8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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): December 31, 2002

Delaware	0-24061	56-2065535
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

US LEC Corp.

(Exact name of registrant as specified in its charter)

Morrocroft III, 6801 Morrison Boulevard Charlotte, North Carolina	28211
(Address of principal executive offices)	(Zip Code)

Registrant's Telephone Number, including area code:    (704) 319-1000

Not Applicable

(Former Name or Former Address, If Changed Since Last Report)

ITEM 5.    Other Events

On December 31, 2002, US LEC Corp. (the “Company”) restructured its senior secured credit facility and issued $5 million of subordinated notes with warrants to purchase shares of the Company’s common stock to a group of 13 investors that included the Company’s founders, Richard T. Aab and Tansukh V. Ganatra. Mr. Aab currently serves as Chairman of the Company and Mr. Ganatra serves as a director. On January 15, 2003, the Company acquired the Internet Service Provider (“ISP”) customers of Eagle Communications, Inc. (“Eagle”) in North Carolina, Georgia, Florida and Tennessee, a transaction that was contemplated in connection with the restructuring of the Company’s senior credit facility and the investment of $5 million in the Company’s subordinated notes.

Amended Senior Credit Facility

As amended, the senior credit facility is comprised of a $103 million term loan and a $25 million revolving credit facility. The Company made an $8 million principal payment on the term loan in connection with the restructuring, reducing the outstanding balance of the term loan from $111 million to $103 million. The interest rate for the facility is a floating rate based, at the Company’s option, on a base rate (as defined in the loan agreement) or the London Interbank Offered Rate, plus a specified margin. The facility is secured by a security interest in substantially all of the Company’s and its subsidiaries’ assets, including a pledge of the capital stock of the Company’s subsidiaries.

In amending the senior credit facility, the Company, after the application of the $8 million principal payment, deferred $30 million of term loan principal payments from 2003-2004 to 2005-2006; deferred repayment of the $25 million outstanding under the revolving facility from 2005 to 2006; agreed to pay additional interest on the deferred portions of the term loan at an annual rate of 10%, payable upon the maturity of the loan in December 2006, and agreed to revised financial covenants.

Before this amendment, the Company’s remaining scheduled principal payments on the term loan were approximately $4.7 million per quarter through December 2003, approximately $6.3 million per quarter through December 2004 and approximately $7.8 million per quarter through the maturity date of the loan in December 2006. As amended, no scheduled quarterly principal payments are due during 2003, $500,000 in principal payments are due in March and June 2004, approximately $3.2 million is due in September 2004, approximately $6.3 million is due in December 2004, approximately $11.5 million is payable in each quarter of 2005 and the first three quarters of 2006, and a final principal payment of approximately $12.4 million is due when the term loan matures in December 2006.

The revised financial covenants were designed to conform to the business plan provided by the Company to its senior lenders in connection with the restructuring. The covenants include: achievement of minimum levels of earnings before interest, taxes, depreciation, amortization and credit restructuring costs; maintenance of a minimum gross profit percentage; quarterly limits on the amount of capital expenditures; maintenance of minimum quarterly levels

2

of unrestricted cash; and, beginning in 2005, maintenance of specified quarterly total leverage, cash interest coverage and minimum fixed charge coverage ratios.

Private Placement of Subordinated Notes With Warrants

The $5 million of subordinated notes bear interest at an annual rate of 11%, payable monthly, have a five-year term and are subordinated to the senior credit facility. The note purchasers also received warrants to purchase 2,631,579 shares of the Company’s common stock at an exercise price of $1.90 per share, representing approximately 10% of the Company’s currently outstanding shares of common stock. The warrants are exercisable immediately and expire upon the earlier of 10 years or five years from the repayment in full of the subordinated notes. The Company granted the warrant holders certain registration rights with respect to the common stock underlying the warrants. The notes and warrants were issued in a private placement in reliance upon the exemption from registration in Section 4(2) of the Securities Act of 1933, as amended ( the “1933 Act”). The investment of $5 million was required by the Company’s senior lenders as a condition to closing the restructuring transaction.

Acquisition of Eagle ISP Customers

The Company acquired Eagle’s ISP customers in North Carolina, Georgia, Florida and Tennessee for $1.25 million in cash, the issuance of a $1.75 million subordinated note and warrants to purchase 921,053 shares of the Company’s common stock, representing approximately 3.5% of the Company’s currently outstanding common stock. The interest rate, maturity, subordination provisions and other terms of the note, as well as the exercise price, exercisability, expiration date and other terms of the warrants (including registration rights related to the underlying common stock), issued to Eagle are the same as the notes and warrants issued to the private investors who purchased $5.0 million of the Company’s subordinated notes on December 31, 2002. The note and warrants were issued in reliance upon the private placement exemption in Section 4(2) of the 1933 Act. Prior to this transaction, Eagle provided services to the ISP customers utilizing US LEC as the underlying carrier for certain network services.

Anticipated Positive Benefits to US LEC Corp.

Management believes that the deferral of previously scheduled principal payments under senior credit facility, together with the extended maturity on the revolving loan to 2006, will give the Company sufficient time to continue to improve its operating results and generate cash flow in amounts necessary to fund its anticipated operating, investing and financing activities over the next several years, including the repayment of principal amounts that will become due under its amended credit facility beginning in March 2004. In conjunction with the amendment to its senior credit facility, the Company is continuing to evaluate all aspects of its cost structure to control and reduce its costs without jeopardizing the Company’s ability to continue to grow its customer base and maintain its high quality of customer service.

3

The acquisition of ISP customers from Eagle is expected to immediately increase the Company’s revenue and cash flow from operations. Management believes that the incremental cash flow that will result from the Eagle transaction will pay back the cash portion of the purchase price in less than one year. In addition, with the Company now serving these customers directly, the Company expects additional revenue growth by offering them the Company’s full suite of products and services.

ITEM 7.    Financial Statements and Exhibits

The following exhibits are being furnished with this report.

Exhibit No.	Description
4.1	Note Purchase Agreement, dated December 31, 2002
4.2	Form of Subordinated Note
4.3	Form of Common Stock Purchase Warrant
4.4	Registration Rights Agreement, dated December 31, 2002
4.5	Intercreditor and Subordination Agreement, dated December 31, 2002
10.1	Third Amended and Restated Loan and Security Agreement, dated December 31, 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	US LEC Corp.
January 17, 2003	By:	/s/ Michael K. Robinson
	Name:	Michael K. Robinson
	Title:	Executive Vice President and Chief Financial Officer

4

EXHIBIT INDEX

Exhibit No.	Description
4.1	Note Purchase Agreement, dated December 31, 2002
4.2	Form of Subordinated Note
4.3	Form of Common Stock Purchase Warrant
4.4	Registration Rights Agreement, dated December 31, 2002
4.5	Intercreditor and Subordination Agreement, dated December 31, 2002
10.1	Third Amended and Restated Loan and Security Agreement, dated December 31, 2002

EX-4.1

Exhibit 4.1

NOTE PURCHASE AGREEMENT

by and among

US LEC CORP.

and

Investors listed on Schedule A hereto

December 31, 2002

$5.0 million Senior Subordinated Notes

due December 31, 2007 of US LEC Corp.

Warrant to purchase 2,631,579 shares

of Common Stock of US LEC Corp.

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		1
Section 1.1	Defined Terms	1
Section 1.2	Definitions and References Generally	10
ARTICLE II THE INVESTMENT		10
Section 2.1	Funding	10
Section 2.2	Subordination	10
Section 2.3	Repayment of Notes	10
Section 2.4	Interest on the Notes	10
Section 2.5	Optional Prepayment	10
Section 2.6	Mandatory Prepayment of the Notes	11
Section 2.7	Payments	11
Section 2.8	Election by Holders to Receive Cash or Common Stock	11
Section 2.9	Use of Proceeds	12
Section 2.10	Warrant	12
ARTICLE III CONDITIONS TO THE OBLIGATION OF INVESTORS TO CLOSE		12
Section 3.1	Conditions to Obligation of Investors to Close	12
Section 3.2	Conditions to Obligation of the Company to Close	14
ARTICLE IV REPRESENTATIONS AND WARRANTIES		14
Section 4.1	Organization; Powers	14
Section 4.2	Authorization	14
Section 4.3	Enforceability	15
Section 4.4	Governmental Approvals; Regulatory Authorizations	15
Section 4.5	Financial Condition	15
Section 4.6	Indebtedness	16
Section 4.7	Warrant Shares	16
Section 4.8	Authorized Capital	16
Section 4.9	No Material Adverse Change	17
Section 4.10	Title to Properties; Possession Under Leases	17
Section 4.11	Litigation; Compliance with Laws	17
Section 4.12	Material Contracts	18
Section 4.13	No Side Agreements	18
Section 4.14	Investment Company Act; Public Utility Holding Company Act	18
Section 4.15	Tax Returns	18
Section 4.16	No Untrue Statements or Material Omissions	18
Section 4.17	Employee Benefit Matters	19
Section 4.18	Environmental Matters	19
Section 4.19	Labor Matters	19
Section 4.20	Employees	19
Section 4.21	Brokers	20
Section 4.22	Intellectual Property	20
Section 4.23	Insurance	20

i

ARTICLE V INVESTOR REPRESENTATIONS		20
Section 5.1	Investment	20
Section 5.2	Authority	20
Section 5.3	Experience	21
Section 5.4	Accredited Investor	21
Section 5.5	Brokers	21
Section 5.6	Further Assurances	21
ARTICLE VI AFFIRMATIVE COVENANTS		22
Section 6.1	Preservation of Corporate Existence and Qualification	22
Section 6.2	Continuation of Business	22
Section 6.3	Insurance	22
Section 6.4	Payment of Taxes, Charges, Claims and Current Liabilities	22
Section 6.5	Reporting and Information Requirements	23
Section 6.6	Compliance with Laws	24
Section 6.7	Maintaining Records; Access to Properties and Inspections	24
Section 6.8	Further Assurances	24
Section 6.9	Reservation of Warrant Shares	24
Section 6.10	Replacement of Warrant	24
ARTICLE VII NEGATIVE COVENANTS		25
Section 7.1	Indebtedness	25
Section 7.2	Dividends and Distributions	26
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES		26
Section 8.1	Events of Default	26
Section 8.2	Waivers	28
Section 8.3	Enforcement Actions	28
Section 8.4	Costs	28
Section 8.5	Remedies Non–Exclusive	28
ARTICLE IX MISCELLANEOUS		28
Section 9.1	Notices	28
Section 9.2	Binding Effect	29
Section 9.3	Successors and Assigns	29
Section 9.4	Expenses	29
Section 9.5	Waiver of Consequential and Punitive Damages	29
Section 9.6	Applicable Law	30
Section 9.7	Waivers; Amendment	30
Section 9.8	Entire Agreement	30
Section 9.9	Severability	30
Section 9.10	Counterparts	31
Section 9.11	Heading	31
Section 9.12	Jurisdiction; Consent to Service of Process	31
Section 9.13	Consents and Approvals; Defaults	31
Section 9.14	Relationship of the Parties; Advice of Counsel	32
Section 9.15	Regulation FD	33
Section 9.16	Registration and Transfer of Notes	33

ii

        Section 9.17 No Shorting Provisions 34

Schedules and Exhibits
SCHEDULE A	Investors and Amount Invested
SCHEDULE 4.8	Authorized Capital
EXHIBIT A	Form of Note
EXHIBIT B	Form of Warrant
EXHIBIT C	Form of Registration Rights Agreement
EXHIBIT D	Form of Subordination Agreement

iii

NOTE PURCHASE AGREEMENT

THIS NOTE PURCHASE AGREEMENT (this “Agreement”) is made as of December 31, 2002 by and among US LEC Corp., a Delaware corporation (the “Company”), and the investors listed Schedule A hereto (the “Investors”) (together with the Company, the “Parties” or individually, a “Party”).

RECITALS:

A. The Company has requested that the Investors invest in the Company the aggregate sum listed on Schedule A in exchange for the Notes and Warrant. The Investors are willing to make such investment in the Company on the terms and conditions set forth herein.

B. The Parties wish to set forth herein their understandings and agreements pertaining to this transaction.

NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Investors and their successors and permitted assigns with respect to their interests in all or any part of any of the Notes, Warrant or Warrant Shares (as these terms are hereinafter defined) (individually, a “Holder” and collectively, the “Holders”), the Company hereby agrees as follows:

ARTICLE I

DEFINITIONS

Section 1.1    Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:

“Affiliate” means, when used 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 the Person specified. “Affiliate” shall also mean any beneficial owner of Capital Stock representing 10% or more of the total voting power of the voting Capital Stock (on a fully diluted basis) of the Company or any of its Subsidiaries (whether or not currently exercisable) and any Person who would be an Affiliate of such beneficial owner pursuant to the first sentence hereof.

“Applicable Law” shall mean any applicable federal, state or local law, ordinance, order, regulation, rule or requirement of any governmental or quasi-governmental agency, instrumentality, board, commission, bureau or other authority having jurisdiction.

“Approval” has the meaning specified in Section 9.14(a).

“Audited Financials” has the meaning specified in Section 4.5(a).

“Business Day” means any day other than a Saturday, Sunday or day on which banks in Charlotte, North Carolina, are authorized or required by law to close.

“Capital Lease” means any lease of (or other arrangement conveying the right to use) real or personal property, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on the balance sheet of the lessee.

“Capital Stock” of any Person means any and all shares, interests, participation or other equivalents (however designated) of capital stock of such Person (if such Person is a corporation), any and all equivalent ownership interests in such Person (if such Person is other than a corporation), any securities convertible into or exchangeable for any of the foregoing and any and all warrants or options to purchase any of the foregoing.

“Change of Control” means an occurrence whereupon, at any time, fewer than one-half of the directors comprising the board of directors of the Company shall include members of a group consisting of the existing directors as of the date of this Agreement, and replacement and additional directors nominated or supported by one-half or more of the members of the foregoing group and any such replacement or additional directors; provided, however, that, in the event the Investor Agents exercise their rights under Section 3.4 of the Corporate Governance Agreement, dated April 11, 2000, between the Company and Affiliates of Bain Capital, Inc. and Thomas H. Lee Partners, L.P., such exercise shall not constitute a “Change of Control.”

“Closing” means the consummation of the Transaction.

“Closing Date” means the date of this Agreement.

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

“Common Stock” means the Company’s Class A common stock par value $0.01 per share, and any other Capital Stock of the Company into which such stock is reclassified or reconstructed.

“Communications Law” means any and all of (i) the Telecommunications Act of 1996, the Communications Act of 1934, any similar or successor federal statute to either and the rules and regulations of the FCC thereunder; and (ii) any state law governing the provision of telecommunications services and the rules and regulations of the PUC, all as the same may be in effect from time to time.

“Competitor” means any Person that is (directly or through one or more Affiliates) both (i) engaged in the Telecommunications Business and the revenues of such Person attributable to such services exceed $50 million annualized and (ii) operating in at least 25% of the Metropolitan Statistical Areas in which the Company and its Subsidiaries are operating as of the time of the proposed transfer.

“Contracts” has the meaning specified in Section 4.12.

2

“Control” means, without limitation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” have meanings correlative thereto.

“Environmental Law” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety, natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

“Equity Payment” means any distribution of earnings or capital, or any redemption or other payment in respect of stock, membership interests, partnership interests or other equity interests, including options and warrants, either directly or indirectly, whether in cash or property or in obligations of the Company.

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

“ERISA Affiliate” means any Person required at any relevant time to be aggregated with the Company or any of its Subsidiaries under Sections 414(b), (c), (m) or (o) of the Code.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Events of Default” has the meaning specified in Article VIII.

“FCC” means the Federal Communications Commission of the United States of America and any successor, in whole of in part, to its jurisdiction.

“GAAP” means generally accepted accounting principles, consistently applied, for the period or periods in question.

“Governmental Authority” means any Federal, state, local, quasi-governmental instrumentality or foreign court, or governmental agency, authority, instrumentality, agency, bureau, commission, department or regulatory body.

“Grace Period” has the meaning specified in Section 8.1(c).

“Grace Period Interest Amount” has the meaning specified in Section 2.8.

“Hazardous Materials” means (a) petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

“Holder” and “Holders” have the meaning specified in the Recitals hereto.

3

“Indebtedness” means, with respect to any Person at the time of any determination, (a) indebtedness for borrowed money or for the deferred purchase price of property or services (other than accounts payable incurred in the ordinary course of business) in respect of which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which such Person otherwise assures a creditor against loss, (b) obligations under leases which shall have been or should be, in accordance with GAAP, recorded as Capital Leases in respect of which obligations such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person assures a creditor against loss, (c) obligations of such Person to purchase or repurchase accounts receivable, chattel paper or other payment rights sold or assigned by such Person, (d) indebtedness or obligations of such Person under or with respect to letters of credit, notes, bonds or other debt instruments (other than letters of credit that are cash collateralized) and (e) all obligations of such Person under any interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in interest rates, in each case whether contingent or matured.

“Information” has the meaning specified in Section 9.15.

“Intellectual Property” means, collectively, all of the Company’s and its Subsidiaries’ now owned and hereafter acquired intellectual property, including, without limitation the following: (a) all patents (including all rights corresponding thereto throughout the world, and all improvements thereon); (b) all trademarks (including service marks, trade names and trade secrets, and all goodwill associated therewith); (c) all copyrights (including all renewals, extensions and continuations thereof); (d) all applications for patents, trademarks or copyrights and all applications otherwise relating in any way to the subject matter of such patents, copyrights and trademarks; (e) all patents, copyrights, trademarks or applications therefor arising after the date of this Agreement; (f) all reissues, continuations, continuations-in-part and divisions of the property described in the preceding clauses (a) through (e), including, without limitation, any claims by the Company or its Subsidiaries against third parties for infringement thereof; and (g) all rights to sue for past, present and future infringements or violations of any such patents, trademarks and copyrights.

“Interest Rate” means a fixed rate of interest as set forth in and payable in accordance with the terms of the Notes.

“Interim Financials” has the meaning specified in Section 4.5.

“Inventory” means “inventory” as defined in Article 9 of the UCC, including all raw materials, work in process, parts, components, assemblies, supplies and materials used or consumed in the Company’s Business, all goods, wares and merchandise, finished or unfinished, held for sale or lease or leased or furnished or to be furnished under contracts of service or hire.

“Leases” has the meaning specified in Section 4.10.

“Licenses” shall mean, collectively, all rights, licenses, permits and authorizations now or hereafter issued by any Governmental Authority reasonably necessary in connection with the operation or conduct of the Company’s Business.

4

“Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

“Loan Documents” means, collectively, this Agreement, the Notes, the Registration Rights Agreement, the Warrant and all other instruments and documents executed and delivered in connection therewith.

“Market Price” of the Common Stock means the average of the closing prices of sales of the Common Stock on all securities exchanges on which the Common Stock may be listed at the time, or, if there has been no sales on any such exchange on any day, or, if on any day the Common Stock is not so listed, the average of the last reported sales prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day the Common Stock is not quoted in the NASDAQ System, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated or any similar successor organization, in each such case averaged over a period of 20 days consisting of the day as of which the “Market Price” is being determined and the 19 consecutive Business Days prior to such day. If at any time the Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the “Market Price” shall be the fair value thereof determined jointly by the Company and the holders of a majority of the principal amount of the Notes then outstanding.

“Material Adverse Change” means any material adverse change in the business, condition (financial or otherwise), operations, performance or properties of the Company and its Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance or properties of the Company and its Subsidiaries taken as a whole.

“Maturity Date” means December 31, 2007.

“Notes” means the senior subordinated notes dated the date hereof in the aggregate principal amount of $5,000,000 payable severally to the Holders and evidencing the repayment obligation of the Company for the investment by the Holders therein described in Section 2.1, the form of which is attached hereto as Exhibit A together with all other notes accepted from time to time in substitution, renewal or replacement for all or any part thereof including pursuant to Section 9.16.

“Obligations” means all Indebtedness incurred pursuant to this Agreement and evidenced by the Notes and all obligations for the performance of covenants or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by the Company to the Holders arising under this Agreement and the Notes. The term includes all principal, interest (including all interest that accrues after the commencement of any case or proceeding in bankruptcy after the insolvency of, or for the reorganization of, the Company, whether or not allowed in such proceeding), any fees, charges,

5

expenses, attorneys’ fees and any other sum chargeable to the Company under this Agreement or the Notes.

“Pari Passu Indebtedness” means any Indebtedness that ranks pari passu in right of payment to the Notes other than:

(i)    Indebtedness existing on the date hereof that ranks pari passu in right of payment to the Notes;

(ii)   Indebtedness of the Company to a Subsidiary or a Subsidiary to the Company or another of the Company’s Subsidiaries;

(iii)  Indebtedness of the Company or its Subsidiaries in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations, in each case provided in the ordinary course of business;

(iv)   Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within 10 Business Days of its incurrence;

(v)    any Indebtedness incurred in connection with the issuance of letters of credit (including cash collateralized letters of credit) in the ordinary course of the business of the Company or any of its Subsidiaries;

(vi)   any Indebtedness incurred in connection with the acquisition of the Internet Service Provider customers of Eagle Communications, Inc. and its Affiliates;

(vii)  any Indebtedness not otherwise permitted by the foregoing; provided that at the time of creation, incurrence or assumption thereof and at any time thereafter, the aggregate principal amount of such Indebtedness outstanding at any point in time shall not exceed $5.0 million; and

(viii) any replacements, renewals or refinancings of Indebtedness described in clauses (i), (v), (vi) and (vii) of this definition.

“PBGC” means the Pension Benefit Guaranty Corporation established under Title IV of ERISA or any other governmental agency, department or instrumentality succeeding to its functions.

“Permitted Encumbrances” has the meaning set forth in the Senior Credit Facility.

“Permitted Indebtedness” has the meaning specified in Section 7.1(a).

“Permitted Transferee” means (a) any Affiliate of any Investor to whom an Investor or another Affiliate of any Investor transfers Notes and (b) any other Person to whom an Investor or

6

any Affiliate of any Investor transfers Notes with the prior written consent of the Company (which consent shall not be unreasonably withheld); provided, however, that in no event shall any such transferee or proposed transferee under clause (a) or (b) be a Competitor or Person acting as a representative of a Competitor. No transfer otherwise permissible shall be effective unless the Permitted Transferee is an “accredited investor” within the definition set forth in Rule 501(a) promulgated under the Securities Act and agrees in writing expressly for the Company’s benefit to be bound by the provisions of this Agreement.

“Person” means any natural person, corporation, business trust, limited liability company, joint venture, association, company, partnership or government, or any agency or political subdivision thereof.

“Plan” means any employee pension benefit plan subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 307 of ERISA, and in respect of which the Company or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Prepayment Amount” has the meaning specified in Section 2.6.

“Prohibited Transaction” means a prohibited transaction as defined in Section 406 of the Code or Section 4975 of ERISA.

“PUC” means the public utilities commission for the state or any other jurisdiction in which all or any portion of a transmission and communications system operated by the Company or its Subsidiaries, including all equipment related thereto, is located, or any successor agency, and any successor, in whole or in part, to its functions or jurisdictions.

“Registration Rights Agreement” means the Registration Rights Agreement, dated of even date herewith, by and between the Company and the Investors, the form of which is attached hereto as Exhibit C.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the environment caused or known by the Company or any of its Subsidiaries.

“Reportable Event” means (i) any “reportable event” within the meaning of Section 4043(c) of ERISA for which the 30-day notice under Section 4043(a) of ERISA has not been waived by the PBGC (including any failure to meet the minimum funding standard of, or timely make any required installment under, Section 412 of the Code or Section 302 of ERISA, regardless of the issuance of any waivers in accordance with Section 412(d) of the Code), (ii) any such “reportable event” subject to advance notice to the PBGC under Section 4043(b)(3) of ERISA, (iii) any application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code, and (iv) a cessation of operations described in Section 4062(e) of ERISA.

“Requirements” has the meaning specified in Section 6.4.

7

“Responsible Officer” of any corporation means its president, chief executive officer, any executive officer of such corporation and any other officer or similar official thereof responsible for the administration of the obligations of such corporation in respect of this Agreement.

“SEC Reports” means each form, report, schedule, registration statement (other than a Form S-8 Registration Statement) and definitive proxy statement filed by the Company with the Securities and Exchange Commission after December 31, 2001.

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

“Senior Credit Facility” means that certain Second Amended and Restated Loan and Security Agreement, by and among the Company, certain operating Subsidiaries of the Company, the lenders party thereto, General Electric Capital Corporation, as administrative agent, First Union Securities, Inc., as syndication agent, and Wachovia Bank, N.A., as documentation agent, dated as of December 20, 1999, as amended, restated, refinanced, replaced, supplemented or otherwise modified from time to time.

“Senior Debt” means all of the following: (a) the aggregate principal amount advanced from time to time under the Senior Credit Facility up to a maximum aggregate principal amount that shall not exceed the sum of $150 million; (b) all interest accrued and accruing on the aggregate principal outstanding under the Senior Credit Facility from time to time (including, without limitation, any interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to the Company or any of its Subsidiaries, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding); (c) all other reasonable fees or monetary obligations owed under the Senior Credit Facility; and (d) all reasonable costs incurred by the lenders under the Senior Credit Facility in commencing or pursuing any enforcement action(s) with respect to the amounts described in clauses (a) through (c), including attorneys’ fees and disbursements. “Senior Debt” shall also include all replacements and refinancings of the foregoing, in whole or in part, including the amount of any Indebtedness incurred after the Senior Debt under the Senior Credit Facility has been indefeasibly paid in full that is designated by the Company as Senior Debt, provided that the aggregate principal amount of any such indebtedness outstanding at any time shall not exceed $150 million.

“Subordination Agreement” means the Intercreditor and Subordination Agreement dated as of the date of this Agreement by and among General Electric Capital Corporation, as administrative agent, the lenders under the Senior Credit Facility and the investors listed on Schedule A hereto, the form of which is attached as Exhibit D.

“Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity having ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, owned, controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by such Person.

“Telecommunications Business” the business of primarily (i) transmitting, or providing services relating to the transmission of voice, fax, video or data through owned or leased

8

transmission facilities or the provision of Internet related or other enhanced services (“Telecommunications Services”), (ii) creating, developing or marketing communications related network equipment, software and other devices for use in Telecommunications Services, (iii) owning, developing or operating assets related to Telecommunications Services, (iv) owning, developing or operating back-office or support systems related to Telecommunications Services or (v) evaluating, participating or pursuing any other activity or opportunity that is primarily related to those identified in clause (i), (ii), (iii) or (iv) above.

“Transaction” has the meaning specified in Section 4.2.

“Warrant Shares” means all shares of Common Stock issued or issuable upon the exercise of the Warrant.

“Warrant” means, collectively, the warrants to purchase 2,631,579 shares of Common Stock of the Company (as adjusted in accordance with the terms thereof), the form of which is attached hereto as Exhibit B.

9

Section 1.2    Definitions and References Generally.  The definitions in Section 1.1 apply equally to both 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” are deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections, Exhibits and Schedules are deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Loan Document means such document as amended, restated, supplemented or otherwise modified from time to time and (b) all terms of an accounting or financial nature are construed in accordance with GAAP, as in effect from time to time.

ARTICLE II

THE INVESTMENT

Section 2.1    Funding.  At the Closing under this Agreement, the Company will borrow, and the Investors will lend to the Company, the aggregate sum of $5,000,000. All such indebtedness shall be evidenced by, and is to be repaid according to the terms of, one or more Notes. The entire principal sum will be advanced at Closing.

Section 2.2    Subordination.  The Holders’ rights under the Notes and this Agreement are subordinate in right and time of payment in accordance with terms of the Subordination Agreement.

Section 2.3    Repayment of Notes.  All unpaid principal amounts and accrued and unpaid interest under the Notes, and all other Obligations of the Company to the Holders due and owing hereunder, shall be paid upon the earliest of (i) the date of acceleration of the Notes pursuant to Article VIII, (ii) the date of prepayment pursuant to Section 2.5 or 2.6 and (ii) the Maturity Date, in immediately available funds, without set-off, defense or counterclaim.

Section 2.4    Interest on the Notes.  The Notes shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 days) at the Interest Rate payable in accordance with the Notes.

Section 2.5    Optional Prepayment.  The Company may at any time, and from time to time, prepay the Notes, in whole or in part, upon at least 10 days, but no more than 60 days, prior written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) to the Holders before 2:00 p.m., Charlotte, North Carolina time. Any partial prepayments shall be made in increments of $250,000 and shall be applied pro rata to amounts outstanding under the Notes. On the date of prepayment, the Company shall pay to the Holders of the Notes being prepaid pursuant to this Section, the prepayment amount, by wire transfer of immediately available funds to an account designated by such Holder. Concurrently therewith, each Holder of Notes being prepaid shall deliver to the Company the original of its Note upon which the Company shall note the amount of the prepayment and promptly return each Holder’s original Note.

10

Section 2.6    Mandatory Prepayment of the Notes.   At any time on or after the occurrence of a Change in Control and for a period of 60 days thereafter, each Holder shall have the right, but not the obligation, to require the Company to (a) prepay the Notes held by such Holder for an amount equal to 101% of the then outstanding principal balance, plus all accrued but unpaid interest thereon and (b) pay in full all of the other Obligations owing to such Holder, which amount shall be calculated on the date of prepayment and be payable in cash on such date (the “Prepayment Amount”). Any Holder may exercise this right by delivering to the Company at its principal office a written notice stating the Holder’s intention to exercise the Holder’s right to require prepayment pursuant to this Section 2.6. The Company shall be obligated to pay the Prepayment Amount on the 30^th Business Day following its receipt of the Holder’s written notice to exercise its prepayment right hereunder. On the date of prepayment of the Notes, the Company shall pay to the Holders of the Notes being prepaid pursuant to this Section, the Prepayment Amount, by wire transfer of immediately available funds to an account designated by such Holder. Concurrently therewith, each Holder of Notes being prepaid shall deliver to the Company the original of its Note or an affidavit of loss thereof in a form that is reasonably satisfactory to the Company.

Section 2.7    Payments.

(a)  The Company shall make each payment (including principal of or interest on the Notes or other amounts) hereunder not later than 2:00 P.M., Charlotte, North Carolina time, on the date when due in immediately available funds, without setoff, defense or counterclaim. Each such payment shall be made to each Holder pursuant to written instructions from such Holder to the Company, including pursuant to wire transfer instructions.

(b)  Whenever any payment (including principal of and interest on the Notes, or other amounts) hereunder shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest.

Section 2.8    Election by Holders to Receive Cash or Common Stock.   In the event a Grace Period occurs with respect to an Event of Default specified in Section 8.1(c), each Holder, upon the expiration of the Grace Period, may elect, upon ten (10) calendar days’ notice to the Company, to be paid the interest payments that accrued but were not paid with respect to such Holder’s Note(s) during the Grace Period (the “Grace Period Interest Amount”) in cash or through the issuance of shares of Common Stock having an aggregate value equal to the Grace Period Interest Amount. For this purpose, a share of Common Stock shall be valued at the Market Price determined as of the expiration of the Grace Period. Payment of the Grace Period Interest Amount in cash or by the issuance of shares of Common Stock in accordance with the notice received from a Holder shall be made by the Company within seven (7) Business Days from the receipt of such notice.

11

Section 2.9      Use of Proceeds.   The proceeds of the loan by the Investors shall be used for general corporate purposes, which may include repayment of any Senior Debt.

Section 2.10    Warrant.

(a)  At the Closing, the Company shall issue the Warrant to the Investors.

(b)  Legends. It is understood that all certificates evidencing shares of Common Stock, including the Warrant Shares, shall bear the legend set forth below:

The securities evidenced by or issuable upon the exercise of this warrant have not been registered under the Securities Act of 1933, as amended (the “Act”), or any applicable state securities law, and may not be offered, assigned, transferred, pledged, hypothecated, or otherwise disposed of in absence of an effective registration statement under the Act and such registration or qualification as may be necessary under the securities laws of any state, or an opinion of counsel reasonably satisfactory to the corporation that such registration or qualification is not required.

The legend shall be removed by the Company from any certificate evidencing such Common Stock upon delivery to the Company of an opinion by counsel, reasonably satisfactory to the Company, that a registration statement under the Securities Act of 1933, as amended, is at that time in effect with respect to the legended security or that such security can be transferred in a public sale without such a registration statement being in effect.

ARTICLE III

CONDITIONS TO THE OBLIGATION OF INVESTORS TO CLOSE

Section 3.1      Conditions to Obligation of Investors to Close.   The obligations of the Investors to enter into this Agreement and to perform its obligations hereunder are subject to the satisfaction of the following conditions on or before to the Closing Date:

(a)  The representations and warranties set forth in Article IV hereof shall be true and correct on and as of the Closing Date.

(b)  The Company shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and at the time of and immediately after the Transaction, no Event of Default shall have occurred and be continuing.

(c)  The Investors shall have conducted such due diligence investigation of the Company and its Subsidiaries as they deem appropriate. In this regard, the Company will furnish to the Investors such information as the Investors may reasonably request in order to enable the Investors to conduct their due diligence.

12

(d)  The Investors shall have received the following items:

(i)   a favorable written opinion of counsel to the Company, dated the Closing Date, addressed to the Investors and covering such matters relating to the Loan Documents and the Transaction as the Investors shall reasonably request, and the Company hereby requests such counsel to deliver such opinion;

(ii)  the Notes, duly executed by the Company and each of the other Loan Documents, executed by each of the parties thereto (other than the Investors);

(iii) (A) a copy of the certificate of incorporation, including all amendments thereto, of the Company, certified as of a recent date by the Secretary of State of the state of Delaware, and a certificate as to the good standing of the Company as of a recent date, from such Secretary of State and (B) a certificate of the Secretary or Assistant Secretary of the Company dated the Closing Date and certifying (1) that attached thereto is a true and complete copy of the by-laws of the Company as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (2) below, (2) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors of the Company authorizing the execution, delivery and performance of the Loan Documents and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (3) that the certificate of incorporation of the Company has not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (A) above;

(iv) the Registration Rights Agreement, in form and substance satisfactory to the Investors, duly executed by the Company; and

(v) the Warrant, in form and substance satisfactory to the Investors, duly executed by the Company.

(e)  No event that has caused or reasonably would be expected to cause a Material Adverse Change shall have occurred since September 30, 2002.

(f)  The Senior Credit Facility shall have been amended on terms satisfactory to the Company.

(g)  The Investors shall have received such other documents, instruments and information as the Investors may reasonably request, including, but not limited to, SEC Reports.

13

Section 3.2     Conditions to Obligation of the Company to Close.   The obligations of the Company to enter into this Agreement and to issue the Notes and Warrant and to perform its other obligations hereunder shall be subject to the satisfaction as determined by the Company of the following conditions on or before the Closing Date:

(a)  The representations and warranties of each of the Investors contained in Article V hereof shall be true and correct on and as of the Closing Date.

(b)  Each of the Investors shall have performed and complied in all material respects with all of its agreements and conditions set forth or contemplated herein that are required to be performed or complied with by each of the Investors on or before the Closing Date.

(c)  The Subordination Agreement shall have been executed and delivered by the parties thereto.

(d)  The Company shall have received copies of each of the Loan Documents and the Subordination Agreement duly executed by all parties thereto (other than the Company).

(e)  The Senior Credit Facility shall have been amended on terms satisfactory to the Company.

(f)  The issuance of the Notes and Warrant pursuant to this Agreement, and the terms of the Subordination Agreement, shall have been approved as required under the Senior Credit Facility.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

In order to induce the Investors to enter into the Transaction, the Company represents and warrants to the Investors on the Closing Date (which representations and warranties shall survive the execution and delivery of this Agreement) that:

Section 4.1     Organization; Powers.   The Company and each of its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of its state of organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure to so qualify would not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect and (d) has the power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated hereby and to borrow hereunder.

Section 4.2     Authorization.   The execution, delivery and performance by the Company of each of the Loan Documents to which the Company is or is to become a party and

14

the obligations hereunder and thereunder (collectively, the “Transaction”) and the consummation of the transactions contemplated thereunder (a) have been duly authorized by all necessary action on the part of the Company and (b) will not (i) violate (A) any provision of Applicable Law or the certificate of incorporation or other constitutive documents or by-laws of the Company, (B) any order of any Governmental Authority applicable to or binding upon the Company or any of its Subsidiaries or (C) any provision of any indenture, agreement or other instrument to which the Company is a party or by which the Company or any of the Company’s property is or may be bound (including, without limitation, the Senior Credit Facility) which is reasonably likely to result in a Material Adverse Effect, (ii) result in a breach of or constitute (alone or with notice or lapse of time or both) a default under or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such indenture, agreement or other instrument which is reasonably likely to result in a Material Adverse Effect or (iii) result in the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by the Company which is reasonably likely to result in a Material Adverse Effect.

Section 4.3     Enforceability.   This Agreement has been duly executed and delivered by the Company and constitutes, and each other Loan Document when executed and delivered by the Company will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws relating to or affecting creditors’ rights generally from time to time in effect and to general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law and the availability of the remedy of specific performance.

Section 4.4     Governmental Approvals; Regulatory Authorizations.

(a)  Governmental Authorizations. No authorization, consent, approval, license, exemption or other action by, and no registration, qualification, designation, declaration or filing with, any Governmental Authority is or will be necessary in connection with the execution and delivery of this Agreement or any other Loan Document by the Company, consummation by the Company of the transactions herein or therein contemplated, performance of or compliance by the Company with the terms and conditions hereof or thereof or the legality, validity and enforceability hereof or thereof.

(b)  Regulatory Authorizations. The Company and each of its Subsidiaries hold all authorizations, permits and licenses required by the FCC or the PUC or any Communications Law for the conduct of their business as now conducted, and all such regulatory authorizations are in full force and effect, are subject to no further administrative or judicial review and are therefore final.

Section 4.5     Financial Condition.

(a)  The Company has previously provided to the Investors a true and complete copy of the audited consolidated balance sheet of the Company and its Subsidiaries at December 31, 2001, and the related consolidated statements of operations,

15

cash flows and stockholders’ deficiency of the Company and its Subsidiaries for the fiscal year then ended (the “Audited Financials”). The Audited Financials were prepared in accordance with GAAP, are true and correct in all material respects and fairly present the Company’s and its Subsidiaries’ financial condition, results of operations and cash flows on a consolidated basis at such date and for the period then ended. The Company’s independent accountants have issued an unqualified opinion to the Company concerning the Audited Financials, a copy of which is included with the Audited Financials.

(b)  The Company has previously provided to the Investors a true and complete copy of the unaudited condensed consolidated balance sheet of the Company and its Subsidiaries at September 30, 2002 and the related unaudited condensed consolidated statements of operations, cash flows and stockholders’ deficiency of the Company and its Subsidiaries for the nine-month period then ended (the “Interim Financials”). The Interim Financials were prepared in accordance with GAAP for interim financial information and the regulations of the Securities and Exchange Commission governing the form and content of financial statements included in Quarterly Reports on Form 10-Q. Accordingly, the Interim Financials do not include all of the information and notes required by GAAP for complete financial statements.

(c)  The Company has previously provided the Investors with two sets of projected consolidated balance sheets, income statements and cash flow statements of the Company and its Subsidiaries through the end of fiscal year 2008, one of which is the revised model submitted to the Company’s senior lenders in September 2002 and the other is the revised model giving effect to the investment of $5 million in the Notes and adjustments in the amortization of the principal amounts payable under the Senior Credit Facility. These projected financial statements were based on estimates, information and assumptions believed by the Company to be reasonable, and the Company has no reason to believe, in the light of conditions existing at the time of delivery, that such projections were incorrect or misleading in any material respect.

Section 4.6    Indebtedness. The Interim Financials accurately reflect all Indebtedness, liabilities or obligations of any nature (whether liquidated or unliquidated, mature or not yet mature, absolute or contingent, secured or unsecured) of the Company and its Subsidiaries as of September 30, 2002. Neither the Company nor any of its Subsidiaries is in default or alleged to be in default in any material respect with respect to any of its liabilities set forth in the Interim Financials.

Section 4.7    Warrant Shares. All of the Warrant Shares have been duly authorized and reserved for issuance, and upon issuance subsequent to the payment of the exercise price in accordance with the terms of the Warrant, the Warrant Shares will be validly issued, fully paid and non-assessable.

Section 4.8    Authorized Capital. Attached hereto as Schedule 4.8 is an accurate and complete list of the following information: (a) the authorized capitalization of the Company as of the date hereof; (b) the number of shares of each class of the issued and outstanding Capital Stock of the Company; and (c) the number of shares covered by all convertible securities and all

16

options, warrants and similar rights held with respect to the Capital Stock of the Company. All shares of Capital Stock of the Company and all convertible securities, options, warrants and similar rights held with respect to the Capital Stock of the Company have been duly authorized, validly issued and, in the case of Capital Stock, are fully paid and nonassessable.

Section 4.9    No Material Adverse Change. Since the balance sheet date of the Interim Financials, there has occurred no Material Adverse Change and, except as set forth on Schedule 4.9 and the transactions contemplated by this Agreement, the Company and its Subsidiaries have operated their business in the ordinary course in all material respects.

Section 4.10    Title to Properties; Possession Under Leases. The Company and each of its Subsidiaries has good and marketable title to, or valid leasehold interests in, all of its material properties and assets free and clear of Liens, other than Permitted Encumbrances. To the best of the Company’s knowledge, neither the Company nor any of its Subsidiaries is in default or alleged to be in default in any material respect with respect to any of its obligations under any leases of real property or other material leases to which the Company or any of its Subsidiaries is a party (collectively, the “Leases”) and no party other than the Company or any of its Subsidiaries is in material default with respect to such party’s obligations under any of the Leases. The Company’s and each of its Subsidiaries’ possession of any property leased by it has not been disturbed, nor has any claim been asserted against the Company or such Subsidiary that is or could be adverse to the Company’s or such Subsidiary’s interests under any of the Leases. None of the Leases is subject to any material rights of set-off, recoupment or similar deduction or offset. Except for Permitted Encumbrances, neither the Company nor any of its Subsidiaries has assigned or encumbered any of its rights, title or interest in or under any of the Leases nor agreed to any oral modifications of any of the material provisions of any of the Leases.

Section 4.11    Litigation; Compliance with Laws.

(a)  There are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the best of knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or any business, property or rights of the Company or any of its Subsidiaries (i) that involve any Loan Document or the Transaction or (ii) as to which there is a reasonable possibility of an adverse determination that could reasonably be expected to result in a Material Adverse Effect except such actions, suits and proceedings that are described in the SEC Reports.

(b)  Neither the Company nor any of its Subsidiaries is in breach of, default under, or in violation of: (a) any Applicable Law, decree or order of any Governmental Authority, which breach, default or violation would reasonably be expected to result in a Material Adverse Effect or (b) any deed, lease, loan agreement, commitment, bond, note, deed of trust, restrictive covenant, license, indenture, contract or other agreement, instrument or obligation to which it is a party or by which it is bound or to which its assets are subject, which breach, default or violation would reasonably be expected to result in a Material Adverse Effect.

17

Section 4.12     Material Contracts. As of the date hereof, neither the Company nor any of its Subsidiaries is in default or, to the best knowledge of the Company, alleged to be in default with respect to any of its obligations under any material contracts to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their assets is bound (collectively, the “Contracts”), except for defaults or alleged defaults which, in the aggregate, could not reasonably be expected to have a Material Adverse Effect and, to the knowledge of the Company, no party other than the Company or any of its Subsidiaries is in default with respect to such party’s obligations under any of the Contracts, except for defaults which, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. As of the date hereof, no claim has been asserted against the Company or any of its Subsidiaries that is or could be materially adverse to its interests under any of the Contracts. Except for Permitted Encumbrances, neither the Company nor any of its Subsidiaries has assigned or encumbered any of its rights, title or interest in or under any of the Contracts nor agreed to any oral modifications of any of the material provisions of any of the Contracts.

Section 4.13    No Side Agreements. To the knowledge of the Company, there exists no agreement or understanding calling for any payment or consideration from a customer or supplier of the Company or any of its Subsidiaries to an officer, director, stockholder or manager of the Company with respect to any transaction between the Company or any of its Subsidiaries and a supplier or customer.

Section 4.14    Investment Company Act; Public Utility Holding Company Act. Neither the Company nor any of its Subsidiaries is (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended or (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended.

Section 4.15    Tax Returns. The Company and each of its Subsidiaries has filed or caused to be filed all Federal, state and local tax returns required to have been filed by it or has filed extensions therefor, except where the failure to do so is not reasonably expected to result in a Material Adverse Effect, and has paid or caused to be paid all taxes as and when due and payable by it thereunder and all assessments received by it thereunder, except taxes that are being contested in good faith by appropriate proceedings and for which the Company and each of its Subsidiaries shall have set aside on its books adequate reserves.

Section 4.16    No Untrue Statements or Material Omissions. None of the statements contained in any report, financial statement, exhibit or schedule furnished by or on behalf of the Company to the Investors in connection with the negotiation of any Loan Document or included therein or delivered pursuant to this Agreement, contained or contains any untrue statement of material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading as of the time when made or delivered.

18

Section 4.17    Employee Benefit Matters.

(a)  With respect to any Plan, there is no Reportable Event currently under consideration by the PBGC which may reasonably result in any material liability to the PBGC with respect to any Plan;

(b)  No Plan has been terminated;

(c)  No trustee has been appointed by any United States District Court to administer any Plan;

(d)  The PBGC has not instituted proceedings to terminate any Plan or to appoint a trustee to administer any such Plan;

(e)  Neither the Company nor any of its Subsidiaries, has withdrawn, completely or partially, from any Plan; and

(f)  Neither the Company nor any of its Subsidiaries, has incurred secondary liability for withdrawal liability payments under any Plan.

Section 4.18    Environmental Matters. The Company and each of its Subsidiaries are in compliance with all Environmental Laws applicable to it or its business or to the real or personal property owned, leased or operated by it, except for such non-compliances as in the aggregate could not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received notice of, or is aware of, any violation or alleged violation, or any liability or asserted liability, under any Environmental Law, with respect to such Party, its business or its premises.

Section 4.19    Labor Matters. As of the date hereof, neither the Company nor any of its Subsidiaries is subject to any collective bargaining agreement with any union. To the best of the Company’s knowledge, the hours worked by and payments made to employees of the Company or any of its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable federal, state or local law dealing with such matters. All payments due from the Company or any of its Subsidiaries or for which any claim may be made against the Company or any of its Subsidiaries, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Company or such Subsidiary.

Section 4.20    Employees. To the best knowledge of the Company, no executive officer of the Company, and no other key employee of the Company or any of its Subsidiaries whose termination would reasonably be expected to have a Material Adverse Effect, has advised the Company or any of its Subsidiaries (orally or in writing) that he or she intends to terminate employment with the Company or any of its Subsidiaries.

19

Section 4.21    Brokers. Neither the Company nor any of its Subsidiaries has engaged the services of a broker in connection with the Transaction.

Section 4.22    Intellectual Property. As of the Closing Date, the Company and each of its Subsidiaries owns or will own or has rights to use all Intellectual Property necessary to continue to conduct its business in all material respects as now or heretofore conducted by it. To the Company’s knowledge, the Company and each of its Subsidiaries conducts its business and affairs without infringement of or interference with any Intellectual Property of any other Person and the Company has no knowledge that another Person is infringing or interfering with any Intellectual Property of the Company or its Subsidiaries.

Section 4.23    Insurance. The Company and its Subsidiaries have insurance in such amounts and covering such risks and liabilities as may be reasonable and prudent. Such insurance is in full force and effect and all premiums have been duly paid.

Section 4.24    Exchange Act Filings. The Company has made all filings required of it under Sections 13(a) and 14 of the Exchange Act. All such filings were timely made and none of such filings contained any untrue statement of material fact (either directly or incorporated by reference) or omitted to state any material fact necessary to make the statement made, in the light of the circumstances under which it was made, not misleading.

ARTICLE V

INVESTOR REPRESENTATIONS

Each Investor as to itself and not as to any other Investor hereby severally represents and warrants to the Company as follows:

Section 5.1    Investment. The Investor is acquiring the Notes and the Warrant for its own account, or for the account of an “employee benefit plan” (within the meaning of Section 3(3) of ERISA), for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and the Investor has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof. If the Investor is acquiring the Notes and the Warrant for the account of an employee benefit plan, neither such acquisition nor the holding of the Notes and the Warrant constitutes a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.

Section 5.2    Authority. The Investor is (unless an individual) duly organized, validly existing and in good standing as a corporation, limited liability company or general or limited partnership under the laws of the state of its incorporation or organization. The Investor has full power and authority to enter into and to perform this Agreement in accordance with its terms. The Investor (unless an individual) represents that it has not been organized, reorganized or recapitalized specifically for the purpose of investing in the Notes and the Warrant.

20

Section 5.3    Experience. The Investor has carefully reviewed the representations concerning the Company contained in this Agreement and has made detailed inquiries concerning the Company, its business and its personnel; the officers of the Company have made available to the Investor any and all written information that the Investor has requested and has answered to the Investor’s satisfaction all inquiries made by the Investor.

