Document:

EXECUTION
COPY

     

    FORBEARANCE
AND SETTLEMENT AGREEMENT

     

    This
FORBEARANCE AND SETTLEMENT
AGREEMENT (this “Agreement”), dated as of
September 20, 2010, is entered into by and among Kohlberg Capital Funding LLC I
(“Kohlberg Funding” or
the “Borrower”), as
Borrower, Kohlberg Capital Corporation (“Kohlberg” or the “Servicer” and, together with
Kohlberg Funding, the “Borrower
Parties”), as Servicer, BMO Capital Markets Corp. (the “Agent”), as Agent, and Bank of
Montreal (“BMO”),
Fairway Finance Company LLC (“Fairway”), Deutsche Bank AG,
New York Branch (“DB”),
and Riverside Funding LLC (“Riverside”, and together with
BMO, Fairway, and DB, the “Lenders”), as Lenders. Each
Borrower Party, the Agent, and each Lender is sometimes referred to herein
individually as a “Party” and collectively, as
the “Parties.”

     

    RECITALS

     

    A.          The
Borrower, the Servicer, the Agent, Fairway and Riverside are parties to that
certain Loan Funding and Servicing Agreement dated as of February 14, 2007 (as
modified, supplemented or amended from time to time, the “LFSA”), and related
Transaction Documents, pursuant to which Fairway and Riverside have made certain
loans and financial accommodations available to the Borrower. Terms used herein
without definition shall have the meanings ascribed to them in the
LFSA.

     

    B.          As
of September 14, 2010, the principal amount of the Advances Outstanding under
the LFSA was $137,159,148.52. As of September 16, 2010, there was aggregate
accrued and unpaid interest with respect to the Advances Outstanding of
$200,332.76.

     

    C.          The
Agent and the Lenders assert that (i) on September 29, 2008, the Termination
Date under the LFSA occurred, and (ii) the occurrence of the Termination Date
commenced the two-year Amortization Period and all Advances Outstanding under
the LFSA will become due and payable on September 29, 2010 (the “Alleged Maturity
Date”).

     

    D.          In
addition, the Agent has previously given notice to the Borrower Parties that the
following Termination Events, Servicer Termination Events, and potential
Termination Events and Servicer Termination Events occurred under the LFSA
(together with assertions relating to the Alleged Maturity Date and any alleged
Termination Events, Servicer Termination Events, Unmatured Termination Events or
Unmatured Servicer Termination Events relating thereto or to Borrower’s failure
to repay all Advances Outstanding and all other amounts payable under the LFSA
and the Transaction Documents on the Alleged Maturity Date, the “Alleged Termination
Events”):

     

    i.           Termination
Events pursuant to Sections 9.1(a), (g) and (h) of the LFSA as a result of the
Servicer’s failure to properly calculate the Moody’s Ratings of certain
Loans;

     

    ii.          a
Termination Event pursuant to Section 9.1(b) of the LFSA as a result the
Borrower’s failure to comply with the corporate separateness requirements of
Section 4.1(t)(xxv) and (xxix) and 5.1(m)(i) and (ii) of the
LFSA;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    iii.         a
Termination Event pursuant to Section 9.1(m) of the LFSA as a result of the
Rolling Three-Month Default Ratio exceeding 7 percent for more than 15
days;

     

    iv.         a
Servicer Termination Event pursuant to Section 7.25(b) of the LFSA (resulting in
a Termination Event under Section 9.1(d) of the LFSA) as a result of the
Servicer’s failure to provide timely annual audited consolidated financial
statements for the period ending December 31, 2009;

     

    v.          a
Termination Event pursuant to Section 9.1(g) as a result of the existence and
continuance of an Overcollateralization Shortfall for a period in excess of
three business days;

     

    vi.         a
Servicer Termination Event pursuant to Section 7.25(g) of the LFSA (resulting in
a Termination Event under Section 9.1(d) of the LFSA) as a result of the
Servicer’s failure to maintain the required minimum Net Worth set forth therein;
and

     

    vii.        potential
Servicer Termination Events pursuant to Sections 7.25(g), (i) and/or (k) and
potential Termination Events under Sections 9.1(d), (e), (f) and/or (g) of the
LFSA as a result of the possible existence of material misstatements in the
Servicer’s audited financial statements for the year ended December 31,
2008.

     

    E.           The
Borrower Parties disagree with and have contested the Alleged Termination Events
(including, without limitation, the Alleged Maturity Date) and on or about
August 28, 2009, the Borrower Parties filed an action in the Supreme Court of
the State of New York (the “Court”) and pending as Case
No. 602688/09 asserting various causes of action against Fairway, Agent,
Riverside and DB relating to, among other things, the assertion by the Agent and
the Lenders of the Alleged Maturity Date and certain of the other Alleged
Termination Events (the “Litigation”).

     

    F.           On
June 23, 2010, Fairway, Agent, Riverside and DB filed a summary judgment motion
regarding the Borrower Parties’ claims relating to the occurrence of a
Termination Date under the LFSA (the “Initial SJ Motion”). On July
28, 2010, the Borrower Parties opposed the Initial SJ Motion and cross-moved for
summary judgment on the same issue (the “Cross Motion”). The briefing
on the Initial SJ Motion is complete and is now pending before the Court.
Fairway, Agent, Riverside and DB filed their response to the Cross Motion on
August 31, 2010. The Borrower Parties’ reply brief with respect thereto has not
yet been filed.

     

    G.           On
September 10, 2010, the Borrower, Servicer and the Lenders executed that certain
Settlement and Forbearance Term Sheet (the “Settlement Term Sheet”)
pursuant to which the parties agreed, on a summary basis and subject to final
documentation, to settle all claims that were or could have been asserted in the
Litigation and to enter into this Agreement.

     

    H.           Kohlberg
is currently contemplating various strategic alternatives, including a possible
sale of a controlling equity interest in Kohlberg or a sale by Kohlberg of
substantially all of its assets pursuant to a strategic process initiated by
Kohlberg (the “Kohlberg
Strategic Process”).

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    I.           Each
Party is entering into this Agreement with the understanding and agreement that,
except as specifically provided herein, none of the other Parties’ rights or
remedies as set forth in the LFSA is being waived or modified by the terms of
this Agreement.

     

    AGREEMENT

     

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

     

    1.           Incorporation of Recitals. Each of the
above recitals is expressly incorporated herein and is represented by the
Parties to be true and correct.

     

    2.           Reaffirmation of Obligations. The
Parties hereby agree and acknowledge as follows:

     

    (a)              The
Advances Outstanding and all other amounts payable by the Borrower under the
LFSA (as modified hereby) constitute valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with the LFSA, and the
Borrower Parties hereby reaffirm their respective obligations under the
LFSA.

     

    (b)         
    The Agent’s and any Lender’s entry into this Agreement
or any of the documents referenced herein, the Agent’s and any Lender’s
negotiations with any party with respect to any Transaction Document, the
Agent’s and any Lender’s conduct of any analysis or investigation of any
collateral, Agent’s and any Lender’s acceptance of any payment from the Borrower
prior to the date hereof, or any other action or failure to act on the part of
the Agent or any Lender shall not constitute (i) a modification of the LFSA or
any Transaction Document (except as specifically provided herein) or (ii) a
waiver of any Forbearance Termination Event (as defined herein), Servicer
Termination Event or Termination Event or a waiver of any term or provision of
any Transaction Document.

     

    3.           Payment in Full of Advances
Outstanding. The Advances Outstanding and all other amounts payable by
the Borrower under the LFSA (as modified hereby) shall be paid in full by the
Borrower on or before the earlier of (i) the closing date of a Disposition
Transaction and (ii) February 28, 2011.

     

    4.           Agreement to Forbear. For and during
the Forbearance Term (as defined below), the Agent and the Lenders each agree to
not take any action or commence any proceedings with respect to the enforcement
of any right or remedy under the Transaction Documents held by any of them as a
result of any Alleged Termination Event or any other Termination Event, Servicer
Termination Event, Unmatured Termination Event, or Unmatured Servicer
Termination Event that resulted from or otherwise relates to an event that
occurred or a condition that existed prior to the date hereof and that was known
or reasonably should have been known to the Agent or the Lenders prior to the
date hereof (collectively, the “Existing Termination Events”).
As used herein, “Forbearance
Term” shall mean the period commencing upon the date hereof and
continuing until the earliest to occur of: (x) any Forbearance Termination
Event, or (y) February 28, 2011.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    5.           Right to Exercise Remedies Upon Termination
of Agreement to Forbear. Each of the Borrower and the Servicer
acknowledges and agrees that upon the termination of the Forbearance Term and
without any further action on the part of the Agent or the Lenders, all Advances
Outstanding and other amounts payable under the LFSA (as modified hereby) shall
be immediately due and payable and the Agent and the applicable Lenders shall be
entitled to exercise any or all of their remedies under the LFSA and applicable
law, including, without limitation, the appointment of a receiver and the
enforcement under the UCC of any liens or security interests held by the Agent
or any applicable Lender.

     

    6.           Modification of Certain LFSA
Provisions. Solely during the Forbearance Term, the Borrower Parties’
failure to comply with Sections 7.25(g), 9.1(f), (g), (h), (k), and (m), and
Sections 5.1(m), 5.1(bb), and 5.1(cc) of the LFSA shall not give rise to the
occurrence of a Forbearance Termination Event, Termination Event or Servicer
Termination Event, as applicable. Notwithstanding the provisions of this Section 6, the Borrower Parties shall
continue to deliver to Agent all Required Reports in the form and substance
required by the LFSA and the Transaction Documents.

     

    7.           Forbearance Termination Events. The
occurrence of any of the following events shall constitute a “Forbearance Termination
Event”:

     

    (a)              Borrower
or Servicer fails to observe or perform any term, covenant, or agreement binding
on them contained in Section 10 of this Agreement.

     

    (b)              The
occurrence of any Termination Event or Servicer Termination Event under the LFSA
other than (i) the Existing Termination Events or (ii) any Termination Event,
Servicer Termination Event, Unmatured Termination Event or Unmatured Servicer
Termination Event arising as a result of the Borrower Parties’ failure to comply
with the provisions of the LFSA set forth in Section 6 hereof.

     

    (c)              The
Overcollateralization Ratio, calculated as of any Determination Date, is less
than 115 percent. For purposes of this Section 7(c) the
“Overcollateralization Ratio” shall be defined as (i) the Purchased Loan Balance
(excluding any amounts related to Defaulted Loans other than those set forth on
Schedule A hereto) divided by (ii) the Advances Outstanding.

     

    (d)              On
any date during the Forbearance Term, the Servicer fails to maintain a minimum
Net Worth of at least $150,000,000.

