CONFORMED THROUGH NINTH AMENDMENT DATED AS OF JANUARY 10, 2003

FOR REFERENCE ONLY

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.1

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

among

 

FIBERNET OPERATIONS, INC.,

as a Borrower,

 

DEVNET L.L.C.,

as a Borrower,

 

THE INSTITUTIONS PARTY HERETO

FROM TIME TO TIME AS LENDERS,

as the Lenders,

 

DEUTSCHE BANK AG NEW YORK BRANCH,

as the Administrative Agent,

 

WACHOVIA INVESTORS, INC.,

formerly known as First Union Investors, Inc.,

as the Documentation Agent.

 

and

 

TD SECURITIES (USA) INC.,

formerly known as Toronto Dominion (USA) Securities Inc.,

as the Syndication Agent,

 

 

--------------------------------------------------------------------------------

 

DEUTSCHE BANC ALEX.BROWN INC.,

as the Lead Arranger

 

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

ARTICLE I. DEFINITIONS    3

SECTION 1.1.

  

DEFINED TERMS

   3

SECTION 1.2.

  

ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT

   35

SECTION 1.3.

  

OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION

   35 ARTICLE II. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS    36

SECTION 2.1.

  

COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES

   36

SECTION 2.2.

  

LETTERS OF CREDIT

   40

SECTION 2.3.

  

INTEREST ON THE LOANS

   45

SECTION 2.4.

  

FEES

   49

SECTION 2.5.

  

REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN COMMITMENTS; GENERAL PROVISIONS
REGARDING PAYMENTS

   50

SECTION 2.6.

  

SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS

   56

SECTION 2.7.

  

INCREASED COSTS; TAXES; CAPITAL ADEQUACY

   57

SECTION 2.8.

  

OBLIGATION OF THE LENDERS TO MITIGATE

   62 ARTICLE III. CONDITIONS TO THE MAKING OF EXTENSIONS OF CREDIT    62

SECTION 3.1.

  

CONDITIONS PRECEDENT TO THE INITIAL LOAN AND INITIAL LETTER OF CREDIT

   62

SECTION 3.2.

  

CONDITIONS PRECEDENT TO SUBSEQUENT LOANS

   69 ARTICLE IV. REPRESENTATIONS AND WARRANTIES    70

SECTION 4.1.

  

ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND SUBSIDIARIES

   70

SECTION 4.2.

  

AUTHORIZATION OF BORROWING, ETC.

   71

SECTION 4.3.

  

SOLVENCY

   72

SECTION 4.4.

  

FINANCIAL CONDITION

   72

SECTION 4.5.

  

NO MATERIAL ADVERSE EFFECT

   73

SECTION 4.6.

  

TITLE TO PROPERTIES; LIENS; REAL PROPERTY

   73

SECTION 4.7.

  

LITIGATION; ADVERSE FACTS

   73

SECTION 4.8.

  

PAYMENT OF TAXES

   73

SECTION 4.9.

  

PERFORMANCE OF AGREEMENTS; MATERIAL CONTRACTS

   74

SECTION 4.10.

  

GOVERNMENTAL REGULATION

   74

SECTION 4.11.

  

SECURITIES ACTIVITIES

   74

SECTION 4.12.

  

LABOR MATTERS

   74

SECTION 4.13.

  

CERTAIN FEES

   75

 

 

i

--------------------------------------------------------------------------------

SECTION 4.14.

   ENVIRONMENTAL PROTECTION   

75

SECTION 4.15.

   MATTERS RELATING TO COLLATERAL   

76

SECTION 4.16.

   IMMUNITY   

76

SECTION 4.17.

   ADDITIONAL MATTERS    77 ARTICLE V.    BORROWERS’ AFFIRMATIVE COVENANTS    78

SECTION 5.1.

  

FINANCIAL STATEMENTS AND OTHER REPORTS

   78

SECTION 5.2.

  

PERFORMANCE OF OBLIGATIONS; CONDUCT OF BUSINESS

   82

SECTION 5.3.

  

BUSINESS PLAN

   82

SECTION 5.4.

  

EXISTENCE

   83

SECTION 5.5.

  

PAYMENT OF OBLIGATIONS

   83

SECTION 5.6.

  

MAINTENANCE OF PROPERTIES; INSURANCE

   83

SECTION 5.7.

  

INSPECTION; LENDER MEETING

   84

SECTION 5.8.

  

COMPLIANCE WITH LAWS; GOVERNMENTAL ACTIONS AND RIGHTS OF WAY

   84

SECTION 5.9.

  

ENVIRONMENTAL MATTERS

   84

SECTION 5.10.

  

PAYMENT OF LIENS

   87

SECTION 5.11.

  

FURTHER ASSURANCES

   87

SECTION 5.12.

  

USE OF PROCEEDS

   89

SECTION 5.13.

  

INTELLECTUAL PROPERTY

   90

SECTION 5.14.

  

COOPERATION WITH SYNDICATION

   90

SECTION 5.15.

  

INTEREST RATE PROTECTION

   90 ARTICLE VI.    BORROWERS’ NEGATIVE COVENANTS    90

SECTION 6.1.

  

INDEBTEDNESS

   91

SECTION 6.2.

  

LIENS AND RELATED MATTERS

   92

SECTION 6.3.

  

CHANGE OF OFFICE

   92

SECTION 6.4.

  

CHANGE OF NAME

   92

SECTION 6.5.

  

INVESTMENTS; JOINT VENTURES; FORMATION OF SUBSIDIARIES

   92

SECTION 6.6.

  

FINANCIAL COVENANTS

   94

SECTION 6.7.

  

RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS

   99

SECTION 6.8.

  

SALES AND LEASE-BACKS

   100

SECTION 6.9.

  

SALE OR DISCOUNT OF RECEIVABLES

   101

SECTION 6.10.

  

TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES

   101

SECTION 6.11.

  

DISPOSAL OF STOCK

   102

SECTION 6.12.

  

CERTAIN RESTRICTIONS ON CHANGES TO CHARTER DOCUMENTS

   102

SECTION 6.13.

  

CERTAIN RESTRICTIONS IN RESPECT OF MATERIAL CONTRACTS

   102

SECTION 6.14.

  

LIMITATIONS ON RESTRICTED ACTIONS

   102

SECTION 6.15.

  

NATURE OF BUSINESS

   103

 

 

ii

--------------------------------------------------------------------------------

SECTION 6.16.

  

FISCAL YEAR

   103

SECTION 6.17.

  

CURRENCY

   103

SECTION 6.18.

  

RESTRICTED PAYMENTS

   103

SECTION 6.19.

  

PLEDGED ACCOUNTS

   104 ARTICLE VII. EVENTS OF DEFAULT    104

SECTION 7.1.

  

FAILURE TO MAKE PAYMENTS WHEN DUE

   104

SECTION 7.2.

  

DEFAULT UNDER OTHER INDEBTEDNESS

   104

SECTION 7.3.

  

BREACH OF WARRANTY

   104

SECTION 7.4.

  

INVOLUNTARY BANKRUPTCY PROCEEDING, ETC.

   105

SECTION 7.5.

  

VOLUNTARY BANKRUPTCY PROCEEDING, ETC.

   105

SECTION 7.6.

  

JUDGMENTS AND ATTACHMENTS

   105

SECTION 7.7.

  

DISSOLUTION

   105

SECTION 7.8.

  

CHANGE IN CONTROL

   105

SECTION 7.9.

  

NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS

   106

SECTION 7.10.

  

IMPAIRMENT OF MATERIAL CONTRACT

   106

SECTION 7.11.

  

DEFAULT UNDER OR TERMINATION OF MATERIAL CONTRACTS

   106

SECTION 7.12.

  

DEFAULT UNDER OR TERMINATION OF GOVERNMENTAL ACTIONS

   107

SECTION 7.13.

  

FAILURE OF GUARANTY; REPUDIATION OF OBLIGATIONS

   107

SECTION 7.14.

  

CRIMINAL PROCEEDING

   107

SECTION 7.15.

  

ERISA

   107

SECTION 7.16.

  

RECEIPT OF GOVERNMENTAL ACTIONS

   108

SECTION 7.17.

  

PARENT LETTER AGREEMENT

   108

SECTION 7.18.

  

REMEDIES

   108 ARTICLE VIII. AGENTS    109

SECTION 8.1.

  

APPOINTMENT

   109

SECTION 8.2.

  

POWERS AND DUTIES; GENERAL IMMUNITY

   110

SECTION 8.3.

  

REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS

   112

SECTION 8.4.

  

RIGHT TO INDEMNITY

   112

SECTION 8.5.

  

SUCCESSOR AGENTS

   113

SECTION 8.6.

  

COLLATERAL DOCUMENTS AND SUBSIDIARY GUARANTIES

   113 ARTICLE IX. MISCELLANEOUS    114

SECTION 9.1.

  

ASSIGNMENTS AND PARTICIPATIONS IN LOANS

   114

SECTION 9.2.

  

EXPENSES

   116

SECTION 9.3.

  

INDEMNITY

   117

 

iii

--------------------------------------------------------------------------------

SECTION 9.4.  

  

SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS

   118

SECTION 9.5.  

  

RATABLE SHARING

   118

SECTION 9.6.  

  

AMENDMENTS AND WAIVERS

   119

SECTION 9.7.  

  

INDEPENDENCE OF COVENANTS

   120

SECTION 9.8.  

  

NOTICES

   120

SECTION 9.9.  

  

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS

   121

SECTION 9.10.

  

FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE

   122

SECTION 9.11.

  

MARSHALING; PAYMENTS SET ASIDE

   122

SECTION 9.12.

  

SEVERABILITY

   122

SECTION 9.13.

  

OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF THE LENDERS’ RIGHTS

   122

SECTION 9.14.

  

HEADINGS

   123

SECTION 9.15.

  

GOVERNING LAW; ENTIRE AGREEMENT

   123

SECTION 9.16.

  

SUCCESSORS AND ASSIGNS

   123

SECTION 9.17.

  

CONSENT TO JURISDICTION AND SERVICE OF PROCESS

   123

SECTION 9.18.

  

WAIVER OF JURY TRIAL

   124

SECTION 9.19.

  

LIMITED RECOURSE

   124

SECTION 9.20.

  

LIMITATION OF LIABILITY

   125

SECTION 9.21.

  

SATISFACTION

   125

SECTION 9.22.

  

COUNTERPARTS; EFFECTIVENESS

   125

SECTION 9.23.

  

USURY

   125

SECTION 9.24.

  

JOINT AND SEVERAL LIABILITY

   126

 

iv

--------------------------------------------------------------------------------

SCHEDULES

 

Schedule 1.1.A

  Permitted Investments

Schedule 1.1.B

  Permitted Liens

Schedule 2.1.A

  Lenders; Commitments

Schedule 3.1.A

  Pledged Accounts

Schedule 4.1.D

  Capital Structure

Schedule 4.1.E

  Options; Warrants

Schedule 4.2.C

  Governmental Actions

Schedule 4.6.B

  Real Property

Schedule 4.7

  Litigation

Schedule 4.9.B

  Material Contracts

Schedule 4.12

  Labor Matters

Schedule 4.14

  Environmental Matters

Schedule 4.15.A

  Filings and Other Actions

Schedule 4.15.D

  Chief Executive Office

Schedule 4.17

  Intellectual Property

Schedule 5.6.B

  Insurance

Schedule 6.1

  Indebtedness

 

v

--------------------------------------------------------------------------------

EXHIBITS

 

Exhibit A

  Form of Assignment Agreement

Exhibit B

  Form of Certificate re: Non–Bank Status

Exhibit C

  Form of Closing Date Certificate

Exhibit D

  Form of Compliance Certificate

Exhibit E

  Form of Control Agreement

Exhibit F

  Form of Financial Officer’s Certificate

Exhibit G

  Form of Loan/Letter of Credit Certificate

Exhibit H

  Form of Loan/Letter of Credit Request

Exhibit I

  Form of Notice of Continuation/Conversion

Exhibit J

  Form of Solvency Certificate

Exhibit K

  Form of Subsidiary Guaranty Agreement

Exhibit L

  Form of Subsidiary Pledge Agreement

Exhibit M

  Form of Subsidiary Security Agreement

Exhibit N

  Form of Revolving Loan Note

Exhibit O

  Form of Term Loan Note

Exhibit P

  Form of Legal Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC, New
York counsel to the Borrower Group

 

 

vi

--------------------------------------------------------------------------------

This AMENDED AND RESTATED CREDIT AGREEMENT (as amended, supplemented, amended
and restated or otherwise modified from time to time, this “Agreement”), is
entered into as of February 9, 2001, among FIBERNET OPERATIONS, INC., a Delaware
corporation (“FiberNet”), DEVNET L.L.C., a Delaware limited liability company
(“Devnet” and, together with FiberNet, the “Borrowers”), THE FINANCIAL
INSTITUTIONS FROM TIME TO TIME PARTIES HERETO AS LENDERS (each individually
referred to herein as a “Lender” and, collectively, as the “Lenders”), DEUTSCHE
BANK AG NEW YORK BRANCH (“DBAG”), as administrative agent for the Lenders (in
such capacity, the “Administrative Agent”), TD SECURITIES (USA) INC. (“TD”)
(formerly known as Toronto Dominion (USA) Securities Inc.) as syndication agent
for the Lenders (in such capacity, the “Syndication Agent”), and WACHOVIA
INVESTORS, INC. (formerly known as First Union Investors, Inc.), as
documentation agent for the Lenders (in such capacity, the “Documentation
Agent”) and amends and restates in its entirety that certain Credit Agreement
(as amended prior to the date hereof, the “Original Credit Agreement”), dated as
of April 11, 2000 and amended as of July 14, 2000, July 28, 2000, October 27,
2000 and January 18, 2001 among FiberNet Operations, Inc. (formerly known as
FiberNet Telecom Group, Inc.), the financial institutions from time to time
party thereto as lenders, Deutsche Bank AG New York Branch, as administrative
agent for such lenders, Deutsche Banc Alex.Brown Inc. (formerly known as
Deutsche Bank Securities Inc.), as co-syndications agent for such lenders, and
Toronto Dominion (Texas), Inc., as co-syndications agent for such lenders.

 

RECITALS

 

A.The Borrowers provide integrated telecommunications products and services in
major metropolitan service areas throughout the United States (the “System”).

 

B. The Borrowers desire that the Lenders extend the senior secured credit
facilities contemplated hereby to the Borrowers to provide the financing
necessary to acquire Telecommunication Assets and provide working capital for
the Borrowers and their Subsidiaries.

 

C. Subject to the terms and conditions of this Agreement and the other Loan
Documents, the Lenders are willing to extend such senior secured credit
facilities to the Borrowers, the proceeds of which will be used to, among other
things, (i) fund the acquisition of Telecommunication Assets, (ii) provide
working capital for the Borrowers and their respective Subsidiaries, and
(iii) pay certain fees and expenses incurred by the Borrowers in connection with
the transactions contemplated hereby.

 

D. The Borrowers desire to secure all of the Obligations hereunder and under the
other Loan Documents by granting or having granted to the Administrative Agent,
for the benefit of the Secured Parties, a perfected first priority security
interest in each Borrower’s interests in (i) the Collateral and (ii) its
Subsidiaries.

 

E. In order to further secure and support the Borrowers’ obligations to the
Lenders under the Loan Documents, (i) the Parent will (a) guaranty the
Obligations pursuant to the Parent Guaranty Agreement and (b) grant to the
Administrative Agent, for the benefit of the Secured Parties, a perfected first
priority security interest in the Parent’s interest in (1) the Collateral and
(2) its Subsidiaries and (ii) each Subsidiary of any Borrower will (x) guaranty
the Obligations

 

--------------------------------------------------------------------------------

pursuant a Subsidiary Guaranty Agreement and (y) grant to the Administrative
Agent, for the benefit of the Secured Parties, a perfected first priority
security interest in such Subsidiary’s interest in (I) the Collateral and (II)
its Subsidiaries.

 

F. FiberNet has requested that the Lenders amend and restate the Original Credit
Agreement in order to, among other things, (i) enable Devnet to borrow Loans and
receive the benefit of other extensions of credit as a Borrower, (ii) increase
the aggregate commitment of the Lenders party hereto to $105,000,000, (iii)
create a term loan facility, and allocate the commitments of the Lenders between
the term loan facility and the revolving credit facility, (iv) evidence the
commitment of several new Lenders to a portion of the commitments evidenced
hereby, (v) evidence certain changes in the commitments of the Lenders who were
party to the Original Credit Agreement, (vi) extend the maturity date of the
Loans and Letters of Credit provided hereunder, (vii) refinance the Indebtedness
of FiberNet under the Original Credit Agreement and (viii) make such other
changes as are more fully set forth herein.

 

G. Subject to the terms and conditions set forth herein and in the other Loan
Documents, the parties hereto agree to amend and restate in its entirety the
Original Credit Agreement in order to, among other things, make the
modifications described in Recital F above.

 

2

--------------------------------------------------------------------------------

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:

 

ARTICLE I.

DEFINITIONS

 

Section 1.1. DEFINED TERMS. Capitalized words and phrases used and not otherwise
defined elsewhere in this Agreement shall have the following meanings:

 

“Accounts” means the securities accounts (as such term is defined in the UCC) of
each Borrower and each of its Subsidiaries pledged to the Administrative Agent,
for the benefit of the Secured Parties, by any Borrower or any of its
Subsidiaries in accordance with the terms of this Agreement and the other Loan
Documents.

 

“Adjusted Eurodollar Rate” means, for any Interest Rate Determination Date with
respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum
appearing on Page 3750 of the Dow Jones Telerate Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, on such Interest Rate Determination Date, at the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the “Adjusted
Eurodollar Rate” for such Interest Rate Determination Date shall be the average
rate (rounded upwards, if necessary, to the next  1/16 of 1%) at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal New York office of DBAG in immediately available funds
in the London interbank market at approximately 11:00 a.m., London Time, on such
Interest Rate Determination Date.

 

“Administrative Agent” is defined in the Preamble to this Agreement and includes
each of its successors and assigns.

 

“Affected Lender” has the meaning assigned to that term in Section 2.6.C.

 

“Affected Loans” has the meaning assigned to that term in Section 2.6.C.

 

“Affiliate”, as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, that Person. For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling”, “controlled by”
and “under common control with”), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise. Notwithstanding
anything to

 

3

--------------------------------------------------------------------------------

the contrary herein, for the purposes of the Loan Documents, no Agent nor any
Affiliate thereof shall be an Affiliate of any member of the Borrower Group.

 

“Agents” means the collective reference to the Administrative Agent, the
Securities Intermediary, the Syndication Agent and the Documentation Agent.

 

“Agreement” has the meaning assigned to that term in the Preamble to this
agreement.

 

“Applicable Margin” for each type of Loan means the rate per annum set forth
under the relevant column heading below:

 

Eurodollar Rate Loans

--------------------------------------------------------------------------------

  Base Rate Loans

--------------------------------------------------------------------------------

4.50%

  3.50%

 

provided that following the last day of any period of two consecutive Fiscal
Quarters during which the Consolidated EBITDA of the Borrower Group is greater
than zero, the Applicable Margin shall, for any Interest Period during which the
Consolidated EBITDA of the Borrower Group is greater than zero, be a percentage
per annum determined by reference to the Consolidated Leverage Ratio of the
Borrower Group as set forth below (in each case, as demonstrated by the
financial statements delivered to the Administrative Agent pursuant to Section
5.1(ii) and Section 5.1(iii)); provided further that, notwithstanding the
foregoing, until December 31, 2003, the Applicable Margin for Eurodollar Rate
Loans shall be 3.75% and for Base Rate Loans shall be 2.75%.

 

Consolidated

Leverage Ratio

--------------------------------------------------------------------------------

 

Applicable Margin For

Eurodollar Rate Loans

--------------------------------------------------------------------------------

 

Applicable Margin For

Base Rate Loans

--------------------------------------------------------------------------------

Ratio > 6.0:1.0

  4.50%   3.50%

6.0:1.0 ³ Ratio > 5.5:1.0

  4.25%   3.25%

5.5:1.0 ³ Ratio > 5.0:1.0

  4.00%   3.00%

5.0:1.0 ³ Ratio > 4.5:1.0

  3.75%   2.75%

4.5:1.0 ³ Ratio > 4.0:1.0

  3.50%   2.50%

4.0:1.0 ³ Ratio > 3.5:1.0

  3.25%   2.25%

3.5:1.0 ³ Ratio > 3.0:1.0

  3.00%   2.00% 3.0:1.0 ³ Ratio   2.50%   1.50%

 

If any financial statements referred to in Section 5.1(ii) or 5.1(iii) are not
delivered within the time periods specified therein, then, until and including
the date on which such financial statements are delivered, the Consolidated
Leverage Ratio of the Borrower Group as at the end of the period that would have
been covered thereby shall for the purposes of this definition be deemed to be
greater than 6.0:1.0.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitments or, with respect to
any Lender and a given Class of Commitments, the percentage of the total
commitments of such Class represented by such Lender’s Commitments. If the
Commitments have

 

4

--------------------------------------------------------------------------------

terminated or expired, the Applicable Percentages shall be determined based upon
the Commitments most recently in effect prior to such termination or expiration,
giving effect to any assignments.

 

“Asset Sale” means the sale or issuance by any member of the Borrower Group to
any Person of (i) any of the stock of any of such Person’s Subsidiaries, (ii)
substantially all of the assets of any division or line of business of any
member of the Borrower Group, or (iii) any other assets (whether tangible or
intangible) of any member of the Borrower Group (other than any transfers or
dispositions permitted by Section 6.7).

 

“Assigned Interests” means that portion of the Revolving Loan Commitments
assigned to DBAG pursuant to the Bank One/Nortel/TD Assignment Agreements.

 

“Assigning Lenders” means each of Bank One, Nortel Networks and TD.

 

“Assignment Agreement” means an Assignment Agreement in substantially the form
of Exhibit A annexed hereto.

 

“Available Cash” means, for any period, the sum of (i) unused Commitments
hereunder plus (ii) all amounts that would, in conformity with GAAP, be included
on a consolidated balance sheet of the Borrower Group as Cash and Cash
Equivalents.

 

“Bank One” means Bank One, NA.

 

“Bank One Debt Exchange Agreement” means the Debt Exchange Agreement, dated
January 10, 2003, between the Parent and Bank One.

 

“Bank One Stock Purchase Agreement” means the Stock Purchase Agreement, dated
January 10, 2003, among Bank One and the purchasers listed on Exhibit A thereto.

 

“Bank One/Nortel/TD Assignment Agreements” means (i) the Assignment Agreement,
dated as of January 10, 2003, entered into by and between Bank One and DBAG,
(ii) the Assignment Agreement, dated as of January 10, 2003, entered into by and
between Nortel and DBAG and (iii) the Assignment Agreement, dated as of January
10, 2003, entered into by and between TD and DBAG.

 

“Bank One/Nortel/TD Common Stock Conversion” means (i) the conversion by Bank
One of Term Loans in an aggregate amount of $2,552,127.24 (which amount includes
accrued interest thereon to the date of such conversion) and Revolving Loans in
an aggregate amount of $793,570.24 (which amount includes accrued interest
thereon to the date of such conversion) into 34,628,636 shares of the Parent’s
common stock, (ii) the conversion by Nortel Networks of Term Loans in an
aggregate amount of $3,828,190.87 (which amount includes accrued interest
thereon to the date of such conversion) and Revolving Loans in an aggregate
amount of $1,190,355.35 (which amount includes accrued interest thereon to the
date of such conversion) into 51,942,950 shares of the Parent’s common stock,
(iii) the conversion by TD of Term Loans in an aggregate amount of $3,828,190.87
(which amount includes accrued interest thereon to the date of such conversion)
and Revolving Loans in an aggregate amount of $1,190,355.35 (which

 

5

--------------------------------------------------------------------------------

amount includes accrued interest thereon to the date of such conversion) into
51,942,950 shares of the Parent’s common stock, (iv) the subsequent sale by each
of Bank One, Nortel Networks and TD of such shares to certain third party
purchasers, (v) the issuance by the Parent to certain other purchasers of
29,166,667 shares of the Parent’s common stock and (vi) the satisfaction of all
conditions precedent to closing under the Bank One/Nortel/TD Common Stock
Conversion Documents.

 

“Bank One/Nortel/TD Common Stock Conversion Documents” means the Bank One Stock
Purchase Agreement, the Bank One Debt Exchange Agreement, the Nortel Stock
Purchase Agreement, the Nortel Debt Exchange Agreement, the TD Stock Purchase
Agreement, the TD Debt Exchange Agreement, the First Amendment to the Investors’
Rights Agreement, and the warrants issued in connection therewith, and the
Common Stock Purchase Agreement, together with any other instruments and
agreements entered into by the Parent or its Subsidiaries in connection
therewith (in each case, in the form delivered to the Lenders prior to the
effectiveness of this Ninth Amendment), as the same may be amended,
supplemented, replaced or otherwise modified from time to time in accordance
with this Agreement.

 

“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as now and hereafter in effect, or any successor statute.

 

“Base Rate” means, at any time, a rate per annum equal to the greater of (i) the
Prime Rate or (ii) the rate which is  1/2 of 1% in excess of the Federal Funds
Effective Rate. Any change in the Base Rate due to a change in the Prime Rate or
the Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, as the case may be.

 

“Base Rate Loans” means Loans bearing interest at rates determined by reference
to the Base Rate as provided in Section 2.3.

 

“Borrower Group” means the Parent, each Borrower and their respective
Subsidiaries.

 

“Borrowers” has the meaning assigned to that term in the Preamble to this
Agreement.

 

“Business Day” means (i) for all purposes other than as covered by clauses (ii)
and (iii) below, any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the States of Illinois, New York or Texas or is a day
on which banking institutions located in the States of Illinois, New York or
Texas are authorized or required by law or other governmental action to close,
(ii) with respect to all notices, determinations, fundings and payments in
connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, any
day that is a Business Day described in clause (i) above and that is also a day
for trading by and between banks in Dollar deposits in the London interbank
market, and (iii) with respect to all notices, determinations, fundings and
payments in connection with Letters of Credit, this definition also excludes any
day on which banking institutions are authorized or required by law or other
governmental

 

6

--------------------------------------------------------------------------------

action to close in the jurisdiction in which the Issuing Bank for such Letter of
Credit is located.

 

“Business Plan” means the business plan of the Borrowers and their respective
Subsidiaries prepared by the management of the Borrowers and delivered to the
Administrative Agent on February 1, 2001.

 

“Capital Lease” means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.

 

“Capital Lease Obligations” means, as applied to any Person, the obligations of
such Person to pay rent or other amounts under any Capital Lease, the amount of
which obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.

 

“Capital Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person other than a corporation (including
partnership interests in a partnership, member interests in a limited liability
company and beneficial interests in a trust), and any and all warrants, options
and other rights to purchase any of the foregoing.

 

“Cash” means (i) money or (ii) currency.

 

“Cash Equivalents” means:

 

(i) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;

 

(ii) investments in commercial paper maturing within 365 days from the date of
acquisition thereof and having, at such date of acquisition, a credit rating of
at least A-1 from S&P or at least P-1 from Moody’s;

 

(iii) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within 180 days from the date of acquisition thereof;

 

(iv) money market mutual funds (including money market funds or money market
mutual funds for which the Securities Intermediary in its individual capacity or
any of its Affiliates is investment manager or advisor or from which the
Securities Intermediary in its individual capacity or any of its Affiliates
charges or collects fees and expenses for services rendered) registered under
the U.S. Investment Company Act of 1940, as amended, having a rating in the
highest investment category by S&P and Moody’s; and

 

7

--------------------------------------------------------------------------------

(v) fully collateralized repurchase agreements with a term of not more than 30
days for securities described in clause (i) above and entered into with a
financial institution satisfying the criteria described in clause (iii) above.

 

“Casualty Proceeds” means all payments received by the Administrative Agent or
any member of the Borrower Group from any insurer in respect of any Event of
Loss, but excluding business interruption insurance or delayed opening of
business insurance and payments in respect of liability policies.

 

“Certificate re: Non-Bank Status” means a certificate substantially in the form
of Exhibit B annexed hereto delivered by a Lender to the Administrative Agent
pursuant to Section 2.7.B.(iii).

 

“Change in Control” means and shall be deemed to have occurred if (i) there
shall have occurred the sale, lease, transfer or other disposition, in one or a
series of related transactions, of (a) all or substantially all of the assets of
the Parent and its Subsidiaries taken as a whole to any “person” or “group”
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) or (b)
20% or more of the Capital Stock of the Parent to any such “person” or “group”
(other than the sale of up to 35% of the Capital Stock of the Parent to SDS
Merchant Fund, L.P. and its Affiliates); (ii) during any period of twelve
consecutive months, individuals who at the beginning of such period constituted
the board of directors of the Parent (together with any new directors whose
election by such board or whose nomination for election by the Shareholders of
the Parent was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved), cease for any
reason to constitute a majority of the board of directors of the Parent then in
office; (iii) the holders of Capital Stock of any member of the Borrower Group
shall approve any plan or proposal for the liquidation or dissolution of any
such member; (iv) the Parent shall cease to own, directly or indirectly, 100% of
the voting and economic interests in FiberNet; (v) the Parent and FiberNet shall
cease to collectively own, directly or indirectly, 100% of the voting and
economic interests in Devnet; (vi) FiberNet shall cease to own, directly or
indirectly, 100% of the voting and economic interests in FTI; (vii) FTI shall
cease to own, directly or indirectly, 100% of the voting and economic interests
in Equal Access; or (vii) FTI shall cease to own, directly or indirectly, 100%
of the voting and economic interests in Local Fiber; provided, however, that,
notwithstanding the foregoing, no transaction effected by any of the Borrowers
with the consent of the Lenders in connection with the Lender Common Stock
Conversion, the Deferred Interest Common Stock Conversion, the SDS Common Stock
Conversion or the Bank One/Nortel/TD Common Stock Conversion shall be deemed a
Change in Control.

 

“Class” means, as applied to the Lenders, each of the following two classes of
Lenders: (i) the Lenders having Revolving Loan Exposure and (ii) the Lenders
having Term Loan Exposure.

 

8

--------------------------------------------------------------------------------

“Closing Date” means the date on which this Agreement shall have been executed
and delivered by the parties hereto and the conditions specified in Section
3.1.A. are satisfied or waived as set forth in such Section.

 

“Closing Date Certificate” means each certificate substantially in the form of
Exhibit C annexed hereto delivered to the Administrative Agent and the Lenders
by a Responsible Officer of each Borrower on the Closing Date in accordance with
Section 3.1.V.

 

“Code” means the Internal Revenue Code of 1986, amendments thereto, successor
statutes, and regulations, rulings and guidance promulgated or issued
thereunder.

 

“Collateral” means, collectively, all of the real, personal and mixed property
(including Accounts and Capital Stock) in which Liens are purported to be
granted pursuant to the Collateral Documents as security for the Obligations.

 

“Collateral Documents” means the Pledge Agreements, the Devnet Security
Agreement, the FiberNet Security Agreement, the Parent Security Agreement, the
Parent Guaranty Agreement, each Subsidiary Guaranty Agreement, each Subsidiary
Security Agreement, each Consent, each Control Agreement and all other
instruments or documents delivered by a member of the Borrower Group pursuant to
this Agreement or any of the other Loan Documents in order to grant to the
Administrative Agent, for the benefit of the Secured Parties, a Lien on any
real, personal or mixed property of that member as security for the Obligations.

 

“Commitment” means the commitment of a Lender to make Loans as set forth in
Section 2.1., and “Commitments” means such commitments of all the Lenders in the
aggregate.

 

“Commitment Letter” means the Commitment Letter, dated as of February 1, 2001,
among the Borrowers, DBAG, DBAB, First Union, First Union Securities, Inc., TD,
IBM Credit Corporation, Nortel Networks and FNBC Leasing Corporation.

 

“Common Stock Purchase Agreement” means the Common Stock Purchase Agreement,
dated January 10, 2003, among the Parent and the purchasers listed on Exhibit A
thereto.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit D annexed hereto delivered to the Administrative Agent and the Lenders
by the Borrowers pursuant to Section 5.1.

 

“Consent” means, individually or collectively, the Hudson Street Consent, the
MFN Consent, the Gateway Consent, the 707 Wilshire Consent, the Pavonia Consent
and each other document (other than any Material Contract) in which a party to a
Material Contract consents to the collateral assignment thereof to the
Administrative Agent for the benefit of the Secured Parties.

 

9

--------------------------------------------------------------------------------

“Consolidated Capital Expenditures” means, for any period, the aggregate of all
expenditures by the members of the Borrower Group for the acquisition or leasing
(pursuant to a Capital Lease) of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period) which would be capitalized under GAAP on a consolidated cash flow
statement of the Borrower Group for such period.

 

“Consolidated EBITDA” means, for any period, Consolidated Net Income of the
Borrower Group for such period plus, without duplication and to the extent
reflected as a charge in the statement of such Consolidated Net Income for such
period, the sum of (i) income tax expense, (ii) Consolidated Interest Expense of
the Borrower Group, amortization or write-off of debt discount and debt issuance
costs and commissions, discounts and other fees and charges associated with
Indebtedness (including, in the case of the Borrowers, the Loans and Letters of
Credit), (iii) depreciation and amortization expense, (iv) amortization of
intangibles (including goodwill) and organization costs and (v) any other
non-cash charges, and minus, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (a) interest income (except
to the extent deducted in determining Consolidated Interest Expense), (b) any
extraordinary, unusual or non-recurring income or gains (including, whether or
not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, gains on the sales of assets outside of
the ordinary course of business) and (c) any other non-cash income, all as
determined on a consolidated basis; provided that for purposes of calculating
the Consolidated Leverage Ratio of the Borrower Group for any period, (i) the
Consolidated EBITDA of any Person or business acquired by any member of the
Borrower Group during such period shall be included on a pro forma basis for
such period (assuming the consummation of such acquisition and the incurrence or
assumption of any Indebtedness in connection therewith occurred on the first day
of such period) if the consolidated balance sheet of such acquired Person or
business and its consolidated Subsidiaries as at the end of the period preceding
the acquisition of such Person and the related consolidated statements of income
and stockholders’ equity and of cash flows for the period in respect of which
Consolidated EBITDA is to be calculated (x) have been previously provided to the
Administrative Agent and the Lenders and (y) either (1) have been reported on
without a qualification arising out of the scope of the audit by independent
certified public accountants of nationally recognized standing or (2) have been
found acceptable by the Administrative Agent and (ii) the Consolidated EBITDA of
any Person or business disposed of by any member of the Borrower Group during
such period shall be excluded for such period (assuming the consummation of such
disposition and the repayment of any Indebtedness in connection therewith
occurred on the first day of such period).

 

“Consolidated Fixed Charge Coverage Ratio” means, as at the last day of any
Fiscal Quarter, the ratio of (i) the Consolidated EBITDA of the Borrower Group
for the four preceding Fiscal Quarters ended on such date minus the aggregate
amount actually paid by any member of the Borrower Group in cash during the then
just ended Fiscal Quarter on account of Consolidated Capital Expenditures of the
Borrower Group to (ii) Consolidated Fixed Charges of the Borrower Group for the
period of the prior four consecutive Fiscal Quarters ending on such date.

 

10

--------------------------------------------------------------------------------

“Consolidated Fixed Charges” means, for any period, the sum (without
duplication) of (i) the Consolidated Interest Expense of the Borrower Group for
such period, (ii) provision for cash income taxes made by the Borrower Group on
a consolidated basis in respect of such period and (iii) scheduled payments made
during such period on account of principal of Indebtedness of any member of the
Borrower Group (including scheduled principal payments in respect of the Loans).

 

“Consolidated Interest Coverage Ratio” means, as at the last day of any Fiscal
Quarter, the ratio of (i) Consolidated EBITDA of the Borrower Group for the
prior four consecutive Fiscal Quarters ending on such date to (ii) Consolidated
Interest Expense of the Borrower Group for the period of the prior four
consecutive Fiscal Quarters ending on such date.

 

“Consolidated Interest Expense” means, for any period, total cash interest
expense (including that attributable to Capital Lease Obligations) of each
member of the Borrower Group for such period with respect to all outstanding
Indebtedness of each member of the Borrower Group (including all commissions,
discounts and other fees and charges owed by any such member with respect to
letters of credit and bankers’ acceptance financing and net costs of any such
member under Interest Rate Agreements in respect of interest rates to the extent
such net costs are allocable to such period in accordance with GAAP, determined
on a consolidated basis in accordance with GAAP).

 

“Consolidated Leverage Ratio” means, as at the last day of any Fiscal Quarter,
the ratio of (i) the Consolidated Total Debt of the Borrower Group on such day
to (ii) the Consolidated EBITDA of the Borrower Group for the four preceding
Fiscal Quarters ended on such date.

 

“Consolidated Net Income” means, for any period, the consolidated net income (or
loss) of the Borrower Group for such period, determined on a consolidated basis
in accordance with GAAP; provided, that in calculating Consolidated Net Income
of the Borrower Group for any Period, there shall be excluded (i) the income (or
deficit) of any Person accrued prior to the date it becomes a member of the
Borrower Group or is merged into or consolidated with any member of the Borrower
Group, (ii) the income (or deficit) of any Person (other than a member of the
Borrower Group) in which a member of the Borrower Group has an ownership
interest, except to the extent that any such income is actually received by any
member of the Borrower Group in the form of dividends or similar distributions
and (iii) the undistributed earnings of any member of the Borrower Group to the
extent that the declaration or payment of dividends or similar distributions by
such member is not at the time permitted by the terms of any Contractual
Obligation (other than under any Loan Document) or Legal Requirement applicable
to such member.

 

“Consolidated Revenue” means, for any period, all revenue received by any member
of the Borrower Group that would, in conformity with GAAP, be included on the
consolidated income statement of the Borrower Group as revenue for such period.

 

11

--------------------------------------------------------------------------------

“Consolidated Total Debt” means, for any period, the aggregate principal amount
of all Indebtedness of each member of the Borrower Group at such date,
determined on a consolidated basis in accordance with GAAP, provided, however,
that for purposes of this definition only, (a) the Indebtedness of the Parent
shall not include any guarantee by the Parent of obligations of any other member
of the Borrower Group if (i) such guarantee by the Parent does not constitute
indebtedness of the Parent on the Parent’s balance sheet and (ii) the Parent has
notified the Administrative Agent of such guarantee and has provided the
Administrative Agent with all documentation associated therein reasonably
requested by the Administrative Agent, (b) the Indebtedness of any member of the
Borrower Group in respect of Interest Rate Agreements shall be excluded from
this definition and (c) Indebtedness of any members of the Borrower Group
reflected on the consolidated balance sheet of the member of the Borrower Group
as a result of the application of SFAS, 133 shall be excluded from this
definition.

