Exhibit 10.11


	
  

 
	
 Greystone Business Credit II, L.L.C.

 
	


 


Loan and Security Agreement 

          This
Loan and Security Agreement (as it may be amended, this  “Agreement”) is entered into
on October 12, 2007 between GREYSTONE BUSINESS CREDIT II, L.L.C.  (“Lender”), having an
address at 152 West 57th Street, 60th Floor, New York, New York 10019 and WILMINGTON TRUST COMPANY AND GEORGE JEFF MENNEN AS
CO-TRUSTEES U/A/D NOVEMBER 25, 1970, AS AMENDED FOR THE BENEFIT OF JOHN HENRY MENNEN
(the  “Mennen Trust”), and WAVE2WAVE COMMUNICATIONS,
INC., a Delaware corporation  (“Wave2Wave” and
collectively with the Mennen Trust; each a  “Borrower” and
collectively, the  “Borrowers”). The Schedules
to this Agreement are an integral part of this Agreement and are incorporated
herein by reference. Terms used, but not defined elsewhere, in this Agreement
are defined in Schedule B.


1. LOANS.


          1.1 Term
Loan. Subject to the
terms and conditions contained in this Agreement, Lender will make on the date
of this Agreement an advance to Borrowers computed with respect to the value of
all Eligible Securities owned by the Mennen Trust on the date of this Agreement
(the
 “Advance”) in the principal amount, if any, set forth
in Section 2(a) of Schedule A. The Advance is referred to as a  “Term Loan Advance” and the  “Term Loan” and
will be wired to Borrowers’ Bank set forth in Section 16 of Schedule A or as
directed by Borrowers pursuant to the terms of the authorization to pay
proceeds dated as of the date
hereof. The Term Loan will be evidenced by a term note in the form attached
hereto as Exhibit A.


          1.2
Repayment.  Principal of the Term Loan shall be repaid as set forth
in Section 2(c) of Schedule A. Notwithstanding the foregoing, Lender may, in
its sole and absolute discretion, make or permit the Term Loan or any other
monetary Obligations to be in excess of any of the Loan Limits; provided, that Borrowers shall, upon Lender’s demand,
pay to Lender such amounts as shall cause Borrowers to be in full compliance
with all of the Loan Limits. All unpaid monetary Obligations shall be payable
in full on the Maturity Date or, if earlier, the date of any early termination
pursuant to Section 7.2.


2. INTEREST’ AND FEES.


          2.1
Interest. All Loans
and other monetary Obligations shall bear interest at the Interest Rate set
forth in Section 3 of Schedule A, except where expressly set forth to the contrary
in this Agreement or another Loan Document; provided, that (i) after
the occurrence of an Event of Default, all Loans and other monetary Obligations shall, at Lender’s option, bear
interest at a rate per annum equal to two percent (2%) in excess
of the rate otherwise applicable thereto (the  “Default Rate”) until paid in
full (notwithstanding the entry of any











	
  

 	
  

 
	
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judgment
against any
Borrower or the exercise of any other right or remedy by Lender), and all such
interest shall be payable on demand and (ii) after the occurrence of an Event
of Default under either of clauses (vii) or (viii) of Section 8, the increase
described in the foregoing clause (i) shall occur automatically and shall
continue until all Loans and other monetary Obligations are paid in full.
Changes in the Interest Rate shall be effective as of the date of any change in
the Prime Rate. Notwithstanding anything to the contrary contained in this
Agreement, the aggregate of all amounts deemed to be interest hereunder and
charged or collected by Lender is not intended to exceed the highest rate
permissible under any applicable law, but if it should, such interest shall
automatically be reduced to the extent necessary to comply with applicable law
and Lender will refund to Borrowers any such excess interest received by
Lender.


          2.2 Fees. Borrowers shall pay Lender the following fees, which are in addition to all interest and other sums payable by
Borrowers to Lender under this Agreement, and are not refundable:


                    (a)
Closing Fee. A closing fee (the  “Closing Fee”) in the amount set forth in Section 6(a) of
Schedule A, which shall be deemed to be fully earned as of, and payable on, the
date hereof.


                    (b)
Servicing Fee. A monthly servicing
fee (the  “Servicing Fee”) in the amount
set forth in Section 6(c) of Schedule A, in consideration of Lender’s
administration and other services pursuant to this Agreement for each month (or
part thereat), which shall be fully earned as of, and payable in advance on,
the date hereof and on the first day of each month thereafter so long as any of
the Obligations are outstanding.


                    (c)
Minimum Borrowing Fee. A minimum borrowing
fee (the  “Minimum Borrowing Fee”) equal to the
excess, if any, of (i) interest which would have been payable in respect of any
applicable interest period it at all times during such period, the principal
balance of the Loans were equal to the Minimum Loan Amount over (ii) the actual
interest payable in respect of such
period, which fee shall be fully earned as of the last day of such period and
payable on the date set forth in Section 2.4 with respect to such period and on
the Maturity Date.


                    (d)
Monitoring Fees. (i) A one time set-up fee
for electronic collateral monitoring in the amount set forth in Section 6(e)(i)
of Schedule A, which shall be deemed to be fully earned as of, and payable on,
the date hereof and (ii) a monthly fee for electronic collateral monitoring in
the amount set forth in Section 6(e)(ii) of Schedule A, which shall be fully
earned as of, and payable in advance on, the date hereof, and on the first day
of each month thereafter so long as any of the Obligations are outstanding


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          2.3 Computation of Interest and Fees. All interest and fees shall be calculated daily on the closing
balances in the Loan Account based on the actual number of days elapsed in a
year of 360 days.


          2.4 Loan
Account; Monthly Accountings. Lender shall maintain a loan account for Borrowers reflecting all
advances, charges, expenses and payments made pursuant to this Agreement (the  “Loan Account”), and shall provide Borrower Representative
with a monthly accounting reflecting the activity in the Loan Account. Each
accounting shall be deemed correct, accurate and binding on Borrowers and an
account stated. (except for reverses and reapplication of payments made and
corrections of errors discovered by Lender), unless Borrower Representative
notifies Lender in writing to the contrary within sixty days after such account
is rendered, describing the nature of any alleged errors or omissions. However,
Lender’s failure to maintain the Loan Account or to provide any such accounting
shall not affect the legality or binding nature of any of the Obligations. With
respect to each calendar month end, Lender shall provide Borrower
Representative with a statement of interest, fees and any other Obligations
then payable, which amount Borrowers shall pay within five (5) Business Days of
receipt of such statement.


3. SECURITY INTEREST.


          3.1 Grant of Security Interest.


                    (a)
To secure the full payment and performance of all of the Obligations, the
Mennen Trust hereby assigns to Lender and grants to Lender a continuing
security interest in the following property of the Mennen Trust, whether
tangible or intangible, now or hereafter owned, existing, acquired or arising
and wherever now or hereafter located, and whether or not eligible for lending
purposes: (i) the Securities Accounts, (ii) all Investment Property, deposit
accounts, Money, cash and other property in the Securities Accounts; (ii) all
Capital. Stock of Wave2Wave owned by the Mennen Trust; and (iii) all additions
and accessions to, substitutions for, and replacements, products and Proceeds
of the foregoing property, and all of the Mennen Trust’s books and records
relating to any of the foregoing.


                    (b)
To secure the full payment and performance of all of the Obligations, Wave2Wave
hereby assigns to Lender and grants to Lender a continuing security interest in
the following property of Wave2Wave, whether tangible or intangible, now or
hereafter owned, existing, acquired or arising and wherever now or hereafter
located, and whether or not eligible for lending purposes: (i) all Accounts and
all Goods whose sale, lease or other disposition by Wave2Wave has given rise to
Accounts and have been returned to, or repossessed or stopped in transit by,
Wave2Wave; (ii) all Chattel Paper, Instruments, Documents and General Intangibles
(including all patents, patent applications, trademarks, trademark
applications, trade names, trade secrets, goodwill, copyrights, copyright
applications, registrations, licenses, software, franchises, customer lists,
tax refund claims, claims against carriers and shippers, guarantee claims,
contracts rights, payment intangibles,


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security interests, security deposits and rights
to indemnification); (iii) all Inventory; (iv) all Goods (other than
Inventory), including Equipment, vehicles and Fixtures; (v) all Investment
Property; (vi) all Deposit Accounts, bank accounts, deposits, Money and cash;
(vii) all Letter-of-Credit Rights; (viii) all Commercial Tort Claims listed in
Section 14 of Schedule A; (ix) all Supporting Obligations; (x) any other
property of Wave2Wave now or hereafter in the possession, custody or control of
Lender or any agent or any parent, Affiliate or Subsidiary of Lender or any
participant with Lender in the Loans, for any purpose (whether for safekeeping,
deposit, collection, custody, pledge, transmission or otherwise) and (xi) all
additions and accessions to, substitutions for, and replacements, products and
Proceeds of the foregoing property, including proceeds of all insurance
policies insuring the foregoing property, and all of Wave2Wave’s books and
records relating to any of the foregoing and to Wave2Wave’s business.
Notwithstanding anything to the contrary in this Section 3.1(b), the types or
items of Collateral of Wave2Wave shall not include (i) any rights or interest
in any contract, license, or license agreement that is now or hereafter held by
Wave2Wave but only to the extent that such item contains
a term or is subject to a rule of law, statute or regulation that restricts,
prohibits, or requires a consent (that has not been obtained) of a Person
(other than an Obligor) to, the creation, attachment or perfection of the
security interest granted herein, and any such restriction, prohibition and/or
requirement of consent is effective and enforceable under applicable law and is
not rendered ineffective by applicable law (including, without limitation,
pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC) (provided,
however, that (A) the provisions of this clause (i) shall not
include, any Proceeds of any such item and (B) any such item that at any time
ceases to satisfy the criteria of this clause (i) (whether as a result of
obtaining any necessary consent, any change in any rule of law, statute or
regulation, or otherwise), shall be Collateral hereunder), and (ii) any
equipment or other property now existing or hereafter acquired in accordance
with clause (i) of the definition of Permitted Liens in this Agreement and
which is subject to a lease or other financing arrangement, the terms of which
prohibit the granting of a lien or security interest in such property. By way
of clarification, Collateral shall not include Capital Stock of RNK until the
receipt of the final Regulatory Approval.


          3.2 Possessory Collateral. Promptly upon
any Borrower’s receipt of any portion of the Collateral evidenced by an
agreement, Instrument or Document, including any Tangible Chattel Paper and any
Investment Property consisting of certificated securities, such Borrower shall
deliver the original thereof to Lender together with an appropriate endorsement
or other specific evidence of assignment thereof to Lender (in form and
substance acceptable to Lender). If an endorsement or assignment of any such
items shall not be made for any reason, Lender is hereby irrevocably
authorized, as such Borrower’s attorney and agent-in-fact, to endorse or assign
the same on such Borrower’s behalf.


          3.3
Preservation of Collateral and Perfection of Security Interest Therein. Each Borrower shall, at Lender’s
request, at any time and from time to time, authenticate, execute and deliver
to Lender such financing statements, documents and other agreements


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and instruments (and pay the cost of filing or
recording the same in all public offices deemed necessary or desirable by
Lender) and do such other acts and things or cause third parties to do such
other acts and things as Lender may deem necessary or desirable in its sole and
absolute discretion in order to establish and maintain a valid, attached and
perfected security interest in the Collateral in. favor of Lender (free and
clear of all other liens, claims, encumbrances and rights of third parties
whatsoever, whether voluntarily or involuntarily created, except Permitted
Liens) to secure payment of the Obligations and to facilitate the collection of
the Collateral. Each Borrower authorizes Lender to file, transmit, or
communicate, as applicable, financing statements and amendments describing the
Collateral (including, with respect to Wave2Wave, as “all personal property of
debtor” or “all assets of debtor” or words of similar effect), in order to
perfect Lender’s security interest in the Collateral without such Borrower’s
signature. Each Borrower also hereby ratifies its authorization for Lender to
have filed in any jurisdiction any financing statements filed prior to the date
hereof.


          3.4
Supplement
to Portfolio. In the
event that the aggregate marked to market value of Eligible Securities in the
Securities Accounts is on any date of determination less than the lesser of (a)
$37,777,000 and (b) 111.11% of the then outstanding principal balance of the
Obligations, the Borrowers shall within, one (1) Business Day, deposit
Securities in the Securities Accounts such that the aggregate value of
Securities in the Securities Accounts exceeds the lesser of (a) $40,000,000 and
(b) 117.65% of the then outstanding principal balance of the Obligations
immediately after giving effect to such deposit..


4. ADMINISTRATION.


          4.1
[Intentionally Omitted]


          4.2
Remittance of Proceeds. All
Proceeds arising from the sale or other disposition of any Collateral (other
than the provision of services in the ordinary course of business, or the sale
of inventory in the ordinary course of business or Proceeds of Investment
Property that remain on deposit in the Securities Accounts) shall be delivered,
in kind, by each Borrower to Lender in the original form in which received by
such Borrower not later than the following Business Day after receipt by such
Borrower. Until so delivered to Lender, each Borrower shall hold such Proceeds
separate and apart from such Borrower’s other funds and property in an express
trust for Lender. Nothing in this Section 4.2 shall limit the restrictions on
disposition of Collateral set forth elsewhere in this Agreement.


          4.3
Application of Payments. Lender may, in its sole and absolute discretion,
apply, reverse and re-apply all cash and non-cash Proceeds of Collateral or
other payments received with respect to the Obligations, in such order and
manner as Lender shall determine, whether or not the Obligations are due, and
whether before or after the occurrence of a Default or an Event of Default.


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          4.4 Notification; Verification. Lender or its designee may, from time to time, whether or not a Default or Event of
Default has occurred: (i) verify directly with the Account Debtors of Wave2Wave
the validity, amount and other matters relating to the Accounts and Chattel
Paper, by means of mail, telephone or otherwise, either in the name of
Wave2Wave or Lender or such other name as Lender may choose; (ii) notify
Account Debtors that Lender has a security interest in the Accounts and that
payment thereof is to be made directly to Lender; and (iii) demand, collect or
enforce payment of any Accounts and Chattel Paper (but without any duty to do
so). If no Default or Event of Default has occurred, Lender shall provide
Borrower Representative with prompt written notice of any such verification,
notification or demand.


          4.5 Power of Attorney. Each Borrower hereby
grants to Lender an irrevocable power of attorney, coupled with an interest,
authorizing and permitting Lender (acting through any of its officers,
employees, attorneys or agents), at any time (whether or not a Default or Event
of Default has occurred and is continuing, except as expressly provided below),
at Lender’s option, but without obligation, with or without notice to such
Borrower, and at such Borrower’s expense, to do any or all of the following, in
such Borrower’s name or otherwise: (i) execute on behalf of any Borrower any
documents that Lender may, in its sole and absolute discretion, deem advisable
in order to perfect and maintain Lender’s security interests in the Collateral,
to exercise a right of any Borrower or Lender, or to fully consummate all the
transactions contemplated by this Agreement and the other Loan Documents
(including such financing statements and continuation financing statements, and
amendments thereto, as Lender shall deem necessary or appropriate) and to file
as a financing statement any copy of this Agreement or any financing statement
signed by any Borrower; (ii) execute on behalf of any Borrower any
document exercising, transferring or assigning any option to purchase, sell or
otherwise dispose of or lease (as lessor or lessee) any real or personal
property which is part of the Collateral or in which Lender has an interest; (iii)
execute on behalf of Wave2Wave any invoices relating to any Accounts, any draft against
any Account Debtor, any proof of claim in bankruptcy, any notice of Lien or
claim, and any assignment or satisfaction of mechanic’s, materialman’s or other
Lien; (iv) execute on behalf of Wave2Wave any notice, to any Account Debtor;
(v) receive and otherwise take control’ in any mariner of any cash or non-cash
items of payment or Proceeds of Collateral; (vi) after the occurrence of a
Default or Event of Default, endorse any Borrower’s name on all checks and
other forms of remittances received by Lender; (vii) pay, contest or settle any
Lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any. action to
terminate or discharge the same; (viii) after the occurrence of a Default or
Event of Default, grant extensions of time to pay, compromise claims relating
to, and settle Accounts, Chattel Paper and General Intangibles for less than
face value and execute all releases and other documents in connection
therewith; (ix) pay any sums required on account of any Borrower’s taxes or to
secure the release of any Liens therefor; (x) pay any amounts necessary to
obtain, or maintain in effect,
any of the insurance described in Section 5.14; (xi) settle and adjust, and
give


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releases
of, any insurance claim that relates to any of the Collateral and obtain
payment therefor; (xii) instruct any third party having custody or control of
any Collateral or books or records belonging to, or relating to, any Borrower
to give Lender the same rights of access and other rights with respect thereto
as Lender has under this Agreement; (xiii) after the occurrence of a Default or
Event of Default, change the address for delivery of any Borrower’s mail and
receive and open all mail addressed to any Borrower, and (xiv) endorse or
assign to Lender on any Borrower’s behalf any portion of Collateral evidenced
by an agreement, Instrument or Document if an endorsement or assignment of any
such items is not made by such Borrower pursuant to Section 3.2. Any and all
sums paid, and any and all costs, expenses, liabilities, obligations and
reasonable attorneys’ fees incurred, by Lender with respect to the foregoing
shall be added to and become part of the Obligations, shall be payable on
demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations. Each Borrower agrees that Lender’s rights
under the foregoing power of attorney or any of Lender’s other rights under
this Agreement or the other Loan Documents shall not be construed to indicate
that Lender is in control of the business, management or properties of any
Borrower.


          4.6 Disputes. Wave2Wave shall
promptly notify Lender of all disputes or claims in excess of $50,000 relating to
Accounts and Chattel Paper of Wave2Wave. Wave2Wave will not, without Lender’s
prior written consent, compromise or settle any Account or Chattel Paper for
less than the full amount thereof, grant any extension of time of payment of
any Account or Chattel Paper, release (in whole or in part) any Account Debtor
or other person liable for the payment of any Account or Chattel Paper or grant
any credits, discounts, allowances, deductions, return authorizations or the
like with respect to any Account or Chattel Paper; except that prior to the
occurrence of an Event of Default, Wave2Wave may take any of such actions in
the ordinary course of its business, provided that Wave2Wave
promptly reports the same to Lender.


          4.7 Invoices. At Lender’s request,
Wave2Wave will cause all invoices and statements which it sends to Account
Debtors or other third parties to be marked, in a manner satisfactory to
Lender, to reflect Lender’s security interest therein.


          4.8 Inventory.


                    (a)
Returns. Provided that no Event of
Default has occurred and is continuing, if any Account Debtor returns any
Inventory to Wave2Wave in the ordinary course of its business, Wave2Wave will
promptly determine the reason for such return and promptly issue a credit
memorandum to the Account Debtor in the appropriate amount (sending a copy to
Lender). After the occurrence of an Event of Default, Wave2Wave will not accept
any return without Lender’s prior written consent. Upon Lender’s demand,
‘regardless of whether an Event of Default has occurred, Wave2Wave will (i)
hold the returned Inventory in trust for Lender; (ii) segregate all returned
Inventory from all of Wave2Wave’s other property; (iii) conspicuously label the
returned Inventory as Lender’s


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property; and (iv) immediately notify Lender of
the return of such Inventory, specifying the reason for such return, the
location and the condition of the returned Inventory and, at Lender’s request,
deliver such returned Inventory to Lender at an address specified by Lender.


                    (b)
Other Covenants. Wave2Wave will
not, without Lender’s prior written consent, (i) store any Inventory with any
warehouseman or other third party other than as set forth in Section 9(d) of
Schedule A or (ii) sell any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis. All of the Inventory has been produced
only in accordance with the Fair Labor Standards Act of 1938 and all rules,
regulations and orders promulgated thereunder.


          4.9 Access to Collateral, Books and Records.
At reasonable times, and on one Business Day’s notice prior to the occurrence
of a Default or an Event of Default and at any time and with or without notice
after the occurrence of a Default or an Event of Default, Lender or its agents
shall have the right to inspect the Collateral, and the right to examine and
copy any Borrower’s books and records. Lender shall take reasonable steps to
keep confidential all information obtained in any such inspection or
examination, but Lender shall have the. right to disclose any such information
to its auditors, regulatory agencies, attorneys, participants, agents,
shareholders, directors, partners, managers, affiliates and financing sources,
and pursuant to any subpoena or other legal process. Each Borrower agrees to
give Lender access to any or all of any Borrower’s premises to enable Lender to
conduct such inspections and examinations. Such inspections and examinations
shall be at Borrowers’ expense and the charge therefor shall be $1,000 per
person per day (or such higher amount as shall represent Lender’s then current
standard charge), plus reasonable out-of-pocket expenses. Lender may, at
Borrower& expense, use any Borrower’s personnel, computer and other
equipment, programs, printed output and computer readable media, supplies and
premises for the collection, sale or other disposition of Collateral to the
extent Lender, in its sole and absolute discretion, deems appropriate. Each
Borrower hereby irrevocably authorizes all accountants and third parties to
disclose and deliver to Lender following Lender’s written request therefore
which shall also be sent to Borrowers, at Borrowers’ expense, all financial
information, books and records, work papers, management reports and other
information in their possession regarding such Borrower. Wave2Wave will not
enter into any agreement with any accounting firm, service bureau or third,
party to store such Borrower’s books or records at any location other than
Borrowers’ Address without first obtaining Lender’s written consent (which
consent may be conditioned upon such accounting firm, service bureau or other
third party agreeing to give Lender the same rights with respect to access to books
and records and related rights as Lender has under this Agreement).


5. REPRESENTATIONS, WARRANTIES AND COVENANTS.


          To
induce Lender to enter into this Agreement, each Borrower represents, warrants
and covenants as follows, after giving effect to the Related Transactions (it
being


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understood that (i) each such representation and
warranty will be deemed remade as of the date on which each Loan is made and
shall not be affected by any knowledge of, or any investigation by, Lender, and
(ii) the accuracy of each such representation, warranty and covenant will be a
condition to each Loan):


          5.1 Existence and
Authority. The Mennen Trust
is, and at all times will be, duly organized and validly existing under the
laws of the State of Delaware and Wave2Wave is, and at all times will be, duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each Borrower is, and at all times will be, qualified and licensed to
do business in all jurisdictions in which any failure to do so would have a
material adverse effect on such Borrower. The execution, delivery and
performance by each Borrower of this Agreement and, all of the other Loan Documents
have been duly and validly authorized, do not violate such Borrower’s articles
or certificate of incorporation, by-laws, trust or other organizational
documents, as applicable, or any law or any agreement or instrument or any
court order which is binding upon such Borrower or its property, do not
constitute grounds for acceleration of any indebtedness or obligation under any
agreement or instrument which is binding upon such Borrower or its property,
and do not require the consent of any Person. This Agreement and such other
Loan Documents have been duly executed and delivered by, and are enforceable
against, each Borrower, and all other Obligors who have signed them, in
accordance with their respective terms. Sections 9(g) and 9(h) of Schedule A set
forth the trustees and beneficiaries of the Mennen Trust and the ownership of
Wave2Wave and the names and ownership of each Borrower’s Subsidiaries as of the
date of this Agreement.


          5.2 Name; Trade Names and Styles. The name of each Borrower set forth
in the heading to this Agreement is its correct and complete legal name as of
the date hereof. Listed in Sections 9(a), 9(b) and 9(c) of Schedule A are all
prior names of each Borrower and all of Wave2Wave’s present and prior trade
names. Borrower shall give Lender at least thirty days’ prior written notice
before changing its name or doing business under any other name. Wave2Wave has
complied with all laws relating to the conduct of business under a fictitious
business name. Wave2Wave represents and warrants that (1) each trade name does
not refer to another corporation or other legal entity; and (ii) all Accounts
invoiced under any such trade names are owned exclusively by Wave2Wave and are
subject to the security interest of Lender and the other terms of this
Agreement.