     

    (e)              Any
representation or warranty made by the Borrower or Servicer in this Agreement is
untrue or misleading in any material respect when made.

     

    (f)              The
Borrower, the Servicer, or any other person brings any action in any judicial,
administrative or other proceeding disputing (i) the legality, validity or
enforceability of (A) this Agreement or any agreement executed in connection
herewith, (B) the LFSA or any other Transaction Documents, or (C) the Borrower’s
obligation to repay the Advances Outstanding in accordance with the terms of
this Agreement or (ii) the validity, priority, enforceability or extent of
Agent’s or any Lender’s liens and security interests in or against any item of
Collateral or (iii) the existence or amount of the Advances Outstanding;
provided, however, that the foregoing shall not limit or restrict the right of
the Borrower and the Servicer to enforce their respective rights under this
Agreement.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (g)              The
Servicer and/or Borrower (as applicable) has neither (i) on or before September
30, 2010, (A) entered into a merger agreement, purchase and sale agreement or
other agreement with an entity (the “Purchaser”) selected by the
Servicer (in its discretion) pursuant to the Kohlberg Strategic Process,
pursuant to which the Servicer agrees to sell and convey to Purchaser a
controlling equity interest in the Servicer or substantially all of its assets
(a “Disposition
Transaction”) and (B) provided the Agent and the Lenders with written
notice thereof nor (ii) made payments to the applicable Lenders on or before
September 30, 2010 sufficient to reduce the Advances Outstanding to $125,000,000
(or less).

     

    (h)              The
Servicer and/or Borrower (as applicable) has neither (i) on or before October
31, 2010, (A) filed with the Securities and Exchange Commission a preliminary
proxy statement with respect to a Disposition Transaction and the actions
required to be taken by the Servicer to obtain all requisite approvals from the
shareholders of Kohlberg in respect of such Disposition Transaction and (B)
provided the Agent and the Lenders with written notice thereof nor (ii) made
payments to the Lenders sufficient to reduce the Advances Outstanding as of each
of the following dates to the following amounts:

     

    
      
        
          	
                  Payment Date

                	 
      	
                  Balance of Advances
    Outstanding

                
	 
      	 
      	 
      
	
                  11/3/2010

                	 
      	
                  $115,000,000
      (or less)

                
	
                  12/1/2010

                	 
      	
                  $105,000,000
      (or less)

                
	
                  1/3/2011

                	 
      	
                  $95,000,000
      (or less)

                
	
                  2/1/2011

                	 
      	
                  $85,000,000
      (or less)

                

        

      

    

     

    (i)              The
Servicer and/or Borrower (as applicable) has neither (i) on or before February
15, 2011, (A) received any requisite approvals from the shareholders of Kohlberg
in respect of a Disposition Transaction and (B) provided the Agent and the
Lenders with written notice thereof, nor (ii) made payments to the Lenders on or
before February 15, 2011 sufficient to reduce Advances Outstanding to
$85,000,000 (or less).

     

    Solely
for purposes of determining whether Advances Outstanding have been reduced for
the purposes of, and by the payment dates set forth in, subsections (g), (h),
and (i) of this Section 7, the
amount of Advances Outstanding as of an applicable payment date will be deemed
reduced by (i) the aggregate amount of loan proceeds, settlement proceeds and
sale proceeds received by the Lenders or deposited into the Collection Account
in respect of any Loans since the preceding Payment Date, less interest due on
the subsequent Payment Date and (ii) the proceeds due from the sale of any Loan
which have not yet been received as of the applicable payment date, provided
that the trade date with respect to such Loan sale is a date within thirty (30)
days prior to the applicable payment date and provided further that the Lenders
shall have received, on or before the applicable payment date, documentation
evidencing the Borrower’s agreement to sell any such Loan. The Parties agree
that for purposes of the preceding sentence, a trade ticket or trade
confirmation of a pending sale shall satisfy the requirement for
documentation.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (j)              The
Borrower fails to repay all Advances Outstanding and all other amounts due (as
modified hereby) and owing to the Lenders in accordance with Section 3 hereof.

     

    8.           Interest Rate During the Forbearance
Term. During the period commencing as of the date of the Term Sheet and
continuing throughout the entire Forbearance Term, interest shall accrue and be
paid on the Advances Outstanding owed to each Lender at the rates applicable to
such Lender and on the applicable dates under the LFSA prior to the occurrence
of a Termination Event.

     

    9.           Discretionary Loan Sales During the
Forbearance Term. During the Forbearance Term, the Borrower Parties may,
without further consent or authorization from the Agent or the Lenders, make
discretionary sales of Loans included in the Collateral only on the following
terms:

     

    (a)              for
the sale of any Loans set forth on Schedule B hereto, so long as the sale
proceeds equal or exceed 90 percent of such Loan’s mark-to-market value
reflected on Schedule B, (and
for the avoidance of doubt, mark-to-market value will not be adjusted for
purposes of this Section) without the Lenders’ written consent;

     

    (b)              in
the case of a Discount Loan, so long as the proceeds for such sale are at least
equal to 90 percent of such Discount Loan’s purchase price; and

     

    (c)              for
all other Loans, so long as the proceeds from any such sale equal or exceed 90
percent of the par value of such Loan;

     

    Provided however, that neither the
Servicer nor the Borrower shall, without the prior written consent of the Agent
and each of the Lenders, make a discretionary sale of a Loan if the proceeds
from such a sale are expected to be less than the amounts set forth in this
Section 9.

     

    10.         Discontinuance of
Litigation.

     

    (a)              Within
two (2) business days of the Parties’ execution of this Agreement, the Parties
shall jointly file a Stipulation of the Discontinuance of the Litigation with
prejudice in the form attached hereto as Exhibit A, with each party to bear its
own legal fees and costs in connection therewith.

     

    (b)              Provided
that all Advances Outstanding and, subject to Section 10(c), all other amounts
due and owing to the Lenders (the “Loan Amounts”) are paid by the
Borrower in full on or before February 28, 2011, BMO, on the one hand, and
Riverside or DB on the other hand shall each make a payment to Kohlberg Funding
in the amount of $1,000,000.00 (for a total aggregate payment of $2,000,000.00)
which payment shall, in the discretion of each Lender, (a) be made as a
settlement payment contemporaneously with the payment in full by the Borrower of
the Loan Amounts due such Lender or (b) be credited, as of the time the Borrower
pays the Loan Amounts in full, against the Loan Amounts owed and to be paid to
such Lender.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (c)              Provided
that the Loan Amounts are paid by the Borrower in full on or before February 28,
2011, the Loan Amounts shall not include any fees or expenses, including
attorneys’ fees and any other Indemnified Amounts incurred by the Agent or the
Lenders (or their respective Affiliates, officers, directors, employees or
agents) in or in connection with or on account of, the Litigation, or any other
fees and expenses payable to the Agent or the Lenders under the LFSA or the
Transaction Documents; provided however, the Loan
Amounts shall include any fees and expenses, including, without limitation,
reasonably attorneys fees, incurred by the Agent and/or Lenders in connection
with or related to the exercise of remedies under this Agreement, the LFSA
and/or the other Transactions Documents following the occurrence of a
Forbearance Termination Event.

     

    11.         Releases.

     

    (a)              Kohlberg
and Kohlberg Funding, for themselves and all of their respective past, present
or future parents, subsidiaries, divisions, affiliates, predecessors,
successors, joint venturers, partners, partnerships, corporations, companies,
organizations, associations, principals, members, associates, employees,
officers, directors, shareholders, servants, advisors, attorneys and agents, and
all of those persons’ (be they individuals or entities) past, present or future
heirs, beneficiaries, trustees, representatives, executors, distributees,
administrators, assigns, guardians, officers, directors, shareholders and others
acting on their behalf (any and all of the foregoing being referred to herein as
the “Kohlberg Parties”), do
hereby release and forever discharge each of the Lenders and the Agent and any
of their respective past, present or future parents, subsidiaries, divisions,
affiliates, predecessors, successors, joint venturers, partners, partnerships,
corporations, companies, organizations, associations, principals, members,
associates, employees, officers, directors, shareholders, servants, advisors,
attorneys and agents, and all of those persons’ (be they individuals or
entities) past, present or future heirs, beneficiaries, trustees,
representatives, executors, distributees, administrators, assigns, guardians,
officers, directors, shareholders and others acting on their behalf (any and all
of the foregoing being referred to herein as the “Lender Parties”), of and from any and
all, and all manner of, action and actions, cause and causes of action, claims,
suits, demands, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, incidents, executions, obligations, damages, liabilities,
judgments, and all other claims or demands of any kind whatsoever, whether in
law or in equity, whether known or unknown, which any of the Kohlberg Parties
ever had, now has or hereafter can, shall or may have, from the beginning of the
world to the date of this Agreement, against any of the Lender Parties arising
from or relating to the LFSA, the Transaction Documents, or the Litigation;
provided, however, that no Lender Party is released from any obligation under
this Agreement.

     

    (b)              Upon
payment in full of the Loan Amounts in accordance with this Agreement, each of
the Lenders and the Agent shall execute and deliver a release to Kohlberg and
Kohlberg Funding from any and all claims in connection with the LFSA, the
Transaction Documents or the Litigation, in the form set forth in Exhibits B and
C.

     

    12.         Information Access. Subject to the
confidentiality provisions set forth in the LFSA, the Borrower Parties shall
provide the Lenders and their representatives, upon reasonable notice and during
normal business hours, with full and complete access to their books and records
respecting their actions and activities respecting the sale, collection, or
administration of the Loans and the tracking of any and all payments received on
account of such Loans, including the sale of such Loans.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    13.         Representations and Warranties. Each
Party represents and warrants as follows:

     

    (a)              Authority. Such Party has the
requisite corporate power and authority to execute and deliver this Agreement,
and to perform its obligations hereunder and under the LFSA and other
Transaction Documents (as modified hereby) to which it is a party. The
execution, delivery and performance by such Party of this Agreement have been
duly approved by all necessary corporate action, have received all necessary
governmental approval, if any, and do not contravene any applicable law. No
other corporate proceedings by such Party are necessary to consummate any
actions contemplated by this Agreement.

     

    (b)              Enforceability. This Agreement has
been duly executed and delivered by such Party. This Agreement and the LFSA and
other Transaction Documents (as modified hereby) are legal, valid and binding
obligations of such Party, enforceable against such Party in accordance with
their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors’ rights generally, and are in full force
and effect.

     

    (c)              LFSA Representations and Warranties.
The Borrower and the Servicer represent that, except for the existence of the
Existing Termination Events, the representations and warranties contained in the
LFSA and other Transaction Documents are true and correct in all respects on and
as of the date hereof as though made on and as of the date hereof (other than
any such representations or warranties that, by their terms, are specifically
made as of a date other than the date hereof).

     

    (d)              No Duress. This Agreement has been
entered into without force or duress, of the free will of such Party. Such
Party’s decision to enter into this Agreement is a fully informed decision and
such Party is aware of all legal and other ramifications of such
decision.

     

    (e)              Counsel. Such Party has read and
understands this Agreement, has consulted with and been represented by legal
counsel of its own choosing in connection herewith and has been advised by its
counsel of its rights and obligations hereunder.

     

    (f)              No Unknown Termination Events. Except
for the existence of the Existing Termination Events, the Borrower Parties are
not aware of any event that has occurred and is continuing that constitutes a
Termination Event, Servicer Termination Event, Unmatured Termination Event, or
Unmatured Servicer Termination Event

     

    (g)              No Assignment. In the case of the
Borrower and the Servicer, such Party has not assigned, transferred, conveyed or
released and discharged, voluntarily or involuntarily, or by operation of law,
to any other person (whether an individual or entity), any claim or portion
thereof or interest therein relating to the LFSA or any of the matters that are
the subject of this Agreement.

     

    14.         No Third Party Beneficiaries. Nothing
contained in this Agreement, express or implied, is intended to confer any
rights or benefits upon any party other than the Borrower Parties, each Lender,
and the Agent, and their respective successors and assigns.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    15.         Choice of Law, Jurisdiction and Venue.
This Agreement shall be governed by and construed in accordance with the
internal laws (without regard to the conflict of laws provisions) of the State
of New York. Any action or proceeding that may be commenced with respect to this
Agreement shall be commenced in the Supreme Court of the State of New York,
County of New York or the United States District Court for the Southern District
of New York, and each of the parties hereto submits to the in personam
jurisdiction of said courts for purposes of such action or proceeding, and
waives any claim of improper venue or inconvenient forum in said
courts.

     

    16.         Waiver of Jury Trial. EACH OF THE
AGENT, THE LENDERS, THE BORROWER, AND THE SERVICER IRREVOCABLY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE LFSA OR ANY
OTHER TRANSACTION DOCUMENT.

     

    17.         Waiver of Bond. Each of the Borrower
and the Servicer waives the posting of any bond otherwise required of the Agent
or the Lenders in connection with any judicial process or proceeding to enforce
any judgment or other court order entered in favor of the Agent or the Lenders
or to enforce by specific performance, temporary restraining order, preliminary
or permanent injunction, this Agreement.

     

    18.         Time of the Essence. Time is of the
essence with respect to the provisions of this Agreement. This Agreement shall
not be effective until it is fully executed by all of the Parties.

     

    19.         Counterparts. This Agreement may be
executed in any number of counterparts and by different Parties on separate
counterparts. Each of such counterparts shall be deemed to be an original, and
all of such counterparts, taken together, shall constitute but one and the same
agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or electronic transmission of a “pdf” (or other such viewable,
printable data file) shall be equally effective as delivery of a manually
executed original counterpart.

     

    20.         Status of LFSA and Transactions
Documents.

     

    (a)              Except
as specifically set forth in this Agreement, the LFSA and all other Transaction
Documents, are and shall continue to be in full force and effect and are hereby
in all respects ratified and confirmed and shall constitute the legal, valid,
binding and enforceable obligations of each of the Parties.

     

    (b)              The
execution, delivery and performance of this Agreement shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Party under the LFSA (as modified hereby) or any other Transaction
Documents, nor constitute a waiver of any provision of any of the LFSA (as
modified hereby).

     

    21.         Ratification. Each of the Parties
hereby restates, ratifies and reaffirms each and every term and condition set
forth in the LFSA, as amended hereby, and the other Transaction Documents
effective as of the date hereof.

     

    22.         Estoppel. To induce Agent and the
Lenders to enter into this Agreement, each of the Borrower and the Servicer
hereby acknowledges and agrees that, subject to Section 10(b) as of the date
hereof, there exists no right of offset, defense, counterclaim or objection in
favor of the Borrower or the Servicer as against the Agent or any Lender with
respect to the Advances Outstanding.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    23.         Amendments. No amendment or
modification of any provision of this Agreement shall be effective without the
written agreement of the Agent, the Lenders and the Borrower Parties, and no
termination or waiver of any provision of this Agreement, or consent to any
departure by the Agent, the Lenders or the Borrower Parties therefrom, shall in
any event be effective without the written concurrence of each of the other
Parties. Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No notice to or demand upon
the Borrower Parties in any case shall entitle the Borrower Parties to any other
or further notice or demand in similar or other circumstances.

     

    24.         No Waiver. The Agent’s and/or Lenders’
failure, at any time or times hereafter, to require strict performance by the
Borrower Parties of any provision or term of this Agreement shall not waive,
affect or diminish any right of the Agent and/or the Lenders thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by
the Agent and/or Lenders of a Forbearance Termination Event, Servicer
Termination Event or Termination Event shall not, except as may be expressly set
forth herein, suspend, waive or affect any other Forbearance Termination Event,
Servicer Termination Event or Termination Event whether the same is prior or
subsequent thereto and whether of the same or of a different kind or character.
None of the undertakings, agreements, warranties, covenants and representations
of the Borrower Parties contained in this Agreement, the LFSA or in any of the
other Transaction Documents, and no Forbearance Termination Event, Servicer
Termination Event or Termination Event shall be deemed to have been suspended
(except as expressly provided herein) or waived by the Agent and/or the Lenders
unless such suspension or waiver is (a) in writing and signed by the Agent and
the Lenders, and (b) actually delivered to the Borrower Parties.

     

    25.         Section Headings. Section headings are
solely for the convenience of the Parties and do not affect the meaning or
construction of any provision in this Agreement.

     

    26.         Integration. This Agreement, together
with the LFSA (as modified hereby), the other Transaction Documents,
incorporates all negotiations of the parties hereto with respect to the subject
matter hereof and is the final expression and agreement of the Parties hereto
with respect to the subject matter hereof.

     

    27.         Severability. In case any provision in
this Agreement shall be invalid, illegal or unenforceable, such provision shall
be severable from the remainder of this Agreement and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    28.         Notices. All notice and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including telex communication and communication by facsimile copy)
and mailed, telexed, transmitted or hand delivered, as to each party hereto, at
its address set forth below:

     

    (a)              The
Agent:

     

    BMO
Capital Markets Corp.

    115 South
LaSalle Street

    12th
Floor West

    Chicago,
Illinois 60603 

    Attn:
Jack Kane 

    Telephone:
(312) 461-7900 

    Facsimile:
(312) 461-7958

     

    with a
copy to:

     

    Mayer
Brown LLP

    71 South
Wacker Drive 

    Chicago,
Illinois 60606 

    Attn:
Stuart M. Rozen, Esq. 

    Telephone:
(312) 701-7302 

    Facsimile:
(312) 706-8237

     

    (b)              The
Lenders:

     

    Fairway
Financing Company, LLC 

    c/o Lord
Securities Corporation 

    48 Wall
Street, 27th Floor 

    New York,
New York 10005 

    Telephone:
(212) 346-9000 

    Facsimile:
(212) 346-9000

     

    and

     

    BMO
Capital Markets Corp. 

    115 South
LaSalle Street 

    12th
Floor West 

    Chicago, Illinois
60603 

    Attn:
Jack Kane 

    Telephone:
(312) 461-7900 

    Facsimile:
(312) 461-7958

     

    with a
copy to:

     

    Mayer
Brown LLP 

    71 South
Wacker Drive 

    Chicago,
Illinois 60606 

    Attn:
Stuart M. Rozen, Esq. 

    Telephone:
(312) 701-7302 

    Facsimile:
(312) 706-8237

     

    and

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    Riverside
Funding, LLC 

    c/o
Global Securitization Services, LLC 

    445 Broad
Hollow Road, Suite 239 

    Melville,
NY 11747 

    Attn:
Jill Russo 

    Telephone:
(212) 295-5731 

    Facsimile:
(212) 797-5150

     

    and

     

    Deutsche
Bank Securities Inc. 

    60 Wall
Street, 19th Floor 

    New York,
New York 10005 

    Attn:
Mary Conners 

    Telephone:
(212) 250-4731 

    Facsimile:
(212) 797-5150

     

    With a
copy to:

     

    Bingham
McCutchen LLP 

    399 Park
Avenue 

    New York,
NY 10022 

    Attn:
Susan F. DiCicco, Esq. 

    Telephone:
(212) 705-7421 

    Facsimile:
(212) 593-6012

     

    (c)              The
Borrower:

     

    Kohlberg
Capital Funding LLC I 

    c/o
Kohlberg Capital Corporation 

    295
Madison Avenue, 6th Floor 

    New York,
New York 10017 

    Attention:
Dayl W. Pearson 

    Telephone:
(212) 455-8366 

    Facsimile:
(212) 983-7654

     

    with a
copy to:

     

    Dickstein
Shapiro LLP 

    1633
Broadway 

    New York,
NY 10019-6708 

    Attn:
Howard Graff, Esq. 

    Telephone:
(212) 277-6560 

    Facsimile:
(212) 277-6501

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (d)              The
Servicer:

     

    Kohlberg
Capital Corporation 

    295
Madison Avenue, 6th Floor 

    New York,
New York 10017 

    Attention:
Dayl W. Pearson 

    Telephone:
(212) 455-8366 

    Facsimile:
(212) 983-7654

     

    with a
copy to:

     

    Dickstein
Shapiro LLP 

    1633
Broadway 

    New York,
NY 10019-6708 

    Attn:
Howard Graff, Esq. 

    Telephone:
(212) 277-6560 

    Facsimile:
(212) 277-6501

     

    All such
notices and communications shall be effective upon receipt, or, in the case of
(a) notice by mail, five days after being deposited in the United States mail,
first class postage prepaid, (b) notice by telex, when telexed against receipt
of answer back, or (c) notice by facsimile copy, when verbal communication of
receipt is obtained.

     

    29.         Limitation on Relationship Between
Parties. The relationship of the Agent and the Lenders, on the one hand,
and the Borrower and the Servicer, on the other hand, has been and shall
continue to be, at all times, that of creditor and debtor. Nothing contained in
this Agreement, any instrument, document or agreement delivered in connection
therewith or in the LFSA or any of the other Transaction Documents shall be
deemed or construed to create a fiduciary relationship between the
parties.

     

    30.         No Assignment. This Agreement shall
not be assignable by either the Borrower or the Servicer without the express
written consent of the Agent and the Lenders. Pursuant to Section 12.17 of the
LFSA, each Lender may assign to one or more Persons all or any part of, or any
participation interest in, such Lender’s rights and benefits
hereunder.