 

“Contractual Obligation”, as applied to any Person, means any provision of any
Security issued by that Person or of any material indenture, mortgage, deed of
trust, contract, undertaking, agreement or other instrument to which that Person
is a party or by which it or any of its properties is bound or to which it or
any of its properties is subject.

 

“Control Agreement” means each Control Agreement entered into by the
Administrative Agent, for the benefit of the Secured Parties, the bank or other
financial institution party thereto and a Borrower or a Subsidiary of a
Borrower, in each case in substantially the form of Exhibit E annexed hereto.

 

“DBAB” means Deutsche Banc Alex.Brown Inc. (formerly known as Deutsche Bank
Securities Inc.).

 

“DBAG” has the meaning assigned to such term in the Preamble to this Agreement.

 

“Debt Engagement Letter” means that certain Debt Engagement Letter, dated April
11, 2000, among the Parent, the Borrowers, DBAB and TD.

 

“Deferred Interest Common Stock Closing” means the issuance by Parent to the
Lenders of 20,000,000 shares of Parent’s common stock and warrants to purchase
20,000,000 shares of Parent’s common stock, and the satisfaction of all
conditions precedent to closing under the Deferred Interest Stock and Warrant
Purchase Agreement.

 

“Deferred Interest Common Stock Conversion” means the conversion by the Lenders
of interest in an aggregate amount of $2,000,000 to the equity capital of the
Parent pursuant to the Deferred Interest Stock and Warrant Purchase Agreement.

 

“Deferred Interest Stock and Warrant Purchase Agreement” means the Common Stock
and Warrant Purchase Agreement, dated November 11, 2002, among the Parent and
the Investors.

 

“Devnet” has the meaning assigned to such term in the Preamble to this
Agreement.

 

12

--------------------------------------------------------------------------------

“Devnet Security Agreement” means the Amended and Restated Devnet Security
Agreement, dated as of the date hereof, between Devnet and the Administrative
Agent, for the benefit of the Secured Parties, in form and substance
satisfactory to the Administrative Agent.

 

“Documentation Agent” is defined in the Preamble to this Agreement and includes
each of its successors and assigns.

 

“Dollars” and the sign “$” mean the lawful money of the United States of
America.

 

“Eligible Assignee” means (A) (i) a commercial bank organized under the laws of
the United States or any state thereof; (ii) a savings and loan association or
savings bank organized under the laws of the United States or any state thereof;
(iii) a commercial bank organized under the laws of any other country or a
political subdivision thereof, provided that (x) such bank is acting through a
branch or agency located in the United States or (y) such bank is organized
under the laws of a country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such country; (iv) any
Person in connection with a securitization of all or a portion of the amounts
payable to or for the benefit of any Lender under the Loan Documents, provided
that the rights of such Person under the Loan Documents are serviced or
administered for such Person by the relevant Lender or another Eligible
Assignee; and (v) any other entity which is an “accredited investor” (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses, including insurance companies, mutual funds and lease
financing companies; and (B) any Lender and any Affiliate of any Lender,
provided that no Borrower nor any Affiliate of any Borrower shall be an Eligible
Assignee.

 

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section
3(3) of ERISA which is or was maintained or contributed to by any Borrower, any
of its Subsidiaries or any of their respective ERISA Affiliates.

 

“Environmental Claim” means any investigation, notice, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), by any governmental authority or any other
Person, arising (i) pursuant to or in connection with any actual or alleged
violation of any Environmental Law, (ii) in connection with any Hazardous
Materials or any actual or alleged Hazardous Materials Activity, or (iii) in
connection with any actual or alleged damage, injury, threat or harm to health,
safety, natural resources or the environment.

 

“Environmental Laws” means any and all current or future statutes, ordinances,
orders, rules, regulations, guidance documents, judgments, Governmental Actions,
or any other requirements of governmental authorities relating to (i)
environmental matters, including those relating to any Hazardous Materials
Activity, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or welfare,
in any manner applicable to any member of the Borrower Group or any Facility,

 

13

--------------------------------------------------------------------------------

including the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
§ 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et
seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. §136 et seq.), the Occupational Safety and Health Act
(29 U.S.C. § 651 et seq.), the Oil Pollution Act (33 U.S.C. § 2701 et seq.) and
the Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et
seq.), each as amended or supplemented, any analogous present or future state or
local statutes or laws, and any regulations promulgated pursuant to any of the
foregoing.

 

“Equal Access” means FiberNet Equal Access, L.L.C., a New York limited liability
company.

 

“Equity Financing Fee” has the meaning assigned to that term in Section 2.4.D.

 

“Equity Registration Rights Joinder Agreement” means the Equity Registration
Rights Joinder Agreement, dated April 11, 2000, among the Parent, DBAB, TD and
each other signatory thereto.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§
1000 et seq., amendments thereto, successor statutes, and regulations or
guidance promulgated thereunder.

 

“ERISA Affiliate” means, as applied to any Person, (i) any corporation which is
a member of a controlled group of corporations within the meaning of Section
414(b) of the Code of which that Person is a member; (ii) any trade or business
(whether or not incorporated) which is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the Code
of which that Person is a member; and (iii) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of any
Borrower or any of its Subsidiaries shall continue to be considered an ERISA
Affiliate of such Borrower or such Subsidiary within the meaning of this
definition with respect to the period such entity was an ERISA Affiliate of such
Borrower or such Subsidiary and with respect to liabilities arising after such
period for which such Borrower or such Subsidiary could be liable under the Code
or ERISA.

 

“Eurodollar Rate Loans” means Loans bearing interest at rates determined by
reference to the Adjusted Eurodollar Rate as provided in Section 2.3.

 

“Event of Default” means each of the events or occurrences set forth in Article
VII.

 

“Event of Loss” means, with respect to any property or asset (tangible or
intangible, real or personal), any of the following: (i) any loss, destruction
or damage of such property or asset; (ii) any actual condemnation, seizure or
taking by exercise of the

 

14

--------------------------------------------------------------------------------

power of eminent domain or otherwise of such property or asset, or confiscation
of such property or asset or the requisition of the use of such property or
asset; or (iii) any settlement in lieu of clause (ii) above.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and any successor statute.

 

“Facilities” means any and all real property (including all buildings, fixtures
or other improvements located thereon) now, hereafter or heretofore owned,
leased, operated or used by any member of the Borrower Group or any of their
respective predecessors or Affiliates.

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

“Federal Funds Effective Rate” means, for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by the Administrative Agent.

 

“Fee Letters” means the collective reference to (i) the Fee Letter, dated
February 1, 2001, among the Borrowers, DBAB, DBAG, First Union Securities, Inc.
and TD, (ii) the Fee Letter, dated February 1, 2001, among the Borrowers and
FNBC Leasing Corporation, (iii) the Fee Letter, dated February 1, 2001, among
the Borrowers and Nortel Networks, (iv) the Fee Letter, dated February 1, 2001,
among the Borrowers and IBM Credit Corporation and (v) the Fee Letter, dated
October 30, 2002, among the Borrowers, DBAG, Wachovia Securities, Inc., TD, Bank
One, NA, Nortel Networks and IBM Credit Corporation.

 

“FiberNet Pledge Agreement (Devnet)” means the Amended and Restated FiberNet
Pledge Agreement (Devnet), dated as of the date hereof, between FiberNet and the
Administrative Agent, for the benefit of the Secured Parties, in form and
substance satisfactory to the Administrative Agent.

 

“FiberNet Pledge Agreement (FTI)” means the Amended and Restated FiberNet Pledge
Agreement (FTI), dated as of the date hereof, between FiberNet and the
Administrative Agent, for the benefit of the Secured Parties, in form and
substance satisfactory to the Administrative Agent.

 

“FiberNet Security Agreement” means the Amended and Restated FiberNet Security
Agreement, dated as of the date hereof, between FiberNet and the Administrative
Agent, for the benefit of the Secured Parties, in form and substance
satisfactory to the Administrative Agent.

 

15

--------------------------------------------------------------------------------

“Financial Officer’s Certificate” means each certificate substantially in the
form of Exhibit F annexed hereto delivered to the Administrative Agent and the
Lenders by a Responsible Officer of each Borrower on the Closing Date in
accordance with Section 3.1.Q.

 

“First Closing” means the issuance of $2,300,000 of Series J Convertible
Preferred stock by Parent to SDS Merchant Fund, L.P., representing the first
installment of the SDS Merchant Equity Contribution.

 

“First Union” means First Union Investors, Inc.

 

“Fiscal Year” means the fiscal year of the applicable Person, which, for each
member of the Borrower Group, begins on January 1 and ends on December 31 of
each calendar year, and “Fiscal Quarter” means a corresponding fiscal quarter of
such Person.

 

“FTI” means FiberNet Telecom, Inc., a Delaware corporation.

 

“FTI Pledge Agreement (Equal Access)” means the Amended and Restated FTI Pledge
Agreement (Equal Access), dated as of the date hereof, between FTI and the
Administrative Agent, for the benefit of the Secured Parties, in form and
substance satisfactory to the Administrative Agent.

 

“FTI Pledge Agreement (Local Fiber)” means the Amended and Restated FTI Pledge
Agreement (Local Fiber), dated as of the date hereof, between FTI and the
Administrative Agent, for the benefit of the Secured Parties, in form and
substance satisfactory to the Administrative Agent.

 

“Funding and Payment Office” means (i) the office of the Administrative Agent
located at 31 West 52nd Street, New York, New York 10019 or (ii) such other
office of the Administrative Agent as may from time to time hereafter be
designated as such in a written notice delivered by the Administrative Agent to
the Borrowers and each Lender.

 

“GAAP” means, subject to the limitations on the application thereof set forth in
Section 1.2., generally accepted accounting principles in the United States of
America set forth in opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession in the United States of America, in each case as the
same are applicable to the circumstances as of the date of determination.

 

“Gateway Consent” means the Consent and Agreement, dated as of June 28, 2000,
among Gateway I Newark, L.L.C., Equal Access and the Administrative Agent.

 

“Governmental Action” means all permits, authorizations, registrations,
consents, approvals, determinations, decrees, waivers, privileges,
certifications, environmental clearances, notices and licenses of any
Governmental Instrumentality.

 

16

--------------------------------------------------------------------------------

“Governmental Instrumentality” means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity (including any zoning authority, the
FDIC, the Comptroller of the Currency or the Federal Reserve Board, any central
bank or any comparable authority) or any arbitrator with authority to bind a
party at law.

 

“Hazardous Materials” means (i) any chemical, material or substance at any time
defined as or included in the definition of “hazardous substances,” “hazardous
wastes,” “hazardous materials,” “extremely hazardous waste,” “acutely hazardous
waste,” “radioactive waste,” “biohazardous waste,” “pollutant,” “toxic
pollutant,” “contaminant,” “restricted hazardous waste,” “infectious waste,”
“toxic substances,” or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, “TCLP toxicity” or “EP toxicity” or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(ix) pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental authority or which
may or could pose a hazard to the health and safety of the owners, occupants or
any Persons in the vicinity of any Facility or to the indoor or outdoor
environment.

 

“Hazardous Materials Activity” means any past, current, proposed or threatened
activity, event or occurrence involving any Hazardous Materials, including the
use, manufacture, possession, storage, holding, presence, existence, location,
Release, threatened Release, discharge, placement, generation, transportation,
processing, construction, treatment, abatement, removal, remediation, disposal,
disposition or handling of any Hazardous Materials, and any corrective action or
response action with respect thereto.

 

“Hudson Street Consent” means that certain letter agreement, dated as of
February 2001, by Hudson Telegraph Associates, L.P. in favor of the
Administrative Agent, for the benefit of the Lenders, in respect of that certain
Agreement of Lease between Hudson Telegraph Associates and Local Fiber.

 

“Included Taxes” has the meaning assigned to that term in Section 2.7.B.

 

“Indebtedness”, as applied to any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) all obligations of such
Person for the deferred purchase price of property or services (other than trade
payables not overdue by more than 90 days incurred in the ordinary course of
such Person’s business), (iii) all

 

17

--------------------------------------------------------------------------------

obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (iv) all obligations of such Person created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (unless the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of such property), (v) that portion of obligations with
respect to Capital Leases that is properly classified as a liability on a
balance sheet in conformity with GAAP, (vi) all obligations, contingent or
otherwise, of such Person under acceptance, letter of guaranty, letter of credit
or similar facilities, (vii) all obligations of such Person to purchase, redeem,
retire, defease or otherwise make any cash payment in respect of any capital
stock of or other ownership or profit interest in such Person or any other
Person or any warrants, rights or options to acquire such capital stock, (viii)
all obligations of such Person in respect of Interest Rate Agreements, (ix) all
Indebtedness of others referred to in clauses (i) through (viii) above
guaranteed directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (a) to pay
or purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (b) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss, (c) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are
rendered), or (d) otherwise to assure a creditor against loss, and (x) all
Indebtedness referred to in clauses (i) through (viii) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person. All obligations under the Loan Documents
shall constitute Indebtedness.

 

“Indemnified Liabilities” has the meaning assigned to that term in Section 9.3.

 

“Indemnitee” has the meaning assigned to that term in Section 9.3.

 

“Intellectual Property” means all patents, trademarks, tradenames, copyrights,
technology, know-how and processes used in or necessary for the conduct of the
business of any member of the Borrower Group that are material to the condition
(financial or otherwise), business or operations of any member of the Borrower
Group.

 

“Interest Payment Date” means (i) with respect to any Base Rate Loan, each March
31, June 30, September 30 and December 31 of each year, commencing on the first
such date to occur after the Closing Date, and (ii) with respect to any
Eurodollar Rate Loan, the last day of each Interest Period applicable to such
Loan, provided that in the case of each Interest Period of longer than three
months, “Interest Payment Date” shall also include each date that is three
months, or an integral multiple thereof, after the commencement of such Interest
Period.

 

“Interest Period” has the meaning assigned to that term in Section 2.3.B.

 

18

--------------------------------------------------------------------------------

“Interest Rate Agreement” means any interest rate swap, cap or collar agreement
or similar arrangement dealing with interest rates or the exchange of nominal
interest obligations, either generally or under specific contingencies or any
arrangement otherwise documented under an ISDA Master Agreement.

 

“Interest Rate Determination Date” means, with respect to any Interest Period,
two Business Days prior to the first day of such Interest Period.

 

“Investment” means (i) any direct or indirect purchase or other acquisition by
any member of the Borrower Group of, or of a beneficial interest in, any
Securities of any other Person (including any Subsidiary), (ii) any direct or
indirect redemption, retirement, purchase or other acquisition for value, by any
member of the Borrower Group from any Person, of any equity Securities of any
Subsidiary of the Parent, or (iii) any direct or indirect loan, advance (other
than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business) or
capital contribution by any member of the Borrower Group to any other Person,
including all indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business. The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.

 

“Investors” means DBAG, TD, Nortel Networks, IBM Credit Corporation, Bank One,
NA and Wachovia Investors, Inc.

 

“Investors’ Rights Agreement” means the Investor’s Rights Agreement, dated
October 30, 2002, among the Parent and the Investors.

 

“ISP98” has the meaning assigned to that term in Section 2.2.H.

 

“Issuing Bank” means DBAG, as the issuer of Letters of Credit hereunder for the
account of the applicable Borrower, or any other Lender, Affiliate of any Lender
or other financial institution reasonably acceptable to the Administrative Agent
and each Borrower which may at any time issue a Letter of Credit for the account
of a Borrower under this Agreement. If there is more than one Issuing Bank, all
references to the “Issuing Bank” shall be deemed to refer to each Issuing Bank
or to all Issuing Banks, as the context requires.

 

“Issuing Bank Fees” has the meaning assigned to that term in Section 2.4.B.

 

“Joint Venture” means a joint venture, partnership or other similar arrangement,
whether in corporate, partnership, limited liability company or other legal
form; provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.

 

“Lead Arranger” means DBS.

 

19

--------------------------------------------------------------------------------

“Legal Requirements” means all laws, statutes, orders, decrees, injunctions,
licenses, permits, approvals, authorizations, agreements and regulations of any
Governmental Instrumentality having jurisdiction over the matter in question.

 

“Lender” and “Lenders” means the persons identified as “Lenders” and listed on
the signature pages of this Agreement, together with their successors and
permitted assigns pursuant to Section 9.1.; provided that the term “Lenders”,
when used in the context of a particular Commitment, shall mean the Lenders
having that Commitment.

 

“Lender Common Stock and Warrants” means the common stock and warrants of Parent
issued to the Lenders pursuant to the Stock Purchase Agreement.

 

“Lender Common Stock Closing” means the issuance by Parent to the Lenders of
440,000,000 shares of Lender Common Stock and Warrants to purchase 110,000,000
shares of Parent’s common stock, and the satisfaction of all conditions
precedent to closing under the Stock Purchase Agreement.

 

“Lender Common Stock Conversion” means the conversion of debt to the equity
capital of the Parent by the Lenders in an aggregate amount of $66,000,000, as
more particularly described in Article II of the Seventh Amendment.

 

“Lender Common Stock Conversion Documents” means the Stock Purchase Agreement,
the Investors’ Rights Agreement, the Stockholders’ Agreement and the warrants
issued in connection therewith, together with any other instruments and
agreements entered into by the Parent or its Subsidiaries in connection
therewith, as the same may be amended, supplemented, replaced or otherwise
modified from time to time in accordance with this Agreement.

 

“L/C Facing Fees” has the meaning assigned to that term in Section 2.4.A.

 

“Letter of Credit Obligations” means the sum of the aggregate undrawn amount of
all Letters of Credit outstanding, plus the aggregate amount of all drawings
under Letters of Credit for which any Borrower has not reimbursed the Issuing
Bank.

 

“Letter of Credit” means any letter of credit issued under Section 2.3 and all
amendments, renewals, extensions and replacements thereof.

 

“Letter of Credit Date” means the date of the issuance of any Letter of Credit.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the UCC).

 

20

--------------------------------------------------------------------------------

“Loan/Letter of Credit Certificate” means a certificate substantially in the
form of Exhibit G annexed hereto delivered by a Borrower to the Administrative
Agent pursuant to Section 2.1.C(ii) with respect to a proposed Loan.

 

“Loan Date” means the date of the making of any Loan.

 

“Loan Documents” means this Agreement, the Notes, the Collateral Documents, the
LOC Documents, the Fee Letters, the Debt Engagement Letter, the Equity
Registration Rights Joinder Agreement, the Warrant Agreement, the Warrant Escrow
Agreement and all other agreements, certificates, instruments or documents
executed and delivered by a member of the Borrower Group pursuant to any of the
aforementioned documents or agreements.

 

“Loan Exposure” means, with respect to any Lender as of any date of
determination (i) prior to the termination of the Commitments, that Lender’s
Commitment (including all drawn and undrawn portions thereof) and (ii) after the
termination of the Commitments, the aggregate outstanding principal amount of
the Loans of that Lender.

 

“Loan/Letter of Credit Request” means a notice substantially in the form of
Exhibit H annexed hereto delivered by the applicable Borrower to the
Administrative Agent pursuant to Section 2.1.C. with respect to a proposed Loan.

 

“Loans” shall be the collective reference to the Revolving Loans and the Term
Loans.

 

“LOC Account Control Agreement” means the Securities Account Control Agreement,
dated as of January 10, 2003, by and among the Parent, DBAG and Deutsche Bank
Trust Company Americas.

 

“LOC Cash Collateral Security Agreement” means the Security Agreement, dated as
of January 10, 2003, by and among the Parent and DBAG.

 

“LOC Documents” means, with respect to any Letter of Credit, such Letter of
Credit, any amendments thereto, any documents delivered in connection therewith,
any application therefor, and any agreements, instruments, guarantees or other
documents (whether general in application or applicable only to such Letter of
Credit) governing or providing for (i) the rights and obligations of the parties
concerned or at risk or (ii) any collateral security for such obligations.

 

“LOC Pro Rata Share” means, with respect to any Lender, the percentage set forth
opposite such Lender’s name in the appropriate column on Schedule 2.1.A annexed
hereto.

 

“LOC Revolving Loan” has the meaning assigned to that term in Section 2.2.A.

 

21

--------------------------------------------------------------------------------

“LOC Security Account” means the securities account established by the Parent
and DBAG pursuant to the LOC Account Control Agreement. “LOC Committed Amount”
has the meaning assigned to that term in Section 2.2.A.

 

“Local Fiber” means Local Fiber, L.L.C., a New York limited liability company.

 

“Majority Lenders” means at least two Lenders who together hold more than 51% of
the sum of the aggregate Loans and unused Commitments of all the Lenders.
Notwithstanding the foregoing, solely for purposes of determining the Majority
Lenders, as long as DBAG has a perfected first priority security interest in the
LOC Security Account that is not subject to challenge in any judicial or
administrative proceeding (including, without limitation, any bankruptcy,
insolvency, receivership or similar proceeding), any amount on deposit in the
LOC Security Account on the date of such determination shall be deducted from
the Commitment of DBAG, unless the matter as to which such determination is
being made relates directly to the Letter of Credit Obligations.

 

“Margin Stock” has the meaning assigned to that term in Regulations T, U and X
of the Board of Governors of the Federal Reserve System as in effect from time
to time.

 

“Material Adverse Effect” means (i) a material adverse effect on the business,
assets, revenues, operations, results of operations or condition (financial or
otherwise) of the Borrowers and their respective Subsidiaries taken as a whole,
(ii) a material adverse effect on the ability of any member of the Borrower
Group to perform its obligations under the Loan Documents to which it is a
party, or (iii) a material adverse effect on the validity or enforceability of
the Loan Documents, the Liens granted under the Loan Documents or the Lenders’
rights and remedies under the Loan Documents.

 

“Material Contract” means any contract, lease or other agreement or arrangement
to which any member of the Borrower Group is a party (other than the Loan
Documents) (i) involving aggregate consideration payable to or by any member of
the Borrower Group in excess of $5,000,000, or (ii) which is otherwise material
to the business, assets, operations, results of operations or condition
(financial or otherwise) of the Borrowers and their respective Subsidiaries,
taken as a whole, and without limiting the foregoing, shall be deemed to include
each of the agreements or arrangements set forth in Schedule 4.9.B.

 

“Maturity Date” means the date which is the sixth anniversary of the Closing
Date.

 

“Maximum Rate” has the meaning assigned to that term in Section 9.23.

 

“MFN Consent” means that certain Consent and Agreement, dated as of April 7,
2000, by Metromedia Fiber Network Services, Inc. in favor of the Administrative
Agent, for the benefit of the Lenders.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

22

--------------------------------------------------------------------------------

“Multiemployer Plan” means a “multiemployer plan” (as defined in Section
4001(a)(3) of ERISA) to which any member of the Borrower Group or any ERISA
Affiliate has contributed within the past six years or with respect to which any
member of the Borrower Group may incur any liability.

 

“Net Asset Sale Proceeds” means the aggregate cash proceeds received by any
member of the Borrower Group in respect of any Asset Sale, net of the direct
costs relating to such Asset Sale (including legal, accounting and investment
banking fees and expenses, employee severance and termination costs, any trade
payables or similar liabilities related to the assets sold and required to be
paid by the seller as a result thereof and sales, finders’ or brokers’
commissions), and any relocation expenses incurred as a result thereof and taxes
paid or payable as result thereof (including any such taxes paid or payable by
an owner of any member of the Borrower Group) (after taking into account any
available tax credits or deductions and any tax sharing arrangements), amounts
required to be applied to the repayment of Indebtedness secured by a Lien which
is prior to the Lien under the Collateral Documents on the asset or assets that
are the subject of such Asset Sale, all distributions and other payments
required to be made to minority interest holders in a Subsidiary or Joint
Venture as a result of the Asset Sale and any reserve for adjustment in respect
of the sale price of such asset or assets or any liabilities associated with the
asset disposed of in such Asset Sale.

 

“Net Proceeds” has the meaning assigned to that term in Section 2.5.B(iii)(d).

 

“Net Proceeds Amount” has the meaning assigned to that term in Section
2.5.B(iv).

 

“Ninth Amendment” means the Agreement, Limited Waiver and Ninth Amendment to the
Credit Agreement, dated January 10, 2002, among the Borrowers and the
Administrative Agent.

 

“NOC” means any network operation center of any Borrower or any of its
Subsidiaries.

 

“Non-US Lender” has the meaning assigned to that term in Section 2.7.B(iii).

 

“Nortel Networks” means Nortel Networks Inc., a Delaware corporation.

 

“Nortel Debt Exchange Agreement” means the Debt Exchange Agreement, dated
January 10, 2003, between the Parent and Nortel Networks.

 

“Nortel Note” means the promissory note, dated December 7, 2001, issued by
FiberNet in an aggregate principal amount of $2,321,117.00 and made payable to
the order of Nortel Networks.

 

“Nortel Stock Purchase Agreement” means the Stock Purchase Agreement, dated
January 10, 2003, among Nortel Networks and the purchasers listed on Exhibit A
thereto.

 

23

--------------------------------------------------------------------------------

“Notes” means one or more of the Revolving Loan Notes or Term Loan Notes.

 

“Notice of Conversion/Continuation” means a notice substantially in the form of
Exhibit H annexed hereto delivered to the Administrative Agent pursuant to
Section 2.3.D. with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.

 

“Obligations” means the collective reference to the Letter of Credit Obligations
and the unpaid principal of, and the accrued and unpaid interest on, the Loans
and all other obligations and liabilities of any member of the Borrower Group to
each Agent, the Lenders and the Issuing Bank (including each member of the
Borrower Group’s liability for all interest that accrues after the maturity of
the Loans and all interest that accrues after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to any member of the Borrower Group whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, that may arise under, out of, or in connection
with, this Agreement, any other Loan Document, any Interest Rate Agreement
entered into by any Borrower with any Lender pursuant to this Agreement or any
other document made, delivered or given in connection with this Agreement, any
other Loan Document or any such Interest Rate Agreement, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including all fees and disbursements of counsel to each
Agent, the Lenders and the Issuing Bank that are required to be paid by any
Borrower pursuant to the terms of any such agreement), and all other obligations
and liabilities of any or all of the Loan Parties to each Agent, the Issuing
Bank and/or any Lender under this Agreement, or any other Loan Document.

 

“Officer’s Certificate” means a certificate executed on behalf of a Person by a
Responsible Officer thereof (in his capacity as such officer); provided that
every Officer’s Certificate with respect to the compliance with a condition
precedent to the making of any Loans hereunder shall include (i) a statement
that the Responsible Officer making or giving such Officer’s Certificate has
read such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of such
Responsible Officer, he is reasonably familiar with the Borrowers’ assets,
liabilities, operations and affairs and, accordingly, is able to express an
informed opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the Responsible Officer, such
condition has been complied with in all material respects.

 

“Operating Lease” means, as applied to any Person, any lease (including leases
that may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) that is not a Capital Lease other than any such lease under
which that Person is the lessor.

 

“Original Credit Agreement” has the meaning assigned to such term in the
Preamble to this Agreement.

 

24

--------------------------------------------------------------------------------

“Other Taxes” has the meaning assigned to that term in Section 2.7.B.

 

“Parent” means FiberNet Telecom Group, Inc., a Delaware corporation.

 

“Parent Guaranty Agreement” means the Amended and Restated Parent Guaranty
Agreement, dated as of the date hereof, made by the Parent in favor of the
Administrative Agent, for the benefit of the Secured Parties, in form and
substance satisfactory to the Administrative Agent.

 

“Parent Letter Agreement” means the letter agreement, dated as of the date
hereof, entered into by the Parent for the benefit of the Administrative Agent
and the Lenders, in form and substance reasonably satisfactory to the
Administrative Agent.

 

“Parent Pledge Agreement (Devnet)” means the Amended and Restated Parent Pledge
Agreement (Devnet), dated as of the date hereof, between the Parent and the
Administrative Agent, for the benefit of the Secured Parties, in form and
substance satisfactory to the Administrative Agent.

 

“Parent Pledge Agreement (FiberNet)” means the Amended and Restated Parent
Pledge Agreement (FiberNet), dated as of the date hereof, between the Parent and
the Administrative Agent, for the benefit of the Secured Parties, in form and
substance satisfactory to the Administrative Agent.

 

“Parent Security Agreement” means the Amended and Restated Parent Security
Agreement, dated as of the date hereof, between the Parent and the
Administrative Agent, for the benefit of the Secured Parties, in form and
substance satisfactory to the Administrative Agent.

 

“Pavonia Consent” means the Consent and Agreement, dated as of October 30,2000,
among Telecom Management Resources, Inc., Equal Access and the Administrative
Agent.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

 

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan,
which is subject to Section 412 of the Code or Section 302 of ERISA.

 

“Permitted Investments” means, with respect to any member of the Borrower Group,
Investments which are (i) Cash or Cash Equivalents; (ii) accounts receivable
created, acquired or made by such member of the Borrower Group in the ordinary
course of business; (iii) Investments consisting of Capital Stock, obligations,
securities or other property received by such member of the Borrower Group in
settlement of accounts receivable or in satisfaction of judgments (each created
in the ordinary course of business) from obligors in the ordinary course of
business; (iv) Investments existing as of the Closing Date and set forth in
Schedule 1.1.A; (v) to the extent permitted under Section 6.7, Investments
consisting of non-cash consideration received by such member of the Borrower
Group in any Asset Sales; (vi) to the extent constituting Investments,

 

25

--------------------------------------------------------------------------------

transactions permitted under Section 6.18; and (vii) Investments in any other
Person(s) that in the aggregate do not exceed $500,000.

 

“Permitted Liens” means the following types of Liens, excluding (a) any such
Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Code or by ERISA,
(b) any such Lien relating to or imposed in connection with any Environmental
Claim, and (c) any such Lien expressly prohibited by any applicable terms of any
of the Collateral Documents, provided in each case that such Liens do not secure
Indebtedness for borrowed money (other than Indebtedness of the nature described
in clause (iv) of Section 6.1):

 

(i) Liens for taxes, assessments or governmental charges or claims the payment
of which is not, at the time, required by Section 5.5;

 

(ii) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 6.5;

 

(iii) Liens of sellers of goods to any member of the Borrower Group arising
under Article 2 of the UCC or similar provisions of applicable law in the
ordinary course of business, covering only goods sold and securing only the
unpaid purchase price for such goods and related expenses;

 

(iv) statutory Liens of landlords, statutory Liens of banks and rights of
set-off, statutory Liens of carriers, warehousemen, mechanics, repairmen,
workmen and materialmen, and other Liens imposed by law, in each case incurred
in the ordinary course of business (a) for amounts not yet overdue or (b) for
amounts that are overdue and that (in the case of any such amounts overdue for a
period in excess of five days) are being contested in good faith by appropriate
proceedings, so long as (1) the relevant member of the Borrower Group maintains
cash reserves sufficient to discharge any such Lien, and (2) in the case of a
Lien with respect to any portion of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral on
account of such Lien;

 

(v) Liens incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other types of
social security (exclusive of obligations for the payment of borrowed money),
incurred in the ordinary course of business (a) for amounts not yet overdue or
(b) for amounts that are overdue and that (in the case of any such amounts
overdue for a period in excess of five days) are being contested in good faith
by appropriate proceedings, so long as (1) the relevant member of the Borrower
Group maintains cash reserves sufficient to discharge any such Lien, and (2) in
the case of a Lien with respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral on account of such Lien;

 

(vi) leases or subleases granted to third parties in accordance with any
applicable terms of this Agreement and the Collateral Documents, provided, that
each such lease or sublease (a) is in the ordinary course of business and is in
connection with

 

26

--------------------------------------------------------------------------------

the provision of co-location services by any Borrower or any of its Subsidiaries
and (b) does not interfere in any material respect with the ordinary conduct of
the business of any Borrower or any of its Subsidiaries;

 

(vii) easements, rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do not and will not
interfere in any material respect with the ordinary conduct of the business of
any Borrower or any of its Subsidiaries or result in a material diminution in
the value of any Collateral as security for the Obligations;

 

(viii) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;

 

(ix) Liens granted pursuant to the Collateral Documents;

 

(x) without limiting any of the Borrowers’ obligations under Sections 5.11 and
6.13, interests of landlords or any of their respective lenders in leases or
co-location agreements entered into by any Borrower or any of its Subsidiaries;

 

(xi) Liens existing as of the Closing Date and set forth on Schedule 1.1.B,
provided that no such Lien shall at any time be extended to or cover any asset
or property other than the asset or property subject thereto on the Closing
Date;

 

(xii) Liens securing any Indebtedness renewing, refinancing or extending
Indebtedness secured by Liens permitted pursuant to clause (xi) above on terms
and conditions no less favorable to the applicable member of the Borrower Group,
provided that no such Lien shall at any time be extended to or cover any asset
or property other than the asset or property subject to such prior Lien on the
Closing Date;

 

(xiii) Liens securing any Indebtedness permitted under Section 6.1(iv) or
6.1(v);

 

(xiv) with respect to Devnet, rights of landlords or property managers,
telecommunications or service providers, cable television providers or similar
providers with respect to contracts, leases, easements and/or licenses in
existence as of the Closing Date; and

 

(xv) other Liens securing indebtedness in an aggregate amount not to exceed
$1,000,000 at any time outstanding.

 

“Permitted Purpose” has the meaning assigned to that term in Section 5.12.

 

“Person” means and includes natural persons, corporations, limited partnerships,
general partnerships, limited liability companies, limited liability
partnerships, joint stock companies, Joint Ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and Governmental
Instrumentalities.

 

27

--------------------------------------------------------------------------------

“Pledge Agreements” means the collective reference to the Parent Pledge
Agreement (FiberNet), the Parent Pledge Agreement (Devnet), the FiberNet Pledge
Agreement (Devnet), the FiberNet Pledge Agreement (FTI), the FTI Pledge
Agreement (Equal Access), the FTI Pledge Agreement (Local Fiber), and each
Subsidiary Pledge Agreement.

 

“Potential Event of Default” means a condition or event that, after notice or
lapse of time or both, would constitute an Event of Default.

 

“Prime Rate” means the rate that DBAG announces from time to time as its Dollar
prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. DBAG or any other Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate.

 

“Pro Rata Share” means (i) with respect to all payments, computations and other
matters relating to the Term Loan Commitment or the Term Loan of any Lender, the
percentage obtained by dividing (x) the Term Loan Exposure of that Lender by (y)
the aggregate Term Loan Exposure of all the Lenders, or (ii) with respect to all
payments, computations and other matters relating to the Revolving Loan
Commitment or the Revolving Loans or the obligations or unreimbursed drawings
with respect to a Letter of Credit of any Lender, the percentage obtained by
dividing (x) the Revolving Loan Exposure of that Lender by (y) the aggregate
Revolving Loan Exposure of all the Lenders. The initial Pro Rata Share of each
Lender for purposes of each of clauses (i) and (ii) of the preceding sentence is
set forth opposite the name of that Lender in Schedule 2.1.A annexed hereto.

 

“Proceedings” has the meaning assigned to that term in Section 5.1.

 

“Rating Agency” means S&P and Moody’s together with any other nationally
recognized credit rating agency if either of such corporations is not then
currently rating the pertinent obligations.

 

“Register” has the meaning assigned to that term in Section 2.1.D(i).

 

“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

 

“Release” means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), including the movement
of any Hazardous Materials through the air, soil, surface water or groundwater.

 

“Required Equity” means the issuance of common stock and warrants of the same
class and series as, and otherwise identical to, the Lender Common Stock and
Warrants, yielding Net Proceeds of at least $3,300,000.

 

28

--------------------------------------------------------------------------------

“Required Lenders” means the Lenders having or holding more than 662/3% of the
sum of the aggregate Loans and unused Commitment of all the Lenders.

 

“Responsible Officer” means, with respect to any matter and with respect to any
Person, the Chief Executive Officer, Chief Operating Officer, the President, any
Executive Vice President, any Senior Vice President, any Vice President,
Assistant Vice President, Treasurer or Assistant Treasurer of such Person.

 

“Restricted Payment” means (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of stock of any member of the
Borrower Group now or hereafter outstanding, except a dividend or distribution
payable solely in shares of that class of stock to the holders of that class (or
the accretion of such dividends or distribution), (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of any member of
the Borrower Group now or hereafter outstanding, (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of stock of any member of the
Borrower Group now or hereafter outstanding, and (iv) any payment or prepayment
of principal of, premium, if any, or cash interest on, or redemption, purchase,
retirement, defeasance (including covenant or legal defeasance), sinking fund or
similar payment with respect to Indebtedness permitted by this Agreement to be
incurred by any member of the Borrower Group and which is subordinated in right
of payment to the Obligations; provided further, however, that, notwithstanding
the foregoing, no transaction effected by any of the Borrowers with the consent
of the Lenders in connection with the Lender Common Stock Conversion, the
Deferred Interest Common Stock Conversion, the SDS Common Stock Conversion or
the Bank One/Nortel/TD Common Stock Conversion shall be deemed a Restricted
Payment.

 

“Revolving Lender” means any Lender with a Revolving Loan Commitment or making a
Revolving Loan.

 

“Revolving Loan Commitment” means the commitment of a Lender to make Revolving
Loans to the Borrowers pursuant to Section 2.1.A.(ii), and “Revolving Loan
Commitments” means such commitments of all the Lenders in the aggregate.

 

“Revolving Loan Commitment Termination Date” means the date which is the earlier
of (i) the date which is 30 days prior to the Maturity Date and (ii) the date on
which all of the Revolving Lenders’ Commitments expire or terminate.

 

“Revolving Loan Exposure” means, with respect to any Lender as of any date of
determination, such Lender’s unused Revolving Loan Commitment and the
outstanding principal amount of the Revolving Loans of that Lender and that
Lender’s reimbursement obligations under Sections 2.2.C. and 2.2.D in respect of
any Letter of Credit.

 

“Revolving Loans” means the Loans made by the Lenders to any Borrower pursuant
to Section 2.1.A.(ii).

 

29

--------------------------------------------------------------------------------

“Revolving Loan Notes” means (i) the promissory notes of each Borrower issued
pursuant to Section 3.1.A on the Closing Date and (ii) any promissory notes
issued by the applicable Borrower pursuant to Section 9.1.B. in connection with
assignments of the Revolving Loan Commitments and Revolving Loans of any of the
Revolving Loan Lenders, in each case substantially in the form of Exhibit N
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.

