Exhibit 10.1


SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT


THIS SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT (this “Agreement”)
dated as of the Effective Date by and between SILICON
VALLEY BANK, a California corporation with its principal place of
business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan
production office located at One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462 (“Bank”),
and IBASIS, INC., a Delaware corporation
with offices located at 20 Second Avenue, Burlington, Massachusetts 01803 (“Borrower”), provides the terms on which Bank shall lend to
Borrower and Borrower shall repay Bank and amends and restates in its entirety
a certain Amended and Restated Loan and Security Agreement dated as of December
29, 2003 entered into by and between Bank and Borrower, as amended.  The parties agree as follows:


1              ACCOUNTING
AND OTHER TERMS


Accounting terms not
defined in this Agreement shall be construed following GAAP.  Calculations and determinations must be made
following GAAP.  Capitalized terms not
otherwise defined in this Agreement shall have the meanings set forth in
Section 13.  All other terms
contained in this Agreement, unless otherwise indicated, shall have the meaning
provided by the Code to the extent such terms are defined therein.


2              LOAN
AND TERMS OF PAYMENT


2.1          Promise to Pay.  Borrower hereby unconditionally promises to
pay Bank the outstanding principal amount of all Credit Extensions and accrued
and unpaid interest thereon as and when due in accordance with this Agreement.


2.1.1       Revolving Advances.


(a)            Availability.  Subject to the terms and conditions of this
Agreement, Bank will make Advances to Borrower up to the Availability
Amount.  Amounts borrowed under the
Revolving Line may be repaid, and prior to the Revolving Line Maturity Date,
reborrowed, subject to the applicable terms and conditions precedent herein.


(b)           Termination;
Repayment.  The Revolving Line
terminates on the Revolving Line Maturity Date, when the principal amount of
all Advances, the unpaid interest thereon, and all other Obligations relating
to the Revolving Line shall be immediately due and payable.


2.1.2       Letters of Credit Sublimit.


(a)            As
part of the Revolving Line, Bank shall issue or have issued Letters of Credit
for Borrower’s account.  The face amount
of outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve) may not exceed $10,000,000 inclusive
of Credit Extensions relating to Sections 2.1.3 and 2.1.4.  In accordance with the definition of
Availability Amount, such aggregate amounts utilized hereunder shall at all
times reduce the amount otherwise available for Advances under the Revolving
Line.  If, on the Revolving Line Maturity
Date, there are any outstanding Letters of Credit, then on such date Borrower
shall provide to Bank cash collateral in an amount equal to 105% of the face
amount of all such Letters of Credit plus all interest, fees, and costs due or
to become due in connection therewith (as estimated by Bank in its good faith
business judgment), to secure all of the Obligations relating to said Letters
of Credit.  All Letters of Credit shall
be in form and substance acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank’s standard Application and Letter
of Credit Agreement (the “Letter of Credit
Application”).  Borrower
agrees to execute any further documentation in connection with the Letters of
Credit as Bank may reasonably request. 
Borrower further agrees to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guarantied by Bank and
opened for Borrower’s account or by Bank’s good faith interpretations of any
Letter of Credit issued by Bank for Borrower’s account (provided such
interpretation is not manifestly erroneous), and Borrower understands and
agrees that Bank shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower’s instructions or
those contained in the Letters of Credit or any modifications, amendments, or
supplements thereto.













(b)           The
obligation of Borrower to immediately reimburse Bank for drawings made under
Letters of Credit shall be absolute, unconditional, and irrevocable, and shall
be performed strictly in accordance with the terms of this Agreement, such
Letters of Credit, and the Letter of Credit Application.


(c)           Borrower
may request that Bank issue a Letter of Credit payable in a Foreign
Currency.  If a proper demand for payment
is made under any such Letter of Credit, Bank shall treat such demand as an
Advance to Borrower of the equivalent of the amount thereof (plus fees and
charges in connection therewith such as wire, cable, SWIFT or similar charges)
in Dollars at the then-prevailing rate of exchange in San Francisco,
California, for sales of the Foreign Currency for transfer to the country
issuing such Foreign Currency.


(d)           To
guard against fluctuations in currency exchange rates, upon the issuance of any
Letter of Credit payable in a Foreign Currency, Bank shall create a reserve
(the “Letter of Credit Reserve”)
under the Revolving Line in an amount equal to ten percent (10%) of the face
amount of such Letter of Credit.  The
amount of the Letter of Credit Reserve may be adjusted by Bank from time to
time to account for fluctuations in the exchange rate.  The availability of funds under the Revolving
Line shall be reduced by the amount of such Letter of Credit Reserve for as
long as such Letter of Credit remains outstanding.


2.1.3       Foreign Exchange Sublimit.  As part of the Revolving Line, Borrower may
enter into foreign exchange contracts with Bank under which Borrower commits to
purchase from or sell to Bank a specific amount of Foreign Currency (each, a “FX Forward Contract”) on a specified date
(the “Settlement Date”).  FX Forward Contracts shall have a Settlement
Date of at least one (1) FX Business Day after the contract date and shall be
subject to a reserve of ten percent (10%) of each outstanding FX Forward
Contract  (the “FX Reserve”). The aggregate amount of the
FX Reserve at any one time plus Credit Extensions relating to Sections 2.1.2
and 2.1.4 may not exceed Ten Million Dollars ($10,000,000.00).  In accordance with the definition of Availability
Amount, the amount otherwise available for Credit Extensions under the
Revolving Line shall be reduced by the aggregate amount of all FX
Reserves.  Any amounts due and unpaid
under an FX Forward Contract will be treated as Advances under the Revolving
Line and will accrue interest at the interest rate applicable to Advances.


2.1.4       Cash Management Services
Sublimit.  Borrower may use up to Ten
Million Dollars ($10,000,000.00) inclusive of Credit Extensions relating to
Sections 2.1.2 and 2.1.3 (the “Cash Management
Services Sublimit”) of the Revolving Line for Bank’s cash management
services which may include merchant services, direct deposit of payroll,
business credit card, and check cashing services identified in Bank’s various
cash management services agreements (collectively, the “Cash Management Services”).  In accordance with the definition of
Availability Amount, the dollar amount of any Cash Management Services provided
under this sublimit will reduce the amount otherwise available under the
Revolving Line.  Any amounts owed to Bank
which are due and unpaid from Borrower for any Cash Management Services will be
treated as Advances under the Revolving Line and will accrue interest at the
interest rate applicable to Advances.


2.2          Overadvances.  If at any time or for any reason the total of
all outstanding Advances and all other monetary Obligations exceeds the
Availability Amount (an “Overadvance”),
Borrower shall immediately pay the amount of the excess to Bank, without notice
or demand.  Without limiting Borrower’s
obligation to repay to Bank the amount of any Overadvance, Borrower agrees to
pay Bank interest on the outstanding amount of any Overadvance, on demand, at
the Default Rate.


2.3          General Provisions
Relating to the Advances.  Each
Advance shall, at Borrower’s option in accordance with the terms of this
Agreement, be either in the form of a Prime Rate Advance or a LIBOR Advance; provided that in no event shall Borrower
maintain at any time LIBOR Advances having more than four (4)  different Interest Periods.  Borrower shall pay interest accrued on the
Advances at the rates and in the manner set forth in Section 2.4(a).


2.4          Payment of Interest on
the Credit Extensions.


(a)            Advances.  Each
Advance shall bear interest on the outstanding principal amount thereof from
the date when made, continued or converted until paid in full at a rate per annum equal to (i) the Prime Rate plus the applicable
Prime Rate Margin or (ii) the LIBOR Rate plus the applicable LIBOR Rate
Margin.  Pursuant to the terms hereof,
interest on each Advance shall be paid in arrears on each Interest Payment
Date.  Interest shall also be paid on the
date of any prepayment of any Advance pursuant to this Agreement for the
portion of any Advance so prepaid and upon payment (including prepayment) in
full thereof.  All accrued but unpaid
interest on the Advances shall be due and payable on the Revolving Line
Maturity Date.



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(b)           Performance
Pricing.  Each of the Prime Rate
Margin and the LIBOR Rate Margin shall be adjusted quarterly and shall be applied
on and after the first day of each such fiscal quarter as follows: for any
fiscal quarter, as of the first day of each such fiscal quarter: (i) if the
Total Funded Debt Ratio for the immediately preceding fiscal quarter is less
than 1.50:1.00, then the Prime Rate Margin for such fiscal quarter shall be
0.00% and the LIBOR Rate Margin for such fiscal quarter shall be 2.25%, and
(ii) if the Total Funded Debt Ratio for the immediately preceding fiscal
quarter is equal to or greater than 1.50:1.00, then the Prime Rate Margin for
such fiscal quarter shall be 0.50% and the LIBOR Rate Margin for such fiscal
quarter shall be 2.75%.


(c)           Default
Rate.  Immediately upon the
occurrence and during the continuance of an Event of Default, the Obligations
shall bear interest at a rate per annum which is five percentage points above
the rate effective immediately before the Event of Default (the “Default Rate”).  Payment or acceptance of the increased
interest rate provided in this Section 2.4(c) is not a permitted alternative
to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Bank.


(d)           Prime
Rate Advances.  Each change in the
interest rate of the Prime Rate Advances based on changes in the Prime Rate
shall be effective on the effective date of such change and to the extent of
such change.  Bank shall use its best
efforts to give Borrower prompt notice of any such change in the Prime Rate; provided, however, that any failure by Bank to provide
Borrower with notice hereunder shall not affect Bank’s right to make changes in
the interest rate of the Prime Rate Advances based on changes in the Prime
Rate.


(e)           LIBOR
Advances.  The interest rate
applicable to each LIBOR Advance shall be determined in accordance with Section
3.6(a) hereunder.  Subject to Sections
3.6 and 3.7, such rate shall apply during the entire Interest Period applicable
to such LIBOR Advance, and interest calculated thereon shall be payable on the
Interest Payment Date applicable to such LIBOR Advance.


(f)            360-Day
Year.  Interest shall be computed on
the basis of a 360-day year for the actual number of days elapsed.


(g)           Debit
of Accounts.  Bank may debit the
Designated Deposit Account and account nos. 3300372126, 3300381409 and
3300498404 maintained at Bank, for principal and interest payments or, after
notice to Borrower, any other amounts Borrower owes Bank when due.  These debits shall not constitute a set-off.


(h)           Payment;
Interest Computation; Float Charge. 
In computing interest on the Credit Extensions, all Payments received
after 12:00 p.m. Pacific time on any day shall be deemed received on the next
Business Day.  Bank may charge Borrower’s Designated Deposit Account for the amount of
any item of payment which is returned to Bank unpaid.


2.5          Fees.  Borrower shall pay to Bank:


(a)           Facility Fee.  A fully earned, non-refundable facility fee
of $262,500, on or before the Effective Date;


(b)           Letter
of Credit Fee.  Bank’s customary fees
and expenses for the issuance or renewal of Letters of Credit, upon the
issuance or renewal of such Letter of Credit by Bank, which fees and expenses
shall not exceed 1.25% per annum of the face amount of such Letter of Credit
plus expenses;


(c)           Termination
Fee.  Subject to the terms of Section
4.1, a termination fee;


(d)           Unused
Revolving Line Facility Fee.  A fee
(the “Unused Revolving Line Facility Fee”),
which fee shall be paid quarterly, in arrears, on the last day of each fiscal
quarter, calculated as follows: (i) if the Total Funded Debt Ratio for the
fiscal quarter for which the Unused Revolving Line Facility Fee is due is less
than 1.50:1.00, the Unused Revolving Line Facility Fee for such fiscal quarter
shall be 0.375% per annum of the average unused portion of the Revolving Line
for such quarter, as determined by Bank; and (ii) if the Total Funded Debt
Ratio for the fiscal quarter for which the Unused Revolving Line Facility Fee
is due is greater than or equal to 1.50:1.00, the Unused Revolving Line
Facility Fee for such fiscal quarter shall be 0.625% per annum of the average
unused portion of the Revolving Line for such quarter, as determined by
Bank.  Borrower shall not be entitled to
any credit, rebate or repayment of any Unused Revolving Line Facility Fee
previously earned by Bank pursuant to this Section 2.5(d) notwithstanding any
suspension or termination of Bank’s obligation to make Advances hereunder; and



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(e)           Bank Expenses.  All Bank Expenses (including reasonable
attorneys’ fees and expenses for documentation and negotiation of this
Agreement) incurred through and after the Effective Date, when due.


3              CONDITIONS OF
LOANS


3.1          Conditions Precedent to
Initial Credit Extension.  Bank’s
obligation to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, such documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without limitation:


(a)         Borrower
shall have delivered duly executed original signatures to the Loan Documents to
which it is a party;


(b)           Borrower
shall have delivered its Operating Documents and a good standing certificate of
Borrower certified by the Secretary of State of the State of Delaware as of a
date no earlier than thirty (30) days prior to the Effective Date;


(c)           Borrower
shall have delivered duly executed original signatures to the completed
Borrowing Resolutions for Borrower;


(d)           Borrower
shall have delivered evidence that (i) the Liens securing Indebtedness owed by
Borrower to any party other than the Lender will be terminated and (ii) the
documents and/or filings evidencing the perfection of such Liens, including
without limitation any financing statements and/or control agreements, have or
will, concurrently with the initial Credit Extension, be terminated.


(e)           Bank
shall have received certified copies, dated as of a recent date, of financing
statement searches, as Bank shall request, accompanied by written evidence
(including any UCC termination statements) that the Liens indicated in any such
financing statements either constitute Permitted Liens or have been or, in
connection with the initial Credit Extension, will be terminated or released;


(f)            Borrower
shall have delivered the Perfection Certificates executed by Borrower and each
Guarantor;


(g)           Borrower
shall have delivered a legal opinion of Borrower’s counsel dated as of the
Effective Date together with the duly executed original signatures thereto;


(h)           Borrower
shall have delivered the duly executed original signatures of each Guarantor to
each Guaranty and Security Agreement, together with the Operating Documents and
completed Borrowing Resolutions for each Guarantor;


(i)            Borrower
shall have delivered evidence satisfactory to Bank that the insurance policies
required by Section 6.7 hereof are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured clauses or
endorsements in favor of Bank; and


(j)            Borrower
shall have paid the fees and Bank Expenses then due as specified in Section 2.5
hereof.


3.2          Conditions Precedent to
all Credit Extensions.  Bank’s
obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following:


(a)           for
Advances, timely receipt of an executed Notice of Borrowing;


(b)           timely
receipt of an executed Transaction Report; and


(c)           for
any other Credit Extension (other than Letters of Credit), timely receipt of a
completed and executed Payment/Advance Form;


(d)           the representations and warranties in
Section 5 shall be true in all material respects on the date of the Transaction
Report, on the date of the Notice of Borrowing or Payment/Advance Form, as
applicable, and on the Funding Date of each Credit Extension; provided,
however, that such materiality qualifier shall not be 



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applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no
Default or Event of Default shall have occurred and be continuing or result
from the Credit Extension.  Each Credit
Extension is Borrower’s representation and warranty on that date that the
representations and warranties in Section 5 remain true in all material
respects; provided, however, that such materiality qualifier shall not
be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof; and provided  further,
that those representations and warranties expressly referring to a specific
date shall be true, accurate and complete in all material respects as of such
date; and


(e)            there
has not been a Material Adverse Change.