Section 5.4    Accredited Investor. The Investor is an “accredited investor” within the definition set forth in Rule 501(a) of the Securities Act, as follows:

(a)    If an individual, the Investor has an individual net worth or joint net worth with his/her spouse at the time of his/her investment that exceeds $1,000,000, or has an individual income in excess of $200,000 in each of the two most recent years or joint income with his/her spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

(b)    If a partnership or limited liability company, the Investor was not formed for the specific purpose of acquiring the securities offered and has total assets in excess of $5,000,000.

(c)    If an employee benefit plan within the meaning of ERISA, (i) the investment decision is made by a plan fiduciary, as defined in ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or the plan has total assets in excess of $5,000,000, or (ii) if the plan is a self-directed plan, the investment decisions are made solely by persons that are accredited investors as described under clause (a) above.

Section 5.5    Brokers. The Investor has not engaged the services of a broker in connection with the Transaction.

Section 5.6    Further Assurances. The Investor shall execute any and all further documents, agreements and instruments, and take all further action that may be required under Applicable Law, or that the Company or any holder of Senior Debt may reasonably request, in order to effectuate the provisions of this Agreement, any other Loan Document and the Subordination Agreement or in order to subordinate the Notes to any Senior Debt, whether existing as of the date hereof or created, incurred or suffered to exist hereafter, on terms reasonably requested by the holders of such Senior Debt.

21

ARTICLE VI

AFFIRMATIVE COVENANTS

Except as otherwise provided herein, until the Notes and all expenses or other amounts payable under this Agreement and the Notes are repaid in full, unless the Holders shall otherwise consent in writing, the Company covenants and agrees with the Holders to do all of the following:

Section 6.1    Preservation of Corporate Existence and Qualification. The Company shall, and shall cause each of its Subsidiaries to, maintain its existence, good standing and rights in full force and effect in its jurisdiction of organization. The Company shall, and shall cause each of its Subsidiaries to, qualify to do business and remain qualified and in good standing and shall obtain all necessary authorizations to do business in each jurisdiction in which failure to receive or retain such would have a Material Adverse Effect.

Section 6.2    Continuation of Business. The Company shall, and shall cause each of its Subsidiaries to, continue to engage solely in the Telecommunications Business and shall acquire and maintain in full force and effect all material rights, privileges, franchises necessary therefor (including any license or authorization required by the FCC or any PUC).

Section 6.3    Insurance. The Company shall keep its and each of its Subsidiaries’ insurable properties adequately insured at all times by financially sound and reputable insurers; maintain such other insurance to such extent and against such risks as is reasonable and prudent, including commercial general liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it, hazard insurance and business interruption insurance; and maintain such other insurance as may be required by law.

Section 6.4    Payment of Taxes, Charges, Claims and Current Liabilities. The Company shall pay or discharge, and cause its Subsidiaries to pay or discharge:

(a)    on or prior to the date on which penalties thereto accrue, all taxes, assessments and other government charges or levies imposed upon it or any of its properties or income (including such as may arise under Sections 4062, 4063 or 4064 of ERISA, or any similar provision of law);

(b)    on or prior to the date when due, all lawful claims of materialmen, mechanics, carriers, warehousemen and other like persons which result in the creation of a Lien upon any property or assets of the Company or any of its Subsidiaries; and

(c)    on or prior to the date when due, all other lawful claims which, if unpaid, might result in the creation of a Lien upon any such property (other than Permitted Encumbrances) or which, if unpaid, might give rise to a claim entitled to priority over general creditors of the Company or its Subsidiaries in a case under Title 11 (Bankruptcy)

22

of the United States Code, as amended, or in any insolvency proceeding, dissolution or winding-up involving the Company or its Subsidiaries.

Notwithstanding the foregoing, the Company and its Subsidiaries shall be entitled to contest or appeal the requirements of any law or Governmental Authority or the payment of any tax, assessment, charge, levy, claim, asserted liability or any judgment entered against the Company or any of its Subsidiaries (collectively, the “Requirements”), as long as (i) such Requirements are being contested in good faith by appropriate proceedings diligently conducted; (ii) the Company maintains adequate cash reserves and makes other appropriate provisions as may be required by GAAP to provide for any liability arising from such Requirements; (iii) the contesting of, or failure to comply with, such Requirements does not in any way jeopardize the Company’s ability or authority to operate all or any part of its business; (iv) the contesting of, or failure to comply with, such Requirements does not have a Material Adverse Effect; and (v) any foreclosure, attachment, execution, sale or similar proceeding against the Company or any of its Subsidiaries or their properties in connection with any such Requirements is duly stayed by posting of a bond or security deposit or by other action sufficient under Applicable Law to stay such foreclosure, attachment, execution, sale or other proceedings.

Section 6.5    Reporting and Information Requirements.

(a)     Annual Audit Reports.  Within ninety (90) days after the close of each fiscal year, the Company shall furnish or cause to be furnished to the Holders audited consolidated statements of operations, cash flow and stockholders’ equity (deficiency) for the Company for such fiscal year and a consolidated balance sheet of the Company as of the close of such fiscal year, and notes to each, all in reasonable detail, and setting forth in comparative form the corresponding figures for the preceding fiscal year, with such statements and balance sheet to be certified without qualification by the Company’s independent accountants.

(b)    Quarterly Reports.  Within forty-five (45) days after the end of each of the Company’s first three fiscal quarters, the Company shall furnish to the Holders (i) unaudited condensed consolidated statements of operations, cash flow and stockholders’ equity (deficiency) for the Company for such quarter and for the period from the beginning of the then current fiscal year to the end of such quarter and a condensed unaudited consolidated balance sheet of the Company as of the end of such quarter, all in reasonable detail and presenting fairly the financial position of the Company as of the end of such quarter and the results of its operations and the changes in its financial position for such quarter, in conformity with GAAP for interim information and the regulations of the Securities and Exchange Commission governing the form and content of financial statements in Quarterly Reports on Form 10-Q.

(c)    Compliance Certificates.  With each annual or quarterly report furnished pursuant to Sections 6.5(a) and (b), if requested by a Holder, the Company shall deliver to the Holder a certificate, in form and substance reasonably satisfactory to the Holder, dated as of the end of such annual or quarterly period, signed by a Responsible Officer of the Company, stating that as of the date thereof no Event of Default has occurred and is

23

continuing or exists, or if an Event of Default has occurred and is continuing or exists, specifying in detail the nature and period of existence thereof and any action with respect thereto taken or contemplated to be taken by the Company.

(d)    SEC Filings.  If requested by a Holder, the Company shall furnish to such Holder a copy of each periodic report, effective registration statement (other than Form S-8 Registration Statement) and definitive proxy statement filed by the Company with the Securities and Exchange Commission on or after the Closing Date. Any such documents requested by a Holder shall be furnished to such Holder within five calendar days from the date of filing or effectiveness, as the case may be, with the Securities and Exchange.

Section 6.6    Compliance with Laws. The Company shall, and cause its Subsidiaries to, comply in all respects with all Applicable Law; provided, however, that the Company shall not be deemed to be in violation of this covenant as a result of any failure to comply which would not result in any liability or exposure to the Holders or any fines, penalties, injunctive relief or other civil or criminal liabilities which, in the aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 6.7    Maintaining Records; Access to Properties and Inspections. The Company shall keep, and shall cause its Subsidiaries to keep, proper books of record and account in which full and correct entries in conformity with GAAP are made of all dealings and transactions in relation to its business and activities.

Section 6.8    Further Assurances. The Company shall execute any and all further documents, agreements and instruments, and take all further action that may be required under Applicable Law, or that the Holders may reasonably request, in order to effectuate the transactions contemplated by the Loan Documents. The Company shall deliver or cause to be delivered to the Holders all such instruments and documents (including legal opinions) as the Holders may reasonably request to evidence compliance with this Section.

Section 6.9    Reservation of Warrant Shares. So long as any Warrant is outstanding, the Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the exercise of the Warrant, such number of shares of Common Stock issuable upon the exercise of the outstanding Warrant. All Warrant Shares which are so issuable in accordance with the Warrant shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all Liens created by the Company and taxes (except those based on the income, revenue or capital gains of the Holder thereof). The Company shall take all such action as may be reasonably necessary to assure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange or market system upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately transmitted by the Company upon issuance).

Section 6.10    Replacement of Warrant. So long as any Warrant is outstanding, the Company shall perform all acts required under the Warrant, including the re-issuance or

24

replacement of the Warrant to any of the Holders upon transfer, exchange, loss or destruction thereof (upon provision of reasonable indemnification and affidavit).

Section 6.11    Exchange Act Filings. The Company shall timely file all reports, proxy statements and other documents required to be filed by it pursuant to Sections 13(a) and 14 of the Exchange Act.

ARTICLE VII

NEGATIVE COVENANTS

Until the Obligations are paid in full, unless the Holders shall otherwise consent in writing, the Company covenants and agrees not to do any of the following without the prior written consent of the Holders:

Section 7.1    Indebtedness.

(a)    The Company shall not, nor will it permit any of its Subsidiaries to, directly or indirectly incur, create, assume or permit to exist any Indebtedness other than the following (together, the “Permitted Indebtedness”):

(i)    Senior Debt;

(ii)    Indebtedness (other than Senior Debt) existing on the date hereof;

(iii)    Indebtedness created hereunder;

(iv)    Indebtedness of the Company to a Subsidiary or a Subsidiary to the Company or another of the Company’s Subsidiaries;

(v)    Indebtedness of the Company or its Subsidiaries in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations, in each case provided in the ordinary course of business;

(vi)    Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within 10 Business Days of its incurrence;

(vii)    any Indebtedness that is expressly subordinate and made junior in right of payment to the Notes pursuant to a written subordination agreement in form and substance reasonably acceptable to the Holders;

(viii)    any Indebtedness incurred in connection with the issuance of letters of credit (including cash collateralized letters of credit) in the ordinary course of the business of the Company or any of its Subsidiaries;

25

(ix)    any Indebtedness incurred in connection with the acquisition of the Internet Service Provider customers of Eagle Communications, Inc. and its Affiliates;

(x)    any Indebtedness not otherwise permitted by the foregoing paragraphs of this Section 7.1; provided that at the time of creation, incurrence or assumption thereof and at any time thereafter, the aggregate principal amount of such Indebtedness outstanding at any point in time shall not exceed $5.0 million; and

(xi)    any replacements, renewals or refinancings of Indebtedness described in clauses (i), (ii), (iii), (vii), (viii), (ix) and (x).

(b)    The Company shall not incur any Pari Passu Indebtedness.

(c)    The Company shall not, and shall not permit any of its Subsidiaries to, incur, create or permit to exist any Indebtedness (other than Permitted Indebtedness) that is expressly subordinate in right of payment to any other Indebtedness of the Company or such Subsidiary unless such Indebtedness is also pari passu or subordinate in right of payment to the Notes.

Section 7.2    Dividends and Distributions. The Company shall not make any Equity Payment other than dividends on, and any mandatory redemption of, the Company’s Series A Preferred Stock to the extent provided for in the certificate of incorporation of the Company (including the applicable certificates of designation) as in effect on the date of the first issuance of the Notes.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

Section 8.1    Events of Default. If any of the following events (“Events of Default”) occur:

(a)    any representation or warranty made in or in connection with any Loan Document hereunder, or any representation, warranty or certification contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, proves to have been materially incorrect when so made or furnished;

(b)    default is made in the payment of any principal of the Notes when, and as the same shall become, due and payable, whether at the due date thereof, by acceleration thereof or otherwise;

26

(c)    default is made in the payment of any interest on the Notes or any other amount (other than an amount referred to in (b) above) due hereunder, when and as the same becomes due and payable, and such default continues unremedied for a period of seven (7) Business Days; provided that the failure to pay monthly interest payments during any Blockage Period (as defined in the Subordination Agreement) plus ten (10) calendar days following the termination of any such Blockage Period (the “Grace Period”) shall not constitute an Event of Default pursuant to this clause (c) so long as the Company continues to accrue any unpaid interest during the Grace Period and begins making monthly payments of interest as and when they become due and payable after the expiration of the Grace Period;

(d)    default is made in the due observance or performance by the Company or any of its Subsidiaries of any covenant, condition or agreement contained in Article VII;

(e)    default is made in the due observance or performance by the Company or any of its Subsidiaries of any covenant, condition or provision of this Agreement (other than those specified in (a), (b), (c) or (d) above) and such default continues unremedied for a period ending the earlier of (i) a period of thirty 30 calendar days from the date the Company or any of its Subsidiaries knew of the occurrence of such default and (ii) a period of 30 calendar days after notice thereof from the Holders to the Company; or

(f)    any default is declared or otherwise occurs (after giving effect to any applicable notice and/or grace periods) with respect to Senior Debt pursuant to which the lenders providing such Senior Debt have accelerated the maturity thereof;

(g)    a case or proceeding commences against the Company or any of its Subsidiaries seeking a decree or order in respect of any such Person (i) under Title 11 of the United States Code, as now constituted or hereafter amended or any other applicable federal or state bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for the Company or any of its Subsidiaries or of any substantial part of any such Person’s assets, or (iii) ordering the winding-up or liquidation of the affairs of any such Person, and such case or proceeding shall remain undismissed or unstayed for sixty (60) days or more or such court shall enter a decree or order granting the relief sought in such case or proceeding; or

(h)    the Company or any of its Subsidiaries (i) files a petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy or other similar law, (ii) fails to contest in a timely and appropriate manner or consents to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of any such Person or of any substantial part of any such Person’s assets, (iii) makes an assignment for the benefit of creditors, (iv) takes any corporate action in furtherance of any of the foregoing or (v) admits in writing its inability to, or shall be generally unable to pay its debts as such debts become due.

27

Section 8.2    Waivers. The Company waives presentment, demand, notice of dishonor, and protest, and all demands and notices of any action taken by the Holders under this Agreement and the Notes, except as otherwise provided herein.

Section 8.3    Enforcement Actions. Upon the occurrence of an Event of Default, the Holders may, at their option, declare all or any portion of the Obligations to be forthwith due and payable and seek to enforce against the Company any of their respective rights and remedies with respect to the Obligations including, but not limited to: (i) commencing or pursuing legal proceedings to collect any amounts owed with respect to or to otherwise enforce the Obligations or (ii) executing upon, or otherwise enforcing, any judgment obtained with respect to the payment or performance of the Obligations.

Section 8.4    Costs. The Company shall pay all reasonable expenses of any nature, whether incurred in or out of court and whether incurred before or after the Notes shall become due at their Maturity Date or otherwise (including, but not limited to, reasonable attorneys’ fees and costs), which the Holders may reasonably incur in connection with the collection or enforcement of any of the Obligations. The Holders are authorized to pay at any time and from time to time any or all of such expenses, to add the amount of such payment to the amount of principal outstanding under the Notes and to charge interest thereon at the rate specified in the Notes.

Section 8.5    Remedies Non-Exclusive. None of the rights, remedies, privileges or powers of the Holders expressly provided for herein are exclusive, but each of them is cumulative with, and in addition to, every other right, remedy, privilege and power now or hereafter existing in favor of each of the Holders, whether pursuant to the other Loan Documents, at law or in equity, by statute or otherwise.

ARTICLE IX

MISCELLANEOUS

Section 9.1    Notices. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a)    if to the Company, US LEC Corp., Morrocroft III, 6801 Morrison Boulevard, Charlotte, North Carolina 28211, Attention: Aaron D. Cowell, Jr., Chief Executive Officer, (Telecopy No. 704-319-1345); with a copy to Moore & Van Allen PLLC, 100 North Tryon Street, Suite 4700, Charlotte, North Carolina 28202, Attention: Barney Stewart III (Telecopy No. 704-331-1159); and

(b)    if to the Investors, to the addresses listed on Schedule A; with a copy to Harter Secrest & Emery LLP, 1600 Bausch & Lomb Place, Rochester, New York 14604, Attention: Frank T. Crego (Telecopy No. 585-232-2152).

28

All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given (i) three Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid or (ii) one Business Day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery or (iii) on the date on which it is sent by facsimile transmission with acknowledgement of receipt at the number to which it is required to be sent in each case to the intended recipient as set forth above.

Section 9.2    Binding Effect. This Agreement shall become effective when it shall have been executed by the Company and the Investors and when the Investors shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.

Section 9.3    Successors and Assigns.

(a)  Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and Permitted Transferees of such party, and all covenants, promises and agreements by or on behalf of the Company or the Investors that are contained in this Agreement or any other Loan Document shall bind and inure to the benefit of their successors and Permitted Transferees, whether or not such Persons expressly become a party hereto.

(b)  The Company shall not assign or delegate any of its rights or duties hereunder without the prior written consent of the Holders, and any attempted assignment or delegation without such consent shall be null and void. The Holders may assign or delegate any of their rights or duties hereunder or under the other Loan Documents to any Permitted Transferee.

Section 9.4    Expenses. Each party to this Agreement shall bear all expenses incurred by it in connection with the Transaction; provided that the Company shall pay Harter, Secrest & Emery LLP its aggregate fees and expenses incurred in advising and assisting certain Investors in negotiating the Loan Documents and Closing the Transaction.

Section 9.5    Waiver of Consequential and Punitive Damages. The Company and the Holders hereby waive to the fullest extent permitted by law all claims to consequential and punitive damages in any lawsuit or other legal action brought by any of them against any other of them in respect of any claim among or between any of them arising under this Agreement, the other Loan Documents or any other agreement or agreements between or among any of them at any time, including any such agreements, whether written or oral, made or alleged to have been made at any time prior to the Closing Date and all agreements made hereafter or otherwise and any and all claims arising under common law or under any statute of any state or the United States of America, including any thereof in contract, tort, strict liability or otherwise, whether any such claims be now existing or hereafter arising, now known or unknown. In making this waiver, the Holders and the Company acknowledge and agree that there shall be no claims for consequential or punitive damages made by the Holders against the Company and there shall be

29

no claims for consequential or punitive damages made against the Holders by the Company. The Holders and the Company acknowledge and agree that this waiver of claims for consequential damages and punitive damages is a material element of the consideration for this Agreement.

Section 9.6    Applicable Law. This Agreement and the other Loan Documents (other than as expressly set forth in other Loan Documents) shall be construed in accordance with and governed by the laws of the State of Delaware (excluding conflicts of laws provisions).

Section 9.7    Waivers; Amendment.

(a)  No failure or delay of a Holder in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Holders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that it would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Company therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances.

(b)  Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Company and the Holders.

Section 9.8    Entire Agreement. This Agreement and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

Section 9.9    Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any way, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

30

Section 9.10    Counterparts.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract and shall become effective as provided in Section 9.2. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

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

Section 9.12    Jurisdiction;  Consent to Service of Process.

(a)  Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any North Carolina state court or federal court of the United States of America sitting in the State of North Carolina, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment and each of the Parties hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in the State of North Carolina or, to the extent permitted by law, in such federal court. Each of the Parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Holders may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Company or its properties in the courts of any jurisdiction.

(b)  Each of the parties hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any North Carolina state or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c)  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

Section 9.13    Consents and Approvals; Defaults.

(a)  Subject to the terms of the Subordination Agreement and the terms of paragraph (c) of this Section, to the extent that (i) the terms of this Agreement or any of the other Loan Documents require the Company to obtain the consent or approval of the Holders, (ii) the Company seeks an amendment to or termination of any of the terms of

31

this Agreement or any of the Loan Documents or (iii) the Company seeks a waiver of any right granted to the Holders under this Agreement or any of the Loan Documents, such consent, approval, termination, amendment or waiver (each, an “Approval”) shall be made in writing by the Holders of Notes representing at least a majority of the aggregate principal amount outstanding under all of the Notes.

(b)  Subject to the terms of paragraph (c) of this Section, to the extent that the terms of this Agreement permit the Holders to take any enforcement action, including but not limited to declaring an Event of Default or accelerating amounts due hereunder or under the Notes, the taking of any such action shall require the written consent of the Holders of Notes representing at least a majority of the aggregate principal amount outstanding under all of the Notes.

(c)  Notwithstanding anything to the contrary contained in paragraphs (a) or (b) of this Section, the Holders shall not, without the prior written consent and approval of all of the affected Holders, amend, modify, terminate or obtain a waiver of any provision of this Agreement or any of the Loan Documents, which will have the effect of (i) reducing the principal amount of any Notes or of any payment required to be made to the Holders hereunder or modifying the terms of a payment or prepayment thereof; (ii) reducing the Interest Rate or extending the time for payment of interest under any Notes or (iii) releasing the Company from any obligation under this Agreement or any of the other Loan Documents.

(d)  Each Holder agrees that, for the benefit of the other Holders, any proceeds received by a Holder upon enforcement by the Holders of their rights and remedies under this Agreement, will be divided, pro rata, among all Holders.

Section 9.14    Relationship of the Parties; Advice of Counsel.  This Agreement provides for the making of an investment by the Holders, in their capacity as investors, in the Company, in its capacity as a borrower, and for the payment of interest and repayment of principal under the Notes and this Agreement by the Company to the Holders. The provisions herein for delivery of financial statements are intended solely for the benefit of Holders to protect their interests as investors in assuring payments of interest and repayment of principal, and nothing contained in this Agreement shall be construed as permitting or obligating a Holder, in its capacity as a Holder, to act as a financial or business advisor or consultant to the Company, as permitting or obligating any Holder, in its capacity as a Holder, to control the Company or to conduct the Company’s operations, as creating any fiduciary obligation on the part of any such Holder to the Company or as creating any joint venture, agency or other relationship between the parties other than as explicitly and specifically stated in this Agreement. The Holders, in their capacity as Holders, are not (and shall not be construed as) a partner, joint venturer, alter-ego, manager, controlling person, operator or other business participant of any kind of the Company; neither the Holders nor the Company intends that the Holders assume such status, and, accordingly, the Holders, in their capacity as Holders, shall not be deemed responsible for (or a participant in) any acts or omissions of the Company or any of its Subsidiaries. Each of the Holders and the Company represent and warrant to the other that it has had the advice of

32

experienced counsel of its own choosing in connection with the negotiation and execution of this Agreement and with respect to all matters contained herein.

Section 9.15    Regulation FD.  Each of the Holders agrees to maintain the confidentiality of all Information (as defined below) and to refrain from trading shares of any class of the Capital Stock of the Company while in possession of any material Information, in each case so long as such Information is not publicly available, except that Information may be disclosed (a) to its directors, officers, employees and agents, including accountants, legal counsel and other advisors (limited, in the case of outside directors, agents, accountants, legal counsel and other advisors, to those who expressly agree to keep all such Information confidential), it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential and to refrain from trading the Capital Stock of the Company while in possession of any material Information, (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (e) to any Permitted Transferee of any of its rights or obligations under this Agreement who becomes a party to this Agreement or (f) with the consent of the Company, as applicable. For the purposes of this Section, “Information” means all non-public information received from the Company, or its Subsidiaries, relating to the Company or its Subsidiaries, their businesses, financial condition, results of operations and prospects.

Section 9.16    Registration and Transfer of Notes.

(a)  The Company will keep at its principal office a register in which the Company will provide for the registration of the Notes and their transfer. The Company may treat any Person in whose name any Note is registered on such register as the owner thereof for the purpose of receiving payment of the principal of and interest on such Note and for all other purposes, whether or not such Note shall be overdue, and the Company shall not be affected by any notice to the contrary from any Person other than the applicable Holder. All references in this Agreement to a “Holder” of any Note shall mean the Person in whose name such Note is at the time registered on such register.

(b)  Upon surrender of any Note for registration of transfer or for exchange to the Company at its principal office, the Company at its expense will execute and deliver in exchange therefor a new Note or Notes, as the case may be, of the same type in denominations of at least $100,000 (except a Note may be issued in a lesser principal amount if the unpaid principal amount of the surrendered Note is not evenly divisible by, or is less than, $100,000, as requested by the Holder or transferee, which aggregate the unpaid principal amount of such Note, registered as such Holder or transferee may request, dated so that there will be no loss of interest on such surrendered Note and otherwise of like tenor).

(c)  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Note and, in the case of any such loss, theft or

33

destruction of any Note, upon delivery of an indemnity bond in such reasonable amount as the Company may determine (or an unsecured indemnity agreement from the Holder reasonably satisfactory to the Company), or, in the case of any such mutilation, upon the surrender of such Note for cancellation to the Company at its principal office, the Company at its expense will execute and deliver, in lieu thereof, a new Note of the same class and of like tenor, dated so that there will be no loss of interest on (and registered in the name of the Holder of) such lost, stolen, destroyed or mutilated Note. Any Note in lieu of which any such new Note has been so executed and delivered by the Company shall be deemed to be not outstanding for any purpose of this Agreement.

Section 9.17    No Shorting Provisions.

(a)  Until the Notes held by a Holder are repaid in full, neither the Holder nor any of its Affiliates shall, directly or indirectly, engage in, or advise, encourage or knowingly assist any third party to engage in, any practice that would commonly be understood to constitute a short sale of the Company’s Common Stock. Without limiting the generality of the foregoing, neither the Holder nor any of its Affiliates shall (i) sell shares of the Company’s Common Stock that the Holder or such Affiliate does not own, consummate a sale of the Company’s Common Stock with shares borrowed by or for the account of the Holder of such Affiliate or otherwise hold a net short position in shares of the Company’s Common Stock or (ii) lend shares of the Company’s Common Stock to short sellers.

(b)  Nothing in this Section shall limit any Holder or its Affiliates from engaging in bona fide cap or collar transactions on shares of the Company’s Common Stock owned by such Holder or such Affiliate or from selling its shares of the Company’s Common Stock to the highest bidder in a public or private transaction.

[Signatures next page]

34

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.

COMPANY: US LEC CORP.
By:	/s/    Michael K. Robinson            (SEAL)
	Name: Michael K. Robinson
	Title: Executive Vice President and
	Chief Financial Officer

The Investors:

/s/    Richard T. Aab                                (SEAL)         

Richard T. Aab

/s/    Tansukh V. Ganatra                        (SEAL)      

Tansukh V. Ganatra

/s/    Shirley C. Levy                                (SEAL)         

Shirley C. Levy

/s/    Michael E. Jones                            (SEAL)        

Michael E. Jones

/s/    Frank Lamar, DDS                        (SEAL)         

Frank Lamar, DDS

/s/    Kevin J. Phelps                            (SEAL)         

Kevin J. Phelps

/s/    Ann E. Phelps                                (SEAL)         

Ann E. Phelps

/s/    Stephen E. Webster                        (SEAL)         

Stephen E. Webster

35

/s/ R. Wayne LeChase                            (SEAL)        

R. Wayne LeChase

SYKES ASSOCIATES,
a New York Limited Partnership
By:	/s/ Robert F. Sykes                        (SEAL)
	Name: Robert F. Sykes
	Title: General Partner

ROBJAN LLC,
a New York Limited Liability Company
By:	/s/ Dr. Robert Loss                        (SEAL)
	Name: Dr. Robert Loss
	Title: Manager/Member

BROPHY, DAILEY & CO., Profit Sharing Plan
By:	/s/ Harold E. Dailey, Jr.                        (SEAL)
	Name: Harold E. Dailey, Jr.
	Title: Trustee

Frame Family LLC,
a New York Limited Liability Company
By:	/s/ Robert B. Frame                        (SEAL)
	Name: Robert B. Frame
	Title: Manager/Member

JO & CO.,
an Indiana Partnership
By:	/s/ Ross J. Mangano                        (SEAL)
	Name: Ross J. Mangano
	Title: General Partner

36

EX-4.2

Exhibit 4.2

This Note has not been registered under the Securities Act of 1933, as amended, or applicable securities laws. This Note may not be offered, sold, assigned, transferred, pledged, hypothecated or otherwise disposed of in the absence of an effective registration of the Note under such act and under any applicable state securities laws, unless such transaction is exempt from, or not subject to, registration and the issuer hereof is satisfied that such registration is not required as to such transaction.

This instrument and the rights and obligations evidenced hereby are subordinate in the manner and to the extent set forth in that certain Intercreditor and Subordination Agreement dated as of December 31, 2002 between General Electric Capital Corporation and certain subordinated creditors including the initial holder hereof (the “Subordination Agreement”) to the “Senior Debt” (as defined in the Subordination Agreement), and each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement.

SENIOR SUBORDINATED NOTE

Charlotte, North Carolina December     , 2002

$                

FOR VALUE RECEIVED, US LEC Corp., a Delaware corporation (the “Company”), promises to pay to the order of                 , his, her, or its successors, assigns or any subsequent holder of this Note (“Holder”), at                 , or at such other place as may be designated in writing by Holder, in lawful money of the United States of America in immediately available funds, the amount of                  DOLLARS ($                 ) or, if less, the aggregate unpaid balance due to Holder under the Note Purchase Agreement of even date herewith by and among the Company and the Investors listed on Schedule A thereto, as amended, restated, supplemented or otherwise modified from time to time (the “Note Purchase Agreement”). All capitalized terms used but not otherwise defined herein have the meanings given to them in the Note Purchase Agreement. This Note shall mature on December 31, 2007 (the “Maturity Date”).

This Note is issued pursuant to the Note Purchase Agreement. Reference is made to (a) the Note Purchase Agreement, which, among other things, permits the acceleration of the maturity hereof upon the occurrence of certain events and for prepayments in certain circumstances and to (b) the Subordination Agreement, which provides the terms by which the indebtedness evidenced hereby is subordinated in right and time of payment to Senior Debt.

The principal amount of the indebtedness evidenced hereby shall be payable in full on the Maturity Date. Interest thereon shall be paid until such principal amount is paid in full at the rate of 11% per annum, shall be calculated on the basis of a 365-day year and shall be computed for each payment period on the principal balance for the actual number of days outstanding.

Commencing on February 1, 2003, and continuing on the first day of each succeeding calendar month thereafter, up to and including the Maturity Date, interest shall be payable in arrears by the Company in cash at a rate of 11% per annum.

Whenever any payment (including principal of and interest on this Note, or other amounts) hereunder shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest.

Upon the occurrence of any one or more of the Events of Default specified in the Note Purchase Agreement, all or any portion of the amounts then remaining unpaid on this Note may become or be declared immediately due and payable as provided in the Note Purchase Agreement, without further notice.

Demand, presentment, notice and protest are expressly waived by the Company, except for notices to the Company otherwise expressly required in the Note Purchase Agreement.

In the event this Note is placed in the hands of one or more attorneys for collection or enforcement or protection of Holder’s rights described herein or in the Note Purchase Agreement, the Company agrees to pay all reasonable attorneys’ fees and all court and other out-of-pocket costs incurred by Holder.

This Note is governed by and shall be construed in accordance with the law of the State of Delaware. If any provision of this Note should for any reason be invalid or unenforceable, the remaining provisions shall remain in full force and effect.

This Note may not be changed, extended or terminated except in writing. No waiver of any term or provision hereof shall be valid unless in writing signed by Holder or Holders as provided in the Note Purchase Agreement.

Executed as of December     , 2002.

US LEC Corp.
By:	/s/ Michael K. Robinson
	Michael K. Robinson
	Executive Vice President and
	Chief Financial Officer

2

EX-4.3

Exhibit 4.3

This warrant and the securities issuable upon the exercise of this warrant have not been registered under the Securities Act of 1933, as amended (the “Act”) or any applicable state securities law, and may not be offered, sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in the absence of an effective registration statement under the Act, and such registration or qualification as may be necessary under the securities laws of any state, or an opinion of counsel satisfactory to the Company that such registration or qualification is not required.

US LEC Corp.

COMMON STOCK PURCHASE WARRANT

Warrant No. 1

Dated as of                           , 2002

1.      Grant.   For value received, US LEC Corp., a Delaware corporation (the “Company”), hereby grants to                             , or his, her, or its registered assigns or transferees (the “Holder”), at the Exercise Price set forth in Section 3 below, the right to purchase                              shares of Common Stock (the “Warrant Shares”), subject to adjustment from time to time as hereinafter set forth. This Warrant is issued under a Note Purchase Agreement, dated as of the date hereof, by and among the Company and the Investors listed on the signature page thereof (the “Purchase Agreement”). Capitalized terms used herein, but not elsewhere defined herein, have the meanings set forth in the Purchase Agreement.

2.      Exercise Period.  The right to exercise this Warrant, in whole or in part, begins on the date hereof. The right to exercise this Warrant expires on the earlier of (i) the tenth anniversary of the date hereof and (ii) the date five years after payment of all amounts due under the Notes (the “Expiration Date”).

3.      Exercise Price.  The exercise price per share of this Warrant is equal to $1.90, subject to adjustment from time to time as hereinafter set forth (the “Exercise Price”).

4.      Anti-Dilution Adjustments.

(a)    Adjustment for Changes in Common Stock.  If the Company pays a dividend or makes a distribution on its Common Stock in shares of its Common Stock, subdivides its outstanding shares of Common Stock into a greater number of shares, combines its outstanding shares of Common Stock into a smaller number of shares, or issues by reclassification of its Common Stock any other shares of capital stock (each, an “Adjustment Event”), the number of Warrant Shares issuable hereunder immediately

prior to such action shall be proportionately adjusted so that the Holder will receive upon exercise, the aggregate number and kind of shares of capital stock of the Company which the Holder would have owned immediately following such action if the Holder had exercised this Warrant immediately prior to such Adjustment Event, and the Exercise Price in effect hereunder immediately prior to such action shall be proportionately adjusted so that the Holder shall pay upon exercise, the aggregate amount which the Holder would have paid if the Holder had exercised this Warrant immediately upon to such Adjustment Event. The adjustment shall become effective immediately upon the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification.

(b)    Capital Reorganizations.  If there shall be any consolidation or merger to which the Company is a party, other than a consolidation or a merger of which the Company is the continuing or surviving corporation and which does not result in any reclassification of, or change (other than an Adjustment Event) in, outstanding shares of Common Stock, or any sale or conveyance of all or substantially all of the property of the Company, or any recapitalization of the Company (any such event being called a “Capital Reorganization”), then, effective upon the effective date of such Capital Reorganization, the Holder shall no longer have the right to purchase Common Stock, but shall have instead the right to purchase, upon exercise of this Warrant, the kind and amount of shares of stock and other securities and property (including cash) which the Holder would have owned or have been entitled to receive pursuant to such Capital Reorganization if this Warrant had been exercised immediately prior to the effective date of such Capital Reorganization. As a condition to effecting any Capital Reorganization, the Company or the successor or surviving corporation, as the case may be, shall (a) execute and deliver to the Holder an agreement as to the Holder’s rights in accordance with this Section 4(b), providing, to the extent of any right to purchase equity securities hereunder, for subsequent adjustments as nearly equivalent as may be practicable to the adjustments provided for in this Section 4. The provisions of this Section 4(b) shall similarly apply to successive Capital Reorganizations.

(c)    Adjustment Rules.  Any adjustments pursuant to this Section 4 shall be made successively whenever an event referred to herein occurs. If the Company takes a record of the holders of its Common Stock for any purpose referred to in this Section 4, then (i) such record date shall be deemed to be the effective date of any adjustment required pursuant to this Section 4 and (ii) if the Company shall legally abandon such action prior to effecting such action, no adjustment shall be made pursuant to this Section 4 in respect of such action.

(d)    Notice of Adjustment.  Not less than 10 nor more than 30 days prior to the record date or effective date, as the case may be, of any action which requires or might require an adjustment or readjustment pursuant to Section 4, the Company shall give notice to the Holder of such event, describing such event in reasonable detail and specifying the record date or effective date, as the case may be, and, if determinable, the required adjustment and the computation thereof. If the required adjustment is not

2

determinable at the time of such notice, the Company shall give notice to the Holder of such adjustment and computation promptly after such adjustment becomes determinable.

(e)    No Fractional Shares Required to be Issued.  The Company shall not be required to issue fractions of shares of Common Stock upon exercise of this Warrant. If any fraction of a share would, but for this Section, be issuable upon final exercise of this Warrant, in lieu of such fractional share, the Company shall pay to the Holder in cash an amount equal to the same fraction of the Market Value (as defined in Section 8) per share of outstanding Common Stock immediately prior to the date of such exercise.

5.      Reservation of Common Stock.  The Company will reserve and keep available for issuance and delivery upon the exercise of this Warrant such number of its authorized but unissued shares of Common Stock or other securities of the Company as will be sufficient to permit the exercise in full of this Warrant. Upon issuance, each of the Warrant Shares will be validly issued, fully paid and nonassessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale (other than restrictions imposed by applicable securities laws) and free and clear of all preemptive rights.

6.      No Voting Rights; Limitations of Liability.  Prior to exercise, this Warrant shall not entitle the Holder to (a) any voting rights or (b) other rights as a stockholder of the Company. No provision of this Warrant, in the absence of affirmative action by the Holder to exercise this Warrant, and no enumeration in this Warrant of the rights or privileges of the Holder, will give rise to any liability of such Holder for the Exercise Price.

7.      Exercise Procedure.

(a)    To exercise this Warrant, the Holder must deliver to the principal office of the Company (prior to the Expiration Date) this Warrant, the Election to Purchase substantially in the form of Exhibit A attached hereto, and the Exercise Price. The Holder may deliver the Exercise Price by any of the following methods, at the Holder’s option: (i) in legal tender, (ii) by bank cashier’s or certified check, (iii) by wire transfer to an account designated by the Company, (iv) by delivery to the Company of a Note(s) with instructions to apply all or the applicable portion of the unpaid principal balance thereof to pay the aggregate Exercise Price (the “Note Payment Amount”) or (v) in accordance with Section 8. Upon exercise, the Company, at its sole expense, will issue and deliver to Holder, within 10 days after the date on which the Holder exercises this Warrant, certificates for the Warrant Shares purchased hereunder. The Warrant Shares shall be deemed issued, and the Holder deemed the holder of record of such Warrant Shares, as of the opening of business on the date on which the Holder exercises this Warrant.

(b)    If this Warrant is exercised by the delivery of a Note(s) in payment of the aggregate Exercise Price pursuant to Section 7(a)(iv), the Company will cancel the unpaid principal amount of the Note(s) equal to the Note Payment Amount. If the unpaid principal amount of the Note(s) so delivered exceeds the aggregate Exercise Price, the Company, within 10 days, will deliver to the Holder a replacement Note in a principal amount equal to such excess, together with payment of any accrued but unpaid interest on

3

the Note Payment Amount through the date of receipt of the Holder’s Election to Purchase.

(c)    In the event this Warrant is partially exercised, the Company shall forthwith issue and deliver to the Holder a new Warrant of like tenor to purchase that number of shares with respect to which such partial exercise did not apply.

(d)    The Company shall pay any documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of the Warrant Shares.

8.      Cashless Exercise.

(a)    Use of Warrant Shares to Pay Exercise Price.  In lieu of paying the applicable Exercise Price by legal tender, check or wire transfer, the Holder may elect to receive, upon exercise of this Warrant, that number of Warrant Shares equal to the quotient obtained by dividing:

[(A-B)(X)] by (A), where:

A      =      the Market Value (as defined below) of a share of Common Stock on the date of exercise;

B      =      the Exercise Price for a share of Common Stock;

X      =      the number of Warrant Shares (equal to or less than the number of Warrant Shares then issuable hereunder) as to

                 which this Warrant is being exercised.

(b)    Market Value.  For purposes of this Section 8, the Market Value of a share of Common Stock means:

(i)    if the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange or listed for trading on The Nasdaq Stock Market, Inc. — the average of the last reported sale price of the Common Stock for the five consecutive trading days immediately prior to the date of exercise of this Warrant (or the average closing bid and asked prices for each such day if no such sale is made on such day);

(ii)  if clause (i) does not apply, and if the prices are reported by the OTC Bulletin Board Service — the average of the means of the last reported bid and asked prices reported for the five consecutive trading days immediately prior to the date of exercise of this Warrant; and

(iii) in all other cases, the per share value as determined by the Company’s Board of Directors in good faith.

9.      Sale of Warrant or Warrant Shares.  Neither the sale of this Warrant nor the issuance of any of the Warrant Shares upon exercise of this Warrant has been registered under

4

the Act or under the securities laws of any state. The issuance of the Warrant Shares upon exercise of this Warrant shall comply with all applicable federal and state securities laws. Neither this Warrant nor any of the Warrant Shares (when issued) may be sold, assigned, transferred, pledged or hypothecated or otherwise disposed of except as permitted: (i) by any effective registration statement under the Act and by registration or qualification under applicable state securities laws or (ii) by an opinion of counsel reasonably satisfactory to the Company stating that such registration under the Act and registration or qualification under applicable state securities laws is not required. Until the Warrant Shares have been registered under the Act and registered and qualified under applicable state securities laws, the Company shall cause each certificate evidencing any Warrant Shares to bear the following legend:

The shares evidenced by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), or under the securities laws of any state. The shares may not be offered, sold, assigned, transferred, pledged or hypothecated or otherwise disposed of in the absence of an effective registration statement under the Act and such registration or qualification as may be necessary under the securities laws of any state or an opinion of counsel reasonably satisfactory to the Company that such registration or qualification is not required.

10.      Transfer.  The Company will register this Warrant on its books and keep such books at its offices. To effect a transfer, the Holder must present (either in person or by duly authorized attorney) this Warrant and written notice substantially in the form of Exhibit B attached hereto. To prevent a transfer in violation of Section 9, the Company may issue appropriate stop orders to its transfer agent.

11.      Replacement of Warrant.  If the Holder provides evidence that this Warrant or any certificate or certificates representing the Warrant Shares have been lost, stolen, destroyed or mutilated, the Company (at the request and expense of the Holder) will issue a replacement Warrant or certificates upon reasonably satisfactory indemnification of the Company by the Holder.

12.      Registration Rights Agreement.  The Holder shall have certain rights in regard to the Warrant Shares issued or issuable hereunder as set forth in a Registration Rights Agreement, as amended, by and among the Company, the Holder and the other Investors listed on the signature page of the Purchase Agreement.

13.      Governing Law.  The laws of the State of Delaware (other than its conflict of law rules) govern this Warrant.

5

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on its behalf, in its corporate name, by its Executive Vice President and Chief Financial Officer, as of the date first written above.

US LEC Corp. a Delaware corporation
By:	/s/ Michael K. Robinson
	Michael K. Robinson Executive Vice President and       Chief Financial Officer

EX-4.4

Exhibit 4.4

REGISTRATION RIGHTS AGREEMENT

This Agreement is entered into as of December 31, 2002 by US LEC Corp., a Delaware corporation (the “Company”), and the Investors whose names are set forth on the signature page of this Agreement (collectively, the “Investors”).

A.    The Company and the Investors have entered into a Note Purchase Agreement, dated as of the same date as this Agreement (the “Purchase Agreement”), pursuant to the terms and conditions of which (i) the Company is issuing and selling to the Investors, and the Investors are purchasing from the Company, $5,000,000 in aggregated principal amount of Senior Subordinated Notes and (ii) the Company is issuing warrants (the “Warrants”) to the Investors to purchase an aggregate of 2,631,579 shares of Common Stock.

B.    The parties’ execution and delivery of this Agreement is a condition of their respective obligations to close the Purchase Agreement.

The parties agree as follows:

1.     Definitions.

Capitalized terms which are used in this Agreement without being defined have the same meanings that they are given in the Purchase Agreement. In addition, the following terms have these meanings:

“Commission” means the United States Securities and Exchange Commission.

“Registrable Securities” means any shares of Common Stock or other securities issued or issuable upon conversion or exercise of the Warrants. Any Registrable Securities shall cease to be Registrable Securities (i) when they have been distributed to the public pursuant to a offering registered under the Securities Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force) or repurchased by the Company or any Subsidiary or (ii) if and when they (or, in respect of issuable but not yet issued Registrable Securities, the underlying Warrants or Common Stock) cease to be held by an Investor or a Permitted Transferee.

“Registration Expenses” means all expenses incident to the Company’s performance of or compliance with this Agreement, including all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts, commissions and underwriters’ counsel fees) and other Persons retained by the Company.

“Series A Agreement” means the Registration Rights Agreement, dated as of April 11, 2000, by and among the Company and affiliates of Bain Capital, Inc. and Thomas H. Lee Partners L.P.

“Series A Registrable Securities” means the Registrable Securities as defined in the Series A Agreement.

“Violation” means any of the following statements, omissions or violations: (i) any untrue statement or alleged untrue statement of a material fact contained or incorporated by reference in a registration statement pursuant to this Agreement, including any related preliminary or final prospectus, any amendment or supplement, or any document filed under state securities or “blue sky” laws, (ii) the omission or alleged omission to state a material fact required to be stated in any such registration statement, prospectus, amendment, supplement or document or necessary to make the statements in any such registration statement, prospectus, amendment, supplement or document not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law.

2.     Demand Registrations.

2.1   General.  At any time after the Closing, holders of a majority of the Registrable Securities then outstanding may request registration under the Securities Act of all or any portion of their Registrable Securities. A registration requested pursuant to this Section 2.1 is referred to in this Agreement as “Demand Registration.” Holders of Registrable Securities then outstanding shall be limited to two Demand Registrations and any such Demand Registration must include an initial request to register Registrable Securities having an aggregate offering value of at least $ 3,000,000. In regard to a Demand Registration:

(a)     The request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered. Within 10 Business Days after receipt of a request for a Demand Registration, the Company shall give written notice of the requested registration to all other holders of Registrable Securities and, subject to Section 2.2 below, shall include in the registration all Registrable Securities with respect to which the Company has received written requests for inclusion within 15 Business Days after receipt of the Company’s notice.

(b)     A Demand Registration shall not be counted as one of the two permitted Demand Registrations unless (i) it has become effective and (ii) the Persons making the request are able to register and sell at least 75% of the Registrable Securities included in the registration.

2

(c)    The Company shall pay all Registration Expenses in connection with a Demand Registration whether or not it is counted as a permitted Demand Registration.

(d)    A Demand Registration shall be on Form S-2 or Form S-3 or any similar short-form registration statement, if available. Otherwise a Demand Registration shall be on Form S-1 or any similar long-form registration statement.

(e)    The Company shall have the right to select the managing underwriters in connection with an underwritten public offering of Registrable Securities, subject to the approval of a majority of the holders of the Registrable Securities included in a Demand Registration which approval shall not be unreasonably withheld, and holders of a majority of the Registrable Securities included in a Demand Registration shall have the right to select a co-managing underwriter, subject to the Company’s approval which shall not be unreasonably withheld.

(f)    The holders of a majority of the Registrable Securities included in a Demand Registration shall have the right to select the investment banker(s) and manager(s) to administer an offering of Registrable Securities that is not an underwritten public offering, subject to the Company’s approval which shall not be unreasonably withheld.

2.2   Priority on a Demand Registration.  If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such offering exceeds the number of securities that can be sold in such offering without adversely affecting the marketability of the offering, the Company shall include in such registration only the amount of securities which the managing underwriters have advised can be sold and will allocate such amount as follows: (i) first, to the Registrable Securities requested to be included in the registration by the holders thereof and to the Series A Registrable Securities requested to be included in the registration by the holders thereof, pro rata among the respective holders of the Registrable Securities and the Series A Registrable Securities on the basis of the number of Registrable Securities and Series A Registrable Securities owned by each such holder, and (ii) second, to any other securities requested to be included in such Demand Registration.

2.3   Restrictions on Demand Registration.  The Company shall not be obligated to effect more than one Demand Registration within any 12-month period. The Company shall not be obligated to effect any Demand Registration within 180 days after the effective date of a previous registration in which the holders of Registrable Securities were given piggyback rights pursuant to Section 3 and were able to register and sell at least 50% of the Registrable Securities included in such registration. The Company may postpone for up to 90 days the filing or the effectiveness of a registration statement for a Demand Registration if a certificate signed by an executive officer of the Company is promptly furnished to the holders requesting the Demand Registration stating that the Board of Directors of the Company has determined that such a Demand Registration

3

would reasonably be expected to have a material adverse effect on any proposal or plan by the Company to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer, reorganization or similar transaction. In addition, the Company may postpone for up to 180 days the filing of a registration statement for a Demand Registration if a certificate signed by an executive officer of the Company is promptly furnished to the holders requesting the Demand Registration stating that the Company intends to file a registration statement for a primary offering of its debt or equity securities within the next 60 days so long as the Company is at all times proceeding in good faith to make such registration statement effective. In the event the filing or the effectiveness of a registration statement is postponed pursuant to this Section 2.3, the holders of Registrable Securities initially requesting the Demand Registration shall be entitled to withdraw their request. If their request is withdrawn, the Demand Registration shall not count as one of the two permitted Demand Registrations and the Company will pay all Registration Expenses in connection with such registration. The Company may delay the filing or suspend the effectiveness of a Demand Registration pursuant to this Section 2.3 only once in any 12-month period.

3.     Piggyback Registrations.

3.1   Right To Piggyback.  At any time after the Closing, whenever the Company proposes to register any of its equity securities under the Securities Act (other than (i) pursuant to a Demand Registration or (ii) a registration on Form S-4 or Form S-8 or any successor or similar form) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), whether or not for sale for its own account, the Company shall give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and, subject to the provisions of Sections 3.3, 3.4 and 3.5, shall include in the registration all Registrable Securities with respect to which the Company has received written requests for inclusion within 15 Business Days after receipt of the Company’s notice. Holders of Registrable Securities shall be entitled to unlimited Piggyback Registrations for their Registrable Securities.

