Exhibit 10.8
 
 

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TERM LOAN AND SECURITY AGREEMENT

Dated as of November ____, 2008

Among

CAPITAL GROWTH SYSTEMS, INC.,
GLOBAL CAPACITY GROUP, INC.,
CENTREPATH, INC.,
20/20 TECHNOLOGIES, INC.,
20/20 TECHNOLOGIES I, LLC,
NEXVU TECHNOLOGIES, LLC,
FNS 2007, INC.,
MAGENTA NETLOGIC LIMITED,
CAPITAL GROWTH ACQUISITION, INC., and
VANCO DIRECT USA, LLC, t/b/k/a GLOBAL CAPACITY DIRECT, LLC
(as Borrowers),

THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,
(as Lenders),

and

ACF CGS, L.L.C.
(as Agent)
 

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TABLE OF CONTENTS

   
Page
     
1.
Definitions
2
2.
Borrowing
14
3.
Interest and Fees
20
4.
Representations and Warranties of Borrowers
21
5.
Collateral
25
6.
Financial Covenants
26
7.
Collateral Covenants
26
8.
Negative Covenants
30
9.
Reporting and Information
32
10.
Inspection Rights; Expenses; Etc.
33
11.
Rights of Setoff, Application of Payments, Etc.
34
12.
Attorney-in-Fact
34
13.
Defaults and Remedies
35
14.
Indemnification
38
14.
Indemnification
43
15.
General Provisions
44

 
Attachments:
     
Addendum
 
Exhibit A - Lender and Lenders’ Commitment
 
Exhibit B - Form of Compliance Certificate
 
Exhibit C - Form of Term Note
 
Exhibit D - Employment Agreements
 

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TERM LOAN AND SECURITY AGREEMENT
 
This TERM LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as of
the ___ day of September, 2008 among CAPITAL GROWTH SYSTEMS, INC., a Florida
corporation (“Parent”), GLOBAL CAPACITY GROUP, INC., a Texas corporation
(“GCG”), CENTREPATH, INC., a Delaware corporation (“Centrepath”), 20/20
TECHNOLOGIES, INC., a Delaware corporation (“20/20 Inc.”), 20/20 TECHNOLOGIES I,
LLC, a Delaware limited liability company (“20/20 LLC”), NEXVU TECHNOLOGIES,
LLC, a Delaware limited liability company (“Nexvu”), FNS 2007, INC., a Delaware
corporation (“FNS”), MAGENTA NETLOGIC LIMITED, a company incorporated under the
laws of England and Wales (“Magenta”), CAPITAL GROWTH ACQUISITION, INC., a
Delaware corporation (“CG Acquisition”), VANCO DIRECT USA, LLC, t/b/k/a Global
Capacity Direct, LLC, a Delaware limited liability company (“Vanco”; Parent,
GCG, Centrepath, 20/20 Inc., 20/20 LLC, Nexvu, FNS, Magenta, CG Acquisition and
Vanco are referred to herein individually as a “Borrower” and collectively as
the “Borrowers”), the lenders from time to time party hereto (each a “Lender”
and collectively, the “Lenders”) and ACF CGS, L.L.C., a Delaware limited
liability company, as agent for the Lenders (in such capacity, together with any
successors in such capacity, the “Agent”).

RECITALS:
 
WHEREAS, Borrowers have requested that the Lenders provide Borrowers with a
secured term loan and Lenders are willing to provide a secured term loan to
Borrowers on the terms set forth herein, which secured term loan Borrowers will
use for the purposes permitted hereunder; and
 
WHEREAS, Borrowers’ business is a mutual and collective enterprise and Borrowers
believe that the consolidation of the secured term loan and other financial
accommodations under this Agreement will enhance the aggregate borrowing powers
of Borrowers and facilitate the administration of their loan relationship with
Agent and each of the Lenders, all to the mutual advantage of Borrowers; and

WHEREAS, each Borrower acknowledges that it will receive substantial direct and
indirect benefits by reason of the making of the secured term loan and other
financial accommodations to Borrowers as provided in this Agreement, by virtue
of Borrowers’ various inter-relationships as joint guarantors or joint obligors
and the beneficiaries thereof, as lessors and lessees, as suppliers and
customers, and as joint venturers; and

WHEREAS, Lender’s willingness to extend financial accommodations to Borrowers,
and to administer Borrowers’ collateral security therefor, on a combined basis
as more fully set forth in this Agreement, is done solely as an accommodation to
Borrowers and at Borrowers’ request and in furtherance of Borrowers’ mutual and
collective enterprise.

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NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows.
 
1. Definitions. For purposes of this Agreement:
 
“20/20 Inc. Stock Pledge Agreement” means that certain Pledge Agreement dated as
of the date hereof, granted by 20/20 Inc. in favor of the Agent, on behalf if
itself and the Lenders, with respect to its Stock in 20/20 LLC.
 
“20/20 LLC Stock Pledge Agreement” means that certain Pledge Agreement dated as
of the date hereof, granted by 20/20 LLC in favor of the Agent, on behalf of
itself and the Lenders, with respect to its Stock in Magenta.
 
“Accounts” means all presently existing or hereafter arising accounts receivable
due each Borrower (including medical and health-care-insurance receivables),
book debts, notes, drafts and acceptances and other forms of obligations now or
hereafter owing to each Borrower, whether or not arising from the sale or lease
of goods or the rendition of services by such Borrower (including any obligation
that might be characterized as an account, contract right, general intangible or
chattel paper under the UCC), all of each Borrower’s rights in, to and under all
purchase orders now or hereafter received by such Borrower for goods and
services, all proceeds from the sale of Inventory, all monies due or to become
due to each Borrower under all contracts for the sale or lease of goods or the
rendition of services by such Borrower (whether or not yet earned) (including
the right to receive the proceeds of said purchase orders and contracts), all
amounts payable to each Borrower under any insurance policy, all collateral
security and guarantees of any kind given by any obligor with respect to any of
the foregoing, and all goods returned to or reclaimed by each Borrower that
correspond to any of the foregoing.
 
“Account Control Agreements” shall mean collectively, the Private Bank Account
Control Agreement and the HSBC Account Control Agreement.
 
“Acquisition” means the acquisition by CG Acquisition of 100% of the membership
interests of Vanco pursuant to the Acquisition Documents.

“Acquisition Documents” means the Interest Purchase Agreement and the Management
Services Agreement, together with all other agreements, instruments, opinions of
counsel and other documents executed and/or delivered in connection with the
Acquisition.

“Addendum” means the Addendum to Term Loan and Security Agreement attached
hereto, as the same may be amended and in effect from time to time.

“Adjusted Working Capital” means the remainder of (a) the consolidated current
assets of the Borrowers minus the amount of cash and cash equivalents included
in such consolidated current assets, minus (b) the consolidated current
liabilities of the Borrowers minus the amount of consolidated short-term
Indebtedness (including current maturities of long-term Indebtedness) of the
Borrowers included in such consolidated current liabilities.

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“Affiliate” means, with respect to a Person, (a) any family member, officer,
director, employee or managing agent of such Person, and (b) any other Person
(i) that, directly or indirectly, through one or more intermediaries, controls,
or is controlled by, or is under common control with, such given Person, (ii)
that, directly or indirectly beneficially owns or holds 10% or more of any class
of voting stock or partnership or other interest of such Person or any
subsidiary of such Person, or (iii) 10% or more of the voting stock or
partnership or other interest of which is directly or indirectly beneficially
owned or held by such Person or a subsidiary of such Person. The term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through
ownership of voting securities or partnership or other interests, by contract or
otherwise.

“Agent” has the meaning set forth in the preamble hereto.
 
“Agent Advances” has the meaning specified therefor in Section 14(h).

“Agreement Date” means the date as of which this Agreement is dated.

“Annualized EBITDA” shall mean the trailing period EBITDA annualized to twelve
(12) months.

“Applicable Authorization States” means the states of Arizona, Delaware,
Georgia, Indiana, Pennsylvania, Tennessee and West Virginia.
 
“Applicable Margin” means the rate of interest to be paid on the unpaid
principal amount of the Term Note from and after the Agreement Date. For the
period from and after the Agreement Date, the Applicable Margin shall be 14% per
annum payable monthly, of which 9% shall be paid in cash, and 5% shall be
capitalized, compounded and added to the unpaid principal amount of the Term
Note monthly (whereupon from and after such date such additional amounts shall
also accrue interest) (such interest, “PIK Interest”).
 
“Applicable Rate” means a rate equal to the sum of (i) the Prime Rate, plus (ii)
the Applicable Margin.
 
“Assignment and Acceptance” shall mean an assignment and acceptance entered into
by a Lender and an assignee, and accepted by the Agent, in form approved by the
Agent.
 
“Borrowers’ Agent” means Parent, in its capacity as agent for itself and the
other Borrowers pursuant to Section 2(j).
 
“Borrower Asset Sales” has the meaning set forth in Section 2(c)(i).
 
“BT Receivable” means those certain receivables related to Magenta invoices
OPT-20080807-1 and OPT-20080331-2 as defined in the BT Receivables Agreement.
 
“BT Receivables Agreement” means that certain Second Amendment to British
Telecommunications and Magenta netLogic Ltd. Camera Agreement 10693 dated
September 30, 2008.

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“BT Receivable Payment” means any cash received by a Borrower with respect to
the BT Receivable.
 
“Business Day” means any day excluding Saturday, Sunday, and any day which is a
legal holiday under the laws of the State of New York or which is a day on which
Agent is otherwise closed for transacting business with the public.
 
“Capitalized Lease” means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

“Capitalized Lease Obligations” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

“Cash Balance” means, at any time, unrestricted cash and cash equivalents of
Borrowers, on deposit with (i) the Depository Bank and subject to the Private
Bank Account Control Agreement, and (ii) HSBC USA, National Association and
subject to the HSBC Account Control Agreement.

“CG Acquisition Stock Pledge Agreement” means that certain Pledge Agreement
dated as of the date hereof, granted by CG Acquisition in favor of Agent, on
behalf of itself and the Lenders, with respect to its Stock in Vanco.
 
“Collateral” has the meaning set forth in Section 5(a).
 
“Commitment” means with respect to each Lender, the commitment of such Lender to
make the Term Loan to the Borrowers in the amount set forth in Exhibit A hereto,
as the same may be terminated or reduced from time to time in accordance with
the terms of this Agreement.
 
“Credit Party” means each Borrower, any other Person primarily or secondarily,
directly or indirectly, liable on any of the Obligations, or any other Person
which has granted a Lien on any assets of such Person as collateral for any of
the Obligations, and “Credit Parties” means all of the foregoing Persons
collectively.
 
“Customer” means any customer of any Borrower.
 
“Debenture Documents” means the Debenture Purchase Agreements and all
debentures, security agreements, guarantees and other agreements executed and/or
delivered in connection with the Debenture Indebtedness.
 
“Debenture Indebtedness” means Indebtedness of Parent (which is guaranteed by
certain other Borrowers) evidenced by the debentures issued pursuant to the
Debenture Purchase Agreements, as described in Item 9 of the Addendum.
 
“Debenture Intercreditor Agreement” means that certain Debt Subordination and
Intercreditor Agreement dated on or about the Agreement Date among Agent, for
the benefit of the Agent and the Lenders, and the Debenture Purchasers.

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“Debenture Purchasers” means the Purchasers under and as defined in the
Debenture Purchase Agreements and any successor holders of Debenture
Indebtedness permitted under the Debenture Intercreditor Agreement.
 
“Debenture Purchase Agreements” mean each of: (a) that certain Securities
Purchase Agreement dated as of March 11, 2008, among Parent and the Debenture
Purchasers party thereto, as modified and amended pursuant to that certain
Consent, Waiver, Amendment and Exchange Agreement dated on or about the
Agreement Date, pursuant to which Parent agrees to issue debentures to such
Debenture Purchasers to cover the outstanding interest payable for the remainder
of the terms of their original debentures and to cover the remaining penalties
associated with failure to meet the maximum negotiated obligations pursuant to
the Registration Rights Agreement between Parent and such Debenture Purchasers;
(b) that certain Note Purchase Agreement dated as of September 25, 2008, between
Parent and Aequitas Catalyst Fund, LLC –Series B; (c) that certain Securities
Purchase Agreement dated on or about the Agreement Date among Parent and the
Debenture Purchasers party thereto; and (d) the Interest Purchase Agreement to
the extent the same provides, for the issuance of a debenture to the
Administrator in the original principal amount of $4,000,000.
 
“Depository Bank” shall mean The Private Bank and Trust Company, its successors
and assigns, in its capacity as the provider of cash management services to the
Borrowers.
 
“Default” has the meaning set forth in Section 13(a).
 
“EBITDA” means for Borrowers on a consolidated basis, net income (excluding
non-recurring gains and extraordinary gains) before provision for interest
expense, taxes, depreciation, amortization, and financing and transaction fees
relating to the initial closing of this Agreement and the Acquisition
,determined in accordance with GAAP, and excluding, in any event, any non-cash
impact on income or loss from application of variable accounting rules or
requirements, and any expenses associated with original issue discounts and
Stock based compensation.
 
“Employment Agreements” means, collectively, the Employment Agreements between
Parent and each of (i) Patrick C. Shutt, (ii) George A. King, (iii) Robert A.
Pollan, (iv) Jim McDevitt, and (v) Chris Conant, each as attached hereto as
Exhibit D.
 
“Equipment” means all of each Borrower’s machinery, apparatus, equipment, motor
vehicles, tractors, trailers, rolling stock, fittings, fixtures and other
tangible personal property of every kind and description, together with all
parts, accessories and special tools and all increases and accessions thereto
and substitutions and replacements therefor.
 
“Excess Cash Flow” means, with respect to any fiscal period for the Borrowers on
a consolidated basis determined in accordance with GAAP, (a) EBITDA, plus (b)
any net decrease (or minus any net increase) in Adjusted Working Capital during
such period, minus (c) the sum of (i) the cash portion of interest actually paid
during such period, (ii) the cash portion of income taxes paid during such
period, (iii) all principal payments made in cash with respect of the Term Loan
(if any), and (iv) the cash portion of capital expenditures made during such
period and in accordance with Item 21 of the Addendum.

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“Excluded Equipment” means the Equipment owned by any Borrower or Vanco, as the
case may be, and used in connection with the delivery of telecommunications
services as part of the respective business operations of any Borrower or Vanco
within the Applicable Authorization States.
 
“Extraordinary Receipts” means any cash received by a Borrower with respect to
(a) federal and state tax refunds (but only to the extent such state tax refunds
exceed $25,000, in the aggregate in any fiscal year), (b) pension plan
reversions, (c) proceeds of insurance (including key man life insurance and,
unless Agent provides its prior written consent otherwise, business interruption
insurance, but excluding any casualty insurance), (d) judgments, proceeds of
settlements or other consideration of any kind in connection with any cause of
action, including without limitation, awards or settlements in respect of
condemnation and eminent domain proceedings, (e) indemnity payments, (f) any
purchase price adjustment received in connection with any purchase agreement
(other than relating to ordinary purchases of goods and services in the ordinary
course of business), excluding in all events, any future proceeds from the
previous asset sale transactions involving Nexvu or FNS, and (g) at any time
that a Default shall exist and at the sole discretion of Agent, any other cash
received by a Borrower not in the ordinary course of business.
 
“FCC” means the U.S. Federal Communications Commission.
 
“Final Closing” means the release from escrow of the Purchased Membership
Interests pursuant to the Acquisition Documents.
 
“Funding Date” means a date (i) no later than one (1) Business Day following the
delivery of notification to the Agent, in form and substance satisfactory to
Agent in its sole discretion, that the STA Requests (as such term is defined in
the Interest Purchase Agreement) have been approved and (ii) on which
satisfaction of the applicable conditions set forth in Item 2 of the Addendum
have occurred.
 
“GAAP” means generally accepted accounting principles set forth in the 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 that are applicable to the circumstances as
of the date of determination and applied on a consistent basis.

“General Intangibles” means all of each Borrower’s present and future general
intangibles and all other presently owned or hereafter acquired intangible
personal property of each Borrower (including payment intangibles, all rights
under insurance policies and any and all choses or things in action, goodwill,
patents and patent applications, trade names, servicemarks, trademarks and
trademark applications, copyrights, blueprints, drawings, purchase orders,
customer lists, monies due or recoverable from pension funds, route lists,
infringement claims, software, computer programs, computer discs, computer
tapes, literature, reports, catalogs, deposit accounts, tax refunds and tax
refund claims) other than Goods and Accounts, as well as each Borrower’s books
and records relating to any of the foregoing.

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“Goods” means all of each Borrower’s present and hereafter acquired goods, as
defined in the UCC, wherever located, including imbedded software to the extent
included in “goods” as defined in the UCC, manufactured homes, and standing
timber that is to be cut and removed for sale.

“Governing Documents” shall mean, with respect to any Person, its certificate or
articles of incorporation, certificate of formation, or, as the case may be,
certificate of limited partnership, its by-laws, operating agreement or, as the
case may be, partnership agreement or other constitutive documents and all
shareholder agreements, voting trusts and similar arrangements applicable to any
of its Stock.
 