 

“S&P” means Standard & Poor’s Corporation.

 

“SDS Common Stock Closing” means the issuance by Parent to SDS of 52,000,000
shares of Parent’s common stock and the satisfaction of all conditions precedent
to closing under the SDS Stock Purchase Agreement.

 

“SDS Common Stock Conversion” means the conversion by SDS of debt in an
aggregate amount of $2,080,000 to the equity capital of the Parent pursuant to
the SDS Stock Purchase Agreement.

 

“SDS Merchant Equity Contribution” means the contribution of cash to the equity
capital of the Parent by SDS Merchant Fund, L.P. in an aggregate amount of not
less than $8,000,000.

 

“SDS Merchant Equity Contribution Documents” means the definitive documentation
regarding the SDS Merchant Equity Contribution.

 

“SDS Stock Purchase Agreement” means the Common Stock Purchase Agreement, dated
November 11, 2002, among the Parent and SDS.

 

“Second Closing” means the issuance of $2,600,000 of Series J Convertible
Preferred stock by Parent to SDS Merchant Fund, L.P., representing the second
installment of the SDS Merchant Equity Contribution.

 

“Secured Parties” means the Agents, the Lenders, the Issuing Bank and any Lender
or Affiliate of a Lender party to an Interest Rate Agreement.

 

“Securities” means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as “securities” or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

 

“Securities Intermediary” means Bankers Trust Company and includes each of its
permitted successors and assigns.

 

30

--------------------------------------------------------------------------------

“Seventh Amendment” means the Agreement and Seventh Amendment to the Credit
Agreement, dated October 30, 2002, among the Borrowers and the Administrative
Agent.

 

“Shareholder” means any Person who holds the Capital Stock of the Parent from
time to time.

 

“Solvency Certificate” means each certificate substantially in the form of
Exhibit J annexed hereto delivered to the Administrative Agent and the Lenders
by a Responsible Officer of each Borrower on the Closing Date in accordance with
Section 3.1.W.

 

“Solvent” or “Solvency” means, with respect to any Person as of a particular
date, that on such date (i) such Person is able to realize upon its assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (ii) 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 in their ordinary course, (iii) such Person is not engaged in a business
or a transaction, and is not about to engage in a business or a transaction, for
which such Person’s property or assets would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage, (iv) the fair value of
the property or assets of such Person is greater than the total amount of
liabilities, including contingent liabilities, of such Person and (v) the
present fair salable value of the assets of such Person, as a going concern, is
not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

 

“Stage 1” means the period from the Closing Date to and including the earlier of
(i) the last day of the first Fiscal Quarter of the Borrower Group for which the
Consolidated Leverage Ratio of the Borrower Group as at such date is less than
or equal to 6.00 to 1.00 and (ii) March 31, 2003.

 

“Stage 2” means the period commencing immediately after the last day of Stage 1.

 

“Stock Purchase Agreement” means the Common Stock and Warrant Purchase
Agreement, dated October 30, 2002, among the Parent and the Investors.

 

“Stockholders’ Agreement” means the Stockholders’ Agreement, dated October 30,
2002, among the Parent and the Investors.

 

“Subsidiary” means, with respect to any Person, (i) any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing

 

31

--------------------------------------------------------------------------------

similar functions) having the power to direct or cause the direction of the
management and policies thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof and (ii) any partnership or limited liability
company of which more than 50% of such entities’ capital accounts, distribution
rights, general or limited partnership interests or membership interests are
owned or controlled directly or indirectly by such Person or one of more other
Subsidiaries of that Person or a combination thereof. Without limiting the
generality of the foregoing, FiberNet and Devnet are Subsidiaries of the Parent,
FTI is a Subsidiary of FiberNet and Equal Access and Local Fiber are
Subsidiaries of FTI.

 

“Subsidiary Guarantor” means each Subsidiary of a Borrower that executes and
delivers a Subsidiary Guaranty Agreement on the Closing Date or from time to
time thereafter pursuant to Section 6.5.B.

 

“Subsidiary Guaranty Agreement” means each Subsidiary Guaranty Agreement and
Amended and Restated Subsidiary Guaranty Agreement executed and delivered by a
Subsidiary of a Borrower, in each case substantially in the form of Exhibit K
annexed hereto.

 

“Subsidiary Pledge Agreement” means each Subsidiary Pledge Agreement and Amended
and Restated Subsidiary Pledge Agreement executed and delivered by a Subsidiary
of a Borrower, in each case substantially in the form of Exhibit L annexed
hereto.

 

“Subsidiary Security Agreement” means each Subsidiary Security Agreement and
Amended and Restated Subsidiary Security Agreement executed and delivered by a
Subsidiary of a Borrower, in each case substantially in the form of Exhibit M
annexed hereto.

 

“Syndication Agent” is defined in the Preamble to this Agreement and includes
each of its successors and assigns.

 

“System” has the meaning assigned to that term in the Recitals to this
Agreement.

 

“Tax” or “Taxes” means any present or future tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature and whatever called, by whomsoever,
on whomsoever and wherever imposed, levied, collected, withheld or assessed,
including interest, penalties and additions in connection therewith; provided
that “Tax on the overall net income” of a Person shall be construed as a
reference to a tax imposed by the jurisdiction in which that Person is organized
or in which that Person’s principal office (and/or, in the case of a Lender, its
lending office) is located or in which that Person (and/or, in the case of a
Lender, its lending office) is deemed to be doing business on all or part of the
net income, profits or gains (whether worldwide, or only insofar as such income,
profits or gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its
lending office).

 

“TD” has the meaning assigned to such term in the Preamble to this Agreement.

 

32

--------------------------------------------------------------------------------

“TD Debt Exchange Agreement” means the Debt Exchange Agreement, dated January
10, 2003, between the Parent and TD.

 

“TD Stock Purchase Agreement” means the Stock Purchase Agreement, dated January
10, 2003, among TD and the purchasers listed on Exhibit A thereto.

 

“Telecommunications Assets” means all assets, rights (contractual or otherwise)
and properties, whether tangible or intangible, used or intended for use in
connection with the Telecommunications Business.

 

“Telecommunications Business” means, with respect to the Borrower Group, the
business of (i) transmitting, or providing services relating to the transmission
of, voice, video or data through owned or leased terrestrial or microwave
transmission facilities which are a part of the System and (ii) constructing,
installing, maintaining, creating, designing, developing, operating or marketing
terrestrial or microwave communications related network infrastructure,
components, equipment, software and other devices for use in the
telecommunications business of the Borrower Group (as contemplated by the
Business Plan) and any other business or opportunity that is reasonably related
or complementary thereto.

 

“Term Lender” means any Lender with a Term Loan Commitment or making a Term
Loan.

 

“Term Loan Commitment” means the commitment of a Lender to make a Term Loan to
the Borrowers pursuant to Section 2.1.A.(i), and “Term Loan Commitments” means
such commitments of all the Lenders in the aggregate.

 

“Term Loan Commitment Termination Date” means the date which is the earlier of
(i) March 31, 2002 and (ii) the date on which all of the Term Lenders’
Commitments expire or terminate.

 

“Term Loan Exposure” means, with respect to any Lender as of any date of
determination, such Lender’s unused Term Loan Commitment and the outstanding
principal amount of the Term Loans of such Lender.

 

“Term Loan Notes” means (i) the promissory notes of each Borrower issued
pursuant to Section 3.1.A. on the Closing Date and (ii) any promissory notes
issued by the applicable Borrower pursuant to Section 9.1.B. in connection with
assignments of the Term Loan Commitments or Term Loans of any of the Term Loan
Lenders, in each case substantially in the form of Exhibit O annexed hereto.

 

“Term Loans” means the Loans made by the Lenders to any Borrower pursuant to
Section 2.1.A.(i).

 

“Third Closing” means the issuance of $3,100,000 of Series J Convertible
Preferred stock by Parent to SDS Merchant Fund, L.P., representing the third
installment of the SDS Merchant Equity Contribution.

 

33

--------------------------------------------------------------------------------

“Tishman” means Tishman Speyer Properties, L.P., a Delaware limited partnership.

 

“Tishman Licenses” means each of the licenses and agreements, dated as of April
10, 2000, entered into by FiberNet or any of its Subsidiaries with Tishman or an
Affiliate thereof.

 

“Tishman Warrant Agreement” means that certain Warrant to Purchase L.L.C. Units,
dated as of August 7, 1997, between Equal Access and Tishman.

 

“Total Utilization of Revolving Loan Commitments” means, as at any date of
determination, the aggregate principal amount of all outstanding Revolving
Loans.

 

“Total Utilization of Term Loan Commitments” means, as at any date of
determination, the aggregate principal amount of all outstanding Term Loans.

 

“Transaction Costs” means the fees, costs and expenses payable by any member of
the Borrower Group on or before the Closing Date in connection with the
transactions contemplated by the Loan Documents.

 

“UCC” means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.

 

“UCP” has the meaning assigned to that term in Section 2.2.H.

 

“Unadjusted Eurodollar Rate Component” has the meaning assigned to that term in
Section 5.15.

 

“Unused Commitments” means, for any period, the average of the daily excess of
the Commitments in effect during such period over the average daily aggregate
principal amount of Loans outstanding during such period.

 

“Utilization Ratio” means, for any period, the average daily aggregate principal
amount of Loans outstanding during such period divided by the average daily
total Commitments in effect during such period.

 

“Warrant Agreement” means the Warrant Agreement, dated April 11, 2000, among the
Parent, DBAB, TD and Bankers Trust Company.

 

“Warrant Escrow Agreement” means the Warrant Escrow Agreement, dated April 11,
2000, among the Parent, DBAB, TD and Bankers Trust Company.

 

“707 Wilshire Consent” means the Consent and Agreement, dated as of October 12,
2000, among First Interstate Tower, Equal Access and the Administrative Agent.

 

34

--------------------------------------------------------------------------------

SECTION  1.2. ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER                                     AGREEMENT.

 

Except as otherwise expressly provided in this Agreement, all accounting terms
not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Without limiting the foregoing, financial statements and
other information required to be delivered by any member of the Borrower Group
to the Lenders pursuant to Sections 3.1. and 5.1. shall be prepared in
accordance with GAAP as in effect at the time of such preparation (and delivered
together with the reconciliation statements provided for in Section 5.1).
Calculations in connection with the definitions, covenants and other provisions
of this Agreement shall utilize accounting principles and policies in conformity
with those used to prepare the financial statements referred to in Section 5.1.

 

SECTION 1.3. OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.

 

A.    Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.

 

B.    Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.

 

C.    Any reference to any agreement or instrument shall be deemed to include a
reference to such agreement or instrument as assigned, amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with the terms of this Agreement.

 

D.    The use in any of the Loan Documents of the word “include” or “including,”
when following any general statement, term or matter, shall not be construed to
limit such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as “without limitation” or “but not limited to” or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter. The word “will” shall
be construed to have the same meaning and effect as the word “shall.”

 

E.    References to “Sections” and “subsections” shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.

 

F.    References to “Articles” shall be to Articles of this Agreement unless
otherwise specifically provided.

 

G.    The use in this Agreement of the words “herein,” “hereof,” and
“hereunder,” and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof.

 

35

--------------------------------------------------------------------------------

H. The use in this Agreement of the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

 

I. This Agreement, the other Loan Documents and any documents or instruments
delivered pursuant hereto shall be construed without regard to the identity of
the party who drafted the various provisions of the same. Each and every
provision of this Agreement, the other Loan Documents and instruments and
documents entered into and delivered in connection therewith shall be construed
as though the parties participated equally in the drafting of the same.
Consequently, each of the parties acknowledges and agrees that any rule of
construction that a document is to be construed against the drafting party shall
not be applicable either to this Agreement, or the other Loan Documents and
instruments and documents entered into and delivered in connection therewith.

 

ARTICLE II.

AMOUNTS AND TERMS OF COMMITMENTS AND LOANS

 

SECTION 2.1. COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.

 

A. Commitments. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of each Borrower herein set
forth, each Lender hereby severally agrees to make the Loans described in this
Section 2.1.A.

 

(i) Term Loans. Each Term Lender severally agrees to make term loans (“Term
Loans”) to the Borrowers from time to time from the Closing Date until the Term
Loan Commitment Termination Date in an aggregate amount not exceeding its Pro
Rata Share of the aggregate amount of the Term Loan Commitments. Each Borrower
shall use the proceeds of any such Term Loans solely for the purposes identified
in Section 5.12. The amount of each Term Lender’s Commitment as of the date of
the Ninth Amendment is set forth opposite its name on Schedule 2.1.A annexed
hereto and the aggregate amount of the Term Loan Commitments is $16,532,240.94;
provided that the Term Loan Commitments of the applicable Term Lenders shall be
adjusted to give effect to any assignments of such Term Lender’s respective Term
Loan Commitments pursuant to Section 9.1.; and provided further that the amount
of the Term Loan Commitments shall be reduced from time to time by the amount of
any reductions thereto made pursuant to Section 2.5. Each Term Lender’s Term
Loan Commitments shall expire immediately and without further action on the Term
Loan Commitment Termination Date and no Term Loans shall be made after such
date. Amounts borrowed under this Section 2.1.A.(i) and subsequently repaid or
prepaid may not be reborrowed. For the avoidance of doubt, any Term Loan
converted into equity of the Parent or any of the Parent’s Affiliates shall be
deemed to be a prepayment of such Term Loan.

 

(ii) Revolving Loans. Each Revolving Lender severally agrees to make revolving
loans (“Revolving Loans”) to the Borrowers from the Closing Date until the
Revolving Loan Commitment Termination Date in an aggregate amount not exceeding
its Pro Rata Share of the aggregate amount of the Revolving Loan Commitments.
Each Borrower shall use the proceeds of any such Revolving Loans

 

36

--------------------------------------------------------------------------------

solely for the purposes identified in Section 5.12. The amount of each Revolving
Lender’s Commitment as of the date of the Ninth Amendment is set forth opposite
its name on Schedule 2.1.A annexed hereto and the aggregate amount of the
Revolving Loan Commitments is $11,224,043,14; provided that the Revolving Loan
Commitments of the applicable Revolving Lenders shall be adjusted to give effect
to any assignments of such Revolving Lender’s respective Revolving Loan
Commitments pursuant to Section 9.1.; and provided further that the amount of
the Revolving Loan Commitments shall be reduced from time to time by the amount
of any reductions thereto made pursuant to Section 2.5. Notwithstanding anything
to the contrary herein, the outstanding principal amount of Revolving Loans made
pursuant to this Section 2.1.A(ii) shall not at any time exceed $5,142,298.87.
Each Revolving Lender’s Revolving Loan Commitments shall expire immediately and
without further action on the Revolving Loan Commitment Termination Date and no
Revolving Loans shall be made after such date. Amounts borrowed under this
Section 2.1.A.(ii) and subsequently repaid or prepaid may be reborrowed;
provided, however, that (i) the aggregate principal amount of Revolving Loans
outstanding that were made pursuant to this Section 2.1.A(ii) shall not at any
time exceed $5,142,298.87 and (ii) the aggregate principal amount of the
Revolving Loans (including LOC Revolving Loans) outstanding at any time, when
taken together with the outstanding Letter of Credit Obligations, may not exceed
the aggregate amount of the Revolving Loan Commitments.

 

B. Borrowing Mechanics. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of each Borrower herein
set forth, each Lender hereby severally agrees to make the Loans described in
Section 2.1.A., if, and only if, the borrowing mechanics set forth as follows
are satisfied:

 

(i) (a)  Revolving Loans shall be in an aggregate minimum amount of $1,000,000
and integral multiples of $100,000 in excess of that amount and (b)  Term Loans
shall be in an aggregate minimum amount of $10,000,000 and integral multiples of
$100,000 in excess of that amount or the entire remaining undrawn amount
thereof;

 

(ii) Whenever a Borrower desires that the Lenders make Revolving Loans or Term
Loans, such Borrower shall deliver to the Administrative Agent a Loan/Letter of
Credit Request no later than 10:00 A.M. (New York City time) at least three
Business Days in advance of the proposed Loan Date (in the case of a Eurodollar
Rate Loan) or at least one Business Day in advance of the proposed Loan Date (in
the case of a Base Rate Loan). The Borrowers may request (a) a Revolving Loan no
more frequently than twice per month and (b) a Term Loan no more frequently than
once per month;

 

(iii) With respect to the making of a Loan, each Loan/Letter of Credit Request
shall (a) specify (1) the identity of the applicable Borrower, (2) whether the
requested Loan is a Revolving Loan or Term Loan, (3) the aggregate amount of the
requested Loan, (4) the proposed Loan Date (which may occur only on a Business
Day), (5) whether any Loan shall be a Base Rate Loan or a Eurodollar Rate Loan,
and (6) in the case of any Loans requested to be made as Eurodollar Rate Loans,
the initial Interest Period requested therefor, which shall be a period
contemplated by the definition of the

 

37

--------------------------------------------------------------------------------

term “Interest Period,” and (b) be accompanied by an accurate and complete
Loan/Letter of Credit Certificate;

 

(iv) With respect to the issuance of a Letter of Credit, each such issuance
shall be made in accordance with the requirements set forth in Section 2.2.B;
and

 

(v) The applicable Borrower shall notify the Administrative Agent prior to the
making of any Loan in the event that any of the matters to which such Borrower
is required to certify in the applicable Loan/Letter of Credit Request or
Loan/Letter of Credit Certificate, as applicable, is no longer accurate and
complete as of the applicable Loan Date, and the acceptance by any Borrower of
the proceeds of any Loan shall constitute a re-certification by the applicable
Borrower, as of the applicable Loan Date, as to the matters to which such
Borrower is required to certify in the applicable Loan/Letter of Credit Request
and Loan/Letter of Credit Certificate.

 

Except as otherwise provided in Sections 2.6.B. and 2.6.C., a Loan/Letter of
Credit Request for a Eurodollar Rate Loan shall be irrevocable on and after the
related Interest Rate Determination Date, and a Loan/Letter of Credit Request
for a Base Rate Loan shall be irrevocable on and after the delivery of such
Loan/Letter of Credit Request to the Administrative Agent and, in each case, the
applicable Borrower shall be bound to make a borrowing in accordance therewith.

 

C. Disbursement of Funds.    All Loans under this Agreement shall be made by the
Lenders simultaneously and proportionately to their respective Pro Rata Shares,
it being understood that no Lender shall be responsible for any default by any
other Lender in that other Lender’s obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make the particular type of
Loan requested be increased or decreased as a result of a default by any other
Lender in that other Lender’s obligation to make a Loan requested hereunder.
Promptly after receipt by the Administrative Agent of a Loan/Letter of Credit
Request pursuant to Section 2.1.B., the Administrative Agent shall notify each
Lender of the proposed borrowing. Each Lender shall make the amount of its Loan
available to the Administrative Agent not later than 12:00 Noon (New York City
time) on the applicable Loan Date, in immediately available funds in Dollars, at
the Funding and Payment Office. The Administrative Agent shall disburse the
proceeds of each Loan, all in accordance with and as more particularly described
in the Loan/Letter of Credit Request.

 

Unless the Administrative Agent shall have been notified by any Lender prior to
the Loan Date that such Lender does not intend to make available to the
Administrative Agent the amount of such Lender’s Pro Rata Share of such Loan
requested on such Loan Date, the Administrative Agent may assume that such
Lender has made such amount available to the Administrative Agent on such Loan
Date and the Administrative Agent may, in its sole discretion, but shall not be
obligated to, make available to the applicable Borrower a corresponding amount
on such Loan Date. If such corresponding amount is not in fact made available to
the Administrative Agent by such Lender, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Lender
together with interest thereon, for each day from such Loan Date until the date
such amount is paid to the Administrative Agent, at the Federal Funds Effective
Rate for

 

38

--------------------------------------------------------------------------------

the first three Business Days and thereafter at the rate payable under this
Agreement for Base Rate Loans. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s share of
the Loan included in such Loan. If such Lender does not pay such corresponding
amount forthwith upon the Administrative Agent’s demand therefor, the
Administrative Agent shall promptly notify the applicable Borrower and the
applicable Borrower shall immediately pay such corresponding amount to the
Administrative Agent together with interest thereon, for each day from such Loan
Date until the date such amount is paid to the Administrative Agent, at the rate
payable under this Agreement for Base Rate Loans. Nothing in this Section 2.1.C.
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that the applicable Borrower
may have against any Lender as a result of any default by such Lender hereunder.

 

D. The Register.

 

(i) The Administrative Agent shall maintain, at its address referred to in
Section 9.8., a register for the recordation of the names and addresses of the
Lenders and the Commitments and Loans of each Lender from time to time (the
“Register”). The Register shall be available for inspection by any Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.

 

(ii) The Administrative Agent shall record in the Register (a) the Term Loan
Commitment, the Revolving Loan Commitment, the Loans and the type of Loans from
time to time of each Lender, (b) the amount of any principal or interest due and
payable or to become due and payable from each Borrower to each Lender
hereunder, (c) each repayment or prepayment in respect of the principal amount
of the Loans of each Lender, (d) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender’s
share thereof, (e) the date of issuance, face amount and expiry date of each
Letter of Credit and the Issuing Bank with respect thereto and the Borrower
requesting the issuance thereof, and, (f) if applicable, the date and amount of
each Letter of Credit converted, in whole or in part, into a Loan pursuant to
Section 2.2. Any such recordation shall be conclusive and binding on each
Borrower and each Lender, absent manifest error; provided that failure to make
any such recordation, or any error in such recordation, shall not affect any
Lender’s Commitments or Obligations in respect of any applicable Loans.

 

(iii) Each Lender shall record on its internal records (including the Notes held
by such Lender) the amount and type of each Loan made by it and each payment in
respect thereof. Any such recordation shall be conclusive and binding on each
Borrower, absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect any Lender’s
Commitments or Obligations in respect of any applicable Loans or otherwise; and
provided, further that in the event of any inconsistency between the Register
and any Lender’s records, the recordations in the Register shall govern.

 

(iv) The Administrative Agent and the Lenders shall deem and treat the Persons
listed as the Lenders in the Register as the holders and owners of the
corresponding Commitments, Letters of Credit and Loans listed therein for all
purposes

 

39

--------------------------------------------------------------------------------

hereof, and no assignment or transfer of any such Commitment, Letter of Credit
or Loans shall be effective, in each case unless and until an Assignment
Agreement effecting the assignment or transfer thereof shall have been accepted
by the Administrative Agent and recorded in the Register as provided in Section
9.1. Prior to such recordation, all amounts owed with respect to the applicable
Commitment, Letter of Credit or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and binding
on any subsequent holder, assignee or transferee of the corresponding
Commitments, Letters of Credit or Loans.

 

E. Notes. Each Borrower, as applicable, shall execute and deliver on the Closing
Date and on the date of any assignment or transfer of any Loan or Commitment to
each Lender who so requests (or to the Administrative Agent for that Lender) (i)
a Revolving Note substantially in the form of Exhibit N annexed hereto to
evidence that Lender’s Revolving Loans, in the principal amount of that Lender’s
Revolving Loan Commitment and with other appropriate insertions and (ii) a Term
Loan Note substantially in the form of Exhibit O annexed hereto to evidence that
Lender’s Term Loans, in the principal amount of that Lender’s Term Loan
Commitment and with other appropriate insertions.

 

The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes hereof unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by the
Administrative Agent as provided in Section 9.1. Any request, authority or
consent of any person or entity who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, assignee or transferee of that Note or of
any Note or Notes issued in exchange therefor.

 

SECTION 2.2. LETTERS OF CREDIT.

 

A. Issuance of Letters of Credit.    Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth herein, the
Issuing Bank agrees to issue, and each Revolving Loan Lender severally agrees to
participate in the issuance by the Issuing Bank of, Letters of Credit in Dollars
from time to time from the Closing Date until the Revolving Loan Commitment
Termination Date as any Borrower may request, in a form acceptable to the
Issuing Bank; provided, however, that (i) the sum of the outstanding Letter of
Credit Obligations and any outstanding Revolving Loans made under Section 2.2.E.
(each such Revolving Loan an “LOC Revolving Loan”) shall not at any time exceed
$6,081,744.27 (the “LOC Committed Amount”) and (ii) the sum of the aggregate
outstanding principal amount of Revolving Loans (including LOC Revolving Loans)
plus outstanding Letter of Credit Obligations shall not at any time exceed the
aggregate amount of the Revolving Loan Commitments. No Letter of Credit shall
(a) have an original expiry date more than one year from the date of issuance
(provided that any such Letter of Credit may contain customary “evergreen”
provisions pursuant to which the expiry date is automatically extended by a
specific time period unless the Issuing Bank gives notice of expiration or
termination to the beneficiary of such Letter of Credit at least a specified
time period prior to the expiry date then in effect) or (b) as originally issued
or as extended, have an expiry date extending beyond the date which is 30 days

 

40

--------------------------------------------------------------------------------

prior to the Maturity Date. Each Letter of Credit shall comply with the terms
and conditions of the related LOC Documents. The issuance and expiry dates of
each Letter of Credit shall be a Business Day.

 

B. Notice and Reports.

 

(i) The request for the issuance of a Letter of Credit shall be submitted by a
Borrower to the Issuing Bank no later than 10:00 A.M. (New York City time) at
least two Business Days in advance of the proposed Letter of Credit Date. The
Borrowers shall request the issuance of a Letter of Credit no more frequently
than once per month (and on the same day on which any Loans requested in such
month are requested). Each request for the issuance of a Letter of Credit shall
utilize the form of Loan/Letter of Credit Request attached hereto as Exhibit H
and shall (a) specify (1) the identity of the Borrower requesting the issuance
of the Letter of Credit (2) the aggregate amount of the requested Letter of
Credit and (3) the proposed Letter of Credit Date, and (b) be accompanied by an
accurate and complete Loan/Letter of Credit Certificate.

 

(ii) The Issuing Bank shall, at least quarterly and more frequently upon
reasonable request, disseminate to each of the Revolving Loan Lenders a detailed
report specifying the Letters of Credit which are then issued and outstanding
and any activity with respect thereto which may have occurred since the date of
the prior report, and including therein, among other things, the beneficiary,
the face amount and the expiry date, as well as any payment or expirations which
may have occurred.

 

(iii) The applicable Borrower shall notify the Administrative Agent prior to the
issuance of any Letter of Credit in the event that any of the matters to which
such Borrower is required to certify in the applicable Loan/Letter of Credit
Request or Loan/Letter of Credit Certificate, as applicable, is no longer
accurate and complete as of the applicable Loan Date, and the acceptance by the
applicable Borrower of the issuance of the Letter of Credit shall constitute a
re-certification by such Borrower, as of the applicable Letter of Credit Date,
as to the matters to which such Borrower is required to certify in the
applicable Loan/Letter of Credit Request and Loan/Letter of Credit Certificate.

 

C. Participation. Each Lender, upon issuance of a Letter of Credit, shall be
deemed to have purchased without recourse a participation interest from the
Issuing Bank in such Letter of Credit and the obligations arising thereunder and
any collateral relating thereto, in each case in an amount equal to its Pro Rata
Share of the obligations under such Letter of Credit and shall absolutely,
unconditionally and irrevocably assume and be obligated to pay to the Issuing
Bank and discharge when due its Pro Rata Share of the obligations arising under
such Letter of Credit. Without limiting the scope and nature of each Revolving
Loan Lender’s participation interest in any Letter of Credit, to the extent that
the Issuing Bank has not been reimbursed as required hereunder or under any such
Letter of Credit, each such Revolving Loan Lender shall pay to the Issuing Bank
its Pro Rata Share of such unreimbursed drawing in same day funds on the day of
notification by the Issuing Bank of an unreimbursed drawing pursuant to the
provisions of Section 2.2.D. below. The obligation of each Revolving Loan Lender
to so reimburse the Issuing Bank shall be absolute and unconditional and shall
not be affected by the occurrence of a

 

41

--------------------------------------------------------------------------------

Potential Event of Default, an Event of Default or any other occurrence or
event. Any such reimbursement shall not relieve or otherwise impair the
obligation of the applicable Borrower to reimburse the Issuing Bank under any
Letter of Credit, together with interest as hereinafter provided.
Notwithstanding anything to the contrary set forth in this Agreement, for
purposes of this Section 2.2.C, each Lender’s Pro Rata Share of its obligations
in respect of any Letter of Credit shall be determined by reference to such
Lender’s LOC Pro Rata Share as set forth opposite such Lender’s name on Schedule
2.1.A annexed hereto. Each Lender hereby acknowledges and agrees,
notwithstanding anything to contrary set forth in this Agreement (including,
without limitation, Section 9.5), that (i) the rights and interests assigned to
DBAG under and pursuant to the LOC Cash Collateral Security Agreement and the
LOC Account Control Agreement shall run solely to the benefit of DBAG and no
other Lender shall have any right, title or interest thereunder or thereto and
(ii) DBAG shall have the sole and exclusive authority to consent to any release,
amendment, supplementation or other modification in respect of the LOC Cash
Collateral Security Agreement and the LOC Account Control Agreement.

 

D. Reimbursement. In the event of any drawing under any Letter of Credit, the
Issuing Bank shall promptly notify the applicable Borrower. Unless such Borrower
shall immediately notify the Issuing Bank that such Borrower intends to
otherwise reimburse the Issuing Bank for such drawing, such Borrower shall be
deemed to have requested that the Revolving Loan Lenders make a Revolving Loan
in the amount of the drawing as provided in Section 2.2.E. below on the related
Letter of Credit, the proceeds of which shall be used to satisfy the related
reimbursement obligations. Such Borrower promises to reimburse the Issuing Bank
on the day of drawing under any Letter of Credit (either with the proceeds of a
Revolving Loan obtained hereunder or otherwise) in same day funds. If such
Borrower shall fail to reimburse the Issuing Bank as provided hereinabove, the
unreimbursed amount of such drawing shall bear interest at a per annum rate
equal to 2.00% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. The Borrowers’ reimbursement obligations
hereunder shall be absolute and unconditional under all circumstances
irrespective of any rights of setoff, counterclaim or defense to payment any
Borrower may claim or have against the Issuing Bank, any other Secured Party,
the beneficiary of the Letter of Credit drawn upon or any other Person,
including any defense based on any failure of any Borrower or any other member
of the Borrower Group to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing Bank will
promptly notify the other Revolving Loan Lenders of the amount of any
unreimbursed drawing and each Lender shall promptly pay to the Administrative
Agent for the account of the Issuing Bank, in Dollars and in immediately
available funds, the amount of such Revolving Loan Lender’s Pro Rata Share of
such unreimbursed drawing (after giving effect to the second to last sentence of
Section 2.2.C). Such payment shall be made on the day such notice is received by
such Revolving Loan Lender from the Issuing Bank if such notice is received at
or before 11:00 A.M. (New York City time), and otherwise such payment shall be
made at or before 11:00 A.M. (New York City time) on the Business Day next
succeeding the day such notice is received. If such Revolving Loan Lender does
not pay such amount to the Issuing Bank in full upon such request, such Lender
shall, on demand, pay to the Administrative Agent for the account of the Issuing
Bank interest on the unpaid amount during the period from the date of such
drawing until such Lender pays such amount to the Issuing Bank in full at a rate
per annum equal to, if paid within three Business Days of the date that such
Revolving Loan Lender is required to make payments of such amount pursuant to
the preceding sentence, the Federal Funds Effective Rate and, thereafter, at a
rate

 

42

--------------------------------------------------------------------------------

equal to the interest rate otherwise payable under this Agreement for Base Rate
Loans. Each Revolving Loan Lender’s obligation to make such payment to the
Issuing Bank, and the right of the Issuing Bank to receive the same, shall be
absolute and unconditional, shall not be affected by any circumstance whatsoever
and shall be without regard to the termination of this Agreement or the
Commitments hereunder, the existence of a Potential Event of Default or Event of
Default or the acceleration of the obligations of any Borrower hereunder and
shall be made without any offset, abatement, withholding or reduction
whatsoever. Simultaneously with the making of each such payment by a Revolving
Loan Lender to the Issuing Bank, such Revolving Loan Lender shall, automatically
and without any further action on the part of the Issuing Bank or such Revolving
Loan Lender, acquire a participation interest in an amount equal to such payment
(excluding the portion of such payment constituting interest owing to the
Issuing Bank) in the related unreimbursed drawing portion of the Letter of
Credit Obligation and in the interest thereon and in the related LOC Documents,
and shall have a claim against the applicable Borrower with respect thereto.

 

E. Repayment with Loans. On any day on which a Borrower shall have requested, or
been deemed to have requested, a Revolving Loan to reimburse a drawing under a
Letter of Credit, the Administrative Agent shall give notice to the Lenders that
a Revolving Loan has been requested or deemed requested by the applicable
Borrower to be made in connection with a drawing under a Letter of Credit, in
which case a Revolving Loan comprised of Base Rate Loans (or Eurodollar Loans to
the extent the applicable Borrower has complied with the procedures of Section
2.1.C. with respect thereto) shall be immediately made to the applicable
Borrower by all Revolving Loan Lenders in accordance with their Pro Rata Shares
(after giving effect to the second to last sentence of Section 2.2.C) and the
proceeds thereof shall be paid directly to the Issuing Bank for application to
the respective Letter of Credit Obligations. Each such Revolving Loan Lender
hereby irrevocably agrees to make its Pro Rata Share (after giving effect to the
second to last sentence of Section 2.2.C) of each such Revolving Loan
immediately upon any such request or deemed request in the amount, in the manner
and on the date specified in the preceding sentence notwithstanding (i) that the
amount of such borrowing may not comply with the minimum amount for advances of
Revolving Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 3.2 are then satisfied, (iii) whether a Potential Event of
Default or an Event of Default then exists, (iv) the failure for any such
request or deemed request for Revolving Loans to be made by the time otherwise
required hereunder, (v) whether the date of such borrowing is a date on which
Revolving Loans are otherwise permitted to be made hereunder or (vi) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing.

 

F. Designation of Subsidiary as Account Party. Notwithstanding anything to the
contrary set forth in this Agreement, a Letter of Credit issued hereunder may
contain a statement to the effect that such Letter of Credit is issued for the
account of any Subsidiary of any Borrower, provided that notwithstanding such
statement, the requesting Borrower shall be the actual account party for all
purposes of this Agreement for such Letter of Credit and such statement shall
not affect such Borrower’s reimbursement obligations hereunder with respect to
such Letter of Credit.

 

43

--------------------------------------------------------------------------------

G. Renewal; Extension. The renewal or extension of any Letter of Credit shall,
for purposes hereof, be treated in all respects in the same manner as the
issuance of a new Letter of Credit hereunder.

 

H. Uniform Customs and Practices. The Issuing Bank may have the Letters of
Credit be subject to The Uniform Customs and Practice for Documentary Credits
(the “UCP”) or the International Standby Practices 1998 (the “ISP98”), in either
case as published as of the date of issue by the International Chamber of
Commerce, in which case the UCP or the ISP98, as applicable, may be incorporated
therein and deemed in all respects to be a part thereof.

 

I. Indemnification; Nature of Issuing Bank’s Duties.

 

(i) In addition to its other obligations under this Section 2.2, each Borrower
hereby agrees to pay, and protect, indemnify and save each Lender harmless from
and against, any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys’ fees) that such Lender may
incur or be subject to as a consequence, direct or indirect, of (a) the issuance
of any Letter of Credit or (b) the failure of such Lender to honor a drawing
under a Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Legal Requirement.

 

(ii) As between the Borrowers and the Lenders (including the Issuing Bank), the
Borrowers shall assume all risks of the acts, omissions or misuse of any Letter
of Credit by the beneficiary thereof. No Lender (including the Issuing Bank)
shall be responsible: (a) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (b) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, that may prove to be invalid or ineffective for any reason; (c) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (d) for any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (e) for any consequences arising from causes beyond the
control of such Lender, including any Governmental Action. None of the above
shall affect, impair, or prevent the vesting of the Issuing Bank’s rights or
powers hereunder, or otherwise limit the indemnities provided for in Section 9.3
or in any of the LOC Documents.

 

(iii) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Lender
(including the Issuing Bank), under or in connection with any Letter of Credit
or the related certificates, if taken or omitted in good faith, shall not put
such Lender under any resulting liability to any Borrower or any other member of
the Borrower Group. It is the intention of the parties that this Agreement shall
be construed and applied to protect and indemnify each Lender (including the
Issuing Bank) against any and all risks involved in

 

44

--------------------------------------------------------------------------------

the issuance of the Letters of Credit, all of which risks are hereby assumed by
each Borrower (on behalf of itself and each of the other Loan Parties),
including any and all Governmental Action. No Lender (including the Issuing
Bank) shall, in any way, be liable for any failure by such Lender or anyone else
to pay any drawing under any Letter of Credit as a result of any Government
Action or any other cause beyond the control of such Lender.

 

(iv) Nothing in this Section 2.2.I. is intended to limit the reimbursement
obligations of any Borrower contained in Section 2.2.D. above. The obligations
of each Borrower under this Section 2.2.I. shall survive the termination of this
Agreement. No act or omission of any current or prior beneficiary of a Letter of
Credit shall in any way affect or impair the rights of the Lenders (including
the Issuing Bank) to enforce any right, power or benefit under this Agreement.

 

(v) Notwithstanding anything to the contrary contained in this Section 2.2.I.,
no Borrower shall have any obligation to indemnify any Lender (including the
Issuing Bank) in respect of any liability incurred by such Lender (a) arising
out of the gross negligence or willful misconduct of such Lender, as determined
in a final judgment of a court of competent jurisdiction, or (b) caused by such
Lender’s failure to pay under any Letter of Credit after presentation to it of a
request strictly complying with the terms and conditions of such Letter of
Credit, as determined in a final judgment of a court of competent jurisdiction,
unless such payment is prohibited by any Legal Requirement.

 

J. Responsibility of Issuing Bank. It is expressly understood and agreed that
the obligations of the Issuing Bank hereunder to the Lenders are only those
expressly set forth in this Agreement and that the Issuing Bank shall be
entitled to assume that the conditions precedent set forth in Section 3.2 have
been satisfied as of the applicable Letter of Credit Date unless it shall have
been notified in writing by the applicable Borrower that any such condition
precedent has not been satisfied; provided, however, that nothing set forth in
this Section 2.2 shall be deemed to prejudice the right of any Lender to recover
from the Issuing Bank any amounts made available by such Lender to the Issuing
Bank pursuant to this Section 2.2 in the event that it is determined by a court
of competent jurisdiction that the payment with respect to a Letter of Credit
constituted gross negligence or willful misconduct on the part of the Issuing
Bank.