3.2   Piggyback Expenses.  The Registration Expenses of the holders of Registrable Securities shall be paid by the Company in all Piggyback Registrations.

3.3   Priority on Primary Registrations.  If a Piggyback Registration is an underwritten primary registration on behalf of the Company and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in the registration exceeds the number that can be sold without adversely affecting the marketability of the offering, the Company shall include in such registration only the amount of securities which the managing underwriters have advised can be sold and will allocate such amount as follows: (i) first, to the securities that the Company proposes to sell, (ii) second, to the Series A Registrable Securities requested to be included in the registration by the holders thereof, pro rata among the holders of the Series A Registrable Securities on the basis of the number of such securities owned by each holder, (iii) third, to the Registrable Securities requested to be included in the

4

registration by the holders thereof, pro rata among the holders of the Registrable Securities on the basis of the number of such securities owned by each such holder, and (iv) fourth, to any other securities requested to be included in the registration.

3.4   Priority on Secondary Registrations Initiated by Holders of Series A Registrable Securities.  If a Piggyback Registration is an underwritten secondary registration initiated by a demand by the holders of Series A Registrable Securities and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in the registration exceeds the number that can be sold without adversely affecting the marketability of the offering, the Company shall include in such registration only the amount of securities which the managing underwriters have advised can be sold and will allocate such amount as follows: (i) first, to the Series A Registrable Securities requested to be included therein by the holders thereof requesting such registration, pro rata among the holders of such securities on the basis of the number of such securities owned by each such holder and (ii) second, subject to the provision of Section 10.1, to the Registrable Securities requested to be included in such registration, pro rata among the holders of the Registrable Securities on the basis of the number of such securities owned by each such holder.

3.5   Priority on Other Secondary Registrations.  If a Piggyback Registration is an underwritten secondary registration other than one initiated pursuant to a demand by the holders of the Series A Registrable Securities or the holders of Registrable Securities and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included to the registration exceeds the number that can be sold without adversely affecting the marketability of the offering, the Company shall include in the registration only the amount of securities which the managing underwriters have advised can be sold and will allocate such amount as follows: (i) first, to the Series A Registrable Securities requested to be included in the registration by the holders thereof, pro rata among the holders of the Series A Registrable Securities on the basis of the number of such securities owned by each holder, (ii) second, to the Registrable Securities requested to be included in the registration by the holders thereof, pro rata among the holders of the Registrable Securities on the basis of the number of such securities owned by each such holder, and (iii) third, to any other securities requested to be included in the registration.

3.6   Other Registrations.  If the Company has previously filed a registration statement with respect to Registrable Securities pursuant to Section 2 or pursuant to this Section 3, and if the previous registration has not been withdrawn or abandoned, the Company shall not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-4 or Form S-8 or any successor or similar forms), whether on its own behalf or at the request of any holder or holders of its securities, until a period of at least 180 days has elapsed from the effective date of the previous registration or, if shorter, a period of at least 60 days has elapsed from the date all securities covered by such registration have been disposed of.

5

4.      Holdback Agreements.

4.1    Holders of Registrable Securities.  Each holder of Registrable Securities shall not effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for equity securities of the Company, during the seven days prior to and the 120-day period beginning on the effective date of any Demand Registration or any underwritten Piggyback Registration in which Registrable Securities are included (except as part of such underwritten offering), unless the underwriters managing the registered public offering otherwise agree.

4.2    Company.  The Company shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during such period prior to and following the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration as the Company and the underwriters managing the offering may agree.

5.      Registration Procedures.

Whenever holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition. In this regard, the Company will as expeditiously as possible:

(a)    prepare and file with the Commission a registration statement with respect to such Registrable Securities and use its reasonable best efforts to cause the registration statement to become effective;

(b)    notify each holder of Registrable Securities of the effectiveness of each registration statement filed under this Agreement and prepare and file with the Commission any amendments and supplements to the registration statement and the prospectus that may be necessary to keep the registration statement effective for a period of either (i) not less than 120 days (subject to extension pursuant to Section 8.2), or if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer or (ii) such shorter period as will terminate when all of the securities covered by such registration statement have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement (but in any event not before the expiration of any longer period required under the Securities Act), and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement;

6

(c)    furnish to each seller of Registrable Securities the number of copies of the registration statement, each amendment and supplement, the prospectus included in the registration statement (including each preliminary prospectus) and any other documents that each seller may reasonably request in order to facilitate the disposition of the seller’s Registrable Securities;

(d)    use its best efforts to register or qualify the Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable the seller to consummate the disposition in those jurisdictions of the Registrable Securities owned by the seller (but the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction);

(e)    notify each seller of Registrable Securities, at any time when a prospectus relating to those securities is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in the registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements in the prospectus not misleading; and, at the request of any seller, the Company shall prepare a supplement or amendment to the prospectus so that, when delivered to purchasers of the Registrable Securities, the prospectus, as supplemented or amended, does not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements in the prospectus not misleading;

(f)    cause all such Registrable Securities to be quoted on the Nasdaq Small Cap Market and listed on any other exchange on which the Company’s shares of Common Stock are listed;

(g)    provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of the registration statement;

(h)    enter into such customary agreements (including underwriting agreements in customary form) and take all other actions that holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of the Registrable Securities;

(i)    make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to the registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with the registration statement;

(j)    otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as

7

reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158; and

(k)    in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in the registration statement for sale in any jurisdiction, use its reasonable best efforts promptly to obtain the withdrawal of such order.

6.      Registration Expenses.

6.1    Payment by Company.  All Registration Expenses shall be borne as provided in this Agreement, except that the Company shall, in any event, pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review and the expenses and fees for listing the securities to be registered on the Nasdaq Small Cap Market or any other exchange on which the Company’s shares of Common Stock are listed.

6.2    Fees of Counsel.  In connection with a Demand Registration and each Piggyback Registration, the Company shall reimburse the holders of Registrable Securities included in the registration for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities included in such registration.

6.3    Payment by Holders.  To the extent that Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration under this Agreement shall pay those Registration Expenses allocable to the registration of such holder’s securities so included, and any Registration Expenses not so allocable shall be borne by all sellers of securities included in the registration in proportion to the aggregate selling price of the securities to be so registered.

7.      Indemnification.

7.1    Indemnification by Company.  The Company agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities, each Person who controls such holder (within the meaning of the Securities Act), and their respective partners, shareholders, trustees, members, officers and directors against all losses, claims, damages, liabilities and expenses caused by any Violation, except insofar as the Violation is caused by or contained in any information furnished in writing to the Company by the holder expressly for use in a registration statement, prospectus, amendment, supplement or related document or is caused by the holder’s failure to deliver a copy of the registration statement or prospectus or any amendment or supplements after the Company has furnished the holder with a sufficient number of copies. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and

8

directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent provided in this Section 7.1 with respect to the indemnification of holders of Registrable Securities.

7.2    Indemnification by Holder.  In connection with any registration statement pursuant to which a holder of Registrable Securities is selling Registrable Securities, the holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with the registration statement or prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and any of its officers who signs such registration statement and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any Violation to the extent that the Violation is caused by or contained in any information furnished in writing to the Company by the holder expressly for use in such registration statement, prospectus, amendment, supplement or related document. This obligation to indemnify shall be individual, not joint and several, for each holder and shall be limited to the net amount of proceeds received by the holder from the sale of Registrable Securities pursuant to the registration statement.

7.3    Procedures.  Any Person entitled to indemnification under this Section 7 shall, promptly after the receipt of notice of the commencement of any action, investigation, claim or other proceeding against such indemnified party in respect of which indemnity may be sought from an indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof. The omission of any indemnified party so to notify an indemnifying party of any such action shall not relieve the indemnifying party from any liability which it may have to such indemnified party under this Section 7 unless, and only to the extent that, such omission results in the indemnifying party’s forfeiture of substantive rights or defenses or the indemnifying party is otherwise irrevocably prejudiced in defending such proceeding. In case any such action, claim or other proceeding shall be brought against any indemnified party for which indemnification is claimed pursuant to Section 7.1, and it shall notify the Company of the commencement thereof, the Company shall be entitled to assume the defense thereof at its own expense, with counsel satisfactory to the Company; provided, that any such indemnified party may, at its own expense, retain separate counsel to participate in such defense. Notwithstanding the foregoing, in any action, claim or proceeding in which both the Company, on the one hand, and an indemnified party, on the other hand, is, or is reasonably likely to become, a party, such indemnified party shall have the right to employ separate counsel at the Company’s expense and to control its own defense of such action, claim or proceeding if, (a) the Company has failed to assume the defense and employ counsel as provided herein, (b) the Company has agreed in writing to pay such fees and expenses of separate counsel or (c) in the reasonable opinion of counsel to such indemnified party, a conflict or likely conflict exists between the Company, on the one hand, and such indemnified party, on the other hand, that would make such separate representation advisable, provided, however, that the Company shall not in any event be required to pay the fees and expenses of more than one separate counsel (and if deemed necessary by such separate counsel, appropriate local counsel who shall report to such separate counsel). The Company agrees that it will not, without the prior written consent

9

of an indemnified party, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if such indemnified party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of such indemnified party from all liability arising or that may arise out of such claim, action or proceeding. The Company shall not be liable for any settlement of any claim, action or proceeding effected against an indemnified party without the prior written consent of the Company. The rights accorded to indemnified parties hereunder shall be in addition to any rights that any indemnified party may have at common law, by separate agreement or otherwise.

7.4    Survival.  The indemnification under this Section 7 shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of the indemnified party and shall survive the transfer of securities. The Company and each holder subject to Section 7.2 also agree to make such provisions as are reasonably requested by any indemnified party for contribution to the indemnified party in the event that the Company’s or such holder’s indemnification is unavailable for any reason.

8.      Participation in Underwritten Registration.

8.1    Cooperation with Underwriters.  No Person may participate in any underwritten registration pursuant to this Agreement unless the Person (i) agrees to sell securities on the basis provided in the underwriting arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of the underwriting arrangements. In any event, however, no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding the holder and the holder’s intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters except as otherwise provided in Section 7.2.

8.2    Discontinuance of Dispositions.  Each Person that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(e) above, such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person receives copies of a supplemented or amended prospectus as contemplated by such Section 5(e). In the event the Company shall give any such notice, the applicable time period mentioned in Section 5(b) during which a registration statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this Section to and including the date when each seller of a Registrable Security covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 5(e).

10

9.    Current Public Information.

The Company will timely file all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder, all to the extent required to enable such holders to sell Registrable Securities pursuant to Rule 144 adopted by the Commission under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Commission and pursuant to Form S-3 or any similar short form registration statement. Upon written request, the Company will deliver to such holders a written statement as to whether it has complied with such requirements. In addition, unless the Common Stock is listed for trading on the New York Stock Exchange, the Company, to the extent permitted by Nasdaq, will continue to cause its Common Stock and any Common Stock issuable upon conversion or exercise of the Warrants to be listed for trading on the Nasdaq Small Cap Market.

10.    Miscellaneous.

10.1    Certain Limitations Contained in Series A Agreement.  The holders of the Registrable Securities are not entitled to include Registrable Securities in a demand registration initiated by the holders of the Series A Registrable Securities without the prior written consent of the holders of a majority of the Series A Registrable Securities included in such registration. With the consent of the holders of a majority of the Series A Registrable Securities, the holders of the Registrable Securities may participate in Piggyback Registrations pursuant to Sections 3.3 and 3.5 on a pari passu basis with the holders of the Series A Registrable Securities.

10.2    Notices.  All notices, claims, demands and other communications (“Notices”) under this Agreement shall be in writing and sent by certified or registered mail, return receipt requested, a recognized overnight courier service, telecopier or personal delivery, as follows:

(a)    if to the Company, to:

US LEC Corp.

Three Morrocroft Centre

6801 Morrison Boulevard

Charlotte, North Carolina 28211

Attention: Chief Executive and Chief Financial Officer

Telecopier: (704) 319-3098

11

with a required copy to:

Moore & Van Allen, PLLC

100 North Tryon Street, Floor 47

Charlotte, North Carolina 28202-4003

Attention: Barney Stewart III

Telecopier: (704) 378-2029

(b)    if to the Investors:

To the address of each Investor on

Schedule A to the Purchase Agreement

with a required copy to:

Harter Secrest & Emery LLP

1600 Bausch & Lomb Place

Rochester, New York 14604-2711

Attention: Frank T. Crego

Telecopier: (585) 232-2152

All Notices shall be deemed to have been duly given: when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial overnight courier service; five Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is acknowledged by the individual to whom the telecopy is sent, if telecopied. A party may change its address for purposes of this Agreement by Notice in accordance with this Section 10.2.

10.3    Waiver.  The rights and remedies of the Company and holders of Registrable Securities are cumulative and not alternative. Neither the failure nor any delay by the Company or any holder of Registrable Securities in exercising any right, power or privilege under this Agreement shall operate as a waiver of that right, power or privilege, and no single or partial exercise of any right, power or privilege shall preclude any other or further exercise of that right, power or privilege or the exercise of any other right, power or privilege. All waivers shall be in writing signed by the party to be charged with the waiver, and no waiver that may be given by a party shall be applicable except in the specific instance for which it is given.

10.4    Amendment.  This Agreement may not be amended except by a written agreement signed by the Company and holders of a majority of the Registrable Securities.

10.5    Severability.  If any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement which is held invalid or unenforceable only in part shall remain in full force and effect to the extent not held invalid or unenforceable.

12

10.6    Captions.  The captions of sections of this Agreement are for convenience only and shall not affect this the construction or interpretation of this Agreement.

10.7    Construction.  All references in this Agreement to “Section” or “Sections” refer to the corresponding section or sections of this Agreement. All words used in this Agreement shall be construed to be of the appropriate gender or number as the context requires. Unless otherwise expressly provided, the word” including” does not limit the preceding words or terms.

10.8    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be considered an original copy of this Agreement and all of which, when taken together, shall be considered to constitute one and the same agreement.

10.9.    Entire Agreement.  This Agreement supercedes all prior agreements between the parties with respect to its subject matter and constitutes a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter.

10.10    Governing Law.  This Agreement shall be governed by the laws of the State of Delaware without regard to conflicts of laws principles.

10.11    Binding Effect.  This Agreement shall apply to, be binding in all respects upon and inure to the benefit of the parties and their respective successors and permitted assigns and transferees.

[Signature Pages Follow]

13

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written.

US LEC CORP.
By:	/s/ Michael K. Robinson
	Name: Michael K. Robinson Title: Executive Vice President and               Chief Financial Officer

INVESTORS

/s/ Richard T. Aab

Richard T. Aab

/s/ Tansukh V. Ganatra

Tansukh V. Ganatra

/s/ Shirley C. Levy

Shirley C. Levy

/s/ Michael E. Jones

Michael E. Jones

/s/ Frank Lamar, DDS

Frank Lamar, DDS

/s/ Kevin J. Phelps

Kevin J. Phelps

/s/ Ann E. Phelps

Ann E. Phelps

/s/ Stephen E. Webster

Stephen E. Webster

14

/s/ R. Wayne LeChase

R. Wayne LeChase

SYKES ASSOCIATES, a New York Limited Partnership
By:	/s/ Robert F. Sykes
	Name: Robert F. Sykes Title: General Partner

ROBJAN LLC, a New York Limited Liability Company
By:	/s/ Dr. Robert Loss
	Name: Dr. Robert Loss Title: Manager/Member

BROPHY, DAILEY & CO., Profit Sharing Plan,
By:	/s/ Harold E. Dailey, Jr.
	Name: Harold E. Dailey, Jr. Title: Trustee

Frame Family LLC, a New York Limited Liability Company
By:	/s/ Robert B. Frame
	Name: Robert B. Frame Title: Manager/Member

Jo & Co., an Indiana Partnership
By:	/s/ Ross J. Mangano
	Name: Ross J. Mangano Title: General Partner

15

EX-4.5

Exhibit 4.5

FORM OF

INTERCREDITOR AND SUBORDINATION AGREEMENT

Dated as of December [___], 2002

between

GENERAL ELECTRIC CAPITAL CORPORATION,

as Administrative Agent,

the Senior Creditors

and

Certain Subordinated Creditors,

as the Initial Subordinate Creditors

TABLE OF CONTENTS

		Page
ARTICLE I        DEFINITIONS		1
SECTION 1.1	Cross-references	1
SECTION 1.2	Additional Definitions	2
ARTICLE II       PAYMENTS, MODIFICATION OF DOCUMENTS AND SUBORDINATION TO SENIOR DEBT		5
SECTION 2.1	Payments	5
SECTION 2.2	Modification of Subordinated Debt Documents; Etc	6
SECTION 2.3	Subordination to the Senior Debt	6
ARTICLE III      ENFORCEMENT OF REMEDIES		6
SECTION 3.1	Waivers of Rights	6
SECTION 3.2	Bankruptcy	7
SECTION 3.3	Waiver and Indemnity	8
SECTION 3.4	Rights of the Senior Creditors	9
SECTION 3.5	Subrogation	10
SECTION 3.6	Modification of Subordinated Debt Documents	10
ARTICLE IV      LIEN SUBORDINATION; RELEASE OF COLLATERAL		10
SECTION 4.1	Lien Subordination	10
SECTION 4.2	Release of Collateral	10
ARTICLE V       MISCELLANEOUS		11
SECTION 5.1	No Partnership or Joint Venture	11
SECTION 5.2	Notices	11
SECTION 5.3	Amendments and Waivers	12
SECTION 5.4	Payments	12
SECTION 5.5	Counterparts; Effectiveness	12
SECTION 5.6	Benefits	12
SECTION 5.7	Term	12
SECTION 5.8	Governing Law	13
SECTION 5.9	Conflicts	13
SECTION 5.10	WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; LIMITATION OF REMEDIES	13

TABLE OF CONTENTS

(continued)

		Page
SECTION 5.11	Application of Provisions	14
SECTION 5.12	Specific Performance	14
SECTION 5.13	No Strict Construction	14

FORM OF

INTERCREDITOR AND SUBORDINATION AGREEMENT

THIS INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of December 31, 2002, is made by GENERAL ELECTRIC CAPITAL CORPORATION, as administrative agent for the Senior Creditors (the “Administrative Agent”), the Senior Creditors and the subordinated creditors described on Schedule I hereto (the “Initial Subordinated Creditors”).

RECITALS

A.    US LEC CORP., a Delaware corporation (the “Company”), certain operating subsidiaries of the Company, the Senior Creditors and the Administrative Agent have entered into a Second Amended and Restated Credit Agreement dated as of December 20, 1999 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).

B.    The Company and the Initial Subordinated Creditors have also entered into a Note Purchase Agreement dated as of December 31, 2002 (as amended, restated, supplemented or otherwise modified from time to time, the “Subordinated Note Agreement”).

C.    The Company and its existing Subsidiaries have executed and delivered, and the Company has agreed to cause all subsequently organized or acquired Subsidiaries to execute and deliver, various security agreements, financing statements and other documents providing liens and security interests in favor of the Senior Creditors in the property described therein in order to secure the Senior Debt (the foregoing, together with any amendments, restatements, supplements or other modifications thereto, collectively, the “Senior Security Documents”).

D.    It is a condition precedent to the effectiveness of the Subordinated Note Agreement that this Agreement shall have been executed and delivered in order to establish among the Senior Creditors and the Subordinated Creditors their respective rights with respect to (i) certain matters relating to the Credit Agreement and the Subordinated Note Agreement and (ii) the Collateral described in the Senior Security Documents.

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

ARTICLE I

DEFINITIONS

SECTION 1.1  Defined Terms and Cross-references.    The capitalized terms used herein and defined in the Credit Agreement but not otherwise defined in this Agreement are used herein

with the meaning therein specified as of the date hereof. Each reference to a particular section, paragraph or other provision of the Credit Agreement or the Subordinated Note Agreement is a reference to such section, paragraph or other provision as in effect on the date hereof.

SECTION 1.2  Additional Definitions.    The following terms, as used herein, have the following meanings:

“Agreement” shall mean this Intercreditor and Subordination Agreement, as amended, restated, supplemented or otherwise modified from time to time.

“Blockage Period” shall mean the period beginning with the date any Default Notice is issued by the Administrative Agent to the Subordinated Creditors and ending on the date upon which such Senior Default is cured or the Senior Debt had been indefeasibly paid in full in cash; provided, that if the date for payment of any Senior Debt is accelerated, then the Blockage Period shall continue until such Senior Debt has been indefeasibly paid in full in cash.

“Collateral” shall mean any and all property, security or other interest, tangible or intangible, securing the obligations of the Company and its Subsidiaries under either or both Credit Facilities and covered by any of the Senior Security Documents.

“Credit Facilities” shall mean the Senior Debt Documents, the Subordinated Debt Documents and all notes or other evidences of indebtedness issued pursuant to either of the foregoing, and “Credit Facility” shall mean either of the foregoing.

“Creditors” shall mean the Senior Creditors and the Subordinated Creditors.

“Default Notice” shall mean a written notice by the Administrative Agent to the Subordinated Creditors notifying the Subordinated Creditors of the existence of a Senior Default.

“Dollars” shall mean lawful currency of the United States of America.

“Equity Obligations” shall mean any obligations and/or liabilities of the Company to any Securityholder arising under or pursuant to the Warrant and/or the Securityholders Agreement.

“Event of Default” shall have the meaning set forth in the Credit Agreement, and any similar event under any Replacement Credit Agreement.

“Initial Subordinated Creditors” shall have the meaning specified in the preamble hereto.

“Insolvency Proceeding” shall mean any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings, or any receivership proceedings in connection therewith, any assignment for the benefit of creditors or marshaling of assets, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company or its Subsidiaries, whether or not involving insolvency or bankruptcy proceedings.

2

“Post Petition Interest” shall mean interest accruing at the applicable rate set forth in the Senior Debt Documents or Subordinated Debt Documents, as applicable, accruing subsequent to the filing of a petition initiating any Insolvency Proceeding whether or not such interest is an allowable claim in any such Insolvency Proceeding.

“Replacement Credit Agreement” shall mean any loan or credit agreement or securities purchase agreement or other similar agreement entered into by the Company in connection with any complete or partial refinancing of Senior Debt; provided, that such refinancing is on terms that would not be prohibited by Section 3.4 hereof if the Senior Debt being refinanced were amended to reflect the terms of such refinancing instead of being refinanced, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Required Creditors” shall mean (a) the Required Senior Creditors, and (b) the Required Subordinated Creditors.

“Required Senior Creditors” shall mean the Required Lenders as defined in the Credit Agreement.

“Required Subordinated Creditors” shall mean Subordinated Creditors holding, in the aggregate, at least a majority of the outstanding principal amount of Subordinated Debt.

“Securityholder” means the Initial Subordinated Creditors together with any other holders of a Warrant or Issued Warrant Shares (as defined in the Securityholders Agreement) and any subsequent transferee or assignee thereof.

“Securityholders Agreement” shall mean that certain Securityholders’ and Registration Rights Agreement dated as of December 31, 2002 by and between the Company and the Initial Subordinated Creditors, as the same may be amended, waived, supplemented, replaced or otherwise modified from time to time (and including any transferee or assignee of the Initial Subordinated Creditor’s rights thereunder from time to time).

“Senior Covenant Default” shall mean any Event of Default that is not a Senior Payment Default.

“Senior Creditors” shall mean the Administrative Agent, all Lenders, all other holders from time to time of any Obligations (including, without limitation, any Affiliates of any Lenders that are parties to any interest rate protection agreements with any of the Loan Parties or hold any deposit obligations), any agents and any lenders parties to any Replacement Credit Agreement, and all other holders from time to time of any obligations now existing or hereafter arising under any of the Senior Debt Documents.

“Senior Debt” shall mean all Obligations and all other indebtedness, liabilities and obligations of the Loan Parties or any of them or any other Person to any of the Senior Creditors whether direct, indirect, contingent, joint, several, or independent, now or hereafter existing or arising, due or to become due to, or held or to be held by, any of the Senior Creditors arising under or in connection with the Credit Agreement or any other Senior Debt Document, whether created directly or acquired by assignment or otherwise, whether or not evidenced by written instrument including, without limitation, all principal, interest (including Post Petition Interest,

3

whether or not allowed in an Insolvency Proceeding), premium, obligations under guaranties, indemnity payments, reimbursement obligations under letters of credit, fees, costs, and other expenses.

“Senior Debt Documents” shall mean the Credit Agreement, the Senior Security Documents, the other Loan Documents, any Replacement Credit Agreement, and all other documents, guaranties, agreements and instruments evidencing, securing or otherwise pertaining to all or any portion of the Senior Debt.

“Senior Default” shall mean any Senior Covenant Default or a Senior Payment Default.

“Senior Payment Default” shall mean (a) any Event of Default under clause (a) of Article 10.1 of the Credit Agreement, and (b) any failure to pay any other Senior Debt when the same becomes due (taking into account any permitted grace periods in respect thereof), as a result of acceleration or otherwise.

“Senior Security Documents” shall have the meaning specified in Recital C hereto.

“Standstill Period” shall mean a period ending on the 180th day after (a) with respect to any Subordinated Debt Payment Default occurring as a result of the delivery of a Default Notice hereunder, the date of such Subordinated Debt Payment Default, (b) with respect to any Subordinated Debt Payment Default occurring other than as a result of the delivery of a Default Notice hereunder, the date the Administrative Agent is provided with written notice of such Subordinated Debt Payment Default and (c) with respect to any Subordinated Debt Default (other than a Subordinated Debt Payment Default), the date the Administrative Agent is provided with written notice of such Subordinated Debt Default which notice indicates the Subordinated Creditors’ intent to accelerate the Subordinated Debt; provided, in each case, that if the date for payment of any Senior Debt is accelerated, the Standstill Period shall continue until such Senior Debt has been indefeasibly paid in full in cash.

“Subordinated Creditors” shall mean the Initial Subordinated Creditors and all other holders from time to time of the Subordinated Debt.

“Subordinated Debt” shall mean any and all existing and hereafter arising obligations and/or liabilities whatsoever, including any payments of any nature whatsoever in respect of any Obligations (as defined in the Subordinated Note Agreement), of the Company or any Subsidiary of the Company (or any other Person) in connection with any of the Subordinated Debt Documents, in each case, whether direct, indirect, contingent, joint, several, or independent, now or hereafter existing, due or to become due to, or held or to be held by, a Subordinated Creditor, whether created directly or acquired by assignment or otherwise, and whether or not evidenced by written instrument, including, without limitation, all principal, interest (including Post Petition Interest, whether or not allowed in an Insolvency Proceeding), premium, obligations under guaranties, indemnity payments, reimbursement obligations under letters of credit, fees, costs, and other expenses; provided that the term “Subordinated Debt” shall not include any Equity Obligations.

4

“Subordinated Debt Default” shall mean a Subordinated Debt Payment Default or any other event or occurrence that entitles the holders of the Subordinated Debt to accelerate the maturity of the Subordinated Debt.

“Subordinated Debt Documents” shall mean the Subordinated Note Agreement, the Subordinated Note, the Warrant and all other documents, guaranties, agreements and instruments evidencing, securing or otherwise pertaining to all or any portion of the foregoing.

“Subordinated Debt Payment Default” shall mean any event of default under Section 8.1(b) or (c) of the Subordinated Note Agreement.

“Subordinated Note” shall mean the senior subordinated promissory note due December 31, 2007 to be issued to the Initial Subordinated Creditors by the Company pursuant to the Subordinated Note Agreement, together with any portions thereof assigned or transferred.

“Warrant” means that certain Warrant to Purchase the Common Stock of US LEC Corp., dated as of December 31, 2002 issued by the Company in favor of the Initial Subordinated Creditors (together with any replacement warrants issued to the Initial Subordinated Creditors pursuant to the terms thereof and any additional warrants issued to any other Securityholder), as the same may be amended, waived, supplemented or otherwise modified from time to time.

ARTICLE II

PAYMENTS, MODIFICATION OF DOCUMENTS AND

SUBORDINATION TO SENIOR DEBT

SECTION 2.1  Payments.

(a)  Except as provided in Section 2.1(b) of this Agreement, no Subordinated Creditor will ask, demand, sue for, take or receive from the Company or any Subsidiary of the Company or any Affiliate or other Person, by setoff or in any other manner, the whole or any part of the Subordinated Debt, unless and until all Senior Debt has been indefeasibly paid in full in cash and all obligations of the Senior Creditors under the Senior Debt Documents have terminated.

(b)  At any time when no Blockage Period is in effect, the Company may make and the Subordinated Creditors may receive (i) regularly scheduled payments of interest on account of the Subordinated Note in accordance with the terms of the Subordinated Note as in effect on the date hereof, (ii) payments in respect of indemnification obligations of the Company arising under the Subordinated Debt Documents in respect of claims by third parties against the Subordinated Creditors, and (iii) costs, disbursements, other indemnification amounts, fees and expenses provided for pursuant to the Subordinated Debt Documents. Following the termination of any Blockage Period, the Company may make and the Subordinated Creditors may receive the payments described in clauses (i)-(iii) of the foregoing sentence which could have been made but for the existence of a Blockage Period.

(c)  Any payments received by the Subordinated Creditors in violation of the terms hereof, shall be held by the Subordinated Creditors in trust for the Senior Creditors and

5

shall immediately be delivered by the Subordinated Creditors, in the form received (together with any necessary endorsement), to the Senior Creditors to be applied to the Senior Debt until all such Senior Debt shall have been paid in full in cash after giving effect to any concurrent payment or distribution to the Senior Creditors, and the obligations of the Senior Creditors under the Senior Debt Documents shall have terminated. In the event that any Subordinated Creditor fails to provide any necessary endorsement as contemplated above, the Senior Creditors are hereby irrevocably authorized to appropriately make the same.

SECTION 2.2  Modification of Subordinated Debt Documents; Etc.    Until all Senior Debt has been indefeasibly paid in full in cash and all obligations of the Senior Creditors under the Senior Debt Documents have terminated, (i) no Subordinated Creditor will seek to establish with the Company or any Subsidiary a sinking fund for the payment or prepayment of or otherwise arrange for the defeasance of any Subordinated Debt, and (ii) no amendment, modification or other alteration to the terms of the Subordinated Debt Documents shall be of any effect unless the Required Senior Creditors have previously consented thereto in writing. Each Subordinated Creditor agrees that it will not challenge, object to or in any respect inhibit or otherwise interfere with the enforcement by any of the Senior Creditors of any of their rights or remedies in respect of the Senior Debt, any Collateral or this Agreement. Without limitation of the foregoing, each Subordinated Creditor agrees that it will not take any action to (x) contest the validity, perfection, priority or enforceability of any Senior Debt, any Senior Debt Documents, any security interest in any Collateral therefor or any guaranties thereof; (y) contest the relative rights and duties of any holders of any Senior Debt with respect to any Collateral, established in any instruments or agreements creating or evidencing any of the Senior Debt; or (z) contest or affect such Subordinated Creditor’s obligations and agreements set forth in this Agreement.

SECTION 2.3  Subordination to the Senior Debt.    The Subordinated Creditors shall at all times cause the Subordinated Debt to be junior in right of payment and otherwise subordinate to the Senior Debt on the terms and conditions set forth in this Agreement, and shall promptly execute and deliver all documents requested by the Required Senior Creditors to evidence such subordination.

ARTICLE III

ENFORCEMENT OF REMEDIES

SECTION 3.1  Waivers of Rights.    Until all Senior Debt has been indefeasibly paid in full in cash and all obligations of the Senior Creditors under the Senior Debt Documents have terminated, the Subordinated Creditors hereby agree:

(a)  to refrain from exercising any and all rights each, either directly or through an agent, may now or hereafter have to (i) except as provided in clauses (b) and (c) below and except the right to receive permitted payments in accordance with Section 2.1(b) hereof, exercise any right pursuant to the Subordinated Debt Documents or with respect to any Subordinated Debt, (ii) exercise any right available under the laws of any applicable jurisdiction with respect to the Collateral, whether at law or in equity, or (iii) otherwise dispose of or retain any of the Collateral, in each case without the prior written consent of the Required Senior Creditors;

6

(b)  to refrain from initiating or joining, either directly or through an agent, in the initiation of, any Insolvency Proceeding relative to the Company or any of its Subsidiaries, without the prior written consent of the Required Senior Creditors until such time as a Standstill Period with respect to any then-existing Subordinated Debt Default has both commenced and expired in accordance with the terms of the definition thereof; and

(c)  to refrain from accelerating the Subordinated Debt unless a Standstill Period with respect to any then-existing Subordinated Debt Default has both commenced and expired in accordance with the terms of the definition thereof; provided, however, that the holders of the Subordinated Debt may accelerate the Subordinated Debt if the Senior Debt is accelerated, but must immediately rescind any such acceleration of the Subordinated Debt if acceleration of the Senior Debt is rescinded.

SECTION 3.2  Bankruptcy.    Until all Senior Debt has been indefeasibly paid in full in cash and all obligations of the Senior Creditors under the Senior Debt Documents have terminated, the Subordinated Creditors agree as follows:

(a)  the Subordinated Creditors shall retain the right to vote and otherwise act with respect to the Subordinated Debt with respect to any Insolvency Proceeding (including, without limitation, the right to vote to accept or reject any plan of partial or complete liquidation, reorganization, arrangement, resolution, compromise, settlement, composition or extension or for the election of trustees or otherwise); provided, that no Subordinated Creditor shall vote in favor of or propose any such plan or take any other action in any way so as to contest (i) the validity or enforceability of any Senior Debt Document or any Senior Debt or the perfection, priority or validity of any lien purporting to secure any of the Senior Debt, (ii) the relative rights and duties of the Administrative Agent or any Senior Creditors established in this Agreement, the Senior Debt Documents or any instruments or agreements creating or evidencing any of the Senior Debt with respect to any of such Collateral, or (iii) any of the Senior Creditor’s rights or the Subordinated Creditors’ obligations and agreements set forth in this Agreement; provided, further, that the Administrative Agent shall have the right, but not the obligation, to vote the claim of any Subordinated Creditor in any such Insolvency Proceeding if such Subordinated Creditor has not voted its claim on or prior to ten (10) days before the expiration of the time to vote any such claim. In the event that the Administrative Agent votes any claim in accordance with the authority granted hereby, no Subordinated Creditor shall be entitled to change or withdraw such vote.

(b)  the Subordinated Creditors will, at the Required Senior Creditors’ request, file any claims, proofs of claim, or other instruments of similar character necessary to enforce the obligations of Company or its Subsidiaries in respect of the Subordinated Debt; provided that the Administrative Agent shall have the right, but not the obligation, to execute, verify, deliver and file such proofs of claim upon the failure of any Subordinated Creditor to promptly do so prior to fifteen (15) days before the expiration of the time to file any such proof of claim;

(c)  any payment or distribution of any kind or character with respect to the Subordinated Debt, whether in cash, property or securities, by set-off or otherwise, to which the Subordinated Creditors would be entitled but for the provisions of this Agreement, including any such payment or distribution which may be payable or deliverable by reason of the payment of

7

any other indebtedness of any Loan Party being subordinated to the payment of the Subordinated Debt is hereby irrevocably assigned to the Senior Creditors and the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, is hereby irrevocably directed to pay directly to the Senior Creditors, to the extent necessary to make payment in full in cash of all Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution to the Senior Creditors; provided that the Subordinated Creditors shall be entitled to receive (and shall not be required to remit to the Senior Creditors) in any such proceeding either (x) debt securities (but no payments thereon) which mature no earlier than 180 days prior the maturity of the Subordinated Debt and are subordinated to the Senior Debt on terms no less favorable to the Senior Creditors (as determined by the Required Senior Creditors) than the Subordinated Debt or (y) equity securities (but no payments thereon) which, with respect to any such debt securities and any preferred equity securities, rank junior in all respects to any debt or equity securities distributed to the Senior Creditors; and

(d)  in the event that, notwithstanding the foregoing provisions of this Section 3.2, any Subordinated Creditor shall have received any payment or distribution of any kind or character, whether in cash, property or securities (other than those described in the proviso to Section 3.2(c) above), before all Senior Debt is paid in full in cash, then and in such event such payment or distribution shall be deemed to be the property of, segregated, received and held in trust for the benefit of and shall be immediately paid over or delivered forthwith to the Senior Creditors (in the same form as received, with any necessary endorsement) to the extent necessary to make payment in full (or, in the case of non-cash property or securities, to be held as collateral for such payment in full in cash) of all Senior Debt remaining unpaid until all such Senior Debt shall have been paid in full in cash, after giving effect to any concurrent payment or distribution to the Senior Creditors. In the event that any Subordinated Creditor fails to provide any necessary endorsement as contemplated above, the Senior Creditors are hereby irrevocably authorized to appropriately make the same.

In furtherance of the foregoing, the Subordinated Creditors hereby irrevocably grant to the Administrative Agent the right to act as attorney-in-fact for the Subordinated Creditors in any Insolvency Proceeding and to take such actions (or refrain from taking any action) on behalf of the Subordinated Creditors, in each case, solely to the extent the Administrative Agent is permitted to take any action (or omit to take any action) on behalf of the Subordinated Creditors pursuant to this Agreement. The Subordinated Creditors agree to execute and deliver to the Administrative Agent or any successors in interest to the Administrative Agent such other and further powers of attorney or other instruments as such party or parties may request in order to accomplish the foregoing.

SECTION 3.3  Waiver and Indemnity.    The Senior Creditors shall have no liability to the Subordinated Creditors with respect to, and the Subordinated Creditors waive any claim or defense which the Subordinated Creditors may now or hereafter have against the Senior Creditors arising from or in connection with the exercise by the Senior Creditors of their rights under this Agreement, the Senior Debt Documents or any other documents or instruments contemplated hereby or thereby. Without limitation of the foregoing, the Subordinated Creditors waive any claim or defense which the Subordinated Creditors may now or hereafter have against the Senior Creditors arising from or in connection with (a) any and all actions which the Senior

8

Creditors take or omit to take with respect to any Credit Facility or any Collateral now or hereafter securing the same (including, without limitation, actions with respect to the creation, perfection or continuation of Liens in any Collateral, actions with respect to the occurrence of any default under any Credit Facility, actions with respect to the foreclosure upon, sale, release of, depreciation of or failure to realize upon any of the Collateral, actions with respect to the collection of any claim for all or any part of any Credit Facility from any account debtor, guarantor or any other Person, and actions with respect to the valuation, use, protection, or release of any Collateral); (b) any right, now or hereafter existing, to require the Senior Creditors to proceed against or exhaust any Collateral at any time securing the Senior Debt or to marshal any assets in favor of the Subordinated Creditors; (c) any notice of the incurrence or increase of Senior Debt, it being understood that the Senior Creditors may make advances now or hereafter relating to the Senior Debt and there may be other increases to the Senior Debt without notice to or authorization of the Subordinated Creditors in reliance upon the provisions of this Agreement; (d) any defense based upon or arising by reason of (i) any disability or other defense of the Company or any other Person or entity; or (ii) any lack of authority of any agent or any other person or entity acting or purporting to act on behalf of the Company or the Subordinated Creditors; or (iii) any failure by the Senior Creditors to properly perfect any Lien in any asset of Company; or (e) any election by the Senior Creditors in any Insolvency Proceeding, including, without limitation, any failure of the Administrative Agent to make any election or vote any claim with regard to the Subordinated Debt to the extent the Administrative Agent is permitted to do so under this Agreement. Each Subordinated Creditor further hereby severally agrees to pay and to indemnify and save each Senior Creditor harmless from and against any damage, loss, cost or expense (including, without limitation, attorneys’ fees) which such Senior Creditor may incur or be subject to as a consequence, direct or indirect, of (A) the breach by the Subordinated Creditors of this Agreement, and (B) any legal action commenced by a Subordinated Creditor to challenge the validity of this Agreement, unless it is determined in a final, non-appealable judgment by a court of competent jurisdiction that such Senior Creditor has breached its obligations under this Agreement. Notwithstanding any other provision of this Agreement to the contrary, the provisions set forth in this Section 3.3 shall survive the termination of this Agreement.

SECTION 3.4  Rights of the Senior Creditors.    The Senior Creditors may, at any time and from time to time, without the consent of or notice to the Subordinated Creditors, without incurring responsibility to the Subordinated Creditors, and without impairing or releasing, any of its rights, or any of the obligations of the Subordinated Creditors hereunder, do any of the following:

(a)  Change the amount, manner, place, or terms of payment or change or extend the time of payment of or increase, renew or alter the Senior Debt, or any part thereof, or enter into or amend in any manner any agreement (including any related loan agreement, promissory notes and collateral documents) relating to the Senior Debt;

(b)  Sell, exchange, release, or otherwise deal with all or any part of any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Senior Debt, or any part thereof;

9

(c)  Release anyone liable in any manner for the payment or collection of the Senior Debt, or any part thereof;

(d)  Exercise or refrain from exercising any rights against the Company and others (including, without limitation, the Subordinated Creditors); and

(e)  Apply any sums, by whomsoever paid or however realized, in accordance with the Senior Debt Documents.

SECTION 3.5  Subrogation.    The holders of the Subordinated Debt shall not be subrogated to the rights of the holders of the Senior Debt in respect of payments or distributions of assets of, or ownership interests in, the Company or any Loan Party made on the Senior Debt until after all Senior Debt has been indefeasibly paid in full in cash and all obligations under the Senior Debt Documents have terminated. Neither the Administrative Agent nor any other Senior Creditor shall have any obligation or duty to protect any Subordinated Creditor’s rights of subrogation arising pursuant to this Agreement or under any applicable law, nor shall the Administrative Agent or any other Senior Creditor be liable for any loss to, or impairment of, any subrogation rights held by any Subordinated Creditor.

For purposes of such subrogation, no payments or distributions to the Senior Creditors of any cash, property or securities to which the Subordinated Creditors would be entitled except for the provisions of this Section 3.5, and no payments over pursuant to the provisions of this Agreement to the Senior Creditors by any of the Subordinated Creditors, as among the Loan Parties, their creditors (other than the Senior Creditors), and the Subordinated Creditors, shall be deemed to be a payment or distribution by any Loan Party to or on account of the Senior Debt.

SECTION 3.6  Modification of Subordinated Debt Documents.    The holders of the Subordinated Debt shall not amend, modify, supplement or otherwise alter the terms and conditions of any Subordinated Debt Document, including, without limitation, the creation of any lien or security interest to secure the Subordinated Debt, without the prior written consent of the Required Senior Creditors.

ARTICLE IV

LIEN SUBORDINATION; RELEASE OF COLLATERAL

SECTION 4.1  Lien Subordination.    If any lien or security interest is created to secure the Subordinated Debt, such lien or security interest shall be made junior in priority and subordinated to the rights and interests of the Senior Creditors in the assets subject to such lien or security interest and the Subordinated Creditors shall under no circumstances have any right to possession of any such assets or to foreclose upon any such assets, whether by judicial action or otherwise until all Senior Debt has been indefeasibly paid in full in cash and all obligations under the Senior Debt Documents have terminated. The foregoing shall apply regardless of the order of filing of any such liens or perfection of any such security interests (or failure to make any such filing or perfect any such security interest).

SECTION 4.2  Release of Collateral.    Without limiting any of the rights (including any of the foreclosure rights) of the Administrative Agent or any Senior Creditor under the Senior Debt

10

Documents or under the provisions of any applicable law, in the event that the Administrative Agent releases or discharges any Liens upon any Collateral which is subject to a Lien in favor of the Subordinated Debt, such Collateral shall thereupon be deemed to have been released from all Liens securing the Subordinated Debt, provided that the Administrative Agent believes in good faith that any such released or discharged Collateral is being sold or transferred either (a) pursuant to a transaction permitted by the Credit Agreement or (b) following the occurrence and during the continuance of an Event of Default under the Senior Debt, for consideration believed by the Administrative Agent to be reasonably equivalent to the fair value of such Collateral, under circumstances in which the seller of such Collateral shall have agreed that the net proceeds of any such sale under this clause (b) shall be applied to the payment of the Senior Debt and the Subordinated Debt in the order of priority provided in this Agreement. Each Subordinated Creditor agrees that within ten (10) days following the Administrative Agent’s written request therefor, the Subordinated Creditor will execute, deliver and file any and all such termination statements, lien releases and other agreements and instruments as the Administrative Agent may reasonably deem necessary or appropriate in order to give effect to the preceding sentence. Each Subordinated Creditor hereby irrevocably appoints the Administrative Agent the true and lawful attorney-in-fact of the Subordinated Creditors for the purpose of effecting any such executions, deliveries and filings. Without limiting the foregoing, and without implying that the Administrative Agent is obligated to undertake any special investigation with respect to its good faith belief as to the fair value of any property, the parties hereto agree to be bound as to the fair value of any property as determined by any independent appraisal of such property that may be conducted at the request of the Administrative Agent. The cost of any such appraisal, shall be borne by the Company and, if funded by the Administrative Agent or the Senior Creditors, shall constitute Senior Debt.

ARTICLE V

MISCELLANEOUS

SECTION 5.1  No Partnership or Joint Venture.    Nothing contained in this Agreement, and no action taken by any of the Creditors pursuant hereto, is intended to constitute or shall be deemed to constitute a partnership, association, joint venture or other entity.

SECTION 5.2  Notices.    Unless otherwise specified herein, all notices, requests and other communications to any party hereunder shall be in writing (including overnight delivery service, facsimile copy or similar writing) and shall be given to such party at its address or facsimile number specified on the applicable signature page hereof, or such other address or facsimile number as such party may hereafter specify in writing to the Administrative Agent for the purpose by notice to the other parties. All such notices and other communications shall be sent by certified or registered first-class mail, by nationally recognized overnight delivery service, by personal delivery or by facsimile, and shall be deemed to have been duly given: if mailed, three (3) Business Days after being deposited in the mail, postage prepaid; if delivered by a nationally recognized overnight delivery service, the following Business Day; if personally delivered, when delivered by hand; or if by telecopier, upon confirmation of transmittal.

11

SECTION 5.3  Amendments and Waivers.    Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed by the Required Creditors.

SECTION 5.4  Payments.    All payments hereunder shall be made in Dollars in immediately available funds. All payments to any Creditor shall be made to it, to the extent practicable, in accordance with the provisions of the relevant Credit Facility.

SECTION 5.5  Counterparts; Effectiveness.    This Agreement may be signed in any number of counterparts, each of which shall be an original, and all of which taken together shall constitute a single agreement, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when (a) the Administrative Agent shall have received counterparts hereof executed by each of the other parties listed on the signature pages hereto and (b) each of the Credit Facilities shall have become effective.

SECTION 5.6   Benefits.    This Agreement is solely for the benefit of and shall be binding upon the Creditors and their successors or assigns, and neither the Company nor any other party shall have any right, benefit, priority or interest under or by reason of this Agreement. The Subordinated Creditors will advise each future Subordinated Creditor that the Subordinated Debt and rights and remedies with respect to the Subordinated Debt are subordinated to the Senior Debt in the manner and to the extent set forth herein, and will place the following legend on each document and instrument evidencing or related to the Subordinated Debt indicating that such instrument or document is subject to this Agreement (and which shall be exhibited prominently thereon):

THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN INTERCREDITOR AND SUBORDINATION AGREEMENT DATED AS OF DECEMBER 31, 2002 BETWEEN GENERAL ELECTRIC CAPITAL CORPORATION AND CERTAIN SUBORDINATED CREDITORS INCLUDING THE INITIAL HOLDER HEREOF (THE “SUBORDINATION AGREEMENT”) TO THE “SENIOR DEBT” (AS DEFINED IN THE SUBORDINATION AGREEMENT), AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

Notice of the acceptance of the provisions set forth herein is hereby waived.

SECTION 5.7  Term.    This Agreement shall remain in effect until all Senior Debt has been indefeasibly paid in full in cash and all obligations under the Senior Debt Documents have terminated. The Senior Creditors may continue, at any time and without notice to any Subordinated Creditor, to extend Senior Debt to or for the benefit of the Company or any of its subsidiaries on the faith hereof. To the extent any payment of Senior Debt (whether by or on behalf of the Company or any Loan Party, as proceeds of security or enforcement of any right of set-off or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to a trustee, receiver or similar party under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by or paid over to such trustee,

12

receiver or similar party, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred.

SECTION 5.8  Governing Law.    THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.

SECTION 5.9  Conflicts.    In the event of any inconsistency or conflict between the terms and provisions of any Security Document and the terms and provisions of this Agreement, the terms and provisions of this Agreement shall control in all respects.

SECTION 5.10  WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; LIMITATION OF REMEDIES.

