN, W-8ECI and/or W-8IMY, as appropriate, or any successor form prescribed by the Internal Revenue Service (together with any 65 form, documentation or information such Bank is required or chooses to transmit with any such forms), certifying that such Bank is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States and/or certifying as provided on Form W-8IMY. If the form provided by a Bank at the time such Bank first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from "Taxes" as defined in 19 imposed by the United States. (d) For any period with respect to which a Bank has failed to provide the Company with the appropriate form pursuant to Section 8.04(c) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which a form originally was required to be provided), such Bank shall not be entitled to indemnification under 19 with respect to Taxes imposed by the United States; provided, however, that should a Bank, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to Taxes because of its failure to deliver a form required hereunder, the Company shall take such steps as such Bank shall reasonably request to assist such Bank to recover such Taxes. (e) If any Loan Party is required to pay additional amounts to or for the account of any Bank pursuant to this Section 8.04, then such Bank will change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Bank, is not otherwise disadvantageous to such Bank. Section 8.05. Domestic Loans Substituted for Affected Euro-Dollar Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans to the Borrower has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 with respect to its Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such Bank through the Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Company that the circumstances giving rise to such suspension or demand for compensation no longer exist: (a) all Loans which would otherwise be made by such Bank as (or continued as or converted into) Euro-Dollar Loans shall instead be Domestic Loans (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and 66 (b) after each of its Euro-Dollar Loans has been repaid (or converted to a Domestic Loan), all payments of principal which would otherwise be applied to repay such Euro-Dollar Loans shall be applied to repay its Domestic Loans instead. If such Bank notifies the Borrower that the circumstances giving rise to such notice no longer apply, the principal amount of each such Domestic Loan shall be converted into a Euro-Dollar Loan on the first day of the next succeeding Interest Period applicable to the related Euro-Dollar Loans of the other Banks. Section 8.06. Substitution of Bank. If (i) the obligation of any Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02, (ii) any Bank has demanded compensation under Section 8.03 or (iii) any Bank has not signed an amendment or waiver which must be signed by all the Banks to become effective, and such amendment or waiver has been signed by the Super-Majority Banks, the Company shall have the right, with the assistance of the Agent, to seek a mutually satisfactory substitute bank or banks (which may be one or more of the Banks) to purchase the Notes (by paying to such Bank the principal amount of such Note, together with accrued interest thereon and any other amounts payable to such Bank hereunder) and assume the Commitment of such Bank. ARTICLE 9 GUARANTEES Section 9.01. The Guaranty. Each Guarantor hereby unconditionally guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of its Guaranteed Obligations. Upon failure by the Borrower to pay or perform punctually any Guaranteed Obligation, each Guarantor shall forthwith on demand pay or perform such Guaranteed Obligation in the manner specified in the relevant Loan Document. Section 9.02. Guaranty Unconditional. The obligations of each Guarantor hereunder shall be unconditional, irrevocable and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (i) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of any other Loan Party under any Loan Document, by operation of law or otherwise; (ii) any modification or amendment of or supplement to any Loan Document; 67 (iii) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of any other Loan Party under any Loan Document; (iv) any change in the corporate existence, structure or ownership of any other Loan Party or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any other Loan Party or any of its assets or any resulting release or discharge of any obligation of any other Loan Party contained in any Loan Document; (v) the existence of any claim, set-off or other rights which such Guarantor may have at any time against any other Loan Party, the Agent, any Bank or any other Person, whether in connection herewith or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vi) any invalidity or unenforceability relating to or against any other Loan Party for any reason of any Loan Document, or any provision of applicable law or regulation purporting to prohibit the payment by any other Loan Party of the principal of or interest on any Note or any other amount payable by it under the Loan Document; or (vii) any other act or omission to act or delay of any kind by any other Loan Party, the Agent, any Bank or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of such Guarantor's obligations hereunder. Section 9.03. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances. Each Guarantor's obligations hereunder shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Loans and all other amounts payable by the Borrower under the Loan Documents shall have been indefeasibly paid in full. If at any time any payment of the principal of or interest on any Loan or any other amount payable by the Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, each Guarantor's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. Section 9.04. Waiver by Each Guarantor. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any other Loan Party or any other Person. 68 Section 9.05. Subrogation. Each Guarantor irrevocably waives any and all rights to which it may be entitled, by operation of law or otherwise, upon making any payment hereunder to be subrogated to the rights of the payee against the Borrower with respect to such payment or against any direct or indirect security therefor, or otherwise to be reimbursed, indemnified or exonerated by or for the account of the Borrower in respect thereof until (i) the Commitments shall have terminated and (ii) all Loans and all other obligations under this Agreement and the other Loan Documents have been paid in full in cash. Section 9.06. Stay of Acceleration. In the event that acceleration of the time for payment of any amount payable by the Borrower under the Loan Documents is stayed upon insolvency, bankruptcy or reorganization of the Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by each Guarantor hereunder forthwith on demand by the Agent made at the request of the Required Banks. Section 9.07. Limit of Liability. 20. Anything contained in this Guaranty to the contrary notwithstanding, the obligations of each QwestDex Company that is a Guarantor under this Guaranty (each, a "QwestDex Guarantor") shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of such QwestDex Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however (to the extent permitted to be excluded for purposes of Fraudulent Transfer Laws) any liabilities of such QwestDex Guarantor (x) in respect of intercompany indebtedness to the Borrower or other Affiliates of the Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such QwestDex Guarantor hereunder and (y) under any guaranty of other Debt which guaranty contains a limitation as to maximum amount similar to that set forth in this ?subsection 9.07(a), pursuant to which the liability of such Guarantor hereunder is included in the liabilities taken into account in determining such maximum amount) and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of such QwestDex Guarantor pursuant to applicable law or pursuant to the terms of any agreement. (a) Each QwestDex Guarantor, and each guarantor under other guaranties, if any, relating to the Agreement (the "Related Guaranties") that contain a contribution provision similar to that set forth in this ?subsection 9.07(b), together desire to allocate among themselves (collectively, the "Contributing Guarantors"), in a fair and equitable manner, their obligations 69 arising under this Guaranty and the Related Guaranties. Accordingly, in the event any payment or distribution is made on any date by a QwestDex Guarantor under this Guaranty or a guarantor under a Related Guaranty, each such QwestDex Guarantor or such other guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in the maximum amount permitted by law so as to maximize the aggregate amount of the Guarantied Obligations paid to the Banks. Section 9.08. Subordination To QwestDex Senior Debt. Each QwestDex Company covenants and agrees, and each Bank likewise covenants and agrees, that the Guaranty provided pursuant to this Article 9 by each QwestDex Company (a "QwestDex Guaranty") is made subject to the provisions of this Section 9.08 and each Bank accepts and agrees to be bound by such provisions. Each QwestDex Guaranty shall, in the manner hereinafter set forth, be subordinate and junior in right of payment to all QwestDex Senior Debt (as hereinafter defined) of the applicable Guarantor. For purposes of this Section 9.08, the term "QwestDex Senior Debt" shall mean, as to each QwestDex Company, all amounts payable by it under the QwestDex Term Loan Agreement, including without limitation the principal, premium, if any, and interest on all Loans under the QwestDex Term Loan Agreement or under the notes issued pursuant thereto and all other liabilities and obligations, direct or contingent, of such QuestDex Company to the "Lenders" (as defined in the QwestDex Term Loan Agreement) or the QwestDex Agent thereunder, and any liabilities and obligations under any renewal, extension or refinancing thereof so long as any such renewal, extension or refinancing constitutes "QwestDex Term Debt" pursuant to clause (ii) of the definition thereof; provided that the aggregate principal or face amount of the QwestDex Senior Debt (calculated without duplication of any Guaranty thereof by any QwestDex Company) shall not exceed the lesser of (x) the aggregate principal amount of Debt incurred by QwestDex Inc. pursuant to the QwestDex Term Loan Agreement and (y) $750,000,000. (a) No QwestDex Company to Make Payments with Respect To Its QwestDex Guaranty in Certain Circumstances. Article 1 Upon the maturity of any principal of, premium, if any, or interest on, or fees payable with respect to, any QwestDex Senior Debt by lapse of time, acceleration or otherwise, all principal thereof, premium, if any, and interest thereon and all other QwestDex Senior Debt then due shall first be paid in full, or such payment shall be duly provided for in cash or in a manner satisfactory to the holders of such QwestDex Senior Debt, before any payment by any QwestDex Company is made under its QwestDex Guaranty. 70 (i) In the event and during the continuation of any Event of Default (as such term is defined in the QwestDex Term Loan Agreement) (each such Event of Default being referred to in this Agreement as a "QwestDex Senior Debt Default"), no payment shall be made by any QwestDex Company under its QwestDex Guaranty unless and until such QwestDex Senior Debt Default shall have been remedied, nor shall any such payment be made if after giving effect to such payment, any QwestDex Senior Debt Default would exist. (b) QwestDex Guaranty Subordinated to Prior Payment of All QwestDex Senior Debt on Dissolution, Liquidation or Reorganization of Any QwestDex Company. In the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization or other similar proceedings in connection therewith, relative to any QwestDex Company or its creditors, or to substantially all of any property of such QwestDex Company, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of any QwestDex Company, whether or not involving insolvency or bankruptcy, then (i) the holders of all QwestDex Senior Debt of such QwestDex Company shall first be entitled to receive payment in full of the principal thereof, premium, if any, interest (including interest accruing subsequent to the commencement of such proceedings, whether or not such interest is allowed or allowable as a claim in such proceedings) and all other amounts payable thereon before the Banks are entitled to receive any payment under its QwestDex Guaranty; and (ii) any payment or distribution of assets of such QwestDex Company of any kind or character, whether in cash, property or securities to which the Banks would be entitled, but for the provisions of this Section 9.08, shall be paid or distributed by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to the QwestDex Agent or any other representative on behalf of the holders of QwestDex Senior Debt, to the extent necessary to make payment in full of all principal, premium, if any, interest and all other amounts payable on all QwestDex Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of the QwestDex Senior Debt. (c) Rights of Holders of QwestDex Senior Debt. Should any payment or distribution or security or the proceeds of any thereof be collected or received by any Bank in respect of a QwestDex Guaranty at a time when that payment or distribution should not have been made to such Bank because of Section 9.08(a) or 9.08(b), such Bank will forthwith deliver the same to the QwestDex Agent for the equal and ratable benefit of the holders of the QwestDex 71 Senior Debt in precisely the form received (except for the endorsement or the assignment of or by such holder where necessary) for application to payment of all QwestDex Senior Debt in full, after giving effect to any concurrent payment or distribution to the holders of QwestDex Senior Debt and, until so delivered, the same shall be held in trust by such holder as the property of the holders of the QwestDex Senior Debt. (d) Subrogation. Subject to the prior payment in full of all QwestDex Senior Debt, the Banks shall be subrogated to the rights of the holders of QwestDex Senior Debt to receive payments or distributions of cash, property or securities of any QwestDex Company applicable to the QwestDex Senior Debt until all amounts owing on each QwestDex Guaranty shall be paid in full. For purposes of such subrogation, no payments or distributions to the Banks of cash, property, securities or other assets by virtue of the subrogation herein provided which otherwise would have been made to the holders of the QwestDex Senior Debt shall, as between any QwestDex Company, its creditors other than the holders of QwestDex Senior Debt and the Banks, be deemed to be a payment under a QwestDex Guaranty. (e) Avoidance of Payments. The Banks agree that, in the event that all or any part of any payment made on account of the QwestDex Senior Debt is recovered from the holders of QwestDex Senior Debt as a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law, any payment or distribution received by the Banks on account of a QwestDex Guaranty at any time after the date of the payment so recovered, whether pursuant to the right of subrogation provided for in this Section 9.08(d) or otherwise, shall be deemed to have been received by such Banks in trust as the property of the holders of the QwestDex Senior Debt and such Banks shall forthwith deliver the same to the QwestDex Agent for the equal and ratable benefit of the holders of the QwestDex Senior Debt for application to payment of all QwestDex Senior Debt in full. (f) Renewals, Extensions and Increases of QwestDex Senior Debt. Each Bank hereby waives any and all notice of renewal, extension or refinancing in the amount of any of the QwestDex Senior Debt, present or future, and agrees and consents that without notice to or assent by any Bank: (i) the obligation and liabilities of any QwestDex Company or any other party or parties for or upon the QwestDex Senior Debt (or any promissory note, security document or guaranty evidencing or securing the same) may, from time to time, in whole or in part, be renewed, extended, modified, amended, accelerated, compromised, supplemented, terminated, sold, exchanged, waived or released; provided that the principal amount of the QwestDex Senior Debt is not increased; 72 (ii) the QwestDex Agent or any other representative acting on behalf of the holders of the QwestDex Senior Debt and the holders of the QwestDex Senior Debt may exercise or refrain from exercising any right, remedy or power granted by or in connection with any agreements relating to the QwestDex Senior Debt (other than any rights, remedies or powers granted to the Banks under the Security and Pledge Agreement in accordance with Section 22 thereof); and (iii) any balance or balances of funds with any holders of the QwestDex Senior Debt at any time standing to the credit of any QwestDex Company may, from time to time, in whole or in part, be surrendered or released; all as the QwestDex Agent or any other representative or representatives acting on behalf of the holders of the QwestDex Senior Debt and the holders of the QwestDex Senior Debt may deem advisable and all without impairing, abridging, diminishing, releasing or affecting the subordination of each QwestDex Guaranty to the QwestDex Senior Debt provided for herein. (g) Obligation of Any QwestDex Company Unconditional. Nothing contained in this Section 9.08 is intended to or shall impair, as between any QwestDex Company, its creditors other than the holders of the QwestDex Senior Debt, and the Banks, the obligations of each QwestDex Company under its QwestDex Guaranty, which are absolute and unconditional in accordance with their terms, or is intended to or shall affect the relative rights of the Banks and other creditors of any QwestDex Company other than the holders of the QwestDex Senior Debt, nor shall anything herein or therein prevent any Bank (i) from taking all appropriate actions to preserve its rights under each QwestDex Guaranty not inconsistent with the rights of the holders of the QwestDex Senior Debt under this Section 9.08, or (ii) from exercising all remedies otherwise permitted by the Loan Documents and applicable law upon a Default, subject to the rights, if any, under this Section 9.08 of the holders of the QwestDex Senior Debt in respect of cash, property or securities of any QwestDex Company otherwise payable or delivered to the Banks upon the exercise of any such remedy. (h) Miscellaneous. Article 2 Each Bank hereby acknowledges and agrees that the holders of the QwestDex Senior Debt have relied upon and will continue to rely upon the subordination provided for herein in entering into the agreements relating to QwestDex Senior Debt and in extending credit to QwestDex, Inc. pursuant thereto. 73 No present or future holder of QwestDex Senior Debt shall be prejudiced in his right to enforce the subordination contained herein in accordance with the terms hereof by any act or failure to act on the part of any QwestDex Company or any Bank. The subordination provisions contained herein are for the benefit of the holders of the QwestDex Senior Debt from time to time and, so long as QwestDex Senior Debt is outstanding under any agreement, may not be rescinded, cancelled or modified in any way without the prior written consent thereto of the Required Lenders (as defined in the QwestDex Term Loan Agreement). ARTICLE 10 MISCELLANEOUS Section 10.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of any Loan Party party hereto or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Bank, at its address or facsimile number set forth in its Administrative Questionnaire or (z) in the case of any party, such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and the Company. Each such notice, request or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, (ii) if given by facsimile transmission, when such facsimile is transmitted to the facsimile number specified pursuant to this Section 10.01 and telephonic confirmation of receipt thereof is received, or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Agent under Article 2 or Article 8 shall not be effective until received. Section 10.02. No Waivers. No failure or delay by the Agent or any Bank in exercising any right, power or privilege under any Loan Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in the Loan Document shall be cumulative and not exclusive of any rights or remedies provided by law. Section 10.03. Expenses; Indemnification. 21. The Borrower shall pay (i) all reasonable out-of-pocket expenses of the Agent, including reasonable fees and disbursements of special counsel for the Agent, in connection with the preparation and administration of the Loan Documents, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Agent and each Bank, including reasonable fees and disbursements of counsel, in connection with such Event of Default and 74 collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. (a) The Borrower agrees to indemnify the Agent and each Bank, their respective Affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of the Loan Documents or any actual or proposed use of proceeds of Loans hereunder; provided that (i) no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction and (ii) the Company shall not be liable for any settlement entered into by an Indemnitee without its consent (which shall not be unreasonably withheld). (b) Each Indemnitee agrees to give the Company prompt written notice after it receives any notice of the commencement of any action, suit or proceeding for which such Indemnitee may wish to claim indemnification pursuant to subsection (b). The Company shall have the right, exercisable by giving written notice within fifteen Domestic Business Days after the receipt of notice from such Indemnitee of such commencement, to assume, at the Company's expense, the defense of any such action, suit or proceeding; provided, that such Indemnitee shall have the right to employ separate counsel in any such action, suit or proceeding and to participate in the defense thereof, but the fees and expenses of such separate counsel shall be at such Indemnitee's expense unless (1) the Company shall have agreed to pay such fees and expenses; (2) the Company shall have failed to assume the defense of such action, suit or proceeding or shall have failed to employ counsel reasonably satisfactory to such Indemnitee in any such action, suit or proceeding; or (3) such Indemnitee shall have been advised by independent counsel in writing (with a copy to the Company) that there may be one or more defenses available to such Indemnitee which are in conflict with those available to the Company (in which case, if such Indemnitee notifies the Company in writing that it elects to employ separate counsel at the Company's expense, the Company shall be obligated to assume the expense, it being understood, however, that the Company shall not be liable for the fees or expenses of more than one separate firm of attorneys, which firm shall be designated in writing by such Indemnitee). Section 10.04. Sharing of Set-offs. Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to any Note held by it which is greater than the proportion received by 75 any other Bank in respect of the aggregate amount of principal and interest due with respect to any Note held by such other Bank, the Bank receiving such proportionately greater payment shall purchase such participations in the Notes held by the other Banks, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Notes held by the Banks shall be shared by the Banks pro rata; provided that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than its indebtedness hereunder. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation. Section 10.05. Amendments and Waivers; Release of Liens. 22. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company, the Borrower and the Required Banks (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that no such amendment or waiver shall, unless signed by all the Banks, (i) increase or decrease the Commitment of any Bank (except for a ratable decrease in the Commitments of all Banks) or subject any Bank to any additional obligation (it being understood that an increase or decrease pursuant to Section 8.06 or 10.06 shall not constitute an amendment or waiver for this purpose), (ii) reduce the principal of or rate of interest on any Loan or any fees hereunder, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder or for any reduction or termination of any Commitment, (iv) amend or waive the provisions of Article 9 or (v) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement, and provided further that no such amendment or waiver shall, unless signed by the 66 and 2/3% Banks, postpone the date on which any reduction of the Commitments is required to occur pursuant to Section 2.09(c) or the amount of any such reduction, but only if such reduction is to occur as a result of the consummation of a Company Qualifying Asset Sale consummated by a QwestDex Company. (a) Any provision of any Collateral Document may be amended or waived if, but only if, such amendment or waiver is entered into in accordance with the terms thereof. 76 (b) Upon consummation of any Asset Sale with respect to any QwestDex Asset Collateral permitted by this Agreement, including without limitation pursuant to the QwestDex Purchase Agreements, the Lien created under the Collateral Documents securing the Revolver Secured Obligations on the assets subject to such Asset Sale shall terminate in accordance with Section 27 of the Security and Pledge Agreement. (c) No amendment may be made to Section 9.08 which adversely affects the rights of the QwestDex Senior Debt without the consent of the Required Banks under the QwestDex Term Loan Agreement. Section 10.06. Successors and Assigns. 23. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that no Loan Party may assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Banks (it being understood that nothing in this subsection (a) shall be construed to prohibit the consummation of the transactions contemplated by the Qwest Assignment and Assumption Agreement). (a) Any Bank may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its Commitment or any or all of its Loans, with (and subject to) the written consent of the Company and the Agent, which consents shall not be unreasonably withheld; provided that (i) if a Participant is a Bank Affiliate or is another Bank, no such consent shall be required, and (ii) any consent of the Company otherwise required under this subsection shall not be required if an Event of Default specified under clause (g) or (h) of Section 6.01 has occurred and is continuing. In the event of any such grant by a Bank of a participating interest to a Participant, such Bank shall remain responsible for the performance of its obligations hereunder, and the Loan Parties and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Loan Parties hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of Section 10.05 without the consent of the Participant. The Borrower agrees that each Participant shall, to the extent provided in its participation agreement and subject to subsection (e) below, be entitled to the benefits of Article 8 with respect to its participating interest. An assignment or other transfer which is not permitted by subsection (c) or (d) below but which is consented to in accordance with this subsection (b) shall be given 77 effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). (b) Any Bank may at any time assign to one or more banks or other institutions (each an "Assignee") all, or a proportionate part of all, of its rights and obligations under this Agreement and the Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit F hereto executed by such Assignee and such transferor Bank, with (and subject to) the subscribed consent of the Company and the Agent, which consents shall not be unreasonably withheld; provided that (i) if an Assignee is a Bank Affiliate or is another Bank, no such consent shall be required; (ii) after giving effect to any assignment, the assignor Bank shall hold a Commitment of at least $5,000,000 or $0 and the assignee Bank shall hold a Commitment of at least $5,000,000 (or, in the case of an assignment by any Bank to any of its Bank Affiliates, such assignee Bank Affiliate shall hold a Commitment of at least $2,500,000); and (iii) any consent of the Company otherwise required under this subsection shall not be required if an Event of Default specified under clause (g) or (h) of Section 6.01 has occurred and is continuing. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the Assignee. In connection with any such assignment, the transferor Bank shall pay to the Agent an administrative fee for processing such assignment in the amount of $2,500. If the Assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to the Company and the Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 8.04. (c) Any Bank may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement and its Notes to secure obligations of such Bank, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release the transferor Bank from its obligations hereunder or substitute any such pledgee or assignee for such Bank as a party hereto. In the case of any Bank that is a fund that invests in bank loans, such Bank may, without the consent of the Borrower or the Agent, assign or pledge all or any portion of its rights under this Agreement, including the Loans and Notes or any 78 other instrument evidencing its rights as a Bank under this Agreement, to any holder of, trustee for, or any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or securities; provided that any foreclosure or similar action by such trustee or representative shall be subject to the provisions of this Section 10.06(c) concerning assignments. (d) No Assignee, Participant or other transferee of any Bank's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Company's prior written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. (e) Notwithstanding anything to the contrary contained herein, any Bank (a "Granting Bank") may grant to a special purpose funding vehicle (an "SPC") of such Granting Bank, identified as such in writing from time to time by the Granting Bank to the Agent and the Company, the option to provide all or any part of any Loan that such Granting Bank would otherwise be obligated to make hereunder, provided that (i) nothing herein shall constitute a commitment to make any Loan by any SPC and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Bank shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to the same extent, and as if, such Loan were made by the Granting Bank. Each party hereto agrees that no SPC shall be liable for any payment under this Agreement for which a Bank would otherwise be liable, for so long as, and to the extent, the related Granting Bank makes such payment. In furtherance of the foregoing, each party hereto hereby agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or similar proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 10.06, any SPC may (i) with notice to, but without the prior written consent of, the Company or the Agent and without paying any processing fee therefor, assign all or portion of its interests in any Loans to its Granting Bank or to any financial institutions (if consented to by the Company and the Agent) providing liquidity and/or credit facilities to or for the account of such SPC to fund the Loans made by such SPC or to support the securities (if any) issued by such SPC to fund such Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of a surety, guarantee or credit or liquidity enhancement to such SPC. 79 Section 10.07. Governing Law; Submission to Jurisdiction. This Agreement and each Note shall be governed by and construed in accordance with the laws of the State of New York. Each Loan Party party hereto hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to the Loan Documents or the transactions contemplated thereby, and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Section 10.08. Counterparts; Integration. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof. Section 10.09. WAIVER OF JURY TRIAL. EACH OF THE LOAN PARTIES PARTY HERETO, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. Section 10.10. Confidentiality. Each of the Agent and the Banks agrees to use its reasonable best efforts to keep confidential any information delivered or made available by or on behalf of the Loan Parties to it (including without limitation any information obtained through any financial advisor); provided that nothing herein shall prevent the Agent or any Bank from disclosing such information (i) to the Agent or any other Bank in connection with the transactions contemplated hereby, (ii) to its officers, directors, employees, agents, attorneys and accountants who have a need to know such information in accordance with customary banking practices and who receive such information having been made aware of the restrictions set forth in this Section, (iii) upon the order of any court or administrative agency, (iv) upon the request or demand of any regulatory agency or authority having jurisdiction over such party, (v) which has been publicly disclosed (by a Person other than such Agent or Bank), (vi) which has been obtained from any Person other than the Company and its Subsidiaries, provided that such Person is not (x) known to it to be bound by a confidentiality agreement with the Company or its Subsidiaries or any other obligation not to disclose or (y) known to it to be otherwise prohibited from transmitting the information to it by a contractual, legal or fiduciary obligation, (vii) in connection with the exercise of any remedy under the Loan 80 Documents or (viii) to any actual or proposed participant or assignee of all or any of its rights hereunder, or to any actual or proposed counterparty to any swap, hedge or similar account relating to the Loans which, in each case, has agreed in writing to be bound by the provisions of this Section. Section 10.11. No Reliance on Margin Stock. Each Bank represents to the Agent and each of the other Banks that it in good faith is not relying upon any Margin Stock as collateral in the extension or maintenance of the credit provided for in this Agreement. Section 10.12. Co-Lead Arrangers, Joint Bookrunners and Co-Syndication Agents. No Person identified on the cover page of this Agreement as a co-lead arranger, joint bookrunner or co-syndication agent shall have any right, power, obligation, liability, responsibility or duty under the Loan Documents in such capacity. 81 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. QWEST SERVICES CORPORATION By: _____________________________________ Name: Title: 1801 California Street Denver, CO 80202 Attn: Chief Financial Officer Fax: (303) 296-4920 and: 1801 California Street Denver, CO 80202 Attn: General Counsel Fax: (303) 296-5974 QWEST COMMUNICATIONS INTERNATIONAL INC. By: _____________________________________ Name: Title: 1801 California Street Denver, CO 80202 Attn: Chief Financial Officer Fax: (303) 296-4920 and: 1801 California Street Denver, CO 80202 Attn: General Counsel Fax: (303) 296-5974 QWEST DEX HOLDINGS, INC. By: _____________________________________ Name: Title: 1801 California Street Denver, CO 80202 Attn: Chief Financial Officer Fax: (303) 296-4920 and: 1801 California Street Denver, CO 80202 Attn: General Counsel Fax: (303) 296-5974 QWEST DEX, INC. By: _____________________________________ Name: Title: 1801 California Street Denver, CO 80202 Attn: Chief Financial Officer Fax: (303) 296-4920 and: 1801 California Street Denver, CO 80202 Attn: General Counsel Fax: (303) 296-5974 BANK OF AMERICA, N.A., as Administrative Agent By: _____________________________________ Name: Title: Bank of America, N.A. 901 Main Street, 14th Floor Dallas, TX 75202-3714 TX1-492-14-11 Fax: (214) 290-9508 ABN AMRO BANK N.V. By: _____________________________________ Name: Title: BANK OF AMERICA, N.A. By: _____________________________________ Name: Title: THE BANK OF NEW YORK By: _____________________________________ Name: Title: THE BANK OF NOVA SCOTIA By: _____________________________________ Name: Title: BANK ONE, N.A. By: _____________________________________ Name: Title: BAYERISCHE LANDESBANK, CAYMAN ISLANDS BRANCH By: _____________________________________ Name: Title: BEAR STEARNS CORPORATE LENDING INC. By: _____________________________________ Name: Title: CITIBANK, N.A. By: _____________________________________ Name: Title: COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By: _____________________________________ Name: Title: CREDIT SUISSE FIRST BOSTON acting through its Cayman Islands Branch By: _____________________________________ Name: Title: DELANO COMPANY (#274) By: _____________________________________ Name: Title: DEUTSCHE BANK AG NEW YORK BRANCH By: _____________________________________ Name: Title: By: _____________________________________ Name: Title: FLEET NATIONAL BANK By: _____________________________________ Name: Title: GOLDENTREE LOAN OPPORTUNITIES I LTD. By: _____________________________________ Name: Title: JPMORGAN CHASE BANK By: _____________________________________ Name: Title: KEYBANK NATIONAL ASSOCIATION By: _____________________________________ Name: Title: LEHMAN COMMERCIAL PAPER INC. By: _____________________________________ Name: Title: MELLON BANK, N.A. By: _____________________________________ Name: Title: MERRILL LYNCH BANK USA By: _____________________________________ Name: Title: MIZUHO CORPORATE BANK, LTD. By: _____________________________________ Name: Title: OCTAGON INVESTMENT PARTNERS II, LLC By: _____________________________________ Name: Title: OCTAGON INVESTMENT PARTNERS III, LTD. By: _____________________________________ Name: Title: OCTAGON INVESTMENT PARTNERS IV LTD By: _____________________________________ Name: Title: PIMCO HIGH YIELD FUND (#705) By: _____________________________________ Name: Title: ROYAL BANK OF CANADA By: _____________________________________ Name: Title: THE ROYAL BANK OF SCOTLAND PLC By: _____________________________________ Name: Title: SUMITOMO MITSUI BANKING CORPORATION By: _____________________________________ Name: Title: UFJ BANK LIMITED By: _____________________________________ Name: Title: U.S. BANK NATIONAL ASSOCIATION By: _____________________________________ Name: Title: WACHOVIA BANK, N.A. By: _____________________________________ Name: Title: WELLS FARGO BANK, N.A. By: _____________________________________ Name: Title: WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH By: _____________________________________ Name: Title: EX-10.2 4 ex10_2.txt EXHIBIT 10.2 - -------------------------------------------------------------------------------- $750,000,000 TERM LOAN AGREEMENT dated as of August 30, 2002 among Qwest Services Corporation Qwest Dex Holdings, Inc. Qwest Dex, Inc. The Lenders Listed Herein and Bank of America, N.A., as Agent - -------------------------------------------------------------------------------- Banc of America Securities LLC Sole Lead Arranger and Bookrunner TABLE OF CONTENTS ------------- PAGE ---- ARTICLE 1 DEFINITIONS Section 1.01. The Definitions.................................................1 Section 1.02. Accounting Terms and Determinations............................18 Section 1.03. Types of Borrowings............................................19 ARTICLE 2 THE CREDITS Section 2.01. Commitments to Lend............................................19 Section 2.02. Notice of Borrowing............................................19 Section 2.03. [Intentionally Deleted]........................................20 Section 2.04. Notice to Lenders; Funding of Loans............................20 Section 2.05. Notes; Evidence of Loans.......................................21 Section 2.06. Maturity of Loans..............................................22 Section 2.07. Interest Rates.................................................22 Section 2.08. [Intentionally Deleted]........................................24 Section 2.09. Termination of Commitments.....................................24 Section 2.10. Method of Electing Interest Rates with Respect to Tranche A Loans..........................................................24 Section 2.11. Prepayments....................................................26 Section 2.12. General Provisions as to Payments..............................27 Section 2.13. Funding Losses.................................................27 Section 2.14. Computation of Interest........................................28 Section 2.15. Notice of Prepayment Events....................................28 ARTICLE 3 CONDITIONS Section 3.01. Closing........................................................28 Section 3.02. The Borrowing Date.............................................29 ARTICLE 4 REPRESENTATIONS AND WARRANTIES Section 4.01. Corporate Existence and Power..................................30 Section 4.02. Corporate and Governmental Authorization; No Contravention..................................................30 i Section 4.03. Binding Effect.................................................31 Section 4.04. Financial Information..........................................31 Section 4.05. Litigation.....................................................31 Section 4.06. Compliance with ERISA..........................................32 Section 4.07. Environmental Matters..........................................32 Section 4.08. Taxes..........................................................33 Section 4.09. Subsidiaries...................................................33 Section 4.10. Not an Investment Company......................................33 Section 4.11. Full Disclosure................................................33 Section 4.12. Solvency.......................................................33 ARTICLE 5 COVENANTS Section 5.01. Information....................................................34 Section 5.02. Maintenance of Property; Insurance.............................36 Section 5.03. Maintenance of Existence.......................................37 Section 5.04. Compliance with Laws...........................................37 Section 5.05. Inspection of Property, Books and Records......................37 Section 5.06. Financial Covenants............................................37 Section 5.07. Negative Pledge................................................38 Section 5.08. Consolidations, Mergers and Sales of Assets....................39 Section 5.09. Use Of Proceeds................................................39 Section 5.10. Restricted Payments............................................39 Section 5.11. Transactions With Affiliates...................................40 Section 5.12. Limitations on Debt............................................40 Section 5.13. Limitations on Investments; Loans, Advances, Guarantees and Acquisitions...................................................41 Section 5.14. Further Assurances Regarding Collateral and Guaranty Requirement....................................................41 Section 5.15. QSC Bank Facility Covenants....................................42 ARTICLE 6 DEFAULTS Section 6.01. Events of Default..............................................42 Section 6.02. Notice of Default..............................................44 ARTICLE 7 THE AGENT Section 7.01. Appointment and Authorization..................................45 Section 7.02. Agent and Affiliates...........................................45 Section 7.03. Action by Agent................................................45 Section 7.04. Consultation with Experts......................................45 Section 7.05. Delegation of Duties...........................................46 Section 7.06. Liability of Agent.............................................46 ii Section 7.07. Indemnification................................................46 Section 7.08. Credit Decision; Disclosure of Information by Agent............46 Section 7.09. Successor Agent................................................47 Section 7.10. Agent's Fee....................................................47 ARTICLE 8 CHANGES IN CIRCUMSTANCES Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair.......48 Section 8.02. Illegality.....................................................48 Section 8.03. Increased Cost and Reduced Return..............................49 Section 8.04. Taxes..........................................................50 Section 8.05. Domestic Loans Substituted for Affected Euro-Dollar Loans......52 Section 8.06. Substitution of Lender.........................................52 ARTICLE 9 GUARANTEES Section 9.01. The Guaranty...................................................53 Section 9.02. Guaranty Unconditional.........................................53 Section 9.03. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances..........................................54 Section 9.04. Waiver by Guarantors...........................................54 Section 9.05. Subrogation....................................................54 Section 9.06. Stay of Acceleration...........................................54 ARTICLE 10 MISCELLANEOUS Section 10.01. Notices........................................................54 Section 10.02. No Waivers.....................................................55 Section 10.03. Expenses; Indemnification......................................55 Section 10.04. Sharing of Set-offs............................................56 Section 10.05. Amendments and Waivers; Release of Liens.......................56 Section 10.06. Successors and Assigns.........................................57 Section 10.07. Governing Law; Submission to Jurisdiction......................59 Section 10.08. Counterparts; Integration; Effectiveness.......................59 Section 10.09. WAIVER OF JURY TRIAL...........................................59 Section 10.10. Confidentiality................................................59 Section 10.11. No Reliance on Margin Stock....................................60 Commitment Schedule Schedule 4.04(a) - Supplemental Information Schedule 4.05 - Litigation iii Schedule 4.07 - Environmental Matters Schedule 5.07 - Existing Liens Schedule 5.12 - Existing Debt Schedule 5.13 - Existing Investments Exhibit A - Note Exhibit B - Security and Pledge Agreement Exhibit C-1, C-2, C-3 and C-4 - Opinions of Counsel for the Loan Parties Exhibit D - Assignment and Assumption Agreement Exhibit E - Notice of Borrowing Exhibit F - Use of Proceeds Certificate iv TERM LOAN AGREEMENT AGREEMENT dated as of August 30, 2002, among QWEST SERVICES CORPORATION, QWEST DEX HOLDINGS, INC., QWEST DEX, INC., the LENDERS listed on the signature pages hereof, and BANK OF AMERICA, N.A., as Agent. The parties hereto agree as follows: ARTICLE 1 DEFINITIONS Section 1.01. The Definitions. The following terms, as used herein, have the following meanings: "Additional Permitted Secured Obligations" has the meaning set forth in the Security and Pledge Agreement. "Adjusted London Interbank Offered Rate" has the meaning set forth in Section 2.07. "Administrative Questionnaire" means, with respect to each Lender, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent (with a copy to the Borrower) duly completed by such Lender. "Affiliate", as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. "Agent" means Bank of America, N.A., in its capacities as administrative agent and collateral agent for the Lenders under the Loan Documents, and its successors in such capacities. "Agent-Related Person" has the meaning set forth in Section 7.08. "Agreement" means this Term Loan Agreement dated as of August 30, 2002, as the same may from time to time be amended, amended and restated, modified or supplemented. "Applicable Lending Office" means, with respect to any Lender, (i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its 1 Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its Tranche B Loans, its Tranche B Lending Office. "Asset Sale" means, with respect to any Person, any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property of such Person, except (i) sales of inventory, customer premises equipment and other equipment, conduit, fiber and capacity (including indefeasible rights of use), Permitted Investments and sales or licenses of technology, in each case in the ordinary course of business, (ii) write-offs of accounts receivable or settlements of accounts receivable for less than the total unpaid balance thereof, in each case in the ordinary course of business and consistent with such Person's historical collection practices, and (iii) Excluded Asset Transfers. Nothing contained in this definition shall be construed to limit or modify any restriction contained in Section 5.08(b) or 5.08(c). "Assignee" has the meaning set forth in Section 10.06(c). "Base Rate" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day. "Base Rate Margin" has the meaning set forth in Section 2.07(a). "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group. "Borrower" means Qwest Dex, Inc., a Colorado corporation, and its successors. "Borrowing" has the meaning set forth in Section 1.03. "Borrowing Date" means the date on which the Loans are to be made. "Capital Expenditures" means, for any period, the sum (without duplication) of (a) the additions to property, plant and equipment and other capital expenditures of Holdings and its Subsidiaries that are (or would be) set forth in a consolidated statement of cash flows of Holdings and its Subsidiaries for such period and (b) any capital lease obligations incurred by Holdings and its Subsidiaries during such period. "Capital Funding" means Qwest Capital Funding, Inc., a Colorado corporation, and its successors. "Change of Control" shall occur if (i) any person or group of persons (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended), other than Philip F. Anschutz, Anschutz Company or any of their 2 affiliates, obtain ownership or control (whether in one transaction or one or more series of transactions) of more than 50% of the outstanding shares of common stock of QCII or of the shares of QCII entitled to vote on the election of members of the board of directors of QCII, (ii) Holdings shall cease to be a direct or indirect wholly-owned Subsidiary of QCII, (iii) the Borrower shall cease to be a wholly-owned Subsidiary of Holdings or (iv) QSC shall cease to be a direct or indirect Subsidiary of QCII. "Class", when used in respect of any Loan, Borrowing or Commitment, refers to whether such Loan, or the Loans comprising such Borrowing, or the Loans to be made pursuant to such Commitment, are Tranche A Loans or Tranche B Loans. "Closing Date" means the date on which the Agent shall have received the documents or evidence specified in or pursuant to Section 3.01. "Collateral" means any and all "Collateral", as defined in any Collateral Document. "Collateral Agent" has the meaning set forth in the Security and Pledge Agreement. "Collateral and Guaranty Requirement" means the requirement that: (a) the Collateral Agent shall have received from each Lien Grantor either (i) a counterpart of the Security and Pledge Agreement duly executed and delivered on behalf of such Lien Grantor or (ii) in the case of any Person that becomes a Lien Grantor after the Closing Date, a supplement to the Security and Pledge Agreement, in the form specified therein, duly executed and delivered on behalf of such Lien Grantor; (b) all outstanding Equity Interests constituting Collateral shall have been pledged pursuant to the Security and Pledge Agreement and the Collateral Agent shall have received all certificates or other instruments representing all outstanding Equity Interests of Corp., all outstanding Equity Interests of QwestDex and all outstanding Equity Interests of QwestDex, Inc., in each case together with stock powers or other instruments of transfer with respect thereto endorsed in blank; (c) all Instruments constituting Collateral shall have been pledged pursuant to the Security and Pledge Agreement and the Collateral Agent shall have received all such Instruments (subject to any limitations set forth in the Security and Pledge Agreement), together with instruments of transfer with respect thereto endorsed in blank; (d) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably 3 requested by the Collateral Agent to be filed, registered or recorded to create the Liens intended to be created by the Security and Pledge Agreement and perfect or record such Liens to the extent, and with the priority, required by the Security and Pledge Agreement, shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or recording; and (e) each Lien Grantor shall have obtained all consents and approvals required to be obtained by it in connection with (i) the execution and delivery of the Security and Pledge Agreement and (ii) subject to any limitations set forth in the Security and Pledge Agreement, the performance of its obligations thereunder and the granting of the Liens purported to be granted by it thereunder. "Collateral Documents" means the Security and Pledge Agreement and each other security agreement, pledge agreement, instrument or document executed and delivered pursuant to Section 5.14 to secure any of the Secured Obligations. "Commitment" means a Tranche A Commitment or Tranche B Commitment, or any combination thereof (as the context requires). "Consolidated Adjusted Interest Expense" means, for any period, Consolidated Interest Expense minus any portion thereof attributable to Intercompany Debt. "Consolidated EBITDA" means, for any period, the net income of Holdings and its Consolidated Subsidiaries determined on a consolidated basis for such period (adjusted to exclude the effect of (w) any non-cash losses as a result of impairment of goodwill as required by Statement of Financial Accounting Standards No. 142, (x) equity gains or losses in unconsolidated Persons, (y) any preferred dividend income and any extraordinary or other non-recurring or non-operating gain or non-recurring or non-operating loss or (z) any gain or loss on the disposition of investments), plus, to the extent deducted in determining such adjusted net income, (i) Consolidated Interest Expense, (ii) income tax expense and (iii) depreciation, amortization, reserves and other non-cash charges and (iv) transaction costs incurred with this Agreement and minus, to the extent included in determining such adjusted net income, the aggregate amount of (i) interest income and (ii) income tax benefit. "Consolidated Interest Expense" means, for any period, for Holdings and its Consolidated Subsidiaries on a consolidated basis, (a) all cash interest expense in connection with borrowed money (including capitalized interest payable currently in cash) or in connection with the deferred purchase price of assets, and (b) the portion of cash rent expense of Holdings and its Consolidated Subsidiaries with respect to such period under capital leases that is treated as interest. 4 "Consolidated Net Worth" means, at any date, the consolidated stockholders equity of Holdings and its Consolidated Subsidiaries at such date, without giving effect to any non-cash losses as a result of impairment of goodwill as required by Statement of Financial Accounting Standards No. 142. "Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of QCII, QSC, Holdings or the Borrower, as applicable, in its consolidated financial statements if such statements were prepared as of such date. "Consolidated Working Capital Adjustment" means, for any period, on a consolidated basis, the amount (which may be a negative number) by which Net Working Capital as of the beginning of such period exceeds (or is less than) Net Working Capital as of the end of such period. "Contingent Prepayment Amount" means, with respect to any Contingent Prepayment Date, the largest multiple of $1,000,000 which is no greater than the amount by which Dex Cash exceeded $15,000,000 at 5:00 PM (Denver time) on the preceding Friday. To the extent a Contingent Payment Amount would otherwise include the Net Proceeds of any Prepayment Event (as defined herein or in the QSC Bank Facility), appropriate adjustments shall be made to exclude such Net Proceeds. "Contingent Prepayment Date" means the second Domestic Business Day following each Friday of each calendar week. "Corp." means Qwest Corporation, a Colorado corporation, and its successors. "Corp. Company" means Corp. or any of its Subsidiaries. "Corp. Equity Collateral" has the meaning set forth in the Security and Pledge Agreement. "Credit Exposure" means, with respect to any Lender, the amount of its Commitment, if still in existence, or the aggregate unpaid principal amount of its Loans, if the Commitments shall have, or shall have been, terminated. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles, (v) all Debt secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person, and (vi) all Debt of others Guaranteed by such Person. 5 "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Dex Cash" means, at any date, the consolidated cash and cash equivalents of Holdings and its Consolidated Subsidiaries at such date. "Dex Purchaser Secured Obligations" has the meaning set forth in the Security and Pledge Agreement. "Dexter Assets" means any assets of any QwestDex Company other than Rodney Assets. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City, New York or Charlotte, North Carolina are authorized by law to close. "Domestic Lending Office" means, as to each Lender, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Lender may hereafter designate as its Domestic Lending Office by notice to the Borrower and the Agent. "Domestic Loan" means (i) a Tranche A Loan which bears interest at the Base Rate pursuant to the Notice of Borrowing or the applicable Notice of Interest Rate Election or the provisions of Article 8 or (ii) an overdue amount which was a Domestic Loan immediately before it became overdue. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to the environment, the effect of the environment on human health or to emissions, discharges or releases of pollutants, contaminants, Hazardous Substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, Hazardous Substances or wastes or the clean-up or other remediation thereof. "Equity Interests" means (i) shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person or (ii) any warrants, options or other rights to acquire such shares or interests. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. 6 "ERISA Group" means QCII, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with QCII or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code. "Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London. "Euro-Dollar Lending Office" means, as to each Lender, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or affiliate of such Lender as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower and the Agent. "Euro-Dollar Loan" means (i) a Tranche A Loan which bears interest at a Euro-Dollar Rate pursuant to the Notice of Borrowing or the applicable Notice of Interest Rate Election or (ii) an overdue amount which was a Euro-Dollar Loan before it became overdue. "Euro-Dollar Margin" has the meaning set forth in Section 2.07(c). "Euro-Dollar Rate" means a rate of interest determined pursuant to Section 2.07 on the basis of an Adjusted London Interbank Offered Rate. "Euro-Dollar Reserve Percentage" has the meaning set forth in Section 2.07. "Event of Default" has the meaning set forth in Section 6.01. "Excess Cash Flow" means, for any fiscal period, (i) Consolidated EBITDA for such fiscal period plus (ii) to the extent deducted from such Consolidated EBITDA, (x) interest income and (y) cash income tax benefit plus (iii) to the extent excluded from such Consolidated EBITDA, non-recurring or non-operating cash gains (except to the extent attributable to a QwestDex Qualifying Asset Sale or a Qualifying Dexter Asset Sale), plus (iv) the Consolidated Working Capital Adjustment for such period minus (v) to the extent excluded from such Consolidated EBITDA, non-recurring or non-operating cash losses minus (vi) Consolidated Adjusted Interest Expense for such fiscal period minus (vii) Capital Expenditures (except to the extent attributable to the incurrence of long-term Debt) for such fiscal period minus (viii) the current portion of income tax expense for such period, provided that at any time a Trigger Event exists, the amount deducted pursuant to this clause (viii) shall not exceed the actual amount of income taxes payable currently by or on behalf of the QwestDex Companies, after giving effect to any credits, loss carryforwards or 7 other tax attributes of QCII and its Subsidiaries available to reduce such current payment obligation ("Permitted Tax Payments") minus (ix) the portion of rentals under capital leases allocable to principal and minus (x) the amount of any optional prepayments of the Loans or mandatory prepayments of the Loans pursuant to Section 2.11(d) during such period. To the extent Excess Cash Flow for any period would otherwise include the Net Proceeds of any Prepayment Event (as defined herein or in the QSC Bank Facility), appropriate adjustments shall be made to exclude such Net Proceeds. "Excluded Asset Transfer" means (i) a sale or disposition of shares of Equity Interests in a Subsidiary of Holdings in order to qualify members of the governing body of such Subsidiary, if required by applicable law, and in such amounts as required by applicable law, (ii) the formation of, and transfer of assets to, newly formed, wholly-owned Subsidiaries of the Borrower contemplated by the QwestDex Purchase Agreements substantially simultaneously with the consummation of the respective Asset Sales contemplated thereby, (iii) in the event that the respective sales of the Dexter Assets and the Rodney Assets pursuant to the QwestDex Purchase Agreements are not consummated, any similar transfer of assets to one or more wholly-owned Subsidiaries of the Borrower required in connection with, and effected substantially simultaneously with the consummation of, an Asset Sale of the Dexter Assets or the Rodney Assets, as the case may be, permitted by Section 5.08(b), and (iv) any transfer of assets pursuant to any merger or consolidation permitted by Section 5.08(a). "Facility Liens" has the meaning set forth in Section 5.07(e). "Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Bank of America, N.A., on such day on such transactions as determined by the Agent. "Fixed Rate" has the meaning set forth in Section 2.07(c). "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. 8 "Group of Loans" means at any time a group of Loans consisting of (a) all Tranche A Loans outstanding at such time which are (i) Domestic Loans at such time or (ii) Euro-Dollar Loans having the same Interest Period at such time; provided that, if a Loan of any particular Lender is converted to or made as a Domestic Loan pursuant to Section 8.02 or 8.05, such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been in if it had not been so converted or made or (b) all Tranche B Loans outstanding at such time. "Guaranteed Obligations" means, with respect to each Guarantor, all advances to, and debts, liabilities (including without limitation the Loans), obligations, covenants and duties of, the Borrower, arising under any Loan Document, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after, or would accrue but for, the commencement of an insolvency proceeding, whether or not allowed or allowable in such proceeding. "Guarantor" means each of QSC and Holdings. "Guaranty" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guaranty shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Hazardous Substances" means any toxic, radioactive, caustic or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics. "Holdings" means Qwest Dex Holdings, Inc., a Delaware corporation, and its successors. "Indemnitee" has the meaning set forth in Section 10.03(b). "Instruments" has the meaning set forth in the Security and Pledge Agreement. 9 "Insured Judgment Amounts" means that part, if any, of any and all judgments rendered against any Loan Party and/or any of its Subsidiaries that are covered by insurance issued by a financially responsible insurer(s) who has not disputed coverage. "Intercompany Debt" means Debt of a QwestDex Company owing to QCII or any of its Subsidiaries. "Interest Period" means, with respect to each Euro-Dollar Loan, a period commencing on the date of borrowing specified in the Notice of Borrowing or the date specified in the applicable Notice of Interest Rate Election and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and (c) no Interest Period may end after the Termination Date. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "Lender" means each Person listed as a "Lender" on the signature pages hereof, each Assignee which becomes an Lender pursuant to Section 10.06(c), and their respective successors. "Lender Affiliate" means, (a) with respect to any Lender, (i) an Affiliate of such Lender or (ii) an entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an Affiliate of such Lender and (b) with respect to any Lender that is a fund or managed account which invests in bank loans and similar extensions of credit, any other fund or managed account that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. 10 "Leverage Trigger Event" means a Senior Debt Ratio exceeding, at the last day of any fiscal quarter, (i) 1.0 to 1.0 if such date is prior to the date of consummation of a Qualifying Dexter Asset Sale and (ii) 1.5 to 1.0 if such date is on or after the date of consummation of a Qualifying Dexter Asset Sale. A Leverage Trigger Event will cease to be continuing on the first to occur of (x) the date of delivery of financial statements pursuant to Section 5.01 showing no Trigger Event existed at the date thereof and (y) the date on which, after subtracting the amount of prepayments of Loans since the date of the most recent financial statements delivered pursuant to Section 5.01 from Senior Debt as reflected in such financial statements, no Trigger Event would have existed as at the date thereof. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. For the purposes of this Agreement, QSC or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Lien Grantor" has the meaning set forth in the Security and Pledge Agreement. "Loan" means a Tranche A Loan or Tranche B Loan, or any combination thereof (as the context requires). "Loan Documents" means this Agreement, the Notes, and the Collateral Documents. "Loan Party" means each of QSC, Holdings and the Borrower. "London Interbank Offered Rate" has the meaning set forth in Section 2.07. "Margin Stock" means "margin stock" as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Material Debt" means Debt (other than the Loans) of QSC and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal amount exceeding $100,000,000. "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $100,000,000. 11 "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period. "Net Proceeds" means, with respect to any event, the cash proceeds received in respect of such event including, without limitation, any cash received in respect of any non-cash proceeds, but only as and when received, in each case net of the sum of (1) all reasonable fees and out-of-pocket costs and expenses paid (or reasonably estimated to be payable) by a Prepayment Party to third parties (other than Affiliates) in connection with such event, (2) in the case of a sale, transfer or other disposition of an asset (including, without limitation, pursuant to a sale and leaseback transaction), the amount of all payments required to be made by a Prepayment Party as a result of such event to repay Debt secured by such asset (but excluding (x) Loans and (y) any Debt secured by such asset if such Debt or the Lien securing such Debt is subordinated (or is required to be subordinated) to the Loans), and (3) the amount of all taxes paid (or reasonably estimated to be payable) by a Prepayment Party, the amount of any reserves established by a Prepayment Party to fund contingent liabilities reasonably estimated to be payable (until such time as such amounts are no longer reserved or such reserves are no longer necessary, at which time any remaining amounts will become Net Proceeds) and the amount of capital and operating expenditures that would not otherwise have been incurred and are required in writing or by application of policy by a public utility commission to be incurred as a condition to its consent, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by the chief financial officer of the Borrower); provided that "Net Proceeds" shall not include any cash payment received by a Prepayment Party and constituting a deposit or advance with respect to an Asset Sale that has not been consummated on or prior to the date of receipt thereof (it being understood that upon consummation of such Asset Sale such cash payment shall constitute "Net Proceeds" with respect thereto). "Net Working Capital" means, at any date, (a) the consolidated current assets of Holdings and its Consolidated Subsidiaries as of such date (excluding cash and Permitted Investments) minus (b) the consolidated current liabilities of Holdings and its Consolidated Subsidiaries as of such date (excluding current liabilities in respect of Debt). Net Working Capital at any date may be a positive or negative number. Net Working Capital increases when it becomes more positive or less negative and decreases when it becomes less positive or more negative. "Notes" means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the 12 Loans made to it, and "Note" means any one of such promissory notes issued hereunder. "Notice of Borrowing" has the meaning set forth in Section 2.02. "Parent" means, with respect to any Lender, any Person controlling such Lender. "Participant" has the meaning set forth in Section 10.06(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Permitted Investments" means investments in: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States), in each case maturing within one year from the date of acquisition thereof; (b) commercial paper maturing within one year from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from Standard & Poor's or from Moody's Investors Service, Inc.; (c) certificates of deposit, banker's acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States or any State thereof which has a combined capital and surplus and undivided profits of at least $500,000,000; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and (e) any other Investments made in compliance with the Cash Management Investment Policy of the cash management group of QSC with respect to cash investments, substantially as in effect on the Closing Date. "Permitted Tax Payments" is defined in the definition of Excess Cash Flow. 13 "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group. "Prepayment Event" means (i) any QwestDex Qualifying Asset Sale and (ii) any sale, transfer or other disposition of the capital stock of Corp. which constitutes a Prepayment Event under the QSC Bank Facility (as in effect on the date hereof). "Prepayment Event Notice" means any notice delivered by the Borrower pursuant to Section 2.15. "Prepayment Party" means the Borrower or QSC (solely with respect to the sale of the capital stock of Corp.). "Prime Rate" means the rate of interest publicly announced by Bank of America, N.A., from time to time as its Prime Rate. "Purchase Money Debt" means Debt of any Person incurred for the purpose of financing all or any part of the cost of the acquisition of any asset by such Person, so long as the proceeds of any such Debt are applied by such Person upon receipt thereof (and in any event within ten (10) Domestic Business Days after receipt thereof) to acquire such asset. "Purchase Money Obligor" has the meaning set forth in Section 5.07(b). "QCII" means Qwest Communications International Inc., a Delaware corporation, and its successors. "QCII Indentures" means the Indenture dated as of November 27, 1998 between QCII and Bankers Trust Company, as Trustee, the Indenture dated as of November 4, 1998 between QCII and Bankers Trust Company, as Trustee, the Indenture dated as of August 28, 1997 between QCII and Bankers Trust Company, as Trustee, as supplemented by First Supplemental Indenture dated as of February 16, 2001, the Indenture dated as of October 15, 1997 between QCII and Bankers Trust Company, as Trustee, as supplemented by First Supplemental Indenture dated as of February 16, 2001, and the Indenture dated as of January 29, 14 1998 between QCII and Bankers Trust Company, as Trustee, as supplemented by First Supplemental Indenture dated as of February 16, 2001. "QSC" means Qwest Services Corporation, a Colorado corporation, and its successors. "QSC Asset Collateral" has the meaning set forth in the Security and Pledge Agreement. "QSC Bank Facility" means the QSC Existing Bank Facility as restructured and assumed pursuant to the amendment and restatement referred to in Section 3.01(d), and as further amended from time to time. "QSC Existing Bank Facility" means the 364-Day Credit Agreement dated as of May 4, 2001 and amended and restated as of March 12, 2002 among Qwest Capital Funding, Inc., Corp. and QCII, the banks listed therein and Bank of America, N.A., as administrative agent, as in effect immediately prior to the Closing Date. "Qualifying Dexter Asset Sale" means any Asset Sale by a QwestDex Company to the extent that the assets transferred pursuant thereto consist solely of Dexter Assets. "Qwest Entity" has the meaning set forth in Section 7.02. "QwestDex Asset Collateral" has the meaning set forth in the Security and Pledge Agreement. "QwestDex Company" means Holdings or any of its Subsidiaries. "QwestDex Dexter Purchase Agreement" means the Purchase Agreement dated August 19, 2002 between QCII, QSC, the Borrower and the QwestDex Purchaser with respect to the Dexter Assets, as amended, amended and restated, modified or supplemented from time to time. "QwestDex Holdings Intercompany Note" means the Loan Agreement dated January 15, 2002 governing borrowings by Holdings from Capital Funding and the Debt outstanding thereunder. "QwestDex Inc. Intercompany Note" means the Loan Agreement dated January 15, 2002 governing borrowings by the Borrower from Capital Funding and the Debt outstanding thereunder. "QwestDex Purchase Agreements" means the QwestDex Dexter Purchase Agreement and the QwestDex Rodney Purchase Agreement. "QwestDex Purchaser" means Dex Holdings LLC, a Delaware limited liability company, and its successors and, with respect to either QwestDex Purchase Agreement, its permitted assignees pursuant to Section 10.5 of such QwestDex Purchase Agreement. 15 "QwestDex Qualifying Asset Sale" means any Asset Sale by Holdings or any of its Subsidiaries, except (i) any Qualifying Dexter Asset Sale, (ii) any Asset Sale to Holdings or to any of its Subsidiaries and (iii) any other single disposition or series of related dispositions resulting in aggregate Net Proceeds not exceeding $2,500,000 for any single disposition or series of related dispositions or $10,000,000 in the aggregate for all such dispositions which constitute Asset Sales by Holdings or any of its Subsidiaries (other than an Asset Sale described in clause (i) or (ii) of this definition). "QwestDex Rodney Purchase Agreement" means the Purchase Agreement dated August 19, 2002 between QCII, QSC, the Borrower and the QwestDex Purchaser with respect to the Rodney Assets, as amended, amended and restated, modified or supplemented from time to time. "QwestDex Statements" has the meaning set forth in Section 4.04(a). "Required Lenders" means at any time Lenders having more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding Loans evidencing more than 50% of the aggregate unpaid principal amount of the Loans. "Restatement Date" means the first date after the Closing Date on which the QCII, QSC or Corp. files a restatement of a Form 10-Q or Form 10-K with the Securities and Exchange Commission. "Restricted Payment" means (i) any dividend or other distribution (whether in cash, securities or other property, including without limitation pursuant to a "spin-off" or other distribution to equity holders generally) with respect to any Equity Interest of Holdings or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, (ii) any payment of principal, premium or interest in respect of any Intercompany Debt and (iii) any investment in or other advance of funds to QCII or any of its Subsidiaries (other than a QwestDex Company), including without limitation any transfer of funds in connection with the consolidated cash management practices of QCII but excluding any Permitted Tax Payment. "Revolver Secured Obligations" has the meaning set forth in the Security and Pledge Agreement. "Rodney Assets" means any assets of any QwestDex Company which are to be sold pursuant to the QwestDex Rodney Purchase Agreement, which assets constitute assets located in Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming or are used by such QwestDex Company primarily in the conduct of its business in any of the foregoing states. 