 

K. Conflict with LOC Documents. In the event of any conflict between this
Agreement and any LOC Document (including any letter of credit application),
this Agreement shall control.

 

SECTION 2.3. INTEREST ON THE LOANS.

 

A. Rate of Interest. Subject to the provisions of Sections 2.2.E., 2.6. and
2.7., each Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate. The
applicable basis for determining the rate of interest with respect to any Loan
shall be selected by the applicable Borrower initially at the time a Loan/Letter
of Credit Request is given with respect to such Loan pursuant to Section 2.1.B.,
and the basis for determining the interest rate with respect to any Loan may be
changed from time to

 

45

--------------------------------------------------------------------------------

time pursuant to Section 2.3.D. If on any day a Loan is outstanding with respect
to which notice has not been delivered to the Administrative Agent in accordance
with the terms of this Agreement specifying the applicable basis for determining
the rate of interest, then for that day that Loan shall bear interest determined
by reference to the Base Rate.

 

Subject to the provisions of Sections 2.3.E., 2.6. and 2.7., the Loans shall
bear interest through maturity as follows:

 

(i) if a Base Rate Loan, then at the sum of the Base Rate plus the Applicable
Margin; or

 

(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar Rate
plus the Applicable Margin.

 

B. Interest Periods. In connection with each Eurodollar Rate Loan, the
applicable Borrower may, pursuant to the applicable Loan/Letter of Credit
Request or Notice of Conversion/Continuation, as the case may be, select an
interest period (each an “Interest Period”) to be applicable to such Loan, which
Interest Period shall be, at such Borrower’s option, either a one, two, three or
six month period; provided that:

 

(i) the initial Interest Period for any Eurodollar Rate Loan shall commence on
the Loan Date in respect of such Loan, in the case of a Loan initially made as a
Eurodollar Rate Loan, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted to a Eurodollar Rate
Loan;

 

(ii) in the case of immediately successive Interest Periods applicable to a
Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;

 

(iii) if an Interest Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided that, if any Interest Period would otherwise expire on a day that
is not a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;

 

(iv) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall, subject to clause
(iii) of this Section 2.3.B., end on the last Business Day of a calendar month;

 

(v) no Interest Period with respect to any portion of the Loans shall extend
beyond the Maturity Date;

 

(vi) no Interest Period shall extend beyond a date on which the applicable
Borrower is required to make a scheduled payment of principal of the Loans or a
permanent reduction of the Commitments is scheduled to occur unless the sum of
(a) the aggregate principal amount of Loans that are Base Rate Loans plus (b)
the aggregate

 

46

--------------------------------------------------------------------------------

principal amount of Loans that are Eurodollar Rate Loans with Interest Periods
expiring on or before such date plus (c) the excess of the Commitments then in
effect over the aggregate principal amount of the Loans then outstanding equals
or exceeds the principal amount required to be paid on the Loans, or the
permanent reduction of the Commitments that is scheduled to occur, on such date;

 

(vii) there shall be no more than eight Interest Periods outstanding at any
time; and

 

(viii) in the event the applicable Borrower fails to specify an Interest Period
for any Eurodollar Rate Loan in the applicable Loan/Letter of Credit Request or
Notice of Conversion/Continuation, the applicable Borrower shall be deemed to
have selected an Interest Period of one month.

 

C. Interest Payments. Subject to the provisions of Section 2.3.E., interest on
each Loan shall be payable in arrears on and to each Interest Payment Date
applicable to that Loan, upon any prepayment of that Loan (to the extent accrued
on the amount being prepaid) and at maturity (including final maturity);
provided, however, that, notwithstanding the foregoing, (i) accrued but unpaid
interest on the Loans being prepaid on the date of the Seventh Amendment as set
forth in Article II thereof in the amount of $3,156,579.77 shall, on such date,
be capitalized and added to the outstanding principal amount of the Term Loans,
(ii) if, on or prior to November 8, 2002, accrued but unpaid interest on the
Loans being prepaid on the date of the Seventh Amendment as set forth in Article
II thereof in the amount of $2,000,000 has not been paid to the Lenders on terms
and conditions satisfactory to the Administrative Agent, then an Event of
Default shall occur at such time and the provisions of Section 2.3.E. shall
apply thereto, (iii) all accrued but unpaid interest on the Loans being prepaid
on the date of the Seventh Amendment as set forth in Article II thereof (other
than the accrued but unpaid interest that is referred to in clause (i) or clause
(ii) of this proviso) shall be capitalized and added to the outstanding
principal amount of the Term Loans on the next Interest Payment Date on which
such interest otherwise would have been due and payable and (iv) all interest on
any Loan that accrues during the period beginning on the date of the Seventh
Amendment and ending on June 30, 2003 shall, on the earlier to occur of the next
Interest Payment Date on which such interest otherwise would be due and payable
and June 30, 2003, be capitalized and added to the outstanding principal amount
of the Term Loans, and, in the case of each of clauses (i), (iii) and (iv)
above, all interest on such Term Loans shall, thereafter, subject to the
provisions of Section 2.3.E, be payable in arrears on and to each Interest
Payment Date applicable to the Term Loans, upon any prepayment of that Loan (to
the extent accrued on the amount being prepaid) and at maturity (including final
maturity).

 

D. Conversion or Continuation. Subject to the provisions of Section 2.6., each
Borrower shall have the option (i) to convert at any time all or any part of its
outstanding Loans equal to (a) in the case of a Term Loan, $5,000,000 and
integral multiples of $1,000,000 in excess of that amount from Term Loans
bearing interest at a rate determined by reference to one basis to Term Loans
bearing interest at a rate determined by reference to an alternative basis, or
(b) in the case of a Revolving Loan, $1,000,000 and integral multiples of
$200,000 in excess of that amount from Revolving Loans bearing interest at a
rate determined by reference to one basis to Revolving Loans bearing interest at
a rate determined by reference to an alternative basis or,

 

47

--------------------------------------------------------------------------------

or (ii) upon the expiration of any Interest Period applicable to a Eurodollar
Rate Loan, to continue all or any portion of such Loan equal to (x) in the case
of a Term Loan, $5,000,000 and integral multiples of $1,000,000 in excess of
that amount as a Eurodollar Rate Loan, or (y) in the case of a Revolving Loan,
$1,000,000 and integral multiples of $200,000 in excess of that amount as a
Eurodollar Rate Loan; provided, however, that a Eurodollar Rate Loan may only be
converted into a Base Rate Loan on the expiration date of an Interest Period
applicable thereto.

 

The applicable Borrower shall deliver a Notice of Conversion/Continuation to the
Administrative Agent no later than 10:00 A.M. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. Further, the submission by any Borrower of a Notice
of Conversion/Continuation shall constitute a re-certification by such Borrower,
as of the date of the proposed conversion/continuation, as to the matters to
which such Borrower certified to in the applicable Loan/Letter of Credit Request
and Loan/Letter of Credit Certificate.

 

Except as otherwise provided in Sections 2.6.B. and 2.6.C., a Notice of
Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate
Loan shall be irrevocable on and after the related Interest Rate Determination
Date, and the applicable Borrower shall be bound to effect a conversion or
continuation in accordance therewith.

 

E. Default Rate. Upon the occurrence and during the continuation of any Event of
Default, the outstanding principal amount of all Loans and, to the extent
permitted by applicable Legal Requirements, any interest payments thereon not
paid when due and any fees and other amounts then due and payable hereunder,
shall thereafter bear interest (including post-petition interest in any
proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable upon demand at a rate that is 2.00% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable Loans
(or, in the case of any such fees and other amounts, at a rate which is 2.00%
per annum in excess of the interest rate otherwise payable under this Agreement
for Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon
the expiration of the Interest Period in effect at the time any such increase in
interest rate is effective, such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2.00% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. Payment or acceptance of the increased rates
of interest provided for in this Section 2.2.E. is not a permitted alternative
to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of the Administrative Agent
or any Lender.

 

F. Computation of Interest. Interest on the Loans shall be computed on the basis
of a 360-day year, except that interest computed by reference to the Base Rate
at times when the

 

48

--------------------------------------------------------------------------------

Base Rate is based on the Prime Rate shall be computed on the basis of a 365-day
year (or 366 days in a leap year), and in each case interest shall be payable
for the actual number of days elapsed in the period during which it accrues. In
computing interest on any Loan, (i) the date of the making of such Loan, (ii)
the first day of an Interest Period applicable to such Loan or (iii) with
respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the
date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the
case may be, shall be included, and the date of payment of such Loan or the
expiration date of an Interest Period applicable to such Loan or, with respect
to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of
conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may
be, shall be excluded; provided that if a Loan is repaid on the same day on
which it is made, one day’s interest shall be paid on that Loan.

 

SECTION 2.4. FEES.

 

A. Letter of Credit Fees.

 

(i) The Borrowers agree to pay to the Issuing Bank, for its own account, on the
date of issuance of any Letter of Credit, a facing fee equal to 0.125% of the
initial face amount of each such Letter of Credit (the “L/C Facing Fee”).

 

(ii) The Borrowers shall also pay the customary charges, fees and expenses of
the Issuing Bank for the issuance, administration and negotiation of each Letter
of Credit (the “Issuing Bank Fees”).

 

B. Commitment Fees. The Borrowers shall pay to the Administrative Agent, for the
account of the Lenders, commitment fees for the period from and after the
Closing Date until but excluding the later of (i) the Revolving Loan Commitment
Termination Date and (ii) the Term Loan Commitment Termination Date in an amount
equal to the Unused Commitments multiplied by

 

(a) for any Fiscal Quarter (or, if shorter, the period in which Commitments are
in effect hereunder) during which the Utilization Ratio is less than 33%, 1.25%
per annum,

 

(b) for any Fiscal Quarter (or, if shorter, the period in which Commitments are
in effect hereunder) during which the Utilization Ratio is greater than or equal
to 33% but less than 66%, 1.00% per annum, or

 

(c) for any Fiscal Quarter during which the Utilization Ratio is greater than or
equal to 66% (or, if shorter, the period in which Commitments are in effect
hereunder), 0.75% per annum, as applicable.

 

Each such commitment fee shall be calculated on the basis of a 360-day year and
the actual number of days elapsed and shall be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year (commencing on
March 31, 2001), and on the later of (x) the Revolving Loan Commitment
Termination Date and (y) the Term Loan Commitment Termination Date.

 

49

--------------------------------------------------------------------------------

C. Annual Administrative Fee. The Borrowers agree to pay to the Administrative
Agent, for its own account, an annual administrative fee in an amount equal to
$35,000 per annum from and including the Closing Date to and including the later
of (i) the Maturity Date and (ii) the date on which all of the Obligations have
been satisfied in full. Such administrative fee shall be payable yearly in
advance, commencing on April 11, 2001.

 

D. Other Fees. The Borrowers agree to pay the fees in the amounts, and at the
times, separately agreed upon by the Borrowers, the Lead Arrangers, the Agents
and/or certain of the Lenders in the Fee Letters. In addition, the Borrowers
shall advise the Lead Arranger of any fees paid to any Lender in connection with
the transactions contemplated hereby.

 

E. Annual Letter of Credit Exposure Fee. The Borrowers agree to pay DBAG, for
its own account, an annual Letter of Credit exposure fee in an amount equal to
$100,000 per annum from and including February 1, 2003 to and including the date
on which (i) the Borrower has repaid or otherwise reduced the Letter of Credit
funding obligations of DBAG by an amount equal to $2,316,855.07 and (ii) the
Revolving Loan Commitments of DBAG have been permanently canceled by a
corresponding amount. Such annual Letter of Credit exposure fee shall be payable
yearly in advance, commencing on February 1, 2003.

 

SECTION 2.5. REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN COMMITMENTS; GENERAL
PROVISIONS                                    REGARDING PAYMENTS.

 

A. Scheduled Payments of Loans.

 

On the Maturity Date, the entire remaining unpaid principal amount of the Loans
shall be due and payable. The Borrowers shall make all such amounts due and
payable available to the Administrative Agent not later than 12:00 Noon (New
York City time) on the Maturity Date, in immediately available funds in Dollars,
at the Funding and Payment Office.

 

B. Prepayments and Unscheduled Reductions in Commitments.

 

(i) Voluntary Prepayments. Any Borrower may, upon not less than three Business
Day’s prior written notice given to the Administrative Agent by 12:00 Noon (New
York City time) on the date required, at any time and from time to time prepay,
without premium or penalty, any Loan on any Business Day in whole or in part in
an aggregate minimum principal amount of $1,000,000 and integral multiples of
$200,000 in excess of that amount (the amount due upon such prepayment being
equal to the principal amount being so prepaid plus accrued and unpaid interest
thereon, plus with respect to any Eurodollar Rate Loan not prepaid on the
expiration of the Interest Period applicable thereto, any amount payable
pursuant to Section 2.6.D). The prepaying Borrower’s notice to the
Administrative Agent shall designate (a) the date (which shall be a Business
Day) of such prepayment, (b) whether such prepayment applies to Revolving Loans
or Term Loans (and to which Revolving Loans or Term Loans the prepayment
applies) and (c) the amount of such prepayment. Notice of prepayment having been
given as aforesaid, the principal amount of the Loans specified in such notice
shall

 

50

--------------------------------------------------------------------------------

become due and payable on the prepayment date specified therein. Any such
voluntary prepayment shall be applied as specified in Section 2.5.C.

 

(ii) Voluntary Reductions of Commitments. Any Borrower may, upon not less than
three Business Days’ prior written notice given to the Administrative Agent by
12:00 Noon (New York City time) on the date required, at any time and from time
to time, without premium or penalty, terminate in whole or permanently reduce in
part the Commitments; provided that (a) no Borrower may terminate or reduce the
Term Loan Commitments to an amount less than the Total Utilization of Term Loan
Commitments, (b) no Borrower may terminate or reduce the Revolving Loan
Commitments to an amount less than the Total Utilization of Revolving Loan
Commitments, (c) any such partial reduction of the Commitments shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $200,000 in
excess of that amount and (d) no Borrower may terminate or reduce the Term Loan
Commitments or the Revolving Loan Commitments if such termination or reduction
could reasonably be expected to have a Material Adverse Effect. The applicable
Borrower’s notice to the Administrative Agent shall designate (i) the date
(which shall be a Business Day) of such termination or reduction, (ii) whether
the termination or reduction applies to Revolving Loan Commitments or Term Loan
Commitments and (iii) the amount of any such reduction or termination. Notice of
such reduction or termination having been given as aforesaid, such termination
or reduction of the specified Commitments shall be effective on the date
specified in the applicable Borrower’s notice and shall reduce the specified
Commitment of each Lender proportionately by its Pro Rata Share thereof.

 

(iii) Mandatory Reduction of Commitments. The Loans and the Commitments shall be
permanently reduced in the amounts, at the times and under the circumstances set
forth below, all such prepayments to be applied as set forth below or as more
specifically provided in Section 2.5.C.:

 

(a) Automatic Reductions of Commitments. The Revolving Loan Commitments and the
Term Loan Commitments in effect from time to time shall be permanently reduced
on the dates and by the amounts (calculated from the amount of the Revolving
Loan Commitments and the Term Loan Commitments, as the case may be, outstanding
as of the date of the Seventh Amendment) set forth below:

 

Date of Reduction

--------------------------------------------------------------------------------

  Aggregate Reduction
(Expressed as a
Percentage)

--------------------------------------------------------------------------------

03/31/2004

  3.00%

06/30/2004

  3.00%

09/30/2004

  6.50%

12/31/2004

  6.50%

03/31/2005

  9.00%

06/30/2005

  9.00%

09/30/2005

  9.00%

 

51

--------------------------------------------------------------------------------

Date of Reduction   Aggregate Reduction
(Expressed as a
Percentage)

--------------------------------------------------------------------------------

12/31/2005

  9.00%

03/31/2006

  9.00%

06/30/2006

  9.00%

09/30/2006

  9.00%

12/31/2006

  9.00%

Maturity

  9.00%

 

All such reductions shall reduce (1) the Revolving Loan Commitment of each
Revolving Loan Lender proportionately to its Pro Rata Share of the Revolving
Loan Commitments and (2) the Term Loan Commitment of each Term Loan Lender
proportionately to its Pro Rata share of the Term Loan Commitments. In
connection with any such reduction, the Borrowers shall prepay the Revolving
Loans and the Term Loans, as the case may be, in accordance with Section
2.5.B(v).

 

(b) Additional Commitment Reductions. Without limiting anything set forth in
clause (a) above, (1) if the Borrowers have not borrowed Term Loans in an amount
equal to at least $32,500,000 by October 31, 2001, the Term Loan Commitments
shall be permanently reduced on October 31, 2001 in an amount equal to
$32,500,000 minus the aggregate amount of Term Loans which have been made on or
before October 31, 2001, unless the Majority Lenders waive such reduction of the
commitment in writing, and (2) if the Borrowers have not borrowed Term Loans in
an amount equal to at least $65,000,000 by March 31, 2002, the Term Loan
Commitments shall be permanently reduced on March 31, 2002, in an amount equal
to $65,000,000 minus the aggregate amount of Term Loans which have been made on
or before March 31, 2002, unless the Majority Lenders waive such reduction of
the commitment in writing. All such reductions shall reduce the Term Loan
Commitment of each Term Loan Lender proportionately to its Pro Rata Share of the
Term Loan Commitments. In connection with any such reduction, the Borrowers
shall prepay the Term Loans in accordance with Section 2.5.B(v).

 

(c) Prepayments From Net Asset Sale Proceeds. Subject to Section 2.5.B(iv)
below, no later than the fifth Business Day following the date of receipt by any
member of the Borrower Group of any Net Asset Sale Proceeds in respect of any
Asset Sale, the Borrowers shall prepay the Loans and permanently reduce the
Commitments in accordance with Section 2.5.C.

 

(d) Prepayments Due to Issuance of Debt or Equity. Subject to Section 2.5.B(iv)
below, on the fifth Business Day following the date of receipt by any member of
the Borrower Group of the proceeds (including Cash, real property or other
property) (any such proceeds, net of underwriting discounts and commissions and
other

 

52

--------------------------------------------------------------------------------

reasonable costs and expenses associated therewith, including reasonable legal
fees and expenses, being “Net Proceeds”) from the incurrence of any debt by, or
issuance of any equity of, any member of the Borrower Group (other than those
incurrences permitted pursuant to Section 6.1), the Borrowers shall prepay the
Loans and permanently reduce the Commitments in accordance with Section 2.5.C;
provided, however, that no member of the Borrower Group shall be required to
utilize (i) such Net Proceeds received in respect of any equity issuances made
by any member of the Borrower Group in exchange for non-cash consideration to
strategic partners, (ii) such Net Proceeds received in respect of any equity
issuances made by the Parent as a result of the exercise by any Lender or any
Affiliate thereof of any warrants to purchase Capital Stock of the Parent,
(iii) the first $1,000,000 of the aggregate amount of such Net Proceeds received
in respect of any equity issuances made by the Parent in connection with the
exercise of options, warrants or other rights to acquire equity interests in the
Parent each year, (iv) the first $25,000,000 of the aggregate amount of such Net
Proceeds received in respect of any equity issuances made by any member of the
Borrower Group to strategic partners, (v) such Net Proceeds received in
connection with the Lender Common Stock Conversion, (vi) such Net Proceeds
received in connection with the issuance, on or before December 31, 2002, of
equity (other than the Required Equity) at a price equal to or greater than
$0.15 per share and in an amount not to exceed $2,000,000, (vii) such Net
Proceeds received in connection with the Required Equity, (viii) such Net
Proceeds received in connection with the Deferred Interest Common Stock
Conversion, (ix) such Net Proceeds received in connection with the SDS Common
Stock Conversion and (x) such Net Proceeds received in connection with the Bank
One/Nortel/TD Common Stock Conversion in each case to prepay the Loans or
permanently reduce the Commitments hereunder.

 

(e) Prepayments from Receipt of Casualty Proceeds. Subject to Section 2.5.B(iv)
below, on the fifth Business Day following the date of receipt by any member of
the Borrower Group of any Casualty Proceeds, the Borrowers shall prepay the
Loans and permanently reduce the Commitments in accordance with Section 2.5.C;
provided, however, that the obligations of this Section 2.5.B.(iii)(e) shall not
apply to the extent that such Casualty Proceeds are applied by such member
within twelve months of the casualty event to the repair, replacement or
restoration of the asset or property so affected.

 

(iv) Calculations of Net Proceeds Amounts; Additional Prepayments Based on
Subsequent Calculations. Concurrently with any prepayment of the Loans and
reduction of the Commitments pursuant to this Section 2.5.B., the Borrowers
shall deliver to the Administrative Agent an Officer’s Certificate executed by a
Responsible Officer of each of the Borrowers demonstrating the calculation of
the amount (the “Net Proceeds Amount”) of the applicable Net Asset Sale
Proceeds, the applicable Net Proceeds, the applicable Casualty Proceeds or other
amounts, as the case may be, that gave rise to such prepayment and/or reduction.
In the event that the Borrowers subsequently determine that the actual Net
Proceeds Amount was greater than the amount set forth in such Officer’s
Certificate, the Loans shall be prepaid and the Commitments shall be permanently
reduced in an amount equal to the amount of such excess, and the Borrowers shall
concurrently therewith deliver to the Administrative Agent an Officer’s
Certificate

 

53

--------------------------------------------------------------------------------

demonstrating the derivation of the additional Net Proceeds Amount resulting in
such additional prepayment.

 

(v) Prepayments Due to Reductions or Restrictions of Commitments. (a)  The
Borrowers shall from time to time prepay the Revolving Loans to the extent
necessary so that the Total Utilization of Revolving Loan Commitments shall not
at any time exceed the Revolving Loan Commitments then in effect and (b) the
Borrowers shall from time to time prepay the Term Loans to the extent necessary
so that the Total Utilization of Term Loan Commitments shall not at any time
exceed the Term Loan Commitments then in effect (in each case, the amount due
upon such prepayment being equal to the principal amount being so paid, plus
accrued and unpaid interest thereon, plus, with respect to any Eurodollar Rate
Loan not prepaid on the expiration of the Interest Period applicable thereto,
any amount payable pursuant to Section 2.6.D.).

 

C. Application of Prepayments and Unscheduled Reductions of Loan Commitments.

 

(i) Voluntary Prepayments. Any voluntary prepayments pursuant to Section 2.5.B.
shall be applied as specified by the applicable Borrower in the applicable
notice of prepayment, provided that in the event the applicable Borrower fails
to specify the Loans to which any such prepayment shall be applied, such
prepayment shall be applied first to repay outstanding Revolving Loans to the
full extent thereof on a pro rata basis and second to repay outstanding Term
Loans on a pro rata basis.

 

(ii) Application of Mandatory Prepayments by Type of Loan. With respect to any
mandatory prepayments pursuant to Sections 2.5.B(iii)(c)-(e), the Borrowers
shall (a) prepay the Term Loans in an aggregate amount equal to 100% of such Net
Asset Sale Proceeds, Net Proceeds or Casualty Proceeds, as applicable, (b) after
making the prepayment specified in clause (a) and if any portion of such Net
Asset Sale Proceeds, Net Proceeds or Casualty Proceeds, as applicable, shall
remain after making the prepayments specified in clause (a), terminate in whole
or permanently reduce in part the Term Loan Commitments in an aggregate amount
equal to 100% of such remaining Net Asset Sale Proceeds, Net Proceeds or
Casualty Proceeds, as applicable and (c) after making the prepayments and
reductions specified in clauses (a) and (b) and if any portion of such Net Asset
Sale Proceeds, Net Proceeds or Casualty Proceeds, as applicable, shall remain
after making the prepayments and reductions specified in clauses (a) and (b),
prepay the Revolving Loans in an aggregate amount equal to 100% of such
remaining Net Asset Sale Proceeds, Net Proceeds or Casualty Proceeds, as
applicable, and terminate in whole or permanently reduce in part the Revolving
Loan Commitments by an amount equal to the amount of such prepayment of such
Revolving Loans. The amount due upon such prepayment shall be equal to the
principal amount being so prepaid, plus accrued and unpaid interest thereon,
plus, with respect to any Eurodollar Rate Loan not prepaid on the expiration of
the Interest Period applicable thereto, any amount payable pursuant to Section
2.6.D.

 

(iii) Application of Prepayments to Base Rate Loans and Eurodollar Rate Loans.
Considering Loans being prepaid separately, any prepayment thereof shall

 

54

--------------------------------------------------------------------------------

be applied first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in each case in a manner which minimizes
the amount of any payments required to be made by the Borrowers pursuant to
Section 2.6.D.

 

(iv) Application of Prepayments between the Borrowers. With respect to any
mandatory prepayments pursuant to Sections 2.5.B(iii)(c)-(e), such prepayment
shall be applied pro rata to repay outstanding Loans made to Devnet and
outstanding Loans made to FiberNet.

 

D. General Provisions Regarding Payments.

 

(i) Manner and Time of Payment. All payments by a Borrower of principal,
interest, fees, expenses and other Obligations hereunder and under the Notes
shall be made in Dollars in immediately available funds, without defense,
set-off or counterclaim, free of any restriction or condition, and delivered to
the Administrative Agent not later than 12:00 Noon (New York City time) on the
date due at the Funding and Payment Office for the account of the Lenders; funds
received by the Administrative Agent after that time on such due date shall be
deemed to have been paid by such Borrower on the next succeeding Business Day.

 

(ii) Application of Payments to Principal and Interest. All payments in respect
of the principal amount of any Loan shall include payment of accrued interest on
the principal amount being repaid or prepaid, and all such payments shall be
applied to the payment of interest before application to the payment of
principal.

 

(iii) Apportionment of Payments. Aggregate principal and interest payments in
respect of Loans shall be apportioned among all outstanding Loans
proportionately to the Lenders’ respective Pro Rata Shares. Notwithstanding the
foregoing provisions of this Section 2.5.D(iii), if, pursuant to the provisions
of Section 2.6., any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its
Pro Rata Share of any Eurodollar Rate Loans, the Administrative Agent shall give
effect thereto in apportioning payments received thereafter. In addition,
mandatory payments in respect of any Loans shall be made pro rata across the
maturities of each such type of Loan.

 

(iv) Payments on Business Days. Whenever any payment to be made hereunder shall
be stated to be due on a day that is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest hereunder or of the
commitment fees hereunder, as the case may be.

 

(v) Notation of Payment. Each Lender agrees that before disposing of any Note
held by it, or any part thereof (other than by granting participations therein),
that Lender will make a notation thereon of all Loans evidenced by that Note and
all principal payments previously made thereon and of the date to which interest
thereon has been paid; provided that the failure to make (or any error in the
making of) a notation of any Loan made under such Note shall not limit or
otherwise affect the obligations of any

 

55

--------------------------------------------------------------------------------

Borrower hereunder or under such Note with respect to any Loan or any payments
of principal or interest on such Note.

 

SECTION 2.6. SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.

 

Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:

 

A. Determination of Applicable Interest Rate. As soon as practicable after 10:00
A.M. (New York City time) on each Interest Rate Determination Date, the
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to the
applicable Borrower and each Lender.

 

B. Inability to Determine Applicable Interest Rate. In the event that the
Administrative Agent shall have determined (which determination shall be final,
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that, by reason of
circumstances affecting the interbank Eurodollar market, adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, the
Administrative Agent shall on such date give notice (by telefacsimile or by
telephone confirmed in writing) to the applicable Borrower and each Lender of
such determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as the Administrative Agent notifies the
applicable Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist and (ii) any Loan/Letter of Credit Request or Notice of
Conversion/Continuation given by the applicable Borrower with respect to the
Loans in respect of which such determination was made shall be deemed to be made
with respect to Base Rate Loans.

 

C. Illegality or Impracticability of Eurodollar Rate Loans. In the event that on
any date any Lender shall have determined (which determination shall be final,
conclusive and binding upon all parties hereto but shall be made only after
consultation with the Borrowers and the Administrative Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any Legal
Requirement not in effect on the date such Person became a Lender (or would
conflict with any such Legal Requirement not having the force of law even though
the failure to comply therewith would not be unlawful), or (ii) would cause such
Lender material financial hardship as a result of contingencies occurring after
the date of this Agreement which materially and adversely affect the interbank
Eurodollar market or the position of such Lender in that market, then, and in
any such event, such Lender shall be an “Affected Lender” and it shall on that
day give notice (by telefacsimile or by telephone confirmed in writing) to the
Borrowers and the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each other Lender). Thereafter
(a) the obligation of the Affected Lender to make Loans as, or to convert Loans
to, Eurodollar Rate Loans shall be suspended until such notice shall be
withdrawn by the Affected Lender (which such Affected Lender shall do at the

 

56

--------------------------------------------------------------------------------

earliest practicable date), (b) to the extent such determination by the Affected
Lender relates to a Eurodollar Rate Loan then being requested by any Borrower
pursuant to a Loan/Letter of Credit Request or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender’s
obligation to maintain its outstanding Eurodollar Rate Loans (the “Affected
Loans”) shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by applicable Legal Requirements, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Except as provided in the immediately preceding sentence, nothing in this
Section 2.6.C. shall affect the obligation of any Lender other than an Affected
Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate
Loans in accordance with the terms of this Agreement.

 

D. Compensation For Breakage or Non-Commencement of Interest Periods. The
Borrowers shall compensate each Lender, upon written request by that Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Loan/Letter of Credit Request, or a conversion to or continuation of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of
Conversion/Continuation, (ii) if any prepayment (including any prepayment
pursuant to Section 2.5.B) or other principal payment or any conversion of any
of its Eurodollar Rate Loans occurs on a date prior to the last day of an
Interest Period applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by the applicable Borrower, (iv) as a consequence of any other
default by any Borrower in the repayment of its Eurodollar Rate Loans when
required by the terms of this Agreement, (v) as a consequence of the
consummation of the transactions contemplated by the Lender Common Stock
Conversion Documents or (vi) as a consequence of the consummation of the
transactions contemplated by the Bank One/Nortel/TD Common Stock Conversion
Documents.

 

E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender.

 

SECTION 2.7. INCREASED COSTS; TAXES; CAPITAL ADEQUACY.

 

A. Compensation for Increased Costs and Taxes. Subject to the provisions of
Section 2.7.B. (which shall be controlling with respect to the matters covered
thereby), in the event that any Lender shall determine (which determination
shall, absent manifest error, be final, conclusive and binding upon all parties
hereto) that any law, treaty or governmental rule, regulation or order, or any
change therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by such
Lender with any guideline, request or

 

57

--------------------------------------------------------------------------------

directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force of
law):

 

(i) subjects such Lender (or its applicable lending office) to any additional
Tax (other than any Tax on the overall net income of such Lender) with respect
to this Agreement or any of its obligations hereunder or any payments to such
Lender (or its applicable lending office) of principal, interest, fees or any
other amount payable hereunder;

 

(ii) imposes, modifies or holds applicable any reserve (including any marginal,
emergency, supplemental, special or other reserve), special deposit, compulsory
loan, FDIC insurance or similar requirement against assets held by, or deposits
or other liabilities in or for the account of, or advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of such
Lender; or

 

(iii) imposes any other condition (other than with respect to a Tax matter) on
or affecting such Lender (or its applicable lending office) or its obligations
hereunder or the interbank Eurodollar market;

 

and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto, then, in any such case, the Borrowers shall promptly pay to
such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to the Borrowers (with a copy to the
Administrative Agent) a written statement setting forth in reasonable detail the
basis for calculating the additional amounts owed to such Lender under this
Section 2.7.A., which statement shall be final, conclusive and binding upon all
parties hereto absent manifest error.

 

B. Withholding of Taxes.

(i)    Payments to Be Free and Clear.    All sums payable by any Borrower under
this Agreement and the other Loan Documents shall (except to the extent required
by law) be paid free and clear of, and without any deduction or withholding on
account of, any Tax (other than a Tax on the overall net income of any Lender)
(all such Taxes being hereinafter collectively referred to as “Included Taxes”).

 

(ii)    Grossing-up of Payments.    If any Borrower or any other Person is
required by law to make any deduction or withholding on account of any such
Included Tax from any sum paid or payable by such Borrower to the Administrative
Agent or any Lender under any of the Loan Documents:

 

(a)    such Borrower shall notify the Administrative Agent of any such
requirement or any change in any such requirement as soon as such Borrower
becomes aware of it;

 

58

--------------------------------------------------------------------------------

(b) such Borrower shall pay any such Included Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to pay is
imposed on such Borrower) for its own account or (if that liability is imposed
on the Administrative Agent or such Lender, as the case may be) on behalf of and
in the name of the Administrative Agent or such Lender;

(c) the sum payable by such Borrower in respect of which the relevant deduction,
withholding or payment is required shall be increased to the extent necessary to
ensure that, after the making of that deduction, withholding or payment, the
Administrative Agent or such Lender, as the case may be, receives on the due
date a net sum equal to what it would have received had no such deduction,
withholding or payment been required or made; and

 

(d) within 30 days after paying any sum from which it is required by law to make
any deduction or withholding, and within 30 days after the due date of payment
of any Included Tax which it is required by clause (b) above to pay, such
Borrower shall deliver to the Administrative Agent evidence satisfactory to the
other affected parties of such deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other authority;

 

provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above with respect to (and only to the extent of) any
deduction or withholding applicable as of the date hereof (in the case of each
Lender listed on the signature pages hereof) or the date of the Assignment
Agreement pursuant to which such Lender became a Lender (in the case of each
other Lender), in respect of payments to such Lender.

 

In addition, the Borrowers agree to pay any present or future stamp, mortgage
recording or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made under this Agreement or any of
the other Loan Documents or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any of the other Loan Documents
(hereinafter referred to as “Other Taxes”) and hold the Administrative Agent and
each Lender harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Lender) to pay such Other Taxes.

 

(iii) Evidence of Exemption from United States Withholding Tax.

 

(a) Each Lender that is organized under the laws of any jurisdiction other than
the United States or any state or other political subdivision thereof (for
purposes of this Section 2.7.B.(iii) a “Non-US Lender”) shall deliver to the
Administrative Agent for delivery to the Borrowers, on or prior to the Closing
Date (in the case of each Lender listed on the signature pages hereof) or on or
prior to the date of the Assignment Agreement pursuant to which it becomes a
Lender (in the case of each other Lender), and at such other times as may be
necessary in the determination of the Borrowers or the Administrative Agent
(each in the reasonable exercise of its discretion) (1) two original copies of
Internal Revenue Service Form 1001 or 4224 (or any successor forms), properly
completed and duly executed by such Lender, together with any other

 

59

--------------------------------------------------------------------------------

certificate or statement of exemption required under the Code or the regulations
issued thereunder to establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to any payments to
such Lender of principal, interest, fees or other amounts payable under any of
the Loan Documents or (2) if such Lender is not a “bank” or other Person
described in Section 881(c)(3) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (1) above, a Certificate
re: Non-Bank Status together with two original copies of Internal Revenue
Service Form W-8 (or any successor form), properly completed and duly executed
by such Lender, together with any other certificate or statement of exemption or
reduction required under the Code or the regulations issued thereunder to
establish that such Lender is exempt from or entitled to a reduction in the
amount of the deduction or withholding of United States federal income tax with
respect to any payments to such Lender of interest payable under any of the Loan
Documents.

 

(b) Each Lender required to deliver any forms, certificates or other evidence
with respect to United States federal income tax withholding matters pursuant to
Section 2.7.B.(iii) hereby agrees, from time to time after the initial delivery
by such Lender of such forms, certificates or other evidence, whenever a lapse
in time or change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such Lender shall
promptly (1) deliver to the Administrative Agent for delivery to the Borrowers
two new original copies of Internal Revenue Service Form 1001 or 4224, or a
Certificate re: Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and duly executed by
such Lender, together with any other certificate or statement of exemption or
reduction required in order to confirm or establish that such Lender is exempt
from or entitled to a reduction in the amount of the deduction or withholding of
United States federal income tax with respect to payments to such Lender under
the Loan Documents or (2) notify the Administrative Agent and the Borrowers of
its inability to deliver any such forms, certificates or other evidence.

 

(c) The Borrowers shall not be required to pay any additional amount to any
Non-US Lender under clause (c) of Section 2.7.B.(ii) to the extent any deduction
or withholding is a result of such Lender’s failure to satisfy the requirements
of clause (a) or (b)(1) of this Section 2.7.B.(iii); provided that if such
Lender shall have satisfied the requirements of subsection Section
2.6.7.(iii)(a) on the Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Assignment Agreement pursuant to
which it became a Lender (in the case of each other Lender), nothing in this
Section 2.7.B.(iii)(c) shall relieve any Borrower of its obligation to pay any
additional amounts otherwise payable pursuant to clause (c) of
Section 2.7.B.(ii) in the event that, as a result of any change in any
applicable law, treaty or governmental rule, regulation or order, or any change
in the interpretation, administration or application thereof, such Lender is no
longer properly entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender is not subject to
withholding as described in Section 2.7.B.(iii).

 

(d) Each Borrower will indemnify the Administrative Agent and any Lender for the
full amount of Taxes or Other Taxes arising in connection with

 

60

--------------------------------------------------------------------------------

payments made under this Agreement or any other Loan Document (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.7.B. paid by the Administrative Agent or any Lender or any of their
respective Affiliates and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto). Payment under
this indemnification shall be made within fifteen days from the date the
Administrative Agent or any Lender or any of their respective Affiliates makes
written demand therefor; provided, however, that no Borrower shall be obligated
to make payment to the Lenders or the Administrative Agent (as the case may be)
pursuant to this Section 2.7.B.(iii) in respect of penalties, interest and other
liabilities attributable to any Taxes or Other Taxes if (i) written demand
therefor has not been made by such Lender or the Administrative Agent within 60
days from the date on which such Lender or the Administrative Agent received
written notice of the imposition of Taxes or Other Taxes by the relevant taxing
or governmental authority, but only to the extent such penalties, interest and
other similar liabilities are attributable to such failure or delay by the
Administrative Agent or the Lender in making such written demand, (ii) such
penalties, interest and other liabilities have accrued after the Borrowers had
indemnified or paid an additional amount due as of the date of such payment
pursuant to this Section 2.7.B.(iii) or (iii) such penalties, interest and other
liabilities are attributable to the gross negligence or willful misconduct of
the Lender or the Administrative Agent or such Affiliates. After the Lender or
the Administrative Agent (as the case may be) has received written notice of the
imposition of the Taxes or Other Taxes which are subject to this
Section 2.7.B.(iii), such Lender and the Administrative Agent will act in good
faith to promptly notify the Borrowers of their respective obligations under
this Agreement; provided, however, that the failure to so act shall not,
standing alone, affect the rights of the Administrative Agent or the Lenders
under this Section 2.7.B.(iii).

 

C. Capital Adequacy Adjustment. If any Lender shall have determined that the
adoption, effectiveness, phase-in or applicability after the date hereof of any
law, rule or regulation (or any provision thereof) regarding capital adequacy,
or any change therein or in the interpretation or administration thereof after
the date hereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender’s Loans or participations therein or other obligations hereunder
with respect to the Loans to a level below that which such Lender or such
controlling corporation could have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance (taking into
consideration the policies of such Lender or such controlling corporation with
regard to capital adequacy), then from time to time, within five Business Days
after receipt by the Borrowers from such Lender of the statement referred to in
the next sentence, the Borrowers shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction. Such Lender shall deliver to the Borrowers
(with a copy to the Administrative Agent) a written statement, setting forth in
reasonable detail the basis of the calculation of such

 

61

--------------------------------------------------------------------------------

additional amounts, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.

 

SECTION 2.8. OBLIGATION OF THE LENDERS TO MITIGATE.

 

Each Lender agrees that, as promptly as practicable after the officer of such
Lender responsible for administering the Loans of such Lender becomes aware of
the occurrence of an event or the existence of a condition that would cause such
Lender to become an Affected Lender or that would entitle such Lender to receive
payments under Section 2.7., it will, to the extent not inconsistent with the
internal policies of such Lender and any applicable legal or regulatory
restrictions, use reasonable efforts to (i) make, issue, fund or maintain the
Commitments of such Lender or the affected Loans of such Lender through another
lending office of such Lender or (ii) take such other measures as such Lender
may deem reasonable, if as a result thereof the circumstances which would cause
such Lender to be an Affected Lender would cease to exist or the additional
amounts which would otherwise be required to be paid to such Lender pursuant to
Section 2.7. would be materially reduced and if, as determined by such Lender in
its sole discretion, the making, issuing, funding or maintaining of such
Commitments or Loans through such other lending office or in accordance with
such other measures, as the case may be, would not otherwise materially
adversely affect such Commitments or Loans or the interests of such Lender;
provided that such Lender will not be obligated to utilize such other lending
office pursuant to this Section 2.8. if such Lender would incur incremental
expenses as a result of utilizing such other lending office as described in
clause (i) above. A certificate as to the amount of any such expenses payable by
the Borrowers pursuant to this Section 2.8. (setting forth in reasonable detail
the basis for requesting such amount) submitted by such Lender to the Borrowers
(with a copy to the Administrative Agent) shall be conclusive and binding absent
manifest error.

 

ARTICLE III.

CONDITIONS TO THE MAKING OF EXTENSIONS OF CREDIT

 

SECTION 3.1. CONDITIONS PRECEDENT TO THE INITIAL LOAN AND INITIAL LETTER OF
CREDIT.

 

The obligations of the Administrative Agent and each Lender hereunder, and the
obligations of the Lenders to make the initial Loans or the Issuing Bank to
issue the initial Letter of Credit, whichever shall occur first, shall be
subject to the fulfillment or waiver by the Lenders of each of the following
conditions precedent:

 

A. Loan Documents. The Administrative Agent shall have received each of the
following documents:

 

(i) this Agreement, duly executed and delivered by each of the parties hereto;

 

(ii) a Revolving Loan Note, duly executed by FiberNet in favor of DBAG;

 

(iii) a Term Loan Note, duly executed by FiberNet in favor of DBAG;

 

62

--------------------------------------------------------------------------------

(iv) a Revolving Loan Note, duly executed by FiberNet in favor of First Union;

 

(v) a Term Loan Note, duly executed by FiberNet in favor of First Union;

 

(vi) a Revolving Loan Note, duly executed by FiberNet in favor of FNBC Leasing
Corporation;

 

(vii) a Term Loan Note, duly executed by FiberNet in favor of FNBC Leasing
Corporation;

 

(viii) a Revolving Loan Note, duly executed by FiberNet in favor of IBM Credit
Corporation;

 

(ix) a Term Loan Note, duly executed by FiberNet in favor of IBM Credit
Corporation;

 

(x) a Revolving Loan Note, duly executed by FiberNet in favor of Nortel
Networks;

 

(xi) a Term Loan Note, duly executed by FiberNet in favor of Nortel Networks;

 

(xii) a Revolving Loan Note, duly executed by FiberNet in favor of Toronto
Dominion (Texas), Inc.;

 

(xiii) a Term Loan Note, duly executed by FiberNet in favor of Toronto Dominion
(Texas), Inc.;

 

(xiv) a Revolving Loan Note, duly executed by Devnet in favor of DBAG;

 

(xv) a Term Loan Note, duly executed by Devnet in favor of DBAG;

 

(xvi) a Revolving Loan Note, duly executed by Devnet in favor of First Union;

 

(xvii) a Term Loan Note, duly executed by Devnet in favor of First Union;

 

(xviii) a Revolving Loan Note, duly executed by Devnet in favor of FNBC Leasing
Corporation;

 

(xix) a Term Loan Note, duly executed by Devnet in favor of FNBC Leasing
Corporation;

 

(xx) a Revolving Loan Note, duly executed by Devnet in favor of IBM Credit
Corporation;

 

63

--------------------------------------------------------------------------------

(xxi) a Term Loan Note, duly executed by Devnet in favor of IBM Credit
Corporation;

 

(xxii) a Revolving Loan Note, duly executed by Devnet in favor of Nortel
Networks;

 

(xxiii) a Term Loan Note, duly executed by Devnet in favor of Nortel Networks;

 

(xxiv) a Revolving Loan Note, duly executed by Devnet in favor of Toronto
Dominion (Texas), Inc.;

 

(xxv) a Term Loan Note, duly executed by Devnet in favor of Toronto Dominion
(Texas), Inc.;

 

(xxvi) the Parent Pledge Agreement (Devnet), duly executed and delivered by the
Parent and the Administrative Agent, together with (A) the certificates
representing 96.386% of the Capital Stock of Devnet and (B) undated transfer
documents for each certificate representing such Capital Stock, executed in
blank and delivered by a duly authorized officer of the Parent;

 

(xxvii) the Parent Pledge Agreement (FiberNet), duly executed and delivered by
the Parent and the Administrative Agent, together with (A) the stock
certificates representing all of the Capital Stock of FiberNet and (B) undated
transfer documents for each certificate representing such Capital Stock,
executed in blank and delivered by a duly authorized officer of the Parent;

 

(xxviii) the FiberNet Pledge Agreement (Devnet), duly executed and delivered by
FiberNet and the Administrative Agent, together with (A) certificates
representing 3.614% of the Capital Stock of Devnet and (B) undated transfer
documents for each certificate representing such Capital Stock, executed in
blank and delivered by a duly authorized officer of FiberNet;

 

(xxix) the FiberNet Pledge Agreement (FTI), duly executed and delivered by
FiberNet and the Administrative Agent, together with (A) the certificates
representing all of the Capital Stock of FTI and (B) undated transfer documents
for each certificate representing such Capital Stock, executed in blank and
delivered by a duly authorized officer of FiberNet;

 

(xxx) the FTI Pledge Agreement (Equal Access), duly executed and delivered by
FTI and the Administrative Agent, together with (A) the certificates
representing all of the Capital Stock of Equal Access and (B) undated transfer
documents for each certificate representing such Capital Stock, executed in
blank and delivered by a duly authorized officer of FTI;

 

(xxxi) the FTI Pledge Agreement (Local Fiber), duly executed and delivered by
FTI and the Administrative Agent, together with (A) the certificates
representing all of the Capital Stock of Local Fiber and (B) undated transfer
documents

 

64

--------------------------------------------------------------------------------

for each certificate representing such Capital Stock, executed in blank and
delivered by a duly authorized officer of FTI;

 

(xxxii) the Parent Security Agreement, duly executed and delivered by the Parent
and the Administrative Agent;

 

(xxxiii) the Devnet Security Agreement, duly executed and delivered by Devnet
and the Administrative Agent;

 

(xxxiv) the FiberNet Security Agreement, duly executed and delivered by FiberNet
and the Administrative Agent;

 

(xxxv) a Subsidiary Security Agreement, duly executed and delivered by FTI and
the Administrative Agent;

 

(xxxvi) a Subsidiary Security Agreement, duly executed and delivered by Equal
Access and the Administrative Agent;

 

(xxxvii) a Subsidiary Security Agreement, duly executed and delivered by Local
Fiber and the Administrative Agent;

 

(xxxviii) the Parent Guaranty Agreement, duly executed and delivered by the
Parent and the Administrative Agent;

 

(xxxix) a Subsidiary Guaranty Agreement, duly executed and delivered by FTI and
the Administrative Agent;

 

(xl) a Subsidiary Guaranty Agreement, duly executed and delivered by Equal
Access and the Administrative Agent;

 

(xli) a Subsidiary Guaranty Agreement, duly executed and delivered by Local
Fiber and the Administrative Agent;

 

(xlii) a Control Agreement, duly executed and delivered by each party thereto,
for each of the Accounts set forth in Schedule 3.1.A; and

 

(xliii) the Hudson Street Consent, duly executed and delivered by each party
thereto.

 

B. Material Contracts. The Administrative Agent shall have received a true and
complete copy of each Material Contract, duly certified as such by a Responsible
Officer of each Borrower as of the Closing Date and as being in full force and
effect.

 

C. Legal Opinion. The Administrative Agent shall have received, with a
counterpart for each Lender, the legal opinion of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo PC, New York counsel to the Borrower Group, substantially in
the form of Exhibit P. Such legal opinion shall be dated as of the Closing Date.

 

65

--------------------------------------------------------------------------------

D. Security Interests (Recordings and Filings). Each of the documents and
instruments set forth in Schedule 4.15.A.(i) shall have been delivered to the
Administrative Agent for recording or filing or (ii) shall have been recorded or
filed in the respective places or offices set forth in Schedule 4.15.A. and, in
each such case, any and all recording and filing fees with respect thereto shall
have been paid, and each of the other actions set forth in Schedule 4.15.A.
shall have been taken.

 

E. UCC Searches. The Administrative Agent shall have received searches of UCC
filings in the jurisdictions of the chief executive office of each member of the
Borrower Group and each jurisdiction where any Collateral is located or where a
filing would need to be made in order to perfect the Administrative Agent’s
security interest in the Collateral, copies of the financing statements on file
in such jurisdictions and other evidence that the Administrative Agent may
reasonably require to confirm that no Liens exist as of the Closing Date other
than Permitted Liens.

 

F. No Violation of Law. The consummation of the transactions contemplated by the
Loan Documents shall not violate any Legal Requirements.

 

G. Financial Statements. The Administrative Agent shall have received accurate
and complete copies of the unaudited balance sheets and income statements of the
Borrower Group for the year ending December 31, 2000, which unaudited financial
statements shall be subject to adjustments agreed to by the Administrative
Agent.

 

H. Corporate Proceedings of the Parent. The Administrative Agent shall have
received a copy of the resolutions, in form and substance reasonably
satisfactory to the Administrative Agent, of the Board of Directors of the
Parent authorizing, among other things, (i) the execution, delivery and
performance of the Loan Documents to which it is a party and (ii) the granting
by it of the Liens created pursuant to the Collateral Documents to which it is a
party, certified by the Secretary of the Parent as of the Closing Date, which
certificate shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded and are accurate and complete.

 

I. Parent Incumbency Certificate. The Administrative Agent shall have received a
certificate of the Parent, dated as of the Closing Date, as to the incumbency
and signature of the officers of the Parent executing any Loan Document, in form
and substance reasonably satisfactory to the Administrative Agent, executed by
the Chief Executive Officer or the President and the Secretary or any Assistant
Secretary of the Parent.

 

J. Corporate Proceedings of the Borrowers. The Administrative Agent shall have
received a copy of the resolutions, in form and substance reasonably
satisfactory to the Administrative Agent, of the Board of Directors of each
Borrower authorizing, among other things, (i) the execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party, (ii) the execution, delivery and performance of the Material Contracts to
which it is a party that are in effect as of the Closing Date, (iii) the Loans
and Letters of Credit contemplated hereunder, (iv) the granting by it of the
Liens created pursuant to the Collateral Documents to which it is a party and
(v) with respect to FiberNet, the refinancing

 

66

--------------------------------------------------------------------------------

of the Indebtedness evidenced by the Original Credit Agreement, certified by the
Secretary of each Borrower as of the Closing Date, which certificate shall be in
form and substance reasonably satisfactory to the Administrative Agent and shall
state that the resolutions thereby certified have not been amended, modified,
revoked or rescinded and are accurate and complete.

 

K. Borrower Incumbency Certificate. The Administrative Agent shall have received
a certificate of each Borrower, each dated as of the Closing Date, as to the
incumbency and signature of the officers of such Borrower executing any Loan
Document, in form and substance reasonably satisfactory to the Administrative
Agent, executed by the Chief Executive Officer or the President and the
Secretary or any Assistant Secretary of such Borrower.

 

L. Corporate Proceedings of Subsidiaries. The Administrative Agent shall have
received a copy of the resolutions, in form and substance reasonably
satisfactory to the Administrative Agent, of the Management Board and the
members (if necessary) of each Subsidiary of any Borrower, if any, authorizing,
among other things, (i) the execution, delivery and performance of the Loan
Documents to which such Subsidiary is a party, (ii) the execution, delivery and
performance of the Material Contracts to which such Subsidiary is a party that
are in effect as of the Closing Date and (iii) the granting by it of the Liens
created pursuant to the Collateral Documents to which such Subsidiary is a
party, certified by the Secretary of such Subsidiary as of the Closing Date,
which certificate shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded and are accurate and complete.

 

M. Subsidiary Incumbency Certificates. The Administrative Agent shall have
received a certificate of each Subsidiary, dated as of the Closing Date, as to
the incumbency and signature of the officers of such Subsidiary executing any
Loan Document, in form and substance reasonably satisfactory to the
Administrative Agent, executed by the Chief Executive Officer or the President
of such Subsidiary and the Secretary or any Assistant Secretary of such
Subsidiary.

 

N. Corporate Documents. The Administrative Agent shall have received accurate
and complete copies of the certificate or articles of incorporation, certificate
of formation, by-laws and limited liability company agreements (or such other
organizational and governing documents as may be in existence) of each member of
the Borrower Group, certified as of the Closing Date as accurate and complete
copies thereof by a Responsible Officer of such member.

 

O. Good Standing Certificates. The Administrative Agent shall have received
certificates of good standing, existence, foreign qualification or its
equivalent with respect to each member of the Borrower Group certified as of a
date not more than seven (7) days prior to the Closing Date by the appropriate
Government Instrumentality of (i) the state of jurisdiction of such member of
the Borrower Group and (ii) each other jurisdiction in which the failure to so
qualify and be in good standing could reasonably be expected to have a Material
Adverse Effect.

 

P. Business Plan. The Administrative Agent shall have received, with a copy for
each Lender, a copy of the Business Plan.

 

67

--------------------------------------------------------------------------------

Q. Financial Officer’s Certificate. The Administrative Agent shall have received
the Financial Officer’s Certificate in the form of Exhibit F annexed hereto,
dated as of the Closing Date and duly executed by the chief financial officer or
the treasurer of each Borrower. Such certificate shall include certifications by
the chief financial officer or the treasurer of each Borrower that such Borrower
is delivering (i) a true and complete copy of the financial statements referred
to in Section 3.1.G., which fairly presents in all material respects the
financial condition of the Borrower Group at the dates indicated and the results
of their operations and their cash flows for the periods indicated and (ii) a
true and complete copy of the Business Plan referred to in Section 3.1.P.,
prepared in good faith and based on reasonable assumptions.

 

R. Insurance. The Administrative Agent shall have received copies of insurance
policies or certificates of insurance of each member of the Borrower Group
evidencing insurance meeting the requirements set forth in Section 5.6.B.,
including naming the Administrative Agent as additional insured (in the case of
liability insurance) or sole loss payee (in the case of hazard insurance) on
behalf of the Lenders.

 

S. Governmental and Third-Party Consents. The Administrative Agent shall have
received evidence satisfactory to it that each consent, authorization,
clearance, notice and filing required to be made or obtained by or on behalf of
any member of the Borrower Group in connection with the consummation of the
transactions contemplated hereby have been made or obtained.

 

T. Representations and Warranties. All representations and warranties made by
each Borrower and each other member of the Borrower Group in any Loan Document
shall be true and correct in all material respects as of the Closing Date
(unless any such representation or warranty relates solely to an earlier date,
in which case it shall have been true and correct in all material respects as of
such earlier date).

 

U. No Potential Event of Default or Event of Default. No Potential Event of
Default or Event of Default shall have occurred and be continuing as of the
Closing Date.

 

V. Closing Date Certificate. The Administrative Agent shall have received the
Closing Date Certificate in the form of Exhibit C annexed hereto, dated as of
the Closing Date and duly executed by a Responsible Officer of each Borrower,
stating that (i) all representations and warranties made by such Borrower in any
Loan Document are true and correct in all material respects as of the Closing
Date (unless any such representation or warranty relates solely to an earlier
date, in which case it shall have been true and correct in all material respects
as of such earlier date), (ii) to the best of such Responsible Officer’s
knowledge, all representations and warranties made by each other member of the
Borrower Group in any Loan Document are true and correct in all material
respects as of the Closing Date (unless any such representation or warranty
relates solely to an earlier date, in which case it shall have been true and
correct in all material respects as of such earlier date), and (iii) no
Potential Event of Default or Event of Default shall have occurred and be
continuing as of the Closing Date.

 

W. Solvency Certificate. The Administrative Agent shall have received the
Solvency Certificate in the form of Exhibit J annexed hereto, dated as of the
Closing Date and

 

68

--------------------------------------------------------------------------------

duly executed by the Chief Financial Officer or Treasurer of each Borrower,
regarding the financial condition, solvency and related matters of each of the
members of the Borrower Group.

 

X. Loan/Letter of Credit Request. The Administrative Agent shall have received a
properly completed Loan/Letter of Credit Request in accordance with Section
2.1.C. or Section 2.2.B., as applicable, executed by a Responsible Officer of
the applicable Borrower.

 

Y. Loan/Letter of Credit Certificate. The Administrative Agent shall have
received a properly completed Loan/Letter of Credit Certificate executed by a
Responsible Officer of the applicable Borrower in accordance with Section 2.1.C.
or Section 2.2.B., as applicable, dated as of the applicable Loan Date or Letter
of Credit Date.

 

Z. Fees and Expenses. The Borrowers shall have paid (or shall concurrently pay)
to each of the Lenders, the Agents and the Lead Arranger any and all fees,
expenses and costs relating to this Agreement, the Fee Letters, the other Loan
Documents and the transactions contemplated hereby and thereby which are due and
payable on the Closing Date.

 

AA. Equity Contribution. The Administrative Agent shall have received evidence
demonstrating to the reasonable satisfaction of the Administrative Agent, the
Syndication Agent and the Documentation Agent that the Parent shall have
received cash proceeds (net of underwriting discounts, commissions and the
reasonable expenses associated therewith) in an amount equal to or greater than
$26,100,000 from the issuance of its Capital Stock during the period from and
after January 25, 2001 to and including the Closing Date, and the Parent shall
have contributed (or shall concurrently contribute) the proceeds thereof as
equity to FiberNet pursuant to an equity contribution agreement reasonably
satisfactory to the Administrative Agent, the Syndication Agent and the
Documentation Agent.

 

BB. Satisfactory Documentation. All documentation received by the Administrative
Agent shall be reasonably satisfactory to the Administrative Agent.

 

Section 3.2. CONDITIONS PRECEDENT TO SUBSEQUENT LOANS.

 

The making of any Loan or the issuance of any Letter of Credit after the Initial
Loan or the initial Letter of Credit, whichever shall have occurred first, shall
be subject to the fulfillment, or waiver by the Lenders, of each of the
following conditions precedent, provided that any waiver granted by the Lenders
in respect of a Loan or the issuance of a Letter of Credit shall only be
effective in respect of such Loan or Letter of Credit, as the case may be, and
shall not, unless subsequently waived in respect of a subsequent Loan or Letter
of Credit, be effective as to any subsequent Loan or Letter of Credit:

 

A. Representations and Warranties. All representations and warranties made by
each Borrower and each other member of the Borrower Group in any Loan Document
shall be true and correct in all material respects as of the applicable Loan
Date or Letter of Credit Date, as the case may be (unless any such
representation or warranty relates solely to an earlier date, in which case it
shall have been true and correct in all material respects as of such earlier
date).

 

69

--------------------------------------------------------------------------------

B. No Potential Event of Default or Event of Default. No Potential Event of
Default or Event of Default shall have occurred and be continuing as of the
applicable Loan Date or Letter of Credit Date, as the case may be.

 

C. Loan/Letter of Credit Request. The Administrative Agent shall have received a
properly completed Loan/Letter of Credit Request in accordance with Section
2.1.C. executed by a Responsible Officer of the applicable Borrower.

 

D. Loan/Letter of Credit Certificate. The Administrative Agent shall have
received an accurate and complete Loan/Letter of Credit Certificate in
accordance with Section 2.1.C., dated as of the applicable Loan Date or Letter
of Credit Date, as the case may be, executed by a Responsible Officer of the
applicable Borrower.

 

E. Pro Forma Compliance. During Stage 1, immediately before and after giving
effect to the making of the applicable Loan or the issuance of the applicable
Letter of Credit (as the case may be) and the intended application of the
proceeds therefrom, the Borrower Group shall be in pro forma compliance with the
covenants set forth in Sections 6.6.A. and 6.6.E., in each case calculated based
on the consolidated balance sheets and the related consolidated statements of
income of the members of the Borrower Group as at the end of the month prior to
the applicable Letter of Credit Date or Loan Date, as the case may be (and each
such calculation shall be set forth in reasonable detail in the applicable
Loan/Letter of Credit Certificate).

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

 

In order to induce the Lenders to enter into this Agreement and to make the
Loans, and to induce the Issuing Bank to issue the Letters of Credit, each
Borrower represents and warrants to the Administrative Agent, the Issuing Bank
and each Lender that, on the Closing Date, on each Loan Date and on each Letter
of Credit Date:

 

SECTION 4.1. ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.

 

A. Organization and Powers. FiberNet is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Devnet is
a limited liability company duly formed, validly existing and in good standing
under the laws of the State of Delaware. FiberNet has all requisite corporate
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Loan
Documents and the Material Contracts to which it is a party and to carry out the
transactions contemplated thereby. Devnet has all requisite limited liability
company power and authority to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to enter into the
Loan Documents and the Material Contracts to which it is a party and to carry
out the transactions contemplated thereby.

 

B. Qualification and Good Standing. Each member of the Borrower Group is
qualified to do business and is in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, except where the failure to be so

 

70

--------------------------------------------------------------------------------

qualified or in good standing could not reasonably be expected to have a
Material Adverse Effect.

 

C. Ownership of the Parent. The equity interests in the Parent are duly
authorized, validly issued and fully paid and nonassessable and, as of the
Closing Date, none of such equity interests constitutes Margin Stock.

 

D. Subsidiaries. All of the Subsidiaries of the Parent are identified in
Schedule 4.1.D annexed hereto, as such Schedule 4.1.D may be supplemented from
time to time pursuant to the provisions of Section 6.5. The equity interests of
each of the Subsidiaries of the Parent are identified in Schedule 4.1.D. annexed
hereto (as so supplemented) and such equity interests are duly authorized,
validly issued and fully paid and nonassessable and none of such equity
interests constitutes Margin Stock. Each of the Subsidiaries of the Parent
identified in Schedule 4.1.D. annexed hereto (as so supplemented) is (i) a
corporation or limited liability company duly organized or formed, validly
existing and in good standing under the laws of its respective jurisdiction of
organization set forth therein, has all requisite corporate or limited liability
company power and authority to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted (including, all
activities in respect of the System), and (ii) is qualified to do business and
is in good standing in every jurisdiction where its assets are located and
wherever necessary to carry out its business and operations, except where the
failure to be so qualified and in good standing could not reasonably be expected
to have a Material Adverse Effect. Schedule 4.1.D. annexed hereto (as so
supplemented) completely and correctly sets forth the ownership of each
Subsidiary of the Parent.

 

E. Rights to Acquire Equity. There are no options, warrants, convertible
securities or other rights to acquire any equity interests in any member of the
Borrower Group except as set forth as Schedule 4.1.E.

 

F. Conduct of Business. Each member of the Borrower Group is engaged only in the
Telecommunications Business.

 

SECTION 4.2. AUTHORIZATION OF BORROWING, ETC.

 

A. Authorization of Borrowing. The execution, delivery and performance of the
Loan Documents have been duly authorized by all necessary action on the part of
each member of the Borrower Group that is a party thereto.

 

B. No Conflict. The execution, delivery and performance by each member of the
Borrower Group of the Loan Documents and Material Contracts to which it is a
party and the consummation of the transactions contemplated by the Loan
Documents and the Material Contracts do not and will not (i) violate any
provision of (a) any Legal Requirement applicable to any member of the Borrower
Group, (b) the certificate or articles of incorporation, certification of
formation, by-laws or limited liability company agreements (or any other
organizational or governing document) of any member of the Borrower Group or (c)
any order, judgment or decree of any court or agency or Governmental
Instrumentality binding on any member of the Borrower Group, (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of any member of the Borrower Group,

 

71

--------------------------------------------------------------------------------

(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of any member of the Borrower Group (other than any
Liens created under any of the Loan Documents in favor of the Administrative
Agent for the benefit of the Lenders), or (iv) require any approval of
stockholders or members of any member of the Borrower Group, or any approval or
consent of any Person under any Contractual Obligation of any member of the
Borrower Group except for such approvals or consents which will be obtained on
or before the Closing Date and which are disclosed in writing to the
Administrative Agent pursuant to Section 3.1.S.

 

C. Governmental Consents. Except as set forth in Schedule 4.2.C., the execution,
delivery and performance by each member of the Borrower Group of the Loan
Documents to which they are parties and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
Governmental Instrumentality.

 

D. Binding Obligation. Each of the Loan Documents and Material Contracts has
been duly executed and delivered by each member of the Borrower Group that are
parties hereto or thereto, as applicable, and is the legally valid and binding
obligation of such member, enforceable against such member in accordance with
its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability, whether
brought in a proceeding in equity or at law.

 

SECTION 4.3. SOLVENCY.

 

Both before and after giving effect to the transactions contemplated by this
Agreement, each member of the Borrower Group is and will be Solvent.

 

SECTION 4.4. FINANCIAL CONDITION.

 

In the case of each financial statement and accompanying information delivered
by the Parent or any Borrower hereunder, each such financial statement and
information shall have been prepared in conformity with GAAP and fairly present,
in all material respects, the financial position (on a consolidated and, where
applicable, consolidating basis) of the entities described in such financial
statements as at the respective dates thereof and the results of operations and
cash flows (on a consolidated and, where applicable, consolidating basis) of the
entities described therein for each of the periods then ended, subject, in the
case of any such unaudited financial statements, to changes resulting from audit
and normal year-end adjustments. Except for obligations under the Material
Contracts and the Loan Documents, the Borrowers do not (and will not following
the funding of the initial Loans) have any contingent obligations, unmatured
liabilities, contingent liability or liability for taxes, long-term lease or
forward or long-term commitment that is not reflected in the foregoing financial
statements or the notes thereto and which in any such case is material in
relation to the business, operations, properties, assets, financial condition or
prospects of the Borrower Group taken as a whole.

 

72

--------------------------------------------------------------------------------

SECTION 4.5. NO MATERIAL ADVERSE EFFECT.

 

Since September 30, 2000, no development, event or change in respect of any
member of Borrower Group and no development, event or change in respect of the
telecommunications market in which any member of the Borrower Group is or will
be conducting its business, has occurred that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect.

 

SECTION 4.6. TITLE TO PROPERTIES; LIENS; REAL PROPERTY.

 

A. Title to Properties; Liens. Each member of the Borrower Group has (i) good
marketable and insurable fee simple title to (in the case of fee interests in
real property), (ii) valid leasehold interests in (in the case of leasehold
interests in real or personal property), or (iii) good title to (in the case of
all other personal property), all of their respective material properties and
assets reflected in the financial statements referred to in Section 4.4. or in
the most recent financial statements delivered pursuant to Section 5.1., in each
case except for assets disposed of since the date of such financial statements
in the ordinary course of business or as otherwise permitted under Section 6.7.
Except as permitted by this Agreement and set forth on Schedule 6.2.A., all such
properties and assets are held free and clear of Liens.

 

B. Real Property. As of the Closing Date, Schedule 4.6.B. contains an accurate
and complete list of (i) all material properties owned by any member of the
Borrower Group and (ii) all material leases, subleases or assignments of leases
(together with all amendments, modifications, supplements, renewals or
extensions of any thereof) affecting real estate of properties owned or leased
by any member of the Borrower Group regardless of whether any such member is the
landlord or tenant (whether directly or as an assignee or successor in interest)
under such lease, sublease or assignment.

 

SECTION 4.7. LITIGATION; ADVERSE FACTS.

 

Except as set forth in Schedule 4.7, there are no actions, suits, proceedings,
arbitrations or governmental investigations at law or in equity, or before or by
any arbitrator or Governmental Instrumentality, domestic or foreign (including
any Environmental Claims) that are, to the knowledge of any Borrower, pending or
threatened against or affecting any member of the Borrower Group or any property
of any member of the Borrower Group, which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect. No member of the
Borrower Group (i) is in violation of any applicable Legal Requirement
(including Environmental Laws) or (ii) is subject to or in default with respect
to any final judgments, writs, injunctions, decrees, rules or regulations of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, with respect to any such violations or defaults occurring after the
Closing Date, could reasonably be expected to have a Material Adverse Effect.

 

SECTION 4.8. PAYMENT OF TAXES.

 

All tax returns and reports of each member of the Borrower Group required to be
filed by any such member have been timely filed, and all taxes required to be
paid with respect to such tax returns to be due and payable and all material
assessments, fees and other governmental

 

73

--------------------------------------------------------------------------------

charges upon each member of the Borrower Group and upon their respective
properties, assets, income, businesses and franchises which are due and payable
have been paid when due and payable. No Borrower knows of any proposed tax
assessment against any member of the Borrower Group which could reasonably be
expected to have a Material Adverse Effect that is not being actively contested
by any member of the Borrower Group in good faith and by appropriate proceedings
and for which reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall not have been made or provided therefor.

 

SECTION 4.9. PERFORMANCE OF AGREEMENTS; MATERIAL CONTRACTS.

 

A. No member of the Borrower Group is in default in the performance, observance
or fulfillment of any of the material obligations, covenants or conditions
contained in any of its Material Contracts and no condition exists that, with
the giving of notice or the lapse of time or both, would constitute such a
default, or that would permit the counterparty to any Material Contract to
terminate the Material Contract to which it is a party.

 

B. As of the Closing Date, the Parent is not a party to any Material Contract or
other revenue producing contract, other than those Material Contracts set forth
in Schedule A to the Parent Guaranty Agreement. Schedule 4.9.B contains an
accurate and complete list of all the Material Contracts in effect on the
Closing Date. Except as described on Schedule 4.9.B, to the knowledge of each
Borrower, all such Material Contracts are in full force and effect and no
defaults currently exist thereunder.

 

SECTION 4.10. GOVERNMENTAL REGULATION.

 

No member of the Borrower Group is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or the Interstate
Commerce Act, nor is an “investment company” as defined in the Investment
Company Act of 1940, or subject to regulation under the Investment Company Act
of 1940, or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.

 

SECTION 4.11. SECURITIES ACTIVITIES.

 

No Borrower is engaged nor will it engage in the business of extending credit
for the purpose of “buying” or “carrying” any “margin stock” within the
respective meanings of each of the quoted terms under Regulations T, U and X of
the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect. No portion of the proceeds of any Loan under this
Agreement will be used for “buying” or “carrying” any “margin stock” as so
defined or for any purpose which violates the provisions of the Regulations of
such Board of Governors.

 

SECTION 4.12. LABOR MATTERS.

 

Except as disclosed and described in Schedule 4.12, there are no collective
bargaining agreements or Multiemployer Plans covering the employees of any
member of the Borrower Group as of the Closing Date. No member of the Borrower
Group is engaged in any unfair labor practice that could reasonably be expected
to have a Material Adverse Effect. There is no strike,

 

74

--------------------------------------------------------------------------------

labor dispute, union organizing activity, slowdown or stoppage pending or, to
the best knowledge of each Borrower, threatened against any member of the
Borrower Group which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

SECTION 4.13. CERTAIN FEES.

 

No broker’s or finder’s fee or commission will be payable with respect to this
Agreement or any of the transactions contemplated hereby (other than fees
payable to the Lead Arranger, the Administrative Agent, the Syndication Agent,
the Documentation Agent, the Issuing Bank and the Lenders or any of their
Affiliates), and each Borrower hereby indemnifies the Lead Arranger, the
Administrative Agent, the Syndication Agent, the Documentation Agent, the
Issuing Bank and the Lenders against, and agrees that it will hold each of the
Lead Arranger, the Administrative Agent, the Syndication Agent, the
Documentation Agent, the Issuing Bank and the Lenders harmless from, any claim,
demand or liability for any such broker’s or finder’s fees alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.

 

SECTION 4.14. ENVIRONMENTAL PROTECTION.

 

Except as set forth in Schedule 4.14 annexed hereto:

 

(i) no member of the Borrower Group nor any of their respective Facilities are
subject to any outstanding written order, consent decree or settlement agreement
with any Person relating to (a) any Environmental Law, (b) any Environmental
Claim, or (c) any Hazardous Materials Activity;

 

(ii) no member of the Borrower Group has received any letter or request for
information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law;

 

(iii) there are and, to each Borrower’s knowledge, have been, no conditions,
occurrences, or Hazardous Materials Activities on any Facility which could
reasonably be expected to form the basis of an Environmental Claim against any
member of the Borrower Group;

 

(iv) no member of the Borrower Group nor, to each Borrower’s knowledge, any
predecessor of any member of the Borrower Group has filed any notice under any
Environmental Law indicating past or present treatment of Hazardous Materials at
any Facility, and no member of the Borrower Group’s operations involves the
generation, transportation, treatment, storage or disposal of hazardous waste,
as defined under 40 C.F.R. Parts 260-270 or any state equivalent; and

 

(v) compliance with all current or reasonably foreseeable future requirements
pursuant to or under Environmental Laws could not, individually or in the
aggregate, reasonably be expected to give rise to a Material Adverse Effect.

 

75

--------------------------------------------------------------------------------

Notwithstanding anything in this Section 4.14. to the contrary, no event or
condition has occurred or is occurring with respect to any member of the
Borrower Group relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity, including any matter disclosed
on Schedule 4.14 annexed hereto, which individually or in the aggregate has had
or could reasonably be expected to have a Material Adverse Effect.

 

SECTION 4.15. MATTERS RELATING TO COLLATERAL.

 

A. Creation, Perfection and Priority of Liens. The execution and delivery of the
Collateral Documents by each member of the Borrower Group, together with the
actions taken on or prior to the date hereof pursuant to this Section 4.15.A. or
Schedule 4.15.A are effective to create in favor of the Administrative Agent for
the benefit of the Secured Parties, as security for the Obligations, a valid and
perfected first priority Lien on all of the Collateral, and all filings and
other actions necessary to perfect and maintain the perfection and priority
status of such Liens have been duly made or taken and remain in full force and
effect, other than the filing of any UCC financing statements delivered to the
Administrative Agent for filing (but not yet filed) and the periodic filing of
UCC continuation statements in respect of UCC financing statements filed by or
on behalf of the Administrative Agent.

 

B. Governmental Actions. No authorization, approval or other action by, and no
notice to or filing with, any Governmental Instrumentality is required for
either (i) the pledge or grant by each member of the Borrower Group of the Liens
purported to be created in favor of the Administrative Agent pursuant to any of
the Collateral Documents or (ii) the exercise by the Administrative Agent of any
rights or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided for
by applicable law), except for filings or recordings set forth in Schedule
4.15.A.

 

C. Absence of Third-Party Filings. Except such as may have been (i) filed in
favor of the Administrative Agent as contemplated by Section 4.15.A. or (ii)
filed to perfect a Lien permitted under Section 6.2., no effective UCC financing
statement, fixture filing or other instrument similar in effect covering all or
any part of the Collateral is on file in any filing or recording office.

 

D. Chief Executive Office. As of the Closing Date, the “chief executive office,”
“major executive office” and “principal place of business” of each member of the
Borrower Group are set forth in Schedule 4.15.D.

 

E. Information Regarding Collateral. All information supplied to the
Administrative Agent by or on behalf of any Borrower or any other member of the
Borrower Group with respect to any of the Collateral (in each case taken as a
whole with respect to any particular Collateral) is accurate and complete in all
material respects.

 

SECTION 4.16. IMMUNITY.

 

No member of the Borrower Group is entitled to claim for itself or any of its
assets immunity from suit, execution, attachment or other legal process in any
proceeding in any jurisdiction in connection with any of the Loan Documents to
which it is a party.

 

76

--------------------------------------------------------------------------------

SECTION 4.17. ADDITIONAL MATTERS.

 

A. Disclosure. The written factual information furnished by (or based on written
information furnished by) any member of the Borrower Group to the Lenders or any
Agent in connection with the negotiation of the Loan Documents (excluding any
financial projections and other estimates or views of future circumstances),
taken as a whole, does not contain, as of the Closing Date, any untrue
statements of material fact and does not omit to state, as of the Closing Date,
any material fact necessary in order to make the statements contained therein,
in light of the circumstances under which they were made, not materially
misleading (unless superseded or corrected and disclosed in writing to the
Administrative Agent prior to the Closing Date). The Business Plan, when
delivered by the Borrowers to the Administrative Agent in accordance with
Section 3.1.P., shall have been prepared in good faith and shall have been based
on assumptions which were reasonable at the time prepared. The updated Business
Plan, when delivered in accordance with Section 5.3., shall have been, as of the
date delivered to the Administrative Agent in accordance with the terms hereof,
prepared by the Borrowers in good faith and shall have been based on assumptions
which were reasonable at the time prepared.