(a)  EACH OF THE CREDITORS AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF THE CREDITORS ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE OTHER CREDITORS TO ENTER INTO THE BUSINESS RELATIONSHIP CONTEMPLATED BY THIS AGREEMENT AND THE FINANCING DOCUMENTS TO WHICH EACH IS A PARTY, THAT EACH CREDITOR HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THE CREDIT AGREEMENT OR SUBORDINATED NOTE AGREEMENT, AS APPLICABLE, AND THAT EACH CREDITOR WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS WITH THE COMPANY, ITS SUBSIDIARIES AND THE OTHER CREDITORS. EACH CREDITOR FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

(b)  Each Creditor hereby irrevocably submits to the jurisdiction of any New York state or Federal court sitting in New York County, New York in any action or proceeding arising out of or relating to this Agreement, or any dealings between such Creditor and any other Creditor relating to the subject matter of the transactions contemplated hereby, and such Creditor hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in any such New York state or Federal court. Each Creditor hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. Each Subordinated Creditor further hereby agrees and irrevocably consents to the service of any and all process in any such action or proceeding by the mailing, by registered or certified U.S. mail, or by any other means or mail that requires a

13

signed receipt, of copies of such process to the address of such Subordinated Creditor contained in the records of the Company. Each Creditor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section 5.10 shall affect the right of any Creditor to serve legal process in any other manner permitted by law or affect the right of any Creditor to bring any action or proceeding against any other Creditor or its property in the courts of any other jurisdiction. To the extent that any Creditor has or hereafter may acquire immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, such Creditor hereby irrevocably waives such immunity in respect of its obligations under this Agreement.

SECTION 5.11  Application of Provisions.    The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the Subordinated Creditors on the one hand and the Senior Creditors on the other hand. The failure by any Loan Party to make a payment on account of the Subordinated Debt by reason of any provision of this Agreement will not be construed as preventing the occurrence of a default or event of default or the accrual of interest under the Subordinated Debt Documents. Nothing contained in this Agreement is intended to or shall (a) impair, as among the Company, its respective creditors (other than the Senior Creditors) and the Subordinated Creditors, the obligation of the Company, which is absolute and unconditional, to pay to the Subordinated Creditors the principal of, premium, if any, and interest on the Subordinated Debt as and when the same shall become due and payable in accordance with their terms (provided, however, that this provision is not intended to limit the restrictions on payments on the Subordinated Debt set forth in Article II hereof); or (b) affect the relative rights of the Subordinated Creditors against the Company and creditors of the Company (other than the Senior Creditors); or (c) except as provided in Article III hereof, prevent the Subordinated Creditors from exercising all remedies otherwise permitted by applicable law upon a default or any event of default under the Subordinated Debt Documents, subject however in all respects to the rights, if any, under this Agreement of the Senior Creditors (i) in any Insolvency Proceeding of the Company or any of its Subsidiaries to receive, pursuant to and in accordance with Section 3.2, cash, property and securities otherwise payable or deliverable to such holder, or (ii) under the conditions specified in Article II, to prevent any payment prohibited by such Article.

SECTION 5.12  Specific Performance.    The parties hereto hereby acknowledge that legal remedies may be inadequate and therefore the Senior Creditors are hereby authorized to demand specific performance of the provisions of this Agreement at any time when any Loan Party or any Subordinated Creditor shall have failed to comply with any provision hereof. Each Subordinated Creditor hereby irrevocably waives any defense based on the adequacy of a remedy at law that might be asserted as a bar to such remedy of specific performance.

SECTION 5.13  No Strict Construction.    Each party hereto hereby acknowledges that it has been represented by counsel in connection with this Agreement and the transactions described herein. Each party hereto has participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises under any provision of this Agreement, this Agreement shall be construed as if drafted jointly by the parties

14

hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship of any of the provisions of this Agreement.

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

15

IN WITNESS WHEREOF, the parties hereto have caused this Intercreditor and Subordination Agreement to be duly executed by their respective officers hereunto duly authorized as of the date first above set forth.

GENERAL ELECTRIC CAPITAL CORPORATION, as Administrative Agent and a Senior Creditor
By:	/s/    Angela M. LePore
	Name:	Angela M. LePore
	Title:	SVP, Special Assets

Address for notices:

General Electric Capital Corporation

10 Riverview Drive

Danbury, CT 06810

Attention:    SA Account Manager

WACHOVIA BANK, NATIONAL ASSOCIATION, as a Senior Creditor
By:	/s/    Matthew Berk
	Name:	Matthew Berk
	Title:	Authorized Officer

Address for notices:

Wachovia

301 S. College St.

NC 0537 TWS

Charlotte, NC 28288

Attn:    Matthew Berk

US BANK NATIONAL ASSOCIATION, as a Senior Creditor
By:	/s/    David Y. Kopolow
	Name:	David Y. Kopolow
	Title:	Vice President

Address for notices:

U.S. Bancorp Center

BC-MN-H22A

800 Nicollet Mall

Minneapolis, MN 55402

PNC BANK, NATIONAL ASSOCIATION, as a Senior Creditor
By:	/s/    Steven J. McGehrin
	Name:	Steven J. McGehrin
	Title:	Vice President

Address for notices:

1600 Market Street

11th Floor

Philadelphia, PA 19103

IBM CREDIT CORPORATION, as a Senior Creditor
By:	/s/    Steven A. Flanagan
	Name:	Steven A. Flanagan
	Title:	Manager of Global Special Handling

Address for notices:

North Castle Drive

Mail Stop NC 318

Armonk, NY 10504-2575

BANK AUSTRIA CREDIT ANSTALT CORPORATE FINANCE, INC., as a Senior Creditor
By:	/s/    A.W. Seidel
	Name:	A.W. Seidel
	Title:	SVP

Address for notices:

c/o Hypo Vereinsbank

Attn:    HVB Credit Advisers, LLC

150 East 42 Street

New York, NY 10017

SUBORDINATED CREDITORS:

/s/    Richard T. Aab  

Richard T. Aab

Address for notices:

C/o RTA Associates, LLC

200 Meridian Centre, Suite 140

Rochester, New York 14618

/s/    Tansukh V. Ganatra

Tansukh V. Ganatra

Address for notices:

6523 Ashdale Place

Charlotte, North Carolina 28215

/s/    Shirley C. Levy

Shirley C. Levy

Address for notices:

Permanent Address:

5267 Menteth Drive

Canandaigua, New York 14424

Temporary Address (Dec. 2002-Jan. 2003):

425 17^th Avenue South

Naples, FL 34102

/s/    Michael E. Jones

Michael E. Jones

Address for notices:

8 Hidden Springs

Pittsford, New York 14534

/s/    Frank Lamar, DDS

Frank Lamar, DDS

Address for notices:

1950 Clinton Avenue South

Rochester, New York 14618

/s/    Kevin J. Phelps

Kevin J. Phelps

Address for notices:

22 Chelsea Park

Pittsford, New York 14534

/s/    Ann E. Phelps

Ann E. Phelps

Address for notices:

22 Chelsea Park

Pittsford, New York 14534

/s/    Stephen E. Webster

Stephen E. Webster

Address for notices:

1595 Elmwood Avenue

Rochester, New York 14620

/s/    R. Wayne LeChase

R. Wayne LeChase

Address for notices:

420 Windward Shores

Webster, New York 14580

SYKES ASSOCIATES, a New York Limited Partnership
By:	/s/    Robert F. Sykes
	Name: Robert F. Sykes Title: General Partner

Address for notices:

60 Brookside Drive

Rochester, New York 14618

Attn: Robert F. Sykes, General Partner

ROBJAN LLC, a New York Limited Liability Company
By:	/s/    Dr. Robert Loss
	Name: Dr. Robert Loss Title: Manager/Member

Address for notices:

19 Brookwood Road

Pittsford, New York 14534

Attn: Dr. Robert Loss

BROPHY, DAILEY & CO., Profit Sharing Plan,
By:	/s/    Harold E. Dailey, Jr.
	Name: Harold E. Dailey, Jr. Title: Trustee

Address for notices:

C/o Harold Dailey, Jr.

150 Allens Creek Road

Rochester, New York 14618

Frame Family LLC a New York Limited Liability Company
By:	/s/    Robert B. Frame
	Name: Robert B. Frame Title: Manager/Member

Address for notices:

6 Malm Lane

Rochester, New York 14618

Attn: Robert B. Frame

Jo & Co., an Indiana Partnership
By:	/s/    Ross J. Mangano
	Name: Ross J. Mangano Title: General Partner

Address for notices:

P.O. Box 1655

South Bend, Indiana 46634-1655

Attn: Ross J. Mangano

EX-10.1

Exhibit 10.1

THIRD AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

Dated as of December 31, 2002

among

US LEC CORP.,

as Guarantor and Borrower Representative,

CERTAIN OPERATING SUBSIDIARIES OF US LEC CORP.,

as Borrowers,

LENDERS PARTY HERETO,

GENERAL ELECTRIC CAPITAL CORPORATION,

as Administrative Agent,

WACHOVIA BANK, National Association,

as Documentation Agent

and

WACHOVIA SECURITIES, INC.,

as Syndication Agent

GECC CAPITAL MARKETS GROUP, INC.

and

WACHOVIA SECURITIES, INC.,

as Co-Arrangers

TABLE OF CONTENTS

		Page
ARTICLE 1:	DEFINITIONS	1
1.1	Certain Definitions	1
1.2	Accounting Principles; Subsidiaries	19
1.3	UCC Terms	20
1.4	General Construction; Captions	20
1.5	References to Documents and Laws	20
ARTICLE 2:	LOANS	20
2.1	Facility A	20
2.2	Facility B	20
2.4	Letters of Credit	21
2.5	Reliance on Notices; Appointment of Borrower Representative	21
2.6	Procedures for Borrowing	22
2.7	Facility B Loan Amortization	22
2.8	Intentionally Omitted	22
2.9	Maturity	22
2.10	Prepayments; Commitment Reductions	23
2.11	Interest and Applicable Margins	25
2.12	Payments	27
2.13	Application and Allocation of Payments	27
2.14	Loan Account and Accounting	28
2.15	Indemnity	28
2.16	Access	29
2.17	Taxes	30
2.18	Capital Adequacy; Increased Costs; Illegality	30
2.19	Use of Proceeds	31
2.20	Fees	32
2.21	Expenses	32
ARTICLE 3:	ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF ADMINISTRATIVE AGENT	33
3.1	Assignment and Participations	33
3.2	Appointment of Administrative Agent	34
3.3	Administrative Agent’s Reliance, Etc	35
3.4	GE Capital and Affiliates	35

TABLE OF CONTENTS

		Page
3.5	Lender Credit Decision	36
3.6	Indemnification	36
3.7	Successor Administrative Agent	36
3.8	Set Off and Sharing of Payments	37
3.9	Facility A Advances; Payments; Non-Funding Lenders; Information; Actions in Concert	38
3.10	Syndication and Documentation Agents	40
ARTICLE 4:	COLLATERAL AND SECURITY AGREEMENT	40
4.1	Grant of Security Interest	40
4.2	Regulatory Authorizations	41
4.3	Priority of Security Interests	41
4.4	Pledge Agreements	42
4.5	Further Documentation; Pledge of Instruments; Chattel Paper	42
4.6	Accounts, Etc	43
4.7	Further Identification of Collateral	43
4.8	Remedies	43
4.9	Standard of Care	43
4.10	Advances to Protect Collateral	43
4.11	License to Use	44
4.12	Benefit of Lenders	44
4.13	Release of Collateral	44
ARTICLE 5:	REPRESENTATIONS AND WARRANTIES	44
5.1	Organization and Qualification	44
5.2	Authority and Authorization	44
5.3	Execution and Binding Effect	44
5.4	Governmental Authorizations	45
5.5	Regulatory Authorizations	45
5.6	Agreements and Other Documents	45
5.7	Absence of Conflicts	45
5.8	No Restrictions	45
5.9	Government Contracts	46
5.10	Financial Statements; Business Plan	46
5.11	Financial Accounting Practices	46

TABLE OF CONTENTS

		Page
5.12	Deposit and Disbursement Accounts	46
5.13	Insurance	46
5.14	Accurate and Complete Disclosure	47
5.15	No Event of Default; Compliance with Material Agreements	47
5.16	Labor Matters	47
5.17	Litigation	47
5.18	Rights to Property	47
5.19	Intentionally Omitted	48
5.20	Taxes	48
5.21	No Material Adverse Change	48
5.22	No Regulatory Event	48
5.23	Solvency	48
5.24	Trade Relations	48
5.25	No Brokerage Fees	48
5.26	Margin Stock; Regulation U	48
5.27	Investment Company; Public Utility Holding Company	48
5.28	Personal Holding Company; Subchapter S	49
5.29	Securities Act, Etc	49
5.30	ERISA	49
5.31	Intellectual Property	49
5.32	Environmental Warranties	49
5.33	Security Interests	49
5.34	Place of Business	49
5.35	Location of Collateral	50
5.36	Validity of Contracts and Accounts	50
5.37	No Defaults Under Contracts or Accounts	50
5.38	Subsidiaries	50
5.39	Assumed Names	50
5.40	Pledge Agreements; Registration of Pledge	50
5.41	Transactions with Affiliates	50
5.42	Going Concern	51
ARTICLE 6:	CONDITIONS TO EFFECTIVENESS	51
6.1	Closing Certificates	51

TABLE OF CONTENTS

		Page
6.2	Opinions of Counsel	51
6.3	Closing Documents	52
6.4	No Material Adverse Change	52
6.5	No Existing Default or Event of Default	53
6.6	Payment of Expenses	53
6.7	Facility B Loan Payment	53
6.8	Subordinated Debt Investment	53
ARTICLE 7:	CONDITIONS OF LENDING	53
7.1	Conditions to Each Borrowing Date	53
7.2	Affirmation of Representations and Warranties	54
7.3	Deadline for Funding Conditions	54
ARTICLE 8:	AFFIRMATIVE COVENANTS	54
8.1	Reporting and Information Requirements	54
8.2	Other Notices	56
8.3	Notice of Pension-Related Events	57
8.4	Inspection Rights	57
8.5	Preservation of Corporate Existence and Qualification	57
8.6	Continuation of Business	57
8.7	Insurance	58
8.8	Payment of Taxes, Charges, Claims and Current Liabilities	59
8.9	Financial Accounting Practices	60
8.10	Compliance with Laws	60
8.11	Use of Proceeds	60
8.12	Government Authorizations; Regulatory Authorizations, Etc	60
8.13	Contracts and Franchises	60
8.14	Site Leases and Consents	61
8.15	Financial Covenants	61
8.16	Patent, Trademark and Copyright Collateral	61
8.17	Sites	62
8.18	Certain Notices	62
8.19	Management Team	62
8.20	Enforcement of Contracts	62
8.21	Legal Fee Reserve	62

TABLE OF CONTENTS

		Page
8.22	Subordinated Loans	62
8.23	Liens on After-Acquired Property	62
8.24	Intentionally Omitted	63
8.25	Intentionally Omitted	63
8.26	Further Assurances	63
8.27	Financial Advisor	63
ARTICLE 9:	NEGATIVE COVENANTS	63
9.1	Indebtedness	63
9.2	Restrictions on Liens and Sale of Collateral	64
9.3	Limitation on Contingent Obligations	65
9.4	Prohibition of Mergers, Acquisitions, Name, Office or Business Changes, Etc	65
9.5	Limitation on Equity Payments	66
9.6	Prohibition on Sale or Issuance of Stock	66
9.7	Limitation on Investments, Advances and Loans	66
9.8	Capital Expenditures	66
9.9	Limitation on Leases	66
9.10	Transactions with Affiliates	67
9.11	Extension of Accounts	67
9.12	Assumed Names	67
9.13	Subsidiaries	67
9.14	Advisor	67
9.15	Cash Management	67
ARTICLE 10:	EVENTS OF DEFAULT AND REMEDIES	67
10.1	Events of Default	67
10.2	Remedies	70
10.3	Waivers by Loan Parties	71
10.4	Exercise of Rights	71
10.5	Rights of Secured Party	71
10.6	Additional Remedies	72
10.7	Application of Proceeds	73
10.8	Discontinuance of Proceedings	73
10.9	Power of Attorney	73

TABLE OF CONTENTS
		Page
10.10	Regulatory Matters	74
ARTICLE 11:	JOINT AND SEVERAL OBLIGATIONS; GUARANTY	75
11.1	Guaranty	75
11.2	Waivers by Loan Parties	76
11.3	Benefit of Guaranty	76
11.4	Subordination of Subrogation, Etc	76
11.5	Election of Remedies	77
11.6	Limitation	77
11.7	Contribution with Respect to Guaranty Obligations	78
11.8	Liability Cumulative	78
ARTICLE 12:	GENERAL CONDITIONS/MISCELLANEOUS	78
12.1	Amendments, Modifications and Waivers	78
12.2	Advances Not Implied Waivers	79
12.3	Business Day	79
12.4	Records	79
12.5	Notices	80
12.6	FCC and PUC Approval	80
12.7	Lenders Sole Beneficiary	80
12.8	Lender’s Review of Information	81
12.9	No Joint Venture	81
12.10	Severability	81
12.11	Rights Cumulative	81
12.12	Duration; Survival	81
12.13	Governing Law	81
12.14	Counterparts	81
12.15	Successors and Assigns	81
12.16	Disclosures and Confidentiality	82
12.17	Jurisdiction and Venue	83
12.18	Jury Waiver	84
12.19	Limitation on Liability	84
12.20	General Wavier and Release	84
12.21	Schedules, Exhibits and Annexes	85
12.22	Agreement to Govern	85

TABLE OF CONTENTS

		Page
12.23	Entire Agreement	85

ANNEXES TO LOAN AND SECURITY AGREEMENT
Annex I	Letters of Credit
Annex II	Initial Commitments; Addresses of Lenders
Annex III	Closing Checklist
Annex IV	Matrix of Actual to Projected Operating Statistics
SCHEDULES TO LOAN AND SECURITY AGREEMENT
Schedule 1	Borrower Information and Certain Defined Terms
Schedule 2.7	Facility B Loan Amortization Schedule
Schedule 2.10(b)	Alternate Working Capital
Schedule 2.20	Commitment Fees
Schedule 3.9	Wire Instructions
Schedule 5.4	Required Consent
Schedule 5.5	Regulatory Authorizations
Schedule 5.6	Agreements and Other Documents
Schedule 5.8	Restrictions on Indebtedness
Schedule 5.9	Government Contracts
Schedule 5.10	Financial Statements
Schedule 5.12	Deposit and Disbursement Accounts
Schedule 5.13	Insurance Policies
Schedule 5.16	Labor Matters
Schedule 5.17	Litigation
Schedule 5.18	Site and Site Leases; Real Property; Equipment Location
Schedule 5.31	Intellectual Property
Schedule 5.33	Security Interests—Recordings and Filings
Schedule 5.34	Place of Business
Schedule 5.35	Location of Collateral
Schedule 5.39	Assumed Names
Schedule 5.41	Transactions with Affiliates
Schedule 8.7	Insurance; Certificates of Insurance
Schedule 8.15	Financial Covenants
Schedule 9.1	Permitted Debt
Schedule 9.2	Liens
Schedule 9.14	Advisor Services
Schedule 10.2	Chief Strategy Officer Services
EXHIBITS TO LOAN AND SECURITY AGREEMENT
Exhibit A-1	Form of Amended and Restated Facility A Note
Exhibit A-2	Form of Amended and Restated Facility B Note
Exhibit B	Form of Borrowing Certificate
Exhibit C	Form of Notice of Conversion/Continuation
Exhibit D	Form of Opinion of Counsel to Loan Parties
Exhibit E	Form of Opinion of Regulatory Counsel to Loan Parties
Exhibit F	Form of Landlord Waiver and Consent
Exhibit G	Form of Assignment Agreement
Exhibit H	Form of Administrative Questionnaire
Exhibit I	Form of Additional Borrower Assumption
Exhibit J	Form of Amended and Restated Pledge Agreement

Exhibit K	Form of Perfection Certificate
Exhibit L	Form of Compliance Certificate

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as of December 31, 2002, by and among the entity or entities which are described on Schedule 1 or may become a party hereto pursuant to an Additional Borrower Assumption as herein provided (individually a “Borrower” and collectively, “Borrowers”); US LEC CORP., a Delaware corporation (“Holdings”), as Guarantor and Borrower Representative; GENERAL ELECTRIC CAPITAL CORPORATION (in its individual capacity, “GE Capital”), as a Lender and as administrative agent for Lenders (in that latter capacity, “Administrative Agent”); WACHOVIA BANK, NATIONAL ASSOCIATION (“Wachovia Bank”), as a Lender and as documentation agent for Lenders (in that latter capacity, “Documentation Agent”); WACHOVIA SECURITIES, INC., (“Wachovia Securities”), as syndication agent (in that capacity, “Syndication Agent”); and the other Lenders party hereto from time to time.

B A C K G R O U N D:

1.    Borrowers, Holdings, GE Capital, Wachovia Bank, Wachovia Securities and the Lenders are parties to the Second Amended and Restated Loan and Security Agreement, dated as of December 20, 1999 (the “Existing Loan Agreement”).

2.    Borrowers and Holdings have requested that Lenders amend and restate the Existing Loan Agreement in its entirety.

3.    It is the intention of the parties hereto that (a) this Agreement not constitute a novation of the obligations and liabilities existing under the Existing Loan Agreement or evidence payment of all or any of such obligations and liabilities (b) this Agreement amend and restate in its entirety the Existing Loan Agreement and (c) from and after the Effective Date, the Existing Loan Agreement be of no further force or effect except as to evidence the incurrence of the “Obligations” under and as defined therein, the representations and warranties made and the actions or omissions performed or required to be performed thereunder, in each case prior to the Effective Date.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE 1: DEFINITIONS

1.1    Certain Definitions.     Certain terms are defined on Schedule 1. In addition to other words and terms defined in the preamble hereof or elsewhere in this Agreement, or on the Schedules, the following words and terms shall have the following meanings unless the context otherwise clearly requires:

“Accounts”: as defined in Section 4.1(a).

“Additional Borrower”: as defined in Section 6.3(c).

“Additional Borrower Assumption”: as defined in Section 9.13.

“Additional Interest”: as defined in Section 2.11(b).

1

“Advisor”: a Person retained by Holdings in accordance with Section 9.14, and any successor thereof, with the duties and obligations as set forth on Schedule 9.14.

“Affected Lender”: as defined in Section 2.18(d).

“Affiliate”: with respect to any Person, (a) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, five percent (5%) or more of the Stock having ordinary voting power in the election of directors of such Person, (b) each Person that controls, is controlled by or is under common control with such Person, (c) each of such Person’s officers, directors, joint venturers and partners and (d) in the case of individuals, the immediate family members, spouses and lineal descendants of individuals who are Affiliates of any Borrower. For the purposes of this definition, “control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise; provided, however, that the term “Affiliate” shall specifically exclude, in the case of any Loan Party, Administrative Agent and each Lender.

“Agent”: Administrative Agent, Syndication Agent or Documentation Agent.

“Agreement”: the Existing Loan Agreement, as amended and restated by this Third Amended and Restated Loan and Security Agreement.

“Alternate Working Capital”: the lesser of the Loan Parties’ Excess Unrestricted Cash and Excess Working Capital.

“Amendment Fee”: as defined in Section 6.3(g).

“Applicable Base Margin”: the 3.00% per annum interest rate margin payable in addition to the Base Rate applicable to the Base Rate Loans.

“Applicable L/C Margin”: the per annum fee, from time to time in effect, payable with respect to outstanding Letter of Credit Obligations, which shall be equal to the Applicable LIBOR Margin.

“Applicable LIBOR Margin”: the 4.00% per annum interest rate margin payable in addition to the LIBOR Rate applicable to LIBOR Loans.

“Asset Disposition”: means any sale or other disposition, or series of sales or other dispositions (including by merger or consolidation, and whether by operation of law or otherwise), made on or after the date hereof by any Loan Party or any of its Subsidiaries to any Person of (a) all or substantially all of the outstanding Stock of any of its Subsidiaries, (b) all or substantially all of its assets or the assets of any division of any Borrower or any of its Subsidiaries or (c) any other asset or assets which, when taken together with all sales or other dispositions of assets not covered by the foregoing clauses (a) and (b), yield proceeds or involve assets having a fair market value in excess of $100,000 in any twelve-month period, other than as a result of (x) the casualty or condemnation of such assets the proceeds of which do not exceed $500,000 in the aggregate and (y) an upgrade of any existing asset so long as the replacement asset is acquired within five (5) Business Days of such disposition; provided that in the case of clause (x) above, such proceeds shall be reinvested in productive assets useable in the Borrowers’ business on or before 180 days after receipt thereof.

2

“Assignment Agreement”: as defined in Section 3.1(a).

“Base Rate”: for any day, a floating rate equal to the higher of (a) the rate publicly quoted from time to time by The Wall Street Journal as the “base rate on corporate loans at large U.S. money center commercial banks” (or, if The Wall Street Journal ceases quoting a base rate of the type described, the highest per annum rate of interest published by the Board of Governors of the Federal Reserve System in Federal Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as the Bank prime loan rate or its equivalent) and (b) the Federal Funds Rate plus fifty (50) basis points per annum. Each change in any interest rate provided for in this Agreement based upon the Base Rate shall take effect at the time of such change in the Base Rate.

“Base Rate Loan”: a Loan or portion thereof bearing interest by reference to the Base Rate.

“Borrower Representative”: Holdings, in its capacity as representative and agent of Borrowers.

“Borrowers”: as defined in Schedule 1 and any other subsidiary of Holdings that becomes a Borrower as herein provided.

“Borrowing Certificate”: a certificate substantially in the form of Exhibit B.

“Borrowing Date”: any Business Day on which a Facility A Advance is made or a Letter of Credit Obligation is incurred.

“Business Day”: a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York or Charlotte, North Carolina are authorized or required by law to close.

“Business Plan”: Loan Parties’ business plan, including pro forma projections, dated December 12, 2002, a copy of which is attached as Schedule 5.10, updated as provided in Section 8.1(i).

“Capital Expenditures”: for any period, (a) the additions to property, plant and equipment and other capital expenditures (including all systems and development expenditures related to the Networks) of Loan Parties that are (or would be) set forth in a consolidated statement of cash flows of Loan Parties for such period prepared in accordance with GAAP; provided, however, that no consideration paid for or expenditure related to the acquisition of any license and no capitalized interest shall be treated as a Capital Expenditure nor shall expenditures of proceeds of insurance settlements, condemnation awards and other like settlements in respect of lost, destroyed, damaged or condemned property, plant or equipment, to the extent that such expenditures are made to repair or replace such property or to acquire other property, plant and equipment useful in the business within twelve (12) months of receipt of such proceeds, be deemed Capital Expenditures and (b) Capital Lease Obligations incurred by Loan Parties during such period.

“Capital Lease”: with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person.

3

“Capital Lease Obligation”: with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease.

“Cash”: at any time, the cash, cash equivalents or marketable investment grade securities held by any Loan Party free of any claims or encumbrances other than those created by the Loan Documents.

“Cash Interest Coverage Ratio”: EBITDAR for any period of twelve (12) consecutive Fiscal Months divided by Net Interest Expense (excluding any portion thereof not paid in cash) for such period.

“Change of Control”: the earlier to occur of (a) an occurrence whereupon, fewer than one-half of the directors comprising the board of directors of Holdings shall include members of a group consisting of (i) the directors of Holdings as of the Effective Date, and (ii) replacement or additional directors nominated or supported by one-half or more of the members of the foregoing group and any such replacement or additional directors; provided, however, that in the event the “Investor Agents” exercise their rights under Section 3.4 of the Corporate Governance Agreement dated April 11, 2000, between Holdings and affiliates of Bain Capital, Inc. and Thomas H. Lee Partners, L.P., such exercise shall not constitute a “Change of Control” and (b) a “Change of Control” under any documentation with respect to Permitted Subordinated Debt.

“Charges”: all federal, state, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to the PBGC at the time due and payable), levies, assessments, charges, liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or gross receipts of any Loan Party, (d) any Loan Party’s ownership or use of any properties or other assets or (e) any other aspect of any Loan Party’s business.

“Closing Checklist”: the schedule, including all appendices, exhibits or schedules thereto, listing certain documents and information to be delivered in connection with this Agreement, the other Loan Documents and the transactions contemplated thereunder, substantially in the form attached hereto as Annex III.

“Co-Arrangers”: GECMG and Wachovia Securities.

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

“Collateral”: as defined in Section 4.1.

“Commercial Tort Claim”: shall have the meaning given to it in the UCC.

“Commitment Fees”: as defined in Section 2.20(a).

“Communications Law”: any and all of (a) the Telecommunications Act of 1996, the Communications Act of 1934, any similar or successor federal statute to either and the rules and regulations of the FCC thereunder and (b) any state law governing the provision of telecommunications services and the rules and regulations of the PUC, all as the same may be in effect from time to time.

4

“Communications Pledge Agreement”: the Pledge Agreement, dated as of even date herewith, executed by US LEC Communications Inc., pursuant to which all of the Stock of US LEC Acquisition Co. described on Schedule 1 on the date hereof is pledged to the Administrative Agent on behalf of the Secured Parties.

“Compliance Certificate”: a certificate substantially in the form of Exhibit L, which shall also include an update of the Perfection Certificate, in form and substance acceptable to the Administrative Agent.

“Contingent Obligation”: as to any Person, any obligation of such Person guaranteeing, directly or indirectly, any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (d) otherwise to assure or hold harmless the owner of such primary obligation against loss in respect thereof.

“Contracts”: as defined in Section 4.1(b).

“CSO”: as defined in Section 10.2(c).

“Current Assets”: with respect to any Person, all current assets of such Person as of any date of determination calculated in accordance with GAAP, but excluding Indebtedness due from Affiliates.

“Current Liabilities”: with respect to any Person, all liabilities which should, in accordance with GAAP, be classified as current liabilities, and in any event shall include all Indebtedness payable on demand or within one year from any date of determination without any option on the part of the obligor to extend or renew beyond such year, all accruals for federal or other taxes based on or measured by income and payable within such year, and the current portion of long-term debt required to be paid within one year, but excluding, in the case of Borrowers, the aggregate outstanding principal balances of the Loans.

“Default”: any of the conditions or occurrences specified in Section 10.1, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition has been satisfied.

“Default Rate”: as defined in Section 2.11(e).

“Deferral Period”: the period of eight (8) consecutive Fiscal Quarters beginning with the Fiscal Quarter ended December 31, 2002, through and including the Fiscal Quarter ended September 30, 2004, during which a portion of the Facility B Loan amortization payments due under the Existing Loan Agreement are deferred.

“Deferred Amortization”: all amortization due during the Deferral Period under the Existing Loan Agreement (exclusive of the Facility B Loan Payment) in an aggregate amount of not more than $30,000,000, which has been reallocated as set forth in Schedule 2.7.

5

“Deposit Account”:  shall have the meaning given to it in the UCC.

“Disqualified Stock”:  any Stock of Holdings which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the Facility B Loan Maturity Date.

“EBITDAR”:  for any period, the sum of (a) consolidated net income (excluding (i) extraordinary gains and losses and any losses resulting from resolution of disputed reciprocal compensation, (ii) costs and expenses of the Advisor and the CSO and (iii) costs and expenses related to the execution of this Agreement and the Subordinated Debt Investment Documents (including amendment fees, fees and expenses of counsel, charges taken in respect of loan fees previously paid and similar charges relating to this Agreement, the Subordinated Debt Investment Documents and the transactions contemplated thereby), plus (b) depreciation, amortization, Net Interest Expense, and tax expense plus (c) non-cash charges and non-cash losses from (i) write-offs or write-downs resulting from the impairment or abandonment of assets or (ii) the amount of any compensation deduction as the result of any grant of Stock to employees, officers, directors or consultants (other than charges representing accruals of future cash expenses and any non-cash gains from any reversal of a charge by reason of a decrease in the value of any Stock or Stock Equivalent); provided that in the case of clause (i), such write-off or write-down shall be required by GAAP and/or a requirement of Holding’s independent auditors but not as the result of any sale or closure of any asset or facility minus (d) non-cash gains.

“Effective Date”:  the date on which the conditions set forth in Article 6 are satisfied or waived with consent of all Lenders.

“Electronic Chattel Paper”:  shall have the meaning given to it in the UCC.

“Environmental Laws”:  all applicable federal, state, local and foreign laws, statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and in each case as amended or supplemented from time to time, and any applicable judicial or administrative interpretation thereof, including any applicable judicial or administrative order, consent decree, order or judgment, imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et seq.) (“CERCLA”); the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq.); the Clean Air Act (42 U.S.C. §§ 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.); each as from time to time amended, and any and all regulations promulgated thereunder, and all analogous state, local and foreign counterparts or equivalents and any transfer of ownership notification or approval statutes.

“Environmental Liabilities”:  with respect to any Person, all liabilities, obligations, responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages, property

6

damages, natural resource damages, consequential damages, treble damages, costs and expenses (including all fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, including any arising under or related to any Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Material whether on, at, in, under, from or about or in the vicinity of any real or personal property.

“Environmental Permits”:  all permits, licenses, authorizations, certificates, approvals or registrations required by any Governmental Authority under any Environmental Laws.

“Equipment”:  as defined in Section 4.1(c).

“Equity Payment”:  any distribution of earnings or capital, or any redemption or other payment in respect of stock, membership interests, partnership interests or other equity interests, including options and warrants, either directly or indirectly, whether in cash or property or in obligations of any Loan Party.

“ERISA”:  the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute.

“Event of Default”:  any of the events specified in Section 10.1; provided, however, that any requirement for the giving of notice, the lapse of time, or both, or any other condition, under Section 10.1 or otherwise, has been satisfied.

“Excess Cash”:  at any date, the aggregate amount of unrestricted Cash in excess of $5 million held by Loan Parties on such date.

“Excess Cash Flow”:  without duplication, with respect to any Fiscal Year of Loan Parties, consolidated net income plus (a) depreciation, amortization and Net Interest Expense to the extent deducted in determining consolidated net income, plus decreases or minus increases (as the case may be) (b) in Working Capital (exclusive of Cash), minus (c) Net Interest Expense paid or accrued (excluding any original issue discount, interest paid in kind or amortized debt discount, to the extent included in determining Net Interest Expense) and scheduled principal payments paid or payable in respect of Indebtedness permitted hereunder to be incurred, minus or plus (as the case may be), (d) extraordinary gains or losses which are cash items not included in the calculation of net income, minus (e) Capital Expenditures for such Fiscal Year permitted hereunder, plus (f) taxes deducted in determining consolidated net income to the extent not paid for in Cash.

“Excess Unrestricted Cash”:  for each Fiscal Month, the amount of actual unrestricted Cash in excess of the sum of (a) the amount of projected unrestricted cash as set forth on Schedule 2.10(b) opposite such Fiscal Month, (b) $7,500,000, (c) the proceeds from Asset Dispositions that the Loan Parties are permitted to retain under Section 2.10(b)(i) and (d) the proceeds from the sale or issuance of Stock or Indebtedness that the Loan Parties are permitted to retain under Section 2.10(b)(ii).

“Excess Working Capital”:  for each Fiscal Month, the amount of actual Working Capital in excess of the sum of (a) the amount of projected Working Capital as set forth on Schedule 2.10(b) opposite such Fiscal Month, (b) $15,000,000, (c) the proceeds from Asset Dispositions

7

that the Loan Parties are permitted to retain under Section 2.10(b)(i), and (d) the proceeds from the sale or issuance of Stock or Indebtedness that the Loan Parties are permitted to retain under Section 2.10(b)(ii).

“Existing Loan”:  as defined in Section 2.2(b).

“Existing Loan Agreement”:  as defined in the recitals to this Agreement.

“Facility A Advance”:  any advance made pursuant to Section 2.1(a) together with each “Facility A Advance” under and as defined in the Existing Loan Agreement.

“Facility A Commitment”:  (a) as to any Lender, the aggregate commitment of such Lender to make its Pro Rata Share of Facility A Advances and/or incur Letter of Credit Obligations hereunder or in the most recent Assignment Agreement executed by such Lender and (b) as to all Lenders, the aggregate commitment of all Lenders to make Facility A Advances and/or incur Letter of Credit Obligations, which aggregate commitment shall be Twenty-Five Million Dollars ($25,000,000) on the date hereof, as such amount may be adjusted, if at all, from time to time in accordance with this Agreement.

“Facility A Commitment Termination Date”:  the earliest of (a) December 20, 2006, (b) the date of termination of Lenders’ obligations to make Facility A Advances and/or incur Letter of Credit Obligations or permit existing Loans to remain outstanding pursuant to Section 10.2(b) and (c) the date of indefeasible prepayment in full by Borrowers of the Facility A Loans and the cancellation and return (or stand-by guarantee) of all Letters of Credit or the cash collateralization of all Letter of Credit Obligations pursuant to Annex I and the permanent reduction of the Facility A Commitment to zero dollars ($0).

“Facility A Loan”:  at any time, the sum of (a) the aggregate amount of Facility A Advances outstanding to Borrowers plus (b) the aggregate outstanding balance of all Letter of Credit Obligations incurred on behalf of Borrowers. Unless the context otherwise requires, references to the outstanding principal balance of the Facility A Loan shall include the outstanding balance of Letter of Credit Obligations.

“Facility A Note”:  as defined in Section 2.3(a).

“Facility B Loan”:  the aggregate amount of “Facility B Advances” under and as defined in the Existing Loan Agreement outstanding to Borrowers on the Effective Date.

“Facility B Loan Maturity Date”:  the earlier of (a) December 20, 2006 and (b) the date of termination of Lenders’ obligations to permit the Facility B Loan to remain outstanding pursuant to Section 10.2(b).

“Facility B Loan Payment”:  as defined in Section 6.7.

“Facility B Note”:  as defined in Section 2.3(b).

“FCC”:  the Federal Communications Commission of the United States of America, and any successor, in whole or in part, to its jurisdiction.

8

“Federal Funds Rate”:  shall mean, for any day, a floating rate equal to the weighted average of the rates on overnight Federal funds transactions among members of the Federal Reserve System, as determined by Administrative Agent.

“Fees”:  any and all fees payable to Administrative Agent or any Lender pursuant to this Agreement or any of the other Loan Documents.

“Financial Statements”:  the consolidated income statements, statements of cash flows and balance sheets of Loan Parties delivered in accordance with this Agreement.

“Fiscal Month”:  any of the monthly accounting periods of Loan Parties ending on the last day of each calendar month of each year.

“Fiscal Quarter”:  any of the quarterly accounting periods of Loan Parties ending on March 31, June 30, September 30 and December 31 of each year.

“Fiscal Year”:  any of the annual accounting periods of Loan Parties ending on December 31 of each year.

“Fixed Charges”:  the sum, for any period, of (a) Total Debt Service, plus (b) Capital Expenditures, plus (c) cash taxes.

“Fixed Charges Coverage Ratio”:  as of any date, (a) the sum of (i) EBITDAR for any period of twelve (12) consecutive Fiscal Months plus (ii) the product of (but not less than zero) (x) up to $15 million of Excess Cash as of the last day of the most recent Fiscal Month in such period minus (y) Cash required to be paid pursuant to Section 2.10(b) on such date or thereafter and which is attributable to such period, divided by (b) Fixed Charges for such period.

“GAAP”:  subject to Section 1.2, generally accepted accounting principles in the United States of America (as such principles may change from time to time) applied on a consistent basis (except for changes in application in which Loan Parties’ independent certified public accountants concur), applied both to classification of items and amounts.

“General Intangibles”:  as defined in Section 4.1(d).

“Governmental Actions”:  actions by any Governmental Authority.

“Governmental Authority”:  the federal government, any state or political subdivision thereof, any city or municipal entity, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Gross PP&E”:  total property, plant and equipment, excluding accumulated depreciation and amortization.

“Gross Profit Percentage”:  for any period, the percentage resulting from consolidated gross profit of Loan Parties divided by consolidated total revenues of Loan Parties.

“Guaranties”:  collectively, the Holdings Guaranty and any other guaranty executed by any Guarantor in favor of Secured Parties in respect of the Obligations.

9

“Guarantors”:  Holdings and any existing or future Subsidiary of Holdings which is not a Borrower and which executes a guaranty or other similar agreement in favor of Secured Parties in respect of the Obligations.

“Hazardous Material”:  any substance, material or waste which is regulated by, or forms the basis of liability now or hereafter under, any Environmental Laws, including any material or substance which is (a) defined as a “solid waste,” “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or other similar term or phrase under any Environmental Laws or (b) petroleum or any fraction or by-product thereof, asbestos, polychlorinated biphenyls (“PCBs”) or any radioactive substance.

“Holdings”:  as defined in the recitals to this Agreement.

“Holdings Guaranty”:  the Guaranty of Holdings, pursuant to Article 11.

“Holdings Pledge Agreement”:  the Amended and Restated Pledge Agreement, dated of even date herewith, as amended, executed by Holdings pursuant to which all of the Stock of all Borrowers described on Schedule I on the date hereof is pledged to Administrative Agent on behalf of Secured Parties.

“Holdings Series A Preferred Stock”:  Series A Convertible Preferred Stock, par value $0.01 per share, of Holdings.

“Indebtedness”:  as to any Person, at a particular time, without duplication (a) indebtedness for borrowed money or for the deferred purchase price of property or services in respect of which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which such Person otherwise assures a creditor against loss, (b) obligations under leases which shall have been or should be, in accordance with GAAP, recorded as Capital Leases in respect of which obligations such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person assures a creditor against loss, (c) obligations of such Person to purchase or repurchase accounts receivable, chattel paper or other payment rights sold or assigned by such Person, (d) indebtedness or obligations of such Person under or with respect to letters of credit, notes, bonds or other debt instruments (other than letters of credit that are cash collateralized) and (e) all obligations of such Person under any interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in interest rates, in each case whether contingent or matured.

“Interest Expense”:  for any period, the aggregate amount of interest, hedging costs and fees (excluding closing fees) paid or payable during such period by Loan Parties in respect of Total Debt.

“Interest Income”:  for any period, the aggregate amount of interest received during such period by Loan Parties in respect of Cash.

“Interest Payment Date”:  (a) as to any Base Rate Loan, the last Business Day of each Fiscal Quarter to occur while such Loan is outstanding and (b) as to any LIBOR Loan, the last day of the applicable LIBOR Period; provided, however, that in the case of any LIBOR Period greater than three (3) months in duration, interest shall be payable at three month intervals and on the last day of such LIBOR Period; and provided, further, that, in addition to the foregoing, each

10

of (x) the date upon which the Facility A Commitment has been terminated and all of the Loans have been paid in full and (y) the Facility A Commitment Termination Date shall be deemed to be an “Interest Payment Date” with respect to any interest which is then accrued under this Agreement. Notwithstanding the foregoing, until the repayment in full of the Deferred Amortization, the Interest Payment Date, with respect to any Base Rate Loan or LIBOR Loan shall be the last Business Day of each Fiscal Month to occur while such Loan is outstanding and, as applicable, the last day of any applicable LIBOR Period.

“Inventory”: as defined in Section 4.1(e).

“Investment Property”: shall have the meaning given to it in the UCC.

“Investors”: shall mean the Persons party to the Subordinated Debt Investment Documents as investors.

“Landlord Consent”: a consent substantially in the form of Exhibit F or in other form acceptable to Requisite Lenders executed by the owner/landlord, sublessor and/or licensor (including carriers) of any real property where any of the Collateral is or is to be located.

“Law”: any law (including common law), constitution, statute, regulation, rule, ordinance, order, injunction, writ, decree or award of any governmental body or court of competent jurisdiction or of any arbitrator (including but not limited to ERISA, the Code, the UCC, any applicable tax law, product safety law, occupational safety or health law, Communications Law, Environmental Law and/or securities laws).

“L/C Sublimit”: as defined in Annex I.

“Lenders”: the Lenders party hereto and, if any such Lender shall decide to assign all or any portion of the Obligations, such term shall include such assignee and any subsequent assignee of any assignee.

“Letter of Credit Obligations”: all outstanding obligations incurred by Administrative Agent or Lenders at the request of Borrower Representative, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance of a reimbursement agreement or guaranty by Administrative Agent or purchase by Lenders of a participation as set forth in Annex I with respect to any Letter of Credit. The amount of such Letter of Credit Obligations shall equal the maximum amount which may be payable by Administrative Agent or Lenders thereupon or pursuant thereto.

“Letter of Credit Right”: shall have the meaning given to it in the UCC.

“Letters of Credit”: commercial or standby letters of credit issued for the account of any Borrower by any L/C Issuer for which Administrative Agent and Lenders have incurred Letter of Credit Obligations.

“Liberty”: Liberty Bank and Trust Company.

“LIBOR Business Day”: a Business Day on which banks in the city of London are generally open for interbank or foreign exchange transactions.

11

“LIBOR Loan”:   Loan or any portion thereof bearing interest by reference to the LIBOR Rate.

“LIBOR Period”:  with respect to any LIBOR Loan, each period commencing on a LIBOR Business Day selected by Borrower Representative pursuant to this Agreement and ending one week or one, two, three or six months thereafter, as selected by Borrower Representative’s irrevocable notice to Administrative Agent as set forth in Section 2.11(e); provided, however, that the foregoing provision relating to LIBOR Periods is subject to the following:

(a)  if any LIBOR Period would otherwise end on a day that is not a LIBOR Business Day, such LIBOR Period shall be extended to the next succeeding LIBOR Business Day unless the result of such extension would be to carry such LIBOR Period into another calendar month in which event such LIBOR Period shall end on the immediately preceding LIBOR Business Day;

(b)  any LIBOR Period pertaining to a LIBOR Loan that begins on the last LIBOR Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such LIBOR Period) shall end on the last LIBOR Business Day of a calendar month;

(c)  Borrower Representative shall select LIBOR Periods so as not to require a payment or prepayment of any LIBOR Loan during a LIBOR Period for such Loan;

(d)  Borrower Representative shall select LIBOR Periods so that there shall be no more than six (6) separate LIBOR Loans in existence at any one time; and

(e)  Borrower Representative may not more frequently than once each calendar month select, or continue a LIBOR Loan for, a LIBOR Period of one week and may not continue any LIBOR Loan having a LIBOR Period of one week for another LIBOR Period of one week.

“LIBOR Rate”:  for each LIBOR Period, a rate of interest determined by Administrative Agent equal to:

(a)  the offered rate for deposits in United States Dollars for the applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00 a.m., London time, on the second full LIBOR Business Day next preceding the first day of each LIBOR Period (unless such date is not a Business Day, in which event the next succeeding Business Day will be used); divided by

(b)  a number equal to 1.0 minus the aggregate (but without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on the day which is two (2) LIBOR Business Days prior to the beginning of such LIBOR Period (including basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other governmental authority having jurisdiction with respect thereto, as now and from time to time in effect) for Eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D of such Board) which are required to be maintained by a member bank of the Federal Reserve System.

12

If such interest rates shall cease to be available from Telerate News Service, the LIBOR Rate shall be determined from such financial reporting service or other information as shall be mutually acceptable to Administrative Agent and Borrower Representative.

“Lien”:  any mortgage, pledge, hypothecation, lien (statutory or other), judgment lien, security interest, security agreement, charge or other encumbrance, or other security arrangement of any nature whatsoever, including, without limitation, any installment contract, conditional sale or other title retention arrangement, any sale of accounts receivable or chattel paper, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and the filing of any financing statement under the UCC or comparable law of any jurisdiction.

“Loan Documents”:  this Agreement, the Notes, the Security Documents, the Guaranties, all other filings and all other agreements, instruments, documents and certificates identified in the Closing Checklist executed and delivered to, or in favor of, Administrative Agent and/or Lenders and including all other pledges, powers of attorney, consents, assignments, contracts, notices, filings and all other written matter whether heretofore, now or hereafter executed by or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to Administrative Agent or any Lender in connection with this Agreement or the transactions contemplated hereby. Any reference in this Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to such agreement as the same may be in effect at any and all times such reference becomes operative.

“Loan Parties”:  Borrowers, Holdings and each other Guarantor.

“Loans”:  the Facility A Loan and the Facility B Loan.

“Markets”:  as defined in Schedule 1.

“Material Adverse Effect” or “Material Adverse Change”:  a material adverse effect on or material adverse change in (a) a material portion of the Collateral, (b) the business, financial or other condition, prospects or projections of Holdings and its Subsidiaries taken as a whole from that reflected in the Business Plan, (c) the ability of any Loan Party to perform its obligations under this Agreement, the Notes, the other Loan Documents or the System Agreements or (d) Administrative Agent’s or Lenders’ ability to enforce the rights and remedies granted under this Agreement or the other Loan Documents, in all cases whether attributable to a single circumstance or event or an aggregation of circumstances or events.

“Maximum Lawful Rate”:  as defined in Section 2.11(f).

“Net Interest Expense”:  for any period, Interest Expense less Interest Income.

“Net Total Debt”:  as of any date, (a) Total Debt minus (b) the product of (but not less than zero) (i) Cash minus (ii) Cash required to be paid pursuant to Section 2.10(b) on such date or thereafter and which is attributable to such period.

“Network”:  a transmission and communications system operated by a Loan Party, including all Equipment related thereto.

“Non-Funding Lender”:  as defined in Section 3.9(a)(ii).

13

“Notes”:  the Facility A Notes and the Facility B Notes, collectively.

“Notice of Conversion/Continuation”:  as defined in Section 2.11(f).

