Exhibit 10.23

CREDIT AGREEMENT

among

FIBERNET OPERATIONS, INC.

and

DEVNET L.L.C.,

as Co-Borrowers,

FIBERNET TELECOM GROUP, INC.,

FIBERNET TELECOM, INC.

AVAILIUS, LLC

LOCAL FIBER, LLC

and

FIBERNET EQUAL ACCESS, L.L.C.,

as Guarantors

CAPITALSOURCE FINANCE LLC,

as Agent,

and

THE LENDERS FROM TIME TO TIME PARTIES HERETO

Dated as of

March 21, 2007

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TABLE OF CONTENTS

 

               Page I    DEFINITIONS    1 II    CREDIT FACILITIES    2    2.1   

Revolving Facility

   2    2.2   

Term Loans

   2    2.3   

Letters of Credit

   2    2.4   

Evidence of Loans

   2    2.5   

Interest

   3    2.6   

Procedures for Advances under the Revolving Facility and Term B Advances

   4    2.7   

LIBOR Loans

   4    2.8   

Voluntary Prepayments

   6    2.9   

Mandatory Payments and Prepayments

   6    2.10   

Promise to Pay; Manner of Payment

   8    2.11   

Payments by Agent

   9    2.12   

Computation of Interest and Fees; Lawful Limits

   9    2.13   

Cash Management Systems

   9    2.14   

Reliance

   10 III    FEES    10    3.1   

Certain Fees

   10    3.2   

Unused Line Fees

   10    3.3   

Prepayment Fee

   10    3.4   

Letter of Credit Fees

   11 IV    CONDITIONS PRECEDENT    11    4.1   

Conditions to Initial Advance, Funding of the Term Loans and the Closing

   11    4.2   

Conditions to each Advance and Funding of the Term Loans

   11 V    REPRESENTATIONS AND WARRANTIES    12    5.1   

Organization and Authority

   12    5.2   

Loan Documents and Related Documents

   12    5.3   

Subsidiaries, Capitalization and Ownership Interests

   13    5.4   

Properties

   13    5.5   

Material Contracts; Material Customers and Affiliate Transactions

   13    5.6   

Litigation

   14    5.7   

Environmental Matters

   14    5.8   

Tax Returns; Governmental Reports

   14    5.9   

Financial Statements and Reports

   14    5.10   

Compliance with Law; ERISA; Business

   14    5.11   

Intellectual Property

   15    5.12   

Permits; Labor

   15    5.13   

No Default; Solvency

   15    5.14   

Insurance

   15    5.15   

Margin Stock; Regulated Entities; OFAC; Patriot Act

   15    5.16   

Broker’s or Finder’s Commissions

   16    5.17   

Regulatory Matters

   16    5.18   

Special Telecommunications Matters

   17    5.19   

Disclosure

   17 VI    AFFIRMATIVE COVENANTS    17    6.1   

Reporting, Collateral and Other Information

   17

 

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               Page    6.2   

Conduct of Business; Maintenance of Existence and Assets

   17    6.3   

Compliance with Legal and Other Obligations

   18    6.4   

Insurance

   18    6.5   

Inspection

   18    6.6   

Use of Proceeds

   19    6.7   

Loans Secured

   19    6.8   

Further Assurances; Post Closing Deliveries

   19 VII    NEGATIVE COVENANTS    20    7.1   

Financial Covenants

   20    7.2   

Indebtedness

   20    7.3   

Liens

   21    7.4   

Consolidations, Mergers and Investments

   21    7.5   

Restricted Payments

   22    7.6   

Transactions with Affiliates

   23    7.7   

Transfer of Assets; Issuance of Capital Stock

   23    7.8   

Holding Company

   24    7.9   

Organizational Documents; Accounting Changes; Use of Proceeds; Insurance;
Business; Other Liabilities

   24    7.10   

Related Documents and Subordinated Debt

   24    7.11   

No Performance Restrictions

   24    7.12   

Certain Specific Agreements

   25 VIII    EVENTS OF DEFAULT    25    8.1   

Events of Default

   25    8.2   

Certain Effects of Event of Default

   27 IX    RIGHTS AND REMEDIES    27    9.1   

Rights and Remedies

   27    9.2   

Application of Proceeds

   29    9.3   

Attorney in Fact

   29    9.4   

Rights and Remedies not Exclusive

   29    9.5   

Changes in Law or Policy

   29    9.6   

Regulatory Matters

   29 X    WAIVERS AND JUDICIAL PROCEEDINGS    30    10.1   

Certain Waivers

   30    10.2   

Amendments and Waivers

   31    10.3   

Survival

   31 XI    AGENT PROVISIONS; SETTLEMENT    31    11.1   

Agent

   31    11.2   

Co-Agents and Other Designations

   36    11.3   

Set-off and Sharing of Payments

   36    11.4   

Disbursement of Advances and Term B Advances

   36    11.5   

Settlements; Payments; and Information

   37    11.6   

Dissemination of Information

   38    11.7   

Special Agent Advances

   38 XII    MISCELLANEOUS    38    12.1   

Governing Law; Jurisdiction; Service of Process; Venue

   38    12.2   

Successors and Assigns; Assignments and Participations

   39    12.3   

Reinstatement; Application of Payments; Releases

   40    12.4   

Indemnity

   40    12.5   

Notice

   41

 

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               Page    12.6   

Severability; Captions; Counterparts

   41    12.7   

Expenses

   41    12.8   

Entire Agreement

   41    12.9   

Confidentiality and Publicity

   41    12.10   

No Consequential Damages

   42    12.11   

Joint and Several Liability

   43

XIII

   TAXES    44    13.1   

Taxes

   44

XIV

   GUARANTY    46    14.1   

Guaranty

   46    14.2   

Reinstatement

   47    14.3   

Additional Waivers

   47    14.4   

Continuing Guaranty

   47    14.5   

Maximum Liability

   47    14.6   

Subordination

   48    14.7   

Subrogation

   48    14.8   

Information Concerning Borrowers

   48

 

iii

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CREDIT AGREEMENT

This CREDIT AGREEMENT (this “Agreement”), dated as of March 21, 2007, is entered
into by and among FIBERNET OPERATIONS, INC., a Delaware corporation
(“FiberNet”), as a Borrower and a Credit Party; DEVNET L.L.C., a Delaware
limited liability company (“Devnet”), as a Borrower and a Credit Party; FIBERNET
TELECOM GROUP, INC., a Delaware corporation (“Holdings”), as a Guarantor and a
Credit Party; FIBERNET TELECOM, INC., a Delaware corporation (“FiberNet
Telecom”), as a Guarantor and a Credit Party; AVAILIUS, LLC, a New York limited
liability company (“Availius”), as a Guarantor and a Credit Party; LOCAL FIBER,
LLC, a New York limited liability company (“Local Fiber”), as a Guarantor and a
Credit Party; FIBERNET EQUAL ACCESS, L.L.C., a New York limited liability
company (“FiberNet Equal Access”), as a Guarantor and a Credit Party;
CAPITALSOURCE FINANCE LLC, a Delaware limited liability company (in its
individual capacity, “CapitalSource”), as administrative agent for the Lenders
(CapitalSource, in such capacity, “Agent”); and the LENDERS from time to time
parties hereto.

WHEREAS, the Credit Parties have requested that Lenders make available to
Borrowers (i) a revolving credit facility (including a letter of credit
sub-facility) (the “Revolving Facility”) in a maximum amount not to exceed the
facility cap in effect from time to time pursuant to the terms of this Agreement
(the “Facility Cap”), the amount of which, initially, shall be Six Million
Dollars ($6,000,000), (ii) a Term A Loan in an aggregate original principal
amount of Fourteen Million Dollars ($14,000,000), and (iii) a Term B Loan in an
the principal amount of Five Million Dollars ($5,000,000), the proceeds of
which, in each case, shall be used by Borrowers for purposes permitted under,
and otherwise in accordance with and subject to the terms of, this Agreement.

WHEREAS, Lenders are willing to make the Revolving Facility, the Term A Loan and
the Term B Loan available to Borrowers, upon the terms and subject to the
conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt, sufficiency and adequacy of which hereby
are acknowledged, the parties hereto hereby agree as follows:

 

I DEFINITIONS

For purposes of all Loan Documents, (a) the terms listed in Appendix A hereto
shall have the respective meanings assigned to such terms in Appendix A, and
(b) all capitalized terms used which are not specifically defined herein shall
have the respective meanings assigned to them in Article 9 of the UCC. Unless
otherwise specified, (a) any agreement or instrument referred to in any Loan
Document shall mean such agreement or instrument, as modified, amended,
supplemented or restated and in effect from time to time, subject to any
applicable restrictions set forth therein, and (b) all accounting terms not
defined in any Loan Documents shall be interpreted in accordance with GAAP. If
any change in GAAP results in a change in the calculation of the financial
covenants or interpretation of related provisions of any Loan Document, then the
Credit Parties and Lender Parties agree to amend such provisions so as to
equitably reflect such changes in GAAP with the desired result that the criteria
for evaluating the Credit Parties’ financial condition shall be the same after
such change in GAAP as if such change had not been made, provided that, until
such amendments are effective, the calculations of financial covenants and the
interpretation of any related provisions shall be calculated and interpreted in
accordance with GAAP as in effect immediately prior to such change in GAAP.

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II CREDIT FACILITIES

 

  2.1 Revolving Facility

Subject to the terms and conditions set forth in this Agreement, each Revolving
Lender agrees to make available to Borrowers its Pro Rata Share of Advances from
time to time prior to the Maturity Date; provided, that (i) the Pro Rata Share
of Advances of any Revolving Lender shall not at any time exceed such Revolving
Lender’s Commitment and (ii) the aggregate amount of all Advances at any time
outstanding shall not exceed the Revolving Loan Limit. The obligations of
Revolving Lenders are several, and not joint or joint and several. The Revolving
Facility is a revolving credit facility that may be drawn, repaid and redrawn
from time to time as permitted under this Agreement. Borrowers may not at any
time increase, reduce or otherwise adjust the Facility Cap. Agent shall have the
right to establish and readjust from time to time, in its Permitted Discretion
and upon not less than ten Business Days’ prior written notice to Borrowers,
reserves under the Revolving Facility, which reserves shall have the effect of
reducing the amounts otherwise available to be disbursed to Borrowers under the
Revolving Facility. The Revolving Loans shall be due and payable in full, if not
earlier in accordance with this Agreement, on the Maturity Date.

 

  2.2 Term Loans

(a) Subject to the terms and conditions set forth in this Agreement, each Term A
Lender agrees to loan to Borrowers on the Closing Date such Term A Lender’s Pro
Rata Share of the Term A Loan, which, in the aggregate for all Term A Lenders,
shall be in the original principal amount of Fourteen Million Dollars
($14,000,000). The Term A Loan is not a revolving credit facility and may not be
drawn, repaid and redrawn, and payments of principal on the Term A Loan shall
permanently reduce the Term A Loan. The obligations of Term A Lenders hereunder
are several, and not joint or joint and several. Borrowers irrevocably authorize
Agent and Term A Lenders to disburse the proceeds of the Term A Loan on the
Closing Date in accordance with the applicable funds disbursement letter in form
and substance satisfactory to Agent in its Permitted Discretion.

(b) Subject to the terms and conditions set forth in this Agreement, each Term B
Lender agrees to make available to Borrowers its Pro Rata Share of Term B
Advances from time to time prior to the third anniversary of the Closing Date;
provided, that (i) the Pro Rata Share of Term B Advances of any Term B Lender
shall not at any time exceed such Term B Lender’s Term B Loan Commitment and
(ii) the aggregate amount of all Term B Advances shall not exceed the principal
amount of Five Million Dollars ($5,000,000). The Term B Loan is not a revolving
credit facility and may not be drawn, repaid and redrawn, and payments of
principal on the Term B Loan shall permanently reduce the Term B Loan. The
obligations of Term B Lenders hereunder are several, and not joint or joint and
several.

 

  2.3 Letters of Credit

In the event that Borrowers and Agent have executed, or hereafter execute, the
Letters of Credit Addendum to Credit Agreement in the form attached hereto as
Appendix B (the “L/C Addendum”), then, subject to the terms set forth in the L/C
Addendum, the Letter of Credit Documents and this Agreement, at the request of
Borrowers, Agent agrees to arrange for the account of a Borrower one or more
Letters of Credit, for the ratable risk of each Revolving Lender according to
its Pro Rata Share, containing terms and conditions acceptable to Agent and the
issuer thereof.

 

  2.4 Evidence of Loans

(a) Each Lender shall maintain, in accordance with its usual practice,
electronic or written records evidencing the Obligations to such Lender
resulting from each Loan made by such Lender from

 

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time to time. Agent shall maintain electronic or written records (the
“Register”) recording (i) the amount, class and type of each Loan made hereunder
and all applicable interest rate periods, (ii) the amount of any principal
and/or interest due and payable and/or to become due and payable from Borrowers
to each Lender hereunder and (iii) all amounts received by Agent hereunder from
Borrowers and each Lender’s share thereof. The Register shall be prima facie
evidence of the existence and amounts of the obligations and indebtedness
therein recorded; provided, however, that the failure of Agent to maintain such
records or any error therein shall not in any manner affect the Obligations in
accordance with their terms. The Register shall be subject to the terms of
Section 12.2(b) hereof. Within a reasonable period of time after written request
from any Credit Party, Agent shall provide such Credit Party with a copy of the
Register.

(b) Agent will account to Borrowers monthly with a statement of Advances and any
charges and payments made pursuant to the Loan Documents, and in the absence of
demonstrable error, such accounting rendered by Agent shall be deemed final,
binding and conclusive unless Agent is notified by Borrowers in writing to the
contrary within 15 calendar days of Receipt of such accounting, which notice
shall be deemed an objection only to items specifically objected to therein.

(c) Upon written notice by Agent to Borrowers that a promissory note or other
evidence of indebtedness is requested by any Lender to evidence the Loans and
other Obligations owing or payable to, or to be made by, such Lender, Borrowers
promptly (and in any event within three Business Days of any such request) shall
execute and deliver to Agent an appropriate promissory note or notes in form and
substance satisfactory to Agent and such Lender in their Permitted Discretion.

(d) Upon Agent’s (for itself or on behalf of any Lender) written request to
Borrowers, and in any event within three Business Days of any such request,
Borrowers shall execute and deliver to Agent new Notes and/or split or divide
the Notes, or any of them, in exchange for the then existing subject Notes, in
such amounts or denominations as Agent or such Lender shall specify; provided,
that the aggregate principal amount of such new, split or divided Notes shall
not exceed the aggregate principal amount of the then existing subject Notes
outstanding at the time such request is made; and provided, further, that such
Notes that are replaced shall then be deemed no longer outstanding hereunder and
shall be replaced by such new Notes and returned to Borrowers for cancellation
within a reasonable period of time after Agent’s receipt of the replacement
Notes.

(e) In the event of the mutilation, destruction, loss or theft of any Notes,
Borrowers shall, upon the written request of the holder of such Notes to
Borrowers, and in any event within three Business Days of any such request,
execute and deliver to Agent new replacement Notes in the same form and original
principal amount and original date as the Notes so mutilated, destroyed, lost or
stolen, and such replaced Notes shall then be deemed no longer outstanding
hereunder. If the Notes being replaced have been mutilated, they shall be
surrendered to Borrowers after Agent’s receipt of the replacement Notes and if
such replaced Notes have been destroyed, lost or stolen, such holder shall
furnish Borrowers with an indemnity in writing reasonably acceptable to
Borrowers to save them harmless in respect of such replaced Note.

 

  2.5 Interest

(a) Subject to Section 2.5(b) and Section 2.7, each Loan shall bear interest on
the outstanding principal amount thereof at a rate per annum equal to its
Applicable Rate in effect from time to time, plus its Applicable Margin in
effect from time to time. Accrued interest on each Prime Rate Loan shall be due
and payable in cash in arrears on each Interest Payment Date and on the date of
any payment of Loans pursuant to this Agreement. Accrued interest on each LIBOR
Loan shall be due and payable in cash in arrears on the last day of the Interest
Period applicable to such LIBOR Loan (and, for LIBOR Loans with Interest Periods
longer than 90 days, on the 90th day of such Interest Period), and on the date
of any payment of Loans pursuant to this Agreement.

 

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(b) If an Event of Default exists, (i) the Obligations shall bear interest at
the Default Rate, and (ii) the applicable Letter of Credit Fees shall be
increased and payable in accordance with the provisions of Section 3.4(b)
hereof, in each case upon written notice of such increase given by Agent, in its
sole discretion, to Borrowers, provided, that, from and after the occurrence of
any Event of Default under Section 8.1(g) or (h), such increase shall be
automatic and without any notice from Agent or any other Person. In all such
events, and notwithstanding the date on which application of the Default Rate or
such increased Letter of Credit Fees is communicated to Borrowers, the Default
Rate and such increased Letter of Credit Fees shall accrue from the initial date
of any Event of Default until all existing Events of Default are waived in
writing in accordance with the terms of this Agreement and shall be payable in
cash upon demand. Neither Agent nor Lenders shall be required to (A) accelerate
the Loans, (B) terminate any Commitment or (C) exercise any other rights or
remedies under the Loan Documents or Applicable Law in order to charge the
Default Rate.

 

  2.6 Procedures for Advance under the Revolving Facility and Term B Advances

Each Advance and each Term B Advance shall be in a minimum principal amount of
$100,000 and integral multiples of $100,000 in excess thereof and shall be made
on a Business Day. Each Advance and each Term B Advance shall be made upon
Borrowers’ irrevocable written request in the form of a completed Borrowing
Certificate delivered to Agent not later than 12:00 p.m. (New York City time) at
least one but not more than four Business Days prior to the proposed Business
Day on which such requested Advance is to be made (the “Borrowing Date”). On
each Borrowing Date, Borrowers irrevocably authorize Agent and Revolving Lenders
to disburse the proceeds of the requested Advance or Term B Advance to an
account of a Borrower that is subject to an Account Control Agreement (and that
is not solely a payroll account), for credit to such Borrower via Federal funds
wire transfer.

 

  2.7 LIBOR Loans

(a) Subject to Section 2.7(b) and provided no Default or Event of Default
exists, Borrowers from time to time may elect to have all or a portion of the
principal balance of any Loan bear interest at the LIBOR Rate as its Applicable
Rate, such election to be exercised by delivery of a LIBOR Election Notice from
Borrowers to Agent not later than 1:00 p.m. (New York City time) at least two
Business Days prior to the Business Day on which the requested Interest Period
will commence. Agent shall determine (which determination shall, absent manifest
error, be presumptively correct) the LIBOR Rate applicable to the relevant LIBOR
Loan on the applicable Interest Rate Determination Date and promptly shall give
notice thereof to Borrowers. Any LIBOR Election Notice received by Agent shall
be irrevocable. Upon the expiration of an Interest Period the applicable LIBOR
Loan shall be converted to and become a Prime Rate Loan unless such LIBOR Loan
has been continued as a LIBOR Loan in accordance with this Section 2.7(a). Each
LIBOR Loan shall be in an amount not less than $100,000 or integral multiples of
$100,000 in excess thereof and at no time shall more than eight LIBOR Loans be
in effect.

(b) If Agent in its Permitted Discretion determines that (i) Dollar deposits of
the relevant amount for the relevant Interest Period are not available in the
London interbank eurodollar market, (ii) the rate at which such Dollar deposits
are being offered will not adequately and fairly reflect the cost to Lenders of
maintaining a LIBOR Rate for such Interest Period, (iii) the making or funding
of LIBOR Loans has become impracticable as a result of an event which in the
opinion of Agent materially affects such Loans, or (iv) adequate and reasonable
means do not exist for ascertaining the LIBOR Rate applicable to such Interest
Period, then in any such case Agent may give notice of such determination to
Borrowers and if such notice is so given then, so long as such circumstances
shall continue as determined by Agent in its Permitted Discretion, (x) no Lender
Party shall be required to make or convert any Prime Rate Loans into LIBOR
Loans, and (y) on the last day of the current Interest Period for each LIBOR
Loan then existing, each such LIBOR Loan, unless then repaid in full,
automatically shall convert to a Prime Rate Loan.

 

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(c) If any change in any, or imposition of any new, Applicable Law, whether or
not having the force of law, including, without limitation, the imposition of
any reserve and/or special deposit requirement (other than reserves included in
the Eurocurrency Reserve Requirements), results in or causes any Lender Party to
be subject to any (i) tax, levy, impost, charge, fee, duty, deduction or
withholding of any kind whatsoever in respect of any LIBOR Loan (other than any
tax imposed upon the total Net Income of such Lender Party), (ii) increase in
the cost to such Lender Party of maintaining any LIBOR Loan or (iii) reduction
in the amount of principal or interest receivable by such Lender Party in
respect of any LIBOR Loan, then Borrowers shall pay to Agent, for the benefit of
Lender Parties, within 10 Business Days after Receipt of a notice from Agent
containing reasonably detailed calculations as to any such additional amounts
sought, an amount equal to such increased cost or reduced amount, provided, that
such losses and expenses are being charged by such Lender Party generally to its
other borrowers of similar types of loans at such time, and provided, further,
that Borrowers shall not be obligated to pay any such increased cost or reduced
amount which accrued prior to the day which is 180 days prior to the date upon
which Agent first makes demand therefor.

(d) If any change in any, or imposition of any new, Applicable Law, whether or
not having the force of law, including, without limitation, the imposition of
any reserve and/or special deposit requirement (other than reserves included in
the Eurocurrency Reserve Requirements), results in or causes it to be unlawful
for any Lender Party to make, maintain or fund its share of any LIBOR Loan,
then, upon the occurrence of such event, such Lender Party shall notify Agent
and Agent shall notify Borrowers thereof and thereupon (i) no Lender Party shall
be under any obligation to make or convert any Prime Rate Loans into LIBOR Loans
and (ii) on the last day of the current Interest Period for each LIBOR Loan (or,
in any event, on such earlier date as may be required by the relevant Applicable
Law), such LIBOR Loan, unless then repaid in full, automatically shall convert
to a Prime Rate Loan.

(e) Without limiting any other provision of the Loan Documents, Borrowers shall
indemnify and reimburse each Lender Party on demand for any and all reasonable
and documented costs, expenses and losses which such Lender Party may sustain,
including, without limitation, any expense resulting from their contractual
obligations in connection with applicable Dollar deposits, as a consequence of
(i) any withdrawal by Borrowers of any LIBOR Election Notice, (ii) any failure
by Borrowers to borrow, continue, or convert the amount set forth in any LIBOR
Election Notice on the date specified therefor, (iii) any failure of Borrowers
to make any payment when due of any amount payable with respect to any LIBOR
Loan, and (iv) any prepayment of any LIBOR Loan prior to the expiration of the
Interest Period applicable thereto.

(f) Each Lender Party may fulfill its commitment as to any LIBOR Loan by causing
an Affiliate of such Lender Party to make such Loan; provided that in such event
for the purposes of this Agreement such Loan shall be deemed to have been made
by such Lender Party and the obligation of Borrowers to repay such Loan shall
nevertheless be to such Lender Party and shall be deemed held by it.
Notwithstanding any provision of the Loan Documents, each Lender Party shall be
entitled to fund and maintain its funding of all or any part of its LIBOR Loans
in any manner it sees fit, it being understood, however, that all determinations
under the Loan Documents shall be made as if such Lender Party actually had
funded and maintained each LIBOR Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the LIBOR Rate for such
Interest Period. All determinations and statements of any Lender Party pursuant
to this Section 2.7 shall be prima facie evidence of such determinations and
statements. Each Lender Party may use reasonable averaging and attribution
methods in determining compensation under this Section 2.7, and the provisions
of Sections 2.7(c) and (e) shall survive the repayment of the Obligations and
the termination of the Commitments and this Agreement. For the avoidance of
doubt, the amounts payable under Sections 2.7(c) and (e) shall not be
duplicative of one another.

 

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  2.8 Voluntary Prepayments

(a) Subject to the terms of this Section 2.8 and Section 3.3, Borrowers may
prepay to Agent, for the ratable benefit of the applicable Lenders, the
outstanding principal amount of the Term Loans, in whole or in part, at any time
in an amount not less than $500,000 or, if in excess thereof, in integral
multiples of $100,000 in excess thereof, or if less, the entirety of such Loan.
A Responsible Officer on behalf of Borrowers shall give irrevocable written
notice of any such prepayment to Agent not less than five Business Days prior to
the date of such prepayment, specifying (i) the date and the amount of such
prepayment, (ii) the amount of the Prepayment Fee, if any, and (iii) that such
payment is being made in compliance with this Section 2.8. Payments of the
amounts set forth in the notice of prepayment shall be due and payable on the
prepayment date set forth in such notice.

(b) No LIBOR Loan may be prepaid in part. Concurrently with any prepayment of
any LIBOR Loan prior to the expiration of the Interest Period applicable
thereto, Borrowers shall pay all breakage fees and any other amounts due under
Section 2.7(e) as a consequence of such prepayment.

(c) Subject to Section 9.2 hereof, any voluntary partial prepayment with respect
to the Revolving Loan shall be applied in the following order of priority to the
payment of: (i) any and all Obligations that are due and owing under the Loan
Documents, except the principal balance of the Loans and accrued and unpaid
interest thereon; (ii) accrued and unpaid interest on the principal balance of
the Revolving Loans then due and owing; and (iii) the principal balance of the
Revolving Loan. Subject to Section 9.2 hereof, any voluntary partial prepayment
with respect to the Term Loans shall be applied in the following order of
priority to the payment of: (i) any and all Obligations that are due and owing
under the Loan Documents including, without limitation, the applicable
Prepayment Fee, except the principal balance of the Loans and accrued and unpaid
interest thereon; (ii) accrued and unpaid interest on the principal balance of
the Term Loans then due and owing (in such order as Agent shall determine in its
sole discretion); and (iii) the principal balance of the Term Loans (applied to
the tranches as Agent shall determine in its sole discretion, provided that
Agent shall not apply to the principal balance of the Term B Loan more than the
aggregate amount available for application under this clause (iii) multiplied by
a fraction, the numerator of which is the then outstanding principal balance of
the Term B Loan and the denominator of which is then outstanding principal
balance of the Term Loans), which shall be applied pro rata to the remaining
scheduled installments thereof until paid in full.

 

  2.9 Mandatory Payments and Prepayments

(a) The principal amount of the Loans shall be paid as follows:

(i) The principal amount of the Term A Loan shall be paid in installments on the
dates and in the respective amounts set forth below:

 

Payment Date

  

Amount of

Principal Payment

July 1, 2008

   $ 350,000

October 1, 2008

   $ 350,000

January 1, 2009

   $ 350,000

April 1, 2009

   $ 350,000

July 1, 2009

   $ 525,000

October 1, 2009

   $ 525,000

 

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January 1, 2010

   $ 525,000

April 1, 2010

   $ 525,000

July 1, 2010

   $ 700,000

October 1, 2010

   $ 700,000

January 1, 2011

   $ 700,000

April 1, 2011

   $ 700,000

July 1, 2011

   $ 1,925,000

October 1, 2011

   $ 1,925,000

January 1, 2012

   $ 1,925,000

(ii) The remaining unpaid principal amount of the Loans and all other
Obligations shall be due and payable in full, if not earlier in accordance with
this Agreement, on the Maturity Date.

(b) If a Change of Control occurs, all Obligations immediately shall be due and
payable in full without the necessity of any notice or demand.

(c) If any Credit Party or any Subsidiary of any Credit Party, whether in a
single transaction or a series of transactions:

(i) sells or transfers any Property in any transaction permitted under
Section 7.7 (other than under Section 7.7(a) or Section 7.7(c));

(ii) sells or issues any Capital Stock (excluding any sale or issuance of
Permitted Securities to the extent that no Default or Event of Default exists or
would result therefrom);

(iii) receives any condemnation award or insurance proceeds of any kind;

(iv) incurs any Indebtedness other than Permitted Indebtedness;

(v) sells or transfers any Property in any transaction not permitted under this
Agreement; or

(vi) receives the proceeds of any purchase price adjustment or indemnification
payment with respect to any Acquisition;

then such Credit Party or such Subsidiary, as the case may be, shall prepay the
Loans in an amount equal to 100% of the Net Proceeds thereof, provided, however,
if such Credit Party or Subsidiary reasonably expects the Net Proceeds of any
such sale or transfer in respect of the foregoing clause (i) or any property
damage insurance award under the foregoing clause (iii), or a portion thereof,
to be reinvested in productive assets of a kind then used or usable in the
Business and not otherwise prohibited by the Loan Documents, it shall deliver to
Agent a certificate setting forth the amount of such Net Proceeds that Borrowers
reasonably expect to be reinvested (the “Reinvestment Amount”) and shall deliver
to Agent the Reinvestment Amount to be, at Agent’s election, (x) applied to the
Revolving Loans (without resulting in a permanent reduction in the Revolving
Loan Commitment) or (y) held by Agent in a Cash Collateral Account pending such
reinvestment; provided further, that so long as no Default or Event of Default
exists, Agent shall hold such Net Proceeds in a Cash Collateral Account for such
period of time that the application of such Net Proceeds to the outstanding
Revolving Loans would not result in the prepayment of a LIBOR Loan prior to the
expiration of the Interest Period with respect thereto resulting in the
incurrence by Borrowers of prepayment fees and expenses under Section 2.7(f)
hereof. If such reinvestment is not made within 270 days after the Reinvestment
Amount is delivered to Agent, Borrowers thereupon shall prepay the Loans in an
amount equal to 100% the portion of the Reinvestment Amount not used to make
such reinvestment.

 

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(d) Concurrently with the delivery to Agent of the Credit Parties’ annual
audited financial statements for each fiscal year in accordance with this
Agreement (but in any event no later than five days after such audited financial
statements are required to be delivered hereunder), commencing with the fiscal
year ending December 31, 2007, Borrowers shall prepay the Loans in an amount
equal to (i) twenty-five percent (25%) of the Excess Cash Flow for the period
from the Closing Date to December 31, 2007 with respect to the fiscal year
ending December 31, 2007 and fifty percent (50%) of the Excess Cash Flow for any
other fiscal year minus (ii) an amount equal to the aggregate amount of all
voluntary prepayments of the principal amount of the Term Loan(s) made by the
Credit Parties during such fiscal year. If such financial statements have not
been timely delivered, the Excess Cash Flow prepayment due hereunder shall equal
Agent’s estimate thereof based on financial information then available to Agent.
If, upon satisfactory delivery of the Excess Cash Flow calculation, the actual
payment due exceeds the estimated payment received by Agent, then Borrowers
shall pay to Agent an amount equal to the difference between the actual and
estimated payments, but Agent shall in no event be obligated to refund any
excess between the estimated and actual payment due.

(e) Any balance of Advances under the Revolving Facility outstanding at any time
in excess of the Revolving Loan Limit immediately shall be due and payable
without the necessity of any notice or demand. All prepayments pursuant this
Section 2.9(e) shall be applied to the outstanding principal amount of the
Revolving Loans.

(f) Subject to Section 9.2 hereof and 2.9(e), all prepayments pursuant to this
Section 2.9 shall be applied in the following order of priority to the payment
of: (i) all then unpaid fees and expenses of Agent under the Loan Documents;
(ii) all then unpaid fees and expenses of Lenders under the Loan Documents,
including the Prepayment Fee, if any, applicable to such prepayment; (iii) any
and all other Obligations that are due and owing under the Loan Documents,
except the principal balance of the Loans and accrued and unpaid interest
thereon; (iv) accrued and unpaid interest on the principal balance of the
Revolving Loans then due and owing; (v) accrued and unpaid interest on the Term
Loans (in such order as Agent shall determine in its sole discretion); (vi) the
principal balance of the Term Loans (applied to the tranches as Agent shall
determine in its sole discretion, provided that Agent shall not apply to the
principal balance of the Term B Loan more than the aggregate amount available
for application under this clause (vi) multiplied by a fraction, the numerator
of which is the then outstanding principal balance of the Term B Loan and the
denominator of which is then outstanding principal balance of the Term Loans),
which shall be applied pro rata to the remaining scheduled installments thereof
until paid in full; and (vii) the principal amount of Revolving Loans (with a
corresponding permanent reduction in the Facility Cap).

 

  2.10 Promise to Pay; Manner of Payment

Each Credit Party absolutely and unconditionally, jointly and severally promises
to pay, when due and payable pursuant hereto, principal, interest and all other
amounts and Obligations payable by it under any Loan Document, in each case,
without any right of rescission or defense and without any deduction whatsoever,
including any deduction for set-off, recoupment or counterclaim, notwithstanding
any damage to, defects in or destruction of the Collateral or any other event,
including obsolescence of any property or improvements. Any payments made by the
Credit Parties (other than payments automatically paid through Advances) shall
be made by wire transfer on the date when due, without offset, deduction or
counterclaim, in Dollars, in immediately available funds to such account as may
be indicated in writing by Agent to Borrowers. Any payment received after 2:00
p.m. (New York City time) on any date shall be deemed received on the next
succeeding Business Day, and any applicable interest or fees shall continue to
accrue in respect thereof. Whenever any payment under any Loan Document is due
and payable on a day other than a Business Day, it shall be due and payable on
the next succeeding Business Day, and such extension of time in such case shall
be included in the computation of payment of any interest (at the interest rate
in effect during such extension) and/or fees, as the case may be.

 

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  2.11 Payments by Agent

If any Obligation remains unpaid beyond any applicable cure period, such
Obligation may be paid by Agent, on behalf of Lenders, which non-payment shall
be deemed an automatic request for an Advance as of the date such payment was
due, and Borrowers hereby irrevocably authorize disbursement of any such funds
to Agent, for the benefit of Lender Parties, by way of direct payment of the
relevant amount, without necessity of any demand. Any sums expended or amounts
paid by Lender Parties as a result of any Credit Party’s failure to comply with
any Loan Document or any of the Obligations may be charged to Borrowers’ account
as an Advance and added to the Obligations.

 

  2.12 Computation of Interest and Fees; Lawful Limits

All interest and fees owing from time to time under the Loan Documents shall be
computed on the basis of a year of 360 days and for the actual number of days
elapsed in each calculation period, as applicable. Under no circumstances shall
the interest and other charges paid or agreed to be paid under any Loan Document
exceed the maximum rate permissible under Applicable Law which a court of
competent jurisdiction shall, in a final non-appealable determination, deem
applicable thereto, and if any such amount shall exceed any such limit, then the
obligation to be so fulfilled shall be reduced to such lawful limit. If any
Lender Party shall have received interest or any other charges of any kind which
might be deemed to be interest under Applicable Law in excess of the maximum
lawful rate, then such excess shall be applied first to any unpaid fees and
other charges under the Loan Documents as determined by Agent, then to the
unpaid principal balance owed hereunder as determined by Agent, and any excess
shall be promptly refunded to Borrowers and the provisions hereof shall be
deemed amended to provide for such permissible rate. The terms and provisions of
this Section 2.12 shall control to the extent any other provision of any Loan
Document is inconsistent herewith.

 

  2.13 Cash Management Systems

(a) No Credit Party shall establish or maintain any deposit, brokerage or other
account with any financial institution (except for deposit accounts solely
dedicated to the payment of payroll expenses provided that the aggregate amount
on deposit in all such deposit accounts does not exceed the aggregate payroll
obligations of the Credit Parties for the current pay period) unless, prior to
the Closing Date or opening such account, Agent, the applicable Credit Party and
such financial institution shall have entered into an Account Control Agreement
with respect to such account. Each Credit Party shall ensure that all
collections of accounts and all other payments received by such Credit Party are
remitted directly to a deposit account subject to an Account Control Agreement.

(b) Upon the request of Agent from time to time if an Event of Default exists,
each Credit Party shall establish lockbox or blocked accounts (collectively,
“Blocked Accounts”) in such Credit Party’s name with such banks as are
reasonably acceptable to Agent (“Depository Banks”), each subject to an Account
Control Agreement between Agent the applicable Credit Party the applicable
Collecting Bank (each, a “Blocked Account Agreement”). Each Credit Party
(i) promptly thereafter shall direct all of its account debtors to remit all
payments directly to a Blocked Account, (ii) promptly (and in any event within
two Business Days of receipt) deposit in a Blocked Account, in the identical
form in which such payment was made, all cash, money, checks, notes, drafts or
other payments relating to and/or constituting proceeds of accounts or other
Collateral which come into the possession or under the control of such Credit
Party and (iii) until deposited in a Blocked Account, hold such items in trust
for Agent, for the benefit of the Lender Parties.

 

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(c) Agent, for the benefit of the Lender Parties, may establish one or more
deposit accounts at each Depository Bank or at a centrally located bank in the
name of Agent or such Credit Party as customer (collectively, the “Concentration
Accounts”). If Agent so directs all collected funds on deposit in the Blocked
Accounts shall be transferred by the Depository Banks on each Business Day to
Agent or any of the Concentration Accounts. All funds received in the
Concentration Account pursuant to this Section 2.13 shall be applied by Agent on
each Business Day to reduce the Obligations under the Revolving Facility in such
order and manner as Agent shall determine. If a credit balance exists with
respect to the Concentration Account, such credit balance shall not accrue
interest in favor of any Credit Party, but unless a Default or Event of Default
exists, shall be available to Borrowers upon written request in accordance with
the terms of this Agreement.

(d) If at any time while a Depository Bank is obligated to transfer to Agent or
any Concentration Account all amounts held or deposited in the Blocked Accounts
held by such Depository Bank, no Credit Party shall nor shall any such Credit
Party permit any Subsidiary to, accumulate or maintain cash in any disbursement
or payroll account, as of any date, in an amount in excess of checks outstanding
against such account as of such date and amounts necessary to meet minimum
balance requirements.

 

  2.14 Reliance

Notwithstanding any provision of any Loan Document, Lender Parties shall be
entitled to rely upon the authority of any Responsible Officer of Borrowers for
communications with and instructions from Borrowers, until Agent has received
written notice from Borrowers that such Responsible Officer no longer has such
authority.

 

III FEES

 

  3.1 Certain Fees

Borrowers shall pay Agent the fees as are set forth in the Fee Letter.

 

  3.2 Unused Line Fees

(a) Borrowers shall pay to Agent, for the ratable benefit of Revolving Lenders,
an unused line fee payable quarterly in arrears on each Interest Payment Date,
in an amount equal to 0.50% per annum of the difference between (a) the Facility
Cap as in effect during the preceding quarter and (b) the sum of the daily
average amount of (i) the outstanding principal balance of all Advances
(determined as of the end of each day) plus (ii) the Letter of Credit Usage
(determined as of the end of each day) plus (iii) any reserves established by
Agent pursuant to Section 2.1), in each case outstanding during such preceding
quarter.

(b) Borrowers shall pay to Agent, for the ratable benefit of Term B Lenders, an
unused line fee payable quarterly in arrears on each Interest Payment Date, in
an amount equal to 0.50% per annum of the difference between (a) the Term B Loan
Commitment as in effect during the preceding quarter and (b) the aggregate
amount of all Term B Advances disbursed as of such Interest Payment Date.

 

  3.3 Prepayment Fee

If any Obligations are accelerated or any Credit Party otherwise prepays, or is
required to prepay, Term Loans in full or in part (other than as a result of any
mandatory prepayment under Section 2.9(a), 2.9(c)(i), 2.9(c)(iii) or 2.9(d)),
then, on the earliest to occur of (i) the effective date of such acceleration,
(ii) the date such prepayment is due and payable, and (iii) the date such
payment is actually paid,

 

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Borrowers shall pay to Agent, for the ratable benefit of Lenders (in addition to
all Obligations then owing pursuant to the terms of the Loan Documents), as
yield maintenance for the loss of bargain and not as a penalty, a prepayment fee
(the “Prepayment Fee”) equal to (a) 2.0% of the principal balance of the Term
Loans outstanding immediately prior to such prepayment if such prepayment occurs
or is required prior to the first anniversary of the Closing Date and (b) 1.0%
of the principal balance of the Term Loans outstanding immediately prior to such
prepayment if such prepayment occurs or is required on or after the first
anniversary of the Closing Date but prior to the second anniversary of the
Closing Date. For purposes of determining the Prepayment Fee due upon
acceleration of any Obligation, such acceleration shall be deemed to have
occurred on the date the Event of Default giving rise to such acceleration first
occurred.

 

  3.4 Letter of Credit Fees

(a) Borrowers shall pay to Agent a fee equal to (i) 3.0% per annum of the
aggregate undrawn face amount of all outstanding Standby Letters of Credit
issued for the account of Borrowers (the “Standby Letter of Credit Fee”), which
fee shall be payable in arrears on each Interest Payment Date and (ii) 0.50% of
the aggregate undrawn face amount of any Documentary Letter of Credit issued for
the account of Borrowers, which fee shall be payable upon issuance (together
with the Standby Letter of Credit Fee, the “Letter of Credit Fees”). Agent may
distribute all or any portion of the Letter of Credit Fees the L/C Issuer or any
Underlying Issuer and any remainder for the ratable benefit of Revolving
Lenders. Borrowers also shall pay to Agent on demand the normal and customary
administrative charges for the issuance, amendment, negotiation, renewal,
extension and maintenance, and any other charges and fees, related to any
Standby Letter of Credit or Documentary Letter of Credit incurred or imposed by
Agent, the L/C Issuer or any Underlying Issuer.

(b) If an Event of Default exists, all Letter of Credit Fees shall be payable on
demand at a rate equal to the applicable Letter of Credit Fee, plus 2.00% per
annum, in each case on the aggregate undrawn face amount of all outstanding
Standby Letters of Credit issued for the account of Borrowers in accordance with
the provisions of Section 2.5(b).

(c) On demand by Agent at any time after an Event of Default exists, Borrowers
will deliver cash to Agent, as cash collateral, an amount equal to one hundred
and five percent (105%) of the Letter of Credit Usage to be held by Agent in a
Cash Collateral Account. Borrowers may not withdraw amounts credited to such
Cash Collateral Account except upon the earlier of (i) the payment and
performance in full of all Obligations (other than Unasserted Obligations) and
termination of this Agreement and (ii) at such time as no Event of Default
exists.

 

IV CONDITIONS PRECEDENT

 

  4.1 Conditions to Initial Advance, Funding of the Term Loans and the Closing

The obligations of the Lender Parties to consummate the transactions
contemplated herein, to make the initial Advance (the “Initial Advance”) and to
fund the Term Loans are subject to the satisfaction of each of the conditions
precedent listed both on Section 4.2 below and Exhibit D hereto, all in a
manner, form and substance satisfactory to Agent in its sole discretion.

 

  4.2 Conditions to each Advance and Funding of the Term Loans

The obligations of the Lenders to make any Advance and/or to fund the Term Loans
are subject to the satisfaction of each of the following:

 

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(a) Borrowers shall have delivered to Agent a Borrowing Certificate for each
Advance and each Term B Advance, accompanied, in the case of a Term B Advance,
by a schedule of the Capital Expenditures to be financed with the proceeds of
such Term B Advance;

(b) each of the representations and warranties made by each Credit Party and
each other Person party thereto (other than the Lender Parties) in the Loan
Documents shall be true and correct in all material respects (except to the
extent already qualified by materiality, in which case each shall be true and
correct in all respects) before and after giving effect to the applicable
funding (unless it expressly relates to an earlier date, in which case they
shall have been true and correct in all material respects as of such earlier
date (except to the extent already qualified by materiality, in which case each
shall have been true and correct in all respects));

(c) no Default or Event of Default shall exist after giving effect to the
applicable funding;

(d) immediately after giving effect to the requested (i) Advance, the aggregate
outstanding principal amount of Advances shall not exceed the Revolving Loan
Limit then in effect and (ii) Term B Advance, the aggregate principal amount of
all Term B Advances disbursed shall not exceed $5,000,000;

(e) No Material Adverse Effect exists; and

(f) Agent shall have received such other approvals, opinions, documents,
agreements, instruments, certificates and materials as any Lender Party may
request in its Permitted Discretion.

Each Credit Party hereby represents and warrants that by virtue of requesting
any funding under any Loan Document, that as of the date of each such notice and
as of the relevant Borrowing Date the conditions in Section 4.1 and this
Section 4.2 have been satisfied.

 

V REPRESENTATIONS AND WARRANTIES

Each Credit Party, jointly and severally, represents and warrants to the Lender
Parties, with the knowledge and intention that the Lender Parties are relying
and will rely thereon, as follows:

 

  5.1 Organization and Authority

Each Credit Party and each of its Subsidiaries, is a corporation, partnership or
limited liability company, as the case may be, duly organized or formed, validly
existing and in good standing under the laws of its jurisdiction of organization
or formation. Each Credit Party and each of its Subsidiaries (a) is duly
qualified and licensed to do business in and in good standing in each other
jurisdiction where its failure to do so reasonably could be expected to have in
a Material Adverse Effect and (b) has all requisite corporate, partnership or
limited liability company power and authority (i) to own its Properties and
carry on its Business, (ii) to execute, deliver and perform the Loan Documents
and the Related Documents to which it is a party, (iii) to borrow and incur
Obligations, as applicable, hereunder, and to consummate the transactions
contemplated by the Loan Documents and (iv) to grant the Liens pursuant to the
Loan Documents to which it is a party.

 

  5.2 Loan Documents and Related Documents

The execution, delivery and performance by each Credit Party of the Loan
Documents and the Related Documents to which it is a party, and its consummation
of the transactions contemplated thereby, (a) have been duly authorized,
executed and delivered by or on behalf of such Credit Party; (b) do not violate
or conflict with any Applicable Law, (c) do not constitute or result in a
conflict, violation, breach or default of or an event of default under, or an
event, fact, condition or circumstance which, with notice or passage of time, or
both, would constitute or result in a conflict, violation, breach, default or
event of

 

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default under, any agreement, instrument or other arrangement to which such
Credit Party is a party, or by which any of its Properties are bound, to the
extent any of the foregoing, either individually or in the aggregate, reasonably
could be expected to have a Material Adverse Effect; (d) will not result in the
creation or imposition of any Lien, other than a Permitted Lien, upon any of the
Properties of any Credit Party; and (e) except for filings in connection with
the perfection of the Liens created by the Loan Documents and as set forth on
Schedule 5.2(e), do not require the consent, approval or authorization of, or
filing, registration or qualification with, any Person. Each of the Loan
Documents and the Related Documents to which each Credit Party is a party
constitutes the legal, valid and binding obligation of such Credit Party,
enforceable against such Credit Party in accordance with its terms, subject to
the effect of (a) applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of creditors’ rights generally
and (b) general principles of equity which may limit the availability of
equitable remedies (whether in a proceeding at law or in equity).

 

  5.3 Subsidiaries, Capitalization and Ownership Interests

Schedule 5.3 states as of the Closing Date the authorized, issued and
outstanding Capital Stock of each Credit Party and its Subsidiaries and the
beneficial and record owners thereof (including rights to acquire, subscribe for
or purchase any of the foregoing), all of which have been duly authorized and
validly issued and are fully paid and nonassessable and are owned free and clear
of any Liens other than Liens created by the Loan Documents. Schedule 5.3 lists
as of the Closing Date all Subsidiaries of each Credit Party, and all directors,
managers and executive officers of each Credit Party. Except as listed on
Schedule 5.3, as of the Closing Date no Credit Party nor any of its Subsidiaries
(a) owns any interest in, or participates or engages in any joint venture,
partnership or similar arrangements with, any Person, (b) is a party to or knows
of any agreements (other than the Loan Documents) restricting the transfer of
its Capital Stock, (c) is subject to any obligation (contingent or otherwise) to
repurchase, acquire or retire any of its Capital Stock or any calls, commitments
or Claims relating to its Capital Stock or (d) has any stock appreciation
rights, phantom stock plan or similar rights or obligations outstanding.

 

  5.4 Properties

(a) Each Credit Party is the sole owner and has good, valid and marketable title
to, or a valid leasehold interest in, a license for, or the right to use, all of
its Properties, in each instance, as necessary or used in the Ordinary Course,
free and clear of all Liens other than Permitted Liens. All Property of each
Credit Party is in good repair, working order and condition (normal wear and
tear excepted).

(b) Schedule 5.4 (i) lists as of the Closing Date the locations of the chief
executive office of each Credit Party, the locations of the Collateral and all
books and records in connection therewith or in any way relating thereto or
evidencing the Collateral, (ii) identifies the common address and use of each
such location, (iii) indicates whether such location is owned or leased by such
Credit Party or whether such Credit Party is entitled to occupy or use such
location by virtue of a license or easement, (iv) if such location is leased,
describes the parties to and date of such lease and the name and current address
of the landlord under the lease, (v) if such location is owned, sets forth a
complete and accurate legal description for such location and (vi) if such
Credit Party occupies or uses such location by virtue of a license or easement
agreement, describes such license or easement agreement with reasonable
specificity.

 

  5.5 Material Contracts; Material Customers and Affiliate Transactions

Schedule 5.5 lists all Material Contracts and Material Customers of each Credit
Party as of the Closing Date. No Credit Party is (a) a party to any agreement,
arrangement or instrument, or subject to any Applicable Law or restriction,
which adversely affects its ability to execute and deliver, or perform under,
any Loan Document or Related Document or (b) in breach of or default under, in
any material respect, any Related Document or Material Contract, nor is there
any event, fact, condition or

 

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circumstance which, with notice or passage of time or both, would constitute or
result in any of the foregoing. Schedule 5.5 lists and describes all
transactions, agreements, and arrangements between the Credit Parties and any of
their Affiliates as of the Closing Date. No Credit Party is obligated to pay any
service or management fee to any Affiliate.

 

  5.6 Litigation

Except as set forth on Schedule 5.6, there are no actions, suits, proceedings or
investigations pending or, to the knowledge of any Credit Party, threatened
against any Credit Party that (a) reasonably could be expected to prevent any
Credit Party from performing under any Loan Document or any Related Document or
(b) reasonably could be expected to have a Material Adverse Effect.

 

  5.7 Environmental Matters

No Credit Party has been notified of any action, suit, proceeding or
investigation (a) relating to any Environmental Law or Hazardous Substance or
(b) which seeks to suspend, revoke or terminate any license, Permit or approval
necessary for the generation, handling, storage, treatment or disposal of any
Hazardous Substance.

 

  5.8 Tax Returns; Governmental Reports

Each Credit Party (a) has filed all applicable tax returns and other material
reports which are required by Applicable Law and (b) has paid all due and
payable taxes, assessments, fees and other governmental charges, except for
items being contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP, and for which
no Lien or notice of Lien exists.

 

  5.9 Financial Statements and Reports

All financial statements relating to any Credit Party (a) are consistent with
the books of account and records of the Credit Parties, (b) have been prepared
in accordance with GAAP on a consistent basis throughout the indicated periods,
subject to, in the case of interim unaudited financial statements, the lack of
footnote disclosure and normal year-end adjustments to the extent they do not
materially impact the reported results or financial condition of the Credit
Parties and (c) present fairly in all material respects the consolidated
financial condition, assets and liabilities and results of operations of the
Credit Parties at the dates and for the relevant periods indicated in accordance
with GAAP on a basis consistently applied. The Credit Parties have no material
obligations or liabilities that are not disclosed in their financial statements
or otherwise permitted under this Agreement, and since the date of their most
recent financial statements, there has not occurred any Material Adverse Effect.

 

  5.10 Compliance with Law; ERISA; Business

Each Credit Party is in compliance in all material respects with all Material
Contracts and Applicable Laws including, without limitation, ERISA, the Patriot
Act, Environmental Laws and Communications Laws and there is no event, fact,
condition or circumstance which, with notice or passage of time, or both, would
constitute or result in any material noncompliance with any Applicable Law. No
Credit Party has (i) engaged in any “Prohibited Transactions,” as defined in
Section 406 of ERISA and Section 4975 of the Code, (ii) failed to meet any
applicable minimum funding requirements under Section 302 of ERISA in respect of
its plans and no funding requirements have been postponed or delayed,
(iii) knowledge of any event or occurrence which would cause the Pension Benefit
Guaranty Corporation to institute proceedings under Title IV of ERISA to
terminate any of its employee benefit plans, (iv) any fiduciary responsibility
under ERISA for investments with respect to any plan existing for

 

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the benefit of Persons other than its employees or former employees, or
(v) withdrawn, completely or partially, from any multi-employer pension plans so
as to incur liability under the MultiEmployer Pension Plan Amendments of 1980.
With respect to each Credit Party, there exists no event described in
Section 4043 of ERISA, excluding Subsections 4043(b)(2) and 4043(b)(3) thereof,
for which the thirty (30) day notice period contained in 12 C.F.R. § 2615.3 has
not been waived. Each Credit Party has maintained in all material respects all
records required to be maintained by any applicable Governmental Authority.

 

  5.11 Intellectual Property

Schedule 5.11 sets forth as of the Closing Date all registered Intellectual
Property owned, licensed or utilized by any Credit Party and sets forth all
licenses of Intellectual Property granted by or to a third party and entered
into by a Credit Party which are material to the Business of such Credit Party.
Each Credit Party owns directly, or is entitled to use by license or otherwise,
all Intellectual Property material to such Credit Party’s Business. All
Intellectual Property material to each Credit Party’s Business is properly
maintained, valid, in full force and effect and not in known conflict with the
rights of any Person. Each Credit Party has made all filings and recordations
necessary in the exercise of reasonable and prudent business judgment to protect
its interest in its Intellectual Property. No actions, suits, proceedings or
investigations are pending or, to the knowledge of any Credit Party, threatened
with respect to the validity, enforceability, infringement, use or ownership of
any Credit Party’s Intellectual Property. No Credit Party is in material breach
of or default under any agreement, arrangement or instrument relating to any
Intellectual Property, nor is there any event, fact, condition or circumstance
which, with notice or passage of time or both, would constitute or result in any
of the foregoing.

 

  5.12 Permits; Labor

Each Credit Party is in material compliance with, and has, all Permits required
for the operation of its Business, and for the execution, delivery and
performance by, and enforcement against, such Credit Party of each Loan Document
and Related Document. No Credit Party is in material breach of or default under
the provisions of any Permit, nor is there any event, fact, condition or
circumstance which, with notice or passage of time or both, would constitute or
result in any of the foregoing. No Credit Party is or has been involved in any
labor dispute, strike, walkout or union organization.

 

  5.13 No Default; Solvency

No Default, Event of Default or Material Adverse Effect exists. Each Credit
Party is and, after giving effect to the transactions and the Indebtedness
contemplated by the Loan Documents and the Related Documents, will be, Solvent.

 

  5.14 Insurance

All insurance policies of the Credit Parties or otherwise relating to or
covering their Properties as of the Closing Date are listed and described on
Schedule 5.14.

 

  5.15 Margin Stock; Regulated Entities; OFAC; Patriot Act

(a) The Credit Parties are not engaged in the business of extending credit for
the purpose of purchasing or carrying any “margin stock” or “margin security”
(within the meaning of Regulations T, U or X issued by the Board of Governors of
the Federal Reserve System), and no proceeds of the Loans will be used to
purchase or carry any margin stock or margin security or to extend credit to
others for the purpose of doing the same.

 

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(b) No Credit Party or any Person controlling any Credit Party is (a) an
“investment company” within the meaning of the Investment Company Act of 1940;
or (b) subject to regulation under the Public Utility Holding Company Act of
2005, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or any other Applicable Law limiting its ability to incur
Indebtedness.

(c) No Credit Party (i) is a Person whose Property or interest in Property is
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of
such executive order, or is otherwise associated with any such Person in any
manner violative of Section 2 of such executive order, or (iii) is a Person on
the list of Specially Designated Nationals and Blocked Persons or is in
violation of the limitations or prohibitions under any other U.S. Department of
Treasury’s Office of Foreign Assets Control regulation or executive order
(“OFAC”).

(d) No part of the proceeds of the Loans will be used, directly or indirectly,
for any payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or anyone else
acting in an official capacity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.

 

  5.16 Broker’s or Finder’s Commissions

Except as set forth in Schedule 5.16, no fee or commission is or will be payable
to any Person in connection with the transactions contemplated by the Loan
Documents and the Related Documents, except for fees payable to Lender Parties.
The fees and commissions described on Schedule 5.16 will be paid by Borrowers on
the Closing Date.

 

  5.17 Regulatory Matters

There is set forth in Schedule 5.17 a description of all material Telecom
Licenses issued by the FCC or any State Regulatory Agency which have been issued
or assigned to any Credit Party and (a) for all Telecom Licenses other than
State Regulatory Authorizations, the name of the licensee, the type of service
and the expiration dates and (b) for each State Regulatory Authorization, the
geographic area covered by such State Regulatory Authorization, the services
that may be provided thereunder and the expiration date, if any. Such Telecom
Licenses (i) have been duly authorized by the grantors thereof, (ii) have been
validly issued or assigned to such Credit Party, (iii) are in full force and
effect and without conditions (except for such conditions as are generally
applicable to the holders of such Telecom Licenses and otherwise which could not
reasonably be expected to have a Material Adverse Effect) and (iv) constitute
all Telecom Licenses which are necessary to enable the Credit Parties to operate
their Business as presently conducted. No material default or breach known to
any Credit Party exists under such Telecom Licenses and no Credit Party has
knowledge of any event or occurrence that could result in the termination,
revocation, adverse modification or non-renewal of any such Telecom License.
Each Credit Party has duly and timely filed all material reports and other
filings which are required to be filed under the applicable Communications Laws.
All information provided by or on behalf of any Credit Party in any material
filing with the FCC, any State Regulatory Agency or any other Governmental
Authority was, at the time of filing, true, complete and correct in all material
respects when made, and the FCC, such State Regulatory Agency or such other
Governmental Authority has been notified of any substantial or significant
changes in such information as may be required by applicable Communications
Laws.

 

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  5.18 Special Telecommunications Matters

(a) To the best knowledge of the Credit Parties, each Network Agreement has been
duly executed and delivered by the other parties thereto, is in full force and
effect and neither such Credit Party nor, to the best knowledge of the Credit
Parties, any of the other parties thereto, is in default of any of the
provisions thereof in any material respect.

(b) All of the Network Facilities and other material properties, equipment and
systems owned, leased or managed by the Credit Parties, and all such property,
equipment and systems acquired or added in connection with any contemplated
system expansion or construction, are in good repair, working order and
condition (reasonable wear and tear excepted) and are in compliance in all
material respects with all terms and conditions of the Credit Parties’ Telecom
Licenses and all standards or rules imposed by applicable Communications Laws
and Governmental Authorities or as imposed under any agreements with telephone
companies and customers.

(c) The Credit Parties have paid all franchise, license or other fees and
charges which have become due pursuant to any State Regulatory Authorization or
other Telecom License and have made appropriate provision as required by GAAP
for any such fees and charges which have accrued.

(d) Each interconnection agreement to which any Credit Party is a party has been
duly executed and delivered by a Credit Party and, to the best knowledge of the
Credit Parties, has been duly executed and delivered by the other parties
thereto, is in full force and effect and no Credit Party is in default thereof
in any material respect.

 

  5.19 Disclosure

No Loan Document contains any untrue statement of a material fact or omits to
state any fact necessary to make the factual statements therein taken as a whole
not materially misleading as of the time made or delivered in light of the
circumstances under which it was made or furnished. There is no material fact,
event or circumstance known to any Credit Party which has not been disclosed to
the Lender Parties.

 

VI AFFIRMATIVE COVENANTS

Each Credit Party, jointly and severally, covenants and agrees that, until the
full performance and satisfaction, and indefeasible payment in full in cash, of
all the Obligations (other than Unasserted Obligations) and the termination of
this Agreement in accordance with its terms:

 

  6.1 Reporting, Collateral and Other Information

The Credit Parties shall maintain a system of accounting established and
administered in accordance with sound business practices to permit the
preparation of financial statements in conformity with GAAP (provided that
interim financial statements shall not be required to have footnote disclosure
and may be subject to normal year-end adjustments to the extent they do not
materially impact the reported results or financial condition of the Credit
Parties). Each Credit Party shall, and shall cause each of its Subsidiaries to,
comply with the agreements, requirements, covenants and undertakings set forth
in Exhibits C-1 and C-2, in accordance with the terms thereof.

 

  6.2 Conduct of Business; Maintenance of Existence and Assets

Each Credit Party shall, and shall cause each of its Subsidiaries to (a) engage
solely in the Business in accordance with good business practices customary to
its industry, and preserve the goodwill of those having material business
relations with it; (b) collect its Accounts in the Ordinary Course; (c)

 

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except for dispositions permitted under Section 7.7 of this Agreement, maintain
and preserve its Properties in good repair, working order and condition (normal
wear and tear excepted); (d) maintain and preserve in full force and effect
(i) its existence and good standing under the laws of its jurisdiction of
incorporation, organization or formation, as applicable and (ii) its
qualifications and good standing in all other jurisdictions, except as could not
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect; and (e) maintain, comply with and keep in full force
and effect its Permits and its Intellectual Property, except as could not
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect.

 

  6.3 Compliance with Legal and Other Obligations

Each Credit Party shall, and shall cause each of its Subsidiaries to (a) comply
with all Applicable Laws (including properly filing all reports required
thereunder) except where the failure to comply could not reasonably be expected
to result, either individually or in the aggregate, in a Material Adverse
Effect; (b) pay all taxes imposed on or assessed against it, except those being
diligently contested in good faith by appropriate proceedings for which no
non-Permitted Lien exists and for which adequate reserves are maintained in
accordance with GAAP; and (c) subject to any subordination provisions in favor
of the Lender Parties and/or other restrictions set forth in the Loan Documents,
pay and perform in accordance with their terms other Claims against it, except
where the failure to do so could not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect.

 

  6.4 Insurance

Each Credit Party shall maintain at all times in full force and effect, at its
own expense, with insurers reasonably acceptable to Agent in its Permitted
Discretion, and comply with all the terms and conditions of adequate insurance
in such amounts and covering such matters as are customarily maintained by
businesses engaging in similar activities or owning similar Properties and at
least the minimum amount required by Applicable Law and any other agreement,
instrument or arrangement to which such Credit Party is bound, including,
without limitation, liability, D&O, property, patent liability and business
interruption insurance; provided the amount of business interruption insurance
shall not be less than projected EBITDA for a period of not less than
$16,000,000. All of the foregoing insurance policies and coverage levels shall
(i) be satisfactory to Agent in its Permitted Discretion, (ii) name Agent, for
the benefit of the Lender Parties, as loss payee/mortgagee in respect of
property damage and casualty insurance, additional insured in respect of
liability insurance and assignee in respect of business interruption insurance
and (iii) expressly provide that they cannot be altered, amended, modified,
canceled or terminated without at least thirty (30) days’ prior written notice
to Agent from the insurer, and that they inure to the benefit of Agent, for the
benefit of the Lender Parties, notwithstanding any action or omission or
negligence of or by such Credit Party, or any insured thereunder.

 

  6.5 Inspection

Each Credit Party shall permit the representatives of Agent from time to time
during normal business hours upon reasonable notice to (a) visit and inspect any
of such Person’s offices or properties or any other place where Collateral is
located, inspect and appraise the Collateral, and/or examine and/or audit all of
such Credit Party’s books and records; (b) make copies and extracts therefrom;
and (c) discuss any aspect of any Credit Party or its Business with its officers
and independent public accountants (and such officers and accountants are hereby
authorized to discuss the foregoing); provided, however, that (i) Borrowers
shall not be obligated to reimburse Agent for more than two such inspections and
audits conducted during any fiscal year while no Event of Default exists (it
being agreed and understood that the Borrowers shall be obligated to reimburse
Agent for all such inspections and audits conducted while an Event of Default
exists), and (ii) no notice shall be required to do any of the foregoing if any
Event of Default exists.

 

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  6.6 Use of Proceeds

Borrowers shall use the proceeds from the Term A Loan and the Revolving Facility
solely for the following purposes: (a) to refinance existing Indebtedness on the
Closing Date; (b) to pay transaction costs and expenses of the Related
Transactions; and (c) for other lawful purposes in compliance with Applicable
Law and not in violation of the Loan Documents. Borrowers shall use the proceeds
from the Term B Loan solely to finance Capital Expenditures.

 

  6.7 Loans Secured

(a) Each Credit Party shall, and Borrowers and the other Credit Parties shall
cause their Subsidiaries to: (a) except in the case of Borrowers, guarantee the
Obligations; (b) grant to Agent, for the benefit of the Lender Parties, a valid,
first priority perfected Lien on all of its Property (except as expressly
provided otherwise in the Loan Documents) to secure the Obligations, including,
without limitation, pledging all Capital Stock owned or held by such Person to
Agent, for the benefit of the Lender Parties; and (c) in the case of any
Subsidiary of any Credit Party formed or acquired after the Closing Date
(i) execute a Joinder Agreement and become a party to such of the Loan
Documents, in such capacity as Agent shall require in its Permitted Discretion
and (ii) deliver to Agent such other documents and opinions of counsel as Agent
may request in its Permitted Discretion.

(b) Concurrently with the execution by any Credit Party, as lessee, of any lease
pertaining to real property or any contract relating to the acquisition by such
Credit Party of real property, such Credit Party shall deliver to Agent an
executed copy thereof and, at the option of Agent (i) in the case of a lease, a
collateral assignment of such lease in favor of Agent, in form and substance
acceptable to Agent in its Permitted Discretion and a Landlord Waiver and
Consent from the Landlord under such lease; and (ii) in the case of a contract
for the acquisition of real property, a first mortgage or deed of trust in favor
of Agent, for the benefit of the Lender Parties, on such real property, in form
and substance acceptable to Agent in its Permitted Discretion and such other
documents and assurances with respect to such real property as Agent may require
in its Permitted Discretion, including without limitation a lender’s policy of
title insurance, a survey of such real property and an environmental assessment
of such real property, all issued by Persons and in form and substance
satisfactory to Agent may require in its Permitted Discretion.

(c) Each Credit Party shall, and shall cause its Subsidiaries to, upon the
exercise by Agent, or any Lender of any power, right, privilege or remedy
pursuant to any Loan Document or under applicable law or at equity which
requires any consent, approval, registration, qualification or authorization of
any Person (including, without limitation, the FCC, any State Regulatory Agency
or any other Governmental Authority), execute and deliver, or cause the
execution and delivery by each such Credit Party of, all applications,
certificates, instruments and other documents that may be so required for such
consent, approval or authorization. Without limiting the foregoing, upon the
exercise by Agent, or any Lender of any right or remedy under any Loan Document
which requires any consent, approval or registration with, consent,
qualification or authorization by, any Governmental Authority (including,
without limitation, transfer of Telecom Licenses) or other Person, each Credit
Party shall execute and deliver, or cause the execution and delivery by each
such Credit Party of, all applications, certificates, instruments and other
documents that Agent, or any Lender may be required to obtain for itself or on
its behalf for such consent, approval or authorization.

 

  6.8 Further Assurances; Post Closing Deliveries

Each Credit Party shall, and shall cause each of its Subsidiaries to, (a) within
five Business Days of Agent’s request, take such further actions, obtain such
consents and approvals and duly execute and deliver such further agreements,
assignments, instruments or documents as may be requested by Agent in

 

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its Permitted Discretion consistent with the Loan Documents, whether before, at
or after the occurrence of any Default or Event of Default, and (b) comply with
the requirements set forth on Schedule 6.8 in accordance with the terms thereof.

 

VII NEGATIVE COVENANTS

Each Credit Party, jointly and severally, covenants and agrees that, until the
full performance and satisfaction, and indefeasible payment in full in cash, of
all Obligations (other than Unasserted Obligations) and the termination of this
Agreement in accordance with its terms:

 

  7.1 Financial Covenants

No Credit Party shall, and no Credit Party shall cause or permit any of its
Subsidiaries to, violate any of the financial covenants set forth in Exhibit B-1
hereto.

 

  7.2 Indebtedness

No Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, create, incur, assume, suffer to exist, or otherwise become or
remain directly or indirectly liable (including, without limitation, by
guaranteeing, indemnifying, endorsing or becoming liable for any Contingent
Obligations) with respect to, any Indebtedness, except the following
(collectively, “Permitted Indebtedness”):

(a) the Obligations;

(b) Indebtedness set forth on Schedule 7.2 and extensions and refinancings
thereof (so long as the principal amount thereof is not increased, the maturity
date is not shortened, the average life is not shortened, no additional
mandatory prepayments or sinking fund payments are required, it remains
unsecured and the cash payment portion of the interest due on any such
Indebtedness is not increased);

(c) Capital Lease Obligations and Indebtedness secured by purchase money Liens
permitted by Section 7.3(e)(i) not to exceed $500,000 in the aggregate for all
Credit Parties and their Subsidiaries;

(d) inter-company unsecured Indebtedness owing from one domestic Credit Party
(other than Holdings) to another domestic Credit Party (other than Holdings);
provided, that, upon the request of Agent, such Indebtedness shall be evidenced
by promissory notes having terms (including subordination terms) satisfactory to
Agent, the sole originally executed counterparts of which shall be pledged and
delivered to Agent, for the benefit of the Lender Parties, as security for the
Obligations;

(e) Subordinated Debt of Holdings to the extent such Indebtedness remains
subject to the terms and conditions of the applicable Subordination Agreement,
the proceeds of which are contributed upon receipt by Holdings to a Borrower as
a cash equity capital contribution;

(f) endorsement of negotiable instruments for deposit or collection in the
Ordinary Course;

(g) unsecured interest rate agreements in the Ordinary Course for bona fide
hedging purposes and not for speculation, with Agent’s prior written consent;
and

(h) Contingent Obligations in the Ordinary Course arising under indemnity
agreements to title insurers to cause such title insurers to issue to Agent
title insurance policies.

 

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  7.3 Liens

No Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer
to exist any Lien upon, in, against or with respect to, or any pledge of, any
part of its Property, including, without limitation, Capital Stock, whether now
owned or hereafter acquired, except the following (collectively, “Permitted
Liens”):

(a) Liens created by the Loan Documents or otherwise arising in favor of Agent,
for the benefit of the Lender Parties;

(b) Liens imposed by Applicable Law for taxes, assessments or charges (i) that
are not yet due and payable or (ii) which are being diligently contested in good
faith by appropriate proceedings and for which reserves are maintained by such
Person in accordance with GAAP, and which do not exceed $200,000 in the
aggregate at any time for all Credit Parties and their Subsidiaries;

(c) statutory Liens of landlords, carriers, warehousemen, mechanics and/or
materialmen and other similar Liens imposed by law that arise in the Ordinary
Course (i) that are only for amounts not yet due and payable or (ii) which are
being diligently contested in good faith by appropriate proceedings for which
reserves are being maintained by such Person in accordance with GAAP, and which
do not exceed $200,000 in the aggregate at any time for all Credit Parties and
their Subsidiaries;

(d) Liens (other than any Lien imposed by ERISA) on or in respect of deposits or
pledges of cash or letters of credit posted in the Ordinary Course (i) in
connection with workers’ compensation, unemployment insurance and other types of
social security benefits or (ii) to secure the performance of obligations (such
as tenders, bids, leases, trade contracts, statutory obligations and other
similar obligations) (other than for the repayment of Indebtedness), provided
that any such Lien attaches only to the cash collateral or letter of credit
posted to secure such obligation;

(e) purchase money Liens securing Indebtedness permitted under Section 7.2(c)
hereof; provided, that (i) any such Lien attaches only to the Property acquired
with the proceeds of such Indebtedness and (ii) the principal amount of the
Indebtedness secured thereby does not exceed the cost of such Property;

(f) any Lien relating to an attachment or Judgment provided that its enforcement
is stayed and it secures Claims not otherwise constituting an Event of Default;

(g) easements, rights of way, restrictions, zoning ordinances, reservations,
covenants and other similar charges, title exceptions or encumbrances relating
to real Property incurred in the Ordinary Course that, either individually or in
the aggregate for all Credit Parties and their Subsidiaries, are not substantial
in amount, do not materially interfere with the use of the subject Property or
the ordinary conduct of the Business and do not result in material diminution in
value of the subject Property; and

(h) Liens disclosed on Schedule 7.3.

 

  7.4 Consolidations, Mergers and Investments

No Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, directly or indirectly, (i) liquidate, merge, amalgamate or
consolidate with or into any Person, (ii) purchase, own, hold, invest in or
otherwise acquire any Investment Property or any obligations or Capital Stock of
any Person (including the establishment or creation of any Subsidiary) or any
joint venture, or otherwise consummate any Acquisition, (iii) make or permit to
exist any loans, advances or extensions of credit to or for the benefit of any
Person, or (iv) commit or agree to do any of the foregoing (all of the foregoing
are referred to herein as “Investments”), except:

 

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(a) Investments created by the Loan Documents;

(b) trade credit extended in the Ordinary Course;

(c) transactions expressly permitted under Section 7.2(d), 7.2(f), 7.2(g),
7.2(h), 7.5, 7.7 or 7.8 hereof;

(d) temporary loans and advances made in the Ordinary Course to officers,
directors and employees, not to exceed $25,000 in the aggregate at any time
outstanding for all Credit Parties and their Subsidiaries;

(e) Investments in Cash Equivalents;

(f) Capital Stock received in satisfaction of disputes or in connection with a
bankruptcy of a customer;

(g) upon not less than ten Business Days’ prior written notice to Agent, any
Subsidiary may merge with, or dissolve or liquidate into, or transfer its
Property to, a Borrower or a domestic Wholly-Owned Subsidiary that is a Credit
Party, provided that, as applicable, such Borrower or such domestic Wholly-Owned
Subsidiary shall be the continuing or surviving entity; and

(h) cash equity investments by Holdings in Borrowers and the Investments
existing as of the Closing Date of FiberNet in its Subsidiaries and of
FiberNet’s Subsidiaries in their respective Subsidiaries.

 

  7.5 Restricted Payments

No Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, (i) declare, pay or make any Distribution of cash, securities
or other Property on any of its Capital Stock, (ii) acquire, redeem or retire
any of its Capital Stock, (iii) pay or otherwise redeem, exchange, purchase,
retire or defease any Subordinated Debt, (iv) pay or compensate any of its
Affiliates or any of its or its Affiliate’s officers, directors or employees, or
(v) commit or agree to do any of the foregoing (all of the foregoing are
referred to herein as “Restricted Payments”), except:

(a) for so long as Devnet is treated as a disregarded entity for tax purposes
under the Code, Devnet may make quarterly tax Distributions to Holdings provided
that the aggregate amount of all such Distributions by Devnet with respect to
any year does not exceed the lesser of (i) the federal, state and local (net of
federal benefit) income tax liability of Holdings allocable to the taxable
income of Devnet for such year and (ii) the consolidated federal, state and
local (net of federal benefit) income tax liability of Holdings for such year;

(b) any Wholly-Owned Subsidiary may declare and pay Distributions to Borrowers
or to any other domestic Wholly-Owned Subsidiary that is a Credit Party;

(c) Holdings may declare and pay Distributions in the form of Permitted
Securities and may issue Permitted Securities to acquire, redeem or retire any
of its Capital Stock;

(d) Borrowers may make Distributions to Holdings solely to permit Holdings to
promptly redeem for cash any of its Capital Stock owned by any terminated
employee of any Credit Party, provided, that: (i) no Default or Event of Default
exists or would result therefrom, (ii) after giving effect

 

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to such Distribution and redemption, the Credit Parties are both in compliance
on a pro forma basis with Section 7.1 hereof and have at least $750,000 in
Availability, cash on hand and Cash Equivalents, (iii) the aggregate amount of
such Distributions shall not exceed $250,000 in any fiscal year or $1,000,000
prior to the Maturity Date and (iv) such Distributions are permitted under the
terms of all Subordinated Debt;

(e) Borrowers may make Distributions to Holdings solely to permit Holdings to
pay, as and when due and payable, obligations incurred in the Ordinary Course
only to the extent relating to activities in which Holdings otherwise is
permitted to engage under the Loan Documents, so long as no Default or Event of
Default exists or would result therefrom;

(f) to the extent payments on the Subordinated Debt are permitted under the
applicable Subordination Agreement, Borrowers may make Distributions to Holdings
to enable Holdings to make such payments; and

(g) Borrowers may pay (i) reasonable compensation to officers and employees for
actual services rendered in the Ordinary Course, and (ii) directors’ fees and
reimbursement of actual out-of-pocket expenses incurred in connection with
attending board of director meetings not to exceed in the aggregate $500,000 (to
the extent payable in cash) in any fiscal year.

 

  7.6 Transactions with Affiliates

No Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, enter into or consummate any transaction with any Affiliate of
such Person, or agree or commit to do any of the foregoing, other than (a) as
expressly permitted by, and subject to, the terms of Sections 7.2(d), 7.4(d),
7.4(g), 7.4(h) and 7.5, and (b) other transactions pursuant to written
agreements which are entered into in the Ordinary Course and are on fair and
reasonable terms not less favorable to such Person than would be obtained in an
arm’s length transaction between unrelated parties of equal bargaining power.

 

  7.7 Transfer of Assets; Issuance of Capital Stock

No Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, directly or indirectly, engage in any sale-leaseback, synthetic
lease or similar transaction involving any of its Property or any interest
therein, or sell, lease (as lessor), transfer, convey, assign or otherwise
dispose of any Property or any interest therein, sell or issue any Capital Stock
or agree or commit to do any of the foregoing, whether in a single transaction
or a series of transactions, except:

(a) Borrowers and their respective Subsidiaries may (i) sell Inventory and use
cash and Cash Equivalents in the Ordinary Course, and (ii) sell obsolete, worn
out, replaced or excess equipment no longer needed in the Ordinary Course,
provided that the greater of fair market value or book value of the disposed
equipment does not exceed $150,000 in the aggregate for all Credit Parties and
their Subsidiaries in any fiscal year;

(b) as expressly permitted by and subject to the terms of Sections 7.3, 7.4 and
7.5 hereof;

(c) other sales of Property (other than sales of Capital Stock of a Credit
Party) to the extent (a) the Credit Parties comply with Section 2.9, (b) such
sale is for fair market value and the aggregate fair market value of all
Property sold by all Credit Parties and their Subsidiaries does not exceed
$250,000 in any fiscal year, (c) no Default or Event of Default exists or would
result therefrom and (d) the sole consideration received by such Person is cash;
and

 

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(d) Holdings may issue Permitted Securities provided that (i) Holdings promptly
contributes the Net Proceeds thereof to a Borrower and (ii) such Borrower
complies with the mandatory prepayment provisions of Section 2.9(c) in
connection therewith.

 

  7.8 Holding Company

Other than the Loan Documents to which it is a party and the transactions
contemplated thereby, Holdings shall not (i) own any Property other than 100% of
the Capital Stock of Borrowers, (ii) incur any Indebtedness or Contingent
Obligations, (iii) grant any Liens in any of its Property or (iv) agree or
commit to do any of the foregoing.

 

  7.9 Organizational Documents; Accounting Changes; Use of Proceeds; Insurance;
Business; Other Liabilities

No Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to:

(a) modify or restate its name without 30 days’ prior notice to Agent, or
reincorporate or reorganize under the laws of any jurisdiction;

(b) otherwise modify or restate any of its Organizational Documents in any
respect adverse to Lender Parties;

(c) make any significant change in accounting treatment or reporting practices,
except as required by GAAP, or change its fiscal year;

(d) use any proceeds of any Loans, directly or indirectly, (i) in violation of
Applicable Law or the Loan Documents, or (ii) to “purchase” or “carry” “margin
stock” as defined in Regulations T, U or X of the Board of Governors of the
Federal Reserve System, or repay or refinance Indebtedness incurred to so
“purchase” or “carry” “margin stock”;

(e) modify, restate or terminate any Material Contract or any insurance policy
in any manner materially adverse to any Lender Party or Credit Party as
determined by Agent in its Permitted Discretion, except changes in insurance
coverage in connection with renewals in the Ordinary Course;

(f) engage, directly or indirectly, in any business other than the Business; or

(g) agree or commit to do any of the foregoing.

 

  7.10 Related Documents and Subordinated Debt

Except as expressly permitted by the applicable Subordination Agreement or other
applicable subordination terms enforceable by Agent, no Credit Party shall, and
no Credit Party shall permit or cause any of its Subsidiaries to, (i) amend,
supplement, waive or otherwise modify any Subordinated Debt Document except to
the extent permitted under the applicable Subordination Agreement, (ii) amend,
supplement, waive or otherwise modify, take or fail to take any action under or
fail to enforce or diligently pursue its remedies under any other Related
Document in any manner materially adverse to any Lender Party or Credit Party as
determined by Agent in its Permitted Discretion or (ii) agree or commit to do
any of the foregoing.

 

  7.11 No Performance Restrictions

No Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, directly or indirectly, (a) except as permitted by the Loan
Documents, be subject to any restriction with respect to

 

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(i) Agent’s ability to exercise its rights and remedies under the Loan
Documents, (ii) the existence of a first priority perfected Lien on all of such
Person’s Property in favor of Agent (except such Property that is subject to a
Priority Permitted Lien), or such Credit Party’s (or such Subsidiary’s) ability
to perform or fulfill any other obligations under the Loan Documents or
(iii) the ability of any Subsidiary of any Borrower to make any Distribution to
such Borrower, (b) have outstanding any Capital Stock other than Permitted
Securities, (c) be a party or subject to any license agreement (excluding
shrink-wrap licenses of mass-marketed, commercially-available software) which
(i) restricts the pledge, assignment or other transfer of such agreement or any
rights thereunder (including as a result of any change of control of any such
Person), or (ii) restricts or limits in any way the sale of Inventory by Agent
or its designee containing or bearing (whether on the packaging therefor or the
goods) Intellectual Property subject to such license, or (d) agree or commit to
any of the foregoing.

 

  7.12 Certain Specific Agreements

Neither any Credit Party nor any Subsidiary of any Credit Party (i) will be or
become a Person whose Property or interests in Property are blocked or subject
to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit or Support Terrorism (66 Fed. Reg. 49079(2001)), (ii) will engage in
any dealings or transactions prohibited by Section 2 of such executive order, or
otherwise be associated with any such Person in any manner violative of
Section 2 of such executive order, or (iii) otherwise will become a Person on
the list of Specially Designated Nationals and Blocked Persons in violation of
the limitations or prohibitions under any other OFAC regulation or executive
order.

 

VIII EVENTS OF DEFAULT

 

  8.1 Events of Default

The occurrence of any of the following shall constitute an “Event of Default”:

(a) any Credit Party shall fail to pay when due and payable (i) all or any
portion of any principal payment or any payment of any Prepayment Fee required
under the Loan Documents or (ii) within two Business Days after the same shall
become due and payable any other payment obligations required under the Loan
Documents;

(b) any representation, warranty, statement or certification made or deemed made
by any Credit Party or any other Person (other than any Lender Party) in any
Loan Document or Related Document to which it is a party shall not be true and
correct in all material respects or shall have been false or misleading in any
material respect on the date when made or deemed to have been made (except to
the extent already qualified by materiality, in which case it shall have been
true and correct in all respects and shall not have been false or misleading in
any respect on the date when made or deemed to have been made);

(c) any Credit Party or other Person party thereto (other than Agent or any
Lender Party) shall fail to perform, observe or comply with, any covenant,
obligation or agreement set forth in:

(i) Article VII or Sections 2.13, 6.1, 6.2(d), 6.3(b), 6.4, 6.5 or 6.8(b) of
this Agreement; or

(ii) this Agreement or any other Loan Document (other than any such failure
described in the immediately preceding clause (i)), and such failure described
in this clause (ii) shall not be cured within 30 days after the earlier of
(i) Receipt by such Person of written notice of such failure and (ii) the time
at which a Responsible Officer of such Person knew or became aware, or should
reasonably have known or been aware, of such failure;

 

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(d)(i) any Loan Document or Related Document is revoked or invalidated or
otherwise shall cease to be in full force and effect (other than in accordance
with its terms), (ii) any Lien created under any Loan Document ceases to
constitute a valid first priority perfected Lien (subject only to Priority
Permitted Liens) in accordance with the terms of such Loan Document, (iii) any
Person shall contest in any manner the validity or enforceability of any of the
foregoing or deny that it has any liability or obligation thereunder, or
(iv) the Obligations for any reason shall not have the priority contemplated by
this Agreement, the applicable Subordination Agreement or any applicable
subordination provisions;

(e) any Judgment(s) are rendered against any Credit Party or any of its
Subsidiaries in an amount in excess of $200,000 individually or $400,000 in the
aggregate for all Credit Parties and their Subsidiaries unless otherwise covered
by third party insurance acknowledged by the insurer, or stayed, vacated,
dismissed, discharged or fully paid in their entirety, in each case, within 30
days of being rendered;

(f) any Credit Party or any Subsidiary of any Credit Party (i) shall fail to pay
when due and payable all or any portion of any payment in respect of any
Indebtedness other than the Obligations if the aggregate amount of such late
payments would exceed $200,000 or (ii) shall fail to perform, observe or comply
with, any covenant, obligation or agreement in respect of any Indebtedness other
than the Obligations having an outstanding principal balance in excess of
$400,000, which failure permits the holder of any such Indebtedness to
accelerate the maturity thereof;

(g) any Credit Party or any of its Subsidiaries shall (i) be unable to pay its
debts generally as they become due, (ii) file a petition under any insolvency
statute, (iii) make a general assignment for the benefit of its creditors,
(iv) commence a proceeding for the appointment of a custodian, receiver,
trustee, liquidator or conservator of itself or of the whole or any substantial
part of its Property or shall otherwise be dissolved or liquidated, or (v) file
a petition seeking reorganization or liquidation or similar relief, in all of
the foregoing cases under any Debtor Relief Law or any other Applicable Law;

(h)(i) a court of competent jurisdiction shall (A) enter an order or judgment
appointing a custodian, receiver, trustee, liquidator or conservator of any
Credit Party or any of its Subsidiaries or the whole or any substantial part of
any such Person’s Property, which shall continue unstayed and in effect for a
period of 60 days, (B) approve a petition filed against any such Person seeking
reorganization, liquidation or similar relief under any Debtor Relief Law or any
other Applicable Law which is not dismissed within 60 days, or (C) under the
provisions of any Debtor Relief Law or other Applicable Law, assume custody or
control of any such Person or of the whole or any substantial part of any such
Person’s Property, which is not irrevocably relinquished within 60 days, or
(ii) there is commenced against any such Person any proceeding or petition
seeking reorganization, liquidation or similar relief under any Debtor Relief
Law or any other Applicable Law (A) which is not unconditionally dismissed
within 60 calendar days after the date of commencement or (B) in respect of
which such Person takes any action to indicate its approval thereof or consent
thereto;

(i) any Change of Control or Material Adverse Effect;

(j)(i) any Credit Party is (A) criminally indicted or convicted of a felony or
(B) charged under any Applicable Law that could lead to forfeiture of any
material portion of the Collateral, or (ii) any director or senior officer of
any Credit Party is (A) convicted of a felony for fraud or dishonesty in
connection with the Business or (B) charged under any Applicable Law that could
lead to forfeiture of any material portion of the Collateral;

 

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(k) uninsured damage to, or uninsured loss, theft or destruction of, any portion
of the Collateral occurs that exceeds $200,000 in the aggregate for all Credit
Parties and their Subsidiaries;

(l) the issuance of any process for levy, attachment or garnishment, or any
execution upon or enforcement of any Judgment, against any Credit Party or any
of its Subsidiaries, any of its material Property or any of the Collateral, in
any case which is not satisfied, stayed, vacated, dismissed or discharged within
30 days of being issued, executed or enforced;

(m) any Credit Party or any of its Subsidiaries is enjoined, restrained or in
any way prevented by any Applicable Law from conducting all or any material part
of the Business for more than 15 days;

(o)(i) any Governmental Authority shall revoke, terminate or suspend any Telecom
License of any Credit Party, (ii) there shall exist any violation or default in
the performance of, or a failure to comply with any agreement, or condition or
term of any Telecom License of any Credit Party in any material respect or
(iii) any agreement which is material to the operation of the Business of the
Credit Parties, including, without limitation, any interconnection agreement,
shall be revoked or terminated and not replaced by a substitute reasonably
acceptable to the Requisite Lenders within 30 days after the date of such
revocation or termination; or

(p) any federal, state or local statute, regulation or ordinance, or judicial or
administrative decision or order, relating to or affecting the operation of the
Network Facilities and the conduct of the Business by the Credit Parties
(including any statutes, regulations, ordinances, decisions or orders affecting
telecommunication operators generally and not directed against the Credit
Parties specifically) shall have been issued or adopted that reasonably could be
expected to have a Material Adverse Effect.

 

  8.2 Certain Effects of Event of Default

Notwithstanding any provision of any Loan Document and without limiting any of
the other rights and/or remedies of any Lender Party, if an Event of Default
exists, (a) Agent may, by notice to Borrowers (i) terminate or reduce Lender
Parties’ Commitments, obligations or other amounts available to Credit Parties
hereunder, and (ii) declare any or all of the Obligations to be immediately due
and payable (provided, that if an Event of Default under Section 8.1 (g) or
(h) occurs, all of the Obligations shall be immediately due and payable
immediately and Lender Parties’ Commitments and obligations hereunder shall
immediately terminate, in each case without any action, presentment, demand,
protest or notice of any kind, all of which hereby are expressly waived by the
Credit Parties), and (b) no action permitted under Article VII hereof or under
any negative covenant contained in any other Loan Document may be taken during
the existence of an Event of Default.

 

IX RIGHTS AND REMEDIES

 

  9.1 Rights and Remedies

Notwithstanding any provision of any Loan Document and without limiting any of
the other rights and/or remedies of any Lender Party, if an Event of Default
exists (and/or, with respect to (c) below, if the Revolving Facility is
terminated):

(a) Agent shall have the right to exercise any and all rights and remedies
provided for in any Loan Document, under the UCC or at law or in equity or
otherwise (including, without limitation, pay for the performance of any of the
Obligations), and no such action or failure to take any such action shall be
construed as a waiver by any Lender Party of any Event of Default or any other
rights or remedies of any Lender Party;

 

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(b) each Credit Party shall take all actions in compliance with Applicable Law
that Agent requests to enable Agent to obtain and enjoy the full rights and
benefits hereunder;

(c) each Credit Party hereby grants to Agent, for the benefit of the Lender
Parties, an irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to such Credit Party) to use, assign, license or
sublicense any Intellectual Property, now owned or hereafter acquired by such
Credit Party, and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof, and hereby agree that all proceeds received by Agent in
connection with such license may be used to satisfy the Obligations in Agent’s
sole discretion;

(d) Agent shall have the right to (i) apply for and have a receiver appointed in
order to enforce any Lender Party’s rights and remedies relating to or arising
out of the Credit Parties’ Businesses, Collateral, Obligations or Loan
Documents, including without limitation, the maintenance, operation,
preservation and disposition thereof, (ii) continue operation of the Businesses
of the Credit Parties and/or (iii) collect all revenues and profits thereof and
apply the same to the payment of all expenses and other charges of such
receivership including the compensation of the receiver and to the payments as
aforesaid until a sale or other disposition of such Collateral shall be finally
consummated; and

(e) without limiting the generality of the foregoing, at the request of Agent
and at the Credit Parties’ sole cost and expense, each Credit Party shall
(i) assist Agent in obtaining any required approval of the FCC, any State
Regulatory Agency or any other Governmental Authority for any action or
transaction contemplated hereby, including preparing, signing and filing with
the FCC, any State Regulatory Agency and/or any other Governmental Authority the
assignor’s or transferor’s portion of any application or applications for
consent to the assignment of license or transfer of control over any of any
Credit Party’s Telecom Licenses necessary or appropriate under applicable
Communications Laws or the rules and regulations of any Governmental Authority
for approval of any sale, assignment or transfer to Agent or any other Person of
any or all Collateral and the Telecommunication Licenses of any Credit Party and
(ii) execute all applications and other documents and take all other actions
reasonably requested by Agent to enable Agent, its designee, any receiver,
trustee or similar official or any purchaser of all or any part of the
Collateral to obtain from the FCC, any State Regulatory Agency or any other
Person any required authority necessary to operate the Telecommunications
Business of the Credit Parties.

In dealing with or disposing of all or any part of the Collateral, Lender
Parties shall not be required to give priority or preference to any item of
Collateral or otherwise to marshal assets or to take possession or sell any
Collateral with judicial process. Furthermore, each Credit Party and each
Subsidiary thereof hereby agrees not to resist or interfere with any action
taken by any Lender Party in accordance with Articles 8 and 9 hereof, and to the
extent not prohibited by Applicable Law, each Credit Party and each Subsidiary
thereof hereby irrevocably consents to, and waives any right to object to or
otherwise contest the appointment of a receiver as provided above. Each Credit
Party acknowledges that FCC and State Regulatory Agency authorization is
integral to Agent’s realization of the value of all of the Collateral, that the
Telecom Licenses of the Credit Parties are unique assets, that there is no
adequate remedy at law for failure by the Credit Parties to comply with the
provisions of Section 9.1(e) and that such failure would not be adequately
compensable in monetary damages; therefore, each Credit Party agrees that, in
addition to all other remedies available at law or in equity, Agent shall be
entitled to obtain decree(s) of specific performance entitling it to temporary
restraining order(s), preliminary injunction(s), or permanent injunction(s) to
enforce specifically and require specific performance of the provisions of
Section 9.1(e). Each Credit Party agrees that notice shall be adequate for the
entry of a decree of specific performance with respect to any such matter (i) in
the case of a temporary restraining order, upon twenty-four (24) hours’ prior
notice of the hearing thereof and (ii) in the case of any other proceeding, upon
three (3) days’ prior notice of the hearing thereof, and hereby waives all
requirements and demands that Agent give any greater notice of such hearings or
post a bond or other surety arrangement in connection with the issuance of such
decree.

 

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  9.2 Application of Proceeds

Notwithstanding any provision of any Loan Document, if an Event of Default
exists, all payments, proceeds and amounts received by any Lender Party with
respect to the Obligations, the Collateral, or any exercise of rights or
remedies hereunder shall be applied to the Obligations in such order and manner
as Agent may determine in its sole discretion. The Credit Parties shall be
liable for any deficiency if such proceeds are insufficient to satisfy all of
the Obligations.

 

  9.3 Attorney in Fact

Notwithstanding any provision of the Loan Documents and without limiting any of
the other rights and/or remedies of any Lender Party, if an Event of Default
exists, each Credit Party and each Subsidiary thereof hereby irrevocably
constitutes and appoints Agent (and all Persons designated by Agent), with full
power of substitution, as its true and lawful attorney-in-fact, with full
irrevocable power, right and authority in its place and stead, in its own name
and on its own behalf (and without notice to or assent by such Person), from
time to time in Agent’s sole discretion, to take any and all appropriate action
and to execute and deliver any and all documents or instruments which may be
necessary or advisable (a) to accomplish the purposes of the Loan Documents,
(b) to protect and realize upon the Liens in the Collateral, or (c) in
connection with any Credit Party’s (or any Subsidiary’s) Business, Collateral,
Obligations or Loan Documents, including without limitation, the maintenance,
operation, preservation and disposition of any of the foregoing. The foregoing
appointment shall create in Agent a power coupled with an interest.

 

  9.4 Rights and Remedies not Exclusive

Agent shall have the right in its sole discretion to determine which rights
and/or remedies Lender Party may at any time pursue, relinquish, subordinate or
modify, without in any way modifying or affecting any of Lender Party’s rights
or remedies under any Loan Document, any Applicable Law or in equity. The
enumeration or partial or complete exercise of any rights and remedies are not
exhaustive or exclusive, and shall not preclude any other further exercise of
such (or any other) right or remedy.

 

  9.5 Changes in Law or Policy

Each Credit Party, Agent and each Lender acknowledge their intent that, upon the
occurrence of an Event of Default, Agent shall receive, to the fullest extent
permitted by law and governmental policy (including, without limitation, the
rules, regulations and policies of the FCC and State Regulatory Agencies), all
rights necessary or desirable to obtain, use or sell the Collateral and the
Telecom Licenses of Borrowers, or to transfer control over the Telecom Licenses
of Borrowers, and to exercise all remedies available to Agent under the Loan
Documents, the UCC or other applicable law. Each Credit Party, Agent and each
Lender further acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that affect in any
manner Agent’s rights of access to, or use or sale of, the Collateral or the
Telecom Licenses of Borrowers, or of Agent’s rights to transfer control over the
Telecom Licenses of Borrowers, or the procedures necessary to enable Agent to
obtain such rights of access, use, sale or transfer of control, Agent, Lenders
and each Credit Party shall execute an amendment to the Loan Documents, in such
manner as Agent reasonably shall request, in order to provide Agent such rights
to the greatest extent possible consistent with then applicable law and
governmental policy.

 

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  9.6 Regulatory Matters

Notwithstanding anything to the contrary contained herein or in any of the Loan
Documents, Agent and Lenders will not take any action pursuant to this Agreement
or any of the other Loan Documents that would constitute or result in any
assignment or transfer of control, whether de jure or de facto, of any Telecom
License if such assignment or transfer of control would require under then
existing law (including applicable Communications Laws) the prior approval of
the FCC or applicable State Regulatory Agencies without first obtaining such
approval. Each Lender and Agent specifically acknowledge that (i) voting rights
in the equity securities or other ownership interests of each Credit Party will
remain with the holders of such voting rights upon and following the occurrence
of an Event of Default unless and until any required prior approvals of the FCC
or applicable State Regulatory Agencies to the transfer of such voting rights
shall have been obtained and (ii) prior to the exercise of voting rights by the
purchaser of such equity securities or other ownership interests at a public or
private sale, all prior consents of the FCC and applicable State Regulatory
Agencies required by applicable law shall have been obtained.

 

X WAIVERS AND JUDICIAL PROCEEDINGS

 

  10.1 Certain Waivers

(a) Each Credit Party and each Subsidiary thereof hereby absolutely and
unconditionally waives, in each case with respect to or arising under the
Obligations, Collateral or the Loan Documents, (i) all rights of rescission,
set-off, counterclaim, demand, presentment or protest, and all defenses, with
respect to any and all obligations, liabilities, agreements, arrangements or
instruments, including without limitation, in any action or proceeding brought
to obtain a court order recognizing the Lien of Agent in and to any Collateral,
(ii) except as expressly provided herein, all notices and demands of any
description, (iii) the pleading of any statute of limitations, and (iv) any
duty, responsibility or obligation of any Lender Party with respect to any of
the Collateral, including, without limitation, to give priority or preference to
any item of Collateral, marshal assets, take possession or sell any Collateral
with judicial process, collect any sums due in respect of any Collateral, or
protect or preserve any Collateral or any rights thereto or thereunder, and no
Lender Party shall have any such duty, responsibility or obligation.

(b) No course of action or dealing, forbearance, event, act or omission, in
whole or in part, by any Lender Party under or in connection with any Loan
Document shall affect the liability of any Credit Party or any Subsidiary
thereof, or operate as a waiver of any provision of any Loan Document or
preclude any other or further course of action or dealing, forbearance, event,
act or omission under or in connection with any provision of any Loan Document.
Each waiver or consent under any Loan Document shall be limited solely to the
express terms and conditions of such waiver or consent. Notwithstanding any
other provision of any Loan Document, no Lender Party waives any violation under
any Loan Document by virtue of completing the Closing or funding any Loan.
Unless expressly provided otherwise, any matter subject to any Lender Party’s
discretion under any Loan Document shall be at such Lender Party’s sole and
absolute discretion.

(c) EACH PARTY HEREBY (i) EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED
WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO ANY LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND
(ii) AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY
JURY.

 

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  10.2 Amendments and Waivers

No amendment, modification or waiver of any Loan Document, or consent to any
departure by any Credit Party therefrom, shall be effective unless in writing
and signed by (a) Agent, (b) Borrowers (or such Credit Party), (c) to the extent
required under such Loan Document, Requisite Lenders (or Agent at the direction
of the Requisite Lenders), and (d) any Lender that is directly affected to the
extent such amendment, modification, waiver or consent does any of the following
(except as otherwise permitted in the Loan Documents): (i) increase the
Commitment of any individual Lender (which action shall be deemed to directly
affect all Lenders); (ii) reduce the principal of, rate of interest on or fees
payable with respect to any Obligation; (iii) waive, forgive, extend, defer or
postpone the payment (but not prepayment) of any principal, interest or fees
under any Loan Document; (iv) change the percentage of the Commitments or the
aggregate unpaid principal amount of the Loans; (v) alter, as between Lenders,
the amount payable to each hereunder; (vi) release any Guaranty or any material
portion of the Collateral (which action shall be deemed to directly affect all
Lenders) unless such release is made when an Event of Default exists in
connection with a disposition of the Collateral by Agent; (vii) amend, modify or
waive this Section 10.2 or the definitions of the terms used in this
Section 10.2 insofar as the definitions affect the substance of this Section
(which action shall be deemed to directly affect all Lenders); and/or
(viii) consent to the assignment or other transfer by any Credit Party or any of
its Subsidiaries of any of their rights or obligations under any Loan Document
Any amendment, modification, waiver or consent affected in accordance with this
Section 10.2 shall be binding upon all Lender Parties and Credit Parties.

 

  10.3 Survival

All Obligations, covenants, agreements, representations, warranties, waivers and
indemnities of or made by each Credit Party in the Loan Documents shall survive
the execution and delivery of the Loan Documents, the Closing, the funding of
the Loans and any termination of any Loan Document until all the Obligations
(other than Unasserted Obligations) are fully performed and indefeasibly paid in
full in cash (unless any such covenants, agreements, representations or
warranties relate to a specific period of time, in which case such covenants,
agreements, representations or warranties shall be limited to such period of
time and shall not survive beyond such period), except Sections 2.7, 3.3, 10.1,
10.3, 12.1, 12.3, 12.4, 12.7, 12.9, 12.10 and 12.11, Article XI and Article XIII
shall survive the termination of the Loan Documents and any payment of the
Obligations.

 

XI AGENT PROVISIONS; SETTLEMENT

 

  11.1 Agent

(a) Appointment. Each Lender hereby appoints CapitalSource as the sole and
exclusive administrative, payment and collateral agent under the Loan Documents
and each Lender hereby irrevocably authorizes CapitalSource, as agent for such
Lender, to take such action or to refrain from taking such action on its behalf
under the provisions of the Loan Documents and to exercise such powers and
perform such duties as are delegated to Agent by the terms of the Loan
Documents, together with such other powers, rights and remedies as are
reasonably incidental thereto. Agent agrees to act as such on the conditions
contained in this Article XI. The provisions of this Article XI are solely for
the benefit of Agent and Lenders, and the Credit Parties shall have no rights as
third-party beneficiaries of any of the provisions of this Article XI other than
Section 11.1(g). Agent may exercise any of its powers, rights or remedies or
perform any of its duties under the Loan Documents by or through its respective
Affiliates, and its or their respective officers, directors, managers, equity
owners, employees, advisors, attorneys, agents, representatives, and the
successors, assigns and Affiliates of each of the foregoing (for purposes of
this Article XI, all of the foregoing are “Representatives”).

 

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(b) Nature of Duties. Agent, in performing its functions and duties under this
Agreement, (i) is acting solely on behalf of Lenders, (ii) has duties which are
administrative in nature, and (iii) does not assume and shall not be deemed to
have assumed, any obligation toward or agency, trust or other fiduciary
relationship with or for any Lender (other than as expressly set forth in the
Loan Documents) or any Credit Party. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in the Loan Documents. Each
Lender shall make its own independent investigation and appraisal of the
financial condition, collateral, creditworthiness and affairs of the Credit
Parties in connection with the extensions of credit hereunder. No Lender shall
be entitled to rely upon any underwriting summary report or other statistical
analysis or information prepared by or at the direction of Agent which is
furnished by Agent to any Lender. Except for information, notices, reports and
other documents expressly required to be furnished to Lenders by Agent
hereunder, Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any notices, documents or reports
or any credit or other information with respect to any Credit Party, the
Collateral, the Loan Documents or any matter relating thereto, whether coming
into its possession before the Closing Date or at any time thereafter. Except as
expressly provided in this Article XI, Agent has no duty (fiduciary or
otherwise) or liability whatsoever to any Lender in any respect. Agent shall not
be deemed to have any knowledge of the existence or non-existence of any Default
or Event of Default unless and until Agent is notified in writing of any of the
foregoing by the Credit Parties.

(c) Rights, Exculpation, Etc. In performing its functions and duties hereunder,
Agent shall exercise the same care which it would in dealing with loans for its
own account; provided, however, that neither Agent, its Affiliates, nor any of
its or their Representatives shall be liable to any Lender for any action
lawfully taken or omitted by them under the Loan Documents, or in connection
therewith; provided, further, that the foregoing shall not prevent Agent from
being liable to the extent of its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction on a final and nonappealable
basis. Agent shall not be liable for any apportionment or Distribution of
payments made by it 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 such payment was due but not made shall be to recover from the
other Lenders any such payment due to it (and such other Lenders hereby agree
promptly to return to such Lender any such erroneous payments received by them).
Notwithstanding any provision of any Loan Document, Agent shall not have any
liability arising from confirmations of the amount of outstanding Loans or the
component amounts thereof. Agent shall not be responsible to any Lender for, or
required to make any inquiry concerning, any recitals, statements,
representations or warranties (written or oral) made by the Credit Parties in
any Loan Document, the execution, effectiveness, performance, genuineness,
validity, enforceability, collectability or sufficiency of any Loan Document or
the transactions contemplated thereby, the existence of any Default or Event of
Default, or the condition (financial or otherwise) of the Credit Parties or any
of the Collateral. Agent may at any time request instructions from one or more
Lenders with respect to any actions or approvals which, by the terms of any Loan
Document, Agent is permitted or required to take or to grant, and Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from taking any action or withholding any approval under any Loan
Document until it shall have received such instructions from such Lenders.
Without limiting the foregoing, no Lender shall have any claim or right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting under the Loan Documents in accordance with the instructions of Requisite
Lenders (or such other proportion as applicable) and, notwithstanding such
instructions, Agent shall have no obligation to take any action or refrain from
taking any action if it, in good faith, believes that such action or non-action
may expose Agent or any of its Affiliates or its or their Representatives to any
liability unless Agent receives an indemnification satisfactory to it in its
sole discretion.

(d) Reliance. Agent shall be entitled to rely upon (i) any written notices,
statements, certificates, orders or other documents or any telephone message or
other communication in any form

 

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believed by it in good faith to be genuine and correct and to have been sent or
made by the proper Person, and (ii) the advice of legal counsel, independent
accountants and other experts selected by Agent in its sole discretion.

(e) Indemnification. Each Lender, severally (and not jointly, nor jointly and
severally) agrees to reimburse and indemnify and hold harmless Agent and its
Affiliates and its and their Representatives (to the extent not reimbursed by
the Credit Parties, as applicable) and to pay such amounts upon demand by Agent,
ratably according to such Lender’s respective Pro Rata Share (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated, ratably in accordance with such Lender’s Pro Rata Share immediately
prior to the date the Loans were repaid in full), from and against any and all
Claims which may be imposed on, incurred by, or asserted against Agent, its
Affiliates, or any of its or their respective Representatives in any way
relating to or arising out of any Loan Document or any action taken or omitted
by Agent under any Loan Document except to the extent resulting from such
Person’s gross negligence or willful misconduct as determined by a court of
competent jurisdiction on a final and non-appealable basis. The obligations of
Lenders under this Article XI shall survive the payment in full of the
Obligations and the termination of this Agreement.

(f) CapitalSource Individually. With respect to the Loans made by it,
CapitalSource shall have, and may exercise, the same rights and powers under the
Loan Documents, and is subject to the same obligations and liabilities, as and
to the extent set forth in the Loan Documents, as any other Lender. The terms
“Lenders” or “Requisite Lenders” or any similar terms shall include
CapitalSource in its individual capacity as a Lender. CapitalSource may lend
money to, and generally engage in any kind of lending or other business with,
any Credit Party or any Subsidiary or Affiliate of any Credit Party as if it
were not acting as Agent pursuant hereto.

(g) Resignation of Agent; Successor Agent. Agent may resign from the performance
of all or part of its functions and duties hereunder at any time by giving at
least thirty (30) calendar days’ prior written notice to Borrowers and Lenders
(the “Resignation Notice”). Such resignation shall take effect upon the earlier
of (i) the appointment of a successor Agent pursuant to this Agreement and
(ii) 5:00 p.m. (New York City time) on the 30th calendar day following Receipt
by Borrowers and Lenders of the Resignation Notice. Absent a voluntary
resignation, Agent may not be removed or terminated as Agent. Upon receipt of
any Resignation Notice, Requisite Lenders shall appoint a successor Agent with
the consent of Borrowers, which consent shall not be unreasonably withheld,
delayed or conditioned (or required if any Default or Event of Default exists).
If a successor Agent shall not have been so appointed by the 30th calendar day
following receipt of the Resignation Notice, the retiring Agent may, on behalf
of Lenders, appoint a successor Agent with the consent of Borrowers, which
consent shall not be unreasonably withheld, delayed or conditioned (or required
if any Default or Event of Default exists), who shall serve as Agent until such
time as Requisite Lenders appoint a successor Agent as provided above. If no
successor Agent has been appointed pursuant to the foregoing within said 30
calendar day period, Requisite Lenders thereafter shall perform all the duties
of Agent hereunder, until such time, if any, as Requisite Lenders appoint a
successor Agent as provided above. Upon the appointment of a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent and, upon the
effective date of the retiring Agent’s resignation, the retiring Agent shall be
discharged from its duties and obligations under the Loan Documents, provided
that any indemnity rights or other rights in favor of such retiring Agent shall
continue after and survive such resignation and succession. The provisions of
this Article XI shall inure to the benefit of any Agent with respect to actions
taken or not taken by it while it was Agent under the Loan Documents.

 

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(h) Administrative and Collateral Matters.

(i) Collateral. Each Lender agrees that any action taken by Agent in accordance
with the provisions of the Loan Documents relating to the Collateral, and the
exercise by Agent of the powers set forth therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and binding
upon all Lender Parties. Without limiting the generality of the foregoing, Agent
shall have the sole and exclusive right and authority to (A) act as the
disbursing and collecting agent for Lenders with respect to all payments and
collections arising in connection with the Loan Documents and the Collateral;
(B) execute and deliver, and accept delivery of, each Loan Document and all
other materials and communications by and with the Credit Parties or any of
their Subsidiaries; (C) act as collateral agent for Lenders for purposes of the
perfection, priority, management, supervision and all other actions in relation
to the Collateral and the Liens created thereon by the Loan Documents and
(D) except as may be otherwise specifically restricted by the terms of any Loan
Document, exercise all rights and remedies given to any Lender Party with
respect to any Credit Party and/or the Collateral under the Loan Documents,
Applicable Law or otherwise. Each Lender appoints Agent as its attorney-in-fact,
granting Agent powers to execute each Security Document and any registrations of
the security interest thereby created, in each case in such Lender’s name and on
its behalf, with the effect that each Lender becomes a secured party thereunder,
and Agent has the power to sub-delegate to third parties all of the foregoing
powers.

(ii) Release of the Collateral. Lenders hereby irrevocably authorize Agent, in
its sole discretion, to release any Lien granted to or held by Agent, for the
benefit of the Lender Parties, upon any Collateral (A) upon termination of this
Agreement and indefeasible payment in cash and satisfaction in full of all
Obligations (other than Unasserted Obligations); (B) which is sold or disposed
of (x) in compliance with the Loan Documents (and Agent may rely conclusively on
a certification of Borrowers to such effect, without further inquiry) or
(y) while an Event of Default exists, in connection with the exercise of
remedies under any Loan Document; or (C) which does not constitute a material
portion of the Collateral.

(iii) Absence of Duty. Agent shall have no obligation whatsoever to any Person
with respect to the Collateral, including, without limitation, to assure that it
exists, is owned by any Credit Party or is cared for, protected or insured or
has or has not been encumbered or that the Liens granted to Agent, on behalf of
the Lender Parties, have or have not been properly, sufficiently or lawfully
created, perfected, protected, enforced or maintained or are entitled to any
particular priority. Agent may act in any manner it may deem appropriate in its
sole discretion with respect to the Collateral.

(i) Agency for Perfection. In accordance with the appointment of Agent
hereunder, Agent shall be each Lender’s agent for the purpose of perfecting all
security interests in any Collateral under Article 9 of the UCC or otherwise.
Should any Lender (other than Agent) be perfected in any Collateral other than
through Agent (whether by possession or otherwise), such Lender shall hold such
Collateral and be perfected therein for the benefit of the other Lender Parties,
notify Agent thereof and, promptly upon Agent’s request, deliver such Collateral
to Agent or otherwise act in respect thereof in accordance with Agent’s
instructions.

(j) Exercise of Remedies. Except as set forth in Section 11.3, each Lender
agrees that it will not have any right individually to enforce or to seek to
enforce any Loan Document or to exercise any right or remedy thereunder or
otherwise against any Credit Party or any Collateral. All such rights and
remedies may be exercised only by Agent in accordance with the terms of the Loan
Documents.

(k) Consents; Defaulting Lenders. Nothing contained in the Loan Documents will
be deemed to relieve a Lender of its obligation to fulfill its commitments or to
prejudice any rights Agent or any Credit Party may have against such Lender as a
result of any default by such Lender in the

 

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performance of its obligations under the Loan Documents. Without limiting any
provision of any Loan Document, no Defaulting Lender shall have any right to
vote or consent as a Lender under the Loan Documents, and Agent will be
entitled, in addition to all other rights available under the Loan Documents, to
recover any amounts owed by any Defaulting Lender under the Loan Documents on
demand from such Defaulting Lender without set-off, counterclaim or deduction of
any kind together with interest thereon for each day from the date such amount
was due until the date such amount is paid to Agent at the Federal Funds Rate
for each day during such period (as published by the Federal Reserve Bank of New
York or at Agent’s option based on the arithmetic mean determined by Agent of
the rates for the last transaction in overnight Federal Funds arranged prior to
9:00 a.m. (New York City time) on that day by each of the three leading brokers
of Federal Funds transactions in New York City selected by Agent) and if such
amounts are not paid within 3 days of Agent’s demand, at the highest rate
applicable to the Loans. If Agent requests in writing the consent of a Lender
and does not receive a written denial thereof within 5 Business Days after such
Lender’s Receipt of such request, then such Lender will be deemed to have so
consented. If (i) Agent requests the consent of a Lender in a situation where
such Lender’s consent is required and such consent is not given or is denied
within the time prescribed in such request, (ii) a Lender is deemed to be a
Defaulting Lender, or (iii) a Lender requests compensation under Article XIII,
then, within 45 Business Days of any such occurrence or event, Agent may, at its
option, without prejudice to any other rights or remedies Agent may have against
such Lender, (A) require such Lender to sell and assign its Loans and
Commitments and rights under the Loan Documents, without recourse to or warranty
by such Lender (other than as to title and absence of adverse claims) or Agent
(and without expense to Agent), to Agent or its designee for a purchase price
equal to the then outstanding principal amount of the Loans payable to such
Lender, plus any accrued but unpaid interest on such Loans and all accrued but
unpaid fees owed to such Lender and any other amounts payable to such Lender
under the Loan Documents (in all cases except for the Prepayment Fee, less, if
such Lender is a Defaulting Lender, any amounts owed by such Lender under the
Loan Documents, and less an amount equal to the commitment fee paid to such
Lender multiplied by a fraction, the numerator of which shall be the days
remaining until the scheduled Maturity Date and the denominator of which shall
be the total number of days from the Closing Date until the scheduled Maturity
Date, and (B) assume all the Commitments and obligations of such Lender under
the Loan Documents. If Agent requires any assignment and sale pursuant to this
section, Agent will so notify the applicable Lender in writing and such Lender
will consummate such assignment and sale no later than 5 Business Days following
receipt of such notice upon payment of the purchase price as provided herein.
Upon consummation of such sale and assignment, such assigning Lender shall no
longer be a party to any of the Loan Documents or have any rights under any of
the Loan Documents (other than rights with respect to indemnities and similar
rights applicable to such assigning Lender prior to the date of such assignment
and sale).

(l) Proofs of Claim. In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to any Credit Party, Agent (irrespective of
whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether Agent shall
have made any demand on any Credit Party) shall be entitled and empowered, by
intervention in such proceeding or otherwise to file and prove a claim for the
whole amount of principal and interest owing and unpaid in respect of the Loans
and any other Obligations that are owing and unpaid and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of any Lender Party (including any claim for the reasonable compensation,
expenses, disbursements and Advances of any Lender Party and their respective
agents and counsel and all other amounts due to any Lender Party under any Loan
Document) allowed in such judicial proceeding, and to collect and receive any
moneys or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is hereby
authorized by each Lender to make such payments to Agent and, in the event that
Agent shall consent to the making of such payments directly to Lenders, to pay
to Agent any amount due for the reasonable compensation, expenses, disbursements
and Advances Agent and its agents and counsel, and any other amounts due Agent
under any Loan Document.

 

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  11.2 Co-Agents and Other Designations

Agent may, in its sole discretion, from time to time designate a Lender as a
“Co-Agent”, “Syndication Agent”, “Documentation Agent” or other designation and
may enter into an agreement with such Lender to have it so identified for
purposes of this Agreement and each such designation shall be effective upon
written notice thereof by Agent to Borrowers. Any Lender that is so designated
(i) shall have no rights, powers, obligations, liabilities, responsibilities or
duties under any Loan Document as such other than those otherwise applicable to
all Lenders, and (ii) shall not have or be deemed to have any fiduciary
relationship with any Lender.

 

  11.3 Set-off and Sharing of Payments

All payments by any Lender to Agent will be made without set-off, counterclaim
or deduction of any kind except as permitted under this Section 11.3. If any
Event of Default exists, each Lender is hereby authorized by the Credit Parties
from time to time, to the fullest extent permitted by Applicable Law, without
notice to any Credit Party (such notice being hereby expressly waived) to set
off, appropriate and apply any (i) balances of any kind (including general or
special, time or demand, provisional or final) held by such Lender for the
account of any Credit Party regardless of whether such balances are then due to
any Credit Party, and (ii) other Property held or owing by such Lender to or for
the credit or for the account of any Credit Party, against and on account of any
of the Obligations which are not paid when due; provided, that no Lender shall
exercise any of the foregoing rights without the prior written consent of Agent.
To the extent any Lender receives or has amounts or Property in excess of its
Pro Rata Share whether by set off or otherwise, such Lender shall purchase for
cash (and the other Lenders shall sell) participations in each such other
Lender’s Pro Rata Share as would be necessary to cause such Lender to share such
excess with each other Lender in accordance with their respective Pro Rata
Shares.

 

  11.4 Disbursement of Advances and Term B Advances

Agent may, on behalf of Revolving Lenders or the Term B Lenders, as applicable,
disburse funds to Borrowers for Advances or Term B Advances. Each Revolving
Lender and Term B Lender shall promptly remit to Agent its Pro Rata Share of all
funds disbursed on its behalf by Agent either before or after such disbursement
as requested by Agent in its Permitted Discretion. If Agent requires funds from
a Revolving Lender or Term B Lender prior to disbursement to Borrowers, Agent
shall advise each such Lender by written notice in accordance with this
Agreement of the amount of such Lender’s Pro Rata Share of such requested
disbursement no later than one Business Day prior to the funding date thereof,
and each such Lender shall pay Agent its Pro Rata Share of such requested
disbursement, in same day funds, by wire transfer to Agent’s account not later
than 2:00 p.m. (New York City time). If Agent shall have already disbursed funds
to Borrowers, each Lender shall pay its Pro Rata Share thereof to Agent within
one Business Day of Agent’s request therefor. If Agent shall have disbursed
funds to Borrowers and any Lender fails to pay its Pro Rata Share thereof in
accordance with this Agreement within one Business Day of Agent’s request
therefor, Agent shall promptly notify Borrowers and Borrowers shall immediately
repay such amount to Agent without premium or penalty. Nothing in any Loan
Document, shall be deemed to require Agent to advance funds on behalf of any
Lender or to relieve any Lender from its obligation to fulfill its commitments
under the Loan Documents or to prejudice any rights that Agent may have against
any Lender as a result of any default by such Lender under the Loan Documents.

 

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  11.5 Settlements; Payments; and Information

(a) Advances; Payments; Interest and Fee Payments. The amount of outstanding
Loans may fluctuate from day to day through Agent’s disbursement of funds to,
and receipt of funds from, Borrowers. In order to minimize the frequency of
transfers of funds between Agent and each Lender, repayments of Loans may, at
the election of Agent, be settled according to this Section 11.5.

(i) Payments of principal on the Term Loans will be settled, in accordance with
each Lender’s Pro Rata Share, on the first Business Day after such payments are
received.

(ii) Once each week, or more frequently (including daily), if Agent so elects
(each such day being a “Settlement Date”), Agent will advise each Revolving
Lender by 1:00 p.m. (New York City time) on a Business Day by written notice in
accordance with this Agreement of the amount of each such Revolving Lender’s Pro
Rata Share of the outstanding Advances. If payments are necessary to adjust the
amount of such Revolving Lender’s share of the Advances to such Revolving
Lender’s Pro Rata Share of the Advances, the party from which such payment is
due will pay the other party, in same day funds, by wire transfer to the other’s
account not later than 2:00 p.m. (New York City time) on the Business Day
following the Settlement Date.

(iii) On the first Business Day of each quarter, or, with respect to LIBOR
Loans, on the Business Day on which payments of accrued interest are due thereon
(each, an “Interest Settlement Date”), Agent will advise each Lender by written
notice in accordance with this Agreement of the amount of interest and fees
charged to and collected from Borrowers for the preceding quarter or applicable
Interest Period (or portion thereof in the case of Interest Periods longer than
90 days) in respect of the applicable Loans. Provided that such Lender is not
then a Defaulting Lender, Agent will pay to such Lender, by wire transfer to
such Lender’s account (as specified by such Lender in accordance with this
Agreement) such Lender’s share of such interest and fees not later than the next
Business Day following the Interest Settlement Date.

(b) Availability of Lenders’ Pro Rata Share. Unless Agent has been notified in
writing by a Revolving Lender or Term B Lender prior to any proposed funding
date of such Lender’s intention not to fund its Pro Rata Share of any Advance or
Term B Advance in accordance with this Agreement due to any existing Event of
Default, Agent may assume that such Revolving Lender or Term B Lender will make
such amount available to Agent in accordance with Section 11.4; provided,
however, nothing contained in this Agreement shall obligate a Revolving Lender
to make an Advance or a Term B Lender to make a Term B Advance at any time any
Event of Default exists other than an Advance made under Section 11.4 or 11.7.

(c) Return of Payments. If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be received
by Agent from any Credit Party and such related payment is not received by
Agent, or if Agent overpays an amount to a Lender under this Agreement or
otherwise in error, then Agent will be entitled to recover such amount from such
Lender without set-off, counterclaim or deduction of any kind. If Agent
determines at any time that any amount received by Agent under the Loan
Documents must be returned to any Credit Party or paid to any other Person
pursuant to any Debtor Relief Law or otherwise, then, notwithstanding any other
term or condition of any Loan Document, Agent will not be required to distribute
any portion thereof to any Lender and each Lender will repay to Agent on demand
any portion of such amount that Agent has distributed to such Lender, together
with interest at such rate, if any, as Agent is required to pay to Borrowers or
such other Person, without set-off, counterclaim or deduction of any kind.

 

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  11.6 Dissemination of Information

Upon request by a Lender, Agent will use reasonable efforts to distribute
promptly to such Lender, unless previously provided by any Credit Party to such
Lender, copies of all notices, schedules, reports, projections, financial
statements, agreements and other material and information, including, without
limitation, financial and reporting information received by Agent from the
Credit Parties, as provided for in any Loan Document (in all cases excluding all
internal information generated by CapitalSource and/or its Affiliates and/or its
or their respective agents and Representatives). Agent shall not be liable to
any of the Lenders for any failure to comply with its obligations under this
Section 11.6, except to the extent that such failure is attributed to Agent’s
gross negligence or willful misconduct and results in demonstrable damages to
such Lender as determined, in each case, by a court of competent jurisdiction on
a final and non-appealable basis. Each Lender expressly agrees and acknowledges
that (i) none of Agent, its Affiliates or its or their Representatives makes any
representation or warranty as to the accuracy of any materials or information or
shall be liable for or with respect thereto, and (ii) any Person performing any
audit or examination will inspect only specific information regarding the Credit
Parties and will rely upon the Credit Parties’ books and records, as well as on
representations of the Credit Parties’ personnel. Each Lender agrees (A) to keep
all materials and information confidential (at least to the standards as
required by this Agreement) and strictly for its internal use, and not to
distribute (except to its Participants, so long as such Participants are bound
by these provisions and such Lender shall be responsible for any breach hereof
by any such Participant), or use any of the foregoing in any other manner, and
(B) without limiting the generality of any other indemnification provision
contained in the Loan Documents, (1) to hold Agent, its Affiliates and any such
other Person delivering or preparing such material and/or information harmless
from any action the indemnifying Lender may take or any conclusions the
indemnifying Lender may reach from any such material or information in
connection with any Loans that the indemnifying Lender has made or may make to
Borrowers, or the indemnifying Lender’s participation in, or the indemnifying
Lender’s purchase of, Loans of Borrowers, (2) to pay and protect, and indemnify,
defend, and hold Agent, its Affiliates and such Person delivering or preparing
such material and/or information harmless from and against, all Claims incurred
by such Person as the direct or indirect result of any violation hereof.

 

  11.7 Special Agent Advances

Agent may in its sole discretion at any time that an Event of Default exists or
upon any failure of a condition precedent to any of the Loans, make such
disbursements and advances (“Special Agent Advances”) which Agent, in its sole
discretion, (i) deems necessary or desirable either to preserve or protect any
portion of the Collateral, (ii) to enhance the likelihood of or maximize the
amount of repayment by Credit Parties of the Obligations, and/or (iii) to pay
any other amount chargeable to any Credit Party pursuant to the terms of any
Loan Documents, including without limitation, costs, fees and expenses.
Notwithstanding any provision of the Loan Documents, Special Agent Advances
shall be deemed an Advance under this Agreement but shall be repayable on demand
and together with all interest thereon and shall be payable prior to the payment
of interest and principal of all other Loans. Each Lender agrees that it shall
make available to Agent, upon Agent’s demand in immediately available funds, the
amount equal to such Lender’s Pro Rata Share of each such Special Agent Advance.

 

XII MISCELLANEOUS

 

  12.1 Governing Law; Jurisdiction; Service of Process; Venue

The Loan Documents, pursuant to New York General Obligations Law Section 5-1401,
shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to its choice of law provisions that would result
in the application of the laws of a different jurisdiction. By execution and
delivery of each Loan Document to which it is a party, each Credit Party hereby
(i) accepts the non-

 

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exclusive jurisdiction of any federal or state court of competent jurisdiction
and irrevocably agrees to be bound by any Judgment rendered thereby, (ii) waives
personal service of process, (iii) agrees that service of process upon it may be
made pursuant to Section 12.5 hereof or in any manner permitted by Applicable
Law, and (iv) waives any objection to jurisdiction and venue of any action
instituted hereunder and agrees not to assert any defense based on lack of
jurisdiction, venue, convenience or forum nonconveniens. Each Credit Party
hereby agrees that any proceedings against any Lender Party involving, directly
or indirectly, the Obligations, the Collateral or any Loan Document, or any
transaction contemplated or permitted thereby, shall be brought only in a
federal or state court located in New York County located in the State of New
York.

 

  12.2 Successors and Assigns; Assignments and Participations

(a) Subject to Section 12.2(b) hereof, each Lender Party may assign all or any
portion of its rights and delegate all or any portion of its obligations under
any Loan Document to one or more Eligible Assignees in accordance with the terms
hereof (each, a “Transferee”) with the prior written consent of Agent and, so
long as no Event of Default exists, Borrowers (which consent of Borrowers shall
not be unreasonably withheld, delayed or conditioned); provided that at any time
that an Event of Default exists, such assignments shall not be restricted to
Eligible Assignees. Each Lender Party may furnish any information concerning the
Credit Parties in the possession of that Lender Party from time to time to
assignees and participants (including prospective assignees and participants),
subject to the confidentiality provisions hereunder.

(b) (i) Any Transfer hereunder shall be effective only upon satisfaction of the
following conditions: (A) execution and delivery by the Transferee, the
assigning Lender and Agent of an original Lender Addition Agreement and any
documents required thereunder, (B) Agent shall have accepted such Lender
Addition Agreement and recorded in the Register the names and addresses,
Commitment, principal amount of the Loans owing, and Notes, if any, evidencing
such transfer, and (C) receipt by Agent from such Transferee of a processing fee
in the amount of $3,500. The parties hereto hereby agree that upon the
effectiveness of each such Transfer, the Transferee shall become a Lender Party
hereunder and the assigning Lender shall be relieved of its obligations
hereunder in accordance with such Lender Addition Agreement. Within a reasonable
amount of time after the effectiveness of any Transfer, the assigning Lender
shall surrender any outstanding applicable Notes held by it, and Borrowers, at
their own expense, shall promptly (and in any event within five (5) Business
Days thereof) execute and deliver to Agent, new Notes to reflect the interest
held by the assigning Lender and its Transferee. Agent shall maintain a copy of
each Lender Addition Agreement delivered to it and the Register, which shall be
available for inspection by any party hereto at any reasonable time upon
reasonable prior notice to Agent. (ii) Notwithstanding anything in the Loan
Documents, (X) no CapitalSource Entity shall be required to comply with
Section 12.2(b)(i) in connection with any transaction involving any other
CapitalSource Entity or any of its or their lenders or funding or financing
sources, and none of the foregoing shall be considered a Transferee, and
(Y) there shall be no limitation or restriction on (I) the ability of any
CapitalSource Entity to assign or otherwise transfer any Loan Document,
Commitment or Obligation to any other CapitalSource Entity or any lender or
financing or funding source or (II) any such lender’s or funding or financing
source’s ability to assign or otherwise transfer any Loan Document, Commitment
or Obligation; provided, however, that CapitalSource shall continue to be liable
as a “Lender” under the Loan Documents unless such other Person complies with
the provisions of Section 12.2(b)(i) and thereby becomes a “Lender.”

(c) Each Lender Party may sell participations in all or any part of its rights
and obligations under the Loan Documents to one or more Persons (each, a
“Participant”). Upon any such sale, (i) such Lender’s obligations under each
Loan Document shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Loan and all parties hereto shall continue to deal solely and directly
with such Lender in connection with the Loan

 

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Documents. Any agreement pursuant to which any Lender shall sell any such
participation shall provide that such Lender shall retain the sole right and
responsibility to exercise such Lender’s rights and enforce each Credit Party’s
obligations hereunder, including the right to consent to any amendment,
supplement, modification or waiver of any provision of any Loan Document. The
Credit Parties hereby acknowledge and agree that the Participant under each
participation shall, solely for the purposes of Sections 10.3, 11.3, 12.4 and
12.7 hereof, be considered to be a “Lender” hereunder.

(d) Notwithstanding any other provision set forth in any Loan Document, any
Lender Party may at any time create a security interest in any portion of its
rights under any Loan Document. Each Credit Party agrees to use commercially
reasonable efforts to assist any Lender Party in making assignments or selling
participations in any part of any Loan.

(e) The Loan Documents shall (i) inure to the benefit of each Lender Party,
Transferee, Participant (only to the extent expressly provided herein) and all
future holders of the Loans, Obligations and/or any Collateral, and each of
their respective permitted successors and assigns, and (ii) be binding upon all
the Credit Parties. No Credit Party may sell, assign or transfer any of its
interests or Obligations under any Loan Document. No rights are intended to be
created under any Loan Document for the benefit of any third party donee,
creditor or incidental beneficiary of any Credit Party. Nothing contained in any
Loan Document shall be construed as a delegation to any Lender Party of any
other Person’s duty of performance.

 

  12.3 Reinstatement; Application of Payments; Releases

To the extent that any payment made or received with respect to the Obligations
is subsequently set aside, defeased or required to be repaid to any Person for
any reason, then such Obligations (and the Liens corresponding thereto) shall be
automatically revived as if such payment had not been received. Anything
contained in any Loan Document to the contrary notwithstanding, only upon
(i) payment in full in cash and performance of all of the Obligations (other
than Unasserted Obligations), (ii) termination of the Commitments,
(iii) delivery of a mutual written release by the Credit Parties of all Claims
against all Lender Parties and by Agent, on behalf of the Lender Parties, of all
Claims against all Credit Parties, in a form satisfactory to Agent in its
Permitted Discretion and (iv) so long as no suits, actions, proceedings or
claims are pending or threatened against any Indemnified Person, shall Agent be
required to deliver to Borrowers the termination statements, Mortgage releases
and other documents necessary or appropriate to evidence the termination of the
Liens securing the Obligations.

 

  12.4 Indemnity

The Credit Parties, jointly and severally, hereby indemnify, hold harmless and
defend, each Lender Party and its respective Affiliates, and the managers,
members, employees, equity owners, agents, representatives, accountants,
attorneys, and holders of equity interests, and the successors, assigns and
Affiliates of each of the foregoing (collectively, the “Indemnified Persons”)
from and against any and all Claims, relating to or arising out of any Loan
Document, any Related Document or any agreement, arrangement, instrument, matter
or transaction contemplated thereby or any act or omission relating thereto,
whether or not such Indemnified Person is a party thereto except to the extent
resulting from such Indemnified Person’s gross negligence or willful misconduct
as determined by a court of competent jurisdiction on a final and non-appealable
basis. Indemnification obligations hereunder include (a) in-house counsels’
reasonable charges in accordance with their standard rate structures (but
without duplication of work performed by outside counsel), and (b) all claims
for brokerage fees or commissions (other than claims of a broker with whom such
Indemnified Party has directly contracted in writing). Agent may elect (but is
not obligated) to direct the defense of any Claim. Any Indemnified Person may
take any action it deems necessary and appropriate (including the retention of
counsel) to investigate, defend or settle any Claim, or take any other remedial
or corrective action with respect thereto.

 

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  12.5 Notice

Any notice or request under any Loan Document shall be given to any party to
this Agreement at such party’s address set forth beneath its signature to this
Agreement, or at such other address as such party hereafter may specify in a
notice given in the manner required under this Section 12.5. Any notice or
request hereunder shall be given only by, and shall be deemed to have been
received upon (each, a “Receipt”): (i) registered or certified mail, return
receipt requested, on the date indicated in such return receipt, (ii) delivery
by a nationally recognized overnight courier, one Business Day after deposit
with such courier, or (iii) facsimile or electronic transmission, in each case
upon telephone or further electronic communication from the recipient
acknowledging receipt (whether automatic or manual from recipient), as
applicable.

 

  12.6 Severability; Captions; Counterparts

Any provision of any Loan Document that is adjudicated to be invalid under
Applicable Law shall be inapplicable to the extent of such invalidity and shall
not affect the validity or enforceability of the remainder of the Loan
Documents, which shall be given effect so far as possible. The captions in the
Loan Documents are intended for reference only and shall not affect the meaning
of the Loan Documents. The Loan Documents may be executed in one or more
counterparts and by facsimile transmission, which counterparts and facsimile
signatures shall be considered original executed counterparts.

 

  12.7 Expenses

The Credit Parties hereby jointly and severally agree to pay on demand all
costs, taxes, fees, charges, expenses and advances incurred by Agent and/or its
Affiliates (including, without limitation, reasonable attorneys’ fees and
expenses and in-house counsels’ charges in accordance with their standard rate
structures (but without duplication of work performed by outside counsel)),
relating to or arising out of any Loan Document, any Related Document or any
agreement, arrangement, instrument, matter or transaction contemplated thereby
including, without limitation, in connection with exercising (or forbearing) any
right or remedy under any of the foregoing, administering or monitoring the
Obligations, syndicating any Loan, taking or refraining from taking any action
requested by any Credit Party, seeking, obtaining or receiving any advice with
respect to any of the foregoing, or modifying, amending, or waiving any of the
foregoing. All of the foregoing shall be part of the Obligations.

 

  12.8 Entire Agreement

The Loan Documents constitute the entire agreement between and among the parties
thereto and supersede all prior agreements and arrangements relating to the
subject matter thereof (including, without limitation, the Summary of Terms
dated February 6, 2007). Execution hereof constitutes a full, complete and
irrevocable release of any and all Claims which any Credit Party or Lender Party
may have under any Applicable Law or in equity in respect of all prior
agreements, arrangements and discussions concerning the Loans. Each party hereto
acknowledges that it has been advised by counsel in connection with the
negotiation and execution of the Loan Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions
thereof. Any and all Schedules, exhibits, appendices, annexes and attachments to
any Loan Documents shall be incorporated therein and made a part thereof, as
applicable.

 

  12.9 Confidentiality and Publicity

(a) Except to the extent required by Applicable Law, including, without
limitation, filings with the Securities and Exchange Commission or other similar
regulatory filings, the Credit Parties and the Lender Parties shall not, and
shall not permit any of their Affiliates to, (i) disclose any provision of

 

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any Loan Document to any Person without prior written consent, other than to
their respective directors, equity owners, advisors, counsel, accountants and
officers on a need-to-know basis, all of whom shall be deemed to be bound by
these provisions (and the Credit Parties and the Lender Parties, as applicable,
shall be responsible for any violations hereof by such other Persons) or
(ii) publish or disclose any materials containing any Credit Party’s or Lender
Party’s name without first obtaining such party’s prior written consent. In
addition, the Credit Parties shall not use any Lender Party’s name (or the name
of any of their Affiliates) in connection with its operations or Business.
Nothing contained in any Loan Document is intended to permit or authorize any
Credit Party or any of its Affiliates to contract on behalf of any Lender Party.

(b) Each Lender Party shall exercise commercially reasonable efforts to maintain
in confidence, in accordance with its customary procedures for handling
confidential information, all non-public information of a Credit Party that any
Credit Party furnishes on a confidential basis (“Confidential Information”),
other than any such Confidential Information that becomes generally available to
the public or becomes available to any Lender Party from a source other than a
Credit Party and that is not known to such recipient to be subject to
confidentiality obligations; provided, that each Lender Party and their
Affiliates shall have the right to disclose Confidential Information to:

(i) such Person’s Affiliates;

(ii) such Person’s or such Person’s Affiliates’ lenders, funding or financing
sources;

(iii) such Person’s or such Person’s Affiliates’ directors, officers, trustees,
partners, members, managers, employees, agents, advisors, representatives,
attorneys, equity owners, professional consultants, portfolio management
services and rating agencies;

(iv) any other Lender Party and any successor or assign of any Lender Party;

(v) any Person to whom any Lender Party offers to sell, assign or transfer any
Loan or any part thereof or any interest or participation therein;

(vi) any Person that provides statistical analysis and/or information services
to such Lender Party or its Affiliates; and

(vii) any Person (A) to the extent required by Applicable Law, (B) in response
to any subpoena or other legal process or informal investigative demand, (C) in
connection with any litigation, or (D) in connection with the actual or
potential exercise or enforcement of any right or remedy under any Loan
Document.

(c) Notwithstanding any provision of any Loan Document, each Lender Party and
their Affiliates may (i) disclose a general description of transactions arising
under the Loan Documents and the Related Documents for advertising, marketing or
other similar purposes, and (ii) use any Credit Party’s name, logo or other
indicia germane to such party in connection with such advertising, marketing or
other similar purposes.

(d) The obligations of Lender Parties and their Affiliates under this
Section 12.9 shall supersede and replace any other confidentiality obligations
agreed to by any Lender Party or their Affiliates.

12.10 No Consequential Damages

No Lender Party nor any of its respective Affiliates, nor the managers, members,
employees, officers, directors, trustees, partners, equity owners, agents,
advisors, representatives, accountants, attorneys, successors, assigns or
Affiliates of any of the foregoing shall be liable for any special, indirect,
consequential or punitive damages.

 

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12.11 Joint and Several Liability

(a) Each Borrower agrees that it is jointly and severally, directly and
primarily liable for full and prompt payment and performance of all Obligations.
Each Borrower acknowledges that (i) it will receive substantial direct and
indirect benefits from the financing arrangements contemplated in this Agreement
which would not have been available to Borrowers except upon the joint and
several basis set forth herein, and (ii) Lender Parties have made no
representation or warranty with respect to validity, genuineness, regularity, or
enforceability of any of the Loan Documents, and have no duty or responsibility
whatsoever to any Borrower in respect of the management and maintenance of the
Obligations or any Collateral. Each Borrower hereby absolutely and
unconditionally guarantees to Lender Parties the full and prompt payment and
performance of all Obligations and agrees that such guarantee is a continuing
guarantee of payment and performance and not of collection which shall not be
discharged until all Obligations are indefeasibly paid in full in cash and
performed in full and this Agreement is terminated.

(b) Each Borrower’s obligations under this Section 12.11 shall be irrevocable,
absolute and unconditional irrespective of and unaffected by (i) the lack of
genuineness, validity or enforceability of any of the Obligations or Loan
Documents, (ii) change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any rescission, amendment or
modification to, or waiver or compromise or acceleration of or any consent with
respect to, any of the Obligations or any Loan Document or any other guaranty or
the failure to obtain the consent of any Borrower or other Person with respect
thereto, (iii) the existence, value or condition of, or the failure by any
Lender Party to perfect and maintain any Lien in, or to preserve any rights to,
or the release or foreclosure of, any Collateral or other security for the
Obligations, (iv) the change, restructuring, dissolution or termination of the
structure or existence of any Credit Party or the insolvency or bankruptcy under
any Debtor Relief Law of any Credit Party, (v) any action taken or omitted by
any Lender Party or any failure of any Lender Party to assert any claim or
demand or to enforce any right or remedy against any Credit Party or any other
guarantor, or (vi) any other action or circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by Lender Parties that might otherwise constitute a defense
available to, or a legal or equitable discharge of, any co-obligor, Credit Party
or any other guarantor or surety (other than actual indefeasible payment of the
Obligations in full in cash). Agent may enforce the Loan Documents independently
as to each Borrower and/or each remedy, Collateral or other security Agent may
at any time have, without first proceeding against or joining any other Person,
Collateral or other security for the Obligations. A separate action or actions
may be brought and prosecuted against each Borrower to enforce such obligations,
irrespective of whether any action is brought against any other Credit Party or
whether any other Credit Party is joined in any such action or actions. Lender
Parties shall be under no obligation to marshal any assets in favor of any
Borrower or to proceed against or exhaust any Collateral before proceeding
against any Borrower. Each Borrower agrees that it may be joined as a party
defendant in any legal proceeding instituted by any Lender Party against any
Credit Party.

(c) To the extent that any Borrower makes payment under this Section 12.11 of
all or any of the Obligations (other than on Loans made to that Borrower for
which it is primarily liable) (an “Accommodation Payment”), then at such time as
all the Obligations are indefeasibly paid in full in cash, such Borrower shall
be entitled to contribution and indemnification from, and to 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 and the denominator of which
is the sum of the Allocable Amounts of all of the Borrowers. As of any date of
determination, the “Allocable Amount” of each Person shall be equal to the
maximum amount of

 

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the claims for Accommodation Payments which could be recovered against such
Person hereunder without rendering such claim voidable or avoidable under the
Bankruptcy Code, the applicable provisions of the Uniform Fraudulent Transfer
Act or Uniform Fraudulent Conveyance Act or any similar Applicable Law after
taking into account such Borrowers’ rights to indemnification and contribution
from each other Borrower provided herein.

(d) Each Borrower hereby: (i) expressly and irrevocably subordinates to the
indefeasible payment in full of the Obligations, any and all rights at law, in
equity or otherwise to subrogation, reimbursement, exoneration, contribution,
indemnification, set off or any other rights that could accrue to a co-obligor,
surety or guarantor and (ii) acknowledges and agrees that this Section 12.11
shall not limit or otherwise affect such Borrower’s liability for the
Obligations or the enforceability of the Loan Documents, and shall survive
payment in full of the Obligations. As further security for the Obligations, any
and all debts and liabilities now or hereafter arising and owing by any Borrower
to any other Credit Party are hereby subordinated to Lender Parties’ claims and
upon the occurrence of an Event of Default are assigned to Agent, and no
Borrower shall demand, sue for or otherwise attempt to collect any indebtedness
of any Credit Party owing to it until the Obligations shall have been
indefeasibly paid in full in cash and this Agreement terminated. If,
notwithstanding the foregoing sentence, a Borrower shall collect, enforce or
receive any amounts in respect of any indebtedness, such amounts shall be held
in trust for the benefit of the Lender Parties, and such Borrower shall
immediately deliver any such amounts to Agent for application to the
Obligations.

(e) Each Borrower hereby expressly assumes all responsibilities to remain
informed of the financial condition of the other Credit Parties and any other
guarantors of the Obligations and any circumstances affecting the Collateral or
the ability of the Credit Parties to perform under the Loan Documents.

 

XIII TAXES

 

  13.1 Taxes

(a) Subject to Section 13.1(e), (i) all payments by any Credit Party to any
Lender Party under any Loan Document shall be made free and clear of, and
without deduction or withholding for, any and all present or future Taxes,
(ii) the Credit Parties shall pay any present or future Other Taxes, and
(iii) the Credit Parties shall indemnify and hold harmless each Lender Party for
the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 13.1) paid by
such Lender Party and any liability (including penalties, interest, additions to
tax and expenses) arising therefrom or with respect thereto, whether or not they
were correctly or legally asserted, payment of which shall be made within ten
(10) days from the date any Lender Party makes written demand therefor. For
purposes of this Section 13.1, the term “Taxes” shall mean all levies, imposts,
deductions, charges and/or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender Party, those imposed on or
measured by the net income of such Lender Party by the jurisdiction under the
laws of which such Lender Party is organized or maintains a Lending Office or
any political subdivision thereof (all such excluded items being hereinafter
referred to as “Excluded Taxes”), and the term “Other Taxes” shall mean stamp
and/or documentary taxes and/or any other excise or property taxes, charges or
similar levies which arise from any payment made under the Loan Documents or
from the execution, delivery, performance or registration of, or otherwise with
respect to any Loan Document.

(b) If any Credit Party shall be required by Applicable Law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable under
any Loan Document to any Lender Party, then, subject to Section 13.1(e): (i) the
sum payable shall be increased as necessary so that after making all required
deductions or withholdings (including those applicable to additional sums
payable under this

 

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Section 13.1), such Lender Party receives an amount equal to the sum it would
have received had no such deductions or withholdings been made or required, and
(ii) such Credit Party shall make such deductions and/or withholdings and shall
timely pay the full amount deducted or withheld to the relevant Governmental
Authority in accordance with Applicable Law and provide written evidence of such
timely payment to Agent within five Business Days of having made such payment.

(c) Within 10 days after the date of any payment by any Credit Party of Taxes or
Other Taxes, Borrowers shall furnish to Agent (and the applicable Lender) the
original or a certified copy of a receipt evidencing payment thereof.

(d) Each Lender that is not a citizen or resident of the United States of
America, or a corporation, partnership or other entity created or organized in
or under the laws of the United States of America (or any state or territory
thereof or the District of Columbia), or a trust or estate that is subject to
United States federal income taxation regardless of the source of its income (a
“Non-U.S. Lender”) shall deliver to Borrowers and Agent (i) two copies of each
U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or any subsequent
versions thereof or successors thereto, 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 (ii) a
certificate representing that such Non-U.S. Lender is not a “bank” for purposes
of Section 881(c) of the Code, is not a ten (10%) percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of any Credit Party and is not
a controlled foreign corporation related to any Credit Party (within the meaning
of Section 864(d)(4) of the Code)), in each case properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from, or a reduced
rate of, U.S. federal withholding tax on all payments by Credit Parties under
the Loan Documents. Such items shall be delivered by each Non-U.S. Lender on or
before the date it becomes a Lender under this Agreement. Each Non-U.S. Lender
shall promptly notify Borrowers and Agent at such time it determines that it is
no longer in a position to provide any item previously delivered hereunder .
Notwithstanding any other provision of this section, a Non-U.S. Lender shall not
be required to deliver any items or document pursuant hereto that such Non-U.S.
Lender is not legally able to deliver. Upon Borrowers’ or Agent’s reasonable
request, any Lender that is a United States person as defined in
Section 7701(a)(30) of the Code shall deliver to Borrowers or Agent, as
applicable, a properly completed and duly executed U.S. Internal Revenue Service
Form W-9, or any subsequent version thereof or successor thereto.

(e) The Credit Parties will not be required to pay any amounts in respect of
United States Federal income tax pursuant to Section 13.1(b) to any Lender
Party: (i) if the obligation to pay such additional amounts would not have
arisen but for a failure by such Lender Party to comply with its obligations
under Section 13.1(d), or (ii) if such Lender Party has complied with
Section 13.1(d) but such Lender Party shall not at such time be entitled to
exemption from deduction or withholding of United States Federal income tax in
respect of payments by the Credit Parties under the Loan Documents for any
reason other than a change in United States law, treaty or regulations or in the
official interpretation of such law or regulations by any Governmental Authority
charged with the interpretation or administration thereof (whether or not having
the force of law) after the date of delivery of the items delivered pursuant to
Section 13.1(d).

(f) If any Credit Party requests any Lender Party to deliver any documentation
pursuant to this Article XIII or any Lender Party takes any actions pursuant to
Article XIII, then the Credit Parties shall reimburse such Lender Party for all
costs and expenses (including in-house and external attorneys’ fees and expenses
(but, in the case of in-house counsels’ fees and expenses, without duplication
of work performed by outside counsel)) reasonably incurred by such Lender Party
in connection therewith.

(g) If any Credit Party is required to pay additional amounts to any Lender
Party pursuant to Section 13.1(b) hereof, then such Lender Party shall use its
commercially reasonable efforts (consistent

 

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with legal and regulatory restrictions) to change the jurisdiction of its
Lending Office so as to eliminate any such additional payment which may
thereafter accrue unless such change in the sole judgment of such Lender Party
is otherwise disadvantageous to such Lender Party, provided, that the Credit
Parties shall reimburse such Lender Party for all costs and expenses (including
in-house and external attorneys’ fees and expenses (but, in the case of in-house
counsels’ fees and expenses, without duplication of work performed by outside
counsel)) reasonably incurred as a result of or in connection with such change
(including, without limitation, Taxes, Other Taxes and/or Excluded Taxes imposed
on, with respect to or in connection with such reimbursement).

(h) The agreements and obligations of the Credit Parties in this Section 13.1
shall survive the payment of the Obligations and termination of the Loan
Documents.

 

XIV GUARANTY

 

  14.1 Guaranty

(a) Each Guarantor jointly and severally hereby unconditionally and irrevocably
(i) guarantees the full and prompt payment and performance when due of all now
existing and hereafter arising Obligations, and (ii) agrees to pay any and all
costs, fees and expenses (including in-house and external attorneys’ fees and
expenses (but, in the case of in-house counsels’ fees and expenses, without
duplication of work performed by outside counsel)) reasonably incurred by Lender
Parties in enforcing the Guaranty set forth in this Article XIV (collectively,
the “Guaranteed Obligations”). This Guaranty is a continuing guaranty of payment
and performance when due and not of collection which shall not be discharged
until all Guaranteed Obligations are indefeasibly paid in cash and performed in
full and this Agreement is terminated.

(b) Each Guarantor jointly and severally hereby unconditionally and irrevocably
(i) guarantees that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Loan Documents, regardless of any Applicable
Law now or hereafter in effect in any jurisdiction affecting any such terms or
the rights of any Lender Party, and (ii) waives any rights and defenses it may
now or hereafter have. The obligations of each Guarantor under this Article XIV
are independent of the Guaranteed Obligations, and Agent may enforce the this
Article XIV independently as to each Guarantor and/or each remedy, Collateral or
other security Agent may at any time have, without first proceeding against or
joining any other Person, Collateral or other security for the Guaranteed
Obligations. A separate action or actions may be brought and prosecuted against
each Guarantor to enforce such obligations, irrespective of whether any action
is brought against any other Credit Party or whether any other Credit Party is
joined in any such action or actions. Lender Parties shall be under no
obligation to marshal any assets in favor of any Guarantor or to proceed against
or exhaust any Collateral before proceeding against any Guarantor. Each
Guarantor agrees that it may be joined as a party defendant in any legal
proceeding instituted by any Lender Party against any other Credit Party. The
obligations of each Guarantor under this Article XIV shall extend to all amounts
that constitute part of the Guaranteed Obligations and would be owed by any
Credit Party to Lender Parties under any Loan Document but for, and shall be
unaffected by, any of the following:

(i) lack of genuineness, validity, regularity or enforceability of any of the
Obligations or Loan Document;

(ii) change in the time, manner or place of payment of, or in any other term of,
all or any of the Guaranteed Obligations, or any rescission, amendment or
modification to, or waiver or compromise or acceleration of or any consent with
respect to, any of the Guaranteed Obligations or any Loan Document or any other
guaranty or the failure to obtain the consent or any Guarantor or other Person
with respect thereto;

 

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(iii) the existence, value or condition of, or the failure by any Lender Party
to perfect and maintain any Lien in, or to preserve any rights to, or the
release or foreclosure of, any Collateral or other security for the Obligations;

(iv) the change, restructuring, dissolution or termination of the structure or
existence of any Credit Party or the insolvency or bankruptcy of any Credit
Party under any Debtor Relief Law;

(v) any action taken or omitted by any Lender Party or any failure of any Lender
Party to assert any claim or demand or to enforce any right or remedy against
any Credit Party or any other guarantor; or

(vi) other action or circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by Lender
Parties that might otherwise constitute a defense available to, or a legal or
equitable discharge of, any co-obligor, Credit Party or any other guarantor or
surety (other than actual indefeasible payment of the Obligations in full in
cash).

(c) Each Guarantor acknowledges and agrees that (i) it will receive substantial
direct and indirect benefits from the financing arrangements contemplated in
this Agreement which would not have been available to the Credit Parties except
upon the joint and several basis set forth herein and with the Guaranty provided
in this Article XIV, and (ii) Lender Parties have made no representation or
warranty with respect to validity, genuineness, regularity, or enforceability of
any of the Loan Documents, and have no duty or responsibility whatsoever to any
Guarantor in respect to the management and maintenance of the Guaranteed
Obligations or any Collateral.

 

  14.2 Reinstatement

This Article XIV shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned to any Person upon the insolvency,
bankruptcy or reorganization of any Credit Party or otherwise, all as though
such payment had not been made.

 

  14.3 Additional Waivers

Without limiting any other provision of any Loan Document, each Guarantor hereby
waives (i) promptness, diligence, and all notices with respect to the Guaranteed
Obligations and this Article XIV and any requirement that Lender Parties exhaust
any right or take any action against any other Person or Collateral, and
(ii) any setoff rights and presentation to, demand for payment from and protest
to, as the case may be, any Credit Party or any other Person of any of the
Guaranteed Obligations.

 

  14.4 Continuing Guaranty

This Article XIV is a continuing Guaranty of payment and performance and not of
collection and shall (i) not be discharged until all Guaranteed Obligations are
indefeasibly paid in full in cash and performed in full and this Agreement is
terminated, (ii) be binding upon each Guarantor, its successors and assigns and
(iii) inure to the benefit of, and be enforceable by, Lender Parties and their
respective successor, pledgees, transferees and assigns. Each Guarantor waives
any right to revoke this Article XIV.

 

  14.5 Maximum Liability

Notwithstanding any other provision of this Article XIV, the amount guaranteed
by each Guarantor hereunder shall be limited to the extent, if any, required so
that each Guarantor’s obligations

 

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hereunder shall not exceed its Allocable Amount. In determining the foregoing
limitation, if any, the parties intend that any rights of subrogation or
contribution which any Guarantor may have shall be taken into account. Each
Guarantor agrees that the Guaranteed Obligations may at any time exceed the
maximum liability of each Guarantor without impairing this Guaranty or affecting
the rights and remedies of the Lender Parties hereunder.

 

  14.6 Subordination

Each Guarantor hereby (i) expressly and irrevocably subordinates to the
indefeasible payment in full of the Obligations, any and all rights at law, in
equity or otherwise to subrogation, reimbursement, exoneration, contribution,
indemnification, set off or any other rights that could accrue to a co-obligor,
surety or guarantor and (ii) acknowledges and agrees that this Section 14.6
shall not limit or otherwise affect such Guarantor’s liability for the
Guaranteed Obligations or the enforceability of the Loan Documents, and shall
survive payment in full of the Obligations. As further security for the
Guaranteed Obligations, any and all debts and liabilities now or hereafter
arising and owing by any Guarantor to any other Credit Party are hereby
subordinated to Lender Parties’ claims and upon the occurrence of an Event of
Default are assigned to Agent, and no Guarantor shall demand, sue for or
otherwise attempt to collect any indebtedness of any Credit Party owing to it
until the Obligations shall have been indefeasibly paid in full in cash and this
Agreement terminated. If, notwithstanding the foregoing sentence, a Guarantor
shall collect, enforce or receive any amounts in respect of any indebtedness,
such amounts shall be held in trust for the benefit of the Lender Parties, and
such Guarantor shall immediately deliver any such amounts to Agent for
application to the Obligations.

 

  14.7 Subrogation

No Guarantor shall exercise any rights against any other Person that arise from
the existence, payment, performance or enforcement of such Guarantor’s
obligations under this Article XIV, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of Lender Parties against any other
Person or any Collateral, whether or not arising under Applicable Law, in
equity, by agreement or otherwise, until all of the Guaranteed Obligations have
been indefeasibly paid in full in cash and this Agreement has been terminated;
provided that no Guarantor shall have any rights hereunder against any Credit
Party or any of its Subsidiaries if all or any portion of the Guaranteed
Obligations shall have been satisfied in connection with an exercise of remedies
in respect of the Capital Stock of any Credit Party or any of its Subsidiaries
pursuant to a Pledge Agreement or otherwise. If any amount shall be paid to any
Guarantor in violation of this Article XIV, such amount shall be held in trust
for the benefit of Lender Parties and shall forthwith be paid to Agent to be
credited and applied to the Guaranteed Obligations.

 

  14.8 Information Concerning Borrowers

Each Guarantor hereby expressly assumes all responsibilities to remain informed
of the financial condition of the other Credit Parties and any other guarantors
of the Guaranteed Obligations and any circumstances affecting the Collateral or
the ability of the Credit Parties to perform under the Loan Documents.

[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW]

 

48

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

IN WITNESS WHEREOF, each of the parties has duly executed this Credit Agreement
as of the date first written above.

 

BORROWER:   FIBERNET OPERATIONS, INC.   By:  

 

  Name:  

 

  Title:  

 

 

c/o FiberNet Telecom Group, Inc.

570 Lexington Avenue

New York, New York 10022

  Attention:   Michael S. Hubner     Senior Vice President, General Counsel  
Telephone:   (212) 405-6206   FAX:   (646) 219-0556   E-MAIL:  
michael.hubner@ftgx.com BORROWER:   DEVNET L.L.C.   By:  

 

  Name:  

 

  Title:  

 

 

c/o FiberNet Telecom Group, Inc.

570 Lexington Avenue

New York, New York 10022

  Attention:   Michael S. Hubner     Senior Vice President, General Counsel  
Telephone:   (212) 405-6206   FAX:   (646) 219-0556   E-MAIL:  
michael.hubner@ftgx.com GUARANTOR:   FIBERNET TELECOM GROUP, INC.   By:  

 

  Name:  

 

  Title:  

 

 

c/o FiberNet Telecom Group, Inc.

570 Lexington Avenue

New York, New York 10022

  Attention:   Michael S. Hubner     Senior Vice President, General Counsel  
Telephone:   (212) 405-6206   FAX:   (646) 219-0556   E-MAIL:  
michael.hubner@ftgx.com

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

GUARANTOR:   FIBERNET TELECOM, INC.   By:  

 

  Name:  

 

  Title:  

 

 

c/o FiberNet Telecom Group, Inc.

570 Lexington Avenue

New York, New York 10022

  Attention:   Michael S. Hubner     Senior Vice President, General Counsel  
Telephone:   (212) 405-6206   FAX:   (646) 219-0556   E-MAIL:  
michael.hubner@ftgx.com GUARANTOR:   AVAILIUS, LLC   By:  

 

  Name:  

 

  Title:  

 

 

c/o FiberNet Telecom Group, Inc.

570 Lexington Avenue

New York, New York 10022

  Attention:   Michael S. Hubner     Senior Vice President, General Counsel  
Telephone:   (212) 405-6206   FAX:   (646) 219-0556   E-MAIL:  
michael.hubner@ftgx.com GUARANTOR:   LOCAL FIBER, LLC   By:  

 

  Name:  

 

  Title:  

 

 

c/o FiberNet Telecom Group, Inc.

570 Lexington Avenue

New York, New York 10022

  Attention:   Michael S. Hubner     Senior Vice President, General Counsel  
Telephone:   (212) 405-6206   FAX:   (646) 219-0556   E-MAIL:  
michael.hubner@ftgx.com

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

GUARANTOR:   FIBERNET EQUAL ACCESS, L.L.C.   By:  

 

  Name:  

 

  Title:  

 

 

c/o FiberNet Telecom Group, Inc.

570 Lexington Avenue

New York, New York 10022

  Attention:   Michael S. Hubner     Senior Vice President, General Counsel  
Telephone:   (212) 405-6206   FAX:   (646) 219-0556   E-MAIL:  
michael.hubner@ftgx.com AGENT AND A LENDER:   CAPITALSOURCE FINANCE LLC   By:  

 

  Name:  

 

  Title:  

 

 

4445 Willard Avenue, 12th Floor

Chevy Chase, Maryland 20815

  Attention:   Corporate Finance, Portfolio Manager   Telephone:   (301)
841-2700   FAX:   (301) 841-2313   E-MAIL:   jrancilio@capitalsource.com

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

Appendices    Appendix A    Definitions Appendix B    Letters of Credit EXHIBITS
   Exhibit A    Form of Borrowing Certificate Exhibit B-1    Financial Covenants
Exhibit B-2    Form of Compliance Certificate Exhibit C-1    Reporting
Requirements Exhibit C-2    Collateral Reporting and Other Requirements Exhibit
D    Closing Conditions Exhibit E    LIBOR Election Notice SCHEDULES   
Schedule A    Lenders/Commitments Schedule 5.2(e)    Required Consents and
Filings Schedule 5.3    Subsidiaries, Capitalization and Ownership Interests
Schedule 5.4    Properties Schedule 5.5    Material Contracts; Material
Customers and Affiliate Transactions Schedule 5.6    Litigation Schedule 5.11   
Intellectual Property Schedule 5.14    Insurance Schedule 5.16    Broker’s or
Finder’s Commissions Schedule 5.17    Regulatory Matters Schedule 6.8    Post
Closing Deliverables Schedule 7.2    Permitted Indebtedness Schedule 7.3   
Permitted Liens

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

Schedule 6.8

Post Closing Deliverables

In accordance with Section 6.8 of the Agreement, the following actions, items
and deliverables shall be completed, taken and/or delivered to Agent’s
satisfaction on or before the respective dates specified below and any failure
to do so shall constitute an immediate Event of Default.

1. On or prior to April 4, 2007, Borrowers shall deliver to Agent evidence
satisfactory to Agent in its Permitted Discretion that the following letters of
credit have been surrendered by the respective beneficiaries thereof to the
respective issuers thereof and have been cancelled and are of no further force
or effect:

(a) Irrevocable Standby Letter of Credit No. 839-56636 dated April 2, 2001, as
amended, in the amount of $3,950,000.00 issued by Deutsche Bank AG in favor of
60 Hudson Owner LLC for the account of Holdings;

(b) Irrevocable Standby Letter of Credit No. 839-56600 dated March 14, 2001, as
amended, in the amount of $783,365.00 issued by Deutsche Bank AG in favor of 60
Hudson Owner LLC for the account of Holdings;

(c) Irrevocable Standby Letter of Credit No. DBS-17105 dated May 16, 2006 in the
amount of $457,240.00 issued by Deutsche Bank AG in favor of 111 Chelsea
Commerce LP c/o Taconic Investment Partners LLC for the account of Holdings;

(d) Irrevocable Standby Letter of Credit No. DBS-17102 dated May 16, 2006 in the
amount of $155,574.99 issued by Deutsche Bank AG in favor of 570 Tower Company
L.P. c/o Jefferey Management Corp. for the account of Holdings;

(e) Irrevocable Standby Letter of Credit No. DBS-17103 dated May 16, 2006 in the
amount of $89,355.00 issued by Deutsche Bank AG in favor of 570 Tower Company
L.P. c/o Jefferey Management Corp. for the account of Holdings; and

(f) Irrevocable Standby Letter of Credit No. 3087281 dated the Closing Date in
the amount of $5,707,311.74 issued by the L/C Issuer in favor of Deutsche Bank
AG for the account of Holdings.

2. On or prior to April 20, 2007, Borrowers shall deliver to Agent Account
Control Agreements covering each deposit, brokerage or other accounts maintained
by any Credit Party with any financial institution as of the Closing Date
(except as otherwise provided in Section 2.13 with respect to deposit accounts
solely dedicated to the payment of payroll expenses), duly executed by the
applicable Credit Party and applicable financial institution.

3. Borrowers shall use commercially reasonable efforts to deliver to Agent
Landlord Waivers and Consents covering the premises located at 165 Halsey
Street, Newark, New Jersey and 570 Lexington Avenue, New York, New York, in each
case duly executed by the Landlord of such premises.

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

Exhibit A

Form of Borrowing Certificate

Please see attached

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

BORROWING CERTIFICATE

FIBERNET OPERATIONS, INC.

DEVNET L.L.C.

DATED AS OF                     , 20    

Reference is made to that certain Credit Agreement dated as of March 21, 2007
(as amended through the date hereof, the “Credit Agreement”) by and among
FiberNet Operations, Inc., Devnet L.L.C., FiberNet Telecom Group, Inc., FiberNet
Telecom, Inc., Availius, LLC, Local Fiber, LLC, FiberNet Equal Access, L.L.C.,
the financial institutions from time to time parties thereto, as Lenders
thereunder, and CapitalSource Finance LLC, as administrative agent for such
financial institutions. All capitalized terms used but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement.

In accordance with Section 4.2 of the Credit Agreement, Borrowers hereby
irrevocably request [an Advance] [a Term B Advance] in the amount of
$             to be made on             , 20     (the “Borrowing Date”), which
day is a Business Day.

In connection with the requested [Advance] [Term B Advance], Borrowers, by the
undersigned duly authorized officer, hereby certify to Agent and Lenders, in
accordance with the Credit Agreement and the other Loan Documents, that:

(a) the certifications, representations, calculations and statements herein will
be true and correct in all respects as of the date hereof and as of the
Borrowing Date;

(b) each of the representations and warranties made by each Credit Party and
each other Person party thereto (other than the Lender Parties) in the Loan
Documents are true and correct in all material respects (except to the extent
already qualified by materiality, in which case each are true and correct in all
respects) before and after giving effect to the requested Advance (unless it
expressly relates to an earlier date, in which case they were true and correct
in all material respects as of such earlier date (except to the extent already
qualified by materiality, in which case each was true and correct in all
respects));

(c) no Default or Event of Default shall exist after giving effect to the
requested [Advance] [Term B Advance];

(d) immediately after giving effect to the requested (i) Advance, the aggregate
outstanding principal amount of Advances shall not exceed the Revolving Loan
Limit then in effect and/or (ii) Term B Advance, the aggregate amount of all
Term B Advances disbursed shall not exceed $5,000,000

(e) no Material Adverse Effect exists;

[(f) if the Borrowing Date for the requested [Advance] [Term B Advance] is on or
after the date Agent and Lenders have received the Compliance Certificate for
the calendar quarter ending June 30, 2007, then, assuming such [Advance] [Term B
Advance] had been made on the last day of the calendar quarter most recently
ended prior to the Borrowing Date for which Agent and Lenders have received a
Compliance Certificate, the Leverage Ratio would have been less than or equal to
        :1.00 as of such day (i.e., the maximum ratio set forth in Item 1 of
Exhibit B-1 of the Credit Agreement for the calendar quarter most recently ended
prior to such day), as demonstrated by the calculation attached hereto.]

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

IN WITNESS WHEREOF, the undersigned has caused this Borrowing Certificate to be
executed on behalf of Borrowers as of the date first written above.

 

FIBERNET OPERATIONS, INC. By:  

 

Name:  

 

Title:  

 

DEVNET L.L.C. By:  

 

Name:  

 

Title:  

 

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

                            (cont’d)

BORROWING CERTIFICATE

Date:                     , 20     (the “Computation Date”)

 

CALCULATION OF EBITDA

Twelve Month Period Ending on                     , 20    

or the last day of any calendar quarter thereafter

(the “Computation Period”)

 

EBITDA for the Computation Period is defined as follows (all of the following
determined in accordance with GAAP and without duplication):    Net income (or
loss) of the Credit Parties on a consolidated basis for such Computation Period
taken as a single accounting period determined in conformity with GAAP,
excluding (i) the income (or loss) of any Person (other than FiberNet so long as
all of the Capital Stock of FiberNet is owned by Devnet and Holdings) in which
any Credit Party has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid in cash to such Credit Party by
such Person during such Computation Period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Credit Party or is merged into or
consolidated with a Credit Party or that Person’s assets are acquired by a
Credit Party, (iii) the income of any Subsidiary of any Credit Party to the
extent that the declaration or payment of dividends or similar distributions of
that income by that Subsidiary is not at the time permitted by operation of the
terms of the charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary,
(iv) compensation expense resulting from the issuance of capital stock,
equity-related incentives, stock options, stock appreciation rights or similar
incentive compensation issued to former or current employees, including
officers, of any Credit Party, or the exercise of such options or rights, in
each case to the extent the obligation (if any) associated therewith is not
expected to be settled by the payment of cash by any Credit Party or any
Affiliate thereof prior to the sale of all or substantially all of the assets or
equity of the Credit Parties, and (v) compensation expense resulting from the
repurchase of capital stock, equity options and rights described in clause
(iv) of this definition (“Net Income”)    $                     

Plus:     “Interest Expense” for such Computation Period (defined as total
interest expense generated during the Computation Period (including attributable
to conditional sales contracts, Capital Leases and other title retention
agreements in accordance with GAAP) of the Credit Parties on a consolidated
basis with respect to all outstanding Indebtedness, including without limitation
accrued interest, interest paid or payable in kind and capitalized interest, but
excluding (i) commissions, discounts and fees owed with respect to letters of
credit and bankers’ acceptance financing, and (ii) net costs under Hedging
Agreements), in each case to the extent deducted in determining such Net Income

   $                     

Plus:     franchise, income and other taxes and similar charges to the extent
deducted in determining such Net Income

   $                     

Plus:     depreciation and amortization expense to the extent deducted in
determining such Net Income

   $                     

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

                            (cont’d)

BORROWING CERTIFICATE

Date:                     , 20     (the “Computation Date”)

 

Plus:     

   to the extent deducted in determining such Net Income (i) for any such period
which includes the Closing Date, transaction fees and expenses incurred in
connection with the Loans in an aggregate amount not to exceed $300,000 and
(ii) all other non-cash and/or non-recurring charges and expenses (including
non-cash charges resulting from an increase in inventory as a result of the
application of FASB Statement 141 and non-cash charges arising by reason of
“impairment losses” under FASB Statement 142 and FASB Statement 144) approved by
Agent in its sole discretion, but specifically excluding (A) accruals for cash
expenses made in the Ordinary Course of Business and (B) write-offs of accounts
receivable    $                     

Plus:     

   loss from any sale of assets, other than sales of inventory in the Ordinary
Course of Business, to the extent deducted in determining such Net Income    $
                    

Plus:     

   extraordinary losses to the extent deducted in determining such Net Income   
$                     

Less:    

   gain from any sale of assets, other than sales in the Ordinary Course of
Business, to the extent included in determining such Net Income    $
                    

Less:    

   extraordinary gains to the extent included in determining such Net Income   
$                     

Less:    

   all non-cash and/or non-recurring revenue (other than non-recurring revenue
incurred in the Ordinary Course) to the extent included in determining such Net
Income    $                     

Less:    

   proceeds of insurance (other than business interruption insurance) to the
extent included in determining such Net Income    $                        

EBITDA for the Computation Period:

   $                        

Minimum EBITDA for the Computation Period required under Credit Agreement

   $                        

In Compliance

     Yes/No

LEVERAGE RATIO

 

Total Indebtedness of the Credit Parties on a consolidated basis at the
Computation Date, including, without limitation, all Indebtedness under the Loan
Documents, in each case together with all accrued interest thereon (including,
without limitation, all interest paid in kind), and all Capital Lease
Obligations, and including, without duplication, Contingent Obligations
consisting of guarantees of Indebtedness that otherwise would constitute Total
Debt of other Persons and all discounts, deductions or allocations relating or
  

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

                            (cont’d)

BORROWING CERTIFICATE

Date:                     , 20     (the “Computation Date”)

 

applicable to or arising from any equity or equity participation or fees,
whether under GAAP or otherwise, plus the amount of the requested Advance
(“Total Debt”)    $                     

EBITDA for the Computation Period (as calculated in the manner set forth above)

   $                     

Leverage Ratio (Total Debt divided by EBITDA) on the Computation Date

              to 1.00

Maximum Leverage Ratio for the applicable period permitted under Credit
Agreement

              to 1.00

In Compliance

     Yes/No

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

Exhibit B-1

Financial Covenants

1. Minimum EBITDA. No Credit Party shall permit EBITDA for the Computation
Period (as defined in Exhibit B-2) ending on any date set forth in the table
below to be less than the minimum amount set forth in the table below opposite
such date:

 

Date

  

Minimum EBITDA

June 30, 2007

   $5,890,000

September 30, 2007

   $5,950,000

December 31, 2007

   $5,965,000

March 31, 2008

   $6,575,000

June 30, 2008

   $7,150,000

September 30, 2008

   $7,700,000

December 31, 2008

   $8,200,000

March 31, 2009

   $8,800,000

June 30, 2009

   $9,450,000

September 30, 2009

   $10,175,000

December 31, 2009

   $10,900,000

March 31, 2010

   $11,600,000

June 30, 2010

   $12,250,000

September 30, 2010

   $12,850,000

December 31, 2010

   $13,500,000

March 31, 2011

   $13,925,000

June 30, 2011

   $14,475,000

September 30, 2011

   $15,100,000

December 31, 2011 and the last day of each

calendar quarter thereafter

   $15,750,000

“EBITDA” shall be calculated in the manner set forth on Exhibit B-2.

2. Leverage Ratio. No Credit Party shall permit the Leverage Ratio as of any
date set forth below to exceed the maximum ratio set forth in the table below
opposite such date:

 

Date

  

Maximum Leverage Ratio

June 30, 2007

   3.75

September 30, 2007

   3.70

December 31, 2007

   3.65

March 31, 2008

   3.60

June 30, 2008

   3.45

September 30, 2008

   3.25

December 31, 2008

   3.00

March 31, 2009

   2.85

June 30, 2009

   2.65

September 30, 2009

   2.50

 

Exhibit B-1

Financial Covenants

Page 1 of 3

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

December 31, 2009

   2.25

March 31, 2010

   2.15

June 30, 2010

   2.00

September 30, 2010 and the last day of each

calendar quarter thereafter

   1.75

The “Leverage Ratio” shall be calculated in the manner set forth in Exhibit B-2.

3. Fixed Charge Coverage Ratio. No Credit Party shall permit the Fixed Charge
Coverage Ratio as of any date set forth in the table below to be less than the
minimum ratio set forth in the table below opposite such date:

 

Date

  

Minimum Ratio

June 30, 2007

   1.10

September 30, 2007

   1.10

December 31, 2007

   1.10

March 31, 2008

   1.10

June 30, 2008

   1.10

September 30, 2008

   1.10

December 31, 2008

   1.10

March 31, 2009

   1.10

June 30, 2009 and the last day of each calendar

quarter thereafter

   1.20

The “Fixed Charge Coverage Ratio” shall be calculated in the manner set forth in
Exhibit B-2.

4. Interest Coverage Ratio. No Credit Party shall permit the Interest Coverage
Ratio as of any date set forth in the table below to be less than the minimum
ratio set forth in the table below opposite such date:

 

Date

  

Minimum Ratio

June 30, 2007

   2.50

September 30, 2007

   2.50

December 31, 2007

   2.50

March 31, 2008

   2.75

June 30, 2008

   2.75

September 30, 2008

   2.75

December 31, 2008

   2.75

March 31, 2009 and the last day of each calendar

quarter thereafter

   3.00

The “Interest Coverage Ratio” shall be calculated in the manner set forth in
Exhibit B-2.

5. Capital Expenditures. No Credit Party shall make or commit to make Capital
Expenditures for any fiscal year set forth in the table below in an aggregate
amount exceeding the dollar limitation set forth in the table below (the
“Capital Expenditure Limitation”) with respect to such fiscal year:

 

Fiscal Year:

   Limitation

Fiscal year ending December 31, 2007

   $ 7,750,000

Each fiscal year thereafter

   $ 6,750,000;

 

Exhibit B-1

Financial Covenants

Page 2 of 3

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

provided, however, in the event the Credit Parties do not expend the entire
respective Capital Expenditure Limitation in any fiscal year, the Credit Parties
may carry forward to the immediately succeeding fiscal year (but not to
subsequent fiscal years) fifty percent (50%) of such unutilized portion. All
Capital Expenditures during any fiscal year shall be applied first to reduce the
applicable Capital Expenditure Limitation of such fiscal year and then to reduce
the carry-forward from the previous fiscal year (or shorter period), if any.

 

Exhibit B-1

Financial Covenants

Page 3 of 3

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

Exhibit B-2

FORM OF COMPLIANCE CERTIFICATE

Please see attached

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

COMPLIANCE CERTIFICATE

FIBERNET OPERATIONS, INC.

DEVNET L.L.C.

DATED AS OF                     , 20    

This Compliance Certificate (this “Certificate”) is given by FiberNet
Operations, Inc. and Devnet L.L.C. (“Borrowers”), pursuant to Section 6.1 of
that certain Credit Agreement dated as of March 21, 2007 (as amended through the
date hereof, the “Credit Agreement”) by and among Borrowers, FiberNet Telecom
Group, Inc., FiberNet Telecom, Inc., Availius, LLC, Local Fiber, LLC, FiberNet
Equal Access, L.L.C., the financial institutions from time to time parties
thereto, as Lenders thereunder, and CapitalSource Finance LLC, as administrative
agent for such financial institutions. All capitalized terms used but not
elsewhere defined herein shall have the respective meanings ascribed to such
terms in the Credit Agreement.

The officer executing this Certificate is the                      of Borrowers,
and as such is duly authorized to execute and deliver this Certificate on behalf
of Borrowers. By so executing this Certificate, Borrowers hereby certify to the
Lender Parties that:

(a) the financial statements delivered with this Certificate in accordance with
subsection 6.1 of the Credit Agreement fairly present in all material respects
the consolidated results of operations and financial condition of the Borrowers
as of, and for the respective periods ending on, the dates of such financial
statements;

(b) Borrowers have reviewed the relevant terms of the Loan Documents and the
condition of Borrowers and the other Credit Parties;

(c) no Default or Event of Default has occurred or is continuing, except as set
forth in Schedule 1 hereto, which includes a description of the nature and
status and period of existence of such Default or Event of Default, if any, and
what action Borrowers have taken, and are undertaking and propose to take with
respect thereto; and

(d) Borrowers and the other Credit Parties are in compliance with all financial
covenants set forth on Exhibit B-1 to the Credit Agreement, as demonstrated by
the calculations of such covenants below, except as set forth in Schedule 1
hereto.

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

IN WITNESS WHEREOF, Borrowers have caused this Certificate to be executed by the
                             of Borrowers this          day of
                    , 20    .

 

FIBERNET OPERATIONS, INC.

By:

 

 

Name:

 

 

Title:

 

 

DEVNET L.L.C.

By:

 

 

Name:

 

 

Title:

 

 

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

                            (cont’d)

COMPLIANCE CERTIFICATE

Date:                     , 20     (the “Computation Date”)

 

CALCULATION OF EBITDA

Twelve Month Period Ending on                     , 20    

or the last day of any calendar quarter thereafter

(the “Computation Period”)

 

EBITDA for the Computation Period is defined as follows (all of the following
determined in accordance with GAAP and without duplication):    Net income (or
loss) of the Credit Parties on a consolidated basis for such Computation Period
taken as a single accounting period determined in conformity with GAAP,
excluding (i) the income (or loss) of any Person (other than FiberNet so long as
all of the Capital Stock of FiberNet is owned by Devnet and Holdings) in which
any Credit Party has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid in cash to such Credit Party by
such Person during such Computation Period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Credit Party or is merged into or
consolidated with a Credit Party or that Person’s assets are acquired by a
Credit Party, (iii) the income of any Subsidiary of any Credit Party to the
extent that the declaration or payment of dividends or similar distributions of
that income by that Subsidiary is not at the time permitted by operation of the
terms of the charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary,
(iv) compensation expense resulting from the issuance of capital stock,
equity-related incentives, stock options, stock appreciation rights or similar
incentive compensation issued to former or current employees, including
officers, of any Credit Party, or the exercise of such options or rights, in
each case to the extent the obligation (if any) associated therewith is not
expected to be settled by the payment of cash by any Credit Party or any
Affiliate thereof prior to the sale of all or substantially all of the assets or
equity of the Credit Parties, and (v) compensation expense resulting from the
repurchase of capital stock, equity options and rights described in clause
(iv) of this definition (“Net Income”)    $                    

Plus:     

   “Interest Expense” for such Computation Period (defined as total interest
expense generated during the Computation Period (including attributable to
conditional sales contracts, Capital Leases and other title retention agreements
in accordance with GAAP) of the Credit Parties on a consolidated basis with
respect to all outstanding Indebtedness, including without limitation accrued
interest, interest paid or payable in kind and capitalized interest, but
excluding (i) commissions, discounts and fees owed with respect to letters of
credit and bankers’ acceptance financing, and (ii) net costs under Hedging
Agreements), in each case to the extent deducted in determining such Net Income
   $                    

Plus:     

   franchise, income and other taxes and similar charges to the extent deducted
in determining such Net Income    $                    

Plus:     

   depreciation and amortization expense to the extent deducted in determining
such Net Income    $                    

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

                            (cont’d)

COMPLIANCE CERTIFICATE

Date:                     , 20     (the “Computation Date”)

 

Plus:     

  to the extent deducted in determining such Net Income (i) for any such period
which includes the Closing Date, transaction fees and expenses incurred in
connection with the Loans in an aggregate amount not to exceed $300,000 and
(ii) all other non-cash and/or non-recurring charges and expenses (including
non-cash charges resulting from an increase in inventory as a result of the
application of FASB Statement 141 and non-cash charges arising by reason of
“impairment losses” under FASB Statement 142 and FASB Statement 144) approved by
Agent in its sole discretion, but specifically excluding (A) accruals for cash
expenses made in the Ordinary Course of Business and (B) write-offs of accounts
receivable    $                     

Plus:     

  loss from any sale of assets, other than sales of inventory in the Ordinary
Course of Business, to the extent deducted in determining such Net Income    $
                    

Plus:     

  extraordinary losses to the extent deducted in determining such Net Income   
$                     

Less:    

  gain from any sale of assets, other than sales in the Ordinary Course of
Business, to the extent included in determining such Net Income    $
                    

Less:    

  extraordinary gains to the extent included in determining such Net Income    $
                    

Less:    

  all non-cash and/or non-recurring revenue (other than non-recurring revenue
incurred in the Ordinary Course) to the extent included in determining such Net
Income    $                     

Less:    

  proceeds of insurance (other than business interruption insurance) to the
extent included in determining such Net Income    $                     

EBITDA for the Computation Period:

   $                     

Minimum EBITDA for the Computation Period required under Credit Agreement

   $                     

In Compliance

     Yes/No

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

                            (cont’d)

COMPLIANCE CERTIFICATE

Date:                     , 20     (the “Computation Date”)

 

LEVERAGE RATIO

 

Total Indebtedness of the Credit Parties on a consolidated basis at the
Computation Date, including, without limitation, all Indebtedness under the Loan
Documents, in each case together with all accrued interest thereon (including,
without limitation, all interest paid in kind), and all Capital Lease
Obligations, and including, without duplication, Contingent Obligations
consisting of guarantees of Indebtedness that otherwise would constitute Total
Debt of other Persons and all discounts, deductions or allocations relating or
applicable to or arising from any equity or equity participation or fees,
whether under GAAP or otherwise (“Total Debt”)    $                     

EBITDA for the Computation Period (as calculated in the manner set forth above)

   $                     

Leverage Ratio (Total Debt divided by EBITDA) on the Computation Date

              to 1.00

Maximum Leverage Ratio for the applicable period permitted under Credit
Agreement

              to 1.00

In Compliance

     Yes/No

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

                            (cont’d)

COMPLIANCE CERTIFICATE

Date:                     , 20     (the “Computation Date”)

 

FIXED CHARGE COVERAGE RATIO

Three Month Period Ending on June 30, 2007

Six Month Period Ending on September 30, 2007

Nine Month Period Ending on December 31, 2007

or

Twelve Month Period Ending on March 31, 2008

or the last day of any calendar quarter thereafter

(each, a “Computation Period”)

 

Fixed Charges of the Credit Parties on a consolidated basis for the Computation
Period:

   Scheduled payments of principal on Total Debt (as calculated in the manner
set forth above in “Leverage Ratio”) for such Computation Period    $
                    

Plus:

   Interest Expense (calculated in the manner set forth above in “EBITDA”) paid,
or required to be paid, in cash during such Computation Period    $
                    

Plus:

   dividends, redemptions, equity repurchases and/or distributions paid in cash
(other than distributions to a Borrower or any Subsidiary of a Borrower by any
Subsidiary of Borrower and tax distributions) during such Computation Period   
$                     

Fixed Charges

   $                     

EBITDA for the Computation Period (calculated in the manner set forth above in
“EBITDA”)

   $                     

Less:

  

Unfinanced Capital Expenditures made during such Computation Period

   $                     

Less:

  

income taxes paid in cash during such Computation Period

   $                     

Less:

  

tax distributions paid in cash during such Computation Period

   $                     

Operating Cash Flow

   $                     

Fixed Charge Coverage Ratio (Operating Cash Flow divided by Fixed Charges)

              to 1.00

Minimum Fixed Charge Coverage Ratio for the applicable period required under
Credit Agreement

              to 1.00

In Compliance

     Yes/No

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

COMPLIANCE CERTIFICATE

Date:                     , 20     (the “Computation Date”)

 

INTEREST COVERAGE RATIO

Three Month Period Ending on June 30, 2007

Six Month Period Ending on September 30, 2007

Nine Month Period Ending on December 31, 2007

or

Twelve Month Period Ending on March 31, 2008

or the last day of any calendar quarter thereafter

(each, a “Computation Period”)

 

Interest Expense (calculated in the manner set forth above in “EBITDA”) for the
Computation Period

   $                     

EBITDA for the Computation Period (calculated in the manner set forth above in
“EBITDA”)

   $                     

Interest Coverage Ratio (EBITDA divided by Interest Expense)

              to 1.00

Minimum Interest Coverage Ratio for the applicable period required under Credit
Agreement

              to 1.00

In Compliance

     Yes/No

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

COMPLIANCE CERTIFICATE

Date:                     , 20    

 

SCHEDULE 1 TO EXHIBIT B-2

CONDITIONS OR EVENTS WHICH CONSTITUTE A DEFAULT OR

EVENT OF DEFAULT

If any condition or event exists that constitutes a Default or Event of Default,
specify nature and period of existence and what action Borrowers have taken, are
taking or propose to take with respect thereto; if no such condition or event
exists, state “None.”

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

Exhibit C-1

Reporting Requirements

(a) Financial Reports. The Credit Parties shall furnish to Agent in a form
satisfactory to Agent:

(i) as soon as available and in any event within 90 calendar days after the end
of each fiscal year of the Credit Parties, for such fiscal year, audited
consolidated financial statements of the Credit Parties, including footnotes,
balance sheet, income statement, retained earnings, cash flows and owners’
equity, all of which shall be prepared by a “Big Four” or similar independent
certified public accounting firm satisfactory to Agent in its Permitted
Discretion, and accompanied by an opinion of such firm which shall (X) be
without any qualification or exception, regarding “going concern” or otherwise.
and (Y) state that such financial statements present fairly in all material
respects the financial position for the periods indicated in conformity with
GAAP applied on a basis consistent with prior periods; and

(ii) as soon as available and in any event within 30 calendar days after the end
of each calendar month (including the last month of each fiscal quarter and
fiscal year)

(A) unaudited consolidated financial statements for such calendar month of the
Credit Parties consisting of a balance sheet and an income statement, all of
which shall be certified on behalf of the Credit Parties by a Responsible
Officer as being in compliance with this paragraph (a), together with a cash
flow analysis;

(B) a consolidated operating report for the Credit Parties, including a detailed
comparison of the actual year-to-date operating results against (x) the
projected operating budget delivered hereunder for the current or prior fiscal
year and (y) the actual operating results for the same period during the prior
fiscal year, in each case inclusive of profit and loss statements and including
a narrative detailing the reasons for the variances; and

(C) a management or board report signed by a Responsible Officer of the Credit
Parties, describing in reasonable detail the Credit Parties’ operations and
financial condition for such month.

All financial statements shall be prepared, and shall be complete, correct and
fairly presenting, in each case in accordance with GAAP consistently applied
with prior periods the financial position and results of operations of Credit
Parties (subject, as to interim statements, to normal year-end adjustments and
the absence of footnote disclosure to the extent they do not materially impact
the reported results or financial condition of the Credit Parties). All monthly
financial statements delivered hereunder with respect to the last month of a
fiscal quarter, and all annual audited financial statements, shall be
accompanied by a completed Compliance Certificate certified on behalf of the
Credit Parties by a Responsible Officer. All annual audited financial statements
delivered hereunder shall be accompanied by a written calculation of Excess Cash
Flow for the fiscal year covered by such annual audited financial statements.

(b) Operating Budget and Projections. The Credit Parties shall furnish to Agent
for each fiscal year of the Credit Parties, not less than 30 calendar days prior
to the commencement of such fiscal year, (i) consolidated and consolidating
month by month (as at the end of each such month) projected operating budgets,
projections, profit and loss statements, income statements, balance sheets and
cash flow reports of and for the Credit Parties for such upcoming fiscal year,
and (ii) annual projections for the fiscal years then remaining prior to the
Maturity Date, in each case prepared in accordance with GAAP

 

Exhibit C-1

Reporting Requirements

Page 1 of 3

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

consistently applied with prior periods (subject to normal year-end adjustments
and the absence of footnote disclosure to the extent they do not materially
impact the reported results or financial condition of the Credit Parties).

(c) Other Materials. The Credit Parties shall furnish to Lender Parties, in form
and substance satisfactory to Agent in its Permitted Discretion:

(i) concurrently with the delivery of annual and quarterly financial statements
required above:

(1) a report detailing Material Contracts entered into by any Credit Party or
Subsidiary thereof during such preceding fiscal year or quarter and Material
Customers of any Credit Party or Subsidiary thereof gained or lost during such
preceding fiscal year or quarter; and

(2) a report specifying all Capital Expenditures made by any Credit Party during
such preceding fiscal year or quarter; and

(ii) as soon as available and in any event within ten calendar days after the
preparation, receipt or issuance thereof or request therefor by any Lender
Party, (A) copies of any reports and management control letters provided by
Credit Parties’ independent accountants; and, (B) such additional information,
documents, statements, and other materials as any Lender Party may request from
time to time in its Permitted Discretion.

(d) Notices. The Credit Parties shall promptly, and in any event within five
Business Days after any Credit Party or Responsible Officer thereof obtains
knowledge thereof, notify each Lender Party in writing of:

(i) any pending or threatened action, suit, proceeding or investigation
involving any Credit Party or Subsidiary thereof, or any such Person’s Property
to the extent the amount in controversy exceeds $100,000 in the aggregate or any
injunctive relief is sought;

(ii) the existence of any Default or Event of Default, which notice shall
specify the nature, status and period of existence thereof and the actions
proposed to be taken with respect thereto;

(iii) any matters totaling $100,000 in the aggregate which could adversely
affect the value or collectability of any Collateral or the enforceability of
any Lien thereon;

(iv) to the extent not already delivered hereunder, any notice or information
given or received by any Credit Party to or from any lender thereto, together
with copies thereof;

(v)(A) the receipt of any notice or request from any Governmental Authority
regarding any liability or claim equal to or exceeding $100,000 in the aggregate
or (B) any action taken or threatened to be taken by any Governmental Authority
(or any notice of any of the foregoing);

(vi) any notice regarding termination of any lease of real property or of any
senior officer, or the loss, termination or expiration of any Material Contract
to which any Credit Party or its assets are bound;

 

Exhibit C-1

Reporting Requirements

Page 2 of 3

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

(vii) the filing, recording or assessment of any federal, state, local or
foreign tax Lien against any Collateral or any Credit Party; and

(viii) the creation, establishment or acquisition of any Subsidiary or the
issuance by any Credit Party of any Capital Stock.

Each such notice shall be accompanied by a written statement by a Responsible
Officer on behalf of such Credit Party describing with particularity whether and
how any Loan Document has been breached.

(e) Shareholder/Equity Holder Reports and Government Filings; Updates. The
Credit Parties shall furnish to Agent (i) concurrently with the sending or
filing thereof, copies of all proxy statements, financial statements and reports
which any Credit Party has made available to any of its equity owners, and
copies of all regular, periodic and other filings which any Credit Party makes
with the Securities and Exchange Commission, any stock exchange (or equivalent)
or any Governmental Authority, and (ii) revisions to the schedules to any Loan
Document to the extent necessary or appropriate; provided, that delivery or
receipt thereof by any Lender Party shall not constitute a waiver by any Lender
Party or a cure of any Default or Event of Default resulting therefrom.

(f) Regulatory Matters. The Credit Parties shall furnish to Agent a copy of each
material notice to or filing made by any Credit Party with the FCC or any State
Regulatory Agency, including any application filed by any Credit Party for any
new Telecom License, promptly after such notice is given or filing is made.
Borrowers shall deliver to Agent (i) at least 30 days’ prior written notice of
the proposed amendment of any Telecom License issued with respect to the System,
(ii) notice of the expiration of any such Telecom License and (iii) (A) evidence
of the filing of any application for renewal of any such Telecom Licenses not
less than the earlier of (x) 60 days prior to the expiration of such Telecom
License or (y) the last day such application may be filed in accordance with
applicable law and (B) copies of any petition filed to deny any such renewal
application promptly after receipt thereof by any Credit Party. Borrowers shall
deliver to Agent promptly upon receipt by any Borrower a copy of any material
adverse report or notice regarding any Telecom License of any Credit Party from
the FCC or any State Regulatory Agency.

 

Exhibit C-1

Reporting Requirements

Page 3 of 3

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

Exhibit C-2

Collateral Reporting and Other Requirements

 

(a) Collateral Reporting. Each Credit Party shall, and shall cause each of its
Subsidiaries to:

(i) provide Agent with not less than 30 days’ prior written notice of any change
in such Person’s legal name, organizational identification number, if any,
federal employer identification number, chief place of business or chief
executive office, corporate or organizational form or jurisdiction of
organization, or of any new location for any of its Property, or any other
changes to the information set forth on Schedule 5.4;

(ii) notify Agent in writing (A) prior to any change in the proposed use by such
Credit Party or Subsidiary of any trade name or fictitious business name,
(B) within three Business Days of any changes to the information set forth on
Schedule 5.11 and (C) upon obtaining knowledge of any adverse determination or
development (including any proceeding by a Governmental Authority) regarding
such Person’s ownership or registration of any Intellectual Property;

(iii) notify Agent in writing within three Business Days after obtaining
knowledge of any existing Commercial Tort Claim, and enter into a supplement to
the Security Agreement granting Agent a Lien thereon;

(iv) upon receipt, deliver and pledge to Agent any and all Instruments,
negotiable Documents, Chattel Paper, certificated Securities and Capital Stock
(accompanied by stock powers executed in blank) duly endorsed and/or accompanied
by executed instruments of transfer in form and substance satisfactory to Agent;

(v) advise Agent within three Business Days of obtaining knowledge thereof, in
reasonable detail, (A) of any Lien (other than a Permitted Lien) or claim made
or asserted against any of its Property, and (B) of any other event which
reasonably could be expected to have a Material Adverse Effect on the value of
the Collateral or on the Liens created under any Loan Document;

(vi) notify Agent within three Business Days after becoming a beneficiary of any
letter of credit (excluding those letters of credit produced by a customer of a
Credit Party in lieu of a cash security deposit);

(vii) notify Agent within three Business Days of obtaining knowledge thereof, of
any Collateral which constitutes a claim against a Governmental Authority or
agent thereof, the assignment of which claim is restricted by Applicable Law
and, upon the request of Agent, such Person shall take all necessary actions to
comply with any assignment of claims or other comparable laws; and

(viii) provide to Agent upon request a schedule prepared by the Credit Parties’
insurance broker setting forth the nature and extent of all insurance maintained
by the Credit Parties, certified as true and correct by a Responsible Officer of
Borrowers.

 

Exhibit C-2

Collateral Reporting and Other Requirements

Page 1 of 1

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

Exhibit D

Closing Conditions

(a) Agent shall have received fully executed Loan Documents, including without
limitation, a completed Borrowing Certificate for the Initial Advance executed
by Borrowers;

(b) Agent shall have received, to its satisfaction, (i) a report of Uniform
Commercial Code financing statement, tax Lien, bankruptcy, pending litigation,
Intellectual Property Lien, and Judgment Lien searches showing no Liens on the
Collateral (other than Permitted Liens and Liens to be terminated at Closing),
(ii) each document required by any Loan Document or under Applicable Law or
requested by Agent to be filed, registered or recorded to create and perfect, in
favor of Agent a first priority Lien upon the Collateral, subject only to
Priority Permitted Liens, and (iii) evidence of each such filing, registration
and recordation and of the payment by Borrowers of any necessary fee, tax or
expense relating thereto;

(c) Agent shall have received evidence (i) of repayment in full of all
Indebtedness of the Credit Parties other than Permitted Indebtedness, (ii) of
release and termination of, or Agent’s authority to release and terminate, any
and all Liens other than Permitted Liens, and (iii) that all prior lockbox and
blocked account arrangements are terminated;

(d) Agent shall have received (i) a copy of the certificate of organization,
formation or incorporation for each Credit Party certified within 30 days prior
to the Closing Date by the applicable Governmental Authority, (ii) a copy of the
bylaws or operating documents of each Credit Party certified as of the Closing
Date by the corporate secretary, general partner or managing member of such
Credit Party, as applicable, (iii) an original certificate of good standing for
each Credit Party as of a date acceptable to Agent issued by the applicable
Governmental Authority of the jurisdiction of organization and of every other
jurisdiction in which such Credit Party is required to be in good standing, and
(iv) copies of the resolutions of the applicable governing body and, if
required, any other equity owners, authorizing the execution, delivery and
performance of the Loan Documents and the Related Documents to which such Credit
Party is a party, certified by a Responsible Officer of such Person as of the
Closing Date, (iv) a certificate of the secretary of each Credit Party, dated
the Closing Date, as to the incumbency and signature of the signatories to the
Loan Documents and the Related Documents, and (v) the written legal opinions of
counsel for the Credit Parties;

(e) Agent shall be satisfied with all proceedings, documents, instruments and
other legal matters in connection with the transactions contemplated by the Loan
Documents and the Related Documents, and shall have received such approvals and
agreements from such third parties as Agent shall determine in its Permitted
Discretion are necessary or desirable;

(f) the Related Transactions shall have closed pursuant to the Related
Documents, and Agent shall have received certified copies thereof;

(g) Agent shall have received original certificates of all insurance policies
required hereunder, which certificates shall name Agent as loss payee or
additional insured, as applicable;

(h) Agent shall have received or shall net out all fees, charges and expenses
due and payable to Lender Parties;

(i) Agent shall have completed its due diligence, the results of which shall be
satisfactory to Agent;

 

Exhibit D

Closing Conditions

Page 1 of 2

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

(j) no Material Adverse Effect shall have occurred since December 31, 2006;

(k) Agent shall have received in form and substance satisfactory to it
(i) Credit Parties’ audited financial statements of the Credit Parties for the
fiscal year ended December 31, 2005, and unaudited financial statements on a
consolidated, consolidating and pro-forma basis for the fiscal year ended
December 31, 2006, (ii) evidence that Credit Parties’ consolidated EBITDA for
the 12-month period ending on December 31, 2006 was at least $5,200,000, and
(iii) evidence that the ratio of (x) total Indebtedness of the Credit Parties as
of the Closing Date after consummating the transactions contemplated by the Loan
Documents and the Related Documents, to (y) consolidated EBITDA of the Credit
Parties for the 12-month period ending on December 31, 2006 shall not be greater
than 4.00 to 1.00;

(l) after consummating the transactions contemplated by the Loan Documents and
the Related Documents, Availability shall not be less than $250,000;

(m) Agent shall have received evidence that (i) the Credit Parties hold all
Telecom Licenses and have good and marketable title to all other Property
necessary for the operation of the System, free and clear of all Liens other
than Permitted Liens, (ii) such Telecom Licenses constitute all Telecom Licenses
which are necessary to enable the Credit Parties to operate the System,
(iii) such Telecom Licenses are in full force and effect as of the Closing Date,
and (iv) no event has occurred that could result in the termination, revocation
or non-renewal of any such Telecom License;

(n) Agent shall have received an opinion from Borrowers’ telecommunications
regulatory counsel to the effect that: (i) all consents of the FCC and all
applicable State Regulatory Agencies, if any, required for the execution and
delivery of the Loan Documents and the incurrence of the Loans by Borrowers have
been or will be obtained, or that no such consents are required, (ii) the Credit
Parties hold all Telecom Licenses necessary to enable Borrowers to conduct their
Telecommunications Business and for the operation of the System, (iii) all such
Telecom Licenses are in full force and effect and (iv) to such counsel’s
knowledge, no event has occurred that could result in the termination,
revocation or non-renewal of any such Telecom License;

(o) Agent shall have received copies of (i) all Telecom Licenses required for
the operation of the System, and (ii) all other Permits required for the Credit
Parties and each Guarantor to conduct the business in which it is currently
engaged or is contemplated pursuant to the Loan Documents the absence of which
would reasonably be expected to have or result in a Material Adverse Effect;

(p) Agent shall have received evidence that all Shareholder Blocking Rights, if
any, have been waived in form and substance satisfactory to Agent in its
Permitted Discretion; and

(q) Agent shall have received such other approvals, opinions, documents,
agreements, instruments, certificates and materials as Agent may request in its
Permitted Discretion.

 

Exhibit D

Closing Conditions

Page 2 of 2

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

Exhibit E

Form of LIBOR Election Notice

Please see attached

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

LIBOR ELECTION NOTICE

DATED AS OF                     ,         

 

TO:

  

CapitalSource Finance LLC

4445 Willard Avenue, Twelfth Floor

Chevy Chase, Maryland 20815

  

Attention: Corporate Finance Group, Portfolio Manager

Facsimile No. (301) 841-2313

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement dated as of March 21, 2007
(as amended through the date hereof, the “Credit Agreement”) by and among
FiberNet Operations, Inc., Devnet L.L.C., FiberNet Telecom Group, Inc., FiberNet
Telecom, Inc., Availius, LLC, Local Fiber, LLC, FiberNet Equal Access, L.L.C.,
the financial institutions from time to time parties thereto, as Lenders
thereunder, and CapitalSource Finance LLC, as administrative agent for such
financial institutions. All capitalized terms used but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement.

In accordance with Section 2.7 of the Credit Agreement, Borrowers hereby
irrevocably request that Lenders:

[(a) disburse as a LIBOR Loan, on                     ,             ,
$                     of the $                     portion of the Principal
Balance of the [Term A Loan][Term B Loan][Revolving Facility] requested pursuant
to that certain Borrowing Certificate of even date herewith, such LIBOR Loan to
bear interest determined by reference to the LIBOR Rate for an Interest Period
of                      months;]

[(b) continue as a LIBOR Loan, on                     ,             ,
$                     of the $                     portion of the Principal
Balance of the [Term A Loan][Term B Loan][Revolving Facility] now bearing
interest determined by reference to a LIBOR Rate for an additional Interest
Period of                      months; and/or]

[(c) convert to a LIBOR Loan, on                     ,             ,
$                     of the $                     portion of the Principal
Balance of the [Term A Loan][Term B Loan][Revolving Facility] now bearing
interest determined by reference to the Prime Rate, such LIBOR Loan to bear
interest determined by reference to the LIBOR Rate for an Interest Period of
                     months.]