“Governmental Approvals” means all authorizations, consents, approvals, licenses
and exemptions of, registrations and filings with, and reports to, all
governmental bodies, whether federal, state, local or foreign national or
provincial and all agencies thereof, including, without limitation, any domestic
and international Section 214 authorizations from the FCC and certificates of
public convenience and necessity or the equivalent from various state
telecommunications regulatory commissions.

“HSBC Account Control Agreement” shall mean the Account Control Agreement dated
on or about the Agreement Date, among the Agent, for the benefit of the Agent
and the Lenders, the Borrowers and HSBC USA, National Association.
 
“Indebtedness” shall mean the aggregate amount of, without duplication, (a) all
obligations of each Borrower for borrowed money, (b) all obligations of each
Borrower evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of each Borrower to pay the deferred purchase price of property
or services (excluding trade payables that are aged less than ninety (90) days),
(d) all Capitalized Lease Obligations of each Borrower, (e) all obligations or
liabilities of any other Person secured by a Lien on any asset of any Borrower,
whether or not such obligation or liability is assumed, (f) all obligations or
liabilities of others guaranteed by any Borrower; and (g) any other obligations
or liabilities which are required by GAAP to be shown as debt on the balance
sheet of any Borrower.
 
“Intellectual Property” means any and all licenses, patents, copyrights,
trademarks, designs and the goodwill associated with such trademarks.
 
“Interest Expense” means, for any period, the aggregate of the interest expense
of the Borrowers for such period, determined on a consolidated basis in
accordance with GAAP.
 
“Interest Purchase Agreement” means that certain Interest and Loan Purchase
Agreement dated as of November 14, 2008 among CG Acquisition, Seller, and the
Administrators party thereto.
 
“Inventory” means all of each Borrower’s inventory as defined in the UCC,
together with all of each Borrower’s present and future inventory, including
goods held for sale or lease or to be furnished under a contract of service and
all of each Borrower’s present and future raw materials, work in process,
finished goods, shelving and racking upon which the inventory is stored and
packing and shipping materials, wherever located, and any documents of title
representing any of the above.

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“Investment” shall mean the purchase or acquisition of any capital stock, equity
interest, or any obligations or other securities of, or any interest in, any
Person, or the extension of any advance, loan, extension of credit or capital
contribution to, any Person.
 
“Lien” means any security interest, security title, mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, conditional sale or other title
retention agreement, or other encumbrance of any kind in respect of any
property, including the interest of each lessor under any capitalized lease and
the interest of any bondsman under any payment or performance bond, in, of or on
any assets or properties of a Person, whether now owned or hereafter acquired
and whether arising by agreement or operation of law.
 
“Loan Documents” means, collectively, this Agreement and all other agreements,
instruments, certificates and other documents executed and/or delivered in
connection with this Agreement, including collateral documents, security
agreements, pledges, guaranties, mortgages, deeds of trust, assignments,
subordination agreements, intercreditor agreements, warrants and registration
rights agreements (it being understood, however, that any termination of this
Agreement shall not terminate or otherwise limit Agent’s or any Lender’s rights
under any such warrant, registration rights agreement or other related document
unless Agent expressly so agrees in writing) and all other agreements executed
or delivered by any Borrower or any other Credit Party or any Affiliate of any
Borrower or any other Credit Party pursuant hereto or in connection herewith.

“Magenta Account” has the meaning set forth in Section 7(k)(ii).
 
“Magenta Three-Party Account Agreement” shall mean the Three-Party Account
Agreement dated on or about the Agreement Date, among the Agent, for the benefit
of the Agent and the Lenders, Magenta and HSBC Bank, plc.
 
“Management Services Agreement” means that certain Management Services Agreement
dated as of November 14, 2008, among CG Acquisition, Seller, and the
Administrators party thereto.

“Material Adverse Effect” shall mean any state of facts, events, changes or
effects that is materially adverse to or materially impairs: (a) the business,
results of operations, properties, assets, condition (financial or otherwise) or
prospects of the Borrowers taken as a whole; (b) the ability of Borrowers to
perform the Obligations in accordance with the terms of the Loan Documents, or
the ability of Agent or any of the Lenders to enforce any of its rights or
remedies with respect to the Obligations or under the Loan Documents; or (c) the
Collateral (including the value and condition thereof) or Agent’s or any
Lender’s Liens on the Collateral or the priority of such Liens.
 
“Material Contract” means, with respect to any Person, (i) each contract or
agreement to which such Person or any of its Subsidiaries is a party involving
aggregate consideration payable to or by such Person or such Subsidiary of
$250,000 or more, (ii) the Acquisition Documents and (iii) all other contracts
or agreements material to the business, operations, condition (financial or
otherwise), performance, prospects or properties of such Person or such
Subsidiary.

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“Monthly Recurring Circuit Revenue” means the aggregate monthly invoice amount
for all monthly billings issued by any of the Borrowers with respect to their
circuit business. The monthly recurring circuit revenue will equal the total
monthly billing amount determined as of the date the Borrowers issue their
monthly invoices (usually the 1st day of the month).
 
“Negotiable Collateral” means all of each Borrower’s present and future letters
of credit, advises of credit, notes, drafts, instruments, and documents,
including, without limitation, bills of lading, leases, and chattel paper, and
each Borrower’s books and records relating to any of the foregoing.
 
“Net Cash Proceeds” means:
 
(a) with respect to any sale or disposition by a Borrower of property or assets,
the amount of cash proceeds received (directly or indirectly) from time to time
(whether as initial consideration or through the payment of deferred
consideration) by or on behalf of a Borrower, in connection therewith after
deducting therefrom only (i) the amount of any Indebtedness secured by any
Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any
Lender under this Agreement or the other Loan Documents and (B) Indebtedness
assumed by the purchaser of such asset) which is required to be, and is, repaid
in connection with such sale or disposition, (ii)  all fees, commissions, and
expenses related thereto and required to be paid by a Borrower in connection
with such sale or disposition and (iii) taxes paid or payable to any taxing
authorities by a Borrower in connection with such sale or disposition, in each
case to the extent, but only to the extent, that the amounts so deducted are, at
the time of receipt of such cash, actually paid or payable to a Person that is
not an Affiliate of a Borrower, and are properly attributable to such
transaction;
 
(b) with respect to the issuance or incurrence of any Indebtedness by a
Borrower, or the issuance by a Borrower of any shares of its Stock (excluding
sales of Stock in the Parent pursuant to warrants or options in existence as of
the date hereof), the aggregate amount of cash received (directly or indirectly)
from time to time (whether as initial consideration or through the payment or
disposition of deferred consideration) by or on behalf of a Borrower in
connection with such issuance or incurrence, after deducting therefrom only
(i) all fees, commissions, and expenses related thereto and required to be paid
by a Borrower in connection with such issuance or incurrence, and (ii) taxes
paid or payable to any taxing authorities by a Borrower in connection with such
issuance or incurrence, in each case to the extent, but only to the extent, that
the amounts so deducted are, at the time of receipt of such cash, actually paid
or payable to a Person that is not an Affiliate of a Borrower, and are properly
attributable to such transaction; and
 
(c) with respect to any Extraordinary Receipts received by a Borrower, the
amount of cash proceeds received (directly or indirectly) from time to time
(whether as initial consideration or through the payment of deferred
consideration) by or on behalf of a Borrower, in connection therewith after
deducting therefrom only (i)  all fees, commissions, and expenses related
thereto and required to be paid by a Borrower in connection with such
Extraordinary Receipts and (ii) taxes paid or payable to any taxing authorities
by a Borrower in connection with such Extraordinary Receipts, in each case to
the extent, but only to the extent, that the amounts so deducted are, at the
time of receipt of such cash, actually paid or payable to a Person that is not
an Affiliate of a Borrower, and are properly attributable to such Extraordinary
Receipts.

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“New Lending Office” has the meaning set forth in Section 2(o).

“Nexvu Stock Pledge Agreement” means that certain Pledge Agreement dated as of
the date hereof, granted by Nexvu in favor of Agent, on behalf of itself and the
Lenders, with respect to its Stock in Nexvu Manager, Inc. and Nexvu APM, LLC.

“Obligations” means all indebtedness, obligations and liabilities of each Credit
Party to Agent, any of the Lenders, and any of their Affiliates, individually or
collectively, under the Loan Documents, whether now existing or hereafter
arising, whether presently contemplated or not, regardless of how the same
arise, or whether evidenced by any instrument, agreement or book account,
including, but not limited to, the Term Loan (including any modification,
renewal or extension), and all interest, taxes, fees, charges, expenses,
indemnity obligations and attorney’s fees (whether or not such attorney is a
regularly salaried employee of Agent or any of the Lenders or any of their
Affiliates) chargeable to any Credit Party or incurred by Agent or any of the
Lenders under this Agreement or any other Loan Document.
 
“Parent Stock Pledge Agreement” means that certain Pledge Agreement of even date
herewith granted by Parent in favor of Agent, on behalf if itself and the
Lenders, with respect to its Stock in CentrePath, GCG, 20/20 Inc., FNS, Nexvu
and CG Acquisition.
 
“Participant Register” has the meaning specified therefor in Section 16(f)(vii).

“Permitted Dispositions” means (a) sales or other dispositions of Inventory and
Equipment that is substantially worn, damaged, or obsolete or no longer used or
usable in the business of the Borrowers, in each case, in the ordinary course of
business and for fair consideration and on terms no less favorable to the
Borrowers than would be obtainable in a comparable arm's length transaction with
a Person that is not an Affiliate thereof, and (b) sales of Inventory to buyers
in the ordinary course of business.

“Permitted Indebtedness” shall mean and include: (a) the Obligations; (b)
Indebtedness arising from the endorsement of instruments in the ordinary course
of business of a Borrower; (c) Subordinated Debt; (d) Indebtedness existing as
of the date hereof to the extent listed on Item 9 of the Addendum; (e)
Indebtedness in connection with purchase money security interests constituting
Permitted Liens and Capitalized Leases not to exceed, in aggregated principal
amount for all Borrowers on a consolidated basis, the amount set forth on Item
20 of the Addendum at any one time outstanding; (f) Indebtedness consisting of
reimbursement obligations under surety, indemnity, performance, release and
appeal bonds and guarantees thereof and letters of credit issued to landlords in
the ordinary course of business of a Borrower; and (g) extensions, refinancings,
refundings, renewals, modifications, amendments and restatements of any
Permitted Indebtedness that do not increase the principal amount or interest
rate per annum thereof, shorten the maturity thereof or accelerate the principal
payments thereof.

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“Permitted Investments” shall mean and include: (a) deposit accounts with
commercial banks organized under the laws of the United States or a state
thereof to the extent such deposits are fully insured by the Federal Deposit
Insurance Corporation in which Agent has a perfected, first-priority security
interest, and up £75,000 at any time in the Magenta Account, as disclosed to
Agent on Item 14 of the Addendum, in the United Kingdom without such a security
interest and provided such account shall be maintained at all times in
accordance with the terms of Section 7(k)(ii) of this Agreement; (b) Investments
in money market accounts maintained by banks or financial institutions having a
net worth of not less than $50,000,000 in which Agent has a perfected,
first-priority security interest; (c) Investments in certificates of deposit
maintained by banks or financial institutions having a net worth of not less
than $50,000,000 in which Agent has a perfected, first-priority security
interest; (d) Investments in marketable obligations issued or fully guaranteed
by the United States, or any agency thereof, and maturing not more than one (1)
year from the date of acquisition; (e) Investments in open market commercial
paper rated at least “A1” or “P1” or higher by a national credit rating agency
and maturing not more than one (1) year from the creation thereof; (f)
Investments existing on the date hereof to the extent listed on Item 7 of the
Addendum; (g) Investments pursuant to or arising under currency agreements or
interest rate agreements entered into in the ordinary course of business of a
Borrower, but only to the extent the same are entered into to hedge risk and not
for speculation; (h) Investments not to exceed $100,000 in the aggregate in any
fiscal year consisting of travel advances and employee relocation loans and
other employee loans and advances in the ordinary course of business of the
Borrowers; and (i) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of business the Borrowers.
 
“Permitted Liens” means (a) Liens or charges for current taxes, assessments or
other governmental charges which are not delinquent or remain payable without
any penalty, or the validity of which is contested in good faith by appropriate
proceedings upon stay of execution of the enforcement thereof and for which
appropriate reserves have been established in accordance with GAAP; (b) deposits
or pledges to secure (i) statutory obligations, (ii) surety or appeal bonds,
(iii) bonds for release of attachment, stay of execution or injunction; (iv) the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money); (v) indemnity, performance or other bonds for the performance
of bids, tenders or contracts (other than for the repayment of borrowed money);
and (vi) obligations to landlords in the ordinary course of business of the
Borrowers; (c) statutory Liens on property arising in the ordinary course of
business which, in the aggregate, do not materially impair the use of such
property or materially detract from the value of such property; (d) Liens
existing on the Agreement Date and described on Item 1 of the Addendum; (e)
Liens on Equipment securing all or part of the purchase price of such Equipment;
provided, however, that (i) such Lien is created contemporaneously with the
acquisition of such Equipment, (ii) such Lien attaches only to the specific
items of Equipment so acquired, and (iii) such Lien secures only the
Indebtedness incurred to acquire such Equipment; (f) so long as the Debenture
Intercreditor Agreement is in full force and effect, Liens on all or
substantially all assets of Borrowers in favor of the Debenture Purchasers to
secure the Debenture Indebtedness, including the indebtedness described in Item
9 of the Addendum; (g) Liens arising from judgments, decrees or attachments that
do not constitute a Default under this Agreement; and (h) Liens in favor of
Agent or any of the Lenders securing any of the Obligations.

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“Person” means an individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization, government or any
agency or political subdivision thereof, or any other entity.

“PIK Interest” has the meaning set forth in the definition of “Applicable
Margin”.

“Prime Rate” means, at any time, the rate of interest noted in The Wall Street
Journal, Money Rates section, as the “Prime Rate” (currently defined as the base
rate on corporate loans posted by at least 75% of the nation’s thirty (30)
largest banks). In the event that The Wall Street Journal quotes more than one
rate, or a range of rates, as the Prime Rate, then the Prime Rate shall mean the
average of the quoted rates. In the event that The Wall Street Journal ceases to
publish a Prime Rate, then the Prime Rate shall be the average of the three (3)
largest U.S. money center commercial banks, as determined by Agent.
Notwithstanding the foregoing, for purposes of this Agreement, at no time shall
the Prime Rate be less than five percent (5.0%) per annum. The Prime Rate may
not be the lowest or best rate at which Agent calculates interest or the Lenders
extend credit. Any change in the Prime Rate shall be effective for purposes of
calculating interest hereunder as of the date of such change.
 
“Private Bank Account Control Agreement” shall mean the Account Control
Agreement dated on or about the Agreement Date, among the Agent, for the benefit
of the Agent and the Lenders, the Borrowers and the Depository Bank.
 
“Pro Rata Share” means the percentage obtained by dividing (i) such Lender's
Commitment, by (ii) the Total Commitment.

“Purchased Membership Interests” means the membership interests of Vanco to be
purchased by CG Acquisition pursuant to the Acquisition Documents.
 
“Recurring Circuit Margin” means for a particular measurement period (i) the
difference between the Monthly Recurring Circuit Revenue for the months
comprising such measurement period and (ii) the direct cost to Borrowers of any
circuits included within Monthly Recurring Circuit Revenue for the months
included within such measurement period, but excluding any costs which are
non-recurring.
 
“Register” has the meaning set forth in Section 16(f)(iv).
 
“Registered Loan” has the meaning set forth in Section 16(f)(iv).
 
“Required Lenders” means Lenders whose Pro Rata Shares aggregate at least 50.1%.
 
“Related Fund” means, with respect to any Person, an Affiliate of such Person,
or a fund or account managed by such Person or an Affiliate of such Person.

“Seller” means Vanco plc (in administration), a United Kingdom corporation.

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“Stock” means all shares, options, warrants, general or limited partnership
interests, membership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company or
equivalent entity whether voting or nonvoting, including common stock, preferred
stock or any other “equity security” (as such term is defined in Rule 3a11 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Exchange Act) or equivalent securities issued by Magenta or
any other foreign subsidiary.
 
“Strategic Sourcing Business Unit” means the segment of the Borrowers’ business
that provides network services for clients, including design, installation,
provisioning, management and monitoring of circuits.
 
“Subordinated Debt” means (a) so long as the Debenture Intercreditor Agreement
remains in full force and effect, the Debenture Indebtedness, and (b) all of the
Indebtedness owed by any Borrower to any other Person, the repayment of which is
subordinated to the repayment of the Obligations pursuant to the terms of a
subordination agreement approved by Agent and the Required Lenders in writing in
their sole discretion.