“Obligations”:  all loans, advances, debts, liabilities and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by any Loan Party to Administrative Agent or any Lender, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, arising under this Agreement, any of the other Loan Documents or any interest rate swap agreement. This term includes all principal, interest (including all interest which accrues after the commencement of any case or proceeding in bankruptcy after the insolvency of, or for the reorganization of, any Loan Party, whether or not allowed in such proceeding), Letter of Credit Obligations, Fees, expenses, attorneys’ fees and any other sum chargeable to any Loan Party under this Agreement or any of the other Loan Documents.

“Organizational Documents”:  with respect to a corporation, the articles of incorporation and by-laws of such corporation; with respect to a partnership, the certificate of partnership (or limited partnership, as applicable) and partnership agreement, together with the analogous documents for any corporate or partnership general partner; and in any case, any other document governing the formation and conduct of business by such entity.

“Original Amortization”:  the component of each amortization payment of the Facility B Loan identified on Schedule 2.7 as “Original Amortization”.

“Other Lender”:  as defined in Section 3.9(d).

“PBGC”:  the Pension Benefit Guaranty Corporation established under Title IV of ERISA or any other governmental agency, department or instrumentality succeeding to its functions.

“Perfection Certificate”:  a certificate substantially in the form of Exhibit K.

“Permits”:  all consents, licenses, notices, approvals, authorizations, filings, orders, registrations, and permits required by any Governmental Authority for the construction and operation of a Network (excluding Regulatory Authorizations), issued or obtained as and when required in accordance with all Requirements of Law.

“Permitted Acquisition”:  a Telecommunications Acquisition which satisfies the following conditions:

(a)  no Default or Event of Default exists, both immediately before and after giving effect to such acquisition;

(b)  not later than fifteen (15) days prior to the completion of such acquisition, Holdings shall have provided Lenders with information and financial analysis (including purchase price and historical and projected revenue, cash flow and cost reductions) regarding such acquisition, demonstrating to the reasonable satisfaction of Lenders, after giving pro forma effect to such acquisition, compliance with Schedule 8.15;

14

(c)  the sole form of consideration for such acquisition shall consist of Stock of Holdings which does not constitute Disqualified Stock and/or Permitted Subordinated Debt;

(d)  the Advisor shall have analyzed the proposed acquisition and shall have recommended the acquisition;

(e)  the acquisition shall have been approved by management and the board of directors of Holdings; and

(f)  the total transaction value of any single acquisition or series of related acquisitions shall not exceed $2,500,000 or, until the Termination Date, $5,000,000 in the aggregate with all other acquisitions.

“Permitted Debt”:  (a) the Obligations, (b) existing Indebtedness (including existing letters of credit) specified on Schedule 9.1 and any refinancings thereof which do not increase the aggregate outstanding principal amount thereof and are on terms that in the aggregate are not less favorable to Loan Parties, (c) Indebtedness incurred in connection with purchase money Indebtedness and Capital Leases in an aggregate amount up to $1,000,000 at any time outstanding, (d) Indebtedness incurred in connection with letters of credit (including letters of credit set forth on Schedule 9.1) with Wachovia and Liberty or such other financial institution as shall be acceptable to Administrative Agent or the Lenders in an aggregate amount not to exceed $2,000,000 at any time outstanding, provided that simultaneously with the issuance of any letter of credit by a financial institution other than Wachovia or Liberty, the relevant control agreement then in effect with Wachovia or Liberty shall be revised to decrease the aggregate amount of letters of credit permitted thereunder in an amount equal to the letters of credit issued by such financial institution, (e) Permitted Subordinated Debt, (f) inter-company Indebtedness between Loan Parties and (g) interest rate protection agreements in connection with Indebtedness permitted hereunder.

“Permitted Encumbrances”:  the Liens permitted under Section 9.2.

“Permitted Subordinated Debt”:  (a) the subordinated debt evidencing and giving rise to the Subordinated Debt Investment and (b) Indebtedness in an amount not greater than $150,000,000 that (i) does not require any payment of principal until twelve (12) months after the later of the Facility A Commitment Termination Date and the Facility B Loan Maturity Date, (ii) is issued on market terms prevailing at the time and (iii) is subordinated on terms reasonably acceptable to Requisite Lenders to the Indebtedness created hereunder or pursuant to any other Loan Document.

“Person”:  any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).

“Plan”:  any employee pension benefit plan to which Section 4021 of ERISA applies and (i) which is maintained for employees of any Loan Party or (ii) to which any Loan Party made, or was required to make, contributions at any time within the preceding five (5) years.

15

“Pledge Agreement(s)”:   the Holdings Pledge Agreement and any other pledge agreement, substantially in the form of Exhibit J, executed by any Loan Party pledging any stock or membership or ownership interests to Administrative Agent on behalf of Secured Parties.

“Preferred Stock Purchase Agreement”:  Preferred Stock Purchase Agreement, dated as of April 11, 2000, among Holdings and affiliates of Bain Capital, Inc. and Thomas H. Lee Partners, L.P., without giving effect to any amendments thereof or waivers with respect thereto.”

“Preferred Stock Transaction Documents”:  collectively, the Preferred Stock Purchase Agreement and the other Transaction Documents (as defined in the Preferred Stock Purchase Agreement), without giving effect to any amendments thereof or waivers with respect thereto.

“Proceeds”:  as defined in Section 4.1(l).

“Projections”:  Loan Parties’ forecasted consolidated (a) balance sheets; (b) profit and loss statements and (c) cash flow statements, together with appropriate supporting details and a statement of underlying assumptions.

“Pro Rata Share”:  (a) with respect to all matters relating to any Lender, the percentage obtained by dividing (i) the sum of the Facility A Commitment and outstanding Facility B Loans of such Lender by (ii) the aggregate Facility A Commitment and Facility B Loans of all Lenders and (b) with respect to all Loans on and after the Facility A Commitment Termination Date, the percentage obtained by dividing (i) the aggregate outstanding principal balance of the Loans held by that Lender by (ii) the outstanding principal balance of the Loans held by all Lenders.

“PUC”:  the public utilities commission for the state or any other jurisdiction in which all or any portion of a Network is located, or any successor agency, and any successor, in whole or in part, to its functions or jurisdictions, and any other Persons specified on Schedule 1.

“Regulatory Authorizations”:  all approvals, authorizations, licenses, filings, notices, registrations, consents, permits, exemptions, registrations, qualifications, designations, declarations, or other actions or undertakings now or hereafter made by, to or in respect of any telecommunications Governmental Authority, including any certificates of public convenience and all grants, approvals, licenses, filings and registrations from or to the FCC or PUC or under any Communications Law necessary in order to enable any Loan Party to provide telecommunications service of the type provided or proposed to be provided by such Loan Party and any authorizations specified on Schedule 1.

“Regulatory Event”:  any of the following events: (a) any Lender becomes subject to regulation as a “carrier,” a “telephone company,” a “common carrier,” a “public utility” or otherwise under any applicable law or governmental regulation, federal, state or local, solely as a result of the transactions contemplated by this Agreement and the other Loan Documents, or (b) any Loan Party becomes subject to regulation by any Governmental Authority in any way that is materially different from the regulation existing on the date of the Existing Loan Agreement and that could reasonably be expected to have a Material Adverse Effect or (c) the FCC or any PUC issues an order revoking, denying or refusing to renew, or recommending the revocation, denial or non-renewal of, any Regulatory Authorization that could reasonably be expected to have a Material Adverse Effect.

“Release”:  any release, threatened release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching

16

or migration of Hazardous Material in the indoor or outdoor environment, including the movement of Hazardous Material through or in the air, soil, surface water, ground water or property.

“Released Parties”: as defined in Section 12.20.

“Replacement Lender”: as defined in Section 2.18(d).

“Reportable Event”: (a) a reportable event described in Section 4043 of ERISA and regulations thereunder, (b) a withdrawal by a substantial employer from a Plan to which more than one employer contributes, as referred to in Section 4063(b) of ERISA or (c) a cessation of operations at a facility causing more than twenty percent (20%) of Plan participants to be separated from employment, as referred to in Section 4062(f) of ERISA.

“Required Consents”: the Governmental Authority approvals or consents of other Persons required with respect to each Loan Party’s execution, delivery and performance of this Agreement and the other Loan Documents, as defined in Schedule 5.4.

“Requirement of Law”: as to any Person, the Organizational Documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its properties or transactions or to which such Person or any of its property or transactions is subject, including all applicable common law and equitable principles, all provisions of all applicable state and federal constitutions, statutes, rules, regulations and orders of governmental bodies, all Permits or Regulatory Authorizations issued to Borrower, all Communications Laws and all Environmental Laws.

“Requisite Lenders”: (a) (i) Lenders having at least sixty-six and two-thirds percent (66 2/3%) of the sum of the Facility A Commitment and outstanding Facility B Loan of all Lenders or (ii) if the Facility A Commitment has been terminated, at least sixty-six and two-thirds percent (66 2/3%) of the aggregate outstanding amount of all Loans, as applicable, and (b) in no event, shall be fewer than three (3) Lenders. In the event that any Affiliate of a Loan Party shall become a Lender, such Lender’s Facility A Commitment and Loans shall not be taken into account in determining the Requisite Lenders. As of the Effective Date, no Lender is an Affiliate of any Loan Party.

“Responsible Officer”: of a Person, the chief executive officer, the president, the general counsel, the chief financial officer or the vice president of treasury operations of such Person.

“Secured Parties”: Administrative Agent and Lenders.

“Security Documents”: this Agreement, the Pledge Agreements, the Landlord Consents, all financing statements, and any other documents granting, evidencing, or perfecting any security interest or Lien with respect to or securing any of the Obligations.

“Site Leases”: collectively, all leases, subleases, tower leases, co-location agreements, license agreements, easements, use agreements, privileges, access agreements, right-of-way agreements and all other agreements relating to the use by any Loan Party of any Site.

“Site(s)”: any site where Equipment with a cost of more than $100,000 is located.

17

“Software” and “Software Licenses”:  any software now or hereafter owned by, or licensed to, any Loan Party or with respect to which such Loan Party has or may have license or use rights.

“Solvent”:  with respect to any Person on a particular date, that on such date (a) the present fair saleable value of the assets of such Person in a non-distressed sale is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature and (c) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities (such as litigation, guarantees and pension plan liabilities) at any time shall be computed as the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can be reasonably be expected to become an actual or matured liability.

“Stock”:  all shares, options, warrants, general or limited partnership or membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended).

“Subordinated Debt Investment”:  net cash proceeds of at least $5,000,000 in form and substance, including with respect to any terms and conditions thereto, acceptable to Administrative Agent and Requisite Lenders, in their sole and absolute discretion.

“Subordinated Debt Investment Documents”:  all agreements, instruments, documents and certificates executed and delivered in connection with the Subordinated Debt Investment or the transactions contemplated thereby, including all appendices, exhibits or schedules thereto.

“Subsidiary”:  with respect to any Person, (a) any corporation of which an aggregate of more than fifty percent (50%) of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person and/or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of fifty percent (50%) or more of such Stock, whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) or of which any such Person is a general partner or may exercise the powers of a general partner.

“System Agreements”:  any and all agreements and documents executed by or delivered by or to any Loan Party at any time in connection with any Network or its acquisition, construction or operation, including all management and maintenance agreements, agreements for storage or warehousing of Collateral, Site Leases and interconnection agreements.

“Taxes”:  taxes, levies, imposts, deductions, Charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on or measured by the net income of Administrative Agent or a Lender by the jurisdiction under which Administrative Agent or any

18

Lender is organized or from which it makes its Loans or any political subdivision of either thereof.

“Telecommunications Acquisition”:  the acquisition of a Telecommunications Business effected by (a) a merger with a Loan Party in which the Loan Party is the surviving entity, (b) an acquisition of assets by a Loan Party, (c) an acquisition of Stock by Holdings or (d) a merger of a newly created wholly-owned first tier Subsidiary of Holdings into another Person, which, upon the merger, becomes a wholly-owned Subsidiary of Holdings and a Borrower.

“Telecommunications Business”:  the business of primarily (a) transmitting, or providing services relating to the transmission of voice, fax, video or data through owned or leased transmission facilities or the provision of Internet related or other enhanced services (“Telecommunications Services”), (b) creating, developing or marketing communications related network equipment, software and other devices for use in a Telecommunications Services, (c) owning, developing or operating assets related to Telecommunications Services, (d) owning, developing or operating back-office or support systems related to Telecommunications Services or (e) evaluating, participating or pursuing any other activity or opportunity that is primarily related to those identified in clause (a), (b), (c) or (d) above.

“Termination Date”:  the date on which the Loans have been indefeasibly repaid in full and all other amounts then due and payable under this Agreement or any of the other Loan Documents have been indefeasibly paid in full and Letter of Credit Obligations have been cash collateralized, canceled or backed by stand-by letters of credit in accordance with Annex I, and no Borrower shall have any further right to borrow any monies under this Agreement.

“Total Debt”:  Without duplication, (a) all Indebtedness of any Loan Party (other than Indebtedness under clause (e) of the definition thereof), (b) all guarantees by any Loan Party of Indebtedness of any Person other than a Loan Party and (c) all liabilities of any Person other than a Loan Party secured by any Lien on property of any Loan Party; provided, that the amount of such obligation shall be the lesser of the stated or determinable amount of such obligation and the value of the property securing the same.

“Total Debt Service”:  the sum, for any period, of: (a) scheduled principal payments on Total Debt and (b) Net Interest Expense (excluding any portion thereof not paid in cash).

“Total Leverage Ratio”:  for any period, Net Total Debt as of the last day of such period divided by EBITDAR for any period of twelve (12) consecutive Fiscal Months.

“UCC”:  the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code of another jurisdiction, to the extent it may be required to apply to any item or items of Collateral.

“Working Capital”:  for any date, Current Assets minus Current Liabilities.

1.2    Accounting Principles; Subsidiaries.      Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), consistently applied, and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP. If at any time a Loan Party has any Subsidiaries, all accounting and financial terms herein shall be deemed to include references to consolidated and consolidating principles, and

19

covenants, representations and agreements with respect to a Loan Party and its properties and activities shall be deemed to refer to such Loan Party and its consolidated Subsidiaries collectively. For purposes of Section 8.15, GAAP shall be determined on the basis of such principles in effect on the date of the most recent annual audited Financial Statements provided hereunder (or if prior to delivery of the first such annual audited Financial Statements hereunder, then on a basis consistent with the annual audited Financial Statements referenced in Section 5.10); provided, however, that if due to a change in application of GAAP or the rules promulgated with respect thereto, (i) Borrower Representative shall object to determination of compliance with the financial covenants in Section 8.15 on such basis or (ii) Administrative Agent or Requisite Lenders shall object to determination of compliance therewith on such basis within thirty (30) days after delivery of such Financial Statements, then such calculations shall be made on a basis consistent with the most recent Financial Statements delivered as to which no such objection shall have been made.

1.3    UCC Terms.    Except as otherwise provided or amplified (but not limited) herein, terms used in this Agreement that are defined in the UCC shall have the same meanings herein.

1.4    General Construction; Captions.    All definitions and other terms used in this Agreement shall be equally applicable to the singular and plural forms thereof, and all references to any gender shall include all other genders. The words “hereof,” “hereto,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular Article, Section, subsection or clause in this Agreement. References herein to an Exhibit, Schedule, Article, Section, subsection or clause refer to the appropriate Exhibit, Schedule, Article, Section, subsection or clause in this Agreement unless otherwise specified. The word “including” shall have the meaning represented by the phrase “including, without limitation.” The captions and table of contents in this Agreement and the other Loan Documents are for convenience only, and in no way limit or amplify the provisions hereof.

1.5    References to Documents and Laws.    All defined terms and references in this Agreement or the other Loan Documents with respect to any agreements, notes, instruments, certificates or other documents shall be deemed to refer to such documents and to any amendments, modifications, renewals, extensions, replacements, restatements, substitutions and supplements of and to such documents. All references to Laws shall include any amendments thereof and any successor statutes and regulations.

ARTICLE 2:  LOANS

2.1    Facility A.    Borrowers acknowledge and confirm that Lenders made and that there are outstanding Facility A Advances under the Existing Loan Agreement in an amount equal to $25,000,000 in the aggregate which shall be deemed to be a Facility A Loan hereunder on the Effective Date. Subject to the terms and conditions hereof, each Lender agrees to continue to make available from time to time until the Facility A Commitment Termination Date its Pro Rata Share of all Facility A Advances. The Pro Rata Share of any Lender of the Facility A Loan shall not at any time exceed such Lender’s Facility A Commitment. The obligations of each Lender hereunder shall be several and not joint. Until the Facility A Commitment Termination Date, Borrowers may from time to time borrow, repay and reborrow under this Section 2.1.

2.2    Facility B.    Borrowers acknowledge and confirm that (a) Lenders made and that there is outstanding a Facility B Loan under the Existing Loan Agreement in an amount equal to $110,937,500 and (b) after giving effect to the Facility B Loan Payment, there will be outstanding

20

a Facility B Loan in an amount equal to $102,937,500 which shall be deemed to be a Facility B Loan hereunder on the Effective Date.

2.3    Notes.

(a)  Borrowers shall execute and deliver to each Lender a note to evidence the Facility A Commitment of that Lender.

Each note shall be in the principal amount of the Facility A Commitment of the applicable Lender, dated the Effective Date, and substantially in the form of Exhibit A-1 (each a “Facility A Note” and, collectively, the “Facility A Notes”). Each Facility A Note shall represent the obligation of each Borrower to pay the amount of each Lender’s Facility A Commitment or, if less, the applicable Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Facility A Advances to such Borrower together with interest thereon as prescribed in Section 2.11.

(b)  Borrowers shall execute and deliver to each Lender a note to evidence the Facility B Loan of that Lender. Each

note shall be in the principal amount of the Facility B Loan of the applicable Lender, dated the Effective Date, and substantially in the form of Exhibit A-2 (each a “Facility B Note” and, collectively, the “Facility B Notes”). Each Facility B Note shall represent the obligation of each Borrower to pay the amount of each Lender’s Facility B Loan to such Borrower together with interest thereon as prescribed in Section 2.11.

2.4    Letters of Credit.    Subject to and in accordance with the terms and conditions contained herein and in Annex I, Borrower Representative shall have the right to request, and Lenders agree to incur, or purchase participations in, Letter of Credit Obligations for the account of Borrowers.

2.5    Reliance on Notices; Appointment of Borrower Representative.    Administrative Agent and each Lender shall be entitled to rely upon, and shall be fully protected in relying upon, any Borrowing Certificate, Notice of Conversion/Continuation or similar notice believed by Administrative Agent or such Lender to be genuine. Administrative Agent and each Lender may assume that each Person executing and delivering such a notice was duly authorized, unless the responsible individual acting thereon for Administrative Agent or such Lender has actual knowledge to the contrary. Each Borrower hereby designates Holdings as its representative and agent on its behalf for the purposes of issuing Borrowing Certificates and Notices of Conversion/Continuation, giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, requesting Letters of Credit, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Loan Documents (Holdings, in that capacity, being “Borrower Representative”). Holdings hereby accepts such appointment. Administrative Agent and each Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers, and may give any notice or communication required or permitted to be given to any Borrower or Borrowers hereunder to Borrower Representative on behalf of such Borrower or Borrowers. Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

21

2.6    Procedures for Borrowing.

(a)  Borrowing Certificates.    To request a Facility A Advance hereunder, Borrower Representative shall send to Administrative Agent a completed Borrowing Certificate at least three (3) Business Days prior to the requested Borrowing Date for LIBOR Loans and one (1) Business Day prior to the requested Borrowing Date for Base Rate Loans. Each Borrowing Certificate shall specify therein (i) the requested Borrowing Date, (ii) the aggregate amount of such Facility A Advance, (iii) the amount thereof, if any, requested to be LIBOR Loans and (iv) the initial LIBOR Period or Periods for any such LIBOR Loans. The Loans shall be made as Base Rate Loans unless (subject to Section 2.18) the Borrowing Certificate specifies that all or a portion thereof shall be LIBOR Loans. All LIBOR Loans shall comply with Section 2.11(e).

Each Borrowing Certificate shall be irrevocable and binding on Borrowers. In the case of any requested Facility A Advance which the related Borrowing Certificate specifies is to be comprised of LIBOR Loans, Borrowers shall, jointly and severally, indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Borrowing Certificate for such requested Facility A Advance the applicable conditions set forth in Article 7, including any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund any LIBOR Loan to be made by such Lender as part of such requested Facility A Advance when such LIBOR Loan, as a result of such failure, is not made on such date.

(b)  Lender’s Obligation.    The failure of any Lender to make the Facility A Advance to be made by it as part of and Loan shall not relieve any other Lender of its obligation, if any, hereunder to make its Facility A Advance on such Borrowing Date, but no Lender shall be responsible for the failure of any other Lender to make the Facility A Advance to be made by such other Lender on the Borrowing Date.

(c)  Facility A Advances.    Each Facility A Advance (other than the last Facility A Advance) shall be in an aggregate

principal amount of not less than $1,000,000 and integral multiples of $100,000 in excess thereof. No amount may be borrowed hereunder on or after the Facility A Commitment Termination Date applicable to the proposed Facility A Advance.

2.7    Facility B Loan Amortization.    The Facility B Loan shall be amortized according to Schedule 2.7.

2.8    Intentionally Omitted.

2.9    Maturity.

(a)  The entire unpaid balance of the aggregate Facility A Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Facility A Commitment Termination Date, if not sooner paid in full pursuant to Section 2.10.

(b)  The entire unpaid balance of the aggregate Facility B Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Facility B Loan Maturity Date, if not sooner paid in full pursuant to Section 2.10.

22

2.10    Prepayments; Commitment Reductions.

(a)  Voluntary Prepayments.

(i)  Borrowers may, at their option, at any time and from time to time, in whole or in part, voluntarily

prepay all or part of any Loan upon three (3) Business Days’ prior written notice to Administrative Agent, specifying the date and amount of prepayment, in a minimum amount of $1,000,000, plus all accrued but unpaid interest thereon and any LIBOR funding breakage costs in accordance with Section 2.15(b). Such notice shall be irrevocable and the principal amount specified in such notice shall be due and payable on the date specified together with accrued interest on the amount prepaid. Any prepayment of the Facility A Loan made by Borrowers pursuant to this clause (a) shall be applied as follows: first, to Fees and reimbursable expenses of Administrative Agent then due and payable pursuant to any of the Loan Documents; second, to interest then due and payable on the Facility A Loan; third, to prepay the Facility A Loan; and fourth, to any Letter of Credit Obligations of Borrowers to provide cash collateral therefore in the manner set forth in Annex I, until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex I. Any prepayments of the Facility B Loan made by Borrowers pursuant to this clause (a) shall be applied as follows: first, to Fees and reimbursable expenses of Administrative Agent then due and payable pursuant to any of the Loan Documents; second, to interest then due and payable on the Facility B Loan; third, to prepay the scheduled installments of the Facility B Loan comprised of Deferred Amortization in the inverse order of maturity; and fourth, to prepay the scheduled installments of the Facility B Loan comprised of Original Amortization in the inverse order of maturity. Notwithstanding the foregoing, until payment in full of the Deferred Amortization, Borrower may not make any prepayment to the Facility A Loan.

(ii)  Borrowers may, at their option, at any time, permanently reduce from time to time or terminate the

Facility A Commitment in a minimum amount of $1,000,000; provided, however, that the Facility A Commitment shall not be reduced to an amount less than the outstanding principal amount of the Facility A Loan.

(b)  Mandatory Prepayments.

(i)  Asset Dispositions.    In the event of receipt by any Loan Party of proceeds of any Asset Disposition

(including insurance recoveries and condemnation proceeds); Borrowers shall prepay the Loans in an amount equal to all such cash proceeds, as and when received, net of (A) commissions and other reasonable and customary transaction costs, fees and expenses properly attributable to such transaction and payable by such Loan Party in connection therewith (in each case, paid to non-Affiliates), (B) transfer taxes and (C) an appropriate reserve for income taxes in accordance with GAAP in connection therewith. Any such prepayment shall be applied in accordance with clause (c) of this Section 2.10.

(ii)  Sale or Issuance of Stock or Indebtedness.    No later than the Business Day following the receipt by

Holdings of any proceeds from (A) a sale or issuance of Stock by Holdings or (B) the issuance or incurrence of any Indebtedness (excluding Permitted Debt incurred pursuant to clauses (a), (b), (c), (e) and (f) of the definition thereof) by Holdings or any of its Subsidiaries, in each case, Borrowers shall prepay the Loans in an amount equal to (A) during the Deferral Period, (I) twenty-five percent (25%) of the cash proceeds thereof up to and including the amount of $10,000,000, and (II) fifty percent (50%) of the cash proceeds thereof in excess of $10,000,000, (B) thereafter until repayment in full of the Deferred Amortization, one hundred percent (100%) of the cash proceeds thereof, and (C) upon repayment in full of the

23

Deferred Amortization, one hundred percent (100%) of the cash proceeds solely from the sale or issuance of Stock by Holdings. Any cash proceeds applied in respect of the sale or issuance of Stock by Holdings shall be (A) exclusive of 100% of proceeds from the exercise of options granted pursuant to equity-based compensation arrangements, the issuance of stock pursuant to employee stock purchase plans and the exercise of warrants and (B) net of underwriting discounts and commissions and other reasonable costs paid to non-Affiliates in connection therewith. Any such prepayment shall be applied in accordance with clause (c) of this Section 2.10.

(iii)  Excess Cash Flow.    After repayment in full of the Deferred Amortization, Borrowers shall prepay the Loans, in an amount equal to fifty percent (50%) of Excess Cash Flow, in each case for each Fiscal Year, which payment shall be made on the earlier of the date which is ten (10) days after (A) the date on which Holdings’ annual audited Financial Statements for the immediately preceding Fiscal Year are delivered pursuant to Section 8.1 or (B) the date on which such annual audited Financial Statements were required to be delivered pursuant to Section 8.1.

(iv)  Alternate Working Capital.    Until repayment in full of the Deferred Amortization, Borrowers shall prepay the Loans in an amount equal to one hundred percent (100%) of the Alternate Working Capital for each Fiscal Month, which payment shall be made on the earlier of the date which is five (5) days after (A) the date on which Holdings’ unaudited Financial Statements for the immediately preceding Fiscal Month are delivered pursuant to Section 8.1 or (B) the date on which such monthly unaudited Financial Statements were required to be delivered pursuant to Section 8.1.

(v)  Subordinated Debt Investment Interest Prepayment.    Borrowers shall prepay the Loans, in an amount equal to 5% per annum on the original principal amount of the Subordinated Debt Investment and on any other Permitted Subordinated Debt incurred prior to the repayment in full of the Deferred Amortization, which payment shall be made on the date of any payment (in Cash) of interest on such Subordinated Debt Investment or Permitted Subordinated Debt. For purposes of greater clarity, no prepayment is required under this clause (v) unless cash payment is made on the Subordinated Debt Investment or Permitted Subordinated Debt, as applicable.

(c)  Application of Mandatory Prepayments.

(i)  Any prepayments made by Borrowers pursuant to clause (b)(ii), b(iii), b(iv) or b(v) of this Section 2.10 above shall be applied as follows: first, to Fees and reimbursable expenses of Administrative Agent then due and payable pursuant to any of the Loan Documents; second, to interest then due and payable on the Facility B Loan; third, to prepay the scheduled principal installments of the Facility B Loan attributable to the Deferred Amortization component of such installment in inverse order of maturity until such Deferred Amortization shall have been prepaid in full; fourth, to prepay the scheduled principal installments of the Facility B Loan attributable to the Original Amortization component of such installment in the inverse order of maturity until such Original Amortization shall have been prepaid in full; fifth, to interest then due and payable on the Facility A Advances; sixth, to the principal balance of the Facility A Advances outstanding until the same shall have been paid in full; seventh, to any Letter of Credit Obligations of Borrowers to provide cash collateral therefor in the manner set forth in Annex I, until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex I.

24

(ii)  Any prepayments made by Borrowers pursuant to clause (b)(i) of this Section 2.10 above shall be

applied as follows: first, to Fees and reimbursable expenses of Administrative Agent then due and payable pursuant to any of the Loan Documents; second, to interest then due and payable on the Facility B Loan; third, to prepay the scheduled principal installments of the Facility B Loan attributable to the Original Amortization component of such installment in inverse order of maturity until such Original Amortization shall have been prepaid in full; fourth, to prepay the scheduled principal installments of the Facility B Loan attributable to the Deferred Amortization component of such installment in the inverse order of maturity until such Deferred Amortization shall have been prepaid in full; fifth, to interest then due and payable on the Facility A Advances; sixth, to the principal balance of the Facility A Advances outstanding until the same shall have been paid in full; seventh to any Letter of Credit Obligations of Borrowers to provide cash collateral therefor in the manner set forth in Annex I, until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex I.

2.11     Interest and Applicable Margins.

(a)  Borrowers shall pay interest to Administrative Agent, for the ratable benefit of Lenders in accordance with the

various Loans being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates: (i) the Base Rate plus the Applicable Base Margin per annum or (ii) at the election of Borrower Representative and, if permitted herein, the applicable LIBOR Rate plus the Applicable LIBOR Margin per annum, based on the aggregate amount of Loans outstanding from time to time.

(b)  Additional interest shall accrue on the Deferred Amortization from the date such Deferred Amortization would

have been paid under the Existing Loan Agreement to and including the date such Deferred Amortization is paid in full at the rate of 10.00% per annum (the “Additional Interest”). Borrowers shall pay Additional Interest to Administrative Agent, for the ratable benefit of Lenders in accordance with each Lender’s Pro Rata Share of the Facility B Loan, on the earlier of (i) the Facility B Loan Maturity Date and (ii) the date of repayment in full of the Facility B Loans.

Solely for purposes of calculating the Additional Interest (i) the Facility B Loan Payment shall be applied against

the Deferred Amortization in direct order of maturity (i.e. $4,687,500 to the amount of the fourth Fiscal Quarter 2002 payment due under the Existing Loan Agreement and deferred hereunder and $3,312,500 to the amount of the first Fiscal Quarter 2003 payment due under the Existing Loan Agreement and deferred hereunder) and (ii) all mandatory prepayments and voluntary prepayments shall be applied in the manner set forth in Section 2.13.

(c)  If any payment on any Loan becomes due and payable on a day other than a Business Day, the maturity thereof

will be extended to the next succeeding Business Day (except as set forth in the definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

(d)  All computations of Fees calculated on a per annum basis and of interest shall be made by Administrative

Agent on the basis of a three hundred sixty (360) day year, in each case for the actual number of days occurring in the period for which such interest and Fees are payable. The Base Rate shall be determined each day based upon the Base Rate as in effect each day. Each determination by Administrative Agent of an interest rate and Fees hereunder shall be conclusive, absent manifest error.

25

(e)  As long as an Event of Default shall have occurred and be continuing under Section 10.1(a), (j) or (k) or as long

as any other Event of Default shall have occurred and be continuing, at the election of Requisite Lenders confirmed by written notice to Borrower Representative, the interest rates applicable to the Loans and the Letter of Credit Fees shall be increased by two percent (2%) per annum above the rates of interest or the rate of such Fees otherwise applicable hereunder (“Default Rate”), and all outstanding Obligations shall bear interest at the Default Rate applicable to such Obligations. Interest and Letter of Credit Fees at the Default Rate shall accrue from the initial date of such Event of Default until that Event of Default is cured or waived and shall be payable upon demand.

(f)  As long as no Default or Event of Default shall have occurred and be continuing, Borrower Representative shall

have the option to (i) request that any Facility A Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans from Base Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to a Base Rate Loan, subject to payment of LIBOR funding breakage costs in accordance with Section 2.15(b) if such conversion is made prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of any Loan as a LIBOR Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan shall commence on the last day of the LIBOR Period of the Loan to be continued. Any Loan to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $1,000,000 and integral multiples of $100,000 in excess of such amount. Any such election must be made by 11:00 a.m. (New York time) on the third (3rd) Business Day prior to (1) the date of any proposed Facility A Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be continued as such or (3) the date on which Borrower Representative wishes to convert any Base Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower Representative in such election. If no election is received with respect to a LIBOR Loan by 11:00 a.m. (New York time) on the third (3rd) Business Day prior to the end of the LIBOR Period with respect thereto (or if an Event of Default shall have occurred and be continuing), that LIBOR Loan shall be converted to a Base Rate Loan at the end of its LIBOR Period. Borrower Representative must make such election by notice to Administrative Agent in writing, by telecopy or overnight courier. In the case of any conversion or continuation, such election must be made pursuant to a written notice (a “Notice of Conversion/Continuation”) in the form of Exhibit C.

(g)  Notwithstanding anything to the contrary set forth in this Section 2.11, if a court of competent jurisdiction

determines in a final order that the rate of interest payable hereunder exceeds the highest rate of interest permissible under law (the “Maximum Lawful Rate”), then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder shall be equal to the Maximum Lawful Rate; provided, however, that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by Administrative Agent, on behalf of Lenders, is equal to the total interest which would have been received had the interest rate payable hereunder been (but for the operation of this paragraph) the interest rate payable since the date of the making of the applicable Loan as otherwise provided in this Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of interest and in the manner provided in Sections 2.11(a) through (e) above unless and until the rate of interest again exceeds the Maximum Lawful Rate, and at that time this paragraph shall again apply. In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the amount which such Lender could lawfully have received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is calculated pursuant to this paragraph, such interest shall be

26

calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made. If, notwithstanding the provisions of this Section 2.11(f), a court of competent jurisdiction shall finally determine that a Lender has received interest hereunder in excess of the Maximum Lawful Rate, Administrative Agent shall, to the extent permitted by applicable law, promptly apply such excess in the order specified in Section 2.13 and thereafter shall refund any excess to Borrowers or as a court of competent jurisdiction may otherwise order.

2.12    Payments.    All payments and prepayments to be made in respect of principal, interest or other amounts due from

Borrowers hereunder or under any other Loan Document shall be payable on or before 1:00 p.m., New York time, on the day when due, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, and an action therefor shall immediately accrue. Such payments shall be made to Administrative Agent at Administrative Agent’s office at 10 Riverview Drive, Danbury, Connecticut 06810, Attn: TFS/US LEC Portfolio Manager or such other location specified in writing by Administrative Agent, in immediately available funds, without set off, recoupment, counterclaims or any other deduction of any nature. Payments received after 1:00 p.m., New York time, on any Business Day shall be deemed to have been received on the following Business Day.

2.13     Application and Allocation of Payments.

(a)  As long as no Default or Event of Default shall have occurred and be continuing (i) payments matching

specific scheduled payments then due shall be applied to those scheduled payments; (ii) voluntary prepayments shall be applied as set forth in Section 2.10(a); and (iii) mandatory prepayments shall be applied as set forth in Section 2.10(c). All payments and prepayments applied to a particular Loan shall be applied ratably to the portion thereof held by each Lender as determined by its Pro Rata Share. As to each other payment, and as to all payments made when an Event of Default shall have occurred and be continuing or following the Facility A Commitment Termination Date, each Borrower hereby irrevocably waives the right to direct the application of any and all payments received from or on behalf of such Borrower, and each Borrower hereby irrevocably agrees that Administrative Agent shall have the continuing exclusive right to apply any and all such payments against the Obligations of Borrowers as Administrative Agent may deem advisable notwithstanding any previous entry by Administrative Agent in the Loan Account or any other books and records. In the absence of a specific determination by all Lenders and Administrative Agent with respect thereto, payments shall be applied to amounts then due and payable in the following order: (1) to Fees and Administrative Agent’s and Lenders’ expenses reimbursable hereunder; (2) to interest on the Loans, ratably in proportion to the interest accrued as to each Loan; (3) to principal payments on the Loans and to provide cash collateral for Letter of Credit Obligations in the manner described in Annex I, ratably to the aggregate, combined principal balance of the Loans and outstanding Letter of Credit Obligations (such prepayments of the Facility B Loan to be applied in the inverse order of maturity and first to the Original Amortization component of each installment and thereafter to the Deferred Amortization component of each installment); and (4) to all other Obligations including expenses of Lenders to the extent reimbursable under Section 2.21.

(b)  Administrative Agent is authorized to, and at its sole election may, charge to the Facility A Loan balance on

behalf of each Borrower and cause to be paid all Fees, expenses, Charges, costs (including insurance premiums in accordance with Section 8.7(a)) and interest and principal, other than principal of the Facility A Loan, owing by Borrowers under this Agreement or any of the other Loan Documents if and to the extent Borrowers fail to promptly pay any such amounts as and when due, even if such charges would cause the balance of the aggregate Facility

27

A Loan to exceed the Facility A Commitment. At Administrative Agent’s option and to the extent permitted by law, any charges so made shall constitute part of the Facility A Loan hereunder.

2.14    Loan Account and Accounting.    Administrative Agent shall maintain a loan account (the “Loan Account”) on its books to record: all Facility A Advances, all Loans, all payments made by Borrowers, and all other debits and credits as provided in this Agreement with respect to the Loans or any other Obligations. All entries in the Loan Account shall be made in accordance with Administrative Agent’s customary accounting practices as in effect from time to time. The balance in the Loan Account, as recorded on Administrative Agent’s most recent printout or other written statement, shall, absent manifest error, be presumptive evidence of the amounts due and owing to Administrative Agent and Lenders by Borrowers; provided, however, that any failure to so record or any error in so recording shall not limit or otherwise affect any Borrower’s duty to pay the Obligations. Administrative Agent shall render to Borrower Representative a monthly accounting of transactions with respect to the Loans setting forth the balance of the Loan Account. Unless Borrower Representative notifies Administrative Agent in writing of any objection to any such accounting (specifically describing the basis for such objection), within thirty (30) days after the date thereof, each and every such accounting shall (absent manifest error) be deemed final, binding and conclusive upon Borrowers in all respects as to all matters reflected therein. Only those items expressly objected to in such notice shall be deemed to be disputed by Borrowers. Notwithstanding any provision herein contained to the contrary, any Lender may elect (which election may be revoked) to dispense with the issuance of Notes to that Lender and may rely on the Loan Account as evidence of the amount of Obligations from time to time owing to it.

2.15    Indemnity.

(a)  Each Loan Party that is a signatory hereto shall jointly and severally indemnify and hold harmless each of Administrative Agent, Syndication Agent, Documentation Agent, Lenders and their respective Affiliates, and each such Person’s respective officers, directors, employees, attorneys, agents and representatives (each, an “Indemnified Person”), from and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including reasonable attorneys’ fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal) which may be instituted or asserted against or incurred by any such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents and the administration of such credit, and in connection with or arising out of the transactions contemplated hereunder and thereunder and any actions or failures to act in connection therewith, including any and all Environmental Liabilities and legal costs and expenses arising out of or incurred in connection with disputes between or among any parties to any of the Loan Documents (collectively, “Indemnified Liabilities”); provided, however, that no such Loan Party shall be liable for any indemnification to an Indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense results from that Indemnified Person’s gross negligence or willful misconduct or material and knowing breach of its obligations and this Agreement. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED

28

UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

(b)  To induce Lenders to provide the LIBOR Rate option on the terms provided herein, if (i) any LIBOR Loans

are repaid in whole or in part prior to the last day of any applicable LIBOR Period (whether that repayment is made pursuant to any provision of this Agreement or any other Loan Document or is the result of acceleration, by operation of law or otherwise); (ii) any Borrower shall default in payment when due of the principal amount of or interest on any LIBOR Loan; (iii) any Borrower shall default in making any borrowing of, conversion into or continuation of LIBOR Loans after Borrower Representative has given notice requesting the same in accordance herewith; or (iv) any Borrower shall fail to make any prepayment of a LIBOR Loan after Borrower Representative has given a notice thereof in accordance herewith, Borrowers shall jointly and severally indemnify and hold harmless each Lender from and against all losses, costs and expenses resulting from or arising from any of the foregoing. Such indemnification shall include any loss (including loss of margin) or expense arising from the reemployment of funds obtained by it or from fees payable to terminate deposits from which such funds were obtained. For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to have actually funded its relevant LIBOR Loan through the purchase of a deposit which bears interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a maturity comparable to the relevant LIBOR Period; provided, however, that each Lender may fund each of its LIBOR Loans in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this subsection. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. As promptly as practicable under the circumstances, each Lender shall provide Borrower Representative with its written calculation of all amounts payable pursuant to this Section 2.15, and such calculation shall be presumed correct (absent manifest error) and shall be binding on the parties hereto unless Borrower Representative shall object in writing within thirty (30) Business Days of receipt thereof, specifying the basis for such objection in detail.

2.16    Access.    Each Loan Party which is a party hereto shall, during normal business hours, from time to time upon one (1) Business Day’s prior notice as frequently as Administrative Agent determines to be appropriate: (a) provide any Agent and any of its officers, employees and agents (and, during the continuance of an Event of Default, any Lender and any of its officers, employees and agents) access to the properties, facilities, advisors and employees (including officers) of such Loan Party and to the Collateral, (b) permit any Agent, each Lender and any of their officers, employees and agents, to inspect, audit and make extracts from such Loan Party’s books and records and (c) permit Administrative Agent, each Lender and their officers, employees and agents, to inspect, review, evaluate and make test verifications and counts of the Accounts, Equipment, Inventory and other Collateral of such Loan Party. If a Default or Event of Default shall have occurred and be continuing or if access is necessary to preserve or protect the Collateral as determined by Administrative Agent, each such Loan Party shall provide such access to Administrative Agent and to each Lender at all times and without advance notice. Furthermore, as long as any Event of Default shall have occurred and be continuing, each such Loan Party shall provide Administrative Agent and each Lender with access to their suppliers and customers. Each Loan Party shall make available to Administrative Agent, each Lender and their respective counsel, as quickly as is possible under the circumstances, originals or copies of all books and records which Administrative Agent may request. Each Loan Party shall deliver any document or instrument necessary for Administrative Agent or each Lender, as it may from time to time request, to obtain records from any service bureau or other Person which maintains records for such Loan Party, and shall maintain duplicate records or supporting documentation on

29

media, including computer tapes and discs owned by such Loan Party. Any Lender or its representatives (other than any Person in the telecommunications business), upon request by such Lender to Administrative Agent, may accompany Administrative Agent on any such visit.

2.17    Taxes.

(a)  Any and all payments by Borrowers hereunder (including any payments made pursuant to Article 11 or under

any other Loan Document) shall be made, in accordance with this Section 2.17, free and clear of and without deduction for any and all present or future Taxes. If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder (including any sum payable pursuant to Article 11 or under any other Loan Document), (i) the sum payable shall be increased as much as shall be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.17) Administrative Agent or Lenders, as applicable, receive an amount equal to the sum they would have received had no such deductions been made, (ii) such Borrower shall make such deductions, and (iii) such Borrower shall pay the full amount deducted to the relevant taxing or other authority in accordance with applicable law. Within thirty (30) days after the date of any payment of Taxes, Borrower Representative shall furnish to Administrative Agent the original or a certified copy of a receipt evidencing payment thereof.

(b)  Each Loan Party that is a signatory hereto shall jointly and severally indemnify and, within ten (10) days of

demand therefor, pay Administrative Agent and each Lender for the full amount of Taxes (including any Taxes imposed by any jurisdiction on amounts payable under this Section 2.17) paid by Administrative Agent or such Lender, as appropriate, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted.

2.18    Capital Adequacy; Increased Costs; Illegality.

(a)  If any Lender shall have determined that any law, treaty, governmental (or quasi-governmental) rule,

regulation, guideline or order regarding capital adequacy, reserve requirements or similar requirements or compliance by any Lender with any request or directive regarding capital adequacy, reserve requirements or similar requirements (whether or not having the force of law), in each case, adopted after the date hereof, from any central bank or other Governmental Authority increases or would have the effect of increasing the amount of capital, reserves or other funds required to be maintained by such Lender and thereby reducing the rate of return on such Lender’s capital as a consequence of its obligations hereunder, then Borrowers shall from time to time upon demand by such Lender made within ninety (90) days of the occurrence thereof (with a copy of such demand to Administrative Agent) pay to Administrative Agent, for the account of such Lender, additional amounts sufficient to compensate such Lender for such reduction. A certificate as to the amount of that reduction and showing the basis of the computation thereof submitted by such Lender to Borrower Representative and to Administrative Agent shall, absent manifest error, be final, conclusive and binding for all purposes.

(b)  If, due to either (i) the introduction of or any change in any law or regulation (or any change in the

interpretation thereof) or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), in each case adopted after the date hereof, there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any Loan, then Borrowers shall from time to time, upon demand by such Lender (with a copy of such demand to Administrative Agent), pay to Administrative Agent for the account of such Lender additional amounts sufficient to compensate

30

such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to Borrower Representative and to Administrative Agent by such Lender, shall be conclusive and binding on Borrowers for all purposes, absent manifest error. Each Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred to above which would result in any such increased cost, but in any event within ninety (90) days thereof, the affected Lender shall, to the extent not inconsistent with such Lender’s internal policies of general application, use reasonable commercial efforts to minimize costs and expenses incurred by it and payable to it by Borrowers pursuant to this Section 2.18(b).

(c)  Notwithstanding anything to the contrary contained herein, if the introduction of or any change in any law or regulation (or any change in the interpretation thereof) shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to make or to continue to fund or maintain any LIBOR Loan, then, unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan at another branch or office of that Lender without, in that Lender’s opinion, adversely affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to Borrower Representative through Administrative Agent, (i) the obligation of such Lender to agree to make or to make or to continue to fund or maintain LIBOR Loans shall terminate and (ii) Borrowers shall forthwith prepay in full all outstanding LIBOR Loans owing by such Borrower to such Lender, together with interest accrued thereon, unless Borrower Representative on behalf of Borrowers, within five (5) Business Days after the delivery of such notice and demand, converts all such Loans into a Loan bearing interest based on the Base Rate.

(d)  Replacement of Lender in Respect of Increased Costs.    Within fifteen (15) days after receipt by Borrower Representative of written notice and demand from any Lender (an “Affected Lender”) for payment of additional amounts or increased costs as provided in Section 2.17, 2.18(a) or 2.18(b), Borrower Representative may, at its option, notify Administrative Agent and such Affected Lender of its intention to replace the Affected Lender. As long as no Default or Event of Default shall have occurred and be continuing, Borrower Representative, with the consent of Administrative Agent, may obtain, at Borrowers’ expense, a replacement Lender (“Replacement Lender”) for the Affected Lender, which Replacement Lender must be satisfactory to Administrative Agent. If Borrowers obtain a Replacement Lender within ninety (90) days following notice of their intention to do so, the Affected Lender must sell and assign its Loans and Facility A Commitment to such Replacement Lender for an amount equal to the principal balance of all Loans held by the Affected Lender and all accrued interest and Fees with respect thereto through the date of such sale; provided, however, that Borrowers shall have reimbursed such Affected Lender for the additional amounts or increased costs that it is entitled to receive under this Agreement through the date of such sale and assignment.

Notwithstanding the foregoing, Borrowers shall not have the right to obtain a Replacement Lender if the Affected Lender rescinds its demand for increased costs or additional amounts within fifteen (15) days following its receipt of Borrowers’ notice of intention to replace such Affected Lender. Furthermore, if Borrowers give a notice of intention to replace and do not so replace such Affected Lender within ninety (90) days thereafter, Borrowers’ rights under this Section 2.18(d) shall terminate and Borrowers shall promptly pay all increased costs or additional amounts demanded by such Affected Lender pursuant to Sections 2.17(a), 2.18(a) and 2.18(b).

2.19    Use of Proceeds.    (a)  Borrowers utilized the proceeds of the Facility B Loan under the Existing Loan Agreement solely for the financing of the acquisition, construction or improvement of telecommunication asset or assets which are an integral part of a Network in a

31

Market or any assets (not including any leasehold improvements except those leasehold improvements expended during the initial buildout of each switch site and related off-site sales office) which are at all times located at a Site or sales office in a Market or, to the extent other funds were used by the Loan Parties to acquire such assets, for general corporate purposes.

(b)  Borrowers shall utilize the proceeds of the Facility A Loan for Permitted Acquisitions, working capital or general corporate purposes, including capital expenditures and transaction costs.

2.20    Fees.    Borrower shall pay to Administrative Agent, for the ratable benefit of Lenders, the fees described on Schedule 2.20 in connection with this Agreement (the “Commitment Fees”).