          5.3 Title to Collateral; Permitted Liens. Each
Borrower has good and marketable title to its Collateral. The Collateral now is
and will at all times remain free and clear of any and all Liens, charges,
security interests, encumbrances and adverse claims, except for Permitted
Liens. Lender now has, and will continue to have, a first-priority perfected
and enforceable security interest in all of the Collateral, subject only to the
Permitted Liens, and each Borrower will at all times defend Lender and the
Collateral against all claims of others. None of the Collateral which is
Equipment with a value in excess of $500,000 is or will be affixed to any real
property in such a manner, or with such intent, as to become a fixture. Except
for leases or subleases for locations where the value of the Collateral exceeds


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$250,000 as to which Wave2Wave has delivered to
Lender a landlord’s waiver in form and substance satisfactory to Lender,
Wave2Wave is not a lessee or sublessee under any real property lease or
sublease pursuant to which the lessor or sublessor may obtain any rights in any
of the Collateral. Wave2Wave is not a lessee or sublessee under any real property
lease or sublease pursuant to which it has granted the lessor or sublessor a
contractual lien or security interest in any of the Collateral. Except for
warehouses as to which Wave2Wave has delivered to Lender a warehouseman’s
waiver in form and substance satisfactory to Lender, Wave2Wave is not a bailor
of any Goods at any warehouse under an arrangement pursuant to which the
warehouseman may obtain any rights in any of the Collateral. Prior to causing
or permitting any Collateral (other than Collateral which is located at an
Excluded Collateral Location) to be located upon premises in which any third
party has an interest (whether as owner, mortgagee, beneficiary under a deed of
trust, lienholder or otherwise), Wave2Wave shall, whenever the value of the
Collateral at such location exceeds $250,000 or otherwise reasonably requested
by Lender, cause each such third party to execute and deliver to Lender, in
form and substance acceptable to Lender, such waivers and subordination as-
Lender shall specify, so- as to ensure that Lender’s rights in the Collateral
are, and will continue to be, superior to the rights of any such third party.
Wave2Wave will keep in full force and effect except for expirations of leases
in the ordinary course of business, and will comply with all the material terms
of, any lease of real property where any of the Collateral now or in the future
may be located.


          5.4 Accounts and Chattel Paper. All
Accounts and Chattel Paper are genuine and in all respects what they purport to
be, arise out of a completed, bona fide and unconditional and non-contingent
sale and delivery of goods or rendition of services by Wave2Wave in the
ordinary course of its business and in accordance with the terms and conditions
of all purchase orders, contracts or other documented relating thereto, each
Account Debtor thereunder had the capacity to contract at the time any contract
or other document giving rise to such Accounts and Chattel Paper were executed,
and the transactions giving rise to such Accounts and Chattel Paper comply with
all applicable laws and governmental rules and regulations.


          5.5 Electronic Chattel Paper. To the extent that Wave2Wave obtains or maintains any Electronic Chattel Paper,
Wave2Wave shall create, store and assign the record or records comprising the-
Electronic Chattel Paper in such a manner that (i) a single authoritative copy
of the record or records exists which is unique, identifiable and except as
otherwise provided below, unalterable, (ii) the authoritative copy identifies
Lender as the assignee of the record or records, (iii) the authoritative copy
is communicated to and maintained by the Lender or its designated custodian,
(iv) copies or revisions that add or change an identified assignee of the
authoritative copy can only be made with the participation of Lender, (v) each
copy of the authoritative copy and any copy of a copy is readily identifiable
as a copy that is
not the authoritative copy and (vi) any revision of the authoritative copy is
readily identifiable as an authorized or unauthorized revision.


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          5.6 Investment Property. Each Borrower will take any and all actions required or reasonably requested by Lender, from time to
time, to (i) cause Lender to obtain exclusive control of (x) any Investment
Property of Wave2Wave and (y) any Investment Property of the Mennen Trust in
the Securities Account, in each case in a manner acceptable to Lender and (ii)
obtain from any issuers of such Investment Property and such other Persons as
Lender shall specify, for the benefit of Lender, written confirmation of
Lender’s exclusive control over such Investment Property and take such other
actions as Lender may reasonably request to perfect Lender’s security interest
in such Investment Property. For purposes of this Section 5.6, Lender shall
have exclusive control of such Investment Property if (A) pursuant to Section
3.2, such Investment Property consists of certificated securities and the
applicable Borrower delivers such certificated securities to Lender (with
appropriate endorsements if such certificated securities are in registered
form); (B) such Investment Property consists of uncertificated securities and
either (x) the applicable Borrower delivers such uncertificated securities to
Lender or (y) the issuer thereof agrees, pursuant to documentation in form and
substance satisfactory to Lender, that it will comply with instructions
originated by Lender without further consent by any Borrower, and (C) such
Investment Property consists of security entitlements and either (x) Lender
becomes the entitlement holder thereof or (y) the appropriate securities
intermediary agrees, pursuant to documentation in form and substance satisfactory
to Lender, that it will comply with entitlement order’s originated by Lender
without further consent by any Borrower.


          5.7 Commercial Tort Claims. Wave2Wave has
no Commercial Tort Claims spending other than those listed in Section 14 of
Schedule A, and Wave2Wave shall promptly notify Lender in writing upon
incurring or otherwise obtaining a Commercial Tort Claim after the date hereof
against any third party. Such notice shall constitute Wave2Wave’s authorization
to amend such Section 14 to add such Commercial Tort Claim.


          5.8 State of Organization; Location of Collateral.
Borrowers’ Address is Wave2Wave’s chief executive office and the location of
its books and records. The location of the Mennen Trust’s books and records is
set forth on Section 9(d) of Schedule A. Wave2Wave has places of business and
Collateral located only at the locations set forth on Section 9(e) of Schedule
A (other than Collateral that is located at an Excluded Collateral
Location). Each Borrower will give Lender at least thirty days’ prior written
notice before changing any Borrower’s state of organization, opening any
additional place of business, changing its chief executive office or the
location of its books and records, or moving any of the Collateral (other than
Collateral that is located at an than Excluded Collateral Location) to a
location other than Borrowers’ Address or one of the locations set forth in
Sections 9(d) and 9(e) of Schedule A, and will execute and deliver all
financing statements and other agreements, instruments and documents which
Lender shall require as a result thereof.


          5.9 Financial
Condition, Statements and Reports. All financial statements delivered to
Lender by or on behalf of Wave2Wave have been, and will at all times continue
to be, prepared in conformity with GAAP and all financial statements delivered to
Lender by


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or on behalf of any Borrower completely and
fairly reflect the financial condition of such Borrower, at the times and for
the periods therein stated. Between the last date covered by any such financial
statement provided to Lender and the date hereof (or, with respect to the
remaking of this representation in connection with the making of any Loan, the
date such Loan is made) there has been no material adverse change in the
financial condition or business of such Borrower. Each Borrower is solvent and
able to pay its debts as they come due, and has sufficient capital to carry on
its business as now conducted and as proposed to be conducted. All schedules,
reports and other information and documentation delivered by any Borrower to
Lender with respect to the Collateral are, or when delivered will be, true,
correct and complete as of the date delivered or the date specified therein.


          5.10 Tax
Returns and Payments; Pension Contributions. Except as set forth in Section 9(j) of Schedule A, each Borrower
has timely filed, and shall at all times continue to timely file, all tax returns
and reports required by applicable law or a request for an extension thereof,
has timely paid, and shall continue to timely pay, all applicable taxes,
assessments, deposits and contributions owing by such Borrower and will timely
pay all such items in the future as they become due and payable. Prior to the
entrance by any Borrower into any payment plan with the Internal Revenue
Service, the Internal Revenue Service and such Borrower shall enter into a
subordination agreement with Lender in form and substance satisfactory to
Lender with respect thereto. Each Borrower may, however, defer payment of any
contested taxes; provided, that
such Borrower (i) in good faith contests its obligation to pay such taxes by
appropriate proceedings promptly and diligently instituted and conducted; (ii)
notifies Lender in writing of the commencement of, and any material development
in, the proceedings; (iii) posts bonds or takes any other steps required to
keep the contested taxes from becoming a Lien upon any of the Collateral and
(iv) maintains adequate reserves therefor in conformity with GAAP. Except as
set forth in Section 9(j) of Schedule A, each Borrower is unaware of any claims
or adjustments proposed for any of such Borrower’s prior tax years that could
result in additional taxes becoming due and payable by such Borrower and shall
give prompt written notice to Lender if it becomes aware of any such claims or
adjustments. Each Borrower has paid, and shall continue to pay, all amounts
necessary to fund
all present and future pension, profit sharing and deferred compensation plans
in accordance with their terms, and no Borrower has withdrawn from
participation in, permitted partial or complete termination of, or permitted
the occurrence of any other event with respect to, any such plan which could
result in any liability of such Borrower, including any liability to the
Pension Benefit Guaranty Corporation or any other governmental agency. Without
the prior written consent of Lender, no Borrower will withdraw from participation
in; permitted partial or complete termination of, or permitted the occurrence
of any other event with respect to, any such plan which could result in any
liability of such Borrower, including any liability to the Pension Benefit
Guaranty Corporation or any other governmental agency.


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          5.11 Compliance with Laws. Each Borrower has complied, and shall at all times continue to comply, in all material
respects with all provisions of all applicable laws and regulations, including
those relating to such Borrower’s ownership of real or personal property, the
conduct and licensing of such Borrower’s business, the payment and withholding
of taxes, ERISA and other employee matters, safety and environmental matters.


          5.12 Litigation. Section 9(f) of Schedule A
discloses all claims, proceedings, litigation or investigations pending or (to
the best of any Borrower’s knowledge) threatened against any Borrower. There is
no claim, suit, litigation, proceeding or investigation pending or (to the best
of any Borrower’s knowledge) threatened by or against or affecting any Borrower
in any court or before any governmental agency (or any basis therefor known to
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of any Borrower,
or in any material impairment in the ability of any Borrower to carry on its
business in substantially the same manner as it is now being conducted. Each
Borrower will promptly inform Lender in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or
against any Borrower that could reasonably be expected to result in Costs to
Borrowers in excess of $50,000.


          5.13 Use of Proceeds. All proceeds of all
Loans will be used solely for lawful business purposes, including to finance
the Related Transactions.


          5.14 Insurance. Wave2Wave will at all times
carry property, liability and other insurance, with insurers acceptable to
Lender, in such form and amounts, and with such deductibles and other
provisions, as Lender shall require, and Wave2Wave will provide Lender with
evidence satisfactory to Lender that such insurance is, at all times, in full
force and effect. Each property insurance policy shall name Lender as loss
payee and shall contain a lender’s loss payable endorsement in form acceptable
to Lender, each liability insurance policy shall name Lender as an additional
insured, and each business interruption insurance policy shall be collaterally
assigned to Lender, all in form and substance satisfactory to Lender. All
policies of insurance shall provide that they may not be cancelled or changed
without at least thirty days’ prior written notice to Lender, shall contain
breach of warranty coverage, and shall otherwise be in form and substance
satisfactory to Lender. Upon receipt of the proceeds of any such insurance,
Lender will apply such proceeds in reduction of the Obligations as Lender shall
determine in its sole
discretion; provided that with respect to proceeds of insurance of less than
$100,000, Wave2Wave shall be permitted to retain the amount of such proceeds
actually applied within 180 days of receipt thereof to repair, replace or
reconstruct the property subject to the applicable insurance proceeds.
Wave2Wave will promptly deliver to Lender copies of all reports made to
insurance companies.


          5.15 Financial and Collateral Reports. Each Borrower has kept and will keep
adequate records and books of account with respect to its business and
financial activities and the Collateral in which proper entries are made
reflecting all its financial transactions (and


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which
entries with respect to Wave2Wave are made in accordance with GAAP), and will
cause to be prepared and furnished to Lender the following (all to be prepared
in accordance with GAAP, unless such Borrower’s certified public accountants
concur in any change therein and such change is disclosed to Lender):


                    (a)
Collateral
Reports. On or before
the fifteenth day of each month, an aging of Wave2Wave’s Accounts, Chattel
Paper and notes receivable, and monthly Inventory reports, all in such form,
and together with such additional certificates, schedules and other information
with respect to the Collateral or the business of Wave2Wave or any Obligor, as
Lender shall request; provided, that
Wave2Wave’s failure to execute and deliver the same shall not affect or limit
Lender’s security interests and other rights in any of the Accounts. Together
with each such schedule, Wave2Wave shall furnish Lender with copies (or, at
Lender’s request, originals) of all contracts, orders, invoices, and other
similar documents, and all original shipping instructions, delivery receipts,
bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Accounts, and each Borrower warrants the
genuineness of all of the foregoing. In addition, Wave2Wave shall deliver to
Lender the originals of all Instruments, Chattel Paper, security agreements,
guaranties and other documents and property evidencing or securing any
Accounts, immediately upon receipt thereof and in the same form as received,
with all necessary endorsements. The Mennen Trust shall create a portfolio
report with respect to the Securities Accounts which shall be accessible
on-line by Lender on a daily basis. Together with such report, the Mennen Trust
shall furnish Lender such additional certificates, schedules and other
information with respect to the Collateral as Lender shall request. Lender may
destroy or otherwise dispose of all documents, schedules and other papers
delivered to Lender pursuant to this Agreement six months after Lender receives
them, unless the Mennen Trust requests their return in writing in advance and
arranges for their return to the Mennen Trust at the Mennen Trust’s expense.
Lender may destroy or otherwise dispose of all documents, schedules and other
papers delivered to Lender pursuant to this Agreement (other than originals of
Instruments, Chattel Paper, security agreements, guaranties and other documents
and property evidencing or securing any Accounts) six months after Lender
receives them, unless Borrower Representative requests their return in writing
in advance and arranges for their return to Borrower Representative at
Borrowers’ expense;


                    (b)
Annual
Statements.  Not later than one hundred twenty (120) days after the
close of each fiscal year of Wave2Wave, unqualified (except for a qualification
for a change in accounting principles with which the accountant concurs)
audited financial statements of Wave2Wave and its Subsidiaries as of the end of
such year, on a consolidated and consolidating basis, certified by a firm of
independent certified public accountants of recognized standing selected by
Borrower Representative but reasonably acceptable to Lender, together with a copy
of any management letter issued in connection therewith and a letter from such
accountants acknowledging that Lender is relying on such financial statements.
No later than April 15 of any calendar year, federal and state tax returns of
the Mennen Trust prepared by independent certified public accountants of
recognized standing selected by Borrower Representative but acceptable to
Lender;


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                    (c)
Interim Statements. Not later than thirty (30) days after the
end of each month hereafter, including the last month of Wave2Wave’s fiscal
year, (i) unaudited interim financial statements of Wave2Wave and its
Subsidiaries as of the end of such month and of the portion of Wave2Wave’s
fiscal year then elapsed, on a consolidated and consolidating basis, certified
by the chief financial officer of Borrower Representative as prepared in
accordance with GAAP and fairly presenting the consolidated financial position
and results of operations of the Wave2Wave and its Subsidiaries for such month
and period subject only to changes from audit and year-end adjustments and
except that such statements need not contain notes and (ii) for each month
that. is the end of a fiscal quarter, a compliance certificate in form and
substance satisfactory to Lender setting forth the financial covenants set
forth in Section 8 of Schedule A for such quarter, as certified by officer of
Borrower Representative;


                    (d) Projections, Etc. Such business projections, business plans, budgets and cash flow statements for Wave2Wave and
its Subsidiaries as Lender shall reasonably request from time to time;


                    (e)
Shareholder Reports, Etc. Promptly after
the sending or filing thereof, as the case may be, copies of any proxy
statements, financial statements or other material reports which any Borrower
has made available to its trustees, beneficiaries or shareholders, as
applicable, and copies of any regular, periodic and special reports or
registration statements which such Borrower files with the Securities and
Exchange Commission or any governmental authority which may be substituted
therefor, or any national securities exchange;


                    (f)
ERISA Reports. Upon request by
Lender, copies of any annual report to be filed pursuant to the requirements of
ERISA in connection with each plan subject thereto; and


                    (g)
Other Information. Such other data
and information (financial and otherwise) as Lender, from time to time, may
reasonably request, bearing upon or related to the Collateral or any Borrower’s
and each of its Subsidiary’s financial condition or results of Operations.


          5.16 Litigation Cooperation. Should any third-party suit or proceeding be instituted by or against Lender with respect
to any Collateral or in any manner relating to any Borrower or any Obligor,
each Borrower shall, without expense to Lender, make available each Borrower
and its trustees or beneficiaries and each Obligor, and its officers, employees
and agents, and each Borrower’s and each Obligor’s books and records, without charge, to the extent that
Lender may deem them reasonably necessary in order to prosecute or defend any
such suit or proceeding.


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          5.17
Maintenance of Collateral, Etc. Wave2Wave will maintain all of its
Equipment in good working condition, ordinary wear and tear excepted, and no
Borrower will use the Collateral for any unlawful purpose. Each Borrower will
promptly advise Lender in writing of any material loss or damage to the
Collateral and of any investigation, action, suit, proceeding or claim relating
to the Collateral or which may result in an adverse impact upon such Borrower’s
business, assets or financial condition.


          5.18
Notification of Changes. Each Borrower will promptly notify Lender
in writing of any change in its trustees, beneficiaries, officers or directors,
the opening of any new bank account or other deposit account, or any material
adverse change in the business or financial affairs of any Borrower or the
existence of any circumstance which would make any representation or warranty
of any Borrower untrue in any material respect or constitute a material breach
of any covenant of any Borrower.


          5.19 Further
Assurances. Each Borrower agrees at its expense, to take all
actions, and execute or cause to be executed and delivered to Lender all
promissory notes, security agreements, agreements with landlords, mortgagees
and processors and other bailees, subordination and intercreditor agreements
and other agreements, instruments and documents, as Lender may reasonably
request from time to time to perfect and maintain Lender’s security interests
in the Collateral and to fully carry out the transactions contemplated by this
Agreement.


          5.20 Negative Covenants. No Borrower will, without Lender’s prior written consent, (i) merge or consolidate
with another Person or form any new Subsidiary or acquire any interest in any
Person (other than the acquisition by the Mennen Trust of marketable Securities
deposited in the Securities Accounts and consummation. f the Related
Transaction by Wave2WaVe); (ii) sell or transfer any Collateral or other
assets, except that Wave2Wave may provide services in the ordinary course-of
its business and sell Inventory in the ordinary course of its business and the
Mennen Trust may make sales of assets (provided that any sales of Investment
Property in the Securities Accounts shall be for reasonably equivalent value);
(iii) incur any debt outside the ordinary course of business other than Permitted
Debt or (A) with respect to the Mennen Trust, debt with respect to which the
Mennen Trust has provided Lender written notice prior to the incurrence thereof
and (B) with respect to Wave2Wave, other. debt that Lender has consented to in
writing (which consent shall not be unreasonably withheld); (iv) guaranty or
otherwise become- liable with respect to the obligations of another party or
entity other than guaranties of Permitted Debt or other guaranties that Lender
has consented to in writing (which consent shall not be unreasonably withheld);
(viii) pay or declare any dividends or other distributions from the Mennen
Trust (ix) pay or
declare any dividends or other distributions on Wave2Wave’s stock (except for
dividends payable solely in Capital Stock of Wave2Wave); (xi) make any change
in any of


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Wave2Wave’s capital structure that causes the Mennen Trust to own less than 20% of the
Capital Stock of Wave2Wave; (xii) dissolve or elect to dissolve; (xv) amend,
restate, supplement or otherwise modify any agreements, documents or
instruments governing the Mennen Trust or (xvi) change the state of Wave2Wave’s
organization or enter into any transaction which has the effect Of changing
Wave2Wave’s state of organization except as provided for in Section 5.8; or
(xvii) agree to do any of the foregoing. Wave2Wave will not, without Lender’s
prior written consent, (i) acquire any assets except in the ordinary course of
business and as otherwise permitted by this Agreement and the other Loan
Documents; (ii) enter into any transaction outside the ordinary course of
business except as contemplated by this Agreement; (iii) except’ as set forth
in Section 9(m) of Schedule A make any loans to, or investments in, any
Affiliate or other Person in the form of money or other assets; (iv) redeem,
retire, purchase or otherwise acquire, directly or indirectly, any Capital
Stock or other equity interests (other than so long as no Default or Event of
Default has occurred, the repurchase by Wave2Wave of Capital Stock issued
pursuant to the Stock Plan not to exceed $2,500,000 in any fiscal year of
Wave2Wave); (v) pay any principal or interest on any indebtedness owing to an
Affiliate other than (A) Seller Notes subject to the terms of the Seller
Subordination Agreement and (B) the regularly scheduled payments of interest on
the Mennen Brothers Note; (vi) enter into any transaction with an Affiliate
other than on arms-length terms and disclosed to Lender in writing with respect
to any material transaction with an Affiliate; or (vii) agree to do any of the
foregoing.


          5.21
Financial Covenants. Each Borrower will comply with the financial
covenants set forth in Section 8 of Schedule A.


          5.22 Other
Covenants. Each Borrower will comply with the additional covenants
set forth in Section 12 of Schedule A.


          5.23 Related
Transactions. Wave2Wave has furnished Lender a true and correct copy
of the Related Agreements. Wave2Wave and to Wave2Wave’s knowledge, each other
party to the Related Agreements, has duly taken all necessary organizational
action to authorize the execution, delivery and performance of the Related
Agreements and the consummation of transactions contemplated thereby. As of the
date hereof, the Related’ Transactions have been consummated (or are being
consummated substantially contemporaneously with the initial credit extension
hereunder) in accordance with the terms of the Related Agreements in all
material respects (except for any matters to which the -Lender has consented).
The Related Transactions will’ comply in all material respects with all
applicable legal requirements, and except as provided in the Transition
Services Agreement with respect to the Regulatory Approvals, all necessary
governmental, regulatory, creditor, shareholder, partner and other material
consents, approvals and exemptions required to be obtained by any Person and
any such consents, approvals and exemptions in connection with the Related
Transactions will be, prior to Consummation of the Related Transactions, duly
obtained and will be in full force and effect. Except as provided in the
Transition Services Agreement with respect to the Regulatory Approvals, as of
the date Of the Related


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Agreements, all applicable waiting periods with respect to the Related Transactions will
have expired without any action being taken by any competent governmental
authority which restrains, prevents or imposes material adverse conditions upon
the consummation of the Related Transactions. The execution and delivery of the
Related Agreements did not, and the consummation of the Related Transactions
will not, violate any statute or regulation of the United States (including any
securities law) or of any state or other applicable jurisdiction, or any order,
judgment or decree of any court or governmental body binding on any Person, or
result in a breach of, or constitute a default under, any material agreement,
indenture, instrument or other document, or any judgment, order or decree, to
which any Person is bound. No material statement or representation made in the
Related Agreements by any Person, contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary in order to make the statements made therein; in light of the circumstances under which they are
made, not misleading as of the time that such statement or representation is
made. Except for the fees to Lender set forth in this Agreement, no Borrower is
in any way obligated to any Person in respect
of any finder’s or broker’s fee or similar commission in connection with
the closing of the Loans or any part of the Related Transactions.


          5.24
Subsidiaries. Wave2Wave VoIP Communications, LLC, a Delaware limited
liability company, Wave2Wave Data Communications, LLC, a Delaware limited
liability company, and Wave2Wave Communications Mid-West Region, LLC, a Delaware
limited liability company, are the only subsidiaries of Wave2Wave on the date
hereof, (collectively, the “Subsidiaries”). The Subsidiaries
have no assets, individually or in the aggregate, together or separately, with a
book value in excess of fifty thousand dollars ($50,000). 


6. RELEASE AND INDEMNITY.


          6.1 Release. Each
Borrower hereby releases Lender and its Affiliates and their respective
directors, officers, employees, attorneys and agents and any other Person
affiliated with or representing Lender (the “Released
Parties”) from any and all liability arising from acts or omissions
under or pursuant to this Agreement; whether based on errors of judgment or
mistake of law or fact, except with respect to any Released Party for those
arising from willful misconduct or gross negligence of such Released Party.
However, in no circumstance will any of the Released Parties be liable for lost
profits or other special or consequential damages. Such release is made on the
date- hereof and remade upon each request for a Loan by any Borrower. Without
limiting the foregoing, Lender shall not be liable for (i) any shortage or
discrepancy in, damage to, or loss or destruction of, any goods, the sale or
other disposition of which gave rise to an Account; (ii) any error, act, omission,
or delay of any kind occurring in the settlement, failure to settle, collection
or failure to collect any Account; (iii) settling any Account in good faith for
less than the full amount thereof; or (iv) any of Wave2Wave’s obligations under
any contract or agreement giving rise to an Account.