“Subsidiary” means, with respect to any Person, (a) any corporation of which an
aggregate of more than 50% of the outstanding Stock having ordinary voting power
to elect a majority of the board of directors of such corporation (irrespective
of whether, at the time, Stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person or one or more Subsidiaries of such Person, or with
respect to which any such Person has the right to vote or designate the vote of
more than 50% or more of such Stock whether by proxy, agreement, operation of
law or otherwise, and (b) any partnership or limited liability company in which
such Person and/or one or more Subsidiaries of such Person shall have an
interest (whether in the form of voting or participation in profits or capital
contribution) of more than 50% or of which any such Person is a general partner
or managing member or may exercise the powers of a general partner whether
directly or indirectly, and (c) any other Person (other than a corporation,
limited liability company or partnership) in which such Person, a Subsidiary of
such Person or such Person and one or more Subsidiaries of such Person, directly
or indirectly, at the date of determination thereof, has (a) at least a majority
ownership interest or (b) the power to elect or direct the election of a
majority of the directors or other governing body of such Person.
 
“Term Loan” has the meaning set forth in Section 2(a).
 
“Term Note” has the meaning set forth in Section 2(b).
 
“Total Commitment” means the sum of the amounts of the Lenders' Commitments.
 
“Transferee” has the meaning set forth in Section 2(o).

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the
State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the issue of perfection of
security interests; provided, however, that to the extent that the UCC is used
to define any term herein or in any other documents and such term is defined
differently in different Articles or Divisions of the UCC, the definition of
such term contained in Article or Division 9 shall govern.

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Other Definitional Provisions. References to the “Addendum” or any “Section” or
“Exhibit” refer to the Addendum or a section or exhibit, respectively, of this
Agreement unless otherwise specifically provided. Any of the terms defined in
Section 1 may, unless the context otherwise requires, be used in the singular or
the plural depending on the reference. In this Agreement: words importing any
gender include the other genders; the words “including”, “includes” and
“include” shall be deemed to be followed by the words “without limitation”;
references to agreements and other contractual instruments shall be deemed to
include subsequent amendments, assignments, and other modifications thereto, but
only to the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement; references to any Person includes
their respective permitted successors and assigns or people succeeding to the
relevant functions of such Persons; any and all terms which are defined in the
UCC and are not defined herein shall be construed and defined in accordance with
the definition of such terms under the UCC; all references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations; all references to time of day shall refer to New York,
New York time; and all references to financial calculations or statements on a
“consolidated” basis mean calculations or statements that reflect information
and results with respect to Borrowers and no other Person. Unless otherwise
specifically indicated, all monetary amounts and references herein refer to
United States dollars, and all amounts to be loaned and paid hereunder shall be
in United States dollars. In the event that Agent receives any payment in any
currency other than United States dollars, Agent shall determine the conversion
rate with respect to such amount in its reasonable discretion for purposes of
determining the amount of the Obligations that have been satisfied.

2. Borrowing and Terms of Payment.
 
(a) The Term Loan. Subject to the terms and conditions set forth in this
Agreement, each Lender, simultaneously and proportionately to their Pro Rata
Shares of the Total Commitment, agrees to make a term loan in favor of the
Borrowers to be funded on the Funding Date (the “Term Loan”). Any portion of the
Total Commitment not funded on the Funding Date, shall not be available to the
Borrowers without the Agent’s express written consent. Subject to satisfaction
of the applicable conditions set forth in Item 2 of the Addendum, on the Funding
Date each Lender shall disburse the proceeds of the Term Loan to the Borrowers
or as the Borrowers’ Agent shall request in writing. Amounts repaid in respect
of the Term Loan may not be reborrowed.
 
(b) The Term Note. The Term Loan shall be evidenced by separate promissory notes
of the Borrowers in the form of Exhibit C attached hereto payable to each Lender
(the “Term Note”) in the original principal amount of such Lender’s Commitment,
dated as of the Agreement Date (or such other date on which a Lender may become
a party hereto in accordance with Section 16(f) hereof) and completed with
appropriate insertions.

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(c) Mandatory Prepayments.

(i) Immediately upon the receipt by any Borrower of the proceeds of any
voluntary or involuntary sale or disposition by any Credit Party of property or
assets (including casualty losses or condemnations but excluding sales or
dispositions which qualify as Permitted Dispositions) (“Borrower Asset Sales”),
Borrowers shall prepay the outstanding principal amount of the Obligations
(including, without limitation, any fees pursuant to Section 3(c) due and
payable on the amount so prepaid) in an amount equal to 100% of the Net Cash
Proceeds (including condemnation awards and payments in lieu thereof) received
by such Person in connection with such Borrower Asset Sale; provided that,
solely in respect of any Borrower Asset Sales, so long as (A) no Default shall
have occurred and is continuing, (B) Borrower’s Agent shall have given Agent
prior written notice of Borrowers’ intention to apply such monies to the costs
of replacement of the properties or assets that are the subject of such sale or
disposition, (C) the monies are held in a cash collateral account in which
Agent, for the benefit of the Agent and the Lenders has a perfected first
priority security interest, and (D) Borrowers complete such replacement,
purchase, or construction within 90 days after the initial receipt of such
monies, Borrowers shall have the option to apply such monies to the costs of
replacement of the property or assets that are the subject of such sale or
disposition unless and to the extent that such applicable period shall have
expired without such replacement, purchase or construction being made or
completed, in which case, any amounts remaining in the cash collateral account
shall be paid to Agent for application against the Obligations. Nothing
contained in this Section 2(c)(i) shall permit any Borrower to sell or otherwise
dispose of any property or assets other than in accordance with the terms and
conditions of this Agreement.
 
(ii) Immediately upon the receipt by any Borrower of any Extraordinary Receipts,
Borrowers shall prepay the outstanding principal amount of the Obligations
(including, without limitation, any fees pursuant to Section 3(c) due and
payable on the amount so prepaid) in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such Extraordinary Receipts.

(iii) Immediately upon the issuance or incurrence by any Borrower of any
Indebtedness (other than Indebtedness permitted hereunder) or the issuance by
any Borrower of any shares of such Borrower’s Stock (excluding sales of Stock of
the Parent pursuant to warrants or options in existence as of the date hereof)
Borrowers shall prepay the outstanding principal amount of the Obligations
(including, without limitation, any fees pursuant to Section 3(c) due and
payable on the amount so prepaid) in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such issuance or incurrence.
The provisions of this Section 2(c)(iii) shall not be deemed to be implied
consent to any such issuance or incurrence otherwise prohibited by the terms and
conditions of this Agreement.

(iv) No later than two (2) Business Days following the receipt by any Borrower
of any BT Receivable Payment, Borrowers shall prepay the outstanding principal
amount of the Obligations in an amount equal to sixty-six percent (66%) of the
BT Receivable Payment received by such Person. A payment hereunder shall not
constitute a prepayment for purposes of any fees payable under Item 5 of the
Addendum.

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(v) Within ten (10) days following delivery to Agent and the Lenders of
Borrowers’ monthly financial statements pursuant to Section 9(a) for the month
ended December 31, 2009 or, if such financial statements are not delivered to
Agent and the Lenders on the date such statements are required to be delivered
pursuant to Section 9(a), ten (10) days after the date such statements are
required to be delivered to Agent and the Lenders pursuant to Section 9(a),
Borrowers shall prepay the outstanding principal amount of the Obligations in an
amount equal to 50% of the Excess Cash Flow of the Borrowers for fiscal year
2009. If the information in the Borrowers’ audited financial statements
delivered pursuant to Section 9(a) for fiscal year 2009 proves to be incorrect
such that the Borrowers have overpaid the Excess Cash Flow payment referred to
herein, then the Agent shall credit such overpayment to any interest then due
and payable, if any, or the Borrowers’ next scheduled payment of interest if no
interest is then due and payable. If the information in the Borrowers’ audited
financial statements delivered pursuant to Section 9(a) for fiscal year 2009
proves to be incorrect such that the Borrowers have underpaid the Excess Cash
Flow payment referred to herein, then the amount of such underpayment shall be
immediately due and payable in cash to the Agent for application to any
outstanding Obligations. A payment hereunder shall not constitute a prepayment
for purposes of any fees payable under Item 5 of the Addendum.

(d) Voluntary Prepayments. Borrowers may prepay the principal balance of the
Term Loan in whole or in part at any time upon at least 30 days’ prior written
notice from Borrowers’ Agent to Agent (which notice, once given shall be
irrevocable). Any such prepayment of principal shall be accompanied by accrued
interest on the amount so prepaid and any fees pursuant to Section 3(c) due and
payable on the amount so prepaid. Any portion of the Term Loan prepaid hereunder
may not be reborrowed.
 
(e) Conditions to Obligation to Making of the Term Loan. Borrowers acknowledge
that Lenders’ obligation to make the Term Loan to Borrowers is subject to the
following terms and conditions:
 
(i) Agent has no obligation to make the Term Loan to Borrowers or to extend any
other financial accommodation to any Borrower unless and until (A) Borrowers
deliver to Agent, in form and substance satisfactory to Agent in its discretion,
each agreement, instrument, legal opinion and other document specified on Item 2
of the Addendum, and (B) each other condition precedent specified on Item 2 of
the Addendum has been satisfied in a manner satisfactory to Agent in Agent’s
sole discretion. Once the conditions described in this Section 2(e) have been
satisfied in Agent’s sole and absolute discretion, Agent shall provide Lender
with a letter confirming same.
 
(ii) Lenders’ obligation to make the Term Loan to Borrowers and extend other
financial accommodations to Borrowers is subject to the conditions that, as of
the Agreement Date, (A) no Default will have occurred and be continuing
hereunder, (B) there will have occurred no event or circumstance which has had
or which could reasonably be expected to have a Material Adverse Effect, (C)
Borrowers’ representations and warranties set forth in this Agreement and the
other Loan Documents will be true and correct and (D) the Borrowers’ application
for Special Temporary Authority has been approved by the applicable governmental
authorities, as defined and described in the Interest Purchase Agreement.

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(f) Repayment of Term Loan. The entire outstanding principal balance of the Term
Loan, together with all accrued and unpaid interest and all other outstanding
Obligations, shall be due and payable on the Termination Date as provided for in
Item 3 of the Addendum, unless sooner due as a result of acceleration or demand
hereunder.  Borrowers shall make each payment required hereunder or under any
other Loan Document without setoff, deduction or counterclaim. All payments by
Borrowers shall be made to Agent’s for the account of the Lenders or as
otherwise directed by the Agent in writing from time to time and shall be made
in immediately available funds, no later than 2:00 p.m. (New York City time) on
the date specified herein. Any payment received by Agent (or such Person to whom
the Agent has directed payment) later than 2:00 p.m. (New York City time), shall
be deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue until such following Business Day.
 
(g) Maturity. This Agreement will continue in full force and effect from the
Agreement Date until the Termination Date provided for in Item 3 of the
Addendum.
 
(h) Termination on Default. Notwithstanding the foregoing, should a Default
occur and be continuing, Agent will have the right to terminate this Agreement
at any time without notice.
 
(i) Survival. Notwithstanding termination, all the terms, conditions, and
provisions hereof (including Agent’s security interest in the Collateral, but
excluding any obligations of Agent hereunder) will continue to be fully
operative until all Obligations have been fully disposed of, concluded, paid,
satisfied, and liquidated (other than inchoate indemnification obligations,
unless Agent determines in its reasonable discretion that any such
indemnification obligations are likely to become actual obligations and
obligations under the warrant and registration rights agreement issued or
executed in connection herewith). All indemnification obligations of Borrowers
hereunder and under the other Loan Documents shall survive termination of this
Agreement and the other Loan Documents.
 
(j) Borrowers’ Agent. Each Borrower other than Parent hereby appoints Parent,
and Parent shall act under this Agreement and the other Loan Documents, as, the
agent, attorney-in-fact and legal representative of all Borrowers for all
purposes, including receiving account statements and other notices and
communications to Borrowers (or any of them) from Agent. Agent, and each of the
Lenders, may rely, and shall be fully protected in relying, on any disbursement
instruction, report, information or any other notice or communication made or
given by Parent, whether in its own name, as Borrowers’ Agent, or on behalf of
one or more Borrowers, and Agent and each of the Lenders, shall not have any
obligation to make any inquiry or request any confirmation from or on behalf of
any other Borrower as to the binding effect on it of any such request,
instruction, report, information, other notice or communication, nor shall the
joint and several character of Borrowers’ obligations hereunder be affected,
provided, that the provisions of this paragraph shall not be construed so as to
preclude any Borrower from taking actions permitted to be taken by a “Borrower”
hereunder.

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(k) Joint and Several Liability.

(i) The Term Loan made to Borrowers and all of the other Obligations of
Borrowers, including all interest, fees and expenses with respect thereto, shall
constitute one joint and several direct and general obligation of all Borrowers.
Notwithstanding anything to the contrary contained herein, each Borrower shall
be jointly and severally, with each other Borrower, directly and unconditionally
liable to Agent and each of the Lenders for all Obligations, it being understood
that the Term Loan to each Borrower inures to the benefit of all Borrowers, and
that Agent and each of the Lenders are relying on the joint and several
liability of Borrowers as co-makers in extending the Term Loan hereunder. Each
Borrower hereby unconditionally and irrevocably agrees that upon default in the
payment when due (whether at stated maturity, by acceleration or otherwise) of
any principal of, or interest on, any Obligation payable to Agent or any of the
Lenders, it will forthwith pay the same, without notice or demand, unless such
payment is then prohibited by application of law (provided such Obligation shall
not be extinguished by any such prohibition).

(ii) No payment or payments made by any Borrower or any other Person or received
or collected by Agent from any Borrower or any other Person by virtue of any
action or proceeding or any setoff or appropriation or application at any time
or from time to time in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of each
Borrower under this Agreement, and each Borrower shall remain liable for all of
the remaining Obligations until the Obligations are paid in full.

(l) Obligations Absolute. Each Borrower agrees that the Obligations will be paid
strictly in accordance with the terms of the Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Agent or any of the Lenders with
respect thereto, unless such payment is then prohibited by applicable law
(provided such Obligation shall not be extinguished by any such prohibition.)
All Obligations shall be conclusively presumed to have been created in reliance
hereon. The Obligations and other liabilities under this Agreement and the other
Loan Documents shall be absolute and unconditional irrespective of: (i) any lack
of validity or enforceability of any Loan Document or any other agreement or
instrument relating thereto; (ii) any change in the time, manner or place of
payments of, or in any other term of, all or any part of the Obligations, or any
other amendment or waiver thereof or any consent to departure therefrom,
including any increase in the Obligations resulting from the extension of
additional credit to any Borrower or otherwise; (iii) any taking, exchange,
release of or non-perfection in any Collateral, or any release or amendment or
waiver of or consent to departure from any guaranty for all or any of the
Obligations; (iv) any change, restructuring or termination of the corporate or
limited liability structure or existence of any Borrower; or (v) any other
circumstance which may otherwise constitute a defense available to, or a
discharge of, any Borrower. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by Agent or any of the
Lenders upon the insolvency, bankruptcy or reorganization of any Borrower or
otherwise, all as though such payment had not been made.

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(m) Waiver of Suretyship Defenses. Each Borrower agrees that the joint and
several liability of Borrowers provided for in this Agreement shall not be
impaired or affected by any modification, supplement, extension or amendment of
any contract or agreement to which one or more other Borrowers may hereafter
agree (other than an agreement signed by Agent specifically releasing such
liability), nor by any delay, extension of time, renewal, compromise or other
indulgence granted by Agent with respect to any of the Obligations, nor by any
other agreements or arrangements whatever with one or more other Borrowers or
with any other Person, each Borrower hereby waiving all notice of such delay,
extension, release, substitution, renewal, compromise or other indulgence, and
hereby consenting to be bound thereby as fully and effectually as if it had
expressly agreed thereto in advance. The liability of each Borrower is direct
and unconditional as to all of the Obligations and may be enforced without
requiring Agent first to resort to any other right, remedy or security. Each
Borrower hereby expressly waives promptness, diligence, notice of acceptance and
any other notice (except to the extent expressly provided for herein or in
another Loan Document) with respect to any of the Obligations, this Agreement or
any other Loan Document and any requirement that Agent protect, secure, perfect
or insure any Lien or any property subject thereto or exhaust any right or take
any action against any Borrower or any other Person or any Collateral.

(n) Contribution and Indemnification among Borrowers. Each Borrower is obligated
to repay the Obligations as joint and several obligors under this Agreement. To
the extent that any Borrower shall, under this Agreement as a joint and several
obligor, repay any of the Obligations constituting any of the Term Loan made to
another Borrower hereunder or other Obligations incurred directly and primarily
by any other Borrower (an “Accommodation Payment”), then, to the extent that
such Borrower has not received the benefit of such repaid Obligations (whether
through an inter-company loan or otherwise), the Borrower making such
Accommodation Payment shall be entitled to contribution and indemnification
from, and be reimbursed by, each of the other Borrowers in an amount, for each
of such other Borrowers, equal to a fraction of such Accommodation Payment, the
numerator of which fraction is such other Borrower’s Allocable Amount (as
defined below) and the denominator of which fraction is the sum of the Allocable
Amounts of all of the Borrowers. As of any date of determination, the “Allocable
Amount” of each Borrower shall be equal to the greater of (i) the amount of such
repaid Obligations actually received by such Borrower (whether through an
inter-company loan or otherwise), and (ii) the maximum amount of liability for
Accommodation Payments which could be asserted against such Borrower hereunder
without (x) rendering such Borrower “insolvent” within the meaning of Title 11
of the United States Code (the “Bankruptcy Code”), Section 2 of the Uniform
Fraudulent Transfer Act (the “UFTA”), or Section 2 of the Uniform Fraudulent
Conveyance Act (“UFCA”), (y) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 4 of the UFCA, or (z) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA. All rights
and claims of contribution, indemnification and reimbursement under this
paragraph shall be subordinate in right of payment to the prior payment in full
of the Obligations.

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(o) Non-U.S. Lender. Each Lender (or any transferee or assignee thereof,
including a participation holder (any such entity, a “Transferee”), that is
organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a “NonU.S. Lender”) shall deliver to
the Agent and the Borrowers two properly completed and duly executed copies of
either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case
of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of “portfolio
interest”, a Form W-8BEN, or any subsequent versions thereof or successors
thereto (and, if such Non-U.S. Lender delivers a Form W-8, a certificate
representing that such Non-U.S. Lender is not a bank for purposes of Section 881
(c) of the Internal Revenue Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Parent and
is not a controlled foreign corporation related to the Parent (within the
meaning of Section 864(d)(4) of the Internal Revenue Code)), in each case
claiming complete exemption from U.S. Federal withholding tax on payments by the
Credit Parties under this Agreement. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of a Transferee that is a participation holder, on or before the
date such participation holder becomes a Transferee hereunder) and on or before
the date, if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a “New Lending Office”). In addition,
each Non-U.S. Lender shall deliver such forms or any other forms required under
applicable law within 20 days after receipt of a written request therefor from
the Borrowers or the Agent. Notwithstanding any other provision of this Section
2(o), a Non-U.S. Lender shall not be required to deliver after the date hereof
any form pursuant to this Section 2(o) that such Non-U.S. Lender is not legally
able to deliver.

3.
Interest and Fees.

(a) Interest on the Term Loan. The Term Note shall bear interest at the
Applicable Rate. Interest on the Term Note shall be computed on the basis of the
actual number of days elapsed over a year of 360 days. All accrued interest on
the Term Note shall be payable monthly in arrears, in cash or in PIK Interest,
as specified in the definition of Applicable Margin.
 
(b) Default Interest. To the extent permitted by law and without limiting any
other right or remedy of Agent or any of the Lenders hereunder, whenever there
is a Default under this Agreement, the rate of interest on the unpaid principal
balance of the Obligations shall, at the option of Agent or the Required
Lenders, be increased by adding the default margin identified on Item 4 of the
Addendum to the interest rate otherwise in effect hereunder. In addition, upon
the occurrence and during the continuation of a Default under this Agreement,
all accrued PIK Interest shall immediately become due and payable in full and
without any notice, demand or presentment of any kind notwithstanding any
acceleration by the Required Lenders hereunder. Agent may charge such default
interest rate retroactively beginning on the date the applicable Default first
occurred or existed. Borrowers acknowledge that: (i) such additional rate is a
material inducement to Lenders to make the Term Loan described herein; (ii)
Lenders would not have made the Term Loan in the absence of the agreement of
Borrowers to pay such additional rate; (iii) such additional rate represents
compensation for increased risk to Lenders that the Term Loan will not be
repaid; and (iv) such rate is not a penalty and represents a reasonable estimate
of (A) the cost to Agent and each of the Lenders in allocating its resources
(both personnel and financial) to the ongoing review, monitoring, administration
and collection of the Term Loan, and (B) compensation to Agent and each of the
Lenders for losses that are difficult to ascertain. In the event of termination
of this Agreement by either party hereto, Agent’s and each of the Lenders’
entitlement to this charge will continue until all Obligations are paid in full.
 
(c) Fees. Borrowers will pay to Agent (to be allocated among the Lenders in
accordance with their Pro Rata Shares) the fees set forth in Item 5 of the
Addendum.

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(d) No Usury. Borrowers acknowledge that Agent does not intend to reserve,
charge or collect interest on money borrowed under this Agreement at any rate in
excess of the rates permitted by applicable law and that, should any interest
rate provided for in this Agreement exceed the legally permissible rate(s), the
rate will automatically be reduced to the maximum rate permitted under
applicable law. If Agent should collect any amount from Borrowers which, if it
were interest, would result in the interest rate charged hereunder exceeding the
maximum rate permitted by applicable law, such amount will be applied to reduce
principal of the Obligations or, if no Obligations remain outstanding, will be
refunded to Borrowers.

4.
Representations and Warranties of Borrowers.

 
(a) Authority, Compliance with Laws, Litigation, No Material Adverse Change,
Etc. Borrowers represent and warrant to Agent and the Lenders that: (i) the
exact legal name, type of organization, jurisdiction of organization and
organizational identification number of each Borrower are fully and accurately
set forth on Item 6 of the Addendum, and each Borrower is duly organized and
validly existing under the laws of its jurisdiction of organization; (ii) the
execution, delivery, and performance of this Agreement and the other Loan
Documents are within each Borrower’s corporate or limited liability company
powers, have been duly authorized by all necessary corporate or limited
liability company action, do not violate (A) any Borrower’s constituent
documents, any law or regulation, including without limitation, (B) any law or
regulation relating to occupational health and safety or protection of the
environment, applicable to any Borrower, or any indenture, agreement, or
undertaking to which any Borrower is a party or by which any Borrower or any
Borrower’s property is bound, except where such violation could not reasonably
be expected to have a Material Adverse Effect; (iii) this Agreement and the
other Loan Documents to which any Borrower is a party constitute valid, binding
and enforceable obligations of each Borrower party thereto in accordance with
the terms hereof and thereof, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, moratorium or other similar laws
applicable to creditors’ rights generally or by generally applicable equitable
principles affecting the enforcement of creditors’ rights; (iv) no Borrower has
any subsidiaries or other investments in other Persons, except as set forth on
Item 7 of the Addendum and except for other Permitted Investments; (v) except as
set forth on Item 29 of the Addendum, each Borrower is in compliance in all
material respects with all laws, rules and regulations applicable to such
Borrower, including laws, rules or regulations concerning the environment,
occupational health and safety and pensions or other employee benefits; (vi)
except as set forth on Item
 
8 of the Addendum, there is no litigation or investigation pending against any
Borrower (or, so far as any Borrower is aware, threatened) which, if it were
decided adversely to such Borrower, could reasonably be expected to have a
Material Adverse Effect (taking into account any insurance coverage that has
been acknowledged by the insurer); (vii) other than debt that is to be repaid
from the Term Loan hereunder, no Borrower is indebted to any other Person for
money borrowed nor has any Borrower issued any guaranty of payment or
performance by any other Person, except for Permitted Indebtedness; (viii) since
the date of the financial statements of Borrowers most recently delivered to
Agent, there has been no material adverse change in any Borrower’s business, any
Borrower’s financial or operational condition or any Borrower’s business
prospects; and (ix) each Borrower is, and after giving effect to the
consummation of the Acquisition, the incurrence of the Term Loan under this
Agreement and the application of the proceeds of such Term Loan, the Borrowers,
on a consolidated basis, will be, solvent and will have sufficient revenues to
pay the Borrowers’ obligations as they come due and adequate capital with which
to conduct the Borrowers’ business, all determined on a consolidated basis.

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(b) Title to Assets, Other Collateral Matters. Borrowers represent and warrant
to Agent and the Lenders that: (i) subject to the escrow established for the
Purchased Membership Interests pursuant to the Acquisition Documents, Borrowers
have good and marketable title to the Collateral, free of all Liens except for
Permitted Liens, and no financing statement, mortgage, notice of Lien, deed of
trust, security agreement, or any other agreement or instrument creating or
giving notice of any Lien against any of the Collateral has been signed,
authorized or delivered by any Borrower, except in Agent’s favor for the benefit
of the Agent and the Lenders, and except with respect to Permitted Liens; (ii)
the Accounts are not subject to any material dispute, claim or right of offset
and are validly owing by the applicable Customers and, subject to immaterial
exceptions, are collectible by Borrowers in the ordinary course of business;
(iii) all Inventory is in good condition, meets all applicable governmental
standards and is currently usable or saleable in the ordinary course of the
applicable Borrower’s business for a price approximating at least such
Borrower’s cost thereof; (iv) all Equipment is in good condition and state of
repair, ordinary wear and tear excepted; (v) all Collateral meets applicable
government standards in all material respects; (vi) in the past five years,
except as set forth on Item 9 of the Addendum (A) no Borrower has used any other
legal, trade or fictitious names, and (B) other than the Acquisition, no
Borrower has been a party to any merger or purchased assets from any other
Person other than in the ordinary course of business; and (vii) the chief
executive office and principal place of business of each Borrower, all
Inventory, all Equipment and all other Collateral is located at the addresses
(including the county) set forth on Item 11 of the Addendum and has not been
located at any other location during the five year period prior to the Agreement
Date.
 
(c) Ownership Structure. Borrowers represent and warrant that Item 12 of the
Addendum accurately describes the ownership of each Borrower’s capital stock,
membership interests or other equity interests.
 
(d) Acquisition. Borrowers represent and warrant to Agent and the Lenders that
(i) Borrowers have furnished to Agent true, complete and correct copies of all
of the Acquisition Documents (including any schedules, exhibits and annexes
thereto) as in effect on the date hereof; (ii) none of the Acquisition Documents
has been amended, supplemented or modified; (iii) the Acquisition Documents
constitute the complete understanding among the parties thereto in respect of
the Acquisition and the other matters and transactions covered thereby; (iv)
each Acquisition Document has been duly executed and delivered by the parties
thereto and is a legal, valid and binding obligation of each such party, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general equitable principles; and (v) the Borrowers are not aware of any fact or
circumstance that would prohibit the Acquisition from occurring including,
without limitation, the Final Closing.

(e) Consummation of Transactions. Subject to the occurrence of the Final Closing
upon satisfaction of the conditions precedent set forth in Section 1.5 of the
Interest Purchase Agreement, Borrowers represent and warrant to Agent and the
Lenders that, on the Agreement Date, the transactions contemplated by the
Acquisition Documents will have been consummated in accordance with all
applicable laws (except where such non-compliance could not reasonably be
expected to have a Material Adverse Effect) and, except as consented to in
writing by Agent, in the manner provided therein in accordance with the terms
thereof without any material waivers or amendments thereto, and each of the
material conditions to such consummation set forth in the Acquisition Documents
shall have been fulfilled without any waiver of any such material conditions.
Agent acknowledges that the Purchased Membership Interests shall be held in
escrow pursuant to the satisfaction of certain conditions specified in the
Interest Purchase Agreement, and Borrowers represent and warrant to Agent and
Lenders that (i) the Purchased Membership Interests will be owned by CG
Acquisition free of such escrow arrangement or any claim by Seller no later than
90 days after the Agreement Date, and (ii) the Seller has no right to remove the
Purchased Membership Interests from such escrow arrangement or otherwise reclaim
the Purchased Membership Interests or prevent CG Acquisition from becoming the
absolute owner thereof no later than 90 days following the Agreement Date.

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(f) Licenses and Governmental Approvals. Borrowers represent and warrant to
Agent and Lenders that, except for those Governmental Approvals the absence of
which could not reasonably be expected to have a Material Adverse Effect, (i)
each Borrower has all Governmental Approvals required by applicable law in order
to operate its business; (ii) all such Governmental Approvals are in full force
and effect; and (iii) Agent and each of the Lenders are not required to obtain
any such Governmental Approval in order to enter into the transactions
contemplated by this Agreement or to exercise their rights and remedies
hereunder (including the liquidation of the Collateral and collecting the
Accounts), except for such consents and approvals as may be required by the FCC
or any state public service commission in connection with the transfer of
control or assignment of a licensee of, or an authorization or license issued by
such governmental entity to Vanco and as set forth on Item 29 of the Addendum
and except for such consents and approvals that that would be required under
federal law for Agent and each of the Lenders to exercise their rights and
remedies hereunder.
 
(g) Additional Representations. Borrowers represent and warrant to Agent and the
Lenders that: (i) no Borrower is engaged as one of such Borrower’s principal
activities in owning, carrying or financing the purchase or ownership by others
of “margin stock” (as defined in Regulation U of the Board of Governors of the
Federal Reserve System); (ii) no Borrower owns any real property or leases any
real property other than as listed on Item 13 of the Addendum; (iii) a true,
correct and complete list of any warehousemen, processors, consignees or other
bailees with possession or control of any Inventory is set forth on Item 13 of
the Addendum; and (iv) a true, correct and complete list and brief description
of all bank accounts maintained by each Borrower with any bank or financial
institution is set forth on Item 14 of the Addendum.
 
(h) Intellectual Property. Borrowers represent and warrant to Agent and the
Lenders that, each Borrower owns, or holds licenses in, all trademarks, trade
names, copyrights, patents, patent rights, and licenses that are necessary to
the conduct of its business as currently conducted and as proposed to be
conducted, and attached hereto as Item 15 of the Addendum is a true, correct,
and complete listing of all patents, patent applications, trademarks, trademark
applications, copyrights, and copyright registrations as to which a Borrower is
the owner or is an exclusive licensee. There is no action, proceeding, claim or
complaint pending or, to the best knowledge of Borrowers, after reasonable
inquiry, threatened in writing to be brought against any Borrower which would be
reasonably likely to jeopardize any of such Person’s interest in any of the
foregoing licenses, patents, copyrights, trademarks, trade names, designs or
applications.

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(i) Leases. Borrowers represent and warrant that, each Borrower enjoys peaceful
and undisturbed possession under all leases material to their business and to
which they are parties or under which they are operating and all of such
material leases are valid and subsisting and no material default by a Borrower
exists under any of them.
 
(j) Material Contracts. Borrowers represent and warrant that, set forth on Item
16 of the Addendum is a description of all Material Contracts of the Borrowers,
showing the parties and principal subject matter thereof and amendments and
modifications thereto. Except for matters which, either individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, each Material Contract (other than those that have expired at the end of
their normal terms) (a) is in full force and effect and is binding upon and
enforceable against the applicable Borrower and, to the best of Borrowers’
knowledge, each other Person that is a party thereto in accordance with its
terms, (b) is not in default due to the action or inaction of any Borrower and
(c) neither the consummation of the Acquisition, nor the consummation of the
financing arrangements contemplated hereunder, will constitute or create a
default or create a right of termination under any Material Contract.
 
(k) Customers and Suppliers. Borrowers represent and warrant that, set forth on
Item 17 of the Addendum is a list of the top 20 largest customers of the Credit
Parties and the top 20 largest suppliers of Credit Parties, in each case for the
year ended December 31, 2007 and the six-month period ended June 30, 2008.
Except as contemplated by the BT Receivables Agreement, there has not been, and
none of Credit Parties have received notice of, any termination or cancellation
of, or a materially adverse modification or change in, the business relationship
with any of the 10 largest customers and suppliers, and, to the knowledge of
Credit Parties, such customers and suppliers intend to renew their customer or
supplier contracts, as applicable, in the ordinary course and on terms as
favorable as those currently in place.
 
(l) Taxes. Borrowers represent and warrant that, each of the Credit Parties has
filed all federal, state, and other tax returns and reports required to be
filed, and have paid all federal, state, and other taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable.
 
(m) FCC Licenses, Etc. Except for any change of control or similar applications
to be filed with respect to Vanco as described in Item 29 of the Addendum,
Borrowers represent and warrant that, all FCC, state public utility commission
and other required permissions and licenses are in good standing, and that
Borrowers are not aware of any claim, purported claim or unrealized claim
against the validity of the Borrowers’ ability to operate now and into the
future under such existing licenses.
 
(n) Working Capital. Borrowers represent and warrant that after giving effect to
the transactions contemplated in the Debenture Documents and this Agreement (i)
the Borrowers, on a consolidated basis, have not less than (a) ($8,453,687) in
Adjusted Working Capital and (b) not less than $6,000,000 in cash;  and (ii)
the aging and collectability of the Borrowers' accounts receivable is in all
material respects similar to the aging and collectability of the accounts
receivable reflected by the financial statements delivered to Agent pursuant to
Item 2(p) of the Addendum. 

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5.
Collateral.

 
(a) Grant of Security Interest. To induce the Lenders to accept this Agreement
and to make the Term Loan to Borrowers, each Borrower hereby grants to Agent,
for itself and as agent for each Lender, a security interest in, and assigns,
mortgages and pledges to Agent, for itself and as agent for any each Lender, all
of such Borrower’s right, title and interest in and to all of such Borrower’s
property (other than Excluded Equipment), whether real or personal, tangible or
intangible, now owned or existing or hereafter acquired or arising, including
all of the following (collectively, the “Collateral”):
 
(i) all Accounts, Inventory, Equipment (other than Excluded Equipment), Goods,
General Intangibles, Intellectual Property and Negotiable Collateral;
 
(ii) all investment property, securities and securities accounts and financial
assets, as well as all bank and depository accounts and all funds on deposit
therein;
 
(iii) all chattel paper (whether tangible or electronic) and contract rights;
 
(iv) all guaranties, collateral, Liens on real or personal property, leases,
letters of credit, letter-of-credit rights, supporting obligations, and all
other rights, agreements, and property securing or relating to payment of
Accounts or any other Collateral;
 
(v) all documents, books and records relating to any Collateral or to any
Borrower’s business;
 
(vi) all Governmental Approvals and all proceeds from Governmental Approvals,
but in each case only to the extent permitted under applicable law (including,
without limitation, the Communications Act of 1934);
 
(vii) all other property of any Borrower now or hereafter in the possession or
control of Agent or any of Agent’s Affiliates (including cash, money, credits
and balances of any Borrower held by or on deposit with Agent or any Affiliate
of Agent);
 
(viii) all other assets of any Borrower in which Agent receives a security
interest to secure all or part of the Obligations or which hereafter come into
the possession, custody or control of Agent or any Affiliate of Agent;

(ix) all of each Borrower’s commercial tort claims listed on (A) Item 18 of the
Addendum (which Borrowers represent and warrant is a true, accurate and complete
list of all of each Borrower’s commercial tort claims as of the Agreement Date)
or (B) any other writing provided to Agent pursuant to Section 7(g); and

(x) all proceeds and products of all of the foregoing in any form, including
amounts payable under any policies of insurance insuring all or any of the
foregoing against loss or damage, all parts, accessories, attachments, special
tools, additions, replacements, substitutions and accessions to or for all or
any of the foregoing, all condemnation or requisition payments with respect to
all or any of the foregoing and all increases and profits received from all or
any of the foregoing.

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(b) Obligations. Such grant, assignment, mortgage and transfer is made for the
purpose of securing, and the Collateral secures and will continue to secure, all
of the Obligations; provided that upon satisfaction of all Obligations other
than inchoate indemnification obligations and obligations under the warrant or
the registration rights agreement, the Lenders shall release any Liens in the
Collateral.
 
(c) Excluded Equipment. Borrowers agree that Agent shall automatically have a
security interest in the Excluded Equipment promptly after receiving any
Governmental Approvals required for the lawful grant of such security interest.
Borrowers agree to execute and deliver to Agent such security agreements and
other documents confirming such grant as Agent may reasonably request, but any
failure to do so shall not limit Agent’s security interest therein pursuant to
the first sentence of this paragraph. Each Borrower represents and warrants to
Agent that it does not own any Excluded Equipment.
 
6. Financial Covenants. Unless the Required Lenders shall otherwise consent in
writing, the Borrowers, on a consolidated basis, shall comply with each of the
financial covenants set forth on Item 19 of the Addendum.
 
7. Collateral Covenants. So long as any principal of or interest on the Term
Loan or any other Obligation (whether or not due) shall remain unpaid (other
than inchoate indemnification obligations and obligations under the warrant or
the registration rights agreement), the Borrowers shall comply with the
covenants set forth in this Section 7, unless the Required Lenders shall
otherwise consent in writing.

(a) Accounts. Borrowers will notify Agent promptly of and settle all Customer
disputes, but, if Agent so elects while a Default exists, Agent will have the
right at all times to settle, compromise, adjust, or litigate all Customer
disputes directly with the Customer or other complainant upon such terms and
conditions as Agent deems advisable without incurring liability to any Borrower
for Agent’s performance of such acts. Agent may, at any time and from time to
time, contact Customers to verify Accounts and, while a Default exists, Agent
may notify Customers of Agent’s security interest in the Accounts and instruct
such Customers to pay such Accounts to one of the bank accounts listed on Item
14 of the Addendum. All of each Borrower’s books and records concerning Accounts
and a copy of each Borrower’s general ledger will be maintained at the address
of Borrowers’ chief executive office set forth on Item 11 of the Addendum. All
Accounts will be, in all material respects and except as otherwise indicated in
writing to Agent, bona fide and existing obligations of Customers arising out of
the sale of goods and/or the rendering of services by Borrowers in the ordinary
course of Borrowers’ business, owned by and owing to the applicable Borrower
without defense, setoff or counterclaim, and will be subject to a perfected,
first-priority security interest in Agent’s favor and will be free and clear of
all Liens other than Permitted Liens.
 
(b) Inventory. All Inventory will at all times be located at one of the
Inventory locations set forth on Item 11 of the Addendum as the current location
of Borrowers’ chief executive office or a current location of other Collateral
set forth on the Addendum, will be subject to a perfected, first-priority
security interest in Agent’s favor and will be free and clear of all Liens other
than Permitted Liens. Sales of Inventory will be made in compliance with all
material requirements of applicable law.

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(c) Equipment. Borrowers will maintain all Equipment used or useful in
Borrowers’ business in good and workable condition, ordinary wear and tear
excepted, and, except for Excluded Equipment only for the first 90 days after
the Agreement Date, subject to a perfected, first-priority security interest in
Agent’s favor and free and clear of all other Liens (other than Permitted
Liens), at one of the locations set forth on Item 11 of the Addendum as the
current location of Borrowers’ chief executive office or a current location of
other Collateral set forth on the Addendum.
 
(d) Defense of Title. All Collateral will at all times be owned by Borrowers,
and Borrowers will defend Borrowers’ title to the Collateral against the claims
of third parties. Borrowers will at all times keep accurate and complete records
of the Collateral.
 
(e) Perfection; Further Assurances. No Borrower shall change its name,
jurisdiction of organization, type of organization or organizational
identification number; provided, however, that Vanco may change its name to
“Global Capacity Direct, LLC” so long as Borrowers provide Agent with at least 5
Business Days’ notice of such name change. Borrowers will give Agent at least 30
days’ prior written notice of any change in the location of any Borrower’s
principal place of business or chief executive office, any change in the
locations of any Borrower’s Inventory or Equipment and any acquisition by any
Borrower of any interest in real property. Each Borrower will, at Borrowers’
expense, promptly execute and deliver from time to time at Agent’s request and
pay the costs of filing such additional financing statements, mortgages, or
other evidences of Liens as may be necessary or desirable to perfect or continue
perfection of Agent’s security interest in Borrowers’ property or, at Agent’s
request, to create and perfect a Lien on newly acquired real property. Borrowers
will use all reasonable efforts to obtain from any landlord, warehouseman, or
other third party operator of premises on which any Collateral is located an
acceptable Lien waiver or subordination agreement in Agent’s favor with respect
to such Collateral. In the event that any Collateral, including proceeds, is
evidenced by or consists of Negotiable Collateral, Borrowers shall, immediately
upon written request therefor from Agent, endorse and assign such Negotiable
Collateral over to Agent and deliver actual physical possession of the
Negotiable Collateral to Agent. Borrowers shall at any time and from time to
time take such steps as Agent may request for Agent (i) to obtain an
acknowledgment, in form and substance satisfactory to Agent, of any bailee
having possession of any of the Collateral that such bailee holds such
Collateral for Agent, (ii) to obtain “control” of any investment property,
deposit accounts, letter-of-credit rights or chattel paper (including electronic
chattel paper) in accordance with Article 9 of the UCC, with any agreements
establishing control to be in form and substance satisfactory to Agent, (iii) to
have Agent’s Lien noted on each certificate of title evidencing any Collateral,
and (iv) otherwise to insure the continued perfection and priority of Agent’s
security interest in any of the Collateral and of the preservation of its rights
therein. Agent may, from time to time at Borrowers’ expense, obtain an appraisal
on some or all of the Collateral; provided, however, that Borrowers shall not be
required to reimburse Agent for more than one such appraisal per calendar year
(it being understood that any such appraisal conducted while a Default exists
shall not count against such one-per-year limitation).

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(f) Insurance. Borrowers will obtain and maintain in full force and effect
insurance covering the Collateral against all customary risks to which the
Collateral is exposed, including loss, damage, fire, theft, and all other such
customary risks, in such amounts, with such companies, under such policies and
in such form as will be reasonably satisfactory to Agent, which policies will
name Agent, for itself and each of the Lenders, as an additional insured and
provide that loss thereunder will be payable to Agent as Agent’s interests may
appear upon a loss payee endorsement reasonably acceptable to Agent. Borrowers
will also obtain and maintain in full force and effect liability insurance and
such other types of insurance as Agent may reasonably require (including
business interruption insurance), in each case against such risks, in such
amounts, with such companies, under such policies and in such form as will be
reasonably satisfactory to Agent. All proceeds of any such insurance will be
paid over to Agent directly, and Agent may apply such proceeds to payment of the
Obligations, whether or not due, in such order of application as Agent
determines or, in Agent’s sole discretion, apply such proceeds, in whole or in
part, to the replacement, restoration or rebuilding of the lost or damaged
property. Borrowers will provide to Agent on or prior to the Agreement Date and
from time to time thereafter, certificates showing such coverage in effect and,
at Agent’s request, the underlying policies.
 
(g) Commercial Tort Claims. If any Borrower shall at any time acquire a
commercial tort claim, Borrowers shall immediately notify Agent in a writing
signed by the applicable Borrower of the details thereof and grant to Agent, for
itself and each of the Lenders, in such writing a security interest therein and
in the proceeds thereof, all upon the terms of this Agreement, with such writing
to be in form and substance reasonably satisfactory to Agent.
 
(h) Financing Statements. Agent may at any time and from time to time file
financing statements, continuation statements and amendments thereto that
describe the Collateral as “all assets” of Borrowers or words of similar effect
and which contain any other information required by Part 5 of Article 9 of the
UCC for the sufficiency or filing office acceptance of any financing statement,
continuation statement or amendment, including whether the applicable Borrower
is an organization, the type of organization and any organization identification
number issued to any Borrower, and each Borrower hereby ratifies and
re-authorizes any such financing statement filed by Agent on or prior to the
Agreement Date. Each Borrower agrees to furnish any such information to Agent
promptly upon request. Any such financing statements, continuation statements or
amendments may be signed by Agent on behalf of any Borrower or filed by Agent
without the signature of any Borrower and may be filed at any time in any
jurisdiction. Each Borrower acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement naming any Borrower as the debtor and Agent as the secured
party without the prior written consent of Agent, and each Borrower agrees that
it shall not do so without the prior written consent of Agent.
 

(i)
Governmental Approvals.

 
(i) Each Borrower shall maintain in full force and effect all Governmental
Approvals required by applicable law in order to operate such Borrower’s
business, except for those Governmental Approvals, the absence of which could
not reasonably be expected to result in a Material Adverse Effect. Borrowers
shall promptly notify Agent in the event that any such license or approval is
revoked or if any Borrower receives any notice from any licensing authority or
other governmental authority which alleges that any Borrower is or may be in
violation of any applicable law, rule, regulation or licensing requirement.

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(ii) Borrowers shall, as described below, act immediately, upon notice of a
Default, to permit Lender to realize the full value of foreclosure on the
Collateral, including, without limitation, by obtaining any and all regulatory
approvals required to do so. For example, and without limitation of the
foregoing, if the approval of the FCC or any state public service commission is
required in connection with any action taken by the Agent or any Lender
(including any of their respective agents, officers, and attorneys) in the
exercise of their rights and remedies hereunder with respect to the Collateral,
in order to facilitate the intended realization of the value of the Collateral
the Borrowers shall immediately and in no event later than three (3) Business
Days following notice thereof take such action as is requested by Lender or
Agent to obtain each and any approval required to allow a Lender the full
benefit of the Collateral and Borrowers shall diligently pursue the obtaining of
such approvals until obtained in accordance with the instructions of Agent or a
Lender and applicable law. For avoidance of doubt, and by way of example,
immediately upon notice thereof, Borrowers shall or shall cause their counsel to
prepare, or at the option of Agent or a Lender to cooperate with counsel of
Agent or a Lender in preparing, relevant applications to the FCC and each
applicable state public service commission to seek approval of a substantial
transfer of control of the applicable Borrower or its licenses and
authorizations as instructed by Agent or a Lender, or to do any other action to
protect for a Lender the value of the applicable Borrower’s licenses and
authorizations. Without diminution of the foregoing, the Borrowers shall,
immediately following the occurrence of a Default which is continuing, upon the
written request and instructions of the Agent, execute and deliver (or cause the
execution and delivery of) all relevant applications, certificates, instruments,
agreements and other documents to the FCC or the applicable state public service
commission, or at the option of Agent or a Lender, to Agent or a Lender for
filing with Borrowers’ cooperation, which are required to be filed in connection
with obtaining any required approval of the FCC or any state public service
commission and take such other action as the Agent may request in connection
therewith.
 
(j) Conduct of Business. The Borrowers shall conduct their business in
substantially the same manner as currently conducted.

(k) Bank Accounts.
 
(i) The Borrowers (other than Magenta) will maintain their principal accounts
for operation, administration, cash management and other deposit accounts for
the conduct of the Borrowers’ business with the Depository Bank. On or prior to
the Agreement Date, the Borrowers will establish and maintain (so long as the
Obligations are outstanding), the Private Bank Account Control Agreement, which
shall be applicable to all bank accounts of the Borrowers, other than the bank
account maintained by Magenta in the United Kingdom and the account subject to
the HSBC Account Control Agreement.
 
(ii)  Magenta will maintain a single bank account (as disclosed to Agent on Item
14 of the Addendum) with HSBC Bank plc (the “Magenta Account”). On or prior to
the Agreement Date, Magenta will establish and maintain (so long as the
Obligations are outstanding), the Magenta Three-Party Account Agreement,
pursuant to which all amounts deposited in the Magenta Account in excess of
£75,000 shall automatically be transferred (on a daily basis if applicable) to
the account of Borrowers identified in the Magenta Three-Party Account Agreement
which is subject to the HSBC Account Control Agreement.

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(l) Employment Agreements. The non-compete provisions contained in the
Employment Agreements shall remain in full force and effect and shall not be
amended, modified or waived without the Agent’s written consent.
 
8. Negative Covenants. So long as any principal of or interest on the Term Loan
or any other Obligation (whether or not due) shall remain unpaid (other than
inchoate indemnification obligations and obligations under the warrant or the
registration rights agreement), the Borrowers shall comply with the covenants
set forth in this Section 8, unless the Required Lenders shall otherwise consent
in writing.

(a) No Merger or Disposition of Assets. No Borrower will merge or consolidate
with any other Person, or purchase all or substantially all of the assets of any
other Person, or sell, transfer, lease, abandon, or otherwise dispose of a
substantial portion of such Borrower’s assets or any of the Collateral or any
interest therein, except that, so long as no Default has occurred and is
continuing, each Borrower may make Permitted Dispositions.

(b) No Debt or Liens; Taxes. No Borrower will obtain or attempt to obtain from
any Person other than Agent any loans, advances, or other financial
accommodations or other Indebtedness of any kind, nor will any Borrower enter
into any direct or indirect guaranty of any obligation of another Person, other
than Permitted Indebtedness. No Borrower will permit any of its assets to be
subject to any Lien other than Permitted Liens. Each Borrower shall pay when due
(or before the expiration of any extension period) any tax or other assessment
(including all required payments or deposits with respect to withholding taxes),
and Borrowers will, upon request by Agent, promptly furnish Agent with proof
satisfactory to Agent that Borrowers have made such payments and deposits.
 
(c) No Distributions; Payments on Subordinated Debt. No Borrower will retire,
repurchase or redeem any of such Borrower’s Stock in such Borrower, nor declare
or pay any dividend in cash or other property (other than additional shares of
Stock) to any owner or holder of such Borrower’s Stock; provided, however, that
any Borrower may pay cash dividends or distributions to any other Borrower which
owns such Borrower’s Stock. No Borrower will refinance, repurchase, defease or
make any payment on any Subordinated Debt, other than payments expressly
permitted by the Debenture Intercreditor Agreement or subordination provisions
applicable to such Subordinated Debt.
 
(d) No ERISA Liabilities. Borrowers will make timely payments of all
contributions required to meet the minimum funding standards for Borrowers’
employee benefit plans subject to the Employee Retirement Income Security Act of
1974 (as amended, “ERISA”) and will promptly report to Agent the occurrence of
any reportable event (as defined in ERISA) and any giving or receipt by any
Borrower of any governmental notice (other than routine requests for
information) in respect of any such plan.

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(e) Transactions with Affiliates. No Borrower will engage in any transaction
with any of such Borrower’s or any other Borrower’s officers, directors,
employees or other Affiliates, except for an “arms-length” transaction on terms
no less favorable to such Borrower than would be granted to such Borrower in a
transaction with a Person who is not an Affiliate of any Borrower, which
transaction shall be approved by such Borrower’s disinterested directors or
managers and shall be disclosed in a timely manner to Agent prior to the
consummation of the transaction.
 
(f) Loans/Investments. No Borrower will make any loans or advances to or extend
any credit to any Person except (i) the extension of trade credit to customers
in the ordinary course of business; and (ii) Permitted Investments. No Borrower
shall purchase, acquire or otherwise invest in any Person except Permitted
Investments and investments in other Borrowers; provided, however, that the
aggregate amount of intercompany advances and other transfers to Magenta by the
other Borrowers shall not exceed the actual cash expenses of Magenta, which such
actual cash expenses shall be in the ordinary course and consistent with past
practices of Magenta. Without limiting the generality of the foregoing, no
Borrower shall create any new subsidiary or make loans to, transfer any money or
other assets to or otherwise invest in any subsidiary unless such subsidiary is
or becomes a Borrower hereunder pursuant to documentation acceptable to Agent in
its reasonable discretion.
 