2.21    Expenses.    Borrowers shall (a) pay or reimburse (i) Administrative Agent for all of its reasonable costs, fees, charges and expenses incurred or arising in connection with the negotiation, review, preparation and execution of this Agreement, the Loan Documents or any commitment or proposal letter and (ii) Administrative Agent (and, upon the occurrence and during the continuance of an Event of Default, each Lender) for all of its reasonable costs, fees, charges and expenses incurred or arising in connection with the negotiation, review, preparation and execution of any amendment, supplement, waiver, modification to, or restructuring of this Agreement, the Obligations or the other Loan Documents, including reasonable legal fees and disbursements, expenses, document charges and other charges and expenses of Administrative Agent, (b) pay or reimburse Administrative Agent for all of its reasonable costs, fees, charges and expenses incurred in connection with the administration and syndication of the Loans (including printing, distribution and bank meetings) and Administrative Agent and each Lender for all of its reasonable costs, fees, charges and expenses incurred in connection with the enforcement, protection or preservation of any rights under or in connection with this Agreement or any other Loan Documents, including reasonable legal fees and disbursements, audit fees and charges, and all out-of-pocket expenses, (c) pay, indemnify and hold Lenders harmless from any and all recording and filing fees and taxes and any and all liabilities with respect to, or resulting from any delay by any Loan Party in paying, stamp, excise and other taxes (excluding income and franchise taxes and Taxes of similar nature), if any, which may be payable or determined to be payable in connection with the execution and delivery or recordation or filing of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement and the other Loan Documents. All of the amounts described in this Section are referred to collectively as the “Lenders’ Expenses,” shall be payable upon demand, and shall accrue interest at the interest rate in effect when such demand is made from five (5) days after the date of demand until paid in full. All Lenders’ Expenses, and interest thereon, shall be part of the Obligations and shall be secured by the Collateral. The agreements in this Section 2.21 shall survive repayment of the Obligations. All Lenders’ Expenses that are outstanding on any Borrowing Date shall be paid before or with such advance. If Borrower Representative has not paid to Lenders the amount of all Lenders’ Expenses billed to Borrowers at least five (5) Business Days before such Borrowing Date, Lenders shall be authorized to retain from any Facility A Advance on such Borrowing Date the amount of such Lenders’ Expenses that remain unpaid. Borrowers’ obligation to pay Lenders’ Expenses shall not be limited by any limitation on the amount of the Commitment that may be designated as available for such purposes, and any amounts so designated shall be used to pay Lenders’ Expenses accrued at the time of any Facility A Advance before any of Borrowers’ legal fees or similar expenses.

32

ARTICLE 3: ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF

ADMINISTRATIVE AGENT

3.1    Assignment and Participations.

(a)  Loan Parties signatory hereto consent to any Lender’s assignment of, and/or sale of participations in, at any time or times, the Loan Documents, Loans, Letter of Credit Obligations and any Commitment or of any portion thereof or interest therein, including any Lender’s rights, title, interests, remedies, powers or duties thereunder, whether evidenced by a writing or not. Any assignment by a Lender shall (i) except in the case of assignments to existing Lenders, require the consent of Administrative Agent (which shall not be unreasonably withheld); (ii) require the execution of an assignment agreement (an “Assignment Agreement”) and the delivery by the assignee of a completed Administrative Questionnaire, substantially in the form attached hereto as Exhibit G and Exhibit H, respectively, and otherwise in form and substance satisfactory to, and acknowledged by, Administrative Agent; (iii) be conditioned on such assignee Lender representing to the assigning Lender and Administrative Agent that it is making the purchase for its own account, for investment purposes and not with a view to the distribution thereof; (iv) if a partial assignment, be in an amount at least equal to $5,000,000, be of the same Pro Rata Share of each of the Facility A Commitment and Facility B Loan and, after giving effect to any such partial assignment, the assigning Lender shall have retained a Facility A Commitment and Facility B Loan in an aggregate amount at least equal to $5,000,000; and (v) include a payment to Administrative Agent of an assignment fee of $3,500 by the assigning Lender. Notwithstanding the foregoing, an assignment to a Person that is engaged in the telecommunications industry in the Markets as its primary business activity and which is a competitor of any Loan Party shall require the consent of Borrower Representative. In the case of an assignment by a Lender under this Section 3.1, the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as it would if it were a Lender hereunder. The assigning Lender shall be relieved of its obligations hereunder with respect to its Facility A Commitment or assigned portion thereof from and after the date of such assignment. Each Borrower hereby acknowledges and agrees that any assignment will give rise to a direct obligation of Borrowers to the assignee and that the assignee shall be considered to be a “Lender.” In all instances, each Lender’s liability to make Loans hereunder shall be several and not joint and shall be limited to such Lender’s Pro Rata Share of the applicable Commitment. In the event any Lender assigns or otherwise transfers all or any part of the Obligations, any such Lender shall so notify Borrower Representative and Borrowers shall, upon the request of Administrative Agent or such Lender, execute a new Note in exchange for each Note, if any, or portion thereof being assigned. Notwithstanding the foregoing provisions of this Section 3.1(a), any Lender may at any time pledge the Obligations held by it and such Lender’s rights under this Agreement and the other Loan Documents to a Federal Reserve Bank, and any Lender that is an investment fund may assign the Obligations held by it and such Lender’s rights under this Agreement and the other Loan Documents to another investment fund managed by the same investment advisor; provided, however, that no such pledge to a Federal Reserve Bank or to another such investment fund shall release such Lender from such Lender’s obligations hereunder or under any other Loan Document.

(b)  Any participation by a Lender of all or any part of its Facility A Commitment shall be made with the understanding that all amounts payable by Borrowers hereunder shall be determined as if that Lender had not sold such participation, and that the holder of any such participation shall not be entitled to require such Lender to take or omit to take any action hereunder except actions directly affecting (i) any reduction in the principal amount of, or interest rate or Fees payable with respect to, any Loan in which such holder participates, (ii) any

33

extension of the scheduled amortization of the principal amount of any Loan in which such holder participates or the final maturity date thereof, and (iii) any release of all or substantially all of the Collateral (other than in accordance with the terms of this Agreement, the Collateral Documents or the other Loan Documents). Solely for purposes of Sections 2.15, 2.17, 2.18 and 3.8, each Borrower acknowledges and agrees that a participation shall give rise to a direct obligation of Borrowers to the participant and the participant shall be considered to be a “Lender.” Except as set forth in the preceding sentence no Borrower or Loan Party shall have any obligation or duty to any participant. Neither Administrative Agent nor any Lender (other than Lender selling a participation) shall have any duty to any participant and may continue to deal solely with Lender selling a participation as if no such sale had occurred.

(c)  Except as expressly provided in this Section 3.1, no Lender shall, as between any Loan Party and that Lender, or Administrative Agent and that Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or granting of participation in, all or any part of the Loans, the Notes or other Obligations owed to such Lender.

(d)  Each Loan Party executing this Agreement shall assist any Lender permitted to sell assignments or participations under this Section 3.1 as reasonably required to enable the assigning or selling Lender to effect any such assignment or participation, including the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and, if requested by Administrative Agent, the preparation of informational materials for, and the participation of management in meetings with, potential assignees or participants. Each Loan Party executing this Agreement shall certify the correctness, completeness and accuracy of all descriptions of such Loan Parties and its affairs contained in any selling materials provided by it and all other information provided by it and included in such materials, except that any Projections delivered by such Loan Party shall only be certified by such Loan Party as having been prepared by it in compliance with the representations contained in Section 5.10.

(e)  A Lender may furnish any information concerning Loan Parties in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants). Each Lender shall obtain from assignees or participants confidentiality covenants substantially equivalent to those contained in Section 12.16.

(f)  So long as no Event of Default shall have occurred and be continuing, no Lender shall assign or sell participations in any portion of its Loans or Facility A Commitment to a potential Lender or participant if, as of the date of the proposed assignment or sale, the assignee Lender or participant would be subject to capital adequacy or similar requirements under Section 2.18(a), increased costs under Section 2.18(b), an inability to fund LIBOR Loans under Section 2.18(c), or withholding taxes in accordance with Section 2.17(a).

3.2    Appointment of Administrative Agent.    GE Capital is hereby appointed to act on behalf of all Lenders as Administrative Agent under this Agreement and the other Loan Documents. The provisions of this Section 3.2 are solely for the benefit of Administrative Agent and Lenders and no Loan Party nor any other Person shall have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement and the other Loan Documents, Administrative Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for any Loan Party or any other Person. Administrative Agent shall have no duties or responsibilities except for those expressly set forth in this Agreement and the other Loan Documents. The duties of Administrative Agent shall be

34

mechanical and administrative in nature and Administrative Agent shall not have, or be deemed to have, by reason of this Agreement, any other Loan Document or otherwise a fiduciary relationship in respect of any Lender. Neither Administrative Agent nor any of its Affiliates nor any of their respective officers, directors, employees, agents or representatives shall be liable to any Lender for any action taken or omitted to be taken by it hereunder or under any other Loan Document, or in connection herewith or therewith, except for damages caused by its or their own gross negligence or willful misconduct.

If Administrative Agent shall request instructions from Requisite Lenders or all affected Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Loan Document, then Administrative Agent shall be entitled to refrain from such act or taking such action unless and until Administrative Agent shall have received instructions from Requisite Lenders or all affected Lenders, as the case may be, and Administrative Agent shall not incur liability to any Person by reason of so refraining. Administrative Agent shall be fully justified in failing or refusing to take any action hereunder or under any other Loan Document (a) if such action would, in the opinion of Administrative Agent, be contrary to law or the terms of this Agreement or any other Loan Document, (b) if such action would, in the opinion of Administrative Agent, expose Administrative Agent to Environmental Liabilities or (c) if Administrative Agent shall not first be indemnified to its satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Without limiting the foregoing, no Lender shall have any right of action whatsoever against Administrative Agent as a result of Administrative Agent acting or refraining from acting hereunder or under any other Loan Document in accordance with the instructions of Requisite Lenders or all affected Lenders, as applicable.

3.3    Administrative Agent’s Reliance, Etc.    Neither Administrative Agent nor any of its Affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except for damages caused by its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, Administrative Agent: (a) may treat the payee of any Note as the holder thereof until Administrative Agent receives written notice of the assignment or transfer thereof signed by such payee and in form satisfactory to Administrative Agent; (b) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Loan Party or to inspect the Collateral (including the books and records) of any Loan Party; (e) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (f) shall incur no liability under or in respect of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties.

3.4    GE Capital and Affiliates.    With respect to its Facility A Commitment and its Loans hereunder, GE Capital shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not

35

Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include GE Capital in its individual capacity. GE Capital and its Affiliates may lend money to, invest in, and generally engage in any kind of business with, any Loan Party, any of their Affiliates and any Person who may do business with or own securities of any Loan Party or any such Affiliate, all as if GE Capital were not Administrative Agent and without any duty to account therefor to Lenders. GE Capital and its Affiliates may accept fees and other consideration from any Loan Party for services in connection with this Agreement or otherwise without having to account for the same to Lenders. Each Lender acknowledges the potential conflict of interest between GE Capital as a Lender and GE Capital as Administrative Agent.

3.5    Lender Credit Decision.    Each Lender acknowledges that it has, independently and without reliance upon Administrative Agent or any other Lender and based on the Financial Statements referred to in Section 5.10 and such other documents and information as it has deemed appropriate, made its own credit and financial analysis of Loan Parties and its own decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. Each Lender acknowledges the potential conflict of interest of each other Lender as a result of Lenders holding disproportionate interests in the Loans, and expressly consents to, and waives any claim based upon, such conflict of interest.

3.6    Indemnification.    Lenders agree to indemnify Administrative Agent (to the extent Administrative Agent is not reimbursed by Loan Parties and without limiting the obligations of Loan Parties hereunder), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against Administrative Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by Administrative Agent in connection therewith; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Administrative Agent’s gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse Administrative Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, to the extent that Administrative Agent is not reimbursed for such expenses by Loan Parties.

3.7    Successor Administrative Agent.    Administrative Agent may resign at any time by giving not less than thirty (30) days’ prior written notice thereof to Lenders and Borrower Representative. Upon any such resignation, the Requisite Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Requisite Lenders and shall have accepted such appointment within thirty (30) days after the resigning Administrative Agent’s giving notice of resignation, then the resigning Administrative Agent may, on behalf of Lenders, appoint a successor Administrative Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at

36

least $300,000,000. If no successor Administrative Agent has been appointed pursuant to the foregoing by the 30th day after the date such notice of resignation was given by the resigning Administrative Agent, such resignation shall become effective and the Requisite Lenders shall thereafter perform all the duties of Administrative Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor Administrative Agent as provided above. Any successor Administrative Agent appointed by the Requisite Lenders hereunder shall be subject to the approval of Borrower Representative, such approval not to be unreasonably withheld or delayed; provided, however, that such approval shall not be required if a Default or Event of Default shall have occurred and be continuing. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Administrative Agent. Upon the earlier of the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent or the effective date of the resigning Administrative Agent’s resignation, the resigning Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents, except that any indemnity rights or other rights in favor of such resigning Administrative Agent shall continue. After any resigning Administrative Agent’s resignation hereunder, the provisions of this Section 3.7 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

3.8    Set Off and Sharing of Payments.    In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default, each Lender and each holder of any Note and each of their respective Affiliates is hereby authorized at any time or from time to time, without notice to any Loan Party or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all balances held by it at any of its offices for the account of any Borrower or Guarantor (regardless of whether such balances are then due to such Borrower or Guarantor) and any other properties or assets at any time held or owing by that Lender, that holder or that Affiliate to or for the credit or for the account of any Borrower or Guarantor against and on account of any of the Obligations which are not paid when due. Any Lender or holder of any Note or any Affiliate of either exercising a right to set off or otherwise receiving any payment on account of the Obligations in excess of its Pro Rata Share of the Obligations shall purchase for cash (and the other Lenders or holders shall sell) such participations in each such other Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary to cause such Lender or holder to share the amount so set off or otherwise received with each other Lender or holder in accordance with their respective Pro Rata Shares. Each Loan Party agrees, to the fullest extent permitted by law, that (a) any Lender or holder may exercise its right to set off with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such amount so set off to other Lenders and holders and (b) any Lender or holder so purchasing a participation in the Loans made or other Obligations held by other Lenders or holders may exercise all rights of set off, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such Lender or holder were a direct holder of the Loans and the other Obligations in the amount of such participation. Notwithstanding the foregoing, if all or any portion of the set off amount or payment otherwise received is thereafter recovered from Lender, holder or Affiliate that has exercised the right of set off, the purchase of participations by that Lender shall be rescinded and the purchase price restored without interest.

37

3.9    Facility A Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.

(a)  Facility A Advances; Payments.

(i)  Administrative Agent shall notify Lenders, promptly after receipt of a Borrowing Certificate and in any event prior to 3:00 p.m. (New York time) on the date such Borrowing Certificate is received, by telecopy, telephone or other similar form of transmission. Each Lender shall make the amount of such Lender’s Pro Rata Share of such Facility A Advance available to Administrative Agent in same day funds by wire transfer to Administrative Agent’s account as set forth in Schedule 3.9 not later than 3:00 p.m. (New York time) on the requested funding date in the case of a Base Rate Loan and not later than 11:00 a.m. (New York time) on the requested funding date in the case of a LIBOR Loan. After receipt of such wire transfers (or, in Administrative Agent’s sole discretion, before receipt of such wire transfers), subject to the terms hereof, Administrative Agent shall make the requested Facility A Advance to Borrower Representative to the account of Borrower Representative specified on Schedule 3.9. All payments by each Lender shall be made without set off, counterclaim or deduction of any kind.

(ii)  All Payments due hereunder and under the Notes shall be made to Administrative Agent by wire transfer to the account specified on Schedule 3.9 no later than 1:00 p.m. (New York time) on the date due. Payments received after such time shall be deemed to have been made on the next Business Day. On each Business Day that Administrative Agent receives a payment with respect to the Loans, Administrative Agent will advise each Lender by telephone or telecopy of the amount of such Lender’s Pro Rata Share of principal, interest and Fees paid for the benefit of Lenders with respect to each applicable Loan. Provided that such Lender has funded all payments or Facility A Advances required to be made by it and has purchased all participations required to be purchased by it under this Agreement and the other Loan Documents as of such date, Administrative Agent will pay to each Lender such Lender’s Pro Rata Share of such payment. Such payments shall be made by wire transfer to such Lender’s account (as specified by such Lender in Schedule 3.9 or the applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on the next Business Day following receipt. To the extent that any Lender (a “Non-Funding Lender”) has failed to fund all such payments and Facility A Advances or failed to fund the purchase of all such participations, Administrative Agent shall be entitled to set off the funding short-fall against that Non-Funding Lender’s Pro Rata Share of all payments received from Borrowers.

(b)  Availability of Lender’s Pro Rata Share.    Administrative Agent may assume that each Lender will make its Pro Rata Share of each Facility A Advance available to Administrative Agent on each funding date. If such Pro Rata Share is not, in fact, paid to Administrative Agent by such Lender when due, Administrative Agent will be entitled to recover such amount on demand from such Lender without set off, counterclaim or deduction of any kind. If any Lender fails to pay the amount of its Pro Rata Share forthwith upon Administrative Agent’s demand, Administrative Agent shall promptly notify Borrower Representative and Borrowers shall immediately repay such amount to Administrative Agent. Nothing in this Section 3.9(b) or elsewhere in this Agreement or the other Loan Documents shall be deemed to require Administrative Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Facility A Commitment hereunder or to prejudice any rights that any Loan Party may have against any Lender as a result of any default by such Lender hereunder. To the extent that Administrative Agent advances funds to Borrowers on behalf of any Lender and is not reimbursed therefor on the same Business Day as such Facility A Advance is made,

38

Administrative Agent shall be entitled to retain for its account all interest accrued on such Facility A Advance until reimbursed by the applicable Lender.

(c)  Return of Payments.

(i)  If Administrative Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment has been or will be received by Administrative Agent from Borrowers and such related payment is not received by Administrative Agent, then Administrative Agent will be entitled to recover such amount from such Lender on demand without set off, counterclaim or deduction of any kind.

(ii)  If Administrative Agent determines at any time that any amount received by Administrative Agent under this Agreement must be returned to any Borrower or paid to any other Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this Agreement or any other Loan Document, Administrative Agent will not be required to distribute any portion thereof to any Lender. In addition, each Lender will repay to Administrative Agent on demand any portion of such amount that Administrative Agent has distributed to such Lender, together with interest at such rate, if any, as Administrative Agent is required to pay to Borrowers or such other Person, without set off, counterclaim or deduction of any kind.

(d)  Non-Funding Lenders.    The failure of any Non-Funding Lender to make any Facility A Advance or any payment required by it hereunder shall not relieve any other Lender (each such other Lender, an “Other Lender”) of its obligations to make such Facility A Advance, but neither any Other Lender nor Administrative Agent shall be responsible for the failure of any Non-Funding Lender to make a Facility A Advance or to purchase a participation required hereunder. Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights under or with respect to any Loan Document or constitute a “Lender” (or be included in the calculation of “Requisite Lenders” hereunder) for any voting or consent rights under or with respect to any Loan Document.

(e)  Dissemination of Information.    Administrative Agent will use reasonable efforts to provide Lenders with any notice of an Event of Default received by Administrative Agent from, or delivered by Administrative Agent to, any Loan Party, with notice of any Event of Default of which Administrative Agent has actually become aware and with notice of any action taken by Administrative Agent following any Event of Default; provided, however, that Administrative Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Administrative Agent’s gross negligence or willful misconduct. Lenders acknowledge that each Loan Party is required to provide Financial Statements and Collateral Reports to Lenders hereunder and agrees that Administrative Agent shall have no duty to provide the same to Lenders.

(f)  Actions in Concert.    Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement or the Notes (other than exercising any rights of set off) without first obtaining the prior written consent of Requisite Lenders, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Notes shall be taken in concert and at the direction or with the consent of Administrative Agent.

39

3.10    Syndication and Documentation Agents.    The Syndication Agent and the Documentation Agent shall have no duties, responsibilities or obligations under this Agreement.

ARTICLE 4: COLLATERAL AND SECURITY AGREEMENT

4.1    Grant of Security Interest.    To secure the prompt and complete payment, performance and observance of all of the Obligations (specifically including each Loan Party’s Obligations arising under the provisions of Article 10), each Loan Party hereby grants, assigns, conveys, mortgages, pledges, hypothecates and transfers to Administrative Agent, for itself and the benefit of Lenders, a continuing Lien upon all of such Loan Party’s right, title and interest in and to the following kinds and types of property, whether now owned or hereafter acquired or arising, wherever located, together with all substitutions therefor and all accessions, replacements and renewals thereof, and in all proceeds and products thereof (collectively, the “Collateral”):

(a)  all existing and future accounts, accounts receivable and rights to payment and (i) all accounts receivable created by or arising from all sales or leases of goods or rendition of services by such Loan Party to its customers or subscribers; (ii) all unpaid seller’s rights (including rescission, replevin, reclamation and stopping in transit) relating to the foregoing or arising therefrom; (iii) all rights to any goods represented by any of the foregoing, including returned or repossessed goods; (iv) all reserves and credit balances arising from any of the foregoing; (v) all guarantees or collateral for any of the foregoing; and (vi) all insurance policies or rights relating to any of the foregoing (collectively, “Accounts”);

(b)  all existing and future instruments, chattel paper, documents of title, securities, contracts, agreements, licenses, easements, grants and rights now or hereafter entered into or acquired by such Loan Party, as modified, replaced or supplemented from time to time, including (i) all capacity usage agreements and other agreements with carriers, customers or subscribers which constitute five percent (5%) or more of such Loan Party’s revenues, (ii) all purchase agreements and supply agreements and related warranty rights, (iii) all operating agreements, (iv) all interconnection agreements, (v) all other System Agreements and (vi) all insurance policies (collectively, “Contracts”);

(c)  all equipment, furniture and fixtures, switches, towers, electronics, transmitting equipment, software, cabling, hardware, devices and components now or hereafter owned by such Loan Party, and any and all additions, substitutions and replacements to or of any of the foregoing, together with all attachments, components, parts, improvements, upgrades and accessions installed thereon or affixed thereto (collectively, “Equipment”);

(d)  all general intangibles and intangible property, including rights under Contracts, rights to payment of any kind, insurance proceeds and amounts due under insurance policies, deposit accounts, patent rights, trademarks, service marks, copyrights, trade names, customer lists, goodwill, registrations, licenses, license rights, rights in intellectual property, software, software licenses, computer programming (including source codes, object codes and all other embodiments of computer programming or information), tax refunds and benefits, corporate and other business records, refunds and indemnification rights, all amounts owed at any time to such Loan Party (to the extent permitted by applicable law in effect at any time and subject to Section 4.2), all rights that such Loan Party may have at any time in any Regulatory Authorization, including any rights to payment upon any transfer of any Regulatory Authorization, or any other transfer or transaction intended to result in a transfer of such a Regulatory Authorization, or the obtaining of FCC or PUC authority for another Person to operate a telecommunications system in the area instead of such Loan Party, all rights to receive

40

payment or property upon any assignment, transfer, sale or surrender of any other Collateral and all other intangible personal property of such Loan Party of every kind and nature (collectively, “General Intangibles”);

(e)  all merchandise, inventory and goods now or hereafter owned by such Loan Party, together with all goods and materials used or usable in manufacturing, processing, packaging or shipping such merchandise, inventory and goods in all states of production, from raw materials through work-in-progress to finished goods (collectively, “Inventory”);

(f)  all Deposit Accounts;

(g)  all Investment Property;

(h)  all Letter of Credit Rights;

(i)  all books and records relating to the Collateral;

(j)  all other goods and personal property of such Loan Party whether tangible or intangible wherever located;

(k)  all property of such Loan Party held by the Administrative Agent or any other Secured Party, including all property of every description, in the possession or custody of or in transit to the Administrative Agent or such Secured Party for any purpose, including safekeeping, collection or pledge, for the account of such Loan Party or as to which such Loan Party may have any right or power; and

(l)  all proceeds and products of any of the foregoing, including (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to such Loan Party from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to such Loan Party from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of any other Collateral by any Governmental Authority (or any Person acting under color of governmental authority), (iii) any and all other amounts from time to time paid or payable under or in connection with any other Collateral and (iv) any and all cash proceeds and non-cash proceeds in the form of Equipment, Inventory, Contracts, Accounts, General Intangibles, chattel paper, documents, instruments, securities or other proceeds (collectively, “Proceeds”).

4.2    Regulatory Authorizations.    Administrative Agent and each Lender acknowledge and recognize that each Loan Party’s assignment of or grant of a security interest in its Regulatory Authorizations may be subject to restrictions imposed by the FCC or PUC on such Loan Party’s ability to assign its interest in or transfer control of any Regulatory Authorizations. Likewise, Administrative Agent and each Lender acknowledge and recognize that each Loan Party’s assignment of or grant of a security interest in any state or local franchises or licenses may be subject to similar government restrictions. Each Loan Party acknowledges, however, that the value of the Regulatory Authorizations is a critical part of the Collateral package, and agrees to use its best efforts to effect the transfer of such Regulatory Authorizations to Administrative Agent, on behalf of Lenders, or its designee upon the occurrence of an Event of Default.

4.3    Priority of Security Interests.    The security interests granted in Section 4.1 by each Loan Party to Administrative Agent on behalf of Secured Parties are and shall be continuing

41

and indefeasible first-priority security interests in the Collateral which may be perfected by filing under the UCC, subject to no Liens except for Liens permitted under Section 9.2.

4.4    Pledge Agreements.    Each Loan Party hereby represents and warrants that valid, first-priority security interests have been granted by Holdings to Administrative Agent, on behalf of Secured Parties, pursuant to the Holdings Pledge Agreement, in 100% of the Stock of each Borrower, together with an irrevocable proxy to vote such Stock if an Event of Default should occur, and that all existing stock certificates, warrants and other instruments evidencing ownership, together with executed blank stock powers, have been delivered to Administrative Agent on behalf of Secured Parties. Each Loan Party shall also grant to Administrative Agent on behalf of Secured Parties valid, first-priority security interests in 100% of the Stock of all other present or future Subsidiaries of such Loan Party having assets in excess of $100,000 and an irrevocable proxy to vote such Stock if an Event of Default should occur.

4.5    Further Documentation; Pledge of Instruments; Chattel Paper

(a)  At any time and from time to time, upon the written request of the Administrative Agent or Requisite Lenders, and at the sole expense of Loan Parties, each Loan Party shall promptly execute, deliver and record any documents, instruments, agreements and amendments, and take all such further action, as the Administrative Agent or Requisite Lenders may deem necessary or reasonably desirable in obtaining the full benefits of this Agreement and of the rights and powers herein granted, including (i) filing any financing or continuation statements under the UCC with respect to the Liens granted hereunder or under any other Loan Document, (ii) transferring Collateral to the Administrative Agent’s possession (for the benefit of the Secured Parties) if such Collateral consists of any chattel paper, promissory notes or other instruments or certificated securities or if a Lien on such Collateral can be perfected only by possession, or if reasonably requested by the Administrative Agent or Requisite Lenders, (iii) obtaining, or using its reasonable best efforts to obtain Landlord Consents in accordance with this Agreement, (iv) obtaining signed acknowledgements of the Administrative Agent’s Liens from bailees having possession of Loan Parties’ goods; and (v) obtaining signed control agreements with respect to all (A) Deposit Accounts and (B) Investment Property not in certificated form excluding any Deposit Accounts containing Cash and/or uncertificated Investment Property with a value not to exceed $50,000 in the aggregate at any time for all such Deposit Accounts and Investment Property. Each Loan Party also hereby authorizes the Administrative Agent, for the benefit of the Secured Parties, to file any such financing or continuation statements without the signature of such Loan Party, or with a copy or telecopy of such Loan Party’s signature, to the extent permitted by applicable law, or to execute any financing statement or amendment thereof on behalf of such Loan Party as such Loan Party’s attorney-in-fact. If any amount payable under or in connection with any of the Collateral is or shall become evidenced by any promissory note or other instrument or any certificated securities, such note, instrument or certificate shall be immediately pledged and delivered to Administrative Agent on behalf of the Secured Parties hereunder, duly endorsed in a manner satisfactory to the Administrative Agent or Requisite Lenders.

(b)  Upon the request of the Administrative Agent, Loan Parties shall deliver to the Administrative Agent the original of all letters of credit issued to it as a beneficiary along with a collateral assignment thereof evidencing the consent to such assignment by the issuer of the letter of credit and each correspondent or confirming bank, all in form and substance reasonably satisfactory to the Administrative Agent.

(c)  All chattel paper shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the security interest of General Electric

42

Capital Corporation, as Administrative Agent, for the benefit of Administrative Agent and Lenders.” Loan Parties shall take all steps necessary to grant the Administrative Agent control of all Electronic Chattel Paper in accordance with the UCC as revised effective July 1, 2001.

(d)  Each Loan Party shall keep and maintain, in accordance with GAAP and prudent business standards for companies engaged in the same or similar businesses, at its own cost and expense, satisfactory and complete records of the Collateral, including a record of any and all payments received and any and all credits granted with respect to the Collateral and all other dealings with the Collateral. Each Loan Party shall mark its books and records pertaining to the Collateral to evidence this Agreement and the Liens granted hereby. Each Loan Party shall duly register on its books and records pertaining to the Stock the security interests of the Administrative Agent on behalf of the Secured Parties in such Stock.

4.6    Accounts, Etc.    Each Loan Party shall be entitled to collect any Accounts and General Intangibles until the occurrence of an Event of Default, during the continuance of which Administrative Agent or Requisite Lenders may restrict or terminate such authority. Each Loan Party agrees that, upon the occurrence of an Event of Default, Administrative Agent on behalf of Secured Parties shall be entitled to assume any or all of the Contracts, Accounts or General Intangibles in the place of such Loan Party (without releasing such Loan Party from liability thereunder).

4.7    Further Identification of Collateral.    Each Loan Party shall furnish to Administrative Agent on behalf of Secured Parties from time to time statements and schedules further identifying and describing the Collateral and each location thereof and such other reports in connection with the Collateral as Administrative Agent or Requisite Lenders may reasonably request, all in reasonable detail.

4.8    Remedies.    Administrative Agent on behalf of Secured Parties shall have all the rights and remedies of a secured party under the UCC, and shall be entitled to exercise any and all remedies available under this Article 4 or Article 10 or otherwise available at law or in equity upon the occurrence of an Event of Default. Except as otherwise specifically provided herein, each Loan Party hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Agreement or any Collateral.

4.9    Standard of Care.    Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral in its possession if it takes such action for that purpose as Borrower Representative requests in writing, but Administrative Agent’s failure to comply with any such request shall not of itself be deemed a failure to exercise reasonable care, and no failure of Administrative Agent to preserve or protect any rights with respect to such Collateral against prior parties, or to do any act with respect to the preservation of such Collateral not so requested by Borrower Representative, shall be deemed a failure to exercise reasonable care in the custody or preservation of such Collateral.

4.10    Advances to Protect Collateral.    All insurance expense and all expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral (including all rent payable by any Loan Party to any landlord of any premises where any of the Collateral may be located) and any and all Taxes shall be borne and paid by such Loan Party. Administrative Agent on behalf of Secured Parties may (but shall not be obligated to) make advances to preserve, protect or obtain any of the Collateral, including advances to cure defaults under any of the Contracts or advances to pay Taxes, insurance and the like, and all such

43

advances shall become part of the Obligations owing to Lenders hereunder and shall be payable to Administrative Agent on demand, with interest thereon from the date of such advance until paid at the Default Rate applicable to Base Rate Loans in effect on the date of such advance.

4.11    License to Use.    Administrative Agent on behalf of Secured Parties is hereby granted a non-exclusive license or other right to use without charge during the continuance of an Event of Default any Loan Party’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any tangible or intangible property or rights of a similar nature, as they pertain to the Collateral, in advertising for sale and selling any Collateral, and such Loan Party’s rights under all licenses and all franchise agreements shall inure to the benefit of Administrative Agent on behalf of Secured Parties.

4.12    Benefit of Lenders.    All Liens granted or contemplated hereby shall be for the benefit of Administrative Agent and Lenders, and all Proceeds or payments realized from the Collateral in accordance herewith shall be applied to the Obligations in accordance with the terms provided herein. Notwithstanding anything herein to the contrary, the amount realizable hereunder in respect of the Collateral pledged by any Borrower shall not exceed the Obligations of such Borrower under Section 11.6 and Article 2.

4.13    Release of Collateral.    Upon any sale of assets permitted herein and application of the proceeds as required by Section 2.10, the Liens granted by Loan Parties to Administrative Agent for the benefit of Secured Parties shall be released and Administrative Agent shall, upon request of Borrower Representative, execute and deliver to Borrower Representative appropriate executed UCC-3s confirming such release.

ARTICLE 5: REPRESENTATIONS AND WARRANTIES

Each Loan Party hereby represents and warrants, jointly and severally, to Administrative Agent and each Lender, with respect to all Loan Parties, as follows:

5.1    Organization and Qualification.    Each Loan Party is duly organized, validly existing and in good standing under the laws of its state of organization. Each Loan Party is duly qualified to do business and in good standing in each jurisdiction in which the failure to receive or retain such qualification could reasonably be expected to have a Material Adverse Effect. As to any Loan Party that is a limited liability company, each manager is duly organized, validly existing, in good standing under the laws of its state of organization, and duly qualified to do business and in good standing in each jurisdiction in which the failure to receive or retain such qualification could reasonably be expected to have a Material Adverse Effect.

5.2    Authority and Authorization.    Each Loan Party has all requisite corporate or limited liability company right, power, authority and legal right to carry on its business, to own or lease its properties and to execute and deliver and perform its obligations under this Agreement, to make the borrowings provided for herein, and to execute and deliver and to perform its obligations under the Loan Documents. Each Loan Party’s execution, delivery and performance of the Loan Documents have been duly and validly authorized by all necessary corporate or limited liability company proceedings on the part of each Loan Party and the manager of any Loan Party that is a limited liability company.

5.3    Execution and Binding Effect.    This Agreement, the Notes and all other Loan Documents have been or will be duly and validly executed and delivered by each Loan Party, and constitute or, when executed and delivered, will constitute, the legal, valid and binding

44

obligations of such Loan Party enforceable in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws affecting creditors’ rights generally.

5.4    Governmental Authorizations.    Except for the consents identified on Schedule 5.4 (the “Required Consents”), no authorization, consent, approval, license, exemption or other action by, and no registration, qualification, designation, declaration or filing with, any Governmental Authority (other than the filing of financing statements and continuation statements) is or will be necessary in connection with the execution and delivery of this Agreement, the Notes or any other Loan Documents by each Loan Party, consummation by each Loan Party of the transactions herein or therein contemplated, including obtaining the Loans and granting security for the Obligations, performance of or compliance by each Loan Party with the terms and conditions hereof or thereof or the legality, validity and enforceability hereof or thereof.

5.5    Regulatory Authorizations.    Loan Parties hold all authorizations, permits and licenses required by the FCC or the PUC or any Communications Law for the conduct of their business as now conducted and as proposed in the Business Plan to be conducted, and all such Regulatory Authorizations are in full force and effect, are subject to no further administrative or judicial review and are therefore final. No Lender, by reason of the execution, delivery and performance (other than the enforcement of remedies) of any of the Loan Documents, will be subject to the regulation or control of either the FCC or the PUC. The Regulatory Authorizations are described on Schedule 5.5.

5.6    Agreements and Other Documents.    As of the date hereof, Schedule 5.6 contains a list of all of the following agreements or documents to which such Loan Party is subject: (a) supply agreements and purchase agreements not terminable by such Loan Party within sixty (60) days following written notice issued by such Loan Party and involving transactions in excess of $1,000,000 per annum; (b) any lease of Equipment having a remaining term of one year or longer and requiring aggregate rental and other payments in excess of $500,000 per annum; (c) licenses and permits held by such Loan Party, the absence of which could be reasonably likely to have a Material Adverse Effect; (d) instruments or documents evidencing Indebtedness of such Loan Party and any security interest granted by such Loan Party with respect thereto; and (e) instruments and agreements evidencing the issuance of any equity securities, warrants, rights or options to purchase equity securities of a Borrower. Upon the request of Administrative Agent, Loan Parties will provide Lenders with accurate and complete copies of the foregoing agreements or documents.

5.7    Absence of Conflicts.    The execution and delivery of this Agreement, the Notes and the other Loan Documents, the consummation of the transactions herein or therein contemplated and the performance of or compliance with the terms and conditions hereof or thereof by each Loan Party will not (a) violate any applicable Law; (b) conflict with or result in a breach of or a default under the Organizational Documents of such Loan Party or any material agreement or instrument to which such Loan Party is a party or by which such Loan Party or its properties are bound; or (c) result in the creation or imposition of any Lien upon any property (now owned or hereafter acquired) of such Loan Party except as otherwise contemplated by this Agreement.

5.8    No Restrictions.    No Loan Party is a party or subject to any contract, agreement or restriction in its Organizational Documents that materially and adversely affects its business or the use or ownership of any of its properties or operation of its business as contemplated in its

45

Business Plan. Loan Parties’ strategy is to deploy owned switching equipment and to lease transmission capacity from others. No Loan Party is a party or subject to any contract or agreement which restricts its right or ability to incur Indebtedness, other than as set forth on Schedule 5.8, none of which prohibits such Loan Party’s execution of or compliance with this Agreement. No Loan Party has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of the Collateral, whether now owned or hereafter acquired, to be subject to a Lien that is not a Permitted Encumbrance.

5.9     Government Contracts.     Except as set forth in Schedule 5.9, as of the date hereof, no Loan Party is a party to any contract or agreement with any Governmental Authority and no Loan Party’s Accounts are subject to the Federal Assignment of Claims Act, as amended (31 U.S.C. § 3727) or any similar state or local law.

5.10    Financial Statements; Business Plan.    Borrower Representative has furnished to Lenders the most recent annual or quarterly Financial Statements of Holdings, certified by a Responsible Officer of Holdings, including balance sheets and related statements of income, retained earnings and cash flow, as described on Schedule 5.10. Such Financial Statements (including the notes thereto) present fairly the financial condition of Loan Parties on a consolidated basis as of the end of such fiscal period and the results of its operations and the changes in its financial position for the fiscal period then ended, all in conformity with GAAP applied on a basis consistent with that of the preceding fiscal period. As of the date hereof, no Loan Party has any obligation or liability (absolute, contingent, liquidated or unliquidated) material to Loan Parties taken as a whole, which are required to be disclosed in financial statements prepared in accordance with GAAP, except for those reflected in the Financial Statements discussed on Schedule 5.10, and since the date hereof has incurred no such obligation or liability, except as permitted by this Agreement. The Projections and pro forma financial statements delivered by Borrower Representative to Administrative Agent, on behalf of Lenders, as part of the Business Plan, a copy of which has been delivered prior to the date hereof, were prepared in good faith, based on reasonable assumptions.

5.11    Financial Accounting Practices.    Loan Parties have made and kept books, records and accounts which, in reasonable detail, accurately and fairly reflect their respective transactions and dispositions of their assets, and Loan Parties maintain a system of internal accounting controls sufficient to provide reasonable assurances that (a) transactions are executed in accordance with management’s general or specific authorization, (b) transactions are recorded as necessary (i) to permit preparation of financial statements in conformity with GAAP and (ii) to maintain accountability for assets, (c) access to assets is permitted only in accordance with management’s general or specific authorization and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

5.12    Deposit and Disbursement Accounts.    Schedule 5.12 lists all banks and other financial institutions at which any Loan Party maintains Deposit Accounts as of the date hereof, including any disbursement accounts, and such Schedule correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number.

5.13    Insurance.    Schedule 5.13 lists all insurance policies of any nature maintained, as of the date hereof, for current occurrences by each Loan Party, as well as a summary of the terms of each such policy.

46

5.14    Accurate and Complete Disclosure.    No representation or warranty made by any Loan Party in this Agreement or any other Loan Document and no statement made by any Loan Party in any financial statement, certificate, report, exhibit or document furnished by such Loan Party to Administrative Agent pursuant to or in connection with this Agreement (including any filings with the Securities and Exchange Commission, the FCC or the PUC) is or was false or misleading as of the date made in any material respect (including by omission of material information necessary to make such representation, warranty or statement not misleading). There are no facts that would reasonably be expected to evidence or create a Material Adverse Effect which have not been set forth in the Financial Statements referred to in Section 5.10 or otherwise disclosed in writing to Administrative Agent and Lenders prior to the Effective Date.

5.15    No Event of Default; Compliance with Material Agreements.    No event has occurred and is continuing and no condition exists which constitutes a Default or an Event of Default. As of the date hereof, no Loan Party is in violation of any term of any material agreement or instrument to which it is a party or by which it or its properties are bound that would reasonably be expected to have a Material Adverse Effect.

5.16    Labor Matters.    As of the date hereof, (a) no strikes or other material labor disputes against any Loan Party are pending or, to any Loan Party’s knowledge, threatened; (b) hours worked by and payment made to employees of each Loan Party comply with the Fair Labor Standards Act and each other federal, state, local or foreign law applicable to such matter; (c) all payments due from any Loan Party for employee health and welfare insurance have been paid or accrued as a liability on the books of such Loan Party; (d) except as set forth in Schedule 5.16, no Loan Party is a party to or bound by any collective bargaining agreement, management agreement, consulting agreement or any employment agreement (and, upon the request of Administrative Agent, true and complete copies of any agreements described on Schedule 5.16 will be delivered to Administrative Agent and each Lender); (e) there is no organizing activity involving any Loan Party pending or, to any Loan Party’s knowledge, threatened by any labor union or group of employees; (f) there are no representation proceedings pending or, to any Loan Party’s knowledge, threatened with the National Labor Relations Board, and no labor organization or group of employees of any Loan Party has made a pending demand for recognition; and (g) except as set forth in Schedule 5.16, there are no complaints or charges against any Loan Party pending or, to the knowledge of the executive officers of Holdings, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by any Loan Party of any individual which, if adversely determined, could reasonably be expected to have a Material Adverse Effect.

5.17    Litigation.    Except as set forth in Schedule 5.17, there is no pending action, suit or threatened proceeding by or before any Governmental Authority against or affecting any Loan Party or any of its properties, rights or licenses which if adversely decided could reasonably be expected to have a Material Adverse Effect.

5.18    Rights to Property.    Each Loan Party has good and marketable title, subject only to the Permitted Encumbrances, to the Collateral, to all other personal and real property purported to be owned by it and to all property reflected in the most recent balance sheet referred to in Section 5.10 (except as sold or otherwise disposed of in the ordinary course of business as no longer used or useful in the conduct of the business). Schedule 5.18 lists as of the date hereof (i) all Sites and Site Leases, (ii) all other real property owned by each Loan Party, and (iii) all material Equipment of each Loan Party and its location or proposed location. Each Loan Party

47

has entered into the Site Leases described on Schedule 5.18. Such Site Leases are in full force and effect and are not subject to termination because of default or otherwise.

5.19    Intentionally Omitted.

5.20    Taxes.    Each Loan Party’s federal tax identification number is set forth on Schedule 1. All tax returns required to be filed by each Loan Party have been properly prepared, executed and filed, and all Taxes upon such Loan Party or upon any of its respective properties, incomes, sales or franchises which are shown to be due and payable thereon have been paid, other than Taxes or assessments the validity or amount of which such Loan Party is contesting in good faith. The reserves and provisions for taxes on the books of each Loan Party are adequate for all open years and for its current fiscal period.

5.21    No Material Adverse Change.    Since the date of the Financial Statements referenced in Section 5.10, there has been no Material Adverse Change.

5.22    No Regulatory Event.     No Regulatory Event has occurred and is continuing.

5.23    Solvency.    After giving effect to (a) the Loans and Letter of Credit Obligations outstanding on the Effective Date (after giving effect to the Facility B Loan Payment) or on such other date as the Facility A Advances and Letter of Credit Obligations requested hereunder are made or extended, (b) the disbursement of the proceeds of such Loans pursuant to the instructions of Borrower Representative and (c) the payment and accrual of all transaction costs in connection with the foregoing, Loan Parties, taken as a whole, are Solvent.

5.24    Trade Relations.    There exists no actual or threatened termination, cancellation or limitation of, or any modification or change in, the business relationship between any Loan Party and any customer or supplier that could reasonably be expected to have a Material Adverse Effect or to prevent Loan Parties from conducting their business after the consummation of the financing contemplated by this Agreement in substantially the same manner as is contemplated in the Business Plan.

5.25    No Brokerage Fees.    No brokerage or other fee, commission or compensation is to be paid by any Loan Party to any Person in connection with the Loans to be made hereunder except as contemplated herein. Each Loan Party jointly and severally hereby indemnifies each Indemnified Person against any claims brought against such Indemnified Person for brokerage fees or commissions of any Person based on an agreement with such Loan Party and agrees to pay all expenses incurred by such Indemnified Person in connection with the defense of any action or proceeding brought to collect any such brokerage fees or commissions.

5.26    Margin Stock; Regulation U.    No Loan Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock. The making of the Facility A Advances and the use of the proceeds thereof will not violate Regulation U or X of the Board of Governors of the Federal Reserve System.

5.27    Investment Company; Public Utility Holding Company.    No Loan Party is an “investment company” or a “company controlled by an investment company” or an “affiliated person” or “promoter” or “principal underwriter” for, an “investment company,” within the meaning of the Investment Company Act of 1940, as amended, or a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a

48

“subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

5.28    Personal Holding Company; Subchapter S.    No Loan Party is a “personal holding company” as defined in Section 542 of the Code, or a “Subchapter S” corporation within the meaning of the Code.

5.29    Securities Act, Etc.    The Notes are not required to be registered under the Securities Act of 1933, as amended, or under the securities laws of any state.

5.30    ERISA.    (i) With respect to any Plan, there is no Reportable Event currently under consideration by the PBGC which may reasonably result in any material liability to the PBGC with respect to any Plan, (ii) no Plan has been terminated, (iii) no trustee has been appointed by any United States District Court to administer any Plan, (iv) the PBGC has not instituted proceedings to terminate any Plan or to appoint a trustee to administer any such Plan, (v) no Loan Party or Affiliate of a Loan Party has withdrawn, completely or partially, from any Plan and (vi) no Loan Party or Affiliate of a Loan Party has incurred secondary liability for withdrawal liability payments under any Plan.

5.31    Intellectual Property.    Each Loan Party owns or possesses the right to use all patents, trademarks, service marks, trade names, copyrights, know-how, franchises, Software and Software Licenses necessary for the operation of its business, free from burdensome restrictions that could reasonably be expected to have a Material Adverse Effect. All such rights are described on Schedule 5.31.

5.32    Environmental Warranties.    Each Loan Party is in compliance with all Environmental Laws applicable to such Loan Party or its business or to the real or personal property owned, leased or operated by such Loan Party, except for such non-compliances as in the aggregate could not reasonably be expected to have a Material Adverse Effect. No Loan Party has received notice of, or is aware of, any violation or alleged violation, or any liability or asserted liability, under any Environmental Law, with respect to such Loan Party or its business or its premises. The only premises occupied by any Loan Party are office spaces in multi-tenant commercial office buildings.

5.33    Security Interests.    The provisions of Article 4 are effective to create in favor of Administrative Agent, on behalf of Secured Parties, a legal, valid and enforceable Lien on or security interest in all of the Collateral, and, when the recordings and filings described on Schedule 5.33 have been effected in the public offices listed on said Schedule 5.33, this Agreement will create a perfected first priority security interest in all right, title, estate and interest of each Loan Party in the Collateral which may be perfected by filing, subject to no Liens except for Permitted Encumbrances. All action necessary or desirable to protect and perfect such security interest in each item of the Collateral has been duly taken. The recordings and filings shown on said Schedule 5.33 are all the actions necessary or advisable in order to establish, protect and perfect the interest of Administrative Agent, on behalf of Secured Parties, in the Collateral.

5.34    Place of Business.    The chief executive office of each Loan Party is identified on Schedule 5.34. Each Loan Party’s principal place of business in the state(s) where a Site is located is identified on Schedule 5.34. Each Loan Party’s records concerning the Collateral are kept at one or both of these addresses.

49

5.35    Location of Collateral.  The Collateral is and will be kept at the locations identified by Loan Party and type of Collateral on Schedule 5.35 or such other locations as may be permitted under Section 9.4.

5.36    Validity of Contracts and Accounts.    Each Contract, General Intangible and Account is, or will be when it is created, a bona fide, valid and legally enforceable property or right of a Loan Party and, so far as such Loan Party knows, of any other party thereto, except for those that do not, in the aggregate, materially and adversely affect the value of the Collateral. All consents, licenses, approvals or authorizations of, or declarations with, any Governmental Authority required in connection with each Loan Party’s execution, delivery or performance of each Contract, General Intangible or Account have been or will be duly and timely obtained, effected or given and are or will be in full force and effect except where all failures to do or be so, in the aggregate, do not materially and adversely affect the value of the Collateral. No amount payable under or in connection with any of the Contracts, General Intangibles or Accounts are evidenced by any chattel paper or any promissory notes or other instruments that have not been delivered to Administrative Agent on behalf of Secured Parties.

5.37    No Defaults Under Contracts or Accounts.    With respect to each Contract, Account and General Intangible, no default by any Loan Party or event which with the giving of notice or the passage of time would be a default has occurred and, to the knowledge of the executive officers of Holdings, the other party or parties thereto are not in default thereunder except as referred to in Section 5.17, and each Loan Party has fully and timely performed all its material obligations thereunder. Except as referred to in Section 5.17, the right, title and interest of such Loan Party thereunder is not subject to any defense, set off, counterclaim or claim, and none of the foregoing been asserted or alleged against such Loan Party except in respect of such defaults, defenses, set offs, counterclaims and claims that in the aggregate do not materially adversely affect the value of the Collateral. Except as referred to in Section 5.17, the amount represented by each Loan Party to Administrative Agent, on behalf of Lenders, from time to time as owing on any or all Accounts, Contracts or General Intangibles, will at such time be the correct amount actually and unconditionally owing by such account debtors thereunder.