 

B. Licenses and Permits. Each member of the Borrower Group has obtained and
holds in full force and effect, free from burdensome restrictions, all
Governmental Actions, franchises, leases, qualifications, easements, rights of
way and other rights and approvals which are necessary for the operation of its
business as presently conducted, except where the failure to obtain such rights
and approvals, individually and in the aggregate, could not be reasonably
expected to have a Material Adverse Effect. No member of the Borrower Group is
in violation of the terms or conditions of any such Governmental Action,
franchise, lease, qualification, easement, right of way, right or approval,
which violation could reasonably be expected to have a Material Adverse Effect.

 

C. Intellectual Property. Each member of the Borrower Group has obtained and
holds in full force and effect the Intellectual Property, free from burdensome
restrictions, which is necessary for the operation of its business as presently
conducted except for that Intellectual Property which the failure to own or
license could not reasonably expected to have a Material Adverse Effect. No
product, process, method, substance, part or other material presently sold or
employed by any member of the Borrower Group in connection with such business
infringes any Intellectual Property owned by any other Person, except as could
not, individually and in the aggregate, reasonably be expected to have a
Material Adverse Effect. All of the material Intellectual Property owned or used
by any member of the Borrower Group as of the Closing Date is set forth in
Schedule 4.17. Upon the recordation or filing of the applicable Loan Documents,
all material Intellectual Property owned, licensed or used by any member of the
Borrower Group, other than Intellectual Property that is in the public domain
and Intellectual Property with respect to which a member of the Borrower Group
has a license the enforceable terms of which would prohibit the granting of a
Lien by such member of the Borrower Group, is or will be subject to a first
priority perfected Lien in favor of the Administrative Agent, for the benefit of
the Secured Parties.

 

77

--------------------------------------------------------------------------------

ARTICLE V.

BORROWERS’ AFFIRMATIVE COVENANTS

 

Each Borrower covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment and performance in full of
all of the Loans and other Obligations, such Borrower shall perform, and shall
cause each of its Subsidiaries to perform, all covenants set forth in this
Article V.

 

SECTION 5.1. FINANCIAL STATEMENTS AND OTHER REPORTS.

 

Each Borrower shall, and shall cause its Subsidiaries to, maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with GAAP.
FiberNet shall deliver to the Administrative Agent, with a copy for each Lender,
the following:

 

(i) Monthly Financials: as soon as available and in any event within 45 days
after the end of each calendar month (other than the months of March, June,
September or December), the consolidated balance sheets of the members of the
Borrower Group as at the end of such month and the related consolidated
statements of income of the members of the Borrower Group for such month, all in
reasonable detail;

 

(ii) Quarterly Financials: as soon as available and in any event within 45 days
after the end of each of the first three Fiscal Quarters of each Fiscal Year,
the consolidated balance sheets of the members of the Borrower Group as at the
end of such Fiscal Quarter and the related consolidated statements of income and
cash flows of the members of the Borrower Group for such Fiscal Quarter and for
the period from the beginning of the then current Fiscal Year to the end of such
Fiscal Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Business Plan for the current Fiscal Year, all in
reasonable detail and certified by the chief financial officer or treasurer of
the Parent and FiberNet, on behalf of the Borrower Group, that they fairly
present, in all material respects, the financial condition of the Borrower Group
as at the dates indicated and the results of their operations and their cash
flows for the periods indicated, subject to changes resulting from audit and
normal year-end adjustments;

 

(iii) Year-End Financials: as soon as available and in any event 90 days after
the end of each such Fiscal Year,

 

(a) the consolidated balance sheets of the members of the Borrower Group as at
the end of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders’ or members’ equity and cash flows of the
members of the Borrower Group for such Fiscal Year, setting forth in each case
in comparative form the corresponding figures for the previous Fiscal Year and
the corresponding figures from the Business Plan for the Fiscal Year covered by
such financial statements, all in reasonable detail and certified by the chief
financial officer or treasurer of the Parent and FiberNet, on behalf of the
Borrower Group, that they fairly present, in all material respects, the
financial condition of the Borrower Group as at the

 

78

--------------------------------------------------------------------------------

dates indicated and the results of their operations and their cash flows for the
periods indicated; and

 

(b) in the case of such consolidated financial statements specified in paragraph
(a) above, a report thereon of Arthur Andersen LLP or of any other of the
so-called “Big 5” independent certified public accounting firms, which report
shall be unqualified as to scope of audit, shall express no doubts about the
ability of the Persons covered thereby to continue as a going concern, and shall
state that such consolidated financial statements fairly present, in all
material respects, the consolidated financial position of the Borrower Group as
at the dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise disclosed in such financial statements)
and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards;

 

(iv) Officers’ and Compliance Certificates: together with each delivery of
financial statements of the Borrower Group pursuant to paragraphs (ii) and (iii)
above, (a) an Officer’s Certificate executed by the chief financial officer or
treasurer of the Parent and FiberNet stating that such officer, on behalf of the
Borrower Group, has reviewed the terms of this Agreement and has made, or caused
to be made under its supervision, a review in reasonable detail of the
transactions and condition of the Borrower Group during the accounting period
covered by such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that such officer
does not have knowledge of the existence as at the date of such Officer’s
Certificate, of any condition or event that constitutes an Event of Default or a
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
each member of the Borrower Group has taken, is taking and proposes to take with
respect thereto and (b) a Compliance Certificate demonstrating in reasonable
detail compliance during and at the end of the applicable accounting periods
with the restrictions contained in Article V and VI;

 

(v) Reconciliation Statements: if, as a result of any change in accounting
principles and policies from those used in the preparation of the audited
financial statements referred to in Section 4.4., the consolidated financial
statements of the Borrower Group delivered pursuant to paragraphs (ii) or (iii)
of this Section 5.1. will differ in any material respect from the consolidated
financial statements that would have been delivered pursuant to such paragraphs
had no such change in accounting principles and policies been made, then (a)
together with the first delivery of financial statements pursuant to paragraph
(ii) or (iii) of this Section 5.1. following such change, consolidated financial
statements of the Borrower Group for (y) the current Fiscal Year to the
effective date of such change and (z) the two full Fiscal Years immediately
preceding the Fiscal Year in which such change is made, in each case prepared on
a pro forma basis as if such change had been in effect during such periods, and
(b) together with each delivery of financial statements for the Borrower Group
pursuant to paragraph (ii) or (iii) of this Section 5.1. following such change,
a written statement of the chief financial officer or

 

79

--------------------------------------------------------------------------------

treasurer of each Borrower setting forth the differences (including any
differences that would affect any calculations relating to the financial
covenants set forth in Section 6.6.) which would have resulted if such financial
statements had been prepared without giving effect to such change;

 

(vi) Accountants’ Certification: together with each delivery of consolidated
financial statements pursuant to paragraph (iii) above, a written statement by
the independent certified public accountants giving the report thereon (a)
stating that their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting matters, (b)
stating whether, in connection with their audit examination, any condition or
event that constitutes an Event of Default or Potential Event of Default has
come to their attention and, if such a condition or event has come to their
attention, specifying the nature and period of existence thereof; provided that
such accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default that would
not be disclosed in the course of their audit examination, and (c) stating that
based on their audit examination nothing has come to their attention that causes
them to believe either or both that the information contained in the
certificates delivered therewith pursuant to paragraph (iv) above is not correct
or that the matters set forth in the Compliance Certificates delivered therewith
pursuant to clause (b) of paragraph (iv) above for the applicable Fiscal Year
are not stated in accordance with the terms of this Agreement;

 

(vii) Accountants’ Reports: promptly upon receipt thereof (unless restricted by
applicable professional standards), copies of all reports or “management
letters” submitted to any member of the Borrower Group by independent certified
public accountants in connection with each annual, interim or special audit of
the financial statements of any member of the Borrower Group made by such
accountants, including any comment letter submitted by such accountants to
management in connection with their annual audit;

 

(viii) SEC Filings, Press Releases and Other Financial Reports: promptly upon
its becoming available, if ever, copies of (a) all financial statements,
reports, notices and proxy statements sent or made available generally by any
member of the Borrower Group to their security holders, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or a
similar form) and prospectuses, if any, filed by any member of the Borrower
Group with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority and (c) all press
releases and other statements made available generally by any member of the
Borrower Group to the public concerning material developments in the business of
any member of the Borrower Group;

 

(ix) Events of Default, Etc.: promptly upon any officer of any Borrower
obtaining knowledge (a) of any condition or event that constitutes an Event of
Default or Potential Event of Default, or becoming aware that any Lender has
given any notice (other than to the Administrative Agent) or taken any other
action with respect to a claimed Event of Default or Potential Event of Default,
(b) that any Person has given any notice to any member of the Borrower Group or
taken any other action with respect to a

 

80

--------------------------------------------------------------------------------

claimed default or event or condition of the type referred to in Section 7.2.,
(c) of any condition or event that would be required to be disclosed in a
current report filed by any member of the Borrower Group with the Securities and
Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in
effect on the date hereof) if any member of the Borrower Group was required to
file such reports under the Exchange Act, or (d) of the occurrence of any event
or change that has caused or evidences, either in any case or in the aggregate,
a Material Adverse Effect, an Officer’s Certificate specifying the nature and
period of existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such claimed Event of
Default, Potential Event of Default, default, event or condition, and what
action each Borrower has taken, is taking and proposes to take with respect
thereto;

 

(x) Litigation or Other Proceedings: (a) promptly upon any Responsible Officer
of any Borrower obtaining knowledge of (1) the institution of, or threat of, any
action, suit, proceeding (whether administrative, judicial or otherwise),
governmental investigation or arbitration against or affecting any member of the
Borrower Group, or any property of any member of the Borrower Group
(collectively, “Proceedings”) not previously disclosed in writing by any
Borrower to the Lenders or (2) any development in any Proceeding that, in any
case:

 

(a) if adversely determined, could reasonably be expected to have a Material
Adverse Effect;

 

(b) seeks to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated hereby;
or

 

(c) if adversely determined, could materially adversely impact the design,
development, construction, or installation of the System;

 

written notice thereof together with such other information as may be reasonably
available to any member of the Borrower Group to enable the Lenders and their
counsel to evaluate such matters;

 

(xi) ERISA Events: promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any event in connection with an Employee Benefit Plan
or Multiemployer Plan which has had or could reasonably be expected to have a
Material Adverse Effect, a written notice specifying the nature of such event,
what action any Borrower or any of its respective ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto;

 

(xii) Insurance: as soon as practicable and in any event by the last day of each
Fiscal Year, a report in form and substance reasonably satisfactory to the
Administrative Agent outlining all insurance coverage maintained as of the date
of such report by each member of the Borrower Group and all insurance coverage
planned to be

 

81

--------------------------------------------------------------------------------

maintained by each member of the Borrower Group in the immediately succeeding
Fiscal Year;

 

(xiii) Board of Directors: with reasonable promptness, written notice of any
change in the members of the Board of Directors or similar governing body of any
member of the Borrower Group, as applicable;

 

(xiv) New Subsidiaries: promptly upon any Person becoming a Subsidiary of the
Parent, a written notice setting forth with respect to such Person (a) the date
on which such Person became a Subsidiary of the Parent and (b) all of the data
required to be set forth in Schedule 4.1.D annexed hereto with respect to all
Subsidiaries of the Parent (it being understood that such written notice shall
be deemed to supplement Schedule 4.1.D annexed hereto for all purposes of this
Agreement); and

 

(xv) Other Information: with reasonable promptness, such other information and
data regarding the business, properties or financial condition of, or compliance
with the terms and conditions of the Loan Documents by, any member of the
Borrower Group as from time to time may be reasonably requested by any Lender.

 

(xvi) Monthly Statements: as soon as available, and in any event within (a) 15
days after the end of each calendar month (other than the months of March, June,
September and December) or (b) 30 days after then end of the months of March,
June, September and December, a monthly statement of the members of the Borrower
Group as at the end of such month setting forth (1) their Available Cash as at
such date, (2) their accounts receivable balance as at such date and the actual
number of days such receivables are outstanding, and (3) their accounts payable
balance as at such date and the actual number of days such payables are
outstanding.

 

SECTION 5.2. PERFORMANCE OF OBLIGATIONS; CONDUCT OF BUSINESS.

 

Each Borrower shall, and shall cause each of its Subsidiaries to, perform in all
material respects all of its obligations under the terms of all Material
Contracts to which it is a party or by which it is bound, provided, that any
such member of the Borrower Group shall not be obligated to perform any such
obligation if such obligation or the nature of such performance is being
contested in good faith. Each Borrower shall, and shall cause each of its
Subsidiaries to, operate and maintain its business in an efficient and
business-like manner in accordance with good telecommunications industry
practice.

 

SECTION 5.3. BUSINESS PLAN.

 

Within 30 days after the end of each Fiscal Year, the Borrowers shall deliver a
copy of an updated Business Plan to the Administrative Agent, which updated
Business Plan shall be (i) prepared in good faith and based on reasonable
assumptions and, (ii) if materially different than the then current Business
Plan, reasonably satisfactory to the Required Lenders. The Borrowers shall
promptly notify the Administrative Agent of any material change to the then
current Business Plan.

 

82

--------------------------------------------------------------------------------

SECTION 5.4. EXISTENCE.

 

Each Borrower shall, and shall cause each of its Subsidiaries to, do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and take all reasonable action to maintain all
rights, licenses, privileges and franchises necessary in the normal conduct of
its business (including the development, operation and construction of the
System); provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.7.

 

SECTION 5.5. PAYMENT OF OBLIGATIONS.

 

Each Borrower shall, and shall cause each of its Subsidiaries to, pay at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, including all taxes, assessments and
other governmental charges imposed upon it or any of its properties or assets or
in respect of any of its income, businesses or franchises before any penalty
accrues thereon, and all claims (including claims for labor, services, materials
and supplies) for sums that have become due and payable and that by law have or
may become a Lien upon any of its properties or assets, prior to the time when
any penalty or fine shall be incurred with respect thereto; provided that no
such charge or claim need be paid if it is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, so long as
such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.

 

SECTION 5.6. MAINTENANCE OF PROPERTIES; INSURANCE.

 

A. Maintenance of Properties. Each Borrower shall, and shall cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties of
such Borrower and its Subsidiaries and from time to time will make or cause to
be made all appropriate repairs, renewals and replacements thereof except to the
extent that such Borrower or such Subsidiary, as applicable, determines in good
faith not to maintain, repair, renew or replace such property if such property
is no longer desirable in respect of such Borrower’s or such Subsidiary’s, as
applicable, business and the failure to do so is not disadvantageous in any
material respect to such Borrower and its Subsidiaries, taken as a whole.

 

B. Insurance. Each Borrower shall, and shall cause each of Subsidiaries to, at
all times maintain, with financially sound and reputable insurers, in full force
and effect insurance (including worker’s compensation insurance, liability
insurance, casualty insurance and business interruption insurance) in such
amounts, covering such risks and liabilities and with such deductibles or
self-insurance retentions as are in accordance with normal industry practice or
as otherwise required by the Collateral Documents. The Administrative Agent
shall be named as loss payee or mortgagee, as its interest may appear, and/or
additional insured with respect to each such insurance providing coverage in
respect of any Collateral, and each provider of any such insurance shall agree,
by endorsement upon the policy or policies issued by it or by independent
instruments furnished to the Administrative Agent, that it will give the
Administrative Agent 30 days prior written notice before any such policy or
policies shall be materially altered or canceled, and that no act or default of
any member of the Borrower Group

 

83

--------------------------------------------------------------------------------

or any other Person shall affect the rights of the Administrative Agent or the
Lenders under such policy or policies. The present insurance coverage of the
Loan Parties is outlined as to carrier, policy number, expiration date, type and
amount on Schedule 5.6.B.

 

SECTION 5.7. INSPECTION; LENDER MEETING.

 

A. Inspection Rights. Upon reasonable notice and during normal business hours
and at the sole expense of the Lenders (or, if a Potential Event of Default or
an Event of Default exists, at the sole expense of the Borrowers), each Borrower
shall, and shall cause each of its Subsidiaries to, permit representatives
appointed by the Administrative Agent and, if requested by any Lender, such
Lender, including independent accountants, agents, representatives of certain
Lenders, attorneys, and appraisers, to visit and inspect its property, including
its books and records, its accounts receivable and inventory, its facilities and
its other business assets, and to make photocopies or photographs thereof and to
write down and record any information such representative obtains and shall
permit the Administrative Agent or its representatives to investigate and verify
the accuracy of information provided to the Administrative Agent or Lenders and
to discuss all such matters with the officers, employees and representatives of
such Borrower or such Subsidiary.

 

B. Lender Meeting. Each Borrower shall, upon the request of the Administrative
Agent or the Majority Lenders, participate in a meeting of the Administrative
Agent and the Lenders once during each Fiscal Year to be held at the FiberNet’s
corporate offices (or at such other location as may be agreed to by the
Borrowers and the Administrative Agent) at such time as may be agreed to by the
Borrowers and the Administrative Agent.

 

SECTION 5.8. COMPLIANCE WITH LAWS; GOVERNMENTAL ACTIONS AND RIGHTS OF WAY.

 

A. Legal Requirements. Each Borrower shall, and shall cause each of its
Subsidiaries to, comply in all material respects with all applicable Legal
Requirements (including all Environmental Laws, United States export laws and
regulations, and the Foreign Corrupt Practices Act of the United States, if
applicable).

 

B. Governmental Actions; Rights of Way. Each Borrower shall, and shall cause
each of its Subsidiaries to, from time to time (i) file for and obtain all
Governmental Actions and private party rights of way, franchises, licenses,
consents and approvals as shall now or hereafter be necessary in the conduct of
each Borrower’s and its Subsidiaries’ business, and (ii) maintain, retain,
observe, keep in full force and effect and comply in all material respects with
the terms, conditions and provisions of all Governmental Actions as shall now or
hereafter be necessary under applicable laws.

 

SECTION 5.9. ENVIRONMENTAL MATTERS.

 

A. Environmental Review and Investigation. Each Borrower agrees that the
Administrative Agent may, following the occurrence of any event or the discovery
of any condition that the Administrative Agent or the Majority Lenders
reasonably believes has caused (or could reasonably be expected to cause) the
representations and warranties set forth in Section 4.14 to be untrue in any
material respect, (i) retain, at the Borrowers’ expense, an independent

 

84

--------------------------------------------------------------------------------

professional consultant to review any environmental audits, investigations,
analyses and reports relating to Hazardous Materials in respect of any Facility
prepared by or for any Borrower and (ii) conduct its own investigation of any
Facility and as to the compliance by any Borrower or any of its Subsidiaries
with the representations and warranties set forth in Section 4.14. For purposes
of conducting such a review and/or investigation, each Borrower hereby grants to
the Administrative Agent and its agents, employees, consultants and contractors
the right to enter into or onto any portion of any Facility then owned, leased,
operated or used by any Borrower or any of its Subsidiaries and to perform such
tests on such property (including taking samples of soil, groundwater and
suspected asbestos-containing materials) as are reasonably necessary in
connection therewith. Any such investigation of any portion of any Facility
shall be conducted, unless otherwise agreed to by the Borrowers and the
Administrative Agent, during normal business hours and, to the extent reasonably
practicable, shall be conducted so as not to interfere with the ongoing
operations at such portion of any Facility or to cause any damage or loss to any
property at such portion of the applicable Facility. Each Borrower and the
Administrative Agent hereby acknowledge and agree that any report of any
investigation conducted at the request of the Administrative Agent pursuant to
this Section 5.9. will be obtained and shall be used by the Administrative Agent
and the Lenders for the purposes of the Lenders’ internal credit decisions, to
monitor the Loans and to protect the Lenders’ security interests created by the
Collateral Documents. The Administrative Agent agrees to deliver a copy of any
such report to the Borrowers with the understanding that each Borrower
acknowledges and agrees that (x) it will indemnify and hold harmless the
Administrative Agent and each Lender from any costs, losses or liabilities
relating to the Borrowers’ use of or reliance on such report, (y) neither the
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report, and (z) by delivering such report to the Borrowers,
neither the Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.

 

B. Environmental Disclosure. Each Borrower shall deliver to the Administrative
Agent and the Lenders:

 

(i) Environmental Audits and Reports. As soon as practicable following receipt
thereof, copies of all environmental audits, investigations, analyses and
reports of any kind or character, whether prepared by personnel of any Borrower
or any of its Subsidiaries or by independent consultants, governmental
authorities or any other Persons, with respect to significant environmental
matters at any portion of any Facility or with respect to any Environmental
Claims;

 

(ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly upon the
occurrence thereof, written notice describing in reasonable detail (a) any
Release required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (b) any remedial
action taken by any Borrower or any other Person in response to (1) any
Hazardous Materials Activities the existence of which has a reasonable
possibility of resulting in one or more Environmental Claims having,
individually or in the aggregate, a Material Adverse Effect, or (2) any
Environmental Claims that, individually or in the aggregate, have a reasonable
possibility of resulting in a Material Adverse Effect;

 

85

--------------------------------------------------------------------------------

(iii) Written Communications Regarding Environmental Claims, Releases, Etc. As
soon as practicable following the sending or receipt thereof by any Borrower or
any of its Subsidiaries, a copy of any and all written communications with
respect to (a) any Environmental Claims that, individually or in the aggregate,
have a reasonable possibility of giving rise to a Material Adverse Effect, (b)
any Release required to be reported to any federal, state or local governmental
or regulatory agency, and (c) any request for information from any governmental
agency that suggests such agency is investigating whether any Borrower or any of
its Subsidiaries may be potentially responsible for any Hazardous Materials
Activity;

 

(iv) Notice of Certain Proposed Actions Having Environmental Impact. Prompt
written notice describing in reasonable detail (a) any proposed acquisition of
Securities, assets, or property by any Borrower or any of its Subsidiaries that
could reasonably be expected to (1) expose any Borrower or any of its
Subsidiaries to, or result in, Environmental Claims that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect or
(2) affect the ability of any Borrower or any of its Subsidiaries to maintain in
full force and effect all material Governmental Actions required under any
Environmental Laws for their respective operations and (b) any proposed action
to be taken by any Borrower or any of its Subsidiaries to modify current
operations in a manner that could reasonably be expected to subject any Borrower
or any of its Subsidiaries to any material additional obligations or
requirements under any Environmental Laws that could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; and

 

(v) Other Information. With reasonable promptness, such other documents and
information as from time to time may be reasonably requested by the
Administrative Agent in relation to any matters disclosed pursuant to this
Section 5.9.

 

C. The Borrowers’ Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws.

 

(i) Remedial Actions Relating to Hazardous Materials Activities. Each Borrower
shall promptly undertake, and shall cause each of its Subsidiaries promptly to
undertake, any and all investigations, studies, sampling, testing, abatement,
cleanup, removal, remediation or other response actions necessary to remove,
remediate, clean up or abate any Hazardous Materials Activity on, under or about
any portion of the System that is in violation of any Environmental Laws or that
presents a material risk of giving rise to an Environmental Claim. In the event
any Borrower or any of its Subsidiaries undertake any such action with respect
to any Hazardous Materials, any Borrower or such Subsidiary shall conduct and
complete such action in compliance with all applicable Environmental Laws and in
accordance with the policies, orders and directives of all federal, state and
local governmental authorities except when, and only to the extent that, such
Borrower’s or such Subsidiary’s liability with respect to such Hazardous
Materials Activity is being contested in good faith by such Borrower or such
Subsidiary.

 

86

--------------------------------------------------------------------------------

(ii) Actions with Respect to Environmental Claims and Violations of
Environmental Laws. Each Borrower shall promptly take, and shall cause each of
its Subsidiaries promptly to take, any and all actions necessary to (i) cure any
material violation of applicable Environmental Laws by any Borrower or its
Subsidiaries and (ii) make an appropriate response to any Environmental Claim
against any Borrower or any of its Subsidiaries and discharge any obligations it
may have to any Person thereunder.

 

SECTION 5.10. PAYMENT OF LIENS.

 

A. Removal by the Borrowers. In the event that, notwithstanding the covenants
contained in Section 6.2., a Lien not otherwise permitted under Section 6.2. may
encumber the Collateral or any portion thereof, the Borrowers shall promptly
discharge or cause to be discharged by payment to the lien holder or lien
claimant or promptly secure removal by bonding or deposit with the county clerk
or otherwise; provided that, compliance with the provisions of this Section
5.10. shall not be deemed to constitute a waiver of the provisions of Section
6.2. The Borrowers shall exhibit to the Administrative Agent upon request all
receipts or other satisfactory evidence of payment, bonding, deposit of taxes,
assessments, Liens or any other item which may cause any such Lien to be filed
against the Collateral or any portion thereof of any Borrower or any of its
Subsidiaries. Each Borrower and each of its Subsidiaries shall fully preserve
the Lien and the priority of each of the Collateral Documents without cost or
expense to the Administrative Agent or the Lenders.

 

B. Removal by the Agent. If any Borrower or any of its Subsidiaries fails to
promptly discharge, remove or bond off any such Lien or mechanics’ or
materialmen’s claim of lien as described above, which is not being contested by
either any Borrower or any of its Subsidiaries in good faith by appropriate
proceedings promptly instituted and diligently conducted, within 30 days after
the receipt by such Borrower or such Subsidiary of notice thereof, then the
Administrative Agent may, but shall not be required to, procure the release and
discharge of such Lien, mechanics’ or materialmen’s claim of lien and any
judgment or decree thereon, and in furtherance thereof may, in its sole
discretion, effect any settlement or compromise with the lien holder or lien
claimant or post any bond or furnish any security or indemnity as the
Administrative Agent, in its sole discretion, may elect. In settling,
compromising or arranging for the discharge of any Liens under this subsection,
the Administrative Agent shall not be required to establish or confirm the
validity or amount of the Lien. Each Borrower agrees that all costs and expenses
expended or otherwise incurred pursuant to this Section 5.10. (including
reasonable attorneys’ fees and disbursements) by the Administrative Agent shall
be paid by the Borrowers in accordance with the terms hereof.

 

SECTION 5.11. FURTHER ASSURANCES.

 

A. Assurances. Without expense or cost to the Administrative Agent or the
Lenders, each Borrower shall, and shall cause each of its Subsidiaries to, from
time to time hereafter, execute, acknowledge, file, record, do and deliver all
and any further acts, deeds, conveyances, mortgages, deeds of trust, deeds to
secure debt, security agreements, hypothecations, pledges, charges, assignments,
financing statements and continuations thereof, notices of assignment,
transfers, certificates, assurances and other instruments as the Administrative
Agent may from time to time reasonably require in order to carry out more
effectively the purposes of this

 

87

--------------------------------------------------------------------------------

Agreement or the other Loan Documents, including to subject any items of
Collateral, intended to now or hereafter be covered, to the Liens created by the
Collateral Documents, to perfect and maintain such Liens, and to assure, convey,
assign, transfer and confirm unto the Administrative Agent the property and
rights hereby conveyed and assigned or intended to now or hereafter be conveyed
or assigned or which any Borrower or any such Subsidiary may be or may hereafter
become bound to convey or to assign to the Administrative Agent or for carrying
out the intention of or facilitating the performance of the terms of this
Agreement or any other Loan Document or for filing, registering or recording
this Agreement or any other Loan Document. Promptly upon a reasonable request
each Borrower shall, and shall cause each of its Subsidiaries to, execute and
deliver, and hereby authorizes the Administrative Agent to execute and file in
the name of such Borrower or such Subsidiary, to the extent the Administrative
Agent may lawfully do so, one or more financing statements, chattel mortgages or
comparable security instruments to evidence more effectively the Liens of the
Collateral Documents upon the Collateral.

 

B. Specific Actions. Without limiting the generality of Section 5.11.A., (i) no
later than seven Business Days prior to any Borrower or any of its Subsidiaries
opening any new Account, the Borrowers shall notify the Administrative Agent of
the potential opening of such new Account and, upon the request of the
Administrative Agent, such Borrower or such Subsidiary, as applicable, the
Administrative Agent and the bank or financial institution with whom such
account will be opened shall enter into a Control Agreement with respect to such
Account on or prior to its opening and (ii) if any Borrower or any of its
Subsidiaries uses or establishes a NOC in a location different than the location
of FiberNet’s NOC on the Closing Date, such Borrower shall, or shall cause such
Subsidiary to, grant to the Administrative Agent, for the benefit of the Secured
Parties, a first priority security interest in and lien on the real property
interests of such Borrower or such Subsidiary, as applicable, comprising or
directly related to any such NOC. With respect to clause (ii), (a) such grant
shall be effectuated through a deed of trust, leasehold deed of trust, mortgage
or any other document or instrument (and each such document, when entered into,
shall be deemed to be a Collateral Document hereunder) reasonably requested by
the Administrative Agent, in each case, in form and substance satisfactory to
the Administrative Agent, and (b) such Borrower or such Subsidiary shall obtain
a lender’s title insurance policy, in form and substance satisfactory to the
Administrative Agent, in respect of such real property.

 

C. Filing and Recording Obligations. Each Borrower shall pay or cause to be paid
all filing, registration and recording fees and all expenses incident to the
execution and acknowledgment of a deed of trust, leasehold of deed of trust,
mortgage, leasehold mortgage, or any other Loan Document, including any
instrument of further assurance described in Section 5.11.A., and shall pay or
cause to be paid all mortgage recording taxes, transfer taxes, general
intangibles taxes and governmental stamp and other taxes, duties, imposts,
assessments and charges arising out of or in connection with the execution,
delivery, filing, recording or registration of any Collateral Document or any
other Loan Document, including any instrument of further assurance described in
Section 5.11.A., or by reason of its interest in, or measured by amounts payable
under, the Notes, any Collateral Document or any other Loan Document, including
any instrument of further assurance described in Section 5.11.A., and shall pay
all stamp taxes and other taxes required to be paid on the Notes or any other
Loan Document, but excluding in the case of each Lender and the Administrative
Agent, Taxes imposed on its income by a jurisdiction under the laws of which it
is organized or in which its principal executive office

 

88

--------------------------------------------------------------------------------

is located or in which its applicable lending office for funding or booking its
Loans hereunder is located. If any Borrower fails to make or cause to be made
any of the payments described in the preceding sentence within 15 days after
notice thereof from the Administrative Agent (or such shorter period as is
necessary to protect the loss of or diminution in value of any Collateral by
reason of tax foreclosure or otherwise, as determined by the Administrative
Agent in its sole discretion) accompanied by documentation verifying the nature
and amount of such payments, the Administrative Agent may (but shall not be
obligated to) pay the amount due and the Borrowers shall reimburse all amounts
in accordance with the terms hereof.

 

D. Costs of Defending and Upholding the Lien. The Administrative Agent may, upon
at least five days’ prior notice to the Borrowers, (i) appear in and defend any
action or proceeding, in the name and on behalf of the Administrative Agent or
the Lenders in which the Administrative Agent or any Lender is named or which
the Administrative Agent in its sole discretion determines is reasonably likely
to materially adversely affect the Collateral, any Collateral Document, the Lien
thereof or any other Loan Document and (ii) institute any action or proceeding
which the Administrative Agent reasonably determines should be instituted to
protect the interest or rights of the Administrative Agent and the Lenders in
the Collateral or under this Agreement, the Collateral Documents or any other
Loan Document. Each Borrower agrees that all reasonable costs and expenses
expended or otherwise incurred pursuant to this subsection (including reasonable
attorneys’ fees and disbursements) by the Administrative Agent shall be paid by
each Borrower or reimbursed to the Administrative Agent, as the case may be,
promptly after demand.

 

E. Costs of Enforcement. Each Borrower agrees to bear and shall pay or reimburse
the Secured Parties in accordance with the terms of Section 9.2. for all
reasonable sums, costs and expenses incurred by the Secured Parties (including
reasonable attorneys’ fees and the expenses and fees of any receiver or similar
official) of or incidental to the collection of any of the Obligations, any
foreclosure (or transfer in lieu of foreclosure) of this Agreement, any
Collateral Document or any other Loan Document or any sale of all or any portion
of the Collateral.

 

SECTION 5.12. USE OF PROCEEDS.

 

The proceeds of the Loans hereunder shall be used solely to (i) provide for
working capital and general corporate needs of any Borrower or any of its
Subsidiaries, (ii) fund the acquisition of Telecommunication Assets (or to make
a loan or capital contribution to any wholly-owned Subsidiary of any Borrower,
the proceeds of which will be used for the purposes set forth in clauses (i) and
(ii) of this Section 5.12) and (iii) pay Transaction Costs (individually, a
“Permitted Purpose” and, collectively, the “Permitted Purposes”); provided that
the proceeds of the Loans may only be used in connection with the acquisition of
Telecommunications Assets and the making of other capital expenditures in New
York, Chicago and Los Angeles; and provided, further, that notwithstanding the
foregoing proviso, (i) proceeds of the Loans may be used by the Borrowers and
their respective Subsidiaries in connection with their “offnet” businesses (as
such term is used in the Business Plan) in a manner which is consistent with the
then current Business Plan and (ii) up to $2,000,000 of the proceeds of the
Loans may be used in connection with the acquisition of Telecommunication Assets
located

 

89

--------------------------------------------------------------------------------

outside of or used in connection with the provision of telecommunications
services outside of New York, Chicago or Los Angeles.

 

The Letters of Credit shall be used only in the ordinary course of business for
and in connection with a Permitted Purpose.

 

SECTION 5.13. INTELLECTUAL PROPERTY.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to, do
any act, or omit to do any act, whereby any of its Intellectual Property may
lapse or become abandoned or dedicated to the public or unenforceable, unless
such lapse, abandonment, dedication or unenforceability could not reasonably be
expected to have a Material Adverse Effect. Each Borrower shall take, and shall
cause each of its Subsidiaries to take, all reasonably necessary steps to
maintain and pursue any application (and to obtain the relevant registration)
filed with respect to, and to maintain any registration of, any material part of
its Intellectual Property, except where the failure to so maintain, obtain or
pursue could not reasonably be expected to have a Material Adverse Effect.

 

SECTION 5.14. COOPERATION WITH SYNDICATION.

 

Each Borrower shall use good faith efforts, and will cause its Subsidiaries to
use good faith efforts, to coordinate with the Syndication Agent to minimize the
disruption and assist with the initial post-Closing Date syndication of the
Loans, if any.

 

SECTION 5.15. INTEREST RATE PROTECTION.

 

On or before June 30, 2003 each Borrower shall maintain in effect one or more
Interest Rate Agreements with respect to the Loans, for an average term of at
least two years and otherwise in form and substance reasonably satisfactory to
the Administrative Agent, which Interest Rate Agreements shall effectively fix
the Unadjusted Eurodollar Rate Component (as hereinafter defined) of the
interest costs to the Borrowers at a rate not more than 100 basis points above
the then on-market fixed rate equivalent, with respect to an aggregate notional
principal amount of not less than 50% of the aggregate principal amount of the
Loans outstanding from time to time (based on the assumption that such notional
principal amount was a Eurodollar Rate Loan with an Interest Period of three
months). For purposes of this Section 5.15., the term “Unadjusted Eurodollar
Rate Component” means that component of the interest costs to the Borrowers in
respect of a Eurodollar Rate Loan that is based upon the rate obtained pursuant
to the definition of Adjusted Eurodollar Rate.

 

SECTION 5.16. [INTENTIONALLY OMITTED]

 

ARTICLE VI.

BORROWERS’ NEGATIVE COVENANTS

 

Each Borrower covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment and performance in full of
all of the Loans and other Obligations, such Borrower shall perform, and shall
cause each of its Subsidiaries to perform all of the covenants set forth in this
Article VI.

 

90

--------------------------------------------------------------------------------

SECTION 6.1. INDEBTEDNESS.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:

 

(i) each Borrower and its Subsidiaries may become and remain liable with respect
to the Obligations;

 

(ii) each Borrower and its Subsidiaries may become and remain liable with
respect to any Indebtedness set forth in Schedule 6.1 (and renewals,
refinancings and extensions thereof on terms and conditions no less favorable to
such Borrower or such Subsidiary, in a principal amount not in excess of the
principal balance outstanding thereon at the time of such renewal, refinancing
or extension and with a maturity date and weighted average life no greater than
the Indebtedness being refinanced);

 

(iii) each Borrower and its Subsidiaries may become liable with respect to trade
or other similar Indebtedness incurred in the ordinary course of business and
payable within sixty days;

 

(iv) the Borrowers and their Subsidiaries may become liable with respect to
purchase money Indebtedness (including obligations in respect of Capital Leases)
hereafter incurred by any such Borrower or any such Subsidiary to finance the
purchase of fixed assets not owned as of the date hereof, provided, that (a) the
aggregate amount of such Indebtedness shall not exceed an aggregate principal
amount of $10,000,000 at any one time outstanding, (b) such Indebtedness when
incurred shall not exceed the purchase price of the asset(s) financed and (c)
any Lien securing such Indebtedness shall attach to the acquired assets within
90 days after the acquisition thereof;

 

(v) renewals, refinancings and extensions of any Indebtedness permitted pursuant
to clause (iv) above on terms and conditions no less favorable to such Borrower
or such Subsidiary and in a principal amount not in excess of the principal
balance outstanding thereon at the time of such renewal, refinancing or
extension;

 

(vi) each Borrower and its Subsidiaries may become liable with respect to
Indebtedness under, or constituting net exposure under, Interest Rate Agreements
entered into in accordance with Section 5.15;

 

(vii) any wholly-owned Subsidiary of any Borrower may become liable with respect
to loans made to it by any Borrower as long as (a) such Indebtedness is
evidenced by a promissory note in form and substance reasonably satisfactory to
the Administrative Agent which shall be pledged to the Administrative Agent
pursuant to the applicable Pledge Agreement and (b) the proceeds of such loan
are used to provide for working capital and general corporate needs of such
Subsidiary or to fund the acquisition of Telecommunication Assets by such
Subsidiary, in each case in a manner which is consistent with the then current
Business Plan;

 

91

--------------------------------------------------------------------------------

(viii) the Borrowers and their Subsidiaries may become liable with respect to
other Indebtedness with aggregate annual payments not to exceed $500,000; and

 

(ix) the Borrowers and their Subsidiaries may become liable with respect to
unsecured Indebtedness evidenced by the Nortel Note in an aggregate principal
amount not to exceed $2,321,117.00 at any one time outstanding.

 

SECTION 6.2. LIENS AND RELATED MATTERS.

 

A. Prohibition on Liens. No Borrower shall, nor shall any Borrower permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of any Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC of any State or under any similar recording or notice
statute, except Permitted Liens.