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          6.2
Indemnity. Each Borrower hereby agrees to indemnify the Released Parties and
hold them harmless from and against any and all claims, debts, liabilities,
demands, obligations, actions, causes of action, penalties, costs and expenses
(including attorneys’ fees), of every nature, character and description,
which any Released Party may sustain or incur based upon or arising out of any
of the transactions contemplated by this Agreement or the other Loan Documents
or any of the Obligations, or any other matter, cause or thing Whatsoever
occurred, done, omitted or suffered to be done by Lender relating to any
Borrower or Obligor or the Obligations (except any such amounts sustained or
incurred as the result of the willful misconduct or gross negligence of such
Released Party). Notwithstanding any provision in this Agreement to the
contrary, the indemnity agreement set forth in this Section shall survive any
termination of this Agreement. 


7. TERM.


          7.1
Maturity Date. Lender’s obligation to make Loans under this Agreement
shall initially continue in effect for a term (the “Term”)
from the date of this Agreement until the Maturity Date set forth in Section 7 of Schedule A. This
Agreement and the other Loan Documents and Lender’s security interests in and
Liens upon the Collateral, and all representations, warranties and covenants of
any Borrower contained herein and therein; shall remain in full force and effect after the
Maturity Date until all of the monetary Obligations are indefeasibly paid in
full (other than contingent indemnification Obligations that survive the
termination of this Agreement).


          7.2 Early Termination. Lender’s
obligation to make Loans under this Agreement may he terminated prior to the
Maturity Date as follows: (i) by Borrower Representative, effective thirty
Business Days after written notice of termination is given to Lender or (ii) by
Lender at any time after the occurrence of an Event of Default, without notice,
effective immediately; provided,
that (i) no such termination by Borrower Representative shall
occur prior to May 12, 2008 and (ii) if any Subsidiary of any Borrower is also
a party to a financing arrangement with Lender, no such early termination by
Borrower Representative shall be effective unless such Subsidiary
simultaneously terminates its financing arrangement with Lender. If so
terminated under this Section 7.2 prior to the Maturity’ Date, Borrowers shall
pay to Lender (i) an early termination fee (the “Early Termination Fee”) in the amount
set forth in Section. 6(d) of Schedule A plus (ii) any earned but unpaid
Servicing Fees, Minimum Borrowing Fee and other fees owing hereunder and under
the other Loan Documents; provided that no such Early Termination Fee shall be
payable if the Obligations are repaid in full in cash from either solely from
(i) the proceeds of subsequent financing from Lender or (ii) proceeds of the
cash flow of the Wave2Wave and its Subsidiaries and in no case from the
-proceeds of any third party financing. Such fee shall be due and payable on
the effective date of termination and thereafter shall bear interest at a rate
equal to the highest rate applicable to any of the Obligations. In addition, if
Borrower Representative so terminates and Borrowers repay the Obligations
without having provided Lender with at least thirty days’ prior written notice
thereof, Borrowers shall pay to Lender, on the effective date of termination,
an


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additional amount equal to thirty days of interest at the applicable interest rate(s),
based on the average outstanding amount of the Obligations for the six month
period immediately preceding the date of termination.


          7.3 Payment of Obligations. On
the Maturity Date or on any earlier effective date of termination, Borrowers
shall pay in full all Obligations, whether or not all or any part of such
Obligations are otherwise then due and payable.


          7.4 Effect of Termination. No
termination shall affect or impair any right or remedy of Lender or relieve any
Borrower of any of the Obligations until all of the monetary Obligations have
been indefeasibly paid in full. Upon indefeasible payment and performance in
full of all of the monetary Obligations and termination of this Agreement,
Lender shall promptly deliver to Borrower Representative termination
statements, requests for reconveyances and such other documents as may be
reasonably required to terminate Lender’s security interests in the Collateral.


          7.5 Reinstatement. To the
maximum extent not explicitly prohibited by applicable law, this Agreement
shall continue to be effective or be reinstated if at any time any amount
received by the Lender in respect of the Obligations hereunder or under any
other Loan Document is rescinded or must otherwise be restored or returned by
the Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Borrower or upon the appointment of any receiver,
intervenor, conservator, trustee or similar official for any Borrower or any
substantial part of any Borrower’s assets, or otherwise, all as though such
payments had not been made.


8. EVENTS OF DEFAULT AND REMEDIES.


          8.1 Events of Default. The
occurrence of any of the following events shall constitute an “Event of Default” under
this Agreement, and Borrower Representative shall give Lender immediate written
notice thereof: (i) if any warranty, representation, statement, report or
certificate made or delivered to Lender by any Borrower, any Obligor or any of
any Borrower’s or any Obligor’s trustees, officers, employees or agents is
untrue or misleading in any material respect; (ii) if any Borrower or any
Obligor fails to pay when due any principal or interest on any Loan or any
other monetary Obligation; (iii) if any Borrower or any Obligor breaches any
covenant or obligation contained in this Agreement or any other Loan Document
or fails to perform any other non-monetary Obligation; (iv) if any levy,
assessment, attachment, seizure, lien, security interest or encumbrance (other
than a Permitted Lien) involving amounts in excess of $25,000 is made or
permitted to exist on all or any part of the Collateral and is not removed or
bonded over within 30 days; (v) if one or more judgments aggregating in excess
of $25,000, or any injunction or attachment, is obtained against any Borrower
or any Obligor which remains unstayed for more than 30 days. or is enforced;
(vi) the occurrence of any default beyond applicable grace or cure periods under any
financing agreement, security agreement or other agreement, instrument or


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document
executed and delivered by (A) Wave2Wave with respect to the Seller Notes, (B)
any Borrower or any Obligor with, or in favor of, any Person other than Lender
or with respect to indebtedness in excess of $250,000 either comprising a
payment default or any other default entitling the holder of such obligation to
accelerate such indebtedness or (C) any Borrower, any Obligor or any other
Affiliate of any Borrower with, or in favor of, Lender or any Affiliate of
Lender (provided that for purposes of this clause (C), Affiliates of any
Borrower shall not include managers, directors, officers or employees of such
Borrower); (vii) the dissolution, death, termination of existence in good
standing, insolvency or business failure or suspension or cessation of business
as usual of any Borrower or any Obligor or the appointment of a receiver,
trustee or custodian for all or any part of the property of, or an assignment
for the benefit of creditors by any Borrower or any Obligor, or the
commencement of any proceeding by any Borrower or any Obligor under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, or if any Borrower makes or sends a notice of a bulk transfer
or calls a meeting of its creditors; (viii) the commencement of any proceeding
against any Borrower or any Obligor under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, now or in the future in effect; (ix) the actual
or attempted revocation or termination of, or limitation or denial of liability
upon, any guaranty of the Obligations, or any security document securing the
Obligations, by any Borrower or any Obligor; (x) if any Borrower or any Obligor
makes any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations other than as permitted in the applicable
subordination agreement (and such amount is not repaid to Borrower or such
Obligor or paid to Lender within five (5) Business Days), or if any Person who
has subordinated such indebtedness or obligations attempts to limit or
terminate its subordination agreement; (xi) if there is any actual or
threatened indictment of any Borrower or any Obligor under any criminal statute
or commencement or threatened commencement of criminal or civil proceedings
against any Borrower or any Obligor, pursuant to which the potential penalties
or remedies sought or available include forfeiture of any property of such
Borrower or such Obligor; (xii) if there is. a change in the record or
beneficial ownership of an aggregate of more than 20% of the outstanding
shares, of Capital Stock of Wave2Wave, in one or more transactions, compared to
the :ownership of outstanding shares of Capital Stock of Wave2Wave as of the
date hereof, without the prior written consent of Lender; (xiii) if there is
any change in the chief executive officer, chief operating officer or chief
financial officer of Wave2Wave or any trustee of the Mennen Trust, in each case
without the prior written consent of Lender; (xiv) if an Event of Default
occurs under any agreement between Lender and any Obligor or other Affiliate of
any Borrower; (xv) if Lender determines in good faith that the Collateral is
insufficient to fully secure the Obligations; or (xvi) if, since June 30, 2007,
a material adverse change in the business, financial or other condition of any
Borrower or in the Collateral taken as a whole.


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          8.2 Remedies. Upon the
occurrence of any Default, and at any time thereafter, Lender, at its option, may cease making Loans or otherwise extending
credit to any Borrower under this Agreement or any other Loan Document. Upon
the occurrence of an Event of Default, Lender may exercise from time to time
any rights and remedies available to it under the UCC and any other applicable
law in addition to, and not in lieu
of, any rights and remedies expressly granted in this Agreement or in any of
the other Loan Documents and all of Lender’s rights and remedies shall be
cumulative and non-exclusive to the extent permitted by law. In particular, but
not by way of limitation of the foregoing, upon the occurrence of any Event of
Default, and at any time thereafter, Lender, at its option, and without notice
or demand of any kind (all of which are hereby expressly waived by each
Borrower), may do. any one or more of the following: (i) cease making Loans or
otherwise extending credit to any Borrower under this Agreement or any other
Loan Document; (ii) accelerate and declare all or any part of the Obligations
to be immediately due, payable and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any of
the Obligations; (iii) take possession of any or all of the Collateral (in
addition to Collateral of which it already has possession) wherever it may be
found, and for -that purpose each Borrower hereby authorizes Lender, without
judicial process, to enter onto any of any Borrower’s premises without interference to search for, take possession of, keep,
store, or remove any of the Collateral, and remain (or cause a custodian to
remain) on the premises in exclusive control thereof, without charge for so
long as Lender deems it reasonably necessary in order to complete the
enforcement of its rights under this Agreement or any other agreement; provided, that if
Lender seeks to take possession of any of the Collateral by court process, each
Borrower hereby irrevocably waives (A) any bond and any. surety or security
relating. thereto required by law as an incident to such possession, (B) any demand
for possession prior to the commencement of any suit or action to recover
possession thereof and (C) any requirement that Lender retain possession of,
and not dispose of, any such Collateral until after trial or final judgment;
(iv) require any Borrower to assemble any or all of the Collateral and make it
available to Lender at one or more places designated by Lender which are
reasonably convenient to Lender and the applicable Borrower, and to, remove the
Collateral to such locations. as Lender may deem advisable; (v) complete the
processing, manufacturing or repair of any Collateral prior to a disposition
thereof and, for such purpose and for the purpose of removal, Lender shall have
the right to use any
Borrower’s premises, vehicles and other Equipment and all other property
without charge;  (vi) sell, lease or otherwise dispose of any of the
Collateral, in its condition at the time Lender obtains possession of it or
after further manufacturing, processing or repair, at one or more public or
private sales, in lots or in bulk, for cash, exchange or other property, or on
credit (a “Sale”), and
to adjourn any such Sale from time to time without notice. other than oral
announcement at the time scheduled for Sale (and, in connection therewith, (A)
Lender shall have the right to conduct such Sale on any Borrower’s premises
without charge, for such times as Lender deems reasonable, on Lender’s
premises, or elsewhere, and the Collateral need not be located at the place of
Sale; (B) Lender may directly or through any of its Affiliates purchase or
lease any of the Collateral at any such public disposition, and if


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permissible under applicable law, at any private disposition and (C) any Sale of Collateral
shall not relieve any Borrower of any liability any Borrower may have if any.
Collateral is defective as to title, physical condition or otherwise at the
time of sale); (vii) demand payment of and collect any Accounts, Chattel Paper,
Instruments and General Intangibles included in the Collateral and, in
connection therewith, each Borrower irrevocably authorizes Lender to endorse or
sign any Borrower’s name on all collections, receipts, Instruments and other
documents, to take possession of and open mail addressed to any Borrower and
remove therefrom payments made with respect to any item of Collateral or
Proceeds thereof and, in Lender’s sole discretion, to grant extensions of time
to pay, compromise claims and settle Accounts, General Intangibles and the like
for less than face value; and (viii) demand and receive possession of any of
any Borrower’s federal and state income tax returns and the-books and records
utilized in the preparation thereof or relating thereto. Each Borrower
recognizes that if any Borrower fails to perform, observe or discharge any of
its Obligations. under this Agreement or any of the Loan Documents, no remedy
at law will provide adequate relief to Lender, and agrees that Lender shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages. Any notification of intended
disposition of any of the Collateral required by law will be deemed to be a
reasonable authenticated notification of disposition if given at least ten
days. prior to such disposition and such notice shall (i) describe Lender and
the applicable Borrower, :(ii) describe the Collateral that is the subject of
the intended disposition, (iii) state the method of the intended disposition,
(iv) state that Borrowers are entitled to an accounting of the Obligations and
state the charge, if any, for an accounting and (v) state the time and place of
any public disposition or the time after which any private sale is to be made.
Lender may disclaim any warranties that might arise in connection with the
sale, lease or other disposition of the Collateral and has no obligation to
provide any warranties at such time. Any Proceeds of any disposition by Lender
of any of the Collateral may be applied by Lender to the payment of expenses
‘in connection with the Collateral, including legal expenses and reasonable
attorneys’ fees, and any balance of such Proceeds may be applied by Lender
toward the payment of such of the Obligations, and in such order of
application, as Lender. may from time to time elect. Exercise or partial
exercise by Lender of one or more of its rights or remedies shall not be deemed
an election or bar Lender from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Lender to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.


          8.3
Application of Proceeds. Subject to any application required by law,
all Proceeds realized as the result of any Sale shall be applied by Lender to
the Obligations in such order as Lender shall determine in its sole and
absolute discretion. Any surplus shall be paid to Borrower or other Persons
legally entitled thereto; but Borrowers shall remain liable to Lender for any
deficiency. If Lender, in its sole and absolute discretion, directly or
indirectly enters into a deferred payment or other credit transaction with any
purchaser at any


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Sale, Lender shall have the option, exercisable at any time, in its sole and absolute
discretion, of either reducing the Obligations by the principal amount of the
purchase price or deferring the reduction of the Obligations until the actual
receipt by Lender of the cash therefor.


9. EFFECTIVE DATE.


The
obligations of the Lender to make Loans on the date hereof shall not become
effective until the date on which each of the conditions set forth in Section
17 of Schedule A is satisfied (or waived in writing by Lender).


10. GENERAL
PROVISIONS.


          10.1 Notices. All notices to
be given under this Agreement shall be in writing and shall be given either
personally, by reputable private delivery service, by regular first-class mail
or certified mail return receipt requested, addressed to Lender or Borrower
Representative at the address shown in the heading to this Agreement, or by
facsimile to the facsimile number shown in Section 9(i) of Schedule A, or at
any other address (or to any other facsimile number) designated in writing by
one party to the other party in the manner prescribed in this Section 10.1. All
notices shall be deemed to have been given when received or when delivery is
refused by the recipient.


          10.2 Severability. If any
provision of this Agreement, or the application thereof to any party or
circumstance, is held to be void or unenforceable by any court of competent
jurisdiction, such defect shall not affect the remainder of this Agreement,
which shall continue in full force and effect


          10.3 Integration. This
Agreement and the other Loan Documents represent the final, entire and complete
agreement between Borrowers and Lender and supersede all prior and
contemporaneous negotiations, oral representations and agreements, all of which
are merged and integrated into this Agreement. THERE ARE NO ORAL UNDERSTANDINGS,
REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES THAT ARE NOT SET FORTH IN
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.


          10.4 Waivers. The failure of
Lender at any time or times to require any Borrower to strictly comply with any
of the provisions of this Agreement or any other Loan Documents shall not waive
or diminish any right of Lender later to demand and receive strict compliance
therewith. Any waiver of any default shall not waive or affect any other
default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other Loan Document shall be deemed to have
been waived by any act or knowledge of Lender or its agents or employees, but
only by a specific written waiver signed by an authorized officer of Lender and
delivered to Borrower Representative. Each Borrower waives demand, protest,
notice of protest and notice of default or dishonor, notice of payment


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and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, Instrument, Account, General Intangible, Document, Chattel
Paper, Investment Property or guaranty at any time held by Lender on which any
Borrower is or may in any way be liable, and notice of any action taken by
Lender, unless expressly required by this Agreement, and notice of acceptance
hereof.


          10.5
Amendment. This Agreement may not be amended or modified except in a
writing executed by Borrower Representative and a duly authorized officer of
Lender.


          10.6 Time of
Essence. Time is of the essence in the performance by Borrowers of
each and every obligation under this Agreement and the other Loan Documents.


          10.7
Attorneys Fees and Costs. Borrowers shall reimburse Lender for all
attorneys’ and paralegals’ fees (including in-house attorneys and paralegals
employed by Lender) and all filing, recording, search, title insurance,
appraisal, audit, and other costs incurred by Lender, pursuant to, in
connection with, or relating to this Agreement, including all attorneys’ fees
and costs Lender incurs to prepare and negotiate this Agreement and the other
Loan Documents; to obtain legal advice in connection with this Agreement and
the other Loan Documents or any Borrower or any Obligor; to administer this
Agreement and the other Loan Documents (including the cost of periodic
financing statement, tax lien and other searches conducted by Lender); to
enforce, or seek to enforce, any of its rights; prosecute actions against, or
defend actions by, Account Debtors; to commence, intervene in, or defend any
action or proceeding; to enforce and protect, or to seek to enforce and
protect, any of its rights and interests in any bankruptcy case of any
Borrower, including by initiating and prosecuting any motion for relief from
the automatic stay and by initiating, prosecuting or defending any other
contested matter or adversary proceeding in bankruptcy; to file or prosecute
any probate claim, bankruptcy claim, third-party claim, or other claim; to
examine, audit, copy, and inspect any of the Collateral or any of any
Borrower’s books and records; to protect, obtain possession of, lease, dispose
of, or otherwise enforce Lender’s security interests in, the Collateral; and to
otherwise represent Lender in any litigation relating to any Borrower or any
Obligor. If either Lender or any Borrower files any lawsuit against the other
predicated on a breach of this Agreement, the prevailing party in such’ action
shall be entitled to recover its costs and attorneys’ fees, including
attorneys’ fees and costs incurred in the enforcement of, execution upon or
defense of any order, decree, award or judgment. All attorneys’ fees and costs
to which Lender may be entitled pursuant to this Section shall immediately
become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations.


          10.8 Benefit
of Agreement; Assignability. The provisions of this Agreement shall
be binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of each Borrower and Lender; provided, that no
Borrower may assign or transfer any of its rights under this Agreement without
the prior written consent of Lender, and any prohibited assignment shall be
void. No consent by Lender to


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any assignment shall release any Borrower from its liability for
any of the Obligations. Lender shall have the right to assign all or any of its
rights and obligations under the Loan Documents, and to sell participating
interests therein, to one or more other Persons, and each Borrower agrees to
execute all agreements, instruments and documents requested by Lender in
connection with each such assignment and participation. Notwithstanding any
other provision set forth in this Agreement, the Lender may at any time, without
the consent of any Borrower, assign, sell, convey, pledge, hypothecate, or
otherwise encumber any or all of its rights and benefits under this Agreement,
the other Loan Documents or the Collateral.


          10.9 Headings; Construction. Section and subsection headings are used in this Agreement only for
convenience and do not affect the meanings of the provisions that they precede.


          10.10
GOVERNING LAW; CONSENT TO FORUM, ETC. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED TO HAVE BEEN MADE, IN
NEW YORK COUNTY, NEW YORK, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. EACH BORROWER HEREBY CONSENTS AND
AGREES THAT THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK
OR ANY STATE IN WHICH ANY OF THE COLLATERAL IS LOCATED SHALL HAVE NON-EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN SUCH BORROWER
AND LENDER
PERTAINING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENTS OR ANY MATTER ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH BORROWER
EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND WAIVES ANY OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.
EACH BORROWER ALSO AGREES THAT ANY CLAIM OR DISPUTE BROUGHT BY SUCH BORROWER
AGAINST LENDER PURSUANT. TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY
MATTER ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE
BROUGHT EXCLUSIVELY IN THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY,
NEW YORK. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE IN THE MANNER
AND SHALL BE DEEMED RECEIVED AS SET FORTH IN SECTION 10.1 FOR NOTICES, TO THE
EXTENT PERMITTED BY LAW. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE
TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY


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LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE THE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.


          10.11 WAIVER OF JURY TRIAL,
ETC. EACH BORROWER. WAIVES
(I) THE RIGHT TO TRIAL BY JURY (WHICH LENDER ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE
LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL OR ANY CONDUCT, ACTS OR
OMISSIONS OF LENDER OR ANY BORROWER OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OR ANY OTHER PERSONS AFFILIATED WITH
LENDER OR. ANY BORROWER, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE; (II)
THE RIGHT TO INTERPOSE ANY CLAIMS, DEDUCTIONS, SETOFFS OR COUNTERCLAIMS OF ANY
KIND IN ANY ACTION OR PROCEEDING INSTITUTED BY LENDER. WITH RESPECT TO THE LOAN
DOCUMENTS OR ANY MATTER RELATING THERETO, EXCEPT FOR COMPULSORY COUNTERCLAIMS; (111) NOTICE PRIOR TO LENDER’S TAKING
POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE
REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER’S
REMEDIES AND (IV) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS. EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL
INDUCEMENT TO LENDER’S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING
UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH SUCH BORROWER. EACH
BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.


          10.12 Joint and Several Liability.


                    (a)
Notwithstanding anything to the contrary contained herein, all Obligations of
each Borrower hereunder shall be joint and several obligations of Borrowers.


                    (b)
Notwithstanding any provisions of this Agreement to the contrary, it is
intended that the joint and several nature of the Obligations of Borrowers and
the liens and security interests granted by Borrowers to secure the Obligations,
not constitute a “Fraudulent Conveyance” (as defined below). Consequently,
Lender and Borrowers agree that if the Obligations of a
Borrower, or any liens or security interests granted by such Borrower securing
the Obligations would, but for the application of this sentence, constitute a
Fraudulent Conveyance, the Obligations of such Borrower and the liens and
security interests


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securing such Obligations shall be valid and enforceable only to the maximum extent that
would not cause such Obligations or such lien or security interest to
constitute a Fraudulent Conveyance, and the Obligations of such Borrower and
this Agreement shall automatically be deemed to have been amended accordingly.
For purposes hereof, “Fraudulent Conveyance” means a fraudulent conveyance
under Section 548 of Chapter 11 of Title II of the United States Code (11
U.S.C. § 101, et seq.), as amended (the “Bankruptcy Code”) or a fraudulent
conveyance or fraudulent transfer under the applicable provisions of any
fraudulent conveyance or fraudulent transfer law or similar law of any state,
nation or other governmental unit, as in effect from time to time.


                    (c)
Each Borrower assumes responsibility for keeping itself informed of the
financial condition of each other Borrower, and any and all endorsers and/or
guarantors of any instrument or document evidencing all or any part of such
other Borrower’s Obligations and of all other circumstances bearing upon the
risk of nonpayment by such other Borrowers of their Obligations and each
Borrower agrees that Lender shall have no duty to advise. such Borrower of
information known to Lender regarding such condition or any such circumstances
or to undertake any investigation not a part of its regular business routine.
If Lender, in its sole discretion, undertakes at any time or from time to time
to provide any such information to a Borrower, Lender shall not be under any
obligation to update any such information or to provide any such information to
such Borrower on any subsequent occasion.


                    (d)
Lender is hereby authorized, without notice or demand and without affecting the
liability of a Borrower hereunder, to, at any time and from time to time, (i)
renew, extend, accelerate or otherwise change the time for payment of, or other
terms relating to a Borrower’s Obligations or otherwise modify, amend or change
the terms of any promissory note or other agreement, document or instrument now
or hereafter executed by a Borrower and delivered to Lender; (ii) accept
partial payments on a Borrower’s Obligations; (iii) take and hold security or
collateral for the payment of a Borrower’s Obligations hereunder or for the
payment of any guaranties of a 13pirower’s Obligations or other liabilities of
a Borrower and exchange, enforce, waive and release any such security or
collateral; (iv)
apply such security or collateral and direct the order or manner of sale
thereof as Lender, in its sole discretion, may determine; and (v) settle,
release, compromise, collect or otherwise liquidate a Borrower’s Obligations
and any security or collateral therefor in any manner, without affecting or
impairing the obligations of the other Borrowers. Lender shall have the
exclusive right to determine the time and manner of application of any payments
or credits, whether received from a Borrower or any other source, and such
determination shall be binding on such Borrower. All such payments and credits
may be applied, reversed and reapplied, in whole or in part, to any of a
Borrower’s Obligations as Lender shall determine in its sole discretion without
affecting the validity or enforceability of the Obligations of the other
Borrowers.