3.3          Covenant to Deliver.


Borrower agrees to
deliver to Bank each item required to be delivered to Bank under this Agreement
as a condition to any Credit Extension. 
Borrower expressly agrees that the extension of a Credit Extension prior
to the receipt by Bank of any such item shall not constitute a waiver by Bank
of Borrower’s obligation to deliver such item, and any such extension in the
absence of a required item shall be in Bank’s sole discretion.


3.4          Procedures for Borrowing.


(a)            Subject to the prior satisfaction
of all other applicable conditions to the making of an Advance set forth in
this Agreement, each Advance shall be made upon Borrower’s irrevocable written
notice delivered to Bank in the form of a Notice of Borrowing, each executed by
a Responsible Officer of Borrower or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have
become due.  Bank shall credit Advances
to the Designated Deposit Account.  Bank
may rely on any telephone notice given by a person whom Bank reasonably
believes is a Responsible Officer or designee. 
Borrower will indemnify Bank for any loss Bank suffers due to such
reliance.  Such Notice of Borrowing must
be received by Bank prior to 11:00 a.m. Pacific time (i) on the same day
as the requested Funding Date, in the case of Prime Rate Advances, and (ii) at
least two (2) Business Days prior to the requested Funding Date, in the case of
LIBOR Advances, specifying:


(1)           the amount of the
Advance, which, if a LIBOR Advance is requested, shall be in an aggregate
minimum principal amount of $500,000 or in any integral multiple of $500,000 in
excess thereof;


(2)           the requested Funding
Date; and


(3)           whether the Advance is
to be comprised of LIBOR Advances and/or Prime Rate Advances.


(b)           The proceeds of all
such Advances will then be made available to Borrower on the Funding Date by
Bank by transfer to the Designated Deposit Account and, subsequently, by wire
transfer to such other account as Borrower may instruct in the Notice of
Borrowing or Payment/Advance Form, as the case may be.  No Advances shall be deemed made to Borrower,
and no interest shall accrue on any such Advance, until the related funds have
been deposited in the Designated Deposit Account.


3.5          Conversion and
Continuation Elections.


(a)            So long as (i) no
Event of Default or Default exists; (ii) Borrower shall not have sent any
notice of termination of this Agreement; and (iii) Borrower shall have complied
with such customary procedures as Bank has established from time to time for
Borrower’s requests for LIBOR Advances, Borrower may, upon irrevocable written
notice to Bank:


(1)           elect to convert on any
Business Day, Prime Rate Advances in an amount equal to $500,000 or any
integral multiple of $500,000 in excess thereof into LIBOR Advances;


(2)           elect to continue on
any Interest Payment Date any LIBOR Advances maturing on such Interest Payment
Date (or any part thereof in an amount equal to $500,000 or any integral
multiple of $500,000 in excess thereof); provided, that
if the aggregate amount of LIBOR Advances shall have been reduced, by payment,
prepayment, or conversion of part thereof, to be less than $500,000, such LIBOR 



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Advances
shall automatically convert into Prime Rate Advances, and on and after such
date the right of Borrower to continue such Advances as, and convert such
Advances into, LIBOR Advances shall terminate; or


(3)           elect to convert on any
Interest Payment Date any LIBOR Advances maturing on such Interest Payment Date
(or any part thereof in an amount equal to $500,000 or any integral multiple of
$500,000 in excess thereof) into Prime Rate Advances.


(b)        Borrower
shall deliver a Notice of Conversion/Continuation to be received by Bank prior
to 11:00 a.m. Pacific time at least (i) three (3) Business Days in
advance of the Conversion Date or Continuation Date, if any Advances are to be
converted into or continued as LIBOR Advances; and (ii) one (1) Business Day in advance
of the Conversion Date, if any Advances are to be converted into Prime Rate
Advances, in each case specifying the:


(1)           proposed Conversion
Date or Continuation Date; and


(2)           aggregate amount of the
Advances to be converted or continued which, if any Advances are to be
converted into or continued as LIBOR Advances, shall be in an aggregate minimum
principal amount of $1,000,000 or in any integral multiple of $500,000 in
excess thereof.


(c)         If
upon the expiration of any Interest Period applicable to any LIBOR Advances,
Borrower shall have timely failed to select a new Interest Period to be
applicable to such LIBOR Advances, Borrower shall be deemed to have elected to
convert such LIBOR Advances into Prime Rate Advances.


(d)        Any LIBOR Advances shall,
at Bank’s option, convert into Prime Rate Advances in the event that
(i) an Event of Default or Default shall exist, or (ii) the aggregate
principal amount of the Prime Rate Advances which have been previously
converted to LIBOR Advances, or the aggregate principal amount of existing
LIBOR Advances continued, as the case may be, at the beginning of an Interest
Period shall at any time during such Interest Period exceed the Availability
Amount.  Borrower agrees to pay Bank,
upon demand by Bank (or Bank may, at its option, charge the Designated Deposit
Account or any other account Borrower maintains with Bank) any amounts required
to compensate Bank for any loss (including loss of anticipated profits), cost,
or expense incurred by Bank, as a result of the conversion of LIBOR Advances to
Prime Rate Advances pursuant to any of the foregoing.


(e)         Notwithstanding anything
to the contrary contained herein, Bank shall not be required to purchase United
States Dollar deposits in the London interbank market or other applicable LIBOR
market to fund any LIBOR Advances, but the provisions hereof shall be deemed to
apply as if Bank had purchased such deposits to fund the LIBOR Advances.


3.6          Special Provisions
Governing LIBOR Advances. Notwithstanding any other provision of this
Agreement to the contrary, the following provisions shall govern with respect
to LIBOR Advances as to the matters covered:


(a)         Determination
of Applicable Interest Rate.  As soon
as practicable on each Interest Rate Determination Date, Bank shall determine
(which determination shall, absent manifest error in calculation, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the LIBOR Advances for which an interest rate is then being determined for the
applicable Interest Period and shall promptly give notice thereof (in writing
or by telephone confirmed in writing) to Borrower.


(b)        Inability to Determine
Applicable Interest Rate.  In the
event that Bank shall have determined in good faith (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect to any LIBOR
Advance, that by reason of circumstances affecting the London interbank market
adequate and fair means do not exist for ascertaining the interest rate
applicable to such Advance on the basis provided for in the definition of
LIBOR, Bank shall on such date give notice (by facsimile or by telephone
confirmed in writing) to Borrower of such determination, whereupon (i) no
Advances may be made as, or converted to, LIBOR Advances until such time as
Bank notifies Borrower that the circumstances giving rise to such notice no
longer exist, and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Borrower with respect to Advances in respect
of which such determination was made shall be deemed to be rescinded by
Borrower.



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(c)         Compensation for
Breakage or Non-Commencement of Interest Periods.  Borrower shall compensate Bank, upon written
request by Bank (which request shall set forth the manner and method of
computing such compensation), for all reasonable losses, expenses and
liabilities, if any (including any interest paid by Bank to lenders of funds
borrowed by it to make or carry its LIBOR Advances and any loss, expense or
liability incurred by Bank in connection with the liquidation or re-employment of
such funds) such that Bank may incur: (i) if for any reason (other than a
default by Bank or due to any failure of Bank to fund LIBOR Advances due to
impracticability or illegality under Sections 3.7(d) and 3.7(e)) a
borrowing or a conversion to or continuation of any LIBOR Advance does not
occur on a date specified in a Notice of Borrowing or a Notice of
Conversion/Continuation, as the case may be, or (ii) if any principal
payment or any conversion of any of its LIBOR Advances occurs on a date prior
to the last day of an Interest Period applicable to that Advance.


(d)        Assumptions Concerning
Funding of LIBOR Advances. 
Calculation of all amounts payable to Bank under this Section 3.6
and under Section 3.4 shall be made as though Bank had actually funded each
of its relevant LIBOR Advances through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to the definition of LIBOR Rate
in an amount equal to the amount of such LIBOR Advance and having a maturity
comparable to the relevant Interest Period; provided, however,
that Bank may fund each of its LIBOR Advances in any manner it sees fit and the
foregoing assumptions shall be utilized only for the purposes of calculating
amounts payable under this Section 3.6 and under Section 3.4.


(e)         LIBOR Advances After
Default.  After the occurrence and
during the continuance of an Event of Default, (i) Borrower may not elect
to have an Advance be made or continued as, or converted to, a LIBOR Advance
after the expiration of any Interest Period then in effect for such Advance and
(ii) subject to the provisions of Section 3.6(c), any Notice of
Conversion/Continuation given by Borrower with respect to a requested
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Borrower and be deemed a request to convert or continue Advances
referred to therein as Prime Rate Advances.


3.7          Additional
Requirements/Provisions Regarding LIBOR Advances.


(a)            If for any reason
(including voluntary or mandatory prepayment or acceleration), Bank receives
all or part of the principal amount of a LIBOR Advance prior to the last day of
the Interest Period for such Advance, Borrower shall immediately notify
Borrower’s account officer at Bank and, on demand by Bank, pay Bank the amount
(if any) by which (i) the additional interest which would have been
payable on the amount so received had it not been received until the last day
of such Interest Period exceeds (ii) the interest which would have been
recoverable by Bank by placing the amount so received on deposit in the
certificate of deposit markets, the offshore currency markets, or United States
Treasury investment products, as the case may be, for a period starting on the
date on which it was so received and ending on the last day of such Interest
Period at the interest rate determined by Bank in its reasonable
discretion.  Bank’s determination as to
such amount shall be conclusive absent manifest error.


(b)           Borrower shall pay
Bank, upon demand by Bank, from time to time such amounts as Bank may
reasonably determine to be necessary to compensate it for any costs incurred by
Bank that Bank determines are attributable to its making or maintaining of any
amount receivable by Bank hereunder in respect of any Advances relating thereto
(such increases in costs and reductions in amounts receivable being herein
called “Additional Costs”), in
each case resulting from any Regulatory Change which:


(1)           changes the basis of
taxation of any amounts payable to Bank under this Agreement in respect of any
Advances (other than changes which affect taxes measured by or imposed on the
overall net income of Bank);


(2)           imposes or modifies any
reserve, special deposit or similar requirements relating to any Credit
Extensions based upon a LIBOR Rate; or


(3)           imposes any other
material condition affecting this Agreement (or any of such extensions of
credit or liabilities).


Bank will notify Borrower of any event occurring after the Effective
Date which will entitle Bank to compensation pursuant to this Section 3.7 as promptly
as practicable after it obtains knowledge thereof and determines to request
such compensation.  Bank will furnish
Borrower with a statement setting forth the basis and amount of each request by
Bank for compensation under this Section 3.7. 
Determinations and allocations by Bank for purposes of this Section 3.7
of the effect of any Regulatory Change on its costs of maintaining its
obligations to 



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make Advances, of
making or maintaining Advances, or on amounts receivable by it in respect of
Advances, and of the additional amounts required to compensate Bank in
respect of any Additional Costs, shall be conclusive absent manifest error.


(c)           If Bank shall
reasonably determine that the adoption or implementation of any applicable law,
rule, regulation, or treaty regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with any respect or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank, or comparable agency, has or would have the effect of reducing
the rate of return on capital of Bank or any person or entity controlling Bank
(a “Parent”) as a consequence of
its obligations hereunder to a level below that which Bank (or its Parent)
could have achieved but for such adoption, change, or compliance (taking into
consideration policies with respect to capital adequacy) by an amount deemed by
Bank to be material, then from time to time, within fifteen (15) days after
demand by Bank, Borrower shall pay to Bank such additional amount or amounts as
will compensate Bank for such reduction. 
A statement of Bank claiming compensation under this Section 3.7(c) and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive absent manifest error.


(d)           If, at any time, Bank,
in its commercially reasonable discretion, determines that (i) the amount of
LIBOR Advances for periods equal to the corresponding Interest Periods are not
available to Bank in the offshore currency interbank markets, or (ii) LIBOR
does not accurately reflect the cost to Bank of lending the LIBOR Advances,
then Bank shall promptly give notice thereof to Borrower.  Upon the giving of such notice, Bank’s
obligation to make the LIBOR Advances shall terminate; provided,
however, Advances shall not terminate if Bank and Borrower agree in
writing to a different interest rate applicable to LIBOR Advances.


(e)           If it shall become
unlawful for Bank to continue to fund or maintain any LIBOR Advances, or to
perform its obligations hereunder, upon demand by Bank, Borrower shall prepay
the Advances in full with accrued interest thereon and all other amounts
payable by Borrower hereunder (including, without limitation, any amount
payable in connection with such prepayment pursuant to Section 3.7(a)).  Notwithstanding the foregoing, to the extent
a determination by Bank as described above relates to a LIBOR Advance then
being requested by Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Borrower shall have the option, subject to the
provisions of Section 3.6(c), to (i) rescind such Notice of Borrowing or Notice
of Conversion/Continuation by giving notice (by facsimile or by telephone
confirmed in writing) to Bank of such rescission on the date on which Bank
gives notice of its determination as described above, or (ii) modify such
Notice of Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate
Advance or to have outstanding Advances converted into or continued as Prime
Rate Advances by giving notice (by facsimile or by telephone confirmed in writing)
to Bank of such modification on the date on which Bank gives notice of its
determination as described above.


4              CREATION
OF SECURITY INTEREST


4.1          Grant of Security
Interest.


(a)           Borrower hereby grants
Bank, to secure the payment and performance in full of all of the Obligations,
a continuing security interest in, pledges and charges by way of security, to
Bank, the Collateral, wherever located, whether now owned or hereafter acquired
or arising, and all proceeds and products thereof.  Borrower represents, warrants, and covenants
that the security interest granted herein is and shall at all times continue to
be a first priority perfected security interest in the Collateral (subject only
to Permitted Liens that may have superior priority to Bank’s Lien under this
Agreement).  If Borrower shall acquire a
material commercial tort claim, Borrower shall promptly notify Bank in a
writing signed by Borrower of the general details thereof and grant to Bank in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to Bank.


(b)           Borrower hereby
ratifies that certain Intellectual Property Security Agreement, dated as of
December 30, 2002 by and among by and Borrower and Lender, and such
Intellectual Property Security Agreement remains in full force and effect.