 

B. No Further Negative Pledges. No Borrower shall, nor shall any Borrower permit
any of its Subsidiaries to, enter into, assume or become subject to any
agreement prohibiting or otherwise restricting the creation or assumption of any
Lien upon its properties or assets for the purpose of securing the Obligations,
whether now owned or hereafter acquired, or requiring the grant of any security
for obligations relating to such agreement if security is given for the
Obligations, except (i) pursuant to this Agreement and the other Loan Documents,
and (ii) pursuant to customary restrictions and conditions contained in any
agreement relating to the sale of any Property permitted under Section 6.7,
pending the consummation of such sale.

 

SECTION 6.3. CHANGE OF OFFICE.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
change the location of its “principal place of business” or “chief executive
office” unless any Borrower shall have given the Administrative Agent at least
20 days’ prior written notice thereof and all action reasonably requested by the
Administrative Agent to protect and perfect the Liens and security interests in
the Collateral shall have been taken.

 

SECTION 6.4. CHANGE OF NAME.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
change its name unless any Borrower shall have given the Administrative Agent at
least 20 days’ prior written notice thereof and all action reasonably requested
by the Administrative Agent to protect and perfect the Liens and security
interests in the Collateral shall have been taken.

 

SECTION 6.5. INVESTMENTS; JOINT VENTURES; FORMATION OF SUBSIDIARIES.

 

A. Investments; Joint Ventures. No Borrower shall, nor shall any Borrower permit
any of its Subsidiaries to, directly or indirectly, make or own any Investment
in any

 

92

--------------------------------------------------------------------------------

Person, including any Joint Venture, or otherwise form or create any Subsidiary
(other than in accordance with Section 6.5.B.), except for Permitted
Investments.

 

B. Formation of Subsidiaries. No Borrower shall, nor shall any Borrower permit
any of its Subsidiaries to, create or acquire any new Subsidiary unless:

 

(i) the creation or acquisition of such new Subsidiary could not reasonably be
expected to have a Material Adverse Effect;

 

 

(ii) such new Subsidiary shall be or become a party to a guaranty in
substantially the form of the Subsidiary Guaranty Agreement attached hereto as
Exhibit K, with such modifications as the Administrative Agent may reasonably
request or consent to;

 

(iii) the applicable Borrower shall pledge, have pledged or cause or have caused
to be pledged to the Administrative Agent all of the outstanding shares of
Capital Stock or other ownership interests of such new Subsidiary owned directly
or indirectly by it, along with undated stock powers for such certificates,
executed in blank (or, if any such shares of Capital Stock or other ownership
interests are uncertificated, confirmation and evidence satisfactory to the
Administrative Agent that the security interest in such uncertificated
securities has been perfected by the Administrative Agent in accordance with
Article 8 of the UCC or any similar law which may be applicable); in order to
effect the foregoing, the applicable Borrower (or any Subsidiary thereof which
is the direct owner of such new Subsidiary) shall either enter into a pledge
agreement in substantially the form of the Subsidiary Pledge Agreement attached
hereto as Exhibit L or, if it has already entered into such a pledge agreement,
amend such pledge agreement in order to identify the Capital Stock and other
related collateral in respect of such new Subsidiary, and, in the case of a
Subsidiary incorporated or otherwise existing pursuant to the laws of any
jurisdiction other than the United States or any political subdivision thereof,
shall enter into a pledge agreement in form and substance reasonably
satisfactory to the Administrative Agent;

 

(iv) the applicable Borrower shall, and shall cause the new Subsidiary to, take
such other actions (including entering into a security agreement in
substantially the form of the Subsidiary Security Agreement attached hereto as
Exhibit M) as the Administrative Agent may reasonably request in order to
perfect a first priority security interest in favor of the Administrative Agent
in such types of collateral as were perfected with respect to the Borrower
Group;

 

(v) the Administrative Agent shall have received such opinions of legal counsel
for the Borrower Group relating to each of the matters identified in clauses
(ii), (iii), and (iv) above as the Administrative Agent shall reasonably
request, which legal opinions shall be in form and substance reasonably
satisfactory to the Administrative Agent; and

 

(vi) the Administrative Agent shall have received (a) certified copies of such
new Subsidiary’s certificate or articles of incorporation, together with a good

 

93

--------------------------------------------------------------------------------

standing certificate from the Secretary of State of the jurisdiction of its
incorporation and each other state in which such Person is qualified as a
foreign corporation to do business, each to be dated a recent date prior to
their delivery to the Administrative Agent, (b) a copy of such new Subsidiary’s
by-laws (or other operating agreement or governing document), certified by its
corporate secretary or an assistant secretary as of a recent date prior to their
delivery to the Administrative Agent and, (c) a certificate executed by the
secretary or an assistant secretary of such new Subsidiary certifying as to (1)
the fact that the attached resolutions of the Board of Directors or other
governing body of such new Subsidiary approving and authorizing the execution,
delivery and performance of any Loan Documents to which it is a party are in
full force and effect and have not been modified or amended and (2) the
incumbency and signatures of the officers of such new Subsidiary executing any
Loan Documents.

 

SECTION 6.6. FINANCIAL COVENANTS.

 

A. Minimum Consolidated Revenue. At the end of each Fiscal Quarter of the
Borrower Group, no Borrower shall permit the Consolidated Revenue for the
immediately preceding four Fiscal Quarters ending on any date set forth below to
be less than the amount set forth below opposite such date:

 

Date

--------------------------------------------------------------------------------

   Minimum Consolidated
Revenue
(in Dollars)

--------------------------------------------------------------------------------

September 30, 2002

   27,095,700

December 31, 2002

   24,818,600

March 31, 2003

   23,211,600

June 30, 2003

   22,695,200

September 30, 2003

   24,538,700

December 31, 2003

   27,011,000

March 31, 2004

   29,708,600

June 30, 2004

   32,527,400

September 30, 2004

   35,134,100

December 31, 2004

   37,689,200

March 31, 2005

   40,347,200

 

94

--------------------------------------------------------------------------------

 

June 30, 2005

   42,809,100

September 30, 20.05

   45,023,700

December 31, 2005

   46,969,700

March 31, 2006

   48,605,500

June 30, 2006

   50,162,100

September 30, 2006

   51,558,800

December 31, 2006

   52,777,800

 

B. Minimum Consolidated EBITDA. At the end of each Fiscal Quarter of the
Borrower Group, no Borrower shall permit the Consolidated EBITDA for the
immediately preceding four Fiscal Quarters ending on any date set forth below to
be less than the amount set forth below opposite such date:

 

Date

--------------------------------------------------------------------------------

   Minimum Consolidated
EBITDA
(in Dollars)

--------------------------------------------------------------------------------

September 30, 2002

     1,359,100

December 31, 2002

     1,805,000

March 31, 2003

     1,174,800

June 30, 2003

           31,600

September 30, 2003

     1,474,500

December 31, 2003

     3,459,400

March 31, 2004

     5,799,700

June 30, 2004

     8,242,500

September 30, 2004

   10,438,700

December 31, 2004

   12,570,900

March 31, 2005

   14,714,100

 

95

--------------------------------------------------------------------------------

June 30, 2005

   16,666,700

September 30, 2005

   18,382,100

December 31, 2005

   19,824,700

March 31, 2006

   26,561,700

June 30, 2006

   33,281,700

September 30, 2006

   39,914,800

December 31, 2006

   46,442,100

 

C. Maximum Cumulative Capital Expenditures. At the end of each Fiscal Quarter of
the Borrower Group, no Borrower shall permit Consolidated Capital Expenditures
for the period commencing on September 30, 2002 and ending on the dates set
forth below to be greater than the amounts set forth below:

 

Date

--------------------------------------------------------------------------------

   Maximum Cumulative
Consolidated Capital
Expenditures From September 30, 2002
(In Dollars)

--------------------------------------------------------------------------------

September 30, 2002

       550,000

December 31, 2002

     1,650,000

March 31, 2003

     3,186,700

June 30, 2003

     4,262,500

September 30, 2003

     5,404,300

December 31, 2003

     6,679,200

March 31, 2004

     8,284,100

June 30, 2004

     9,758,100

September 30, 2004

   10,968,100

December 31, 2004

   12,707,200

 

96

--------------------------------------------------------------------------------

March 31, 2005

   13,852,300

June 30, 2005

   15,130,500

September 30, 2005

   16,408,700

December 31, 2005

   17,754,000

March 31, 2006

   19,001,400

June 30, 2006

   20,279,600

September 30, 2006

   21,584,200

December 31, 2006

   22,914,100

 

D. Consolidated Leverage Ratio. At the end of each Fiscal Quarter of the
Borrower Group set forth below (after giving effect to any incurrence of
Indebtedness and any payment of principal of Indebtedness on such day), no
Borrower shall permit the Consolidated Leverage Ratio to be greater than the
ratios set forth below:

 

Date

--------------------------------------------------------------------------------

   Consolidated Leverage Ratio

--------------------------------------------------------------------------------

December 31, 2003

   6.50 to 1.00

March 31, 2004

   3.70 to 1.00

June 30, 2004

   2.50 to 1.00

September 30, 2004

   2.00 to 1.00

December 31, 2004

   2.00 to 1.00

March 31, 2005

   2.00 to 1.00

June 30, 2005

   2.00 to 1.00

September 30, 2005

   2.00 to 1.00

December 31, 2005

   2.00 to 1.00

March 31, 2006

   2.00 to 1.00

June 30, 2006

   2.00 to 1.00

 

97

--------------------------------------------------------------------------------

September 30, 2006

   2.00 to 1.00

December 31, 2006

   2.00 to 1.00

 

E. Consolidated Interest Coverage Ratio. At the end of each Fiscal Quarter of
the Borrower Group, no Borrower shall permit the Consolidated Interest Coverage
Ratio to be less than the ratios set forth below:

 

Date

--------------------------------------------------------------------------------

   Consolidated Interest
Coverage Ratio

--------------------------------------------------------------------------------

December 31, 2003

   2.80 to 1.00

March 31, 2004

   4.60 to 1.00

June 30, 2004

   6.50 to 1.00

September 30, 2004

   8.00 to 1.00

December 31, 2004

   8.00 to 1.00

March 31, 2005

   8.00 to 1.00

June 30, 2005

   8.00 to 1.00

September 30, 2005

   8.00 to 1.00

December 31, 2005

   8.00 to 1.00

March 31, 2006

   8.00 to 1.00

June 30, 2006

   8.00 to 1.00

September 30, 2006

   8.00 to 1.00

December 31, 2006

   8.00 to 1.00

 

F. Consolidated Fixed Charge Coverage Ratio. At the end of each Fiscal Quarter
of the Borrower Group, no Borrower shall permit the Consolidated Fixed Charge
Coverage Ratio to be less than the ratios set forth below:

 

98

--------------------------------------------------------------------------------

Date

--------------------------------------------------------------------------------

   Consolidated Fixed Charge
Coverage Ratio

--------------------------------------------------------------------------------

December 31, 2003

   1.70 to 1.00

March 31, 2004

   1.70 to 1.00

June 30, 2004

   1.70 to 1.00

September 30, 2004

   1.70 to 1.00

December 31, 2004

   1.70 to 1.00

March 31, 2005

   1.70 to 1.00

June 30, 2005

   1.70 to 1.00

September 30, 2005

   1.70 to 1.00

December 31, 2005

   1.70 to 1.00

March 31, 2006

   2.00 to 1.00

June 30, 2006

   2.00 to 1.00

September 30, 2006

   2.00 to 1.00

December 31, 2006

   2.00 to 1.00

 

SECTION 6.7. RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
alter the corporate, capital or legal structure of such Borrower or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sublease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all of the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:

 

(i) each Borrower and its Subsidiaries may dispose of obsolete, worn out or
surplus assets or assets no longer used or useful in the business of such
Borrower and any of its Subsidiaries in each case to the extent made in the
ordinary course of business, provided that either (i) such disposal does not
materially adversely affect any

 

99

--------------------------------------------------------------------------------

portion of such Borrower’s or such Subsidiary’s business, as applicable, or (ii)
prior to or within twelve months following such disposal, any such property
shall be replaced with other property of substantially equal utility and a value
at least substantially equal to that of the replaced property when first
acquired and free from any security of any other Person, subject only to
Permitted Liens, and by such removal and replacement such Borrower and its
Subsidiaries shall be deemed to have subjected such replacement property to the
lien of the Collateral Documents in favor of the Secured Parties, as applicable;

 

(ii) each Borrower and its Subsidiaries may sell or otherwise dispose of assets
in transactions that do not constitute “Asset Sales”, provided that the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof; and provided, further, that no Borrower nor any
of its Subsidiaries may lease or sublease to other Persons any portion of such
Borrower’s or any of its Subsidiaries’ interest in any of its Facilities, unless
each such lease or sublease (a) is made in the ordinary course of business and
is in connection with the provision of co-location services by any Borrower or
any of its Subsidiaries and (b) does not interfere in any material respect with
the ordinary conduct of the business of any Borrower or any of its Subsidiaries;
or

 

(iii) any Borrower or any of its Subsidiaries may sell, transfer, lease or
dispose of telecommunications capacity on the System, provided, that each such
sale, transfer, lease or disposition is on commercially reasonable terms and is
in the ordinary course of business (as reasonably determined by any such
Borrower or any such Subsidiary).

 

Notwithstanding the foregoing provisions of this Section 6.7., each of the
clauses in this Section 6.7. shall be subject to the additional proviso that no
Event of Default or Potential Event of Default shall exist and be continuing at
the time of such transaction or would occur as a result of entering into such
transaction (or immediately after any renewal or extension thereof at the option
of any Borrower or any of its Subsidiaries). Further, the proceeds or the Net
Asset Sale Proceeds of any lease or transaction of the nature described in each
of the clauses to this Section 6.7. shall be applied in accordance with the
provisions of Section 2.5.C.

 

SECTION 6.8. SALES AND LEASE-BACKS.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which any Borrower or any of its Subsidiaries has sold
or transferred or is to sell or transfer to any other Person or (ii) which any
Borrower or any of its Subsidiaries intends to use for substantially the same
purpose as any other property which has been or is to be sold or transferred by
any Borrower or any of its Subsidiaries to any Person in connection with such
lease.

 

100

--------------------------------------------------------------------------------

SECTION 6.9. SALE OR DISCOUNT OF RECEIVABLES.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable
provided, however, that the Borrowers shall be permitted to engage a collection
agency for the collection of accounts receivable that have been fully reserved
for by the Borrowers and that do not, in the aggregate, exceed $500,000, and to
pay such firm reasonable and customary fees which may be based on the amounts
recovered by such firm.

 

SECTION 6.10. TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity Securities of any
Borrower or with any Affiliate of any Borrower or of any such holder, except:

 

(i) transactions that are on terms that are not less favorable to such Borrower
or such Subsidiary, as the case may be, than those that might be obtained at the
time from Persons who are not such a holder or Affiliate as long as (a) the
Borrowers have delivered to the Administrative Agent (1) with respect to any
transaction involving an amount in excess of $1,000,000 an Officers Certificate
certifying that such transaction complies with this Section 6.10. at the time
such transaction is entered into, (2) with respect to any transaction involving
an amount in excess of $5,000,000 a resolution adopted by a majority of the
disinterested non-employee directors of the applicable Borrower or Subsidiary
approving such transaction and an Officers Certificate certifying that such
transaction complies with this Section 6.10. at the time such transaction is
entered into and (b) with respect to any such transaction that involves
aggregate payments in excess of $10,000,000, either (1) an opinion as to the
fairness to the applicable Borrower or applicable Subsidiary from a financial
point of view issued by a qualified independent accounting or appraisal firm of
nationally recognized standing at the time such transaction is entered into or
(2) the receipt of the prior written consent of the Majority Lenders;

 

(ii) any Material Contract in existence as of the Closing Date;

 

(iii) any employment, indemnification, noncompetition or confidentiality
agreement entered into by any Borrower or any of its Subsidiaries with their
employees or directors in the ordinary course of business;

 

(iv) the payment of normal compensation, fees and reimbursement of expenses of
officers and directors of any Borrower and its Subsidiaries who are not
employees of any Borrower or its Subsidiaries; and

 

(v) transactions between or among members of the Borrower Group. Notwithstanding
anything to the contrary in this Section 6.10 and for the avoidance of doubt,
the Borrowers are hereby expressly permitted to make all payments required or

 

101

--------------------------------------------------------------------------------

permitted to made to the Lenders under this Agreement and the Lender Common
Stock Conversion Documents.

 

SECTION 6.11. DISPOSAL OF STOCK.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
directly or indirectly sell, assign, pledge or otherwise encumber or dispose of
any shares of Capital Stock or other equity Securities of any Borrower or any of
its Subsidiaries.

 

SECTION 6.12. CERTAIN RESTRICTIONS ON CHANGES TO CHARTER DOCUMENTS.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
amend, supplement or otherwise modify, or permit the amendment, modification or
supplementation of its certificate or articles of incorporation, certificate of
formation or by-laws or other organizational documents (including any limited
liability company agreement) in a manner which is inconsistent with or violates
the terms of or could reasonably be expected to prevent compliance with any of
the terms of any Loan Document or any Material Contract or could reasonably be
expected to result in a Material Adverse Effect.

 

SECTION 6.13. CERTAIN RESTRICTIONS IN RESPECT OF MATERIAL CONTRACTS.

 

A. Termination, amendment or modification. No Borrower shall, nor shall any
Borrower permit any of its Subsidiaries to, agree to any amendment, modification
or termination of any Material Contract if any such amendment, modification or
termination could reasonably be expected to have a Material Adverse Effect. In
addition, no Borrower shall, nor shall any Borrower permit any of its
Subsidiaries to, assign or transfer any of its material rights or obligations
under any of the Material Contracts, other than an assignment or transfer to any
Borrower or a wholly-owned Subsidiary of any Borrower.

 

B. Security Interest in Material Contracts. No Borrower shall, nor shall any
Borrower permit any of its Subsidiaries to, enter into any Material Contract
(other than any of the Tishman Licenses) if such agreement (i) prohibits the
granting to the Administrative Agent or any Lender a lien thereon, (ii) does not
contain a consent by the counterparty thereto to the collateral assignment by
such Borrower or such Subsidiary of its right, title and interest in such
Material Contract in favor of the Administrative Agent, for the benefit of the
Secured Parties, or (iii) otherwise unreasonably restricts or inhibits the
Administrative Agent’s or any Lender’s ability to realize the benefit of any
lien on any of the Collateral.

 

C. Material Contracts and the Parent. No Borrower shall, nor shall any Borrower
permit any of its Subsidiaries to, assign, delegate or transfer any of its
rights or obligations under any Material Contract to which it is a party to the
Parent.

 

SECTION 6.14. LIMITATIONS ON RESTRICTED ACTIONS.

 

Except as provided herein, no Borrower shall, nor shall any Borrower permit any
of its Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual

 

102

--------------------------------------------------------------------------------

encumbrance or restriction of any kind on the ability of any of the Borrower’s
respective Subsidiaries to (i) pay dividends or make any other distributions on
any of such Subsidiary’s Capital Stock owned by any Borrower or any other
Subsidiary of any Borrower, (ii) repay or prepay any Indebtedness owed by any
such Subsidiary to any Borrower or any other Subsidiary of any Borrower, (iii)
make loans or advances to any Borrower, or (iv) transfer any of its property or
assets to any Borrower other than as provided herein or in the other Loan
Documents.

 

SECTION 6.15. NATURE OF BUSINESS.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
substantively alter the character or conduct of the business conducted by each
Borrower and each such Subsidiary as of the Closing Date, except as contemplated
by the Business Plan. No Borrower shall, nor shall any Borrower permit any of
its Subsidiaries to, conduct its business in, or expand the System to include,
any location other than New York City, Chicago and Los Angeles unless such
conduct or expansion is (i) consistent with the Business Plan (as the same may
be updated by the Borrowers, upon the consent of the Required Lenders) and (ii)
approved by the Lenders; provided, however, that (a) any Borrower or any of its
Subsidiaries may use up to $2,000,000 of the proceeds of the Loans in connection
with the acquisition of Telecommunications Assets in a manner which is
inconsistent with the then current Business Plan without the consent of the
Lenders and, (b) notwithstanding anything to the contrary herein, the proceeds
of the Loans may be used by any Borrower and its respective Subsidiaries in
connection with their “offnet” businesses (as such term is used in the then
current Business Plan), provided that such use is included in the then current
Business Plan.

 

SECTION 6.16. FISCAL YEAR.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
change the end of its Fiscal Year from December 31.

 

SECTION 6.17. CURRENCY.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
enter into any contracts, agreements or other arrangements pursuant to which
payments may be rendered to any Borrower or any of its Subsidiaries in
currencies other than Dollars.

 

SECTION 6.18. RESTRICTED PAYMENTS.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
declare or make any Restricted Payment or any payment in connection with any tax
sharing arrangement except for (a) Restricted Payments by any such Subsidiary of
a Borrower to any Borrower, or to any parent of a Subsidiary that is, directly
or indirectly, wholly owned by any Borrower, (b) distributions by any Borrower
or any of its Subsidiaries in respect of its Capital Stock which are payable
solely in additional Capital Stock which is subject to a first priority Lien in
favor of the Administrative Agent and (c) payments by any Borrower to the Parent
in an amount not to exceed $150,000 made in connection with the redemption by
the Parent of up to 1,488,000 warrants issued by the Parent to certain investors
and other parties pursuant to warrant

 

103

--------------------------------------------------------------------------------

agreements with each such investor or other party dated as of February 1, 2001
in connection with the directed public offering completed by the Parent on or
about February 1, 2001.

 

SECTION 6.19. PLEDGED ACCOUNTS.

 

No Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
have on deposit in or credited to any depository account or securities account
(each within the meaning of the UCC) (other than any Account) Cash or Cash
Equivalents in an aggregate amount at any one time outstanding in excess of
$600,000.

 

ARTICLE VII.

EVENTS OF DEFAULT

 

Each of the following events or occurrences set forth in Section 7.1 through
7.19 shall constitute an “Event of Default”:

 

SECTION 7.1. FAILURE TO MAKE PAYMENTS WHEN DUE.

 

Any Borrower shall fail to pay any principal of any Loan when and as the same
shall become due and payable; or any Borrower shall fail to pay any interest on
any Loan or any fee payable under this Agreement or any other Loan Document when
and as the same shall become due and payable, and such failure shall continue
unremedied for a period of three days; or any Borrower or any of its
Subsidiaries shall fail to pay any other amount payable under this Agreement or
any other Loan Document when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of five days; or

 

SECTION 7.2. DEFAULT UNDER OTHER INDEBTEDNESS.

 

Any Borrower or any of its Subsidiaries shall fail to pay when due any principal
of or interest on or any other amount payable in respect of one or more items of
Indebtedness (other than Indebtedness referred to in Section 7.1.) in an
individual or aggregate principal amount of $1,000,000 or more beyond the end of
any grace period provided therefor; or (ii) shall breach or default in its
obligations with respect to any other material term of (a) one or more items of
Indebtedness in the individual or aggregate principal amounts referred to in
clause (i) above or (b) any loan agreement, mortgage, indenture or other
agreement relating to such item(s) of Indebtedness, if the effect of such breach
or default is to cause, or to permit the holder or holders of that Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause, that
Indebtedness to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may be
(upon the giving or receiving of notice, lapse of time, both, or otherwise); or

 

SECTION 7.3. BREACH OF WARRANTY.

 

Any representation or warranty made or deemed made by any Borrower or any member
of the Borrower Group in this Agreement, or in any other Loan Document to which
it is a party or in any certificate delivered by any Borrower or any member of
the Borrower Group pursuant to this Agreement or any other Loan Document shall
prove to have been false or misleading in any material respect as of the time
made or deemed made and, in respect of unintentional

 

104

--------------------------------------------------------------------------------

misrepresentations made or deemed made after the Closing Date, if such
representation is capable of being corrected as of a subsequent date, such
misrepresentation shall not have been corrected as of a day within 30 days (or
if such misrepresentation could not reasonably be expected to have a Material
Adverse Effect, within 60 days) of any member of the Borrower Group becoming
aware of such misrepresentation; or

 

SECTION 7.4. INVOLUNTARY BANKRUPTCY PROCEEDING, ETC.

 

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

 

SECTION 7.5. VOLUNTARY BANKRUPTCY PROCEEDING, ETC.

 

Any member of the Borrower Group shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under
any Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect, (ii) consent to the institution of any
proceeding or petition described in Section 7.4., (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any member of the Borrower Group, or, in each such case,
for a substantial part of any such member’s assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing; or

 

SECTION 7.6. JUDGMENTS AND ATTACHMENTS.

 

Any judgment (i) for the payment of money in an aggregate amount (not paid or
covered by insurance) in excess of $1,000,000 shall be entered or filed against
any member of the Borrower Group or any of such member’s assets and shall remain
unpaid and undischarged, unvacated, unbonded or unstayed for a period of 60 days
(or in any event later than five days prior to the date of any proposed sale of
the respective assets thereunder), or (ii) shall be entered in the form of an
injunction or similar form of relief requiring suspension or abandonment of the
Telecommunications Business of any member of the Borrower Group and such
injunction or similar relief requiring suspension or abandonment of the
Telecommunications Business of any member of the Borrower Group and such
injunction or similar relief shall not have been stayed, discharged or vacated
within 60 days; or

 

SECTION 7.7. DISSOLUTION.

 

Any order, judgment or decree shall be entered against any member of the
Borrower Group decreeing the dissolution or split up of any member of the
Borrower Group and such order shall remain undischarged or unstayed for a period
in excess of 30 days; or

 

SECTION 7.8. CHANGE IN CONTROL.

 

105

--------------------------------------------------------------------------------

A Change in Control shall have occurred; or

 

SECTION 7.9. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS.

 

(i) Any Borrower or any other member of the Borrower Group shall fail to perform
or comply with any of its negative covenants (including those set forth in
Article VI of this Agreement) contained in any Loan Document to which it is a
party; provided, however, that if the completion of UCC searches with respect to
any member of the Borrower Group that were ordered on or prior to the Closing
Date by counsel to the Lenders but were not received on or prior to the Closing
Date shall reveal any Liens which are not Permitted Liens, the Borrowers shall
have 30 days from the date of the receipt of any such search so revealing any
such Lien to terminate such Lien, during which time the Borrowers’ failure to
comply with Section 6.2 shall not constitute an Event of Default; or

 

(ii) Any Borrower or any other member of the Borrower Group shall fail to
observe or perform any covenant or agreement contained in this Agreement or any
other Loan Document to which it is a party (other than those specified in
Section 7.1. and 7.3. above or in clause (i) of this Section 7.9.), and such
failure in any case shall continue unremedied or unwaived for a period of 30
days after any Borrower or such member receives written notice thereof from the
Administrative Agent; provided, however, if, with respect to this clause (ii),
(a) such failure cannot be cured within such 30 day period despite such
Borrower’s or such member’s best efforts to do so, (b) such failure is
susceptible of cure, (c) such Borrower or such member is continuously proceeding
with diligence and in good faith to cure such failure and (d) the existence of
such failure has not had and could not reasonably be expected to have a Material
Adverse Effect, then such 30 day cure period shall be extended to such date, not
to exceed a 90 day cure period in the aggregate, as shall be necessary for such
Borrower or such member to cure such failure; or

 

SECTION 7.10. IMPAIRMENT OF MATERIAL CONTRACT.

 

Any Material Contract shall cease to be valid and binding and in full force and
effect; provided that, an Event of Default shall occur under this Section only
if the failure of such Material Contract to remain valid and binding and in full
force and effect could reasonably be expected to have a Material Adverse Effect;
or

 

SECTION 7.11. DEFAULT UNDER OR TERMINATION OF MATERIAL CONTRACTS.

 

Any of the Material Contracts shall terminate or be terminated or canceled prior
to its stated expiration date or any member of the Borrower Group shall be in
default (after the giving of any applicable notice and the expiration of any
applicable grace period) under any of the Material Contracts; provided that a
default under or termination or cancellation of any Material Contracts shall
constitute an Event of Default hereunder only if such default or termination
could reasonably be expected to have a Material Adverse Effect; or

 

106

--------------------------------------------------------------------------------

SECTION 7.12. DEFAULT UNDER OR TERMINATION OF GOVERNMENTAL ACTIONS.

 

Any member of the Borrower Group shall fail to observe, satisfy or perform, or
there shall be a violation or breach of, any of the material terms, provisions,
agreements, covenants or conditions attaching to or under any material
Governmental Action held by any member of the Borrower Group, or any such
Governmental Action or any material provision thereof shall be terminated or
fail to be in full force and effect, or any Governmental Instrumentality shall
challenge or seek to revoke any such Governmental Action, if such failure to
observe, satisfy or perform, breach or termination or challenge or revocation
could reasonably be expected to have a Material Adverse Effect; or

 

SECTION 7.13. FAILURE OF GUARANTY; REPUDIATION OF OBLIGATIONS.

 

At any time after the execution and delivery thereof, (i) any material provision
of any Loan Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Obligations or any other termination
of a Loan Document in accordance with the terms hereof or thereof) or any Loan
Document shall be declared null and void by a Governmental Instrumentality of
competent jurisdiction, (ii) the Administrative Agent shall not have or shall
cease to have a valid and perfected first priority Lien in the Collateral for
any reason, or (iii) any member of the Borrower Group shall contest the validity
or enforceability of any Loan Document in writing or deny in writing that it has
any further liability prior to the indefeasible payment in full of all
Obligations and the termination of all Commitments, including with respect to
future advances by the Lenders, under any Loan Document to which it is a party;
or

 

SECTION 7.14. CRIMINAL PROCEEDING.

 

A criminal proceeding shall be commenced or a criminal indictment shall be filed
against any member of the Borrower Group, which proceeding or indictment, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.

 

SECTION 7.15. ERISA.

 

Any of the following events or conditions, if such event or condition could
reasonably be expected to have a Material Adverse Effect: (i) any “accumulated
funding deficiency,” as such term is defined in Section 302 of ERISA and Section
412 of the Code, whether or not waived, shall exist with respect to any Plan, or
any lien shall arise on the assets of any member of the Borrower Group or any
ERISA Affiliate in favor of the PBGC or a Plan; (ii) an ERISA Event shall occur
with respect to a Single Employer Plan, which is, in the reasonable opinion of
the Administrative Agent, likely to result in the termination of such Plan for
purposes of Title IV of ERISA; (iii) an ERISA Event shall occur with respect to
a Multiemployer Plan or Multiple Employer Plan, which is, in the reasonable
opinion of the Administrative Agent, likely to result in (a) the termination of
such Plan for purposes of Title IV of ERISA, or (b) any member of the Borrower
Group or any ERISA Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the meaning of Section 4241 of
ERISA), or insolvency (within the meaning of Section 4245 of ERISA) of such
Plan; or (iv) any prohibited transaction (within

 

107

--------------------------------------------------------------------------------

the meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility shall occur which may subject any member of the
Borrower Group or any ERISA Affiliate to any liability under Sections 406, 409,
502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any agreement
or other instrument pursuant to which any member of the Borrower Group or any
ERISA Affiliate has agreed or is required to indemnify any person against any
such liability.

 

SECTION 7.16. RECEIPT OF GOVERNMENTAL ACTIONS.

 

Local Fiber shall have failed to (i) make within 10 Business Days after the
Closing Date any and all applicable filings with the New York Public Service
Commission or otherwise in connection with the amendment and restatement of its
Subsidiary Security Agreement and Subsidiary Guaranty Agreement and the increase
in the Commitment hereunder, (ii) receive within 90 days of the Closing Date any
and all applicable Governmental Actions associated therewith or (iii) have
delivered within 90 days of the Closing Date any ancillary documentation (such
as resolutions and opinions of counsel) reasonably requested by the
Administrative Agent with respect thereto.

 

SECTION 7.17. PARENT LETTER AGREEMENT.

 

The Parent shall fail to observe, satisfy or perform, or there shall be a
violation or breach of, any of the terms, provisions, agreements, covenants or
conditions set forth in the Parent Letter Agreement, and such failure shall
continue unremedied for a period of five Business Days.

 

SECTION 7.18. CONSENTS.

 

The Borrowers shall have failed to deliver or to cause to be delivered to the
Administrative Agent by the sixtieth day after the Closing Date a Consent in
form and substance reasonably satisfactory to the Administrative Agent in
respect of each other Material Contract set forth on Schedule 4.9.B hereto
(other than the Agreement of Lease, dated February 29, 2000, as amended, between
111 Eighth Avenue LLC and FiberNet).

 

SECTION 7.19. SDS MERCHANT EQUITY CONTRIBUTION.

 

The Parent shall have opted out of the Second Closing or Third Closing of the
SDS Merchant Equity Contribution without the prior written consent of the
Majority Lenders.

 

SECTION 7.20. KEY OFFICER.

 

Michael Liss shall have failed for a period of 30 days to participate in the
affairs of the Parent as the Chief Executive Officer thereof, or shall, despite
continuing to hold the title of Chief Executive Officer of the Parent, no longer
have the responsibilities and authority related to such executive management
position as of the date of the Seventh Amendment, in each case, for any reason
other than the death or disability of Michael Liss.

 

108

--------------------------------------------------------------------------------

SECTION 7.21. REMEDIES.

 

Upon the occurrence of any Event of Default described in Section 7.4. or 7.5.,
each of (i) the unpaid principal amount of and accrued interest on the Loans and
(ii) all other Obligations shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by each Borrower, and the Commitments
and obligation of each Lender to make any Loan or the Issuing Bank to issue any
Letter of Credit shall thereupon terminate. Upon the occurrence and during the
continuation of any other Event of Default, the Administrative Agent may, and
upon the written request or with the written consent of the Majority Lenders
shall, by written notice to the Borrowers, declare all or any portion of the
amounts described in clauses (i) and (ii) above to be, and the same shall
forthwith become, immediately due and payable, and the Commitments and
obligation of each Lender to make any Loan or the Issuing Bank to issue any
Letter of Credit shall thereupon terminate. Any amounts described in clause (ii)
above, when received by the Administrative Agent, shall be held by the
Administrative Agent pursuant to a cash collateral arrangement reasonably
satisfactory to the Administrative Agent. Nothing herein shall limit the
Administrative Agent, for the benefit of the Secured Parties, to exercise any
other rights or remedies available to it or the Secured Parties at law or in
equity.

 

Furthermore, upon the occurrence of any Event of Default, the Administrative
Agent may direct any Borrower to pay (and each Borrower agrees that upon receipt
of such notice, or upon the occurrence of an Event of Default under either
Section 7.4. or 7.5 it shall immediately pay) to the Administrative Agent
additional cash, to be held by the Administrative Agent as cash collateral, for
the benefit of the Lenders, as additional security for the Letter of Credit
Obligations in respect of subsequent drawings under all then outstanding Letters
of Credit in an amount equal to the maximum aggregate amount which may be drawn
under all Letters of Credits then outstanding.

 

ARTICLE VIII.

AGENTS

 

SECTION 8.1. APPOINTMENT.

 

A. Appointment of Agents. (i) DBAG is hereby appointed administrative agent,
(ii) TD is hereby appointed syndication agent, (iii) First Union is hereby
appointed documentation agent and (iv) Bankers Trust Company is hereby appointed
securities intermediary, in each case under this Agreement and under the other
Loan Documents and each Lender hereby authorizes the Administrative Agent to act
as its agent in accordance with the terms of this Agreement and the other Loan
Documents with such powers and rights as are expressly delegated hereby,
together with such other powers and rights as are reasonably incidental thereto,
provided, that (i) the Syndication Agent shall act as syndication agent with
respect to all matters related thereto, (ii) the Documentation Agent shall act
as documentation agent with respect to all matters related thereto and (iii) the
Securities Intermediary shall act as securities intermediary under each Control
Agreement. The Agents each agree to act upon the express conditions contained in
this Agreement and the other Loan Documents, as applicable. The provisions of
this Section 8.1. are solely for the benefit of the Agents and the Lenders; no
Borrower shall have any rights as a third party beneficiary of any of the
provisions of this Section. In performing their functions and

 

109

--------------------------------------------------------------------------------

duties under the Loan Documents, the Agents shall act solely as an agent of the
Lenders and each Agent does not assume and shall not be deemed to have assumed
any obligation towards or relationship of agency or trust with or for any
Borrower or any of its Subsidiaries.

 

B. Appointment of Supplemental Agents. It is the purpose of this Agreement and
the other Loan Documents that there shall be no violation of any Legal
Requirement of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the enforcement
of any of the Loan Documents, or in case the Administrative Agent deems that by
reason of any present or future Legal Requirement of any jurisdiction it may not
exercise any of the rights, powers or remedies granted herein or in any of the
other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Administrative
Agent appoint an additional individual or institution as a separate trustee,
co-trustee, collateral agent or collateral co-agent (any such additional
individual or institution being referred to herein individually as a
“Supplemental Agent” and collectively as “Supplemental Agents”).

 

In the event that the Administrative Agent appoints a Supplemental Agent with
respect to any Collateral, (i) each and every right, power, privilege or duty
expressed or intended by this Agreement or any of the other Loan Documents to be
exercised by or vested in or conveyed to the Administrative Agent with respect
to such Collateral shall be exercisable by and vest in such Supplemental Agent
to the extent, and only to the extent, necessary to enable such Supplemental
Agent to exercise such rights, powers and privileges with respect to such
Collateral and to perform such duties with respect to such Collateral, and every
covenant and obligation contained in the Loan Documents and necessary to the
exercise or performance thereof by such Supplemental Agent shall run to and be
enforceable by either the Administrative Agent or such Supplemental Agent, and
(ii) the provisions of this Section 8.1. and of Sections 9.2. and 9.3. that
refer to the Administrative Agent shall inure to the benefit of such
Supplemental Agent and all references therein to the Administrative Agent shall
be deemed to be references to the Administrative Agent and/or such Supplemental
Agent, as the context may require.

 

Should any instrument in writing from any Borrower or any other member of the
Borrower Group be required by any Supplemental Agent so appointed for more fully
and certainly vesting in and confirming to it such rights, powers, privileges
and duties, each Borrower shall, or shall cause such member of the Borrower
Group to, execute, acknowledge and deliver any and all such instruments promptly
upon request by the Administrative Agent. In case any Supplemental Agent, or a
successor thereto, shall die, become incapable of acting, resign or be removed,
all the rights, powers, privileges and duties of such Supplemental Agent, to the
extent permitted by applicable Legal Requirement, shall vest in and be exercised
by the Administrative Agent until the appointment of a new Supplemental Agent.

 

SECTION 8.2. POWERS AND DUTIES; GENERAL IMMUNITY.