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          (e) Each Borrower hereby agrees that, except
as hereinafter provided, its obligations hereunder shall be unconditional,
irrespective of (i) the absence of any attempt to collect a Borrower’s
Obligations from any Borrower or any guarantor or other action to enforce the
same; (ii) the waiver or consent by Lender with respect to any provision of any
instrument evidencing Borrowers’ Obligations, or any part thereof, or any
other agreement heretofore, now or hereafter executed by a Borrower and
delivered to Lender; (iii) failure by Lender to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security or
collateral for Borrowers’ Obligations; (iv) the institution of any
proceeding-under the Bankruptcy Code, or any similar proceeding, by or against a
Borrower or Lender’s election in any such proceeding of the application of
Section 1111(b)(2) of the Bankruptcy Code; (v) any borrowing or grant of a
security interest by any Borrower as debtor-in-possession, under Section 364 of
the Bankruptcy Code; (vi) the disallowance, under Section 502 of the Bankruptcy
Code, of all or any portion of Lender’s claim(s) for repayment of any of
Borrowers’ Obligations; or (vii) any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor
(other than payment in full of the Obligations (other than contingent
indemnification Obligations that survive the termination of this
Agreement)).


         
           (f)
Until the payment in full of the Obligations (other than contingent
indemnification Obligations that survive the termination of this Agreement), no
payment made by or for the account of a Borrower including, without limitation,
(i) a payment made by such Borrower on behalf of another Borrower’s Obligations
or (ii) a payment made by any other person under any guaranty, shall entitle
such Borrower, by subrogation or otherwise, to any payment from such other
Borrower or from or out of such other Borrower’s property and such Borrower
shall not exercise any right or remedy against such. other Borrower or any
property of such other Borrower by reason of any performance of such Borrower
of its joint and several obligations hereunder. 


-29-









	
  

 	
  

 
	
 Greystone
 Business Credit II, L.L.C.

 	
 Loan and Security Agreement

 
	

 


 



          
          
IN WITNESS WHEREOF, each Borrower and Lender have signed this Agreement as of the date first set forth above.


	
  

 	
  

 	
  

 	
  

 
	
 Borrowers:

 	
  

 	
 Lender:

 
	
  

 	
  

 	
  

 
	
 Wilmington Trust Company and

 George Jeff Mennen as co-trustees
 U/AJD November 25, 1970, as
 amended for the benefit of John
 Henry Mennen

 	
  

 	
 GREYSTONE
 BUSINESS CREDIT II, L.L.C.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/
 [illegible]

 
	
  

 	
  

 	

 


 
	
  

 	
 Its
 authorized Signatory

 






	
  

 	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
 /s/ George Jeff Mennen 

 	
  

 
	
  

 	

 


 	
  

 
	
  

 	
 George Jeff
 Mennen, Co-Trustee U/A/D November 25, 1970, as amended for the benefit of
 John Henry Mennen

 	
  

 
	
  

 	
  

 	
  

 
	
 By:

 	
 Wilmington
 Trust Company, Co-Trustee U/AJD November 25, 1970, as amended for the benefit
 of John Henry Mennen

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Mark A. Oller

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
 Mark A.
 Oller, Vice President

 	
  

 
	
  

 	
  

 	
  

 
	
 WAVE2WAVE
 COMMUNICATIONS, INC.

 
	
  

 	
  

 
	
 By

 	
         /s/ Steven Asman

 	
  

 
	
  

 	

 


 	
  

 
	
	
  

 	
 Steven Asman

 	
  

 
	
  

 	
  

 	
 President

 	
  

 



Loan and Security Agreement








Schedule A


Description of Certain Terms


          This
Schedule is an integral part of the Loan and Security Agreement between
WILMINGTON TRUST COMPANY AND GEORGE JEFF MENNEN AS
CO—TRUSTEES U/A/D NOVEMBER 25, 1970, AS AMENDED FOR THE BENEFIT OF JOHN HENRY MENNEN,
WAVE2WAVE COMMUNICATIONS, INC. and GREYSTONE BUSINESS CREDIT II, L.L.C. (the “Agreement”).



	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 1.

 	
  [Intentionally
 Omitted]

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
 Loan
 Limits for Term Loan:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  (a)

 	
 Maximum
 Facility Amount:

 	
  

 	
 $34,000,000

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  (b)

 	
 Eligible
 Securities

 	
  

 	
 The
 lesser of the Maximum Facility Amount and 85% of the market value of the
 Mennen Trust’s Eligible Securities

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  (c)

 	
 Repayment
 Schedule:

 	
  

 	
 The
 entire unpaid balance of the Term Loan shall be due and payable on the
 Maturity Date.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 3.

 	
 Interest
 Rate:

 	
  

 	
 3.25% per
 annum in excess of the Prime Rate

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 4.

 	
  [Intentionally
 Omitted]

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 5.

 	
  [Intentionally
 Omitted]

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 6.

 	
 Fees:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  (a)

 	
 Closing
 Fee:

 	
  

 	
 $510,000

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  (b)

 	
  [Intentionally
 Omitted]

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  (c)

 	
 Servicing
 Fee:

 	
  

 	
 $3,500
 per month

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  (d)

 	
 Early
 Termination Fee:

 	
  

 	
 0.25% of
 the Maximum Facility Amount if terminated prior to the Maturity Date.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  (e)

 	
 Monitoring
 Fees

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 CO Set-Up
 Fee

 	
  

 	
  (i)

 	
 $65.0

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  (ii)
 Monthly Fee

 	
  

 	
  (ii)

 	
 $75

 



A-1 









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 7.

 	
 Maturity Date:

 	
  

 	
 October 11, 2008

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 8.

 	
 Financial Covenants:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Projections

 	
  

 	
 Wave2Wave shall be
 substantially in conformance with the projections delivered to Lender on or
 prior to the date hereof and attached hereto as Exhibit B, including but not
 limited to actual Net Revenue of Wave2Wave and its
 Subsidiaries not less than 80% of projected Net Revenue of Wave2Wave and its
 Subsidiaries in any fiscal quarter, beginning with the fiscal quarter ending
 December 31, 2007 through the end of the Term.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Limitation on Purchase
 Money Security Interests:

 	
  

 	
 In addition to the amount
 of purchase money security interests of $0 currently in place, Wave2Wave and
 its Subsidiaries may incur $250,000 in purchase money security interests
 after the date hereof (which amount shall be increased on a case by case
 basis up on the request of the Borrower Representative and written
 consent of Lender, not to be unreasonably withheld)

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Limitation on Equipment
 Leases:

 	
  

 	
 In addition to the amount
 of equipment leases of $630,000 currently in place, Wave2Wave and its
 Subsidiaries may incur $250,000 in equipment leases after, the date hereof (which amount shall be
 increased on a case by case basis upon the .request of the Borrower
 Representative and written consent of Lender, not to be unreasonably
 withheld) 

 
	
 9.

 	
 Borrower Information:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Prior Names of each
 Borrower:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)          Mennen
 Trust

 	
  

 	
 None

 
	
  

 	
  

 	
 (ii)
         Wave2Wave

 	
  

 	
 None

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Prior Trade Names of Wave2Wave
 None

 	
  

 	
  

 	
  

 


A-2





 


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Existing Trade Names of
 Wave2Wave

 	
  

 	
 Wave2Wave

 
	
  

 	
  

 	
  

 	
  

 	
 Wave2Wave Communications

 
	
  

 	
  

 	
  

 	
  

 	
 W2W

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Locations

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (i) None

 
	
  

 	
  

 	
 (i)

 (ii)

 	
 Inventory Locations

 Other Locations

 	
  

 	
 (ii) Wilmington Trust
 Company, 1100 N.
Market Street; Wilmington, DE 19890

 


A-3









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Wave2Wave -Locations

 	
  

 	
 Wave2Wave Real Property
 Leases

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 1. 433 Hackensack Avenue,
 Hackensack, NJ (current headquarters)

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 2. 1410 Broadway, New
 York, NY

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 3. 10 Riverside Drive,
 Chicago, IL

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 4. 111 South Independence
 Mall, 1st Floor, Philadelphia, PA

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Wave2Wave POP Locations

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 1. 111 8th Avenue Level 3
 3rd Floor S-003.304.001 New York NY 10011

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 2. 21 Harborview Level 3
 1st Floor S-004 Stamford-CT 06902

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 3. 111 North Canal Street
 3rd Floor 5-15 Chicago IL 60606

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 4. 111 Pavonia TMR 6th
 Floor Jersey City NJ 07310

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 5. 360 Hamilton Avenue 1st
 Floor C1.05 White Plains NY 10601

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 In addition to the above
 listed locations, Wave2Wave owns equipment that is located at the businesses
 and personal addresses of its -customers. The value of equipment located at
 each address is de minimus. In all cases but one, the value of the equipment
 at each location is less than $500). This equipment is located pursuant to
 Business Service Agreements with respect to business customers, for which
 there are approximately 550 different locations, and Individual Service
 Agreements with respect-to individual and personal use customers, for which
 there are approximately 300 different locations. Also, Wave2Wave has
 equipment, of a de minimus value (less than $500 at each location), located
 at 30 additional third party locations pursuant to Tower-Service Agreements.

 


A-4









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 Litigation:

 	
  

 	
 On July 30, 2007, ICS
 International Communications Systems, Inc. (“ICS”) filed a Complaint against
 Wave2Wave alleging breach of contract and negligence. The amount demanded in
 the Complaint by ICS is $300,000. On September 21, 2007, Wave2Wave filed an
 Answer with Affirmative Defenses along with discovery requests and the action
 remains pending

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 (i)

 	
 Trustees and Beneficiaries
 of Mennen Trust

 	
  

 	
 (i) Trustees:

 
	
  

 	
  

 	
 (ii)

 	
 Ownership of Wave2Wave

 	
  

 	
 George -Jeff Mennen,
 Co-Trustee U/A/D November 25, 1970, as amended for the benefit of John Henry
 Mennen

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Wilmington Trust Company,
 Co-Trustee U/A/D November 25, 1970, as amended for the benefit of John Henry
 Mennen

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Beneficiaries: John H.
 Mennen and his issue 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (ii) See Exhibit C

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (h)  -

 	
 Subsidiaries (and
 ownership thereof):

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 Mennen Trust

 	
  

 	
 (i) None

 
	
  

 	
  

 	
 (ii)

 	
 Wave2Wave

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (ii)Wave2Wave VoIP
 Communications, LLC; Owned 100% by Wave2Wave Communications, Inc.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Wave2Wave Data
 Communications, LLC; Owned 100% by Wave2Wave Communications, Inc.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Wave2Wave Communications
 Mid-West Region, LLC; Owned 100% by Wave2Wave Communications, Inc. -

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 Facsimile Numbers:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Borrower Representative:

 	
  

 	
 201-968-1886

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Lender:

 	
  

 	
 212-896-9199

 


A-5









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (j)

 	
 Taxes

 	
  

 	
 ‘Wave2Wave is currently in
 discussions with the Internal Revenue Service with respect to payment of a
 payroll tax liability from 2002 in the approximate amount of $400,000.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (k)

 	
 Permitted Debt

 	
  

 	
 Wave2Wave

 Promissory Note, dated June 22, 2007, in the principal amount of $250,000
 payable to M Brothers. The proceeds of the Promissory Note were used for
 working capital purposes.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Mennen Trust

 
Mennen Trust owes $19,550,000 to Bank of America, N.A. (BoA) under a line of credit it has
 with BoA. (the “BoA Line of Credit).

 













	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (l)

 	
 Existing Liens

 	
  

 	
 Debtor: Wave2Wave
 Communications, Inc.
Secured Party: 15 Van Dyke Ave., LLC
Date Lien Filed:
 14/4/2000 (continued on 4/29/2005)

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Jurisdiction of Lien:
 Recorder of Deeds,
Middlesex County, NJ

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Collateral: Assets
 Specified

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Debtor: Wave2Wave
 Communications, Inc.
Secured Party: 15 Van Dyke Ave., LLC
Date Lien Filed:
 14/4/2000 (continued on 4/29/2005)

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Jurisdiction of Lien: NJ
 Department of Treasury

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Collateral: Assets
 Specified

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Debtor: Intellispace, Inc.
Secured Party: Level 3 Communications, LLC
Date Lien Filed: 3/30/2005

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Jurisdiction of Lien:
 State of Delaware
(Transition filing. Original filings made with
New York
 Secretary of State on May 2, 2000
.and with New York City County on May 4, 2000)

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Collateral: Inventory,
 Equipment, Chattel Paper, Accounts and General Intangibles specified in
 Exhibit to UCC-1.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Mennen Trust

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Certain assets in
 connection with the BoA Line of Credit

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (m)

 	
 Affiliate Loans

 	
  

 	
 Certain loans to Andrew
 Bressman in the last year in the total amount of $264,831.19,

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Loan to Jose Rodriguez,
 dated October 16, 2006, in the amount of $4,000.

 


A-7









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 10

 	
 Regulatory Approvals

 	
  

 	
 Canadian Radio-Television and Telecommunications Commission

 
	
  

 	
  

 	
  

 	
 Federal Communications Commission

 
	
  

 	
  

 	
  

 	
 Connecticut Department of Public Utility Control

 
	
  

 	
  

 	
  

 	
 District of Columbia Public Service Commission

 
	
  

 	
  

 	
  

 	
 Florida Public Service Commission

 
	
  

 	
  

 	
  

 	
 Maine Public Utilities’Commission

 
	
  

 	
  

 	
  

 	
 Maryland Public Service Commission

 
	
  

 	
  

 	
  

 	
 Massachusetts Department of Telecommunications and Energy

 
	
  

 	
  

 	
  

 	
 New Hampshire Public Service Commission

 
	
  

 	
  

 	
  

 	
 New Jersey Board of Public Utilities

 
	
  

 	
  

 	
  

 	
 New York Public Service COmmission

 
	
  

 	
  

 	
  

 	
 Pennsylvania Public Utility Commission

 
	
  

 	
  

 	
  

 	
 Rhode Island Public Utilities Commission

 
	
  

 	
  

 	
  

 	
 Texas Public Utilities Commission

 
	
  

 	
  

 	
  

 	
 Vermont Department of Public Service

 
	
  

 	
  

 	
  

 	
 Virginia State Corporation Commission

 
	
  

 	
  

 	
  

 	
  

 
	
 11.

 	
 Lender’s Bank:

 	
  

 	
 Bank of America

 
	
  

 	
  

 	
  

 	
 P.O. Box 4899

 
	
  

 	
  

 	
  

 	
 Atlanta, GA 30302-4899

 
	
  

 	
  

 	
  

 	
 ABA No.: 026-009-593

 
	
  

 	
  

 	
  

 	
 For credit to: Greystone
 Business Credit II, L.L.C.

 
	
  

 	
  

 	
  

 	
 Account No.:
 0032-8251-0983

 
	
  

 	
  

 	
  

 	
 Re: Jeff Mennen
 Trust/Wave2Wave

 


A-8









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 12.

 	
 Other Covenants:

 	
  

 	
 (a)

 	
 Wave2Wave shall promptly
 provide Lender with copies of any material communication delivered in
 connection with any material agreement or contract (including, without
 limitation, any material distribution agreement).

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (b)

 	
 No later than 30 days
 after the close of each calendar year, Borrowers will cause to be prepared
 and delivered to Lender financial statements of George Jeff Mennen, in form.
 and substance satisfactory to the Lender. No later than May 1 of any calendar
 year, Borrowers will cause to be delivered to Lender filed personal tax
 returns of George Jeff Mennen.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (c)

 	
 On or before five (5)
 Business Days after the release to Wave2Wave of the Capital Stock of RNK from
 escrow pursuant to Section C of the Escrow Agreement, Borrowers shall deliver
 to Lender the documents, agreements and instruments necessary for each of RNK
 and each of its Subsidiaries to guaranty the Obligations and grant to Lender
 a first priority security interest in all of their assets, including without
 limitation, the RNK Documents. -

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (d)

 	
 Promptly (but in any event
 within two (2) Business Days) upon the receipt of the proceeds of any
 purchase price adjustment pursuant to the Escrow Agreement, Wave2Wave shall
 prepay the Term Loan in an amount equal to such proceeds.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 (e)

 	
 At all time prior to the
 entrance into a deposit account control agreement in form and substance
 satisfactory to Lender with respect to deposit account # 200008773227 at Wachovia
 Bank, Wave2Wave shall not permit more than . $25,000 to be held in such
 deposit account at any time.

 


A-9









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 13.

 	
 [Intentionally Omitted]

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 14.

 	
 Commercial Tort Claims

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 15.

 	
 Deposit Accounts

 	
  

 	
 NORTHFORK BANK - Operating
 Account # 3094005786

 
	
  

 	
  

 	
  

 	
 NORTHFORK BANK - NY
 Account # 3094005737

 
	
  

 	
  

 	
  

 	
 NORTHFORK BANK -
 PHILADELPHIA Account # 3094005778

 
	
  

 	
  

 	
  

 	
 NORTHFORK BANK - NJ
 Account# 3094005752

 
	
  

 	
  

 	
  

 	
 NORTHFORK BANK - CT
 Account $ 3094005745

 
	
  

 	
  

 	
  

 	
 NORTHFORK BANK - CHI
 Account# 3094005760

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 WACHOVIA Account#
 200008773227

 
	
  

 	
  

 	
  

 	
  

 
	
 16.

 	
 Borrowers’ Bank

 	
  

 	
 NORTH FORK BANK

 
	
  

 	
  

 	
  

 	
 Routing # 021407912

 
	
  

 	
  

 	
  

 	
 Account # 3094005737

 
	
  

 	
  

 	
  

 	
 For the account of
 Wave2Wave

 
	
  

 	
  

 	
  

 	
 Communications, NY Account

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 17.

 	
 Closing Conditions

 	
  

 	
  

 	
 (a)

 	
 Lender shall have received
 satisfactory evidence that no material adverse change has occurred in any
 Borrower’s or any Obligor’s business, operations, profits or prospects or in
 the condition of their property or interests in property, from the date of
 the most recent financial statements submitted to Lender.

 



A-10









	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 (b)

 	
 Lender shall have received
 cash flow Statements and pro forma balance sheets with adjusting entries (i)
 showing that the financing hereunder will provide sufficient funds for each
 Borrower’s projected needs; (ii) showing that after giving effect to the
 Related Transaction and the transactions. contemplated by this Agreement,
 each . Borrower: (A) will have a reasonably sufficient capital to engage in
 its business following the initial funding; (B) will have
 reasonably sufficient capital to engage in its business; and (C) will not
 incur debts beyond its ability to pay such debts as they mature; (iii) in
 form and substance satisfactory to Lender; (iv) certified by an officer of
 Borrower Representative; and (v) based upon agreed assumptions. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 (c)

 	
 Lender shall have received
 evidence that Wave2Wave has consummated (or concurrently with the initial
 credit extension hereunder will consummate) the Related Transactions in
 accordance with the terms of the Related Agreements in all material respects
 (without any material-amendment thereto or waiver thereunder unless. consented to by Lender).

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 (d)

 	
 Subject to the Transition
 Services Agreement with respect to Regulatory Approvals, Lender shall have received
 evidence that all necessary consents, permits and approvals (governmental or
 otherwise) required for the execution, delivery and performance by each
 Borrower of the Loan Documents and the Related TranSactions have been duly
 obtained and are in full force and effect.

 


A-11






          IN
WITNESS WHEREOF, each Borrower and Lender have signed this Schedule as of the
date set forth in the heading to the Agreement. 


	
  

 	
  

 	
  

 	
  

 
	
 Borrowers:

 	
  

 	
 Lender:

 
	
  

 	
  

 	
  

 	
  

 
	
 Wilmington
 Trust Company and George Jeff

 	
  

 	
 GREYSTONE BUSINESS CREDIT
 II, L.L.C.

 
	
 Mennen as
 co-trustees U/A/D November 25,

 	
  

 	
  

 	
  

 
	
 1970, as
 amended for the benefit of John Henry Mennen

 	
  

 	
 By

 	
 /s/ Illegible

 
	
  

 	
  

 	
  

 	
 Authorized
 Signatory

 



	
  

 	
  

 	
  

 
	
 By: 

 	
  

 	
  

 
	
  

 	

 


 
	
  

 	
 George Jeff
 Mennen, Co-Trustee
 U/A/D

 
	
  

 	
 November 25, 1970, as
 amended for the

 
	
  

 	
 benefit of John Henry Mennen
 

 
	
  

 	
  

 	
  

 
	
 By:

 	
 Wilmington
 Trust Company, Co-Trustee 

 
	
  

 	
 U/A/D
 November 25, 1970, as amended 

 
	
  

 	
 for the
 benefit of John henry Mennen 

 
	
  

 	
  

 	
  

 
	
 By:

 	
  

 
	
  

 	

 


 
	
  

 	
 Mark A.
 Oiler, Vice President 

 
	
  

 	
  

 	
  

 
	
 WAVE2WAVE COMMUNICATIONS,
 INC. 

 
	
  

 	
  

 	
  

 
	
 By 

 	
  

 
	
  

 	

 


 
	
 Its

 


A-6





          IN
WITNESS WHEREOF, each Borrower and Lender have signed this Schedule A as of the date set forth in the heading to the Agreement. 


	
  

 	
  

 	
  

 	
  

 
	
 Borrowers:

 	
  

 	
 Lender:

 
	
  

 	
  

 	
  

 	
  

 
	
 Wilmington
 Trust Company and

 	
  

 	
 GREYSTONE BUSINESS CREDIT
 II, L.L.C.

 
	
 George Teff Mennen as co-trustees

 	
  

 	
  

 	
  

 
	
 U/A/D November 25, 1970, as

 	
  

 	
 By

 	
  

 
	
 amended for the benefit of John Henry Mennen

 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
 Its
 Authorized Signatory

 






	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 
	
  

 	

 


 
	
  

 	
 George Jeff
 Mennen, Co-Trustee U/A/D 

 
	
  

 	
 November 25,
 1970, as amended for the 

 
	
  

 	
 benefit of
 John Henry Mennen 

 
	
  

 	
  

 	
  

 
	
 By:

 	
 Wilmington
 Trust Company, Co-Trustee

 
	
  

 	
 U/A/D November 25, 1970; as amended

 
	
  

 	
 for the
 benefit of John Henry Mennen

 
	
  

 	
  

 	
  

 
	
 By:

 	
 /s/ Mark A.
 Oller 

 
	
  

 	
 Mark A.
 Oller, Vice President 

 
	
  

 	
  

 	
  

 
	
 WAVE2WAVE COMMUNICATIONS,
 INC.

 
	
  

 	
  

 	
  

 
	
 By

 	
  

 	
  

 
	
  

 	

 


 
	
 Its 

 	
  

 	
  

 


A-6





          IN
WITNESS ‘WHEREOF, each Borrower and Lender have signed this Schedule A as of
the date set forth in the heading to the Agreement. 


	
  

 	
  

 	
  

 	
  

 
	
 Borrowers:

 	
  

 	
 Lender:

 
	
  

 	
  

 	
  

 	
  

 
	
 Wilmington
 ‘Trust Company and

 	
  

 	
 GREYSTONE
 BUSINESS CREDIT II, LLC

 
	
 George
 Jeff Mennen as co-trustees

 	
  

 	
  

 	
  

 
	
 U/A/D
 November 25, 1970, as

 	
  

 	
 By

 	
  

 
	
 amended
 for the benefit of John

 	
  

 	
  

 	
 

 
	
 Henry
 Mennen

 	
  

 	
  

 	
 Its Authorized Signatory

 






	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 
	
  

 	

 


 
	
  

 	
 George Jeff Mennen,
 Co-Trustee U/A/D

 
	
  

 	
 November 25, 1970, as
 amended for the

 
	
  

 	
 benefit of Jobn Henry
 Mennen

 
	
  

 	
  

 	
  

 
	
 By:

 	
 Wilmington Trust Company,
 Co-Trustee

 
	
  

 	
 U/A/D November 25; 1970;
 as amended

 
	
  

 	
 for the benefit of John
 Henry Mennen

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 [Illegible]

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
 Its
 President

 



WAVE2WAVE COMMUNICATIONS, INC. 