(g) Capital Expenditures. Borrowers shall not make or incur capital expenditures
in excess of the amount set forth on Item 21 of the Addendum during any fiscal
year, determined for all Borrowers on a consolidated basis.
 
(h) Compensation. Borrowers shall not increase the total compensation paid to
their officers or directors (or any of their relatives), including salaries,
withdrawals, fees, bonuses, commissions, drawing accounts and other payments,
whether directly or indirectly, in money or otherwise, during any fiscal year of
Borrowers in an aggregate amount for all such officers and directors in excess
of the limit specified in Item 22 of the Addendum.
 
(i) Amendments of Documents. No Borrower shall amend or modify (i) any
Acquisition Document or any other note, instrument or agreement in connection
with the Acquisition without the prior written consent of Agent, (ii) its
articles or certificate of incorporation, articles or certificate of
organization, by-laws, limited liability company agreement or other constituent
documents, or (iii) any Debenture Document or any other note, instrument or
agreement in connection with any other Subordinated Debt without the prior
written consent of Agent; provided, however, that Borrowers may amend the
Debenture Documents without the consent of the Agent to the extent expressly
permitted by the Debenture Intercreditor Agreement.
 
(j) Capitalized Leases. The Borrowers, taken as a whole, shall not incur greater
than $500,000 in additional Capitalized Lease Obligations after the date hereof;
provided further, that such Capitalized Lease Obligations shall be (i) on terms
and conditions consistent with current market conditions for equipment of that
kind, and (ii) solely for the purchase and/or lease of new pieces of or as a
replacement of existing equipment.
 
(k) Use of Proceeds. Borrowers shall not use the proceeds of the Term Loan for
any purpose other than (i) consummating the Acquisition, and (ii) general
working capital purposes.

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(l) BT Receivable. Borrowers shall not compromise or settle any dispute, provide
a discount, write-off, or waive collection of any part of the BT Receivable
without the prior written consent of the Agent.
 

9.
Reporting and Information.

 
(a) Financial Statements  Borrowers will submit to Agent as soon as available,
and in any case not later than thirty (30) days after the end of each month, a
balance sheet and a detailed statement of profit and loss by business unit and a
statement of cash flows, in each case prepared in accordance with GAAP on a
consolidated (and, if requested by Agent, consolidating) basis, certified by the
chief financial or accounting officer of Parent as presenting fairly, in
accordance with GAAP, Borrowers’ financial condition as of the last day of such
month and Borrowers’ results of operations for such month and for the portion of
Borrowers’ fiscal year ending with such month. Borrowers will also submit to
Agent annual financial statements within 120 days after the end of each fiscal
year, including a balance sheet and the related statement of profit and loss and
stockholders’ equity, and a statement of cash flows, in each case prepared in
accordance with the requirements set forth on Item 23 of the Addendum on a
consolidated (and, if requested by Agent, consolidating) basis. Borrowers will
also submit to Agent annually at least 60 days prior to Borrowers’ fiscal year
end forecasted financial statements for the upcoming fiscal year, containing a
projected balance sheet and profit and loss statement on a consolidated (and, if
requested by Agent, consolidating) basis. Together with each monthly and annual
financial statement, Borrowers will deliver to Agent the certification of the
chief financial or accounting officer of Parent in the form of Exhibit B
attached hereto to the effect that Borrowers are in compliance with the terms
and conditions of this Agreement, and setting forth in detail the calculation of
all financial covenants, or, if Borrowers are not in compliance, describing the
nature of any noncompliance and the steps Borrowers are taking or propose to
take to remedy the same. Borrowers shall, promptly, upon request, furnish such
other information concerning the condition, operations, financial or otherwise,
of any Borrower as the Agent may from time to time request.
 
(b) Collateral Reports. Borrowers shall deliver to Agent within fifteen (15)
days after the end of each month a report, reflecting the status as of the end
of each month or for the month then ended, as the case may be, and certified by
the Chief Executive Officer or Chief Financial Officer of Parent as being true
and correct in all material respects, containing (i) a current detailed aging,
by total and by Customer, of Borrowers’ Accounts, (ii) a current detailed aging,
by total and by vendor, of Borrowers’ accounts payable, (iii) a schedule
detailing loans and intercompany transfers to Magenta from any other Borrower,
and (iv) a true, correct and complete copy of each new material contract entered
into by any Borrower for the sale, lease or other provision of goods or services
by such Borrower and for the lease or purchase of circuit capacity by any
Borrower, all of which shall be set forth in a form and shall contain such
information as is reasonably acceptable to Agent. At Agent’s request, Borrowers
shall deliver such information more or less often than described above and such
other information with respect to the Collateral, Borrowers or Borrowers’
business or financial condition as Agent may reasonably request from time to
time.

(c) Tax Returns. Borrowers shall provide Agent with a copy of all federal tax
returns of each Borrower no later than seven days after the earlier of (i) the
filing date thereof, or (ii) the deadline for filing with respect thereto
(giving effect to any applicable extension in accordance with applicable law).

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(d) SEC Filings. Borrowers shall provide Agent with a copy of all reports and
other filings made by Borrowers with the Securities and Exchange Commission no
later than seven days after the earlier of (i) the filing date thereof, or (ii)
the deadline for filing with respect thereto (giving effect to any applicable
extension in accordance with applicable law).
 
(e) BT Receivable. Borrowers will submit to Agent, promptly, and in any case not
later than (i) one (1) day following each receipt of a BT Receivable Payment and
(ii) two (2) Business Days after the end of each month, a reconciliation and
report showing any amounts collected with respect of the BT Receivable, the
amount left uncollected and, any issues, disputes and offsets with respect to
collection of the BT Receivable, and such additional information with respect
thereto as requested by Agent.
 
(f) Monthly Recurring Circuit Revenue and Recurring Circuit Margin. Borrowers
will submit to Agent, as soon as available, and in any case not later than
thirty (30) days after the end of each month, a summary of Monthly Recurring
Circuit Revenue and Recurring Circuit Margin for the Strategic Sourcing Business
Unit.
 
(g) Other Information. Borrowers will notify Agent as promptly as possible of
any Default, any receipt by any Borrower of notice from any governmental
authority that any Borrower has or may have violated any law, rule or regulation
applicable to any Borrower or the terms or conditions of any permit or license
any Borrower holds or is required to hold in connection with the conduct of such
Borrower’s business, any amendment to any Borrower’s constituent documents and
any change in any Borrower’s senior management, and the commencement of any
material litigation, claim or action by or against any Borrower.
 

10.
Inspection Rights; Expenses; Etc.

 
(a) Field Examinations; Inspections. Agent and any of the Lenders, shall have
the right without hindrance or delay to conduct field examinations to inspect
the Collateral, all other assets of Borrowers or any portion thereof, Borrowers’
books and records and all other aspects of Borrowers’ business, and to examine
and make copies of Borrowers’ records, the Collateral and all other assets of
Borrowers or any portion thereof, in each case wherever located, and Agent and
any of the Lenders may enter upon each Borrower’s premises for such purposes,
without notice, during business hours. Borrowers will assist Agent and any of
the Lenders in whatever way necessary to make each such examination, and
Borrowers agree to pay for such examinations as more fully described on Item 24
of the Addendum. Agent and any of the Lenders may discuss each Borrower’s
financial condition with Borrowers’ independent accountants without liability to
Agent or any of the Lenders or such accountants. Agent and any of the Lenders
shall have full access to all records available to Borrowers from any credit
reporting service, bureau or similar service and shall have the right to examine
and make copies of any such records. Agent and any of the Lenders may exhibit a
copy of this Agreement to such service and such service shall be entitled to
rely on the provisions hereof in providing access to Agent and any of the
Lenders as provided herein.

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(b) Performance by Agent. Agent may, from time to time at Agent’s option,
perform any agreement of any Borrower hereunder which such Borrower fails to
perform and take any other action which Agent deems necessary for the
maintenance or preservation of any of the Collateral or Agent’s interest
therein, and Borrowers agree to reimburse Agent immediately on demand for all of
Agent’s expenses in connection with the foregoing (including, without being
limited to, reasonable fees and expenses of legal counsel), together with
interest thereon at the default rate of interest provided for herein from the
date any such expense is incurred until reimbursed by Borrowers.
 
11. Rights of Setoff, Application of Payments, Etc. Agent and any of the Lenders
will be entitled to hold or set off all sums and all other property of any
Borrower at any time to any Borrower’s credit or in Agent’s or any Lender’s
possession (or the possession of any of Agent’s or Lender’s Affiliates) by
pledge or otherwise or upon or in which Agent or any of the Lenders may have a
Lien, as security for any and all of the Obligations. Recourse to the Collateral
or other security for the Obligations will not at any time be required and each
Borrower hereby waives any right of marshalling that such Borrower may have.
Each Borrower’s obligation to pay or repay the Obligations is unconditional.
Borrowers agree that, while a Default exists, Agent or any of the Lenders may
take such action with regard to the custody and collection of Accounts as Agent
or any of the Lenders may deem necessary. Each Borrower agrees that failure to
take any action with regard to any given Account will not be unreasonable until
and unless Agent receives a written request for specific action from Borrowers’
Agent with regard thereto and fails to respond thereto within a commercially
reasonable time. Each Borrower irrevocably waives the right to direct the
application of any and all payments and collections at any time or times
hereafter received by Agent or any of the Lenders from or on behalf of any
Borrower, and each Borrower hereby irrevocably agrees that Agent or any of the
Lenders shall have the continuing exclusive right to apply and reapply any and
all such payments and collections received at any time or times hereafter by
Agent or any of the Lenders against the Obligations, in such manner and in such
order as the Lenders may deem advisable.
 
12. Attorney-in-Fact. Each Borrower hereby appoints and constitutes Agent as
such Borrower’s attorney-in-fact: (a) at any time, (i) to endorse such
Borrower’s name upon any notes, acceptances, checks, drafts, money orders, and
other evidences of payment that come into Agent’s possession and to deposit or
otherwise collect the same; (ii) to send verifications of Accounts to Customers;
and (iii) to execute in such Borrower’s name any financing statements,
affidavits and notices with regard to any and all Lien rights; and (b) while any
Default exists, (i) to receive, open, and dispose of all mail addressed to such
Borrower; (ii) to notify the postal authorities to change the address and
delivery of mail addressed to such Borrower to such address as Agent may
designate; (iii) to sign such Borrower’s name on any invoice or bill of lading
relating to the Collateral, on drafts against Customers, and notices to
Customers; (iv) to sign any agreement or certificate in connection with any
insurance policy of any Borrower (including all documentation to receive benefit
payments thereunder and to cancel such insurance policy and receive a refund of
the unearned premium with respect thereto); and (v) to do all other acts and
things necessary to carry out this Agreement. All acts of said attorney-in-fact
are hereby authorized, ratified and approved, and said attorney-in-fact will not
be liable for any errors or mistake of fact or law. This power, being coupled
with an interest, is irrevocable while any of the Obligations remain unpaid or
Agent has any commitment to Borrowers under this Agreement or otherwise (other
than inchoate indemnification obligations, unless Agent determines in its
reasonable discretion that any such indemnification obligations are likely to
become actual obligations and other than inchoate indemnification obligations
and obligations under the warrant and the registration rights agreement).

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13.
Defaults and Remedies.

 
(a) Defaults. For purposes of this Agreement, “Default” means the occurrence of
any of the following events: (i) non-payment when due of any amount payable on
any of the Obligations (in the case of non-payment of interest only, including,
but not limited to any non-payment of PIK Interest pursuant to Section 3(b), if
such non-payment continues one (1) Business Day after the date when due and for
the avoidance of doubt, the default margin identified on Item 4 of the Addendum
shall be applicable during the non-payment period); (ii) breach of any covenant
or failure to perform any agreement or failure to meet any of any Credit Party’s
obligations contained herein, in any other Loan Document or in any agreement out
of which any of the Obligations arose if such failure continues for five (5)
Business Days (excluding Sections 8, 9, 7(f), and 7(k), where no cure period
shall be applicable); (iii) any statement, representation, or warranty made in
writing in this Agreement, in any other Loan Document or in any other writing or
statement at any time furnished or made or deemed furnished or made by any
Credit Party to Agent proves to have been untrue in any material respect as of
the date furnished or made or deemed furnished or made; (iv) any event of
default shall occur (after giving effect to any applicable notice and cure
period) under the Debenture Documents, or any Borrower’s default under any other
agreement for borrowed money or any other agreement involving more than the
amount set forth on Item 25 of the Addendum (after giving effect to any
applicable notice and cure period); (v) suspension of the operation of any
Borrower’s present business; (vi) any Borrower becomes insolvent or unable to
pay its debts as they mature, or admits in writing that it is insolvent or
unable to pay its debts, makes an assignment for the benefit of creditors, makes
a conveyance fraudulent as to creditors under any state or federal law, or a
proceeding is instituted by or against any Credit Party alleging that such
Credit Party is insolvent or unable to pay debts as they mature, or a petition
under any provision of Title 11 of the United States Code, as amended (or under
any analogous law of any other jurisdiction), is filed by or against any
Borrower; (vii) entry of any judgment in excess of the amount set forth on Item
26 of the Addendum against any Borrower or creation, assertion, or filing of any
judgment or tax Lien against the property of any Borrower, in each case which
remains undischarged for thirty (30) days after such entry or filing; (viii)
death or withdrawal of any partner of any Borrower which is a partnership, or
dissolution, merger, or consolidation of any Borrower which is a corporation,
partnership or limited liability company; (ix) transfer of a substantial part
(determined by market value) of the property of any Borrower; (x) sale, transfer
or exchange, either directly or indirectly, of a controlling Stock interest of
any Credit Party (without limiting the generality of the foregoing, a Default
shall exist if (A) Parent shall cease to own, directly or indirectly, 100% of
the Stock of any other Borrower or cease to have direct or indirect voting
control of any other Borrower (excluding Vanco until the Final Closing), (B) any
Person or “group” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) is or becomes the “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934,
except that a Person will be deemed to have “beneficial ownership” of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than twenty-five percent (25%) of the voting power of all
classes of stock of Parent; (xi) appointment of a receiver for any of the
Collateral or for any other property in which any Credit Party has an interest;
(xii) seizure of any Collateral by any Person other than Agent; (xiii) any
person identified on Item 27 of the Addendum shall for any reason cease to hold
the office of the applicable Borrower set forth opposite such person’s name on
Item 27 of the Addendum (or any such person shall cease to perform the duties
generally associated with such office) and a replacement reasonably satisfactory
to Agent shall not be appointed within 90 days; (xiv) the occurrence of any act,
omission, event or circumstance which has or could reasonably be expected to
have a Material Adverse Effect; (xv) payment by any Borrower on the Debenture
Indebtedness or any other Subordinated Debt in violation of the Debenture
Intercreditor Agreement or any other applicable subordination agreement; (xvi)
the Pension Benefit Guaranty Corporation or the Department of Labor commences
proceedings under ERISA to terminate any of any Borrower’s employee pension
benefit plans; (xvii) any event of default shall occur under (after giving
effect to any applicable notice and cure period) under the Acquisition Documents
(other than a termination of the Management Agreement as a result of the Final
Closing); (xviii) the Final Closing shall have not occurred by ninety-one (91)
days from the Agreement Date; or (xix) except for Transfer Applications (as such
term is defined in the Interest Purchase Agreement) to be approved by the
applicable regulatory authorities in California, Pennsylvania and Tennessee
(which such Transfer Applications shall in any event be approved within one
hundred twenty (120) days), any Transfer Application shall not have been
approved by the earliest to occur of (A) expiration of the STA Requests unless
replaced by a permanent authorization and (B) ninety (90) days from the date of
this Agreement.

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(b) Remedies. If a Default occurs and is continuing, in each case without demand
or notice to any Borrower, any other Credit Party or any other Person (unless
such notice is expressly required hereunder or under applicable law), the
Required Lenders may authorize and instruct the Agent to do any one of the
following on behalf of the Lenders, all of which such actions are, subject to
any applicable law to the extent any such law may not be waived, permitted under
this Agreement:
 
(i) declare the entire principal amount of the Term Loan outstanding hereunder,
all interest thereon, any unpaid fees and all other Obligations of any kind or
nature to be, and thereupon the same will immediately become, due and payable in
full; and, in the event of a Default described under clause (vi) of Section
13(a), such termination and acceleration shall automatically occur without any
notice, demand or presentment of any kind.
 
(ii) notify Customers that the Accounts have been assigned to Agent and that
Agent has a security interest therein, collect them directly, and charge the
collection costs and expenses to Borrowers’ loan account.

(iii) exercise any right or remedy available to any Borrower under one or more
contracts of such Borrower and sell or otherwise dispose of any such contract.

(iv) (A) exercise any of its remedies under any other Loan Document, (B) apply
any cash collateral to the Obligations (without limiting the foregoing, Agent
may instruct any bank or other financial institution holding any cash,
certificate of deposit or other Collateral to pay over such Collateral to
Agent), and (C) draw on any letter of credit issued for the benefit of Agent in
connection with this Agreement or any other Loan Document and apply the proceeds
thereof to the Obligations.