16 "Secured Obligations" means the "Secured Obligations" (as defined in the Security and Pledge Agreement) that have been or will be incurred under the Loan Documents. "Security and Pledge Agreement" means the Security and Pledge Agreement, substantially in the form of Exhibit B, dated as of the Closing Date among QSC, Holdings, the Borrower and the Agent, as amended from time to time. "Senior Debt" means the total principal amount of Debt of Holdings and its Consolidated Subsidiaries, determined on a consolidated basis, excluding Intercompany Debt and the Guaranty of the QSC Bank Facility. "Senior Debt Ratio" means, as of the last day of any fiscal quarter, the ratio of (i) Senior Debt as of the last day of such fiscal quarter to (ii) Consolidated EBITDA for the period of four fiscal quarters ended on such date. "Subsidiary" means, as to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person. "Supplemental Information" has the meaning set forth in Section 4.04(a). "Term Secured Obligations" has the meaning set forth in the Security and Pledge Agreement. "Termination Date" means the second anniversary of the Closing Date, or, if such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day. "Tranche A Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make a Tranche A Loan in the amount set forth opposite the name of such Lender on the Commitment Schedule hereof or in the applicable Assignment and Assumption Agreement, as such commitment may be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.06. "Tranche A Lender" means an Lender with a Tranche A Commitment or an outstanding Tranche A Loan. "Tranche A Loan" means a Loan made pursuant to Section 2.01(i). "Tranche B Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make a Tranche B Loan in the amount set forth opposite the name of such Lender on the Commitment Schedule hereof or in the applicable Assignment and Assumption Agreement, as such commitment may 17 be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.06. "Tranche B Lender" means an Lender with a Tranche B Commitment or an outstanding Tranche B Loan. "Tranche B Lending Office" means, as to each Lender, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Lender may hereafter designate as its Tranche Lending Office by notice to the Borrower and the Agent. "Tranche B Loan" means a Loan made pursuant to Section 2.01(ii). "Trigger Event" means (i) the occurrence of an Event of Default or (ii) a Leverage Trigger Event. "Type", when used in respect of Tranche A Loan or any Borrowing comprised of Tranche A Loans, refers to whether such Loans are Domestic Loans or Euro-Dollar Loans. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. "Use of Proceeds Certificate" means a certificate of the Borrower substantially in the form of Exhibit F, duly completed and executed by the Borrower. Section 1.02. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time in the United States, applied on a basis consistent (except for changes concurred in Holdings' independent public accountants) with the most recent audited consolidated financial statements of Holdings and its Consolidated Subsidiaries and/or QSC and its Consolidated Subsidiaries delivered to the Agent (and delivered by the 18 Agent to the Lenders); provided that, if the Borrower notifies the Agent that the Borrower wishes to amend any covenant in Article 5 to eliminate the effect of any change in such generally accepted accounting principles on the operation of such covenant (or if the Agent notifies the Borrower that the Required Lenders wish to amend Article 5 for such purpose), then compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect in the United States immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders. Section 1.03. Types of Borrowings. The term "Borrowing" denotes the aggregation of Loans of one or more Lenders to be made pursuant to Article 2 on a single date, all of which Loans are of the same Class and Type (subject to Article 8) and, in the case of Euro-Dollar Loans, have the same Interest Period or initial Interest Period. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Tranche A Loan" or a "Tranche B Loan") or by Type (e.g., a "Eurodollar Loan" or a "Base Rate Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Tranche A Borrowing" or a "Tranche B Borrowing") or by Type (e.g., a "Eurodollar Borrowing" or a "Base Rate Borrowing"). ARTICLE 2 THE CREDITS Section 2.01. Commitments to Lend. Subject to the terms and conditions set forth in this Agreement (i) each Tranche A Lender severally agrees to make on the Borrowing Date a single Tranche A Loan to the Borrower in a principal amount not exceeding the amount of its Tranche A Commitment, and (ii) defined. each Tranche B Lender severally agrees to make on the Borrowing Date a single Tranche B Loan to the Borrower in a principal amount not exceeding the amount of its Tranche B Commitment. None of the Commitments is revolving in nature, and principal amounts of the Loans of either Class repaid or prepaid may not be reborrowed. Section 2.02. Notice of Borrowing. The Borrower shall give the Agent notice, substantially in the form of Exhibit E (the "Notice of Borrowing"), not later than 10:30 A.M. (New York City time) on (x) the third Euro-Dollar Business Day before the Borrowing Date, if any Euro-Dollar Loans are to be made on the Borrowing Date and (y) otherwise, the Borrowing Date, specifying: (i) the proposed Borrowing Date, which shall be a Domestic Business Day, and if any Euro-Dollar Loans are to be made on the Borrowing Date, which shall also be Euro-Dollar Business Day, 19 (ii) the aggregate amount of the Borrowing of each Class to be made on the Borrowing Date; provided that the Borrower may not request a Borrowing of either Class unless (x) contemporaneously therewith, the Borrower shall have requested a Borrowing of the other Class, and (y) the amount of the Borrowing of each Class (expressed as a percentage of the Commitments of such Class) shall be the same, (iii) whether the Loans included in the Tranche A Borrowing bear interest initially at the Base Rate or at a Euro-Dollar Rate, and (iv) in the case of a Euro-Dollar Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. Section 2.03. [Intentionally Deleted]. Section 2.04. Notice to Lenders; Funding of Loans. Upon receipt of the Notice of Borrowing, the Agent shall promptly notify each Lender of the contents thereof and of such Lender's share (if any) of the Borrowing of the relevant Class and the Notice of Borrowing shall not thereafter be revocable by the Borrower. (b) Not later than 1:00 P.M. (New York City time) on the date of the Borrowing, each Lender shall make available its share (if any) of the Borrowing of the relevant Class, in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 10.01. Unless any applicable condition specified in Article 3 has not been satisfied, as determined by the Agent in accordance with Article 3, the Agent will make the funds so received from the Lenders immediately available to the Borrower at the Agent's aforesaid address. (c) Unless the Agent shall have received notice from a Lender prior to the Borrowing Date that such Lender will not make available to the Agent such Lender's share of the Borrowing of the relevant Class, the Agent may assume that such Lender has made such share available to the Agent on the Borrowing Date in accordance with subsection (b) of this Section 2.04 and the Agent may, in reliance upon such assumption, make available to the Borrower on the Borrowing Date a corresponding amount. If and to the extent that such Lender shall not have so made such share available to the Agent, such Lender and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's Loan included in the relevant Borrowing for purposes of this 20 Agreement. If the Borrower shall have repaid such corresponding amount of such Lender, such Lender shall reimburse the Borrower for any loss on account thereof incurred by the Borrower. Nothing contained in the foregoing shall be construed as relieving an Lender of its obligation to fund a Loan when required under the terms of this Agreement. Section 2.05. Notes; Evidence of Loans. (a) Any Lender may, by notice to the Borrower and the Agent, request that Loans made by it be evidenced by a single Note payable to the order of such Lender for the account of its Applicable Lending Office, unless such Lender indicates otherwise, in an amount equal to the aggregate unpaid principal amount of such Lender's Loans. (b) Any Lender may, by notice to the Borrower and the Agent, request that its Loans of a particular Class or Type be evidenced by a separate Note in an amount equal to the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of Exhibit A hereto with appropriate modifications to reflect the fact that it evidences solely Loans of the relevant Class or Type. Each reference in this Agreement to a "Note" or the "Notes" of such Lender shall be deemed to refer to and include any or all of such Notes, as the context may require. (c) Upon receipt of any Lender's Notes pursuant to Section 3.01, the Agent shall forward such Notes to such Lender. Each Lender shall record the date, amount, Class and Type of the Loans made by it and the date and amount of each payment of principal made with respect thereto, and may, if such Lender so elects in connection with any transfer or enforcement of its Note, endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding; provided that the failure of any Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Notes or any other Loan Document. Each Lender is hereby irrevocably authorized by the Borrower so to endorse its Notes and to attach to and make a part of any Note a continuation of any such schedule as and when required. (d) Loans made by each Lender and not evidenced by a Note shall be evidenced by one or more accounts or records maintained by such Lender and by the Agent in the ordinary course of business. The accounts or records maintained by the Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Loans. (e) The Borrower authorizes the Agent, and the Agent agrees, to maintain, or cause to be maintained at its offices, a copy of each Assignment and Assumption Agreement delivered to and accepted by it and a register (the "Register") for the recordation of the names and addresses of the Lenders and the 21 Commitments of, and principal amount of the Loans owing to each Lender from time to time. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice. Each Lender shall maintain a register of its participants comparable to the Register. Failure to make any such recordation, or any error in such recordation, shall not affect the obligations of any Loan Party under the Loan Documents. (f) With respect to any Loans hereunder, whether or not evidenced by a Note, in the event of any conflict between the accounts and records maintained by the Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Agent shall control in the absence of manifest error. Section 2.06. Maturity of Loans. Each Loan shall mature, and the principal amount thereof shall be due and payable, together with accrued interest thereon, on the Termination Date. Section 2.07. Interest Rates. (a) Each Domestic Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the sum of the Base Rate Margin plus the Base Rate for such day. Such interest shall be payable quarterly in arrears on the last day of each calendar quarter and, with respect to the principal amount of any Domestic Loan converted to a Euro-Dollar Loan, on each date a Domestic Loan is so converted. Any overdue principal of or interest on any Domestic Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Domestic Loans for such day. "Base Rate Margin" means a rate per annum equal to 8.75%. (b) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin plus the applicable Adjusted London Interbank Offered Rate. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. The "Adjusted London Interbank Offered Rate" applicable to any Interest Period means a rate per annum equal to the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (x) the applicable London Interbank Offered Rate by (y) 1.00 minus the Euro-Dollar Reserve Percentage. 22 "Euro-Dollar Margin" means a rate per annum equal to 11.50%. The "London Interbank Offered Rate" applicable to any Interest Period means: (A) the rate per annum equal to the rate determined by the Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. (London time) two Euro-Dollar Business Days prior to the first day of such Interest Period, or (B) if the rate referenced in the preceding clause (A) does not appear on such page or service or such page or service shall cease to be available, the rate per annum equal to the rate determined by the Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. (London time) two Euro-Dollar Business Days prior to the first day of such Interest Period, or (C) if the rates referenced in the preceding clauses (A) and (B) are not available, the rate per annum determined by the Agent as the rate of interest at which deposits in dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Euro-Dollar Loan being made, continued or converted by Bank of America, N.A., and with a term equivalent to such Interest Period, would be offered by Bank of America, N.A.'s London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 P.M. (London time) two Euro-Dollar Business Days prior to the first day of such Interest Period. "Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Lender to United States residents). The Adjusted London Interbank Offered Rate shall be adjusted 23 automatically on and as of the effective date of any change in the Euro-Dollar Reserve Percentage. Any overdue principal of or interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 2% plus the higher of (A) the Euro-Dollar Margin plus the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (x) the rate per annum at which one day (or, if such amount due remains unpaid more than three Euro-Dollar Business Days, then for such other period of time not longer than six months as the Agent may select) deposits in dollars in an amount approximately equal to such overdue payment due to Bank of America, N.A. are offered to Bank of America, N.A., in the London interbank market for the applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the rate applicable to Domestic Loans for such day) and (B) the sum of the Euro-Dollar Margin plus the Adjusted London Interbank Offered Rate applicable to such Loan at the date such payment was due. (c) Each Tranche B Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Fixed Rate. Such interest shall be payable quarterly in arrears on the last day of each calendar quarter. Any overdue principal of or interest on any Tranche B Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Fixed Rate. "Fixed Rate" means a rate per annum equal to 14.00%. (d) The Agent shall determine each interest rate applicable to the Tranche A Loans hereunder. The Agent shall give prompt notice to the Borrower and the Tranche A Lenders of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. Section 2.08. [Intentionally Deleted]. Section 2.09. Termination of Commitments. The Commitments shall automatically terminate on the earlier of (i) close of business (New York City time) on September 6, 2002 and (ii) the Borrowing Date, immediately after the Loans are made. Section 2.10. Method of Electing Interest Rates with Respect to Tranche A Loans. (a) The Loans included in the Tranche A Borrowing shall bear interest initially at the Type of rate specified by the Borrower in the Notice of Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the 24 Type of interest rate borne by each Group of Tranche A Loans (subject in each case to the provisions of Article 8), as follows: (i) if such Loans are Domestic Loans, the Borrower may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day; and (ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Domestic Loans or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, in each case effective on the last day of the then current Interest Period applicable to such Loans. Each such election shall be made by delivering a notice (a "Notice of Interest Rate Election") to the Agent at least three Euro-Dollar Business Days before the conversion or continuation selected in such notice is to be effective. A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Tranche A Loans; provided that (i) such portion is allocated ratably among the Tranche A Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each $25,000,000 or any larger multiple of $5,000,000. (b) Each Notice of Interest Rate Election shall specify: (i) the Group of Tranche A Loans (or portion thereof) to which such notice applies; (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection (a) above; (iii) if the Loans comprising such Group are to be converted, the new Type of Loans and, if such new Loans are Euro-Dollar Loans, the duration of the initial Interest Period applicable thereto; and (iv) if such Loans are to be continued as Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of Interest Period. (c) Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to subsection (a) above, the Agent shall promptly notify each Tranche A Lender of the contents thereof and such notice shall not thereafter be revocable by the Borrower. If the Borrower fails to deliver a timely Notice of 25 Interest Rate Election to the Agent for any Group of Euro-Dollar Loans, such Loans shall be converted into Domestic Loans on the last day of the then current Interest Period applicable thereto. Section 2.11. Prepayments. (a) Subject in the case of any Euro-Dollar Loans to Section 2.13, the Borrower may, upon at least one Domestic Business Day's notice to the Agent, prepay any Group of Domestic Loans or the Tranche B Loans or, upon three Euro-Dollar Business Days' notice to the Agent, prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or from time to time in part in amounts aggregating $25,000,000 or any larger multiple of $5,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment; provided that the Borrower may prepay Loans of one Class pursuant to this subsection (a) only if contemporaneously therewith the Borrower shall prepay Loans of the other Class (pro rata on the basis of aggregate principal amount of Loans of each Class the outstanding) pursuant to this subsection (a). (b) On the third Euro-Dollar Business Day after any date on which any Net Proceeds are received by or on behalf of QCII or any of its Subsidiaries in respect of any Prepayment Event, the Borrower shall prepay Loans in an aggregate principal amount equal to 100% of such Net Proceeds. (c) The Borrower shall prepay Loans in an aggregate principal amount equal to 25% of Excess Cash Flow for each fiscal year of Holdings, commencing with the fiscal year ending December 31, 2003. Each such prepayment shall be made on the third Euro-Dollar Business Day after the date on which financial statements of Holdings are delivered pursuant to Section 5.01 with respect to the relevant fiscal year (and in any event no later than the 95th day after the end of such fiscal year). (d) If a Leverage Trigger Event shall have occurred at any fiscal quarter end, on each Contingent Prepayment Date following the date on which the related financial statements were (or were required to be) delivered pursuant to Section 5.01 for so long as such Trigger Event is continuing, the Borrower shall prepay an aggregate principal amount of the Loans equal to the related Contingent Prepayment Amount. (e) Upon receipt of a notice of prepayment pursuant to this Section or Section 2.15, the Agent shall promptly notify each Lender of the contents thereof and of such Lender's ratable share of such prepayment and such notice shall not thereafter be revocable by the Borrower. (f) Each prepayment of the Loans pursuant to subsections (b), (c) or (d) above shall be applied to prepay ratably the Loans of each Class (on the basis of aggregate principal amount of Loans of each Class the outstanding). Each prepayment of the Tranche A Loans pursuant to subsections (a), (b) or (c) above 26 shall be applied to prepay the Loans of the several Lenders included in such Group or Groups of Tranche A Loans as the Borrower shall have specified in the relevant notice of prepayment (or, if the Borrower shall have failed to so specify, such Group or Groups of Tranche A Loans as the Agent shall determine in its discretion). Section 2.12. General Provisions as to Payments. (a) The Borrower shall make each payment of principal of, and interest on, the Loans and of fees and other amounts payable hereunder, not later than 12:00 Noon (New York City time) on the date when due, in Federal or other funds immediately available in New York City, without off set or counterclaim, to the Agent at its address referred to in Section 10.01. The Agent will promptly distribute to each Lender its ratable share of each such payment received by the Agent for the account of the Lenders. Whenever any payment of principal of, or interest on, the Domestic Loans, Tranche B Loans or other amounts payable hereunder (other than amounts described in the immediately succeeding sentence) shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day. (b) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due from the Borrower to the Lenders hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate. Section 2.13. Funding Losses. If the Borrower makes any payment of principal with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is converted to a Domestic Loan (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or the last day of an applicable period fixed pursuant to Section 2.07(d), or if the Borrower fails to borrow or prepay any Euro-Dollar Loan, or convert or continue any Euro-Dollar Loans, in each case after notice has been given to any Lender in accordance with Section 2.04(a), 2.11(a) or 2.15, as applicable, the Borrower shall reimburse each Lender within 15 days after demand for any resulting loss or expense incurred by it (or by an existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or 27 employing deposits from third parties, but excluding loss of margin for the period after any such payment or conversion or failure to borrow or prepay, provided that such Lender shall have delivered to the Borrower a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error. Any Lender requesting compensation pursuant to this Section 2.13 shall notify the Borrower of such request on or before the date that is three Euro-Dollar Business Days after the event giving rise to such request. Section 2.14. Computation of Interest. Interest based on the Prime Rate or the Fixed Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest hereunder shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). Section 2.15. Notice of Prepayment Events. The Borrower shall notify the Agent by telephone (confirmed by telecopy) of the proposed consummation of any Prepayment Event (and the prepayment of the Loans pursuant to Section 2.11(b)), not later than 10:30 a.m., New York City time, on the date of the proposed consummation thereof. Each such notice shall be irrevocable and shall specify (i) the date of consummation of the applicable Prepayment Event, (ii) a reasonably detailed calculation of the Net Proceeds thereof, and (iii) the amount of the prepayment of the Loans as a result of such Prepayment Event. Upon receipt of a notice of a Prepayment Event pursuant to this subsection, the Agent shall promptly notify each Lender of the contents thereof. ARTICLE 3 CONDITIONS Section 3.01. Closing. The closing hereunder shall occur upon receipt by the Agent (or its counsel) of the following (in the case of any document, dated the Closing Date unless otherwise indicated): (a) duly executed counterparts hereof signed by each of the Borrower, the Guarantors, the Lenders and the Agent (or, in the case of any party as to which an executed counterpart shall not have been received, written evidence satisfactory to the Agent (which may include telecopy transmission of a signed signature page) that such party has signed a counterpart hereof); (b) a duly executed Note for the account of each Lender requesting a Note dated on or before the Closing Date complying with the provisions of Section 2.05; (c) (i) duly executed counterparts of the Security and Pledge Agreement and (ii) evidence satisfactory to the Agent that the Collateral and Guaranty Requirement shall have been satisfied; 28 (d) evidence satisfactory to the Agent in its discretion of the effectiveness of an amendment and restatement of the QSC Existing Bank Facility on terms and conditions reasonably satisfactory to the Required Lenders; (e) opinions of Yash Rana, associate general counsel for the Loan Parties, O'Melveny & Myers LLP, special counsel to the Loan Parties, Holme Roberts & Owen LLP, special counsel to the Loan Parties, and Hogan & Hartson, L.L.P., special regulatory counsel to the Loan Parties, covering the matters set forth in Exhibits C-1, C-2, C-3 and C-4 hereto, respectively, and such additional matters relating to the transactions contemplated hereby as the Required Lenders may reasonably request; (f) evidence satisfactory to the Agent of the payment of all fees and other amounts payable to the Agent for the account of the Lenders or the Agent on or prior to the Closing Date, including, to the extent invoiced, reimbursement of all out-of-pocket expenses (including, without limitation, legal fees and expenses) required to be reimbursed or paid by the Borrower hereunder; (g) evidence satisfactory to the Agent in its discretion that neither QCII nor any of its Subsidiaries (including without limitation any Loan Party) shall be the subject of a proceeding under Chapter 11 of the Bankruptcy Code; (h) the QwestDex Restated Statements, in each case in form and substance reasonably satisfactory to the Agent (which financial statements shall be made available to each Lender upon request); (i) the QwestDex Inc. Intercompany Note and the QwestDex Holdings Intercompany Note shall have been modified so as to extend the maturity thereof to a date not earlier than 91 days after the Termination Date, to be subordinated to the Loans and the Guarantees hereunder on terms and conditions satisfactory to the Agent and otherwise to be on terms and conditions reasonably satisfactory in form and substance to the Required Lenders; and (j) all documents the Agent may reasonably request relating to the existence of the Loan Parties, the corporate authority for and the validity of the Loan Documents, and any other matters relevant hereto, all in form and substance reasonably satisfactory to the Agent. The Agent shall promptly notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding on all parties hereto. Section 3.02. The Borrowing Date. The obligation of any Lender to make a Loan on the Borrowing Date is subject to the satisfaction of the following conditions: 29 (a) the fact that the Closing Date shall have occurred on or prior to September 6, 2002, (b) the fact that the Borrowing Date shall occur on the Closing Date; (c) receipt by the Agent of the Notice of Borrowing as required by Section 2.02; (d) the fact that, immediately before and after the Borrowings to occur on the Borrowing Date, no Default shall have occurred and be continuing; (e) the fact that the representations and warranties of the Loan Parties contained in the Loan Documents shall be true on and as of the Borrowing Date; and (f) receipt by the Agent of the Use of Proceeds Certificate. The Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the Borrowing Date as to the facts specified in clauses (d) and (e) of this Section. ARTICLE 4 REPRESENTATIONS AND WARRANTIES Each of the Loan Parties party to this Agreement represents and warrants that: Section 4.01. Corporate Existence and Power. Each Loan Party is a corporation duly incorporated, validly existing and in good standing under the laws of the state of its incorporation, and has all corporate powers and all material governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted. Section 4.02. Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which it is a party are within such Person's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official except, with respect to the Security and Pledge Agreement and the transactions contemplated thereby, as set forth in the Collateral Documents, and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of such Person or of any material agreement (including in any event the QCII Indentures and the QwestDex Purchase Agreements), judgment, injunction, order, decree or other instrument binding upon such Person or any Significant Subsidiary or result in the 30 creation or imposition of any Lien on any material asset of such Person or any Significant Subsidiary (other than the Liens created by the Collateral Documents). Section 4.03. Binding Effect. Each Loan Document (other than the Notes) constitutes a valid and binding agreement of each Loan Party party thereto, and the Notes, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the Borrower, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. Section 4.04. Financial Information. (a) (i) The audited consolidated balance sheet of Holdings and its Consolidated Subsidiaries as of December 31, 2000 and December 31, 2001 and, in each case, the related consolidated statements of income and cash flows for the fiscal year then ended, as well as the consolidated statements of income and cash flows for the fiscal year ended December 31, 1999, all reported on by KPMG (collectively, the "QwestDex Statements") and (ii) the consolidated balance sheet of Holdings and its Consolidated Subsidiaries as of June 30, 2002 a copy of each of which has been delivered to each of the Lenders, taken together, fairly present in all material respects, in conformity with generally accepted accounting principles, the consolidated financial position of Holdings and its Consolidated Subsidiaries as of such date specified therein and their consolidated results of operations and cash flows for such period specified therein, except in each case as listed in the information set forth in Schedule 4.04(a) (collectively, the "Supplemental Information") or as modified by the financial statements as of such date or for such period described in clause (ii) of this subsection 4.04(a) or delivered pursuant to Section 5.01(g), and subject to changes resulting from audit and year-end adjustments and the absence of footnotes. (b) Since June 30, 2002, there has been no material adverse change in the financial position or results of operations of Holdings and its Consolidated Subsidiaries, considered as a whole, except as set forth in the Supplemental Information (it being understood that (i) the restatement of the financial statements of QCII or any of its Consolidated Subsidiaries with respect to any fiscal period, or as of any date, ended on or prior to June 30, 2002 and (ii) the facts or events disclosed to the Lenders prior to the Closing Date as the facts or events necessitating such restatement shall not, in and of themselves, constitute a material adverse change in the financial position or results of operations of Holdings and its Consolidated Subsidiaries, considered as a whole). Section 4.05. Litigation. Except as disclosed in the QCII's 2001 Form 10-K and as specifically identified in Schedule 4.05, there is no action, suit or proceeding pending, or to the knowledge of QSC, Holdings or the Borrower, 31 threatened, against QCII or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which would materially adversely affect the financial position or results of operations of Holdings and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity of any Loan Document. Section 4.06. Compliance with ERISA. Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan, except where failure to comply would not have a material adverse effect on the consolidated financial position or consolidated results of operations of QCII and its Consolidated Subsidiaries, considered as a whole. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, in either case, which has resulted or could reasonably be expected to result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. Section 4.07. Environmental Matters. (a) The operations of Holdings and each of its Subsidiaries comply in all respects with all Environmental Laws except such non-compliance which would not (if enforced in accordance with applicable law) reasonably be expected to result, individually or in the aggregate, in a material adverse effect on the financial position or results of operations of Holdings and its Consolidated Subsidiaries, considered as a whole. (b) Except as specifically identified in Schedule 4.07, Holdings and each of its Subsidiaries have obtained all material licenses, permits, authorizations and registrations required under any Environmental Laws ("Environmental Permits") necessary for their respective operations, and all such Environmental Permits are in good standing, and Holdings and each of its Subsidiaries is in compliance with all material terms and conditions of such Environmental Permits. (c) Except as specifically identified in Schedule 4.07, there are neither any conditions or circumstances known to Holdings which may give rise to any claims or liabilities respecting any Environmental Laws or Hazardous Substances arising from the operations of Holdings or its Subsidiaries (including, without limitation, off-site liabilities), nor any additional costs of compliance with Environmental Laws, which collectively have an aggregate potential liability in excess of $25,000,000. 32 Section 4.08. Taxes. United States Federal income tax returns of QCII and its Subsidiaries have been examined and closed through the fiscal year ended December 31, 1992. QCII and its Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by QCII or any Subsidiary, except for taxes the amount, applicability or validity of which is being contested in good faith by appropriate proceedings. The charges, accruals and reserves on the books of QCII and its Subsidiaries in respect of taxes or other governmental charges are, in the opinion of QCII, adequate. Section 4.09. Subsidiaries. The Borrower is the only Subsidiary of Holdings that exists on the Closing Date. Section 4.10. Not an Investment Company. No Loan Party is an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Section 4.11. Full Disclosure. All written information heretofore furnished by any Loan Party to the Agent or any Lender for purposes of or in connection with the Loan Documents or any transaction contemplated hereby is, and all such information hereafter furnished by any Loan Party to the Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is stated or certified, in each case in light of the circumstances in which the same were made and subject to the Supplemental Information. Any projections or pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by the applicable Loan Party to be reasonable at the time they were made, it being recognized that such projections are not to be viewed as facts and that actual results may differ and such differences may be material. Section 4.12. Solvency. On the Closing Date, immediately after giving effect to the transactions contemplated herein (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the properties of each Loan Party will exceed the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (c) each Loan Party will be able to pay its debts and other liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, and (d) no Loan Party will have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and proposed to be conducted after the Closing Date. 33 ARTICLE 5 COVENANTS Each Loan Party agrees that, so long as any Lender has any Commitment hereunder or any Loan or any other amount payable under any Loan Document remains unpaid: Section 5.01. Information. The Borrower will deliver to the Agent for distribution to each of the Lenders: (a) (i) as soon as available and in any event within 90 days after the end of each fiscal year of Holdings, a consolidated balance sheet of Holdings and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by KPMG or other independent public accountants of nationally recognized standing, and (ii) as soon as available and in any event within 90 days after the end of each fiscal year of QSC, a consolidated balance sheet of QSC and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by KPMG or other independent public accountants of nationally recognized standing; provided that, with respect to any set of financial statements required of QSC to be delivered pursuant to this clause (ii) prior to the Restatement Date, QSC may, by notice to the Agent, elect (one time only with respect to any set of financial statements of QSC) that the date on which such financial statements are required to be delivered be extended to the earlier of (x) the date on which any filing is made with the Securities and Exchange Commission which filing includes such financial statements and (y) the date specified in such notice (which date shall be no later than the date which is 135 days after the end of the relevant fiscal year of QSC) and, upon receipt of such notice, such date of delivery shall be extended to the earlier of the date described in clause (x) and the date set forth in such notice; (b) (i) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of Holdings, beginning with the fiscal quarter ending September 30, 2002, a consolidated balance sheet of Holdings and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of Holdings' fiscal year ended at the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the corresponding quarter and the corresponding portion of Holdings' previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of Holdings, and (ii) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of QSC, beginning with the fiscal quarter ending September 30, 2002, a consolidated balance sheet of QSC and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of QSC's fiscal year ended at the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the corresponding quarter and the corresponding portion of QSC's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of 34 presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of QSC; provided that, with respect to any set of financial statements required of QSC to be delivered pursuant to this clause (ii) prior to the Restatement Date, QSC may, by notice to the Agent, elect (one time only with respect to any set of financial statements of QSC) that the earlier of (x) the date on which any filing is made with the Securities and Exchange Commission which filing includes such financial statements and (y) the date on which such financial statements are required to be delivered be extended to the date specified in such notice (which date shall be no later than the date which is 95 days after the end of the relevant fiscal quarter of QSC) and, upon receipt of such notice, such date of delivery shall be extended to the earlier of the date described in clause (x) and the date set forth in such notice; (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate, in form and scope satisfactory to the Agent, of the chief financial officer (or such officer's designee, designated in writing by such officer) or the chief accounting officer of Holdings or QSC, as applicable, (i) in the case of financial statements of Holdings, setting forth in reasonable detail the calculations required to establish whether Holdings was in compliance with the requirements of Sections 5.06, 5.07, 5.10, 5.12 and 5.13 on the date of such financial statements and (ii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which Holdings or QSC, as applicable, is taking or proposes to take with respect thereto; and (2) in any event no later than 90 days after the end of each fiscal year of Holdings and 50 days after the end of each fiscal quarter of Holdings, a certificate of the chief financial officer (or such officer's designee, designated in writing by such officer) or the chief accounting officer of Holdings (i) setting forth in reasonable detail the calculations required to establish whether the Qwest Dex Companies were in compliance with the requirements of Sections 5.07, 5.10, 5.12 and 5.13 on the last day of such fiscal year or fiscal quarter, as applicable and (ii) stating