5.38    Subsidiaries.    No Borrower has any Subsidiaries (other than US LEC Acquisition Co., which is a Borrower) nor any current plans to form or acquire any Subsidiary.

5.39    Assumed Names.    Except as set forth on Schedule 5.39, no Loan Party conducts business under any assumed names or trade names, or has conducted business under any other names, or any assumed names or trade names, at any time prior to the date hereof.

5.40    Pledge Agreements; Registration of Pledge.    The Holdings Pledge Agreement is effective to grant to Administrative Agent, on behalf of Secured Parties, a legal, valid and enforceable security interest in 100% of the Stock of each Borrower, to the extent that such security interests may be created under Article 8 and/or Article 9 of the UCC. Such security interests constitute fully perfected, first priority security interests in such Stock and proceeds thereof, and the security interests of Administrative Agent on behalf of Secured Parties in Holdings’ interests have been duly registered on the books and records of such Borrower.

5.41    Transactions with Affiliates.    No Affiliate and no officer or director of any Loan Party or any individual related by blood, marriage, adoption or otherwise to any such Affiliate, officer or director, or any Person in which any such Affiliate, officer, director or individual related thereto owns any material beneficial interest, is a party to any agreement, contract,

50

commitment or transaction with such Loan Party or has any material interest in any material property used by such Loan Party, except as set forth on Schedule 5.41.

5.42    Going Concern.    Holdings has reviewed the professional standards published by the American Institute of Certified Public Accountants that are applied to determine if the going concern assumption is appropriate for an entity. Based on a review of these standards and a confirmation of Holdings’ understanding of such standards with its outside auditors, Holdings believes that the Subordinated Debt Investment, the Deferred Amortization and the financial covenant modifications provided hereby, and the projected operating results included in the Business Plan dated December 12, 2002, document that the Loan Parties will achieve the going concern criteria at December 31 , 2002.

ARTICLE 6: CONDITIONS TO EFFECTIVENESS

This Agreement shall become effective upon satisfaction, or waiver by all Lenders, of the following conditions:

6.1    Closing Certificates.    Administrative Agent and each Lender shall have received the following certificates, all in form and substance satisfactory to Administrative Agent and Requisite Lenders and all dated the Effective Date upon which Administrative Agent may conclusively rely unless and until later certificates have been furnished to Administrative Agent and each Lender: (a) a certificate of each Loan Party signed by a duly authorized Responsible Officer, certifying as to (i) true copies of Organizational Documents of such Loan Party in effect on such date; (ii) true copies of all corporate action (including, without limitation, a corporate resolution of its board of directors ratifying the Loan Documents, and authorizing the Obligations and the granting of the liens and security interests in the Collateral securing the Obligations) taken by such Loan Party relative to this Agreement, the Note and the other Loan Documents which have been properly adopted and have not been modified or amended; and (iii) the names, true signatures and incumbency of the Responsible Officers of such Loan Party authorized to execute and deliver this Agreement, the Note and the other Loan Documents; (b) a Certificate of Good Standing (or equivalent certificate) for such Loan Party and for the managing member of any Loan Party that is a limited liability company, duly issued by the Secretary of State of each state in which such Loan Party intends to do business; and (c) a certificate as to such other matters as Administrative Agent or any Lender shall request.

6.2    Opinions of Counsel.    Administrative Agent and each Lender shall have received the following opinions, all dated the Effective Date and all in form and substance satisfactory to Administrative Agent and each Lender:

(a)    a written opinion of counsel to each Loan Party, substantially in the form of Exhibit D, as to such matters as shall be required by Administrative Agent, any Lender or their respective counsel, including the corporate good standing of such Loan Party, the proper adoption of any corporate resolution required hereby, the authority of the Person signing for such Loan Party, the validity, binding nature and enforceability of the Loan Agreement and related Loan Documents and the continuation of the perfected liens and security interests granted to Administrative Agent on behalf of Secured Parties by such Loan Party in the Collateral; and

(b)    a written opinion of regulatory counsel for Loan Parties, substantially in the form of Exhibit E, as to such matters as shall be required by Administrative Agent and its counsel, including the validity of each Loan Party’s authorizations and approvals, permits or licensing required by the Federal Communications Commission, the Public Utilities

51

Commission(s) and the relevant state and local utilities commissions or municipality, and all other applicable regulatory or governmental bodies.

6.3    Closing Documents.    Administrative Agent and Lenders shall have received the following documents, all in form and substance satisfactory to Administrative Agent, Lenders and their respective counsel:

(a)    Agreement.    This Agreement, duly executed by all Loan Parties;

(b)    Notes.    The Notes, duly executed by all Borrowers, to the order of each Lender;

(c)    Financing Statements.    All UCC-1 financing statements necessary to perfect the Liens granted hereby by any Borrower which was not a party to the Existing Loan Agreement (each an “Additional Borrower”), duly executed by such Additional Borrower, and duly recorded in all of the offices identified on Schedule 5.33;

(d)    Pledge Amendment.    (i) The Holdings Pledge Agreement duly executed by Holdings, along with the original pledged stock or membership interest certificates with executed blank stock powers or assignments attached thereto with respect to 100% of the Stock of any Borrower and (ii) the Communications Pledge Agreement duly executed by US LEC Communications Inc., along with the original pledged stock certificates with executed blank stock powers attached thereto with respect to 100% of the Stock of US LEC Acquisition Inc.;

(e)    Required Consents.    Evidence of the Required Consents or a certificate of a Responsible Officer of Borrower Representative to such effect;

(f)    Control Agreements.    Except as set forth in Section 8.26(c), Loan Parties shall have obtained signed control agreements (in form and substance acceptable to Administrative Agent in its sole and absolute discretion) with respect to any Deposit Accounts and Investment Property not in certificated form, or, to the extent any Loan Party is unable to obtain such control agreement, such Loan Party shall have closed the account and opened a replacement account with a financial institution that has executed or contemporaneously with the opening of such account executes a control agreement;

(g)    Amendment Fee.    Administrative Agent shall have received an amendment fee in an amount equal to 0.15% of the aggregate amount of the Facility A Commitments in effect and the Facility B Loans outstanding on the Effective Date (the “Amendment Fee”).

(h)    Pre-Closing Lien Searches.    Lien searches from all jurisdictions reasonably determined by Administrative Agent or any Lender to be appropriate, effective as of a date reasonably close to the Effective Date, with respect to each Additional Borrower (under their present names and any previous names), reflecting no other Liens (other than Permitted Encumbrances) on any of the Collateral.

6.4    No Material Adverse Change.    As of the Effective Date, after giving effect to any Facility A Advances or outstanding Loans, there shall not have been (i) any litigation commenced which, if successful, would have a material adverse impact on any Loan Party, its Subsidiaries, their business or their ability to repay the Loan or which would challenge the financing contemplated by this Agreement, except those litigations listed on Schedule 5.17 and (ii) since Holding’s last audited Financial Statements, any material increase in the liabilities, liquidated or

52

contingent, of any Loan Party and its Subsidiaries or a material decrease in the assets of any Loan Party and its Subsidiaries.

6.5    No Existing Default or Event of Default.    No “Default” or “Event of Default” under the Existing Loan Agreement is continuing.

6.6    Payment of Expenses.    All fees and expenses of Administrative Agent, Syndication Agent and Lenders reimbursable by Borrowers (including all fees and expenses of Weil, Gotshal & Manges LLP and KPMG LLP) accrued through the Effective Date shall have been paid.

6.7    Facility B Loan Payment.    Borrowers shall pay to the Administrative Agent, for the benefit of Lenders, on or before the Effective Date the amount of $8,000,000, which amount shall be applied to repay the Facility B Loan (the “Facility B Loan Payment”).

6.8    Subordinated Debt Investment.    Administrative Agent and Lenders shall have received satisfactory evidence that Holdings shall have received the Subordinated Debt Investment.

ARTICLE 7: CONDITIONS OF LENDING

7.1    Conditions to Each Borrowing Date.    The obligation of any Lender to fund any Facility A Advance, convert or continue any Loan or portion thereof as a LIBOR Loan or incur any Letter of Credit Obligation is subject to each Loan Party’s performance of its obligations hereunder and satisfaction of the following further conditions on the Borrowing Date for any such Facility A Advance (including the Effective Date), the date of such conversion or continuation or the issuance of such Letter of Credit:

(a)    Borrowing Certificate.    Administrative Agent shall have received a duly executed Borrowing Certificate in the form of Exhibit B or a request for a Letter of Credit pursuant to Annex I.

(b)    No Default or Event of Default.    No Default or Event of Default shall have occurred and be continuing or would exist upon the consummation of transactions to occur on such Borrowing Date.

(c)    Representations and Warranties.    The representations and warranties contained in Article 5 shall be true and correct in all material respects on and as of such Borrowing Date hereunder both before and after giving effect thereto.

(d)    No Regulatory Event.    No Regulatory Event (in Requisite Lenders’ reasonable determination) shall have occurred and be continuing or would exist upon the consummation of transactions to occur on such Borrowing Date.

(e)    Expenses.    All closing costs and other expenses of Administrative Agent, Syndication Agent and Co-Arrangers that are reimbursable by the Company shall have been paid in full (or shall be paid first from such Facility A Advance as provided in Section 2.21).

(f)    Details, Proceedings and Documents.    All legal details and proceedings in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory to Administrative Agent and Requisite Lenders, and Administrative Agent and Requisite Lenders

53

shall have received all such counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance reasonably satisfactory to Administrative Agent and Requisite Lenders, as Administrative Agent and Requisite Lenders may from time to time request.

7.2    Affirmation of Representations and Warranties.    Any Borrowing Certificate or other request for any Facility A Advance or Letter of Credit hereunder shall constitute a representation and warranty that (a) the representations and warranties contained in Article 5 are true and correct on and as of the date of such request with the same effect as though made on and as of the date of such request and (b) on the date of such request no Default or Event of Default has occurred and is continuing or exists or will occur or exist after giving effect to such Facility A Advance or issuance of Letter of Credit (for this purpose such Facility A Advance or Letter of Credit being deemed to have been made or issued, as the case may be, on the date of such request). Failure of Administrative Agent to receive notice from each Loan Party to the contrary before the applicable Borrowing Date shall constitute a further representation and warranty by such Loan Party that (x) the representations and warranties of such Loan Party contained in the first sentence of this Section 7.2 are true and correct on and as of such Borrowing Date with the same effect as though made on and as of such Borrowing Date, (y) on such Borrowing Date, no Default or Event of Default has occurred and is continuing or exists or will occur or exist after giving effect to such Facility A Advance or issuance and (z) on such Borrowing Date, all conditions set forth in this Article 7 have been satisfied.

7.3    Deadline for Funding Conditions.    No Lender shall have any obligation to make any Facility A Advance hereunder if all of the conditions set forth in Article 6 and Article 7 have not been fully satisfied or waived by Requisite Lenders.

ARTICLE 8: AFFIRMATIVE COVENANTS

Loan Parties hereby jointly and severally agree as to all Loan Parties to, from and after the date hereof until the Termination Date, keep and perform fully each and all of the following covenants:

8.1    Reporting and Information Requirements.

(a)    Annual Audit Reports.    As soon as practicable, and in any event within ninety (90) days after the close of each Fiscal Year, Borrower Representative shall furnish or cause to be furnished to Administrative Agent and Lenders audited consolidated statements of income, cash flow and retained earnings for Holdings for such Fiscal Year and a consolidated balance sheet of Holdings as of the close of such Fiscal Year, and notes to each, all in reasonable detail, and beginning with the second full Fiscal Year after the date hereof setting forth in comparative form the corresponding figures for the preceding Fiscal Year, with such statements and balance sheet to be certified without qualification by independent certified public accountants of recognized national standing selected by Borrower Representative and reasonably satisfactory to Administrative Agent and Requisite Lenders.

(b)    Quarterly Reports.    Within forty five (45) days after the end of the first three (3) Fiscal Quarters, Borrower Representative shall furnish to Administrative Agent and Lenders (i) unaudited consolidated statements of income, cash flow and retained earnings for Holdings for such quarter and for the period from the beginning of the then current Fiscal Year to the end of such quarter, and an unaudited consolidated balance sheet of Holdings as of the end of such quarter, all in reasonable detail and certified by a Responsible Officer of Borrower Representative

54

as presenting fairly the financial position of Loan Parties as of the end of such quarter and the results of their operations and the changes in their financial position for such quarter, in conformity with GAAP (except for accompanying notes thereto), subject to year-end audit adjustments, (ii) updates of revenues, gross margin and EBITDAR of Holdings on a consolidating basis, (iii) upon request of Administrative Agent or Requisite Lenders, an aging of accounts payable and accounts receivable and (iv) a disclosure for the corresponding quarter setting forth by switch site the revenues, direct market costs and EBITDAR of Loan Parties before and after corporate allocations.

(c)    Monthly Reports.    Until repayment in full of the Deferred Amortization, within thirty (30) days after the end of each Fiscal Month, Borrower Representative shall furnish to Administrative Agent and Lenders (a) unaudited statements of income, cash flow and retained earnings for Holdings for such month and that portion of the current Fiscal Year ending as of the close of such month, and an unaudited balance sheet of Holdings as of the end of such month, all in reasonable detail and certified by a Responsible Officer of Borrower Representative as presenting fairly the financial position of Loan Parties as of the end of such periods and the results of their operations and the changes in their financial position for the periods indicated in conformity with GAAP (except for accompanying notes thereto), subject to quarter-end and year-end audit adjustments, setting forth in comparative form the projected figures in the Business Plan for the corresponding month, (b) a matrix reflecting in comparative form the actual operating statistics to projected operating statistics in substantially the form attached hereto as Annex IV, (c) an accounts receivable aging report of all customers with balances in excess of $1,000,000, (d) an accounts payable aging report of all payables in excess of $1,000,000 and (e) a narrative discussing performance for the corresponding month and explaining any material variations from the Business Plan.

(d)    Compliance Certificates.    Within thirty (30) days after the end of each Fiscal Month, (ii) forty-five (45) days after the end of the first three (3) Fiscal Quarters, and (iii) ninety (90) days after the end of each Fiscal Year, Borrower Representative shall deliver to Administrative Agent and Lenders a Compliance Certificate, dated as of the end of such Fiscal Month, Fiscal Quarter or Fiscal Year, as applicable, signed by a Responsible Officer of Borrower Representative (A) stating that as of the date thereof no Event of Default has occurred and is continuing or exists, or if an Event of Default has occurred and is continuing or exists, specifying in detail the nature and period of existence thereof and any action with respect thereto taken or contemplated to be taken by the applicable Loan Party; (B) stating that the signer has personally reviewed this Agreement and that such certificate is based on an examination made by or under the supervision of the signer sufficient to assure that such certificate is accurate; (C) in the case of a Compliance Certificate delivered for the first two (2) Fiscal Months of each Fiscal Quarter, the first three (3) Fiscal Quarters and each Fiscal Year, calculating and certifying Loan Parties’ compliance with the financial covenants set forth on Schedule 8.15; (D) certifying such Loan Parties’ compliance with the provisions of Section 8.27; (E) in the case of a Compliance Certificate delivered for any Fiscal Quarter or Fiscal Year, calculating and certifying the amount of the Capital Expenditures made by Loan Parties during such Fiscal Quarter or Fiscal Year and stating the source of funds for such Capital Expenditures; and (F) detailing the parties (or financial institutions), the amounts and a description of (1) Indebtedness incurred pursuant to clauses (c), (d) or (e) of the definition of Permitted Debt, (2) obligations secured by deposits pursuant to Section 9.2(a)(v) or letters of credit cash collateralized pursuant to Section 9.2(a)(x), (3) Asset Dispositions pursuant to Section 9.2(b), (4) leases entered into pursuant to Section 9.9 and (5) each account in which any Loan Party maintains any Cash or Investment Property.

55

(e)  Accountants’ Certificate.    Each set of year-end audited consolidated Financial Statements and balance sheet delivered pursuant to Section 8.1(a) shall be accompanied by a certificate or report dated the date of such statement and balance sheet by the accountants who certified such statements and balance sheet stating in substance that they have reviewed this Agreement and that in making the examination necessary for their certification of such statements and balance sheet they did not become aware of any Event of Default or, if they did become so aware, such certificate or report shall state the nature and period of existence thereof.

(f)  Projections.    If requested by Administrative Agent or Requisite Lenders, Borrower Representative shall deliver to Administrative Agent and Lenders within thirty (30) days after the beginning of each calendar year projections of Holdings’ anticipated income, expenses, cash flow, assets and liabilities for the next five (5) calendar years prepared in good faith on assumptions believed by Holdings to be reasonable and in a manner and format consistent with other Financial Statements and the Projections provided by Borrower Representative to Administrative Agent and Lenders.

(g)  Other Reports and Information.    Upon the request of Administrative Agent or Requisite Lenders, Borrower Representative shall deliver to Administrative Agent and Lenders copies of (i) all regular or special reports or effective registration statements which any Loan Party shall file with Governmental Authorities, the FCC or the PUC (or any successor thereto) or any securities exchange, (ii) financial statements, material reports, and other information distributed by any Loan Party to its creditors or the financial community in general, and (iii) all press releases issued by or concerning any Loan Party.

(h)  Further Information.    Each Loan Party will promptly furnish to Administrative Agent or any Lender such other information (including any report by independent auditors) in such form as Administrative Agent or any Lender may reasonably request.

(i)  Business Plan.    Borrower Representative shall deliver to the Administrative Agent on the earlier of (i) forty-five (45) days after the beginning of each Fiscal Year (commencing with the Fiscal Year 2004) and (ii) the completion thereof, an updated Business Plan of Holdings for such Fiscal Year and each Fiscal Year up to and including the Fiscal Year ending on December 31, 2006, certified by the Chief Financial Officer of Holdings, as having been discussed and approved by, among others, the Chief Executive Officer and the Vice President, Treasurer, of Holdings, as prepared in good faith and believed to be reasonable and in a manner and format consistent with other Financial Statements provided by Borrower Representative to Administrative Agent and Lenders, containing substantially the types of financial information contained in the Business Plan previously delivered, which shall include forecasts prepared by management for each Fiscal Quarter in the next succeeding Fiscal Year, including (A) a projected year end consolidated balance sheet and income statement and statement of cash flows and (B) a statement of all of the material assumptions on which such forecasts are based.

8.2    Other Notices.    Promptly upon a Responsible Officer of any Loan Party becoming aware of any of the following, Borrower Representative shall give Administrative Agent and each Lender notice thereof, together with a written statement of a Responsible Officer of Borrower Representative setting forth the details thereof and any action with respect thereto taken or contemplated to be taken by such Loan Party:

(a)  a Default or Event of Default;

56

(b)  any Material Adverse Change;

(c)  any event or circumstance that could reasonably be expected to have a Material Adverse Effect or cause a Material Adverse Effect;

(d)  any event that could reasonably be expected to constitute a Regulatory Event;

(e)  the commencement, existence or threat of any proceeding by or before any Governmental Authority against such Loan Party which, if adversely decided, could reasonably be expected to have a Material Adverse Effect;

(f)  such Loan Party’s receipt of any notice of violation of, or liability under, any Environmental Laws affecting such Loan Party or any of its properties that could reasonably be expected to have a Material Adverse Effect;

(g)  any Change of Control;

(h)  any Commercial Tort Claim filed by or in favor of any Loan Party or any of their respective Subsidiaries; or

(i)  the resignation or removal of the Advisor.

8.3    Notice of Pension-Related Events.    Each Loan Party shall promptly furnish Administrative Agent with written notice upon the receipt by such Loan Party or the administrator of any Plan of any notice, correspondence or other communication from the PBGC, the IRS, the Secretary of Treasury, the Department of Labor, or any other Person, as the case may be, relating to (i) any Reportable Event, (ii) any funding deficiency with respect to any Plan, (iii) any liability, either primary or secondary, with respect to complete or partial withdrawal from any Plan, (iv) proceedings to terminate any Plan or (v) the appointment of a trustee for any Plan that could reasonably be expected to have a Material Adverse Effect. Such notice shall be accompanied by any pertinent documents including the relevant notice, correspondence or other communication and a statement of a Responsible Officer of such Loan Party describing the event or the action taken and the reasons therefor.

8.4    Inspection Rights.    To the extent required by Section 2.16, each Loan Party shall upon reasonable notice permit such persons as Administrative Agent or any Lender may designate to visit and inspect the Collateral or any other properties of such Loan Party, to examine its books and records and take copies and extracts therefrom and discuss its respective affairs with its officers, employees and independent engineers at such times and as often as Administrative Agent may reasonably request. Each Loan Party hereby authorizes such officers, employees and independent engineers to discuss with Administrative Agent or such Lenders the affairs of such Loan Party.

8.5    Preservation of Corporate Existence and Qualification.    Each Loan Party shall maintain its existence, good standing and rights in full force and effect in its jurisdiction of organization. Each Loan Party shall qualify to do business and remain qualified and in good standing and shall obtain all necessary authorizations to do business in each jurisdiction in which failure to receive or retain such would have a Material Adverse Effect.

8.6    Continuation of Business.    Loan Parties shall continue to engage solely in the business of providing telecommunications services and shall acquire and maintain in full force

57

and effect all material rights, privileges, franchises and licenses necessary therefor (including any license or authorization required by the FCC or any PUC).

8.7    Insurance.

(a)  Loan Parties shall, at their sole cost and expense, provide and maintain or cause to be maintained at all times insurance in such forms and covering such risks and hazards and in such amounts and with an insurance corporation with a Best rating of “A” or above, licensed to do business in the states where any Network or Loan Party is located, as may be satisfactory to Administrative Agent, as shown on Schedule 8.7, and otherwise as may be required by the Security Documents. If any Loan Party at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay all premiums relating thereto, Administrative Agent may at any time or times thereafter obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto which Administrative Agent deems advisable. Administrative Agent shall have no obligation to obtain insurance for any Loan Party or pay any premiums therefor. By doing so, Administrative Agent shall not be deemed to have waived any Default or Event of Default arising from any Loan Party’s failure to maintain such insurance or pay any premiums therefor. All sums so disbursed, including attorneys’ fees, court costs and other charges related thereto, shall be payable on demand by Loan Parties to Administrative Agent and shall be additional Obligations hereunder secured by the Collateral.

(b)  Administrative Agent reserves the right at any time upon any material change in any Loan Party’s risk profile (including any change in the business conducted by any Loan Party or any laws affecting the potential liability of such Loan Party) to require additional forms and limits of insurance to, in Administrative Agent’s reasonable opinion, adequately protect both Administrative Agent’s and Lenders’ interests in all or any portion of the Collateral and to ensure that each Loan Party is protected by insurance in amounts and with coverage customary for its industry. If requested by Administrative Agent, each Loan Party shall deliver to Administrative Agent from time to time a report of a reputable insurance broker, satisfactory to Administrative Agent, with respect to its insurance policies.

(c)  Each Loan Party shall cause (i) all general liability and automobile insurance policies to name Administrative Agent on behalf of Secured Parties as an additional insured, (ii) all physical damage insurance policies to contain a lender’s or mortgagee’s loss payable provision acceptable to Administrative Agent, (iii) all insurance policies to provide that no assignment, cancellation, material modification, reduction in amount or adverse change in coverage thereof shall be effective until at least thirty (30) days after receipt by Administrative Agent of written notice thereof, (iv) all insurance policies to insure the interests of Administrative Agent on behalf of Secured Parties regardless of any breach of or violation by such Loan Party of any warranties, declarations or conditions contained therein and (v) all insurance policies to provide that Administrative Agent and Lenders shall have no obligation or liability for premiums, commissions, assessments or calls in connection with such insurance. Administrative Agent shall be under no obligation to verify the adequacy or existence of any insurance coverage. Each Loan Party shall furnish Administrative Agent copies of, or acceptable certificates with respect to, all such policies prior to the date hereof, and shall provide to Administrative Agent, at least thirty (30) days prior to each policy expiration date, evidence of the insurance being maintained by such Loan Party in compliance with this Section 8.7(c). Certificates for insurance required under clause (i) above shall be in ACORD Form 25S (attached to Schedule 8.7), and all certificates shall be satisfactory in form and substance to Administrative Agent.

58

(d)  If any of the Collateral is partially or totally damaged or destroyed, Borrower Representative shall give prompt notice to Administrative Agent, and all insurance proceeds, less the costs of collection thereof, shall be paid to or retained by Administrative Agent. Settlements, adjustments or compromises of any claims for loss, damage or destruction to the Collateral shall be made jointly by Borrower Representative and Administrative Agent as long as no Event of Default has occurred and is continuing, and otherwise shall be made solely by Administrative Agent. Each Loan Party hereby authorizes and directs any affected insurance company to pay such proceeds directly to Administrative Agent, and to rely on Administrative Agent’s statement as to whether an Event of Default has occurred. Loan Parties shall pay all costs of collection of insurance proceeds payable on account of such damage or destruction. If no Event of Default has occurred and is continuing on the date any Network is partially or totally damaged or destroyed, Administrative Agent shall make available to Borrower Representative the proceeds of any physical damage insurance actually paid to Administrative Agent in respect of such damage or destruction of any of the Collateral (after deducting therefrom any sums retained by Administrative Agent in reimbursement for costs of collection) to pay the cost of restoration, and Borrower Representative shall proceed promptly with the work of restoration of the Collateral and shall pursue the work of restoration diligently to completion. If any Event of Default has occurred and is continuing either on the date of such damage or destruction or on the date such insurance proceeds are paid, or if any Event of Default shall occur prior to completion of such work of restoration, then Administrative Agent, at its option, may apply such insurance proceeds in payment of any of the Obligations, in such order as set forth in Section 2.10(c). Any insurance proceeds remaining after completion of work or restoration shall, at Administrative Agent’s election, be applied in accordance with Section 2.10(c), or paid over to Borrower Representative. Upon completion of any restoration, Borrower Representative shall deliver to Administrative Agent a certificate stating that the restoration has been duly completed and accounting for the use of any insurance proceeds in such restoration.

8.8    Payment of Taxes, Charges, Claims and Current Liabilities.    Each Loan Party shall pay or discharge:

(a)  on or prior to the date on which penalties thereto accrue, all taxes, assessments and other government charges or levies imposed upon it or any of its properties or income (including such as may arise under Section 4062, Section 4063 or Section 4064 of ERISA, or any similar provision of law);

(b)  on or prior to the date when due, all lawful claims of materialmen, mechanics, carriers, warehousemen and other like persons which result in creation of a Lien upon any such property;

(c)  on or prior to the date when due, all other lawful claims which, if unpaid, might result in the creation of a Lien upon any such property (other than Permitted Encumbrances) or which, if unpaid, might give rise to a claim entitled to priority over general creditors of such Loan Party in a case under Title 11 (Bankruptcy) of the United States Code, as amended, or in any insolvency proceeding or dissolution or winding-up involving such Loan Party; and

(d)  all other current liabilities so that none is overdue more than sixty (60) days.

Notwithstanding the foregoing, each Loan Party shall be entitled to contest or appeal the requirements of any Law or Governmental Authority or the payment of any tax, assessment, charge, levy, claim, asserted liability or any judgment entered against such Loan

59

Party (collectively, in this Section 8.8, the “requirements”), as long as (i) such requirements are being contested in good faith by appropriate proceedings diligently conducted; (ii) Borrower Representative has given Administrative Agent written notice of such requirements and its intent to contest them, with supporting reasons for such contest, before the addition of any interest or penalties that may accrue on such requirements; (iii) such Loan Party maintains adequate cash reserves and makes other appropriate provisions as may be required by GAAP to provide for any liability arising from such requirements; (iv) the contesting of, or failure to comply with, such requirements does not in any way jeopardize such Loan Party’s ability or authority to operate all or any part of its business or the value or continuing priority of the security interests of Administrative Agent on behalf of Secured Parties in the Collateral; (v) the contesting of, or failure to comply with, such requirements does not have a Material Adverse Effect, in the reasonable determination of Requisite Lenders; and (vi) any foreclosure, attachment, execution, sale or similar proceeding against such Loan Party or any of its properties in connection with any such requirements is duly stayed by posting of a bond or security deposit or by other action sufficient under applicable law to stay such foreclosure, attachment, execution, sale or other proceedings.

8.9    Financial Accounting Practices.    Each Loan Party shall make and keep books, records and accounts which, in reasonable detail, accurately and fairly reflect its transactions and dispositions of its assets and maintain a system of internal accounting controls sufficient to provide reasonable assurances that (a) transactions are executed in accordance with management’s general or specific authorization, (b) transactions are recorded as necessary (i) to permit preparation of financial statements in conformity with GAAP and (ii) to maintain accountability for assets, (c) access to assets is permitted only in accordance with management’s general or specific authorization and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

8.10    Compliance with Laws.    Each Loan Party shall comply in all respects with all Laws applicable to such Loan Party, including all Environmental Laws; provided, however, that such Loan Party shall not be deemed to be in violation of this Section 8.10 as a result of any failure to comply which would not result in any liability or exposure to Administrative Agent or Lenders or any fines, penalties, injunctive relief or other civil or criminal liabilities which, in the aggregate, could reasonably be expected to have a Material Adverse Effect.

8.11    Use of Proceeds.    Each Loan Party shall use the proceeds of Facility A Advances and the Letter of Credit Obligations hereunder only as set forth in Section 2.19.

8.12    Government Authorizations; Regulatory Authorizations, Etc.    Each Loan Party shall at all times obtain and maintain in force all Regulatory Authorizations and all other authorizations, permits, consents, approvals, licenses, exemptions and other actions by, and all registrations, qualifications, designations, declarations and other filings with, any Governmental Authority necessary in connection with execution and delivery of this Agreement, the Notes or any other Loan Document, consummation of the transactions herein or therein contemplated, performance of or compliance with the terms and conditions hereof or thereof or to ensure the legality, validity and enforceability hereof or thereof.

8.13     Contracts and Franchises     Each Loan Party shall comply with all agreements or instruments to which it is a party or by which it or any of its properties (now owned or hereafter acquired) may be subject or bound and shall maintain any and all franchises it may have or hereafter acquire; provided, however, that such Loan Party shall not be deemed to be in violation

60

of this Section 8.13 as a result of any failure to comply with any agreement if such failure would not have a Material Adverse Effect on Loan Parties taken as a whole.

8.14    Site Leases and Consents.    Each Loan Party shall maintain in force and renew as necessary all Site Leases and shall obtain Landlord Consents to protect the Administrative Agent’s Liens and access to the Collateral with respect to all Site Leases entered into after the Effective Date. All Site Leases entered into after the date hereof shall have a term (including automatic renewals and such Loan Party’s unilateral renewal rights) equal to or greater than the term of this Agreement and shall require that Administrative Agent be given notice of default and the right to elect to cure defaults and/or assume such agreement upon such Loan Party’s default thereunder or an Event of Default under this Agreement.

8.15    Financial Covenants.    Loan Parties shall comply with the financial covenants set forth on Schedule 8.15.

8.16    Patent, Trademark and Copyright Collateral.

(i)  Borrower Representative shall notify Administrative Agent immediately if it knows or has reason to know that any application or registration relating to any patent, trademark or copyright (now or hereafter existing) may become abandoned or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding any Loan Party’s ownership of any patent, trademark or copyright, its right to register the same, or to keep and maintain the same.

(ii)  In no event shall any Loan Party, either itself or through any agent, employee, licensee or designee, file an application for the registration of any patent, trademark or copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency without giving Administrative Agent prior written notice thereof and, upon request of Administrative Agent, such Loan Party shall execute and deliver any and all Patent Security Agreements, Copyright Security Agreements or Trademark Security Agreements as Administrative Agent may request to evidence the Lien of Administrative Agent on behalf of Secured Parties on such patent, trademark or copyright, and the General Intangibles of such Loan Party relating thereto or represented thereby.

(iii)  Each Loan Party shall take all actions necessary or requested by Administrative Agent to maintain and pursue each application, to obtain the relevant registration and to maintain the registration of each of the patents, trademarks and copyrights (now or hereafter existing), including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings, unless the applicable Loan Party shall determine that such patent, trademark or copyright is not material to the conduct of its business.

(iv)  In the event that any of the patent, trademark or copyright Collateral is infringed upon, or misappropriated or diluted by a third party, Borrower Representative shall notify Administrative Agent promptly after any Loan Party learns thereof. Each Loan Party shall, unless such Loan Party shall reasonably determine that such patent, trademark or copyright Collateral is in no way material to the conduct of its business or operations, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as

61

Administrative Agent shall deem appropriate under the circumstances to protect such patent, trademark or copyright Collateral.

8.17    Sites.    For all Sites acquired after the date hereof by any Loan Party at any time (except for leases of retail sales offices with terms shorter than three years), such Loan Party shall provide to Administrative Agent, all at such Loan Party’s expense and all in form and substance reasonably satisfactory to Administrative Agent, within twenty (20) days of such Loan Party’s acquisition thereof and before placing any Collateral thereon:

(a)  Site Leases.    Copies of duly executed counterparts of the Site Lease; and

(b)  Consent.    Duly executed Landlord Consent executed by the owner of such real property.

8.18    Certain Notices.    Borrower Representative shall promptly provide Administrative Agent and Lenders with written notice and verification in form and substance satisfactory to Requisite Lenders of each occasion that (i) a switch is installed and (ii) a switch becomes operational in one of the Markets.

8.19    Management Team.    Each Loan Party shall engage and continue to retain a professional and experienced management staff.

8.20    Enforcement of Contracts.    Each Loan Party shall exercise promptly and diligently its material rights under each Contract, General Intangible and/or Account (other than any right of termination). Borrower Representative shall deliver to Administrative Agent copies of all material demands or notices received by any Loan Party relating in any way to any Contract, General Intangible and/or Account.

8.21    Legal Fee Reserve.    Loan Parties shall maintain a legal fee reserve adequate to cover current period unpaid litigation expense for all pending litigation in form, amount and substance satisfactory to Administrative Agent and Requisite Lenders and, upon request of Administrative Agent or Requisite Lenders, will provide Administrative Agent and Lenders with a quarterly analysis evidencing its compliance with this requirement.

8.22    Subordinated Loans.    Any and all Indebtedness, loans or advances to any Loan Party by any other Loan Party shall upon request of Administrative Agent or Requisite Lenders be subordinated to any and all Obligations of such Loan Party to Administrative Agent and Lenders upon terms and provisions reasonably satisfactory to Administrative Agent and Requisite Lender, and each such other Loan Party shall deliver to Administrative Agent and Lenders a signed subordination agreement on terms satisfactory to Administrative Agent and Requisite Lenders.

8.23    Liens on After-Acquired Property.    With respect to any assets acquired after the date hereof of the type defined as Collateral in this Agreement of each Loan Party or any Subsidiary of Holdings as to which Administrative Agent on behalf of Secured Parties does not have a perfected first-priority Lien, such Loan Party shall promptly grant or cause to be granted, or confirm or evidence the grant herein of, to Administrative Agent on behalf of Secured Parties a Lien, upon the terms contained herein, on all such property and interests, free of all other Liens except those permitted under Section 9.2. Such Loan Party at its own expense, shall (i) prepare, execute, acknowledge and deliver, or cause the preparation, execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an

62

appropriate governmental office, any document or instrument deemed by Administrative Agent to be necessary or desirable for the creation, perfection, renewal and continuation of the foregoing Liens (including as to each after-acquired leasehold premises and simultaneously with the execution of the applicable lease a landlord consent in form and substance reasonably satisfactory to the Administrative Agent), (ii) pay, or cause to be paid, all taxes, fees and legal expenses related to such registration, filing or recording and (iii) deliver to Administrative Agent resolutions of Board of Directors and opinions of counsel, in form and substance as may be reasonably acceptable to Administrative agent.

8.24    Intentionally Omitted.

8.25    Intentionally Omitted.

8.26    Further Assurances.

(a)  Each Loan Party executing this Agreement agrees that it shall and shall cause each other Loan Party to, at such Loan Party’s expense and upon request of Administrative Agent or Requisite Lenders, duly execute and deliver, or cause to be duly executed and delivered, to Administrative Agent and Lenders such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of Administrative Agent or Requisite Lenders to carry out more effectively the provisions and purposes of this Agreement or any other Loan Document, including, but not limited to, (i) providing notice of any Commercial Tort Claim in accordance with the terms of Section 8.2(h) and (ii) taking action to grant, secure and/or continue the Secured Parties’ first priority perfected security interest in the Collateral in accordance with the terms of Revised Article 9 of the UCC, effective July 1, 2001.

(b)  Within sixty (60) days of the Effective Date, Loan Parties will use reasonable best efforts to execute and deliver, or cause to be executed and delivered to the Administrative Agent, Landlord Consents for any real property location where any of the Collateral is located.

(c)  Loan Parties shall obtain a control agreement (in form and substance reasonably acceptable to Administrative Agent) with respect to Deposit Accounts and Investment Property not in certificated form with (i) Wachovia Securities on or before January 10, 2003 and (ii) Liberty on or before January 3, 2003.

8.27    Financial Advisor.    Loan Parties shall continue to engage and maintain Ruth Ford of Crossroads, LLC, or any replacement reasonably acceptable to the Requisite Lenders, to act as the financial advisor to Loan Parties with responsibilities and duties similar to those responsibilities and duties being performed on the Effective Date until such time as the Advisor is engaged pursuant to Section 9.14.

ARTICLE 9: NEGATIVE COVENANTS

Each Loan Party hereby jointly and severally agrees as to all Loan Parties that, until the Termination Date, no Loan Party shall, without prior written consent of Requisite Lenders, do or permit to exist any of the following:

9.1    Indebtedness.    Create, incur, assume or suffer to exist at any one time any Indebtedness, except for Permitted Debt, or purchase, redeem, prepay, defease or otherwise acquire for value or make any payment on account or in respect of any principal amount of Permitted Subordinated Debt.

63

9.2    Restrictions on Liens and Sale of Collateral.

(a)  Create or suffer to exist any Lien on the Collateral or on any other property of any Loan Party, or any part thereof, whether superior or subordinate to the Lien of the Loan Documents, except for the following permitted Liens (the “Permitted Encumbrances”):

(i)  Liens and encumbrances in favor of Administrative Agent on behalf of Secured Parties;

(ii)  Liens for Taxes not yet due, or which are being contested in good faith and by appropriate proceedings in accordance with Section 8.8;

(iii)  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings in accordance with Section 8.8;

(iv)  pledges or liens in connection with workers’ compensation, unemployment insurance and other social security legislation;

(v)  deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(vi)  easements, rights-of-way, restrictions and other similar encumbrances that are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of such Loan Party;

(vii)  judgments and judgment Liens with respect to which execution has been stayed within ten (10) days by appropriate judicial proceedings and the posting of adequate security which may not be any of the Collateral;

(viii)  specific Liens, if any, identified on Schedule 9.2;

(ix)  Liens to secure purchase money indebtedness and Capital Leases permitted by clause c of the definition of Permitted Debt which is secured by only the property acquired;

(x)  cash collateralization of the letters of credit (including letters of credit set forth on Schedule 9.1) permitted by clause (d) of the definition of Permitted Debt in an aggregate amount not to exceed $2,000,000; and

(xi)  certain other Liens as may be permitted with Requisite Lenders’ prior written consent.

(b)  Assign, convey, sell or otherwise dispose of or encumber its interest in the Collateral, or any part thereof (including execution of any lease), or permit any such action to be taken, except for sales and other dispositions of equipment and inventory in the ordinary course of business for fair value, not exceeding $400,000 per year in the aggregate.

64

(c)  Enter into or permit to exist any agreement, note, indenture or instrument, take any other action, which would prohibit the creation of a Lien on any of its properties or other assets in favor of Administrative Agent on behalf of Secured Parties, as additional collateral for the Obligations, except operating leases, Capital Leases or Licenses which prohibit Liens solely upon the assets that are subject thereto.

9.3    Limitation on Contingent Obligations.    Agree to, or assume, guarantee, endorse or otherwise in any way be or become responsible or liable for, directly or indirectly, any Contingent Obligation except for those created or contemplated by the Loan Documents or with respect to the obligations (other than Obligations in respect of Indebtedness) of another Loan Party in the ordinary course of business.

9.4    Prohibition of Mergers, Acquisitions, Name, Office or Business Changes, Etc.

(a)  Enter into, or become the subject of, any transaction of merger, acquisition or consolidation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of such Loan Party’s business or assets, whether now owned or hereafter acquired, without Requisite Lenders’ prior written consent; provided, that upon the repayment in full of the Deferred Amortization Holdings and its Subsidiaries may enter into Permitted Acquisitions.

(b)  Change its name, chief executive office, principal place of business, corporate structure or the location of any Collateral without giving Administrative Agent and Lenders at least thirty (30) days’ advance written notice of such change, and ensuring that any steps that Administrative Agent or Requisite Lenders may deem necessary to continue the perfection and priority of security interests of Administrative Agent on behalf of Secured Parties in the Collateral shall have been taken.

(c)  Change the Fiscal Year end of such Loan Party from December 31, except with the prior written consent of Requisite Lenders, which consent shall not be unreasonably withheld.

(d)  Amend, restate or otherwise modify, or violate any terms of, its Organizational Documents in any material respect without the prior written consent of Requisite Lenders, which consent will not be unreasonably withheld.

(e)  Become or agree to become a general or limited partner in any general or limited partnership, or a member in a limited liability company or a joint venturer in any joint venture other than a wholly-owned Subsidiary.

(f)  Acquire or purchase substantially all of the stock or ownership interests in, or substantially all of the business, assets, customers or operations of, any other entity; provided, that upon the repayment in full of the Deferred Amortization Holdings and its Subsidiaries may enter into Permitted Acquisitions.

(g)  Enter into any new business or make any material change in any of such Loan Party’s business objectives, purposes and operations from those contemplated in the Business Plan without the prior written consent of Requisite Lenders.

(h)  Establish or seek to establish any Network outside of the Markets.

65

9.5    Limitation on Equity Payments.    In the case of Holdings, make any Equity Payment (other than dividends that are cumulative and accrue daily at the rate of 6% per annum on Holdings Series A Preferred Stock and shares of common stock issued upon conversion of any such Holdings Series A Preferred Stock to the extent provided for in the Certificate of Incorporation of Holdings (including the applicable Certificates of Designation) as in effect on the date of the first issuance of each of Holdings Series A Preferred Stock; provided, however, that in no event shall any Loan Party make any Equity Payment in Cash if, after giving effect to such Equity Payment, a Default or an Event of Default has occurred and is continuing; provided, further, that in no event shall Holdings make any Equity Payment in Cash until the repayment in full of the Deferred Amortization.

9.6    Prohibition on Sale or Issuance of Stock.    Issue any stock, stock option, warrant, or any other securities other than non-convertible debt securities, or the right to receive any such security (“equity securities”) of each Loan Party other than issuances of equity securities by Holdings, the net cash proceeds of which shall be applied in accordance with Section 2.10(b)(ii).

9.7    Limitation on Investments, Advances and Loans.    Organize, create, acquire, capitalize or own any Subsidiary except in compliance with Section 9.13 or make or commit to make any advance (except in compliance with Section 9.13 or as permitted by Section 9.10), loan, guarantee of any Indebtedness, extension of credit or capital contribution to, or hold or invest in or purchase or otherwise acquire any stock, bonds, notes, debentures or other securities of, or make any other investment in, any Person, including any officer of a Loan Party, any Affiliate of a Loan Party (other than another Loan Party) or any officer of any Affiliate of a Loan Party, except for (a) upon repayment in full of the Deferred Amortization, Permitted Acquisitions, (b) loans to another Loan Party, (c) travel advances in the ordinary course of business, (d) relocation loans to employees but not in excess of $250,000 in the aggregate outstanding at any one time, (e) other loans to any employees of any Loan Party but in any case in an amount (including principal and interest outstanding) not to exceed $250,000 in the aggregate at any given time, other than loans that would be in violation of the Sarbanes-Oxley Act, and (f) Cash.

9.8    Capital Expenditures.    Directly or indirectly make or commit to make any expenditure in respect of the purchase or other acquisition (including installment purchases or Capital Leases) of fixed or capital assets, except for normal replacements and maintenance (including capacity expansions and enhancements for existing Sites) which are properly charged to current operations exceeding, in the aggregate for Holdings, Borrowers and their respective Subsidiaries during any Fiscal Quarter, the amount set forth for such Fiscal Quarter in the Business Plan dated December 12, 2002; provided, that (i) one hundred percent (100%) of any amount not used in any Fiscal Quarter, commencing with the Fiscal Quarter ended March 31, 2003, may be carried forward into the next succeeding Fiscal Quarter and to the extent not used in such succeeding Fiscal Quarter may be carried forward into the next succeeding Fiscal Quarter, provided that (A) such carry forward of unused Capital Expenditure capacity may not exceed three Fiscal Quarters in the aggregate and (B) except as specifically set forth in clause (ii) below, such carry forward or unused Capital Expenditure capacity for any Fiscal Year may not be carried forward into the succeeding Fiscal Year and (ii) Borrowers may carry forward into the Fiscal Quarter ended March 31, 2003, $2,000,000 from the Fiscal Quarter ended December 31, 2002.

9.9    Limitation on Leases.    Enter into any agreement, or be or become liable under any agreement, not in existence on December 20, 1999, and reflected on such Loan Party’s financial statements, for the lease, hire or use of any real or personal property in excess of $100,000 in the aggregate, including capital or operating leases, except that such Loan Party may, in the ordinary course of business and on terms standard in the industry, enter into leases or

66

agreements for office space, vehicles or office equipment and for the location or storage of Collateral.

9.10    Transactions with Affiliates.    Except as described in Schedule 5.41, enter into any transactions, including any loans or advances, any repayment of loans or advances, or the purchase, sale or exchange of property or the rendering of any services, with any Affiliate (other than another Loan Party), or enter into, assume or suffer to exist any employment or consulting contract with any Affiliate (other than another Loan Party), or otherwise pay any fees or expenses to, or reimburse or assure any obligation for the reimbursement of any expenses incurred by, any Affiliate (other than another Loan Party).

9.11    Extension of Accounts.    Without Requisite Lenders’ prior written consent, with respect to any material Accounts, General Intangibles or Contracts (other than with respect to disputed reciprocal compensation and related facilities charges), (i) grant any material extension of the time of payment, (ii) compromise, compound or settle for a material amount less than the full amount thereof, (iii) release any person liable for the payment thereof, or (iv) allow any credit or discount whatsoever thereon, other than trade discounts granted in the normal course of business or discounts, compromises, compounds or settlements that will not have a Material Adverse Effect.

9.12    Assumed Names.    Transact or engage in business under any assumed name, fictitious name, trade style or “d/b/a” except those identified on Schedule 5.39.

9.13    Subsidiaries.    Permit or cause any Loan Party to create, organize or acquire a Subsidiary owning, or any Subsidiary of Holdings that is not already a Borrower to own, assets unless such Subsidiary delivers to Administrative Agent and Lenders an Additional Borrower Assumption (an “Additional Borrower Assumption”), substantially in the form of Exhibit I, pursuant to which such Subsidiary becomes a Borrower, and satisfies the conditions set forth therein, to the reasonable satisfaction of Requisite Lenders.

9.14    Advisor.    Fail to (a) within ten (10) Business Days of delivery to Holdings of a list of three (3) potential advisors approved by all Lenders, engage the Advisor, (b) continue to engage and retain the Advisor until repayment in full of the Deferred Amortization, or (c) in the event of the resignation or removal of the Advisor for any reason, replace the Advisor with another Person approved by all Lenders within ten (10) Business Days of delivery to Holdings of a new list of potential advisors.

9.15    Cash Management.    Permit any Loan Party to maintain any Cash or Investment Property with any Person other than (i) a Lender or a financial institution which has executed a control agreement in respect thereof in form and substance reasonably satisfactory to Administrative Agent and Lenders and (ii) Deposit Accounts containing Cash and/or uncertificated Investment Property with a value not to exceed $50,000 in the aggregate at any time for all such Deposit Accounts and Investment Property.

ARTICLE 10: EVENTS OF DEFAULT AND REMEDIES

10.1    Events of Default.    An Event of Default shall mean the occurrence or existence of one or more of the following events or conditions (whatever the reason for such Event of Default and whether voluntary, involuntary or effected by operation of Law):

67

(a)  Payment Default.    Any Borrower (i) fails to make any payment of principal when due, (ii) fails to make any payment of interest on, or Fees owing in respect of, the Loans or any of the other Obligations within one (1) Business Day after such amount becomes due and payable or (iii) fails to pay or reimburse Administrative Agent or Lenders for any expense reimbursable hereunder or under any other Loan Document within ten (10) Business Days following demand for such reimbursement or payment of expenses.

(b)  False Statement.    If any statement, representation or warranty made or deemed made by any Loan Party in any Loan Document or made in any financial statement, certificate, report, exhibit or document furnished to Administrative Agent or any Lender pursuant to any Loan Document, proves to have been untrue, incomplete, false or misleading in any material respect as of the time when made or deemed made (including by omission of material information necessary to make such representation, warranty or statement not misleading).

