Document:

<PAGE>

EXHIBIT 10.3

                                LOCK UP AGREEMENT

            This Lock Up Agreement (the "Agreement") is made and entered into as
of August 30, 2004, and sets forth certain terms and conditions pursuant to
which Choice One Communications Inc. ("CWON") and certain of its affiliates
(collectively with CWON, the "Proposed Debtors") will implement a restructuring
(the "Restructuring") on a consensual basis with (i) the undersigned lenders
(the "Consenting Senior Lenders") under that certain Third Amended and Restated
Credit Agreement dated as of September 13, 2002 (as amended, the "Credit
Agreement"), by and among CWON as guarantor, certain subsidiaries of CWON, as
borrowers, General Electric Capital Corporation, as administrative agent and
collateral agent (the "Senior Agent") and various lenders (collectively, the
"Senior Lenders"; and the claims of the Senior Lenders under or in connection
with the Credit Agreement are referred to herein as "Senior Lender Claims"); and
(ii) the undersigned lenders (the "Consenting Bridge Lenders"; and, together
with the Consenting Senior Lenders, the "Consenting Lenders") under that certain
Bridge Financing Agreement dated as of August 1, 2000 (as amended, the "Bridge
Loan Agreement") among CWON, Morgan Stanley Senior Funding, Inc., as
administrative agent (the "Bridge Agent"), and various lenders (collectively,
the "Bridge Lenders"; and the claims of the Bridge Lenders in connection with
the Bridge Loan Agreement are referred to herein as the "Bridge Lender Claims").
CWON, the Consenting Senior Lenders and the Consenting Bridge Lenders are
referred to herein individually as a "Party", and collectively as the "Parties".
The loans made under the Credit Agreement are referred to herein as the "Senior
Loans". The loans made under the Bridge Loan Agreement are referred to herein as
the "Bridge Loans".

            1. Chapter 11 Filing; Proposed Plan of Reorganization

            It is anticipated that on or before September 30, 2004, the Proposed
Debtors will commence voluntary cases (the "Chapter 11 Cases") under chapter 11
of title 11 of the United States Code (the "Bankruptcy Code") in the United
States Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court"), which Chapter 11 Cases are intended to be implemented through the
proposed "prepackaged" or "pre-negotiated" plan of reorganization described
below. Attached hereto as Exhibit A is a term sheet (the "Term Sheet") that sets
forth the principal terms of the Restructuring.

            The Parties agree that the Proposed Debtors will draft a plan of
reorganization (the "Proposed Plan") that effects the Restructuring consistent
with the Term Sheet, and a related disclosure statement (the "Disclosure
Statement"), and will circulate such drafts to the Consenting Lenders. On such
date (the "Document Approval Date") as the Proposed Plan, Disclosure Statement
and any exhibits thereto, including, without limitation, documents evidencing
proposed debtor-in-possession financing, the terms of a revolving exit
financing, the terms of new senior notes, warrants and corporate governance
documents (collectively, the "Plan Documents") are in form and substance

<PAGE>

reasonably acceptable to the Senior Agent, the unofficial steering committee of
holders of Senior Loans (the "Senior Loan Steering Committee"), and the
unofficial steering committee of holders of Bridge Loans (the "Bridge Loan
Steering Committee"), the Proposed Debtors will (i) if the Document Approval
Date is on or before September 9, 2004, commence, within five business days
after such Document Approval Date, a solicitation of votes on the Proposed Plan
from holders of Senior Lender Claims and Bridge Loan Claims in accordance with
section 1126(b) of the Bankruptcy Code, or (ii) if the Document Approval Date is
before September 23, 2004, but no solicitation has been commenced by such date,
within five business days after confirmation that counterpart signature pages of
this Agreement have been executed by holders of at least 66 2/3% in dollar
amount and more than one-half in number of each of the Senior Loans and the
Bridge Loans, the Proposed Debtors will either (x) commence the Chapter 11 Cases
on a pre-negotiated basis, and file the Proposed Plan, Disclosure Statement and
related documents, all in form and substance reasonably satisfactory to the
Senior Agent, the Senior Loan Steering Committee and the Bridge Loan Steering
Committee, or (y) with the consent of the Senior Agent, the Senior Loan Steering
Committee and the Bridge Loan Steering Committee, commence a solicitation of
votes on the Proposed Plan in accordance with section 1126(b) of the Bankruptcy
Code; provided, that if by the Document Approval Date, executed signature pages
of this Agreement have been received by the holders of 66 2/3% in dollar amount
but not more than one-half in number of either the Senior Loans or Bridge Loans,
then the Proposed Debtors will, within five business days after receipt of the
written representation described in this section, commence the Chapter 11 Cases
on the pre-negotiated or pre-packaged basis as set forth in clause (x) or (y)
above, in any case, if the financial advisor to the Senior Lenders or the Bridge
Lenders, as applicable, shall have represented in writing its belief, after
reasonable due diligence, that after a vote taken holders of more than one-half
in number of the Senior Loans or Bridge Loans, as applicable, will vote to
accept the plan of reorganization under section 1126(c) of the Bankruptcy Code.

            2. Forbearance

            Upon receipt of counterpart pages of this Agreement executed by CWON
and by the holders of at least 66 2/3% in dollar amount of each of the Senior
Loans and the Bridge Loans, the Consenting Lenders agree to extend their
respective standstill and waiver agreements through and including September 30,
2004; provided, that such extended standstill and waiver agreements shall have
termination provisions similar to those set forth in this Agreement.

            3. Holdings by Consenting Lenders

            Each Consenting Lender represents that, as of the date hereof, such
Consenting Lender (i) either (A) is the sole legal and beneficial owner of the
principal amount of Senior Lender Claims or Bridge Lender Claims, as applicable,
set forth opposite its name on Schedule 1 hereto and all related claims, rights
and causes of action arising out of or in connection with or otherwise relating
to such claims (for each such Consenting Lender, the "Consenting Lender
Claims"), in each case free and clear of all claims, liens and encumbrances, or
(B) has investment or voting discretion with respect

                                       -2-
<PAGE>

to its Consenting Lender Claims and has the power and authority to bind the
beneficial owner(s) of such Consenting Lender Claims to the terms of this
Agreement, (ii) has full power and authority to vote on and consent to matters
concerning such Consenting Lender Claims, and (iii) does not hold any claim or
interest against the Proposed Debtors other than the Consenting Lender Claims.

            4. Transfer of Lender Claims

            Each of the Consenting Lenders hereby agrees that, so long as its
agreement hereunder has not been terminated, it shall not sell, transfer, assign
or grant any participation in any of its Consenting Lender Claims or any option
thereon or any right or interest (voting or otherwise) therein, unless the
transferee thereof or participant therein agrees in writing for the benefit of
the other Parties hereto to be bound by all of the terms of this Agreement and
executes a counterpart signature page of this Agreement and the transferor
provides each of the Parties hereto with a copy thereof, in which event (a) each
Party shall be deemed to have acknowledged that its obligations to the
Consenting Lenders hereunder shall be deemed to constitute obligations in favor
of such transferee and (b) the transferee shall be a Party hereto and all
obligations of the transferor to the other Parties hereto shall be deemed to be
obligations of the transferee.

            5. Agreement to Vote; Support for the Proposed Plan

            Each of the Consenting Lenders agrees that, so long as its agreement
hereunder has not been terminated, and subject to the conditions that (i) the
Proposed Plan, Disclosure Statement and Plan Documents provide for the treatment
of Senior Lender Claims and Bridge Lender Claims consistent with the treatment
contemplated and set forth in the Term Sheet and the DIP Term Sheet (as defined
herein), and (ii) the Proposed Debtors fulfill their obligations as contemplated
herein, including conducting a solicitation of votes on the Proposed Plan,
filing the Chapter 11 Cases, filing the Proposed Plan and Disclosure Statement
and continuing to support the Proposed Plan in accordance with the treatment of
the Senior Lender Claims and the Bridge Lender Claims as set forth in the Term
Sheet and the DIP Term Sheet, it shall (a) vote in favor of the Proposed Plan,
and (b) support the Proposed Plan. Such support shall include the following:
each Consenting Lender (together with its affiliates, officers, directors,
stockholders, members, employees, partners, employees, representatives and
agents) shall not: (v) object to the Proposed Plan or to any efforts to obtain
acceptance of, and to confirm and implement, the Proposed Plan; (w) vote for,
consent to, support or participate in the formulation of any plan other than the
Proposed Plan; (x) solicit, encourage, entertain or engage in any inquiries,
discussions, offers or proposals, or enter into any agreements, relating to any
disposition of the Proposed Debtors or their assets out of the ordinary course
of business or any plan of reorganization or liquidation for the Proposed
Debtors other than the Proposed Plan or any amendment thereto, this Agreement
and any documents in support hereof; (y) encourage or support in any fashion any
person or entity to vote against the Proposed Plan or to take any other action
prohibited to the Consenting Lenders in this Agreement; or (z) take any other
action directly or indirectly for the purpose of delaying, preventing,
frustrating or impeding acceptance, confirmation or implementation of the
Proposed Plan.

                                       -3-
<PAGE>

            6. Termination of Obligations

            Each Consenting Lender under this Agreement may terminate its
obligations under this Agreement by notice to counsel to the Proposed Debtors,
counsel to the Senior Agent, and counsel to the Bridge Loan Steering Committee,
in which case its agreement hereto shall terminate and be of no further force
and effect, if:

            (a) any Party (including the Proposed Debtors, in furtherance of
their fiduciary duties) files a chapter 11 plan providing for treatment of the
Consenting Lender Claims that is inconsistent with the terms and conditions set
forth in the Term Sheet or the DIP Term Sheet in a manner that is adverse to any
of the Consenting Lenders; provided: that the right to terminate under this
clause (a) shall only inure to a Consenting Lender whose treatment under the
filed chapter 11 plan is inconsistent with the Term Sheet or DIP Term Sheet in
an adverse manner;

            (b) on September 30, 2004, the Document Approval Date has not
occurred;

            (c) on September 30, 2004, the Proposed Debtors have completed the
solicitation of votes on the Proposed Plan pursuant to section 1126(b) of the
Bankruptcy Code, in accordance with applicable nonbankruptcy law and consistent
with the Term Sheet and the DIP Term Sheet, but the Proposed Debtors have not
obtained the acceptance of the Proposed Plan by the requisite majorities under
section 1126(c) of the Bankruptcy Code of each of the classes of Senior Loans
and Bridge Loans;

            (d) on September 30, 2004, the Parties have received counterpart
signatures of this Agreement executed by the requisite bankruptcy majorities of
each of the classes of Senior Lenders and Bridge Lenders in accordance with
section 1126(c) of the Bankruptcy Code, but the Proposed Debtors have not either
(x) commenced the Chapter 11 Cases on a pre-negotiated basis, including the
filing of the Proposed Plan, Disclosure Statement and related documents, all in
form and substance reasonably satisfactory to the Senior Agent, the Senior Loan
Steering Committee and the Bridge Loan Steering Committee, or (y) with the
written consent of the Senior Agent, the Senior Loan Steering Committee and the
Bridge Loan Steering Committee, commenced a solicitation of votes on the
Proposed Plan in accordance with section 1126(b) of the Bankruptcy Code;

            (e) on September 30, 2004, the Parties have not received counterpart
signatures of this Agreement executed by the holders of 66 2/3% in dollar amount
and more than one-half in number of each of the Senior Loans and Bridge Loans;
provided, that if by such date, counterpart pages of this Agreement have been
executed by holders of at least 66 2/3% in dollar amount but not more than
one-half in number of either the class of Senior Loans or the class of Bridge
Loans (either such class, a "Non-Consenting Class"), then it shall not be a
termination event under this clause (e) if the financial advisor to the Senior
Lenders or the Bridge Lenders, as applicable, shall have represented in writing
its belief, after reasonable due diligence, that after a vote taken in the
Chapter 11 Cases the class of Senior Lenders or Bridge Lenders, as applicable,
will vote to accept

                                       -4-
<PAGE>

the Proposed Plan under section 1126(c) of the Bankruptcy Code; and provided,
further, that it shall not be a termination event under this clause (e) for any
Consenting Lender of the Non-Consenting Class if CWON and the requisite
bankruptcy majorities under section 1126(c) if the Bankruptcy Code of the other
class determine to proceed with the Restructuring in accordance with the terms
of this Agreement and the Term Sheet and DIP Term Sheet;

            (f) within five business days after the commencement of the Chapter
11 Cases, the Proposed Debtors have not obtained interim approval of a
debtor-in-possession financing facility (the "DIP Financing") consistent with
the terms set forth in the DIP Financing term sheet attached hereto as Exhibit B
(the "DIP Term Sheet"); and within 30 days after the commencement of the Chapter
11 Cases, the Proposed Debtors have not obtained final approval of the DIP
Financing consistent with the DIP Term Sheet;

            (g) after filing, there shall be any modification to the Proposed
Plan or Disclosure Statement that is inconsistent with the terms and conditions
set forth in the Term Sheet or the DIP Term Sheet in a manner that is adverse to
any of the Consenting Lenders;

            (h) in the event of non-performance in any material respect by any
Party hereto (the "Breaching Party"), five business days after the giving of
written notice of termination by any Party hereto that has not failed to
perform, in any material respect, any of its obligations hereunder, to each of
the other Parties hereto of the material non-performance of the Breaching Party
and such non-performance remains uncured at the conclusion of such five-business
day period;

            (i) upon: (i) the dismissal of the Chapter 11 Cases; (ii) the
conversion of the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy
Code; (iii) the appointment of a trustee or receiver; or (iv) the effective date
of the Proposed Plan; or

            (j) upon the occurrence of an event of default that results in
acceleration under the DIP Financing.

No Party shall have any liability to the other or any other person as a result
of the termination of such Party's obligations hereunder in accordance with this
paragraph.

            7. Good Faith Negotiation of Documents

            Each party to this Agreement hereby further covenants and agrees to
negotiate the Plan Documents in good faith and, in any event, in all respects
consistent with the Term Sheet and the DIP Term Sheet.

            8. Prior Negotiations

            This Agreement, the Term Sheet and the DIP Term Sheet attached
hereto constitute the entire understanding of the parties with respect to the
subject matter hereof. No representations, oral or written, other than those set
forth herein and in the Term

                                       -5-
<PAGE>

Sheet and the DIP Term Sheet, may be relied on by any party in connection with
the subject matter hereof.