By: /s/ Steve Asman 

Steve Asman 

President 


A-6






Schedule B


Definitions


          This
Schedule is an integral part of the Loan and Security Agreement between JOHN MENNEN TRUST U/A/D NOVEMBER 25, 1970, WAVE2WAVE COMMUNICATIONS, INC. and. GREYSTONE BUSINESS CREDIT 11,
L.L.C. (the “Agreement”).


As used in the Agreement, the following terms have the following meanings: 


                    “Account”
has the meaning set forth in the UCC.


                    “Account
Debtor” has the meaning set forth in. the UCC. 


                    “Advance” has the meaning set forth in Section 1.1. 


                    “Affiliate”
means, with
respect to any Person, a trustee, partner, shareholder, member, manager,
director, officer, or employee of such Person, any parent or subsidiary of such
Person, or any Person controlling, controlled by or under common control with
such Person or any other Person affiliated, directly or indirectly, by virtue
of family membership, ownership, management or otherwise. A Person shall be
deemed to be “controlled by” any other Person if such Person possesses,.
directly or indirectly, power to vote 5% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors or
managers or power to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise. Unless expressly
stated otherwise herein, Lender shall not be deemed an Affiliate of any
Borrower, Obligor or any Subsidiary of any Borrower or Obligor. 


                    “Agreement”
and “this
Agreement” mean the Loan
and Security Agreement of which this Schedule B is a part and the Exhibits and
Schedules thereto as amended, restated, supplemented or otherwise modified from
time to time 


                    “Bankruptcy
Code” means the United
States Bankruptcy Code (11 U.S.C. § 101 et seq.). 


                    “Borrowers”
has the meaning set
forth in the heading to the Agreement. 


                    “Borrower
Representative” means.
Wave2Wave. 


                    “Borrowers’
Address” means
433 Hackensack Avenue, Hackensack, New Jersey 07601. 


                    “Business
Day” means a day other
than a Saturday or Sunday or any other day-on which Lender or banks in New York
are authorized to close. 


B-1





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


                    “Chattel
Paper” has the meaning
set forth in the UCC. 


                    “Closing
Fee” has the meaning set
forth in Section 2.2(a). 


                    “Collateral”
means all
property and interests in property in or upon which a security interest or
other Lien is granted pursuant to this Agreement or the other Loan Documents,
including all of the property of each Borrower described in Section 3.1. 


                    “Commercial
Tort Claims” has
the meaning set forth in the UCC. 


                    “Default” means any event which with notice or passage
of time, or both, would constitute an Event of Default. 


                    “Default
Rate” has the meaning
set forth in Section 2.1. 


                    “Deposit
Account” has the meaning
set forth in the UCC. 


                    “Document”
has the meaning set
forth in the UCC. 


                    “Early
Termination Fee” has
the meaning set forth in Section 7.2. 


                    “Electronic
Chattel Paper” has
the meaning set forth in the UCC. 


                    “Eligible
Securities” means,
at any time of determination, marketable Securities and Money owned by the
Mennen Trust (other than the Capital Stock of -.Wave2Wave) held in the Securities
Accounts and pledged..to Lender which are not subject to any Lien (other than
the Lien granted to Lender pursuant to the Loan Documents) and which Lender in
its sole and absolute discretion, deems to be eligible for borrowing purposes;
it is hereby agreed and understood that any Security purchased by the Mennen
Trust after the date hereof shall not be an Eligible Security unless such
Security has been issued by an entity with a market capitalization in excess of
$300,000,000. 


                    “Equipment”
has the meaning set
forth in the UCC. 


                    “ERISA”
means the
Employee Retirement Income Security Act of 1974 and all rules, regulations and
orders promulgated thereunder. 


                    “Escrow
Agreement” means that
certain Escrow Agreement dated of even date herewith among Seller, Seller
Shareholders, RISK, Wave2Wave and others. 


                    “Event of
Default” has the meaning
set forth in Section 8.1. 


B-2





                    “Excluded
Collateral Location” means a location at which Collateral is located pursuant to (i) a
building services agreement, (ii) a tower license agreement or (iii) an
individual (as opposed .to business) customer agreement, and, in each case, at
which location the value of such Collateral does not exceed $5,000. 


                    “Fixtures”
has the meaning
set forth in the UCC. 


                    “GAAP”
means generally
accepted accounting principles as in effect from time to time, consistently
applied. 


                    “General
Intangibles” has
the meaning set forth in the UCC. 


                    “Goods”
has the meaning
set forth in the UCC. 


                    “Instrument”
has the meaning
set forth in the UCC. 


                    “Inventory”
has the meaning
set forth in the UCC, 


                    “Investment
Property” has the
meaning set forth in the UCC. “Lender” has the meaning set. forth in the heading to the Agreement. 


                    “Lien”
means any
interest in property securing an obligation owed to, or a claim by, a Person
other than the owner of the property, whether such interest is based on common
law, statute or contract, including rights of sellers under conditional sales
contracts or title retention agreements and reservations, exceptions,
encroachments, easements, rights-of-way,
covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
property. For the purpose of this Agreement, Borrower shall be deemed to be the
owner of any property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person. for security purposes. 


                    “Loan
Account” has the
meaning set forth in Section 2.4. 


                    “Loan
Documents” means,
collectively, the Agreement,. the Pledge Agreement, the Subsidiary Guaranty,
the Mennen Guaranty, the Subsidiary Security Agreement, the RNK Documents and
all notes, guaranties, security agreements,, certificates, landlord’s
agreements, lock box and blocked account agreements and all other agreements,
documents and instruments now or hereafter executed or delivered by any
Borrower or any Obligor in connection with, or to evidence the transactions
contemplated by, this Agreement. 


                    “Loan
Limits” means,
collectively, all limits on the amount of Loans set forth in this Agreement. 


                    “Loans” means the Term Loan.






                    “Maturity
Date” means the date set forth in Section 7 of
Schedule A_


                    “Maximum
Facility Amount” means the amount set forth in
Section 2(a) of Schedule A. 


                    “Mennen
Brothers Note” means that certain promissory note
dated June 22, 2007 issued by Wave2Wave to M Brothers (formerly Hide Away
Partners), 25 Hannover Road, Florham Park, New Jersey 07932, in the original
principal amount of $250,000, as in effect on the date hereof. 


                    “Mennen
Guaranty” means that certain Individual Guaranty
dated as of the date hereof by George Jeff Mennen in favor of Lender, as
amended, restated, supplemented or otherwise modified from time to time. 


                    ‘Minimum
Borrowing Fee” has the meaning set forth in
Section 2.2(c). 


                    “Minimum
Loan Amount” means $20,000,000_ 


                    “Money”
has the meaning set forth in the UCC 


                    “Net
Revenue” means gross revenue minus discounts,
returns and allowances with respect thereto. 


                    “Obligations”
means all present and future Loans, advances, - debts, liabilities, obligations, guaranties, covenants, duties and indebtedness
at any time owing by any Borrower or any Obligor to Lender, arising under this
Agreement or any other Loan Document, whether arising from an extension of
credit, guaranty, indemnification or otherwise whether direct or indirect
(including those acquired by assignment and any participation by Lender in
Borrowers’ indebtedness owing to others), whether absolute or contingent,
whether due or to become due, and whether arising before or after the
commenceinent of a proceeding under the Bankruptcy Code or any similar statute
whether or not allowed in any proceeding under the Bankruptcy Code, including all interest, charges,
expenses, fees, attorney’s fees, expert witness fees, audit fees, letter of
credit fees, Closing Fees, Servicing Fees, Minimum Borrowing Fees and any other
sums chargeable to Borrower under this Agreement or under any other Loan
Document.  


                    “Obligor”
means any guarantor; endorser, acceptor, surety or
other person liable on, or with respect to, the Obligations or who is the owner
of any property which is security for the Obligations, other than Borrowers. 


                    “Permitted
Debt” means (i) indebtedness owing by Wave2Wave to
the Seller pursuant to the Seller Notes, (ii) indebtedness incurred in
connection with purchase money security interests or equipment leases not to
exceed the amounts set forth with respect thereto in Sections 8(b) and 8(c) of
Schedule A, (iii) indebtedness listed on Section 9(k) of Schedule A and (iv)
refinancings, renewals or extensions of (ii) and (iii) so long as: (A) the terms and conditions of such
refmancings, renewals, or extensions do not, in Lender’s 


B-4





judgment,
materially impair the prospects of repayment of the Obligations by Borrowers or
materially impair any Borrower’s creditworthiness, (B) such refinancings,
renewals, or extensions do not result in an increase in the principal amount
of, or interest rate with respect to, the indebtedness so refinanced, renewed,
or extended, (C) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity of the indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions ‘that, taken as a
whole, are materially more burdensome or restrictive to any Borrower, (D) if
the indebtedness that is refinanced, renewed, or extended was subordinated in
right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension indebtedness must include subordination
terms and conditions that are at least as favorable to the Lender as those that
were applicable to the refinanced, renewed, or extended indebtedness, and (E)
the indebtedness that is refinanced, renewed, or extended is not recourse to
any Person that is liable on account of the Obligations other than those.
Persons which were obligated with respect to the indebtedness that was
refinanced, renewed, or extended. 


                    “Permitted
Liens” means: (i) purchase money security interests in
specific items of Equipment in an aggregate amount not to exceed the limit set
forth in Section 8(b) of Schedule A; (ii) leases of specific items of Equipment
in an aggregate amount not to exceed the limit set forth in Section 8(c) of
Schedule A; (iii) Liens for taxes not yet due and payable; (iv) additional
Liens which are fully subordinate to the security interests of Lender and are
consented to in writing by Lender; (v) security interests being terminated
concurrently with the execution of this Agreement; (vi) Liens of materialmen,
mechanics or carriers, but excluding Liens in favor of warehousemen, arising in
the ordinary course of business and securing obligations which are not
delinquent; (vii) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clause (i) or (ii) above; provided, that any extension,
renewal or replacement Lien is limited to the property, encumbered
by the existing Lien and the principal amount of the indebtedness being
extended, renewed or refinanced does not increase; (viii) Liens in favor of
customs and revenue authorities which secure payment of customs duties in
connection with the importation of goods; (ix)
security deposits posted in connection with real property leases or
subleases; (x) Liens in favor of the Seller securing the Seller Notes; (xi)
existing Liens set forth on Section 9(1) of Schedule A and (xii) Liens on the
assets of the Mennen Trust other than Collateral with respect to debt of the
Mennen Trust permitted by clause (iii) of the first sentence of Section 5.20.
Lender will have the right to require, as a condition to its consent under
clause (iv) and (x) above, that the holder of the additional Lien sign an
intercreditor agreement in form and substance satisfactory to Lender, in its
sole discretion, acknowledging that the Lien is subordinate to the security interests
of Lender, and agreeing not to take any action to enforce its subordinate Lien
so long as any Obligations remain outstanding, and that Borrowers agree that
any uncured default in any obligation secured by the subordinate Lien entitling
the holder of such Lien to exercise rights and remedies shall also constitute
an Event of Default’ under this Agreement. 


B-5





                    “Person”
means any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated
organization, association, corporation, government or any agency or political
division thereof, or any other entity. 


                    “Pledge
Agreement” means that certain Stock Pledge Agreement dated as of the date hereof among Borrowers and Lender, as amended,
restated, supplemented or otherwise modified from time to time. 


                    “Prime
Rate” means, at any given time, the prime rate as quoted in The Wall
Street Journal as the base rate on corporate loans posted as of
such time by at least 75% of the nation’s 30 largest banks (which rate is not
necessarily the lowest rate offered by such batiks). 


                    “Proceeds”
has the meaning set forth in the UCC. 


                    “Regulatory
Approval” means those certain approvals of the
Related Transactions as set forth in Section l0 to Schedule A..


                    “Related
Agreements” means that certain Amended and
Restated Stock Purchase Agreement, dated- of even date herewith, among Seller,
Seller Shareholders, RNK, Wave2Wave and others, the Seller Notes, the Seller
Security Agreements, the Transition Services Agreement, the Escrow- Agreement,
that certain Contingent Amount Agreement dated of even date herewith among
Seller, RNK, Wave2Wave and the Eligible Employees named- therein and that
certain Employment Agreement dated of even date herewith among RNK, Wave2Wave
and Richard N. Koch. 


                    “Related
Transactions” means the transactions contemplated by the Related Agreements. 


                    “Released
Parties” has the meaning set forth in Section 6.1:


                    “Reserves”
has the meaning set forth in Section 1.2. 


                    “RNK’
means RNK, Inc., a Massachusetts corporation. 


                    “RNK
Documents” means those documents, instruments and
agreements set forth on Exhibit C hereto, as amended, restated, supplemented or
otherwise modified in the sole discretion of Lender. 


                    “Sale”-has the
meaning set forth in Section 8.2. 


                    “Securities Accounts” shall
mean those certain securities accounts with account numbers 010894-001,
010894-004, 010894-006, 051095-003 located at Wilmington Trust Company, and
subject at all times to control agreements in form and substance satisfactory
to Lender in its sole discretion. 


                    “Security” has the
meaning set forth in the UCC. 


B-6





                    “Seller”
means RNK Holding Company, a Massachusetts business trust. 


                    
“Seller Notes” means those certain promissory
notes, dated as of the date hereof, made by Wave2Wave in favor of the Seller
and the other parties named as Creditors in the Seller Subordination Agreement,
in the aggregate principal amount of $30,666,930. 


                    
“Seller Shareholders” means Richard N. Koch and
Joy Tessier. 


                    “Seller
Security Documents” means (a) that certain
Security Agreement among Seller and Wave2Wave dated the date hereof, as
amended, restated, supplemented or otherwise modified from time to time
pursuant to the terms of the Seller Subordination Agreement and (b) that
certain Pledge Agreement among Seller and Wave2Wave to be entered into after
the Regulatory Approvals are granted (the terms of which are acceptable to
Lender), as amended, restated, supplemented or otherwise modified from time to
time pursuant to the terms of the Seller Subordination Agreement. 


                    
“Seller Subordination Agreement” means that
certain Subordination Agreement dated the date hereof between Lender and RNK
Holding Company,. as amended, restated, supplemented or otherwise modified from
time to time.

                    “Stock
Plan” means the Wave2Wave Communications, Inc. Stock Incentive
Plan established effective January 3, 2000 and amended as of September 8, 2006
(as in effect on the date hereof). 


                    “Servicing Fee” has
the meaning set forth in Section 2.2(c). 


                    “Subsidiary” means
any corporation or other entity of which a Person owns, directly or indirectly,
through one or more intermediaries, more than 50% of the Capital Stock or other
equity interest at the timeof determination. 


                    “Subsidiary Guaranty” means
that certain Corporate Guaranty among Wave2Wave VOIP Communications, a Delaware
limited liability company, LLC, Wave2Wave Data Communications, LLC, a Delaware
limited liability company, Wave2Wave Communications Mid-West Region, LLC, a
Delaware limited liability company, and Lender as amended, restated,
supplemented or otherwise modified from time to time. 


                    “Subsidiary
Security Agreement” means that certain Security
Agreement dated the date hereof among Wave2Wave VOIP Communications, LLC, a
Delaware limited liability company, Wave2Wave Data Communications, LLC, a
Delaware limited liability company, Wave2Wave Communications Mid-West Region,
LLC, a Delaware limited liability company and Lender as amended, restated,
supplemented or otherwise modified from time to time. 


                    “Tangible Chattel Paper” has
the meaning set forth in the UCC. 


B-7





                    “Term”
has the meaning set forth in Section 7.1.


                    “Term Loan” has the
meaning set forth in Section 1_1. 


                    “Transition
Services Agreement” means the Transition Services
Agreement dated as of the date hereof, by and among Seller, RNK, the
shareholders of the Seller and Wave as in effect on the date hereof.


                    “UCC” bmeans, at any given time, the
Uniform Commercial Code as adopted and in effect at such time in the State of New York. 


                    “Wave2Wave” has the
meaning set forth in the heading to this Agreement. 


          All
accounting terms used in this Agreement, unless otherwise indicated, shall have
the meanings given to such terms in accordance with GAAP. All other terms
contained in this Agreement, unless otherwise indicated, shall have the
meanings provided by the UCC, to the extent such terms are defined therein. The
term “including,” whenever
used in this Agreement, shall mean “including but not limited to.” The singular
form of any term shall include the plural form, and vice versa, when the
context so requires. References to Sections, subsections and Schedules are to
Sections and subsections of, and Schedules to, this Agreement. All references
to agreements and statutes shall include all amendments thereto and successor
statutes in the case of statutes. 






          IN
WITNESS WHEREOF, each Borrower and Lender have signed this Schedule B as of the
date set forth in the heading to the Agreement.


	
  

 	
  

 	
  

 	
  

 	
  

 
	

 Borrowers:

	
  

 	
 Lender:

 
	
  

 	
  

 	
  

 
	
 Wilmington
 Trust Company and George 

 Jeff Mennen as co-trustees U/A/D 

 	
  

 	
 GREYSTONE BUSINESS CREDIT II, L.L.C.

 
	
 November 25,
 1970, as amended for the 

 benefit of John Henry Mennen

 	
  

 	
 By /s/
 Illegible 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
            Its Authorized Signatory

 
	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 	
  

 
	
  

 	

 



 	
  

 	
  

 
	
  

 	
 George Jeff
 Mennen, Co-Trustee U/A/D 

 November 25, 1970, as amended for the 
benefit of
 John Henry Mennen

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
 Wilmington
 Trust Company, Co-Trustee 

 U/A/D November 25, 1970, as amended 

 for the benefit of John Henry Mennen

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	

 


 	
  

 	
  

 
	
  

 	
  

 	
 Mark A.
 Oller, Vice President

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 WAVE2WAVE
 COMMUNICATIONS, INC.

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 By

 	
  

 	
  

 	
  

 
	
  

 	

 


 	
  

 	
  

 
	
 Its

 	
  

 	
  

 	
  

 









          IN
WT NESS WHEREOF, each Borrower and Lender have signed this Schedule B as of the
date set forth in the heading to the Agreement.


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 Borrowers:

	
  

 	
 Lender:

 
	
  

 	
  

 	
  

 
	
 Wilmington Trust Company and George 

 Jeff Mennen as co-trustees ‘Win

 	
  

 	
 GREYSTONE
 BUSINESS CREDIT II, L.L.C.

 
	
 November 25, 1970, as amended for the 

 benefit of John Henry Mennen

 	
  

 	
 By 

 	
  

 
	
  

 	
  

 	
  

 	

 


 
	
 By:

 	
 /s/ George Jeff Mennen

 	
  

 	
  

 	
 Its Authorized Signatory

 
	
  

 	

 


 	
  

 	
  

 
	
  

 	
 George Jeff
 Mennen, Co-Trustee U/A/D November 25, 1970, as amended for the benefit of John
 Henry Mennen

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
 Wilmington
 Trust Company, Co-Trustee U/A/D November 25, 1970, as amended for the benefit
 of John Henry Mennen

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	

 


 	
  

 	
  

 
	
  

 	
 By:

 	
 Mark A. Oller, Vice President

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 WAVE2WAVE COMMUNICATIONS,
 INC.

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 By

 	
  

 	
  

 	
  

 
	
  

 	

 


 	
  

 	
  

 
	
 Its

 	
  

 	
  

 	
  

 










          IN
WITNESS WHERBOF, each Borrower and Lender have signed this Schedule B as of the
date set forth in the heading to the Agreement.


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 Borrowers:


	
  

 	
 Lender:

 
	
 Wilmington Trust Company and George 

 Jeff Mennen as co-trustees U/A/D 

 	
  

 	
 GREYSTONE
 BUSINESS CREDIT II, L.L.C.

 
	
 November 25, 1970, as amended for the 

 benefit of John Henry Mennen

 	
  

 	
 By

 	
  

 
	
  

 	
  

 	
  

 	

 


 
	
  

 	
 

 	
  

 	
  

 	
 Its
 Authorized Signatory

 
	
 By: 

 	
 George Jeff Mennen, Co-Trustee U/A/D November 25, 1970, as amended for the benefit of John
 Henry Mennen

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
 Wilmington
 Trust Company, Co-Trustee U/AID November 25, 1970, as amended for the benefit
 of John Henry Mennen

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Mark A. Oller

 	
  

 	
  

 
	
  

 	
  

 	
 Mark A. Oller, Vice President

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 WAVE2WAVE COMMUNICATIONS,
 INC

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 By

 	
  

 	
  

 	
  

 
	
  

 	

 


 	
  

 	
  

 
	
 Its

 	
  

 	
  

 	
  

 










          IN
WITNESS WHEREOF, each Borrower and Lender have signed this Schedule B as of the
date set forth in the heading to the Agreement.


	
  
 	
  
 	
  
 	
  
 	
  
 	
  
 
	

 Borrowers:
	
  
 	
 Lender:
 
	
 Wilmington Trust Company and George 

 Jeff Mennen as co-trustees U/A/D 
 	
  
 	
 GREYSTONE BUSINESS CREDIT II, L.L.C.
 
	
 November 25, 1970, as amended for the 

 benefit of John Henry Mennen
 	
  
 	
 By: 
 	
  
 
	
  
 	
  
 	
  
 	

 
 
	
 By: 
 	
  
 	
  
 	
  
 	
 Its Authorized Signatory
 
	
  
 	

 
 	
  
 	
  
 	
  
 
	
  
 	
 George Jeff
 Mennen, Co-Trustee U/A/D November 25, 1970, as amended for the benefit of John Henry Mennen
 	
  
 	
  
 
	
  
 	
  
 	
  
 	
  
 
	
 By:
 	
 Wilmington
 Trust Company, Co-Trustee U/A/D November 25, 1970, as amended for the benefit
 of John Henry Mennen
 	
  
 	
  
 
	
  
 	
  
 	
  
 	
  
 
	
  
 	
 By: 
 	
 /s/ Mark A. Oiler
 	
  
 	
  
 
	
  
 	
  
 	

 
 	
  
 	
  
 
	
  
 	
  
 	
 Mark A.
 Oller, Vice President
 	
  
 	
  
 
	
  
 	
  
 	
  
 	
  
 	
  
 
	
 WAVE2WAVE COMMUNICATIONS,
 INC.
 	
  
 	
  
 
	
  
 	
  
 	
  
 	
  
 
	
 By:
 	
 [Illegible]
 	
  
 	
  
 
	
  
 	
  
 	
  
 
	
 Its
 President
 	
  
 	
  
 










Exhibit A


FORM OF TERM NOTE


	
  

 	
  

 
	
 $34,000,000

 	
 New
 York, New York

 
	
  

 	
 October
 12, 2007

 



                    FOR
VALUE RECEIVED, the undersigned, WILMINGTON TRUST COMPANY AND GEORGE JEFF MENNEN AS
CO-TRUSTEES U/A/D NOVEMBER 25, 1970, AS AMENDED FOR
Tat: BENEFIT OF JOHN HENRY MENNEN and WAVE2WAVE COMMUNICATIONS,
INC.(each a “Borrower” and collectively, “Borrowers”), hereby unconditionally promises to pay to the
order of GREYSTONE BUSINESS CREDIT II, L.L.C. (“Lender”), a Delaware limited liability company having an address at 152 West 57th
Street, 60th Floor, New York, New York 10019, or at such other place as the
holder of this Term Note (“Term Note”) may from time to time designate in writing, in lawful money of the
United States of America and in immediately available funds, the principal sum
of Thirty-Four Million and No/100 Dollars ($34,000,000). Reference is hereby
made to the Loan and Security Agreement between Borrowers and Lender of even
date herewith (the “Loan Agreement”) for
a statement of the terms and conditions under which the loan evidenced hereby
was made and is to be repaid. This Term Note evidences a Term Loan Advance
described in the Loan Agreement. Capitalized terms used herein which are not
otherwise specifically defined herein shall have the meanings ascribed to such
terms in the Loan Agreement. 


                    The
outstanding principal balance of this Term Note shall be payable in full on the
Maturity Date. Prior thereto, the Term Note shall be repayable as set forth in
the Loan Agreement. 