     

    31.         Successors. The terms of this
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors or permitted assigns and no other Person
shall have any right, benefit or interest under or because of the existence of
this Agreement.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first above written.

    

    
      
        
          
            
              
                
                  
                    	 
      	
                            KOHLBERG
      CAPITAL CORPORATION

                          
	 
      	 
      	 
      
	 
      	
                            By: 

                          	
                            /s/
      Dayl W. Pearson

                          
	 
      	 
      	
                            Its: 

                          	
                            Dayl
      W. Pearson

                          
	 
      	 
      	 
      	
                            Chief
      Executive Officer

                          
	 
      	 
      	 
      	
                            Kohlberg
      Capital
Corporation

                          

                  

                

              

            

          

        

      

    

    

    
      
        
          
            	 
      	
                    KOHLBERG
      CAPITAL FUNDING LLC I

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	
                          
                      /s/
      Dayl W. Pearson

                    

                  
	 
      	 
      	
                    Its: 

                  	
                    Authorized
      Representative

                  

          

        

      

    

    

    
      
        
          
            	 
      	
                    BMO
      CAPITAL MARKETS CORP., as Agent

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	/s/
      Jack J. Kane
	 
      	 
      	
                    Its: 

                  	      
                    Managing
      Director

                  

          

        

      

    

    

    
      
        
          
            	 
      	
                    FAIRWAY
      FINANCE COMPANY LLC, as

                  
	 
      	
                    Conduit
      Lender

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	/s/
      Philip A. Martone
	 
      	 
      	
                    Its: 

                  	      
                    Vice
      President

                  

          

        

      

    

    

    
      
        
          
            
              
                	 
      	
                        RIVERSIDE
      FUNDING LLC, as Conduit

                      
	 
      	
                        Lender

                      
	 
      	 
      	 
      
	 
      	
                        By: 

                      	/s/
      Jill A. Russo
	 
      	 
      	
                        Its: 

                      	      
                        Vice
      President

                      

              

            

          

        

      

    

    

    
      
        
          
            	 
      	
                    BANK
      OF MONTREAL, as Liquidity Bank

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	/s/
      Jack J. Kane
	 
      	 
      	
                    Its: 

                  	      
                    Managing
      Director

                  

          

        

      

    

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    
      
        
          
            	 
      	
                    DEUTSCHE
      BANK AG, NEW YORK

                    BRANCH,
      as Liquidity Bank

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	
                    /s/
      Kevin Tanzer

                  
	 
      	 
      	
                    Its: 

                  	
                    Kevin
      Tanzer

                  
	 
      	 
      	 
      	
                    Director

                  

          

        

      

    

     

    
      
        
          
            	 
      	
                    By: 

                  	
                    /s/
      Sergey Moiseyenko

                  
	 
      	 
      	
                    Its: 

                  	
                    Sergey
      Moiseyenko

                  
	 
      	 
      	 
      	
                    Vice
      President

                  

          

        

      

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    SCHEDULE
A

     

    
      
        	
                Kohlberg
      Capital Funding LLC I

              	
                CoActive
      Technologies, Inc.

              	
                Term
      Loan (Second Lien)

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      SCHEDULE
B

       

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    Portfolio_Name

                                  	
                                    Issuer_Name

                                  	
                                    Asset_Name

                                  	 	
                                    9-10-2010
      Par

                                  	 	 	
                                    6-30-10
      MV

                                  	 	 	
                                    Par
      * 6-30 MV

                                  	 	 	
                                    Par
      *90% of MV

                                  	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Advanced
      Lighting Technologies, Inc.

                                  	
                                    Deferred
      Draw Term Loan (First Lien)

                                  	 	$	321,948.21	 	 	 	97.1000	%	 	$	312,611.71	 	 	$	281,350.54	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Advanced
      Lighting Technologies, Inc.

                                  	
                                    Term
      Loan (First Lien)

                                  	 	$	1,572,449.70	 	 	 	97.1000	%	 	$	1,526,848.66	 	 	$	1,374,163.80	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Aero
      Products International, Inc.

                                  	
                                    Term
      Loan

                                  	 	$	3,118,560.00	 	 	 	62.5000	%	 	$	1,949,100.00	 	 	$	1,754,190.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    AGA
      Medical Corporation

                                  	
                                    Tranche
      B Term Loan

                                  	 	$	1,832,209.30	 	 	 	96.2000	%	 	$	1,762,585.35	 	 	$	1,586,326.81	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    AGS
      LLC

                                  	
                                    Delayed
      Draw Term Loan

                                  	 	$	405,264.24	 	 	 	91.5000	%	 	$	370,816.78	 	 	$	333,735.10	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    AGS
      LLC

                                  	
                                    Initial
      Term Loan

                                  	 	$	2,896,645.42	 	 	 	91.5000	%	 	$	2,650,430.56	 	 	$	2,385,387.50	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Astoria
      Generating Company Acquisitions, L.L.C.

                                  	
                                    Term
      C

                                  	 	$	4,000,000.00	 	 	 	95.7000	%	 	$	3,828,000.00	 	 	$	3,445,200.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Awesome
      Acquisition Company (CiCi's Pizza)

                                  	
                                    Term
      Loan (Second Lien)

                                  	 	$	4,000,000.00	 	 	 	93.3000	%	 	$	3,732,000.00	 	 	$	3,358,800.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Bankruptcy
      Management Solutions, Inc.

                                  	
                                    Term
      Loan (First Lien)

                                  	 	$	1,870,496.50	 	 	 	80.9000	%	 	$	1,513,231.67	 	 	$	1,361,908.50	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Bicent
      Power LLC

                                  	
                                    Advance
      (Second Lien)

                                  	 	$	4,000,000.00	 	 	 	78.3000	%	 	$	3,132,000.00	 	 	$	2,818,800.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Caribe
      Information Investments Incorporated

                                  	
                                    Term
      Loan

                                  	 	$	1,611,044.80	 	 	 	88.8000	%	 	$	1,430,607.79	 	 	$	1,287,547.01	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Cast
      & Crew Payroll, LLC (Payroll Acquisition)

                                  	
                                    Initial
      Term Loan

                                  	 	$	6,373,290.00	 	 	 	98.6000	%	 	$	6,284,063.94	 	 	$	5,655,657.55	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    CoActive
      Technologies, Inc.

                                  	
                                    Term
      Loan (First Lien)

                                  	 	$	3,893,443.58	 	 	 	83.0000	%	 	$	3,231,558.17	 	 	$	2,908,402.35	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    eInstruction
      Corporation

                                  	
                                    Initial
      Term Loan

                                  	 	$	3,237,985.88	 	 	 	97.8000	%	 	$	3,166,750.19	 	 	$	2,850,075.17	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Harland
      Clarke Holdings Corp. (fka Clarke American Corp.)

                                  	
                                    Tranche
      B Term Loan

                                  	 	$	2,910,000.00	 	 	 	86.2500	%	 	$	2,509,875.00	 	 	$	2,258,887.50	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    HMSC
      Corporation (aka Swett and Crawford)

                                  	
                                    Loan
      (Second Lien)

                                  	 	$	5,000,000.00	 	 	 	74.7000	%	 	$	3,735,000.00	 	 	$	3,361,500.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Hunter
      Fan Company

                                  	
                                    Initial
      Term Loan (First Lien)

                                  	 	$	3,690,442.85	 	 	 	87.9000	%	 	$	3,243,899.27	 	 	$	2,919,509.34	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Inmar,
      Inc.

                                  	
                                    Term
      Loan

                                  	 	$	3,363,853.77	 	 	 	97.1000	%	 	$	3,266,302.01	 	 	$	2,939,671.81	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    KIK
      Custom Products Inc.

                                  	
                                    Loan
      (Second Lien)

                                  	 	$	5,000,000.00	 	 	 	61.2000	%	 	$	3,060,000.00	 	 	$	2,754,000.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    La
      Paloma Generating Company, LLC

                                  	
                                    Loan
      (Second Lien)

                                  	 	$	2,000,000.00	 	 	 	79.8000	%	 	$	1,596,000.00	 	 	$	1,436,400.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Primus
      International Inc.

                                  	
                                    Term
      Loan

                                  	 	$	1,080,675.87	 	 	 	96.4000	%	 	$	1,041,771.54	 	 	$	937,594.39	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    San
      Juan Cable, LLC

                                  	
                                    Loan
      (Second Lien)

                                  	 	$	3,000,000.00	 	 	 	98.1000	%	 	$	2,943,000.00	 	 	$	2,648,700.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Schneller
      LLC

                                  	
                                    Term
      Loan

                                  	 	$	4,091,034.67	 	 	 	97.4500	%	 	$	3,986,713.28	 	 	$	3,588,041.95	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Seismic
      Micro-Technology, Inc. (SMT)

                                  	
                                    Term
      Loan

                                  	 	$	780,480.34	 	 	 	97.6000	%	 	$	761,748.81	 	 	$	685,573.93	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Seismic
      Micro-Technology, Inc. (SMT)

                                  	
                                    Term
      Loan

                                  	 	$	1,170,720.51	 	 	 	97.6000	%	 	$	1,142,623.22	 	 	$	1,028,360.89	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Specialized
      Technology Resources, Inc.

                                  	
                                    Term
      Loan (First Lien)

                                  	 	$	3,543,235.78	 	 	 	97.7000	%	 	$	3,461,741.35	 	 	$	3,115,567.22	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    TPF
      Generation Holdings, LLC

                                  	
                                    Loan
      (Second Lien)

                                  	 	$	2,000,000.00	 	 	 	98.0000	%	 	$	1,960,000.00	 	 	$	1,764,000.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    TUI
      University, LLC

                                  	
                                    Term
      Loan (First Lien)

                                  	 	$	3,119,818.45	 	 	 	97.6000	%	 	$	3,044,942.80	 	 	$	2,740,448.52	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Wolf
      Hollow I, LP

                                  	
                                    Acquisition
      Term Loan

                                  	 	$	763,091.67	 	 	 	96.0000	%	 	$	732,568.01	 	 	$	659,311.21	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Wolf
      Hollow I, LP

                                  	
                                    Synthetic
      Letter of Credit

                                  	 	$	668,411.79	 	 	 	96.0000	%	 	$	641,675.32	 	 	$	577,507.79	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Wolf
      Hollow I, LP

                                  	
                                    Synthetic
      Revolver Deposit

                                  	 	$	167,102.95	 	 	 	96.0000	%	 	$	160,418.83	 	 	$	144,376.95	 
	 
      	 
      	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 
      	 
      	 	$	81,482,206.28	 	 	 	88.5824	%	 	$	72,178,884.26	 	 	$	64,960,995.83	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

    

    
      
        
          	
                  SUPREME
      COURT OF THE STATE OF NEW YORK

                	 
      	 
      
	
                  COUNTY
      OF NEW YORK

                	 
      	 
      
	
                  – –
      – – – – – – – – – – – – – – – – – – – – – – – – –

                	
                  x

                	 
      
	 
      	 
      	 
      
	
                  KOHLBERG
      CAPITAL FUNDING LLC I, et al.,

                	
                  :

                	
                  Index
      No. 602688/2009

                
	 
      	 
      	
                  IAS
      Part 60

                
	
                  Plaintiffs,

                	
                  :

                	
                  (Fried,
      J.)