            9. No Due Diligence Condition

            Any provision contained in the Term Sheet or the DIP Term Sheet to
the contrary notwithstanding, (a) the completion of due diligence (including,
without limitation, tax due diligence and due diligence on the benefits obtained
from contract rejections in the Chapter 11 Cases) with respect to the Proposed
Debtors is not a condition precedent to any Party's obligations and agreements
under this Agreement; and (b) no Party hereto may seek to condition or avoid the
performance of its obligations hereunder based on or subject to the completion
of any such due diligence.

            10. Representations of CWON and the Subsidiaries

            CWON, for itself and on behalf of its subsidiaries, hereby
represents and warrants to each Consenting Lender as follows:

            (a) Corporate Power and Authority. It has all requisite corporate,
partnership or limited liability company power and authority to enter into this
Agreement and to carry out the transactions contemplated by, and perform its
obligations under, this Agreement.

            (b) Authorization. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly authorized by all
necessary corporate, partnership or limited liability company action on its
part.

            (c) No Conflicts. The execution, delivery and performance by it of
this Agreement do not and shall not (i) violate any provision of law, rule or
regulation applicable to it or any of its subsidiaries or its certificate of
incorporation or bylaws or other organizational documents or those of any of its
subsidiaries or (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any material contractual
obligation to which it or any of its subsidiaries is a party, other than as a
result of the commencement of the Chapter 11 Cases.

            (d) Governmental Consents. The execution, delivery and performance
by it of this Agreement do not and shall not require any registration or filing
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body, other than
filings under the Securities Exchange Act of 1934, as amended, which have been
or will be made.

            (e) Binding Obligation. Subject to the provisions of sections 1125
and 1126 of the Bankruptcy Code, this Agreement is the legally valid and binding
obligation of it, enforceable against it in accordance with its terms.

            (f) Information True and Correct. The financial and other
information concerning it which it or its representatives have made available to
the Consenting Lenders (other than any projected financial information included
therein) was complete and correct in all material respects when delivered and
did not contain any untrue

                                       -6-
<PAGE>

statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not materially misleading in light of the
circumstances under which such statements were made, and the projected financial
information concerning it which it or its representatives made available to the
Consenting Lenders was prepared in good faith and on the basis of assumptions
which, in light of the circumstances under which they were made, were believed
by its management to be reasonable.

            (g) No Litigation. There are no material actions, suits, claims,
 proceedings, or investigations pending or, to its knowledge, threatened against
 it, except those that have been publicly disclosed by CWON in the periodic or
 current reports filed with the Securities and Exchange Commission by CWON
 pursuant to the reporting requirements set forth in the Securities Exchange Act
 of 1934, as amended.

            11. Representations of the Consenting Lenders

            Each of the Consenting Lenders represents and warrants, severally
but not jointly, to CWON and the other Consenting Lenders, as follows:

            (a) Corporate Power and Authority. It has all requisite corporate,
partnership or limited liability company power and authority to enter into this
Agreement and to carry out the transactions contemplated by, and perform its
obligations under, this Agreement.

            (b) Authorization. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly authorized by all
necessary corporate, partnership or limited liability company action on its
part.

            (c) No Conflicts. The execution, delivery and performance by it of
this Agreement do not and shall not (i) violate any provision of law, rule or
regulation applicable to it or any of its subsidiaries or its certificate of
incorporation or bylaws or other organizational documents or those of any of its
subsidiaries or (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any material contractual
obligation to which it or any of its subsidiaries is a party.

            (d) Governmental Consents. The execution, delivery and performance
by it of this Agreement do not and shall not require any registration or filing
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.

            (e) Binding Obligation. Subject to the provisions of sections 1125
and 1126 of the Bankruptcy Code, this Agreement is the legally valid and binding
obligation of it, enforceable against it in accordance with its terms.

            12. Further Acquisition of Claims

            This Agreement shall in no way be construed to preclude the
Consenting Lenders from acquiring additional claims against CWON or any of its
subsidiaries. However, any such additional claims so acquired shall
automatically be deemed to be Consenting Lender Claims subject to the terms of
this Agreement.

                                       -7-
<PAGE>

            13. No Oral Amendments

            No modification or amendment of the terms of this Agreement shall be
valid unless such modification or amendment is in writing and has been signed by
each of the Parties.

            14. Governing Law

            This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to such state's choice
of law provisions which would require the application of the law of any other
jurisdiction. By its execution and delivery of this Agreement, each of the
Parties hereby irrevocably and unconditionally agrees for itself that any legal
action, suit or proceeding against it with respect to any matter arising under
or arising out of or in connection with this Agreement or for recognition or
enforcement of any judgment rendered in any such action, suit or proceeding, may
be brought in the United States District Court for the Southern District of New
York, and by execution and delivery of this Agreement, each of the Parties
hereby irrevocably accepts and submits itself to the exclusive jurisdiction of
such court, generally and unconditionally, with respect to any such action, suit
or proceeding. Notwithstanding the foregoing consent to New York jurisdiction,
upon the commencement of the Chapter 11 Cases, each of the Parties hereto hereby
agrees that the Bankruptcy Court shall have exclusive jurisdiction of all
matters arising out of or in connection with this Agreement.

            15. Specific Performance

            It is understood and agreed by the Parties that money damages would
not be a sufficient remedy for any breach of this Agreement by any Party and
each non-breaching Party shall be entitled to specific performance and
injunctive or other equitable relief as a remedy of any such breach, including,
without limitation, an order of the Bankruptcy Court or other court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations
hereunder.

            16. Reasonable Best Efforts

            The Senior Agent shall (a) exercise its reasonable best efforts to
obtain the consent of the requisite bankruptcy majorities of the class of Senior
Lenders to this Agreement, (b) notify the Proposed Debtors in writing if and
when such approvals have been received, (c) promptly notify the other Parties in
writing if and when any Senior Lender indicates its intention not to provide its
approval to this Agreement, and (d) promptly provide copies of such approvals to
the other Parties. Each of the Consenting Bridge Lenders shall (a) exercise its
reasonable best efforts to obtain the consent of the requisite bankruptcy
majorities of the class of Bridge Lenders to this Agreement, (b) notify (or
cause the notification of) the other Parties in writing if and when such
approvals have been received, (c) promptly notify (or cause the notification of)
the other Parties in writing if and when any Bridge Lender indicates its
intention not to provide its

                                       -8-
<PAGE>

approval to this Agreement, and (d) promptly provide (or cause the provision of)
copies of such approvals to the other Parties.

            17. Reservation of Rights

            This Agreement is part of a proposed consensual Restructuring among
the Parties hereto. Except as expressly provided in this Agreement, nothing
herein is intended to, or does, in any manner waive, limit, impair or restrict
the ability any party to protect and preserve its rights, remedies and
interests, including, without limitation, its claims against the Proposed
Debtors. If the Restructuring contemplated herein and in the Term Sheet is not
consummated, or if this Agreement is terminated for any reason, the Parties
hereto fully reserve any and all of their rights.

            18. Headings

            The section headings of this Agreement are for convenience of
reference only and shall not, for any purpose, be deemed a part of this
Agreement.

            19. Successors and Assigns, Several Obligations

            This Agreement is intended to bind and inure to the benefit of the
Parties and their respective successors, permitted assigns, heirs, executors,
administrators and representatives. The invalidity or unenforceability at any
time of any provision hereof shall not affect or diminish in any way the
continuing validity and enforceability of the remaining provisions hereof. The
agreements, representations and obligations of the Consenting Lenders under this
Agreement are several and not joint in all respects. Any breach of this
Agreement by a Consenting Lender shall not result in liability for any other
non-breaching Consenting Lender.

            20. Third-Party Beneficiaries

            Unless expressly stated herein, this Agreement shall be solely for
the benefit of the Parties hereto and no other person or entity shall be a third
party beneficiary hereof.

            21. Counterparts

            This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same agreement. Execution copies of this agreement may
be delivered by facsimile which shall be deemed to be an original for the
purposes of this paragraph.

            22. Consideration

            It is hereby acknowledged by the Parties that no consideration shall
be due or paid to the Consenting Lenders in exchange for their support of the
Proposed Plan, in accordance with the terms and conditions of this Agreement,
other than the obligations imposed upon the Proposed Debtors pursuant to the
terms of this Agreement, including,

                                       -9-
<PAGE>

without limitation, the Proposed Debtors' obligations to use reasonable best
efforts to confirm the Proposed Plan in accordance with the terms and conditions
of this Agreement.

            23. Acknowledgement

            This Agreement is not, and shall not be deemed to be, a solicitation
for consents to the Proposed Plan. Each Consenting Lender's acceptance of the
Proposed Plan shall not be solicited until it has received the Disclosure
Statement for the Proposed Plan.

            24. Disclosure of Individual Consenting Lenders

Unless required by applicable law or regulation, including attaching this
Agreement, as executed, to the Disclosure Statement, and other than to the other
Parties hereto, the Proposed Debtors shall not disclose any Consenting Lender's
holdings of Senior Lender Claims or Bridge Lender Claims without the prior
written consent of such Consenting Lender; and if such announcement or
disclosure is so required by law or regulation (other than in connection with
the filing of this Agreement as part of an 8-K filing with the Securities and
Exchange Commission (an "8-K") or as an attachment to the Disclosure Statement),
the Proposed Debtors shall afford the Consenting lenders a reasonable
opportunity to review and comment upon any such announcement or disclosure prior
to making such announcement or disclosure. The foregoing shall not prohibit the
Proposed Debtors from disclosing the approximate aggregate holdings of Senior
Lender Claims or Bridge Lender Claims by the Consenting Lenders as a group. If
this Agreement, as executed, is attached to an 8-K or the Disclosure Statement,
the Debtors agree that only the aggregate amount of Bridge Lender Claims, but
not the individual amount held by any Consenting Bridge Lender, shall be
disclosed therein, subject, however, to the first sentence of this Section 24,
if such disclosure is required by applicable law or regulation.

                                      -10-
<PAGE>

            IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed and delivered by their respective duly authorized officers, solely
in their respective capacity as officers of the undersigned and not in any other
capacity, as of the date first set forth above.

CHOICE ONE COMMUNICATIONS INC.

By: /s/ Ajay Sabherwal
-----------------------------------------
Name: AJAY SABHERWAL
Title: CHIEF FINANCIAL OFFICER

<PAGE>

SENIOR LENDERS

GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent, Collateral Agent and
Syndication Agent under the Credit Agreement
and as a Senior Lender

By:/s/ Christopher T. Nicholls
   --------------------------------------
Name:  Christopher T. Nicholls
Title: Senior Vice President; Authorized Signatery

MORGAN STANLEY SENIOR FUNDING, INC.,
as Documentation Agent under the Credit Agreement
and as a Senior Lender

By:/s/ Daniel Allen
   --------------------------------------
Name:  Daniel Allen
Title: Vice President

BANK OF AMERICA, N.A., as a Senior Lender

By:/s/ Laura I. Sweet
   --------------------------------------
Name:  Laura I. Sweet
Title: Assistant Vice President

BEAR STEARNS INVESTMENT PRODUCTS INC.,
as a Senior Lender

By:/s/ John E. McDermott
   --------------------------------------
Name:  John E. McDermott
Title: Vice President

CARGILL FINANCIAL SERVICES INTERNATIONAL, Inc.,
as a Senior Lender

By:/s/ Mark Guidinger
   --------------------------------------
Name:  Mark Guidinger
Title: Portfolio Manager

By:/s/ Kelly Schreurs
   --------------------------------------
Name:  Kelly Schreurs
Title: Controller

<PAGE>

CREDIT SUISSE FIRST BOSTON INTERNATIONAL,
as a Senior Lender

By:/s/
   ----------------------------
Name:
Title:

DEUTSCHE BANK AND TRUST COMPANY AMERICAS, as a Senior Lender

By: /s/ Jay Hopkins
    ---------------------------
Name: Jay Hopkins
Title: Assistant Vice President

FIDELITY ADVISORS SERIES II: FIDELITY ADVISORS HIGH INCOME
ADVANTAGE (218), as a Senior Lender

By: /s/ John H. Costello
    -----------------------------
Name: John H. Costello
Title: Assistant Vice Treasurer

Pension Investment Committee of
General Motors for General Motors Employees
Domestic Group Pension Trust, as a Senior Lender

By: Fidelity Management Trust Company,
as Investment Manager under Power of Attorney

By: /s/ John P. O'Reilly
    ----------------------------
Name: John P. O'Reilly
Title: Executive Vice President
<PAGE>

GOLDMAN SACHS CREDIT PARTNERS, L.P.,
as a Senior Lender

By: /s/ Pedro Ramirez
    ---------------------------
Name: Pedro Ramirez
Title: Authorized Signatory

GRACIE CAPITAL, L.P.
P+S Capital Partners, LLC
By: /s/ Greg Pearson
    ----------------------------
Name: Greg Pearson
Title: CFO

LITESPEED MASTER FUND LTD
By:/s/ Jamie Zimmerman
   ------------------------------
Name: Jamie Zimmerman
Title: Managing Partner

MERRILL LYNCH CREDIT PRODUCTS, LLC, as a Senior Lender

By: /s/ Peter Chin
    ------------------------------
Name: Peter Chin
Title: Vice President

<PAGE>

ORE HILL HUB FUND, LTD, as a Senior Lender

By: /s/ Frederick Wahl
    ----------------------------
Name: Frederick Wahl
Title:

QUANTUM PARTNERS LDC, as a Senior Lender

By: /s/ Armando Belly
    -----------------------------
Name: Armando Belly
Title: Attorney-in-Fact

SATELLITE SENIOR INCOME FUND, LLC, as a Senior Lender

By: Satellite Asset Management L.P., its manage

By: /s/ Simon Raykhar
    ------------------------------
Name: Simon Raykhar
Title: General Counsel

SCOGGIN CAPITAL MANAGEMENT, LP II, as a Senior Lender

By: S+E Partners, LP its: General Partner

By: Scoggin, Inc its: General Partner

By: /s/ Craig Effron
    -------------------------------
Name: Craig Effron
Title: President of Scoggin, Inc.

STRATEGIC VALUE MASTER FUND, LTD, as a Senior Lender

By: Strategic Value Partners Inc.
    its Investment

By: /s/ Victor Khosla
    --------------------------------
Name: Victor Khosla
Title: President

<PAGE>

TRIAGE CAPITAL MANAGEMENT, LP, as a Senior Lender

By: /s/ Mark D. Wittman
    ---------------------------
Name: Mark D. Wittman
Title: Partner

VARDE PARTNERS, INC., as a Senior Lender

By: /s/ George G. Hicks
    ---------------------------
Name: George G. Hicks
Title: Managing Partner

WACHOVIA BANK, N.A., as a Senior Lender

WAYLAND DISTRESSED OPPORTUNITIES FUND I-B, LLC.,
as a Senior Lender

By: Wayzata Investment Partners, LLC, its Manager

By: /s/ Joseph M. Deignan
    ----------------------------
Name: Joseph M. Deignan
Title: Authorized Signatory

WAYLAND DISTRESSED OPPORTUNITIES FUND I-C, LLC.,
as a Senior Lender

By: Wayzata Investment Partners, LLC, its Manager

By: /s/ Joseph M. Deignan
    ----------------------------
Name: Joseph M. Deignan
Title: Authorized Signatory

<PAGE>

 BRIDGE LENDERS

 QUANTUM PARTNERS LDC, as a Bridge Lender

 By: /s/ Armando Belly
 Name:
 Title:

 CREDIT SUISSE FIRST BOSTON
 INTERNATIONAL, as a Bridge Lender

 By: /s/ Louis J. Impellizeri
     ---------------------------------------------
 Name: Louis J. Impellizeri
 Title: Authorized Signatory

 By: /s/ Vittorio Selaloja
     ---------------------------------------------
 Title: Authorized Signatory

 WACHOVIA INVESTORS, INC., as a Bridge Lender

 By: /s/ Robert Haley
     ---------------------------------------------
 Name:   Robert Haley
 Title:  Authorized Signatory
         Director

<PAGE>

                         CHOICE ONE COMMUNICATIONS INC.
                         SUMMARY OF TERMS AND CONDITIONS
                   FOR POSSIBLE DEBTOR-IN-POSSESSION FINANCING
      CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY; NOT A COMMITMENT TO LEND

This term sheet consists of a summary description of the material terms and
conditions of the debtor-in-possession credit facility described herein, and is
not intended to provide a comprehensive description of all of the terms and
conditions of such facility. Until such time as definitive written agreements
among the Borrowers, the DIP Agent and the DIP Lenders containing terms and
conditions consistent with the terms and conditions set forth herein and
otherwise in form and substance satisfactory to the DIP Agent and DIP Lenders
are fully executed and delivered, no negotiations, discussions, representations
or other communications of any kind shall be deemed to create any binding
agreements or offers capable of acceptance or any basis for detrimental
reliance. The DIP Agent and the DIP Lenders reserve their rights to terminate
discussions regarding the subject matter hereof at any time, in their sole
discretion, and without liability of any kind.

BORROWERS:           Choice One Communications Inc. and each of its
                     subsidiaries, as debtors-in-possession subject to Chapter
                     11 cases (collectively, the "Borrowers" or the "Debtors").
                     Each Borrower would be jointly and severally liable to
                     repay any and all indebtedness incurred under the Facility.
                     Each Borrower will appoint one of the Borrowers as its
                     agent for administrative purposes under the Facility.

ADMINISTRATIVE
AGENT:               General Electric Capital Corporation ("GE Capital") or one
                     or more of its affiliates (in such capacity, the "DIP
                     Agent").

FACILITY;
AVAILABILITY:        Revolving debtor-in-possession credit facility (the
                     "Facility") of up to an overall maximum amount of
                     $20,000,000 (the "Maximum Amount"), including a swingline
                     subfacility of up to $_______________; provided, however,
                     that, (i) from and after the entry of an order of the
                     bankruptcy court acceptable in form and substance to the
                     DIP Agent and the Required DIP Lenders (the "Interim
                     Order"), and prior to the entry of the Final Order (as
                     defined below), the Maximum Amount shall be limited to
                     $____________ and (ii) the Maximum Amount shall be
                     permanently reduced from time to time pursuant to the
                     mandatory prepayment provisions described below.

                     Notwithstanding the foregoing, loans under the Facility
                     will only be available to the Borrowers from time to time
                     prior to the Maturity Date in an aggregate amount not to
                     exceed the lesser of:

                     a. an amount equal to the lesser of (i) the Maximum Amount
                     and (ii) an amount equal to the Borrowing Base minus the
                     amount of the Carve-Out (as defined below); and

                     b. a positive amount (if any) equal to (i) 110% of (x) the
                     sum of the weekly amounts of all projected disbursements of
                     the Borrowers and their subsidiaries, as set forth in a
                     budget approved on or prior to the Closing Date (as defined
                     below) by the DIP Agent, the Senior Lender

<PAGE>

                     Steering Committee (as defined below) and the Bridge Loan
                     Steering Committee (as defined below) (the "Budget"), for
                     the period from the Closing Date through the last day of
                     the week in which the loan is requested (excluding
                     reasonable professional fees and expenses) minus (y) the
                     sum of the weekly amounts of all projected operating cash
                     receipts set forth in the Budget for such period minus (ii)
                     (A) aggregate amount of advances actually made under the
                     Facility to the Borrowers during such period (prior to
                     giving effect to any requested loan not yet made) minus (B)
                     the aggregate amount of reasonable professional fees and
                     expenses actually paid during such period; provided,
                     however, that the limitation described in this paragraph
                     (b) shall not be applicable with respect to any requested
                     loan the proceeds of which are actually applied to the
                     payment of reasonable professional fees and expenses. The
                     formula as set forth in this paragraph shall be applied,
                     with respect to each of the periods described herein, on a
                     cumulative, period to period basis. The Budget shall not be
                     modified or otherwise amended without (i) the consent of
                     the Required DIP Lenders and (ii) the consent of (a) the
                     Prepetition Senior Agent, the Senior Loan Steering
                     Committee and the Bridge Loan Steering Committee or (b) the
                     bankruptcy court.

                     "Borrowing Base" shall mean, as of any date, the sum of, in
                     each case less reserves established from time to time by
                     the DIP Agent in its reasonable credit judgment, up to 85%
                     of the Borrowers' eligible accounts. The DIP Agent will
                     retain the right from time to time to establish standards
                     of eligibility and reserves against availability in its
                     reasonable credit judgment, which reserves against
                     availability will take into account and be impacted by the
                     results of the pending audit of the collateral. Accounts
                     which are 90 days past original invoice date or 60 days
                     past due will be ineligible.

LENDERS:             The lenders under the Facility (the "DIP Lenders") would
                     consist of GE Capital, Strategic Value Credit Opportunities
                     Master Fund, L.P., and Varde Partners, Inc. (or their
                     respective affiliates) (collectively, the "Senior Lender
                     Steering Committee"), and such other holders of the
                     Pre-Petition Obligations (as defined below) as may be
                     approved by the Senior Lender Steering Committee. Unless
                     otherwise approved by the Senior Lender Steering Committee,
                     each lender would participate in the Facility at equal
                     commitment amounts. Any such commitments would be provided,
                     if at all, pursuant to one or more definitive commitment
                     letters provided by such lenders in their sole and absolute
                     discretion.

CLOSING              DATE: The later of the date on which the Debtors file
                     Chapter 11 petitions (the "Petition Date") and the date on
                     which the Interim Order is entered by the bankruptcy court,
                     it being anticipated that the Petition Date would occur on
                     or before September 30, 2004.

MATURITY:            The Facility would mature and the commitments would
                     terminate on the earliest to occur (the "Maturity Date")
                     of: (i) six months from the Petition Date, (ii) thirty days
                     after the Petition Date if a final order from the
                     bankruptcy court approving the Facility in form and
                     substance

                                       2
<PAGE>

                     acceptable to the DIP Agent and the Required DIP Lenders
                     (the "Final Order" and, together with the Interim Order,
                     the "Financing Orders") has not been entered by that date,
                     (iii) the effective date of a plan of reorganization with
                     respect to the Debtors, and (iv) the occurrence and
                     continuation of an Event of Default under the definitive
                     Facility documents and a determination by the Required DIP
                     Lenders (as defined below) to terminate the commitments.

USE OF PROCEEDS:     To pay interest, fees and expenses with respect to the
                     Facility, make adequate protection payments to the lenders
                     party to the pre-petition credit agreement ("Pre-Petition
                     Credit Agreement"), to pay regularly scheduled payments due
                     under the Swap Agreement (as defined below) (including the
                     deferred amount originally due August 9, 2004), to pay
                     reasonable professional fees and expenses incurred by the
                     unofficial committee of lenders (the "Bridge Loan Steering
                     Committee") party to the pre-petition bridge loan agreement
                     ("Bridge Loan Agreement"), and to pay operating expenses
                     and other amounts for general corporate and ordinary course
                     purposes of the Company and its subsidiaries in accordance
                     with the Budget, including ongoing administrative expenses
                     associated with the Chapter 11 cases of the Debtors.

                     None of the proceeds may be used to challenge the validity,
                     perfection, priority, extent or enforceability of the
                     Facility or the Pre-Petition Loan Obligations (as defined
                     below), the obligations under the Bridge Loan Agreement
                     (the "Bridge Loan Obligations"), the Swap Obligations ((as
                     defined below) or the liens or security interests securing
                     the Facility, the Pre-Petition Loan Obligations, the Swap
                     Obligations or the Bridge Loan Obligations.

SECURITY; PRIORITY:

                     To secure all of the obligations of Debtors to the DIP
                     Agent and the DIP Lenders under the Facility, DIP Agent,
                     for the benefit of the DIP Agent and the DIP Lenders, would
                     receive, pursuant to Sections 364(c)(2), 364(c)(3) and
                     364(d)(1) of the Bankruptcy Code, the Financing Orders and
                     the definitive Facility documents, valid, enforceable and
                     fully perfected security interests in and liens and
                     mortgages upon all prepetition and postpetition assets of
                     the Debtors, including, without limitation, all capital
                     stock of their respective subsidiaries, all intercompany
                     notes held by them, and proceeds of all FCC and other
                     public utility licenses, in each case whether now existing
                     or hereafter acquired or arising (collectively, the "DIP
                     Collateral"), which liens would have the priority set forth
                     below. DIP Collateral would not include any proceeds from
                     avoidance actions recovered or avoided under Chapter 5 of
                     the Bankruptcy Code (collectively, "Avoidance Actions"),
                     except to the extent the Carve-Out (defined below) is
                     utilized.

                     The liens and security interests with respect to the
                     Debtors' property securing the Facility shall not be
                     subject to challenge and shall attach and become valid and
                     perfected upon entry of the Interim Order without the
                     requirement of any further action by DIP Agent or DIP
                     Lenders. All DIP Collateral will be free and clear of other
                     liens, claims and encumbrances,

                                       3
<PAGE>

                     except valid, perfected, enforceable and unavoidable liens
                     in existence as of the Petition Date, liens securing the
                     Pre-Petition Loan Obligations (as defined below), the Swap
                     Obligations (as defined below) and the Bridge Loan
                     Obligations, and other permitted liens and encumbrances
                     acceptable to DIP Agent and the DIP Lenders.

                     Subject to the Carve-Out, such liens securing the DIP
                     Obligations (a) would constitute first priority liens in
                     and to all DIP Collateral that is not subject to any valid,
                     perfected, enforceable and non-avoidable lien in existence
                     as of the Petition Date, pursuant to 11 U.S.C. Section
                     364(c)(2), (b) would prime and be senior to those liens
                     (the "Primed Liens"): (i) in favor of the pre-petition
                     agent (the "Pre-Petition Agent") with respect to
                     obligations under the Pre-Petition Credit Agreement (the
                     "Pre-Petition Loan Obligations") and the obligations (the
                     "Swap Obligations") under the pre-petition swap agreement
                     (the "Swap Agreement") among the Debtors and Wachovia Bank,
                     N.A. (formerly known as First Union National Bank)
                     ("Wachovia"), and (ii) in favor of the agent (the "Bridge
                     Loan Agent") with respect to the Bridge Loan Obligations,
                     in each case pursuant to 11 U.S.C. Section 364(d)(1), (c)
                     would be senior to all Adequate Protection Liens (as
                     defined below), and (d) would be immediately junior in
                     priority to any and all valid, perfected, enforceable and
                     non-avoidable liens in existence as of the Petition Date
                     other than the Primed Liens (collectively, the "Non-Primed
                     Liens"), pursuant to 11 U.S.C. Section 364(c)(3).

                     All obligations of the Debtors under and with respect to
                     the Facility (the "DIP Obligations") would enjoy
                     superpriority administrative expense status under 11 U.S.C.
                     Section 364(c)(1) with priority over all other costs and
                     expenses of the kinds specified in, or ordered pursuant to,
                     Sections 105, 326, 330, 331, 503(b), 506(c), 507(a),
                     507(b), 726 or any other provisions of the Bankruptcy Code,
                     subject to the Carve-Out (as defined below). Such
                     superpriority status would be enjoyed with respect to any
                     proceeds of Avoidance Actions to the extent the Carve-Out
                     is utilized and the DIP Obligations would otherwise be pari
                     passu with other allowed administrative expenses with
                     respect to such proceeds.

CARVE-OUT:           Prior to the Maturity Date, the Debtors shall pay their
                     administrative expenses, including, without limitation, the
                     professional fees and disbursements incurred by the Debtors
                     and any statutory committees appointed in the Chapter 11
                     cases, in full and in the ordinary course of the Debtors'
                     business, subject to the entry of an order of the
                     bankruptcy court, in form and substance reasonably
                     acceptable to the DIP Agent, the Senior Lender Steering
                     Committee and the Bridge Loan Steering Committee, allowing
                     for the provisional payment of such amounts. After the
                     Maturity Date, the claims and liens in the Debtors'
                     properties provided for hereunder, and the Primed Liens and
                     Non-Primed Liens, shall, only to the extent unencumbered
                     funds are not available to pay in full administrative
                     expenses, be subject to the payment of professional fees
                     and disbursements incurred by the Debtors and any statutory
                     committees appointed in the Chapter 11 cases, solely to the
                     extent

                                       4
<PAGE>

                     incurred in an aggregate amount not in excess of $1,000,000
                     plus any professional fees and disbursements described in
                     the first sentence of this paragraph which were incurred
                     prior to the Maturity Date and remain unpaid as of such
                     date and which are ultimately allowed by the bankruptcy
                     court, less the aggregate amount of retainers for
                     professional fees and disbursements that are unapplied as
                     of the Maturity Date (collectively, the "Carve-Out").
                     Notwithstanding the foregoing, no portion of the Carve-Out,
                     and no portion of any amounts approved for payment prior to
                     the Maturity Date, shall be utilized for the payment of
                     professional fees, disbursements, costs or expenses
                     incurred in connection with asserting or preparing for any
                     claims or causes of action against the Pre-Petition Agent,
                     the Bridge Loan Agent, the lenders under the Pre-Petition
                     Credit Agreement or party to the Swap Agreement
                     (collectively, the "Pre-Petition Lenders"), the lenders
                     under the Bridge Loan Agreement (the "Bridge Loan
                     Lenders"), the DIP Agent or the DIP Lenders, and/or
                     challenging or raising any defenses to the Pre-Petition
                     Obligations, the Swap Obligations, the Bridge Loan
                     Obligations, the loans or other obligations under the
                     Facility or the liens of the Pre-Petition Agent, the Bridge
                     Loan Agent, the Pre-Petition Lenders, the Bridge Loan
                     Lenders, the DIP Agent or the DIP Lenders.

ADEQUATE
PROTECTION:          As adequate protection for the diminution in the value of
                     the Pre-Petition Agent's and the Pre-Petition Lenders'
                     collateral resulting from (i) the use by the Debtors of
                     such collateral and cash constituting proceeds of such
                     collateral, (ii) those liens granted to the DIP Lenders
                     which prime the Primed Liens and (iii) the imposition of
                     the automatic stay pursuant to 11 U.S.C. Section 362(a),
                     the Pre-Petition Agent, for the benefit of the Pre-Petition
                     Lenders, shall be granted, subject to the Carve-Out, (1)
                     replacement security interests in and liens and mortgages
                     upon all property of the Debtors and their estates, whether
                     now existing or hereafter acquired or arising, including
                     liens on Avoidance Actions to the extent the Carve-Out is
                     utilized ("Adequate Protection Liens") and (2)
                     superpriority administrative expense status under 11 U.S.C
                     Section 507(b), which priority claim shall be junior to the
                     superpriority claim under Section 364(c)(1) of the
                     Bankruptcy Code in favor of the DIP Lenders, provided that
                     as to proceeds of Avoidance Actions, such section 507(b)
                     claim shall enjoy 507(b) superpriority status (junior to
                     the Section 364(c)(1) priority in favor of the DIP Lenders)
                     to the extent the Carve-Out is utilized and will otherwise
                     enjoy a priority in respect of such Avoidance Actions which
                     is pari passu with other allowed administrative expenses
                     (the "Adequate Protection Priority Claim"). The Adequate
                     Protection Liens and the Adequate Protection Priority Claim
                     of the holders of the Primed Liens for the diminution in
                     the value of their collateral will be accorded the same
                     priority as held by such Primed Liens prior to the filing
                     of the chapter 11 cases, but shall be junior to the Liens
                     of the DIP Agent and the DIP Lenders.

                     As additional adequate protection for the benefit of the
                     Pre-Petition Lenders, (i) the Pre-Petition Lenders shall be
                     entitled to the payment of

                                       5
<PAGE>

                     ongoing interest (payable monthly) and fees, the payment on
                     the Closing Date of all accrued and unpaid or deferred
                     interest then owing with respect to the Pre-Petition Loan
                     Obligations (excluding deferred interest which is payable
                     in kind), and the payment of regularly scheduled amounts
                     due under the Swap Agreement (including such amounts which
                     were originally due and payable on August 9, 2004 and
                     extended to September 30, 2004), (ii) the Pre-Petition
                     Agent and the Senior Lender Steering Committee shall be
                     entitled to the payment of its costs and expenses and (iii)
                     the Debtors shall be prohibited from incurring additional
                     indebtedness having priority claims or liens equal or
                     senior in priority to the Facility or the Pre-Petition Loan
                     Obligations or the liens securing such obligations.

                     Notwithstanding anything herein to the contrary, the
                     adequate protection and other protections set forth in this
                     term sheet and afforded with respect to the Swap
                     Obligations and the liens of the Pre-Petition Agent
                     securing such obligations shall be subject to Wachovia
                     having agreed, pursuant to documentation reasonably
                     satisfactory to the DIP Agent, (i) to waive any right to
                     terminate the Swap Agreement as a result of the
                     commencement of the Chapter 11 cases or as part of any plan
                     of reorganization of the Debtors; and (ii) as part of any
                     plan of reorganization of the Debtors, to permit the Swap
                     Agreement and related Swap Obligations to "pass through" as
                     a post-petition agreement of the reorganized Debtors,
                     subject to the continued timely payment of the regularly
                     scheduled amounts due Wachovia thereunder and subject to
                     such plan providing for valid, effective and enforceable
                     post-confirmation liens and security interests securing the
                     Swap Obligations in substantially the same properties of
                     the Debtors by which such obligations are presently
                     secured, and having substantially the same lien priority
                     and liquidation preference over any other post-confirmation
                     funded indebtedness (other than any post-confirmation
                     revolving credit facility, with respect to which the Swap
                     Obligations would be junior) provided by or owing to the
                     Pre-Petition Agent and other Pre-Petition Lenders as the
                     Swap Obligations currently have over the Pre-Petition Loan
                     Obligations.

                     Subject to the last sentence of this paragraph, as adequate
                     protection for any diminution in the value of any interests
                     of the Bridge Loan Agents and the Bridge Loan Lenders in
                     the property of the Debtors' estate on the Petition Date
                     resulting from (i) the use by the Debtors of such property,
                     (ii) those liens granted to the DIP Lenders which prime the
                     Primed Liens and (iii) the imposition of the automatic stay
                     pursuant to 11 U.S.C. Section 362(a), the Bridge Loan
                     Agent, for the benefit of the Bridge Loan Lenders, shall be
                     granted, subject to the Carve-Out, (1) the Adequate
                     Protection Liens and (2) the Adequate Protection Priority
                     Claim. Such Adequate Protection Liens and Adequate
                     Protection Priority Claim of the Bridge Loan Agent and
                     Bridge Loan Lenders for any diminution in the value of any
                     interests of the Bridge Loan Agent and the Bridge Loan
                     Lenders in the property of the Debtors' estate on the
                     Petition Date will be accorded the same priority as held by
                     such Primed Liens prior to the

                                       6
<PAGE>

                     filing of the Chapter 11 cases, but shall be junior to the
                     Liens of the DIP Agent, the DIP Lenders, the Pre-Petition
                     Agent, the Pre-Petition Lenders and the replacement liens
                     of the Pre-Petition Agent and Pre-Petition Lenders.

                     The Bridge Loan Steering Committee shall be entitled to the
                     payment of its reasonable costs and expenses, and the
                     Debtors shall be prohibited from incurring additional
                     indebtedness having priority claims or liens equal or
                     senior in priority to the Bridge Loan Obligations or the
                     liens securing such obligations, except as provided herein.

                     The Financing Orders shall provide that the Debtors
                     acknowledge (a) the validity of the obligations owing to
                     the Pre-Petition Agent, the Pre-Petition Lenders, the
                     Bridge Loan Agent and the Bridge Loan Lenders, without
                     defense, offset or counterclaim of any kind, (b) the
                     validity, perfection and priority of the liens securing the
                     obligations owing to the Pre-Petition Agent, the
                     Pre-Petition Lenders, the Bridge Loan Agent and the Bridge
                     Loan Lenders, and that the Debtors waive any right to
                     challenge or contest such claims and liens and (c) that
                     they have no valid claims or causes of action against the
                     Pre-Petition Agent, any Pre-Petition Lenders, the Bridge
                     Loan Agent or any Bridge Loan Lender with respect to the
                     Pre-Petition Credit Agreement, the Swap Agreement, the
                     Bridge Loan Agreement or the related documents or
                     transactions.

                     The Final Order shall provide that any statutory committee
                     shall have 60 days from the date of the selection of
                     counsel to such committee to file any objection to the
                     claims or liens of the Pre-Petition Agent, the Pre-Petition
                     Lenders, the Bridge Loan Agent or the Bridge Loan Lenders,
                     or to commence any adversary proceeding or other action
                     against the Pre-Petition Agent, the Pre-Petition Lenders,
                     the Bridge Loan Agent or the Bridge Loan Lenders after
                     which date, if no such objection or adversary proceeding or
                     other action has been timely filed, the claims, liens and
                     security interests of the Pre-Petition Agent, the
                     Pre-Petition Lenders, the Bridge Loan Agent and the Bridge
                     Loan Lenders shall not be subject to challenge by any party
                     in interest as to validity, priority or otherwise and that
                     the Debtors and their estates shall have released any and
                     all claims or causes of action against the Pre-Petition
                     Agent, the Pre-Petition Lenders, the Bridge Loan Agent and
                     the Bridge Loan Lenders with respect to the Pre-Petition
                     Credit Agreement, the Swap Agreement, the Bridge Loan
                     Agreement, as applicable, or the related documents or
                     transactions.

REPAYMENT:           The Facility shall be repaid in full on the Maturity Date.

PREPAYMENTS:         The Facility shall be repaid (and the commitment thereunder
                     reduced) with 100% of the net cash proceeds of (i) any sale
                     or other disposition of any assets of one or more Borrowers
                     in excess of $500,000 in the aggregate following the
                     Closing Date, and (ii) subject to exceptions for repairs
                     and replacements consistent with the Budget or other
                     amounts to be approved by the DIP Agent and the Required
                     DIP Lenders, any

                                       7
<PAGE>

                     insurance and condemnation recoveries of any Borrower or
                     subsidiary of a Borrower.

                     The Borrowers shall have the right to voluntarily repay any
                     or all loans under the Facility at any time without premium
                     or penalty in minimum increments to be agreed upon and
                     subject to compensation for breakage of LIBOR loans. The
                     Borrowers shall additionally have the right to terminate
                     the commitments of the DIP Lenders in whole, but not in
                     part, upon payment in full of all outstandings under the
                     Facility and subject to notice requirements to be
                     determined.

CONDITIONS
PRECEDENT TO
CLOSING/INITIAL
LENDING:             Customary for facilities of this nature, including, but not
                     limited to, credit documentation satisfactory to the
                     Administrative Agent, satisfactory review of all corporate
                     documentation and agreements, other legal due diligence and
                     the following:

                     -   An Interim Order, in form and substance reasonably
                         satisfactory to the DIP Agent and the Required DIP
                         Lenders, of the bankruptcy court approving the Facility
                         shall have been entered and shall be in full force and
                         effect, which order shall be entered no later than the
                         5 days after the Petition Date.

                     -   Funding of the Facility shall not violate any
                         requirement of law or cause any of the Borrowers or
                         their subsidiaries to breach any agreement that has not
                         been stayed by the Chapter 11 cases.

                     -   Payment of the DIP Agent's fees and associated
                         transaction expenses, and the fees and expenses of
                         legal counsel and financial advisors to: (a) the Senior
                         Lender Steering Committee and the Pre-Petition DIP
                         Agent and (b) the Bridge Loan Steering Committee (which
                         condition may be satisfied with the proceeds of an
                         initial advance under the Facility on the Closing
                         Date).

                     -   Limitations on payments in respect of prepetition
                         obligations prior to consummation of Debtors' plan of
                         reorganization and limitations on Debtors' ability to
                         grant adequate protection in favor of third parties not
                         otherwise provided herein.

                     -   Establishment or continuation of cash management system
                         for Borrowers and their subsidiaries consistent with
                         the existing cash management arrangements in favor of
                         the Pre-Petition Agent and Pre-Petition Lenders in
                         connection with the Pre-Petition Credit Agreement.

                     -   Except for the commencement of the Chapter 11 cases and
                         as may otherwise be disclosed in writing to the DIP
                         Lenders prior to the Closing Date pursuant to the
                         Facility Documentation, no material adverse change,
                         individually or in the aggregate, in the business,
                         financial or other condition of any Borrower or
                         Borrowers and its subsidiaries taken as a whole, or the
                         DIP Collateral or in the prospects or projections of
                         any Borrower or Borrowers and their subsidiaries taken
                         as a whole.

                                       8
<PAGE>

                     -   No litigation commenced which has not been stayed by
                         the bankruptcy court and which, if successful, would
                         have a material adverse impact on any Borrower or
                         Borrowers and their subsidiaries taken as a whole,
                         their business or ability to repay the loans, or which
                         would challenge the transactions under consideration.

                     -   Receipt of all necessary or appropriate (as determined
                         by the DIP Agent) third party governmental waivers,
                         approvals and consents.

                     -   Completion, receipt and review by the DIP Agent of all
                         lien search reports and lien perfection documentation
                         as may be satisfactory to the DIP Agent with respect to
                         the DIP Collateral.

                     -   Completion and receipt by the DIP Agent of all other
                         Documentation (as described below) in form and
                         substance satisfactory to the DIP Agent.

CONDITIONS
PRECEDENT TO
SUBSEQUENT
BORROWING:           No material adverse change; no continuing matured or
                     unmatured event of default: no undisclosed litigation;
                     ongoing adherence to representations and warranties; the
                     Final Order approving the Financing by the bankruptcy court
                     shall have been entered and shall be in full force and
                     effect within 30 days following the Petition Date.

INTEREST RATE:       On outstanding amounts under the Facility, at the
                     Borrowers' option (absent a default), the one month LIBOR
                     Rate or the Index Rate, plus, in each case, the interest
                     rate margin then in effect (the "Applicable Margin").
                     Applicable Margins for the Facility would be LIBOR + 3.00%
                     or Index Rate + 2.00%, at the Borrowers' option, for all
                     borrowings for each day on which the aggregate outstanding
                     principal balance of the loans is less than or equal to
                     $10MM. Applicable Margins for the Facility would be LIBOR +
                     4.00% or Index Rate + 3.00%, at the Borrowers' option, for
                     each day on which the aggregate outstanding principal
                     balance of the loans exceeds $10MM. Interest will be
                     calculated on the basis of actual days elapsed and a
                     360-day year in all cases, and will be payable monthly in
                     arrears in the case of Index Rate loans and at the end of
                     each one month interest period in the case of LIBOR Rate
                     loans.

                     As used herein:

                     "Index Rate" means the higher of (i) the prime rate per
                     annum as most recently reported in the "Money Rates" column
                     of The Wall Street Journal or (ii) the overnight Federal
                     funds rate per annum plus 50 basis points. Such rate will
                     be adjusted as of each change in the Index Rate.

                     "LIBOR" will be defined as the rate per annum equal to the
                     offered rate for deposits in U.S. dollars for one month
                     interest periods that appears on Telerate Page 3750 as of
                     11:00 a.m. (London time) two (2) Eurodollar business days
                     prior to the beginning of such interest period. Interest on
                     LIBOR loans will be adjusted at the end of each interest
                     period. LIBOR

                                       9
<PAGE>

                     breakage fees and borrowing mechanics will be set forth in
                     the final DIP Facility documents.

                     Upon the occurrence and during the continuance of any event
                     of default under the Facility and at the election of the
                     Required DIP Lenders, interest shall be payable on all
                     outstanding loans under the Facility on demand at 2.0%
                     above the then applicable rate.

YIELD PROTECTION:    Customary LIBOR breakage mechanics would be included in the
                     definitive documentation with respect to the Facility,
                     including, without limitation, provisions as to capital
                     adequacy, illegality, changes in circumstances and
                     withholding taxes.

UPFRONT FEE:         2.00% of the Maximum Amount, payable on the Closing Date to
                     the DIP Agent, for the ratable benefit of the DIP Lenders.

UNUSED FACILITY FEE: 0.50% on the average unused Maximum Amount due and payable
                     quarterly in arrears to the DIP Agent, for the ratable
                     benefit of the DIP Lenders.

COLLATERAL
MONITORING FEE:      $15,000 per calendar month, payable to the DIP Agent, for
                     its own account, on the Closing Date and on the first
                     business day of each month commencing thereafter.

DOCUMENTATION:       The definitive Facility documents and Financing Orders
                     would be prepared by legal counsel to the DIP Agent and
                     would contain terms and provisions, including, without
                     limitation, representations and warranties, conditions
                     precedent, affirmative, negative and financial covenants,
                     indemnities, and events of default and remedies, in each
                     case, as are customary for commercial transactions in which
                     GE Capital has participated as an agent of the type
                     represented by the Facility and inclusive of those specific
                     provisions referred to below. Relevant documents, such as
                     Facility documents and other transaction documents,
                     subordination agreements, intercreditor and subordination
                     agreements, equity or stockholder agreements, incentive and
                     employment agreements, tax agreements, opinions of counsel
                     and other material agreements and instruments, to be
                     acceptable to the DIP Agent and the Required DIP Lenders.
                     The first-day orders and all orders of the bankruptcy
                     court, and all motions relating thereto, shall be in form
                     and substance reasonably acceptable to the DIP Agent and
                     the Required DIP Lenders.

                                       10
<PAGE>

REPRESENTATIONS
AND WARRANTIES:      Usual and customary for facilities of this nature in which
                     GE Capital has acted as agent, including, but not limited
                     to, corporate existence; corporate and governmental
                     authorization; enforceability of credit documentation;
                     financial information; no material adverse changes;
                     compliance with laws, agreements and contractual
                     obligations (including environmental laws); enforceability
                     of the credit documentation; ownership of property;
                     creation and perfection of security interests; compliance
                     with ERISA; no material litigation; payment of taxes;
                     financial condition; and full disclosure.

AFFIRMATIVE
COVENANTS:           Usual and customary for facilities of this nature in which
                     GE Capital has acted as agent, including, but not limited
                     to, receipt of monthly, quarterly and annual financial
                     information, borrowing base certificates, notification of
                     litigation, investigations and other adverse changes,
                     pleadings, motions, applications and other documents filed
                     by or on behalf of the Borrowers; payment and performance
                     of obligations; conduct of business; pledge of newly
                     acquired assets; maintenance of existence; maintenance of
                     property and liability insurance; maintenance of records
                     and accounts; access and inspection rights in favor of the
                     DIP Agent with respect to the Borrowers' and their
                     subsidiaries' property and books and records in each case
                     at the Borrowers' expense; compliance with laws (including
                     environmental laws); payment of taxes; and ERISA.

NEGATIVE
COVENANTS:           Customary for facilities of this nature in which GE Capital
                     has acted as agent including, but not limited to,
                     restrictions and limitations on: additional indebtedness;
                     liens; guaranty obligations; restricted payments;
                     dividends; changes in business; mergers; sales of assets,
                     acquisitions; loans, investments, and capital expenditures;
                     transactions with affiliates; sale and leaseback
                     transactions; restrictive agreements; changes in line of
                     business and changes in fiscal year or accounting methods;
                     superpriority claims which are pari passu with or senior to
                     claims in respect of the Facility.

FINANCIAL COVENANTS: Capital expenditure limitations and other financial
                     covenants to be determined.

BUDGET COMPLIANCE
COVENANT:            On a weekly basis for the period from the Petition Date
                     through the last day of the week of determination (except
                     with respect to reasonable professional fees and expenses),
                     actual disbursements must be no greater than 110% of the
                     sum of the aggregate projected weekly amounts for all
                     projected disbursements set forth in the Budget for such
                     period. Each week, the Borrowers shall provide the DIP
                     Lenders with line-by-line variance reports for the
                     preceding period and on a cumulative basis from the
                     Petition Date to the report date, comparing actual cash
                     receipts and disbursements to amounts projected in the
                     Budget, in form and scope reasonably acceptable to the DIP
                     Agent.

                                       11
<PAGE>

FINANCING ORDERS:    The Financing Orders shall be in form and substance
                     acceptable in all respects to the DIP Agent and Required
                     DIP Lenders and shall include, without limitation,
                     provisions (i) modifying the automatic stay to the extent
                     necessary to permit or effectuate the terms of the
                     Financing Orders and the Documentation for the Facility,
                     including, without limitation, to permit the creation and
                     perfection of DIP Agent's liens on the DIP Collateral, (ii)
                     providing for the automatic vacation of such stay to permit
                     the enforcement of DIP Agent's and the DIP Lenders'
                     remedies under the Facility after reasonable notice to the
                     Pre-Petition Senior Agent and the Bridge Loan Agent, (iii)
                     prohibiting the assertion of claims arising under Section
                     506(c) of the U.S. Bankruptcy Code against the DIP Agent,
                     any DIP Lender, the Pre-Petition Agent, any Pre-Petition
                     Lender, the Bridge Loan Agent or any Bridge Loan Lender, or
                     the commencement of other actions adverse to the DIP Agent,
                     any DIP Lender, the Pre-Petition Agent, any Pre-Petition
                     Lender, the Bridge Loan Agent or any Bridge Loan Lender or
                     their respective rights and remedies under the Facility,
                     the Pre-Petition Credit Agreement, the Swap Agreement, the
                     Bridge Loan Agreement or any bankruptcy court order; (iv)
                     prohibiting the incurrence of debt with priority equal to
                     or greater than that of the DIP Agent, the DIP Lenders, the
                     Pre-Petition Agent, the Pre-Petition Lenders, the Bridge
                     Loan Agent or the Bridge Loan Lenders; (v) prohibiting any
                     granting or imposition of liens other than purchase money
                     priority liens and other liens acceptable to DIP Agent; and
                     (vi) prohibiting the Debtors' use of cash collateral other
                     than as expressly contemplated by the Financing Orders
                     prior to the indefeasible payment in full of the Debtors'
                     obligations under the Facility and termination of the DIP
                     Lenders' commitments thereunder.

EVENTS OF
DEFAULT:             Customary for facilities of this nature in which GE Capital
                     has acted as agent including (with customary grace periods,
                     as applicable): nonpayment of principal when due;
                     nonpayment of interest, fees, or other amounts when due;
                     material inaccuracy of representations and warranties;
                     certain ERISA events; material judgments; invalidity of any
                     security document or security interest; a change of
                     management and/or control; or failure to observe any
                     negative or affirmative covenant. In addition:

                     -   Any of the Chapter 11 cases of the Debtors is dismissed
                         or converted to Chapter 7 of the Bankruptcy Code or a
                         trustee or examiner is appointed in any of the
                         reorganization cases with enlarged powers to operate or
                         manage the financial affairs of any Debtor.

                     -   The bankruptcy court enters a final order that in any
                         way modifies either Financing Order without consent of
                         the DIP Agent and the Required DIP Lenders (except in
                         the case of the replacement of the Interim Order with
                         the entry of the Final Order).

                     -   A plan of reorganization is not confirmed by the
                         bankruptcy court within 120 days following the Petition
                         Date.

                     -   Any Debtor petitions the bankruptcy court to obtain
                         additional financing pari passu or senior to the
                         Facility.

                                       12
<PAGE>

                     -   The Final Order ceases to be in full force and effect.

                     -   Any party other than the Debtors or the DIP Agent shall
                         file a proposed plan of reorganization, or the Debtors'
                         exclusive right to file such a plan has expired or been
                         terminated, in any case without the consent of the DIP
                         Agent and the Required DIP Lenders.

                     -   All or substantially all of the property of any
                         Borrower is seized or otherwise appropriated.

                     -   The entry of any order of the bankruptcy court granting
                         relief from or modifying the automatic stay to permit
                         one or more creditors to execute upon, enforce or
                         perfect a lien on the DIP Collateral or the collateral
                         securing the Pre-Petition Obligations in excess of
                         $500,000 in the aggregate.

                     -   Commencement of any suit against the DIP Agent, DIP
                         Lenders, Pre-Petition Agent or Pre-Petition Lenders
                         that would in any way reduce, set off, or subordinate
                         the Facility or the Pre-Petition Obligations or
                         challenge the DIP Agent's or Pre-Petition Agent's
                         security interest in the DIP Collateral or collateral
                         securing the Pre-Petition Obligations, as the case may
                         be, and if any such suit is commenced by any party
                         other than the Borrowers, in the reasonable judgment of
                         the DIP Agent, such suit has a reasonable possibility
                         of success, and if successful, would be reasonably
                         likely to have a material adverse effect on the
                         Borrowers, their business or their ability to repay the
                         loans made under the Facility, the claims or liens of
                         the DIP Lenders under the Facility or the restructuring
                         of the indebtedness of the Borrowers in connection with
                         the plan of reorganization for the Borrowers.

RELIEF FROM STAY:    The Interim Order and Final Order would provide, that, upon
                     the occurrence and during the continuation of an event of
                     default under the Facility, the automatic stay shall be
                     deemed lifted without any further action by the bankruptcy
                     court, (i) permitting the termination of the Debtors'
                     authority to use cash collateral, the acceleration of the
                     DIP Obligations, the termination of any commitments under
                     the Facility and the exercise of other post-default
                     remedies under the credit agreement and other loan
                     documents for the facility (other than those described in
                     clause (ii) below) and (ii) upon five (5) business days'
                     notice to Borrowers, counsel to any creditors' committee,
                     the United States Trustee, counsel to the Pre-Petition
                     Senior Agent, and counsel to the Bridge Loan Steering
                     Committee, permitting the DIP Agent and the DIP Lenders to
                     exercise any and all enforcement remedies with respect to
                     the DIP Collateral, including, without limitation, the
                     disposition of the DIP Collateral. The only issue that may
                     be contested in such regard is whether or not an event of
                     default shall have occurred.

COSTS AND EXPENSES;
INDEMNIFICATION:     All reasonable out-of-pocket costs and expenses of the DIP
                     Agent and the Senior Lender Steering Committee (including,
                     without limitation, reasonable fees and disbursements of
                     counsel to the DIP Agent and counsel to the Senior Lender
                     Steering Committee, and the fees and

                                       13
<PAGE>

                     expenses of the financial advisors and internal and
                     third-party appraisers and consultants advising the DIP
                     Agent) shall be payable by the Borrowers on demand whether
                     or not the transactions contemplated hereby are
                     consummated. The Borrowers shall indemnify the DIP Agent,
                     the DIP Lenders and the Senior Lender Steering Committee
                     against any liability arising in connection with the
                     transactions contemplated hereby (other than in the case of
                     the gross negligence or willful misconduct of any
                     indemnified person).

ASSIGNMENTS AND
PARTICIPATIONS:      The DIP Lenders would be allowed to assign and sell
                     participations in the Facility and unused commitments under
                     the Facility. In the case of partial assignments (other
                     than to another DIP Lender or an affiliate of a DIP
                     Lender), the minimum assignment amount would be $1,000,000.
                     The DIP Lenders would be allowed to sell participations in
                     their loans, provided that such participations would be in
                     a minimum amount of $1,000,000 and subject to customary
                     limitations on the granting of voting rights to
                     participants.

VOTING:              Required DIP Lenders (defined to mean DIP Lenders holding
                     at least a majority of the commitments under the Facility)
                     except that (x) the following shall require the consent of
                     each affected DIP Lender: (i) an increase in the amount of
                     such DIP Lender's commitment under the Facility, (ii) the
                     reduction of interest rates and fees, (iii) the extension
                     of interest or fee payment dates, or (iv) forgiveness of
                     the principal amount, and (y) the following shall require
                     the consent of all the DIP Lenders: (1) modification to the
                     superpriority status of the Borrowers' obligations; (2) a
                     release of all or substantially all of the DIP Agent's
                     liens on and security interests in the DIP Collateral or
                     (3) a release of any Borrower from its obligations under
                     the Facility Documents (except in the case of a disposition
                     of such Borrower's equity interests to the extent permitted
                     or approved pursuant to the Facility Documents). The
                     Required DIP Lenders shall have the right to extend the
                     Maturity Date for up to 90 days; any further extension
                     shall require the unanimous approval of all DIP Lenders. If
                     DIP Lenders representing the Required DIP Lenders support
                     an amendment or waiver that requires unanimous DIP Lender
                     approval but is opposed by one or more other DIP Lenders,
                     then the Required DIP Lenders may require the disapproving
                     DIP Lenders to sell their interests in the DIP Facility to
                     one or more of the Required Lenders at par plus accrued
                     interest and fees.

GOVERNING LAW:       The Bankruptcy Code and the State of New York.

MISCELLANEOUS:       This summary of terms and conditions does not purport to
                     summarize all the conditions, covenants, representations,
                     warranties and other provisions, which would be contained
                     in definitive credit documentation for the Facility
                     contemplated hereby.

                                       14
<PAGE>

Project Jasper                                                           8/10/04
                                                Preliminary Draft - Confidential

                         CHOICE ONE COMMUNICATIONS INC.
                         TERMS OF PROPOSED RESTRUCTURING

This term sheet describes certain of the principal terms and conditions of a
proposed capital restructuring (the "Restructuring"; the date of consummation of
the Restructuring being the "Restructuring Date") of Choice One Communications
Inc. ("Holdings") and all of its operating subsidiaries ("Borrowers"; with
Holdings, the "Company"). This term sheet has been distributed for discussion
and settlement purposes only and is subject to the provisions of Rule 408 of the
Federal Rules of Evidence and any similar applicable state or other law or rule.
This term sheet is not an offer with respect to any securities. This term sheet
is non-binding and shall not constitute an admission by any person or entity and
the proposals contained herein are subject to, among other things, the
completion of due diligence (including, without limitation, tax due diligence
and diligence on the benefits to be obtained from contract rejections in a
Chapter 11 proceeding) and the negotiation, documentation and execution of
satisfactory definitive documentation.

Restructuring

Senior Loans                The holders of Senior Loans will convert the
(Tranches A, B, C &         principal amount thereof into an aggregate of (i)
D Terms Loans and           $175,000,000 of Senior Secured Term Notes and (ii)
Revolving Loans)            90% of the common stock in the restructured Company
                            ("Common Stock"), all to be distributed on the
                            Restructuring Date, and all subject to dilution as
                            described (and only as described) herein; provided
                            that:

                            (x) each individual holder of Senior Loans will be
                            entitled to receive at least its pro rata share of
                            Senior Secured Term Notes and Common Stock and may
                            elect to allocate more of its recoveries to Senior
                            Secured Term Notes or to Common Stock, as the case
                            may be, so long as the aggregate amounts so
                            allocated to all holders of Senior Loans are equal
                            to $175,000,000 of Senior Secured Term Notes and 90%
                            of the Common Stock, subject to proration for
                            over-elections. In all cases, final equity and debt
                            allocations to the holders of the Senior Loans that
                            are other than pro rata will be subject to the
                            approval of the Senior Loan Steering Committee; and

                            (y) any holder of Senior Loans that elects to
                            acquire at least its pro rata portion of the Senior
                            Secured Term Notes may elect to receive all of its
                            Common Stock in the form of a separate class of
                            Common Stock (the "Class B Common Stock"). The Class
                            B Common Stock will have limited voting rights, will
                            not be entitled to vote in the election of directors
                            and will be convertible into Common Stock, at the
                            option of the holder, at any time. Assumption:
                            $404,058,561 principal outstanding 6/30/04;
                            treatment of existing swap agreement, and rights of
                            holders of Term D Loans and Term C Deferred Interest
                            (including the potential right to receive only
                            Senior Secured Term Notes, and no Common Stock, and
                            the potential right to receive payment priority with
                            respect to the balance of the other Senior Secured
                            Term Notes similar to that in the existing Credit
                            Agreement), to be determined.

                                      -1-
<PAGE>

Project Jasper                                                           8/10/04
                                                Preliminary Draft - Confidential

Bridge Loans, Series A      The holders of the Bridge Loans (including
Preferred Stock,            capitalized interest) (the "Bridge Lenders") will
existing common             convert all of the Bridge Loans into a right to
stock and warrants          receive in the aggregate 10% of the Common Stock
                            plus 7-year warrants to purchase Common Stock as
                            described immediately below, all to be distributed
                            on the Restructuring Date and all subject to
                            dilution as described (and only as described)
                            herein. All existing Series A Preferred Stock,
                            existing common stock, existing options to purchase
                            common stock and warrants will be cancelled on the
                            Restructuring Date (the holders of the Series A
                            Preferred Stock, all existing common stock, options
                            and warrants being, collectively, the "Junior
                            Classes").

Warrants                    The Bridge Lenders will receive 7-year Warrants,
                            which Warrants shall be exercisable as follows:

                            Series A 7-year Warrants convertible into a number
                            of shares of the Common Stock that would equal 3% of
                            the Common Stock if exercised on the Restructuring
                            Date will be exercisable at a price per share equal
                            to 135% of the price per share established on the
                            Restructuring Date based on the reorganization
                            equity value of the Company; and

                            Series B 7-year Warrants convertible into a number
                            of shares of the Common Stock that would equal 10%
                            of the Common Stock if exercised on the
                            Restructuring Date will be exercisable at a price
                            equal to 200% of the price per share established on
                            the Restructuring Date based on the reorganization
                            equity value of the Company.

                            No other warrants will be issued to any other person
                            or entity, including the holders of the Senior
                            Loans, the Bridge Lenders and the Junior Classes,
                            and all Warrants (as well as all Common Stock
                            received by the holders of the Senior Loans and by
                            the holders of the Bridge Loans) shall be subject to
                            dilution for other equity issuances contemplated by
                            this term sheet, including for management/qualifying
                            employee restricted Common Stock and options and the
                            exercise of any Warrants.

                            If, at any time prior to the expiration of two years
                            after the issuance of the Warrants, a Black Scholes
                            Event shall occur, and as a result thereof the
                            Common Stock is converted into the right to:

                            (a) receive cash (and only cash), then the acquirer
                            or the Company shall purchase the Warrants on the
                            effective date of any such Black Scholes Event for
                            an amount in cash equal to the greater of:

                                  (i)   the per share amount of such
                                        consideration reduced by the then
                                        current exercise price of the Warrants;
                                        or

                                  (ii)  the Black-Scholes Valuation of the
                                        Warrants, assuming a risk free interest
                                        rate of 4.37% and 50% stock volatility.
                                        The term of the Warrants will be
                                        adjusted to the remaining life from the
                                        time the Black Scholes Event is
                                        consummated; or

                            (b) receive securities or cash and securities, the
                            Warrants shall remain outstanding, the acquirer
                            shall assume the outstanding Warrants on the
                            effective date of any

                                       -2-
<PAGE>

Project Jasper                                                           8/10/04
                                                Preliminary Draft - Confidential

                            such Black Scholes Event and such Warrants shall be
                            exercisable by the holder of such Warrants for the
                            amount and kind of consideration the holder of such
                            Warrant would have received if such holder exercised
                            such Warrants immediately prior to the Black Scholes
                            Event.

                            "Black Scholes Event" shall mean (i) the acquisition
                            by any person or group, in a tender offer or series
                            of related tender offers made for all outstanding
                            Common Stock, of 50.1% or more of the Common Stock,
                            (ii) the consolidation, merger or combination of
                            Holdings with another person (other than a
                            subsidiary of Holdings) or (iii) a sale, lease or
                            other disposition of all or substantially all of the
                            assets of Holdings."

Management/ Qualifying      Restricted Common Stock aggregating up to [1.5]%,
Employee Stock and Options  and options to purchase Common Stock (subject to a
                            customary vesting schedule and other terms
                            (including strike prices, eligibility criteria and
                            performance targets) to be agreed upon by the
                            post-Restructuring Board of Directors (or an
                            appropriate subcommittee thereof) (the "New Board")
                            representing in the aggregate a number of shares of
                            the Common Stock that would total up to [4.5]% of
                            the Common Stock if exercised on the Restructuring
                            Date will be reserved for management and qualifying
                            employees of the Company, with the New Board making
                            determinations as to timing, vesting, grants,
                            eligibility and the like. These grants of restricted
                            Common Stock will be subject to dilution, including
                            by reason of the exercise of any Warrants.

Dilution                    For purposes of greater clarity, an example of how
                            dilution will affect the various equity stakeholders
                            under certain assumed conditions (and, by
                            extrapolation, to certain other conditions) has been
                            set forth on Annex I.

Reorganization Value        $375,000,000 (plus an amount equal to the
                            outstanding principal amount of any new financing,
                            as described below).

DIP Financing

DIP Financing               Up to $20,000,000 (the "DIP Financing") to be
                            provided on a priming basis pursuant to Section
                            364(d) of the Federal Bankruptcy Code. The permitted
                            uses of the proceeds of the DIP Financing shall be
                            pursuant to a budget prepared by the Company and
                            acceptable to the Administrative Agent and the
                            Senior Loan Steering Committee, and will include
                            payment of adequate protection and payments in
                            respect of the existing swap agreement.

Lenders                     All the DIP Financing would be agented by the
                            Administrative Agent and provided by members of the
                            Senior Loan Steering Committee (and/or their
                            affiliates) and such other holders of the Senior
                            Loans (and/or their affiliates) as may be approved
                            by the Senior Loan Steering Committee, all on terms
                            customary for priming debtor-in-possession
                            financings and otherwise reasonably satisfactory to
                            the Administrative Agent (including, without
                            limitation, the identity of the borrower or
                            borrowers and guarantors). Commitments will be
                            solicited for participation therein prior to the
                            Company's bankruptcy filing. There will be no
                            debtor-in-possession financing other

                                       -3-
<PAGE>

Project Jasper                                                           8/10/04
                                                Preliminary Draft - Confidential

                            than the DIP Financing.

                            The DIP Financing will have a first priority lien
                            and administrative priority over all of the assets
                            of the Company. Adequate protection for the holders
                            of Senior Loans shall consist of payment of any
                            outstanding prepetition interest (other than any
                            payment-in-kind interest), current interest during
                            the chapter 11 case, and professional fees and
                            expenses, as well as customary replacement liens and
                            non-monetary forms of adequate protection to be
                            agreed upon; provided that if the DIP Financing is
                            accelerated due to the occurrence of an event of
                            default, all rights of the holders of the Senior
                            Loans to request additional adequate protection, and
                            all rights of the Company and the holders of the
                            Bridge Loans to oppose any such request, are
                            reserved. To the extent permitted under applicable
                            law, the holders of the Bridge Loans shall receive
                            adequate protection in the form of current payment
                            of professional fees and expenses during the chapter
                            11 case, customary replacement junior liens and
                            other non-monetary forms of adequate protection to
                            be agreed upon, in each case junior to any adequate
                            protection granted to the holders of the Senior
                            Loans.

Exit Financing

Exit Financing              Up to $25,000,000 revolving credit facility (the
                            "Exit Financing"), to refinance the DIP Financing
                            and provide for ongoing working capital requirements
                            of Holdings and its Subsidiaries.

Lenders                     The Administrative Agent will have the option to
                            agent the Exit Financing and the Holders of the
                            Senior Loans and the Bridge Lenders will be given
                            the opportunity to provide the Exit Financing, with
                            the Bridge Lenders being required to provide, as a
                            condition to the implementation of the terms of this
                            Term Sheet, binding commitments for $10,000,000 (but
                            not more than $10,000,000) of the Exit Financing, to
                            be provided at the option of the Senior Loan
                            Steering Committee, all on terms and conditions
                            reasonably satisfactory to the Administrative Agent.

                            The Exit Financing will have a first priority lien
                            on and security interest in all of the assets of the
                            Company and will be senior pursuant to a waterfall
                            to the Senior Secured Term Notes (including, without
                            limitation, all principal and interest with respect
                            to the Exit Financing, whether or not allowed in a
                            subsequent insolvency proceeding).

                                       -4-
<PAGE>

Project Jasper                                                           8/10/04
                                                Preliminary Draft - Confidential

Other Considerations

Board of Directors           The Company will have 7 directors upon consummation
                             of the Restructuring, whose initial term will be
                             two years. The directors will include:

                                  -      5 directors initially designated by
                                         majority holders of Senior Loans
                                         electing to hold voting Common Stock.

                                  -      1 director who shall be the CEO (but
                                         will not be the chairperson).

                                  -      1 director initially designated by the
                                         majority holders of Bridge Loans.

                             Any currently existing control provisions and Board
                             rights between the Company and any party will be
                             canceled as part of the Restructuring. Other
                             governance issues to be agreed.

Implementation/ Lockup       To be implemented pursuant to a pre-packaged or
Agreement                    pre-negotiated plan of reorganization under Chapter
                             11 of the Bankruptcy Code.

                             Each of the Company, the holders of the Senior
                             Loans, and the Bridge Lenders would enter into
                             agreements (the "Lockup Agreements") that would,
                             among other things, (i) commit the signatories to
                             support the Restructuring, (ii) ensure that if any
                             signatory sells, assigns or otherwise conveys its
                             claims (a "Sale Transaction"), it would condition
                             said Sale Transaction upon the transferee's
                             assumption of the transferor's Lockup Agreement and
                             (iii) would not be subject to a due diligence out.
                             The support of the holders of the Senior Loans for
                             the transactions contemplated by this term sheet is
                             conditioned upon, among other things, (i) Lockup
                             Agreements being executed by the Company, (ii)
                             satisfaction of the conditions set forth in
                             "Minimum Acceptance" below and (iii) approval of
                             the Restructuring by the Company's board of
                             directors. With respect to the preceding clause
                             (ii), it is understood that (a) the number of
                             Bridge Loan holders signing Lockup Agreements may
                             not be more than one-half in number of the Bridge
                             Loan holders and (b) if the Bridge Loan Steering
                             Committee becomes aware that any Bridge Loan holder
                             opposes or will oppose the Restructuring, it shall
                             so notify the Senior Loan Steering Committee.

Releases                     The Restructuring would include a full discharge
                             and release of liability in favor of the Company,
                             the restructured Company, the holders of the Senior
                             Loans, the holders of the Bridge Loans and each of
                             their respective principals, employees, agents,
                             officers, directors, shareholders and professionals
                             from: (i) any and all claims and causes of action
                             arising prior to the effective date of the
                             Restructuring and (ii) any and all claims arising
                             from the actions taken or not taken in good faith
                             in connection with the Restructuring.

                                       -5-
<PAGE>

Project Jasper                                                           8/10/04
                                                Preliminary Draft - Confidential

Minimum Acceptance           (i) If votes on a plan of reorganization
                             implementing the Restructuring are solicited
                             pursuant to section 1126(b) of the Bankruptcy Code
                             prior to the Company's commencement of a chapter 11
                             case, at least 66-2/3% in dollar amount and more
                             than one-half in number of each of the holders of
                             the existing Senior Loans and Bridge Loans voting
                             shall have voted in favor of such plan prior to the
                             commencement of the Chapter 11 case for the
                             Company, and (ii) if votes on a plan of
                             reorganization implementing the Restructuring are
                             to be solicited after the Company's commencement of
                             a Chapter 11 case, then prior to the commencement
                             of any Chapter 11 case for the Company, and in no
                             event later than [September 30], 2004, holders of
                             at least 66-2/3% in dollar amount and more than
                             one-half in number of each of the holders of the
                             existing Senior Loans and Bridge Loans shall have
                             executed Lock Up Agreements; provided, that if by
                             the date of commencement of any Chapter 11 case for
                             the Company, executed Lock Up Agreements have been
                             executed by 66 2/3% in dollar amount but not
                             one-half in number of the holders of either the
                             Senior Loans or the Bridge Loans, then Minimum
                             Acceptance will still be deemed to have been
                             obtained if the financial advisor to the Senior
                             Lenders or the Bridge Lenders, as applicable, shall
                             have represented in writing its belief, after
                             reasonable due diligence, that after a vote taken
                             in the Chapter 11 cases of the Company the class of
                             Senior Lenders or Bridge Lenders, as applicable,
                             will vote to accept the plan of reorganization
                             under section 1126(c) of the Bankruptcy Code. If
                             such Minimum Acceptance is not obtained or a
                             Chapter 11 plan implementing the Restructuring can
                             only be confirmed by a "cram down" of the class of
                             Bridge Loan holders, then the holders of the Senior
                             Loans will have the right, in their sole
                             discretion, to withdraw their support for the
                             Restructuring.

Definitive Documentation     Subject to, among other things, definitive
                             documentation acceptable to the signatories to the
                             Lock-up Agreement.

Senior Secured Term Notes

Issuers                      Borrowers, jointly and severally

Guarantor                    Holdings

Initial Principal            $175,000,000.
Amount

Ranking                      Senior indebtedness of Issuers.

Security                     First priority lien on and security interest in all
                             of the assets of the Company, but junior pursuant
                             to a waterfall to the Exit Financing.

                                       -6-
<PAGE>

Project Jasper                                                           8/10/04
                                                Preliminary Draft - Confidential

Interest                     LIBOR + (1)500, paid currently.

Maturity Date                6 years from the date of the consummation of
                             the restructuring.

Scheduled                    Year 1:     0.00%
Amortization

                             Year 2-6:   TBD%

Covenants and Events         Standard and customary provisions, including but
of Default                   without limitation the following financial
                             covenants: fixed charge ratio, total leverage
                             ratio, senior leverage ratio, interest coverage
                             ratio, minimum cash and maximum capital
                             expenditures.

General Provisions

Governing Law and Forum

                             The Senior Secured Term Notes, the Warrants, any
                             options and, to the extent applicable, any other
                             shares of the Company's capital stock issued in
                             connection with the Restructuring, and all related
                             documentation, other than certain security
                             documentation, will be governed by the laws of the
                             State of New York and, as applicable, Delaware.

Expenses

                             The Company will promptly pay all fees and expenses
                             of the Administrative Agent, the Senior Loan
                             Steering Committee and the Bridge Loan Steering
                             Committee, including, without limitation, the legal
                             and professional fees and costs of counsel to the
                             Administrative Agent, counsel to the Senior Loan
                             Steering Committee, financial advisors to the
                             Senior Loan Steering Committee, counsel to the
                             Bridge Loan Steering Committee and financial
                             advisors to the Bridge Loan Steering Committee, and
                             the Administrative Agent, the Senior Loan Steering
                             Committee and the Bridge Loan Steering Committee
                             shall be satisfied that appropriate provision has
                             been made therefor in all applicable documentation
                             (including, without limitation, the agreements
                             entered into in connection with the court order or
                             orders approving the DIP Financing, the use of cash
                             collateral and adequate protection of the holders
                             of the Senior Loans and the Bridge Loans to the
                             extent permitted by applicable law).

Registration Rights

                             Holders of Senior Loans that receive Common Stock
                             will have four demand registration rights with
                             respect to their Common Stock, subject to customary
                             limitations on minimum participation levels and
                             time elapsed since prior

                             (1)   Or such higher rate to reflect a market rate
                                   of interest (which increase would likely be
                                   comprised of PIK interest based on leverage
                                   levels as follows:

                             Leverage Ratio        PIK Interest
                             >3.5 but <4.0X        50 bps
                             >=4.0 but <5.0X       100 bps
                             >=5.0 but <6.0X       150 bps
                             >=6.0X                200 bps

                                       -7-
<PAGE>

Project Jasper                                                           8/10/04
                                                Preliminary Draft - Confidential

                             registration, and unlimited customary piggyback
                             registration rights with respect to the underlying
                             Common Stock. Registration rights of such holders
                             shall have priority over any other registration
                             rights of holders of any of the Company's other
                             capital stock.

                             Holders of the Bridge Loans will have customary
                             piggyback registration rights with respect to their
                             Common Stock, subject to customary limitations and
                             priorities in favor of the demanding party.

Miscellaneous                Customary other provisions for transactions of this
                             nature. To the extent Holdings is a private company
                             after the Restructuring Date, reasonable and
                             customary limitations on transfers of equity
                             interests will be included to comply with
                             securities laws.

                                       -8-
<PAGE>

Project Jasper                                                           8/10/04
                                                Preliminary Draft - Confidential

                                                                         ANNEX I

           Annex I - Sample Dilution Schedule / Capitalization Summary

<TABLE>
<CAPTION>
                                               ISSUED            REORG              TIER I            TIER II
                                               SHARES           ADJUSTED            STRIKE            STRIKE
                                             -----------------------------------------------------------------
<S>                                          <C>               <C>                <C>             <C>
EQUITY VALUE                                 $  200,000        $   200,000        $  270,000      $    400,000

Premium                                                                                35.00%           100.00%

Employee Restricted Stock                                             1.50%               NA                NA
Employee Options                                                      4.50%             0.00%             0.00%
Series A/B Warrants                                                                     3.00%            10.00%

EQUITY SPLIT

Banks - Primary Equity                            90.00%             84.60%            82.06%            73.86%
Notes - Primary Equity                            10.00%              9.40%             9.12%             8.21%
Employee Restricted Stock                          0.00%              1.50%             1.46%             1.31%
Warrant A                                          0.00%              0.00%             3.00%             2.70%
Warrant B                                          0.00%              0.00%             0.00%            10.00%
Employee Options                                   0.00%              4.50%             4.37%             3.93%
                                             ----------        -----------        ----------      ------------
Total                                            100.00%            100.00%           100.00%           100.00%

SHARES

Banks - Primary Equity                        9,000,000          9,000,000         9,000,000         9,000,000
Notes - Primary Equity                        1,000,000          1,000,000         1,000,000         1,000,000
Employee Restricted Stock                             0            159,574           159,574           159,574
Series A Warrants                                     0                  0           329,020           329,020
Series B Warrants                                     0                  0                 0         1,218,591
Employee Options                                      0            478,723           478,723           478,723
                                             ----------        -----------        ----------      ------------
Total                                        10,000,000         10,638,298        10,967,317        12,185,908
</TABLE>

NOTES:

(1) For illustrative purposes: Assumes management strike prices at
    reorganization value.

(2) Primary share count of 10M set for purposes of calculation only.

(3) Total management package consisting of 1.5% Restricted Stock presented for
    illustrative purposes only.

                                      -9-MINIMUM BORROWING NOTE REGISTRATION RIGHTS AGREEMENT

This Minimum Borrowing Note Registration Rights Agreement (this
"Agreement") is made and entered into as of July 28, 2004, by and
between Global Digital Solutions, Inc., a New Jersey corporation (the
"Company"), and Laurus Master Fund, Ltd. (the "Purchaser").
This Agreement is made pursuant to the Security Agreement, dated as of
the date hereof, by and between the Purchaser and the Company (as
amended, modified or supplemented from time to time, the "Security
Agreement"), and pursuant to the Notes and the Warrants referred to
therein.

The Company and the Purchaser hereby agree as follows:
Definitions.  Capitalized terms used and not otherwise defined herein
that are defined in the Security Agreement shall have the meanings
given such terms in the Security Agreement.  As used in this Agreement,
the following terms shall have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Common Stock" means shares of the Company's common stock, par value
$0.001 per share.

"Effectiveness Date" means, (i) with respect to the initial
Registration Statement required to be filed hereunder, a date no later
than one hundred twenty days (120) following the date hereof and (ii)
with respect to each additional Registration Statement required to be
filed hereunder, a date no later than thirty (30) days following the
applicable Filing Date.

"Effectiveness Period" shall have the meaning set forth in Section
2(a).

"Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and any successor statute.

 "Filing Date" means, with respect to (1) the Registration Statement
which is required to be filed with respect to the Loans evidenced by a
Minimum Borrowing Note made on the initial funding date, the date which
is thirty (30) days after the date hereof, (2) with respect to each
$500,000 tranche of Loans evidenced by a Minimum Borrowing Note funded
after the date hereof, the date which is thirty (30) days after such
funding of such additional $500,000 of Loans evidenced by a Minimum
Borrowing Note and (3) with respect to shares of Common Stock issuable
to the Holder as a result of adjustments to the Fixed Conversion Price
made pursuant to Section 3.4 of the Revolving Note, Section 3.5 of the
Minimum Borrowing Notes, or Section 4 of the Warrant or otherwise,
thirty (30) days after the occurrence such event or the date of the
adjustment of the Fixed Conversion Price.

"Holder" or "Holders" means the Purchaser or any of its affiliates or
transferees to the extent any of them hold Registrable Securities.

"Indemnified Party" shall have the meaning set forth in Section 5(c).

"Indemnifying Party" shall have the meaning set forth in Section 5(c).

"Notes" has the meaning set forth in the Security Agreement.

"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

"Prospectus" means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by such Registration Statement, and
all other amendments and supplements to the Prospectus, including post-
effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.

"Registrable Securities" means the shares of Common Stock issued upon
the conversion of the each Note and issuable upon exercise of the
Warrants.

"Registration Statement" means each registration statement required to
be filed hereunder, including the Prospectus therein, amendments and
supplements to such registration statement or Prospectus, including
pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by
reference in such registration statement.

"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

"Rule 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute.

"Trading Market" means any of the NASD OTCBB, NASDAQ SmallCap Market,
the Nasdaq National Market, the American Stock Exchange or the New York
Stock Exchange

"Warrants" means the Common Stock purchase warrants issued pursuant to
the Security Agreement.

Registration.

On or prior to each Filing Date, the Company shall prepare and file
with the Commission a Registration Statement covering the Registrable
Securities for an offering to be made on a continuous basis pursuant to
Rule 415.  Each Registration Statement shall be on Form SB-2 (except if
the Company is not then eligible to register for resale the Registrable
Securities on Form SB-2, in which case such registration shall be on
another appropriate form in accordance herewith).  The Company shall
cause each Registration Statement to become effective and remain
effective as provided herein.  The Company shall use its reasonable
commercial efforts to cause the first such Registration Statement to be
declared effective under the Securities Act as promptly as possible
after the filing thereof, but in any event no later than the
Effectiveness Date.  The Company shall use its reasonable commercial
efforts to cause any subsequent such Registration Statement to be
declared effective under the Securities Act as promptly as possible
after the filing thereof, but in any event no later than sixty (60)
days after the filing thereof.  The Company shall use its reasonable
commercial efforts to keep each Registration Statement continuously
effective under the Securities Act until the date which is the earlier
date of when (i) all Registrable Securities covered by such
Registration Statement have been sold or (ii) all Registrable
Securities covered by such Registration Statement may be sold
immediately without registration under the Securities Act and without
volume restrictions pursuant to Rule 144(k), as determined by the
counsel to the Company pursuant to a written opinion letter to such
effect, addressed and acceptable to the Company's transfer agent and
the affected Holders (each, an "Effectiveness Period").
If: (i) any Registration Statement is not filed on or prior to the
applicable Filing Date for such Registration Statement; (ii) a
Registration Statement filed hereunder is not declared effective by the
Commission by the date required hereby with respect to such
Registration Statement; (iii) after a Registration Statement is filed
with and declared effective by the Commission, such Registration
Statement ceases to be effective (by suspension or otherwise) as to all
Registrable Securities to which it is required to relate at any time
prior to the expiration of the Effectiveness Period applicable to such
Registration Statement (without being succeeded immediately by an
additional Registration Statement filed and declared effective) for a
period of time which shall exceed 30 days in the aggregate per year or
more than 20 consecutive calendar days (defined as a period of 365 days
commencing on the date such Registration Statement is declared
effective); or (iv) the Common Stock is not listed or quoted, or is
suspended from trading on any Trading Market for a period of three (3)
consecutive Trading Days (provided the Company shall not have been able
to cure such trading suspension within 30 days of the notice thereof or
list the Common Stock on another Trading Market); (any such failure or
breach being referred to as an "Event," and for purposes of clause (i)
or (ii) the date on which such Event occurs, or for purposes of clause
(iii) the date which such 30 day or 20 consecutive day period (as the
case may be) is exceeded, or for purposes of clause (iv) the date on
which such three (3) Trading Day period is exceeded, being referred to
as "Event Date"), then until the applicable Event is cured, the Company
shall pay to each Holder an amount in cash, as liquidated damages and
not as a penalty, equal to 2.0% for each thirty (30) day period
(prorated for partial periods) on a daily basis of the original
principal amount of each applicable Minimum Borrowing Note.  While such
Event continues, such liquidated damages shall be paid not less often
than each thirty (30) days.  Any unpaid liquidated damages as of the
date when an Event has been cured by the Company shall be paid within
three (3) days following the date on which such Event has been cured by
the Company.

(c)	Within three (3) business days of the Effectiveness Date, the
Company shall cause its counsel to issue a blanket opinion in the form
attached hereto as Exhibit A, to the transfer agent stating that the
shares are subject to an effective registration statement and can be
reissued free of restrictive legend upon notice of a sale by the
Purchaser and confirmation by the Purchaser that it has complied with
the prospectus delivery requirements, provided that the Company has not
advised the transfer agent orally or in writing that the opinion has
been withdrawn. Copies of the blanket opinion required by this Section
2(c) shall be delivered to the Purchaser within the time frame set
forth above.

Registration Procedures.  If and whenever the Company is required by
the provisions hereof to effect the registration of any Registrable
Securities under the Securities Act, the Company will, as expeditiously
as possible:

prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities, respond as promptly as possible
to any comments received from the Commission, and use its best efforts
to cause such Registration Statement to become and remain effective for
the Effectiveness Period with respect thereto, and promptly provide to
the Purchaser copies of all filings and Commission letters of comment
relating thereto;

prepare and file with the Commission such amendments and supplements to
such Registration Statement and the Prospectus used in connection
therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities covered by such Registration Statement and to keep such
Registration Statement effective until the expiration of the
Effectiveness Period applicable to such Registration Statement;

furnish to the Purchaser such number of copies of the Registration
Statement and the Prospectus included therein (including each
preliminary Prospectus) as the Purchaser reasonably may request to
facilitate the public sale or disposition of the Registrable Securities
covered by such Registration Statement;

use its commercially reasonable efforts to register or qualify the
Purchaser's Registrable Securities covered by such Registration
Statement under the securities or "blue sky" laws of such jurisdictions
within the United States as the Purchaser may reasonably request,
provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;

list the Registrable Securities covered by such Registration Statement
with any securities exchange on which the Common Stock of the Company
is then listed;

immediately notify the Purchaser at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result
of which the Prospectus contained in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing; and

make available for inspection by the Purchaser and any attorney,
accountant or other agent retained by the Purchaser, all publicly
available, non-confidential financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the
attorney, accountant or agent of the Purchaser.

4.	Registration Expenses.  All expenses relating to the Company's
compliance with Sections 2 and 3 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the
Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or "blue sky" laws,
fees of the NASD, transfer taxes, fees of transfer agents and
registrars, fees of, and disbursements incurred by, one counsel for the
Holders are called "Registration Expenses". All selling commissions
applicable to the sale of Registrable Securities, including any fees
and disbursements of any special counsel to the Holders beyond those
included in Registration Expenses, are called "Selling Expenses."  The
Company shall only be responsible for Registration Expenses.

5.	Indemnification.
(a)In the event of a registration of any Registrable Securities under
the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the Purchaser, and its officers, directors
and each other person, if any, who controls the Purchaser within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Purchaser, or such persons
may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration
Statement under which such Registrable Securities were registered under
the Securities Act pursuant to this Agreement, any preliminary
Prospectus or final Prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse the Purchaser, and each such person for any reasonable
legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any
such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity
with information furnished by or on behalf of the Purchaser or any such
person in writing specifically for use in any such document.

(b)In the event of a registration of the Registrable Securities under
the Securities Act pursuant to this Agreement, the Purchaser will
indemnify and hold harmless the Company, and its officers, directors
and each other person, if any, who controls the Company within the
meaning of the Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such persons may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact which was furnished in writing by the
Purchaser to the Company expressly for use in (and such information is
contained in) the Registration Statement under which such Registrable
Securities were registered under the Securities Act pursuant to this
Agreement, any preliminary Prospectus or final Prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and each such
person for any reasonable legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action, provided, however, that the Purchaser will
be liable in any such case if and only to the extent that any such
loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished in writing to
the Company by or on behalf of the Purchaser specifically for use in
any such document.  Notwithstanding the provisions of this paragraph,
the Purchaser shall not be required to indemnify any person or entity
in excess of the amount of the aggregate net proceeds received by the
Purchaser in respect of Registrable Securities in connection with any
such registration under the Securities Act.

(c)Promptly after receipt by a party entitled to claim indemnification
hereunder (an "Indemnified Party") of notice of the commencement of any
action, such Indemnified Party shall, if a claim for indemnification in
respect thereof is to be made against a party hereto obligated to
indemnify such Indemnified Party (an "Indemnifying Party"), notify the
Indemnifying Party in writing thereof, but the omission so to notify
the Indemnifying Party shall not relieve it from any liability which it
may have to such Indemnified Party other than under this Section 5(c)
and shall only relieve it from any liability which it may have to such
Indemnified Party under this Section 5(c) if and to the extent the
Indemnifying Party is prejudiced by such omission. In case any such
action shall be brought against any Indemnified Party and it shall
notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with
counsel satisfactory to such Indemnified Party, and, after notice from
the Indemnifying Party to such Indemnified Party of its election so to
assume and undertake the defense thereof, the Indemnifying Party shall
not be liable to such Indemnified Party under this Section 6(c) for any
legal expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof; if the Indemnified Party retains
its own counsel, then the Indemnified Party shall pay all fees, costs
and expenses of such counsel, provided, however, that, if the
defendants in any such action include both the indemnified party and
the Indemnifying Party and the Indemnified Party shall have reasonably
concluded that there may be reasonable defenses available to it which
are different from or additional to those available to the Indemnifying
Party or if the interests of the Indemnified Party reasonably may be
deemed to conflict with the interests of the Indemnifying Party, the
Indemnified Party shall have the right to select one separate counsel
and to assume such legal defenses and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as incurred.

(d)In order to provide for just and equitable contribution in the event
of joint liability under the Securities Act in any case in which either
(i) the Purchaser, or any officer, director or controlling person of
the Purchaser, makes a claim for indemnification pursuant to this
Section 5 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the Securities
Act may be required on the part of the Purchaser or such officer,
director or controlling person of the Purchaser in circumstances for
which indemnification is provided under this Section 5; then, and in
each such case, the Company and the Purchaser will contribute to the
aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that the
Purchaser is responsible only for the portion represented by the
percentage that the public offering price of its securities offered by
the Registration Statement bears to the public offering price of all
securities offered by such Registration Statement, provided, however,
that, in any such case, (A) the Purchaser will not be required to
contribute any amount in excess of the public offering price of all
such securities offered by it pursuant to such Registration Statement;
and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 10(f) of the Act) will be entitled to
contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.

6.	Representations and Warranties.
(a)The Common Stock of the Company is registered pursuant to Section
12(b) or 12(g) of the Exchange Act and, except with respect to certain
matters which the Company has disclosed to the Purchaser on Schedule
12(u) to the Security Agreement, the Company has timely filed all proxy
statements, reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act.  The Company has
filed [(i) its Annual Report on Form 10-K for the fiscal year ended
March 31, 2003 and (ii) its Quarterly Report on Form 10-Q for the
fiscal quarters ended June 30, 2003, September 30, 2003, December 31,
2003 and March 31, 2004]  (collectively, the "SEC Reports").  Each SEC
Report was, at the time of its filing, in substantial compliance with
the requirements of its respective form and none of the SEC Reports,
nor the financial statements (and the notes thereto) included in the
SEC Reports, as of their respective filing dates, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  The financial statements of the Company included in the
SEC Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect
thereto.  Such financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed) and fairly present in
all material respects the financial condition, the results of
operations and the cash flows of the Company and its subsidiaries, on a
consolidated basis, as of, and for, the periods presented in each such
SEC Report.

(b)The Common Stock is listed for trading on the NASD OTCBB and
satisfies all requirements for the continuation of such listing.  The
Company has not received any notice that its Common Stock will be
delisted from the NASD OTCBB or that the Common Stock does not meet all
requirements for the continuation of such listing.

(c)Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any
offers or sales of any security or solicited any offers to buy any
security under circumstances that would cause the offering of the
Securities pursuant to the Security Agreement to be integrated with
prior offerings by the Company for purposes of the Securities Act which
would prevent the Company from selling the Common Stock pursuant to
Rule 506 under the Securities Act, or any applicable exchange-related
stockholder approval provisions, nor will the Company or any of its
affiliates or subsidiaries take any action or steps that would cause
the offering of the Common Stock to be integrated with other offerings
(other than such concurrent offering to the Purchaser).(d)The Warrants,
the Notes and the shares of Common Stock which the Purchaser may
acquire pursuant to the Warrants and the Notes are all restricted
securities under the Securities Act as of the date of this Agreement.
The Company will not issue any stop transfer order or other order
impeding the sale and delivery of any of the Registrable Securities at
such time as such Registrable Securities are registered for public sale
or an exemption from registration is available, except as required by
federal or state securities laws.

(e)The Company understands the nature of the Registrable Securities
issuable upon the conversion of each Note and the exercise of each
Warrant and recognizes that the issuance of such Registrable Securities
may have a potential dilutive effect.  The Company specifically
acknowledges that its obligation to issue the Registrable Securities is
binding upon the Company and enforceable regardless of the dilution
such issuance may have on the ownership interests of other shareholders
of the Company.

(f)Except for agreements made in the ordinary course of business, there
is no agreement that has not been filed with the Commission as an
exhibit to a registration statement or to a form required to be filed
by the Company under the Exchange Act, the breach of which could
reasonably be expected to have a material and adverse effect on the
Company and its subsidiaries, or would prohibit or otherwise interfere
with the ability of the Company to enter into and perform any of its
obligations under this Agreement in any material respect.(g)The Company
will at all times have authorized and reserved a sufficient number of
shares of Common Stock for the full conversion of each Note and
exercise of the Warrants.

7.	Each Holder holding Registrable Shares to be included in any
registration shall furnish to Company such information regarding the
Holder  and the disposition proposed by the Holder as Company may
reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement

	8.	With a view to making available to the Holders the benefits
of Rule 144 promulgated under the Securities Act and any other rule or
regulation of the Commission that may, at any time, permit Holders to
sell securities of Company to the public without registration, Company
agrees to:

	8.1	make and keep available adequate current public information
as described in paragraph (c) of Rule 144 under the Securities Act;

	8.2	file with the Commission in a timely manner all reports and
other documents required to be filed by Company under the Securities
Act and the Exchange Act, as amended; and

	8.3	furnish to each Holder, upon request, a written statement by
Company as to its compliance with the requirements of said paragraph (c)
of Rule 144, and of the Exchange Act, a copy of the most recent annual
and quarterly reports of Company, and such other reports and documents of
company as any such holder may reasonably request to avail itself of said
Rule 144 or any similar rule or regulation of the Commission allowing it
to sell any such securities without registration.

9.	Miscellaneous.
Remedies.  In the event of a breach by the Company or by a Holder, of
any of their respective obligations under this Agreement, each Holder
or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including
recovery of damages, will be entitled to specific performance of its
rights under this Agreement.

(b)	No Piggyback on Registrations.  Except as set forth on Schedule
9(b) hereto, neither the Company nor any of its security holders (other
than the Holders in such capacity pursuant hereto) may include
securities of the Company in any Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof
enter into any agreement providing any such right for inclusion of
shares in the Registration Statement to any of its security holders.
Except as and to the extent specified in Schedule 9(b) hereto, the
Company has not previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person
that have not been fully satisfied.

(c)	Compliance.  Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities
pursuant to any Registration Statement.

(d)	Discontinued Disposition.  Each Holder agrees by its acquisition
of such Registrable Securities that, upon receipt of a notice from the
Company of the occurrence of a Discontinuation Event (as defined
below), such Holder will forthwith discontinue disposition of such
Registrable Securities under the applicable Registration Statement
until such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of
any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration
Statement.  The Company may provide appropriate stop orders to enforce
the provisions of this paragraph.  For purposes of this Section 7(d), a
"Discontinuation Event" shall mean (i) when the Commission notifies the
Company whether there will be a "review" of such Registration Statement
and whenever the Commission comments in writing on such Registration
Statement (the Company shall provide true and complete copies thereof
and all written responses thereto to each of the Holders); (ii) any
request by the Commission or any other Federal or state governmental
authority for amendments or supplements to such Registration Statement
or Prospectus or for additional information; (iii) the issuance by the
Commission of any stop order suspending the effectiveness of such
Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv)
the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and/or
(v) the occurrence of any event or passage of time that makes the
financial statements included in such Registration Statement ineligible
for inclusion therein or any statement made in such Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or
that requires any revisions to such Registration Statement, Prospectus
or other documents so that, in the case of such Registration Statement
or Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

(e)	Piggy-Back Registrations.  If at any time during any
Effectiveness Period there is not an effective Registration Statement
covering all of the Registrable Securities required to be covered
during such Effectiveness Period and the Company shall determine to
prepare and file with the Commission a registration statement relating
to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or their
then equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written
notice of such determination and, if within fifteen (15) days after
receipt of such notice, any such Holder shall so request in writing,
the Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be
registered, to the extent the Company may do so without violating
registration rights of others which exist as of the date of this
Agreement, subject to customary underwriter cutbacks applicable to all
holders of registration rights and subject to obtaining any required
the consent of any selling stockholder(s) to such inclusion under such
registration statement.

(f)	Amendments and Waivers.  The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing
and signed by the Company and the Holders of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of certain Holders and that does
not directly or indirectly affect the rights of other Holders may be
given by Holders of at least a majority of the Registrable Securities
to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the
immediately preceding sentence.

(g)	Notices.  Any notice or request hereunder may be given to the
Company or the Purchaser at the respective addresses set forth below or
as may hereafter be specified in a notice designated as a change of
address under this Section 7(g).  Any notice or request hereunder shall
be given by registered or certified mail, return receipt requested,
hand delivery, overnight mail or telecopy (confirmed by mail).  Notices
and requests shall be, in the case of those by hand delivery, deemed to
have been given when delivered to any party to whom it is addressed, in
the case of those by mail or overnight mail, deemed to have been given
three (3) business days after the date when deposited in the mail or
with the overnight mail carrier, and, in the case of a telecopy, when
confirmed.  The address for such notices and communications shall be as
follows:

If to the Company:	Global Digital Solutions, Inc.
777 South Flagler Drive
Suite 800
West Tower
West Palm Beach, FL  33401
Attention:  Chief Financial Officer
Facsimile:

With a copy to:	Paul D. Creme
Merra, Kanakis, Creme & Mellor, P.C.
	60 Main Street
	Nashua, NH 03060
Facsimile:  603-883-0750
If to a Purchaser:	To the address set forth under
such Purchaser name on the
signature pages hereto.
If to any other Person who is then the registered Holder:

To the address of such Holder as it appears in the stock transfer books
of the Company or such other address as may be designated in writing
hereafter in accordance with this Section 7(g) by such Person.
Successors and Assigns.  This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. The Company may
not assign its rights or obligations hereunder without the prior
written consent of each Holder. Each Holder may assign their respective
rights hereunder in the manner and to the Persons as permitted under
the Notes and the Securities Purchase Agreement with the prior written
consent of the Company, which consent shall not be unreasonably
withheld.

Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed
to be an original and, all of which taken together shall constitute one
and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.

Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all Proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement shall be commenced exclusively in the
state and federal courts sitting in the City of New York, Borough of
Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the
City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives,
and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
Proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any
such Proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a
Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the
other party for its reasonable attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution
of such Proceeding.

Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.

Severability.  If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and
employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such
that may be hereafter declared invalid, illegal, void or unenforceable.
Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.

IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
GLOBAL DIGITAL SOLUTIONS, INC.
By:_____________________________
Name:___________________________
Title:____________________________
LAURUS MASTER FUND, LTD.
By:______________________________
Name:____________________________
Title:_____________________________
Address for Notices:
825 Third Avenue, 14th Floor
New York, New York 10022
Attention:  Eugene Grin
Facsimile:  212-541-4434

EXHIBIT A
[Month  __, 2004]

[Continental Stock Transfer
   & Trust Company
Two Broadway
New York, NY  10004
Attn:  William Seegraber]

Re:	Global Digital Solutions, Inc.. Registration Statement on Form
[SB-2]

Ladies and Gentlemen:
As counsel to Global Digital Solutions, Inc., a New Jersey corporation
(the "Company"), we have been requested to render our opinion to you in
connection with the resale by the individuals or entitles listed on
Schedule A attached hereto (the "Selling Stockholders"), of an
aggregate of [amount] shares (the "Shares") of the Company's Common
Stock.
A Registration Statement on Form [SB-2] under the Securities Act of
1933, as amended (the "Act"), with respect to the resale of the Shares
was declared effective by the Securities and Exchange Commission on
[date].  Enclosed is the Prospectus dated [date].  We understand that
the Shares are to be offered and sold in the manner described in the
Prospectus.
Based upon the foregoing, upon request by the Selling Stockholders at
any time while the registration statement remains effective, it is our
opinion that the Shares have been registered for resale under the Act
and new certificates evidencing the Shares upon their transfer or re-
registration by the Selling Stockholders may be issued without
restrictive legend.  We will advise you if the registration statement
is not available or effective at any point in the future.
Very truly yours,

[Company counsel]

Schedule A

Selling Stockholder              R/N/O              Shares Being
Offered

15

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