                    Each
Borrower further promises to pay interest on the outstanding principal amount
hereof from the date hereof until payment in full hereof at the per annum-rate
equal to the Prime Rate in effect from time to time plus three and one quarter
percent. (3.25%). Following the occurrence and during the
continuance of an Event of Default the entire outstanding principal balance of
this Term Note shall, at Lender’s option, bear interest until paid in full at a
per annum rate equal to the interest rate applicable to the Term Loan from time
to time in effect plus two percent (2.00%). Until maturity, interest on the
outstanding principal amount hereof shall be payable in arrears on the first
day of each month, commencing November 1, 2007 and on the Maturity Date. After
maturity, whether by acceleration or otherwise, accrued interest shall be
payable on demand. Interest as aforesaid shall be charged for the actual number
of days elapsed over a year consisting of three hundred sixty (360) days. On the
actual daily outstanding balance hereof. Changes in 





the interest
rate provided for herein which are due to changes in the- Prime Rate Shall be
effective on the date of the change in the Prime Rate. 


                    Notwithstanding
anything to the contrary contained herein, the aggregate of all interest
hereunder and charged or collected by Lender is not intended to exceed the
highest rate permissible under any applicable law, but if it should, such
interest shall automatically be reduced to the extent necessary to comply with
applicable law and Lender will refund to Borrowers any such excess interest
received by Lender. 


                    Subject
to Section 7.2 of the Loan Agreement, Borrowers may, prepay the outstanding
principal balance hereof in whole or in part. Any partial prepayment of the
Term Loan shall be applied to the unpaid installments of the Term Loan in the
inverse order of their maturities. 


                    Upon
and after the occurrence of an Event of Default, this Tenn Note may, at The
option of Lender, and without demand, notice or legal process of any kind, be
declared, and immediately shall become, due and payable. 


                    Payments
received by Lender from any Borrower on this Term Note shall be applied to the
Obligations as provided in the Loan Agreement. 


                    Presentment,
demand, protest and notice of presentment, den3aixl, nonpayment and protest are
hereby waived by each Borrower. 


                    THIS
TERM NOTE SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES
HERETO DETERMINED, IN ACCORDANCE. WITH THE LAWS OF THE STATE OF NEW YORK. If
any provision of this Term Note or the application thereof shall be held to be
void or unenforceable by any court of competent jurisdiction, such defect shall
not affect the remainder of this Term Note, which shall continue in full force and effect. Whenever in this Term
Note reference is made to Lender or any Borrower, such reference shall be
deemed to include, as applicable, a reference to their respective successors
and assigns. The provisions- of this Term Note shall be binding. upon each Borrower and its successors
and assigns, and shall inure to the benefit of Lender and its successors and
assigns. 


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Wilmington Trust Company and GeorgeJeff

 Mennen as co-trustees U/A/D November 25,

 1970, as amended for the benefit of John

 Henry Mennen

 
	
  

 
	
  

 
	
  

 
	
  

 	
  

 
	
  

 	
 By:

 	
  

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
 George Jeff
 Mennen, Co-Trustee U/A/D

 November 25, 1970, as amended for the -

 benefit of John Henry Mennen

 
	
  

 	
  

 
	
  

 	
  

 
	
  

 	
  

 
	
 Term Note

 	
  

 













	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 Wilmington Trust Company,
 Co-Trustee

 U/A/D November 25, 1970, as
 amended for
the benefit of John Henry Mennen

 
	
  

 	
  

 
	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
     Mark
 A. Oller, Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 WAVE2WAVE
 COMMUNICATIONS, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
 By

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Its

 	
  

 
	
  

 	
  

 	
  

 
	
 Term Note

 	
  

 	
  

 	
  

 









EXHIBIT B























EXHIBIT C





Pledge Supplement


                    This
Pledge Supplement is dated as of_______________, 20 and is provided in
accordance with the terms of the Pledge Agreement referenced below. The
undersigned directs that this Pledge Supplement be attached to the Pledge
Agreement, dated as of October [   ],2007, between the
undersigned, an Affiliate of the undersigned and GREYSTONE BUSINESS CREDIT II,
L.L.C. in its capacity as Lender (the “Pledge Agreement”; capitalized terms
used and not defined herein having the meanings assigned thereto in the Pledge
Agreement) and that the equity interests listed below shall be deemed to be
part of the Collateral. 


                    The
undersigned hereby certifies that the representations and warranties in Section
3 of the Pledge Agreement are and continue to be true and correct, both as to
the shares, instruments and any other property pledged prior to this Pledge
Supplement and as to the shares, instruments and any other property pledged
pursuant to this Pledge Supplement. The undersigned further agrees that this
Pledge Supplement may be attached to the Pledge Agreement and that the Stock
listed on this Pledge Supplement are a part of the Stock referred to in the
Pledge Agreement and shall secure all Obligations referred to in the Pledge
Agreement. Pursuant to the terms hereof and of the Pledge Agreement, Lender has
a valid second lien and security interest in 65% of the Stock of RNK, Inc. (and
a valid first lien and security interest in 35% of the Stock of RNK, Inc.),
free and clear of all other claims, and subject to no pledgeS, hypothecation,
mortgages, security interest, charges or other encumbrances, except those in
favor of Seller and Lender.


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Assignor

 	
  

 	
 Issuer

 	
  

 	
 Class of

 Interest

 	
  

 	
 Certificate(s)

 of Shares

 	
  

 	
 Number of

 Shares

 	
  

 	
 Percentage of

 Outstanding

 Shares

 	
  

 
	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	
  

 
	
 Wave2Wave 

 Communications, 

 Inc.

 	
  

 	
 RNK, Inc.

 	
  

 	
 Common

 	
  

 	
  [                  ]

 	
  

 	
 201,057

 	
  

 	
 100%

 	
  

 
	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 ,

 	
  

 	
  

 	
  

 	
 .

 	
  

 	
 .

 	
  

 
	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 	

 


 






	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 WAVE2WAVE
 COMMUNICATIONS, INC.

 
	
  

 	
  

 
	
  

 	
 By

 	
  

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name

 	
  

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Title

 	
  

 	
  

 
	
  

 	
  

 	

 


 	
  

 













	
  

 
	
 GREYSTONE BUSINESS CREDIT II, L.L.C.  

 
	
 

 


STOCK PLEDGE AGREEMENT


                    This
Stock Pledge Agreement dated as of ________________ (the “Pledge Agreement”) is executed by RNK, INC., a Massachusetts corporation (“Assignor”),
whose address is c/o
Wave2Wave Communications, Inc., 433 Hackensack Avenue, Hackensack, New Jersey
07601, to and for the benefit of GREYSTONE
BUSINESS CREDIT II, L.L.C., a
Delaware limited liability company, as Lender under the Loan and Security
Agreement described below (“Lender”), whose address is 152 West 57th
Street, 60th Floor, New York, New York 10019. 


RECITALS:


                    A.
Lender has made loans (the “Loans”) to Wilmington Trust Company and George Jeff
Mennen as co-trustees U/A/D November 25, 1970, as amended for the benefit of
John Henry Mennen (the “Mennen Trust”) and Wave2Wave Communications, Inc., a
Delaware corporation (“Wave2Wave” and, together with the Mennen Trust, each a “Borrower”and
collectively the “Borrower?) under
and pursuant to that certain Loan and Security Agreement dated as of October
2007, executed by and among Borrowers and Lender (as amended, supplemented or
modified from time to time, the “Loan Agreement”).  


                    B.
As a condition to Lender entering into the Loan Agreement and making the Loans,
Lender required that upon the receipt of the final Regulatory Approval (as
defined in the Loan Agreement) that Assignor join into the Subsidiary Guaranty
(as defined in the Loan Agreement) pursuant to that certain Joinder Agreement of
even date herewith (the “Joinder Agreement”) in order to guaranty all
obligations of Borrowers to Lender under the Loan Agreement. 


                    C.
As a further condition to Lender entering into the Loan Agreement and making
the Loans, Lender required that Assignor join into the Subsidiary Security
Agreement (as defined in the Loan Agreement) pursuant to the Joinder Agreenient
and enter into this Pledge Agreement in order to grant the security interests
contemplated thereby in order to secure the payment and performance of
Assignor’s obligations hereunder and under the Subsidiary Guaranty. 


                    NOW,
THEREFORE, for and in consideration of the foregoing premises, which are hereby
incorporated herein as true, and the mutual promises and agreements contained
herein, Assignor and Lender hereby agree as follows: 


AGREEMENTS:


                    1. Grant of Security
Interest. To secure the
Obligations described in Paragraph 2, Assignor hereby assigns, pledges and
grants to Lender as a secured party and a secured creditor under the Uniform
Commercial Code of New York, in effect from time to time (the “UCC), a security interest in and to the following
(collectively, the “Collateral”):  


                    (a)
together with all voting rights thereto, the shares of the capital stock,
membership interests, partnership interests and other equity interests of any
the corporations, limited liability companies, limited partnerships or other
legal entities (collectively, the “Issuers”





and each, an “Issuer”) as evidenced by the Certificates
set forth on Schedule
I attached hereto (collectively, the “Certificates”), together with any capital stock, membership interests,
partnership interests and other equity interests of any Issuer delivered to
Lender pursuant to Section 4(b) hereof or otherwise in the possession of Lender
and any and all other shares of the capital stock, membership interests,
partnership interests and other equity interests of any Issuer hereafter owned
or acquired by Assignor by reason of a stock dividend or a sale. or other
transfer of the capital stock of any Issuer by Assignor, as a result of or in
connection with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, • stock split, spin-off
or split-off, together with all substitutions or replacements of any of the foregoing (and any such additional
shares of capital stock, membership interests, partnership interests and other
equity interests, with respect to which the Assignor shall execute and deliver
to Lender a pledge supplement in the form of Exhibit A attached hereto (a “Pledge Supplement”) (all of the foregoing together with any
other stock in any. Issuer required to be pledged and delivered hereunder being
collectively referred to herein as the “Stock”);


                    (b)
the Certificates and any and all other certificates now or hereinafter in the
possession of Assignor or Lender evidencing the Stock, together with any stock
powers therefor; 


                    (a)
all payments, income and dividends (whether in cash, stock or other property),
liquidating dividends, stock warrants, stock options, stock rights,
subscription rights, securities of any Issuer or any other distribution’s of
any other property which Assignor as now or may hereafter be entitled to
receive on account of the Stock (collectively, the “Distributions”;) and 


                    (d)
any and all products and proceeds of any kind of any and all of the foregoing
Collateral, including the proceeds of any insurance thereon, now or hereafter
owned or acquired by Assignor. 


                    2. Obligations.
The obligations secured by this Pledge Agreement (the “Obligations”) are the following: 


                    (a)
any and all obligations and liabilities of Assignor to Lender whether direct or
indirect, joint or several, absolute or contingent, now or hereafter existing,
and however created, evidenced or arising, including, but not limited to, the
obligations and liabilities of Assignor arising under and pursuant to the Loan
Agreement and any and -all extensions or renewals thereof or replacements or
substitutions therefor; 


                    (b)
any and all sums advanced by Lender in order to preserve the Collateral or to
perfect its security interest in the Collateral; and 


                    (c)
in the event of any proceeding to enforce the collection of the Obligations,
the reasonable expenses of retaking, holding, preparing for sale or lease,
selling or otherwise disposing of or realizing on the Collateral, or of any
exercise by Lender of its rights in the event of a default under any agreement
between Assignor and Lender, together with reasonable attorneys’ fees and court
costs. 


                    3. Representations and
Warranties. Assignor represents and warrants to Lender as
follows: 


-2-





                    (a) Assignor
is duly formed and validly existing under the laws of the Commonwealth of
Massachusetts. Assignor has full and adequate power to carry on and conduct its
business as presently conducted, and is duly licensed or qualified in all
foreign jurisdictions in which any failure to do so would have a material
adverse effect on Assignor. 


                    (b) The
exact legal name of Assignor is as set forth in the preamble of this Agreement,
and, except as set forth in the schedules attached to the Joinder Agreement,
Assignor does not currently conduct, nor has it during the last five (5) years
conducted, business under any other name or trade. name. Assignor will not
change its name, its organizational identification number, if it has one, its
type of organization, its jurisdiction of organization or other legal
structure, except that Assignor may change its name with at least thirty days’
prior written notice to Lender. 


                    (c)
Assignor has full right, power and authority, without obtaining the consent of
any other person, body or governmental agency, to enter into and deliver this
Pledge Agreement, to pledge, assign and grant a security interest in and deliver
the Collateral to Lender, and to perform all of its duties and obligations
under this Pledge Agreement. 


                    (d)
All necessary and appropriate action has been taken on the part of Assignor to
authorize the execution and delivery of this Pledge Agreement. This Pledge
Agreement is a valid and binding agreement and contract of Assignor in
accordance with its terms. No basis presently exists for any claim against
Lender or any Lender under this Pledge Agreement or with respect to the enforcement
thereof, and this Pledge Agreement is subject to no defenses of any kind. 


                    (e)
The execution, delivery and performance by Assignor of this Pledge Agreement
and any other documents or instruments to be executed and delivered by Assignor
in connection therewith is valid, binding and enforceable against Assignor, and
shall not: (i) violate or contravene articles of incorporation or bylaws or
comparable documents of Assignor or any existing law or regulation or any
order, writ, injunction or decree of any court or governmental authority, or
(ii) conflict with, be inconsistent with, or result in any breach or default of
any of the terms, covenants, conditions, or provisions of any indenture,
mortgage, deed of trust, instrument, document, agreement or contract of any
kind to which Assignor is a party, or by which Assignor or any of its property
or assets may be bound, and will not result in the creation or-imposition
of any security interest in any properties pursuant to the provisions of any such mortgage, indenture, contract
or other agreement. 


                    (f)
To the best of Assignor’s knowledge, no condition, circumstance, document,
restriction, litigation or proceeding (or threatened litigation or proceeding
or basis therefore exists which (i) could adversely affect the validity or
priority of the liens and security interests granted to Lender hereunder, (ii)
could materially adversely affect the ability of Assignor to perform the
obligations under this. Pledge Agreement, (iii) would constitute an Event of
Default hereunder or (iv) would constitute such an Event of Default with the
giving of notice or lapse of time or both. 


                    (g)
None of the actions contemplated by this Pledge Agreement are in violation of
or restricted by any restrictive agreement, stop transfer order, any legend
appearing on the certificates evidencing any of the Collateral consisting of
Stock, the Securities Act of 


-3-





1933; as amended, the Securities Exchange
Act of 1934, as amended, any state blue-sky or securities law, any federal or
provincial blue-sky or securities law, or any rule or regulation issued under
the foregoing acts and laws. 


                    (h)
Assignor is the beneficial and record owner of the Collateral purported to be
owned by it. All of the Collateral is free of all pledges, hypothecation,
mortgages, security interests, charges or other encumbrances, except those in
favor of Lender, Seller (as permitted hereunder) and Permitted Liens of the
type described in clause (iii) of the definition thereof. 


                    (i)
All of the Stock pledged hereunder has been and continues to be duly and
validly authorized and issued, fully paid and nonassessable shares of each
Issuer of such stock, and was not issued in violation of any preemptive rights
or any agreement by which such Issuer is bound. 


                    (j)
Assignor has either previously or simultaneously herewith delivered to Lender
the Certificates for all of the Stock, together with appropriate stock powers
therefor executed in blank by the Assignor. 


                    (k)
Upon delivery of the duly executed Pledge Agreement and any Certificates
evidencing all of the Stock, together with stock powers therefor, Lender shall
have a valid first lien and security interest in all of the Collateral
hereunder (subject only to the following sentence), free and clear of all other
claims, and subject to no pledges, hypothecation, mortgages, security interest,
charges or other encumbrances, except in favor of Lender. 


                    4. Covenants.
Until the Obligations have been satisfied and discharged in full, Assignor
covenants to and agrees with Lender as follows: 


                    (a)
Assignor shall not sell, assign, deliver, convey or otherwise dispose of or
transfer, or create, grant, incur or permit to exist any pledge, mortgage,
lien, security interest, charge or other encumbrance whatsoever in or with
respect to the Collateral hereunder or any interest therein. 


                    (b)
Assignor shall promptly deliver to Lender a Pledge Supplement, duly executed by
the Assignor, with respect to shares of any additional capital stock,
membership interests, partnership interests or any other equity interests of
any Issuer. Assignor hereby authorizes Lender to attach each Pledge Supplement
to this Agreement. 


                    (c)
If, at any time following an Event of Default hereunder, Assignor receives or
is. entitled to receive into its possession any payments, checks, instruments, chattel paper,
dividends on account of or in respect of the Collateral, or any other
Collateral or proceeds thereof, Assignor shall accept such Collateral as
Lender’s agent, in trust for Lender without commingling such Collateral with
any other property of Assignor
and shall, upon receipt, immediately deliver such Collateral to Lender in the
exact form so received, with any necessary endorsement of such Assignor or
stock powers executed by Assignor in blank. 


                    (d)
After any Event of Default has occurred and is continuing, Lender may exercise
(to the exclusion of Assignor) the voting power and all other incidental rights
of ownership with respect to the Stock or other shares of stock or ownership
interests constituting 


-4-





Collateral. Assignor hereby
grants Lender an irrevocable •proxy, under such circumstances, to vote the Stock and such other Collateral. Assignor hereby covenants to
promptly deliver to Lender such additional proxies, stock powers, appointments
and other documents as may be necessary to allow Lender to exercise such voting
power and other incidental ownership rights. The proxy, voting rights and other
rights under this Section 4(d) are coupled with an interest and are
irrevocable. 


                    (e)
Assignor will, at all times and from time to time, defend. the Collateral
against any and all claims of any person or party whose claims are adverse to
the claims, rights or interest of Lender, and Assignor ,shall indemnify and
hold Lender harmless from any and all such adverse claims. Assignor shall bear
all risk of loss, damage and diminution in value with respect to the
Collateral, and Assignor agrees that neither Lender nor any Lender shall have
any liability or obligation to Assignor with respect to, and is hereby released
by Assignor from any of, the foregoing. 


                    (f)
At any time and from time to time after the occurrence of an Event of Default
(as hereinafter defined) which is continuing uncured and unwaived, Assignor
shall, upon request of Lender, execute and deliver to Lender any proxies, stock
powers or assignments with respect to any of the Stock, or endorse any
instruments or chattel paper with respect to the Collateral as so requested. 


                    5. Events of Default. Assignor shall be in default under this
Pledge Agreement upon the occurrence of any one or more of the following events
or conditions (an “Event of befault”):  


                    (a)
Assignor shall default in the performance or fail to perform any promise,
covenant or agreement to be performed by Assignor hereunder; 


                    (b)
any misrepresentation or breach of any warranty by Assignor in this Pledge
Agreement; and 


                    (c)
any other Event of Default under the Loan Agreement.


                    6. Rifts and Remedies.. of. Lender. Upon the happening or occurrence. of an Event of Default
hereunder which is continuing uncured and unwaived, and at any time thereafter and fioin tinie’to tithe, Lender shall have all Of the
rights and remedies of a-secured party under the Uniform Commercial Code as
enacted in and then in effect in New York. In addition,. Lender shall also
have.* following rights and remedies: 


                    (a)
Without further notice to Assignor, Lender shall have the right and be entitled
to notify any Issuer of any of-the Stock to make payment to Lender and to
receive all Distributions to be applied toward the satisfaction of the
Obligations and to exercise all voting, conversion, exchange, subscription or
other corporate rights, privileges or options pertaining to such Stock. 


                    (b)
Lender shall have the right, at its discretion, to transfer to or register in
the name of Lender or any nominee of Lender any of the Collateral. 






                    (c)
Without demand, notice or advertisement, all of which are hereby expressly’
waived to the extent permitted by applicable law, Lender may sell, pledge,
transfer or otherwise dispose of, or enter into an agreement with respect to
the foregoing, or otherwise realize on the Collateral and any other Collateral,
or any part thereof, at any broker’s board or on any exchange ‘or at public or
private sale or sales, held at such place or places in the City of New York,
New York or otherwise, and at such time or times within ordinary business
hours, for a purchase price or prices in cash or, without assuming any credit
risk or thereby discharging the Obligations to the extent of said purchase price until paid in cash and reserving the right to resell the
Collateral upon the failure of said purchaser to so pay the purchase price
therefor, upon credit or future delivery, and upon such other terms and
conditions as Lender deems satisfactory, and, if required by law, as set forth
in any applicable notice. Lender shall not be obligated to make any such sale
pursuant to any such appliCable notice required by law. Lender may, without
notice or publication, adjourn any such sale or cause the same to be adjourned
from time to time by announcement at the time and place fixed for the sale, and
such sale may be made at any time or place to which the same may be so
adjourned. Lender, for its own account, may purchase any or all of the
Collateral at any public sale and, in lieu of payment of the purchase price
therefor, may set off or apply the purchase price against the Obligations.
Lender is authorized, at any sale, if it deems it advisable so to do, to
restrict the prcispective bidders or purchasers to financially reputable
persons who will represent and agree that they are purchasing for their own
account, for investment, and not with a view to the distribution or sale of any
of the Collateral. Upon any such sale, Lender shall have the right to deliver,
assign, and transfer to the purchaser thereof, including Lender, that portion
of the Collateral so sold. Each purchaser, including Lender, at any sale
shall hold the property sold absolutely free from any claim or right of
whatsoever kind, including any equity or right of redemption of Assignor, and
Assignor hereby specifically waives and releases all rights of redemption, stay
or appraisal which it has or may have under any rule or law or statute now
existing or hereafter adopted. Lender, however, instead of exercising the power
of disposition herein conferred upon it, may proceed by a suit or suits at law or
in equity to foreclose the pledge and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction. After deducting from the proceeds of the foregoing sale or other
disposition of said Collateral, all expenses incurred by Lender in connection
therewith (including reasonable attorneys’ fees), Lender shall apply such
proceeds towards the satisfaction of the Obligations and shall account to the
Assignor for any surplus of such proceeds. 


                    (d)
If at any time after the occurrence and during the
continuance of an Event of Default without cure or waiver, in the opinion of
counsel for Lender, any proposed disposition of Collateral hereunder requires
registration, qualification, notification, or other action under or compliance
with any state blue sky or securities law or the Federal Securities Act of
1933, as amended, or any rules or regulations thereunder (collectively, the“Securities Laws
”), Assignor, at the request of Lender, will as
expeditiously, as possible use its best efforts to take such action or cause
such action to be taken, comply or cause compliance with such Securities Laws
and maintain such compliance or cause such compliance to be maintained for such
period as may be necessary to permit such disposition. Assignor acknowledges
that a breach of the above covenant contained in this Section 6 may cause
irreparable injury to Lender and that Lender will have no adequate remedy at
law with respect to such breach, and consequently, Assignor agrees that the
above covenant shall be specifically enforceable and Assignor hereby waives, to
the extent such waiver is enforceable under law, and agrees not to assert any
defenses against an 


-6-





action for
specific- performance of covenant. In connection with the foregoing, Assignor
will (i) pay all expenses imposed on or demanded of Lender or any Lender under
the Securities Laws in connection with such compliance, including the expense
of furnishing to Lender an adequate number of copies of the prospectus
contained in any such registration statement, (ii) indemnify and hold Lender
harmless from and against any and all claims and liabilities caused by any
untrue statement of a material fact or omission to state a material fact
required to be stated in any registration statement, offering circular or
prospectus used in connection with such compliance, or necessary to make the
statements therein not misleading, and (iii) pay all expenses (including
reasonable attorneys’ fees) incurred by Lender in specifically enforcing the
above covenant. 


The rights and
remedies provided herein, in the Loan Agreement and in any other agreements
between Assignor. and Lender are cumulative and are in addition to and not
exclusive of the rights and remedies of a secured party under the Uniform
Commercial Code and any other rights or remedies provided by applicable law. Assignor hereby
(i) names, constitutes and appoints Lender as such Assignor’s proxy and
attorney-in-fact in Assignor’s name, place and stead, (ii) authorizes Lender to
take, at any time after the occurrence of a Default or Event of Default’ without the appropriate signature of
Assignor, any action to take any action for and on behalf of Assignor which is
required of Assignor or permitted to be taken by the Lender hereunder,
including, without limitation, voting any and all of the Stock or other
securities, as such proxy may elect, for and in the name, place and stead of
Assignor, as to all matters corning before Shareholders, and (iii) acknowledges
that the constitution and appointment of such proxy and attorney-in-fact are
coupled with an interest and are irrevocable. The rights, powers and authority
of said proxy and attorney-in-fact shall remain in full force and effect, and
shall not be rescinded, revoked, terminated, amended or otherwise modified,
until all Obligations have been fully satisfied. 