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(v) make such payments and do such acts as Agent considers necessary or
reasonable to protect its security interest in the Collateral. Borrowers
authorize Agent or any of the Lenders to enter each premises where any
Collateral is located, take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest or compromise any Lien which in
Agent’s opinion appears to be prior or superior to its security interest and to
pay all expenses incurred in connection therewith.

(vi) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale and sell the Collateral. Any such sale may be either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms. It is not necessary that the Collateral be present at any such
sale.

(vii) without regard to any waste, adequacy of the security or solvency of any
Borrower, apply for the appointment of a receiver of the Collateral, to which
appointment each Borrower hereby consents, whether or not foreclosure or
repossession proceedings have been commenced hereunder or under any other Loan
Document and whether or not a foreclosure sale or secured party sale has
occurred.
 
(viii) cancel any insurance policy of any Borrower in exchange for a refund of
the unearned premium with respect thereto, and each Borrower hereby authorizes
any insurance company which has issued any such policy to make such payment
directly to Agent for application to the Obligations;
 
(ix) exercise any of the remedies available to Agent as a secured party under
the UCC as in effect in any applicable jurisdiction, or otherwise available to
Agent under applicable law. Borrowers agree, upon demand by Agent or any of the
Lenders, while a Default exists, to cease the sale or other disposition of the
Collateral, except with Agent’s prior written consent, and to assemble at
Borrowers’ expense all the Collateral at a convenient place acceptable to Agent.
Agent may charge to Borrowers’ loan account and Borrowers will pay Agent upon
demand all costs and expenses, including reasonable attorneys’ fees (including
fees of attorneys that are regular salaried employees of Agent or any of its
Affiliates), in connection with: (A) the liquidation of any Collateral; (B)
obtaining or enforcing payment of the Obligations; (C) the settlement,
adjustment, compromise, or litigation of Customer disputes; or (D) the
prosecution or defense of any action or proceeding either against Agent or
against any Borrower concerning any matter growing out of or in connection with
this Agreement and/or any Collateral and/or any Obligations. If at any time
Agent pays any state, city, local, federal, or other tax or levy attributable to
the Collateral (excluding taxes on income realized by Agent), Borrowers will
repay to Agent the amount of tax so paid by Agent. Borrowers agree that Agent
may apply any proceeds from disposition of the Collateral first to satisfy
obligations secured by Liens prior to Agent’s security interest. Borrowers will
remain liable and will pay on demand any deficiencies arising upon the
liquidation of any Collateral held by Agent or any of the Lenders.

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(c) Notices. If any notice of intended disposition of the Collateral or of any
other act by Agent is required by law or court order and a specific time period
is not stated therein, such notice, if given five (5) Business Days before such
disposition or act, in accordance with the provisions of Section 16(a), will be
deemed reasonably and properly given.
 
(d) License. Each Borrower hereby grants to Agent a license or other right to
use, without charge, such Borrower’s labels, patents, copyrights, rights of use
of any name, trade secrets, trade names, trademarks and advertising matter, or
any property of a similar nature, as it pertains to the Collateral, in
completing production of, advertising for sale and selling any Collateral, and
each Borrower agrees that all of its rights under all licenses and all franchise
agreements shall inure to Agent’s benefit.

(e) Remedies Cumulative. Agent’s and any Lender’s rights and remedies under this
Agreement and all other Loan Documents shall be cumulative. Agent and any of the
Lenders shall have all other rights and remedies not inconsistent herewith as
provided under the UCC, by law, or in equity. No exercise by Agent or any of the
Lenders of one right or remedy shall be deemed an election, and no waiver by
Agent or any of the Lenders of any default on Borrowers’ part shall be deemed a
continuing waiver. No delay by Agent or any of the Lenders shall constitute a
waiver, election or acquiescence by it.

14.
Agent.

 
(a) Appointment.  Each Lender hereby irrevocably appoints and authorizes the
Agent to perform the duties of the Agent as set forth in this Agreement
including: (i) to receive on behalf of each Lender any payment of principal of
or interest on the Term Loan outstanding hereunder and all other amounts accrued
hereunder for the account of the Lenders and paid to the Agent, and, subject to
Section 2 of this Agreement, to distribute promptly to each Lender its Pro Rata
Share of all payments so received; (ii) to distribute to each Lender copies of
all material notices and agreements received by the Agent and not required to be
delivered to each Lender pursuant to the terms of this Agreement, provided that
the Agent shall not have any liability to the Lenders for the Agent's
inadvertent failure to distribute any such notices or agreements to the Lenders;
(iii) to maintain, in accordance with its customary business practices, ledgers
and records reflecting the status of the Obligations, the Term Loan, and related
matters and to maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Collateral and related matters;
(iv) to execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to this Agreement or any other
Loan Document; (v) to make the Term Loan and Agent Advances, for the Agent or on
behalf of the applicable Lenders as provided in this Agreement or any other Loan
Document; (vi) to perform, exercise, and enforce any and all other rights and
remedies of the Lenders with respect to the Credit Parties, the Obligations, or
otherwise related to any of same to the extent reasonably incidental to the
exercise by the Agent of the rights and remedies specifically authorized to be
exercised by the Agent by the terms of this Agreement or any other Loan
Document; (vii) to incur and pay such fees necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to this
Agreement or any other Loan Document; and (viii) subject to Section 14(c) of
this Agreement, to take such action as the Agent deems appropriate on its behalf
to administer the Term Loan and the Loan Documents and to exercise such other
powers delegated to the Agent by the terms hereof or the other Loan Documents
(including, without limitation, the power to give or to refuse to give notices,
waivers, consents, approvals and instructions and the power to make or to refuse
to make determinations and calculations) together with such powers as are
reasonably incidental thereto to carry out the purposes hereof and thereof. As
to any matters not expressly provided for by this Agreement and the other Loan
Documents (including, without limitation, enforcement or collection of the Term
Loan), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions of the Required Lenders shall be
binding upon all Lenders and all makers of the Term Loan; provided, however,
that the Agent shall not be required to take any action which, in the reasonable
opinion of the Agent, exposes the Agent to liability or which is contrary to
this Agreement or any other Loan Document or applicable law.

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(b) Nature of Duties.  The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement or in the other Loan Documents. The
duties of the Agent shall be mechanical and administrative in nature. The Agent
shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Lender. Nothing in this Agreement or
any other Loan Document, express or implied, is intended to or shall be
construed to impose upon the Agent any obligations in respect of this Agreement
or any other Loan Document except as expressly set forth herein or therein. Each
Lender shall make its own independent investigation of the financial condition
and affairs of the Credit Parties in connection with the making and the
continuance of the Term Loan hereunder and shall make its own appraisal of the
creditworthiness of the Credit Parties and the value of the Collateral, and the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the Term Loan hereunder or at
any time or times thereafter, provided that, upon the reasonable request of a
Lender, the Agent shall provide to such Lender any documents or reports
delivered to the Agent by the Credit Parties pursuant to the terms of this
Agreement or any other Loan Document. If the Agent seeks the consent or approval
of the Required Lenders to the taking or refraining from taking any action
hereunder, the Agent shall send notice thereof to each Lender. The Agent shall
promptly notify each Lender any time that the Required Lenders have instructed
the Agent to act or refrain from acting pursuant hereto.
 
(c) Rights, Exculpation, Etc.  The Agent and its directors, officers, agents or
employees shall not be liable for any action taken or omitted to be taken by
them under or in connection with this Agreement or the other Loan Documents,
except for their own gross negligence or willful misconduct as determined by a
final judgment of a court of competent jurisdiction. Without limiting the
generality of the foregoing, the Agent (i) may treat the payee of the Term Loan
as the owner thereof until the Agent receives written notice of the assignment
or transfer thereof, pursuant to Section 16(f) hereof, signed by such payee and
in form satisfactory to the Agent; (ii) may consult with legal counsel
(including, without limitation, counsel to the Agent or counsel to the Credit
Parties), independent public accountants, and other experts selected by any of
them and shall not be liable for any action taken or omitted to be taken in good
faith by any of them in accordance with the advice of such counselor experts;
(iii) make no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, certificates, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Person, the existence
or possible existence of any Default, or to inspect the Collateral or other
property (including, without limitation, the books and records) of any Person;
(v) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall not be deemed to have made any representation
or warranty regarding the existence, value or collectibility of the Collateral,
the existence, priority or perfection of the Agent's Lien thereon, or any
certificate prepared by any Borrower in connection therewith, nor shall the
Agent be responsible or liable to the Lenders for any failure to monitor or
maintain any portion of the Collateral. The Agent shall not be liable for any
apportionment or distribution of payments made in good faith, and if any such
apportionment or distribution is subsequently determined to have been made in
error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount which
they are determined to be entitled. The Agent may at any time request
instructions from the Lenders with respect to any actions or approvals which by
the terms of this Agreement or of any of the other Loan Documents the Agent is
permitted or required to take or to grant, and if such instructions are promptly
requested, the Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval under any of the Loan Documents until it
shall have received such instructions from the Required Lenders. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of the Required Lenders.

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(d) Reliance. The Agent shall be entitled to rely upon any written notices,
statements, certificates, orders or other documents or any telephone message
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the other Loan Documents and its duties hereunder or
thereunder, upon advice of counsel selected by it.

(e) Indemnification.  To the extent that the Agent is hot reimbursed and
indemnified by any Credit Party, the Lenders will reimburse and indemnify the
Agent from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any action taken or omitted by
the Agent under this Agreement or any of the other Loan Documents, in proportion
to each Lender's Pro Rata Share, including, without limitation, advances and
disbursements made pursuant to Section 14(h); provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements for which there has been a final judicial determination that such
liability resulted from the Agent's gross negligence or willful misconduct, as
determined by a final judgment of a court of competent jurisdiction. The
obligations of the Lenders under this Section 14(e) shall survive the payment in
full of the Term Loan and the termination of this Agreement.

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(f) Agent Individually.  With respect to its Pro Rata Share of the Total
Commitment hereunder and the Term Loan made by it, the Agent shall have and may
exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender or maker of the Term Loan. The terms “Lenders” or “Required Lenders” or
any similar terms shall, unless the context clearly otherwise indicates, include
the Agent in its individual capacity as a Lender or one of the Required Lenders.
The Agent and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with the
Borrowers as if it were not acting as the Agent pursuant hereto without any duty
to account to the other Lenders.

(g) Successor Agent.  

(i)  The Agent may resign from the performance of all its functions and duties
hereunder and under the other Loan Documents at any time by giving at least 30
Business Days' prior written notice to the Borrowers and each Lender. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clauses (ii) and (iii) below or as otherwise provided
below.
 
(ii)  Upon any such notice of resignation, the Required Lenders shall appoint a
successor Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the Agent, and the
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. After the Agent's resignation hereunder as the
Agent, the provisions of this Paragraph 14 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent under this
Agreement and the other Loan Documents.
 
(iii)  If a successor Agent shall not have been so appointed within said 30
Business Day period, the Agent shall then appoint a successor Agent who shall
serve as the Agent until such time, if any, as the Required Lenders appoint a
successor Agent as provided above
 
(h) Collateral Matters.
 
(i) The Agent may from time to time make such disbursements and advances (“Agent
Advances”) which the Agent, in its sole discretion, deems necessary or desirable
to preserve, protect, prepare for sale or lease or dispose of the Collateral or
any portion thereof, to enhance the likelihood or maximize the amount of
repayment by the Borrower of the Term Loan and other Obligations or to pay any
other amount chargeable to the Borrowers pursuant to the terms of this
Agreement, including, without limitation, costs, fees and expenses as described
in Section 16(j). The Agent Advances shall be repayable on demand and be secured
by the Collateral and shall bear interest at a rate per annum equal to the rate
of interest then applicable to the Term Loan. The Agent Advances shall
constitute Obligations hereunder. The Agent shall notify each Lender and the
Borrowers in writing of each such Agent Advance, which notice shall include a
description of the purpose of such Agent Advance. Without limitation to its
obligations pursuant to Section 14(e), each Lender agrees that it shall make
available to the Agent, upon the Agent's demand, in Dollars in immediately
available funds, the amount equal to such Lender's Pro Rata Share of each such
Agent Advance. If such funds are not made available to the Agent by such Lender,
the Agent shall be entitled to recover such funds on demand from such Lender,
together with interest thereon for each day from the date such payment was due
until the date such amount is paid to the Agent at the Default Rate.

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(ii) The Lenders hereby irrevocably authorize the Agent, at its option and in
its discretion, to release any Lien granted to or held by the Agent upon any
Collateral upon termination of the Total Commitment and payment and satisfaction
of the Term Loan and all other Obligations which have matured and which the
Agent has been notified in writing are then due and payable; or constituting
property being sold or disposed of in the ordinary course of Borrower's or any
of its Subsidiaries' business or otherwise in compliance with the terms of this
Agreement and the other Loan Documents; or constituting property in which
neither Borrowers nor any of their Subsidiaries owned any interest at the time
the Lien was granted or any time thereafter; or if approved, authorized or
ratified in writing by the Lenders. Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent's authority to release particular
types or items of Collateral pursuant to this Section 14(h)(i).
 
(iii) Without in any manner limiting the Agent's authority to act without any
specific or further authorization or consent by the Lenders (as set forth in
Section 14(h(ii)), each Lender agrees to confirm in writing, upon request by the
Agent, the authority to release Collateral conferred upon the Agent under
Section 14(h)(ii). Upon receipt by the Agent of confirmation from the Lenders of
its authority to release any particular item or types of Collateral, and upon
prior written request by any Credit Party, the Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to the Agent for the
benefit of the Agent and the Lenders upon such Collateral; provided, however,
that (i) the Agent shall not be required to execute any such document on terms
which, in the Agent's opinion, would expose the Agent to liability or create any
obligations or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Lien upon (or obligations of
any Credit Party in respect of) all interests in the Collateral retained by
Borrowers or any of their Subsidiaries.
 
(iv) The Agent shall have no obligation whatsoever to any Lender to assure that
the Collateral exists or is owned by the Credit Parties or is cared for,
protected or insured or has been encumbered or that the Lien granted to the
Agent pursuant to this Agreement or any other Loan Document has been properly or
sufficiently or lawfully created, perfected, protected or enforced or is
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
the Agent in this Section 14(h) or in any other Loan Document, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate,
in its sole discretion, given the Agent's own interest in the Collateral as one
of the Lenders and that the Agent shall have no duty or liability whatsoever to
any other Lender, except as otherwise provided herein.

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(i) Agency for Perfection. Each Lender hereby appoints the Agent and each other
Lender as agent and bailee for the purpose of perfecting the security interests
in and liens upon the Collateral in assets which, in accordance with Article 9
of the UCC, can be perfected only by possession or control (or where the
security interest of a secured party with possession or control has priority
over the security interest of another secured party) and the Agent and each
Lender hereby acknowledges that it holds possession of or otherwise controls any
such Collateral for the benefit of the Agent and the Lenders as secured party.
Should any Lender obtain possession or control of any such Collateral, such
Lender shall notify the Agent thereof, and, promptly upon the Agent's request
therefor shall deliver such Collateral to the Agent or in accordance with the
Agent's instructions. In addition, the Agent shall also have the power and
authority hereunder to appoint such other sub-agents as may be necessary or
required under applicable state law or otherwise to perform its duties and
enforce its rights with respect to the Collateral and under the Loan Documents.
Borrowers by their execution and delivery of this Agreement hereby consents to
the foregoing.

15. Indemnification.
 
(a) Borrowers jointly and severally agree to defend, indemnify, and hold
harmless Agent and Agent’s and any of the Lender’s participants, directors,
officers, employees, Affiliates, representatives, attorneys and agents (each an
“Indemnified Person”) from and against any and all penalties, fines,
liabilities, damages, costs, or expenses of whatever kind or nature asserted
against any such Indemnified Person, arising out of, or in any way related to
this Agreement or any other Loan Document, or the transactions contemplated
hereby or thereby, including by reason of the violation of any law or regulation
relating to the protection of the environment or the presence, generation,
disposal, release, or threatened release of any hazardous materials in
connection with any Borrower’s business on, at or from any property at any time
owned or operated by any Borrower, including, without limitation, reasonable
attorneys’ and consultants’ fees, investigation and laboratory fees, court
costs, and litigation expenses actually incurred. Without limiting the foregoing
and for purposes other than Capstone Investments, Borrowers represent and
warrant that there has been no loan broker or investment banker involved in
connection with the transactions contemplated hereby, and Borrowers agree to
indemnify and hold Agent and any of the Lenders and their participants harmless
from any claim of compensation payable to any loan broker or investment banker
in connection with the transactions contemplated hereby.
 
(b) All payments by any Borrower hereunder or under any other Loan Document
shall be made free and clear of and without deduction or withholding for any and
all taxes other than income taxes imposed on Agent or any of the Lenders
(“Indemnified Taxes”), unless such Taxes are required by law or the
administration thereof to be withheld or deducted. If any Borrower, Agent or
Lender or any participant is required by applicable law to deduct or pay any
Indemnified Taxes in respect of any payment by or on account of any obligation
of a Borrower hereunder or under any other Loan Document, then, if requested by
Agent, any Lender or any participant, the sum payable shall be increased by that
Borrower by such amount as is necessary so that after making or allowing for all
required deductions and payments (including deductions and payments applicable
to additional sums payable under this Section), Agent and any of the Lenders and
their participants receive an amount equal to the sum Agent and any of the
Lenders and such participants would have received had no such deductions or
payments been required.

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(c) Borrowers shall indemnify Agent, the Lenders and their participants, within
5 days after written demand therefor, for the full amount of any Indemnified
Taxes (including Indemnified Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by Agent, any of the Lenders and their
participants and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were
correctly or legally imposed or asserted by the relevant governmental authority.
A certificate as to the amount of such payment or liability delivered to
Borrowers’ Agent by Agent or any participant shall be conclusive absent manifest
error.
 
(d) As soon as practicable after any payment of Indemnified Taxes by a Borrower
to a governmental authority, Borrowers’ Agent shall deliver to Agent the
original or a certified copy of a receipt issued by such governmental authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to Agent.
 
16. General Provisions.
 
(a) Notices. Except as specifically provided in this Agreement or in any of the
other Loan Documents, all notices and communications hereunder and thereunder
will be in writing or by telephone subsequently confirmed in writing. Notices in
writing will be delivered personally or sent by overnight courier service, by
certified or registered mail, postage pre-paid, or by facsimile transmission and
will be deemed received, in the case of personal delivery, when delivered; in
the case of overnight courier service, on the next Business Day after delivery
to such service; in the case of mailing, on the fourth Business Day after
mailing; and, in the case of facsimile transmission, upon transmittal if
confirmed by the sender’s facsimile device; provided that in the case of notices
to Agent, Agent will be charged with knowledge of the contents thereof only when
such notice is actually received by Agent. A telephonic notice to Agent as
understood by Agent will be deemed to be the controlling and proper notice in
the event of a discrepancy with or failure to receive a confirming written
notice. Notices to Agent or Borrowers will be sent to the addresses set forth on
Item 28 of the Addendum, or any other address for Borrowers or Agent of which
the other is notified by like notice.

(b) Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders or by the Agent with the consent of the
Required Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given, provided,
however, that no amendment, waiver or consent shall (i) increase the Commitment
of any Lender, reduce the principal of, or interest on, the Term Loan payable to
any Lender, reduce the amount of any fee payable for the account of any Lender,
or postpone or extend any date fixed for any payment of principal of, or
interest or fees on, the Term Loan payable to any Lender, in each case without
the written consent of any Lender affected thereby, (ii) increase the Total
Commitment without the written consent of each Lender, (iii) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Term Loan that is required for the Lenders or any of them to take any action
hereunder, (iv) amend the definition of “Required Lenders” or “Pro Rata Share”,
(v) release all or a substantial portion of the Collateral (except as otherwise
provided in this Agreement and the other Loan Documents) or subordinate any Lien
granted in favor of the Agent for the benefit of the Lenders (except as
otherwise provided in this Agreement and the other Loan Documents), or release
the Borrower or (vi) amend, modify or waive this Section 16(b) of this
Agreement, in each case, without the written consent of each Lender.
Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent (but
not in its capacity as a Lender) under this Agreement or the other Loan
Documents.

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(c) No Waiver. No waiver hereunder will be valid unless in writing signed by
Required Lenders (or by Agent at the request of the Required Lenders) and then
only to the extent therein stated. No delay or failure on Agent’s or any
Lender’s part in the exercise of any right or remedy hereunder will operate as a
waiver thereof or of Agent’s or any Lender’s right to exercise any other right
or remedy.

(d) Time of Essence. Time is of the essence of this Agreement.
 
(e) Severability. Wherever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement will be prohibited by or invalid under
applicable law, such provision will be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
 
(f) Assignments and Participations.
 
(i)  This Agreement and the other Loan Documents shall be binding upon and inure
to the benefit of each Credit Party and the Agent and each Lender and their
respective successors and assigns; provided, however, that none of the Credit
Parties may assign or transfer any of its rights hereunder without the prior
written consent of each Lender and any such assignment without the Lenders'
prior written consent shall be null and void.

(ii)  Each Lender may assign to one or more other lenders or other entities all
or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment and the Term Loan made by
it); provided, however, that (A) such assignment is in an amount which is at
least $500,000 or a multiple of $100,000 in excess thereof (or the remainder of
such Lender's Commitment) (except such minimum amount shall not apply to an
assignment by a Lender to (x) an Affiliate of such Lender or a Related Fund of
such Lender or (y) a group of new Lenders, each of whom is an Affiliate or
Related Fund of each other to the extent the aggregate amount to be assigned to
all such new Lenders is at least $500,000 or a multiple of $100,000 in excess
thereof), (B) the parties to each such assignment shall execute and deliver to
the Agent, for its acceptance, an Assignment and Acceptance, and such parties
shall deliver to the Agent a processing and recordation fee of $5,000 (except
the payment of such fee shall not be required in connection with an assignment
by a Lender to an Affiliate of such Lender or Related Fund of such Lender), and
(C) no written consent of the Agent shall be required in connection with any
assignment by a Lender to an Affiliate of such Lender or a Related Fund of such
Lender. Upon such execution, delivery and acceptance, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least 3 Business Days after the delivery thereof to the Agent (or
such shorter period as shall be agreed to by the Agent and the parties to such
assignment), (1) the assignee thereunder shall become a “Lender” hereunder and,
in addition to the rights and obligations hereunder held by it immediately prior
to such effective date, have the rights and obligations hereunder that have been
assigned to it pursuant to such Assignment and Acceptance and (2) the assigning
Lender thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance 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). Notwithstanding anything contained to
the contrary in this Section 16(f)(ii), a Lender may assign any or all of its
rights under the Loan Documents to an Affiliate of such Lender or a Related Fund
of such Lender without delivering an Assignment and Acceptance to the Agent;
provided, that (x) the Borrowers and the Agent may continue to deal solely and
directly with such assigning Lender in connection with the interest so assigned
until such Lender and its assignee shall have executed and delivered an
Assignment and Acceptance to the Agent for recordation and (y) the failure of
such assigning Lender to deliver an Assignment and Acceptance to the Agent or
any other Person shall not affect the legality, validity or binding effect of
such assignment.

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(iii)  By executing and delivering an Assignment and Acceptance, the assigning
Lender and the assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (A) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other Loan
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (B) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Credit Party or any of its Subsidiaries or the performance or observance by any
Credit Party of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (C) such assignee confirms that it has
received a copy of this Agreement and the other Loan Documents, together with
such other documents and information it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (D)
such assignee will, independently and without reliance upon the assigning
Lender, the Agent or any Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement and the other Loan
Documents; (E) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to the Agent by the terms hereof
and thereof, together with such powers as are reasonably incidental hereto and
thereto; and (F) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Loan Documents are required to be performed by it as a Lender.
 
(iv)  The Agent shall, on behalf of the Borrowers, maintain, or cause to be
maintained at the Payment Office, a copy of each Assignment and Acceptance
delivered to and accepted by it and a register (the “Register”) for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amount of the Term Loan (the “Registered Loans”) owing to each
Lender from time to time. Other than in connection with an assignment by a
Lender to an Affiliate of such Lender or a Related Fund of such Lender, the
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Agent and the Lenders shall treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers and any Lender at any reasonable time and from time to time upon
reasonable prior notice. In the case of any assignment by a Lender to an
Affiliate of such Lender or a Related Fund of such Lender, and which assignment
is not recorded in the Register, the assigning Lender shall maintain a register
comparable to the Register.

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(v)  Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee, together with any promissory notes subject to such
assignment, the Agent shall, if the Agent consents to such assignment and if
such Assignment and Acceptance has been completed (A) accept such Assignment and
Acceptance and (B) record the information contained therein in the Register.

(vi)  A Registered Loan (and the registered note, if any, evidencing the same)
may be assigned or sold in whole or in part only by registration of such
assignment or sale on the Register (or in the case of any assignment by a Lender
to an Affiliate of such Lender or a Related Fund of such Lender, and which
assignment is not recorded in the Register, a register comparable to the
Register) (and each registered note shall expressly so provide). Any assignment
or sale of all or part of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by registration of such assignment or
sale on the Register (or in the case of any assignment by a Lender to an
Affiliate of such Lender or a Related Fund of such Lender, and which assignment
is not recorded in the Register, a register comparable to the Register),
together with the surrender of the registered note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such registered note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new registered notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the registered note, if any, evidencing the same) on
the Register, the Agent shall treat the Person in whose name such Registered
Loan (and the registered note, if any, evidencing the same) is registered as the
owner thereof for the purpose of receiving all payments thereon and for all
other purposes, notwithstanding notice to the contrary.
 
(vii)  In the event that any Lender sells participations in a Registered Loan,
such Lender shall maintain a register on which it enters the name of all
participants in the Registered Loans held by it (the “Participant Register”). A
Registered Loan (and the registered note, if any, evidencing the same) may be
participated in whole or in part only by registration of such participation on
the Participant Register (and each registered note shall expressly so provide).
Any participation of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
 
(viii)  Any foreign Person who purchases or is assigned or participates in any
portion of such Registered Loan shall comply with Section 2(o). 
 
(ix)  Each Lender may sell participations to one or more banks or other entities
in or to all or a portion of its rights and obligations under this Agreement and
the other Loan Documents (including, without limitation, all or a portion of its
Commitments and the Term Loan made by it); provided, that (A) such Lender's
obligations under this Agreement (including without limitation, its Commitments
hereunder) and the other Loan Documents shall remain unchanged; (B) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, and the Borrowers, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents; and (C) a participant shall not be entitled to require such Lender to
take or omit to take any action hereunder except (1) action directly effecting
an extension of the maturity dates or decrease in the principal amount of the
Term Loan, (2) action directly effecting an extension of the due dates or a
decrease in the rate of interest payable on the Term Loan or the fees payable
under this Agreement, or (3) actions directly effecting a release of all or a
substantial portion of the Collateral or any Credit Party (except as set forth
in Section 14(h) of this Agreement or any other Loan Document).

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(g) Governing Law; Submission to Jurisdiction, Service, Etc. This Agreement and
the other Loan Documents shall be governed by and construed in accordance with
the substantive laws (other than conflict of law provisions and principles, but
including Section 5-1401 and Section 5-1402 of the General Obligations Law) of
the State of New York. Each Borrower hereby consents to the non-exclusive
jurisdiction of any United States Federal Court sitting in New York, New York or
any New York state court sitting in New York, New York in any action, suit or
other proceeding arising out of or relating to this Agreement or any of the
other Loan Documents, and each Borrower irrevocably agrees that all claims and
demands in respect of any such action, suit or proceeding may be heard and
determined in any such court and irrevocably waives any objection it may now or
hereafter have as to the venue of any such action, suit or proceeding brought in
any such court or that such court is an inconvenient forum. Each Borrower waives
personal service of any and all process upon it and consents that all such
service of process may be made by registered mail (return receipt requested)
directed to Parent at Borrowers’ address for notices pursuant to this Agreement,
and service so made shall be deemed to be completed with respect to all
Borrowers five (5) days after the same shall have been so deposited in the
United States mails. Nothing herein shall limit the right of Agent or any of the
Lenders to bring proceedings against any Borrower or any Affiliate of any
Borrower in the courts of any other jurisdiction. Any judicial proceeding
commenced by any Borrower against Agent or any of the Lenders or any other
holder of any Obligations, or any Affiliate of Agent or any of the Lenders or
any other holder of any Obligations, involving, directly or indirectly, any
matter in any way arising out of, related to or connected with any Loan Document
shall be brought only in a United States Federal Court or New York state court
sitting in New York, New York. Nothing in this Agreement shall be deemed or
operate to affect the right of Agent or any of the Lenders to serve legal
process in any other manner permitted by law or to preclude the enforcement by
Agent or any of the Lenders of any judgment or order obtained in such forum or
the taking of any action under this Agreement or any other Loan Document to
enforce same in any other appropriate forum or jurisdiction.
 
(h) Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
BORROWERS, EACH LENDER AND AGENT HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER
BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT, THE OBLIGATIONS OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR ANY PARTY’S ACTIONS IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT HEREOF OR THEREOF. EACH BORROWER, EACH LENDER AND
Agent ACKNOWLEDGE THAT SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING
OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF
ADVICE OF COUNSEL OF ITS CHOOSING.

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(i) Waiver of Hearing. EACH BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY WAIVES ALL RIGHTS WHICH SUCH BORROWER HAS UNDER APPLICABLE LAW TO
NOTICE AND TO A JUDICIAL HEARING PRIOR TO THE ISSUANCE OF A WRIT OF POSSESSION
ENTITLING AGENT, ANY OF THE LENDERS, THEIR SUCCESSORS AND ASSIGNS TO POSSESSION
OF THE COLLATERAL UPON A DEFAULT. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING AND WITHOUT LIMITING ANY OTHER RIGHT WHICH Agent OR ANY OF THE LENDERS
MAY HAVE, EACH BORROWER CONSENTS THAT, IF Agent OR ANY OF THE LENDERS FILES A
PETITION FOR AN IMMEDIATE WRIT OF POSSESSION IN COMPLIANCE WITH APPLICABLE LAW
AND THIS WAIVER OR A COPY HEREOF IS ALLEGED IN SUCH PETITION AND ATTACHED
THERETO, THE COURT BEFORE WHICH SUCH PETITION IS FILED MAY DISPENSE WITH ALL
RIGHTS AND PROCEDURES HEREIN WAIVED AND MAY ISSUE FORTHWITH AN IMMEDIATE WRIT OF
POSSESSION IN ACCORDANCE WITH APPLICABLE LAW, WITHOUT THE NECESSITY OF AN
ACCOMPANYING BOND TO THE EXTENT OTHERWISE REQUIRED BY APPLICABLE LAW.

(j) Expenses. Borrowers shall pay on demand all of Agent’s and any of the
Lender’s costs and expenses in connection with underwriting and performing due
diligence with respect to the transactions contemplated hereby and the
preparation, reproduction, execution, delivery, administration and enforcement
of this Agreement, including the reasonable fees and out-of-pocket expenses of
Agent’s and any of the Lender’s counsel, in each case whether incurred on, prior
or subsequent to the Agreement Date. In addition, Borrowers shall pay any and
all stamp and other taxes and recording and filing fees payable in connection
with the execution and delivery of all other instruments and documents to be
delivered hereunder. All provisions in this Agreement providing for the payment
or reimbursement of Agent’s or any of the Lender’s attorneys’ fees and expenses
include, without limitation, such fees and expenses incurred pursuant to or in
connection with proceedings brought under 11 U.S.C., the Federal Bankruptcy
Code.
 
(k) Execution in Counterparts; Execution by Fax or E-Mail; Waiver of Acceptance.
This Agreement may be executed in separate counterparts, all of which shall
constitute one and the same agreement. Delivery of an executed counterpart of
this Agreement or any other Loan Document by facsimile or e-mail shall be
equally as effective as delivery of an original executed counterpart of this
Agreement or such other Loan Document. Any party delivering an executed
counterpart of this Agreement or any other Loan Document by facsimile or e-mail
also shall deliver an original executed counterpart of this Agreement or such
other Loan Document, but the failure to deliver an original executed counterpart
shall not affect the validity, enforceability, and binding effect of this
Agreement or such other Loan Document. To the fullest extent permitted by
applicable law, each Borrower waives notice of Agent’s and any of the Lender’s
acceptance of this Agreement and the other Loan Documents.

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(l) No Third-Party Beneficiaries. Except as expressly set forth herein, neither
(i) any stockholder or owner of any other equity interest in any Borrower, (ii)
any of Borrower’s employees or creditors (other than Agent and any of the
Lenders and their Affiliates), nor (iii) any other Person claiming by or through
any Borrower shall be entitled to rely on this Agreement or have any rights,
remedies or claims against Agent or any of the Lenders or any Affiliates of them
under or in connection with this Agreement.
 
(m) Entire Agreement. This Agreement and the other Loan Documents embody the
entire agreement and understanding among Agent, the Lenders and Borrowers and
supersede all prior agreements and understandings relating to the subject matter
hereof.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned have executed this Term Loan and Security
Agreement as of the day and year first above written.
 
Borrowers:
 
CAPITAL GROWTH SYSTEMS, INC.
   
By:
    
Name:
   
Title:
           
GLOBAL CAPACITY GROUP, INC.
 
By:
   
Name:
   
Title:
           
CENTREPATH, INC.
   
By:
   
Name:
   
Title:
           
20/20 TECHNOLOGIES, INC.
   
By:
   
Name:
   
Title:
           
20/20 TECHNOLOGIES I, LLC
   
By:
   
Name:
   
Title:
           
NEXVU TECHNOLOGIES, LLC
   
By:
   
Name:
   
Title:
   

 

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FNS 2007, INC.
   
By:
   
Name:
   
Title:
           
CAPITAL GROWTH ACQUISITION, INC.
   
By:
    
Name:
   
Title:
           
VANCO DIRECT USA, LLC t/b/k/a GLOBAL CAPACITY DIRECT, LLC
   
By:
   
Name:
   
Title:
           
MAGENTA NETLOGIC LIMITED
   
By:
   
Name:
   
Title:
   

 
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Agent and Lender:
 
ACF CGS, L.L.C.
   
By:
     
Name:
 
Title: