Exhibit 10.25


[Company Logo]


Cogent Communications


1015 31st Street, NW 
Suite 330


Washington,
DC  20007


Tel:   202-295-4201


Confidential Fax:  
202-342-8269


May 17, 2004


Mr. Jeffrey S. Karnes


47172 Sky Lane


Potomac Falls, Va. 20165


Dear Jeff:


Cogent Communications
is offering you the position of Vice President, Retail Sales. Your monthly
starting salary will be $14,583.33 the equivalent of $175,000 if calculated
annually and $50,000 payable as a commission based upon monthly performance
targets set by the CEO. Your commission, if any, will be paid 32 days following
the end of each quarter. Your initial performance targets will be deemed met
until July 31, 2004. This position is an “exempt” position and will not be
eligible for overtime compensation. You will be an employee at will and may be
discharged at any time without cause. 
Base salary will be paid semi-monthly.


In addition to the
cash compensation you receive, Cogent will grant to you 500 shares of Series H
Preferred Stock which is convertible at the rate of 769 shares of common to one
share of preferred or 384,500 shares of common stock. Twenty-five percent (25%)
of these shares will vest after one year of service and the remainder will vest
monthly over the next three (3) years so that you will be fully vested after
four (4) years of employment.  In order
to receive these shares you must sign Cogent’s standard Restricted Stock
Agreement at the time of your employment. The award of these shares is subject
to approval by the board of directors.


In the event of
Constructive Termination Without Cause, you will be eligible for the benefits
contained in the Severance Agreement attached to this letter.


As a member of
Cogent’s team, you will be entitled to health care and dental coverage, which
is partially (50%) funded by the company. 
The company will also offer a funded life insurance plan.  The company has also implemented a 401(k)
retirement plan that is corporately administered, however, it requires
individual contributions on a non-matching basis by individual
participants.  You will be eligible for 3
weeks paid vacation annually. Additionally, the company has 6 fixed major
holidays and 3 discretionary floating holidays to be chosen by you. These
benefits may be modified by Cogent at any time.











Your employment
date will be on or before June 1, 2004 or at a mutually agreed to date between
yourself and the company.  Also, as a
condition of employment, you will be required to sign Cogent’s standard
agreement providing for invention disclosure and assignment, limitation of your
right to compete with Cogent if you leave, and non-disclosure of confidential
information. Your employment is also contingent upon completing the Form I-9
(Employment Eligibility Verification) and providing the required documentation
establishing your legal right to work in the U. S. on your first day of
employment. Please note that by law, the I-9 requirement must be met before you
can begin work.


We
look forward to having you join our team and build the most advanced next
generation network for high-speed Internet services.  If you have any further questions, please
give me a call at 202-295-4201.


Sincerely,


/s/ David
Schaeffer


Dave Schaeffer


CEO


Accepted


	
  /s/ Jeffrey S. Karnes

  	
   

  	
  5/17/04

  	
   

  	
   

  
	
  Jeffrey S.
  Karnes

  	
   

  	
  Date

  	
   

  	
   

  



 















Severance
Agreement


1.     This agreement is entered into by Cogent
Communications, Inc. (“Cogent”) and the executive employee signing this
Agreement, below (“Executive”).


2.     As an inducement for Executive to focus his
or her full efforts on Cogent’s business without undue concern for future
employment the Compensation Committee of the Cogent Board of Directors has
approved the following minimum severance provisions for Executive.  This severance is not intended to reduce any
severance arrangement provided for in Executive’s offer letter or other
agreement.  In any case in which such
offer letter or other agreement provides a greater severance compensation with
respect to cash payment or continuation of benefits Executive shall receive the
greater cash payment or benefit.


3.     If Executive is terminated other than for
Cause (as defined below) or Executive terminates his or her employment for Good
Reason (as defined below), Executive shall continue to receive his or her
salary (reduced by all mandatory withholdings for taxes or other governmentally
required payments such as garnishments) for 3 months following the date of
termination, i.e. Executive shall be paid through the 91st day following the date of termination.  If such termination follows the 5th anniversary of Executives employment by Cogent
then such payment shall be increased to 6 months salary, i.e. executive will be
paid through the 182nd day following the date of termination.  However, if the termination follows a Change
of Control (as defined below) such payment shall be made as a lump sum within 5
days of termination. Salary means Executive’s salary before voluntary
withholdings and reductions (such as those for parking, 401(k) plan, medical,
dental, and life insurance) and before mandatory withholdings for taxes and
other governmentally required payments such as garnishments.  At the election of Executive, the employee
share of the cost of benefits (provided in paragraph 4) may be paid through a
salary reduction agreement (in order to make such payments with pre-tax
income).  If the amount payable under
this paragraph is less than the amount payable under Executive’s offer letter
or other agreement no payment shall be made under this paragraph and Executive
shall instead receive the payment provided for in the offer letter or other
agreement.