                
	 
      	 
      	 
      
	 
      	
                  :

                	
                  STIPULATION
      OF

                
	
                           –
      against –

                	 
      	
                  DISCONTINUANCE

                
	 
      	
                  :

                	 
      
	 
      	 
      	 
      
	
                  FAIRWAY
      FINANCE COMPANY LLC, et al.,

                	
                  :

                	 
      
	 
      	 
      	 
      
	
                  Defendants.

                	
                  :

                	 
      
	 
      	 
      	 
      
	
                  – –
      – – – – – – – – – – – – – – – – – – – – – – – – –

                	
                  x

                	 
      

        

      

    

    

    IT IS
HEREBY STIPULATED AND AGREED by and between Plaintiffs Kohlberg Capital Funding
LLC I and Kohlberg Capital Corporation, and Defendants Riverside Funding, LLC,
Deutsche Bank AG, New York Branch, Fairway Finance Company, LLC and BMO Capital
Markets Corporation, by their undersigned attorneys, pursuant to Rule 3217 of
the New York Civil Practice Law and Rules, that no party being an infant,
incompetent person for whom a committee has been appointed or conservatee, and
there being no person not a party who has an interest in the subject matter of
the action, that this action be and hereby is discontinued with prejudice, with
each party to bear its own costs.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            
              
                	
                        Dated:

                      	
                        New
      York, New York

                      	 
      	 
      	 
      
	 
      	
                        September
      __, 2010

                      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        DICKSTEIN
      SHAPIRO LLP

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        By:

                      	 
      
	 
      	 
      	 
      	 
      	
                        Howard
      Graff

                      
	 
      	 
      	 
      	 
      	
                        Judith
      R. Cohen

                      
	 
      	 
      	 
      	 
      	
                        Jessica
      E. Elliott

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                        1633
      Broadway

                      
	 
      	 
      	 
      	 
      	
                        New
      York, New York 10019

                      
	 
      	 
      	 
      	 
      	
                        (212)
      277-6500

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        Attorneys
      for Plaintiffs Kohlberg Capital

                      
	 
      	 
      	 
      	 
      	
                        Funding
      LLC I and Kohlberg Capital

                      
	 
      	 
      	 
      	 
      	
                        Corporation.

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        MAYER
      BROWN LLP

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        By:

                      	 
      
	 
      	 
      	 
      	 
      	
                        Michael
      O. Ware

                      
	 
      	 
      	 
      	 
      	
                        Megan
      A. Sramek

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                        1675
      Broadway

                      
	 
      	 
      	 
      	 
      	
                        New
      York, NY 10019

                      
	 
      	 
      	 
      	 
      	
                        (212)
      506-2500

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        Attorneys
      for Defendants Fairway Finance

                      
	 
      	 
      	 
      	 
      	
                        Company
      LLC and BMO Capital Markets

                      
	 
      	 
      	 
      	 
      	
                        Corp.

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        BINGHAM
      McCUTCHEN LLP

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        By:

                      	 
      
	 
      	 
      	 
      	 
      	
                        Robert
      M. Dombroff

                      
	 
      	 
      	 
      	 
      	
                        Susan
      F. DiCicco

                      
	 
      	 
      	 
      	 
      	
                        Stephen
      Scotch-Marmo

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                        399
      Park Avenue

                      
	 
      	 
      	 
      	 
      	
                        New
      York, NY 10022

                      
	 
      	 
      	 
      	 
      	
                        (212)
      705-7000

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	Attorneys
      for Defendants Riverside Funding, LLC
	 
      	 
      	 
      	 
      	
                        and
      Deutsche Bank AG, New York
Branch

                      

              

            

          

        

      

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

     

    RELEASE

     

    WHEREAS, Riverside Funding LLC
(“Riverside”); Deutsche Bank AG,
New York Branch (“DB”); Fairway
Finance Company LLC (“Fairway”);
BMO Capital Markets Corp. the “Agent”); Bank of Montreal (“BMO”); Kohlberg Capital Funding LLC I
(“Kohlberg Funding”); and,
Kohlberg Capital Corporation (“Kohlberg”) (collectively, the “Parties”) have entered into a
Forbearance and Settlement Agreement dated September __, 2010 (the “Agreement”), resolving certain claims
and differences existing among them.

     

    WHEREAS, Riverside, Fairway,
Kohlberg, Kohlberg Funding, the Agent, and others entered into a Loan Funding
and Servicing Agreement dated as of February 14, 2007 (as modified, supplemented
or amended from time to time, the “LFSA”), pursuant to which, among other
things, Riverside and Fairway agreed to provide Funding with a credit
facility.

     

    WHEREAS, as of ______, 20__,
Kohlberg Funding has paid all Advances Outstanding and other amounts payable
under the terms of the LFSA and Transaction Documents, in accordance with the
Agreement.

     

    NOW, THEREFORE, in
consideration of the foregoing, Riverside and Deutsche Bank, for themselves and
all of their respective past, present or future parents, subsidiaries,
divisions, affiliates, predecessors, successors, joint venturers, partners,
partnerships, corporations, companies, organizations, associations, principals,
members, associates, employees, officers, directors, shareholders, servants,
advisors, attorneys and agents, and all of those persons’ (be they individuals
or entities) past, present or future heirs, beneficiaries, trustees,
representatives, executors, distributees, administrators, assigns, guardians,
officers, directors, shareholders and others acting on their behalf (any and all
of the foregoing being referred to herein as the “Deutsche Bank Parties”), do hereby
release and forever discharge Kohlberg and Kohlberg Funding and any of their
past, present or future parents, subsidiaries, divisions, affiliates,
predecessors, successors, joint venturers, partners, partnerships, corporations,
companies, organizations, associations, principals, members, associates,
employees, officers, directors, shareholders, servants, advisors, attorneys and
agents, and all of those persons’ (be they individuals or entities) past,
present or future heirs, beneficiaries, trustees, representatives, executors,
distributees, administrators, assigns, guardians, officers, directors,
shareholders and others acting on their behalf (any and all of the foregoing
being referred to herein as the “Kohlberg Parties”), of and from any
and all, and all manner of, action and actions, cause and causes of action,
claims, suits, demands, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, incidents, executions, obligations, damages, liabilities,
judgments, and all other claims or demands of any kind whatsoever, whether in
law or in equity, whether known or unknown, which any of the Deutsche Bank
Parties ever had, now has or hereafter can, shall or may have, from the
beginning of the world to the date of this Release, against any of the Kohlberg
Parties arising from or relating to the LFSA, the Transaction Documents or the
Litigation (as defined in the Agreement).

     

    [SIGNATURES
ON NEXT PAGE]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    RIVERSIDE
FUNDING LLC

     

    
      
        
          
            
              
                	
                        By:

                      	 
      
	
                        Name:

                      	 
      
	
                        Title:

                      	 
      

              

            

          

        

      

    

     

    DEUTSCHE
BANK AG, NEW YORK BRANCH

     

    
      
        
          
            
              
                	
                        By:

                      	 
	
                        Name:

                      	 
	
                        Title:

                      	 

              

            

          

        

      

    

    

    
      
        
          
            
              
                	
                        By:

                      	 
	
                        Name:

                      	 
	
                        Title:

                      	 

              

            

          

        

      

    

     

    
      Sworn to
before me this

      ____ day
of _____, 20__.

      

    

    
      
        
          
            	 
      
	
                    Notary
      Public

                  

          

        

      

    

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
C

     

    RELEASE

     

    WHEREAS, Riverside Funding LLC
(“Riverside”); Deutsche Bank AG,
New York Branch (“DB”); Fairway
Finance Company LLC (“Fairway”);
BMO Capital Markets Corp. the “Agent”); Bank of Montreal (“BMO”); Kohlberg Capital Funding LLC I
(“Kohlberg Funding”); and,
Kohlberg Capital Corporation (“Kohlberg”) (collectively, the “Parties”) have entered into a
Forbearance and Settlement Agreement dated September __, 2010 (the “Agreement”), resolving certain claims
and differences existing among them.

     

    WHEREAS, Riverside, Fairway,
Kohlberg, Kohlberg Funding, the Agent, and others entered into a Loan Funding
and Servicing Agreement dated as of February 14, 2007 (as modified, supplemented
or amended from time to time, the “LFSA”), pursuant to which, among other
things, Riverside and Fairway agreed to provide Funding with a credit
facility.

     

    WHEREAS, as of ______, 20__,
Kohlberg Funding has paid all Advances Outstanding and other amounts payable
under the terms of the LFSA and Transaction Documents, in accordance with the
Agreement.

     

    NOW, THEREFORE, in
consideration of the foregoing, Fairway, BMO and the Agent shall, for themselves
and all of their respective past, present or future parents, subsidiaries,
divisions, affiliates, predecessors, successors, joint venturers, partners,
partnerships, corporations, companies, organizations, associations, principals,
members, associates, employees, officers, directors, shareholders, servants,
advisors, attorneys and agents, and all of those persons’ (be they individuals
or entities) past, present or future heirs, beneficiaries, trustees,
representatives, executors, distributees, administrators, assigns, guardians,
officers, directors, shareholders and others acting on their behalf (any and all
of the foregoing being referred to herein as the “BMO Parties”), shall and do hereby
release and forever discharge Kohlberg and Kohlberg Funding and any of their
past, present or future parents, subsidiaries, divisions, affiliates,
predecessors, successors, joint venturers, partners, partnerships, corporations,
companies, organizations, associations, principals, members, associates,
employees, officers, directors, shareholders, servants, advisors, attorneys and
agents, and all of those persons’ (be they individuals or entities) past,
present or future heirs, beneficiaries, trustees, representatives, executors,
distributees, administrators, assigns, guardians, officers, directors,
shareholders and others acting on their behalf (any and all of the foregoing
being referred to herein as the “Kohlberg Parties”), of and from any
and all, and all manner of, action and actions, cause and causes of action,
claims, suits, demands, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, incidents, executions, obligations, damages, liabilities,
judgments, and all other claims or demands of any kind whatsoever, whether in
law or in equity, whether known or unknown, which any of the BMO Parties ever
had, now has or hereafter can, shall or may have, from the beginning of the
world to the date of this Release, against any of the Kohlberg Parties arising
from or relating to the LFSA, Transaction Documents or the Litigation (as
defined in the Agreement).