whether any Default exists on the date of such certificate (other than any Default as a result of a breach of 5.06, which any certificate delivered pursuant to this clause (2) shall not be required to address) and, if any Default then exists, setting forth the details thereof and the action which Holdings is taking or proposes to take with respect thereto; (d) within five Domestic Business Days after any officer of QSC, Holdings or the Borrower obtains knowledge of any Default, if such Default is then continuing, a certificate of the chief financial officer or the chief accounting officer of such Loan Party setting forth the details thereof and the action which such Loan Party is taking or proposes to take with respect thereto; (e) upon delivery of any financial statements or other financial information to the holders of any Debt under the QSC Bank Facility, with respect to any Loan Party, without duplication of any statements or information otherwise delivered hereunder, copies of any such statements or information; (f) if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, 35 impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vi) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement, in either case, which has resulted or could reasonably be expected to result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of QCII setting forth details as to such occurrence and action, if any, which QCII or applicable member of the ERISA Group is required or proposes to take; (g) as soon as available, the restated consolidated financial statements of QCII and Corp., for any date, or any period, ended prior to the Closing Date, such statements to be audited by KPMG (but only if they relate to a period with respect to which audited financial statements have been previously issued) and to be reported on by KPMG in a manner acceptable to the Securities and Exchange Commission; and (h) from time to time such additional information regarding the financial position or business of QSC and its Subsidiaries as the Agent, at the request of any Lender, may reasonably request. Information required to be delivered pursuant to clauses 5.01(a), (b), (e) or (f) above shall be deemed to have been delivered on the date on which Borrower delivers such information to the Agent for posting on IntraLinks/IntraAgency or other relevant third-party commercial website (if any) on the Borrower's behalf; provided that (i) the Borrower shall deliver paper copies of the information referred to in clauses 5.01(a), (b), (d) or (e) to any Lender which requests such delivery and (ii) in every instance the Borrower shall provide paper copies of the certificates required by Section 5.01(c) to the Agent and each Lender requesting the same. Except for such certificates delivered pursuant to Section 5.01(c), the Agent shall have no obligation to request the delivery or maintain copies of the information referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining copies of such information. Section 5.02. Maintenance of Property; Insurance. (a) Each QwestDex Company will keep all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted. (b) Each QwestDex Company will maintain (either in the name of the Borrower or in its own name), with financially sound and responsible insurance 36 companies, insurance on all their respective properties in at least such amounts and against at least such risks (and with such risk retention) as are usually insured against in the same general area by companies of established repute engaged in the same or a similar business; and will furnish to the Lenders, upon request from the Agent, information presented in reasonable detail as to the insurance so carried; provided that, in lieu of any such insurance, QCII and any Loan Party may maintain a system or systems of self-insurance and reinsurance which will accord with sound practices of similarly situated corporations maintaining such systems and with respect to which it will maintain adequate insurance reserves, all in accordance with generally accepted accounting principles and in accordance with sound insurance principles and practice. Section 5.03. Maintenance of Existence. Each QwestDex Company will preserve, renew and keep in full force and effect their respective corporate existence and their respective material rights, privileges, franchises and licenses necessary or desirable in the normal conduct of business. Section 5.04. Compliance with Laws. Each QwestDex Company will comply in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA and the rules and regulations thereunder), except where the necessity of compliance therewith is contested in good faith by appropriate proceedings and for which adequate reserves in conformity with generally accepted accounting principles have been established. Section 5.05. Inspection of Property, Books and Records. Each QwestDex Company will keep proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities; and will permit representatives of any Lender at such Lender's expense to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants, all at such reasonable times and as often as may reasonably be desired. Section 5.06. Financial Covenants. (a) Interest Coverage. On the last day of any fiscal quarter of Holdings, the ratio of (i) Consolidated EBITDA to (ii) Consolidated Adjusted Interest Expense, in each case for the four consecutive fiscal quarters of Holdings ended on such date, will not be less than (x) if such date is prior to the date of consummation of a Qualifying Dexter Asset Sale, 8.75 to 1.0 and (ii) if such date is on or after the date of consummation of a Qualifying Dexter Asset Sale, 4.75 to 1.0. For purposes of any determination hereunder prior to the first anniversary of the Borrowing Date, Consolidated Adjusted Interest Expense for any period of four consecutive fiscal quarters shall be calculated by annualizing the amount of Consolidated Adjusted Interest Expense for the period from the Borrowing Date to the last day of such period of four consecutive fiscal quarters, such annualization on a simple arithmetic basis. 37 (b) Maximum Debt to EBITDA. The Senior Debt Ratio will not at any date exceed (i) if such date is prior to the date of consummation of a Qualifying Dexter Asset Sale, 1.25 to 1.0 and (ii) if such date is on or after the date of consummation of a Qualifying Dexter Asset Sale, 1.75 to 1.0. For purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters during, or after, which a Qualifying Dexter Asset Sale is consummated, Consolidated EBITDA will be calculated on a pro forma basis as if the sale occurred on the first day of such period. (c) Minimum Net Worth. Consolidated Net Worth will not at any date be less than (i) if such date is prior to the date of consummation of a Qualifying Dexter Asset Sale, an amount equal to Consolidated Net Worth as at June 30, 2002 minus $150,000,000 and (ii) if such date is on or after the date of consummation of a Qualifying Dexter Asset Sale, such amount as may be mutually agreed upon by the Borrower and the Agent as appropriately giving effect to such Qualifying Dexter Asset Sale and application of the proceeds thereof, provided that in the absence of such agreement, such amount shall be reasonably determined by the Agent as appropriately giving effect to such Qualifying Dexter Asset Sale and application of the proceeds thereof, so long as the "cushion" (i.e., the difference between actual Consolidated Net Worth and minimum required Consolidated Net Worth, expressed as a percentage of actual Consolidated Net Worth) is no less than it was as of June 30, 2002. Section 5.07. Negative Pledge. No QwestDex Company will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, or on any Collateral, except: (a) Liens existing on the Closing Date and listed in Schedule 5.07; (b) any Lien on any asset of any QwestDex Company (a "Purchase Money Obligor") securing Purchase Money Debt incurred by such Purchase Money Obligor in connection with the purchase of such asset and permitted under Section 5.12, provided that such Lien attaches to such asset concurrently with or within 180 days after the incurrence of such Purchase Money Debt; (c) any Lien arising out of the refinancing, replacement, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Debt is not increased and is not secured by any additional assets and such refinancing, replacement, extension, renewal or refunding is on terms and conditions (including the terms, conditions, status and ranking of any such Lien) not materially less favorable to the QwestDex Companies and the Lenders party hereto than the Debt being refinanced; (d) Liens arising in the ordinary course of business which (i) do not secure Debt, (ii) do not secure any obligation in an amount exceeding $50,000,000 and (iii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; (e) (i) Liens ("Facility Liens") on the Collateral pursuant to the Collateral Documents securing the Term Secured Obligations, (ii) Liens on the Collateral consisting of the Corp. Equity Collateral and the QSC Asset Collateral securing the Revolver Secured Obligations, which Liens may be senior to the Facility Liens, as provided in the Security and Pledge Agreement (or on other terms and conditions reasonably approved by the Agent), (iii) Liens on the Collateral (other than the Corp. Equity Collateral and the QSC Asset Collateral) securing the Revolver Secured Obligations so long as the Liens described in this clause (iii) shall be junior and subordinated to the Facility Liens, as provided in the Security and Pledge Agreement (or on other terms and 38 conditions reasonably approved by the Agent), (iv) Liens on the QwestDex Asset Collateral securing indemnity obligations of QCII, QSC and the Borrower under the QwestDex Purchase Agreements in an aggregate amount not to exceed $100,000,000, so long as the Liens described in this clause (iv) shall secure Dex Purchaser Secured Obligations and be junior and subordinated to the Facility Liens and to the Liens described in clause (iii) as provided in the Security and Pledge Agreement (or on other terms and conditions reasonably approved by the Agent); and (v) other Liens on the Collateral permitted by the QSC Bank Facility, so long as such Liens shall secure Additional Permitted Secured Obligations and be junior and subordinated to the Facility Liens as provided in the Security and Pledge Agreement (or on other terms and conditions reasonably approved by the Agent); and (f) Liens not permitted by the foregoing clauses of this Section securing obligations in an aggregate amount at any time outstanding not exceeding $10,000,000. Section 5.08. Consolidations, Mergers and Sales of Assets. (a) No QwestDex Company will merge or consolidate with or into any other Person; provided that any wholly owned Subsidiary of the Borrower formed pursuant to an Excluded Asset Transfer may be merged with and into the Borrower, with the Borrower as the surviving corporation, if the related Asset Sale is not consummated. (b) No QwestDex Company will sell, lease or otherwise transfer, directly or indirectly, all or substantially all of its assets to any other Person; provided that nothing in this subsection (b) shall be construed to prohibit the sale of the Dexter Assets and the Rodney Assets: (i) pursuant to and in accordance with the terms of the QwestDex Purchase Agreements or (ii) otherwise for fair value; provided further that the Loans, together with all other amounts payable under this Agreement, shall be paid in full substantially simultaneously with the consummation of any such sale of all or substantially all of the assets of the QwestDex Companies. (c) No QwestDex Company shall consummate any Asset Sale unless at least 75% of the consideration therefor shall consist of cash payable at closing. Section 5.09. Use Of Proceeds. The proceeds of the Loans made under this Agreement will be used by the Borrower solely as set forth in the Use of Proceeds Certificate. None of such proceeds will be used, directly or indirectly, in violation of any applicable law or regulation, and no use of such proceeds will include any use for the purpose, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock. Section 5.10. Restricted Payments. No QwestDex Company will declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment if at the time a Trigger Event exists; provided the Borrower and Holdings may each 39 make Restricted Payments to the extent required to permit QCII and its Subsidiaries to make mandatory interest and principal payments in respect of (i) Debt of QCII (including Debt of Subsidiaries Guaranteed by QCII) outstanding on the Closing Date, pursuant to the terms thereof in effect on the Closing Date and (ii) Debt of QCII (including Debt of Subsidiaries Guaranteed by QCII) issued in exchange therefor as permitted by Section 5.12 of the QSC Bank Facility, pursuant to the terms thereof, in each case as such terms may be modified in accordance with the terms of the QSC Bank Facility in effect on the Closing Date. Nothing contained in this Agreement is intended to restrict or otherwise limit the QwestDex Companies from continuing their historical cash management practices (which include, without limitation, sweeping cash of the QwestDex Companies from the accounts of the QwestDex Companies to the accounts of QCII or any of its Subsidiaries on a periodic basis and making investments in, or other advances of funds to, any other QCII or any of its Subsidiaries) except at any time during which a Trigger Event exists. Section 5.11. Transactions With Affiliates. No QwestDex Company will enter into any transaction of any kind with any of its Affiliates, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially favorable to such QwestDex Company as would be obtainable by such QwestDex Company at the time in a comparable arm's length transaction with a Person other than an Affiliate; provided that the foregoing restriction shall not apply to (i) transactions involving payments made pursuant to Section 5.10, (ii) Permitted Tax Payments and (iii) transactions otherwise permitted by this Agreement entered into in the ordinary course of business consistent with past practices. Section 5.12. Limitations on Debt. No QwestDex Company will create, incur, assume or permit to exist any Debt, except: (a) Debt created under the Loan Documents; (b) Debt consisting of a Guarantee of a Debt of QSC incurred under the QSC Bank Facility; provided that such Guarantee shall be junior and subordinated to the obligations of the Borrower and Holdings under the Loan Documents as provided in the QSC Bank Facility (as in effect on the date hereof); (c) Debt outstanding on the Closing Date (including Intercompany Debt) and listed in Schedule 5.12, and any extensions, renewals, refinancings, amendments or replacements of any such Debt; provided that any such extension, renewal, refinancing, amendment or replacement of any such Debt is on terms and conditions no less favorable in any material respect to the QwestDex Companies and the Lenders party hereto than the Debt being refinanced; (d) Debt evidenced by the QwestDex Inc. Intercompany Note not to exceed $100,000,000; and 40 (e) Purchase Money Debt in an aggregate amount up to $10,000,000; provided that any Intercompany Debt (including Debt outstanding on the Closing Date) shall be unsecured and subordinated to Debt under the Loan Documents on terms and conditions reasonably satisfactory to the Agent. Section 5.13. Limitations on Investments; Loans, Advances, Guarantees and Acquisitions. No QwestDex Company will purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary before such merger) any Equity Interest in or evidence of indebtedness or other security (including any option, warrant or other right to acquire any of the foregoing) of, make, hold or permit to exist any loan or advance to, Guarantee any obligation of, or make, hold or permit to exist any investment or other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except: (a) Permitted Investments; (b) investments existing on the Closing Date and listed in Schedule 5.13; (c) investments (i) by Holdings in Equity Interests in the Borrower and (ii) by the Borrower in Equity Interests in wholly-owned Subsidiaries pursuant to an Excluded Asset Transfer; provided that any such Equity Interest shall be pledged pursuant to the Security and Pledge Agreement to the extent required thereunder; (d) investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; (e) interest rate swap, cap or collar agreements or other similar agreements or arrangements entered into as a bona fide hedge in respect of the Tranche A Loans; (f) instruments or assets received as consideration for an Asset Sale as permitted by Section 5.08(c); and (g) investments not otherwise permitted under clauses (a) through (f) of this Section 5.13, not to exceed at any time an aggregate amount of $5,000,000. Section 5.14. Further Assurances Regarding Collateral and Guaranty Requirement. Each Loan Party will execute and deliver any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), that may be required 41 under any applicable law, or that the Agent or the Required Lenders may reasonably request, to cause the Collateral and Guaranty Requirement to be and remain satisfied, all at the Borrower's expense. The Loan Parties will provide to the Agent, from time to time upon request, evidence reasonably satisfactory to the Agent as to the perfection and priority of the Liens created or intended to be created by the Collateral Documents. Section 5.15. QSC Bank Facility Covenants. QSC agrees to perform for the benefit of the Agent and the Lenders each of its covenants set forth in Article 5 of the QSC Bank Facility, a copy of which has been furnished to each of the Lenders, which provisions, together with related definitions and ancillary provisions, are hereby incorporated herein as if fully set forth herein. Any amendment, supplement or waiver thereto or thereunder shall be effective for purposes of this Agreement, provided that any consideration granted to the Lenders party to the QSC Bank Facility in connection with such amendment shall also be granted to the Lenders party hereto. ARTICLE 6 DEFAULTS Section 6.01. Events of Default. If one or more of the following events shall have occurred and be continuing: (a) any principal of any Loan shall not be paid when due, or any interest, any fees or any other amount payable hereunder shall not be paid within five days of the due date thereof; (b) any Loan Party shall fail to observe or perform any covenant contained in Section 5.01(d) or Sections 5.06 to 5.13, inclusive; (c) any Loan Party shall fail to observe or perform any covenant or agreement contained in any Loan Document (other than those covered by clause (a) or (b) above) for 30 days after the earlier of a senior officer's knowledge of such failure or written notice thereof has been given to the Borrower by the Agent at the request of any Lender; (d) any representation, warranty, certification or statement made by any Loan Party in any Loan Document or in any certificate, financial statement or other document delivered pursuant thereto (including without limitation the Use of Proceeds Certificate) shall prove to have been incorrect in any material respect when made (or deemed made); (e) QSC or any Subsidiary shall fail to make any payment or payments, in the aggregate in excess of $100,000,000, in respect of any Material Debt when due or within any applicable grace period; 42 (f) any event or condition shall occur which results in the acceleration of the maturity of any Material Debt or enables or permits the holder thereof to accelerate the maturity thereof or any "Event of Default" (as defined in the QSC Bank Facility) exists which has not been waived by the Banks under the QSC Bank Facility or the holders of such other Material Debt, as the case may be, in accordance with the terms thereof; (g) Corp. or any Loan Party shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize or otherwise acquiesce in any of the foregoing; (h) an involuntary case or other proceeding shall be commenced against Corp. or any Loan Party seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against Corp. or any Loan Party under the federal bankruptcy laws as now or hereafter in effect; (i) any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $100,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition specified in Section 4042(a) of ERISA shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $100,000,000; (j) a judgment or order for the payment of money shall be rendered in excess of (i) $100,000,000 (excluding Insured Judgment Amounts) against QSC or any Subsidiary (except Holdings and its Subsidiaries) or (ii) $50,000,000 (excluding Insured Judgment Amounts) against Holdings or any of its 43 Subsidiaries, and such judgment or order shall be enforceable and shall continue unsatisfied, in effect and unstayed for a period of 60 days (or such longer period of time after which the judgment holder may cause the creation of Liens against or seizure of any property of QSC or such Subsidiary) (it being understood that in any event an administrative order of a public utility commission shall not constitute an "order" for purposes of this clause (j) so long as (x) no one is seeking to enforce such order in an action, suit or proceeding before a court and (y) reserves in the full amount of the cost of such order are maintained on the books of QSC and its Subsidiaries); (k) any Guarantor shall repudiate in writing any of its obligations under Article 9 or any such obligation shall be unenforceable against any Guarantor in accordance with its terms, or QSC or any of its Subsidiaries shall so assert in writing; (l) any Lien purported to be created under any Collateral Document shall cease to be, or shall be asserted by QSC or any of its Subsidiaries not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Collateral Document, except (i) as a result of a sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents, (ii) as a result of the Agent's failure to maintain possession of any stock certificates, promissory notes or other documents delivered to it under the Security and Pledge Agreement or (iii) as a result of the operation of Section 2(m) of the Security and Pledge Agreement, so long as each Lien Grantor shall have complied with its obligations thereunder; or (m) a Change of Control shall occur; then, and in every such event, the Agent shall (i) if requested by Lenders having more than 50% in aggregate amount of the Commitments, by notice to the Borrower terminate the Commitments and they shall thereupon terminate, and/or (ii) if requested by Lenders holding Loans evidencing more than 50% in aggregate principal amount of the Loans, by notice to the Borrower declare the Loans (together with accrued interest thereon) to be, and the Loans shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by QSC, Holdings and the Borrower; provided that in the case of any of the Events of Default specified in clause (g) or (h) above with respect to Holdings, the Borrower or QSC, without any notice to the Borrower or any other act by the Agent or the Lenders, the Commitments shall thereupon automatically terminate and the Loans (together with accrued interest thereon) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. Section 6.02. Notice of Default. The Agent shall give notice to the Borrower under Section 6.01(c) promptly upon being requested to do so by any Lender and shall thereupon notify all the Lenders thereof. 44 ARTICLE 7 THE AGENT Section 7.01. Appointment and Authorization. Each Lender irrevocably appoints and authorizes the Agent to take such action (including, without limitation, entering into the Security and Pledge Agreement) as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with all such powers as are reasonably incidental thereto. Section 7.02. Agent and Affiliates. Bank of America, N.A., and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of QCII, the Borrower or any Subsidiary or Affiliate of QCII or the Borrower (each, a "Qwest Entity") as though Bank of America, N.A., were not the Agent hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America , N.A., or its Affiliates may receive information regarding any Qwest Entity (including information that may be subject to confidentiality obligations in favor of such Qwest Entity) and acknowledge that the Agent shall be under no obligation to provide such information to them. With respect to its Loans, Banc of America Bridge LLC shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not an Affiliate of the Agent. Section 7.03. Action by Agent. The obligations of the Agent under the Loan Documents are only those expressly set forth therein. Without limiting the generality of the foregoing, the Agent shall not be required to take any action with respect to any Default, except as expressly provided in the Loan Documents. The Agent shall not have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in any Loan Document with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. Section 7.04. Consultation with Experts. The Agent may consult with legal counsel (who may be counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. 45 Section 7.05. Delegation of Duties. The Agent may execute any of its duties under the Loan Documents by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct. Section 7.06. Liability of Agent. Neither the Agent nor any of its Affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection with any Loan Document (i) with the consent or at the request of the Required Lenders or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Agent nor any of its Affiliates nor any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any Loan Party; (iii) the satisfaction of any condition specified in Article 3, except receipt of items required to be delivered to the Agent; (iv) the existence or sufficiency of the Collateral or (v) the validity, effectiveness or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith. None of the Agent, its Affiliates and their respective directors, officers, agents and employees shall be under any obligation to any Lender or participant to inspect the properties, books or records of any Qwest Entity. The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties. Section 7.07. Indemnification. Each Lender shall, ratably in accordance with its Credit Exposure, indemnify the Agent, its Affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Loan Parties) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with the Loan Documents or any action taken or omitted by such indemnitees thereunder. No action taken with the consent or at the request of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Section 7.08. Credit Decision; Disclosure of Information by Agent. Each Lender acknowledges that none of the Agent, its Affiliates and their respective directors, officers, agents and employees (each, an "Agent-Related Person") has made any representation or warranty to it, and that no act by the Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Qwest Entity, shall be deemed to constitute any representation or warranty by the Agent or any other Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in 46 their possession. Each Lender represents to the Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Qwest Entities, and all applicable bank or other regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Qwest Entities. Except for the notices, reports and other documents expressly required to be furnished to the Lenders by the Agent herein, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Qwest Entities which may come into the possession of any Agent-Related Person. Section 7.09. Successor Agent. The Agent may resign as Agent at any time by giving notice thereof to the Lenders and QSC. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent (with the consent of QSC, such consent not to be unreasonably withheld or delayed). If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent gives notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent (with the consent of QSC, such consent not to be unreasonably withheld), which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $400,000,000. Upon the acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall at its election nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided above. The Agent, if it so elects, may resign as administrative agent but not collateral agent or vice versa, and if it so elects then the provisions of this Section 7.09 and the rest of this Article 7 shall apply separately to each of those separate capacities of the Agent. Section 7.10. Agent's Fee. QSC and the Borrower shall pay to the Agent (or its Affiliates) for their own accounts fees in the amounts and at the times 47 previously agreed upon between QSC, the Borrower and the Agent (or its Affiliates). ARTICLE 8 CHANGES IN CIRCUMSTANCES Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period for any Euro-Dollar Loan: (a) the Agent determines (which determination will be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted London Interbank Offered Rate for such Interest Period, or (b) in the case of Euro-Dollar Loans, Lenders having 50% or more of the aggregate amount of the Euro-Dollar Loans advise the Agent that the Adjusted London Interbank Offered Rate as determined by the Agent will not adequately and fairly reflect the cost to such Lenders of funding their Euro-Dollar Loans for such Interest Period, the Agent shall forthwith give notice thereof to the Borrower and the Lenders, whereupon until the Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Lenders to make Euro-Dollar Loans or to convert outstanding Loans into Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan shall be converted into a Domestic Loan on the last day of the then current Interest Period applicable thereto. Unless the Borrower notifies the Agent at least two Domestic Business Days before the date of any Euro-Dollar Borrowing for which the Notice of Borrowing has previously been given that it elects not to borrow on such date, such Borrowing shall instead be made as a Domestic Borrowing. Section 8.02. Illegality. If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Lender (or its Euro-Dollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Lender (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Lender shall so notify the Agent, the Agent shall forthwith give notice thereof to the other Lenders and the Borrower, whereupon until such Lender notifies the Borrower and the Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make Euro-Dollar Loans, or to convert outstanding Loans into Euro-Dollar Loans, shall be suspended. Before giving any notice to the Agent pursuant to this Section, such Lender shall designate a different Euro-Dollar 48 Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. If such notice is given, each Euro-Dollar Loan of such Lender then outstanding shall be converted to a Domestic Loan either (a) on the last day of the then current Interest Period applicable to such Euro-Dollar Loan if such Lender may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Lender shall determine that it may not lawfully continue to maintain and fund such Loan to such day. Section 8.03. Increased Cost and Reduced Return. (a) If on or after the date hereof, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System with respect to any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar Reserve Percentage), special deposit, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (or its Applicable Lending Office) or shall impose on any Lender (or its Applicable Lending Office) or on the United States market for certificates of deposit or the London interbank market any other condition affecting its Euro-Dollar Loans, its Note or its obligation to make Euro-Dollar Loans and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making or maintaining any Euro-Dollar Loan, or to reduce the amount of any sum received or receivable by such Lender (or its Applicable Lending Office) under this Agreement or under its Note with respect thereto, by an amount deemed by such Lender to be material, then, within 15 days after demand by such Lender (with a copy to the Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction. (b) If any Lender shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Lender (or its Parent) as a consequence of such Lender's obligations hereunder to a level below that which such Lender (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, within 15 49 days after demand by such Lender (with a copy to the Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender (or its Parent) for such reduction. (c) Each Lender will promptly notify the Borrower and the Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. A certificate of any Lender claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods. Section 8.04. (a) Taxes. Any and all payments by any Loan Party to or for the account of any Lender or the Agent under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, (x) in the case of each Lender and the Agent, taxes imposed on its income or profits, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof, (y) in the case of each Lender, taxes imposed on its income or profits, and franchise or similar taxes imposed on it, by the jurisdiction of such Lender's Applicable Lending Office or any political subdivision thereof, taxes that are imposed by any jurisdiction by reason of such Lender doing or having done business in such jurisdiction other than solely as a result of the Loan Documents or any transaction contemplated thereby, and (z) in the case of each Lender and the Agent, any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which such Lender or the Agent is organized or in which its Applicable Lending Office is located or any political subdivision thereof (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If any Loan Party shall be required by law to deduct any Taxes from or in respect of any sum payable under any Loan Document to any Lender or the Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.04) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Person shall make such deductions, (iii) such Person shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) such Person shall furnish to the Agent, at its address referred to in Section 10.01, the original or a certified copy of a receipt evidencing payment thereof. (b) In addition, each Loan Party agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, or charges or 50 similar levies which arise from any payment made under any Loan Document or from the execution or delivery of, or otherwise with respect to, any Loan Document (hereinafter referred to as "Other Taxes"). (c) Each Loan Party agrees to indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 8.04) paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; provided that the indemnification obligation under this Section 8.04(c) shall be only with respect to Taxes, Other Taxes and liabilities related to payments made by any Loan Party under any Loan Document. This indemnification shall be made within 15 days from the date such Lender or the Agent (as the case may be) makes written demand therefor. (d) Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Lender listed on the signature pages hereof, on or prior to the date on which it becomes a Lender in the case of each other Lender, on or prior to the date on which any such Lender grants any participating interest pursuant to Section 10.06 or otherwise ceases to act for its own account with respect to any portion of any sums payable to it under this Agreement, and from time to time thereafter if requested in writing by the Borrower (but only so long as such Lender remains lawfully able to do so), shall provide QSC with Internal Revenue Service form W-8BEN, W-8ECI and/or W-8IMY, as appropriate, or any successor form prescribed by the Internal Revenue Service (together with any form, documentation or information such Lender is required or chooses to transmit with any such forms), certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States and/or certifying as provided on Form W-8IMY. If the form provided by a Lender at the time such Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from "Taxes" as defined in Section 8.04(a) imposed by the United States. (e) For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form pursuant to Section 8.04(d) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which a form originally was required to be provided), such Lender shall not be entitled to indemnification under Section 8.04(a) with respect to Taxes imposed by the United States; provided, however, that should a Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. 51 (f) If any Loan Party is required to pay additional amounts to or for the account of any Lender pursuant to this Section 8.04, then such Lender will change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Lender, is not otherwise disadvantageous to such Lender. Section 8.05. Domestic Loans Substituted for Affected Euro-Dollar Loans. If (i) the obligation of any Lender to make Euro-Dollar Loans to the Borrower has been suspended pursuant to Section 8.02 or (ii) any Lender has demanded compensation under Section 8.03 with respect to its Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such Lender through the Agent, have elected that the provisions of this Section shall apply to such Lender, then, unless and until such Lender notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist: (b) all Loans which would otherwise be made by such Lender as (or continued as or converted into) Euro-Dollar Loans shall instead be Domestic Loans (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Lenders), and (c) after each of its Euro-Dollar Loans has been repaid (or converted to a Domestic Loan), all payments of principal which would otherwise be applied to repay such Euro-Dollar Loans shall be applied to repay its Domestic Loans instead. If such Lender notifies the Borrower that the circumstances giving rise to such notice no longer apply, the principal amount of each such Domestic Loan shall be converted into a Euro-Dollar Loan on the first day of the next succeeding Interest Period applicable to the related Euro-Dollar Loans of the other Lenders. Section 8.06. Substitution of Lender. If (i) the obligation of any Lender to make Euro-Dollar Loans has been suspended pursuant to Section 8.02, (ii) any Lender has demanded compensation under Section 8.03 or (iii) any Lender has not signed an amendment or waiver which must be signed by all the Lenders to become effective, and such amendment or waiver has been signed by the Required Lenders, the Borrower shall have the right, with the assistance of the Agent, to seek a mutually satisfactory substitute institution or institutions (which may be one or more of the Lenders) to purchase the Loans of such Lender (by paying to such Lender the principal amount of such Loans, together with accrued interest thereon and any other amounts payable to such Lender hereunder) or assume the Commitment (if any) of such Lender. 