(c)           This Agreement may be terminated prior to
the Revolving Line Maturity Date by Borrower, effective three (3) Business Days
after written notice of termination is given to Bank.  Notwithstanding any such termination, Bank’s
lien and security interest in the Collateral shall continue until Borrower
fully satisfies its Obligations arising out of the Loan Documents.  If such termination is at Borrower’s election
or at Bank’s 



 8
 









election due to the occurrence
and continuance of an Event of Default, Borrower shall pay to Bank, in addition
to the payment of any other expenses or fees then-owing, a termination fee in
an amount equal to (i) for any termination within six (6) months of the
Effective Date, one percent (1%) of $35,000,000, and (ii) for any termination
during the period from six (6) months after the Effective Date up to but not
including the first anniversary of the Effective Date, one-half of one percent
(0.50%) of $35,000,000, provided that no termination fee shall be charged if
(i) the credit facility hereunder is replaced with a new facility from Silicon
Valley Bank, (ii) the credit facility hereunder is terminated for any reason
after the first anniversary of the Effective Date, or (iii) the credit facility
hereunder is terminated by Borrower solely as a result of Bank’s determination
to no longer offer LIBOR Advances pursuant to the provisions of Sections 3.6(b)
or 3.7(d).  Upon payment in full of the
Obligations and at such time as Bank’s obligation to make Credit Extensions has
terminated, Bank shall release its liens and security interests in the
Collateral and all rights therein shall revert to Borrower and each Guarantor,
as applicable.


4.2          Authorization to File
Financing Statements.  Borrower
hereby authorizes Bank to file financing statements, without notice to
Borrower, with all appropriate jurisdictions to perfect or protect Bank’s
interest or rights hereunder, including a notice that any disposition of the
Collateral, by either Borrower or any other Person, shall be deemed by Bank to
violate the rights of Bank under the Code. 
Without limiting the foregoing, Borrower hereby authorizes Bank to file
financing statements which describe the Collateral as “all assets” and/or “all
personal property” of Borrower or words of similar import.


5              REPRESENTATIONS
AND WARRANTIES


Borrower
represents and warrants as follows:


5.1          Due Organization and
Authorization.  Borrower and each of
its Subsidiaries are duly existing and in good standing as Registered
Organizations in their respective jurisdictions of formation and are qualified
and licensed to do business and are in good standing in any jurisdiction in
which the conduct of their business or their ownership of property requires
that they be qualified except where the failure to do so could not reasonably
be expected to have a material adverse effect on Borrower’s business.  In connection with this Agreement, Borrower
and each Guarantor have delivered to Bank a completed certificate substantially
in the form attached hereto as Exhibit C signed by Borrower and each Guarantor,
as applicable, entitled “Perfection
Certificate”.  Borrower
represents and warrants to Bank that (a) Borrower’s and each Guarantor’s exact
legal name is that indicated on the applicable Perfection Certificate and, in
the case of the Borrower, on the signature page hereof; (b) Borrower and
each Guarantor is an organization of the type and is organized in the
jurisdiction set forth in the applicable Perfection Certificate; (c) each
applicable Perfection Certificate accurately sets forth Borrower’s and each
Guarantor’s organizational identification number or accurately states that
Borrower or such Guarantor has none; (d) each applicable Perfection Certificate
accurately sets forth Borrower’s and each Guarantor’s place of business, or, if
more than one, each chief executive office as well as Borrower’s and each
Guarantor’s mailing address (if different than its chief executive office); (e) Borrower,
each Guarantor (and each of their predecessors) has not, in the past five (5)
years, changed its jurisdiction of formation, organizational structure or type,
or any organizational number assigned by its jurisdiction; and (f) all other information
set forth on each Perfection Certificate pertaining to Borrower and each
Guarantor is accurate and complete.  If
Borrower or any Guarantor is not now a Registered Organization but later
becomes one, Borrower or such Guarantor, as the case may be, shall promptly
notify Bank of such occurrence and provide Bank with Borrower’s or such
Guarantor’s organizational identification number.


The execution,
delivery and performance of the Loan Documents have been duly authorized, and
do not conflict with Borrower’s organizational documents, nor constitute an
event of default under any material agreement by which Borrower is bound.  Borrower is not in default under any
agreement to which it is a party or by which it is bound in which the default
could have a material adverse effect on Borrower’s business.


5.2          Collateral.  Borrower has good title to, has rights in,
and the power to transfer each item of Collateral upon which it purports to
grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens.  Borrower and each Guarantor have no Deposit
Accounts other than the Deposit Accounts with Bank and Deposit Accounts
described in the applicable Perfection Certificate delivered to Bank in
connection herewith.


The Collateral is not in the possession of any third party bailee (such
as a warehouse) except as otherwise provided in the applicable Perfection
Certificate.  None of the material
components of the Collateral are maintained at locations other than as provided
in the applicable Perfection Certificate unless Borrower has notified Bank of
such other locations.  In the event that
Borrower or any Guarantor, after the date hereof, intends to store or otherwise
deliver any material portion of the Collateral to a bailee, then Borrower will
first receive the written consent of Bank 



 9
 









and such bailee must execute and deliver a
bailee agreement in form and substance satisfactory to Bank in its sole
discretion.


All Inventory
is in all material respects of good and marketable quality, free from material
defects.


Borrower and
each Guarantor is a licensee or the sole owner of its respective intellectual
property, except for non-exclusive licenses granted to Affiliates or its
customers in the ordinary course of business. 
To Borrower’s knowledge, each patent is valid and enforceable and no
part of the intellectual property has been judged invalid or unenforceable, in
whole or in part, and to the best of Borrower’s knowledge, no claim has been
made that any part of the intellectual property owned by Borrower violates the
rights of any third party.


Except as
disclosed to Bank in writing, neither Borrower nor any Guarantor is a party to,
nor is bound by, any license or other agreement with respect to which Borrower
or any Guarantor is the licensee that prohibits or otherwise restricts Borrower
or such Guarantor from granting a security interest in Borrower’s or such
Guarantor’s interest in such license or agreement or any other property.


5.3          Accounts Receivable.


(a)            For each
Account with respect to which Advances are requested, on the date each Advance
is requested and made, such Account shall meet the minimum eligibility
requirements set forth in the definition of “Eligible Accounts” in Section 13
below.


(b)           All statements made
and all unpaid balances appearing in all invoices, instruments and other
documents evidencing the Accounts are and shall be true and correct and all
such invoices, instruments and other documents, and all of Borrower’s Books are
genuine and in all respects what they purport to be.  All sales and other transactions underlying
or giving rise to each Account shall comply in all material respects with all
applicable laws and governmental rules and regulations.  Borrower has no knowledge of any actual or
imminent Insolvency Proceeding of any Account Debtor whose accounts are an
Eligible Account in any Borrowing Base Certificate.  To the best of Borrower’s knowledge, all
signatures and endorsements on all documents, instruments, and agreements
relating to all Accounts are genuine, and all such documents, instruments and
agreements are legally enforceable in accordance with their terms.


5.4          Litigation.  Except as set forth in Borrower’s Perfection
Certificate, there are no actions or proceedings pending or, to the knowledge
of the Responsible Officers, threatened in writing by or against Borrower or
any of its Subsidiaries in which an adverse decision could reasonably be
expected to cause a Material Adverse Change.


5.5          No Material Deviation in
Financial Statements.  All
consolidated and consolidating financial statements for Borrower and any of its
Subsidiaries delivered to Bank fairly present in all material respects
Borrower’s consolidated financial condition and Borrower’s consolidated results
of operations.  There has not been any
material deterioration in Borrower’s consolidated financial condition since the
date of the most recent financial statements submitted to Bank.


5.6          Solvency.  The fair salable value of Borrower’s assets
(including goodwill minus disposition costs) exceeds the fair value of its liabilities;
Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts)
as they mature.


5.7          Regulatory Compliance.  Borrower is not an “investment company” nor a
company “controlled” by an “investment company” under the Investment Company
Act.  Borrower is not engaged as one of
its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors).  Borrower has complied in all material
respects with the Federal Fair Labor Standards Act.  Borrower has not violated any laws,
ordinances or rules, the violation of which could reasonably be expected to
have a Material Adverse Change on its business. 
None of Borrower’s or any of its Subsidiaries’ properties or assets has
been used by Borrower or any Subsidiary or, to the best of Borrower’s
knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally.  Borrower and each of its Subsidiaries have
obtained all consents, approvals and authorizations of, made all declarations
or filings with, and given all notices to, all government authorities that are necessary
to continue its business as currently conducted.


5.8          Subsidiaries;
Investments.  Borrower does not own
any stock, partnership interest or other equity securities except for Permitted
Investments.



 10
 









5.9          Tax Returns and
Payments; Pension Contributions. 
Borrower has timely filed all required tax returns and reports, and
Borrower and its Subsidiaries have timely paid all foreign, federal, state and
local taxes, assessments, deposits and contributions owed by Borrower provided
that Borrower may defer payment of any contested taxes, provided that Borrower
(a) in good faith contests its obligation to pay the taxes by appropriate
proceedings promptly and diligently instituted and conducted, (b) notifies Bank
in writing of the commencement of, and any material development in, the
proceedings, and (c) posts bonds or takes any other steps required to prevent
the governmental authority levying such contested taxes from obtaining a Lien
upon any of the Collateral that is other than a “Permitted Lien”.  Borrower is unaware of any claims or
adjustments proposed for any of Borrower’s prior tax years which could result
in additional taxes becoming due and payable by Borrower.  Borrower has paid all amounts necessary to
fund all present pension, profit sharing and deferred compensation plans in
accordance with their terms, and Borrower has not withdrawn from participation
in, and has not permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could
reasonably be expected to result in any liability of Borrower, including any
material liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.


5.10        Use of Proceeds.  Borrower shall use the proceeds of the Credit
Extensions solely as (i) working capital, (ii) to fund its general business
requirements and (iii) to fund dividends declared by the Borrower in connection
with a transaction in which, among other things, KPN, B.V. will become the
owner of 51% of the equity of the Borrower, and not for personal, family,
household or agricultural purposes,.


5.11        Full Disclosure.  No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank, as
of the date such representations, warranties, or other statements were made,
taken together with all such written certificates and written statements given
to Bank, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period
or periods covered by such projections and forecasts may differ from the
projected or forecasted results).


6              AFFIRMATIVE
COVENANTS


Borrower shall do
all of the following:


6.1          Government Compliance.  Maintain its and all its Subsidiaries’ legal
existence and good standing in their respective jurisdictions of formation and
maintain qualification in each jurisdiction in which the failure to so qualify
would reasonably be expected to have a material adverse effect on Borrower’s
business or operations.  Borrower shall
comply, and have each Subsidiary comply, with all laws, ordinances and
regulations to which it is subject, the noncompliance with which could have a
material adverse effect on Borrower’s business.


6.2          Financial Statements,
Reports, Certificates.


(a)            Borrower
shall provide Bank with the following:


(i) as soon as available, and in any event within
thirty (30) days after the end of each month, and upon each request for a
Credit Extension, a Transaction Report together with such supporting
information as Bank may reasonably request;


(ii) as soon as available, and in any event within
thirty (30) days after the end of each month, (A) monthly accounts receivable
agings, aged by invoice date, (B) monthly accounts payable agings, aged by
invoice date, and outstanding or held check registers, if any, and (C) monthly
reconciliations of accounts receivable agings (aged by invoice date),
transaction reports, deferred revenue report and general ledger;


(iii) within five (5) days after the filing of
quarterly financial statements with the SEC, a monthly Compliance Certificate
signed by a Responsible Officer, certifying that as of the end of such quarter,
Borrower was in full compliance with all of the terms and conditions of this
Agreement, and setting forth calculations showing compliance with the financial
covenants set forth in this Agreement and such other information as Bank shall
reasonably request, including, without limitation, a statement that at the end
of such quarter there were no held checks;



 11
 









(iv) as soon as available, and in any event
within forty-five (45) days after the end of each fiscal quarter of Borrower
and its Subsidiaries (including, without limitation, each fiscal quarter ending
December 31 of each fiscal year), consolidated and consolidating quarterly
unaudited financial statements of the Borrower and its Subsidiaries;


(v) as soon as available, and in any event upon
the earlier of (A) one hundred twenty (120) days following the end of
Borrower’s fiscal year or (B) five (5) days after filing with the SEC, annual
audited financial statements certified by, and with an unqualified opinion of,
independent certified public accountants acceptable to Bank;


(vi) within sixty (60) days after the end of each
fiscal year of Borrower, annual operating budgets (including income statements,
balance sheets and cash flow statements, by month) for the upcoming fiscal year
of Borrower, as approved by Borrower’s board of directors, together with any
related business forecasts used in the preparation of such annual financial
projections;


(vii) as soon as available, and in any event
within five (5) days after filing with the SEC, copies of each Form 10-Q and
each Form 10-K, and any amendments thereto, or a link thereto on Borrower’s or
another website on the Internet;


(viii) as soon as available, and in any event
within ten (10) days after filing with the SEC or any other regulatory agency,
copies of any reports filed with any such agencies; and


(b)           Prompt
written notice of (i) any material change in the composition of the
intellectual property of the Borrower or any Guarantor, (ii) the registration
of any copyright, patent or trademark including any subsequent ownership right
of Borrower or any Guarantor in or to any copyright, patent or trademark not
previously disclosed to Bank, or (iii) Borrower’s knowledge of an event
that materially adversely affects the value of any intellectual property of the
Borrower or any Guarantor.


6.3          Accounts Receivable.


(a)            Schedules
and Documents Relating to Accounts.  Borrower shall deliver to Bank transaction reports
and schedules of collections, as provided in Section 6.2; provided, however,
that Borrower’s failure to execute and deliver the same shall not affect or
limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall
Bank’s failure to advance or lend against a specific Account affect or limit
Bank’s Lien and other rights therein.  If
requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s
commercially reasonable request, originals) of all contracts, orders, invoices,
and other similar documents, and all 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.  In addition, Borrower shall deliver to Bank,
on its commercially reasonable request, the originals of all instruments,
chattel paper, security agreements, guarantees and other documents and property
evidencing or securing any Accounts, in the same form as received, with all
necessary endorsements, and copies of all credit memos.


(b)           Disputes.  Borrower shall promptly notify Bank of all
material disputes or claims relating to Accounts.  Borrower may forgive (completely or
partially), compromise, or settle any Account for less than payment in full, or
agree to do any of the foregoing so long as (i) Borrower does so in good
faith, in a commercially reasonable manner, in the ordinary course of business,
in arm’s-length transactions, and reports the same to Bank in the regular
reports provided to Bank; (ii) no Default or Event of Default has occurred
and is continuing; and (iii) after taking into account all such discounts,
settlements and forgiveness, the total outstanding Advances will not exceed the
Availability Amount.


(c)            Collection
of Accounts. 
Borrower shall have the right to collect all Accounts, unless and until
a Default or an Event of Default has occurred and is continuing.  Accounts shall be deposited by Borrower into
a lockbox account, or such other “blocked account” as Bank may specify,
pursuant to a blocked account agreement in such form as Bank may specify in its
good faith business judgment.  Whether or
not an Event of Default has occurred and is continuing, Borrower shall hold all
Payments on, and proceeds of, Accounts in trust for Bank, and Borrower shall
immediately deliver all such payments and proceeds to Bank in their original
form, duly endorsed, to be applied to the Obligations pursuant to the terms of
Section 9.4 hereof, provided, however, in the event no Default or Event of
Default has occurred and is continuing and Borrower maintains unrestricted cash
and Cash Equivalents at Bank plus the Availability Amount under the Revolving
Line of no less than $15,000,000, all Payments on, and proceeds of, Accounts
shall be transferred by Bank to an operating account of Borrower maintained at
Bank.