     

    [SIGNATURES
ON NEXT PAGE]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    BMO
CAPITAL MARKETS CORP.

     

    
      
        
          
            
              
                	
                        By:

                      	 
      
	
                        Name:

                      	 
      
	
                        Title:

                      	 
      

              

            

          

        

      

    

     

    FAIRWAY
FINANCE COMPANY LLC

     

    
      
        
          
            
              
                	
                        By:

                      	 
      
	
                        Name:

                      	 
      
	
                        Title:

                      	 
      

              

            

          

        

      

    

     

    BANK OF
MONTREAL

     

    
      
        
          
            
              
                	
                        By:

                      	 
      
	
                        Name:

                      	 
      
	
                        Title:

                      	 
      

              

            

          

        

      

    

    

    Sworn to
before me this

    ____ day
of ______, 20__.

     

    
      
        
          	 
      
	
                  Notary
      Public

                

        

      

    

    

    
      
        
        

      

      
        2Exhibit
10.1

     

    ABOVENET,
INC.

     

    AMENDED
AND RESTATED

    2010
EMPLOYEE STOCK PURCHASE PLAN

    (as of
August 24, 2010)

    

    
      	
              1.

            	
              Purpose

            

    

    

    The
AboveNet, Inc. Amended and Restated 2010 Employee Stock Purchase Plan (the
“Plan”) is intended to provide a method whereby employees of AboveNet, Inc. (the
“Company”) and its Designated Subsidiaries will have an opportunity to acquire a
proprietary interest in the Company by the purchase of shares of the Company’s
Common Stock to be funded through payroll deductions.  The Plan is
intended to qualify as an “employee stock purchase plan” under Section 423 of
the Internal Revenue Code of 1986, as amended (the “Code”).  The
provisions of the Plan shall, accordingly, be construed in a manner consistent
with the requirements of that Section of the Code and applicable guidance and
regulations issued thereunder.

    

    
      	
              2.

            	
              Eligible
      Employees

            

    

    

    
      	
            	
              (a)

            	
              All
      Employees of the Company and any of its Designated Subsidiaries (each such
      entity being referred to as a “Participating Employer”) who have completed
      at least ninety (90) days of employment with a Participating Employer on
      or before the first day of the applicable Offering Period (as defined in
      Section 4 below) shall be eligible to receive Options under this Plan to
      purchase the Company’s Common
Stock.

            

    

    

    
      	
            	
              (b)

            	
              Notwithstanding
      the foregoing, the following Employees shall not be eligible to
      participate in the Plan or any Offering under the Plan, as
      applicable:

            

    

    

    
      	
               
      

            	
              (i)

            	
              any
      Employee who, immediately after the Option is granted, would own Common
      Stock and/or outstanding options to purchase Common Stock possessing five
      (5%) percent or more of the total combined voting power or value of all
      classes of stock of the Company or of its parent corporation or subsidiary
      corporation as the terms “parent corporation” and “subsidiary corporation”
      are defined in Sections 424(e) and (f) of the Code.  For
      purposes of determining stock ownership under this paragraph, the rules of
      Section 424(d) of the Code shall apply and stock that an Employee may
      purchase under outstanding options shall be treated as stock owned by the
      Employee; and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              any
      officers of the Company or its Designated Subsidiaries subject to the
      disclosure requirements of Section 16(a) of the Securities Exchange Act of
      1934, provided the exclusion is applied in an identical manner to all such
      officers; and

            

    

    

    
      	
            	
              (iii)

            	
              employees
      who are citizens or residents of a foreign jurisdiction if the grant of an
      Option under the Plan or an Offering to such individual is prohibited
      under the laws of the foreign jurisdiction; or compliance with the laws of
      the foreign jurisdiction would cause the Plan or Offering to violate the
      requirements of Section 423 of the
Code.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      
        	
                3.

              	
                Stock
      Subject to the Plan

              

      

    

    

    The stock
available for purchase hereunder shall be shares of the Company’s authorized but
unissued Common Stock or Common Stock reacquired by the Company, including
shares repurchased by the Company in the open market.  The aggregate
number of shares that may be issued pursuant to the Plan is 300,000, subject to
increase or decrease by reason of stock split-ups, reclassifications, stock
dividends, and the like.  If the number of shares of Common Stock
reserved and available for any Offering Period (as defined below) is
insufficient to satisfy all purchase requirements for that Offering Period, the
reserved and available shares for that Offering Period shall be apportioned
among Participants in proportion to their Options.  If any Options
granted under the Plan shall for any reason terminate without having been
exercised, the shares of Common Stock not purchased under such Option shall
again become available for issuance under the Plan.

    

    
      
        	
                4. 

              	
                Offering Periods and
      Options

              

      

    

    

    
      	
            	
              (a)

            	
              While
      the Plan is in effect, one offering period during which payroll deductions
      will be accumulated under the Plan (the “Offering Period”) shall commence
      in each calendar year, unless otherwise determined by the
      Committee.  The Offering Period shall commence on January 16 and
      end on the following November 15, provided that, in 2010, the Offering
      Period shall commence on September 1, 2010 and end on November 15,
      2010.  The Committee may in its sole and absolute discretion
      provide for additional, fewer or other Offering Periods, provided that no
      Offering Period shall exceed twenty-seven (27) months or violate any other
      limitation imposed by Section 423 of the Code.  The Offering
      Commencement Date is the first day of each Offering Period.  The
      Offering Termination Date the last business day of the Offering
      Period.

            

    

    

    
      	
            	
              (b)

            	
              On
      each Offering Commencement Date, the Company will grant to each Eligible
      Employee who is then a Participant in the Plan an Option to purchase on
      the Offering Termination Date at the Option Exercise Price, as provided in
      this paragraph (b), that number of whole shares of Common Stock reserved
      for the purpose of the Plan which his or her accumulated payroll
      deductions determined on the Offering Termination Date (including any
      amount carried forward pursuant to Section 8 hereof) will purchase at the
      Option Exercise Price; provided that such Employee remains eligible to
      participate in the Plan throughout such Offering Period.  The
      Option Exercise Price for each Offering Period shall be eighty-five
      percent (85%) of the Fair Market Value of the Common Stock on (i) the
      Offering Commencement Date or (ii) the Offering Termination Date,
      whichever is lower.  In the event of an increase or decrease in
      the number of outstanding shares of Common Stock through  stock
      split-ups, reclassifications, stock dividends, and the like, an
      appropriate adjustment shall be made in accordance with the provisions of
      Section 23.

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
            	
              (c)

            	
              For
      purposes of this Plan, the term “Fair Market Value” on any date means, if
      the Common Stock is listed on a national securities exchange, the closing
      price of the Common Stock on such date on such exchange or, if the Common
      Stock is traded in the over-the-counter securities market and reported on
      the over-the-counter bulletin board market (“OTCBB”), the closing price
      for such shares on the OTCBB.  If no shares of Common Stock are
      traded on the Offering Commencement Date and/or the Offering Termination
      Date, the Fair Market Value will be determined by taking the closing price
      on the immediately preceding business day on which shares of Common Stock
      are traded.

            

    

    

    
      	
            	
              (d)

            	
              For
      Purposes of this Plan the term “business day” as used herein means a day
      on which there is trading on the national securities exchange on which the
      Common Stock is listed.

            

    

    

    
      	
            	
              (e)

            	
              No
      Employee shall be granted an option that permits his right to purchase
      Common Stock under the Plan and any other Section 423 plans of the Company
      or any parent or subsidiary corporations to accrue at a rate that exceeds
      $25,000 of Fair Market Value of such stock (determined as of the Offering
      Commencement Date) for each calendar year in which such option is
      outstanding at any time.  The preceding sentence shall comply,
      and be construed in accordance, with Section 423(b)(8) of the Code and
      regulations issued thereunder.

            

    

    

    Except as
otherwise provided in applicable regulations or other applicable guidance, all
Employees granted Options under the Plan shall have the same rights and
privileges with respect to such Options.  The provisions applicable to
one Option under an Offering (such as the provisions relating to the method of
payment for the Common Stock and the determination of the Option Exercise Price)
must apply to all other Options under the Offering in the same
manner.

    

    
      	
              5.

            	
              Exercise of
      Option

            

    

    

    Each
Eligible Employee who continues to be a Participant in the Plan on the Offering
Termination Date shall be deemed automatically to have exercised his or her
Option on such date and shall be deemed to have purchased from the Company such
number of whole shares of Common Stock reserved for the purpose of the Plan as
his or her accumulated payroll deductions on such date, plus any amount carried
forward pursuant to Section 8 hereof, will purchase at the Option Exercise
Price, but in no event may an Employee purchase more than 100 shares of Common
Stock with respect to the 2010 Offering Period and no more than 200 shares of
Common Stock with respect to any subsequent Offering Period(s) in a subsequent
calendar year, subject to the further limitations set forth in Section
4(e).  If a Participant is not an Employee on the Offering Termination
Date and throughout the Offering Period, he or she shall not be entitled to
exercise his or her Option.  All Options issued under the Plan shall,
unless exercised as set forth herein, expire at the end of the Offering
Termination Date with respect to the Offering Period during which such Options
were issued.

      

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
              6.

            	
              Authorization for
      Entering Plan

            

    

    

    
      	
            	
              (a)

            	
              An
      Eligible Employee may enter the Plan and become a Participant by filling
      out, signing and delivering to the Chief Financial Officer of the Company
      or his designee an authorization
  (“Authorization”):

            

    

    

    
      	
               
      

            	
              (i)

            	
              stating
      the whole percentage or amount of Compensation to be deducted from his or
      her Compensation by the Company (or the Designated Subsidiary) employing
      such Participant on each payday covering the Offering
    Period;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              authorizing
      the purchase of Common Stock for him or her in each Offering Period on the
      Offer Termination Date in accordance with the terms of the
      Plan;

            

    

     

    
      	
            	
              (iii)

            	
              specifying
      the exact name in which Common Stock purchased for him or her is to be
      issued in accordance with Section 11 hereof;
and

            

    

     

    
      	
            	
              (iv)

            	
              at
      the discretion of the Employee in accordance with Section 14, designating
      a beneficiary who is to receive any Common Stock and/or cash in the event
      of his or her death.

            

    

    

    Such
Authorization must be received by the Chief Financial Officer of the Company or
his designee at least ten (10) business days or such shorter time period as
determined by the Company in its sole discretion before an Offering Commencement
Date.

    

    
      	
            	
              (b)

            	
              The
      Participating Employer will accumulate and hold for the Participant’s
      Account the amounts deducted from his or her Compensation.  Such
      Account shall be a separate bookkeeping account maintained by the
      Participating Employer for each Participant, and the amount of each
      Participant’s payroll deductions shall be credited to such
      Account.  No interest will accrue or be paid
      thereon.  Participants may not make any separate contributions
      into their Account.  Payroll deductions shall not be held in any
      segregated trust fund and may be commingled with the general assets of the
      Participating Employer and used for general corporate
      purposes.

            

    

    

    
      	
            	
              (c)

            	
              Unless
      the Participant files a new Authorization (in accordance with Section 9),
      withdraws from the Plan, ceases to be an Eligible Employee or terminates
      his or her employment, such Authorization will continue in effect for each
      subsequent Offering Period as long as the Plan remains in
      effect.

            

    

    

    
      	
              7.

            	
              Maximum Amount of
      Payroll Deductions

            

    

    

    
      A
Participant may authorize payroll deductions from his or her Compensation in
effect during an Offering Period; provided that the maximum percentage or amount
shall not exceed the amount set forth in Section 4(e) hereof and shall be
reduced, as necessary, to comply with such limit.  If, after giving
effect to other authorized payroll deductions, the Participant does not have a
sufficient amount of Compensation available to cover the full amount of his or
her elected payroll deduction for Common Stock purchases under the Plan, the
payroll deduction rate will be reduced to the amount available for that
applicable pay period or periods and the elected rate will be reinstated when/if
the Participant has the requisite amount of available Compensation to do so. The
Participant shall not be entitled to any accelerated or increased deduction
rates for any missed deductions.

       

        
          
             

          

          
            4

            
              

            

          

          
             

          

        
 

    

    
      
        	
                8.

              	
                Unused Payroll
      Deductions

              

      

    

    
      

    

    
      Only
whole shares of Common Stock may be purchased.  Any balance remaining
in a Participant’s Account after a purchase, which is insufficient to purchase a
whole share of Common Stock at the Option Exercise Price, will be reported to
the Participant and will, in the sole discretion of the Company, either be (i)
carried forward to the next Offering Period or (ii) refunded to the Participant
in the next applicable payroll period.  However, in no event will the
amount of the unused payroll deductions carried forward from a payroll period
exceed the Option Exercise Price per share for the preceding Offering
Period.  If for any Offering Period the amount of unused payroll
deductions should exceed the Option Exercise Price per share, the amount of the
excess for any Participant shall be refunded to such Participant, without
interest.

    

    
       

    

    
      	
              9.

            	
              Change in Payroll
      Deductions

            

    

    

    A
Participant may increase or decrease the amount of his or her payroll
deductions, effective with respect to the next Offering Period, by filling out,
signing and delivering to the Chief Financial Officer of the Company or his
designees a new Authorization at least ten (10) business days before the
commencement of such next Offering Commencement Date; provided, however, that upon
the consent of the Committee, a Participant may change his or her payroll
deduction at any time prior to the applicable Offering Commencement
Date.  An Employee may not increase or decrease his Payroll Deductions
with respect to an on-going Offering Period.

    

    
      	
              10.

            	
              Withdrawal from the
      Plan

            

    

    

    
      	
            	
              (a)

            	
              A
      Participant may withdraw from the Plan and withdraw all but not less than
      all of the payroll deductions credited to his or her Account under the
      Plan prior to an Offering Termination Date by delivering a notice to the
      Chief Financial Officer of the Company or his designee (a “Withdrawal
      Notice”) at least ten days prior to such Offering Termination Date, in
      which event the Company will promptly refund without interest the entire
      balance of such Employee’s deductions not theretofore used to purchase
      Common Stock under the Plan.

            

    

    

    
      	
            	
              (b)

            	
              If
      the Participant withdraws from the Plan, his purchase rights under the
      Plan will be terminated and no further payroll deductions will be
      made.  To re-enter the Plan, such an Employee must file a new
      Authorization at least ten (10) business days before the next Offering
      Commencement Date.  Such Authorization will become effective for
      the Offering Period that commences on such Offering Commencement
      Date.

            

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
              11. 

            	
              Issuance of
      Stock

            

    

    

    The
Committee may in its sole discretion retain an Agent to act as the agent of the
Company with regard to the administration of the Plan.  As soon as
administratively feasible following Option exercise, the Committee shall cause
the Company to issue Common Stock in book entry form for the benefit of each
Participant and the Company and/or the Agent shall make an entry on its books
and records indicating that the shares of Common Stock purchased in connection
with such exercise have been duly issued to each
Participant.  Notwithstanding the foregoing, the Committee in its
discretion may instead deliver certificates representing the shares of Common
Stock issued to Participants. A Participant shall have the right at any time to
request in writing a certificate or certificates for all or a portion of the
whole shares of Common Stock purchased hereunder for his/her Account held in
book entry form.  Following receipt of such request, the Company or
the Agent shall cause the Company’s transfer agent to deliver such
certificate(s) to the Participant.  Common Stock purchased under the
Plan will be issued only in the name of the Participant or, if the Participant’s
Authorization specifies, in the name of the Participant and another person of
legal age (to hold property) as joint tenants with rights of
survivorship.

    

    The
Participant shall have no voting rights, or rights to dividends declared by the
Company in respect of any shares covered by his or her Options hereunder until
such Options have been exercised pursuant to the terms of the Plan.

    

    The
Committee, in its discretion, may impose restrictions on the transferability of
shares of Common Stock acquired pursuant to this Plan and may cause to be placed
on all stock certificates legends setting forth any such restrictions on
transferability instructing the transfer agent to notify the Company of any
transfer of such shares, and may require that any shares acquired pursuant to
the Plan be held in the Participants’ book Accounts until the expiration of any
restrictions.

    

    
      	
              12. 

            	
              No Transfer or
      Assignment of Employee’s
Rights

            

    

    

    Neither
payroll deductions credited to a Participant’s Account, nor any Options granted
to a Participant, may be transferred or assigned to, or availed of by, any other
person other than the Participant, except by will or the laws of descent and
distribution.  Any Option granted to an Employee may be exercised only
by him or her during his or her lifetime, except as provided in Section 13 in
the event of an Employee’s death.

    

    
      	
              13. 

            	
              Termination of
      Employee’s Rights

            

    

    

    
      	
            	
              (a)

            	
              Except
      as set forth in the last paragraph of this Section 13, an Employee’s
      rights under the Plan will terminate when he or she terminates employment,
      dies, or ceases to be an Eligible Employee.  A Withdrawal Notice
      will be considered as having been received from the Employee on the date
      his or her employment ceases, and all payroll deductions not used to
      purchase Common Stock will be
refunded.

            

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	
            	
              (b)

            	
              Upon
      termination of the Employee’s employment because of death, the Employee’s
      beneficiary (as provided in Section 14) shall have the right to elect, by
      written notice given to the Chief Financial Officer of the Company or his
      designee prior to the expiration of the thirty (30) day period (or such
      shorter period if the next Offering Termination Date is less than 30 days
      after the Employee’s death) commencing with the date of the death of the
      Employee, either (i) to withdraw without interest, all of the payroll
      deductions credited to the Employee’s Account under the Plan, or (ii) to
      exercise the Employee’s Option for the purchase of shares of Common Stock
      on the next Offering Termination Date following the date of the Employee’s
      death for the purchase of that number of whole shares of Common Stock
      reserved for the purpose of the Plan which the accumulated payroll
      deductions in the Employee’s Account at the date of the Employee’s death
      will purchase at the applicable Option Exercise Price (subject to the
      maximum number set forth in Section 5), and any excess in such Account
      will be returned to said beneficiary.  In the event that no such
      written notice of election shall be duly received by the Chief Financial
      Officer of the Company or his designee, the beneficiary shall
      automatically be deemed to have elected to withdraw the payroll deductions
      credited to the Participant’s Account at the date of the Participant’s
      death and the same will be paid promptly to said beneficiary, without
      interest.

            

    

    

    
      
        	
                14. 

              	
                Designation of
      Beneficiary

              

      

    

    

    A
Participant may file a written designation of a beneficiary who is to receive
any Common Stock and/or cash credited to his/her Account upon his or her
death.  Such designation of beneficiary may be changed by the
Participant at any time by written notice.  Upon the death of a
Participant and upon receipt by the Company of proof of the identity and
existence at the Participant’s death of a beneficiary validly designated under
the Plan, the Company shall deliver such Common Stock and/or cash to the
designated beneficiary or, if none, to the  executor or administrator
of the estate of the Participant, or if, to the knowledge of the Company, no
such executor or administrator has been appointed, the Company, in the
discretion of the Committee, may deliver such Common Stock and/or cash to the
spouse or to any one or more dependents of the Participant as the Committee may
designate.  No beneficiary shall, prior to the death of the
Participant by whom he or she has been designated, acquire any interest in the
Common Stock or cash credited to the Participant under the Plan.

    

    
      
        	
                15.

              	
                Termination and
      Amendments to Plan

              

      

    

    

    
      	
            	
              (a)

            	
              The
      Plan may be terminated at any time by the Company’s Board of
      Directors.  Upon such termination or any other termination of
      the Plan, all payroll deductions not used to purchase Common Stock will be
      refunded without interest.

            

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      
        	
              	
                (b)

              	
                The
      Board of Directors reserves the right to amend the Plan from time to time
      in any respect; provided, however, that no amendment shall be effective
      without stockholder approval if the amendment would (a) increase the
      aggregate number of shares of Common Stock to be offered under the Plan
      (other than an increase merely reflecting a change in the number of
      outstanding shares, such as a stock dividend or stock split), or (b)
      change the designation of corporations whose Employees may be offered
      Options under the Plan, expressly provided, however, that the Committee
      may, without stockholder approval, designate participating subsidiaries
      and other affiliates in accordance with Section 18 including, without
      limitation, those corporations becoming affiliated with the Company after
      the adoption and approval of the Plan.  The Committee may also
      amend the Plan from time to time in a manner consistent with the Board’s
      power to amend, suspend or discontinue the
Plan.

              

      

    

    

    
      	
              16.

            	
              Sale of Stock
      Purchased Under the Plan and Tax
  Withholding

            

    

    

    
      	
            	
              (a)

            	
              Any
      Participant who sells or otherwise transfers shares purchased under the
      Plan within two (2) years after the beginning of the Offering Commencement
      Period in which the shares were purchased must, within thirty (30) days of
      such transfer notify the Chief Financial Officer of the Company or his
      designee in writing of such transfer, showing the number of such shares
      disposed of, and providing such additional information as the Company may
      require.

            

    

    

    
      	
            	
              (b)

            	
              To
      the extent that a Participant realizes ordinary income in connection with
      a sale or other transfer of any shares of Common Stock purchased under the
      Plan, the Company or other Participating Employer shall, to the extent
      required by applicable law, withhold amounts needed to cover such taxes
      from any payments otherwise due and owing to the Participant or from
      shares that would otherwise be issued to the Participant
      hereunder.