52 ARTICLE 9 GUARANTEES Section 9.01. The Guaranty. Each Guarantor hereby unconditionally guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of its Guaranteed Obligations. Upon failure by the Borrower to pay or perform punctually any Guaranteed Obligation, each Guarantor shall forthwith on demand pay or perform such Guaranteed Obligation in the manner specified in the relevant Loan Document. Section 9.02. Guaranty Unconditional. The obligations of each Guarantor hereunder shall be unconditional, irrevocable and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (i) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of any other Loan Party under any Loan Document, by operation of law or otherwise; (ii) any modification or amendment of or supplement to any Loan Document; (iii) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of any other Loan Party under any Loan Document; (iv) any change in the corporate existence, structure or ownership of any other Loan Party or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any other Loan Party or any of its assets or any resulting release or discharge of any obligation of any other Loan Party contained in any Loan Document; (v) the existence of any claim, set-off or other rights which such Guarantor may have at any time against any other Loan Party, the Agent, any Lender or any other Person, whether in connection herewith or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vi) any invalidity or unenforceability relating to or against any other Loan Party for any reason of any Loan Document, or any provision of applicable law or regulation purporting to prohibit the payment by any other Loan Party of the principal of or interest on any Note or any other amount payable by it under the Loan Document; or (vii) any other act or omission to act or delay of any kind by any other Loan Party, the Agent, any Lender or any other Person or any other circumstance whatsoever which might, but for the provisions of this 53 paragraph, constitute a legal or equitable discharge of such Guarantor's obligations hereunder. Section 9.03. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances. Each Guarantor's obligations hereunder shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Notes and all other amounts payable by the Borrower under the Loan Documents shall have been indefeasibly paid in full. If at any time any payment of the principal of or interest on any Note or any other amount payable by the Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, each Guarantor's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. Section 9.04. Waiver by Guarantors. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any other Loan Party or any other Person. Section 9.05. Subrogation. Each Guarantor irrevocably waives any and all rights to which it may be entitled, by operation of law or otherwise, upon making any payment hereunder to be subrogated to the rights of the payee against the Borrower with respect to such payment or against any direct or indirect security therefor, or otherwise to be reimbursed, indemnified or exonerated by or for the account of the Borrower in respect thereof until (i) the Commitments shall have terminated and (ii) all Loans and all other obligations under this Agreement and the other Loan Documents have been paid in full in cash. Section 9.06. Stay of Acceleration. In the event that acceleration of the time for payment of any amount payable by the Borrower under the Loan Documents is stayed upon insolvency, bankruptcy or reorganization of the Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by each Guarantor hereunder forthwith on demand by the Agent made at the request of the Required Lenders. ARTICLE 10 MISCELLANEOUS Section 10.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of any Loan Party party hereto or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Lender, at its address or facsimile number set forth in its Administrative Questionnaire or (z) in the case of any party, such other address or facsimile number as such party may hereafter 54 specify for the purpose by notice to the Agent and the Borrower. Each such notice, request or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, (ii) if given by facsimile transmission, when such facsimile is transmitted to the facsimile number specified pursuant to this Section 10.01 and telephonic confirmation of receipt thereof is received, or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Agent under Article 2 or Article 8 shall not be effective until received. Section 10.02. No Waivers. No failure or delay by the Agent or any Lender in exercising any right, power or privilege under any Loan Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in the Loan Documents shall be cumulative and not exclusive of any rights or remedies provided by law. Section 10.03. Expenses; Indemnification. (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses of the Agent, including reasonable fees and disbursements of special counsel for the Agent in connection with the preparation and administration of the Loan Documents, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Agent and each Lender, including reasonable fees and disbursements of counsel, in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. (b) The Borrower agrees to indemnify the Agent and each Lender, their respective Affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of the Loan Documents or any actual or proposed use of proceeds of Loans hereunder; provided that (i) no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction and (ii) the Borrower shall not be liable for any settlement entered into by an Indemnitee without its consent (which shall not be unreasonably withheld). (c) Each Indemnitee agrees to give the Borrower prompt written notice after it receives any notice of the commencement of any action, suit or proceeding for which such Indemnitee may wish to claim indemnification pursuant to subsection (b). The Borrower shall have the right, exercisable by giving written notice within fifteen Domestic Business Days after the receipt of notice from such 55 Indemnitee of such commencement, to assume, at the Borrower's expense, the defense of any such action, suit or proceeding; provided, that such Indemnitee shall have the right to employ separate counsel in any such action, suit or proceeding and to participate in the defense thereof, but the fees and expenses of such separate counsel shall be at such Indemnitee's expense unless (1) Bookmark not defined. the Borrower shall have agreed to pay such fees and expenses; (2) the Borrower shall have failed to assume the defense of such action, suit or proceeding or shall have failed to employ counsel reasonably satisfactory to such Indemnitee in any such action, suit or proceeding; or (3) such Indemnitee shall have been advised by independent counsel in writing (with a copy to the Borrower) that there may be one or more defenses available to such Indemnitee which are in conflict with those available to the Borrower (in which case, if such Indemnitee notifies the Borrower in writing that it elects to employ separate counsel at the Borrower's expense, the Borrower shall be obligated to assume the expense, it being understood, however, that the Borrower shall not be liable for the fees or expenses of more than one separate firm of attorneys, which firm shall be designated in writing by such Indemnitee). Section 10.04. Sharing of Set-offs. Each Lender agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to any Loan held by it which is greater than the proportion received by any other Lender in respect of the aggregate amount of principal and interest due with respect to any Note held by such other Lender, the Lender receiving such proportionately greater payment shall purchase such participations in the Notes held by the other Lenders, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Loans held by the Lenders shall be shared by the Lenders pro rata; provided that nothing in this Section shall impair the right of any Lender to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than its indebtedness hereunder. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation. Section 10.05. Amendments and Waivers; Release of Liens. (a) Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by QSC, Holdings, the Borrower and the Required Lenders (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that no such amendment or waiver shall, unless signed by each Lender directly affected thereby, (i) increase or decrease the Commitment of any Lender or subject any Lender to any additional obligation (it being understood that an increase or decrease pursuant to Section 8.06 or 10.06 56 shall not constitute an amendment or waiver for this purpose), (ii) reduce the principal of or rate of interest on any Loan, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or for the termination of any Commitment, (iv) change the provisions of the first sentence of Section 2.11(f) or Section 10.04 in a manner that would alter the pro rata sharing of payments required thereby or (v) release either Guarantor from its obligations under Article 9; and provided further that no amendment or waiver shall, unless signed by each Lender, change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans, or the number of Lenders, which shall be required for the Lenders or any of them to take any action under this Section or any other provision of this Agreement. (b) Any provision of any Collateral Document may be amended or waived if, but only if, such amendment or waiver is entered into in accordance with the terms thereof. (c) Upon consummation of any Asset Sale by a QwestDex Company (including without limitation pursuant to the QwestDex Purchase Agreements), the Lien created under the Collateral Documents securing the Term Secured Obligations on assets subject to such Asset Sale shall terminate in accordance with Section 27 of the Security and Pledge Agreement. Section 10.06. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that no Loan Party may assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Lenders. (b) Any Lender may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its Commitment or any or all of its Loans, with (and subject to) the written consent of the Agent, such consent shall not be unreasonably withheld; provided that if a Participant is a Lender Affiliate or is another Lender, no such consent shall be required. In the event of any such grant by a Lender of a participating interest to a Participant, such Lender shall remain responsible for the performance of its obligations hereunder, and the Loan Parties and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement pursuant to which any Lender may grant such a participating interest shall provide that such Lender shall retain the sole right and responsibility to enforce the obligations of the Loan Parties hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Lender will not agree to any modification, amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of Section 10.05 without the consent of the Participant. The Borrower agrees that each Participant shall, to the extent provided in its participation agreement and subject to subsection (e) below, be entitled to the benefits of Article 8 with 57 respect to its participating interest. An assignment or other transfer which is not permitted by subsection (c) or (d) below but which is consented to in accordance with this subsection (b) shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). (c) Any Lender may at any time assign to one or more banks or other institutions (each an "Assignee") all, or a proportionate part of all, of its rights and obligations under this Agreement and the Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit D hereto executed by such Assignee and such transferor Lender, with (and subject to) the subscribed consent of the Agent, which consent shall not be unreasonably withheld; provided that (i) if an Assignee is a Lender Affiliate or is another Lender, no such consent shall be required and (ii) except in the case of an assignment to a Lender or a Lender Affiliate, any assignment shall not be less than $1,000,000, or if less, shall constitute an assignment of all of such Lender's rights and obligations under this Agreement and the Notes. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Lender of an amount equal to the purchase price agreed between such transferor Lender and such Assignee, such Assignee shall be a Lender party to this Agreement and shall have all the rights and obligations of a Lender with a Commitment or, if the Commitments have terminated, Loans as set forth in such instrument of assumption, and the transferor Lender shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Lender, the Agent and the Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the Assignee. In connection with any such assignment (other than to a Lender Affiliate), the transferor Lender shall pay to the Agent an administrative fee for processing such assignment in the amount of $3,500. If the Assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to QSC and the Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 8.04. (d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement and its Notes to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release the transferor Lender from its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may create a security interest in all or any portion of the Loans owing to it and the Note, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities; provided that unless and until such trustee actually becomes a Lender in 58 compliance with the other provisions of this Section 10.06, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise. (e) No Assignee, Participant or other transferee of any Lender's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Lender would have been entitled to receive with respect to the rights transferred, unless such transfer is made with QSC's prior written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Lender to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. Section 10.07. Governing Law; Submission to Jurisdiction. This Agreement and each Note shall be governed by and construed in accordance with the laws of the State of New York. Each Loan Party hereto hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to the Loan Documents or the transactions contemplated thereby, and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Section 10.08. Counterparts; Integration; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof. Section 10.09. WAIVER OF JURY TRIAL. EACH OF THE LOAN PARTIES PARTY HERETO, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. Section 10.10. Confidentiality. Each of the Agent and the Lenders agrees to use its reasonable best efforts to keep confidential any information delivered or made available by or on behalf of the Loan Parties to it (including without limitation any information obtained through any financial advisor); provided that nothing herein shall prevent the Agent or any Lender from disclosing such information (i) to the Agent or any other Lender in connection with the 59 transactions contemplated hereby, (ii) to its officers, directors, employees, agents, attorneys and accountants who have a need to know such information in accordance with customary banking practices and who receive such information having been made aware of the restrictions set forth in this Section, (iii) upon the order of any court or administrative agency, (iv) upon the request or demand of any regulatory agency or authority having jurisdiction over such party, (v) which has been publicly disclosed (by a Person other than such Agent or Lender), (vi) which has been obtained from any Person other than QCII and its Subsidiaries, provided that such Person is not (x) known to it to be bound by a confidentiality agreement with QCII or its Subsidiaries or any other obligation not to disclose or (y) known to it to be otherwise prohibited from transmitting the information to it by a contractual, legal or fiduciary obligation, (vii) in connection with the exercise of any remedy under the Loan Documents or (viii) to any actual or proposed participant or assignee of all or any of its rights hereunder which has agreed in writing to be bound by the provisions of this Section. Section 10.11. No Reliance on Margin Stock. Each Lender represents to the Agent and each of the other Lenders that it in good faith is not relying upon any Margin Stock as collateral in the extension or maintenance of the credit provided for in this Agreement. 60 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. QWEST SERVICES CORPORATION By: ------------------------------------- Name: Title: 1801 California Street Denver, CO 80202 Attn: Chief Financial Officer Fax: (303) 296-4920 and: 1801 California Street Denver, CO 80202 Attn: General Counsel Fax: (303) 296-5974 QWEST DEX HOLDINGS, INC. By: ------------------------------------- Name: Title: 1801 California Street Denver, CO 80202 Attn: Chief Financial Officer Fax: (303) 296-4920 and: 1801 California Street Denver, CO 80202 Attn: General Counsel Fax: (303) 296-5974 QWEST DEX, INC. By: ------------------------------------- Name: Title: 1801 California Street Denver, CO 80202 Attn: Chief Financial Officer Fax: (303) 296-4920 and: 1801 California Street Denver, CO 80202 Attn: General Counsel Fax: (303) 296-5974 BANK OF AMERICA, N.A., as Administrative Agent By: ------------------------------------- Name: Title: For notices regarding waivers, amendments, financial statements, and all other notices EXCEPT as specified below: CA5-701-05-19 1455 Market Street San Francisco, CA 94103 Fax: (415) 503-5001 For notices regarding borrowings, interest rate elections, interest rates and payments: NC1-001-05-04 101 N. Tryon Street Charlotte, NC 28255 Fax: (704) 409-0003 BANK OF AMERICA SECURITIES LLC, as agent for Bank of America, N.A. By: ------------------------------------- Name: Title: BANK OF AMERICA, N.A. By: ------------------------------------- Name: Title: ABLECO FINANCE LLC By: ------------------------------------- Name: Title: BANK ONE, NA By: ------------------------------------- Name: Title: FARALLON CAPITAL PARTNERS, L.P. By: Farallon Partners, L.L.C., its General Partner By: ------------------------------------- Name: Title: FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P. By: Farallon Partners, L.L.C., its General Partner By: ------------------------------------- Name: Title: FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P. By: Farallon Partners, L.L.C., its General Partner By: ------------------------------------- Name: Title: FARALLON CAPITAL INSTITUTIONAL PARTNERS III, L.P. By: Farallon Partners, L.L.C., as General Partner By: ------------------------------------- Name: Title: TINICUM PARTNERS, L.P. By: Farallon Partners, L.L.C., as General Partner By: ------------------------------------- Name: Title: STATE STREET BANK & TRUST, solely in its capacity as Custodian for General Motors employees Global Group Pension Trust as directed by DDJ Capital Management, LLC, and not in its individual capacity By: ------------------------------------- Name: Title: STONEHILL INSTITUTIONAL PARTNERS, L.P. By: ------------------------------------- Name: Title: THE BANK OF NEW YORK By: ------------------------------------- Name: Title: BEAR STEARNS INVESTMENT PRODUCTS INC By: ------------------------------------- Name: Title: GALAXY CLO 1999-1, LTD. By: SAI Investment Advisor, Inc. Its: Collateral Manager By: ------------------------------------- Name: Title: KZH SOLEIL-2 LLC By: ------------------------------------- Name: Title: LIBERTYVIEW FUNDS, L.P. By: ------------------------------------- Name: Title: PROTECTIVE LIFE INSURANCE COMPANY By: ------------------------------------- Name: Title: SUNAMERICA LIFE INSURANCE COMPANY By: ------------------------------------- Name: Title: WINGATE CAPITAL LTD. By: Citadel Limited Partnership, Portfolio Manager By: GLB Partners, L.P., its General Partner By: Citadel Investment Group, L.L.C., its General Partner By: ------------------------------------- Name: Title: EX-10.3 5 ex10_3.txt EXHIBIT 10.3 EXECUTION COPY SECURITY AND PLEDGE AGREEMENT dated as of August 30, 2002 among QWEST SERVICES CORPORATION, QWEST DEX HOLDINGS, INC., QWEST DEX, INC. and BANK OF AMERICA, N.A., as Collateral Agent TABLE OF CONTENTS ---------------------- PAGE ---- SECTION 1. Definitions........................................................2 SECTION 2. Grant of Transaction Liens........................................15 SECTION 3. General Representations and Warranties............................20 SECTION 4. Further Assurances; General Covenants.............................23 SECTION 5. Acknowledgment....................................................26 SECTION 6. Accounts..........................................................28 SECTION 7. Instruments.......................................................29 SECTION 8. Commercial Tort Claims............................................30 SECTION 9. [Intentionally Omitted]...........................................31 SECTION 10. Proceeds of Letters of Credit....................................31 SECTION 11. Investment Property..............................................31 SECTION 12. [Intentionally Omitted.]..........................................32 SECTION 13. Certain Deposit Account Information..............................32 SECTION 14. Cash Collateral Accounts.........................................33 SECTION 15. Operation of Collateral Accounts.................................34 SECTION 16. [Intentionally Omitted]..........................................35 SECTION 17. Right to Vote Securities.........................................35 SECTION 18. Certain Cash Distributions.......................................35 SECTION 19. Remedies upon Event of Default...................................35 SECTION 20. Limitation on Rights and Remedies................................36 SECTION 21. Application of Proceeds..........................................36 SECTION 22. Certain Intercreditor Arrangements in Bankruptcy.................42 SECTION 23. Fees and Expenses; Indemnification...............................47 SECTION 24. Authority to Administer Collateral...............................48 SECTION 25. Limitation on Duty in Respect of Collateral......................49 SECTION 26. General Provisions Concerning the Collateral Agent...............49 SECTION 27. Termination of Transaction Liens; Release of Collateral..........52 SECTION 28. Additional Lien Grantors.........................................53 SECTION 29. Additional Permitted Secured Obligations.........................53 SECTION 30. Notices..........................................................54 SECTION 31. No Implied Waivers; Remedies Not Exclusive.......................55 SECTION 32. Successors and Assigns...........................................55 SECTION 33. Amendments and Waivers...........................................56 SECTION 34. Choice of Law....................................................56 SECTION 35. Waiver of Jury Trial.............................................56 SECTION 36. Severability.....................................................57 SCHEDULES: - --------- Schedule 1 Securities Owned by QwestDex Schedule 2 Notes or Other Instruments Evidencing Indebtedness Owing to QSC and QwestDex Holdings Schedule 3 Material Commercial Tort Claims Schedule 4 Deposit Accounts Owned by QwestDex Holdings and QwestDex EXHIBITS: - --------- Exhibit A Security and Pledge Agreement Supplement Exhibit B Perfection Certificate Exhibit C Form of Additional Secured Party Consent ii SECURITY AND PLEDGE AGREEMENT AGREEMENT dated as of August 30, 2002 among QWEST SERVICES CORPORATION, QWEST DEX HOLDINGS, INC., QWEST DEX, INC. and BANK OF AMERICA, N.A., as Collateral Agent. WHEREAS, the Revolver Borrower is entering into the Revolver Credit Agreement described in Section 1 hereof, pursuant to which the Revolver Borrower seeks to amend and restate its existing revolving credit facility in order to, among other things, reinstate the commitments of the banks thereunder and extend the maturity date of the credit facility evidenced thereby; WHEREAS, the Revolver Borrower is willing to secure (i) its obligations under the Revolver Credit Agreement and (ii) certain other obligations specified herein, by granting Liens on certain of its assets to the Collateral Agent as provided in the Security Documents; WHEREAS, pursuant to the terms of the Revolver Credit Agreement, QCII and each of the QwestDex Companies have guaranteed the foregoing obligations of the Revolver Borrower; WHEREAS, the Revolver Borrower is willing to cause each of the QwestDex Companies to secure its guarantee of the foregoing obligations of the Revolver Borrower by granting Liens on certain of its assets to the Collateral Agent as provided in the Security Documents; WHEREAS, the Term Borrower is entering into the Term Credit Agreement described in Section 1 hereof, pursuant to which the Term Borrower intends to borrow funds for the purposes set forth therein; WHEREAS, the Term Borrower is willing to secure (i) its obligations under the Term Credit Agreement and (ii) certain other obligations specified herein, by granting Liens on certain of its assets to the Collateral Agent as provided in the Security Documents; WHEREAS, pursuant to the terms of the Term Credit Agreement, each of QSC and QwestDex Holdings have guaranteed the foregoing obligations of the Term Borrower; WHEREAS, each of QSC and QwestDex Holdings is willing to secure its guarantee of the foregoing obligations of the Term Borrower by granting Liens on certain of its assets to the Collateral Agent as provided in the Security Documents; WHEREAS, the Revolver Lenders are not willing to enter into the Revolver Credit Agreement unless (i) the foregoing obligations of the Revolver Borrower are secured as described above and (ii) each guarantee thereof by a QwestDex Company is secured by Liens on assets of the relevant QwestDex Company as provided in the Security Documents; WHEREAS, the Term Lenders are not willing to enter into the Term Credit Agreement unless (i) the foregoing obligations of the Term Borrower are secured as described above and (ii) each guarantee thereof is secured by liens on assets of the relevant Term Guarantor as provided in the Security Documents; and WHEREAS, upon any foreclosure or other enforcement of the Security Documents, the net proceeds of the relevant Collateral are to be received by or paid over to the Collateral Agent and applied as provided in Section 21 hereof; NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Definitions. (a) Terms Defined in UCC. As used herein, each of the following terms has the meaning specified in the UCC: Term UCC - ---- --- Account 9-102 Authenticate 9-102 Certificated Security 8-102 Commercial Tort Claim 9-102 Deposit Account 9-102 Document 9-102 Entitlement Holder 8-102 Equipment 9-102 Financial Asset 8-102 & 8-103 General Intangibles 9-102 Instrument 9-102 Inventory 9-102 Investment Property 9-102 Letter-of-Credit Right 9-102 Payment Intangible 9-102 Record 9-102 Securities Account 8-501 2 Term UCC - ---- --- Securities Intermediary 8-102 Security 8-102 & 103 Security Entitlement 8-102 Supporting Obligations 9-102 (b) Additional Definitions. The following additional terms, as used herein, have the following meanings: "Account Control Agreement" means, with respect to any account, a blocked account agreement in favor of the Collateral Agent, all in form and substance satisfactory to the Collateral Agent. "Additional Permitted Secured Obligations" has the meaning specified in Section 29. "Additional Secured Party Consent" means an Additional Secured Party Consent, substantially in the form of Exhibit C, signed and delivered to the Collateral Agent in connection with the designation of Additional Permitted Secured Obligations on or after the Effective Date pursuant to Section 29. "Administrative Agent" means the Administrative Agent under the Term Credit Agreement or the Administrative Agent under the Revolver Credit Agreement as the context may require and, in each case, as such term is defined in the respective Credit Agreement. "Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such specified Person; provided that as used in this definition "control" means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Bankruptcy Event" means any Event of Default described in Section 6.01(g) or 6.01(h) of the Revolver Credit Agreement or Section 6.01(g) or 6.01(h) of the Term Credit Agreement. "Borrowers" means, collectively, the Revolver Borrower and the Term Borrower, and "Borrower" means either of them as the context may require. 3 "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York or Dallas, Texas are authorized by law to close. "Cash Collateral Accounts" has the meaning specified in Section 14. "Cash Distributions" means dividends, interest and other distributions and payments (including proceeds of liquidation, sale or other disposition) made or received in cash upon or with respect to any Collateral. The term "Cash Distributions" is not intended to include receipt of payment in respect of Accounts in the ordinary course of business. "Collateral" means all property, whether now owned or hereafter acquired, on which a Lien is granted or purports to be granted to the Collateral Agent pursuant to the Security Documents. When used with respect to a specific Lien Grantor, the term "Collateral" means all its property on which such a Lien is granted or purports to be granted to the Collateral Agent pursuant to the Security Documents. "Collateral Accounts" means the Cash Collateral Accounts. "Collateral Agent" means Bank of America, N.A., in its capacities as collateral agent under the Revolver Credit Agreement and as collateral agent under the Term Credit Agreement. "Common Carrier" means any Person who is a common carrier for hire, in intrastate, interstate or foreign communication by wire or radio or intrastate, interstate or foreign radio transmission of energy. "Contingent Secured Obligation" means, at any time, any Secured Obligation (or portion thereof) that is contingent in nature at such time, including, without limitation, any Secured Obligation that is an obligation to provide additional collateral to secure a Secured Obligation, provided that contingent obligations under general indemnification provisions (such as Section 10.03 of the Revolver Term Credit Agreement, Section 10.03 of the Term Credit Agreement or Section 9.1 of each of the QwestDex Sale Agreements) or the like as to which no claim is pending or reasonably foreseeable shall not be treated as Contingent Secured Obligations for purposes of the administration of this Agreement. "Control", when used with respect to any Deposit Account, has the meaning specified in UCC Section 9-104. 4 "Corp." means Qwest Corporation, a Colorado corporation, and its successors. "Corp. Equity Account" has the meaning specified in Section 14(b). "Corp. Equity Collateral" has the meaning specified in Section 2(a). "Corp. Equity Interest" means all Equity Interests in Corp. "Credit Agreements" means, collectively, the Revolver Credit Agreement and the Term Credit Agreement. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles, (v) all Debt secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person, and (vi) all Debt of others guaranteed by such Person. "Dex Purchaser Secured Obligations" means the indemnity obligations of QSC and QwestDex arising pursuant to Section 9.1 of each of the QwestDex Sale Agreements; provided that such obligations shall not constitute Dex Purchaser Secured Obligations to the extent that they exceed $100,000,000 in the aggregate. "Effective Date" means September 4, 2002. "Equity Interest" means (i) in the case of a corporation, any shares of its capital stock, (ii) in the case of a limited liability company, any membership interest therein, (iii) in the case of a partnership, any partnership interest (whether general or limited) therein, (iv) in the case of any other business entity, any participation or other interest in the equity or profits thereof, (v) any warrant, option or other right to acquire any Equity Interest described in this definition or (vi) any Security Entitlement in respect of any Equity Interest described in this definition. "Event of Default" means any "Event of Default" under (and as such term is defined in) either Credit Agreement. 5 "FCC" means the Federal Communications Commission and any successor agency thereof. "Federal Government" means the federal government of the United States or any agency or instrumentality thereof. "First Tier Obligations" means, with respect to any Collateral at any time, all Secured Obligations secured by a Transaction Lien on such Collateral at such time, which Transaction Lien is prior in right of payment to all other Transaction Liens in respect of such Collateral (excluding Transaction Liens securing payment of fees and expenses of the Collateral Agent and the Administrative Agent under either Credit Agreement). "First Tier Revolver Collateral" means, at any time prior to satisfaction of the Revolver Release Conditions, all of the Collateral in respect of which the Revolver Secured Obligations constitute First Tier Obligations at such time. "First Tier Term Collateral" means, at any time prior to satisfaction of the Term Release Conditions, all of the Collateral in respect of which the Term Secured Obligations constitute First Tier Obligations at such time. "Governmental Authority" means the government of the United States, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Holdings Asset Collateral" has the meaning set forth in Section 2(g). "Holdings Equity Collateral" has the meaning specified in Section 2(e). "Junior Secured Parties" means, collectively, (i) the holders from time to time of the Dex Purchaser Secured Obligations and (ii) the holders from time to time of the Additional Permitted Secured Obligations. "Lenders" means, collectively, the Revolver Lenders and the Term Lenders. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. 6 "Lien Grantors" means, collectively, the Revolver Lien Grantors and the Term Lien Grantors. "Liquid Investment" means a Permitted Investment (other than commercial paper) that matures within 30 days after it is first included in the Collateral. "LLC Interest" means a membership interest or similar interest in a limited liability company. "Loan Documents" means, collectively, the Revolver Loan Documents and the Term Loan Documents. "Loan Party" means each Revolver Loan Party and each Term Loan Party. "Material Commercial Tort Claims" means a Commercial Tort Claim involving a claim for more than $10,000,000. "Non-Contingent Secured Obligation" means at any time any Secured Obligation (or portion thereof) that is not a Contingent Secured Obligation at such time. "Opinion of Counsel" means a written opinion of legal counsel (who may be counsel to a Lien Grantor or other counsel, in either case approved by the Collateral Agent) addressed and delivered to the Collateral Agent. "Original Lien Grantor" means any Lien Grantor that grants a Lien on any of its assets hereunder on the Effective Date. "own" refers to the possession of sufficient rights in property to grant a security interest therein as contemplated by UCC Section 9-203, and "acquire" refers to the acquisition of any such rights. "Partnership Interest" means a partnership interest, whether general or limited. "Perfection Certificate" means, with respect to any Lien Grantor, a certificate substantially in the form of Exhibit B, completed and supplemented with the schedules contemplated thereby to the satisfaction of the Collateral Agent, and signed by an officer of such Lien Grantor. "Permitted Investments" means investments in: 7 (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States), in each case maturing within one year from the date of acquisition thereof; (b) commercial paper maturing within one year from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from Standard & Poor's or from Moody's Investors Service, Inc.; (c) certificates of deposit, banker's acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States or any State thereof which has a combined capital and surplus and undivided profits of at least $500,000,000; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and (e) any other Investments made in compliance with the Cash Management Investment Policy of the Company with respect to cash investments, substantially as in effect on the Closing Date. "Permitted Liens" means (i) the Transaction Liens and (ii) any other Liens on the Collateral not prohibited by either of the Credit Agreements. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Pledged", when used in conjunction with any type of asset, means at any time an asset of such type that is included (or that creates rights that are included) in the Collateral at such time. For example, "Pledged Equity Interest" means an Equity Interest that is included in the Collateral at such time. "Post-Petition Interest" means any interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Revolver Borrower or the Term Borrower (or would accrue but for the operation of applicable bankruptcy or insolvency laws), whether or not such interest is allowed or allowable as a claim in any such proceeding. 8 "Proceeds" means all proceeds of, and all other profits, products, rents or receipts, in whatever form, arising from the collection, sale, lease, exchange, assignment, licensing or other disposition of, or other realization upon, any Collateral, including all claims of the relevant Lien Grantor against third parties for loss of, damage to or destruction of, or for proceeds payable under, or unearned premiums with respect to, policies of insurance in respect of, any Collateral, and any condemnation or requisition payments with respect to any Collateral. "PUC" means any commission, board or official (by whatever name designated) which under the laws of any State has regulatory jurisdiction with respect to intrastate operations of Corp., or any of its Subsidiaries or Affiliates, with respect to such Person's business as a Common Carrier. "PUC Licenses" means any license, certificate or other regulatory authorization given or granted by a PUC to Corp., or any of its Subsidiaries or Affiliates, to operate as a Common Carrier. "QCII" means Qwest Communications International Inc., a Delaware corporation. "QSC" means Qwest Services Corporation, a Colorado corporation. "QSC Asset Collateral" has the meaning specified in Section 2(c). "QwestDex Holdings Account" has the meaning specified in Section 14(b). "QwestDex Sale Agreements" means, collectively, (i) the Purchase Agreement dated as of August 19, 2002 among QwestDex, QSC, QCII and Dex Holdings LLC and (ii) the Purchase Agreement dated as of August 19, 2002 among Qwest, QSC, QCII and Dex Holdings LLC. "Qwest Companies" means, collectively, the Borrowers, all of their respective Subsidiaries and QCII. "QwestDex" means Qwest Dex, Inc., a Colorado corporation. "QwestDex Asset Collateral" has the meaning specified in Section 2(i). "QwestDex Companies" means QwestDex Holdings and any of its Subsidiaries, and "QwestDex Company" means any of the foregoing, as the context may require. 