 12
 









(d)           Verification.  Bank may, from time
to time, verify directly with the respective Account Debtors the validity,
amount and other matters relating to the Accounts, either in the name of
Borrower or Bank.  Such verification
shall be accomplished in a commercially reasonable manner.


(e)           No Liability. 
Bank shall not be responsible or liable for any shortage or discrepancy
in, damage to, or loss or destruction of, any goods, the sale or other
disposition of which gives rise to an Account, or for any error, act, omission,
or delay of any kind occurring in the settlement, failure to settle, collection
or failure to collect any Account, or for settling any Account in good faith
for less than the full amount thereof, nor shall Bank be deemed to be
responsible for any of Borrower’s obligations under any contract or agreement
giving rise to an Account.  Nothing
herein shall, however, relieve Bank from liability for its own gross negligence
or willful misconduct.


6.4          Remittance of Proceeds.  Except as otherwise provided in Section
6.3(c), deliver, in kind, all proceeds arising from the disposition of any
Collateral to Bank in the original form in which received by Borrower not later
than the following Business Day after receipt by Borrower, to be applied to the
Obligations pursuant to the terms of Section 9.4 hereof; provided that, if no
Default or Event of Default has occurred and is continuing, Borrower shall not
be obligated to remit to Bank the proceeds of the sale of worn out or obsolete
Equipment disposed of by Borrower in good faith in an arm’s length transaction
for an aggregate purchase price of $500,000 or less (for all such transactions
in any fiscal year).  Borrower agrees that
it will not commingle proceeds of Collateral with any of Borrower’s other funds
or property, but will hold such proceeds separate and apart from such other
funds and property and in an express trust for Bank.  Nothing in this Section 6.4 limits the restrictions
on disposition of Collateral set forth elsewhere in this Agreement.


6.5          Taxes; Pensions. 
Make, and cause each of its Subsidiaries, if any,  to make, timely payment of all foreign,
federal, state and local taxes or assessments (other than taxes and assessment
which Borrower is contesting pursuant to the terms of Section 5.9 hereof), and
shall deliver to Bank, on demand, appropriate certificates attesting to such
payments, and pay all amounts necessary to fund all present pension, profit
sharing and deferred compensation plans in accordance with their terms provided
that Borrower may defer payment of any contested taxes, provided that Borrower
(a) in good faith contests its obligation to pay the taxes by appropriate
proceedings promptly and diligently instituted and conducted, (b) notifies Bank
in writing of the commencement of, and any material development in, the
proceedings, (c) posts bonds or takes any other steps required to prevent the
governmental authority levying such contested taxes from obtaining a Lien upon
any of the Collateral that is other than a “Permitted Lien”.


6.6          Access to Collateral;
Books and Records; Field Exam.  At
reasonable times, on three (3) Business Day’s notice (provided no notice is
required if an Event of Default has occurred and is continuing), Bank, or its
agents, shall have the right to inspect the Collateral and the right to audit
and copy Borrower’s Books.  The foregoing
inspections and audits shall be at Borrower’s expense, and the charge therefor
shall be $750 per person per day (or such higher amount as shall represent
Bank’s then-current standard charge for the same), plus reasonable
out-of-pocket expenses, but the total amount of any such audit shall not exceed
$7,500 plus reasonable out-of-pocket expenses. 
Absent the occurrence of an Event of Default, no more than one such
inspection or audit may occur in any fiscal quarter.  In the event Borrower and Bank schedule an
audit more than ten (10) days in advance, and Borrower cancels or seeks to
reschedule the audit with less than ten (10) days written notice to Bank, then
(without limiting any of Bank’s rights or remedies), Borrower shall pay Bank a
fee of $1,000 plus any out-of-pocket expenses incurred by Bank to compensate
Bank for the anticipated costs and expenses of the cancellation or rescheduling.  The first such inspection and audit shall be
scheduled to occur with sixty (60) days of the Effective Date.


6.7          Insurance. 
Keep its business and the Collateral insured for risks and in amounts
standard for companies in Borrower’s industry and location and as Bank may
reasonably request.  Insurance policies
shall be in a form, with companies, and in amounts that are reasonably
satisfactory to Bank.  All property
policies shall have a lender’s loss payable endorsement showing Bank as the
sole lender loss payee and waive subrogation against Bank, and all liability
policies shall show, or have endorsements showing, Bank as an additional
insured.  All policies (or the loss
payable and additional insured endorsements) shall provide that the insurer
must give Bank at least twenty (20) days notice before canceling, amending, or
declining to renew its policy.  At Bank’s
request, Borrower shall deliver copies of policies and evidence of all premium
payments.  Proceeds payable under any
policy shall, at Bank’s option, be payable to Bank on account of the
Obligations.  Notwithstanding the
foregoing, (a) so long as no Event of Default has occurred and is continuing,
Borrower shall have the option of applying the proceeds of any casualty policy
up to $1,000,000, in the aggregate, toward the replacement or repair of
destroyed or damaged property; provided that any such replaced or repaired
property (i) shall be of equal or like value as the replaced or repaired
Collateral and (ii) shall be deemed Collateral in which Bank has been
granted a first priority security



 13















interest, and (b) after the occurrence and
during the continuance of an Event of Default, all proceeds payable under such
casualty policy shall, at the option of Bank, be payable to Bank on account of
the Obligations.  If Borrower fails to
obtain insurance as required under this Section 6.7 or to pay any amount
or furnish any required proof of payment to third persons and Bank, Bank may
make all or part of such payment or obtain such insurance policies required in
this Section 6.7, and take any action under the policies Bank deems prudent, in
its business judgment.


6.8                               Operating
Accounts.


(a)                                  Maintain
its and its Domestic Subsidiaries’ primary depository, operating accounts and
securities accounts with Bank and Bank’s affiliates with all excess funds
maintained at or invested through Bank or an affiliate of Bank.  Any Guarantor shall maintain all depository,
operating and securities accounts with Bank, or with an Affiliate of Bank,
provided, however, KPN International Network Services, Inc. shall have three (3)
months from the Effective Date to close, transfer or provide a Control
Agreement satisfactory to Bank with respect to any of its accounts that are not
maintained with Bank as of the Effective Date.


(b)                                 Provide
Bank five (5) days prior written notice before establishing any Collateral
Account at or with any bank or financial institution other than Bank or its
Affiliates.  In addition, for each
Collateral Account that Borrower at any time maintains, Borrower shall cause
the applicable bank or financial institution (other than Bank) at or with which
any Collateral Account is maintained to execute and deliver a Control Agreement
or other appropriate instrument with respect to such Collateral Account to
perfect Bank’s Lien in such Collateral Account in accordance with the terms
hereunder.  The provisions of the
previous sentence shall not apply to deposit accounts exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of Borrower’s employees and identified to Bank by Borrower as such.


6.9                               Financial
Covenants.


Borrower
shall maintain at all times, to be tested as of the last day of each quarter,
unless otherwise noted:


(i)                                     Adjusted
Quick Ratio.  On a consolidated
basis, a ratio of Quick Assets to Current Liabilities minus Deferred Revenue of
not less than the following amounts




	
  Period

  	
   

  	
  Minimum Adjusted Quick Ratio

  
	
   

  	
   

  	
   

  
	
  Effective Date through March 31, 2008

  	
   

  	
  0.75:1.00

  
	
   

  	
   

  	
   

  
	
  April 1, 2008 through December 31, 2008

  	
   

  	
  0.85:1.00

  
	
   

  	
   

  	
   

  
	
  Thereafter

  	
   

  	
  1.00:1.00

  






 


(ii)                                  Consolidated
EBITDA.  Maintain, calculated on a
consolidated basis with each of its Subsidiaries, measured as of the end of
each fiscal quarter, EBITDA of at least $10,000,000.


(iii)                               Borrower EBITDA.  For any fiscal quarter in which unrestricted
cash and Cash Equivalents maintained at Bank plus the Availability Amount under
the Revolving Line is less than $15,000,0000, Borrower shall maintain,
calculated on a consolidated basis with its Existing Domestic Subsidiaries,
EBITDA of at least (I) for the fiscal quarter ending December 31, 2007 $1.00
and (II) $2,000,000 for each such fiscal quarter thereafter.


Notwithstanding anything in this Section 6.9 to the
contrary, and provided an Event of Default has not occurred and is not
continuing, if at any time the Borrower is in violation of any one or more of
the provisions of this Section 6.9, and prior to the applicable financial
statement reporting deadline of Section 6.2 for which such violation occurs the
Borrower receives unrestricted cash proceeds from the issuance of Capital
Stock, then such proceeds shall be added to the numerator of the Adjusted Quick
Ratio set forth in Section 6.9(i) and to EBITDA in Sections 6.9(ii) and (iii)
in connection with the calculation of the applicable financial covenant
described herein in such fiscal quarter.


6.10                        Protection
and Registration of Intellectual Property Rights.  Borrower shall: (a) protect, defend and
maintain the validity and enforceability of its material intellectual property;
(b) promptly advise Bank in 



 14
 









writing of material
infringements of its intellectual property; and (c) not allow any intellectual
property material to Borrower’s business to be abandoned, forfeited or
dedicated to the public without Bank’s written consent.  If Borrower or any Guarantor decides to
register any copyrights or mask works in the United States Copyright Office,
Borrower shall, and shall cause such Guarantor to: (x) provide Bank with at
least fifteen (15) days prior written notice of its intent to register such copyrights
or mask works together with a copy of the application it intends to file with
the United States Copyright Office (excluding exhibits thereto); (y) execute an
IP Security Agreement or such other documents as Bank may reasonably request to
maintain the perfection and priority of Bank’s security interest in the
copyrights or mask works intended to be registered with the United States
Copyright Office; and (z) record such IP Security Agreement with the United
States Copyright Office contemporaneously with filing the copyright or mask
work application(s) with the United States Copyright Office.  Borrower shall promptly provide to Bank a
copy of the application(s) filed with the United States Copyright Office together
with evidence of the recording of the IP Security Agreement necessary for Bank
to maintain the perfection and priority of its security interest in such
copyrights or mask works.  Borrower shall
provide written notice to Bank of any application filed by Borrower or any
Guarantor in the United States Patent and Trademark Office for a patent or to
register a trademark or service mark within 30 days after any such filing.


Borrower shall provide
written notice to Bank within ten (10) days of Borrower or any Guarantor
entering into or becoming bound by any material license or agreement that
prohibits or otherwise restricts Borrower or any Guarantor from granting a
security interest in Borrower’s or Guarantor’s interest in such license or
agreement (other than over-the-counter software that is commercially available
to the public).  Borrower shall take such
steps as Bank reasonably requests to obtain the consent of, or waiver by, any
person whose consent or waiver is necessary for all such licenses or contract
rights to be deemed “Collateral” and for Bank to have a security interest in it
that might otherwise be restricted or prohibited by law or by the terms of any
such license or agreement (such consent or authorization may include a licensor’s
agreement to a contingent assignment of the license to Bank, if Bank determines
that is necessary in its good faith judgment), whether now existing or entered
into in the future; provided, however, that the failure of Borrower to obtain
such consent or waiver after taking commercially reasonable steps to do so shall
not constitute an Event of Default hereunder.


6.11                        Litigation
Cooperation.  From the date hereof
and continuing through the termination of this Agreement, make available to
Bank, without expense to Bank, Borrower and its officers, employees and agents
and Borrower’s books and records, to the extent that Bank may deem them
reasonably necessary to prosecute or defend any third-party suit or proceeding
instituted by or against Bank with respect to any Collateral or relating to
Borrower.


6.12                        Further
Assurances.  Borrower shall execute
any further instruments and take further action as Bank reasonably requests to
perfect or continue Bank’s Lien in the Collateral or to effect the purposes of
this Agreement.


7                                         NEGATIVE
COVENANTS


Borrower shall not
do any of the following without Bank’s prior written consent:


7.1                               Dispositions.  Convey, sell, lease, transfer or otherwise
dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, except for Transfers (a)
of Inventory in the ordinary course of business; (b) of worn out or obsolete
Equipment; (c) in connection with Permitted Liens and Permitted Investments;
and (d) Transfers having an aggregate value of less than $500,000 in any fiscal
year.


7.2                               Changes
in Business, Management, Ownership, Control, or Business Locations.  (a) Engage in or permit any of its
Subsidiaries, if any, to engage in any business other than the businesses
currently engaged in by Borrower and such Subsidiary, as applicable, or
reasonably related thereto; (b) liquidate or dissolve; or (c) have a  change in management that could reasonably be
expected to result in a Material Adverse Change or permit or suffer a Change in
Control.  Borrower shall not, and shall
not permit any Guarantor to, (i) without giving written notice to Bank no later
than thirty (30) days afterwards, add any new offices or business
locations, including warehouses (unless such new offices or business locations
contain less than $250,000 in Borrower’s assets or property), and (ii) without
at least thirty (30) days prior notice to Bank: (1) change its jurisdiction of
organization, (2) change its organizational structure or type, (3) change
its legal name, or (4) change any organizational number (if any) assigned
by its jurisdiction of organization.



 15
 









7.3                               Mergers
or Acquisitions.  Merge or
consolidate, or permit any of its Subsidiaries to merge or consolidate, with
any other Person, or acquire, or permit any of its Subsidiaries to acquire, all
or substantially all of the capital stock or property of another Person for
cash; provided that, any merger, consolidation or acquisition for non-cash
consideration shall not cause a violation of Section 6.9 on a pro forma
basis.  A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower; provided that with
respect to mergers of a Subsidiary into the Borrower, the Borrower will remain
in existence after such merger.


7.4                               Indebtedness.  Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.


7.5                               Encumbrance.  Create, incur, or allow any Lien on any
of  its property, or assign or convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries to do so, except for Permitted Liens, permit any Collateral
not to be subject to the first priority security interest granted herein, or
enter into any agreement, document, instrument or other arrangement (except
with or in favor of Bank) with any Person which directly or indirectly
prohibits or has the effect of prohibiting Borrower or any Subsidiary from
assigning, mortgaging, pledging, granting a security interest in or upon, or
encumbering any of Borrower’s or any Subsidiary’s material intellectual
property, except as is otherwise permitted in Section 7.1 hereof and the
definition of “Permitted Lien” herein.


7.6                               Maintenance
of Collateral Accounts.  Maintain any
Collateral Account except pursuant to the terms of Section 6.8.(b) hereof.


7.7                               Investments;
Distributions.  (a) Directly or
indirectly make any Investment other than Permitted Investments, or permit any
of its Subsidiaries to do so; or (b) pay any dividends or make any distribution
or payment or redeem, retire or purchase any capital stock provided that
(i) Borrower may convert any of its convertible securities into other
securities pursuant to the terms of such convertible securities or otherwise in
exchange thereof, (ii) Borrower may pay dividends solely in common stock;
(iii) Borrower may repurchase the stock of former employees or consultants
pursuant to stock repurchase agreements so long as an Event of Default does not
exist at the time of such repurchase and would not exist after giving effect to
such repurchase, provided such repurchase does not exceed in the aggregate of
$50,000 per fiscal year,  so long
as (A) Borrower provides Bank with written notice of the material terms thereof and evidence satisfactory
to Bank that Borrower has obtained the necessary consents and approvals
thereto, including, without limitation, those of Borrower’s board of directors,
and (B) an Event of Default does not exist at the time of such
transaction or would not exist after giving effect thereto; and (iv) a cash
dividend may be paid to the shareholders of the Borrower as contemplated by the
transaction in which, among other things, KPN, B.V. acquires 51% of the equity
of the Borrower.


7.8                               Transactions
with Affiliates.  Directly or
indirectly enter into or permit to exist any material transaction with any
Affiliate of Borrower, except for transactions that are in the ordinary course
of Borrower’s business, upon fair and reasonable terms that are no less
favorable to Borrower than would be obtained in an arm’s length transaction
with a non-affiliated Person.


7.9                               Compliance.  Become an “investment company” or a company
controlled by an “investment company”, under the Investment Company Act of 1940
or undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower’s business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.


8                                         EVENTS
OF DEFAULT


Any one of the
following shall constitute an event of default (an “Event of
Default”) under this Agreement:


8.1                               Payment
Default.  Borrower fails to
(a) make any payment of principal or interest on any Credit Extension on
its due date, or (b) pay any other Obligations within three (3) Business
Days after such Obligations are 



 16
 









due and payable.  During the cure period, the failure to cure
the payment default is not an Event of Default (but no Credit Extension will be
made during the cure period);


8.2                               Covenant
Default.


(a) Borrower fails
or neglects to perform any obligation in Sections 6.2, 6.8, or 6.9 or violates
any covenant in Section 7; or


(b) Borrower
fails or neglects to perform, keep, or observe any other material term,
provision, condition, covenant or agreement contained in this Agreement, any
Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after
the occurrence thereof; provided, however, that if the default cannot by its
nature be cured within the ten (10) day period or cannot after diligent
attempts by Borrower be cured within such ten (10) day period, and such default
is likely to be cured within a reasonable time, then Borrower shall have an
additional period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and within such reasonable time period the
failure to cure the default shall not be deemed a Default or an Event of
Default (but no Credit Extensions shall be made during such cure period).  Grace periods provided under this section
shall not apply, among other things, to financial covenants or any other
covenants set forth in subsection (a) above;


8.3                               Material
Adverse Change.  A Material Adverse
Change occurs;


8.4                               Attachment.  (a) Any material portion of Borrower’s or any
Guarantor’s assets is attached, seized, levied on, or comes into possession of
a trustee or receiver and the attachment, seizure or levy is not removed in ten
(10) days; (b) the service of process upon Bank (or Bank’s Affiliate)
seeking to attach, by trustee or similar process, any funds of Borrower, or of
any entity under control of Borrower (including any Subsidiary) on deposit with
Bank; (c) Borrower is enjoined, restrained, or prevented by court order from
conducting a material part of its business; (d) a judgment or other claim in
excess of $350,000 becomes a Lien on any of Borrower’s (including any
Subsidiary’s) assets; or (e) a notice of lien, levy, or assessment is filed
against any of Borrower’s (including any Subsidiary’s) assets by any government
agency and not paid within ten (10) days after Borrower or such Guarantor or
other Subsidiary receives notice.  These
are not Events of Default if stayed or if a bond is posted pending contest by
Borrower (but no Credit Extensions shall be made during the cure period);


8.5                               Insolvency.  Borrower is unable to pay its debts
(including trade debts) as they become due or otherwise becomes insolvent; (b)
Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is
begun against Borrower and not dismissed or stayed within forty-five (45) days
(but no Credit Extensions shall be made while of any of the conditions
described in clause (a) exist and/or until any Insolvency Proceeding is
dismissed);


8.6                               Other
Agreements.  There is an uncured
default beyond any grace period in any agreement to which Borrower or any
Guarantor is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of $350,000 or that could have a
material adverse effect on Borrower’s or any Guarantor’s business;


8.7                               Judgments.  A judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least $350,000 (not
covered by independent third-party insurance) shall be rendered against
Borrower and shall remain unsatisfied and unstayed for a period of ten (10)
days after the entry thereof (provided that no Credit Extensions will be made
prior to the satisfaction or stay of such judgment);


8.8                               Misrepresentations.  Borrower or any Person acting for Borrower
makes any representation, warranty, or other statement now or later in this
Agreement, any Loan Document or in any writing delivered to Bank or to induce
Bank to enter this Agreement or any Loan Document, and such representation,
warranty, or other statement is incorrect in any material respect when made;


8.9                               Subordinated
Debt.  A default or breach occurs which
remains uncured beyond any grace period under any agreement between Borrower
and any creditor of Borrower that signed a subordination, intercreditor, or
other similar agreement with Bank; or


8.10                        Guaranty.  (a) Any guaranty of any Obligations terminates
or ceases for any reason to be in full force and effect; (b) any Guarantor does
not perform any obligation or covenant under any guaranty of the Obligations;
(c) any circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8. occurs
with respect to any 



 17
 









Guarantor, (d) the
liquidation, winding up, or termination of existence of any Guarantor; or
(e) (i) a material impairment in the perfection or priority of Bank’s
Lien in the collateral provided by Guarantor or in the value of such collateral
or (ii) a Material Adverse Change in the general affairs, management,
results of operation, condition (financial or otherwise) or the prospect of
repayment of the Obligations occurs with respect to any Guarantor.


9                                         BANK’S
RIGHTS AND REMEDIES


9.1                               Rights
and Remedies.  While an Event of
Default occurs and continues Bank may, without notice or demand, do any or all
of the following:


(a)                                  declare
all Obligations immediately due and payable (but if an Event of Default
described in Section 8.5 occurs all Obligations are immediately due and payable
without any action by Bank);


(b)                                 stop
advancing money or extending credit for Borrower’s benefit under this Agreement
or under any other agreement between Borrower and Bank;


(c)                                  demand
that Borrower (i) deposit cash with Bank in an amount equal to the aggregate
amount of any Letters of Credit remaining undrawn, as collateral security for
the repayment of any future drawings under such Letters of Credit, and Borrower
shall forthwith deposit and pay such amounts, and (ii) pay in advance all
Letter of Credit fees scheduled to be paid or payable over the remaining term
of any Letters of Credit;


(d)                                 terminate
any FX Contracts;


(e)                                  settle
or adjust disputes and claims directly with Account Debtors for amounts on
terms and in any order that is commercially reasonable and which Bank considers
advisable, notify any Person owing Borrower money of Bank’s security interest
in such funds, and verify the amount of such account;


(f)                                    make
any payments and do any acts it considers necessary or reasonable in its
commercially reasonable judgment to protect the Collateral and/or its security
interest in the Collateral.  Borrower
shall assemble the Collateral if Bank requests and make it available as Bank
designates.  Bank may enter premises
where the Collateral is located, take and maintain possession of any part of
the Collateral, and pay, purchase, contest, or compromise any Lien which
appears to be prior or superior to its security interest and pay all expenses
incurred.  Borrower grants Bank a license
to enter and occupy any of its premises, without charge, to exercise any of
Bank’s rights or remedies;


(g)                                 apply
to the Obligations any (i) balances and deposits of Borrower it holds, or (ii)
any amount held by Bank owing to or for the credit or the account of Borrower,
except to the extent that funds have been set aside by Borrower to pay wages,
payroll taxes, or employment benefits earned by employees of the Borrower;


(h)                                 ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral.  Bank
is hereby granted a non-exclusive, royalty-free license or other right to use,
without charge, Borrower’s labels, patents, copyrights, mask works, rights of
use of any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any similar property as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral
and, in connection with Bank’s exercise of its rights under this Section,
Borrower’s rights under all licenses and all franchise agreements inure to Bank’s
benefit;


(i)                                     place
a “hold” on any account maintained with Bank and/or deliver a notice of
exclusive control, any entitlement order, or other directions or instructions
pursuant to any Control Agreement or similar agreements providing control of
any Collateral;


(j)                                     demand
and receive possession of Borrower’s Books; and


(k)                                  exercise
all rights and remedies available to Bank under the Loan Documents or at law or
equity, including all remedies provided under the Code (including disposal of
the Collateral pursuant to the terms thereof).


9.2                               Power
of Attorney.  Borrower hereby
irrevocably appoints Bank as its lawful attorney-in-fact, exercisable upon the
occurrence and during the continuance of an Event of Default, to: (a) endorse
Borrower’s name on any checks or other forms of payment or security; (b) sign
Borrower’s name on any invoice or bill of lading for 



 18
 









any Account or drafts against
Account Debtors; (c) subject to Section 9.1(e), settle and adjust disputes and
claims about the Accounts directly with Account Debtors, for amounts and on
terms Bank determines reasonable; (d) subject to Section 6.7, make, settle, and
adjust all claims under Borrower’s insurance policies; (e) pay, contest or
settle any Lien, charge, encumbrance, security interest, and adverse claim in
or to the Collateral, or any judgment based thereon, or otherwise take any
action to terminate or discharge the same; and (f) transfer the Collateral into
the name of Bank or a third party as the Code permits.  Borrower hereby appoints Bank as its lawful
attorney-in-fact to sign Borrower’s name on any documents reasonably necessary
to perfect or continue the perfection of any security interest regardless of
whether an Event of Default has occurred until all Obligations have been
satisfied in full and Bank is under no further obligation to make Credit
Extensions hereunder.  Bank’s foregoing
appointment as Borrower’s attorney in fact, and all of Bank’s rights and
powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Bank’s obligation to provide Credit
Extensions terminates.


9.3                               Protective
Payments.  If Borrower fails to
obtain the insurance called for by Section 6.7 or fails to pay any premium
thereon or fails to pay any other amount which Borrower is obligated to pay
under this Agreement or any other Loan Document, Bank may obtain such insurance
or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately
due and payable, bearing interest at the then highest applicable rate, and
secured by the Collateral.  Bank will
make reasonable efforts to provide Borrower with notice of Bank obtaining such
insurance at the time it is obtained or within a reasonable time thereafter;
provided that, if an Event of Default is not in existence, Bank shall provide
ten (10) days prior written notice to Borrower, during which time Borrower
shall be entitled to cure any breach of Section 6.7. No payments by Bank are deemed
an agreement to make similar payments in the future or Bank’s waiver of any
Event of Default.


9.4                               Application
of Payments and Proceeds.


Unless an Event of
Default has occurred and is continuing or subject to the terms of Section
6.3(c), Bank shall apply any funds in the Designated Deposit Account and
account nos. 3300372126, 3300381409 and 3300498404 maintained at Bank, whether
from Borrower account balances, payments, or proceeds realized as the result of
any collection of Accounts or other disposition of the Collateral, first, to
Bank Expenses, including without limitation, the reasonable costs, expenses,
liabilities, obligations and attorneys’ fees incurred by Bank in the exercise
of its rights under this Agreement; second, to the interest due upon any of the
Obligations; and third, to the principal of the Obligations and any applicable
fees and other charges, in such order as Bank shall determine in its sole
discretion.  Any surplus shall be paid to
Borrower or other Persons legally entitled thereto; Borrower shall remain
liable to Bank for any deficiency.  If an
Event of Default has occurred and is continuing, Bank may apply any funds in
its possession, whether from Borrower account balances, payments, proceeds
realized as the result of any collection of Accounts or other disposition of
the Collateral, or otherwise, to the Obligations in such order as Bank shall
determine in its sole discretion.  Any
surplus shall be paid to Borrower or to other Persons legally entitled thereto;
Borrower shall remain liable to Bank for any deficiency.  If Bank, in its good faith business judgment,
directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale of Collateral, Bank shall have the
option, exercisable at any time, 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 Bank of cash therefor.


9.5                               Bank’s
Liability for Collateral.  So long as
Bank complies with reasonable banking practices regarding the safekeeping of
the Collateral in the possession or under the control of Bank, Bank shall not
be liable or responsible for: (a) the safekeeping of the Collateral; (b) any
loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other Person.  Except as described above,
Borrower bears all risk of loss, damage or destruction of the Collateral.


9.6                               No
Waiver; Remedies Cumulative.  Bank’s
failure, at any time or times, to require strict performance by Borrower of any
provision of this Agreement or any other Loan Document shall not waive, affect,
or diminish any right of Bank thereafter to demand strict performance and
compliance herewith or therewith.  No
waiver hereunder shall be effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it is given.  Bank’s rights and remedies under this
Agreement and the other Loan Documents are cumulative.  Bank has all rights and remedies provided
under the Code, by law, or in equity. 
Bank’s exercise of one right or remedy is not an election, and Bank’s
waiver of any Event of Default is not a continuing waiver.  Bank’s delay in exercising any remedy is not
a waiver, election, or acquiescence.


9.7                               Demand
Waiver.  Borrower waives demand,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees held
by Bank on which Borrower is liable.



 19
 









10                                  NOTICES


All notices,
consents, requests, approvals, demands, or other communication (collectively, “Communication”), other than Advance requests made pursuant
to Section 3.4, by any party to this Agreement or any other Loan Document must
be in writing and be delivered or sent by facsimile at the addresses or
facsimile numbers listed below.  Bank or
Borrower may change its notice address by giving the other party written notice
thereof.  Each such Communication shall
be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, registered or certified mail, return receipt requested, with proper
postage prepaid; (b) upon transmission, when sent by facsimile transmission
(with such facsimile promptly confirmed by delivery of a copy by personal
delivery or United States mail as otherwise provided in this Section 10); (c)
one (1) Business Day after deposit with a reputable overnight courier with all
charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of
which shall be addressed to the party to be notified and sent to the address or
facsimile number indicated below. 
Advance requests made pursuant to Section 3.4 must be in writing and may
be in the form of electronic mail, delivered to Bank by Borrower at the e-mail
address of Bank provided below and shall be deemed to have been validly served,
given, or delivered when sent (with such electronic mail promptly confirmed by
delivery of a copy by personal delivery or United States mail as otherwise
provided in this Section 10), except that a copy thereof need not be delivered
to any party other than the Bank).  Bank
or Borrower may change its address, facsimile number, or electronic mail
address by giving the other party written notice thereof in accordance with the
terms of this Section 10.


	
  If to Borrower:

  	
   

  	
  IBASIS, INC.

  
	
   

  	
   

  	
  20 Second Avenue

  
	
   

  	
   

  	
  Burlington, Massachusetts 01803

  
	
   

  	
   

  	
  Attn: Attn:   Chief Legal Officer

  
	
   

  	
   

  	
  Fax:  (781)
  505.7970

  
	
   

  	
   

  	
  Email:   mflynn@ibasis.net

  
	
   

  	
   

  	
   

  
	
  If to Bank:

  	
   

  	
  Silicon Valley Bank

  
	
   

  	
   

  	
  One Newton Executive Park, Suite 200

  
	
   

  	
   

  	
  2221 Washington Street, Newton, MA 02462

  
	
   

  	
   

  	
  Attn: Michael J. Tramack

  
	
   

  	
   

  	
  Fax:  (617)
  527-0177

  
	
   

  	
   

  	
  Email:   mtramack@svb.com

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Riemer & Braunstein LLP

  
	
   

  	
   

  	
  Three Center Plaza

  
	
   

  	
   

  	
  Boston, Massachusetts 02108

  
	
   

  	
   

  	
  Attn: Charles W. Stavros, Esquire

  
	
   

  	
   

  	
  Fax: (617) 880-3456

  
	
   

  	
   

  	
  Email: CStavros@riemerlaw.com

  



 


11                                  CHOICE
OF LAW, VENUE AND JURY TRIAL WAIVER AND JUDICIAL REFERENCE


Massachusetts law governs
the Loan Documents without regard to principles of conflicts of law.  Borrower and Bank each submit to the
exclusive jurisdiction of the State and Federal courts in Massachusetts;
provided, however, that nothing in this Agreement shall be deemed to operate to
preclude Bank from bringing suit or taking other legal action in any other
jurisdiction to realize on the Collateral or any other security for the
Obligations, or to enforce a judgment or other court order in favor of
Bank.  Borrower expressly submits and
consents in advance to the jurisdiction of the State and Federal Courts in Massachusetts
in any action or suit commenced in any such court, and Borrower hereby waives
any objection that it may have based upon lack of personal jurisdiction,
improper venue, or forum non conveniens and hereby consents to the granting of
such legal or equitable relief as is deemed appropriate by such court.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE, BANK SHALL
SPECIFICALLY HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER
OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE
ENFORCE BANK’S RIGHTS AGAINST BORROWER OR ITS PROPERTY.


TO THE EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION ARISING OUT OF OR 



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BASED UPON THIS AGREEMENT, THE
LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT,
BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR
BOTH PARTIES TO ENTER INTO THIS AGREEMENT. 
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.


12                                  GENERAL
PROVISIONS


12.1                        Successors
and Assigns.  This Agreement binds
and is for the benefit of the successors and permitted assigns of each
party.  Borrower may not assign this
Agreement or any rights or obligations under it without Bank’s prior written
consent (which may be granted or withheld in Bank’s discretion).  Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank’s obligations, rights, and benefits
under this Agreement and the other Loan Documents.


12.2                        Indemnification.  Borrower agrees to indemnify, defend and hold
Bank and its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank harmless against (a) all obligations,
demands, claims, and liabilities (collectively, “Claims”) asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or Bank
Expenses incurred, or paid by Bank to a party other than Borrower or Guarantor
from, following, or arising from transactions between Bank and Borrower
(including reasonable attorneys’ fees and expenses), except for Claims and/or
losses directly caused by Bank’s gross negligence or willful misconduct.


12.3                        Time of
Essence.  Time is of the essence for
the performance of all Obligations in this Agreement.


12.4                        Severability
of Provisions.  Each provision of
this Agreement is severable from every other provision in determining the
enforceability of any provision.


12.5                        Amendments
in Writing; Integration.  All
amendments to this Agreement must be in writing signed by both Bank and
Borrower.  This Agreement and the Loan
Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements. 
All prior agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of this Agreement and
the Loan Documents merge into this Agreement and the Loan Documents.


12.6                        Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, are an original, and all taken together,
constitute one Agreement.


12.7                        Survival.  All covenants, representations and warranties
made in this Agreement continue in full force until this Agreement has
terminated pursuant to its terms and all Obligations (other than inchoate
indemnity obligations and any other obligations which, by their terms, are to
survive the termination of this Agreement) have been satisfied.  The obligation of Borrower in Section 12.2 to
indemnify Bank shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.


12.8                        Confidentiality.  In handling any confidential information,
Bank shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (a) to Bank’s
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any
interest in the Credit Extensions (provided, however, Bank shall use
commercially reasonable efforts to obtain such prospective transferee’s or
purchaser’s agreement to the terms of this provision); (c) as required by
law, regulation, subpoena, or other order; (d) to Bank’s regulators or as
otherwise required in connection with Bank’s examination or audit; and (e) as
Bank considers appropriate in exercising remedies under this Agreement.  Confidential information does not include
information that either: (i) is in the public domain or in Bank’s possession
when disclosed to Bank, or becomes part of the public domain after disclosure
to Bank; or (ii) is disclosed to Bank by a third party, if Bank does not know
that the third party is prohibited from disclosing the information.


12.9                        Attorneys’
Fees, Costs and Expenses.  In any
action or proceeding between Borrower and Bank arising out of or relating to
the Loan Documents, Bank shall be entitled to recover its reasonable attorneys’
fees and other costs and expenses incurred, in addition to any other relief to
which it may be entitled.


12.10                 Right of Set Off.   Borrower hereby grants to Bank, a lien,
security interest and right of set off as security for all Obligations to Bank,
whether now existing or hereafter arising upon and against all deposits,
credits, 



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collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Bank or any
entity under the control of Bank (including a Bank subsidiary) or in transit to
any of them.  At any time after the
occurrence and during the continuance of an Event of Default, without demand or
notice, Bank may set off the same or any part thereof and apply the same to any
liability or obligation of Borrower even though unmatured and regardless of the
adequacy of any other collateral securing the Obligations.  ANY AND ALL RIGHTS TO REQUIRE BANK TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES
THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.


13                                  DEFINITIONS


13.1                        Definitions.  As used in this Agreement, the following
terms have the following meanings:


“Account”
is any “account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable
and other sums owing to Borrower.


“Account Debtor”
is any “account debtor” as defined in the Code with such additions to such term
as may hereafter be made.


“Additional
Costs” is defined in Section 3.7(b).


“Adjusted
Quick Ratio” is a ratio of (i) Quick Assets to (ii) Current
Liabilities minus Deferred Revenue.


“Advance”
or “Advances” means an advance (or
advances) under the Revolving Line.


“Affiliate”
of any Person is a Person that owns or controls directly or indirectly the
Person, any Person that controls or is controlled by or is under common control
with the Person, and each of that Person’s senior executive officers,
directors, partners and, for any Person that is a limited liability company,
that Person’s managers and members.


“Agreement”
is defined in the preamble hereof.


“Availability
Amount” is (a) the lesser of (i) the Revolving Line or (ii) the
Borrowing Base minus (b) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) plus an amount equal to
the Letter of Credit Reserves, minus (c) the FX Reserve, and minus (d) the
outstanding principal balance of any Advances (including any amounts used for
Cash Management Services).


“Bank”
is defined in the preamble hereof.


“Bank
Expenses” are all out-of-pocket audit fees and expenses, costs, and
expenses (including reasonable attorneys’ fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including, without limitation, those incurred in connection with appeals or
Insolvency Proceedings) or otherwise incurred with respect to Borrower, but
shall not include any overhead of the Bank allocated costs of any Bank
personnel.


 “Borrower” is
defined in the preamble hereof.


“Borrower’s
Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and
all computer programs or storage or any equipment containing such information.


“Borrowing
Base” is, as of any date of determination, equal to (a) 80% of
Eligible Domestic Accounts plus (b) 70% of Eligible Foreign Accounts, as
determined by Bank from Borrower’s most recent Borrowing Base Certificate,
provided, however, that Bank may decrease the foregoing percentages in its good
faith business judgment and upon five (5) Business Days’ notice to the
Borrower, based on the results of an audit of the Collateral.


“Borrowing
Base Certificate” is that certain certificate included within each
Transaction Report.



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“Borrowing
Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s Board of Directors or other appropriate body and
delivered by such Person to Bank approving the Loan Documents to which such
Person is a party and the transactions contemplated thereby, together with a
certificate executed by its secretary on behalf of such Person certifying that
(a) such Person has the authority to execute, deliver, and perform its
obligations under each of the Loan Documents to which it is a party, (b) that
attached as Exhibit A to such certificate is a true, correct, and complete copy
of the resolutions then in full force and effect authorizing and ratifying the
execution, delivery, and performance by such Person of the Loan Documents to
which it is a party, (c) the name(s) of the Person(s) authorized to execute the
Loan Documents on behalf of such Person, together with a sample of the true
signature(s) of such Person(s), and (d) that Bank may conclusively rely on
such certificate unless and until such Person shall have delivered to Bank a
further certificate canceling or amending such prior certificate.


“Business Day”
is any day that is not a Saturday, Sunday or a day on which banking
institutions in the Commonwealth of Massachusetts are authorized or required by
law or other governmental action to close, except that if any determination of
a “Business Day” shall relate to a LIBOR Advance, the term “Business Day” shall
also mean a day on which dealings are carried on in the London interbank
market, and if any determination of a “Business Day” shall relate to an FX
Forward Contract, the term “Business Day” shall mean a day on which dealings
are carried on in the country of settlement of the foreign (non-Dollar)
currency.


“Capital Stock” means
any stock or other equity interest issued by the Borrower.


“Cash Equivalents”
means (a) marketable direct obligations issued or unconditionally
guaranteed by the United States or any agency or any State thereof having
maturities of not more than one (1) year from the date of acquisition;
(b) commercial paper maturing no more than one (1) year after its creation
and having the highest rating from either Standard & Poor’s Ratings Group
or Moody’s Investors Service, Inc., (c) Bank’s certificates of deposit issued
maturing no more than one (1) year after issue; and (d) money market funds at
least ninety-five percent (95%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (c) of this
definition.


“Cash Management Services” is
defined in Section 2.1.4.


“Cash Management Services
Sublimit” is defined in Section 2.1.4.


“Change in Control” means any event, transaction, or occurrence as a result of which (a) any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as an amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Borrower, representing thirty-five percent (35%) or more of the combined voting power of Borrower’s then outstanding securities..
“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the Commonwealth of  Massachusetts; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the  Commonwealth of  Massachusetts, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes on the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.


“Collateral”
is any and all properties, rights and assets of Borrower described on Exhibit
A.


“Collateral Account”
is any Deposit Account, Securities Account, or Commodity Account.


“Commodity
Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.


“Communication”
is defined in Section 10.


“Compliance
Certificate” is that certain certificate in the form attached hereto
as Exhibit C.



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“Contingent
Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation directly
or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of
business.  The amount of a Contingent
Obligation is the stated or determined amount of the primary obligation for
which the Contingent Obligation is made or, if not determinable, the maximum
reasonably anticipated liability for it determined by the Person in good faith;
but the amount may not exceed the maximum of the obligations under any
guarantee or other support arrangement.


“Continuation
Date” is any date on which the Borrower elects to continue a LIBOR
Advance into another Interest Period.


“Control
Agreement” is any control agreement entered into among the
depository institution at which Borrower maintains a Deposit Account or the
securities intermediary or commodity intermediary at which Borrower maintains a
Securities Account or a Commodity Account, Borrower, and Bank pursuant to which
Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.


“Conversion
Date” is any date on which the Borrower elects to convert a Prime
Rate Advance to a LIBOR Advance


“Credit
Extension” is any Advance, Letter of Credit, FX Forward Contract,
amount utilized for Cash Management Services, or any other extension of credit
hereunder by Bank for Borrower’s benefit.


“Current Liabilities” are
all obligations and liabilities of Borrower on a consolidated basis to Bank,
plus, without duplication, the aggregate amount of Borrower’s Total Liabilities
that mature within one (1) year.


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


“Default Rate”
is defined in Section 2.3(b).


“Deferred
Revenue” is all amounts received or invoiced in advance of
performance under contracts and not yet recognized as revenue.


“Deposit
Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.


“Designated
Deposit Account” is Borrower’s deposit account, account number
3300098558, maintained with Bank.


“Dollars,”  “dollars” and “$” each mean
lawful money of the United States.


“Domestic
Subsidiary” means a Subsidiary organized under the laws of the
United States or any state or territory thereof or the District of Columbia.


“EBITDA” shall
mean, for any Person, (a) Net Income, plus (b) Interest Expense, plus (c) to
the extent deducted in the calculation of Net Income, depreciation expense and
amortization expense, plus (d) income tax expense, plus (e) reasonable non-cash
items deducted in determining Net Income including, but not limited to, the
value of any stock compensation and adjustments for purchase accounting, plus
(f) at Bank’s reasonable discretion, 
one-time transaction costs relating to the transaction in which, among
other things, KPN, B.V. acquires 51% of the equity of Borrower.


“Effective
Date” is the date Bank executes this Agreement and as indicated on
the signature page hereof.


“Eligible
Accounts” are Accounts which arise in the ordinary course of
Borrower’s business that meet all Borrower’s representations and warranties in
Section 5.3.  Bank reserves the right at
any time and from time to time after the Effective Date, upon five (5) Business
Days notice to Borrower, to adjust any of the criteria set forth below 



 24
 









and to establish new
criteria in its good faith business judgment. 
Unless Bank agrees otherwise in writing, Eligible Accounts shall not
include:


(a)                                  Accounts
for which the Account Debtor has not been invoiced;


(b)                               Accounts
that the Account Debtor has not paid within ninety (90) days of invoice date;


(c)                                  Accounts owing from an Account Debtor, fifty percent
(50%) or more of whose Accounts have not been paid within ninety (90) days of
invoice date;


(d)                                 Credit
balances over ninety (90) days from invoice date;


(e)                                  Accounts
owing from an Account Debtor, including Affiliates, whose total obligations to
Borrower exceed twenty-five percent (25%) of all Accounts, unless the Bank
otherwise approves in writing;


(f)                                    Represent
progress billings, or be due under a fulfillment or requirements contract;


(g)                                 Accounts
owing from an Account Debtor which does not have its principal place of
business in the United States, Canada or the United Kingdom (except for
Eligible Foreign Accounts);


(h)                                 Accounts
owing from the United States or any department, agency, or instrumentality
thereof except for Accounts of the United States if Borrower has assigned its
payment rights to Bank and the assignment has been acknowledged under the
Federal Assignment of Claims Act of 1940, as amended;


(i)                                     Accounts
owing from an Account Debtor to the extent that Borrower is indebted or
obligated in any manner to the Account Debtor (as creditor, lessor, supplier or
otherwise - sometimes called “contra” accounts, accounts payable, customer
deposits or credit accounts), with the exception of customary credits,
adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;


(j)                                     Accounts
for demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, “bill and
hold”, or other terms if Account Debtor’s payment may be conditional;


(k)                                  Accounts
for which the Account Debtor is Borrower’s Affiliate, officer, employee, or
agent;


(l)                                     Accounts
in which the Account Debtor disputes liability or makes any claim (but only up
to the disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business;


(m)                               Accounts
owing from an Account Debtor with respect to which Borrower has received
deferred revenue (but only to the extent of such deferred revenue); and


(n)                                 Accounts
for which Bank in its good faith business judgment determines collection to be
doubtful.


 “Eligible Domestic Accounts”
means Accounts for which the Account Debtor has its principal place of business
in the United States, Canada or the United Kingdom, and which are otherwise
Eligible Accounts.


“Eligible
Foreign Accounts” means Accounts that are not Eligible Domestic
Accounts but are otherwise Eligible Accounts that are (a) covered by credit
insurance satisfactory to Bank, less any deductible; (b) supported by
letter(s) of credit acceptable to Bank; or (c) that Bank approves in writing.


“Equipment”
is all “equipment” as defined in the Code with such additions to such term as
may hereafter be made, and includes without limitation all machinery, fixtures,
goods, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing.


“ERISA”
is the Employment Retirement Income Security Act of 1974, and its regulations.


“Event of
Default” is defined in Section 8.



 25
 









“Existing
Domestic Subsidiaries” means each of IBasis Securities Corporation,
a Delaware corporation, IBasis Global, Inc., a Delaware corporation, and IBasis
Retail, Inc., a Delaware corporation.


“Foreign Currency”
means lawful money of a country other than the United States.


“Foreign Subsidiary”
means any Subsidiary which is not a Domestic Subsidiary.


“Funding Date”
is any date on which a Credit Extension is made to or on account of Borrower
which shall be a Business Day.


“FX Business
Day” is any day when (a) Bank’s Foreign Exchange Department is
conducting its normal business and (b) the Foreign Currency being purchased or
sold by Borrower is available to Bank from the entity from which Bank shall buy
or sell such Foreign Currency.


“FX Forward
Contract”  is defined in
Section 2.1.3.


“FX Reserve”  is defined in Section 2.1.3.


“GAAP”
is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.


“General
Intangibles” is all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
trademarks, service marks and, to the extent permitted under applicable law,
any applications therefor, whether registered or not, any trade secret rights,
including any rights to unpatented inventions, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other
tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.


“Guarantor”  is any present or future guarantor of the Obligations.


“Indebtedness”
is (a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and letters
of credit, (b) obligations evidenced by notes, bonds, debentures or similar
instruments, (c) capital lease obligations, and (d) Contingent Obligations.


“Insolvency
Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.


“Interest
Expense” means for any fiscal period, interest expense (whether cash
or non-cash) determined in accordance with GAAP for the relevant period ending
on such date, including, in any event, interest expense with respect to any
Credit Extension and other Indebtedness of Borrower and its Subsidiaries, if
any, including, without limitation or duplication, all commissions, discounts,
or related amortization and other fees and charges with respect to letters of
credit and bankers’ acceptance financing and the net costs associated with
interest rate swap, cap, and similar arrangements, and the interest portion of
any deferred payment obligation (including leases of all types).


“Interest
Payment Date” means (a) with respect to any LIBOR Advance, the last
Business Day of each month, and (b) with respect to Prime Rate Advances, the
last Business Day of each month.


“Interest
Period” means, as to any LIBOR Advance, the period commencing on the
date of such LIBOR Advance, or on the conversion/continuation date on which the
LIBOR Advance is converted into or continued as a LIBOR Advance, and ending on
the date that is one (1), two (2), or three (3) months thereafter, in each case
as Borrower may elect in the applicable Notice of Borrowing or Notice of
Conversion/Continuation; provided, however,
that (a) no Interest Period with respect to any LIBOR Advance shall end
later than the Maturity Date, 



 26
 









(b) the last day of
an Interest Period shall be determined in accordance with the practices of the
LIBOR interbank market as from time to time in effect, (c) if any Interest
Period would otherwise end on a day that is not a Business Day, that Interest
Period shall be extended to the following Business Day unless, in the case of a
LIBOR Advance, the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period shall
end on the preceding Business Day, (d) any Interest Period pertaining to a
LIBOR Advance that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period, and (e) interest shall
accrue from and include the first Business Day of an Interest Period but
exclude the last Business Day of such Interest Period.


“Interest
Rate Determination Date” means each date for calculating the LIBOR
for purposes of determining the interest rate in respect of an Interest
Period.  The Interest Rate Determination
Date shall be the second Business Day prior to the first day of the related
Interest Period for a LIBOR Advance.


“Inventory”
is all “inventory” as defined in the Code in effect on the date hereof with
such additions to such term as may hereafter be made, and includes without
limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.


“Investment”
is any beneficial ownership interest in any Person (including stock,
partnership interest or other securities), and any loan, advance or capital
contribution to any Person.


“IP Agreement”
and “IP Agreements”  means
each Intellectual Property Security Agreement, ratified or executed and
delivered by Borrower and each applicable Guarantor to Bank.


“KGCS”
means KPN Global Carrier Services, B.V., a private limited liability company
organized under the laws of The Netherlands.


“Letter of
Credit” means a letter of credit issued by Bank or another
institution based upon an application, guarantee, indemnity or similar
agreement on the part of Bank as set forth in Section 2.1.2.


“Letter of
Credit Application” is defined in Section 2.1.2(a).


“Letter of
Credit Reserve” has the meaning set forth in Section 2.1.2(d).


“LIBOR”
means, for any Interest Rate Determination Date with respect to an Interest
Period for any Advance to be made, continued as or converted into a LIBOR
Advance, the rate of interest per annum determined by Bank to be the per annum
rate of interest at which deposits in United States Dollars are offered to Bank
in the London interbank market (rounded upward, if necessary, to the nearest
1/100th of one percent (0.01%)) in which Bank customarily participates at
11:00 a.m. (local time in such interbank market) two (2) Business Days
prior to the first day of such Interest Period for a period approximately equal
to such Interest Period and in an amount approximately equal to the amount of
such Advance.


“LIBOR
Advance” means an Advance that bears interest based on the sum of
the LIBOR Rate plus the LIBOR Rate Margin.


“LIBOR Rate” means, for each Interest Period in respect of
LIBOR Advances comprising part of the same Advances, an interest rate per annum (rounded upward to the nearest 1/100th of one
percent (0.01%)) equal to LIBOR for such Interest Period divided by
one (1) minus the Reserve Requirement for such
Interest Period.


“LIBOR Rate
Margin” shall be determined and applied as described in Section
2.4(b).


“Lien”
is a mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.


“Loan
Documents” are, collectively, this Agreement, the Perfection
Certificate, the IP Agreements, the Security Agreements, the Pledge Agreement,
any note, or notes or guaranties executed by Borrower or any Guarantor, and any
other present or future agreement between Borrower, any Guarantor and/or for
the benefit of Bank in connection with this Agreement, all as amended,
restated, or otherwise modified.



 27
 









“LTM EBITDA”  means, for any Person as of any date of measurement, EBITDA
for the prior 12 consecutive months ending on such date of measurement;
provided, that for any month prior to the Effective Date used in calculating
LTM EBITDA of the Borrower, LTM EBITDA of the Borrower shall be calculated for
each such month as the EBITDA of the Borrower and its Subsidiaries, on a
consolidated basis plus the EBITDA of KGCS for such month.


“Material Adverse Change”
is (a) a material impairment in the perfection or priority of Bank’s Lien in
the Collateral or in the value of such Collateral; (b) a material adverse
change in the business, operations, or condition (financial or otherwise) of
Borrower; or (c) a material impairment of the prospect of repayment of any
portion of the Obligations.


“Net Income” means,
as calculated on a consolidated basis for Borrower and its Subsidiaries, for
any period as at any date of determination, the net profit (or loss), after
provision for taxes, of Borrower and its Subsidiaries for such period taken as
a single accounting period.


“Notice of
Borrowing” means a notice given by Borrower to Bank in accordance
with Section 3.2(a), substantially in the form of Exhibit E, with
appropriate insertions.


“Notice of
Conversion/Continuation” means a notice given by Borrower to Bank in
accordance with Section 3.5(b), substantially in the form of Exhibit F,
with appropriate insertions.


“Obligations”
are Borrower’s obligation to pay when due any debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, whether under this
Agreement, the Loan Documents, or otherwise, including, without limitation, all
obligations relating to letters of credit, cash management services, and
foreign exchange contracts, if any, and including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower
assigned to Bank, and the performance of Borrower’s duties under the Loan
Documents.


“Operating Documents”
are, for any Person, such Person’s formation documents, as certified with the
Secretary of State of such Person’s state of formation on a date that is no
earlier than 30 days prior to the Effective Date, and, (a) if such Person is a
corporation, its bylaws in current form, (b) if such Person is a limited
liability company, its limited liability company agreement (or similar
agreement), and (c) if such Person is a partnership, its partnership agreement
(or similar agreement), each of the foregoing with all current amendments or
modifications thereto.


“Payment” means
all checks, wire transfers and other items of payment received by Bank
(including proceeds of Accounts and payment of all the Obligations in full) for
credit to Borrower’s outstanding Credit Extensions or, if the balance of the
Credit Extensions has been reduced to zero, for credit to its Deposit Accounts.


“Payment/Advance Form” is
that certain form attached hereto as Exhibit G.


“Perfection
Certificate” is defined in Section 5.1, in the form attached hereto
as Exhibit B.


“Permitted
Indebtedness” is:


(a)                                  Borrower’s
Indebtedness to Bank under this Agreement and the other Loan Documents;


(b)                                 Indebtedness
existing on the Effective Date and shown on the Perfection Certificate;


(c)                                  unsecured
Indebtedness to trade creditors and with respect to
surety bonds and similar obligations incurred in the ordinary course of
business;


(d)                                 Indebtedness
incurred as a result of endorsing negotiable instruments received in the
ordinary course of business;


(e)                                  Indebtedness
secured by Permitted Liens up to the amounts described in the definition of
Permitted Liens;


(f)                                    extensions,
refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (e) above, provided that the principal
amount thereof is not increased or the terms thereof are not modified to impose
more burdensome terms upon Borrower or its Subsidiary, as the case may be; and



 28
 









(g)                                 in
addition to all other Permitted Indebtedness, indebtedness in the maximum
amount of $10,000,000 in the aggregate, comprised of (i) promissory note
payable to KPN, B.V. in the amount of up to $9,000,000  plus (ii) up to $1,000,000 of other
indebtedness.


“Permitted Investments”
are:


(a)                                  Investments
shown on the Perfection Certificate and existing on the Effective Date; and


(b)                                 (i)  marketable direct obligations issued or
unconditionally guaranteed by the United States or its agency or any state
maturing within 1 year from its acquisition, (ii) commercial paper maturing no
more than 1 year after its creation and having the highest rating from either
Standard & Poor’s Corporation or Moody’s Investors Service, Inc., (iii)
Bank’s certificates of deposit issued maturing no more than 1 year after issue,
and (iv) any other investments administered through the Bank.


“Permitted
Liens” are:


(a)                                  Liens
existing on the Effective Date and shown on the Perfection Certificate or
arising under this Agreement or other Loan Documents;


(b)                                 Liens
for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on its Books, if they have no priority over any of Bank’s
security interests;


(c)                                  In
addition to the Liens existing on the Effective Date and shown on the
Perfection Certificate, additional purchase money Liens securing not more than
$4,000,000.00 incurred in any fiscal year during the term of this Agreement (i)
on Equipment acquired or held by Borrower incurred for financing the
acquisition of the Equipment, or (ii) existing on equipment when acquired, if
the Lien is confined to the property and improvements and the proceeds of the
equipment;


(d)                                 Leases
or subleases and non-exclusive licenses or sublicenses granted in the ordinary
course of Borrower’s business, if the leases, subleases, licenses and
sublicenses permit granting Bank a security interest; and


(e)                                  Liens
incurred in the extension, renewal or refinancing of the indebtedness secured
by Liens described in (a) through (d), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness may not increase.


“Person”
is any individual, sole proprietorship, partnership, limited liability company,
joint venture, company, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, firm, joint stock
company, estate, entity or government agency.


“Pledge
Agreement” means the Pledge Agreement executed and delivered by the
Borrower to Bank, dated as of the date hereof.


“Prime Rate”
is Bank’s most recently publicly announced “prime rate,” even if it is not Bank’s
lowest rate.


“Prime Rate
Margin” shall be determined and applied as described in Section
2.4(b).


“Prime Rate
Advance” means an Advance that bears interest based on the Prime
Rate plus the Prime Rate Margin.


“Quick Assets”
is, on any date, Borrower’s consolidated, unrestricted cash, Cash
Equivalents, net billed accounts receivable and investments with maturities of
fewer than 12 months determined according to GAAP.


“Registered
Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made


“Regulatory
Change” means, with respect to Bank, any change on or after the date
of this Agreement in United States federal, state, or foreign laws or
regulations, including Regulation D, or the adoption or making on or 



 29
 









after such date of any
interpretations, directives, or requests applying to a class of lenders
including Bank, of or under any United States federal or state, or any foreign
laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.


“Reserve
Requirement” means, for any Interest Period, the average maximum
rate at which reserves (including any marginal, supplemental, or emergency
reserves) are required to be maintained during such Interest Period under
Regulation D against “Eurocurrency liabilities” (as such term is used in
Regulation D) by member banks of the Federal Reserve System.  Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by Bank by reason of any Regulatory Change against (a) any
category of liabilities which includes deposits by reference to which the LIBOR
Rate is to be determined as provided in the definition of LIBOR or (b) any
category of extensions of credit or other assets which include Advances.


“Responsible
Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer, Executive Vice President, Vice President, Vice President of
Finance, and Controller of Borrower.


“Revolving
Line” is an Advance or Advances in an aggregate amount of up to
$35,000,000 outstanding at any time.


“Revolving Line Maturity Date” is
October 1, 2009.


“SEC” means
the United States Securities and Exchange Commission.


“Security
Agreement” and “Security Agreements”  means each Security Agreement executed and delivered by
each applicable Guarantor to Bank, dated as of the date hereof.


“Securities
Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.


“Settlement
Date”  is defined in Section 2.1.3.


“Subsidiary”
means, with respect to any Person, any Person of which more than 50% of the
voting stock or other equity interests is owned or controlled, directly or
indirectly, by such Person or one or more Affiliates of such Person.


“Total Funded
Debt” means, at any date of measurement, the outstanding aggregate
principal amount of all Advances to Borrower.


“Total Funded
Debt Ratio” means, at any date of measurement, the ratio of Total
Funded Debt on such date to LTM EBITDA on such date.


“Total
Liabilities” is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness.


“Transaction Report”
is that certain form attached hereto as Exhibit B.


“Transfer”
is defined in Section 7.1.


“Unused
Revolving Line Facility Fee” is defined in Section 2.5(d).


[Signature page follows.]



 30














IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the Effective Date.


BORROWER:


IBASIS, INC.


	
  By

  	
       /s/ Richard Tennant

  	
   

  	
   

  
	
  Name:

  	
     Richard Tennant

  	
   

  	
   

  
	
  Title:

  	
     Chief Financial Officer

  	
   

  	
   

  
					



 


BANK:


SILICON VALLEY BANK


	
  By

  	
       /s/ Michael J. Tramack

  	
   

  
	
  Name:

  	
     Michael J. Tramack

  	
   

  
	
  Title:

  	
     Senior Vice President

  	
   

  
				



 


 


Effective Date:  October 2, 2007


[Signature
page to Loan and Security Agreement]
















EXHIBIT A


The Collateral consists of all of Borrower’s right,
title and interest in and to the following personal property:


i.              All goods, Accounts
(including health-care receivables), Equipment, Inventory, contract rights or
rights to payment of money, leases, license agreements, franchise agreements,
General Intangibles, commercial tort claims, documents, instruments (including
any promissory notes), chattel paper (whether tangible or electronic), cash,
deposit accounts, fixtures, letters of credit rights (whether or not the letter
of credit is evidenced by a writing), securities, and all other investment
property, supporting obligations, and financial assets, whether now owned or
hereafter acquired, wherever located; and


ii.             All Borrower’s Books
relating to the foregoing, and any and all claims, rights and interests in any
of the above and all substitutions for, additions, attachments, accessories,
accessions and improvements to and replacements, products, proceeds and
insurance proceeds of any or all of the foregoing.


iii.            Notwithstanding the foregoing, the “Collateral”
does not include more than 2/3 of the presently existing and hereafter arising
issued and outstanding shares of capital stock owned by Borrower of any Foreign
Subsidiary which shares entitle the holder thereof to vote for directors or any
other matter.



 1














EXHIBIT B


Transaction Report


[EXCEL spreadsheet to be
provided separately from lending officer.]



 1
 








EXHIBIT C


PERFECTION CERTIFICATE



 2
 








EXHIBIT D


COMPLIANCE
CERTIFICATE


	
  TO:

  	
   

  	
  SILICON VALLEY BANK

  	
  Date:

  	
   

  
	
  FROM:

  	
   

  	
  IBASIS, INC.

  	
   

  	
   

  



 


   The undersigned authorized officer
of IBASIS, INC. (“Borrower”) certifies that under the terms and conditions of
the Loan and Security Agreement between Borrower and Bank (the “Agreement”),
(1) Borrower is in complete compliance for the period ending                                   
with all required covenants except as noted below, (2) there are no Events of
Default, (3) all representations and warranties in the Agreement are true
and correct in all material respects on this date except as noted below;
provided, however, that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, (4)
Borrower, and each of its Subsidiaries, has timely filed all required tax
returns and reports, and Borrower has timely paid all foreign, federal, state
and local taxes, assessments, deposits and contributions owed by Borrower
except as otherwise permitted pursuant to the terms of Section 5.9 of the
Agreement, and (5) no Liens have been levied or claims made against Borrower or
any of its Subsidiaries, if any, relating to unpaid employee payroll or
benefits of which Borrower has not previously provided written notification to
Bank.  Attached are the required
documents supporting the certification. 
The undersigned certifies that these are prepared in accordance with
GAAP consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.  The
undersigned acknowledges that no borrowings may be requested at any time or
date of determination that Borrower is not in compliance with any of the terms
of the Agreement, and that compliance is determined not just at the date this
certificate is delivered.  Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.


Please indicate compliance status
by circling Yes/No under “Complies” column.


	
  Reporting
  Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly
  consolidated and consolidating financial statements with Compliance
  Certificate

  	
   

  	
  Quarterly within 45 days

  	
   

  	
  Yes  No

  
	
  Annual financial
  statement (CPA Audited) + CC

  	
   

  	
  FYE within 120 days

  	
   

  	
  Yes  No

  
	
  10-Q, 10-K and
  8-K

  	
   

  	
  Within 5 days after filing with SEC

  	
   

  	
  Yes  No

  
	
  A/R & A/P
  Agings, Borrowing Base and Transaction Reports

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes  No

  
	
  Other filings
  with the SEC or any other regulatory agency

  	
   

  	
  Within 10 days after filing

  	
   

  	
  Yes  No

  



 


The following Intellectual Property was registered
after the Effective Date and since the last Compliance Certificate was provided
to the Bank (if no registrations, state “None”)


 


	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain on a Quarterly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Adjusted Quick Ratio

  	
   

  	
                :1.0

  	
   

  	
             :1.0

  	
   

  	
  Yes  No

  	
   

  
	
  Minimum Consolidated EBITDA

  	
   

  	
  $                   

  	
   

  	
  $                 

  	
   

  	
  Yes  No

  	
   

  
	
  Minimum EBITDA (if required)

  	
   

  	
  $                   

  	
   

  	
  $                 

  	
   

  	
  Yes  No

  	
   

  



 



 3
 








The
following financial covenant analyses and information set forth in Schedule 1
attached hereto are true and accurate as of the date of this Certificate.


The
following are the exceptions with respect to the certification above:  (If no exceptions exist, state “No exceptions
to note.”)




	
  IBASIS, INC.

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Received by:

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
       AUTHORIZED
  SIGNER

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
       AUTHORIZED
  SIGNER

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status:         Yes     No

  	
   

  
															






 



 4
 








Schedule 1 to Compliance Certificate


Financial Covenants of Borrower


	
  Dated:

  	
   

  	
   

  



 


I.              Adjusted  Quick Ratio
(Section 6.9(i))


Required:                      :1.00


Actual:


	
  A.

  	
   

  	
  Aggregate value of the unrestricted cash and cash
  equivalents of Borrower and its Subsidiaries at Bank

  	
   

  	
  $          

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Aggregate value of the net billed accounts
  receivable of Borrower and its Subsidiaries

  	
   

  	
  $          

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Aggregate value of the Investments with maturities
  of fewer than 12 months of Borrower and it Subsidiaries

  	
   

  	
  $          

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Quick Assets (the sum of lines A through C)

  	
   

  	
  $          

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Aggregate value of Obligations to Bank

  	
   

  	
  $          

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Aggregate value of liabilities of Borrower and its
  Subsidiaries (including all Indebtedness) that matures within one (1)

  	
   

  	
  $          

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
   

  	
  Current Liabilities (the sum of lines E and F)

  	
   

  	
  $          

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  Aggregate value of all amounts received or invoiced
  by Borrower in advance of performance under contracts and not yet recognized
  as revenue

  	
   

  	
  $          

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Line G minus line H

  	
   

  	
  $          

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  J.

  	
   

  	
  Adjusted Quick Ratio (line D divided by line I)

  	
   

  	
            

  



 


Is line J equal to or
greater than      :1:00?


      No,
not in compliance                                                                                          Yes,
in compliance


II.            Consolidated EBITDA
of Borrower and its Subsidiaries(Section 6.9(ii))


Required:               $10,000,000


Actual:


	
  A.

  	
   

  	
  Net Income

  	
   

  	
  $           

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Interest Expense

  	
   

  	
  $           

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Depreciation expense (to the extent deducted from
  Net Income)

  	
   

  	
  $           

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 



 5
 








 


	
  D.

  	
   

  	
  Amortization expense (to the extent deducted from
  Net Income)

  	
   

  	
  $           

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Income Tax Expense

  	
   

  	
  $           

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Consolidated EBITDA (line A plus line B plus line C
  plus line D plus line E

  	
   

  	
  $           

  



 


Is line F equal to or
greater than $10,000,000


  No,
not in compliance                                                                                    Yes,
in compliance


II.            EBITDA of
Borrower and its Existing Domestic Subsidiaries (Section 6.9(ii)) (if
applicable)


Required:               $               


Actual:


	
  A.

  	
   

  	
  Net Income

  	
   

  	
  $        

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Interest Expense

  	
   

  	
  $        

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Depreciation expense (to the extent deducted from
  Net Income)

  	
   

  	
  $        

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Amortization expense (to the extent deducted from
  Net Income)

  	
   

  	
  $        

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Income Tax Expense

  	
   

  	
  $        

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Consolidated EBITDA (line A plus line B plus line C
  plus line D plus line E

  	
   

  	
  $        

  



 


Is line F equal to or
greater than $               


  No,
not in compliance                                                                                    Yes,
in compliance



 6















EXHIBIT E


FORM OF NOTICE OF BORROWING


IBASIS, INC.


	
  Date: 

  	
                 

  



 


TO:                             SILICON VALLEY BANK


One Newton Executive
Park, Suite 200

2221 Washington Street, Newton, MA 02462

Attention:


RE:                              Second
Amended and Restated Loan and Security Agreement dated as of October       ,
2007 (as amended, modified, supplemented or restated from time to time, the “Loan
Agreement”), by and between IBasis Inc. (“Borrower and Silicon Valley Bank (the
“Bank”)


Ladies and Gentlemen:


The undersigned refers to the Loan Agreement, the
terms defined therein and used herein as so defined, and hereby gives you
notice irrevocably, pursuant to Section 3.4(a) of the Loan Agreement, of
the borrowing of an Advance.


1.             The Funding Date,
which shall be a Business Day, of the requested borrowing is                               .


2.             The aggregate
amount of the requested borrowing is $                          .


3.             The requested
Advance shall consist of $                      
of Prime Rate Advances and $            
of LIBOR Advances.


4.             The duration of
the Interest Period for the LIBOR Advances included in the requested Advance
shall be                   
month(s).


The undersigned hereby certifies that the following
statements are true on the date hereof, and will be true on the date of the
proposed Advance before and after giving effect thereto, and to the application
of the proceeds therefrom, as applicable:


(a)           all representations and warranties of
Borrower contained in the Loan Agreement are true, accurate and complete in all
material respects as of the date hereof;


(b)           no Default or Event of Default has
occurred and is continuing, or would result from such proposed Advance; and


(c)           the requested
Advance will not cause the aggregate principal amount of the outstanding
Advances to exceed, as of the designated Funding Date, the Availability Amount.



 1
 









 


	
  BORROWER

  
	
   

  	
  IBASIS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							



 


For internal Bank use
only


	
  LIBOR Pricing Date

  	
   

  	
  LIBOR

  	
   

  	
  LIBOR Variance

  	
   

  	
  Maturity Date

  
	
   

  	
   

  	
   

  	
   

  	
      %

  	
   

  	
   

  



 



 2















EXHIBIT F


FORM OF NOTICE OF
CONVERSION/CONTINUATION


IBASIS, INC.


	
  Date: 

  	
                         

  



 


TO:          SILICON VALLEY BANK


One Newton Executive
Park, Suite 200

2221 Washington Street, Newton, MA 02462

Attention:


RE:          Second Amended and
Restated Loan and Security Agreement dated as of October
     , 2007 (as amended, modified, supplemented or
restated from time to time, the “Loan Agreement”), by and between IBasis Inc. (“Borrower
and Silicon Valley Bank (the “Bank”)


Ladies and Gentlemen:


The undersigned refers to the Loan Agreement, the
terms defined therein being used herein as therein defined, and hereby gives
you notice irrevocably, pursuant to Section 3.5 of the Loan Agreement, of
the [conversion] [continuation] of the Advances specified herein, that:


1.             The date of the
[conversion] [continuation] is
                                           ,
20      .


2.             The aggregate amount
of the proposed Advances to be [converted] is 

$                            
or [continued] is $                                  .


3.             The Advances are to
be [converted into] [continued as] [LIBOR] [Prime Rate] Advances.


4.             The duration of the
Interest Period for the LIBOR Advances included in the [conversion]
[continuation] shall be          
month(s).


The undersigned, on behalf of
Borrower, hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the proposed [conversion]
[continuation], before and after giving effect thereto and to the application
of the proceeds therefrom:


(a)           all representations and
warranties of Borrower stated in the Loan Agreement are true, accurate and
complete in all material respects as of the date hereof; and


(b)           no Default or Event of
Default has occurred and is continuing, or would result from such proposed
[conversion] [continuation].


[Signature page follows.]



 1















BORROWER


	
  

  	
  IBASIS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							



 


For internal Bank
use only


	
  LIBOR Pricing Date

  	
   

  	
  LIBOR

  	
   

  	
  LIBOR Variance

  	
   

  	
  Maturity Date

  
	
   

  	
   

  	
   

  	
   

  	
       %

  	
   

  	
   

  



 



 1















EXHIBIT G


Loan
Payment/Advance Request Form


DEADLINE FOR SAME DAY PROCESSING IS NOON E.S.T.  *


Fax
To:                                                                                                                                   Date:
                                   


LOAN
PAYMENT:


IBASIS, INC.


	
  From Account #

  	
   

  	
   

  	
   

  	
  To Account #

  	
   

  	
   

  
	
   

  	
  (Deposit Account
  #)

  	
   

  	
   

  	
                                                      (Loan
  Account #)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Principal $

  	
   

  	
   

  	
   

  	
  and/or Interest $

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized Signature:

  	
   

  	
   

  	
   

  	
                 Phone
  Number:

  	
   

  	
   

  
	
  Print Name/Title:

  	
   

  	
   

  	
   

  	
   

  
														



 


LOAN
ADVANCE:


Complete Outgoing Wire Request section below if all or a portion of
the funds from this loan advance are for an outgoing wire.


	
  From Account #

  	
   

  	
   

  	
   

  	
  To Account #

  	
   

  	
   

  
	
                                       (Loan
  Account #)

  	
   

  	
   

  	
                                                 (Deposit
  Account #)

  	
   

  
	
   

  	
   

  	
   

  
	
  Amount of Advance $

  	
   

  	
   

  	
   

  
								



 


All Borrower’s
representations and
warranties in the Loan and Security Agreement are true, correct and complete in
all material respects on the date of the request for an advance; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date:


	
  Authorized Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  	
   

  
	
  Print Name/Title:

  	
   

  	
   

  	
   

  
							



 


OUTGOING WIRE REQUEST:


Complete only if all or a portion of funds from
the loan advance above is to be wired.


Deadline for same day
processing is noon, E.S.T.


	
  Beneficiary Name:

  	
   

  	
   

  	
   

  	
  Amount of Wire: $

  	
   

  
	
  Beneficiary Bank:

  	
   

  	
   

  	
   

  	
  Account Number:

  	
   

  
	
  City and State:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Beneficiary Bank Transit (ABA) #:

  	
   

  	
   

  	
   

  	
  Beneficiary Bank Code (Swift, Sort, Chip, etc.):

  	
   

  
	
   

  	
   

  	
            (For
  International Wire Only)

  
	
   

  	
   

  	
   

  
	
  Intermediary Bank:

  	
   

  	
   

  	
   

  	
  Transit (ABA) #:

  	
   

  
	
  For Further Credit to:

  	
   

  
	
   

  	
   

  	
   

  
	
  Special Instruction:

  	
   

  
																	



 


All Borrower’s
representations and
warranties in the Loan and Security Agreement are true, correct and complete in
all material respects on the date of the request for an advance; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date:






* Unless otherwise provided for an Advance
bearing interest at LIBOR.



 1
 









 


	
  Authorized Signature:

  	
   

  	
   

  	
   

  	
  Phone Number:

  	
   

  	
   

  
	
  Print Name/Title:

  	
   

  	
   

  	
   

  	
   

  
									



 



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