            

    

    

    
      	
              17.

            	
              Company’s Payment of
      Plan Expenses

            

    

    

    The
Company will bear all costs of administering and carrying out the Plan;
provided, however, that a Participant shall be solely responsible for brokerage
commissions related to his or her sales of shares of Common Stock acquired
hereunder.

    

    
      	
              18.

            	
              Participating
      Subsidiaries

            

    

    

    The term
“Designated Subsidiaries” shall mean those United States or foreign subsidiaries
of the Company designated by the Committee or the Board, whose Employees shall
be eligible to be granted Options under the Plan.  The Board or
Committee may designate a subsidiary, or terminate the designation of a
subsidiary, without the approval of the stockholders of the
Company.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	
              19. 

            	
              Administration of the
      Plan

            

    

    

    
      	
            	
              (a)

            	
              The
      Plan shall be administered by the Compensation Committee of the Board of
      Directors.  No member of the Committee shall be eligible to
      participate in the Plan while serving as a member of the
      Committee.  The Committee shall have full authority
      to:

            

    

    

    
      	
               
      

            	
              (i)

            	
              determine
      when and how Options shall be granted and the provisions of each
      Offering;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              designate
      from time to time which subsidiaries of the Company shall be eligible to
      participate in the Plan;

            

    

    

    
      	
            	
              (iii)

            	
              construe
      and interpret the Plan and Options granted under the
  Plan;

            

    

    

    
      	
            	
              (iv)

            	
              establish
      rules for the administration of the Plan and make administrative decisions
      regarding the Plan; and

            

    

    

    
      	
               
      

            	
              (v)

            	
              remedy
      any defect, or omission or inconsistency in the Plan in a manner and to
      the extent necessary or expedient to make the Plan fully
      effective.

            

    

    

    All
designations, determinations, interpretations, and other decisions made by the
Committee under or with respect to the Plan shall be final, conclusive, and
binding upon all persons, including the Company, any affiliate, any Participant,
any holder or beneficiary of any right of participation, and any employee of the
Company or of any affiliate.

    

    The
Committee may delegate any one or more of its administrative functions (other
than those set forth in (i) and (ii) above) to any individual(s) of its choice,
in which case the use of the term “Committee” when used in reference to such
functions under the Plan shall refer to such delegatee.

    

    
      	
            	
              (b)

            	
              Promptly
      after the end of each Offering Period, the Company shall prepare and
      distribute to each Participant in the Plan a report containing the amount
      of the Participant’s accumulated payroll deductions as of the Offering
      Termination Date, the Option Exercise Price for such Offering Period, the
      number of shares of Common Stock purchased by the Participant with the
      Participant’s accumulated payroll deductions, and the amount of any unused
      payroll deductions either to be carried forward to the next Offering
      Period, or returned to the Participant without
  interest.

            

    

    

    
      	
            	
              (c)

            	
              No
      member of the Board of Directors or the Committee shall be liable for any
      action or determination made in good faith with respect to the Plan or any
      option granted under it. The Company shall indemnify each member of the
      Board of Directors and the Committee to the fullest extent permitted by
      law with respect to any claim, loss, damage or expense (including counsel
      fees) arising in connection with their responsibilities under this
      Plan.

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	
              20.

            	
              Shareholder
      Status/Employment

            

    

    

    
      	
            	
              (a)

            	
              Neither
      the granting of an Option to an Employee nor the deductions from his or
      her pay shall confer any rights of share ownership with respect to the
      shares covered by such Option until such shares have been purchased by and
      issued to him or her.

            

    

    

    
      	
            	
              (b)

            	
              Neither
      the Plan or any Option granted hereunder confers upon any Employee the
      right to continued employment with the Company or any of its Designated
      Subsidiaries, nor will an Employee’s participation in the Plan restrict or
      interfere in any way with the right of the Company or any of its
      Designated Subsidiaries to terminate the Employee’s employment at any
      time, unless otherwise restricted by a separate agreement between the
      Company and Employee.

            

    

    

    
      	
              21.

            	
              Application of
      Funds

            

    

    

    The
proceeds received by the Company from the sale of Common Stock upon the exercise
of Options granted under the Plan may be used for any corporate purposes, and
the Company shall not be obligated to segregate Participants’ payroll
deductions.

    

    
      	
              22. 

            	
              Governmental
      Regulation

            

    

    

    The
Company’s obligation to sell and deliver shares of the Company’s Common Stock
under this Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance or sale of such stock.
In this regard, the Board of Directors or the Committee may, in its discretion,
require as a condition to the exercise of any Option that a Registration
Statement under the Securities Act of 1933, as amended, with respect to the
shares of Common Stock reserved for issuance upon exercise of the Option shall
be effective.

    

    
      	
              23. 

            	
              Effect of Changes of
      Common Stock

            

    

    

    In the
event a stock dividend, extraordinary cash dividend, spin-off, split-up,
combination, exchange of shares, merger, consolidation, reorganization,
recapitalization, or other similar corporate event affects the Common Stock such
that an adjustment is required in order to preserve the benefits or potential
benefits intended to be made available under the Plan, then the Committee shall,
in its sole discretion, and in such manner as the Committee may deem equitable,
adjust the maximum number of shares available under the Plan, the number and
kind of shares subject to outstanding rights to purchase, and the terms relating
to the purchase price with respect to such outstanding rights and take such
other actions as the Committee, in its opinion, deems appropriate under the
circumstances.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	
              24.

            	
              Merger, Liquidation or
      Dissolution of the Company

            

    

    

    In the
event of: (1) the Company’s dissolution or liquidation, (2) a merger or
consolidation in which the Company is not the surviving corporation; (3) a
reverse merger in which the Company is the surviving corporation but the shares
of common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) the acquisition by any person, entity or group of the
beneficial ownership of the Company’s securities representing at least 50% of
the combined voting power entitled to vote in the election of directors; then,
the Company may, in its sole discretion either: (i) terminate the Plan and
return all accumulated payroll deductions to the Participants; (ii) terminate
the Plan and purchase shares of Common Stock for each Participant’s Account as
if the effective date of the termination were a purchase date; (iii) cause the
surviving or acquiring corporation to assume outstanding rights or substitute
similar rights for those under the Plan, (iv) cause such rights to continue in
full force and effect; (v) use Participants’ accumulated payroll deductions to
purchase Common Stock immediately prior to the transaction and terminate
Participants’ rights under the then ongoing Offering Period, or (vi) use any
combination of the foregoing as long as all Participants are treated
similarly.

    

    
      	
              25.

            	
              Approval of
      Stockholders

            

    

    

    The Plan
shall be submitted for approval of the Company’s stockholders within twelve (12)
months after the Plan’s adoption date.  No Options may be exercised
prior to such stockholder approval.  If Company stockholders do not so
approve, this Plan shall be void and without effect and any payroll deductions
shall be refunded.

    

    
      	
              26.

            	
              Governing
      Law

            

    

    

    To the
extent not preempted by federal law, all legal questions pertaining to the Plan
shall be determined in accordance with the laws of the State of New
York.

    

    
      	
              27.

            	
              Defined
      Terms.

            

    

    

    
      	
            	
              (a)

            	
              “Account” means the
      bookkeeping account established for a Participant under the Plan to record
      his payroll deductions and Common Stock balance under the
      Plan.

            

    

    

    
      	
            	
              (b)

            	
              “Affiliate” means any
      subsidiary corporation of the Company, as defined in Section 424(o) of the
      Code.

            

    

    

    
      	
            	
              (c)

            	
              “Agent” means the
      brokerage firm, bank or other financial institution, entity or person(s)
      if any, engaged to act as agent of the Company or Committee with regard to
      the administration of the Plan.

            

    

    

    
      	
            	
              (d)

            	
              “Authorization” means a
      Participant’s payroll deduction authorization with respect to an Offering
      Period.

            

    

    

    
      	
            	
              (e)

            	
              “Board of Directors”
      means the board of directors of the
Company.

            

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	
            	
              (f)

            	
              “Code” means the
      Internal Revenue Code of 1986, as
amended.

            

    

    

    
      	
            	
              (g)

            	
              “Committee” means the
      Compensation Committee of the
Company.

            

    

    

    
      	
            	
              (h)

            	
              “Common Stock” means the
      Company’s $.01 par value common
stock.

            

    

    

    
      	
            	
              (i)

            	
              “Company” means
      AboveNet, Inc.

            

    

    

    
      	
            	
              (j)

            	
              “Compensation” means
      base salary.

            

    

    

    
      	
            	
              (k)

            	
              “Designated Subsidiaries”
      means those subsidiaries of the Company that have been designated
      as eligible to participate in the Plan with respect to their Employees in
      accordance with Section 18 of the
Plan.

            

    

    

    
      	
            	
              (l)

            	
              “Eligible Employee” means
      any Employee who has met the eligibility requirements of Section 2 and,
      therefore, is eligible to participate in Offerings under the
      Plan.

            

    

    

    
      	
            	
              (m)

            	
              “Employee” means any
      person who is employed by the Company or any one of its Designated
      Subsidiaries for tax purposes.

            

    

    

    
      	
            	
              (n)

            	
              “Offering” means the
      grant of an option to purchase shares of Common Stock under the
      Plan.

            

    

    

    
      	
            	
              (o)

            	
              “Offering Commencement Date”
      means a date selected by the Committee for an Offering to
      commence.

            

    

    

    
      	
            	
              (p)

            	
              “Offering Period” means
      the period during which payroll deductions are accumulated for purchases
      of Common Stock under the Plan, as determined in Section
    4(a).

            

    

    

    
      	
            	
              (q)

            	
              “Offering Termination Date”
      means the last trading day in an Offering Period, as determined in
      Section 4 of the Plan.

            

    

    

    
      	
            	
              (r)

            	
              “Option” means an option
      to purchase shares of Common Stock granted pursuant to the
      Plan.

            

    

    

    
      	
            	
              (s)

            	
              “Option Exercise Price”
      means the purchase price for the Common Stock offered under this Plan, as
      determined in Section 4 hereof.

            

    

    

    
      	
            	
              (t)

            	
              “Participant” means an
      Eligible Employee who has executed, and not withdrawn, an Authorization
      with respect to an Offering Period.

            

    

    

    
      
        	 
      	 
      	
                ABOVENET,
      INC.

              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                By:  

              	
                /s/ Robert Sokota

              	 
      
	 
      	 
      	
                Name:  Robert
      Sokota

              	 
      
	 
      	 
      	
                Title:  Senior
      Vice President and General Counsel

              	 
      

      

    

     

    
      
         

      

      
        12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}]]