9 "QwestDex Holdings" means Qwest Dex Holdings, Inc., a Delaware corporation. "Regulated Entity" means a Person as to which the consent of a governmental body or official is required for any acquisition of control or change of control thereof. "Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and its Affiliates. "Required Secured Lenders" means, at any time, (i) Revolver Lenders constituting "Required Banks" under (and as defined in) the Revolver Credit Agreement and (ii) Term Lenders constituting "Required Lenders" under (and as defined in) the Term Credit Agreement. "Revolver Borrower" means QSC. "Revolver Cash Management Obligations" means obligations of the Revolver Borrower and its Subsidiaries owed to any Revolver Lender or any of its Affiliates in respect of treasury management arrangements or other cash management services performed by such Revolving Lender or such Affiliates; provided that such obligations shall not constitute Revolver Cash Management Obligations to the extent the aggregate amount thereof exceeds $350,000,000 (such amount, the "Maximum Cash Management Amount"); and provided further that such obligations shall only constitute Revolver Cash Management Obligations if (i) the Revolver Borrower (or its Subsidiary, as applicable) and the Revolver Lender (or Affiliate thereof) party thereto shall have expressly agreed in writing that such obligations constitute "Revolver Cash Management Obligations" entitled to the benefits of this Agreement, (ii) the Revolver Lender (or Affiliate thereof) party thereto shall have delivered a notice to the Collateral Agent to the effect set forth in clause (i) of this proviso, and acknowledging and agreeing to be bound by the terms of this Agreement with respect to such obligations and (iii) the Revolver Borrower shall have delivered written notice to the Collateral Agent (x) designating such obligations as Revolver Cash Management Obligations, (y) allocating all or a portion of the Maximum Cash Management Amount to such Revolver Cash Management Obligations, and (z) stating that, after giving effect to the designation of such Revolver Cash Management Obligations, the aggregate amount of all Revolving Cash Management Obligations will not exceed the Maximum Cash Management Amount. "Revolver Credit Agreement" means the Second Amended and Restated Credit Agreement dated as of August 30, 2002 among the Revolver Borrower, the 10 QwestDex Companies, the Revolver Lenders and Bank of America, N.A., as Administrative Agent and Collateral Agent. "Revolver Commitment" means any "Commitment" under (and as defined in) the Revolver Credit Agreement. "Revolver Guarantors" means, collectively, QCII, QwestDex Holdings and QwestDex , and "Revolver Guarantor" means any of them, as the context may require. "Revolver Lender Obligations" means (i) all principal of all Revolver Loans outstanding from time to time under the Revolver Credit Agreement, all interest (including Post-Petition Interest) on such Revolver Loans and all other amounts now or hereafter payable by the Revolver Borrower pursuant to the Revolver Loan Documents and (ii) any renewals, extensions or refinancings of any of the foregoing purported to be secured by the Transaction Liens; provided that the principal of outstanding Revolver Loans shall not constitute a Revolver Lender Obligation to the extent that the aggregate outstanding principal amount of Revolver Loans exceeds $3,400,000,000. "Revolver Lenders" means, at any time, the lenders party to (and constituting the "Banks" as defined under) the Revolver Credit Agreement. "Revolver Lien Grantors" means the Revolver Borrower and each QwestDex Company. "Revolver Loan" means any "Loan" under (and as such term is defined in) the Revolver Credit Agreement. "Revolver Loan Documents" means "Loan Documents" as such term is defined in the Revolver Credit Agreement. "Revolver Loan Party" means each "Loan Party" as such term is defined in the Revolver Credit Agreement. "Revolver Release Conditions" means the following conditions for terminating all the Transaction Liens to the extent (but only to the extent) that they secure the Revolver Secured Obligations: (i) all Revolver Commitments shall have expired or been terminated; 11 (ii) all Non-Contingent Secured Obligations that are Revolver Secured Obligations shall have been paid in full; and (iii) no Contingent Secured Obligation that is a Revolver Secured Obligations shall remain outstanding. "Revolver Secured Obligations" means the Revolver Lender Obligations and the Revolver Cash Management Obligations. "Secured Agreement", when used with respect to any Secured Obligation, refers collectively to each instrument, agreement or other document that sets forth obligations of a Borrower, obligations of a guarantor and/or rights of the holder with respect to such Secured Obligation. "Secured Guarantees" means collectively, with respect to any Lien Grantor, any Secured Revolver Guarantee of such Lien Grantor and any Secured Term Guarantee of such Lien Grantor and a "Secured Guarantee" refers to any such guarantee, as the context may require. "Secured Obligations" means, collectively, the Revolver Secured Obligations, the Term Secured Obligations, the Additional Permitted Secured Obligations and the Dex Purchaser Secured Obligations. "Secured Parties" means the Secured Revolver Parties, the Secured Term Parties, and the Junior Secured Parties. "Secured Revolver Cash Management Parties" means the holders from time to time of the Revolver Cash Management Obligations. "Secured Revolver Guarantee" means with respect to each Revolver Guarantor (other than QCII), its guarantee of the Revolver Secured Obligations under Article 9 of the Revolver Credit Agreement (or under any supplemental or additional guaranty agreement executed pursuant to Section 5.14 of the Revolver Credit Agreement). "Secured Revolver Lender Parties" means the holders from time to time of the Revolver Lender Obligations. "Secured Revolver Parties" means, collectively, (i) the Secured Revolver Lender Parties and (ii) the Secured Revolver Cash Management Parties. "Secured Term Guarantee" means, with respect to each Term Guarantor, its guarantee of the Term Secured Obligations under Article 9 of the Term Credit 12 Agreement (or under any supplemental or additional guaranty agreement executed pursuant to Section 5.14 of the Term Credit Agreement). "Secured Term Parties" means the holders from time to time of the Term Secured Obligations. "Secured Party Requesting Notice" means, at any time, a Secured Party that has, at least five Business Days prior thereto, delivered to the Collateral Agent a written notice (i) stating that it holds one or more Secured Obligations and wishes to receive copies of the notices referred to in Section 26(g) and (ii) setting forth its address, facsimile number and e-mail address to which copies of such notices should be sent. "Security and Pledge Agreement Supplement" means a Security and Pledge Agreement Supplement, substantially in the form of Exhibit A, signed and delivered to the Collateral Agent for the purpose of adding a Subsidiary as a party hereto pursuant to Section 28 and/or adding additional property to the Collateral. "Security Documents" means this Agreement, the Security and Pledge Agreement Supplements and all other supplemental or additional security agreements, control agreements or similar instruments, as required by the Revolver Loan Documents in connection with the Revolver Credit Agreement or the Term Loan Documents in connection with the Term Credit Agreement. "Silent Revolver Collateral Lienholders" has the meaning set forth in Section 22. "Silent Term Collateral Lienholders" has the meaning set forth in Section 22. "Subsidiary" means, as to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person. "Term Borrower" means QwestDex. "Term Commitment" means any "Commitment" under (and as such term is defined in) the Term Credit Agreement. "Term Credit Agreement" means the Term Loan Agreement dated as of August 30, 2002 among the Term Borrower, QSC, QwestDex Holdings, the Term 13 Lenders and Bank of America, N.A., as Administrative Agent and Collateral Agent. "Term Guarantors" means, collectively, QSC and QwestDex Holdings and "Term Guarantor" means either of them, as the context may require. "Term Lenders" means, at any time, the lenders party to (and comprising the "Institutions" as defined under) the Term Credit Agreement. "Term Lien Grantors" means the Term Borrower, QSC and QwestDex Holdings. "Term Loan" means any "Loan" under (and as such term is defined in) the Term Credit Agreement. "Term Loan Documents" means "Loan Documents" as such term is defined in the Term Credit Agreement. "Term Loan Party" means each "Loan Party" as such term is defined in the Term Credit Agreement. "Term Release Conditions" means the following conditions for terminating all the Transaction Liens to the extent (but only to the extent) that they secure the Term Secured Obligations: (i) all Term Commitments shall have expired or been terminated; (ii) all Non-Contingent Secured Obligations that are Term Secured Obligations shall have been paid in full; and (iii) no Contingent Secured Obligation that is a Term Secured Obligation shall remain outstanding. "Term Secured Obligations" means the (i) all principal of all Term Loans outstanding from time to time under the Term Credit Agreement, all interest (including Post-Petition Interest) on such Term Loans and all other amounts now or hereafter payable by the Term Borrower pursuant to the Term Loan Documents and (ii) any renewals, extensions or refinancings of any of the foregoing purported to be secured by the Transaction Liens; provided that the principal of outstanding Term Loans shall not constitute a Term Secured Obligation to the extent that the aggregate outstanding principal amount of Term Loans exceeds $750,000,000. 14 "Transaction Liens" means the Liens granted by the Lien Grantors under the Security Documents. "UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any Transaction Lien on any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, "UCC" means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority. (a) Terms Generally. The definitions of terms herein (including those incorporated by reference to the UCC or to another document) apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun includes the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Sections, Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and Schedules to, this Agreement and (e) the word "property" shall be construed to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. SECTION 2. Grant of Transaction Liens. (a) QSC, in order to secure its Revolver Secured Obligations, grants to the Collateral Agent for the benefit of the Secured Revolver Parties a continuing security interest, with the priority specified in Section 21, in all the following property of QSC (collectively, the "Corp. Equity Collateral") , whether now owned or existing or hereafter acquired or arising and regardless of where located: 15 (i) Corp. Equity Interests; (ii) all rights and privileges of such Original Lien Grantor with respect to Corp. Equity Interests, and all dividends, distributions and other payments with respect to such Corp. Equity Interests; and (iii) all Proceeds of the Collateral described in the foregoing clauses (i) and (ii). (b) QSC, (x) in order to secure its Secured Term Guarantee, grants to the Collateral Agent for the benefit of the Secured Term Parties a continuing security interest, with the priority specified in Section 21, and (y) in order to secure those of its Additional Permitted Secured Obligations (if any) that are designated in accordance with Section 29 to be secured by Transaction Liens on Corp. Equity Collateral, grants to the Collateral Agent for the benefit of the holders from time to time of such Additional Permitted Secured Obligations a continuing security interest, with the priority specified in Section 21, in each case, in all of the Corp. Equity Collateral, whether now owned or, existing or hereafter acquired or arising and regardless of where located. (c) QSC, (x) in order to secure its Revolver Secured Obligations, grants to the Collateral Agent for the benefit of the Secured Revolver Parties a continuing security interest, with the priority specified in Section 21, in all the following property of QSC (collectively, the "QSC Asset Collateral") , whether now owned or existing or hereafter acquired or arising and regardless of where located: (i) any Debt owing to such Original Lien Grantor, whether or not evidenced by a note or Instrument (and including, without limitation, any note or other Instrument evidencing Debt owing from Qwest Wireless L.L.C. to QSC), and all such Original Lien Grantor's rights and privileges with respect to such Debt and all interest, distributions and other payments with respect thereto; and (ii) all Proceeds of the Collateral described in the foregoing clause (i). (d) QSC, (x) in order to secure its Secured Term Guarantee, grants to the Collateral Agent for the benefit of the Secured Term Parties a continuing security interest, with the priority specified in Section 21, and (y) in order to secure those of its Additional Permitted Secured Obligations (if any) that are designated in accordance with Section 29 to be secured by Transaction Liens on 16 QSC Asset Collateral, grants to the Collateral Agent for the benefit of the holders from time to time of such Additional Permitted Secured Obligations a continuing security interest, with the priority specified in Section 21, in each case, in all of the QSC Asset Collateral, whether now owned or, existing or hereafter acquired or arising and regardless of where located. (e) QSC, in order to secure its Secured Term Guarantee, grants to the Collateral Agent for the benefit of the Secured Term Parties a continuing security interest, with the priority specified in Section 21, in all the following property of QSC (collectively, the "Holdings Equity Collateral"), whether now owned or existing or hereafter acquired or arising and regardless of where located: (i) Equity Interests in QwestDex Holdings; (ii) all rights and privileges of such Original Lien Grantor with respect to Equity Interests in QwestDex Holdings, and all dividends, distributions and other payments with respect to such Equity Interests in QwestDex Holdings; and (iii) all Proceeds of the Collateral described in the foregoing clauses (i) and (ii). (f) QSC, (x) in order to secure its Revolver Secured Obligations, grants to the Collateral Agent for the benefit of the Secured Revolver Parties a continuing security interest, with the priority specified in Section 21, and (y) in order to secure those of its Additional Permitted Secured Obligations (if any) that are designated in accordance with Section 29 to be secured by Transaction Liens on Holdings Equity Collateral, grants to the Collateral Agent for the benefit of the holders from time to time of such Additional Permitted Secured Obligations a continuing security interest, with the priority specified in Section 21, in each case, in all of the Holdings Equity Collateral, whether now owned or existing or hereafter acquired or arising and regardless of where located. (g) QwestDex Holdings, in order to secure its Secured Term Guarantee, grants to the Collateral Agent for the benefit of the Secured Term Parties a continuing security interest, with the priority specified in Section 21, in all the following property of QwestDex Holdings (collectively, the "Holdings Asset Collateral"), whether now owned or existing or hereafter acquired or arising and regardless of where located: (i) Equity Interests in QwestDex; 17 (ii) all rights and privileges of such Original Lien Grantor with respect to Equity Interests in QwestDex, and all dividends, distributions and other payments with respect to such Equity Interests in QwestDex; (iii) any Debt owing to such Original Lien Grantor, whether or not evidenced by a note or Instrument (and including, without limitation, any note or other Instrument evidencing Debt owing from QwestDex to such Original Lien Grantor), all such Original Lien Grantor's rights and privileges with respect to such Debt and all interest, distributions and other payments with respect thereto; and (iv) all Proceeds of the Collateral described in the foregoing clauses (i), (ii) and (iii). (h) QwestDex Holdings, (x) in order to secure its Secured Revolver Guarantee, grants to the Collateral Agent for the benefit of the Secured Revolver Parties a continuing security interest, with the priority specified in Section 21 and (y) in order to secure those of its Additional Permitted Secured Obligations (if any) that are designated in accordance with Section 29 to be secured by Transaction Liens on Holdings Asset Collateral, grants to the Collateral Agent for the benefit of the holders from time to time of such Additional Permitted Secured Obligations, a continuing security interest, with the priority specified in Section 21, in all of the Holdings Asset Collateral, whether now owned or existing or hereafter acquired or arising and regardless of where located. (i) QwestDex, in order to secure its Term Secured Obligations, grants to the Collateral Agent for the benefit of the Secured Term Parties a continuing security interest, with the priority specified in Section 21, in all the following property of QwestDex (collectively, subject to the proviso at the end of this subsection (i), the "QwestDex Asset Collateral"), whether now owned or existing or hereafter acquired or arising and regardless of where located: (i) all Accounts; (ii) all Chattel Paper; (iii) the Commercial Tort Claims described in Schedule 3; (iv) all Deposit Accounts; (v) all Documents; (vi) all Equipment; 18 (vii) all General Intangibles (including any Equity Interests in other Persons that do not constitute Investment Property); (viii) all Instruments; (ix) all Inventory; (x) all Investment Property; (xi) all Letter-of-Credit Rights; (xii) all books and records (including customer lists, credit files, computer programs, printouts and other computer materials and records) of such Original Lien Grantor pertaining to any of its Collateral; (xiii) such Original Lien Grantor's ownership interest in (1) its Collateral Accounts, (2) all Financial Assets credited to its Collateral Accounts from time to time and all Security Entitlements in respect thereof, (3) all cash held in its Collateral Accounts from time to time and (4) all other money in the possession of the Collateral Agent; and (xiv) all Proceeds of the Collateral described in the foregoing clauses (i) through (xiii); provided that the following property is excluded from the foregoing security interests: (A) motor vehicles the perfection of a security interest in which is excluded from the Uniform Commercial Code in the relevant jurisdiction, (B) voting Equity Interests in any Foreign Subsidiary, to the extent (but only to the extent) required to prevent the Collateral from including more than 66% of all voting Equity Interests in such Foreign Subsidiary and (C) all assets of QwestDex located in, or attributable to, the State of Washington or the State of Utah. (j) QwestDex, (x) in order to secure its Secured Revolver Guarantee, grants to the Collateral Agent for the benefit of the Secured Revolver Parties a continuing security interest, with the priority specified in Section 21, (y) in order to secure its Dex Purchaser Secured Obligations, grants to the Collateral Agent for the benefit of the holders from time to time of the Dex Purchaser Secured Obligations a continuing security interest, with the priority specified in Section 21, and (z) in order to secure those of its Additional Permitted Secured Obligations (if any) that are designated in accordance with Section 29 to be secured by Transaction Liens on QwestDex Asset Collateral, grants to the Collateral Agent for the benefit of the holders from time to time of such 19 Additional Permitted Secured Obligations a continuing security interest, with the priority specified in Section 21, in each case, in all of the QwestDex Asset Collateral, whether now owned or existing or hereafter acquired or arising and regardless of where located. (k) With respect to each right to payment or performance included in the Collateral from time to time, the Transaction Lien granted therein includes a continuing security interest in (i) any Supporting Obligation that supports such payment or performance and (ii) any Lien that (x) secures such right to payment or performance or (y) secures any such Supporting Obligation. (l) The Transaction Liens are granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or transfer or in any way affect or modify, any obligation or liability of any Lien Grantor with respect to any of the Collateral or any transaction in connection therewith. (m) If the governmental body or official having jurisdiction over any Regulated Entity determines that the pledge of the shares of capital stock of such Regulated Entity hereunder constitutes the acquisition of or a change of control with respect to such Regulated Entity as to which the prior approval of such governmental body or official was required, then, immediately upon the relevant Lien Grantor's (1) written memorialization of oral notice or (2) receipt of written notice from such governmental body or official of such determination and without any action on the part of the Collateral Agent or any other Person, such pledge shall be rendered void ab initio and of no effect. Upon any such occurrence, (i) the Collateral Agent shall, at such Lien Grantor's written request and expense, return all certificates representing such capital stock to such Lien Grantor and execute and deliver such documents as such Lien Grantor shall reasonably request to evidence such Lien Grantor's retention of all rights in such capital stock and (ii) such Lien Grantor shall promptly submit a request to the relevant governmental body or official for approval of the pledge of such shares to the Collateral Agent hereunder and, upon receipt of such approval, shall forthwith deliver to the Collateral Agent certificates representing all the outstanding shares of capital stock of such Regulated Entity (subject to the limitation in Section 11(f) if such Regulated Entity is a Foreign Subsidiary) to be held as Collateral hereunder. SECTION 3. General Representations and Warranties. (a) Each Original Lien Grantor represents and warrants that: (i) Such Lien Grantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction identified as its jurisdiction of organization in its Perfection Certificate. 20 (ii) All Pledged Equity Interests owned by such Lien Grantor are owned by it free and clear of any Lien other than (i) the Transaction Liens and (ii) any liens that are Permitted Liens. All shares of capital stock included in such Pledged Equity Interests have been duly authorized and validly issued and are fully paid and non-assessable. None of such Pledged Equity Interests is subject to any option to purchase or similar right of any Person. Such Lien Grantor is not and will not become a party to or otherwise bound by any agreement (except (x) the Loan Documents and (y) with respect to Pledged Equity Interests of any issuer that is not a Subsidiary of such Lien Grantor, agreements granting rights of first refusal and similar rights to shareholders of such issuer) which restricts in any manner the rights of any present or future holder of any Pledged Equity Interest with respect thereto. (iii) Such Lien Grantor has good and marketable title to all its Collateral (subject to exceptions that are, in the aggregate, not material), free and clear of any Lien other than Permitted Liens. (iv) Such Lien Grantor has not performed any acts that could reasonably be expected to prevent the Collateral Agent from enforcing any of the provisions of the Security Documents or that would limit the Collateral Agent in any such enforcement (it being understood, and the parties hereto having acknowledged pursuant to Section 5, that certain restrictions on such enforcement exist under applicable law). No financing statement, security agreement, mortgage or similar or equivalent document or instrument covering all or part of the Collateral owned by such Lien Grantor is on file or of record in any jurisdiction in which such filing or recording would be effective to perfect or record a Lien on such Collateral, except financing statements, mortgages or other similar or equivalent documents with respect to Permitted Liens. (v) The Transaction Liens on all Collateral owned by such Lien Grantor (i) have been validly created, (ii) will attach to each item of such Collateral on the Effective Date (or, if such Lien Grantor first obtains rights thereto on a later date, on such later date) and (iii) when so attached, will secure all the Secured Obligations purported to be secured by such item of Collateral pursuant to Section 2. (vi) Such Lien Grantor has delivered a Perfection Certificate to the Collateral Agent. The information set forth therein is correct and complete as of the Effective Date. Within 60 days after the Effective Date, such Lien Grantor will furnish to the Collateral Agent a file search report 21 from each UCC filing office listed in its Perfection Certificate, showing the filing made at such filing office to perfect the Transaction Liens on its Collateral. (vii) When UCC financing statements describing the Collateral as set forth in Schedule 2 to such Lien Grantor's Perfection Certificate have been filed in the offices specified in such Perfection Certificate, the Transaction Liens will constitute perfected security interests in the Collateral owned by such Lien Grantor to the extent that a security interest therein may be perfected by filing pursuant to the UCC, prior to all Liens and rights of others therein except Permitted Liens. Except for the filing of such UCC financing statements, (and, in the case of Transaction Liens granted by QwestDex, (x) the filing of certain intellectual property filings, (y) the due recordation of mortgages and (z) the filing of assignments and notices of assignment with the relevant Governmental Authority regarding government contracts between such Lien Grantor and a Governmental Authority), no registration, recordation or filing with any governmental body, agency or official is required in connection with the execution or delivery of the Security Documents or is necessary for the validity or (except as otherwise set forth in Section 5) enforceability thereof or for the perfection or due recordation of the Transaction Liens or (except as otherwise set forth in Section 5) for the enforcement of the Transaction Liens. (b) In addition to the representations and warranties set forth in subsection (a) above, QwestDex represents and warrants that: (i) As of the Effective Date, such Lien Grantor does not own any Equity Interests in Subsidiaries or Affiliates. (ii) Schedule 1 lists, as of the Effective Date, all Securities owned by such Lien Grantor. (iii) Such Lien Grantor has taken, and will continue to take, all actions necessary under the UCC to perfect its interest in (i) any Accounts or Chattel Paper purchased or otherwise acquired by it, as against its assignors and creditors of its assignors and (ii) any Payment Intangibles or promissory notes purchased or otherwise acquired by it, as against its assignors and creditors of its assignors. (iv) Such Lien Grantor's Collateral is insured as required by the Credit Agreement. 22 (v) All of such Lien Grantor's Inventory has or will have been produced in compliance with the applicable requirements of the Fair Labor Standards Act, as amended. (c) In addition to the representations and warranties set forth in subsection (a) of this Section 3, each of QSC and QwestDex Holdings represents and warrants that: (i) Schedule 2 lists all of the notes or other Instruments evidencing Debt owing to such Lien Grantor as of the Effective Date. (ii) As of the Effective Date, such Lien Grantor has delivered to the Collateral Agent as Collateral hereunder all notes and Instruments evidencing Debt owing to such Lien Grantor. SECTION 4. Further Assurances; General Covenants. Each Lien Grantor covenants as follows: (a) Such Lien Grantor will, from time to time, at the Borrowers' expense, execute, deliver, file and record any statement, assignment, instrument, document, agreement or other paper and take any other action (including any filing of financing or continuation statements under the UCC) that from time to time may be necessary or desirable, or that the Collateral Agent may request, in order to: (i) create, preserve, perfect, confirm or validate the Transaction Liens on such Lien Grantor's Collateral; (ii) enable the Collateral Agent and the other Secured Parties to obtain the full benefits of the Security Documents; or (iii) enable the Collateral Agent to exercise and enforce any of its rights, powers and remedies with respect to any of such Lien Grantor's Collateral; provided that no Lien Grantor will be required to take any action with respect to (u) delivering Instruments other than as provided in Section 7, (v) delivering letters of credit other than as provided in Section 10, (w) recording mortgages and/or fixture filings, (x) filing with the United States Patent and Trademark Office or the United States Copyright Office, (y) filing with a Governmental Authority an assignment and notice of assignment of a contract between such Lien Grantor and the relevant Governmental Authority or (z) entering into an issuer control agreement with respect to any Uncertificated Securities, a securities 23 account control agreement with respect to any Security Entitlement or deposit account control agreement with respect to any Deposit Account; provided further that no Lien Grantor shall be required to deliver an Opinion of Counsel in order to satisfy its obligations under this Section 4(a), except to the extent that delivery of such Opinion of Counsel is otherwise expressly required pursuant to this Agreement. To the extent permitted by applicable law, such Lien Grantor authorizes the Collateral Agent to execute and file such financing statements or continuation statements without such Lien Grantor's signature appearing thereon. Such Lien Grantor agrees that a carbon, photographic, photostatic or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement. Such Lien Grantor constitutes the Collateral Agent its attorney-in-fact to execute all filings required or so requested for the foregoing purposes (subject to the limitations set forth in the first proviso above), all acts of such attorney being hereby ratified and confirmed; and such power, being coupled with an interest, shall be irrevocable until all the Transaction Liens granted by such Lien Grantor terminate pursuant to Section 27. The Borrowers will pay the costs of, or incidental to, any recording or filing of any financing or continuation statements or other documents recorded or filed pursuant hereto. (b) Such Lien Grantor will not (i) change its name or corporate structure, (ii) change its location (determined as provided in UCC Section 9-307) or (iii) become bound, as provided in UCC Section 9-203(d) or otherwise, by a security agreement entered into by another Person, unless it shall have given the Collateral Agent prior notice thereof and delivered an Opinion of Counsel with respect thereto in accordance with Section 4(c); provided that no such Opinion of Counsel shall be required in connection with the actions described in clause (iii) (and such actions shall not be prohibited ) if the relevant security agreement creates Liens that are not prohibited under either Credit Agreement. (c) At least 30 days before it takes any action contemplated by Section 4(b) (other than any action described in the proviso to such Section), such Lien Grantor will, at the Borrowers' expense, cause to be delivered to the Collateral Agent an Opinion of Counsel, in form and substance satisfactory to the Collateral Agent, to the effect that (i) all financing statements and amendments or supplements thereto, continuation statements and other documents required to be filed or recorded in order to perfect the Transaction Liens (to the extent such Liens can be perfected by filing pursuant to the UCC) against all creditors of and purchasers from such Lien Grantor after it takes such action (except any continuation statements specified in such Opinion of Counsel that are to be filed more than six months after the date thereof) have been filed or recorded in each office necessary for such purpose, (ii) all fees and taxes, if any, payable in 24 connection with such filings or recordations have been paid in full and (iii) except as otherwise agreed by the Required Secured Lenders, such action will not adversely affect the perfection or priority of the Transaction Lien on any Collateral to be owned by such Lien Grantor after it takes such action or the accuracy of such Lien Grantor's representations and warranties herein relating to such Collateral. (d) Such Lien Grantor will not sell, lease, exchange, assign or otherwise dispose of, or grant any option with respect to, any of its Collateral; provided that such Lien Grantor may do any of the foregoing unless (i) doing so would violate a covenant in one or both of the Credit Agreements or (ii) an Event of Default shall have occurred and be continuing and the Collateral Agent shall have notified such Lien Grantor that its right to do so is terminated, suspended or otherwise limited. Concurrently with any sale, lease or other disposition (except a sale or disposition to another Lien Grantor or a lease) permitted by the foregoing proviso, the Transaction Liens on the assets sold or disposed of (but not in any Proceeds arising from such sale or disposition) will cease immediately without any action by the Collateral Agent or any other Secured Party. The Collateral Agent will, at the Borrowers' expense, execute and deliver to the relevant Lien Grantor such documents as such Lien Grantor shall reasonably request to evidence the fact that any asset so sold or disposed of is no longer subject to a Transaction Lien. (e) Such Lien Grantor will, promptly upon request, provide to the Collateral Agent all information and evidence concerning such Lien Grantor's Collateral that the Collateral Agent may reasonably request from time to time to enable it to enforce the provisions of the Security Documents. (f) Such Lien Grantor agrees to exercise commercially reasonable efforts: (i) to cooperate with the Collateral Agent to obtain any approval of the FCC or the PUCs for any action or transaction contemplated by this Agreement which is then required by applicable law (provided that no Lien Grantor shall be required to seek or obtain such FCC or PUC approval of any grant of Transaction Liens with respect to any Holdings Asset Collateral or any QwestDex Asset Collateral located in, or attributable to, the State of Washington or the State of Utah); and (ii) after the occurrence of an Event of Default, cooperate with the Collateral Agent to obtain any approval of the FCC, any PUC and any other Governmental Authority which may be required, necessary or appropriate under the FCC's, such PUC's or such Governmental 25 Authority's rules and regulations in connection with any sale or transfer of any of the capital stock or assets of a Borrower or any of its Subsidiaries. SECTION 5. Acknowledgment. (a) The Collateral Agent on behalf of the Secured Parties acknowledges and recognizes that Corp. is a Regulated Entity, and that the ability of creditors (including the Secured Parties) to exercise rights in connection with any pledge of, or security interest in, the capital stock of Corp. is subject to any applicable restrictions or prohibitions, before or after any default by such Lien Grantor, (i) on the right of any Person to acquire control of Corp. without the prior consent of the FCC or of certain PUCs or other Governmental Authorities, (ii) on the right of such Lien Grantor to afford its creditors (including the Secured Parties) or creditors of certain Affiliates of Corp. recourse to or against the assets of Corp., or (iii) to foreclose on, or otherwise acquire ownership of, the capital stock of Corp. (b) The Collateral Agent on behalf of the Secured Parties acknowledges and agrees that the pledge of the capital stock of Corp. does not afford the Secured Parties (or any other creditor of such Lien Grantor) (i) any recourse to or against the assets of Corp., including without limitation any assets subject to regulation by the FCC or any PUC, or (ii) ownership of, or the right or power to vote, such capital stock or the right or power to control the operations, management or policies of Corp. (c) The Collateral Agent on behalf of the Secured Parties agrees that, notwithstanding anything to the contrary contained in this Agreement, any Revolver Loan Document or any Term Loan Document, the Collateral Agent shall not, without the prior consent of the FCC and, to the extent required by applicable law, the PUCs or other Governmental Authorities, take any action pursuant to this Agreement, any Revolver Loan Document or any Term Loan Document, whether before or after any Event of Default, including without limitation any exercise of remedies, that would constitute or result in: (i) The exercise by the Collateral Agent on behalf of the Secured Parties of control over Corp. or any of its Subsidiaries, including without limitation, directly or indirectly: (A) Electing or removing any director or officer of Corp. or any of its Subsidiaries; (B) Causing the payment or making of any dividend or other distribution with respect to the capital stock of Corp. 26 (C) Preventing or restricting any Lien Grantor from exercising its power to vote, or give consents with respect to, its shares of the capital stock of Corp.; and (D) Managing or directing the operations or policies of Corp.; (ii) The liquidation, dissolution, reorganization, merger, consolidation or recapitalization, or sale, transfer, mortgage, lease or other disposition of the assets, of Corp.; (iii) Any application of, or other recourse to or against, the assets of Corp. or any of its Subsidiaries that are Regulated Entities to the payment, setoff, or reduction of the Revolver Loans or the Term Loans; (iv) The sale, disposition or transfer of the capital stock of Corp.; and (v) Calling any meeting of shareholders or of the Board of Directors of Corp. (or any committee thereof) or voting, giving consent or exercising any other right as a shareholder of Corp. (d) The Collateral Agent on behalf of the Secured Parties acknowledges and recognizes that a QwestDex Company may be a Regulated Entity in certain States, and that the ability of creditors (including the Secured Parties) to exercise rights in connection with any pledge of, or security interest in, the capital stock or assets of a QwestDex Company may be subject to any applicable restrictions or prohibitions, before or after any default by such Lien Grantor, on the right of any Person (i) to acquire control of a QwestDex Company without the prior consent of certain PUCs or (ii) to foreclose on, or otherwise acquire ownership of, the capital stock of a QwestDex Company or the QwestDex Asset Collateral. (e) The Collateral Agent on behalf of the Secured Parties acknowledges and agrees that the pledge of the capital stock or assets of a QwestDex Company does not afford the Secured Parties (or any other creditor of the applicable Lien Grantor) ownership of, or the right or power to vote, such capital stock or the right or power to control the operations, management or policies of such QwestDex Company. (f) The Collateral Agent agrees that, notwithstanding anything to the contrary contained in this Agreement, any Revolver Loan Document or any Term Loan Document, the Collateral Agent shall not, without the prior consent of the PUCs, to the extent required by applicable law, take any action pursuant to this 27 Agreement, any Revolver Loan Document or any Term Loan Document, whether before or after any Event of Default, including without limitation any exercise of remedies, that would constitute or result in: (i) The exercise by the Collateral Agent of control over a QwestDex Company, any of its Subsidiaries or any of its assets, including without limitation, directly or indirectly: (A) Electing or removing any director or officer of a QwestDex Company or any of its Subsidiaries; (B) Causing the payment or making of any dividend or other distribution with respect to the capital stock of a QwestDex Company; (C) Preventing or restricting any Lien Grantor from exercising its power to vote, or give consents with respect to, its shares of the capital stock of a QwestDex Company; and (D) Managing or directing the operations or policies of a QwestDex Company; (ii) The liquidation, dissolution, reorganization, merger, consolidation or recapitalization, or sale, transfer, mortgage, lease or other disposition of the assets, of a QwestDex Company; (iii) The sale, disposition or transfer of the capital stock of a QwestDex Company; and (iv) Calling any meeting of shareholders or of the Board of Directors of a QwestDex Company (or any committee thereof) or voting, giving consent or exercising any other right as a shareholder of a QwestDex Company. SECTION 6. Accounts. Each Lien Grantor whose Collateral includes Pledged Accounts represents, warrants and covenants as follows: (a) Such Lien Grantor will use commercially reasonable efforts to cause to be collected from its account debtors, when due, all amounts owing under its Accounts (including delinquent Accounts, which will be collected in accordance with lawful collection procedures) and will apply all amounts collected thereon, forthwith upon receipt thereof, to the outstanding balances of such Accounts. Subject to the rights of the Collateral Agent and the other Secured Parties 28 hereunder if an Event of Default shall have occurred and be continuing, such Lien Grantor may allow in the ordinary course of business as adjustments to amounts owing under its Accounts (i) any extension or renewal of the time or times for payment, or settlement for less than the total unpaid balance, that such Lien Grantor finds appropriate in accordance with sound business judgment and (ii) refunds or credits, all in the ordinary course of business and consistent with such Lien Grantor's historical collection practices. The costs and expenses (including attorney's fees) of collection, whether incurred by such Lien Grantor or the Collateral Agent, shall be paid by such Lien Grantor. (b) If an Event of Default shall have occurred and be continuing, such Lien Grantor will, if requested to do so by the Collateral Agent, promptly notify (and such Lien Grantor authorizes the Collateral Agent so to notify) each account debtor in respect of any of its Accounts that such Accounts have been assigned to the Collateral Agent hereunder, and that any payments due or to become due in respect of such Accounts are to be made directly to the Collateral Agent or its designee. SECTION 7. Instruments. Except as to actions to be taken by the Collateral Agent, each Lien Grantor whose Collateral includes Pledged Instruments represents, warrants and covenants as follows: (a) On the Effective Date (in the case of an Original Lien Grantor) or the date on which it signs and delivers its first Security and Pledge Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will deliver to the Collateral Agent as Collateral hereunder all Pledged Instruments then owned by such Lien Grantor; provided that the Lien Grantor shall not be required to deliver any Pledged Instrument to the Collateral Agent if (x) the obligor under such Pledged Instrument is not an Affiliate of QwestDex and (y) the aggregate principal or face amount of such instrument does not exceed $500,000 and (z) the sum of the aggregate principal or face amount of such instrument and the aggregate principal or face amount of all other Pledged Instruments not delivered to the Collateral Agent in reliance on this proviso does not exceed $5,000,000. Thereafter, whenever such Lien Grantor acquires any such Pledged Instrument, such Lien Grantor will immediately deliver such Pledged Instrument to the Collateral Agent as Collateral hereunder, subject to the proviso in the previous sentence. (b) So long as no Event of Default shall have occurred and be continuing, the Collateral Agent will, promptly upon request by the relevant Lien Grantor, make appropriate arrangements for making any Pledged Instrument available to it for purposes of presentation, collection or renewal (any such arrangement to be 29 effected, to the extent deemed appropriate by the Collateral Agent, against trust receipt or like document). (c) All Pledged Instruments owned by such Lien Grantor, when delivered to the Collateral Agent, will be indorsed to the order of the Collateral Agent, or accompanied by duly executed instruments of assignment, with signatures appropriately guaranteed, all in form and substance satisfactory to the Collateral Agent. (d) Upon the delivery of any Pledged Instrument owned by such Lien Grantor to the Collateral Agent, the Transaction Lien on such Collateral will be perfected, subject to no prior Liens or rights of others. SECTION 8. Commercial Tort Claims. Each Lien Grantor whose Collateral includes Commercial Tort Claims represents, warrants and covenants as follows: (a) In the case of an Original Lien Grantor whose Collateral includes Commercial Tort Claims, Schedule 3 accurately describes, with the specificity required to satisfy Official Comment 5 to UCC Section 9-108, each Material Commercial Tort Claim with respect to which such Original Lien Grantor is the claimant as of the Effective Date. In the case of any other Lien Grantor whose Collateral includes Commercial Tort Claims, Schedule 3 to its first Security and Pledge Agreement Supplement will accurately describe, with the specificity required to satisfy said Official Comment 5, each Material Commercial Tort Claim with respect to which such Lien Grantor is the claimant as of the date on which it signs and delivers such Security and Pledge Agreement Supplement. (b) If any Lien Grantor whose Collateral includes Commercial Tort Claims acquires a Material Commercial Tort Claim after the Effective Date (in the case of an Original Lien Grantor) or the date on which it signs and delivers its first Security and Pledge Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will promptly sign and deliver to the Collateral Agent a Security and Pledge Agreement Supplement granting a security interest in such Commercial Tort Claim (which shall be described therein with the specificity required to satisfy said Official Comment 5) to the Collateral Agent for the benefit of the Secured Parties. (c) Upon the filing of a UCC financing statement in the jurisdiction under the laws of which the relevant Lien Grantor is organized, the Transaction Lien on each Material Commercial Tort Claim described pursuant to subsection (a) or (b) above will be perfected, subject to no prior Liens or rights of others. 30 SECTION 9. [Intentionally Omitted]. SECTION 10. Proceeds of Letters of Credit. Except as to actions to be taken by the Collateral Agent, each Lien Grantor whose Collateral includes Letter- of-Credit Rights represents, warrants and covenants that if an Event of Default shall have occurred and be continuing, such Lien Grantor will, promptly upon request by the Collateral Agent, deliver all letters of credit to which it is a beneficiary to the Collateral Agent and notify (and such Lien Grantor authorizes the Collateral Agent to notify) the issuer and each Nominated Person with respect to each of its Pledged letters of credit that (i) the proceeds thereof have been assigned to the Collateral Agent hereunder and (ii) any payments due or to become due in respect thereof are to be made directly to the Collateral Agent or its designee. SECTION 11. Investment Property. Each Lien Grantor whose Collateral includes Investment Property represents, warrants and covenants as follows: (a) Certificated Securities. On the Effective Date (in the case of an Original Lien Grantor) or the date on which it signs and delivers its first Security and Pledge Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will deliver to the Collateral Agent as Collateral hereunder all certificates representing Pledged Certificated Securities then owned by such Lien Grantor. Thereafter, whenever such Lien Grantor acquires any other certificate representing a Pledged Certificated Security, such Lien Grantor will immediately deliver such certificate to the Collateral Agent as Collateral hereunder. The provisions of this subsection are subject to the limitation in Section 11(f) in the case of voting Equity Interests in a Foreign Subsidiary. (b) Regulated Entities. If the Collateral includes any capital stock of a Regulated Entity that is not represented by certificates, the relevant Lien Grantor shall exercise its best efforts to cause such capital stock to be represented by certificates and, promptly upon receipt thereof, comply with Section 11(a) with respect thereto. (c) Perfection as to Certificated Securities. When such Lien Grantor delivers the certificate representing any Pledged Certificated Security owned by it to the Collateral Agent and complies with Section 11(d) in connection with such delivery, (i) the Transaction Lien on such Pledged Certificated Security will be perfected, subject to no prior Liens or rights of others, (ii) the Collateral Agent will have Control of such Pledged Certificated Security and (iii) the Collateral Agent will be a protected purchaser (within the meaning of UCC Section 8-303) thereof. 31 (d) Delivery of Pledged Certificated Securities. All certificates representing Pledged Certificated Securities, when delivered to the Collateral Agent, will be in suitable form for transfer by delivery, or accompanied by duly executed instruments of transfer or assignment in blank, with signatures appropriately guaranteed, all in form and substance satisfactory to the Collateral Agent. (e) Communications. Each Lien Grantor will promptly give to the Collateral Agent copies of any notices and other communications received by it with respect to (i) Pledged Securities registered in the name of such Lien Grantor or its nominee and (ii) Pledged Security Entitlements as to which such Lien Grantor is the Entitlement Holder. (f) Foreign Subsidiaries. A Lien Grantor will not be obligated to comply with the provisions of this Section at any time with respect to any voting Equity Interest in a Foreign Subsidiary if and to the extent (but only to the extent) that such voting Equity Interest is excluded from the Transaction Liens at such time pursuant to clause (B) of the proviso at the end of Section 3(a) and/or the comparable provisions of one or more Security and Pledge Agreement Supplements. (g) Compliance with Applicable Foreign Laws. If and so long as the Collateral includes (i) any Equity Interest in, or other Investment Property issued by, a legal entity organized under the laws of a jurisdiction outside the United States or (ii) any Security Entitlement in respect of a Financial Asset issued by such a foreign legal entity, the relevant Lien Grantor will take all such action as may be required under the laws of such foreign jurisdiction to ensure that the Transaction Lien on such Collateral ranks prior to all Liens and rights of others therein, other than Permitted Liens. SECTION 12. [Intentionally Omitted.]. SECTION 13. Certain Deposit Account Information. Each of QwestDex Holdings and QwestDex represents, warrants and covenants as follows: (a) Schedule 4 hereto lists, with respect to each such Original Lien Grantor as of the Effective Date, (i) each deposit account owned by such Original Lien Grantor on such date, (ii) the legal name of the relevant account party, (iii) the name of the relevant depositary bank, and (iv) the name and telephone number of the appropriate contact person in respect of such account at such depositary bank. (b) Such Lien Grantor agrees to deliver to the Collateral Agent: 32 (i) within 10 days following the Effective Date, copies of the most recent monthly statements provided by the applicable depositary bank (the "Monthly Account Statements") with respect to each Deposit Account owned by such Lien Grantor on the Effective Date; (ii) on the fifth day following each calendar quarter, copies of the Monthly Account Statements for the three months comprising such quarter with respect to each Deposit Account then owned by such Lien Grantor, together with an updated schedule of all deposit accounts owned by such Lien Grantor (x) including, with respect to each account, the information described in clauses (i)-(iv) of subsection (a) above and (y) specifying any changes to such schedule since the Effective Date (or, if later, from the date of the then most recently delivered schedule pursuant to this Section 13(b)); and (iii) at any time during which any Triggering Event (as defined in the Term Credit Agreement) exists, on the fifth day of each calendar month, an Officers Certificate of such Lien Grantor (x) setting forth the amounts (if any) that have been paid out of each Deposit Account owned by such Lien Grantor in respect of mandatory interest and principal payments pursuant to Section 5.10 of the Term Credit Agreement, (y) attaching the current Monthly Statements (and any other Monthly Statements issued since the end of the prior calendar quarter and not previously delivered) with respect to each Deposit Account owned by such Lien Grantor and (z) certifying as to the accuracy of each of the foregoing. SECTION 14. Cash Collateral Accounts. (a) If and when required for purposes hereof, the Collateral Agent will establish with respect to each Lien Grantor one or more accounts (each, a "Cash Collateral Account"), in the name and under the exclusive control of the Collateral Agent and subject (to the extent necessary or advisable in the sole discretion of the Collateral Agent) to an Account Control Agreement, into which all amounts owned by such Lien Grantor that are to be deposited therein pursuant to Section 14(b) or Section 18 shall be deposited from time to time. Each Cash Collateral Account will be operated as provided in this Section and Section 15. (b) The Collateral Agent shall deposit in the relevant Cash Collateral Account of each Lien Grantor: (i) each Cash Distribution required by Section 18 to be deposited therein; and 33 (ii) each amount realized or otherwise received by the Collateral Agent with respect to assets of such Lien Grantor upon any exercise of remedies pursuant to any Security Document; provided that, in the case of QSC, the Collateral Agent shall establish separate Cash Collateral Accounts for the deposit of amounts realized or received by the Collateral Agent with respect to the Pledged Holdings Equity Collateral, on one hand (any such Cash Collateral Account, the "QwestDex Holdings Account"), and with respect to the Pledged Corp. Equity Collateral, on the other (any such Cash Collateral Account, the "Corp. Equity Account"). (c) The Collateral Agent shall maintain such records and/or establish such sub-accounts as shall be required to enable it to identify the amounts held in each Cash Collateral Account from time to time pursuant to each clause of subsection (b) of this Section, as applicable. SECTION 15. Operation of Collateral Accounts. (a) All Cash Distributions received with respect to assets held in any Collateral Account shall be deposited therein promptly upon receipt thereof. (b) Funds held in any Cash Collateral Account may, until withdrawn, be invested and reinvested in such Liquid Investments as the relevant Lien Grantor shall request from time to time; provided that (i) if an Event of Default shall have occurred and be continuing, the Collateral Agent may select such Liquid Investments and (ii) if such Liquid Investments are to be held in a Securities Account, either (x) the Collateral Agent is the Entitlement Holder with respect to such Liquid Investments or (y) the relevant Entitlement Holder and the relevant Securities Intermediary shall have theretofore entered into a Securities Account Control Agreement with respect to such Securities Account and delivered it to the Collateral Agent (which shall enter into the same). (c) If an Event of Default shall have occurred and be continuing, the Collateral Agent may (i) retain all cash and investments then held in any Collateral Account, (ii) liquidate, or instruct the relevant Securities Intermediary to liquidate, any or all investments held therein and/or (iii) withdraw any amounts held therein and apply such amounts as provided in Section 21. (d) If immediately available cash on deposit in any Collateral Account is not sufficient to make any distribution or withdrawal to be made pursuant hereto, the Collateral Agent will cause to be liquidated, as promptly as practicable, such investments held in or credited to such Collateral Account as shall be required to obtain sufficient cash to make such distribution or withdrawal and, notwithstanding any other provision hereof, such distribution or withdrawal shall not be made until such liquidation has taken place. 34 SECTION 16. [Intentionally Omitted]. SECTION 17. Right to Vote Securities. (a) Unless (x) an Event of Default shall have occurred and be continuing, and (y) all approvals and/or consents required to be obtained prior to restricting a Lien Grantor's ability to vote and give consents and waivers (as described in Section 5) have been granted, each Lien Grantor will have the right, from time to time, to vote and to give consents, ratifications and waivers with respect to any Pledged Security or other Pledged Equity Interests owned by it and the Financial Asset underlying any Pledged Security Entitlement owned by it. (b) If (i) an Event of Default shall have occurred and be continuing, (ii) all approvals and/or consents required to be obtained in accordance with Section 5 shall have been granted and (iii) the Collateral Agent shall have notified the relevant Lien Grantor in writing that such required approvals and/or consents have been granted, the Collateral Agent will have the right to the extent permitted by law (and, in the case of a Pledged Partnership Interest or Pledged LLC Interest, by the relevant partnership agreement, limited liability company agreement, operating agreement or other governing document) to vote, to give consents, ratifications and waivers and to take any other action with respect to the Pledged Investment Property and the other Pledged Equity Interests (if any), with the same force and effect as if the Collateral Agent were the absolute and sole owner thereof, and each Lien Grantor will take all such action as the Collateral Agent may reasonably request from time to time to give effect to such right. SECTION 18. Certain Cash Distributions. Cash Distributions with respect to assets held in a Collateral Account shall be deposited and held therein, or withdrawn therefrom, as provided in Section 15. SECTION 19. Remedies upon Event of Default. (a) If an Event of Default shall have occurred and be continuing, the Collateral Agent may exercise (or cause its sub-agents to exercise) any or all of the remedies available to it (or to such sub-agents) (subject, in each case, to the limitations set forth in Section 5) under the Security Documents. (b) Without limiting the generality of the foregoing, if an Event of Default shall have occurred and be continuing, the Collateral Agent may exercise on behalf of the Secured Parties (subject, in each case, to the limitations set forth in Section 5) all the rights of a secured party under the UCC (whether or not in effect in the jurisdiction where such rights are exercised) with respect to any Collateral and, in addition, the Collateral Agent may, without being required to give any notice, except as herein provided or as may be required by mandatory provisions of law, withdraw all cash held in the Collateral Accounts and apply 35 such cash as provided in Section 21 and, if there shall be no such cash or if such cash shall be insufficient to pay all the Secured Obligations in full, sell, lease, license or otherwise dispose of the Collateral or any part thereof. Notice of any such sale or other disposition shall be given to the relevant Lien Grantor(s) as required by Section 24. SECTION 20. Limitation on Rights and Remedies. Notwithstanding anything herein to the contrary: (a) at all times until all Revolver Secured Obligations have been paid in full in cash and the Revolver Release Conditions shall have been satisfied, none of the Secured Revolver Cash Management Parties, the Secured Term Parties or the Junior Secured Parties (in each case, in their respective capacities as such) shall be entitled to (A) exercise (or to direct the Collateral Agent to exercise) any rights (including any rights to approve or disapprove any action or inaction by the Collateral Agent) or remedies with respect to the First Tier Revolver Collateral, including without limitation the right to (1) enforce any Liens or sell or otherwise foreclose on any portion of the First Tier Revolver Collateral or (2) request any action, institute proceedings, give any instructions, make any election, notice account debtors or make collections with respect to all or any portion of the First Tier Revolver Collateral or (B) demand, accept or obtain any lien and/or security interest in any First Tier Revolver Collateral (except for the Transaction Liens arising under, and subject to the terms of, this Agreement). (b) at all times until all Term Secured Obligations have been paid in full in cash and the Term Release Conditions shall have been satisfied, none of the Secured Revolver Parties or the Junior Secured Parties (in their capacities as such) shall be entitled to (A) exercise (or to direct the Collateral Agent to exercise) any rights (including any rights to approve or disapprove any action or inaction by the Collateral Agent) or remedies with respect to the First Tier Term Collateral, including without limitation the right to (1) enforce any Liens or sell or otherwise foreclose on any portion of the First Tier Term Collateral or (2) request any action, institute proceedings, give any instructions, make any election, notice account debtors or make collections with respect to all or any portion of the First Tier Term Collateral or (B) demand, accept or obtain any lien and/or security interest in any First Tier Term Collateral (except for the Transaction Liens arising under, and subject to the terms of, this Agreement). SECTION 21. Application of Proceeds. (a) If an Event of Default shall have occurred and be continuing, the Collateral Agent may apply, in accordance with Section 20, (i) any cash held in the Corp. Equity Account and any cash held in the Collateral Accounts in respect of the QSC Asset Collateral and (ii) the proceeds of any sale or other disposition of all or any part of the Corp. Equity 36 Collateral or all or any part of the QSC Asset Collateral, in the following order of priorities: first, to pay the expenses of such sale or other disposition, including reasonable compensation to agents of and counsel for the Collateral Agent, and all expenses, liabilities and advances incurred or made by the Collateral Agent in connection with the Security Documents; second, to pay all fees and any other expenses and other amounts then due and payable to the Collateral Agent pursuant to Section 23, until payment in full of all such Collateral Agent fees and other expenses and amounts shall have been made; third, to pay all expenses, liabilities and advances incurred or made by the Administrative Agent in connection with the Revolver Credit Agreement, until payment in full of all such expenses and other amounts shall have been made; fourth, to pay all fees then due and payable to the Administrative Agent under the Revolver Credit Agreement or the other Revolver Loan Documents, until payment in full of all such Administrative Agent fees shall have been made; fifth, to pay ratably (i) all interest (including Post-Petition Interest) on the Revolver Lender Obligations and (ii) all commitment and other fees payable under the Revolver Credit Agreement, until payment in full of all such interest and fees shall have been made; sixth, to pay ratably (i) the unpaid principal of the Revolver Lender Obligations (or provide for the payment thereof pursuant to Section 21(d)) and (ii) the unpaid Revolver Cash Management Obligations (or provide for the payment thereof pursuant to Section 21(d)), until payment in full of all such principal and cash management obligations shall have been made (or so provided for); seventh, to pay all other Revolver Secured Obligations ratably (or provide for the payment thereof pursuant to Section 21(d)), until payment in full of all such other Revolver Secured Obligations shall have been made (or so provided for); eighth, to pay any outstanding Term Secured Obligations in the order of priorities set forth in clauses third, fourth, fifth, sixth and seventh of Section 21(b); 37 ninth, to pay ratably the Additional Permitted Secured Obligations (if any) that are secured by a Transaction Lien on Corp. Equity Collateral (or provide for the payment thereof pursuant to Section 21(d)), until payment in full of all such obligations shall have been made (or so provided for); and finally, to pay to the relevant Lien Grantor, or as a court of competent jurisdiction may direct, any surplus then remaining from the proceeds of the Collateral owned by it. The Collateral Agent may make such distributions hereunder in cash or in kind or, on a ratable basis, in any combination thereof. (b) If an Event of Default shall have occurred and be continuing, the Collateral Agent may apply, in accordance with Section 20, (i) any cash held in the Collateral Accounts in respect of the Holdings Equity Collateral and the Holdings Asset Collateral and (ii) the proceeds of any sale or other disposition of all or any part of the Holdings Equity Collateral or all or any part of the Holdings Asset Collateral in the following order of priorities: first, to pay the expenses of such sale or other disposition, including reasonable compensation to agents of and counsel for the Collateral Agent, and all expenses, liabilities and advances incurred or made by the Collateral Agent in connection with the Security Documents; second, to pay all fees and any other expenses and other amounts then due and payable to the Collateral Agent pursuant to Section 23, until payment in full of all such Collateral Agent fees and other expenses and amounts shall have been made; third, to pay all expenses, liabilities and advances incurred or made by the Administrative Agent in connection with the Term Credit Agreement, until payment in full of all such expenses and other amounts shall have been made; fourth, to pay all fees then due and payable to the Administrative Agent under the Term Credit Agreement or the other Term Loan Documents, until payment in full of all such Administrative Agent fees shall have been made; fifth, to pay ratably (i) all interest (including Post-Petition Interest) on the Term Secured Obligations and (ii) all commitment and other fees 38 payable under the Term Credit Agreement, until payment in full of all such interest and fees shall have been made; sixth, to pay ratably the unpaid principal of the Term Secured Obligations (or provide for the payment thereof pursuant to Section 21(d)), until payment in full of all such principal shall have been made (or so provided for); seventh, to pay all other Term Secured Obligations ratably (or provide for the payment thereof pursuant to Section 21(d)), until payment in full of all such other Term Secured Obligations shall have been made (or so provided for); and eighth, to pay any outstanding Revolver Secured Obligations in the order of priorities set forth in clauses third, fourth, fifth, sixth and seventh of Section 21(a); ninth, to pay ratably the Additional Permitted Secured Obligations, (if any) that are secured by a Transaction Lien on the Holdings Equity Collateral or Holdings Asset Collateral, as applicable (or provide for the payment thereof pursuant to Section 21(d)), until payment in full of all such obligations shall have been made (or so provided for); and finally, to pay to the relevant Lien Grantor, or as a court of competent jurisdiction may direct, any surplus then remaining from the proceeds of the Collateral owned by it. The Collateral Agent may make such distributions hereunder in cash or in kind or, on a ratable basis, in any combination thereof. (c) If an Event of Default shall have occurred and be continuing, the Collateral Agent may apply, in accordance with Section 20, (i) any cash held in the Collateral Accounts in respect of the QwestDex Asset Collateral and (ii) the proceeds of any sale or other disposition of all or any part of the QwestDex Asset Collateral in the following order of priorities: first, to pay the expenses of such sale or other disposition, including reasonable compensation to agents of and counsel for the Collateral Agent, and all expenses, liabilities and advances incurred or made by the Collateral Agent in connection with the Security Documents, and all fees then due and payable to the Collateral Agent; 39 second, to pay all fees and any other expenses and other amounts then due and payable to the Collateral Agent pursuant to Section 23, until payment in full of all such Collateral Agent fees and other expenses and amounts shall have been made; third, to pay all expenses, liabilities and advances incurred or made by the Administrative Agent in connection with the Term Credit Agreement, until payment in full of all such expenses and other amounts shall have been made; fourth, to pay all fees then due and payable to the Administrative Agent under the Term Credit Agreement or the other Term Loan Documents, until payment in full of all such Administrative Agent fees shall have been made; fifth, to pay ratably (i) all interest (including Post-Petition Interest) on the Term Secured Obligations and (ii) all commitment and other fees payable under the Term Credit Agreement, until payment in full of all such interest and fees shall have been made; sixth, to pay ratably the unpaid principal of the Term Secured Obligations (or provide for the payment thereof pursuant to Section 21(d)), until payment in full of all such principal shall have been made (or so provided for); seventh, to pay all other Term Secured Obligations ratably (or provide for the payment thereof pursuant to Section 21(d)), until payment in full of all such other Term Secured Obligations shall have been made (or so provided for); eighth, to pay any outstanding Revolver Secured Obligations in the order of priorities set forth in clauses third, fourth, fifth, sixth and seventh of Section 21(a); ninth, to pay ratably the Additional Permitted Secured Obligations, (if any) that are secured by a Transaction Lien on the QwestDex Asset Collateral (or provide for the payment thereof pursuant to Section 21(d)), until payment in full of all such obligations shall have been made (or so provided for); tenth, to pay ratably the Dex Purchaser Secured Obligations (or provide for the payment thereof pursuant to Section 21(d)), until payment 40 in full of all such obligations shall have been made (or so provided for); and finally, to pay to the relevant Lien Grantor, or as a court of competent jurisdiction may direct, any surplus then remaining from the proceeds of the Collateral owned by it. The Collateral Agent may make such distributions hereunder in cash or in kind or, on a ratable basis, in any combination thereof. (d) If at any time any portion of any monies collected or received by the Collateral Agent would, but for the provisions of this Section 21(d), be payable pursuant to Section 21(a), 21(b), 21(c) in respect of a Contingent Secured Obligation, the Collateral Agent shall not apply any monies to pay such Contingent Secured Obligation but instead shall request the holder thereof, at least 10 days before each proposed distribution hereunder, to notify the Collateral Agent as to the maximum amount of such Contingent Secured Obligation if then ascertainable. If the holder of such Contingent Secured Obligation does not notify the Collateral Agent of the maximum ascertainable amount thereof at least two Business Days before such distribution, such holder will not be entitled to share in such distribution. If such holder does so notify the Collateral Agent as to the maximum ascertainable amount thereof, the Collateral Agent will allocate to such holder a portion of the monies to be distributed in such distribution, calculated as if such Contingent Secured Obligation were outstanding in such maximum ascertainable amount. However, the Collateral Agent will not apply such portion of such monies to pay such Contingent Secured Obligation, but instead will hold such monies or invest such monies in Liquid Investments. All such monies and Liquid Investments and all proceeds thereof will constitute Collateral hereunder, but will be subject to distribution in accordance with this Section 21(d) rather than Section 21(a), 21(b), 21(c), as applicable. The Collateral Agent will hold all such monies and Liquid Investments and the net proceeds thereof in trust until all or part of such Contingent Secured Obligation becomes a Non-Contingent Secured Obligation, whereupon the Collateral Agent at the request of the relevant Secured Party will apply the amount so held in trust to pay such Non-Contingent Secured Obligation; provided that, if the other Secured Obligations theretofore paid pursuant to the same clause of Section 21(a), 21(b), 21(c), as applicable (i.e., clause second, fourth or fifth) were not paid in full, the Collateral Agent will apply the amount so held in trust to pay the same percentage of such Non-Contingent Secured Obligation as the percentage of such other Secured Obligations theretofore paid pursuant to the same clause of Section 21(a), 21(b), 21(c), as applicable. If (i) the holder of such Contingent Secured Obligation shall advise the Collateral Agent that no portion thereof remains in the category of a Contingent Secured Obligation and (ii) the Collateral Agent still holds any 41 amount held in trust pursuant to this Section 21(d) in respect of such Contingent Secured Obligation (after paying all amounts payable pursuant to the preceding sentence with respect to any portions thereof that became Non-Contingent Secured Obligations), such remaining amount will be applied by the Collateral Agent in the order of priorities set forth in Section 21(a), 21(b), 21(c), as applicable. (e) In making the payments and allocations required by this Section, the Collateral Agent may rely upon information supplied to it pursuant to Section 26(f). All distributions made by the Collateral Agent pursuant to this Section shall be final (except in the event of manifest error) and the Collateral Agent shall have no duty to inquire as to the application by any Secured Party of any amount distributed to it. SECTION 22. Certain Intercreditor Arrangements in Bankruptcy. (a) (i) Except as otherwise specifically permitted in this Section 22(a): (A) until such time as all Revolver Lender Obligations have been paid in full in cash and the Revolver Release Conditions shall have been satisfied, none of the Secured Revolver Cash Management Parties, the Secured Term Parties or the Junior Secured Parties (in each case, in their respective capacities as such) (collectively, for purposes of this Section 22(a), the "Silent Revolver Collateral Lienholders") shall assert, or make any request or demand upon the Collateral Agent to assert any claim, motion, objection, or argument in respect of the First Tier Revolver Collateral in connection with any Bankruptcy Event in respect of any Loan Party which could otherwise be asserted or raised in connection with such Bankruptcy Event by any Silent Revolver Collateral Lienholder (in each case, in its respective capacity as such) as a creditor and/or equity holder of the applicable Loan Party, including without limitation any claim, motion, objection or argument seeking or opposing adequate protection or relief from the automatic stay in respect of the First Tier Revolver Collateral. (B) until such time as all Term Secured Obligations have been paid in full in cash and the Term Release Conditions shall have been satisfied, none of the Secured Revolver Parties or the Junior Secured Parties (in each case, in their respective capacities as such) (collectively, for purposes of this Section 22(a), the "Silent Term Collateral Lienholders") shall assert, or make any request or demand upon the Collateral Agent to assert any claim, 42 motion, objection, or argument in respect of the First Tier Term Collateral in connection with any Bankruptcy Event in respect of any Loan Party which could otherwise be asserted or raised in connection with such Bankruptcy Event by any Silent Term Collateral Lienholder (in each case, in its capacity as such) as a creditor and/or equity holder of the applicable Loan Party, including without limitation any claim, motion, objection or argument seeking or opposing adequate protection or relief from the automatic stay in respect of the First Tier Term Collateral. (ii) Without limiting the generality of the foregoing, if a Bankruptcy Event occurs in respect of any Loan Party: (A) the Collateral Agent (on behalf of the Secured Revolver Lender Parties) may, without seeking or obtaining the consent of the Silent Revolver Collateral Lienholders as holders of an interest in the First Tier Revolver Collateral, contest or consent to the use of cash collateral (excluding Collateral that is not First Tier Revolver Collateral) on such terms and conditions and in such amounts as the Secured Revolver Lender Parties, in their sole discretion, may decide in accordance with the Revolver Credit Agreement; (B) the Collateral Agent (on behalf of the Secured Term Lender Parties) may, without seeking or obtaining the consent of the Silent Term Collateral Lienholders as holders of an interest in the First Tier Term Collateral, contest or consent to the use of cash collateral (excluding Collateral that is not First Tier Term Collateral) on such terms and conditions and in such amounts as the Secured Term Parties, in their sole discretion, may decide in accordance with the Term Credit Agreement; (C) (1) the Secured Revolver Lender Parties may, in accordance with the Revolver Credit Agreement, consent to postpetition financing (whether provided by a Secured Revolver Lender Party or by a third party) for QSC and its Subsidiaries secured by a priority lien on the First Tier Revolver Collateral, in each case pursuant to Section 364 of the Bankruptcy Code or other applicable law and on such terms and conditions and in such amounts as such Secured Revolver Lender Parties, in their sole discretion, may decide, without seeking or obtaining the consent of the Silent Revolver Collateral Lienholders as holders of an interest in the First Tier Revolver Collateral, and none of the Silent 43 Revolver Collateral Lienholders (in each case, in their respective capacities as such) shall oppose such financing (or the granting of a priority lien on the First Tier Revolver Collateral in connection therewith) as holders of an interest in the First Tier Revolver Collateral, and (2) the Secured Term Lender Parties may, in accordance with the Term Credit Agreement, consent to postpetition financing (whether provided by a Secured Term Lender Party or by a third party) for the QSC and its Subsidiaries secured by a priority lien on the First Tier Term Collateral, in each case pursuant to Section 364 of the Bankruptcy Code or other applicable law and on such terms and conditions and in such amounts as such Secured Term Lender Parties, in their sole discretion, may decide, without seeking or obtaining the consent of Silent Term Collateral Lienholders as holders of an interest in the First Tier Term Collateral, and none of the Silent Term Collateral Lienholders (in each case, in their respective capacities as such) shall oppose such financing (or the granting of a priority lien on First Tier Revolver Collateral in connection therewith) as holders of an interest in the First Tier Term Collateral; (D) (1) none of the Silent Revolver Collateral Lienholders shall oppose the use by any Loan Party of cash collateral (excluding Collateral that is not First Tier Revolver Collateral or Proceeds thereof) on the basis that its interest in the First Tier Revolver Collateral is impaired by such use or inadequately protected by such use to the extent such use has been approved by the Secured Revolver Lender Parties in accordance with the Revolver Credit Agreement, and (2) none of the Silent Term Collateral Lienholders (in each case, in their respective capacities as such) shall oppose the use by any Loan Party of cash collateral (excluding Collateral that is not First Tier Term Collateral or Proceeds thereof) on the basis that its interest in the First Tier Term Collateral is impaired by such use or inadequately protected by such use to the extent such use has been approved by the Secured Term Lender Parties in accordance with the Term Credit Agreement; and (E) (1) none of the Silent Revolver Collateral Lienholders shall oppose any sale or other disposition of any assets comprising part of the First Tier Revolver Collateral free and clear of security interests, liens or other claims of any party, including the Silent Revolver Collateral Lienholders, under Section 363 of the Bankruptcy Code on the basis that the interest of the Silent 44 Revolver Collateral Lienholders in the First Tier Revolver Collateral is impaired by such sale or inadequately protected as a result of such sale if the Secured Revolver Lender Parties have consented to such sale or disposition of such assets in accordance with the Revolver Credit Agreement, and (2) none of the Silent Term Collateral Lienholders shall oppose any sale or other disposition of any assets comprising part of the First Tier Term Collateral free and clear of security interests, liens or other claims of any party, including the Silent Term Collateral Lienholders, under Section 363 of the Bankruptcy Code on the basis that the interest of the Silent Term Collateral Lienholders in the First Tier Term Collateral is impaired by such sale or inadequately protected as a result of such sale if the Secured Term Parties have consented to such sale or disposition of such asset in accordance with the Term Credit Agreement. (iii) (A) To the extent that any Secured Revolver Party (in its capacity as such) realizes any amounts, or otherwise receives any payments, with respect to any First Tier Revolver Collateral (or Proceeds thereof) which payments are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law, or equitable cause, then, to the extent of such payment or proceeds received, the Revolver Secured Obligations, or part thereof, intended to be satisfied shall be revived and continue in full force and effect enjoying all rights and benefits of this Agreement as if such payments or proceeds had not been received by such Secured Revolver Party. (B) To the extent that any Secured Term Party (in its capacity as such) realizes any amounts, or otherwise receives any payments, in respect of the First Tier Term Collateral (or Proceeds thereof) which payments are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law, or equitable cause, then, to the extent of such payment or proceeds received, the Term Secured Obligations, or part thereof, intended to be satisfied shall be revived and continue in full force and effect enjoying all rights and benefits of this Agreement as if such payments or proceeds had not been received by such Secured Term Party. 45 (iv) Notwithstanding any other provision of this Section 22(a), each of the Secured Revolver Parties, the Secured Term Parties and the Junior Secured Parties (in their respective capacities as such) shall be entitled to file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the Secured Revolver Parties or the Secured Term Parties (in their respective capacities as such), including, without limitation, (A) claims of the Secured Revolver Parties secured by the First Tier Term Collateral, if any, and (B) claims of the Secured Term Parties secured by the First Tier Revolver Collateral, if any. (b) (i) All rights and interests of the Secured Revolver Lender Parties (in their capacities as such) hereunder in respect of the Revolver Secured Lender Obligations, and all agreements and obligations of the Silent Revolver Collateral Lienholders (in their respective capacities as such) under this Section 22, and (ii) all rights and interests of the Secured Term Lender Parties (in their capacities as such) hereunder in respect of the Term Secured Lender Obligations, and all agreements and obligations of the Silent Term Collateral Lienholders (in their respective capacities as such) under this Section 22, shall, in each case, remain in full force and effect irrespective of: (A) any lack of validity or enforceability of any other Loan Document or any other agreement or instrument relating thereto; (B) any change in the time, manner or place of, or in any other term of, all or any of the Revolver Secured Obligations, or any amendment or waiver of or any consent to departure from any provision of the Revolver Credit Agreement or any other Revolver Loan Document, provided that such change, amendment, waiver or consent is permitted pursuant to the terms of the Revolver Credit Agreement and the other Revolver Loan Documents; (C) any change in the time, manner or place of, or in any other term of, all or any of the Term Secured Obligations, or any amendment or waiver of or any consent to departure from any provision of the Term Credit Agreement or any other Term Loan Document, provided that such change, amendment, waiver or consent is permitted pursuant to the terms of the Term Credit Agreement and the other Term Loan Documents; 46 (D) any exchange, release, nonperfection, or unenforceability of any lien or security interest in any Collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the Revolver Secured Obligations or all or any of the Term Secured Obligations, as applicable; or (E) any other circumstances which might otherwise constitute a defense available to, or a discharge of, any Loan Party in respect of the Revolver Secured Obligations, the Term Secured Obligations or any other Secured Obligation, as the case may be. SECTION 23. Fees and Expenses; Indemnification. (a) Each Borrower will forthwith upon demand pay to the Collateral Agent the amount of any fees that the Borrowers shall have agreed in writing to pay to the Collateral Agent and that shall have become due and payable in accordance with such written agreement. Additionally, the Borrowers jointly and severally agree to pay to the Collateral Agent forthwith upon demand: (i) the amount of any taxes that the Collateral Agent may have been required to pay by reason of the Transaction Liens or to free any Collateral from any other Lien thereon that is not a Permitted Lien; (ii) the amount of any and all reasonable out-of-pocket expenses, including transfer taxes and reasonable fees and expenses of counsel and other experts, that the Collateral Agent may incur in connection with (x) the administration or enforcement of the Security Documents, including such reasonable expenses as are incurred to preserve the value of the Collateral or the validity, perfection, rank or value of any Transaction Lien, (y) the collection, sale or other disposition of any Collateral or (z) the exercise by the Collateral Agent of any of its rights or powers under and in accordance with the Security Documents; and (iii) the amount required to indemnify the Collateral Agent for, or hold it harmless and defend it against (in each case, to the extent permitted by law), any loss, liability or expense (including the reasonable fees and expenses of its counsel and any experts or sub-agents appointed by it hereunder) incurred or suffered by the Collateral Agent in connection with the Security Documents, except to the extent that such loss, liability or expense arises from the Collateral Agent's gross negligence or willful misconduct. 47 Any such amount not paid to the Collateral Agent on demand will bear interest for each day thereafter until paid at a rate per annum equal to the sum of 2% plus (x) so long as any Term Loans are outstanding, the rate applicable to Base Rate Loans under (and as defined in) the Term Credit Agreement for such day or (y) if no Term Loans are outstanding, the rate applicable to Base Rate Loans under (and as defined in) the Revolver Credit Agreement for such day. (b) If any transfer tax, documentary stamp tax or other tax is payable in connection with any transfer or other transaction provided for in the Security Documents, the Borrowers jointly and severally agree to pay such tax and provide any required tax stamps to the Collateral Agent or as otherwise required by law. SECTION 24. Authority to Administer Collateral. Each Lien Grantor irrevocably appoints the Collateral Agent its true and lawful attorney, with full power of substitution, in the name of such Lien Grantor, any Secured Party or otherwise, for the sole use and benefit of the Secured Parties, but at the Borrowers' expense, to the extent permitted by law to exercise, at any time and from time to time while an Event of Default shall have occurred and be continuing, all or any of the following powers with respect to all or any of such Lien Grantor's Collateral: (a) to demand, sue for, collect, receive and give acquittance for any and all monies due or to become due upon or by virtue thereof, (b) to settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto, (c) to sell, lease, license or otherwise dispose of the same or the proceeds or avails thereof, as fully and effectually as if the Collateral Agent were the absolute owner thereof, and (d) to extend the time of payment of any or all thereof and to make any allowance or other adjustment with reference thereto; provided that, except in the case of Collateral that is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Collateral Agent will give the relevant Lien Grantor at least ten days' prior written notice of the time and place of any public sale thereof or the time after which any private sale or other intended disposition thereof will be made. Any such notice shall (i) contain the information specified in UCC Section 9-613, (ii) be Authenticated and (iii) be sent to the parties required to be notified pursuant to UCC Section 9-611(c); provided that, if the Collateral Agent fails to comply with 48 this sentence in any respect, its liability for such failure shall be limited to the liability (if any) imposed on it as a matter of law under the UCC. SECTION 25. Limitation on Duty in Respect of Collateral. Beyond the exercise of reasonable care in the custody and preservation thereof, the Collateral Agent will have no duty as to any Collateral in its possession or control or in the possession or control of any sub-agent or bailee or any income therefrom or as to the preservation of rights against prior parties or any other rights pertaining thereto. The Collateral Agent will be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession or control if such Collateral is accorded treatment substantially equal to that which it accords its own property, and will not be liable or responsible for any loss or damage to any Collateral, or for any diminution in the value thereof, by reason of any act or omission of any sub-agent or bailee selected by the Collateral Agent in good faith, except to the extent that such liability arises from the Collateral Agent's gross negligence or willful misconduct. SECTION 26. General Provisions Concerning the Collateral Agent. (a) Authority. The Collateral Agent is authorized to take such actions and to exercise such powers as are delegated to the Collateral Agent by the terms of the Security Documents, together with such actions and powers as are reasonably incidental thereto. (b) Rights and Powers as a Secured Party. The bank serving as the Collateral Agent shall, in its capacity as a Secured Party, have the same rights and powers as any other Secured Party and may exercise the same as though it were not the Collateral Agent. Such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with any Qwest Company or Affiliate thereof as if it were not the Collateral Agent hereunder. (c) Limited Duties and Responsibilities. The Collateral Agent shall not have any duties or obligations under the Security Documents except those expressly set forth therein. Without limiting the generality of the foregoing, (a) the Collateral Agent shall not be subject to any fiduciary or other implied duties, regardless of whether an Event of Default has occurred and is continuing, (b) the Collateral Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Security Documents that the Collateral Agent is required in writing to exercise by a majority of the holders at any time of the relevant First Tier Obligations (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 27(f) of this Agreement), and (c) except as expressly set forth in the Loan Documents, the Collateral Agent shall not have any duty to disclose, and shall not be liable for any 49 failure to disclose, any information relating to any Qwest Company that is communicated to or obtained by the bank serving as Collateral Agent or any of its Affiliates in any capacity. The Collateral Agent shall not be liable for any action taken or not taken by it with the consent or at the request of a majority of the holders at any time of the relevant First Tier Obligations (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 27 of this Agreement) or in the absence of its own gross negligence or wilful misconduct. The Collateral Agent shall not be responsible for the existence, genuineness or value of any Collateral or for the validity, perfection, priority or enforceability of any Transaction Lien, whether impaired by operation of law or by reason of any action or omission to act on its part under the Security Documents. The Collateral Agent shall be deemed not to have knowledge of any Event of Default unless and until written notice thereof is given to the Collateral Agent by the Administrative Agent under the Revolver Credit Agreement, the Administrative Agent under the Term Credit Agreement, a Borrower or a Secured Party, and the Collateral Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Security Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Security Document, (iv) the validity, enforceability, effectiveness or genuineness of any Security Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in any Security Document. (d) Authority to Rely on Certain Writings, Statements and Advice. The Collateral Agent shall be entitled to rely on, and shall not incur any liability for relying on, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Collateral Agent also may rely on any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Collateral Agent may consult with legal counsel (who may be counsel for a Lien Grantor), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountant or expert. (e) Sub-Agents and Related Parties. The Collateral Agent may perform any of its duties and exercise any of its rights and powers through one or more sub-agents appointed by it. The Collateral Agent and any such sub-agent may perform any of its duties and exercise any of its rights and powers through its Related Parties. The exculpatory provisions of Section 25 and this Section shall 50 apply to any such sub-agent and to the Related Parties of the Collateral Agent and any such sub-agent. (f) Information as to Secured Obligations and Actions by Secured Parties. For all purposes of the Security Documents, including determining the amounts of the Secured Obligations and whether a Secured Obligation is a Contingent Secured Obligation or not, or whether any action has been taken under any Secured Agreement, the Collateral Agent will be entitled to rely on information from (i) its own records for information as to the Lenders, their Secured Obligations and actions taken by them, (ii) any Secured Party (or any trustee, agent or similar representative designated pursuant to Section 29 to supply such information) for information as to its Secured Obligations and actions taken by it, to the extent that the Collateral Agent has not obtained such information from the foregoing sources, and (iii) any Borrower, to the extent that the Collateral Agent has not obtained information from the foregoing sources. (g) Within two Business Days after it receives or sends any notice referred to in this subsection, the Collateral Agent shall send to the Lenders and each Secured Party Requesting Notice, copies of any certificate designating additional obligations as Secured Obligations received by the Collateral Agent pursuant to Section 29 and any notice given by the Collateral Agent to any Lien Grantor, or received by it from any Lien Grantor, pursuant to Section 19, 21, 24, 26(i) or 27. (h) The Collateral Agent may refuse to act on any notice, consent, direction or instruction from any Secured Parties or any agent, trustee or similar representative thereof that, in the Collateral Agent's opinion, (i) is contrary to law or the provisions of any Security Document, (ii) may expose the Collateral Agent to liability (unless the Collateral Agent shall have been indemnified, to its reasonable satisfaction, for such liability by the Secured Parties that gave such notice, consent, direction or instruction) or (iii) is unduly prejudicial to Secured Parties holding First Tier Obligations not joining in such notice, consent, direction or instruction. (i) Resignation; Successor Collateral Agent. The Collateral Agent may resign at any time by notifying the Lenders and the Borrowers. Upon any such resignation, the Required Secured Lenders shall have the right, in consultation with the Borrowers, to appoint a successor Collateral Agent. If no successor shall have been so appointed by the Required Secured Lenders and shall have accepted such appointment within 30 days after the retiring Collateral Agent gives notice of its resignation, then the retiring Collateral Agent may, on behalf of the Secured Parties, appoint a successor Collateral Agent which shall be either (i) a bank having (x) an office in New York, New York and (y) combined capital and 51 surplus of at least $400,000,000, or an Affiliate of any such bank or (ii) another bank that is reasonably acceptable to the Borrowers (or an Affiliate of such bank). Upon acceptance of its appointment as Collateral Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent hereunder, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder. The fees payable by each Borrower to a successor Collateral Agent shall be the same as those payable by such Borrower to such Collateral Agent's predecessor unless otherwise agreed by such Borrower and such successor Collateral Agent. After the Collateral Agent's resignation hereunder, the provisions of this Section and Section 25 shall continue in effect for the benefit of such retiring Collateral Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Collateral Agent was acting as Collateral Agent. If no successor agent has accepted appointment as Collateral Agent by the date which is 30 days following the retiring Collateral Agent's notice of resignation, the retiring Agent's resignation shall at its election nevertheless become effective and the Lenders shall perform all of the duties of the Collateral Agent hereunder until such time, if any, as the Required Secured Lenders appoint a successor agent as provided above; provided that if such resignation of the Collateral Agent becomes effective in accordance with the foregoing sentence when no Lender is a Secured Party, the Secured Parties at the time of such resignation, in consultation with the Borrowers, shall appoint a successor Collateral Agent. SECTION 27. Termination of Transaction Liens; Release of Collateral. (a) The Transaction Liens granted by each Lien Grantor to secure its Secured Guarantee shall terminate when its Secured Guarantee is released pursuant to Section 9.03 of the Revolver Credit Agreement or Section 9.03 of the Term Credit Agreement, as applicable. (b) The Transaction Liens granted by the Revolver Borrower to secure its Revolver Secured Obligations shall terminate when all the Revolver Release Conditions are satisfied. (c) The Transaction Liens granted by the Term Borrower to secure its Term Secured Obligations shall terminate when all the Term Release Conditions are satisfied. (d) The Transaction Liens on any QwestDex Asset Collateral that is the subject of a sale permitted under both the Revolver Credit Agreement and the Term Credit Agreement shall terminate upon consummation of such permitted asset sale, whereupon the proceeds from such permitted asset sale shall be applied 52 in accordance with Section 2.11(c) of the Revolver Credit Agreement and Section 2.11(b) of the Term Credit Agreement. (e) The Transaction Liens on all of the QwestDex Asset Collateral will cease to secure the Revolver Secured Obligations (but shall remain in full force and effect with respect to any other Secured Obligations then secured by such Collateral) on the earliest date on which (i) the aggregate Revolver Commitments have been reduced to an aggregate amount not exceeding $1,250,000,000, (ii) no obligations are owed by QwestDex to any affiliate of QCII (other than QSC), (iii) no obligations are owed by QwestDex Holdings to Qwest Capital Funding, Inc. and (iv) all Transaction Liens on the Pledged Equity Interests in QwestDex securing the Term Secured Obligations have terminated, such that the Revolver Secured Obligations are secured by a first priority Transaction Lien on such Pledged Equity Interests in QwestDex. (f) At any time before the Transaction Liens granted by either Borrower terminate, the Collateral Agent may, at the written request of such Borrower, (i) release any Collateral (but not (x) all or substantially all of the Collateral or (y) all or any substantial portion of either the First Tier Revolver Collateral or the First Tier Term Collateral) with the prior written consent of the Required Secured Lenders, (ii) release all or any substantial portion of the First Tier Revolver Collateral with the prior written consent of all of the Secured Revolver Lender Parties, (iii) release all or any substantial portion of the First Tier Term Collateral with the prior written consent of all of the Secured Term Parties or (iv) release all or substantially all of the Collateral with the prior written consent of all of the Lenders. (g) Upon any termination of a Transaction Lien or release of Collateral, the Collateral Agent will, at the expense of the relevant Lien Grantor, execute and deliver to such Lien Grantor such documents as such Lien Grantor shall reasonably request to evidence the termination of such Transaction Lien or the release of such Collateral, as the case may be. SECTION 28. Additional Lien Grantors. Any QwestDex Company may become a party hereto by signing and delivering to the Collateral Agent a Security and Pledge Agreement Supplement, whereupon such QwestDex Company shall become a "Lien Grantor" as defined herein. SECTION 29. Additional Permitted Secured Obligations. After the date hereof, any Lien Grantor may from time to time, designate any other obligation as an additional secured obligation for purposes hereof (any such additional secured obligation, an "Additional Permitted Secured Obligation") by delivering to the Collateral Agent (a) a certificate signed by the chief financial officer or chief 53 accounting officer of such Lien Grantor (i) identifying the obligation so designated and the aggregate principal or face amount thereof, stating that such obligation is designated as an Additional Permitted Secured Obligation for purposes hereof, (ii) representing that, after giving effect to the designation of such obligation as an Additional Permitted Secured Obligation, (x) the aggregate amount of all Additional Permitted Secured Obligations will not exceed the sum of $3,000,000,000 plus the aggregate amount of Debt (as defined in the Revolver Credit Agreement) incurred by the Revolver Borrower in reliance on Section 5.12(h) of the Revolver Credit Agreement and (y) no default shall have occurred under any of the Company Indentures and (iii) specifying the name and address of the holder of such obligation or of a trustee, agent or similar representative designated to supply information with respect to such additional Secured Obligation to the Collateral Agent as contemplated by Section 26(f) and (b) an Additional Secured Party Consent, executed by the holder of such obligation; provided that no obligation of a Lien Grantor shall be an Additional Permitted Secured Obligation unless (a) such obligation is permitted under both the Revolver Credit Agreement and the Term Credit Agreement, (b) the Lien securing such obligation is permitted by Section 5.07(i)(iv) of the Revolver Credit Agreement and (c) the Lien securing such obligation is permitted by Section 5.07 of the Term Credit Agreement. SECTION 30. Notices. Each notice, request or other communication given to any party hereunder shall be in writing (which term includes facsimile) and shall be effective (i) when delivered to such party at its address specified below, (ii) when sent to such party by facsimile, addressed to it at its facsimile number specified below, and such party sends back an electronic confirmation of receipt or (iii) ten days after being sent to such party by certified or registered United States mail, addressed to it at its address specified below, with first class or airmail postage prepaid: (a) in the case of any Lien Grantor listed on the signature pages hereof: Qwest Services Corporation 1801 California Street Denver, CO 80202 Attention: Chief Financial Officer Facsimile: (303) 296-4920 with a copy to: Qwest Services Corporation 1801 California Street 54 Denver, CO 80202 Attention: General Counsel Facsimile: (303) 296-5974 (b) in the case of any other Lien Grantor, its address, facsimile number or e-mail address set forth in its first Security and Pledge Agreement Supplement; (c) in the case of the Collateral Agent: Bank of America, N.A. 901 Main Street, 14th Floor Dallas, TX 75202-3714 TX1-492-14-11 Attention: Mickey McLean Facsimile: (214) 290-9508 (d) in the case of any Revolver Lender or Term Lender, to the Collateral Agent to be forwarded to such Lender at its address or facsimile number specified in or pursuant to Section 10.01 of the applicable Credit Agreements; or (e) in the case of any Secured Party Requesting Notice, such address or facsimile number as such party may hereafter specify by notice to the Collateral Agent. Any party may change its address or facsimile number for purposes of this Section by giving notice of such change to the Collateral Agent and the Lien Grantors in the manner specified above. SECTION 31. No Implied Waivers; Remedies Not Exclusive. No failure by the Collateral Agent or any Secured Party to exercise, and no delay in exercising and no course of dealing with respect to, any right or remedy under any Security Document shall operate as a waiver thereof; nor shall any single or partial exercise by the Collateral Agent or any Secured Party of any right or remedy under any Loan Document preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies specified in the Loan Documents are cumulative and are not exclusive of any other rights or remedies provided by law. SECTION 32. Successors and Assigns. This Agreement is for the benefit of the Collateral Agent and the Secured Parties. If all or any part of any Secured 55 Party's interest in any Secured Obligation is assigned or otherwise transferred, in accordance, in the case of Revolver Secured Obligations and the Term Secured Obligations with the terms of the Revolving Credit Agreement or the Term Credit Agreement, respectively, the transferor's rights hereunder, to the extent applicable to the obligation so transferred, shall be automatically transferred with such obligation. This Agreement shall be binding on the Lien Grantors and their respective successors and assigns. SECTION 33. Amendments and Waivers. Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing enter into by the parties hereto, with the consent of the Required Secured Lenders; provided that no such waiver, amendment or modification shall (a) unless signed by all of the Lenders, change the number of Lenders (or the percentage of Revolver Commitments or Term Commitments, or the aggregate unpaid principal amount of the Revolver Loans or Term Loans) which shall be required for the Lenders or any of them to take any action under (i) this Section 33, (ii) any provision of Section 27 specifying the circumstances under which consent of any or all Lenders is required to release Collateral or (iii) any other provision of this Agreement, or (b) unless signed by all of the Lenders who would be adversely affected thereby, change any provision of Section 20, Section 21 or Section 22. No such waiver, amendment or modification shall by its terms affect the rights of a Secured Party (other than a Lender) hereunder more adversely than it affects the comparable rights of the Lenders hereunder (taking into account the relative priorities of the Lenders' Transaction Liens hereunder), without the consent of such Secured Party. SECTION 34. Choice of Law. This Agreement shall be construed in accordance with and governed by the laws of the State of New York, except as otherwise required by mandatory provisions of law and except to the extent that remedies provided by the laws of any jurisdiction other than the State of New York are governed by the laws of such jurisdiction. SECTION 35. Waiver of Jury Trial. EACH PARTY HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY SECURITY DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT 56 IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 36. Severability. If any provision of any Security Document is invalid or unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions of the Security Documents shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Collateral Agent and the Secured Parties in order to carry out the intentions of the parties thereto as nearly as may be possible and (ii) the invalidity or unenforceability of such provision in such jurisdiction shall not affect the validity or enforceability thereof in any other jurisdiction. 57 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. QWEST SERVICES CORPORATION By: ------------------------------------ Name: Title: QWEST DEX HOLDINGS, INC. By: ------------------------------------ Name: Title: QWEST DEX, INC. By: ------------------------------------ Name: Title: BANK OF AMERICA, N.A., as Collateral Agent By: ------------------------------------ Name: Title: 58 Acknowledged and agreed by: BANK OF AMERICA, N.A., as Administrative Agent under the Revolver Credit Agreement By: ------------------------------------ Name: Title: BANK OF AMERICA, N.A., as Administrative Agent under the Term Loan Agreement By: ------------------------------------ Name: Title: 59 EX-99.1 6 ex99_1.txt EXHIBIT 99.1 QWEST RIDE THE LIGHT [GRAPHIC LOGO OMITTED] QWEST COMMUNICATIONS REACHES AGREEMENT ON AMENDED CREDIT FACILITY, announces NEW $750 MILLION LOAN DENVER, September 4, 2002-- Qwest Communications International Inc. (NYSE: Q) today announced it has reached a unanimous agreement with the 29 lenders in its syndicated credit facility, to amend the company's $3.4 billion credit facility. In addition, Qwest has completed a new $750 million term loan at the company's QwestDex, Inc. subsidiary. Both agreements are effective immediately. "We're very pleased to take these additional steps to strengthen the company's financial position," said Oren Shaffer, Qwest vice chairman and CFO. "Coupled with the pending sale of QwestDex, these actions announced today and the cash flow from our operations should provide us with enough funding for the next several years, and put any liquidity concerns behind us." Under the amendment, the maturity of the bank facility has been extended from May 2003 to May 2005, and the financial covenants have been relaxed, increasing the maximum debt to consolidated EBITDA ratio from 4.0 at the end of 2002 to 6.0 throughout the term of the agreement. Qwest has pledged the stock of Qwest Corporation as security for the existing facility, and granted secondary liens on the stock and certain assets of QwestDex. Qwest is required to use a portion of the proceeds from the sale of the first phase of QwestDex to pay down this facility to $2 billion. At the time of completion of the second phase of the QwestDex sale, the facility must be paid down to $1.25 billion. As previously announced, the sale of QwestDex is subject to certain closing conditions. The company's QwestDex subsidiary obtained a $750 million term loan due in 2004. The loan is secured by a lien on the stock and certain assets of QwestDex, and a secondary lien on Qwest Corporation stock. Qwest must pay down this facility by the completion of the second phase of its sale of QwestDex, expected in 2003. Banc of America Securities LLC, J.P. Morgan Securities Inc. and Wachovia Securities, Inc. acted as joint book runners for the amended facility. Banc of America Securities LLC acted as sole lead arranger and sole book runner for the QwestDex term loan. About Qwest Qwest Communications International Inc. (NYSE: Q) is a leading provider of voice, video and data services to more than 25 million customers. The company's 55,000 employees are committed to the "spirit of service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at www.qwest.com. # # # This release may contain projections and other forward-looking statements that involve assumptions, risks and uncertainties. Readers are cautioned not to place undue reliance on these statements, which speak only as of the date of this release. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by Qwest Communications International Inc. (together with its affiliates, "Qwest", "we" or "us") with the Securities and Exchange Commission (the "SEC"), specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: the duration and extent of the current economic downturn in our 14-state local service area, including its effect on our customers and suppliers; the effects of our anticipated restatement of historical financial statements including delays in or restrictions on our ability to access the capital markets or other adverse effects to our business and financial position; our substantial indebtedness, and our inability to complete any efforts de-lever our balance sheet through asset sales of other transactions; any adverse outcome of the SEC's current inquiries into Qwest's accounting policies, practices and procedures; any adverse outcome of the current investigation by the U.S. Attorney's office in Denver into certain matters relating to us; adverse results of increased review and scrutiny by Congress, regulatory authorities, media and others (including any internal analyses) of financial reporting issues and practices or otherwise; the failure of our chief executive and chief financial officers to provide certain certifications relating to certain public filings; rapid and significant changes in technology and markets; failure to achieve the projected synergies and financial results expected to result from the acquisition of U S WEST, and difficulties in combining the operations of the combined company; our future ability to provide interLATA services within our 14-state local service area; potential fluctuations in quarterly results; volatility of Qwest's stock price; intense competition in the markets in which we compete; changes in demand for our products and services; dependence on new product development and acceleration of the deployment of advanced new services, such as broadband data, wireless and video services, which could require substantial expenditure of financial and other resources in excess of contemplated levels; higher than anticipated employee levels, capital expenditures and operating expenses; adverse changes in the regulatory or legislative environment affecting our business; adverse developments in commercial disputes or legal proceedings; and changes in the outcome of future events from the assumed outcome included by Qwest in its significant accounting policies. The information contained in this release is a statement of Qwest's present intention, belief or expectation and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and Qwest's assumptions. Qwest may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in Qwest's assumptions or otherwise. The cautionary statements contained or referred to in this release should be considered in connection with any subsequent written or oral forward looking statements that Qwest or persons acting on its behalf may issue. This release may include analysts' estimates and other information prepared by third parties for which Qwest assumes no responsibility. Qwest undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The Qwest logo is a registered trademark of, and CyberCenter is a service mark of, Qwest Communications International Inc. in the U.S. and certain other countries. Contacts: Media Contact: Investor Contact: -------------- ----------------- Tyler Gronbach Stephanie Comfort 303-992-2155 800-567-7296 tyler.gronbach@qwest.com IR@qwest.com 2 -----END PRIVACY-ENHANCED MESSAGE-----