                    7. No Duty Concerning Collection on
Collateral. Lender shall not be liable for its failure to give
notice to Assignor of a default under any.
agreement between Assignor and Lender. Lender shall not be liable for its
failure to use diligence to collect any amount payable in respect to the
Collateral, but shall be liable only to account to the Assignor for what Lender
may actually collect or receive thereon.  


                    8. Further Assurances. Assignor hereby irrevocably. .authorizes
the Lender at any time and from-time to time file in any jurisdiction any
initial Uniform Commercial Code finaecing statements and/or amendments-thereto
naming the Lender, as Secured Party, and Assignor, as Debtor, that (a)
describe’ the Collateral, and (b)- contain -any other information
required by part 5 of Article 9 of the Uniform Commercial Code for the
sufficiency or filing office acceptance of any financing statement or
amendment, and which shall evidence the Lender’s perfection of a security
interest in such Collateral as security for the Obligations. Assignor, upon
demand, shall furnish to the Lender such further information, execute and
deliver such other- documents and do all such other acts and things as the Lender may at any time, or from
time to time, reasonably request as being necessary or appropriate to establish
and maintain a perfected first security interest in the Collateral (subject to
the lien of the Seller permitted hereunder and Permitted Liens of the type
described in clause (iii) of the definition thereof)or to otherwise evidence,
document or conclude the transactions contemplated hereby, including, without
limitation, registering any Stock pledged hereunder with each Issuer of the
Stock in the 


-7-





event such. Stock is at any
time uncertificated. Assign. or shall pay all costs and expenses of
registering such Stock or of filing such financing statements, of all searches
of records, wherever filing or recording or searching of records is deemed by
the Lender to be necessary and desirable, or otherwise incurred by the Lender
in carrying out the provisions of this Pledge Agreement. A photographic, carbon
or other reproduction of this Pledge Agreement shall be sufficient as a
financing statement. 


                    9. Reserved. 


                    10. Care in Custodv. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral and in protecting
any rights with respect writing, but failure of Lender to comply with any such
request shall not of itself by deemed a failure to exercise reasonable care,
provided, however, that in any event Lender’S responsibility for the
safekeeping of the Collateral shall not extend to matters beyond the control of
Lender, including, without limitation, acts of God, war, insurrection, riot,
governmental actions or acts of any corporate or other depository.  


                    11. Waiver
of Defenses. No
renewal or extension of the time of payment of the Obligations; no release or
surrender of, or failure to perfect or enforce any security interest for the
Obligations; no release of any person primarily or secondarily liable on
the Obligations (including any maker,
indorser, or guarantor); do delay in enforcement of payment of the Obligations;
and no delay or omission in exercising any right or power with respect of the Obligations or any security agreement
securing the Obligations shall affect the rights of Lender in the Collateral.
AsSignor hereby waives presentment, protest, demand, notice of dishonor or
default, notice of any loans made, extensions granted, or other action taken in
reliance hereon and all demands and notices of any kind in connection with the
Obligations.  


                    12. Waiver
of .Assignor’s Subrogation Rights. In case of the death, legal incompetency or
insolvency (howsoever evidenced) of Borrower, or in case of any bankruptcy,
reorganization, debt arrangement or other proceeding under any bankruptcy or
insolvency law, or any dissolution, liquidation or receivership proceeding is
instituted by or against Borrower, all Obligations then existing shall, without
notice to anyone, immediately become due or accrued and be payable, jointly and
severally, from Assignor. If bankruptcy or reorganization proceedings at any
time are instituted by or against 13errower under.the UnitedStates Bankruptcy
Code, Assignor hereby: (a)• expressly and irrevocably.
waives; to the fiilleSt extent possible, on behalf
of itself and its successors and
assigns and any other person, any and all rights at law or in equity to
subrogation, to reimbursement, to exoneration, to contribution, to
indemnification, to set off or to any other rights that could accrue to a surety
against a principal, to a guarantor against a maker or obligor, to an
accommodation party against the party accornmbdated, to a holder or transferee
against a maker, or to the holder of a claim against any person, and which
Assignor may have or hereafter acquire against any person in connection With or
as a result of Assignor’s execution, delivery and/or performance of this Pledge
Agreement, or any other documents to which Assignor is a. party or otherwise;
(b) expressly and irrevocably waives any “claim” (as such term is defined in
the United States Bankruptcy Code) of any kind against Borrower, and further
agrees that it shall’ not have ‘or assert any such rights against any person
(including any surety), either directly or as an attempted set off to any
action commenced against Assignor by Lender or any other person; and (c)
acknowledges and agrees that (i) this waiver is  


-8-





intended to benefit Lender
and shall not limit or otherWiSe effect Assignor’s liability hereunder or the
enforceability of this Pledge Agreement, (ii) Borrower and its successors and
assigns are intended third party beneficiaries of this waiver, and (iii) the
agreements set forth in this Section and Lender’s rights under this Section
shall survive payment in full of the Obligations. 


         
           13. Waiver by Lender. No course of dealing between.Assignor and
Lender, nor any failure to exercise, nor any delay in exercising any right,
remedy, power or privilege of Lender hereunder, under the Loan Documents or
under any other agreement entered into between Assignor and Lender, shall
operate as a waiver thereof. No waiver by Lender of any Event’ of Default or
any right or remedy hereunder, under the Loan Agreement or under any document
or agreement shall constitute a waiver of any other event of default, right or
remedy of Lender, nor of the same event of default, right or remedy o lira
future occasion. 


              
      14. Reinstatement. To the maximum extent not explicitly
prohibited by applicable law, this Pledge Agreement shall continue to be
effective or be reinstated if at any time any amount received by the Lender in
respect of the Obligations hereunder or any other Loan Document is rescinded or
must otherwiSe be restored or returned by the Lender upon the” insolvency, bankruptcy,
dissolution, liquidation or reorganization of Assignor or any:Issuer
or upon the appointment of any receiver, intervenor, conservator, trustee or
similar official for Assignor or any Issuer or any substantial part of
Assignor’s or any Issuer’s assets, or otherwise, all as though such payments
had not been made. 


         
           15. Governing Law; Severability. This /ledge Agreement has been made and
entered into in New York and shall be governed by and construed in accordance
with the laws of the State of New York. Wherever possible each provision of
this Pledge Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Pledge Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Pledge Agreement. 


             
       16. Successors
and Assigns,
This Pledge Agreement and all rights and liabilities hereunder and in and to
any and all Collateral shall inure to the benefit of Lender and their
successors and assigns, and shall be binding on Assignor, its successors and
assigns. Notwithstanding-any other provision set forth in this Pledge
Agreement, the Lender may at any time, without the consent of any Borrower,
-assign, sell; convey, pledge, hypothecate, or otherwise
encumber any or all of its rights and benefits under this Pledge Agreenient,
the other Loan Documents or the Collateral. 


          
          17. Notice. Any notice of any sale, lease,
other disposition, or other intended action by Lender shall be deemed
reasonable if in writing, addressed to Assignor at the address set forth above,
or any other address designated in a written notice by Assignor previously
received by Lender and deposited, first class postage prepaid, in the United
States mails five (5) days in advance of the intended disposition or other
intended action, provided, however, that the foregoing shall not preclude the
fact that failure to give such notice or notice by other means may be
reasonable under the particular circumstances involved. 


           
         18. Duration and Effect. This Pledge
Agreement shall remain and continue in full force and effect (notwithstanding,
withoutlimitation, the dissolution of Assignor) from the


-9-





date hereof until all of the
Obligations have been fully and completely paid, satisfied and discharged
(other than contingent indemnification obligations that by their terms survive
the termination of this Pledge Agreement or any other Loan. Document).
Thereupon, this Pledge Agreement shall terminate and Lender shall release any
Collateral still held by it which has not been sold or otherwise disposed of in
accordance. with Section .6 hereof and applied toward the satisfaction of the
Obligations hereunder, and Lender shall deliver any such Collateral to the
Assignor, together with any necessary stock powers or assignment executed by
Lender in blank, at Assignor’s expense. Assignor acknowledges that this Pledge
Agreement is and shall be effective upon execution by Assignor and delivery to
and acceptance hereof by Lender, and it shall not be necessary for Lender to
execute any acceptance hereof or otherwise to signify or express its acceptance
hereof to Assignor. 


[Signature
Page Follows]










	
  

 
	
 GREYSTONE
BUSINESS CREDIT If, L.L.C. 

 
	

 


 



          IN
WITNESS WHEREOF, Assignor and Lender have duly executed and delivered this
Stock Pledge Agreement as of
the date first above written. 


	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ASSIGNOR;

 
	
  

 	
  

 	
  

 
	
 ATTEST:

 	
  

 	
 RNK, 


 
	
  

 	
  

 	
 a Massachusetts corporation

 






	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 	
 By:

 	
  

 	
  

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name:

 	
  

 	
  

 	
 Name:

 	
  

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Title:

 	
  

 	
  

 	
 Title:

 	
  

 	
  

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 LENDER:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 GREYSTONE BUSINESS CREDIT
 II, L.L.C., a Delaware limited liability company, as Lender

 






	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 By:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Name:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Title:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 


 



Signature
Page to Stock Pledge Agreement 









	
  

 
	
  

 
	

 


 


SCHEDULE I


PLEDGED STOCK


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Assignor

 	
  

 	
 issuer

 	
  

 	
 Class of

 Interest

 	
  

 	
 Certificate

 Number(s)

 	
  

 	
 Number of

 shares of

 Stock

 	
  

 	
 Percentage

 of

 Outstanding

 Stock

 	
  

 
	

 


 	
  

 	

 


 	
  

 	

 



 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 
	
 RNK, Inc.

 	
  

 	
 RNK VA, LLC

 	
  

 	
 MeMbership interest

 	
  

 	
 N/A

 	
  

 	
 N/A

 	
  

 	
 100%

 	
  

 













	
  

 
	
 GREYSTONE BUSINESS CREDIT 

 
	

 


 


Exhibit A 


Pledge Supplement


          This
Pledge Supplement is dated as of ____________, 20_ and is provided in accordance with the terms of the Pledge Agreement
referenced below. The undersigned directs that this Pledge Supplement be
attached to the Pledge Agreement, dated as of________ 200 between the
undersigned and GREYSTONE BUSINESS CREDIT
II, L.L.C. in its capacity as Lender (the “Pledge Agreement”; capitalized terms
used and not defined herein having the meanings assigned
thereto in the Pledge Agreement) and that the equity interests listed below
shall be deemed to be part of the Collateral.  


          The
undersigned hereby certifies that the representations and warranties in Section
3 of the Pledge Agreement are and continue to be true and correct, both as.
to the shares, instruments and any other property pledged prior to this Pledge
Supplement and as to the shares, instruments and any other property pledged
pursuant to this Pledge Supplement. The undersigned further agrees that this
Pledge Supplement may be attached. to
the Pledge Agreement and that
the Stock listed on this Pledge Supplement are a part of the Stock referred to
in the Pledge Agreement and shall secure all Obligations referred to in the
Pledge Agreement.  


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Assignor

 	
  

 	
 Issuer

 	
  

 	
 Class of

 Interest

 	
  

 	
 Certificate(s)

 of Shares

 	
  

 	
 Number of

 Shares

 	
  

 	
 Percentage of

 Outstanding

 Shares

 	
  

 
	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 I   -[

 	
  

 	
 [       1

 	
  

 	
 1             i

 	
  

 	
 L     i

 	
  

 	
 1

 	
  

 	
 1-1%

 	
  

 






	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 RNIC, INC.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 By

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Name

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
 Title

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 


 


Exhibit A





ISSUER ACKNOWLEDGEMENT


          The
undersigned hereby acknowledge receipt of the foregoing Stock Pledge Agreement
dated as of executed by RNIC, INc., a Massachusetts corporation (“Assignor”) to and for the benefit of
Greystone Business Credit II, L.L.C., as Lender, and agrees to pay all
payments, income and dividends (whether in cash, stock or other property),
liquidating dividends, stock warrants, stock options, stock rights,
subscription rights, securities of the undersigned and any other distributions
of any other property which Assignor is now or may hereafter be entitled to
receive on account of the Stock directly to the order of Greystone Business
Credit II, L.L.C.

Dated this____ day of__________, 20_. 



	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Ai ZEST:

 	
  

 	
 RNK VA, LLC,

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 a Virginia limited
 liability company

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 	
 By:

 	
  

 	
  

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name:

 	
  

 	
  

 	
 Name:

 	
  

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Title:

 	
  

 	
  

 	
 Title:

 	
  

 	
  

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 



Acknowledgment to Pledge Agreement






JOINDER AGREEMENT


This Joinder
Agreement dated as of ____________________, 2007 is by and among RNK, Inc., a
Massachusetts- corporation, and RNK VA, LLC, a Virginia limited liability
company (“RNK”) (collectively, the “Companies” and each a “Company”),
Greystone Business Credit II, L.L.C., as Lender, Wave2Wave Communications,
Inc., a Delaware corporation (“Borrower Representative”) Wave2Wave VolP
Conamimications, LLC, a Delaware limited liability company, Wave2Wave Data
Communications, LLC, a Delaware limited liability company, and Wave2Wave
Communications Mid-West Region, LLC, a Delaware limited liability company. 


                    WHEREAS,
Borrower Representative and the Wilmington Trust Company and George Jeff Mennen
as co-trustees U/A/D November 25, 1970, as amended for the benefit of John
Henry Mennen (the “Mennen Trust” and collectively with Borrower
Representative, “Borrowers” and each a “Borrower”), and Lender
have entered into a Loan Agreement dated as of October 2007 (as amended,
restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”);


                    WHEREAS,
each of Wave2Wave VoIP Communications, LLC, a Delaware limited liability
company, Wave2Wave Data Communications, LLC, a Delaware limited liability
company, and Wave2Waire Communications Mid-West Region, LLC, a Delaware limited
liability company, have executed and. delivered the Subsidiary
Guaranty to guaranty all of the obligations of Borrowers under the Loan
Agreement and the other Loan Documents, executed and delivered the Subsidiary
Security Agreement to secure each of their obligations under the Subsidiary
Guaranty and documents related thereto and executed and delivered the Seller
Subordination Agreement to provide for the subordination of certain indebtedness
to the Obligations; and 


                    WHEREAS,
pursuant to the terms of the Loan Agreement, Borrower Representative has
asserted that the final Regulatory Approval has been obtained and Borrower
Representative acknowledges that it is a condition under the Loan Agreement
that each of the Companies join the Subsidiary Guaranty, the Subsidiary
Security Agreement and the Seller Subordination Agreement as parties thereto;


                    NOW
THEREFORE, the parties hereto hereby agree as follows: 


          Section
1. Definitions. Capitalized terms used in this Joinder Agreement, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Loan Agreement or, if not defined therein, in the Security Agreement.


          Section
2. Joinder. Subject to the terms and conditions of this Joinder
Agreement, each Company is hereby joined to the Subsidiary
Guaranty, the Subsidiary Security Agreement and the Seller Subordination -Agreement,
and each Company hereby agrees to be bound by the terms and conditions (including without limitation all of
the representations and Warranties and covenants, as qualified by the attached schedules referred to below) of each
Loan Document to which a Guarantor (as such term is defined in the Subsidiary
Guaranty), Grantor (as such term is defined in the Subsidiary Security
Agreement) or a Loan. Party (as such term is defined in the Seller
Subordination Agreement) is a party, including without limitation the
Subsidiary Guaranty, the Subsidiary Security Agreement and the Seller
Subordination Agreement, as a Guarantor, a Grantor or a Loan Party as
applicable, in each case as if such Company were a direct signatory thereto. In
furtherance of the preceding sentence, without limiting any provision of any
Loan Document to which each Company is now becoming a party and in accordance
with the-terms of the Loan Documents, each Company acknowledges that it is an
Obligor and agrees to be jointly and severally “liable with the Borrowers and
all other Obligors for the Obligations, whether currently or hereafter outstanding.





          Section
3. Grant of Security Interest. TO secure the full
payment and performance of the Guarantied Obligations, each Company hereby
assigns to Lender and grants to Lender a continuing security interest in the
following .property of such Company, whether tangible or intangible, now or
hereafter owned, existing, acquired or arising and wherever now or hereafter
located (all being collectively referred to herein as the “Collateral”):


          (a)
all Accounts and all Goods whose sale, lease or other disposition by such
Company has given rise to Accounts and have been returned to, or repossessed or
stopped in transit by, such Company;


          (b)
all Chattel Paper, Instruments, Documents and General Intangibles (including all
patents, patent applications, trademarks, trademark applications, trade names,
trade secrets, goodwill; copyrights, copyright applications, registrations,
licenses, software, franchises, customer lists, tax refund claims, claims
against carriers and shippers, guarantee claims, contracts rights, payment
intangibles, security interests, security deposits and rights tO indemnification);


          (c)
all Inventory;


          (d)
all Goods (other than Inventory), including Equipment, vehicles and Fixtures; 


          (e)
all Investment Property; . all Deposit 


               
Accounts, bank accounts, deposits and cash; 


          (g)”’
all Letter-of-Credit Rights; 


          (h)
all Commercial Tort Claims listed in Section 14 of Schedule A;


          (i)
all Supporting Obligations; 


          (j)
any other property of any Company now or hereafter in the possession, custody
or control of Lender or any agent or any parent, Affiliate or Subsidiary of
Lender or any participant with any Lender in the Loans, for any purpose
(whether for safekeeping, deposit, collection, custody, pledge, transmission or
otherwise); and


          (lc)
all additions and accessions to, substitutions for, and replacements, products
and Proceeds of the foregoing property, including proceeds of all insurance
policies insuring the foregoing property, and all of such company’s books and
records relating to any of.the foregoing and to such Corapany’S business. • ’


          Notwithstanding
anything to the contrary in this Section 3, the types or items of Collateral of
Companies shall not include (i) any rights or interest in any contract,
license, or license agreement that is now or hereafter held by any Company but
only-to the extent that such item contains a term or is subject to a rule of
law, statute or regulation that restricts, prohibits, or, requires a consent
(that has not been obtained) of a Person (other than an Obligor) to, the
creation, attachment or perfection of the security interest granted herein, and
any such restriction, prohibition and/or requirement of consent is effective
and enforceable under applicable
law and is not rendered ineffective by applicable law (including, without
limitation, pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC)
(provided, however, that (A) the provisions of this clause (i) shall not
include, any Proceeds of any such item and (B) any such item that at any time
ceases to satisfy the criteria of this clause (i) (whether as a result of
obtaining any necessary consent, any change in any rule of law, statute or
regulation, or otherwise), shall be Collateral hereunder), and (ii) any
equipment or other property now existing or hereafter- acquired- in-accordance with clause (1) of the definition of Permitted Liens in the Loan
Agreement and which is subject to a lease 


-2-





or other
financing arrangement, the terms of which prohibit the granting of a lien or
security interest in such property. 


          Section
4. Effectiveness. This Joinder Agreement shall be effective upon the
execution and delivery hereof by the parties hereto.


          Section
5. Representations and Warranties. Each Company represents and warrants
to Lender that after giving effect to the consummation of this Joinder
Agreement (i) each of the representations and warranties of each Company set
forth in the Subsidiary Guaranty, the. Subsidiary Security Agreement, the
Seller Subordination Agreement and the other Loan Documents are true, correct
and complete in all material respects as of the date here,64 and (ii) no
Default or Event of Default has •occurred and is continuing. After the
execution and delivery by each Company Of this Joinder Agreement, each Company
shall be deemed to have made, the representations and warranties as a Guarantor, a Grantor or a Loan Party,
as applicable, at the times required by thetean Document. 


          Section
6. Schedules to Security Agreement. To make the schedules to the
Subsidiary Security Agreement true, correct and complete, each Grantor and each
Company hereby agree that the schedules to the Subsidiary Security Agreement
are each hereby supplemented as set forth on the correspondingly numbered
schedules attached hereto. 


          Section
7. Scope. Except as expressly modified by this Joinder Agreement, the
Subsidiary Guaranty, the Subsidiary Security Agreement, the Seller
Subordination Agreement and all of the other Loan Documents shall remain in
full force and effect as executed.


          Section
8. Governing Law. THIS JOINDER AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.


          Section
9. Counterparts; Electronic Signatures. This Joinder Agreement may be
executed in any number of counterparts and by the different parties hereto on separate counterparts
and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Joinder Agreement.
Receipt by telecopy or electronic portable format (pdf)of any executed
signature page to this Joinder Agreement shall constitute effective delivery of
such signature page. 


 [signature page follows]


-3-





          -         IN
WITNESS WHEREOF; this Joinder Atteement haS bedn duirexeCtited as of the date -
first above written. 


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 RNK, INC., a
 Massachusetts corporation

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Name: 

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Title: 

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 RNK VA, LLC, a Virginia
 limited liability company

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Title:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 WAVE2WAVE
 COMMUNICATIONS, INC., as Borrower Representative

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Title:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 WAVE2WAVE
 VOIP COMMUNICATIONS, LLC

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Title:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 WAVEZWAVE
 DATA COMMUNICATIONS, LLC

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Title:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 WAVE2WAVE
 COMMUNICATIONS MIDWEST REGION, LLC

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Title:

 	
  

 
	
  

 	
  

 	

 


 













	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 GREYSTONE
 BUSINESS CREDIT II, L.L.C., as Lender

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
 Title:

 	
  

 
	
  

 	
  

 	

 


 










SCHEDULES


9.
Information:


(a) Prior
Names of each Grantor:


(i) RNK, Inc. 


None.


(ii) RNK VA,
LLC 


None.


(b) Prior Trade Names of each
Grantor:


(i) RNK, Inc. 


None.


(ii) RNK VA,
LLC 


None.


(c) Exitting
Trade Names of each Grantor:


(i)
RNK, Inc.


RNK
Communications
RNK Telecom


RNK VoIP


RNK Prepaid


RNK Connect


RNK Carrier


Half-Priced
Telecom 


Phone Number Bank
Dial


aroundtheworld.com


          RNK
VA, LLC


None.





(d)
Chief Ettentive Office of each Grantor:


(i)
RNK, Inc.


333
Elm St., Suite 310, Dedham, MA 


          RNK.
VA, LLC


333
Elm St., Suite 310, Dedham, MA


(e)
Other Locations:


(i)
RNK, 


Leased Facilities 


175
The Great Road 

Bedford, MA 01730


333
Elm St.

Dedham, MA 02026 •


Co-Location Facilities 


60
Page St. •

Bedford, MA 01730


300
Carpenter St. 

Providence, RI 02909


1
Sundial Ave. 

Manchester, NH 03103


60
Hudson St.:
New
York, NY 10013


50
NE 9th Street. 

Miami, FL 33132


165
Halsey St. 

Newark, NJ 07102


(ii)
RNK VA, LLC


None.


(i)
Inventory Locations





(i) RNK, Inc. 


None.


(ii) RNK VA,
LLC 


None.


(ii) Other
Locations


(i) RNK, Inc. 


None.


(ii) RNK.
VA, LLC 


None.


(1)
Litigation:


(i) RNK,


	
  

 	
  

 	
  

 
	
 1.

 	
 Jane Doe v.
 RNK. Inc. d/b/a RNK Telecom. Civil Action No, 05-CIV-2602 (SCR)(LMS1 (SONY). 

 
	
  

 	
  

 	
  

 
	
  

 	
 a.

 	
 On March 7,
 2005, Jane Doe, a minor and resident of the State of New York, commenced a
 civil action against RNK, Inc. in the United States District Court for the
 Southern District of New York, White Plains Division.

 
	
  

 	
  

 	
  

 
	
  

 	
 b.

 	
 Jane Doe
 asserts that RNK was negligent in failing to comply with certain orders of
 the New York Public Service Commission and accordingly is liable to her for
 any and all damages resulting from such violations.

