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