 

A. Powers; Duties Specified. Each Lender irrevocably authorizes the
Administrative Agent to take such action on such Lender’s behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are specifically delegated

 

110

--------------------------------------------------------------------------------

or granted to the Administrative Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental thereto. The
Administrative Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. The
Administrative Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. The Administrative Agent
shall not have, by reason of this Agreement or any of the other Loan Documents,
a fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any of the other Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon the Administrative Agent any obligations
in respect of this Agreement or any of the other Loan Documents except as
expressly set forth herein or therein.

 

B. No Responsibility for Certain Matters. No Agent shall be responsible to any
Lender for the perfection of any security interest, or the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any other Loan Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statements or in any financial or other statements,
instruments, reports or certificates or any other documents furnished or made by
any Agent to the Lenders or by or on behalf of the Borrower to any Agent or any
Lender in connection with the Loan Documents and the transactions contemplated
thereby or for the financial condition or business affairs of any Borrower or
any other Person liable for the payment of any Obligations, nor shall any Agent
be required to ascertain or inquire as to the performance or observance of any
of the terms, conditions, provisions, covenants or agreements contained in any
of the Loan Documents or as to the use of the proceeds of the Loans or as to the
existence or possible existence of any Event of Default or Potential Event of
Default. Anything contained in this Agreement to the contrary notwithstanding,
no Agent shall have any liability arising from confirmations of the amount of
outstanding Loans or Letters of Credit or the component amounts thereof.

 

C. Exculpatory Provisions. None of the Agents nor any of their respective
officers, directors, employees or agents shall be liable to the Lenders for any
action taken or omitted by any such Agent under or in connection with any of the
Loan Documents except to the extent caused by such Agent’s gross negligence or
willful misconduct. The Agents shall be entitled to refrain from any act or the
taking of any action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents or from the exercise of
any power, discretion or authority vested in it hereunder or thereunder unless
and until such Agent shall have received instructions in respect thereof from
the Majority Lenders (or such other Lenders as may be required to give such
instructions under Section 9.6.) and, upon receipt of such instructions from the
Majority Lenders (or such other Lenders, as the case may be), such Agent shall
be entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such instructions.
Without limiting the generality of the foregoing, (i) each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for any member of the Borrower Group),
accountants, experts and other professional advisors selected by it and (ii) no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of the

 

111

--------------------------------------------------------------------------------

Majority Lenders (or such other Lenders as may be required to give such
instructions under Section 9.6.).

 

D. Agents Entitled to Act as Lender. The agencies hereby created shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans or Letters of Credit, each Agent
shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term “Lender” or “the Lenders” or any similar
term shall, unless the context clearly otherwise indicates, include each Agent
in its individual capacity as a Lender. Each Agent and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with any Borrower or any of its Affiliates
as if it were not performing the duties specified herein, and may accept fees
and other consideration from any Borrower for services in connection with this
Agreement and otherwise without having to account for the same to the Lenders.

 

SECTION 8.3. REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF

         CREDITWORTHINESS.

 

Each Lender represents and warrants to the Agents and each other Lender that it
has made its own independent investigation of the financial condition and
affairs of the Borrower Group in connection with the extension of the
Commitments, the making of the Loans and the issuance of the Letters of Credit
hereunder and that it has made and shall continue to make its own appraisal of
the creditworthiness of the Borrower Group. No Agent shall have any duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of the Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and no Agent shall have any responsibility with respect to the
accuracy of or the completeness of any information provided to the Lenders.

 

SECTION 8.4. RIGHT TO INDEMNITY.

 

Each Lender, in proportion to its Pro Rata Share of the Loans, severally agrees
to indemnify each Agent, to the extent that each Agent shall not have been
reimbursed by any member of the Borrower Group, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against any Agent in exercising its powers, rights and remedies or performing
its duties hereunder or under the other Loan Documents or otherwise in its
capacity as Agent in any way relating to or arising out of this Agreement or the
other Loan Documents; provided 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 such Agent’s gross
negligence or willful misconduct. If any indemnity furnished to any Agent for
any purpose shall, in the opinion of such Agent, be insufficient or become
impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.

 

112

--------------------------------------------------------------------------------

SECTION 8.5. SUCCESSOR AGENTS.

 

Any Agent may resign at any time by giving 30 days’ prior written notice thereof
to the Lenders and the Borrowers, and any Agent may be removed at any time with
or without cause by an instrument or concurrent instruments in writing delivered
to the Borrowers and the Agent and signed by the Required Lenders. Upon any such
notice of resignation or any such removal, the Required Lenders shall have the
right, upon five Business Days’ notice to the Borrowers, to appoint a successor
Agent (provided that such successor is or simultaneously therewith becomes a
Lender). If no successor Agent shall have been so appointed by the Required
Lenders within such 30 day period, then the retiring Agent may, on behalf of the
Secured Parties, petition a court of competent jurisdiction for a successor or
it may appoint a successor Agent, which shall (i) be authorized under the laws
of the jurisdiction of its incorporation to exercise corporation trust powers or
be a bank, (ii) have a combined capital and surplus of at least five hundred
million dollars ($500,000,000), and (iii) be acceptable to the Majority Lenders
(provided that, if the Majority Lenders do not (a) confirm such acceptance in
writing within 30 days following the selection of such successor by the Agent or
(b) select another Agent within such 30 day period, then the Majority Lenders
shall be deemed to have given such acceptance and such successor shall be deemed
appointed as the applicable Agent hereunder).

 

Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
that successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Agent and the
retiring or removed Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Agent’s resignation or
removal hereunder as Agent, the provisions of this Article VIII. shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.

 

SECTION 8.6. COLLATERAL DOCUMENTS AND SUBSIDIARY GUARANTIES.

 

Each Lender hereby further authorizes the Administrative Agent, on behalf of and
for the benefit of the Lenders, to enter into each Collateral Document as
secured party or beneficiary (as applicable), and each Lender agrees to be bound
by the terms of each Collateral Document; provided that the Administrative Agent
shall not (i) enter into or consent to any material amendment, modification,
termination or waiver of any provision contained in any Collateral Document or
(ii) release any Collateral (except as otherwise expressly permitted or required
pursuant to the terms of this Agreement or the applicable Collateral Document),
in each case without the prior consent of the Required Lenders (or, if required
pursuant to Section 9.6., all the Lenders); provided further, however, that,
without further written consent or authorization from the Lenders, the
Administrative Agent may execute any documents or instruments necessary to (a)
release any Subsidiary from its Subsidiary Guaranty Agreement to the extent all
of the stock of such Subsidiary is sold in a transaction permitted under this
Agreement or otherwise consented to by the Required Lenders in accordance with
Section 9.6. and (b) release any Lien encumbering any item of Collateral that is
the subject of a sale or other disposition of assets permitted by this Agreement
or to which the Required Lenders have otherwise consented in accordance with
Section 9.6. Anything contained in any of the Loan Documents to the contrary
notwithstanding, each Borrower, the Administrative Agent and each Lender hereby
agree that (x) no Lender shall have any right individually to realize upon any
of the Collateral under any

 

113

--------------------------------------------------------------------------------

Collateral Document, it being understood and agreed that all powers, rights and
remedies under the Collateral Documents may be exercised solely by the
Administrative Agent for the benefit of the Lenders in accordance with the terms
thereof, and (y) in the event of a foreclosure by the Administrative Agent on
any of the Collateral pursuant to a public or private sale, the Administrative
Agent or any Lender may be the purchaser of any or all of such Collateral at any
such sale and the Administrative Agent, as agent for and representative of the
Lenders (but not any Lender or the Lenders in its or their respective individual
capacities unless the Majority Lenders shall otherwise agree in writing) shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply any of the Obligations as a credit on account of the
purchase price for any collateral payable by the Administrative Agent at such
sale.

 

ARTICLE IX.

MISCELLANEOUS

 

SECTION 9.1. ASSIGNMENTS AND PARTICIPATIONS IN LOANS.

 

A. General. Subject to Section 9.1.B., any Lender shall have the right at any
time to (i) sell, assign or transfer to any Eligible Assignee, or (ii) sell
participations to any Eligible Assignee or, with the approval of the Borrowers
(which shall not be unreasonably withheld or delayed) to any other Person in,
all or any part of its Commitments or any Loan or Loans made by it or any Letter
of Credit Obligations owed to it or participations therein or any other interest
herein or in any other Obligations owed to it; provided that no such sale,
assignment, transfer or participation shall, without the consent of the
Borrowers, require any Borrower to file a registration statement with the
Securities and Exchange Commission or apply to qualify such sale, assignment,
transfer or participation under the securities laws of any state; provided,
further that no such sale, assignment or transfer described in clause (i) above
shall be effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted and recorded by the
Administrative Agent in the Register as provided in Section 9.1.B.(ii). Except
as otherwise provided in this Section 9.1., no Lender shall, as between the
Borrowers and such Lender, be relieved of any of its obligations hereunder as a
result of any sale, assignment or transfer of, or any granting of participations
in, all or any part of its Commitments or the Loans or participations therein,
or the other Obligations owed to such Lender.

 

B. Assignments.

 

(i) Amounts and Terms of Assignments. Each Commitment, Loan, or participation
therein, or other Obligation owed to any Lender, may (a) be assigned in any
amount, at any time, to another Lender, or to an Affiliate of the assigning
Lender or another Lender, with the giving of notice to the Borrowers and the
Administrative Agent or (b) be assigned in an aggregate amount of not less than
$1,000,000 (or such lesser amount as shall constitute the aggregate amount of
the Commitments, Loans, and participations therein, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of the
Borrowers and the Administrative Agent (which consent shall not, in each such
case, be unreasonably withheld or delayed). To the extent of any such assignment
in accordance with either clause (a) or (b) above, the

 

114

--------------------------------------------------------------------------------

assigning Lender shall be relieved of its obligations with respect to its
Commitments, Loans, or participations therein, or other Obligations or the
portion thereof so assigned. The assignor or assignee to each such assignment
shall execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment Agreement, together with a processing
and recordation fee of $3,500 and such forms, certificates or other evidence, if
any, with respect to United States federal income tax withholding matters as the
assignee under such Assignment Agreement may be required to deliver to the
Administrative Agent pursuant to Section 2.7.B. Upon such execution, delivery,
acceptance and recordation, from and after the effective date specified in such
Assignment Agreement, (y) the assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment Agreement, shall have the rights and obligations of
a Lender hereunder and (z) the assigning Lender thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment Agreement, relinquish its rights (other than any rights which survive
the termination of this Agreement under Section 9.9.) and be released from its
obligations under this Agreement (and, in the case of an Assignment Agreement
covering all or the remaining portion of an assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto).
The Commitments hereunder shall be modified to reflect the Commitment of such
assignee and any remaining Commitment of such assigning Lender and, if any such
assignment occurs after the issuance of Notes hereunder, the assigning Lender
shall, upon the effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable Note to the Administrative Agent for
cancellation, and thereupon new Notes shall be issued to the assignee and to the
assigning Lender, substantially in the form of Exhibit N and/or Exhibit O
annexed hereto, as applicable, with appropriate insertions, to reflect the new
Commitments and/or outstanding Loans, as the case may be, of the assignee and
the assigning Lender.

 

(ii) Acceptance by Administrative Agent; Recordation in Register. Upon its
receipt of an Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in Section 9.1.B.(i) and any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver to the
Administrative Agent pursuant to Section 2.7.B., the Administrative Agent shall,
if it has consented to the assignment evidenced thereby (to the extent such
consent is required pursuant Section 9.1.B.(i)), (a) accept such Assignment
Agreement by executing a counterpart thereof as provided therein (which
acceptance shall evidence any required consent of the Administrative Agent to
such assignment), (b) record the information contained therein in the Register,
and (c) give prompt notice thereof to the Borrowers. The Administrative Agent
shall maintain a copy of each Assignment Agreement delivered to and accepted by
them as provided in this Section 9.1.B.(ii).

 

C. Participations. The holder of any participation, other than an Affiliate of
the Lender granting such participation, shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly (i)
affecting the extension of the scheduled final maturity date of any Loan
allocated to such participation, (ii) affecting a reduction of the

 

115

--------------------------------------------------------------------------------

principal amount of or the rate of interest payable on any Loan allocated to
such participation, or (iii) releasing all or substantially all of the
Collateral, and all amounts payable by any Borrower hereunder (including amounts
payable to such Lender pursuant to Sections 2.6.D. and 2.7.) shall be determined
as if such Lender had not sold such participation. Each Borrower and each Lender
hereby acknowledge and agree that, solely for purposes of Sections 9.4. and
9.5., (a) any participation will give rise to a direct obligation of the
Borrowers to the participant and (b) the participant shall be considered to be a
“Lender”.

 

D. Assignments to Federal Reserve Banks. In addition to the assignments and
participations permitted under the foregoing provisions of this Section 9.1.,
any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve and any operating circular issued by such Federal Reserve Bank;
provided that (i) no Lender shall, as between the Borrowers and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a “Lender” or be entitled to require the assigning Lender to take or omit to
take any action hereunder.

 

E. Information. Each Lender may furnish any information concerning any member of
the Borrower Group in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants).

 

F. Representations of the Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants that it will make its Loans for its own
account in the ordinary course of its business and without a view to
distribution of such Loans within the meaning of the Securities Act or the
Exchange Act or other federal or state securities laws (it being understood
that, subject to the provisions of this Section 9.1., the disposition of such
Loans or any interests therein shall at all times remain within its exclusive
control). Each Lender that becomes a party hereto pursuant to an Assignment
Agreement shall be deemed to agree that the representations and warranties of
such Lender contained in such Assignment Agreement are incorporated herein by
this reference.

 

SECTION 9.2. EXPENSES.

 

Whether or not the transactions contemplated hereby shall be consummated, each
Borrower agrees to pay promptly: (i) all the actual and reasonable costs and
expenses of negotiation, preparation, and execution of the Loan Documents and
any consents, amendments, waivers or other modifications thereto (whether or not
such costs were incurred prior to or after the Closing Date); (ii) all the costs
of furnishing all opinions by counsel for the Borrower Group, including any
opinions requested by the Lenders as to any legal matters arising hereunder and
of any member of the Borrower Group’s performance of and compliance with all
agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including with respect to confirming
compliance with environmental, insurance and solvency requirements; (iii) the
reasonable fees, expenses and disbursements of counsel to any Agent in
connection with the negotiation, preparation, execution and administration of
the Loan Documents and any consents, amendments, waivers or other modifications
thereto and any other documents or matters requested by any Borrower; (iv) all
the actual costs and reasonable

 

116

--------------------------------------------------------------------------------

expenses of creating and perfecting Liens in favor of the Administrative Agent
on behalf of the Secured Parties pursuant to any Collateral Document, including
filing and recording fees, expenses and taxes, stamp or documentary taxes,
search fees, title insurance premiums, and reasonable fees, expenses and
disbursements of counsel to the Administrative Agent and of counsel providing
any opinions that the Administrative Agent may request in respect of the
Collateral Documents or the Liens created pursuant thereto; (v) all the actual
costs and reasonable expenses (including the reasonable fees, expenses and
disbursements) of any auditors, accountants or appraisers and any environmental
or other consultants, advisors and agents employed or retained by the
Administrative Agent or any Supplemental Agent; (vi) costs and expenses relating
to the custody or preservation of any of the Collateral; (vii) all other actual
and reasonable costs and expenses incurred by the Syndication Agent in
connection with the syndication of the Commitments; and (viii) after the
occurrence of an Event of Default, all costs and expenses, including reasonable
attorneys’ fees (including allocated costs of internal counsel) and costs of
settlement, incurred by each Agent and the Lenders in enforcing any Obligations
of or in collecting any payments due from any member of the Borrower Group
hereunder or under the other Loan Documents by reason of such Event of Default
(including in connection with the sale of, collection from, or other realization
upon any of the Collateral or the enforcement of any guaranty) or in connection
with any refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a “work-out” or pursuant to any insolvency or
bankruptcy proceedings.

 

SECTION 9.3. INDEMNITY.

 

In addition to the payment of expenses pursuant to Section 9.2., whether or not
the transactions contemplated hereby shall be consummated, each of the
Borrowers, jointly and severally, agrees to defend, indemnify, pay and hold
harmless each Agent, the Lead Arranger and the Lenders, and the officers,
directors, employees, agents and affiliates of each Agent, the Lead Arranger and
the Lenders (collectively, the “Indemnitees”), from and against any and all
Indemnified Liabilities (as hereinafter defined); provided that no Borrower
shall have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction.

 

As used herein, “Indemnified Liabilities” means, collectively, any and all
liabilities, obligations, losses, damages (including natural resource damages),
penalties, actions, judgments, suits, claims (including Environmental Claims),
costs (including the costs of any investigation, study, sampling, testing,
abatement, cleanup, removal, remediation or other response action necessary to
remove, remediate, clean up or abate any Hazardous Materials Activity), expenses
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto, and any fees or expenses incurred by Indemnitees in
enforcing this indemnity), whether direct, indirect or consequential and whether
based on any Legal Requirement (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan

 

117

--------------------------------------------------------------------------------

Documents, the Material Contracts, or the transactions contemplated hereby or
thereby (including the Lenders’ agreement to make the Loans hereunder or the use
or intended use of the proceeds thereof or the use or intended use of any
thereof, or any enforcement of any of the Loan Documents (including any sale of,
collection from, or other realization upon any of the Collateral or the
enforcement of any guaranty), (ii) the statements contained in the commitment
letters delivered by any Lender to the Borrowers with respect thereto, or (iii)
any Environmental Claim or any Hazardous Materials Activity relating to or
arising from, directly or indirectly, any past or present activity, operation,
land ownership, or practice of any member of the Borrower Group.

 

To the extent that the undertakings to defend, indemnify, pay and hold harmless
set forth in this Section 9.3. may be unenforceable in whole or in part because
they are violative of any applicable Legal Requirement, the Borrowers shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable Legal Requirement to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them.

 

SECTION 9.4. SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.

 

Subject to the last sentence of this Section 9.4., 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 of any Event of Default each Lender is hereby
authorized by each Borrower at any time or from time to time, without notice to
any Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender to or for the credit or
the account of any Borrower against and on account of the obligations and
liabilities of any Borrower to that Lender under this Agreement and the other
Loan Documents, including all claims of any nature or description arising out of
or connected with this Agreement or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any other amounts due hereunder
shall have become due and payable pursuant to Article VII. and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
Each Borrower hereby further grants to the Administrative Agent and each Lender
a security interest in all deposits and accounts maintained with the
Administrative Agent or such Lender as security for the Obligations.
Notwithstanding anything to the contrary herein or in any other Loan Document,
the Lenders hereby agree among themselves that no Lender shall exercise any
right of setoff or banker’s lien, collect any payments due from any member of
the Borrower Group hereunder or under any of the other Loan Documents, or
otherwise exercise any of their rights in respect of the Collateral hereunder or
under any of the other Loan Documents without the prior written consent of
either the Administrative Agent or the Required Lenders.

 

SECTION 9.5. RATABLE SHARING.

 

The Lenders hereby agree among themselves that if any of them shall, whether by
voluntary payment (other than a voluntary prepayment of Loans made and applied
in accordance with the terms of this Agreement), by realization upon security,
through the exercise of any right of setoff or banker’s lien, by counterclaim or
cross action or by the enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash

 

118

--------------------------------------------------------------------------------

collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, fees and other
amounts then due and owing to that Lender hereunder or under the other Loan
Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is
greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify the Administrative Agent and
each other Lender of the receipt of such payment and (ii) apply a portion of
such payment to purchase participations (which it shall be deemed to have
purchased from each seller of a participation simultaneously upon the receipt by
such seller of its portion of such payment) in the Aggregate Amounts Due to the
other the Lenders so that all such recoveries of Aggregate Amounts Due shall be
shared by all the Lenders in proportion to the Aggregate Amounts Due to them;
provided that if all or part of such proportionately greater payment received by
such purchasing Lender is thereafter recovered from such Lender upon the
bankruptcy or reorganization of any Borrower or otherwise, those purchases shall
be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Each Borrower expressly consents to the foregoing arrangement
and agrees that any holder of a participation so purchased may exercise any and
all rights of banker’s lien, set-off or counterclaim with respect to any and all
monies owing by any Borrower to that holder with respect thereto as fully as if
that holder were owed the amount of the participation held by that holder.

 

SECTION 9.6. AMENDMENTS AND WAIVERS.

 

No amendment, modification, termination or waiver of any provision of this
Agreement or of the Notes, and no consent to any departure by any Borrower
therefrom, shall in any event be effective without the written concurrence of
the Majority Lenders; provided that any such amendment, modification,
termination, waiver or consent which: (i) increases the amount of any of the
Commitments or reduces the principal amount of any of the Loans; (ii) changes in
any manner the definition of “Pro Rata Shares” or the definition of “Majority
Lenders” or the definition of “Required Lenders” (it being understood that, with
the consent of the Majority Lenders, additional extensions of credit pursuant to
this Agreement may be included in “Pro Rata Share” and the definition of
“Majority Lenders” and “Required Lenders” on substantially the same terms as the
Commitments and the Loans); (iii) changes in any manner any provision of this
Agreement which, by its terms, expressly requires the approval or concurrence of
all the Lenders; (iv) postpones the scheduled final maturity date of any of the
Loans; (v) postpones the scheduled date or reduces the amount of any scheduled
payment (but not prepayment) of principal of any of the Loans or any scheduled
reduction in Commitments; (vi) postpones the date on which any interest or any
fees or other amounts are payable; (vii) decreases the interest rate borne by
any of the Loans (other than any waiver of any increase in the interest rate
applicable to any of the Loans pursuant to Section 2.3.E.) or the amount of any
fees or other amounts payable hereunder; (viii) increases the maximum duration
of Interest Periods permitted hereunder; (ix) releases any Subsidiary Guarantor
from its obligations under its Subsidiary Guaranty Agreement or the Parent from
its obligation under the Parent Guaranty Agreement, in each case other than in
accordance with the terms of the Loan Documents; (x) changes in any manner the
provisions contained in Section 2.4.D., Section 9.1. or this Section 9.6.; or
(xi) releases any Lien (other than in accordance with the Financing Documents)
granted in favor of the Administrative Agent with respect to 15% or more of the
aggregate fair market value of the

 

119

--------------------------------------------------------------------------------

Collateral, shall be effective only if evidenced by a writing signed by all of
the affected Lenders. Furthermore, no amendment, modification, termination or
waiver of any provision contained in Section 6.6.A. (and the definitions of
“Consolidated Total Debt”, “Consolidated Capitalization”, “Fiscal Quarter” and
“Stage 1” used therein) shall be effective without the written concurrence of
the Required Lenders. In addition, (1) no amendment, modification, termination
or waiver of any provision of any Note shall be effective without the written
concurrence of the Lender which is the holder of that Note and (2) no amendment,
modification, termination or waiver of any provision of Article VIII. or of any
other provision of this Agreement which, by its terms, expressly requires the
approval or concurrence of the Administrative Agent shall be effective without
the written concurrence of the Administrative Agent. The Administrative Agent
may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that Lender.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on any
Borrower in any case shall entitle any Borrower to any other or further notice
or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 9.6.
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by any Borrower, on each Borrower.

 

SECTION 9.7. INDEPENDENCE OF COVENANTS.

 

All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.

 

SECTION 9.8. NOTICES.

 

Unless otherwise specifically provided herein, any notice or other communication
herein required or permitted to be given shall be in writing addressed to the
respective party as set forth below and may be personally served, telexed, or
sent by telecopy or overnight courier service and shall be deemed to have been
given: (a) if delivered in person, when delivered; (b) if delivered by telecopy,
on the date of transmission if transmitted on a Business Day before 4:00 p.m.
Eastern Standard Time or, if not, on the next succeeding Business Day; or (c) if
delivered by overnight courier, two days after delivery to such courier properly
addressed; provided, however, that notices to the Administrative Agent shall not
be effective until received.

 

If to the Administrative Agent:

 

    Deutsche Bank AG New York Branch

    31 West 52nd Street

    New York, New York 10019

    Attn: Alexander Richarz

    Telecopy: (212) 469-3713

 

120

--------------------------------------------------------------------------------

If to the Syndication Agent:

 

Toronto Dominion (Texas), Inc.

909 Fannin Street

Houston, TX 77010

Attn: Alva Jones

Telecopy: (713) 653-8261

 

If to the Documentation Agent:

 

First Union Investors, Inc.

201 South College Street, CP-13

Charlotte, NC 28288-0130

Attn: Frank Wessinger

Telecopy: (704) 383-6647

 

If to any Borrower:

 

[Name of applicable Borrower]

570 Lexington Avenue

3rd Floor

New York, New York 10022

Attn.: President

Telecopy: (212) 421-8920

 

With a copy to:

 

Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC

666 Third Avenue

New York, NY 10017

Attn.: Gordon Caplan, Esq.

Telecopy: (212) 983-3115

 

or to such other address as the party addressed shall have previously designated
by written notice to the serving party, given in accordance with this Section.

 

SECTION 9.9. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

 

A. All representations, warranties, covenants and agreements made herein and in
the certificates or other instruments delivered in connection with or pursuant
to this Agreement shall be considered to have been relied upon by the parties
hereto and shall survive the execution and delivery of this Agreement and the
making of the Loans.

 

B. Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of any Borrower set forth in Sections 2.2.I., 2.6.D., 2.7, 9.2.,
9.3. and 9.4. and the agreements of the Lenders set forth in Sections 8.2.C.,
8.4., and 9.5. shall survive the payment of

 

121

--------------------------------------------------------------------------------

the Loans, the termination or expiration of each Letter of Credit and the
reimbursement of any amounts drawn thereunder, the termination of the
Commitments hereunder and the termination of this Agreement.

 

SECTION 9.10. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.

 

No failure or delay on the part of any Agent or any Lender in the exercise of
any power, right or privilege hereunder or under any other Loan Document shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege. All rights and remedies existing under this
Agreement and the other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.

 

SECTION 9.11. MARSHALING; PAYMENTS SET ASIDE.

 

Neither the Administrative Agent nor any Lender shall be under any obligation to
marshal any assets in favor of any Borrower or any other party or against or in
payment of any or all of the Obligations. To the extent that any Borrower makes
a payment or payments to the Administrative Agent or the Lenders (or to the
Administrative Agent for the benefit of the Lenders), or the Administrative
Agent or the Lenders enforce any security interests or exercise their rights of
setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, any other state or federal
law, common law or any equitable cause, then, to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor or related thereto, shall be revived and
continued in full force and effect as if such payment or payments had not been
made or such enforcement or setoff had not occurred.

 

SECTION 9.12. SEVERABILITY.

 

In case any provision in or obligation under this Agreement or the Notes shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

 

SECTION 9.13. OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF THE LENDERS’ RIGHTS.

 

The obligations of the Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
the Lenders pursuant hereto or thereto, shall be deemed to constitute the
Lenders as a partnership, an association, a Joint Venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights arising

 

122

--------------------------------------------------------------------------------

out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.

 

SECTION 9.14. HEADINGS.

 

Section and subsection headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.

 

SECTION 9.15. GOVERNING LAW; ENTIRE AGREEMENT.

 

This Agreement shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York, without regard to
conflicts of laws principles (other than Sections 5-1401 and 5-1402 of the
General Obligations Law of the State of New York). This Agreement and the other
Loan Documents constitute the entire understanding among the parties hereto with
respect to the subject matter hereof and supersede any prior agreements, written
or oral, with respect thereto (including, subject to the following sentence, the
Original Credit Agreement). On and after the date hereof, each reference to the
“Credit Agreement” in any document, instrument, record or account (other than
the Original Credit Agreement) entered into in connection with the Original
Credit Agreement shall be a reference to and mean this Amended and Restated
Credit Agreement.

 

SECTION 9.16. SUCCESSORS AND ASSIGNS.

 

This Agreement shall be binding upon the parties hereto and their respective
successors and permitted assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of the Lenders (it being
understood that the Lenders’ rights of assignment are subject to Section 9.1.).
No Borrower may assign or delegate any of its rights, interests or obligations
hereunder without the prior written consent of all the Lenders.

 

SECTION 9.17. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.

 

All judicial proceedings brought against any party hereto arising out of or
relating to this Agreement or any other Loan Document, or any obligations
thereunder, may be brought in any state or federal court of competent
jurisdiction in the State, County and City of New York. By executing and
delivering this Agreement or an Assignment Agreement, each party irrevocably

 

(i) accepts generally and unconditionally the nonexclusive jurisdiction and
venue of such courts;

 

(ii) waives any defense of forum non conveniens;

 

(iii) agrees that service of all process in any such proceeding in any such
court may be made by registered or certified mail, return receipt requested, to
its address provided in accordance with Section 9.8. or an Assignment Agreement;

 

123

--------------------------------------------------------------------------------

(iv) with respect to any Borrower, agrees that service as provided in clause
(iii) above is sufficient to confer personal jurisdiction over any such Borrower
in any such proceeding in any such court, and otherwise constitutes effective
and binding service in every respect;

 

(v) with respect to any Borrower, agrees that Lenders retain the right to serve
process in any other manner permitted by law or to bring proceedings against any
such Borrower in the courts of any other jurisdiction; and

 

(vi) agrees that the provisions of this Section 9.17. relating to jurisdiction
and venue shall be binding and enforceable to the fullest extent permissible
under New York General Obligations Law Section 5-1402 or otherwise.

 

SECTION 9.18. WAIVER OF JURY TRIAL.

 

EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. 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 this transaction, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and that each will continue to
rely on this waiver in their related future dealings. Each party hereto 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. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 9.18. AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.

 

SECTION 9.19. LIMITED RECOURSE.

 

There shall be full recourse to each Borrower and its Subsidiaries for the
liabilities of any member of the Borrower Group under this Agreement and the
other Loan Documents, but in no event shall any holder of any equity interest in
any Borrower (or any officer or director of such holder or any officer or
director of any member of the Borrower Group, in its capacity as such) be
personally liable or obligated for such liabilities of any member of the
Borrower Group except to the extent set forth in any Loan Document to which it
is a party.

 

124

--------------------------------------------------------------------------------

SECTION 9.20. LIMITATION OF LIABILITY.

 

No claim shall be made by any Borrower or any of its Affiliates against any of
the Agents, the Lead Arranger, the Issuing Bank, any of the Lenders or any of
their Affiliates, directors, employees, attorneys or agents for any special,
indirect, consequential or punitive damages (whether or not the claim therefor
is based on contract, tort or duty imposed by applicable Legal Requirements), in
connection with, arising out of or in any way related to the transactions
contemplated by this Agreement, the other Loan Documents, the Material Contracts
or any act or omission or event occurring in connection therewith, and each
Borrower hereby waives, releases and agrees not to sue upon any such claim for
any such damages, whether or not accrued and whether or not known or suspected
to exist in its favor.

 

SECTION 9.21. SATISFACTION.

 

Upon (i) the indefeasible payment (whether in Cash and/or other consideration
which is satisfactory to the Lenders in their sole discretion) and performance
in full of the Obligations, (ii) the termination of each Interest Rate Agreement
to which any Secured Party is a party, (iii) the termination or expiration of
each Letter of Credit and (iv) the permanent termination of all Commitments, (a)
each of the Collateral Documents and the security interest created thereby shall
terminate and (b) upon written request of the Borrowers, the Administrative
Agent shall execute and deliver to the Borrowers, at the Borrowers’ expense and
without representation or warranty by or recourse to the Administrative Agent or
the Secured Parties, all certificates, representations or evidences of the
Pledged Shares (as defined in the applicable Pledge Agreement) together with all
other Pledged Collateral (as defined in the applicable Pledge Agreement) held by
the Administrative Agent under any of the Collateral Documents and such
documents as any Borrower shall reasonably request to evidence such termination,
and each Borrower shall deliver to the Administrative Agent a general release of
all of the Administrative Agent’s and the Secured Parties’ liabilities and
Obligations under all Loan Documents and an acknowledgment that the same have
been terminated.

 

SECTION 9.22. COUNTERPARTS; EFFECTIVENESS.

 

This Agreement and any amendments, waivers, consents or supplements hereto or in
connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by the Borrowers
and the Administrative Agent of written or telephonic notification of such
execution and authorization of delivery thereof.

 

SECTION 9.23. USURY.

 

Notwithstanding anything to the contrary contained in any Loan Document, the
interest and fees paid or agreed to be paid under the Loan Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable Legal
Requirements (the “Maximum Rate”).

 

125

--------------------------------------------------------------------------------

If any Lender shall receive interest or a fee in an amount that exceeds the
Maximum Rate, the excessive interest or fee shall be applied to the principal of
the Loans or, if it exceeds the unpaid principal, refunded to the Borrowers. In
determining whether the interest or a fee contracted for, charged, or received
by a Lender exceeds the Maximum Rate, such Person may, to the extent permitted
by applicable Legal Requirements, (i) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (ii) exclude
voluntary prepayments and the effects thereof, and (iii) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Loans.

 

SECTION 9.24. JOINT AND SEVERAL LIABILITY.

 

The obligations of the Borrowers hereunder and under the other Loan Documents
shall be joint and several and, as such, each Borrower shall be liable for the
Obligations of the other Borrower under this Agreement and the other Loan
Documents. The liability of each Borrower for the Obligations of the other
Borrower under this Agreement and the other Loan Documents shall be absolute,
unconditional and irrevocable, irrespective of: (a) any lack of validity,
legality or enforceability of any Loan Document or any Interest Rate Agreement;
(b) the failure of any Secured Party or any holder of any Note (i) to assert any
claim or demand or to enforce any right or remedy against such other Borrower,
any other member of the Borrower Group or any other Person (including any other
guarantor) under the provisions of the Credit Agreement, any Note, any other
Loan Document, any Interest Rate Agreement or otherwise, or (ii) to exercise any
right or remedy against any other guarantor of, or collateral securing, any of
the Obligations; (c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other extension or
renewal of any Obligation of such other Borrower or any other member of the
Borrower Group; (d) any reduction, limitation, impairment or termination of any
of the Obligations for any reason other than the written agreement of the
Secured Parties to terminate the Obligations in full, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to, and each Borrower hereby waives any right to or claim of, any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any Obligations
of such other Borrower, any other member of the Borrower Group or otherwise; (e)
any amendment to, rescission, waiver, or other modification of, or any consent
to departure from, any of the terms of any Loan Document or any Interest Rate
Agreement; (f) any addition, exchange, release, surrender or non-perfection of
any collateral, or any amendment to or waiver or release or addition of, or
consent to departure from, any other guaranty held by any Secured Party or any
holder of any Note securing any of the Obligations; or (g) any other
circumstance which might otherwise constitute a defense available to, or a legal
or equitable discharge of, any Borrower, any other member of the Borrower Group,
any surety or any guarantor.

 

SECTION 9.25. POSTPONEMENT OF SUBROGATION.

 

Each Borrower agrees that it will not exercise any rights which it may acquire
by way of rights of subrogation under this Agreement, by any payment made
hereunder or otherwise, until the prior payment in full in cash of all of the
Obligations, the termination of all Interest Rate Agreements to which any
Secured Party is a party, the termination or expiration of all Letters of Credit
and the termination of all Commitments. Any amount paid to any Borrower on
account of

 

126

--------------------------------------------------------------------------------

any such subrogation rights prior to the payment in full in cash of all of the
Obligations shall be held in trust for the benefit of the Secured Parties and
each holder of a Note and shall immediately be paid to the Administrative Agent
for the benefit of the Secured Parties and each holder of a Note and credited
and applied against the Obligations of the Borrowers and each other member of
the Borrower Group, whether matured or unmatured, in such order as the
Administrative Agent shall elect; provided, however, that if (a) any Borrower
has made payment to the Secured Parties and each holder of a Note of all or any
part of the Obligations of the other Borrower, and (b) all Obligations have been
paid in full in cash, all Interest Rate Agreements to which any Secured Party is
a party have been terminated, all Letters of Credit shall have terminated or
expired and all Commitments have been permanently terminated, then, at paying
Borrower’s request, the Administrative Agent, on behalf of the Secured Parties
and the holders of the Notes, will execute and deliver to such Borrower
appropriate documents (without recourse and without representation or warranty)
necessary to evidence the transfer by subrogation to such Borrower of an
interest in the Obligations resulting from such payment by such Borrower. In
furtherance of the foregoing, for so long as any Obligations, Letters of Credit
or Commitments remain outstanding, each Borrower shall refrain from taking any
action or commencing any proceeding against the other Borrower or any other
member of the Borrower Group (or any of its or their successors or assigns,
whether in connection with a bankruptcy proceeding or otherwise) to recover any
amounts in respect of payments made in respect of the Obligations of the other
Borrower to any Secured Party or any holder of a Note, except that the paying
Borrower may file a proof of claim in a bankruptcy proceeding with respect to
the other Borrower or any other member of the Borrower Group in connection with
any obligations owed by such member to the paying Borrower in the event that the
Administrative Agent has failed to file a proof of claim on such Borrower’s
behalf by the second business day before the due date for such filing.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

127

--------------------------------------------------------------------------------

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

 

FIBERNET OPERATIONS, INC.,

as a Borrower

By:  

 

--------------------------------------------------------------------------------

    Name:   Michael S. Liss     Title:   President and Chief Executive Officer

 

 

DEVNET L.L.C.,

as a Borrower

By:  

 

--------------------------------------------------------------------------------

    Name:   Michael S. Liss     Title:   Chairman

 

 

DEUTSCHE BANK AG NEW YORK BRANCH,

as the Administrative Agent and the Issuing Bank

By:  

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

By  

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

 

TORONTO DOMINION (USA) SECURITIES, INC. ,

as the Syndication Agent

By:  

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

[Credit Agreement - 1]

--------------------------------------------------------------------------------

FIRST UNION INVESTORS, INC.,

as the Documentation Agent

By:  

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

[Credit Agreement - 2]

--------------------------------------------------------------------------------

LENDERS:

 

DEUTSCHE BANK AG NEW YORK BRANCH

By:

 

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

 

By:

 

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

 

FIRST UNION INVESTORS, INC.

By:

 

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

 

FNBC LEASING CORPORATION

By:

 

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

 

IBM CREDIT LLC

By:

 

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

[Credit Agreement - 3]

--------------------------------------------------------------------------------

NORTEL NETWORKS INC.

By:

 

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

 

TORONTO DOMINION (TEXAS), INC.

By:

 

 

--------------------------------------------------------------------------------

    Name:         Title:    

 

[Credit Agreement - 1]