(c)  Immediate Default.    Any Loan Party shall (i) fail or neglect to perform, keep or observe any of the provisions of Sections 8.1(a) (as a result of a qualification of the certification of the independent certified public accountant as to going concern or arising out of the scope of the audit) 8.2, 8.7, 8.11, 8.15 (as of the end of any Fiscal Year, Fiscal Quarter or any two (2) consecutive Fiscal Months), 8.27 and Article 9 or (ii) shall discharge more than two (2) Advisors in any period of twelve (12) consecutive months.

(d)  Covenant Defaults.    If any Loan Party fails or neglects to perform, keep or observe any provision of this Agreement (other than as set forth in clauses (a) through (c) above), and such default continues for a period of ten (10) Business Days after the earlier of such Loan Party’s knowledge thereof or receipt of written notice from the Lenders or the Administrative Agent thereof, except for violations of Section 8.8(d), which shall become an Event of Default at the end of the sixty (60) day period stated therein.

(e)  Undischarged Judgments.    If one or more judgments for the payment of money have been entered against Borrower in an amount in excess of $200,000 in the aggregate and such judgment or judgments have remained undischarged and unstayed for a period of thirty (30) calendar days or, if stayed, all of the conditions in Section 8.8 have not been satisfied.

(f)  Attachments, Etc.    If a writ or warrant of attachment, garnishment, execution, distraint or similar process has been issued against any Loan Party or any of its properties in an amount in excess of $200,000, which has remained undischarged and unstayed for a period of thirty (30) consecutive days or, if stayed, all of the conditions in Section 8.8 have not been satisfied.

(g)  Default Under Third Party Agreements.    A default or breach occurs under any other agreement, document or instrument to which any Loan Party is a party which is not cured within any applicable grace period, and such default or breach (i) involves the failure to make any payment $200,000 in the aggregate, or (ii) causes, or permits any holder of such Indebtedness or a trustee to cause, Indebtedness or a portion thereof in excess of $200,000 in the aggregate to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, regardless of whether such default is waived, or such right is exercised, by such holder or trustee.

(h)  Dissolution; Discontinuance of Business, Etc.    If any Loan Party discontinues its usual business, dissolves, has its charter revoked, winds up or liquidates itself or its business.

68

(i)  Involuntary Bankruptcy or Receivership Proceedings.    A case or proceeding commences against any Loan Party seeking a decree or order in respect of any Loan Party (i) under Title 11 of the United States Code, as now constituted or hereafter amended or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for any Loan Party or of any substantial part of any such Person’s assets, or (iii) ordering the winding-up or liquidation of the affairs of any Loan Party, and such case or proceeding shall remain undismissed or unstayed for sixty (60) days or more or such court shall enter a decree or order granting the relief sought in such case or proceeding.

(j)  Voluntary Bankruptcy.    Any Loan Party (i) prepares to file or files a petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) fails to contest in a timely and appropriate manner or consents to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of any Loan Party or of any substantial part of any such Person’s assets, (iii) makes an assignment for the benefit of creditors, (iv) takes any corporate action in furtherance of any of the foregoing or (v) admits in writing its inability to, or shall be generally unable to, pay its debts as such debts become due.

(k)  Assignments for Benefit of Creditors, Etc.    If any Loan Party makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due, or consents to the appointment of a receiver, trustee or liquidator of itself or of all or any part of its properties.

(l)  Non-compliance with Governmental Requirements.    If any Loan Party fails to comply with any requirement of any Governmental Authority within twenty (20) calendar days after notice in writing of such requirement shall have been given to such Loan Party by such Governmental Authority or such longer period of time permitted by such Governmental Authority and is not being contested by such Loan Party in compliance with Section 8.8.

(m)  Regulatory Authorizations.    If any Regulatory Authorization in connection with this Agreement or any other Loan Document or any such Regulatory Authorization now or hereafter necessary or advisable to make this Agreement or any other Loan Documents legal, valid, enforceable and admissible in evidence or to permit each Loan Party to conduct its business as it is then conducted in all material respects is not obtained or has ceased to be in full force and effect or has been modified or amended or has been held to be illegal or invalid or is revoked or terminated, and is not being contested by such Loan Party in compliance with Section 8.8, and Requisite Lenders have reasonably determined in good faith (which determination shall be conclusive) that such event or occurrence may have a Material Adverse Effect.

(n)  Damage or Destruction.    If the proceeds of any physical damage insurance actually paid in respect of the partial or total damage or destruction of any material amount of Equipment are insufficient to cover the cost of the restoration thereof or if Administrative Agent determines that such damage or destruction is so extensive that repair or restoration cannot be expected within a time period short enough to prevent a Material Adverse Effect.

(o)  Landlord Consents.    If Loan Party fails to provide the Landlord Consents required hereunder and Requisite Lenders determine in their sole discretion that such failure results in a material impairment of Lenders’ security for the Loans.

69

(p)  ERISA Defaults.    If, with respect to any Plan, (i) there has occurred a Reportable Event being considered by the PBGC which may reasonably result in any material liability to the PBGC with respect to any Plan, (ii) a Plan has been terminated, (iii) a trustee has been appointed by a United States District Court to administer a Plan, (iv) a PBGC or any other person has instituted proceedings to terminate a Plan or to appoint a trustee to administer any such Plan, (v) any Loan Party or any Affiliate has withdrawn, completely or partially, from any Plan, (vi) any Loan Party or any Affiliate has incurred secondary liability for withdrawal liability payments under any Plan or (vii) a Plan has failed to meet the minimum funding standards established under the Code or ERISA.

(q)  Defaults Under Other Loan Documents.    If any default, misrepresentation or breach should occur under any Pledge Agreement, Security Document, Guaranty or other Loan Document and is not cured or waived within the time permitted therein, or any such Loan Documents should cease to be in full force and effect, or any Loan Party thereto should assert any unenforceability of, or deny liability on, or admit inability to perform under, any such Loan Document.

(r)  Security Interest.    Any material provision of any Loan Document shall for any reason cease to be valid, binding and enforceable in accordance with its terms (or any Loan Party shall challenge the enforceability of any Loan Document or shall assert in writing, or engage in any action or inaction based on any such assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms), or any security interest created under any Loan Document shall cease to be a valid and perfected first priority security interest or Lien (except as otherwise permitted herein or therein) in any of the Collateral purported to be covered thereby.

(s)  Change of Control, Etc.    Any Change of Control occurs.

10.2    Remedies.

(a)  If any Event of Default shall have occurred and be continuing or if a Default shall have occurred and be continuing and Requisite Lenders shall have determined not to make any Facility A Advances or incur any Letter of Credit Obligations so long as that specific Default is continuing, Administrative Agent shall (at the written request of the Requisite Lenders), without notice, suspend the Facility A Commitment with respect to further Facility A Advances and/or the incurrence of further Letter of Credit Obligations, whereupon any further Facility A Advances and Letter of Credit Obligations shall be made or extended (in the sole discretion of the Requisite Lenders) so long as such Default or Event of Default is continuing. If any Event of Default shall have occurred and be continuing, Administrative Agent shall (at the written request of Requisite Lenders), without notice except as otherwise expressly provided herein, increase the rate of interest applicable to the Loans and the Letter of Credit Fees to the Default Rate.

(b)  If any Event of Default shall have occurred and be continuing, Administrative Agent shall (at the written request of the Requisite Lenders), upon notice to Borrower Representative, (i) terminate the Facility A Commitment with respect to further Facility A Advances or the incurrence of further Letter of Credit Obligations; (ii) declare all or any portion of the Obligations, including all or any portion of any Loan to be forthwith due and payable, and require that the Letter of Credit Obligations be cash collateralized as provided in Annex I, all without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrowers and each other Loan Party; and (iii) exercise any rights and remedies provided to Administrative Agent on behalf of Secured Parties under the Loan

70

Documents and/or at law or equity, including all remedies provided under the Code; provided, however, that upon the occurrence of an Event of Default specified in Sections 10.1(i), (j) or (k), the Facility A Commitment shall be immediately terminated and all of the Obligations, including the Loans, shall become immediately due and payable without declaration, notice or demand by any Person.

(c)  Until repayment in full of the Deferred Amortization, if any Event of Default shall have occurred and be continuing for a period of more than ten (10) Business Days pursuant to (i) Section 10.1(a), (b), (i), (j) or (k), (ii) Section 10.1(c) as a result of the failure of Borrowers to comply with Section 8.15 or (iii) as a result of a qualification of the certification of the independent certified public accountant as to going concern or arising out of the scope of the audit, then Holdings shall engage and continue to retain a chief strategy officer (“CSO”) with the duties and obligations set forth on Schedule 10.2.

(d)  If any Event of Default shall have occurred and be continuing, interest due and owing to the Investors in respect of the Permitted Subordinated Debt shall accrue and may be paid solely through the issuance of additional notes; it being understood that no Loan Party shall make payment thereof in Cash so long as an Event of Default is continuing.

10.3    Waivers by Loan Parties.    Except as otherwise provided for in this Agreement or by applicable law, each Loan Party waives (including for purposes of Article 11): (a) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Administrative Agent on behalf of Secured Parties on which any Loan Party may in any way be liable, and hereby ratifies and confirms whatever Administrative Agent on behalf of Secured Parties may do in this regard, (b) all rights to notice and a hearing prior to Administrative Agent’s taking possession or control of, or to Administrative Agent’s replevy, attachment or levy upon, the Collateral or any bond or security which might be required by any court prior to allowing Administrative Agent on behalf of Secured Parties to exercise any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling and exemption laws. If any notification of intended disposition of any of the Collateral is required by law, such notification shall be deemed reasonably and properly given if given in accordance with Section 12.5 at least ten (10) days before such disposition.

10.4    Exercise of Rights.    Subject to any requirements for FCC, PUC or other governmental approval upon the occurrence of any Event of Default, the rights, powers and privileges provided in this Section 10.4 and all other remedies available to Administrative Agent and Lenders under this Agreement or by statute or by rule of law may be exercised by Administrative Agent or any Lender at any time from time to time whether or not the Obligations shall be due and payable, and whether or not Administrative Agent or any Lender shall have instituted any foreclosure or other action for the enforcement of this Agreement or any other Loan Document. No failure to exercise, nor any delay in exercising on the part of Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under any of the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or future exercise thereof or the exercise of any other right, remedy, power or privilege.

10.5    Rights of Secured Party.    In addition to all other rights and remedies granted to it under this Agreement, the other Loan Documents and under any other instrument or agreement securing, evidencing or relating to any of the Obligations, if any Event of Default shall have

71

occurred and be continuing, Administrative Agent may exercise all rights and remedies of a secured party.

10.6    Additional Remedies.    Remedies of Administrative Agent and Lenders upon the occurrence and during the continuance of an Event of Default shall include, in addition to, and not in lieu of, such remedies as are available at law or in equity or provided for in any of the Loan Documents, the following:

(a)  Foreclosure; Receivership.    Administrative Agent shall be entitled to file one or more suits at law or in equity to collect the Obligations and/or to foreclose on the Liens on and security interests created by this Agreement or any other Loan Document. Administrative Agent may apply or require any Loan Party to apply for any necessary transfers, assignments, orders, consents or licenses in connection with the operation or abandonment of any Network or any part thereof, and shall also be entitled as a matter of right and without notice and without requiring bond (notice and bond being hereby waived), without regard to the solvency or insolvency of any Loan Party at the time of application and without regard to the value of the Collateral at that time, to have a receiver appointed by a court of competent jurisdiction in order to manage, protect and preserve the Collateral or any part thereof and to continue the operation of the business of any Loan Party, and to collect all revenues and profits thereof and apply the same to the payment of all expenses and other charges of such receivership until the sale or other final disposition of the Collateral. Each Loan Party hereby consents to the appointment of such receiver.

(b)  Collection of Accounts, Etc.    At any time after the occurrence and during the continuance of an Event of Default notify account debtors that the Accounts have been assigned to Administrative Agent on behalf of Secured Parties and that payments shall be made directly to Administrative Agent on behalf of Secured Parties. Upon the request of Requisite Lenders at any time after the occurrence and during the continuance of an Event of Default, Borrowers shall so notify such account debtors. Upon the occurrence of an Event of Default, Administrative Agent on behalf of Secured Parties shall be entitled, but not obligated, to collect, compromise, settle and otherwise act with respect to any Accounts, Contracts or General Intangibles, and shall be authorized to (i) endorse checks and other instruments, (ii) communicate directly with any Loan Party’s customers or other obligors to collect payments and/or (iii) bring actions to enforce such collection, and otherwise take any actions necessary to collect and recover any amounts owing to such Loan Party. Any amounts so received by Administrative Agent on behalf of Secured Parties shall be held for the account of Borrowers and may be applied to the Obligations at Administrative Agent’s option, at the direction of Requisite Lenders, but shall not be deemed to be payment of the Obligations until so applied. Borrower Representative shall, at Requisite Lenders’ request, deliver to Administrative Agent copies of all original and other documents evidencing or relating to the Accounts, Contracts or General Intangibles, including without limitation all original orders, sublease contracts, invoices, shipping receipts, computer records and databases.

(c)  Segregation of Payments.    Upon Administrative Agent’s request, at the direction of Requisite Lenders, following an Event of Default, Borrowers shall immediately deliver to Administrative Agent on behalf of Lenders all Proceeds received by any Loan Party, in the form received except for Borrower’s endorsement if required. Alternatively, Administrative Agent may, at the direction of Requisite Lenders, require Borrowers, at the direction of Requisite Lenders, to immediately deliver, or may require the delivery of, such Proceeds to a special bank account or post office box from which only Administrative Agent on behalf of Secured Parties can withdraw them. In either case, all such Proceeds and any payments received by any Loan Party under or in connection with any of the Collateral received by such Loan Party shall be held

72

by Borrowers in trust for Administrative Agent on behalf of Secured Parties and shall be segregated from other funds of Borrowers. Any and all such payments so received by Administrative Agent on behalf of Secured Parties (whether from Borrowers or otherwise) may, in the sole discretion of Administrative Agent, be held by Administrative Agent on behalf of Secured Parties as collateral security for, and/or then or at any time thereafter applied in whole or in part by Administrative Agent, against all or any part of the Obligations of Loan Parties in such order as Administrative Agent may determine in its sole discretion. Any balance of such payments held by Administrative Agent and remaining after payment in full of all the Obligations shall be paid over to Borrowers or to any Person lawfully entitled to receive the same.

(d)  Right to Cure.    If any Loan Party fails in any material respect to perform or comply with any of its agreements contained herein or in any of the other Loan Documents or any Contracts, Administrative Agent may take whatever actions it may deem appropriate to perform or comply or otherwise cause performance or compliance with such agreement, all at the risk, cost and expense of Borrowers.

(e)  Set Off.    If the unpaid principal amount of the Loans, interest accrued thereon or any other amount owing by Loan Parties hereunder or under the Loans shall have become due and payable (by acceleration or otherwise), each Lender and each Affiliate of a Lender shall have the right, in addition to all other rights and remedies available to it, without notice to Loan Parties, to set off against and to appropriate and apply to such due and payable amounts any debt owing to, and any other funds held in any manner for the account of, any of Loan Parties by such Lender or Affiliate. Such right shall exist whether or not such Lender or Affiliate shall have given notice or made any demand hereunder or under the Other Loan Documents, whether or not such debt owing to or funds held for the account of Loan Parties is or are matured or unmatured, and regardless of the existence or adequacy of any collateral, guaranty or any other security, right or remedy available to Administrative Agent and Lenders. Each Loan Party hereby consents to and confirms the foregoing arrangements and confirms such Lender’s and Affiliate’s rights of set off.

10.7    Application of Proceeds.    Any proceeds of any of the Collateral, received by Administrative Agent through sale or disposition of the Collateral or otherwise, shall be applied by Administrative Agent toward the payment of the Obligations, including expenses in connection with the Collateral (including reasonable fees and legal expenses) as specified in Section 2.13(a).

10.8    Discontinuance of Proceedings.    If Administrative Agent or any Lender should proceed to enforce any right or remedy under this Agreement or any other Loan Document, and then discontinue or abandon such proceeding for any reason, all rights, powers and remedies of Administrative Agent and Lenders hereunder shall continue as if no such proceeding had been taken.

10.9    Power of Attorney.    For the purpose of carrying out the provisions and exercising the rights, powers and privileges granted by the Loan Documents, including this Article 10, each Loan Party hereby irrevocably constitutes and appoints Administrative Agent for the benefit of Administrative Agent and Lenders its true and lawful attorney-in-fact to execute, acknowledge and deliver any instruments and do and perform any acts such as are referred to in the Loan Documents, including this Article 10, in the name and on behalf of such Loan Party, from time to time in Administrative Agent’s reasonable discretion after the occurrence and during the continuance of an Event of Default, in accordance with the Loan Documents and any statute or rule of law. This power of attorney is a power coupled with an interest and cannot be revoked.

73

Each Loan Party hereby ratifies all that said attorney-in-fact shall lawfully do or cause to be done by virtue and in accordance with the terms hereof.

Without limiting the generality of the foregoing, Administrative Agent may, after the occurrence and during the continuance of an Event of Default, do the following without notice to or assent by any Loan Party to accomplish the purposes of this Agreement:

(a)  upon failure of such Loan Party to timely pay or discharge taxes or Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement or any other Loan Document, and pay all or any part of the premiums therefor and the costs thereof;

(b)  file any application, petition or other request with the FCC, PUC or any other Governmental Authority for the purpose of obtaining any consent or approval from or satisfying any filing or notice requirement of any Governmental Authority in order to effect a sale or transfer of any or all the Collateral, or a change in control of, or to permit Administrative Agent to complete or operate, or both, any Network; and

(c)  (i)  direct any party liable for any payment under any of the Contracts or Accounts to make payment of any and all monies due and to become due thereunder directly to Administrative Agent or as Administrative Agent shall direct; (ii) in the name of such Loan Party or its own name or otherwise, take possession of and endorse and collect any checks, drafts, notes, acceptances, or other instruments for the payment of monies due under, or otherwise receive payment of and receipt for any and all monies, claims and other amounts due and to become due at any time in respect of or arising out of any Collateral; (iii) sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with Accounts and other documents relating to the Collateral; (iv) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction or before any arbitrator to collect all or any of the Collateral and to enforce any other right in respect of any Collateral; (v) defend any suit, action or proceeding brought against such Loan Party with respect to any Collateral; (vi) settle, compromise or adjust any suit, action or proceeding described above upon commercially reasonable terms under the circumstances and, in connection therewith, give such discharges or releases as Administrative Agent may reasonably deem appropriate; (vii) cure any default under any Contract and/or modify and/or assume any such Contract; and (viii) generally sell, use, operate, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Administrative Agent were the absolute owner thereof for all purposes, and, at Administrative Agent’s option and Loan Parties’ expense, at any time or from time to time after the occurrence and during the continuance of an Event of Default, all other acts and things that Administrative Agent reasonably deems necessary to perfect, preserve or realize upon the Collateral and Administrative Agent’s security interest therein on behalf of Secured Parties, in order to effect the intent of this Agreement and the other Loan Documents all as fully and effectively as such Loan Party might do.

10.10    Regulatory Matters.

(a)  Loan Parties’ Cooperation; Consents.    Notwithstanding any provision to the contrary contained herein, Administrative Agent and Lenders will not exercise any right or remedy under this Agreement that requires prior FCC or PUC approval without first obtaining such approval. If counsel to Administrative Agent reasonably determines that the consent of the FCC or PUC is required in connection with any of the actions that may be taken by

74

Administrative Agent in the exercise of its rights hereunder or under any of the other Loan Documents, then Loan Parties, at their sole cost and expense, agree to use their best efforts to secure such consent and to cooperate with Administrative Agent in any action commenced by Administrative Agent to secure such consent. Upon the occurrence and during the continuation of an Event of Default the applicable Borrower shall promptly execute and/or cause the execution of all applications, certificates, instruments and other documents and papers that may be required in order to obtain any necessary governmental consent, approval or authorization, and if such Borrower fails or refuses to execute such documents, the clerk of the court with jurisdiction may execute such documents on behalf of such Borrower.

(b)  Loan Parties’ Cooperation; Transfers.    In connection with the enforcement by Administrative Agent of any remedies available to it as a result of any Event of Default and subject to the provisions of Section 10.10(a), Loan Parties shall join and cooperate fully with Administrative Agent, and with any receiver or trustee referred to herein and with the successful bidder or bidders at any foreclosure sale when any of these entities file an application with the FCC or PUC, or with any necessary federal, state and local governmental authorities, requesting their prior approval of (i) the operation or abandonment of all or any portion of the Collateral and (ii) the assignment or transfer to such entity of all licenses, authorizations and permits issued to any Loan Party by the FCC, PUC or any such other authorities with respect to Loan Parties’ business and the operation thereof. Loan Parties’ cooperation shall include, without limitation, the furnishing of any information that may be required in connection with such applications.

(c)  Conveyance of Regulatory Authorizations.    Subject to any necessary FCC or PUC approval, each Loan Party agrees to assign, transfer and convey the Regulatory Authorizations to Administrative Agent (or its designee) upon Administrative Agent’s request following the occurrence of an Event of Default, to the extent that any such assignment or transfer may be deemed necessary to allow Administrative Agent to exercise its remedies hereunder or under the Loan Documents.

(d)  Specific Performance.    Each Loan Party recognizes that its Regulatory Authorizations are unique assets that may have to be transferred in order for Administrative Agent to adequately realize the value of its security interests. Each Loan Party further recognizes that a violation of this provision would result in irreparable harm to Administrative Agent and Lenders for which monetary damages are not readily ascertainable. Therefore, in addition to any other remedy that may be available to Administrative Agent and Lenders at law or in equity, Administrative Agent shall have the remedy of specific performance to enforce the provisions of this section.

ARTICLE 11: JOINT AND SEVERAL OBLIGATIONS; GUARANTY

11.1  Guaranty.    Each Borrower hereby agrees that such Borrower is jointly and severally liable for, and hereby absolutely and unconditionally guarantees to Administrative Agent and Lenders and their respective successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Administrative Agent and Lenders by each other Borrower; provided, however, that US LEC of Georgia Inc. shall not be liable for Obligations in excess of $75,000,000. In addition, Holdings hereby absolutely and unconditionally guarantees to Administrative Agent and Lenders and their respective successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of all Obligations owed or hereafter owing to Administrative Agent and Lenders by each Borrower. Each Loan Party agrees that its guaranty obligation hereunder is a continuing guaranty of

75

payment and performance and not of collection, that its obligations under this Article 11 shall not be discharged until payment and performance, in full, of the Obligations has occurred, and that its obligations under this Article 11 shall be absolute and unconditional, irrespective of, and unaffected by:

(a)  the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Loan Document or any other agreement, document or instrument to which any Loan Party is or may become a party;

(b)  the absence of any action to enforce this Agreement (including this Article 11) or any other Loan Document or the waiver or consent by Administrative Agent and Lenders with respect to any of the provisions thereof;

(c)  the existence, value or condition of, or failure to perfect its Lien against, any security for the Obligations or any action, or the absence of any action, by Administrative Agent and Lenders in respect thereof (including the release of any such security);

(d)  the insolvency of any Loan Party; or

(e)  any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

Each Loan Party shall be regarded, and shall be in the same position, as principal debtor with respect to the Obligations guaranteed hereunder.

11.2    Waivers by Loan Parties.    Each Loan Party expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel Administrative Agent or Lenders to marshall assets or to proceed in respect of the Obligations guaranteed hereunder against any other Loan Party, any other party or against any security for the payment and performance of the Obligations before proceeding against, or as a condition to proceeding against, such Loan Party. It is agreed among each Loan Party, Administrative Agent and Lenders that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Loan Documents and that, but for the provisions of this Article 11 and such waivers, Administrative Agent and Lenders would decline to enter into this Agreement. Without limiting the effect of the foregoing, if and to the extent that North Carolina law is applicable, Loan Parties hereby expressly waive the provisions of N.C. Gen. Stat. §§ 26-7 through 26-9, inclusive.

11.3    Benefit of Guaranty.    Each Loan Party agrees that the provisions of this Article 11 are for the benefit of Administrative Agent and Lenders and their respective successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any Loan Party and Administrative Agent or Lenders, the obligations any Loan Party has under the Loan Documents.

11.4    Subordination of Subrogation, Etc.    Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, and except as set forth in Section 11.7, each Loan Party hereby expressly and irrevocably subordinates to payment of the Obligations any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor until the Obligations are indefeasibly paid in full in cash. Each Loan Party acknowledges and agrees that this subordination is intended to benefit Administrative

76

Agent and Lenders and shall not limit or otherwise affect such Loan Party’s liability hereunder or the enforceability of this Article 11 and that Administrative Agent, Lenders and their respective successors and assigns are intended third-party beneficiaries of the waivers and agreements set forth in this Section 11.4.

11.5    Election of Remedies.    If Administrative Agent or any Lender may, under applicable law, proceed to realize its benefits under any of the Loan Documents giving Administrative Agent or such Lender a Lien upon any Collateral, whether owned by any Loan Party or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Administrative Agent or any Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Article 11. If, in the exercise of any of its rights and remedies, Administrative Agent or any Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Loan Party or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Loan Party hereby consents to such action by Administrative Agent or such Lender and waives any claim based upon such action, even if such action by Administrative Agent or such Lender shall result in a full or partial loss of any rights of subrogation which each Loan Party might otherwise have had but for such action by Administrative Agent or such Lender. Any election of remedies which results in the denial or impairment of the right of Administrative Agent or any Lender to seek a deficiency judgment against any Loan Party shall not impair any other Loan Party’s obligation to pay the full amount of the Obligations. In the event Administrative Agent or any Lender shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or the Loan Documents, Administrative Agent or such Lender may bid all or less than the amount of the Obligations and the amount of such bid need not be paid by Administrative Agent or such Lender but, at the election of Administrative Agent or such Lender, shall be credited against the Obligations. The amount of the successful bid at any such sale, whether Administrative Agent, Lender or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Article 11, notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which Administrative Agent or any Lender might otherwise be entitled but for such bidding at any such sale.

11.6    Limitation.    Notwithstanding any provision herein contained to the contrary, each Borrower’s liability under this Article 11 (which liability is in any event in addition to amounts for which such Borrower is primarily liable under Article 2) shall be limited to an amount not to exceed as of any date of determination the greater of:

(a)  the net amount of all Loans advanced to any other Borrower under this Agreement and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower; and

(b)  the amount which could be claimed by Administrative Agent and Lenders from such Borrower under this Article 11 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, such Borrower’s right of contribution and indemnification from each other Borrower under Section 11.7.

77

11.7    Contribution with Respect to Guaranty Obligations.

(a)  To the extent that any Borrower shall make a payment under this Article 11 of all or any of the Obligations (other than Loans made to that Borrower for which it is primarily liable) (a “Guarantor Payment”) which, taking into account all other Guarantor Payments then previously or concurrently made by any other Borrower, exceeds the amount which such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion that such Borrower’s “Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of Borrowers as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Obligations and termination of the Facility A Commitment, such Borrower shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Borrower for the amount of such excess, prorata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.

(b)  As of any date of determination, the “Allocable Amount” of any Borrower shall be equal to the maximum amount of the claim which could then be recovered from such Borrower under this Article 11 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

(c)  This Section 11.7 is intended only to define the relative rights of Borrowers and nothing set forth in this Section 11.7 is intended to or shall impair the obligations of Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 11.1. Nothing contained in this Section 11.7 shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall be primarily liable.

(d)  The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of Borrowers to which such contribution and indemnification are owing.

(e)  The rights of the indemnifying Borrowers against other Loan Parties under this Section 11.7 shall be exercisable upon the full and indefeasible payment of the Obligations and the termination of the Facility A Commitment.

11.8    Liability Cumulative.    The liability of Borrowers under this Article 11 is in addition to and shall be cumulative with all liabilities of each Borrower to Administrative Agent and Lenders under this Agreement and the other Loan Documents to which such Borrower is a party or in respect of any Obligations or obligation of the other Borrowers without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

ARTICLE 12: GENERAL CONDITIONS/MISCELLANEOUS

The following conditions shall be applicable throughout the term of this Agreement:

12.1    Amendments, Modifications and Waivers.

78

(a)  No amendment, modification or waiver of any provision of this Agreement nor consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be in writing and signed by the Requisite Lenders, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, modification, waiver or consent shall, unless in writing and signed by each Lender affected thereby, do any of the following: (i) waive any of the conditions specified in Article 6, except as otherwise provided therein; (ii) increase the Facility A Commitment or subject any Lender to any additional obligations; (iii) reduce the principal of, or interest on, the Loans or any fees or other amounts payable hereunder; (iv) amend any of the provisions in Article 2 in a manner adverse to Lenders (it being understood that any amendment or modification of any definition used therein or in any other Article or Section of this Agreement referred to therein shall not be deemed an amendment of Article 2); (v) release any material amount of Collateral except as shall otherwise be provided herein; (vi) release any Guarantor having a material amount of assets; (vii) amend the definition of Requisite Lenders; (viii) amend this Section 12.1 or (ix) waive the remedy set forth in Section 10.2(c); and provided, further, that no amendment, modification, waiver or consent shall, unless in writing and signed by Administrative Agent in addition to Lenders required above to take such action, affect the rights or duties of Administrative Agent under this Agreement or the other Loan Documents. No failure on the part of any Lender or Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

(b)  Administrative Agent, Lenders and Loan Parties recognize that certain financial covenants set forth in Section 8.15 may need to be adjusted to permit Loan Parties to remain in compliance therewith upon the issuance of the full amount of Permitted Subordinated Debt and, accordingly, upon receipt of notice from Holdings of any proposed issuance of Permitted Subordinated Debt, agree to negotiate in good faith to adjust the financial covenants set forth in Section 8.15 to reflect such issuance.

12.2    Advances Not Implied Waivers.    No waiver of the requirements contained in any Loan Document shall be effective unless in writing duly signed by the required number of Lenders provided for herein. No Facility A Advance hereunder shall constitute a waiver of any of the conditions of Lenders’ obligation to make further Facility A Advances. Any advance made by any Lender and any sums expended by any Lender pursuant to the Loan Documents shall be deemed to have been made pursuant to this Agreement, notwithstanding the existence of an uncured Default or Event of Default. No Facility A Advance at a time when an Event of Default exists shall constitute a waiver of any right or remedy by Administrative Agent or any Lender existing by reason of such Event of Default, including the right to accelerate the maturity of the Indebtedness evidenced by the Loan Documents or to foreclose the Lien on the Collateral or to refuse to make further advances hereunder.

12.3    Business Day.    Except as otherwise provided herein, whenever any payment or action to be made or taken hereunder or under any other Loan Document shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next Business Day and such extension of time shall be included in computing interest or fees, if any, in connection with such payment or action.

12.4    Records.    From time to time Administrative Agent may send Borrower Representative statements of the unpaid principal amount of the Loans, the unpaid interest accrued thereon, the interest rate or rates applicable to such unpaid principal amount, the duration

79

of such applicability, and the amount remaining available on any Commitment, and each statement shall be deemed correct and conclusively binding on Borrowers (absent manifest error) unless Borrower Representative notifies Administrative Agent of an error in the statement in writing within thirty (30) days of the date on which any such statement is provided to Borrower Representative.

12.5    Notices.    All notices, requests, demands, directions and other communications (collectively, “notices”) required under the provisions of this Agreement or any other Loan Document shall be in writing (including communication by facsimile transmission) unless otherwise expressly permitted hereunder and shall be sent by hand, by registered or certified mail (return receipt requested), by overnight courier service (maintaining records of receipt) or by facsimile transmission with confirmation of receipt, in all cases with charges prepaid, and any such properly given notice shall be effective upon the earliest of (i) receipt, (ii) when delivered by hand, (iii) the third Business Day after being mailed, (iv) the following Business Day if sent by overnight courier service or (v) upon transmission when sent by facsimile. All notices shall be addressed as follows:

If to any Loan Party, to the Notice Address set forth on Schedule 1, with copies, if any, as set forth on Schedule 1.

If to Administrative Agent:

General Electric Capital Corporation

10 Riverview Drive

Danbury, Connecticut 06810

Attention: SA Account Manager

Telecopy: (203) 749-4531

If to any Lender, to the Notice Address set forth on Annex II or in the Assignment Agreement by which it became a Lender.

All notices shall be sent to the applicable party at the address stated above or in accordance with the last unrevoked written direction from such party to the other party hereto, given in accordance with the terms hereof. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice.

12.6    FCC and PUC Approval.    The exercise of any rights or remedies hereunder or under any other Loan Document by Administrative Agent or any Lender that may require FCC or PUC approval shall be subject to obtaining such approval. Pending the receipt of any PUC or FCC approval, no Loan Party shall delay, hinder, interfere with or obstruct the exercise of Administrative Agent’s or Lenders’ rights or remedies hereunder or the obtaining of such approvals.

12.7    Lenders Sole Beneficiary.    All conditions of the obligation of Lenders to make any Facility A Advances hereunder are imposed solely and exclusively for the benefit of Lenders and their respective assigns; no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that any Lender will refuse to make any Facility A Advances in the absence of strict compliance with any or all such conditions; and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lenders at any time if, in their sole discretion, Lenders deem it advisable to do so. Each Lender’s sole obligation

80

hereunder is to make the Facility A Advances if and to the extent required by this Agreement or any other Loan Document.

12.8    Lender’s Review of Information.    Each Loan Party acknowledges and agrees that any review or analysis by Administrative Agent or any Lender of financial information, operating information, marketing data or other information provided to Administrative Agent or such Lender by or on behalf of such Loan Party at any time is and shall be conducted solely for Administrative Agent’s and such Lender’s benefit and internal use and that neither Administrative Agent nor any Lender is under any duty or obligation to make the results of such review or analysis available to any Loan Party. No Loan Party is relying, and will not rely, on Administrative Agent or any Lender for financial or business advice.

12.9    No Joint Venture.    Nothing in this Agreement or any other Loan Document shall be deemed to constitute any kind of partnership, joint venture or fiduciary relationship between Administrative Agent, any Lender or any Loan Party.

12.10    Severability.    The provisions of this Agreement are intended to be severable. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement or any other Loan Document shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

12.11    Rights Cumulative.    All rights, powers and remedies herein given to Administrative Agent and Lenders are cumulative and not alternative and are in addition to all statutes or rules of law.

12.12    Duration; Survival.    All representations and warranties of any Loan Party contained herein or made in connection herewith shall survive the making of and shall not be waived by the execution and delivery of this Agreement and the other Loan Documents, any investigation by Administrative Agent or any Lender, or the making of any Facility A Advances or Loans hereunder. All covenants and agreements of any Loan Party contained herein shall continue in full force and effect from and after the date hereof so long as it may borrow hereunder and until payment in full of the Loans, interest thereon, all fees and all other Obligations of Borrowers. Without limitation, it is understood that all obligations of Loan Parties to make payments to or indemnify Lenders shall survive the payment in full of the Loans and of all other Obligations.

12.13    Governing Law.    This Agreement, the Notes and each of the other Loan Documents shall be governed by and construed and enforced in accordance with the law of the State of New York, except to the extent that the law of jurisdictions where the Collateral is located may be required to apply to the Collateral.

12.14    Counterparts.    This Agreement may be executed in any number of counterparts (by facsimile transmission or otherwise) and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same instrument.

12.15    Successors and Assigns.    This Agreement and the other Loan Documents shall be binding on and shall inure to the benefit of each Loan Party, Administrative Agent, Lenders and their respective successors and assigns (including, in the case of any Loan Party, a debtor-in-

81

possession on behalf of such Loan Party), except as otherwise provided herein or therein. No Loan Party may assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder or under any of the other Loan Documents without the prior express written consent of Administrative Agent and Lenders. Any such purported assignment, transfer, hypothecation or other conveyance by any Loan Party without the prior express written consent of Administrative Agent and Lenders shall be void. The terms and provisions of this Agreement are for the purpose of defining the relative rights and obligations of each Loan Party, Administrative Agent and Lenders with respect to the transactions contemplated hereby and no Person shall be a third-party beneficiary of any of the terms and provisions of this Agreement or any of the other Loan Documents.

12.16    Disclosures and Confidentiality.

(a)  Each Loan Party agrees that it and each of its Affiliates will obtain Administrative Agent’s written consent before using or generating any press release, advertisement, publicity materials or other publication in which the name or logo of Administrative Agent or any Lender or any of their Affiliates is used or may be reasonably inferred and will not distribute any such materials in the absence of such prior written approval.

(b)  Each Loan Party agrees that it will not, directly or indirectly, disclose to any third party the terms of this Agreement or the other Loan Documents or prior or future correspondence relating thereto, or the transactions contemplated hereby, or any other information regarding Administrative Agent, any Lender or their Affiliates learned by such Loan Party during the course of negotiation thereof. The term “third party” shall exclude only Loan Parties, their Affiliates and their respective attorney(s) and certified public accountant(s). This Section 12.16(b) shall not restrict the disclosure of information if such disclosure is required by law, by order of any court or by the order, rule or regulation of any administrative agency, including any requirements of the FCC, any PUC or any state or federal securities commissions (the “Commissions”); provided, however, that, except for disclosures required by the FCC, PUC or Commissions, Borrower Representative shall provide Administrative Agent with advance notice of any such required disclosure of information so that Administrative Agent or the applicable Lender may seek an appropriate protective order and/or waive compliance with this Section 12.16(b). Each Loan Party shall not oppose any action taken by Administrative Agent or any Lender to obtain an appropriate protective order or other reliable assurance that the information will be accorded confidential treatment. The obligations set forth in this Section 12.16(b) shall survive the termination of this Agreement.

(c)  Administrative Agent and each Lender agree to use commercially reasonable efforts (equivalent to the efforts Administrative Agent or such Lender applies to maintaining the confidentiality of its own confidential information) to maintain as confidential all confidential information provided to them by Loan Parties and designated as confidential for a period of two (2) years following receipt thereof, except that Administrative Agent and each Lender may disclose such information (a) to Persons employed or engaged by Administrative Agent or such Lender in evaluating, approving, structuring or administering the Loans and the Facility A Commitment; (b) to any bona fide assignee or participant or potential assignee or participant that has agreed to comply with the covenant contained in this Section 12.16 (and any such bona fide assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in clause (b) above); (c) as required or requested by any Governmental Authority or reasonably believed by Administrative Agent or such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, in the opinion of Administrative Agent’s or such Lender’s counsel, required by

82

law; (e) in connection with the exercise of any right or remedy under the Loan Documents or in connection with any litigation to which Administrative Agent or such Lender is a party; or (f) which ceases to be confidential through no fault of Administrative Agent or such Lender.

(d)  The disclosure of information by any of Administrative Agent, Lenders or Loan Parties will not be restricted under this Agreement if such information (i) has been or becomes published or is now, or in the future, in the public domain through (A) no fault of the parties, (B) disclosure other than unauthorized disclosure by the party to whom the information is disclosed or (C) disclosure to third parties by the disclosing party without similar restriction; (ii) is property (other than proposal letters, commitment letters or other correspondence between Lenders and Loan Parties) within the legitimate possession of the receiving party prior to disclosure hereunder; (iii) subsequent to disclosure hereunder, is lawfully received from a third party having rights therein without restriction of the third party’s or receiving party’s rights to disseminate the information and without notice of any restriction against its further disclosure; (iv) is disclosed with the written approval of the other party; or (v) is or becomes publicly available free of any obligation to keep it confidential.

(e)  Each Loan Party authorizes Administrative Agent and each Lender to discuss with and furnish to any Affiliate of Administrative Agent or such Lender, any government or self-regulatory agency with jurisdiction over Administrative Agent or such Lender, any other Governmental Authority or, subject to such Person’s agreeing to this Section 12.16, any assignee, successor, participant, successor, or prospective assignee, successor or participant, all financial statements, audit reports and other information pertaining to such Loan Party and/or its Subsidiaries whether such information was provided by such Loan Party or prepared or obtained by Administrative Agent, Lenders or third parties. No representation or warranty is made by Administrative Agent, Lenders or any of their employees, officers, directors or agents to any existing or prospective assignee, successor or participant regarding any audit reports or other analyses of any Loan Party that Administrative Agent or any Lender may distribute, whether such information was provided by any Loan Party or prepared or obtained by Administrative Agent, Lenders or third parties, nor shall Administrative Agent, Lenders or any of their employees, officers, directors or agents be liable to any Person receiving a copy of such reports or analyses for any inaccuracy or omission contained in such reports or analyses or relating thereto.

(f)  Every reference in this Agreement to disclosures of any Loan Party to any Lender or Administrative Agent (except the Business Plan and financial statements), to the extent that such references refer or are intended to refer to disclosures at or prior to the execution of this Agreement, shall be deemed strictly to refer only to written disclosures delivered to Administrative Agent or Lenders concurrently with the execution of this Agreement and referred to specifically in the Loan Documents. The parties intend that such disclosures are to be limited to those presented in an orderly manner at the time of executing this Agreement and are not to be deemed to include expressly or impliedly any disclosures that previously may have been delivered from time to time to Administrative Agent or any Lender, except to the extent that such previous disclosures are again presented to Administrative Agent or such Lender in writing concurrently with the execution of this Agreement.

12.17    Jurisdiction and Venue.    EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK FOR ANY SUIT BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS AND AGREES NOT TO CONTEST VENUE IN ANY SUCH COURTS. In any such litigation, each Loan Party waives personal service of

83

any summons, complaint or other process, and agree that the service thereof may be made by certified or registered mail directly to Borrower Representative at its address set forth in Section 12.5. The choice of forum set forth herein shall not be deemed to preclude the enforcement of any judgment obtained in such forum or the taking of any action under this Agreement to enforce the same in any appropriate jurisdiction.

12.18    Jury Waiver.    THE PARTIES HERETO HEREBY KNOWINGLY AND WILLINGLY WAIVE THEIR RIGHTS TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, THE OBLIGATIONS OR ANY RELATIONSHIP AMONG ADMINISTRATIVE AGENT, LENDERS AND ANY LOAN PARTY. EACH LOAN PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

12.19    Limitation on Liability.    NONE OF ADMINISTRATIVE AGENT, ANY LENDER OR ANY LOAN PARTY SHALL HAVE ANY LIABILITY UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS FOR SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY SORT IN ANY SUIT BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS AND, EXCEPT TO THE EXTENT PROHIBITED BY LAW, EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH ACTION ANY SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY SORT OTHER THAN ACTUAL DAMAGES.

12.20    General Wavier and Release.    IN ADDITION, TO INDUCE ADMINISTRATIVE AGENT AND LENDERS TO AGREE TO THE TERMS OF THIS AGREEMENT, LOAN PARTIES (BY THEIR EXECUTION BELOW) REPRESENT AND WARRANT THAT AS OF THE DATE OF THEIR EXECUTION OF THIS AGREEMENT THERE ARE NO CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS TO THEIR RESPECTIVE OBLIGATIONS UNDER THE EXISTING LOAN AGREEMENT, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. NOTWITHSTANDING THE FOREGOING, IN THE EVENT THERE EXIST ANY SUCH CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS, LOAN PARTIES (BY THEIR EXECUTION BELOW) HEREBY:

(a)  FOREVER GENERALLY WAIVE ANY AND ALL CLAIMS, OFFSETS, DEFENSES AND/OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING ON OR PRIOR TO THE DATE OF THEIR EXECUTION OF THIS AGREEMENT; AND

(b)  FOREVER RELEASE, ACQUIT AND DISCHARGE ADMINISTRATIVE AGENT AND LENDERS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, SHAREHOLDERS, AFFILIATES AND ATTORNEYS (COLLECTIVELY THE “RELEASED PARTIES”) FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITIES, CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW OR EQUITY, WHICH ANY LOAN PARTY EVER HAD, NOW HAS, CLAIMS TO

84

HAVE OR MAY HAVE AGAINST ANY RELEASED PARTY ARISING ON OR PRIOR TO THE DATE HEREOF AND FROM OR IN CONNECTION WITH THE EXISTING LOAN AGREEMENT, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND HEREIN.

The provisions of this Section 12.20, including without limitation the representations and warranties contained herein, shall survive termination of this Agreement indefinitely.

12.21    Schedules, Exhibits and Annexes.    The Schedules, Exhibits and Annexes attached to this Agreement are an integral part hereof, and are hereby made a part of this Agreement.

12.22    Agreement to Govern.   In case of any conflict between the terms of this Agreement and any of the other Loan Documents, the terms of this Agreement shall govern.

12.23     Entire Agreement.

(a)  This Agreement, the other Loan Documents and other documents, agreements and certificates executed by the parties contemporaneously herewith or subsequent hereto constitute the entire agreement of the parties and supersede all prior understandings and agreements, written or oral, among the parties hereto relating to the subject matter hereof. No Loan Party is entering into this Agreement in reliance on statements or representations made by any Person other than as set forth herein.

(b)  On the Effective Date, the Existing Loan Agreement shall be amended and restated in its entirety by this Agreement and the Existing Loan Agreement shall thereafter be of no further force and effect except to evidence (i) the incurrence by any Borrower of the “Obligations” under and as defined therein (whether or not such “Obligations” are contingent as of the Effective Date), (ii) the representations and warranties made by the Borrowers prior to the Effective Date and (iii) any action or omission performed or required to be performed pursuant to such Existing Loan Agreement prior to the Effective Date (including any failure, prior to the Effective Date, to comply with the covenants contained in such Existing Loan Agreement). The amendments and restatements set forth herein (including deletion of financial covenants applicable to previous Fiscal Quarters) shall not cure any breach thereof or any “Default” or “Event of Default” under and as defined in the Existing Loan Agreement existing prior to the date hereof. This Agreement is not in any way intended to constitute a novation of the obligations and liabilities existing under the Existing Loan Agreement or evidence payment of all or any portion of such obligations and liabilities.

(c)  The terms and conditions of this Agreement and Administrative Agent’s and Lenders’ rights and remedies under this Agreement and the other Loan Documents, shall apply to all of the Obligations incurred under the Existing Loan Agreement and the Notes issued thereunder.

(d)  The Borrower reaffirms the Liens granted pursuant to this Existing Loan Agreement and the Security Documents to Administrative Agent for the benefit of Lenders, which Liens shall continue in full force and effect during the term of this Agreement and any renewals or extensions thereof and shall continue to secure the Obligations.

(e)  On and after the Effective Date, (i) all references to the Existing Loan Agreement (or to any amendment, supplement, modification or amendment and restatement thereof) in the

85

Loan Documents (other than this Agreement) shall be deemed to refer to the Existing Loan Agreement as amended and restated hereby, (ii) all references to any section (or subsection) of the Existing Loan Agreement in any Loan Document (but not herein) shall be amended to become, mutatis mutandis, references to the corresponding provisions of this Agreement and (iii) except as the context otherwise provides, on or after the Effective Date, all references to this Agreement herein (including for purposes of indemnification and reimbursement of fees) shall be deemed to be reference to the Existing Loan Agreement as amended and restated hereby.

(f)  This amendment and restatement is limited as written and is not a consent to any other amendment, restatement, waiver or other modification, whether or not similar, and, except as expressly provided herein or in any other Loan Document, all terms and conditions of the Loan Documents remain in full force and effect unless otherwise specifically amended by this Agreement or any other Loan Document.

[SIGNATURE PAGE APPEARS ON THE NEXT PAGE.]

86

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first above written.

Administrative Agent and Lender: GENERAL ELECTRIC CAPITAL CORPORATION
By:	/s/    Angela M. LePore
	Name:    Angela M. LePore
	Title:      SVP, Special Assets

Lenders:

WACHOVIA BANK, NATIONAL ASSOCIATION,

    as a Lender

By:	/s/    Matthew Berk
	Name:	Matthew Berk
	Title:	Authorized Officer

U.S. BANK NATIONAL ASSOCIATION

By:	/s/    Greg Wilson
	Name:	Greg Wilson
	Title:	Vice President

PNC BANK, NATIONAL ASSOCIATION

By:	/s/    Steven J. McGehrin
	Name:	Steven J. McGehrin
	Title:	Vice President

IBM CREDIT CORPORATION

By:	/s/    Steven A. Flanagan
	Name:	Steven A. Flanagan
	Title:	Manager at Global Special Handling

87

BANK AUSTRIA CREDITANSTALT

CORPORATE FINANCE, INC.

By:	/s/    A.W.Seidel
	Name:	A.W. Seidel
	Title:	SVP

Borrower Representative And Guarantor:
US LEC CORP.
By:	/s/    Michael K. Robinson
	Name:	Michael K. Robinson
	Title:	Executive Vice President and Chief Financial Officer

Borrowers:

US LEC OF ALABAMA INC.

US LEC COMMUNICATIONS INC.

US LEC OF FLORIDA INC.

US LEC OF GEORGIA INC.

US LEC OF MARYLAND INC.

US LEC OF NORTH CAROLINA INC.

US LEC OF PENNSYLVANIA INC.

US LEC OF SOUTH CAROLINA INC.

US LEC OF TENNESSEE INC.

US LEC OF VIRGINIA L.L.C.

US LEC ACQUISITION CO.

By:	/s/    Michael K. Robinson
	Name:	Michael K. Robinson
	Title:	Executive Vice President and Chief Financial Officer

88