Borrowers hereby represent and warrant to the Lender Parties that no Default or
Event of Default exists.

 

Very truly yours,

FIBERNET OPERATIONS, INC.

By:

 

 

Name:

 

 

Title:

 

 

DEVNET L.L.C.

By:

 

 

Name:

 

 

Title:

 

 

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

APPENDIX A

DEFINITIONS

The following terms are defined in the Sections or subsections referenced
opposite such terms:

 

“Accommodation Payment”    12.11(c) “Affected Lender”    13.2 “Agent”   
Preamble “Agreement”    Preamble “Allocable Amount”    12.11(c) “Availius”   
Preamble “Blocked Account”    2.13 “Blocked Account Agreement”    2.13
“Borrowing Date”    2.6 “Capital Expenditure Limitation”    Exhibit B-1
“CapitalSource”    Preamble “Concentration Account”    2.13 “Confidential
Information”    12.9(b) “Customs”    Appendix B “Depository Bank”    2.13
“Devnet”    Preamble “Documentary Letter of Credit”    Appendix B “EBITDA”   
Exhibit B-2 “Event of Default”    8.1 “Excluded Taxes”    13.1(a) “Facility Cap”
   Recitals “FiberNet”    Preamble “FiberNet Equal Access”    Preamble “FiberNet
Telecom”    Preamble “Fixed Charges”    Exhibit B-2 “Fixed Charge Coverage
Ratio”    Exhibit B-2 “Guaranteed Obligations”    14.1 “Holdings”    Preamble
“Indemnified Persons”    12.4 “Initial Advance”    4.1 “Interest Coverage Ratio”
   Exhibit B-2 “Interest Settlement Date”    11.5(a)(iii) “Investments”    7.4
“L/C Addendum”    2.3 “L/C Undertaking”    Appendix B “Letter of Credit”   
Appendix B “Letter of Credit Fees”    3.4(a) “Leverage Ratio”    Exhibit B-2
“Local Fiber”    Preamble “Non-U.S. Lender”    13.1(d) “OFAC”    5.15(c) “Other
Taxes”    13.1(a) “Participant”    12.2(c) “Permitted Indebtedness”    7.2
“Permitted Liens”    7.3 “Prepayment Fee”    3.3

 

Appendix A – Definitions

Page 1 of 18

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“Receipt”    12.5 “Register”    2.4(a) “Resignation Notice”    11.1(g)
“Reinvestment Amount”    2.9(c) “Replacement Lender”    13.2 “Representatives”
   11.1 “Restricted Payments”    7.5 “Revolving Facility”    Recitals
“Settlement Date”    11.5(a)(ii) “Special Agent Advances”    11.7 “Standby
Letter of Credit Fee”    3.4(a) “Standby Letter of Credit”    Appendix B “Taxes”
   13.1(a) “Transferee”    12.2(a)

In addition to the terms defined elsewhere in the Agreement, the following terms
have the following meanings:

“Account Control Agreement” shall mean an agreement in form and substance
satisfactory to Agent in its Permitted Discretion which provides Agent with
“control” over (within the meaning of the UCC), and a first priority, perfected
Lien on, each account of each Credit Party and all Property from time to time on
deposit or otherwise credited to such account.

“Acquisition” shall mean any transaction or series of related transactions in
connection with (a) the acquisition of all or substantially all of the assets of
a Person, or of any business or division of a Person, (b) the acquisition of
more than 50% of the Capital Stock of any Person or otherwise causing any Person
to become a Subsidiary of a Credit Party, or (c) a merger, amalgamation,
consolidation or other combination with another Person.

“Advance” shall mean any borrowing under the Revolving Facility.

“Affiliate” or “affiliate” shall mean, as to any initial Person, any other
Person (a) that directly or indirectly controls, is controlled by, or is under
common control with, such initial Person, (b) who is a current or former
director or officer (i) of such initial Person, (ii) of any Subsidiary of such
initial Person, or (iii) of any other Person described in clause (a) above with
respect to such initial Person, or (c) which, directly or indirectly, is the
beneficial or record owner (as defined in Rule 13d-3 of the Securities Exchange
Act of 1934, as amended) of 5% or more of any class of the outstanding Capital
Stock of such initial Person. For purposes of this definition, the terms
“control”, “controlled by” and “under common control with” shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and/or policies of a Person, whether through
ownership of securities or other interests, by contract or otherwise.

“Applicable Law” shall mean any applicable law, treaty, rule, requirement,
regulation, ordinances, code, policy, rule of common law, and the like, now or
hereafter in effect, of any Governmental Authority, including any judicial,
administrative or other Governmental Authority interpretations thereof, and any
judicial or administrative orders, consents, decrees or Judgments binding on
such Person or any of its respective Properties.

“Applicable Margin” shall mean, for any date, the rate per annum set forth
below, it being understood that the Applicable Margin for (i) Revolving Loans
consisting of LIBOR Loans shall be the percentage set forth under the column
“Revolver LIBOR Margin,” (ii) Revolving Loans consisting of Prime Rate Loans
shall be the percentage set forth under the column “Revolver Prime Rate Margin,”
(iii)

 

Appendix A – Definitions

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any portion of the Principal Balance of the Term Loans consisting of LIBOR Loans
shall be the percentage set forth under the column “Term Loans LIBOR Margin” and
(iv) any portion of the Principal Balance of the Term Loans consisting of Prime
Rate Loans shall be the percentage set forth under the column “Term Loans Prime
Rate Margin:”

 

Revolver LIBOR

Margin

  

Revolver Prime Rate

Margin

  

Term Loans LIBOR

Margin

  

Term Loans Prime Rate

Margin

3.00%

   1.75%    3.50%    2.25%

“Applicable Rate” shall mean with respect to each (a) Prime Rate Loan, the Prime
Rate, and (b) each LIBOR Loan, the LIBOR Rate applicable thereto.

“Availability” shall mean, at any time, the amount by which the Revolving Loan
Limit exceeds the principal amount of all Advances then outstanding.

“Bankruptcy Code” shall mean the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. §101, et seq.) and the regulations issued thereunder, in each case as
amended.

“Borrower” shall mean FiberNet or Devnet.

“Borrowing Certificate” shall mean a Borrowing Certificate substantially in the
form of Exhibit A hereto.

“Business” shall mean the business of (a) transmitting, or providing services
relating to the transmission of, voice, data or video through owned or leased
transmission facilities, (b) providing racks, cabinets and customized caged
spaces for customers to deploy networking equipment and establish network points
of presence, (c) constructing, creating, developing or marketing
communications-related network equipment, software and other devices for use in
the telecommunications business, (d) hosting web sites and providing internet
and ethernet access and virtual private network services and (d) providing
professional services to assist in customer’s deployment of network
infrastructure, such as installing cable, wire and other network systems.

“Business Day” shall mean any day other than a Saturday, Sunday or other day on
which the Federal Reserve or Agent is closed and, in the case of a Business Day
which relates to determining a LIBOR Rate, any day on which dealings are carried
on in the London interbank eurodollar market.

“Capital Expenditures” shall mean, for any period and for any Person, the sum
(without duplication) of all expenditures (whether paid in cash or accrued as
liabilities) made by the Credit Parties and their Subsidiaries during the
Computation Period that are or are required to be treated as capital
expenditures under GAAP, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed
(a) from insurance proceeds (or other similar recoveries) paid on account of the
loss of or damage to the assets being replaced or restored, (b) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced or (c) from the Net Proceeds of any disposition of fixed
assets permitted by this Agreement.

“Capital Lease” shall mean, as to any Person, any lease of any interest in any
kind of Property by that Person as lessee that is, should be or should have been
recorded as a “capital lease” in accordance with GAAP.

“Capital Lease Obligations” shall mean all obligations of any Person under
Capital Leases, in each case taken at the amount thereof accounted for as a
liability in accordance with GAAP.

 

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“Capital Stock” shall mean, as to any Person that is a corporation, the
authorized shares of such Person’s capital stock, including all classes of
common, preferred, voting and nonvoting capital stock, and, as to any Person
that is not a corporation or an individual, the partnership, membership or other
ownership interests in such Person, including, without limitation, the right to
share in profits and losses, the right to receive distributions of cash and
other Property, and the right to receive allocations of items of income, gain,
loss, deduction and credit and similar items from such Person, whether or not
such interests include voting or similar rights entitling the holder thereof to
exercise control over such Person, collectively with, in any such case, all
warrants, options and other rights to purchase or otherwise acquire, and all
other instruments convertible into or exchangeable for, any of the foregoing.

“CapitalSource Entity” shall mean CapitalSource or any of its Affiliates.

“Cash Collateral Account” shall mean a non-interest bearing deposit account or
book entry maintained by Agent in or to which funds are held or designated for
the benefit of Borrowers (it being understood that any funds held in any such
account or designated for the benefit of Borrowers may be commingled with other
funds of Agent).

“Cash Equivalents” shall mean (a) securities issued, or directly and fully
guaranteed or insured, by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than six (6) months from the
date of acquisition, (b) U.S. dollar denominated time deposits, certificates of
deposit and bankers’ acceptances of (i) any domestic commercial bank of
recognized standing having capital and surplus in excess of $500,000,000, or
(ii) any bank (or the parent company of such bank) whose short-term commercial
paper rating from Standard & Poor’s Ratings Services (“S&P”) is at least A-2 (or
the equivalent thereof) or from Moody’s Investors Service, Inc. (“Moody’s”) is
at least P-2 (or the equivalent thereof) in each case with maturities of not
more than six (6) months from the date of acquisition (any bank meeting the
qualifications specified in clauses (b)(i) or (ii), an “Approved Bank”),
(c) repurchase obligations with a term of not more than seven (7) days for
underlying securities of the types described in clause (a) above entered into
with any Approved Bank, (d) commercial paper issued by any Approved Bank or by
the parent company of any Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-term commercial
paper rating of at least A-2 (or the equivalent thereof) by S&P or at least P-2
(or the equivalent thereof) by Moody’s, or guaranteed by any industrial company
with a long term unsecured debt rating of at least A or A2, or the equivalent of
each thereof, from S&P or Moody’s, as the case may be, and in each case maturing
within six (6) months after the date of acquisition, and (e) investments in
money market funds substantially all of whose assets are comprised of securities
of the type described in clauses (a) through (d) above.

“Change of Control” shall mean the occurrence of any of the following:

(i) any “change in/of control” or “sale” or “disposition” or similar event as
defined in any Organizational Document of any Credit Party or any Subordinated
Debt Document;

(ii) Holdings ceases to own and control, directly and of record, 100% of the
Capital Stock of FiberNet and 96% of the Capital Stock of Devnet, FiberNet
ceases to own and control, directly and of record, 4% of the Capital Stock of
Devnet, or FiberNet ceases to own and control, directly and of record, 100% of
the Capital Stock of all other Subsidiaries of Holdings, in any such case free
and clear of all Liens, rights, options, warrants or other similar agreements or
arrangements, other than Liens in favor of Agent;

(iii)(a) any Person or group of Persons (within the meaning of Section 13 or 14
of the Securities Exchange Act of 1934 shall acquire beneficial ownership
(within the meaning of Rule 13d-3 promulgated under such Act) of more than 30%
of the outstanding Capital Stock (on a fully

 

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diluted basis and taking into account any securities or contract rights
exercisable, exchangeable or convertible into equity securities) of Holdings
having voting rights in the election of directors under normal circumstances;
(b) during any period of two consecutive years a majority of the members of the
Board of Directors of Holdings shall cease to be Continuing Members (for
purposes of the foregoing, “Continuing Member” means a member of the Board of
Directors of Holdings who either (x) was a member of Holdings’ Board of
Directors on the Closing Date and has been such continuously thereafter or
(y) became a member of such Board of Directors after the day before the Closing
Date and whose election or nomination for election was approved by a vote of the
majority of the Continuing Members then members of Holdings’ Board of
Directors);

(iv) any Credit Party or Pledged Entity is subject to Shareholder Blocking
Rights which have not been waived in form and substance satisfactory to Agent in
its Permitted Discretion; or

(v) Jon A. DeLuca, or any replacement in accordance with the terms of this
clause (vi), ceases to be employed as sole President and Chief Executive Officer
of each Credit Party or otherwise dies or becomes disabled and, in any case,
shall not have been temporarily and permanently replaced within 30 and 180
calendar days, respectively, by a Person with similar experience and
qualifications.

“Claims” shall mean any and all liabilities, obligations, losses, damages,
penalties, claims, actions, litigation, proceedings, investigations, Judgments,
suits, fees, costs, expenses, advances and disbursements of any kind (including,
without limitation, those of counsel (including in-house counsel but without
duplication of work performed by outside counsel)).

“Closing” shall mean the satisfaction of all of the conditions precedent set
forth in this Agreement required to be satisfied prior to the disbursements and
consummation of the transactions contemplated hereby.

“Closing Date” shall mean the date of this Agreement.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.

“Collateral” shall mean, collectively, all Property, interests in Property,
collateral and/or security granted and/or securities pledged to Agent or any
Lender pursuant to the Loan Documents, including, without limitation, all
Property in which a Lien is granted pursuant to the Security Documents.

“Commitment” or “Commitments” shall mean: (i) with respect to the Revolving
Facility, as to any Revolving Lender, the aggregate commitment of such Revolving
Lender to make Advances, as set forth on Schedule A hereto; (ii) as to all
Revolving Lenders, the aggregate commitment of all Revolving Lenders to make
Advances; (iii) with respect to each Term Loan, as to any Term Lender, the
aggregate commitment of such Term Lender to fund its Pro Rata Share of such Term
Loan, as set forth on Schedule A; (iv) as to all Term Lenders, the aggregate
commitment of all Term Lenders to fund the Term Loans; and (v) as to all
Lenders, the aggregate commitments of all Lenders to fund the Loans; in each
case as the same may be reduced, modified or terminated from time to time
pursuant to this Agreement.

“Communications Laws” shall mean the Communications Act of 1934, the
Telecommunications Act of 1996, and all rules, regulations and decisions of the
FCC promulgated or issued thereunder, any applicable state law, statute, rule,
regulation, ordinance or tariff relating to the regulation of the
Telecommunications Business, including all rules, regulations and decisions of
State Regulatory Agencies promulgated or issued thereunder, as amended and in
effect from time to time.

 

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“Compliance Certificate” shall mean a compliance certificate executed by a
Responsible Officer of Borrowers in the form of Exhibit B-2 hereto.

“Concentration Account” shall mean a depository account or accounts maintained
by Agent or an Affiliate of Agent at such bank as Agent may communicate to
Credit Parties from time to time.

“Contingent Obligations” shall mean, as to any Person, any agreement,
obligation, undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provides funds for the payment of,
or otherwise becomes or is contingently liable upon, or incurs any obligation
of, any Indebtedness, leases, dividends or other obligations (“primary
obligations”) of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, including, without limitation, any so-called “keepwell” or “makewell”
agreement, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, (d) otherwise to
assure, indemnify or to hold harmless the owner of such primary obligation
against loss in respect thereof, (e) with respect to any letter of credit of
such Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (f) with respect to any Hedging Agreement; provided, however, that
the term “Contingent Obligation” shall not include endorsements of instruments
for deposit or collection in the Ordinary Course. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.

“Copyright License” shall mean with respect to a Credit Party, any and all
rights owned or hereafter acquired by such Credit Party under any written
agreement granting any right to use any Copyright or Copyright registration.

“Copyrights” shall mean, with respect to a Credit Party, all of the following
now owned or hereafter adopted or acquired by such Credit Party: (i) all
copyrights and General Intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Copyright Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof; and (ii) all reissues, extensions or renewals
thereof.

“Credit Party” shall mean Holdings, any Borrower, any Subsidiary of any Borrower
or any Guarantor.

“Debtor Relief Law” shall mean, individually and collectively, the Bankruptcy
Code and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization or similar
debtor relief laws affecting the rights of creditors generally, in each case as
amended.

“Default” shall mean any event, fact, circumstance or condition that, with the
giving of applicable notice or passage of time or both, would constitute or
result in an Event of Default.

“Default Rate” shall mean a per annum rate equal to the Applicable Rate in
effect from time to time, plus the Applicable Margin in effect from time to
time, plus 2.0% per annum; provided, that if any

 

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Obligation otherwise does not bear interest, the Default Rate with respect
thereto shall equal the Prime Rate in effect from time to time, plus the highest
Applicable Margin available under this Agreement plus 2.0% per annum.

“Defaulting Lender” shall mean a Lender that has not timely made any payment or
funded any Loan required to be made by it under any Loan Document.

“Distribution” shall mean any fee, payment, dividend, distribution, bonus,
payment or other remuneration of any kind, and any repayment, forgiveness or
prepayment of, or debt service on, loans or other indebtedness.

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

“Eligible Assignee” shall mean any of the following: (a) a Lender or an
Affiliate of any Lender, (b) a commercial bank organized under the laws of the
United States, any state thereof, or the laws of any other country; (c) a
finance company, insurance company or other financial institution or fund which
is engaged in making, purchasing or otherwise investing in commercial loans or
other debt obligations for its own account in its Ordinary Course; or (d) a
Related Fund.

“Environmental Laws” shall mean, collectively, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Superfund Amendment and
Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the Clean Air Act, the Clean Water Act, any other
“Superfund” or “Superlien” law and all other federal, state, local and foreign
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances, in each case, as amended, and the legally-binding rules,
regulations, policies, guidelines, interpretations, decisions, orders and
directives of Governmental Authorities with respect thereto.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.

“Eurocurrency Reserve Requirements” for any day as applied to a LIBOR Loan shall
mean the aggregate (without duplication) of the rates (expressed as a decimal
rounded upward to the nearest  1/100th of a percent) as determined by Agent of
the then stated maximum reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System of the
United States or other Governmental Authority, or any successor thereto, having
jurisdiction with respect thereto) prescribed for eurocurrency funding or
liabilities as defined in Regulation D of such Board (or any successor category
of liabilities under Regulation D) maintained by a member bank of the Federal
Reserve System.

“Excess Cash Flow” shall mean, for any fiscal year, without duplication, an
amount equal to the sum of (i) EBITDA of the Credit Parties, minus (ii) actual
cash tax expense of the Credit Parties or tax distributions permitted hereunder
paid during such fiscal year, minus (iii) Interest Expense actually paid in cash
by the Credit Parties during such fiscal year, minus (iv) an amount equal to
Unfinanced Capital Expenditures of the Credit Parties for such period, minus
(v) an amount equal to the sum of all regularly scheduled payments of principal
on Permitted Indebtedness of the Credit Parties actually made during such period
to the extent permitted hereunder.

“Fair Valuation” shall mean the determination of the value of the consolidated
assets of a Person on the basis of the amount which may be realized by a willing
seller within a reasonable time through

 

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collection or sale of such assets at market value on a going concern basis to an
interested buyer who is willing to purchase under ordinary selling conditions in
an arm’s length transaction.

“FCC” shall mean the Federal Communications Commission or any Governmental
Authority succeeding to its functions.

“Fee Letter” shall mean that certain Fee Letter dated as of the Closing Date by
and among the Credit Parties and Agent.

“GAAP” shall mean generally accepted accounting principles in the United States
of America in effect from time to time as applied by nationally recognized
accounting firms.

“Governmental Authority” shall mean any federal, state, foreign, municipal,
national, provincial, local or other governmental department, court, commission,
board, bureau, agency or instrumentality or political subdivision thereof, or
any entity or officer exercising executive, legislative or judicial, regulatory
or administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia, including, without limitation, the FCC and any State Regulatory
Agency.

“Guarantor” shall mean any Credit Party other than Borrowers, and any other
Person executing a Guaranty in favor of Agent.

“Guaranty” shall mean any guaranty executed by a Guarantor, including, without
limitation, the guaranty effectuated by Article XIV of this Agreement or any
guaranty set forth in a Pledge Agreement.

“Hazardous Substances” shall mean any flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products, methane, hazardous materials,
hazardous wastes, hazardous or toxic substances or related materials as defined
in or other substances or materials regulated by or subject to, or which may
form the basis of liability under, any applicable Environmental Law.

“Hedging Agreement” shall mean any “swap agreements” (as defined in Section 101
of the Bankruptcy Code) and any other agreements or arrangements designed to
provide protection against fluctuations in interest or currency exchange rates.

“Indebtedness” of any Person shall mean, without duplication: (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
unsecured trade payables incurred and paid in the Ordinary Course); (c) the face
amount of all letters of credit (and, without duplication, all drafts drawn and
reimbursement obligations with respect thereto), surety bonds and other similar
instruments issued for the account of such Person; (d) all obligations evidenced
by notes, bonds, debentures or similar instruments; (e) all indebtedness created
or arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to Property acquired by such
Person; (f) all Capital Lease Obligations; (g) the principal balance outstanding
under any synthetic lease, off-balance sheet loan or similar off balance sheet
financing products; (h) all indebtedness referred to in clauses (a) through
(g) above secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon
Property owned by such Person, even though such Person has not assumed or become
liable for the payment of such indebtedness; and (i) all Contingent Obligations
in respect of indebtedness or obligations of others of the kinds referred to in
clauses (a) through (h) above.

 

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“Intellectual Property” shall mean all present and future: trade secrets,
know-how and other proprietary information; Trademarks, Trademark applications,
internet domain names, service marks, service mark applications, trade dress,
trade names, business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing) indicia and other
source and/or business identifiers, and the goodwill of the business relating
thereto and all registrations or applications for registrations which have
heretofore been or may hereafter be issued thereon throughout the world;
Copyrights and Copyright applications; (including Copyrights for computer
programs) and all tangible and intangible property embodying the Copyrights,
unpatented inventions (whether or not patentable); Patents and Patent
applications; industrial design applications and registered industrial designs;
License agreements related to any of the foregoing and income therefrom; books,
records, writings, computer tapes or disks, flow diagrams, specification sheets,
computer software, source codes, object codes, executable code, data, databases
and other physical manifestations, embodiments or incorporations of any of the
foregoing; the right to sue for all past, present and future infringements of
any of the foregoing; all other intellectual property; and all common law and
other rights throughout the world in and to all of the foregoing.

“Intellectual Property Security Agreement” shall mean an Acknowledgment of
Intellectual Property Collateral Lien executed by a Credit Party, made in favor
of Agent on behalf of the Lender Parties.

“Interest Payment Date” shall mean the first day of each calendar quarter.

“Interest Period” shall mean a period (i) commencing (A) on the applicable date
of disbursement of the Loan, if Borrowers prior thereto have elected pursuant to
Section 2.7 to have all or a portion of the Loan to be disbursed on such date
bear interest from such date at a LIBOR Rate, (B) with respect to the conversion
of all or a portion of the Prime Rate Loan to a LIBOR Loan, on the Business Day
specified by Borrowers in the applicable LIBOR Election Notice and (C) with
respect to the continuation as a LIBOR Loan of all or a portion of a then
existing LIBOR Loan after the expiration of the Interest Period applicable to
such existing LIBOR Loan, on the last day of the Interest Period applicable to
such existing LIBOR Loan, and (ii) ending 30, 60 or 90 days thereafter;
provided, however:

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

(b) any Interest Period that begins on a day for which there is no numerically
corresponding day in the last month of such Interest Period shall end on the
last Business Day of the last month of such Interest Period;

(c) Borrowers may not select any Interest Period for any Loan if, after giving
effect to such selection, the aggregate principal amount of all LIBOR Loans
having Interest Periods ending after any date on which an installment is
scheduled to be repaid would exceed the aggregate principal balance of such Loan
scheduled to be outstanding after giving effect to such repayment; and

(d) Borrowers may not select any Interest Period that otherwise would extend
beyond the scheduled Maturity Date.

“Interest Rate Determination Date” shall mean the date for determining a LIBOR
Rate, which date shall be two (2) Business Days prior to the Business Day on
which the applicable Interest Period will commence.

 

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“Inventory” shall mean all “inventory” (as defined in the UCC) of such Person,
now owned or hereafter acquired, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.

“Joinder Agreement” shall mean an agreement, in form and substance satisfactory
to Agent in its Permitted Discretion, pursuant to which a Person becomes a party
to this Agreement and/or any other Loan Document in the same capacity and to the
same extent as either a Borrower or a Guarantor, as Agent may determine.

“Judgments” shall mean judgments, decrees, awards, orders, writs or injunctions
of, or issued by, any Governmental Authority.

“Landlord Waiver and Consent” shall mean a waiver or consent, in form and
substance satisfactory to Agent in its Permitted Discretion, pursuant to which a
mortgagee, owner, lessor, warehouseman, processor or other bailee of any
Property of any Credit Party (i) acknowledges and consents to the Liens of
Agent, (ii) waives any Liens held by such Person on such Property, (iii) permits
Agent access to and use of such Property for a reasonable amount of time during
an Event of Default to assemble, complete and sell any Collateral located
thereon, and (iv) consents to the right of Agent to assume the underlying lease
or assign the underlying lease to a third party in connection with the exercise
of the collateral assignment or mortgage of such underlying lease in favor of
Agent.

“L/C Disbursement” shall mean any payment by the L/C Issuer pursuant to a Letter
of Credit.

“L/C Issuer” shall mean Bank of America, N.A., any Revolving Lender that, at the
request of Agent, agrees, in such Revolving Lender’s sole discretion, to become
an L/C Issuer for purposes of issuing Letters of Credit or L/C Undertakings
pursuant to Section 2.3 hereof or such other bank as Agent may from time to time
designate to become an L/C Issuer for purposes of issuing Letters of Credit or
L/C Undertakings pursuant to Section 2.3 hereof.

“Lender” shall mean any of the Persons named on Schedule A under the headings
“Revolving Lenders” and/or “Term Lenders,” and their respective successors and
permitted assigns (but not any Participant that is not a party to this
Agreement), and “Lenders” shall mean all of them collectively.

“Lender Addition Agreement” shall mean an agreement among Agent, a Lender and
such Lender’s assignee regarding their respective rights and obligations with
respect to assignments of the Commitments, Loans and other interests under the
Loan Documents, in accordance with the terms of Section 12.2 hereof and in form
and substance acceptable to Agent in its Permitted Discretion.

“Lender Parties” shall mean, collectively, Agent and Lenders, and “Lender Party”
shall mean any of them.

“Lending Office” shall mean the office or offices of any Lender set forth
opposite its name on the signature page hereto, as updated from time to time.

“Letters of Credit” shall mean all documentary letters of credit and standby
letters of credit, if any, issued pursuant to the terms of the Loan Documents.

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

 

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“Letter of Credit Usage” shall mean, as of any date of determination, the sum,
without duplication, of (i) the aggregate undrawn amount of all outstanding
Letters of Credit, plus (ii) 100% of the amount of outstanding time drafts
accepted by an Underlying Issuer as a result of drawings under Underlying
Letters of Credit, plus (iii) the aggregate unreimbursed amount of all drawn
Letters of Credit, in each case as of such date of determination.

“LIBOR Election Notice” shall mean a written notice by Borrowers to Agent to
have all or a portion of the principal balance of a Loan bear or continue to
bear interest determined by reference to a LIBOR Rate, in the form of Exhibit E
attached hereto.

“LIBOR Loan” shall mean each portion of the principal balance of a Loan which
bears interest determined by reference to a LIBOR Rate.

“LIBOR Rate” shall mean for each Interest Period a rate of interest equal to
(i) the rate per annum (rounded upwards to the nearest  1/100th of 1%) at which
Dollar deposits in an amount comparable to the amount of the relevant LIBOR Loan
and for a period equal to such Interest Period are offered in the London
interbank eurodollar market as displayed in the Bloomberg Financial Markets
system (or as otherwise determined by Agent in its sole discretion) as of 11:00
A.M. (London time) on the applicable Interest Rate Determination Date, divided
by (ii) 1.00 minus the Eurocurrency Reserve Requirements in effect on the
applicable Interest Rate Determination Date. The LIBOR Rate shall be adjusted
with respect to any LIBOR Loan outstanding on the effective date of any change
in the Eurocurrency Reserve Requirements as of such effective date.

“License” shall mean, with respect to a Credit Party, any Copyright License,
Patent License, Trademark License or other license of rights or interests now
held or hereafter acquired by such Credit Party.

“Lien” shall mean any mortgage, pledge, security interest, encumbrance, transfer
or other restriction, hypothecation, lien or charge of any kind or any other
priority arrangement (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement or any lease in the nature
thereof), or any other arrangement pursuant to which title to the Property is
retained by or vested in some other Person for security purposes.

“Loan” shall mean, individually or collectively, the Term Loans and the
Revolving Loans.

“Loan Documents” shall mean, collectively, this Agreement, the Notes, the
Security Documents, all Borrowing Certificates, all Compliance Certificates, the
Subordination Agreements, any Hedging Agreements with a Lender Party, all
Joinder Agreements, Lender Addition Agreements and all schedules, exhibits,
annexes and attachments thereto, and all other agreements, documents,
instruments, reports, opinions, materials and certificates heretofore or
hereafter executed or delivered to any Lender Party in connection with any of
the foregoing or the Loans, in each case as the same may be amended, restated or
supplemented from time to time in accordance with this Agreement.

“Material Adverse Effect” shall mean any development, event, condition,
obligation, liability or circumstance or set of events, conditions, obligations,
liabilities or circumstances or any change(s) which:

(i) has, had or reasonably could be expected to have a material adverse effect
upon or change in (a) the legality, validity or enforceability of any Loan
Document or (b) the perfection or priority of any Lien granted to Agent or any
Lender under any of the Security Documents;

 

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(ii) has been or reasonably could be expected to be material and adverse to the
value of any of the Collateral or to the business, operations, prospects,
properties, assets, liabilities or condition (financial or otherwise) of the
Credit Parties, either individually or taken as a whole; or

(iii) has materially impaired or reasonably could be expected to materially
impair the ability of any Credit Party or any other Person (other than any
Lender Party) to perform any of the Obligations or its obligations, or to
consummate the transactions, under the Loan Documents.

“Material Contract” shall mean, with respect to any Person, each contract,
agreement and arrangement 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 $750,000 or more (other than purchase orders in the Ordinary
Course).

“Material Customer” shall mean, with respect to any Person, each customer of
such Person from whom such Person derives, or reasonably expects to derive,
$1,000,000 or more in revenue during the preceding or current fiscal year of
such Person.

“Maturity Date” shall mean, in accordance with the terms of this Agreement, the
earliest to occur of (i) the acceleration (whether automatic or by written
notice) of any Obligations and (ii) March 20, 2012.

“Mortgage” shall mean a mortgage, deed of trust, deed to secure debt, leasehold
mortgage, or similar instrument creating a Lien on real Property or on any
interest in real Property.

“Net Proceeds” shall mean:

(a) in respect of any disposition, casualty, condemnation, taking or other event
of loss, proceeds in cash, checks or other cash equivalent financial instruments
(including Cash Equivalents) as and when received by the Person making such
disposition or all insurance proceeds received on account of such casualty,
condemnation, taking or other event of loss, in any such case net of: (i) in the
event of a disposition, (x) the direct costs relating to such disposition
excluding amounts payable to any Credit Party or any Affiliate of any Credit
Party, (y) sale, use or other transaction taxes paid or payable as a result
thereof, and (z) amounts required to be applied to repay principal, interest and
prepayment fees, premiums and penalties on Indebtedness (other than the
Obligations) secured by a Lien on the asset that is the subject of such
disposition; and (ii) in the event of a casualty, condemnation, taking or other
event of loss, (x) all money actually applied to repair or reconstruct the
damaged property or property affected by the condemnation or taking in
accordance with the terms hereof, (y) all of the costs and expenses reasonably
incurred in connection with the collection of such proceeds, award or other
payments, and (z) any amounts retained by or paid to parties having superior
rights to such proceeds, awards or other payments;

(b) in respect of any issuance of debt or equity, or any other event, cash,
checks or other cash equivalent financial instruments (including Cash
Equivalents) as and when received in connection therewith, net of underwriting
discounts and reasonable out-of-pocket costs and expenses paid or incurred in
connection therewith in favor of any Person that is not an Affiliate of any
Credit Party; and

(c) in respect of any purchase price adjustment or indemnification payment with
respect to any Acquisition, cash, checks or other cash equivalent financial
instruments (including Cash Equivalents) as and when received in connection
therewith, net of reasonable out-of-pocket costs and expenses paid or incurred
in connection therewith in favor of any Person that is not an Affiliate of any
Credit Party.

 

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“Network Agreement” means any document or agreement entered into by any Borrower
or any of its Subsidiaries regarding the use, operation or maintenance of, or
otherwise concerning, any of the Network Facilities.

“Network Facilities” means the switches and network of digital and analog
facilities owned or leased by any Borrower or any of its Subsidiaries for use in
their Business.

“Notes” shall mean, the promissory notes or any other instruments issued in
substitution therefor or replacement thereof payable to the order of a Lender
executed by Borrowers evidencing the Loans, to the extent issued (and not
deleted from the Register and returned to Borrowers for cancellation) hereunder
in each case as the same may be amended, divided, split, supplemented and/or
restated from time to time.

“Obligations” shall mean, without duplication, all present and future
obligations, Indebtedness and liabilities of Borrowers and/or any other Credit
Party or other Person to any Lender Party at any time of every kind, nature and
description arising under any Loan Document, whether direct or indirect, secured
or unsecured, joint and/or several, absolute or contingent, matured or
unmatured, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, including, without limitation, all interest, fees,
charges, expenses and/or amounts paid or advanced by any Lender Party to, on
behalf of or for the benefit of any such Person for any reason at any time,
obligations of performance as well as obligations of payment, and all interest,
fees and other amounts that accrue after the commencement of any proceeding
under any Debtor Relief Law by or against any such Person or its Properties,
whether or not post-filing interest, fees or other amounts are allowed in such
proceeding.

“Ordinary Course” shall mean, in respect of any Person, the ordinary course and
reasonable requirements of such Person’s business, as conducted in accordance
with past practices, and undertaken in good faith and not for purposes of
evading any provision of any Loan Document or material Applicable Law.

“Organizational Documents” shall mean (a) for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of designation or
other instrument relating to the rights of preferred shareholders or
stockholders of such corporation, any shareholder rights agreement and all
applicable resolutions of the Board of Directors (or any committee thereof) of
such corporation, (b) for any partnership, the partnership agreement and, if
applicable, the certificate of limited partnership, (c) for any limited
liability company, the operating agreement and articles or certificate of
formation or organization and all applicable resolutions of any managing member
of such limited liability company, and (d) any agreement between any Credit
Party and its shareholders, members, partners or its equity owners, or among any
of the foregoing.

“Patent License” shall mean, with respect to a Credit Party, rights under any
written agreement now owned or hereafter acquired by such Credit Party granting
any right with respect to any invention on which a Patent is in existence.

“Patents” shall mean, with respect to a Credit Party, all of the following in
which such Credit Party now holds or hereafter acquires any interest: (i) all
letters patent of the United States or any other country, all registrations and
recordings thereof, and all applications for letters patent of the United States
or of any other country, including registrations, recordings and applications in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any State or any other country, and (ii) all reissues,
continuations, continuations-in-part or extensions thereof.

“Patriot Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L.
107-56, as amended.

 

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“Permit” shall mean any license, lease, power, permit, franchise, certificate,
authorization or approval issued by a Governmental Authority.

“Permitted Discretion” shall mean, with respect to any Person, a determination
or judgment made by such Person in good faith in the exercise of reasonable
(from the perspective of a secured lender) credit or business judgment.

“Permitted Securities” shall mean any shares, units or interests of equity
securities or ownership interests of Holdings that by their terms (or by the
terms of any security into which they are convertible or for which they are
exchangeable) or upon the happening of any event or otherwise (A) are not
convertible or exchangeable for Indebtedness or any securities that are not
Permitted Securities, (B) (i) do not mature and (ii) are not putable or
redeemable at the option of the holder thereof, in each case in whole or in part
on or prior to the date that is six months after the earlier of the scheduled
Maturity Date or the actual payment in full in cash of the Obligations, (C) do
not require payments of dividends or distributions in cash on or prior to the
date that is six months after the earlier of the scheduled Maturity Date or the
actual payment in full in cash of the Obligations, (D) are not secured by any
Liens in Property of a Credit Party and/or (E) to the extent the same are
subject to or provide for any Shareholder Blocking Rights, all such Shareholder
Blocking Rights have been waived in form and substance satisfactory to Agent in
its Permitted Discretion.

“Person” shall mean an individual, a partnership, a corporation, a limited
liability company, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture, a Governmental Authority or any
other entity of whatever nature.

“Pledge Agreement” shall mean any pledge agreement between Agent and any Credit
Party, as the same be amended, modified, supplemented or restated from time to
time.

“Pledged Entity” shall mean a Person whose Capital Stock is pledged, in whole or
in part, in favor of Agent.

“Prime Rate” shall mean, as of any time of determination, the greater of (i) a
fluctuating per annum rate of interest equal at all times to the rate of
interest announced publicly from time to time by Citibank, N.A. as its base
rate; provided, that such rate is not necessarily the best rate offered to its
customers and, should Agent be unable to determine such rate, such other
indication of the prevailing prime rate of interest as reasonably may be chosen
by Agent; provided, further, that each change in the fluctuating rate of
interest shall take effect simultaneously with the corresponding change in the
Prime Rate, and (ii) five and one-half percent (5.50%) per annum.

“Prime Rate Loan” shall mean any portion of any Loan which is not a LIBOR Loan.

“Priority Permitted Liens” shall mean Permitted Liens permitted under Sections
7.3(b), (d) and/or (e).

“Property” shall mean all types of real, personal or mixed property and all
types of tangible or intangible property.

“Pro Rata Share” shall mean:

(a) with respect to any Revolving Lender as to all Revolving Lenders, the
percentage obtained by dividing (i) the Commitment of that Revolving Lender
under the Revolving Facility by (ii) all such Commitments of all Revolving
Lenders under the Revolving Facility; provided, however, that if any such
Commitment of a Revolving Lender is terminated pursuant to the terms hereof,
then “Pro Rata

 

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Share” means the percentage obtained by dividing (x) the aggregate amount of
such Revolving Lender’s outstanding Advances by (y) the aggregate amount of all
outstanding Advances under the Revolving Facility;

(b) with respect to any Term A Lender as to all Term A Lenders, the percentage
obtained by dividing (i) the aggregate amount of the portion of the outstanding
Term A Loan owing to such Term A Lender by (ii) the aggregate amount of the
outstanding Term A Loans;

(c) with respect to any Term B Lender as to all Term B Lenders, the percentage
obtained by dividing (i) the aggregate amount of the portion of the outstanding
Term B Loan owing to such Term B Lender by (ii) the aggregate amount of the
outstanding Term B Loans; and

(d) with respect to any Lender as to all Lenders, the percentage obtained by
dividing (i) the aggregate amount of such Lender’s Loans outstanding and such
Lender’s Commitments by (ii) the aggregate amount of all Lenders’ Loans
outstanding and all Lenders’ Commitments;

in each case, as such percentage may be adjusted by assignments permitted
pursuant to Section 12.2 hereof.

“Public Offering” shall mean any offer or sale of securities pursuant to any
registration statement filed and effective with the Securities and Exchange
Commission or any other applicable Governmental Authority.

“Related Documents” shall mean, collectively all agreements, documents,
instruments, reports, opinions, materials and certificates hereafter executed or
delivered in connection with any Acquisition or Subordinated Debt or any of the
foregoing and the transactions contemplated thereby, in each case in form and
substance satisfactory to Agent in its Permitted Discretion.

“Related Fund” shall mean (a) any fund, trust or similar entity that invests in
commercial loans in the ordinary course of its business and is advised or
managed by (i) a Lender, (ii) an Affiliate of a Lender, (iii) the same
investment advisor that manages a Lender or (iv) an Affiliate of an investment
advisor that manages a Lender, or (b) any finance company, insurance company or
other financial institution which temporarily warehouses Loans for any Lender or
any Person described in clause (a) above.

“Related Transactions” shall mean the transactions contemplated by the Related
Documents.

“Requisite Lenders” shall mean at any time (a) if the Commitments under the
Revolving Facility have not terminated, Lenders then holding more than 66-2/3%
of the sum of the Commitments then in effect, plus the aggregate unpaid
principal balance of the Term Loans then outstanding, or (b) if the Commitments
under the Revolving Facility have terminated, Lenders then holding more than
66-2/3% of the sum of the aggregate unpaid principal amount of all Loans then
outstanding, plus outstanding Letter of Credit Usage; provided, that, if there
are only two Lenders under the Loan Documents, then Requisite Lenders shall
constitute both Lenders. For purposes of this definition, all Lenders that are
Affiliates, and each Lender and its Related Funds, shall in each case be deemed
to constitute a single Lender.

“Responsible Officer” shall mean, with respect to a Credit Party, the chief
executive officer or the president thereof; or, with respect to compliance with
financial covenants or delivery of financial information, the chief financial
officer or the treasurer of such Person, or, in each case, any other officer
having substantially the same authority and responsibility.

 

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“Revolving Lenders” shall mean the Persons named on Schedule A and their
respective successors and permitted assigns (but not, except as expressly set
forth herein, any Participant that otherwise is not a party to this Agreement).

“Revolving Loan Limit” shall mean, at any time, the Facility Cap then in effect,
less Letter of Credit Usage then in effect, less any reserves established by
Agent in accordance with this Agreement.

“Revolving Loans” shall mean, collectively, the Advances and all Obligations
under or relating to the Revolving Facility.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Security Agreement” shall mean each Security Agreement, in form and substance
satisfactory to Agent in its Permitted Discretion, executed by any Credit Party
in favor of Agent.

“Security Documents” shall mean, collectively, all Security Agreements, Pledge
Agreements, Guarantees, Mortgages, Intellectual Property Security Agreements,
Account Control Agreements, Landlord Waivers and Consents, UCC financing
statements and all other agreements, documents and instruments that create,
grant or perfect the Liens in the Collateral, as the same may be amended,
restated or supplemented from time to time.

“Shareholder Blocking Rights” shall mean any rights or ability (direct or
indirect) of any owner or holder of any Capital Stock of any Credit Party to
consent to, restrain, delay, impair or otherwise interfere with, the exercise of
any of Agent’s rights or remedies under the Loan Documents or otherwise.

“Solvent” shall mean, as to any Person, that (a) the fair value of such Person’s
Property is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of applicable Debtor Relief Laws and, in
the alternative, the Uniform Fraudulent Transfer Act; (b) the present fair
saleable value of the Property of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured; (c) such Person is able to realize upon its
Property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature; and (e) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Person’s Property would constitute unreasonably small capital.

“Standby Letter of Credit” shall mean any standby letter of credit issued by the
L/C Issuer for the account of Borrowers.

“State Regulatory Agency” means any Governmental Authority that exercises
jurisdiction over the rates or services or the ownership, construction or
operation of any Network Facilities or the Business or over Persons who own,
construct or operate Network Facilities or the Business.

“State Regulatory Authorizations” mean all applications, filings, reports,
documents, recordings and registrations with, and all validations, exemptions,
franchises, waivers, approvals, orders, authorizations, consents, licenses,
certificates and permits from, any State Regulatory Agency.

“Subordinated Debt” shall mean any Indebtedness, contingent equity, earnout or
other obligations of Holdings that is unsecured and has subordination terms,
covenants, pricing and other terms which have been approved in writing by Agent
and with respect to which the holder thereof has executed and delivered to Agent
a Subordination Agreement.

 

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“Subordinated Debt Documents” shall mean all documents, instruments and
agreements executed in connection with any Subordinated Debt.

“Subordination Agreement” shall mean any agreement between Agent and the
holder(s) of other Subordinated Debt pursuant to which such Subordinated Debt is
subordinated in right of payment, liens, security and remedies to all of the
Obligations and all of the Lender Parties’ rights, Liens and remedies, in form
and substance satisfactory to Agent.

“Subsidiary” shall mean, as to any initial Person, any other Person in which
more than fifty percent (50%) of all Capital Stock is owned directly or
indirectly, beneficially and of record, by such initial Person or one or more of
its Subsidiaries. For purposes of the Loan Documents, any reference to
“Subsidiary” shall be deemed to refer to a Subsidiary of a Borrower unless the
context provides otherwise.

“System” means a competitive local exchange carrier telecommunications
transmission system covering a metropolitan area or adjacent areas located in
the United States of America that is owned or leased by any Borrower or any of
its Subsidiaries, and all enhancements or additions thereto.

“Telecom License” means any license, authorization, certificate of compliance,
certificate of public convenience and necessity, franchise, approval or permit
for the provision of services relating to the Business or otherwise granted or
issued by the FCC, any State Regulatory Agency or any other applicable
Governmental Authority, including any applicable State Regulatory Authorization,
authorizing or permitting the acquisition, construction or operation of any
Network Facility or any other system for the provision of services relating to
the Business.

“Term A Lenders” shall mean the Persons named on Schedule A and their respective
successors and permitted assigns (but not, except as expressly set forth herein,
any Participant that otherwise is not a party to this Agreement).

“Term A Loan” shall mean the term loan made by Term A Lenders to Borrowers on
the Closing Date pursuant to Section 2.2 in the aggregate original principal
amount of Fourteen Million Dollars ($14,000,000), and all Obligations related
thereto.

“Term B Advance” shall mean any borrowing of the Term B Loan.

“Term B Lenders” shall mean the Persons named on Schedule A and their respective
successors and permitted assigns (but not, except as expressly set forth herein,
any Participant that otherwise is not a party to this Agreement).

“Term B Loan” shall mean the term loan made by Term B Lenders to Borrowers
pursuant to Section 2.2 in the maximum principal amount of Five Million Dollars
($5,000,000), and all Obligations related thereto.

“Term Lenders” shall mean, collectively, Term A Lenders and Term B Lenders.

“Term Loans” shall mean collectively the Term A Loan and the Term B Loan.

“Trademark License” shall mean, with respect to a Credit Party, rights under any
written agreement now owned or hereafter acquired by such Credit Party granting
any right to use any Trademark.

 

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“Trademarks” means, with respect to a Credit Party, all of the following now
owned or hereafter adopted or acquired by such Credit Party: (i) all trademarks,
trade names, corporate names, business names, trade styles, service marks,
logos, internet domain names, other source or business identifiers, prints and
labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications (other than
intent-to-use applications) in connection therewith, including registrations,
recordings and applications (other than intent-to-use applications) in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any state or territory thereof, or any other country or any
political subdivision thereof; (ii) all reissues, extensions or renewals
thereof; and (iii) all goodwill associated with or symbolized by any of the
foregoing.

“Transfer” shall mean an assignment completed in accordance with
Section 12.2(b).

“UCC” shall mean the Uniform Commercial Code as in effect in the State of New
York from time to time; provided, that to the extent the UCC is used to define
any term in any Loan Document and such term is defined differently within the
UCC, then the definition of such term contained in Article or Division 9 of the
UCC shall govern.

“Unasserted Obligations” shall mean contingent indemnification obligations under
the Loan Documents to the extent no claim giving rise thereto has been asserted.

“Underlying Issuer” shall mean a third Person that is the beneficiary of an L/C
Undertaking and has issued a letter of credit at the request of the L/C Issuer
for the benefit of Borrowers.

“Underlying Letter of Credit” shall mean a documentary letter of credit that has
been issued by an Underlying Issuer.

“Unfinanced Capital Expenditures” shall mean all Capital Expenditures other than
(i) Capital Expenditures paid with the Net Proceeds contributed to a Borrower by
Holdings from the issuance of Permitted Securities, (ii) Capital Expenditures
financed with the proceeds of Permitted Indebtedness (Permitted Indebtedness,
for this purpose, includes Term B Advances but does not include Advances under
the Revolving Facility) and (iii) Capital Expenditures made prior to
December 31, 2007 to the extent made from the portion of the Credit Parties’
cash on hand on March 31, 2007 in excess of $3,000,000.

“Wholly-Owned Subsidiary” shall mean a Subsidiary of which (other than
directors’ qualifying shares required by law) 100% of the Capital Stock is at
all times owned, beneficially and of record, by a Borrower or by one or more of
the other Wholly-Owned Subsidiaries of a Borrower, or both

 

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APPENDIX B

LETTERS OF CREDIT ADDENDUM TO CREDIT AGREEMENT

THIS LETTERS OF CREDIT ADDENDUM TO CREDIT AGREEMENT (this “L/C Addendum”), dated
as of March 21, 2007, is entered into by and among FIBERNET OPERATIONS, INC., a
Delaware corporation (“FiberNet”); DEVNET L.L.C., a Delaware limited liability
company (“Devnet”) (FiberNet and Devnet hereinafter are referred to individually
as a “Borrower” and collectively as “Borrowers”); and CAPITALSOURCE FINANCE LLC,
a Delaware limited liability company, as administrative agent for the financial
institutions from time to time parties to the Credit Agreement referred to below
(in such capacity, “Agent”).

The following provisions are hereby incorporated into, and are hereby made a
part of, the Credit Agreement, dated as of March 21, 2007 (such Credit
Agreement, as amended, modified, supplemented or restated from time to time,
hereinafter is referred to as the “Credit Agreement”), by and among the
Borrowers, the other Credit Parties from time to time parties thereto, the
financial institutions from time to time parties thereto, and Agent. The
following provisions shall be effective immediately:

(a) Capitalized terms used herein, to the extent not otherwise defined herein,
shall have the meanings ascribed to them in the Credit Agreement.

(b) Agent agrees to cause the L/C Issuer from time to time prior to the
scheduled Maturity Date to issue standby letters of credit or documentary
letters of credit for the account of a Credit Party (each standby letter of
credit or documentary letter of credit, as applicable, a “Letter of Credit”) or
to purchase participations or execute indemnities or reimbursement obligations
(each such undertaking, an “L/C Undertaking”) with respect to letters of credit
which comply with the provisions hereof issued by an L/C Issuer for the account
of a Credit Party (each Letter of Credit or L/C Undertaking, as the context
requires, constituting or relating to a documentary letter of credit is referred
to in this Agreement as a “Documentary Letter of Credit” and each Letter of
Credit or L/C Undertaking, as the context requires, constituting or relating to
a standby letter of credit is referred to in this Agreement as a “Standby Letter
of Credit”).

(c) Agent will not be required to issue or to cause to be issued any Letter of
Credit to the extent that the issuance of such Letter of Credit would then cause
the sum of the outstanding Advances and all outstanding Letter of Credit Usage
to exceed the Revolving Loan Limit.

(d) The maximum amount of outstanding Letters of Credit shall not exceed
$5,750,000 in the aggregate at any time. Each disbursement or payment by the L/C
Issuer or Agent of an amount drawn under Letters of Credit shall be deemed to be
an Advance and shall bear interest at the Applicable Rate for Advances. Letters
of Credit that have not been drawn upon shall not bear interest.

(e) If L/C Issuer is obligated to advance funds under a Letter of Credit,
Borrowers immediately shall reimburse such L/C Disbursement to L/C Issuer by
paying to Agent an amount equal to such L/C Disbursement not later than 1:00
p.m. (New York City time) on the date that such L/C Disbursement is made, if
Borrowers shall have received written or telephonic notice of such L/C
Disbursement prior to 12:00 p.m. (New York City time) on such date, or, if such
notice has not been received by Borrowers prior to such time on such date, then
not later than 1:00 p.m. (New York City time), on the first Business Day that
Borrowers have received such notice prior to 12:00 p.m. (New York City time),
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the Applicable Rate for Advances. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrowers’ obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance.

 

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(f) Borrowers may from time to time upon notice not later than (i) 11:00 a.m.
(New York City time), at least three Business Days in advance, request Agent to
assist Borrowers in establishing or opening a Standby Letter of Credit by
delivering to Agent the L/C Issuer’s form of standby letter of credit
application (the “Standby Letter of Credit Application”) completed to the
satisfaction of Agent and the L/C Issuer, and such other certificates, documents
and other papers and information as Agent or L/C Issuer may reasonably request.

(g) Borrowers may upon notice not later than 11:00 a.m. (New York City time) at
least three Business Days in advance, request Agent to assist Borrowers in
establishing a Documentary Letter of Credit by delivering to L/C Issuer, with a
copy to Agent, at Agent’s Lending Office, the L/C Issuer’s standard form of
documentary letter of credit application (each “Documentary Letter of Credit
Application”) completed to the satisfaction of Agent and L/C Issuer, and such
other certificates, documents and other papers and information as Agent or L/C
Issuer may reasonably request. If requested by Agent or L/C Issuer, Borrowers
also shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking.

(h) Borrowers acknowledge that the issuance of any Letter of Credit shall occur
no sooner than three Business Days following the submission of a Standby Letter
of Credit Application or Documentary Letter of Credit Application, as the case
may be, to, and to the satisfaction of, the L/C Issuer.

(i) Each Documentary Letter of Credit and each Standby Letter of Credit (and, in
each case, each corresponding Underlying Letter of Credit) shall, among other
things, (i) be in form and substance acceptable to the L/C Issuer, including the
requirement that the amounts payable thereunder must be payable in Dollars,
(ii) provide for the payment of sight or time drafts when presented for honor
thereunder in accordance with the terms thereof and when accompanied by the
documents described therein, (iii) in the case of a Documentary Letter of
Credit, have an expiry date not later than 180 days after such Documentary
Letter of Credit’s date of issuance and in no event later than 30 days prior to
the scheduled Maturity Date, and (iv) in the case of a Standby Letter of Credit,
have an expiry date not later than 12 months after such Standby Letter of
Credit’s date of issuance and in no event later than 30 days prior to the
scheduled Maturity Date, or unless otherwise provided in the Letter of Credit
Documents applicable thereto.

(j) In connection with the issuance of any Letter of Credit, Borrowers shall
indemnify, save and hold Agent, each Revolving Lender and each L/C Issuer
harmless from any loss, cost, expense or liability, including, without
limitation, payments made by Agent, any Revolving Lender or any L/C Issuer, and
reasonable expenses and reasonable attorneys’ fees incurred by Agent, any
Revolving Lender or any L/C Issuer arising out of, or in connection with, any
Letter of Credit to be issued for the account of a Borrower, except as such
loss, cost, expense or liability results from such Person’s gross negligence or
willful misconduct.

(k) Borrowers shall be bound by the L/C Issuer’s regulations and good faith
interpretations of any Letter of Credit issued or created for a Borrower’s
account, although this interpretation may be different from Borrowers’ own; and,
neither Agent nor any Revolving Lender, any L/C Issuer, nor any of its
correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following a Borrower’s instructions or those
contained in any Letter of Credit or of any modifications, amendments or
supplements thereto or in issuing or paying any Letter of Credit, except for,
and solely to the extent of, Agent’s, any Revolving Lender’s, such L/C Issuer’s
or such correspondent’s gross negligence or willful misconduct.

 

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(l) Borrowers shall authorize and direct the L/C Issuer and each Underlying
Issuer to name a Borrower as the “Account Party” therein and to deliver to Agent
all instruments, documents, and other writings and property received by the L/C
Issuer pursuant to the Letter of Credit Documents and to accept and rely upon
Agent’s instructions and agreements with respect to all matters arising in
connection with the Letters of Credit and the applications therefor.

(m) In connection with all Documentary Letters of Credit issued or caused to be
issued by the L/C Issuer under this Agreement, each Borrower hereby appoints
Agent, L/C Issuer and each Underlying Issuer, or the respective designee(s) of
any of them, as its attorney, with full power and authority (i) to sign and/or
endorse such Borrower’s name upon any warehouse or other receipts or any Letter
of Credit applications; (ii) to sign such Borrower’s name on bills of lading;
(iii) to clear Inventory through the United States of America Customs Department
(“Customs”) in the name of such Borrower, L/C Issuer, Underlying Issuer, Agent
or Agent’s, L/C Issuer’s or Underlying Issuer’s designee, and to sign and
deliver to Customs officials powers of attorney in the name of such Borrower for
such purpose; (iv) to complete in the name of Agent, L/C Issuer, Underlying
Issuer or Agent’s, L/C Issuer’s or Underlying Issuer’s designee, any order, sale
or transaction, obtain the necessary documents in connection therewith, and
collect the proceeds thereof; (v) to clear and resolve any questions of
non-compliance of documents; (vi) to give any instructions as to acceptance or
rejection of any documents or goods; (vii) to execute any and all applications
for steamship or airways guarantees, indemnities or delivery orders; (viii) to
grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents; and (ix) to agree to any
amendments, renewals, extensions, modifications, changes or cancellation of any
of the terms or conditions of any of the applications, Documentary Letters of
Credit, drafts or acceptances; all in Agent’s, L/C Issuer’s or Underlying
Issuer’s sole name, and the L/C Issuer shall be entitled to comply with and
honor any and all such documents or instruments executed by or received solely
from Agent, all without notice to or consent from such Borrower. Agent, L/C
Issuer, Underlying Issuer and their agents or attorneys will not be liable for
any acts or omissions or for any error of judgment or mistakes of fact or law,
except gross negligence or willful misconduct. This power, being coupled with an
interest, may only be exercised by Agent or L/C Issuer if an Event of Default
exists and is irrevocable as long as any Documentary Letters of Credit remain
outstanding. Each Borrower hereby authorizes and directs any Underlying Issuer
to deliver to the L/C Issuer all instruments, documents, and such other writings
and Property received by such Underlying Issuer pursuant to such Underlying
Letters of Credit and to accept and rely upon the L/C Issuer’s instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.

(n) Except as expressly provided for herein, neither Agent, L/C Issuer, any
Revolving Lender nor any Underlying Issuer shall be responsible for: the
existence, character, quality, quantity, condition, packing, value or delivery
of the goods purporting to be represented by any documents; any differences or
variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in the documents; the validity,
sufficiency or genuineness of any documents or of any endorsements thereon, even
if such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent, or forged; the time, place, manner or order in which
shipment is made; partial or incomplete shipment, or failure or omission to ship
any or all of the goods referred to in the Documentary Letters of Credit or
documents; any deviation from instructions, delay, default, or fraud by the
shipper and/or any one else in connection with the Collateral or the shipping
thereof; or any breach of contract between the shipper or vendors and any
Borrower.

(o) Borrowers must ensure that any necessary import, export or other licenses or
certificates for the import or handling of the Collateral will have been
promptly procured; all foreign and domestic governmental laws and regulations in
regard to the shipment and importation of the Collateral or the financing
thereof will have been promptly and fully complied with in all material
respects; and any certificates in that regard that Agent and/or L/C Issuer may
at any time request will be promptly furnished. Each Borrower warrants and
represents that all shipments made under any such Documentary

 

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Letters of Credit are in accordance in all material respects with the
governmental laws and regulations of the countries in which the shipments
originate and terminate, and are not prohibited by any such law and regulations
or any other Applicable Law. Each Borrower assumes all risk, liability and
responsibility for, and agrees to pay and discharge all present and future
local, state, federal or foreign taxes, duties, or levies in respect of the
Collateral and/or the applicable Documentary Letter of Credit. Any embargo,
restriction, laws, customs or regulations of any country, state, city or other
political subdivision where the Collateral is or may be located or wherein
payments are to be made or wherein drafts may be drawn, negotiated, accepted, or
paid shall be solely at Borrowers’ risk, liability and responsibility.

(p) Each Revolving Lender shall, to the extent of its Pro Rata Share of the
aggregate amount of all disbursements made with respect to the Letters of
Credit, be deemed to have irrevocably purchased an undivided participation in
each L/C Disbursement and each Advance made as a consequence of such
disbursement. If at the time a L/C Disbursement is made the unpaid balance of
Advances exceeds or would exceed, with the making of such L/C Disbursement, the
Facility Cap and if such L/C Disbursement is not reimbursed by Borrowers within
one Business Day, then Agent shall promptly notify each Revolving Lender, and
upon Agent’s demand each Revolving Lender shall pay to Agent such Revolving
Lender’s Pro Rata Share of such unreimbursed disbursement together with such
Revolving Lender’s Pro Rata Share of Agent’s unreimbursed costs and expenses
relating to such unreimbursed disbursement. Upon receipt by Agent of a repayment
from Borrowers of any amount disbursed by Agent for which Agent had already been
reimbursed by Revolving Lenders, Agent shall deliver to each Revolving Lender
that Revolving Lender’s Pro Rata Share of such repayment. Each Revolving
Lender’s participation commitment shall continue until the last to occur of any
of the following events: (i) L/C Issuer ceases to be obligated to issue or to
cause the issuance of Letters of Credit hereunder; (ii) no Letter of Credit
remains outstanding and uncancelled; or (iii) all Persons (other than Borrowers)
have been fully reimbursed for all payments made under or relating to all
Letters of Credit. The obligations of a Revolving Lender to make payments to
Agent for the account of Agent or the L/C Issuer with respect to a Letter of
Credit shall be irrevocable, without any qualification or exception whatsoever
and shall be made in accordance with the terms and conditions of this Agreement
under all circumstances; provided, however, that after paying in full its
reimbursement obligation hereunder, nothing herein shall adversely affect the
right of Borrowers or any Revolving Lender, as the case may be, to commence any
proceeding against such L/C Issuer for any wrongful disbursement made by such
L/C Issuer under a Letter of Credit as a result or solely to the extent of acts
or omissions constituting gross negligence or willful misconduct on the part of
such L/C Issuer;

(q) If by reason of (i) any change in any Applicable Law, or any change in the
interpretation or application thereof by any Governmental Authority, or
(ii) compliance by any Underlying Issuer, Agent or Revolving Lender with any
direction, request, or requirement (irrespective of whether having the force of
law) of any Governmental Authority or monetary authority including Regulation D
of the Federal Reserve Board as from time to time in effect (and any successor
thereto): (1) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued hereunder, or
(2) there shall be imposed on any Underlying Issuer, L/C Issuer, Revolving
Lender or Agent any other condition regarding any Letter of Credit issued
pursuant hereto; and the result of the foregoing is to increase, directly or
indirectly, the cost to any Underlying Issuer, L/C Issuer, Revolving Lender or
Agent of issuing, making, guaranteeing, or maintaining any Letter of Credit or
to reduce the amount receivable in respect thereof by any Underlying Issuer, L/C
Issuer, Revolving Lender or Agent, then, and in any such case, Agent may, at any
time within a reasonable period after the additional cost is incurred or the
amount received is reduced, notify Borrowers, and Borrowers shall pay on demand
such amounts as Agent may specify to be necessary to compensate Underlying
Issuer, L/C Issuer, Agent and Revolving Lenders for such additional cost or
reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the Applicable Rate for Advances. The
determination by Agent of any amount due as set forth in a certificate setting
forth the calculation thereof in reasonable detail, shall, in the absence of
manifest or demonstrable error, be final and conclusive and binding on all of
the parties hereto.

 

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(r) Each Borrower acknowledges and agrees that certain of the Documentary
Letters of Credit may provide for the presentation of time drafts to the
Underlying Issuer. If an Underlying Issuer accepts such a time draft that is
presented under and in accordance with an Underlying Letter of Credit, it is
acknowledged and agreed that (i) the Documentary Letter of Credit will require
the L/C Issuer to reimburse the Underlying Issuer for amounts paid on account of
such time draft on or after the maturity date thereof, (ii) the pricing
provisions hereof (including Section 3.4(a)) shall continue to apply, until
payment of such time draft on or after the maturity date thereof, as if the
Underlying Letter of Credit were still outstanding, and (iii) on the date on
which L/C Issuer makes payment to the Underlying Issuer of the amounts paid on
account of such time draft, Borrowers immediately shall reimburse such amount to
L/C Issuer and such amount shall constitute an L/C Disbursement hereunder.

(s) Immediately upon the issuance or amendment of any Standby Letter of Credit
or Documentary Letter of Credit, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased and received, without recourse or
warranty, an undivided interest and participation to the extent of such
Revolving Lender’s Pro Rata Share of the liability with respect to such Letter
of Credit and the obligations of Borrowers with respect thereto. Each Revolving
Lender shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the issuer of any such
Letter of Credit therefore and discharge when due, its Pro Rata Share of all of
such obligations arising under such Letter of Credit. Without limiting the scope
and nature of each Revolving Lender’s participation in any such Letter of
Credit, to the extent that the issuer has not been reimbursed or otherwise paid
as required hereunder or under any such Letter of Credit, each such Revolving
Lender shall pay to the issuer its Pro Rata Share of such unreimbursed drawing
or other amounts then due to issuer in connection therewith.

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BORROWER:

  FIBERNET OPERATIONS, INC.   By:  

 

  Name:  

 

  Title:  

 

 

c/o FiberNet Telecom Group, Inc.

570 Lexington Avenue

New York, New York 10022

      Attention:       Michael S. Hubner         Senior Vice President,
General Counsel   Telephone:       (212) 405-6206   FAX:       (646) 219-0556  
E-MAIL:       michael.hubner@ftgx.com BORROWER:   DEVNET L.L.C.   By:  

 

  Name:  

 

  Title:  

 

 

c/o FiberNet Telecom Group, Inc.

570 Lexington Avenue

New York, New York 10022

      Attention:       Michael S. Hubner         Senior Vice President,
General Counsel   Telephone:       (212) 405-6206   FAX:       (646) 219-0556  
E-MAIL:       michael.hubner@ftgx.com AGENT AND A LENDER:   CAPITALSOURCE
FINANCE LLC   By:  

 

  Name:  

 

  Title:  

 

 

4445 Willard Avenue, 12th Floor

Chevy Chase, Maryland 20815

  Attention:       Corporate Finance, Portfolio Manager   Telephone:       (301)
841-2700   FAX:       (301) 841-2813   E-MAIL:       jrancilio@capitalsource.com

 

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SCHEDULE A

Lenders/Commitments

 

Revolving Lenders

   Revolving Commitment CapitalSource Finance LLC    $ 6,000,000

4445 Willard Avenue, 12th Floor

  

Chevy Chase, Maryland 20815

  

Attention:

 

Corporate Finance Group, Portfolio Manager

  

Telephone:

 

(301) 841-2700

  

FAX:

 

(301) 841-2313

  

E-Mail:

 

jrancilio@capitalsource.com

  

Wire Instructions:

  

Bank:

 

Bank of America, N.A.

  

Account:

 

003939396662

  

ABA:

 

026009593

  

Account Name:

 

CapitalSource Funding LLC—CFG

  

Reference:

 

FiberNet

           

Total:

   $ 6,000,000         

Term A Lenders

   Term A Loan Commitment CapitalSource Finance LLC    $ 14,000,000

4445 Willard Avenue, 12th Floor

  

Chevy Chase, Maryland 20815

  

Attention:

 

Corporate Finance Group, Portfolio Manager

  

Telephone:

 

(301) 841-2700

  

FAX:

 

(301) 841-2313

  

E-Mail:

 

jrancilio@capitalsource.com

  

Wire Instructions:

  

Bank:

 

Bank of America, N.A.

  

Account:

 

003939396662

  

ABA:

 

026009593

  

Account Name:

 

CapitalSource Funding LLC—CFG

  

Reference:

 

FiberNet

           

Total:

   $           

Term B Lenders

   Term B Loan Commitment

CapitalSource Finance LLC

   $ 5,000,000

4445 Willard Avenue, 12th Floor

  

Chevy Chase, Maryland 20815

  

Attention:

 

Corporate Finance Group, Portfolio Manager

  

Telephone:

 

(301) 841-2700

  

FAX:

 

(301) 841-2313

  

E-Mail:

 

jrancilio@capitalsource.com

  

 

Schedule A – Lenders/Commitments

Page 1 of 2

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Wire Instructions:

  

Bank:

 

Bank of America, N.A.

  

Account:

 

003939396662

  

ABA:

 

026009593

  

Account Name:

 

CapitalSource Funding LLC—CFG

  

Reference:

 

FiberNet

           

Total:

   $ 5,000,000         

Total:

   $ 25,000,000         

 

Schedule A – Lenders/Commitments

Page 2 of 2