 
	
  

 	
  

 	
  

 
	
  

 	
 c.

 	
 The federal
 court’s jurisdiction over this.matter is based on diversity jurisdiction,
 meaning the parties are citizens of different states and the matter in
 controversy exceeds the threshold amount of $75,000. No specific amount of
 damages, however, was alleged by the plaintiff in the Complaint.

 
	
  

 	
  

 	
  

 
	
  

 	
 d.

 	
 Chubb’
 Insurance has assumed coverage for the defense of this dispute under RNK’s general
 umbrella insurance policy and has retained defense counsel, Cheryl Heller,
 Esq. of Ward, Norris, Heller & Reidy, L.L.P. in Rochester, New York to
 defend RNK. The insurance policy has a limit of $2,000,000 with a $10,000
 deductible.

 
	
  

 	
  

 	
  

 
	
  

 	
 e.

 	
 The
 plaintiff has indicated no objectives other than the recovery of monetary
 damages.

 
	
  

 	
  

 	
  

 
	
  

 	
 f.

 	
 As of April
 30, 2007, discovery had finished, with both parties exchanging information
 pursuant to agreed upon and required deadlines, and depositions were taken by
 both sides.

 
	
  

 	
  

 	
  

 
	
  

 	
 g.

 	
 The parties
 have agreed to mediation on October 9, 2007 in an attempt to settle all
 dispetes.

 
	
  

 	
  

 	
  

 
	
 2.

 	
 Farmers
 Insurance v RNK and Ripple Communications

 
	
  

 	
  

 	
  

 
	
  

 	
 a.

 	
 On March 13,
 2007, Farmers Insurance filed a Declaratory Judgment complaint against RNK
 and Ripple Communications, Inc. in the United States District Court of
 Massachusetts, Docket No. 07 CA 10494 JLT, Farmers Insurance Exchange vs,
 Ripple Communications Inc and RNK Inc d/b/a RNK Telecom. Farmers is
 seeking declaratory judgment against RNK that Farmers has no duty to
 indemnify RNIC if damages are awarded

 













	
  

 	
  

 	
  

 
	
  

 	
  

 	
 in the ongoing United States District Court
 of Southern District of New York action,. Jane Doe et. Al. vs. RNK Inc d//b/a RNK Telecom(Docket No. 05 CW 2602 (SCR) (LMS)). RNK’s insurance company, CHUBB
 Group of Insurance Companies, requested that Ripple Communications Inc.
 indemnify RNK for attorney fees and any damages that may be awarded in the on
 going Jane Doe dispute: CHUBB contends that the Jane Doe action is due to the
 conduct and/or negligence of Ripple Communications, a company that
 contracted with RNK to
 provide telecommunication services. CHUBS sought to enforce the
 indemnification language in the.contract between RNK and Ripple. Ripple’s insurer, Farmers Insurance, declined to
 indenuiify RNK, and has filed this Declaratory Judgment action.

 
	
  

 	
  

 	
  

 
	
  

 	
 b.

 	
 On September 12, 2007, the
 parties attended a
 scheduling conference and agreed to stay the proceeding until November 30,
 2007 to allow for the completion of the mediation in the -underlying matter, Jane Doe v. RNK
 Inc., scheduled for October, 9, 2007.

 
	
  

 	
  

 	
  

 
	
 3.

 	
 Bedford, Massachusetts Lease Dispute

 
	
  

 	
  

 	
  

 
	
  

 	
 a.

 	
 On or about March 14, 2006, RNK
 staffreceived notice from Elie Jarnrnal, General Manager of Bedford 175 Great
 Road, LLC, (“Landlord”), which owns a building rented by RNK at 175 The Great
 Road, Bedford, Massachusetts, and at which RNK maintains its critical network
 facilities, that commencing March 1, 2006, RNK would be billed
 annually for property
 insurance and other costs associated with the building. RNK had signed a
 lease extension, via amendment of the existing lease, with the Landlord on
 November 29, 2005 with an initial term of four years. starting on March 1, 2006, and ending
 February 28; 2010, with options for two additional terms of three years each.
 With the receipt of this notice, RNK realized that it was being charged too
 much for expenses as defined in the lease. As a result, RNK attempted to resolve the
 issue informally with the Landlord, but the Landlord was not interested, and
 informed RNK that he believed the parties had changed the specific language
 within the underlying lease covering expenses by including the term
 “triple-net” as a suffix to the per-square foot pricing term in the
 amendment. The Landlord then sent RNK notice of default. At that time, on the
 advice of counsel, RNK determined it would be best to pay the additional rent under protest, and reserving all
 rights, giving RNK the ability to file suit for the additional rent at any
 time. RNK continues to pay its rent and additional expenses on time each
 month under protest, has had no additional unresolved disputes with the
 landlord, enjoys an otherwise stable business relationship with the Landlord,
 and does not intend to address the issue unless RNK determines it wishes to
 move from its Bedford location.

 
	
  

 	
  

 	
  

 
	
 4.

 	
 Vonage/Verizon
 Patent Dispute
 -

 
	
  

 	
  

 	
  

 
	
  

 	
 a.

 	
 RNK has
 examined the Verizon vs. Vonagepatent dispute for its relevance to - RNK, and
 believes that due to the technical manner in which RNK has set up its VoIP
 service, which differs materially•from Vonage’s system, RNK is not at major
 risk for a similar patent infringement suit from Verizon. In addition, due to the relatively small size of
 RNK’s VofP program as compared to Vonage’s, RNK believes it is less likely
 that Verizon would see RNK as worthy of a litigation effort.

 
	
  

 	
  

 	
  

 
	
 5.

 	
 New
 Hampshire Numbering Review

 
	
  

 	
  

 	
  

 
	
  

 	
 a.

 	
 On November 9, 2006, in its long-running
 docket regarding the deployment by.carriers of, and compensation for,
 so-called “Virtual NXX” (VNXX) calls, the New Hampshire PUC staff issued a
 memorandum recommending to the CommiSsion investigate certain uses of
 numbering resources by New Hampshire carriers, including Level 3

 













	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Communications, Global NAPs, Paetee, and RNK. Specifically, the memorandum indicates there might be evidence that the carriers are
 using numbering resources for interstate toll bypass, and recommended an
 investigation by the ‘Commission into such usage. Further, the memorandum
 requested that the Commission implement its orders regarding the permissive
 use of VNXX, or, alternatively, ban the use of VNXX services, completely deregulate
 them, or consider limiting them exclusively for the purposes of provisioning
 dial-up access to the internet.

 
	
  

 	
  

 	
  

 
	
  

 	
 b.

 	
 As of August 31, 2007, however, there is no
 evidence that the NH PUC intends to expend additional resources to examine
 this issue, and furtherniore, has riot taken any action in this docket
 whatsoever since January 2006. Further, RNK notes the recent departure of key
 staff person, Katy Mulholand, Assistant Director.of the Telecommunications
 Division, which has likely hampered the PUC’s ability to handle additional
 work, especially complex dockets.

 
	
  

 	
  

 	
  

 
	
 6.

 	
 7-11 Dispute

 
	
  

 	
  

 	
  

 
	
  

 	
 a.

 	
 RNK and 7-Eleven, Inc. (“7-11”) entered
 into a Marketing Development Fund Agreement (the “MDP”), dated January 5,
 2007 whereby the Parties agreed to share certain marketing costs associated
 with the marketing of RNK products in 7-11 stores. Pursuant to Section 2(c)
 of the MDF, 7-Eleven was to submit to RNK its marketing plan for each period
 of the marketing campaign (with section 1 of the Agreement also specifically
 requiring that 7-11 submit the actual timeframe and details of the marketing
 campaign), which plans had to be approved by RNK prior to the commencement of
 the relevant period. Under section 4 of the Agreement, approval for such
 projects could only be granted in writing in advance by RNK. 7-11 seeks
 reimbursement for costs which RNK disputes because no plans or campaigns were
 submitted to, or approved by, RNK in the manner set forth inthe Agreement.
 RNK also disputes these claims on the grounds that all invoices were
 submitted well after the contractual bar for submission of invokes. Total
 disputed amounts equal $300,000.

 
	
  

 	
  

 	
  

 
	
  

 	
 b.

 	
 The Parties are in negotiations to settle
 the matter amicably. RNK expects the matter to settle for some amount less
 than the’disputed amount.

 
	
  

 	
  

 	
  

 
	
 7.

 	
 Sprint/Vonage Patent Dispute

 
	
  

 	
  

 	
  

 
	
  

 	
 a.

 	
 RNK is currently
 conducting an examination of the recent Sprint vs. Vonage patent dispute for
 its relevance to RNK.
 After a preliminary investigation, RNK predicts that if these patents
 remain valid upon•appoal they may encompass a substantial amount Of the:Voil). industry.
 The claims. involVed appear very broad in nature, which
 rnayindicate the possibility that the appeals court would narrow the claims’ scope or invalidate them. The breadth of
 these patents may be a strong incentive for the industry to seek their
 invalidation. In addition, due to the relatively small size of RNK’s VollY
 program as compared to Vonage’s there is likely the additional reality that
 Sprint would not see RNK as worthy of a litigation effort.

 



          (ii) RNK VA, LLC 


          None.


          (j) Taxes









	
  

 	
  

 
	
  

 	
 (I)
 RNK, Inc.

 
	
  

 
	
  

 	
 None.

 
	
  

 
	
  

 	
 (ii)
 RNK VA, LLC

 
	
  

 
	
  

 	
 None.

 



(k)
Existing Debt


(i)
RNK, Inc.


	
  

 	
  

 
	
  

 	
 Citizens
 Bank Irrevocable Transferable Standby Letter of Credit with RNK, Inc. as applicant in the amount of
 $90,000 with NS Norfolk Acquisition LLC as beneficiary. Expiration: June 15,
 2008

 
	
  

 	
  

 
	
  

 	
 Sovereign
 Bank Irrevocable Transferable Standby Letter of Credit with RNK, Inc. as
 applicant in the amount of $40,000 with Verizon, Inc. as beneficiary.
 Expiration: September 15, 2008 Sovereign Bank IrreVocable Transferable
 Standby Letter of Credit with RNK, Inc. as applicant in the
 amount of $20,000 with Verizon, Inc. as beneficiary. Expiration: September
 15, 2008 Sovereign Bank Irrevocable Transferable Standby Letter of Credit
 with RNK, Inc. as applicant in the amount of $40,000 with Verizon, Inc. as
 beneficiary. Expiration: September 15, 2008

 






	
  

 	
  

 
	
  

 	
 Sovereign
 Bank Irrevocable Transferable Standby Letter of Credit with RNK Holding
 Company. as applicant in the amount of $50,000 with Acstar Insurance Company
 as beneficiary. Expiration: June 26, 2008

 
	
  

 	
  

 
	
  

 	
 (ii) RNK VA, LLC

 
	
  

 	
  

 
	
  

 	
 None.

 
	
  

 	
  

 
	
  

 	
 (1)
 Existing Liens

 
	
  

 	
  

 
	
  

 	
 (i)
 RNK, Inc.

 
	
  

 	
  

 
	
  

 	
 RNK,
 Inc. Cash Collateral Account Number 63900064393 at- Sovereign Bank,
 containing no 0 more than $150,000 securing those letters of credit described
 in Section (k)(i) above.

 
	
  

 	
  

 
	
  

 	
 (ii)
 RNK VA, LLC 

 
	
  

 	
  

 
	
  

 	
 None.

 
	
  

 	
  

 
	
  

 	
 10.
 Description of Real Property:

 
	
  

 	
  

 
	
  

 	
 (i) RNK,
 Inc.

 










None. 


(ii) RNK VA, LLC 


None. 


12. • Other
Covenants: Grantors shall promptly provide Lender with copies of any material
communication delivered in connection with any material agreement or contract
(including, without limitation, any material distribution agreement). 


14. Coinmercial Tort Claims 


(1) RNK, Inc. 


None. 


(ii) RNK VA,
LLC 


None. 


15. Deposit Accounts 


	
  

 	
  

 	
  

 	
  

 
	
 Bank

 	
  

 	
  

 	
 Aceount
 Number

 
	

 


 	

 


 	

 


 
	
 Sovereign

 	
  

 	
  

 	
 60600020030

 
	
 Sovereign

 	
  

 	
  

 	
 63904953971

 
	
 Sovereign

 	
  

 	
  

 	
 63900064393

 
	
 Sovereign

 	
  

 	
  

 	
 63904953989

 
	
 Sovereign

 	
  

 	
  

 	
 63904954003

 
	
 Sovereign

 	
  

 	
  

 	
 63904953997

 
	
 Sovereign

 	
  

 	
  

 	
 63904956909

 
	
 Sovereign

 	
  

 	
  

 	
 75860032277-

 









TRADEMARK. SECURITY AGREEMENT


          This
TRADEMARK SECURITY AGREEMENT (as amended, amended. and restated or otherwise
modified from time to time, the “Trademark Security Agreement”) is made this
day of     , 2007, by RNK, INC., a Massachusetts corporation (the “Assignor”), in
favor of GREYSTONE BUSINESS CREDIT II, L.L.C., a Delaware limited liability
company (the “Lender”). 


WITNES SETH:


          WHEREAS,
pursuant to that certain Loan and Security Agreement dated as of October [ 1, 2007 (as amended, restated,
supplemented or otherwise modified from time to time, the “Loan and Security
Agreement”) among Wave2Wa.ve Communications, Inc., a Delaware corporation
(“Borrower”), an affiliate of Borrower and Lender, Lender -is
willing to make certain financial accommodations available to the Borrower and
its affiliate pursuant to the terms and conditions thereof;


          WHEREAS, pursuant
to that certain Corporate Guaranty of even date herewith (as amended, restated,
supplemented or otherwise modified from time to time, the “Guaranty”) by
Assignor and certain affiliates of Assignor in favor of Lender, Assignor has
agreed to guaranty the Borrower’s obligations under the Loan and Security
Agreement;


          WHEREAS, pursuant to that certain Security Agreement of even date
herewith (as amended, restated, .supplemented or otherwise modified from time
to time, the “Security Agreement”) by Assignor and certain affiliates of
Assignor in favor of Lender, Assignor has granted a lien on its assets in favor
of Lender to secure its obligations under the Guaranty; and 


          WHEREAS,
pursuant to Section 2.3 of the Security Agreement, Assignor is required to
execute and deliver to Lender this Trademark Security Agreement; 


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



          1. DEFINED TERMS. All capitalized
terms used but not otherwise defined herein have the meanings given to them in
the Loan and Security Agreement. 


          2. GRANT OF SECURITY INTEREST IN TRADEMARK
COLLATERAL. To secure the full payment and performance of all of the
Obligations, Assignor hereby grants to Lender a continuing first priority
security interest in all of Assignor’s right, title and interest in, to and
under the following, whether presently existing or hereafter created or acquired
(collectively, the “Trademark Collateral”): 


                    (a)
(i) all of its trademarks, trade names, registered trademarks, trademark
applications, service marks, registered service marks and service mark
applications, 






throughout the
world and (A) all renewals thereof, (B) all income, royalties,. damages and
payments now and hereafter due and/or payable under and with respect thereto,
including, without limitation, payments under all licenses entered into in
connection thereWith and damages and payments for past or future infringements
or dilutions thereof, (C) the right to sue for past, present and future
infringements and dilutions thereof, (D) the goodwill of Assignor’s business
symbolized by the foregoing and connected therewith, and (E) all of Assignor’s
rights corresponding thereto (the “Trademarks”), including, without limitation,
those Trademarks. filed with-the United States Patent and Trademark
Office, as set forth on Schedule A hereto, and (ii) any rights under or interest in
any Trademark, and the right to-use the foregoing in connection with the
enforcement of Lender’s rights under the Loan Documents, including, without
limitation, the right to prepare for sale and sell any and all Inventory and
Equipment now or hereafter owned by Assignor and now or hereafter covered by
such licenses (the “Trademark Licenses”) to which it is a party, includingthose
referred to on Schedule A
hereto; 


                    (b) all reissues, continuations or
extensions of the foregoing; 


                    (c) all goodwill of the business
connected with the use of; and symbolized by, each Trademark and each Trademark
licensed under any Trademark License; and 


                    (d) all products and proceeds of the
foregoing, including, without limitation, any claim by Assignor against third
parties for past, present or future (i) infringement or dilution of any
Trademark or any Trademark licensed under any Trademark License or (ii) injury
to the goodwill associated with any Trademark or any Trademark licensed under any Trademark
License. 


          3. SECURITY AGREEMENTS
The security interests granted pursuant to this Trademark Security Agreement
are granted in conjunction with the security interests granted to Lender by
Assignor pursuant to the Security Agreement. Assignor hereby acknowledges and
affirms that the rights and remedies of Lender with respect to the security
interest in the Trademark Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of each of which are
incorporated by reference herein as if fully set forth herein. 


          4. AUTHORIZATION TO SUPPLEMENT. If
Assignor shall obtain rights to any new trademarks, the provisions. of this
Trademark Security Agreement shall automatically apply thereto. Assignor shall
give prompt notice in writing to Lender with respect to any such new trademarks
or renewal or extension of any trademark registration. Without limiting
Assignor’s obligations under this Section
4, Assignor hereby.
authorizes Lender unilaterally to modify this Trademark Security Agreement by
amending Schedule A to include any such new trademark
rights of Assignor. Notwithstanding the foregoing, no failure to so modify this
Agreement or amend Schedule A
shall in any way affect, invalidate or detract from Lender’s continuing
security interest in all Collateral, whether or-not listed on Schedule A.


-2-





          5.
COUNTERPARTS. Thisiradenaark Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one and the same
instrument. In proving this Trademark Security Agreement or any other Loan
Document in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom
such enforcement is sought. Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto. 


 [Signature Page Follows}


-3-






          IN
WITNESS WHEREOF, Assignor has caused this Trademark Security Agreement. to-be
executed and.delivered by its duly authorized officer as of the date first set
forth above.


	
  
 	
  
 	
  
 	
  
 	
  
 
	
  
 	
 RNK, INC.,
 
	
  
 	
 as Assignor
 
	
  
 	
  
 	
  
 	
  
 	
  
 
	
  
 	
 By: 
 	
  
 
	
  
 	
  
 	

 
 
	
  
 	
 Name:
 	
  
 
	
  
 	
  
 	

 
 
	
  
 	
 Title:
 	
  
 
	
  
 	
  
 	

 
 
	
  
 	
  
 
		
 ACCEPTED AND
 ACKNOWLEDGED BY:
 
	
  
 	
  
 
	
  
 	
 GREYSTONE
 BUSINESS CREDIT II, L.L.C., as Lender
 
	 	 
	 
	By: 
	 

	 
	 
	

   
	 
	Name:
	 

	 
	 
	

   
	 
	Title:
	 

	 
	 
	

   
	 	 



Signature Page
to Trademark Security Agreement






SCHEDULE A
 - to

RNK. TRADEMARK SECURITY AGREEMENT


Trademark Registrations/Applications



	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Assignor

 	
  

 	
 Country

 	
  

 	
 Mark

 	
  

 	
 Application/

 Registration

 No.

 	
  

 	
 App/Reg

 Date

 	
  

 
	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 
	
 RNK, Inc. dba RNK Communications

 	
  

 	
 USA

 	
  

 	
 Phone Number Bank

 	
  

 	
 N/A•

 	
  

 	
 N/A

 	
  

 
	
 RNK, Inc. dba RNK Communications

 	
  

 	
 USA

 	
  

 	
 Phone Number Bank

 	
  

 	
 N/A

 	
  

 	
 N/A

 	
  

 
	
 RNK,Inc.

 	
  

 	
 USA

 	
  

 	
 Mytempnumber

 	
  

 	
 N/A

 	
  

 	
 N/A

 	
  

 
	
 RNK Inc.

 	
  

 	
 USA

 	
  

 	
 RNK Communications

 	
  

 	
 N/A

 	
  

 	
 N/A

 	
  

 
	
 RNK, Inc.

 	
  

 	
 USA

 	
  

 	
 RNK Communications

 	
  

 	
 N/A

 	
  

 	
 N/A

 	
  

 
	
 RNK Inc.

 	
  

 	
 USA

 	
  

 	
 Bridge2Voip

 	
  

 	
 3174072

 	
  

 	
 11/21/2006

 	
  

 
	
 RNK Inc.

 	
  

 	
 USA

 	
  

 	
 Revos

 	
  

 	
 3171488

 	
  

 	
 .11/14/2006

 	
  

 
	
 RNK Inc.

 	
  

 	
 USA

 	
  

 	
 Voip2Go

 	
  

 	
 3171467

 	
  

 	
 .  11/14/2006

 	
  

 
	
 RNK, Inc.

 	
  

 	
 USA

 	
  

 	
 Subjecttalk

 	
  

 	
 N/A

 	
  

 	
 N/A

 	
  

 
	
 RNK Inc.

 	
  

 	
 USA

 	
  

 	
 RNKvoip

 	
  

 	
 3192154

 	
 -

 	
 1/2/2007

 	
  

 
	
 RNK, Inc. dba RNK Telecom

 	
  

 	
 USA

 	
  

 	
 PVG

 	
  

 	
 2628302

 	
  

 	
 10/1/2002

 	
  

 
	
 RNK, Inc. dba RNK Telecom

 	
  

 	
 USA

 	
  

 	
 Hello PVG Personal

 Voice Greeting

 	
  

 	
 2697484

 	
  

 	
 3/18/2003

 	
  

 
	
 RNK, Inc. dba RNK Telecom

 	
  

 	
 USA

 	
  

 	
 HDC Tel

 	
  

 	
 2674615

 	
  

 	
 1/14/2003

 	
  

 
	
 RNK, Inc.

 	
  

 	
 USA

 	
  

 	
 Bucket of Minutes

 	
  

 	
 2607069

 	
  

 	
 8/13/2002

 	
  

 
	
 RNK, Inc

 	
  

 	
 USA

 	
  

 	
 RNK Telecom

 	
  

 	
 2607068

 	
  

 	
 8/13/2002

 	
  

 
	
 RNK, Inc.

 	
  

 	
 USA

 	
  

 	
 None (Design only)

 	
  

 	
 2506948

 	
  

 	
 11/13/2001

 	
  

 
	
 RNK, Inc.

 	
  

 	
 USA

 	
  

 	
 RNK Telecom

 	
  

 	
 2607067.

 	
  

 	
 8/13/2002

 	
  

 
	
 RNK, Inc.

 	
  

 	
 USA

 	
  

 	
 Dialaroundtheworld.com

 	
  

 	
 2480071

 	
  

 	
 8/21/2001

 	
  

 
	
 RNK, Inc.

 	
  

 	
 USA

 	
  

 	
 RNK Telecom

 	
  

 	
 57956

 	
  

 	
 10/5/1999

 	
  

 
	
 RNK, Inc.

 	
  

 	
 USA

 	
  

 	
 HDC Tel

 	
  

 	
 60961 .

 	
  

 	
 12/13/2001

 	
  

 


Trade Names


	
  

 	
  

 
	
  

 	
 RNK Telecom, Inc. 

 
	
  

 	
 RNK Maryland, Inc.

 
	
  

 	
 RNK Communications 

 
	
  

 	
 RNK Communications, Inc. 

 
	
  

 	
 RNK Telecom 

 
	
  

 	
 RNKVoIP 

 
	
  

 	
 Halfprice Telecom 

 
	
  

 	
 Dialaroundtheworld.com 

 
	
  

 	
 HDC Tel 

 
	
  

 	
 781-382-Talk.com 

 






Schedule A









	
  

 	
  

 	
  

 
	
  

 	
 Supportforvoip.com

 	
  

 
	
  

 	
 SubjectTalk

 	
  

 
	
  

 	
 ConferenceCallingPro

 	
  

 
	
  

 	
 RNK VA LLC

 	
 Phone Number Bank

 
	
  

 	
 VoIP2Go

 	
  

 
	
  

 	
 Revos

 	
  

 
	
  

 	
 Bridge2VolP

 	
  

 
	
  

 	
 RNK Pennsylvania, Inc.

 	
  

 
	
  

 	
 RNK Michigan Inc.

 	
  

 


Common Law Trademarks


None.


Trademarks Not Currently In tJse


None.


Trademark Licenses


None.


-6-