4.     If Executive is terminated other than for
Cause or Executive terminates his or her employment for Good Reason, Executive
shall continue to receive through the last day of the sixth month following the
month in which termination occurs health insurance, dental insurance, life
insurance (to the extent paid by the company), and long term disability
insurance.  Cogent shall pay the company
share of such benefits and Executive shall pay the employee share, e.g. the
employee portion of the premium for health and dental insurance.  The employee share and company share shall be
the same as currently applicable to the benefits at the time of
termination.  If the value of the benefit
under this paragraph is less than the benefit under Executive’s offer letter or
other agreement no benefit shall be provided under this paragraph and Executive
shall instead receive the benefit provided for in the offer letter or other
agreement.


5.     If Executive is terminated other than for
Cause in conjunction with or within 90 days following a Change of Control,
Executive shall on the date of notification of such termination become fully
vested in any restricted stock, options, or other similar incentive plan
involving vesting.


6.     For purposes of this agreement, Cogent
shall have “Cause” to terminate the Executive’s employment hereunder (i) upon
the Executive’s conviction for the commission of an act or acts constituting a
felony under the laws of the United States or any state thereof, or (ii) upon
the Executive’s willful and continued failure to substantially perform his or
her duties hereunder (other than any such failure resulting from the Executive’s
incapacity due to physical or mental illness), after written notice has been
delivered to the Executive by Cogent, which notice specifically identifies the
manner in which the Executive has not substantially performed his duties, and
the Executive’s failure to substantially perform his duties is not cured within
ten (10) business days after notice of such failure has been given to the
Executive. No act or failure to act on the Executive’s part shall be deemed “willful”
unless done or omitted to be done, by the Executive not in good faith and
without reasonable belief that the Executive’s act, or failure to act, was in
the best interest of Cogent.











7.     “Good Reason” shall mean the occurrence
(without the Executive’s express written consent) of any one of the following:


a.               the assignment to Executive of duties inconsistent with the
Executive’s status as a senior executive officer of the Company or a
substantial adverse alteration in the nature or status of the Executive’s
responsibilities; or


b.              if Executive is an attorney, resignation required by any
applicable law, regulation, rule, or code of professional responsibility; or


c.               a reduction in Executive’s salary; or


d.              relocation of Executive’s principal place of employment outside of
the Washington, DC area.


8.      “Change of Control” shall mean any of
the following: (i) a consolidation, merger or reorganization of Cogent
Communications Group, Inc. with or into any other corporation or corporations
in which the stockholders of Cogent Communications Group, Inc. immediately
before such event shall own fifty percent (50%) or less (calculated on an as
converted basis, fully diluted) of the voting securities of the surviving
corporation; (ii) a transaction or series of related transactions, other than
an underwritten public offering, in which at least fifty percent (50%) of
Cogent Communications Group, Inc.’s voting power is transferred; (iii) the
sale, transfer or lease of all or substantially all of the assets of Cogent
Communications Group, Inc.; (iv) the acquisition of shares of capital stock of
Cogent Communications Group, Inc. (whether through a direct issuance by Cogent
Communications Group, Inc., negotiated stock purchase, a tender for such
shares, merger, consolidation or otherwise) by any party or group that did not
beneficially own a majority of the voting power of the outstanding shares of
capital stock of Cogent Communications Group, Inc. immediately prior to such
purchase, the effect of which is that such party or group beneficially owns at
least a majority of such voting power immediately after such event; or (v) the
consummation by Cogent Communications Group, Inc. of a plan of complete
liquidation of Cogent Communications Group, Inc..


9.     Executive’s continued employment shall not
constitute consent to, or a waiver of rights with respect to any act or failure
to act constituting Good Reason hereunder. Notwithstanding the foregoing, a
termination shall not be treated as a Termination for Good Reason if the
Executive shall have consented in writing to the occurrence of the event giving
rise to the claim of Termination for Good Reason.


10.   Executive shall be entitled to the
indemnification set forth in the certificate of organization of any entity for
which he or she performs services to the maximum extent permitted by law.  Executive shall also be entitled to the protection
of any insurance policies Cogent may elect to maintain generally for the
benefit of its directors and officers.


11.   Executive agrees that he or she remains an
employee at will whose employment may be terminated at any time with or without
cause.


12.   Cogent agrees that Executive is giving
consideration for this agreement by accepting employment with Cogent.


 


	
  Accepted and agreed to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cogent
  Communications, Inc.

  	
   

  	
  Executive

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Date: