Document:

EXHIBIT 10.1

 

Silicon Valley Bank

 

Amended and Restated

Loan and Security Agreement

 

	
  Borrower:

  	
   

  	
  COGENT COMMUNICATIONS, INC., a
  Delaware corporation (the “Company”)

  
	
   

  	
   

  	
  COGENT COMMUNICATIONS GROUP, INC., a
  Delaware corporation (the “Parent”)

  
	
   

  	
   

  	
  NETWORK EQUIPMENT SOLUTIONS, LLC, a
  Delaware limited liability company (“NES”)

  
	
   

  	
   

  	
  UFO GROUP, INC., a Delaware
  corporation

  
	
   

  	
   

  	
  ALLIED RISER COMMUNICATIONS CORPORATION, a
  Delaware corporation

  
	
   

  	
   

  	
  ALLIED RISER OPERATIONS CORPORATION, a
  Delaware corporation

  
	
   

  	
   

  	
  COGENT CANADA HOLDINGS, INC., a
  Nova Scotia corporation

  
	
   

  	
   

  	
  COGENT CANADA, INC., a
  Canadian Federal corporation; and certain Additional Borrowers added
  to this Agreement from time to time.

  

 

Address for

all Borrowers

except
NES:                               1015
31st Street, NW, Washington, DC 
20007

 

Address

for NES:                                                 2711
Centerville Road, Suite 400, Wilmington, Delaware 19808

 

Date:                                                                   December
16, 2005

 

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into on the
above date between SILICON VALLEY BANK (“Silicon”), whose address is 3003
Tasman Drive, Santa Clara, California 95054 and with a loan production office
located at 3353 Peachtree Road, NE, Suite M-10, Atlanta, Georgia 30326 and the
borrowers named above or now or hereafter added to this Agreement (jointly and
severally, the “Borrower”), whose chief executive office is located at one of
the two above addresses (“Borrower’s Address”). 
The Schedule to this Agreement (the “Schedule”) shall for all purposes
be deemed to be a part of this Agreement, and the same is an integral part of
this Agreement.  (Definitions of certain
terms used in this Agreement are set forth in Section 8 below.)

 

 

RECITALS

 

A.                                               Silicon and Borrower have entered into that
certain Loan and Security Agreement dated March 9, 2005 (together with all
modifications thereto, extensions or renewals thereof and substitutions
therefore being hereinafter referred to as, the “Original Loan Agreement”),
pursuant to which, Silicon agreed to make certain loans including, the Loans
described therein, and other financial accommodations to Borrower.

 

B.                                                 Borrower has requested and Silicon has agreed
pursuant to this Agreement to (i) increase the maximum principal amount of the
Loans from Ten Million Dollars ($10,000,000) to Twenty Million Dollars
($20,000,000), (ii) add a foreign exchange sub-limit, and (iii) amend and
restate the Original Loan Agreement in its entirety.

 

NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Silicon and Borrower agree that
the Original Loan Agreement is amended and restated in its entirety as follows:

 

1.                                      LOANS.

 

1.1  Loans.  Silicon will make Loans up to the amounts (the
“Credit Limit”) shown on the Schedule, by advancing funds into the Company’s
operating account at Bank, provided no Default or Event of Default has occurred
and is continuing, and subject to deduction of Reserves for accrued interest
and such other Reserves as Silicon deems proper from time to time in its good
faith business judgment.

 

1.2 
Interest.  All Loans and all other monetary Obligations
shall bear interest at the rate shown on the Schedule, except where expressly
set forth to the contrary in this Agreement. 
Interest shall be payable monthly, on the last day of the month.  Interest may, in Silicon’s discretion, be
charged to Borrower’s operating account, and the same shall thereafter bear
interest at the same rate as the other Loans. 
If at any time there are insufficient funds in the Borrower’s operating
account to pay the Obligations when due, Silicon may, in its discretion, charge
interest to the Cash Collateral Account.

 

1.3 
Overadvances.  If at any time or for any reason
the total of all outstanding Loans and all other monetary Obligations exceeds
the Credit Limit (an “Overadvance”), Borrower shall immediately pay the amount
of the excess to Silicon, without notice or demand.

 

1.4  Fees. 
Borrower shall pay Silicon the fees shown on the Schedule, which are in
addition to all interest and other sums payable to Silicon and are not
refundable.

 

1.5  Loan
Requests.  To obtain a Loan, Borrower shall make a
request to Silicon by facsimile, telephone or electronically.  Loan requests received after 12:00 Noon
(Pacific time) may not be considered by Silicon until the next Business
Day.  Silicon may rely on any telephone
request for a Loan given by a person whom Silicon believes is an authorized
representative of Company, and Borrower will indemnify Silicon for any loss
Silicon suffers as a result of that reliance.

 

1.6  Cash
Collateral Account.  Borrower shall direct the mailing of all
Items of Payment from its Account Debtors to the lock box account maintained
with SunTrust Bank, N.A. or to such other additional or replacement post-office
boxes pursuant to the request of Silicon from time to time (collectively, the
“Lockbox”).  Silicon shall have
unrestricted and exclusive access to the Lockbox.

 

2

 

All funds in the Lockbox shall be forwarded to a bank account to be
maintained at Silicon and from which Silicon alone has power of access and
withdrawal (the “Cash Collateral Account”). 
Each deposit into the Cash Collateral Account shall be made not later
than the next Business Day after the date of receipt of the Items of Payment in
the Lockbox.  The Items of Payment shall
be deposited in precisely the form received, except for the endorsements of
Borrower where necessary to permit the collection of any such Items of Payment,
Borrower hereby agreeing to make such endorsement.  In the event Borrower shall fail to do so,
Silicon is hereby authorized by Borrower to make the endorsement in the name of
Borrower.  Borrower will not commingle
any Items of Payment with any of the other funds or property of Borrower, but
will hold them separate and apart in trust and for the account of Silicon.

 

1.7  Letters
of Credit.  At the request of Borrower, Silicon may, in
its good faith business judgment, issue or arrange for the issuance of letters
of credit for the account of Borrower, in each case in form and substance satisfactory
to Silicon in its sole discretion (collectively, “Letters of Credit”).  The aggregate face amount of all Letters of
Credit from time to time outstanding shall not exceed the amount shown on the
Schedule (the “Letter of Credit Sublimit”), and shall be reserved against Loans
which would otherwise be available hereunder, and in the event at any time
there are insufficient Loans available to Borrower for such reserve, Borrower
shall deposit and maintain with Silicon cash collateral in an amount at all times
equal to such deficiency, which shall be held as Collateral for all purposes of
this Agreement for such Letters of Credit until there is no such deficiency at
which time, provided there is no Default or Event of Default such cash will be
returned to Borrower.  Borrower shall pay
all bank charges (including charges of Silicon) for the issuance of Letters of
Credit, together with such additional fee as Silicon’s letter of credit
department customarily charge in connection with the issuance of the Letters of
Credit.  Any payment by Silicon under or
in connection with a Letter of Credit shall constitute a Loan hereunder on the
date such payment is made unless repaid in full on the same Business Day.  Each Letter of Credit shall have an expiry
date no later than thirty (30) days prior to the Maturity Date.  Borrower hereby agrees to indemnify and hold
Silicon harmless from any loss, cost, expense, or liability, including payments
made by Silicon, expenses, and reasonable attorneys’ fees incurred by Silicon
arising out of or in connection with any Letters of Credit.  Borrower agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guaranteed by Silicon and opened for Borrower’s account or by Silicon’s
interpretations of any Letter of Credit issued by Silicon for Borrower’s
account, and Borrower understands and agrees that Silicon shall not be liable
for any error, negligence, or mistake, whether of omission or commission, in
following Borrower’s instructions or those contained in the Letters of Credit
or any modifications, amendments, or supplements thereto.  Borrower understands that Letters of Credit
may require Silicon to indemnify the issuing bank for certain costs or
liabilities arising out of claims by Borrower against such issuing bank.  Borrower hereby agrees to indemnify and hold
Silicon harmless with respect to any loss, cost, expense, or liability incurred
by Silicon under any Letter of Credit as a result of Silicon’s indemnification
of any such issuing bank.  The provisions
of this Loan Agreement, as it pertains to Letters of Credit, and any other Loan
Documents relating to Letters of Credit are cumulative.  In the event of any conflict between this
Agreement and the terms of any documents executed in connection with such
Letters of Credit, the terms of such letter of credit documents shall control.

 

1.8  Cash
Management/ACH Services.  As part of the Loans, Borrower
may use up to the amount of Cash Management Services Sublimit as set forth on
the Schedule for Silicon’s cash management services, which may include merchant
services, direct deposit of payroll, business credit card, and check cashing
services identified in various cash management services agreements related to
such services (the “Cash Management Services”). 
Such aggregate amounts utilized under the Cash Management Services

 

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Sublimit will at all times reduce the amount otherwise available to be
borrowed under the Loans.  Any amounts
Silicon pays on behalf of Borrower or any amounts that are not paid by Borrower
for any Cash Management Services will be treated as Loans and will accrue
interest pursuant to this Agreement.

 

1.9  Foreign
Exchange Sublimit.  At the request of Borrower, Silicon may, in
its good faith business judgment, permit the Borrower to enter into foreign
exchange forward contracts with Silicon under which Borrower commits to
purchase from or sell to Silicon a set amount of foreign currency more than one
(1) Business Day after the contract date (the “FX Forward Contract”).  During all times that any FX Forward Contract
is in place, Silicon will subtract ten percent (10%) of each outstanding FX
Forward Contract (the “FX Reserve”) from the Foreign Exchange Sublimit (as
hereinafter defined).  The total FX
Forward Contracts at any one time may not exceed ten (10) times the amount of
the FX Reserve.  Silicon may terminate
the FX Forward Contracts if a Default or an Event of Default occurs and is
continuing.  The aggregate face amount of
all FX Forward Contracts and the amount of all FX Reserves shall not exceed the
amount shown on the Schedule (the “Foreign Exchange Sublimit”), and shall be
reserved against Loans which would otherwise be available hereunder, and in the
event at any time there are insufficient Loans available to Borrower for such
reserve, Borrower shall deposit and maintain with Silicon cash collateral in an
amount at all times equal to such deficiency, which shall be held as Collateral
for all purposes of this Agreement.

 

1.10  Inter-Company Debt, Contribution.  Without implying any limitation on the joint
and several nature of the Obligations, Silicon agrees that, notwithstanding any
other provision of this Agreement, the Persons included in the term “Borrower”
may create reasonable inter-company indebtedness between or among the Persons
included in the term “Borrower” with respect to the allocation of the benefits
and proceeds of the Loans, Letters of Credit, Cash Management Services and
Foreign Exchange Contracts under this Agreement.  The Persons included in the term “Borrower”
agree among themselves, and Silicon consents to that agreement, that each such
Person shall have rights of contribution from all of the such Persons to the
extent such Person incurs Obligations in excess of the proceeds of the Loans
received by, or allocated to purposes for the direct benefit of, such
Person.  All such indebtedness and rights
shall be, and are hereby agreed by the Persons included in the term “Borrower”
to be, subordinate in priority and payment to the repayment in full in cash of
the Obligations, and, unless Silicon agrees in writing otherwise, shall not be
exercised or repaid in whole or in part until all of the Obligations have been
paid in full in cash.  Each Person
included in the term “Borrower” agrees that all of such inter-company
indebtedness and rights of contribution are part of the Collateral and secure
the Obligations.  Each Person included in
the term “Borrower” hereby waives all rights of counter claim, recoupment and
offset between or among themselves arising on account of that indebtedness and
otherwise.  No Person included in the
term “Borrower” shall evidence the inter-company indebtedness or rights of
contribution by note or other instrument, unless the original of each such note
or other instrument will, upon Silicon’s request, be delivered to Silicon, and
shall not secure such indebtedness or rights of contribution with any lien or
security.

 

1.11  Borrowers are Integrated Group.

 

(i)                                     Each Person included in the term “Borrower”
hereby represents and warrants to Silicon that each of them will derive
benefits, directly and indirectly, from each Letter of Credit and from each
Loan, both in their separate capacity and as a member of the integrated group
to which each such Person belongs and because the successful operation of the
integrated group is dependent upon the continued successful performance of the
functions of the integrated group as a whole, because (i) the terms of the
consolidated financing provided under this Agreement are more favorable than
would

 

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otherwise
would be obtainable by such Persons individually, and (ii) the additional
administrative and other costs and reduced flexibility associated with
individual financing arrangements which would otherwise be required if
obtainable would substantially reduce the value to such Persons of the
financing.

 

(ii)                                  Each Person included in the term “Borrower”
hereby represents and warrants that all of the representations and warranties
contained in this Agreement are true and correct on and as of the date hereof
as if made on and as of such date, both before and after giving effect to this
Agreement, and that no Event of Default or Default has occurred and is
continuing or exists or would occur or exist after giving effect to this
Agreement.

 

1.12 Primary
Obligations. The obligations and liabilities of each Person
included in the term “Borrower”, as guarantor under this paragraph shall be
primary, direct and immediate, shall not be subject to any counterclaim,
recoupment, set off, reduction or defense based upon any claim that such Person
may have against any one or more of the other Persons included in the term
“Borrower”, Silicon and/or any other guarantor and shall not be conditional or
contingent upon pursuit or enforcement by Silicon of any remedies it may have
against Persons included in the term “Borrower” with respect to this Agreement,
whether pursuant to the terms thereof or by operation of law.  Without limiting the generality of the
foregoing, Silicon shall not be required to make any demand upon any of the
Persons included in the term “Borrower”, or to sell the Collateral or otherwise
pursue, enforce or exhaust its or their remedies against the Persons included
in the term “Borrower” or the Collateral either before, concurrently with or
after pursuing or enforcing its rights and remedies hereunder.  Any one or more successive or concurrent
actions or proceedings may be brought against each Person included in the term
“Borrower” under this paragraph , either in the same action, if any, brought
against any one or more of the Persons included in the term “Borrower” or in
separate actions or proceedings, as often as Silicon may deem expedient or
advisable.  Without limiting the
foregoing, it is specifically understood that any modification, limitation or
discharge of any of the liabilities or obligations of any one or more of the
Persons included in the term “Borrower”, any other guarantor or any obligor
under any of the Loan Documents, arising out of, or by virtue of, any
bankruptcy, arrangement, reorganization or similar proceeding for relief of
debtors under federal or state law initiated by or against any one or more of
the Persons included in the term “Borrower”, in their respective capacities as
borrowers and guarantors under this paragraph, or under any of the Loan
Documents shall not modify, limit, lessen, reduce, impair, discharge, or
otherwise affect the liability of each Borrower under this paragraph in any
manner whatsoever, and this paragraph shall remain and continue in full force
and effect.  It is the intent and purpose
of this paragraph that each Person included in the term “Borrower” shall and
does hereby waive all rights and benefits which might accrue to any other
guarantor by reason of any such proceeding, and the Persons included in the
term “Borrower” agree that they shall be liable for the full amount of the
obligations and liabilities under this paragraph regardless of, and
irrespective to, any modification, limitation or discharge of the liability of
any one or more of the other Persons included in the term “Borrower”, any other
guarantor or any obligor under any of the Loan Documents, that may result from
any such proceedings.

 

2.                                      SECURITY INTEREST.  To secure the payment and performance of
all of the Obligations when due, Borrower hereby grants to Silicon a security
interest in all of the following (collectively, the “Collateral”):  all right, title and interest of Borrower in
and to all of the following, whether now owned or hereafter arising or acquired
and wherever located:, all Inventory; all Equipment; the Collateral, including,
without limitation all Accounts, all Deposit Accounts; the Cash Collateral
Account, all Instruments; all Chattel Paper and Documents; all General
Intangibles (including without limitation all

 

5

 

intellectual property); all Investment
Property; all other property; and any and all claims, rights and interests in
any of the above, and all guaranties and security for any of the above, and all
substitutions and replacements for, additions, accessions, attachments,
accessories, and improvements to, and proceeds 
(including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties) of, any and all of the above, and all Borrower’s
books relating to any and all of the above.

 

3.                                      REPRESENTATIONS, WARRANTIES AND COVENANTS OF
BORROWER.

 

In
order to induce Silicon to enter into this Agreement and to make Loans, Borrower
represents and warrants to Silicon as follows, and Borrower covenants that the
following representations will continue to be true, and that Borrower will at
all times comply with all of the following covenants, throughout the term of
this Agreement and until all Obligations (other than any Obligations pursuant
to the indemnification provisions under Section 7.8 of this Agreement, which
survive repayment of the remaining Obligations) have been paid and performed in
full:

 

3.1 
Existence and Authority.  Borrower is and will continue
to be, duly organized, validly existing and in good standing under the laws of
the jurisdiction set forth on the first page of this Agreement.  Borrower is and will continue to be qualified
and licensed to do business in all jurisdictions in which any failure to do so
would result in a Material Adverse Change. 
The execution, delivery and performance by Borrower of this Agreement,
and all other documents contemplated hereby: (i) have been duly and validly
authorized; (ii) are enforceable against Borrower in accordance with their
terms (except as enforcement may be limited by equitable principles and by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
creditors’ rights generally); (iii) do not violate Borrower’s articles or
certificate of incorporation, or Borrower’s by-laws, or any law or any material
agreement or instrument which is binding upon Borrower or its property; and
(iv) do not constitute grounds for acceleration of any material indebtedness or
obligation under any agreement or instrument which is binding upon Borrower or
its property.

 

3.2  Name;
Trade Names and Styles.  The name of each Borrower set
forth in the heading to this Agreement is its correct name.  Listed in the Representations are all prior
names of Borrower and all of Borrower’s present and prior trade names known to
Borrower.  Borrower shall give Silicon
ten (10) days’ prior written notice before changing its name or doing business
under any other name.  Borrower has complied,
and will in the future comply, in all material respects, with all laws relating
to the conduct of business under a fictitious business name, except where the
failure to so comply would not reasonably be expected to result in a Material
Adverse Change.

 

3.3  Place of
Business; Location of Collateral.  The addresses set forth in the
heading to this Agreement and in the Representations is Borrower’s chief
executive office.  In addition, as of the
date hereof, Borrower has places of business and Collateral with a value in
excess of $1,000,000 is located only at the locations set forth in the
Representations.  Borrower will give
Silicon prompt written notice after opening any additional place of business,
changing its chief executive office, or moving any of the Collateral with a
value in excess of $500,000 to a location other than Borrower’s Address or one
of the locations set forth in the Representations, except that Borrower may
maintain places of business in the ordinary course of business at which not more
than $1,000,000 per location in fair market value of Equipment is located.

 

3.4  Title to
Collateral; Perfection; Permitted Liens.

 

(a)  Borrower is now, and will at
all times in the future be, the sole owner of all the Collateral, except for
items of Equipment which are leased to Borrower or sales or other transfers of
Collateral expressly

 

6

 

permitted by this Agreement.  The
Collateral now is and will remain free and clear of any and all Liens, charges,
security interests and encumbrances, except for Permitted Liens.  Silicon now has, and will continue to have, a
first-priority perfected and enforceable security interest in all of
Collateral, subject only to Permitted Liens and Borrower will at all times defend
Silicon and the Collateral against all claims of others, other than those
permitted under this Agreement.

 

(b)  Borrower has set forth in
the Representations all of Borrower’s Deposit Accounts, and Borrower will give
Silicon five (5) Business Days advance written notice before establishing any
new Deposit Accounts and at all times, Borrower will cause the institution
where any such new Deposit Account is maintained to execute and deliver to
Silicon a control agreement in form sufficient to perfect Silicon’s security
interest in the Deposit Account and otherwise satisfactory to Silicon in its
good faith business judgment.  Nothing
herein limits any requirements which may be set forth in the Schedule as to
where Deposit Accounts will be maintained.

 

(c)  In the event that Borrower
shall at any time after the date hereof have any commercial tort claims against
others, which it is asserting or intends to assert, and in which the potential
recovery exceeds $1,000,000, Borrower shall promptly notify Silicon thereof in
writing and provide Silicon with such information regarding the same as Silicon
shall reasonably request (unless providing such information would waive the
Borrower’s attorney-client privilege). 
Such notification to Silicon shall constitute a grant of a security
interest in the commercial tort claim and all proceeds thereof to Silicon, and
Borrower shall execute and deliver all such documents and take all such actions
as Silicon shall request in connection therewith.

 

(d)  Whenever any Collateral is
located upon premises in which any third party has an interest, Borrower shall,
whenever requested by Silicon, use commercially reasonable efforts to cause
such third party to execute and deliver to Silicon, in form acceptable to
Silicon, such waivers and subordinations as Silicon shall specify in its good
faith business judgment.

 

(e)  Borrower shall notify
Silicon promptly of any default or any event which with the giving of notice or
passage of time would constitute a default under the Allied Riser Notes.

 

3.5 
Maintenance of Collateral.  Borrower will maintain the
Collateral in good working condition (ordinary wear and tear excepted), and
Borrower will not use the Collateral for any unlawful purpose.  Borrower will promptly advise Silicon in
writing of any material loss or damage to the Collateral.

 

3.6  Books
and Records.  Borrower has maintained and will maintain at
Borrower’s Address complete and accurate books and records, comprising an
accounting system in accordance with GAAP.

 

3.7 
Financial Condition, Statements and Reports.  All
financial statements now or in the future delivered to Silicon have been and
will be prepared in conformity with GAAP and now and in the future will fairly
present the results of operations and financial condition of Borrower, in
accordance with GAAP, at the times and for the periods therein stated.  Between the last date covered by any such
statement provided to Silicon and the date hereof, there has been no Material
Adverse Change.

 

3.8  Tax
Returns and Payments; Pension Contributions. 
Borrower has filed, and will file when due, all required federal and
state tax returns and reports, and Borrower has paid, and will pay when due,
all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future shown thereon to be owed by Borrower.  Borrower may, however, defer payment of any
contested taxes, provided that Borrower: (i) in good faith contests Borrower’s
obligation to pay the taxes by appropriate proceedings promptly and diligently
instituted and conducted, (ii) notifies Silicon in writing of the commencement
of and any material development in the proceedings, and (iii) posts bonds or
takes any

 

7

 

other steps required to keep the contested taxes from becoming a lien
upon any of the Collateral, except and only to the extent such lien is a
Permitted Lien.  Borrower is unaware of
any claims or adjustments proposed for any of Borrower’s prior tax years which
could result in additional taxes in excess of $50,000 becoming due and payable
by Borrower.  Borrower has paid, and
shall continue to pay all amounts necessary to fund all present and future
pension, profit sharing and deferred compensation plans in accordance with
their terms, and Borrower has not and will not withdraw from participation in,
permit partial or complete termination of, or permit the occurrence of any
other event with respect to, any such plan which could reasonably be expected
to result in any material liability of Borrower, including any material
liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental agency.

 

3.9 
Compliance with Law.  Borrower has, to the best of
its knowledge, complied, and will comply, in all material respects, with all
provisions of all foreign, federal, state and local laws and regulations
applicable to Borrower, including, but not limited to, those relating to
Borrower’s ownership of real or personal property, the conduct and licensing of
Borrower’s business, and all environmental matters, except to the extent that
the noncompliance with or the nonobservance of could not reasonably be expected
to cause a Material Adverse Change.

 

3.10 
Litigation.  There is no claim, suit, litigation,
proceeding or investigation pending or (to best of Borrower’s knowledge)
threatened in writing against or affecting Borrower in any court or before any
governmental agency which could reasonably be expected to result, either
separately or in the aggregate, in any Material Adverse Change.  Borrower will promptly inform Silicon in
writing of any written claim, proceeding, litigation or investigation in the
future threatened in writing or instituted against Borrower involving any
single claim of $500,000 or more, or involving $750,000 or more in the
aggregate.

 

3.11  Use of
Proceeds.  All proceeds of all Loans shall be used
solely for lawful business purposes. 
Borrower is not purchasing or carrying any “margin stock” (as defined in
Regulation U of the Board of Governors of the Federal Reserve System) and no
part of the proceeds of any Loan will be used to purchase or carry any “margin
stock” or to extend credit to others for the purpose of purchasing or carrying
any “margin stock.”

 

3.12 
Material Subsidiaries.  All Material Domestic
Subsidiaries are parties to the Loan Documents.   All Non Material Subsidiaries are listed on Exhibit
B attached hereto.  Company will
promptly notify Silicon if at any time any Non Material Subsidiary becomes a
Material Domestic Subsidiary.

 

3.13  Non
Material Subsidiaries. 
All Subsidiaries listed on Exhibit C attached hereto are either
in the process of dissolving or are planning to dissolve (the “Dissolving
Subsidiaries”).  Each Dissolving
Subsidiary will file the necessary articles of dissolution with the
jurisdiction of incorporation and provide such evidence to Silicon within three
(3) Business Days of such filing. 
Borrower shall not make any loans, transfer any assets to, or guaranty
or otherwise become liable with respect to any obligation of any Dissolving
Subsidiary without the prior written consent of Silicon.

 

3.14  Material
Foreign Subsidiaries.  All
Material Foreign Subsidiaries are listed on Exhibit F attached
hereto.  Borrower will promptly notify
Bank upon the creation or acquisition of any new Material Foreign
Subsidiary.  All Accounts of Material
Foreign Subsidiaries now are and will remain free and clear of any and all
Liens, charges, security interests and encumbrances, except for Permitted
Liens.

 

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4.                                      ACCOUNTS.

 

4.1  Representations Relating to Accounts.  Borrower represents and warrants to Silicon as follows:  Each Account with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made: (i)
represent an undisputed bona fide existing unconditional obligation of the
Account Debtor created by the sale, delivery, and acceptance of goods or the
rendition of services, or the non-exclusive licensing of Intellectual Property,
in the ordinary course of Borrower’s business, and (ii) meet the Minimum
Eligibility Requirements set forth in Section 8 below.

 

4.2  Representations Relating to Documents and
Legal Compliance.  Borrower represents and warrants to Silicon
as follows:  All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing Eligible Accounts and Eligible Foreign Accounts are and shall be
true and correct and all such invoices, instruments and other documents and all
of Borrower’s books and records are and shall be genuine and in all respects
what they purport to be.  All sales and
other transactions underlying or giving rise to each Eligible Accounts and
Eligible Foreign Account shall comply in all material respects with all
applicable laws and governmental rules and regulations.  To the best of Borrower’s knowledge, all
signatures and endorsements on all documents, instruments, and agreements
relating to all Eligible Accounts and Eligible Foreign Accounts are and shall
be genuine, and all such documents, instruments and agreements are and shall be
legally enforceable in accordance with their terms.

 

4.3  Schedules and Documents Relating to Accounts.
 Borrower shall deliver to Silicon transaction reports and schedules of
collections, as provided in Section 5.3 of this Agreement and the Schedule, on
Silicon’s standard forms; provided, however, that Borrower’s failure to execute
and deliver the same shall not affect or limit Silicon’s security interest and
other rights in all of Borrower’s Accounts, nor shall Silicon’s failure to
advance or lend against a specific Account affect or limit Silicon’s security
interest and other rights therein.  If
requested by Silicon, Borrower shall furnish Silicon with copies (or, at
Silicon’s request after the occurrence of an Event of Default, originals) of
all contracts, orders, invoices, and other similar documents, and all shipping
instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Accounts, and Borrower warrants the genuineness of all of the foregoing.  Borrower shall also furnish to Silicon an
aged accounts receivable trial balance as provided in the Schedule.  In addition, Borrower shall deliver to
Silicon, on its request, the originals of all instruments, chattel paper,
security agreements, guarantees and other documents and property evidencing or
securing any Accounts, in the same form as received, with all necessary
indorsements, and copies of all credit memos.

 

4.4  Collection of Accounts.  Borrower shall have the right to collect all
Domestic Accounts, unless and until a Default or an Event of Default has
occurred and is continuing, and all Foreign Accounts.  Whether or not an Event of Default has
occurred and is continuing, Borrower shall hold all payments on and proceeds of
Domestic Accounts in trust for Silicon, and Borrower shall immediately deliver
all such payments and proceeds to Silicon in their original form, duly
endorsed, to be applied to the Obligations in such order as Silicon shall
determine.  Silicon may, in its good
faith business judgment, at any time require that all Domestic Accounts and all
proceeds of Domestic Accounts be segregated from other funds and monies of
Borrower and require that such Domestic Accounts and proceeds be deposited by
Borrower into a lockbox account or, or such other “blocked account” as Silicon
may specify, pursuant to a blocked account agreement in such form as Silicon
may specify in its good faith business judgment.

 

4.5.  Remittance of Proceeds.  All proceeds arising from the disposition of any Domestic Accounts
shall be delivered, in kind, by Borrower to Silicon into an account designated
by Silicon in the original

 

9

 

form in which received by
Borrower not later than the following Business Day after receipt by Borrower,
to be applied to the Obligations in such order as Silicon shall determine;
provided, if no Default or Event of Default has occurred and is continuing,
Borrower shall not be obligated to remit to Silicon the proceeds of the sale of
Equipment disposed of by Borrower, and provided, further, if no Default or
Event of Default has occurred and is continuing, Borrower shall not be
obligated to remit to Silicon the proceeds of the sale of worn out or obsolete
Equipment disposed of in good faith in an arm’s length transaction for an
aggregate purchase price of Ten Million Dollars ($10,000,000) or less (for all
such transactions in any fiscal year). 
Borrower agrees that it will not commingle proceeds of Accounts with any
of Borrower’s other funds or property, but will at all times hold such Accounts
and proceeds thereof separate and apart from such other funds and property and
in an express trust for Silicon.  Nothing
in this Section limits the restrictions on disposition of Collateral set forth
elsewhere in this Agreement.

 

4.6  Disputes.  Borrower shall notify Silicon promptly of all
disputes or claims relating to Eligible Accounts and Eligible Foreign
Accounts.  Borrower shall not forgive
(completely or partially), compromise or settle any Eligible Accounts and
Eligible Foreign Account for less than payment in full, or agree to do any of
the foregoing, except that Borrower may do so provided that: (i) Borrower does
so in good faith, in a commercially reasonable manner, in the ordinary course
of business, and in arm’s length transactions, which are reported to Silicon on
the regular reports provided to Silicon; (ii) no Default or Event of Default
has occurred and is continuing; and (iii) taking into account all such
discounts, settlements and forgiveness, the total outstanding Loans will not
exceed the Credit Limit.

 

4.7  Returns. 
Provided no Event of Default has occurred and is continuing, if any
Account Debtor returns any Inventory to Borrower, Borrower shall promptly
determine the reason for such return and promptly issue a credit memorandum to
the Account Debtor in the appropriate amount. 
In the event any attempted return occurs after the occurrence and during
the continuance of any Event of Default, Borrower shall hold the returned
Inventory in trust for Silicon, and promptly notify Silicon of the return of
the Inventory.

 

4.8  Verification. 
Silicon may, from time to time, verify directly with the respective
Account Debtors the validity, amount and other matters relating to the
Accounts, by means of mail, telephone or otherwise, either in the name of
Borrower or Silicon or such other name as Silicon may choose.

 

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

 

4.10  Additional Borrowers.  Company shall promptly notify Silicon at the time that any Person
becomes a Material Domestic Subsidiary, and promptly thereafter (and in any
event within 30 days of such occurrence), cause such Person to (i) become an
Additional Borrower by executing and delivering to Silicon an Additional
Borrower Joinder Supplement or such other document as Silicon shall deem
appropriate for such purpose, (ii) deliver to Silicon copies of all
organizational and authority documents of the types, all in form, content and
scope satisfactory to Silicon and (iii) executing and delivering to Silicon all
Loan Documents.

 

10

 

5.                                      ADDITIONAL DUTIES OF BORROWER.

 

5.1  Financial and Other Covenants. 
Borrower shall at all times comply with the financial and other
covenants set forth in the Schedule.

 

5.2  Insurance. 
Borrower shall at all times insure all of the tangible personal property
Collateral and carry such other business insurance, with insurers reasonably
acceptable to Silicon, in such form and amounts as Silicon determines are
customary and in accordance with standard practices for Borrower’s industry and
locations, and Borrower shall provide evidence of such insurance to
Silicon.  All such insurance policies
shall name Silicon as an additional loss payee, as its interests may appear,
and shall contain a lenders loss payee endorsement in form reasonably
acceptable to Silicon.  Upon receipt of
any proceeds of any such insurance, Silicon shall apply such proceeds in
reduction of the Obligations as Silicon shall determine in its good faith business
judgment, except that, provided no Default or Event of Default has occurred and
is continuing, Silicon shall release to Borrower insurance proceeds with
respect to Equipment totaling less than $100,000, which shall be utilized by
Borrower for the replacement of the Equipment with respect to which the
insurance proceeds were paid.  Silicon
may require reasonable assurance that the insurance proceeds so released will
be so used.  If Borrower fails to provide
or pay for any insurance required to be maintained hereunder, Silicon may, but
is not obligated to, obtain the same at Borrower’s expense.  Borrower shall promptly deliver to Silicon
copies of all material reports made to insurance companies.

 

5.3  Reports. 
Borrower, at its expense, shall provide Silicon with the written reports
set forth in the Schedule, and such other written reports with respect to
Borrower (including budgets, sales projections, operating plans and other
financial documentation), as Silicon shall from time to time specify in its
good faith business judgment.

 

5.4  Access to Collateral, Books and Records.  At
reasonable times during normal business hours, and prior to a Default on not
less than one (1) Business Day’s notice, Silicon, or its agents, shall have the
right to inspect the Collateral during normal business hours, and the right to
audit and copy Borrower’s books and records. 
Silicon shall take reasonable steps to keep confidential all information
obtained in any such inspection or audit, but Silicon shall have the right to
disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process.  Prior to the occurrence of any Default or
Event of Default, Silicon will perform no more than two (2) such inspections
and audits in any calendar year and during any Streamline Reporting Period,
Silicon will perform no more than one (1) such audit in any calendar year.  All inspections and audits shall be at
Borrower’s expense and the charge therefor shall be $750 per person per day (or
such amount as shall represent Silicon’s then current standard charge for the
same), plus reasonable out of pocket expenses.

 

5.5  Negative Covenants. 
Except as may be permitted in the Schedule, Borrower shall not, without
Silicon’s prior written consent (which shall be a matter of its good faith
business judgment), do any of the following: (i) merge or consolidate with, or
acquire any assets of (“Acquisition”) another corporation or entity (the
“Target”), unless (a) the Company’s Board of Directors approves such
Acquisition (b) the Target is in a similar line of business; (c) a Borrower is
the sole surviving, controlling corporation; (d) total consideration for all
Acquisitions in any one fiscal year does not exceed twenty (20) percent of the
Tangible Net Worth of the Parent and its subsidiaries immediately prior to the
effective date of such Acquisition; and (e) after giving affect to the
Acquisition, the Borrower will remain in compliance with the covenants set
forth in this Agreement on a pro-forma basis. 
Once an Acquisition is completed the Borrower shall provide Silicon with
complete details of the Acquisition and pro-forma projections to demonstrate
continued compliance with the Loan Documents. 
All Targets, other than Targets which

 

11

 

constitute Non Material
Subsidiaries, will be required to pledge all of their assets to secure the Loan
(subject to any Permitted Liens) and will be added as a co-obligors of the
Obligations; (ii) enter into any other transaction outside the ordinary course
of business; (iii) sell or transfer any Accounts or sell or transfer any other
Collateral having a value in the aggregate in excess of $500,000, except for
the sale of finished Inventory in the ordinary course of Borrower’s business,
and for the sale of obsolete or unneeded Equipment in the ordinary course of
business; (iv) store any Inventory or other Collateral having a value in excess
of $250,000 with any warehouseman or other third party; (v) sell any Inventory
on a sale-or-return, guaranteed sale, consignment, or other contingent basis;
(vi) make any loans of any money or other assets, other than loans (a) in
existence as of the Closing Date, (b) to another Borrower, (c) up to
$10,000,000 in the aggregate to any Material Foreign Subsidiaries in connection
with any Acquisition by such Material Foreign Subsidiaries, which is permitted
under Section 5.5(i), or (d) in the ordinary course of business to any Non
Material Subsidiary; provided, (1) no Default or Event of Default has occurred
and is continuing at such time, (2) the aggregate amount of all additional
loans to Non Material Subsidiaries (excluding loans made pursuant to subpart
(c) above) does not at any time exceed $10,000,000 in the aggregate prior to
the Maturity Date, (3) no additional loans shall be made to any Dissolving
Subsidiaries, and (4) no payments on loans existing on or after the Closing
Date shall be permitted by any Borrower to any Non Material Subsidiary; (vii)
incur any indebtedness for borrowed money outside the ordinary course of
business, other than Subordinated Debt; (viii) guarantee or otherwise become
liable with respect to the obligations of another Person, other than to another
Borrower or in connection with either (a) capital or operating Leases, or (b)
or in the ordinary course of business on behalf of Non Material Subsidiaries
and provided that such guaranties and liabilities are only in connection with
indebtedness of Non Material Subsidiaries which is either unsecured or secured
only by Permitted Liens (including capital or operating Leases), further
provided that the amount of such guarantees and liabilities pursuant to
subsections (a) and (b) does not exceed $60,000,000 in the aggregate at any
time; (ix) pay or declare any dividends on Borrower’s stock (except for
dividends payable solely in stock of Borrower); (x) redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of Borrower’s stock; (xi) make
any change in Borrower’s capital structure which would result in a Material
Adverse Change; (xii) engage, directly or indirectly, in any business other
than the businesses currently engaged in by Borrower or reasonably related
thereto; (xiii) dissolve or elect to dissolve, except into a Borrower; (xiv)
amend any of the provisions of any document evidencing any Subordinated Debt,
in a manner which could be materially adverse to Silicon, or (xv) further
encumber the Collateral.  Transactions
permitted by the foregoing provisions of this Section are only permitted if no
Default or Event of Default would occur as a result of such transaction.

 

5.6  Litigation Cooperation. 
Should any third-party suit or proceeding be instituted by or against
Silicon with respect to any Collateral or relating to Borrower, Borrower shall,
without expense to Silicon, make available at reasonable times and for
reasonable periods of time Borrower and its officers and employees and Borrower’s
books and records, to the extent that Silicon may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.

 

5.7  Further Assurances. 
Borrower agrees, at its expense, on request by Silicon, to execute all
documents and take all actions, as Silicon, may, in its good faith business
judgment, deem necessary or prudent in order to perfect and maintain Silicon’s
perfected first-priority security interest in the Accounts and Silicon’s
perfected second priority security interest in all other Collateral (subject
only to Permitted Liens), and in order to fully consummate the transactions
contemplated by this Agreement.

 

12

 

6.                                      TERM.

 

6.1  Maturity Date.  This
Agreement shall continue in effect until the maturity date set forth on the
Schedule (the “Maturity Date”), subject to Section 6.3 below.

 

6.2  Early Termination.  This
Agreement may be terminated prior to the Maturity Date as follows: (i) by
Borrower, effective three (3) Business Days after written notice of termination
is given to Silicon; or (ii) by Silicon at any time after the occurrence and
during the continuance of an Event of Default, without notice, effective
immediately.  If this Agreement is
terminated by Borrower or by Silicon under this Section 6.2, Borrower shall pay
to Silicon a termination fee in an amount equal to three quarters of one
percent (0.75%) of the Credit Limit, provided that no termination fee shall be
charged if the credit facility hereunder is replaced with a new facility from
another division of Silicon Valley Bank. 
The termination fee shall be due and payable on the effective date of
termination and thereafter shall bear interest at a rate equal to the highest
rate applicable to any of the Obligations.

 

6.3  Payment of Obligations.  On
the Maturity Date or on any earlier effective date of termination, Borrower
shall pay and perform in full all Obligations, whether evidenced by installment
notes or otherwise, and whether or not all or any part of such Obligations are
otherwise then due and payable.  Without
limiting the generality of the foregoing, if on the Maturity Date, or on any earlier
effective date of termination, there are any outstanding Letters of Credit
issued by Silicon or issued by another institution based upon an application,
guarantee, indemnity or similar agreement on the part of Silicon, then on such
date Borrower shall provide to Silicon cash collateral in an amount equal to
one hundred percent (100%) of the face amount of all such Letters of Credit and
if requested by Silicon, all interest, fees and cost due or to become due in
connection therewith (as estimated by Silicon in its good faith business
judgment), to secure all of the Obligations relating to said Letters of Credit,
pursuant to a cash pledge agreement satisfactory to Silicon in all material
respects.  Notwithstanding any
termination of this Agreement, all of Silicon’s security interests in all of
the Collateral and all of the terms and provisions of this Agreement shall
continue in full force and effect until all Obligations have been paid and
performed in full; provided that Silicon may in its sole discretion refuse to
make any further Loans after termination. 
No termination shall in any way affect or impair any right or remedy of
Silicon, nor shall any such termination relieve Borrower of any Obligation to
Silicon, until all of the Obligations have been paid and performed in
full.  Upon payment and performance in
full of all the Obligations and termination of this Agreement, Silicon shall
promptly terminate its financing statements with respect to the Borrower and
deliver to Borrower such other documents and cash collateral, if any, as may be
required to fully terminate Silicon’s security interests.

 

7.                                      EVENTS OF DEFAULT AND REMEDIES.

 

7.1  Events of Default.  The
occurrence of any of the following events shall constitute an “Event of
Default” under this Agreement, and Borrower shall give Silicon immediate
written notice thereof: (a) Any warranty, representation, statement, report or
certificate made or delivered to Silicon by Borrower or any of Borrower’s
officers, employees or agents, now or in the future, shall be untrue or
misleading in a material respect when made or deemed to be made; or (b)
Borrower shall fail to pay within five (5) Business Days of when due any Loan
or any interest thereon or any other monetary Obligation; or (c) the total
Loans and other Obligations outstanding at any time shall exceed the Credit
Limit; or (d) Borrower shall fail to comply with any of the financial covenants
set forth in the Schedule, or shall fail to perform any other non-monetary
Obligation which by its nature cannot be cured, or shall fail to permit Silicon
to conduct an inspection or audit as specified in Section 5.4 hereof; or (e)
Borrower shall fail to perform any other non-monetary Obligation, which failure
is not cured within fifteen (15)

 

13

 

Business Days after the date
due; or (f) any levy, assessment, attachment, seizure, lien or encumbrance
(other than a Permitted Lien) is made on all or any part of the Collateral
which is not cured within ten (10) days after the occurrence of the same; or
(g) any event of default occurs under any obligation secured by a Permitted
Lien, which is not cured within any applicable cure period or waived in writing
by the holder of the Permitted Lien; or (h) Borrower breaches any material
contract or obligation with respect to amounts in excess of $1,000,000; or (i)
dissolution, termination of existence, insolvency or business failure of
Borrower; or appointment of a receiver, trustee or custodian, for all or any
part of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding by Borrower under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect;
or (j) the commencement of any proceeding against Borrower, any Guarantor or
any Material Foreign Subsidiary under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, now or in the future in effect, which is not
cured by the dismissal thereof within forty five (45) days after the date
commenced; or (k) revocation or termination of, or limitation or denial of
liability upon, any guaranty of the Obligations by any Guarantor or any attempt
to do any of the foregoing, or commencement of proceedings by any Guarantor
under any bankruptcy or insolvency law; or (l) Borrower makes any payment on
account of any indebtedness or obligation which has been subordinated to the
Obligations other than as permitted in the applicable subordination agreement,
or if any Person who has subordinated such indebtedness or obligations
terminates or in any way limits his subordination agreement; or (m) if at any
time after the date hereof, Persons currently holding shares of stock of
Borrower shall (i) at any time prior to a secondary public offering by any
Borrower hold less than 51% of the outstanding shares, or (ii) at any time
after a secondary public offering, hold less than 15% of the outstanding shares
of Borrower; or (n) Borrower shall generally not pay its debts as they become
due, or Borrower, any Guarantor, or any Material Foreign Subsidiary shall
conceal, remove or transfer any part of its property, with intent to hinder,
delay or defraud its creditors, or make or suffer any transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or (o) a Material Adverse Change shall occur.  Silicon may cease making any Loans hereunder
during any of the above cure periods, and thereafter if an Event of Default has
occurred and is continuing, or (p) if a money judgment(s) in excess of
$2,500,000 individually or in the in the aggregate is rendered against any
Borrower and is unsatisfied and unstayed for 10 days.

 

7.2  Remedies.  Upon
the occurrence and during the continuance of any Event of Default, and at any
time thereafter, Silicon, at its option and without notice or demand of any
kind (all of which are hereby expressly waived by Borrower), may do any one or
more of the following: (a) Cease making Loans or otherwise extending credit to
Borrower under this Agreement or any other Loan Document; (b) Accelerate and
declare all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by
any instrument evidencing or relating to any Obligation; (c) Take possession of
any or all of the Collateral wherever it may be found, and for that purpose
Borrower hereby authorizes Silicon without judicial process to enter onto any
of Borrower’s premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain on the premises or
cause a custodian to remain on the premises in exclusive control thereof,
without charge for so long as Silicon deems it necessary, in its good faith
business judgment, in order to complete the enforcement of its rights under
this Agreement or any other agreement; provided, however, that should Silicon
seek to take possession of any of the Collateral by court process, Borrower
hereby irrevocably waives: (i) any bond and any surety or security relating
thereto required by any statute, court rule or otherwise as an incident to such
possession, (ii) any demand

 

14

 

for possession prior to the
commencement of any suit or action to recover possession thereof, and (iii) any
requirement that Silicon retain possession of, and not dispose of, any such
Collateral until after trial or final judgment; (d) Require Borrower to
assemble any or all of the Collateral and make it available to Silicon at
places designated by Silicon which are reasonably convenient to Silicon and
Borrower, and to remove the Collateral to such locations as Silicon may deem
advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use Borrower’s premises,
vehicles, hoists, lifts, cranes, and other Equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private
sales, in lots or in bulk, for cash, exchange or other property, or on credit,
and to adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. 
Silicon shall have the right to conduct such disposition on Borrower’s
premises without charge, for such time or times as Silicon deems reasonable, or
on Silicon’s premises, or elsewhere and the Collateral need not be located at
the place of disposition.  Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition.  Any sale or other
disposition of Collateral shall not relieve Borrower of any liability Borrower
may have if any Collateral is defective as to title or physical condition or
otherwise at the time of sale; (g) Demand payment of, and collect any Accounts
and General Intangibles comprising Collateral and, in connection therewith,
Borrower irrevocably authorizes Silicon to endorse or sign Borrower’s name on
all collections, receipts, instruments and other documents, to take possession
of and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Silicon’s
good faith business judgment, to grant extensions of time to pay, compromise
claims and settle Accounts and the like for less than face value; (h) Offset
against any sums in any of Borrower’s general, special or other Deposit
Accounts with Silicon against any or all of the Obligations; and (i) Demand and
receive possession of any of Borrower’s federal and state income tax returns
and the books and records utilized in the preparation thereof or referring
thereto.  All reasonable attorneys’ fees,
expenses, costs, liabilities and obligations incurred by Silicon with respect
to the foregoing shall be added to and become part of the Obligations, shall be
due on demand, and shall bear interest at a rate equal to the highest interest
rate applicable to any of the Obligations. 
Without limiting any of Silicon’s rights and remedies, from and after
the occurrence and during the continuance of any Event of Default, the interest
rate applicable to the Obligations shall be increased by an additional three
percent (3%) per annum (the “Default Rate”).

 

7.3  Standards for Determining Commercial
Reasonableness.  Borrower and Silicon agree that a sale or
other disposition (collectively, “sale”) of any Collateral which complies with
the following standards will conclusively be deemed to be commercially
reasonable:  (i) Notice of the sale is
given to Borrower at least ten (10) days prior to the sale, and, in the case of
a public sale, notice of the sale is published at least five days before the
sale in a newspaper of general circulation in the county where the sale is to
be conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon in such notices, with or without the Collateral being present; (iv) The
sale commences at any time between 8:00 a.m. and 6:00 p.m.; (v) Payment of the
purchase price in cash or by cashier’s check or wire transfer is required; and
(vi) With respect to any sale of any of the Collateral, Silicon may (but is not
obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the same.  Silicon shall be free to employ other methods
of noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.

 

15

 

7.4  Power of Attorney.  Upon
the occurrence and during the continuance of any Event of Default, without
limiting Silicon’s other rights and remedies, Borrower grants to Silicon an
irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents)
at any time, at its option, but without obligation, with or without notice to
Borrower, and at Borrower’s expense, to do any or all of the following, subject
to the terms of any applicable intercreditor agreement, in Borrower’s name or
otherwise, but Silicon agrees that if it exercises any right hereunder, it will
do so in good faith and in a commercially reasonable manner:  (a) Execute on behalf of Borrower any
documents that Silicon may, in its good faith business judgment, deem advisable
in order to perfect and maintain Silicon’s security interest in the Collateral,
or in order to exercise a right of Borrower or Silicon, or in order to fully
consummate all the transactions contemplated under this Agreement, and all
other Loan Documents; (b) Execute on behalf of Borrower, any invoices relating to
any Account, any draft against any Account Debtor and any notice to any Account
Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of mechanic’s,
materialman’s or other lien, or assignment or satisfaction of mechanic’s,
materialman’s or other lien; (c) Take control in any manner of any cash or
non-cash items of payment or proceeds of Collateral; endorse the name of
Borrower upon any instruments, or documents, evidence of payment or Collateral
that may come into Silicon’s possession; (d) Endorse all checks and other forms
of remittances received by Silicon; (e) Pay, contest or settle any lien,
charge, encumbrance, security interest and adverse claim in or to any of the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (f) Grant extensions of time to pay,
compromise claims and settle Accounts and General Intangibles for less than
face value and execute all releases and other documents in connection
therewith; (g) Pay any sums required on account of Borrower’s taxes or to
secure the release of any liens therefor, or both; (h) Settle and adjust, and
give releases of, any insurance claim that relates to any of the Collateral and
obtain payment therefor; (i) Instruct any third party having custody or control
of any books or records belonging to, or relating to, Borrower to give Silicon
the same rights of access and other rights with respect thereto as Silicon has
under this Agreement; and (j) Take any action or pay any sum required of Borrower
pursuant to this Agreement and any other Loan Documents.  Any and all reasonable sums paid and any and
all reasonable costs, expenses, liabilities, obligations and attorneys’ fees
incurred by Silicon with respect to the foregoing shall be added to and become
part of the Obligations, shall be payable on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the
Obligations.  In no event shall Silicon’s
rights under the foregoing power of attorney or any of Silicon’s other rights
under this Agreement be deemed to indicate that Silicon is in control of the
business, management or properties of Borrower.

 

7.5  Application of Proceeds. 
Subject to the Intercreditor Agreement, all proceeds realized as the
result of any sale of the Collateral shall be applied by Silicon first to the
reasonable costs, expenses, liabilities, obligations and attorneys’ fees
incurred by Silicon in the exercise of its rights under this Agreement, second
to the interest due upon any of the Obligations, and third to the principal of
the Obligations, in such order as Silicon shall determine in its sole
discretion.  Any surplus shall be paid to
Borrower or other persons legally entitled thereto; Borrower shall remain
liable to Silicon for any deficiency. 
If, Silicon, in its good faith business judgment, directly or indirectly
enters into a deferred payment or other credit transaction with any purchaser
at any sale of Collateral, Silicon shall have the option, exercisable at any
time, in its good faith business judgment, of either reducing the Obligations
by the principal amount of purchase price or deferring the reduction of the
Obligations until the actual receipt by Silicon of the cash therefor.

 

16

 

7.6  Remedies Cumulative.  In
addition to the rights and remedies set forth in this Agreement, Silicon shall
have all the other rights and remedies accorded a secured party under the
California Uniform Commercial Code and under all other applicable laws, and any
Loan Document now or in the future entered into between Silicon and Borrower,
and all of such rights and remedies are cumulative and none is exclusive.  Exercise or partial exercise by Silicon of
one or more of its rights or remedies shall not be deemed an election, nor bar
Silicon from subsequent exercise or partial exercise of any other rights or
remedies.  The failure or delay of
Silicon to exercise any rights or remedies shall not operate as a waiver thereof,
but all rights and remedies shall continue in full force and effect until all
of the Obligations have been fully paid and performed.

 

8.                                      DEFINITIONS. 
As used in this agreement, the following terms have the
following meanings:

 

“Account Debtor” means the obligor on an
Account.

 

“Accounts” means all present and future
“accounts” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all accounts receivable and other sums owing to Borrower.

 

“Additional Borrower” means each Person that
has executed and delivered an Additional Borrower Joinder Supplement that has
been accepted and approved by Silicon, including, but not limited to, each
Material Domestic Subsidiary.

 

“Additional Borrower Joinder Supplement” means
an Additional Borrower Joinder Supplement in substantially the form attached
hereto as Exhibit D, with the blanks appropriately completed and
executed and delivered by the Additional Borrower and accepted by the Company
on behalf of the Borrower.

 

“Affiliate” means, with respect to any
Person, any parent or subsidiary of such Person, or any Person controlling,
controlled by or under common control with such Person.

 

“Allied Riser Notes” means those certain
7.50% Convertible Subordinated Notes due 2007, entered into between Allied
Riser Communications Corporation (“Issuer”) and Wilmington Trust Company
(“Trustee”), dated June 28, 2000.

 

“Business Day” means a day on which Silicon
is open for business.  In the event that
an Obligation is due on a day which is not a Business Day, it shall be deemed
due on the first following Business Day.

 

“Closing Date” is the date of this Agreement.

 

“Code” means the Uniform Commercial Code as
adopted and in effect in the State of California from time to time.

 

“Collateral” has the meaning set forth in
Section 2 above.

 

“continuing” and “during the continuance
of” when used with reference to a Default or Event of Default means that
the Default or Event of Default has occurred and has not been either waived in
writing by Silicon or cured .

 

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

 

“Default Rate” has the meaning set forth in
Section 7.2 above.

 

“Deposit Accounts”
means all present and future “deposit accounts” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation all general and special bank accounts,
demand accounts, checking accounts, savings accounts and certificates of
deposit.

 

17

 

“Domestic Accounts” means Accounts arising
from account debtors located in the United States or Canada.

 

“EBITDA” means earnings before interest,
taxes, depreciation, amortization, non-cash deferred compensation expense, and
expenses for restructuring or terminated public or private offerings.

 

“Eligible Accounts” means Accounts and
General Intangibles arising in the ordinary course of Borrower’s business from
the sale of goods or the rendition of services, or the non-exclusive licensing
of Intellectual Property, which Silicon, in its good faith business judgment,
shall deem eligible for borrowing. 
Without limiting the fact that the determination of which Accounts are
eligible for borrowing is a matter of Silicon’s good faith business judgment,
the following (the “Minimum Eligibility Requirements”) are the minimum
requirements for a Account to be an Eligible Account:  (i) the Account must not be outstanding for
more than the Eligibility Period; (ii) the Account must not represent progress
billings, finance charges or termination billings, or be due under a
fulfillment or requirements contract with the Account Debtor; (iii) the Account
must not be subject to any contingencies (including Accounts arising from sales
on consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional); (iv) the Account must not be owing from an
Account Debtor with whom Borrower has any dispute (whether or not relating to the
particular Account); (v) the Account must not be owing from an Affiliate of
Borrower; (vi) the Account must not be owing from an Account Debtor which is
subject to any insolvency or bankruptcy proceeding, or whose financial
condition is not acceptable to Silicon, or which, fails or goes out of a
material portion of its business; (vii) the Account must not be owing from the
United States or any department, agency or instrumentality thereof (unless
there has been compliance, to Silicon’s satisfaction, with the United States
Assignment of Claims Act); (viii) the Account must not be owing from an Account
Debtor located outside the United States or Canada (unless approved by Silicon
in its discretion in writing); and (ix) the Account must not be owing from an Account
Debtor to whom Borrower is liable for goods purchased from such Account Debtor
or otherwise (but, in such case, the Account will be deemed not eligible only
to the extent of any amounts owed by Borrower to such Account Debtor).  Accounts owing from one Account Debtor will
not be deemed Eligible Accounts to the extent they exceed twenty five percent
(25%) of the total Accounts outstanding. 
Reserves that a Borrower has established for Accounts owed to such Borrower
shall not be deemed Eligible Accounts. 
In addition, if more than twenty five percent (25%) of the Accounts
owing from an Account Debtor are outstanding for a period longer than their
Eligibility Period (without regard to unapplied credits) or are otherwise not
Eligible Accounts, then all Accounts owing from that Account Debtor will be
deemed ineligible for borrowing; provided, however, at all times that Borrower’s
unencumbered cash at Silicon is greater than $15,000,000, if more than fifty
percent (50%) (rather than 25% as per the preceding clause of this sentence) of
the Accounts owing from an Account Debtor are outstanding for a period longer
than their Eligibility Period (without regard to unapplied credits) or are
otherwise not Eligible Accounts, then all Accounts owing from that Account
Debtor will be deemed ineligible for borrowing. 
Silicon may, from time to time, in its good faith business judgment,
revise the Minimum Eligibility Requirements, upon written notice to Borrower.

 

“Eligible Foreign Accounts” are Accounts of a
Borrower that otherwise meet the Minimum Eligibility Requirements except that
the Account arises from an Account Debtor located outside the United States or
Canada.

 

18

 

“Eligibility Period” means ninety (90) days
from the invoice date for each Account, provided that at any time that Borrower
fails to maintain at least $7,000,000 of unencumbered cash with Silicon, the
Eligibility Period shall mean sixty (60) days from the invoice date for each
Account.

 

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

 

“Event of Default” means any of the events
set forth in Section 7.1 of this Agreement.

 

“Existing Subsidiaries” means the
Subsidiaries.

 

“Foreign Accounts” means Accounts arising
from account debtors located outside the United States or Canada.

 

“GAAP” means generally accepted accounting
principles in the United States of America.

 

“General Intangibles” means all present and
future “general intangibles” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all Intellectual Property, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income tax
refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.

 

“good faith business judgment” means honesty
in fact and good faith (as defined in Section 1201 of the Code) in the exercise
of Silicon’s business judgment.

 

“Guarantors” is any present or future
guarantor of the Obligations, including Symposium Gamma, Inc., a Delaware
corporation.

 

“including” means including (but not limited
to).

 

“Intellectual Property” means all present and
future (a) copyrights, copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, (b) trade secret rights,
including all rights to unpatented inventions and know-how, and confidential
information; (c) mask work or similar rights available for the protection of
semiconductor chips; (d) patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same; (e) trademarks,
servicemarks, trade styles, and trade names, whether or not any of the
foregoing are registered, and all applications to register and registrations of
the same and like protections, and the entire goodwill of the business of
Borrower connected with and symbolized by any such trademarks; (f) computer
software and computer software products; (g) designs and design rights; (h) all
claims for damages by way of past, present and future infringement of any of
the rights included above; (i) all licenses or other rights to use any property
or rights of a type described above.

 

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

 

19

 

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

 

“Investment Property” means all present and
future investment property, securities, stocks, bonds, debentures, debt
securities, partnership interests, limited liability company interests,
options, security entitlements, securities accounts, commodity contracts,
commodity accounts, and all financial assets held in any securities account or
otherwise, and all options and warrants to purchase any of the foregoing,
wherever located, and all other securities of every kind, whether certificated
or uncertificated.

 

“Item of Payment” means each check, draft,
cash, money, instrument, item, and other remittance in payment or on account of
payment of the Accounts or otherwise with respect to any Collateral, including,
without limitation, cash proceeds of any returned, rejected or repossessed
goods, the sale or lease of which gave rise to an Account, and other proceeds
of Collateral; and “Items of Payment” means the collective reference to all of
the foregoing.

 

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

 

“Loan Documents” means, collectively, this
Agreement, the Representations, the Guaranties, the Pledge Agreement, and all
other present and future documents, instruments and agreements between Silicon
and Borrower or any Guarantor, including, but not limited to those relating to
this Agreement, and all amendments and modifications thereto and replacements
therefor.

 

“Material Adverse Change”
means any of the following: (i) a material adverse change in the business,
operations, or financial or other condition of the Borrower, or (iii) a
material impairment of the value or priority of Silicon’s security interests in
the Collateral.

 

“Material Domestic
Subsidiary” means any Subsidiary of Borrower organized under the laws of
the United States or Canada that (i) has revenue in excess of One Million
Dollars ($1,000,000) in a fiscal year, (ii) owns assets with a fair market
value in excess of One Million Dollars ($1,000,000), or (iii) is including any
of its Accounts as part of Eligible Accounts or Eligible Foreign Accounts.

 

“Material Foreign
Subsidiary” means any Subsidiary of Borrower organized outside the laws of
the United States or Canada that (i) has revenue in excess of One Million
Dollars ($1,000,000) in a fiscal year, (ii) owns assets with a fair market
value in excess of One Million Dollars ($1,000,000), or (iii) is including any
of its Accounts as part of Eligible Accounts or Eligible Foreign Accounts.

 

“Non Material
Subsidiaries” means any Subsidiary of Borrower which is not required to
become a party to this Agreement pursuant to the requirements of Section 4.10
of this Agreement.

 

“Obligations” means all present and future
Loans, advances, debts, liabilities, obligations, guaranties, covenants, duties
and indebtedness at any time owing by Borrower to Silicon, whether evidenced by
this Agreement or any note or other instrument or document, whether arising
from an extension of credit, opening of a letter of credit, loan, guaranty,
indemnification or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, including, without limitation, all interest,
charges, expenses, fees, attorney’s fees, expert witness fees, audit fees,
letter of credit fees, collateral monitoring fees, closing fees, facility fees,
termination fees, minimum interest charges and any other sums, in each case
required to be paid by Borrower under this Agreement or under any other Loan
Documents.

 

20

 

“Other Property” means the following as
defined in the Code in effect on the date hereof with such additions to such
term as may hereafter be made, and all rights relating thereto: all present and
future “commercial tort claims” (including without limitation any commercial
tort claims identified in the Representations), “documents”, “instruments”,
“promissory notes”, “chattel paper”, “letters of credit”, “letter-of-credit
rights”, “fixtures”, “farm products” and “money”; and all other goods and
personal property of every kind, tangible and intangible, governed by the Code.

 

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

 

“Permitted Liens” means the following: (i)
purchase money security interests in specific items of real property, fiber and
Equipment which Silicon consents to; (ii) leases (operating and capital) of
real property, fiber and Equipment; (iii) liens for taxes not yet payable and
being contested as permitted hereunder; (iv) additional security interests and
liens consented to in writing by Silicon, which consent may be withheld in its
good faith business judgment; (v) security interests being terminated
substantially concurrently with this Agreement; (vi) liens of materialmen,
mechanics, warehousemen, carriers, or other similar liens arising in the
ordinary course of business and securing obligations which are not delinquent;
(vii) liens incurred in connection with the extension, renewal or refinancing
of the indebtedness secured by liens of the type described above in clauses (i)
or (ii) above, provided that any extension, renewal or replacement lien is
limited to the property encumbered by the existing lien and the principal
amount of the indebtedness being extended, renewed or refinanced does not
increase.  Silicon will have the right to
require, as a condition to its consent under subparagraph (iv) above, that the
holder of the additional security interest or lien sign an intercreditor
agreement in form and substance satisfactory to Silicon in its reasonable
discretion, acknowledge that the security interest is subordinate to the
security interest in favor of Silicon, and agree not to take any action to
enforce its subordinate security interest so long as any Obligations remain
outstanding, and that Borrower agree that any uncured default in any obligation
secured by the subordinate security interest shall also constitute an Event of
Default under this Agreement.

 

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

 

“Pledge Agreement” means that certain Stock
Pledge, Assignment and Security Agreement dated March 9, 2005 from the
Guarantor in favor of Silicon.

 

“Proceeds” means all present and future
“proceeds” as defined in the Code in effect on the date hereof.

 

“Representations” means the written
Collateral Information Sheet provided by Borrower to Silicon referred to in the
Schedule, as the same may be updated from time to time with the approval of
Silicon.

 

“Reserves” means, as of any date of
determination, such amounts as Silicon may from time to time establish and
revise in its good faith business judgment, reducing the amount of Loans,
Letters of Credit and other financial accommodations which would otherwise be
available to Borrower under the lending formula(s) provided in the Schedule:
(a) to reflect events, conditions, contingencies or risks which, as determined
by Silicon in its good faith business judgment, do or may adversely affect (i)
the Accounts (including without limitation any increase in delinquencies of
Accounts), (ii) the assets or business of Borrower or Guarantors, or (iii) the
security interests and other rights of Silicon in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Silicon’s
good faith belief

 

21

 

that any collateral report
or financial information furnished by or on behalf of Borrower or any Guarantor
to Silicon is or may have been incomplete, inaccurate or misleading in any
material respect; or (c) in respect of any state of facts which Silicon
determines in good faith constitutes an Event of Default or may, with notice or
passage of time or both, constitute an Event of Default.

 

 “Streamline
Reporting Period” means any period where: (A) no Default or Event of
Default has occurred and is continuing; and (B) (i) outstanding Loans are less
than $1,000,000 or (ii) unencumbered cash at Silicon exceeds $15,000,000.

 

“Subordinated Debt” means indebtedness
incurred by Borrower (up to $200,000,000) subordinated to Borrower’s
indebtedness owed to Silicon and which is reflected in a written agreement in a
manner and form acceptable to Silicon either (i) substantially in the form
attached as Exhibit E or (ii) in such other form as provides for
repayment of such indebtedness to be fully subordinated to the Obligations.

 

“Tangible Net Worth” shall mean the excess of
total assets over total liabilities, determined in accordance with GAAP, with
the following adjustments: (A) there shall be excluded from assets:  (i) notes, accounts receivable and other
obligations owing to Borrower from its officers or other Affiliates, and (ii)
all assets which would be classified as intangible assets under GAAP, including
without limitation goodwill, licenses, patents, trademarks, trade names,
copyrights, capitalized software and organizational costs, licenses and
franchises; and (B) there shall be excluded from liabilities all Subordinated
Debt.

 

Other Terms.  All accounting terms used in
this Agreement, unless otherwise indicated, shall have the meanings given to
such terms in accordance with GAAP.  All
other terms contained in this Agreement, unless otherwise indicated, shall have
the meanings provided by the Code, to the extent such terms are defined
therein.

 

9.                                      GENERAL PROVISIONS.

 

9.1  Interest Computation; Float Charge.  In
computing interest on the Obligations, all Payments received after 12:00 Noon
on any day shall be deemed received on the next Business Day.  In addition, Silicon shall be entitled to
charge Borrower a “float” charge in an amount equal to two (2) Business Days
interest, at the interest rate applicable to the Loans, on all Payments
received by Silicon.  The float charge
for each month shall be payable on the last day of the month.  Silicon shall not, however, be required to
credit Borrower’s account for the amount of any item of payment which is
unsatisfactory to Silicon in its good faith business judgment, and Silicon may
charge Borrower’s loan account for the amount of any item of payment which is
returned to Silicon unpaid.

 

9.2  Application of Payments.  All payments with respect to the Obligations may be applied, and in
Silicon’s good faith business judgment reversed and reapplied, to the
Obligations, in such order and manner as Silicon shall determine in its good
faith business judgment.

 

9.3  Charges to Accounts.  Silicon may, in its discretion, require that Borrower pay monetary
Obligations in cash to Silicon, or charge them to Borrower’s Loan account, in
which event they will bear interest at the same rate applicable to the
Loans.  Silicon may also, in its
discretion, charge any monetary Obligations to Borrower’s Deposit Accounts
maintained with Silicon.

 

9.4  Monthly Accountings. 
Silicon shall provide Borrower monthly with an account of advances,
charges, expenses and payments made pursuant to this Agreement.  Such account shall be deemed correct,
accurate and binding on Borrower and an account stated (except for reverses and
reapplications of payments made and corrections of errors discovered by
Silicon), unless Borrower notifies Silicon in writing to the contrary within
sixty (60) days after such account is rendered, describing the nature of any
alleged errors or omissions.

 

22

 

9.5  Notices.  All
notices to be given under this Agreement shall be in writing and shall be given
either personally or by reputable private delivery service or by regular
first-class mail, or certified mail return receipt requested, addressed to
Silicon or Borrower at each of the addresses shown in the heading to this
Agreement, or at any other address designated in writing by one party to the
other party.  Notices to Silicon shall be
directed to the Commercial Finance Division, to the attention of the Division
Manager or the Division Credit Manager. 
All notices shall be deemed to have been given upon delivery in the case
of notices personally delivered, or at the expiration of one (1) Business Day
following delivery to the private delivery service, or five (5) Business Days
following the deposit thereof in the United States mail, with postage prepaid.

 

9.6  Severability. 
Should any provision of this Agreement be held by any court of competent
jurisdiction to be void or unenforceable, such defect shall not affect the
remainder of this Agreement, which shall continue in full force and effect.

 

9.7  Integration.  This
Agreement and such other written agreements, documents and instruments as may
be executed in connection herewith are the final, entire and complete agreement
between Borrower and Silicon and supersede all prior and contemporaneous
negotiations and oral representations and agreements, all of which are merged
and integrated in this Agreement.  There
are no oral understandings, representations or agreements between the parties
which are not set forth in this Agreement or in other written agreements signed
by the parties in connection herewith.

 

9.8  Waivers; Indemnity.  The
failure of Silicon at any time or times to require Borrower to strictly comply
with any of the provisions of this Agreement or any other Loan Document shall
not waive or diminish any right of Silicon later to demand and receive strict
compliance therewith.  Any waiver of any
default shall not waive or affect any other default, whether prior or
subsequent, and whether or not similar. 
None of the provisions of this Agreement or any other Loan Document
shall be deemed to have been waived by any act or knowledge of Silicon or its
agents or employees, but only by a specific written waiver signed by an
authorized officer of Silicon and delivered to Borrower.  Borrower waives the benefit of all statutes
of limitations relating to any of the Obligations or this Agreement or any
other Loan Document, and Borrower waives demand, protest, notice of protest and
notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
instrument, account, General Intangible, document or guaranty at any time held
by Silicon on which Borrower is or may in any way be liable, and notice of any
action taken by Silicon, unless expressly required by this Agreement. Borrower
hereby agrees to indemnify Silicon and its affiliates, subsidiaries, parent,
directors, officers, employees, agents, and attorneys (each a “Related Party”),
and to hold them harmless from and against any and all claims, debts,
liabilities, demands, obligations, actions, causes of action, penalties, costs
and expenses (including reasonable attorneys’ fees), of every kind, which they
may sustain or incur based upon or arising out of any of the Obligations, or
any relationship or agreement between Silicon and Borrower, or any other
matter, relating to Borrower or the Obligations; provided that this indemnity
shall not extend to damages proximately caused by the indemnitee’s or any
Related Party’s own gross negligence or willful misconduct.  Notwithstanding any provision in this
Agreement to the contrary, the indemnity agreement set forth in this Section
shall survive any termination of this Agreement and shall for all purposes
continue in full force and effect but shall not be an obligation secured by the
Collateral after the termination of this Agreement.

 

23

 

9.9  No Liability for Ordinary Negligence.  Neither
Silicon, nor any of its directors, officers, employees, agents, attorneys or
any other Person affiliated with or representing Silicon shall be liable for
any claims, demands, losses or damages, of any kind whatsoever, made, claimed,
incurred or suffered by Borrower or any Guarantor through the ordinary
negligence of Silicon, or any of its directors, officers, employees, agents,
attorneys or any other Person affiliated with or representing Silicon, but
nothing herein shall relieve Silicon or any other such Person from liability
for its own gross negligence or willful misconduct.

 

9.10  Amendment.  The
terms and provisions of this Agreement may not be waived or amended, except in
a writing executed by Borrower and a duly authorized officer of Silicon.

 

9.11  Time of Essence.  Time
is of the essence in the performance by Borrower of each and every obligation
under this Agreement.  If Borrower is
required under the terms of this Agreement to make any payment, deliver any
report or otherwise take any action on a day that is not a Business Day, then
Borrower shall not be required to make such payment, deliver such report or
take such action until the following Business Day.

 

9.12  Attorneys Fees and Costs. 
Borrower shall reimburse Silicon for all reasonable attorneys’ fees and
all filing, recording, search, title insurance, appraisal, audit, and other
reasonable costs incurred by Silicon, pursuant to, or in connection with, or
relating to this Agreement (whether or not a lawsuit is filed), including, but
not limited to, any reasonable attorneys’ fees and costs Silicon incurs in
order to do the following: prepare and negotiate this Agreement and all present
and future documents relating to this Agreement; obtain legal advice in
connection with this Agreement or Borrower; enforce, or seek to enforce, any of
its rights; prosecute actions against, or defend actions by, Account Debtors;
commence, intervene in, or defend any action or proceeding; initiate any
complaint to be relieved of the automatic stay in bankruptcy; file or prosecute
any probate claim, bankruptcy claim, third-party claim, or other claim;
examine, audit, copy, and inspect any of the Collateral or any of Borrower’s
books and records; protect, obtain possession of, lease, dispose of, or
otherwise enforce Silicon’s security interest in, the Collateral; and otherwise
represent Silicon in any litigation relating to Borrower.  In satisfying Borrower’s obligation hereunder
to reimburse Silicon for attorneys fees, Borrower may, for convenience, issue
checks directly to Silicon’s attorneys, Troutman Sanders LLP, but Borrower
acknowledges and agrees that Troutman Sanders LLP is representing only Silicon
and not Borrower in connection with this Agreement.  If either Silicon or Borrower files any
lawsuit against the other predicated on a breach of this Agreement, the
prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys’ fees, including (but not limited to) reasonable attorneys’
fees and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment.  All
attorneys’ fees and costs to which Silicon may be entitled pursuant to this
Paragraph shall immediately become part of Borrower’s Obligations, shall be due
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.  
Upon request of Borrower after payment of such sums, Silicon will
provide Borrower with copies of invoices received for such fees and expenses.

 

9.13  Benefit of Agreement.  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the respective successors, assigns, heirs, beneficiaries and representatives of
Borrower and Silicon; provided, however, that Borrower may not assign or
transfer any of its rights under this Agreement without the prior written
consent of Silicon, and any prohibited assignment shall be void.  No consent by Silicon to any assignment shall
release Borrower from its liability for the Obligations.

 

24

 

9.14  Joint and Several Liability. 
Borrower’s liability is joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.

 

9.15  Limitation of Actions. 
Any claim or cause of
action by Borrower against Silicon, its directors, officers, employees, agents,
accountants or attorneys, based upon, arising from, or relating to this Loan
Agreement, or any other Loan Document, or any other transaction contemplated
hereby or thereby or relating hereto or thereto, or any other matter, cause or
thing whatsoever, occurred, done, omitted or suffered to be done by Silicon,
its directors, officers, employees, agents, accountants or attorneys, shall be
barred unless asserted by Borrower by the commencement of an action or
proceeding in a court of competent jurisdiction by the filing of a complaint
within one (1) year after the first act, occurrence or omission upon which such
claim or cause of action, or any part thereof, is based, and the service of a
summons and complaint on an officer of Silicon, or on any other person
authorized to accept service on behalf of Silicon, within thirty (30) days
thereafter.  Borrower agrees that such
one-year period is a reasonable and sufficient time for Borrower to investigate
and act upon any such claim or cause of action. 
The one-year period provided herein shall not be waived, tolled, or
extended except by the written consent of Silicon in its sole discretion.  This provision shall survive any termination
of this Loan Agreement or any other Loan Document.

 

9.16  Paragraph Headings; Construction. 
Paragraph headings are only used in this Agreement for convenience.  Borrower and Silicon acknowledge that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. This Agreement has been
fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed
strictly against Silicon or Borrower under any rule of construction or
otherwise.

 

9.17  Governing Law; Jurisdiction; Venue.  This
Agreement and all acts and transactions hereunder and all rights and
obligations of Silicon and Borrower shall be governed by the laws of the State
of California.  As a material part of the
consideration to enter into this Agreement, Borrower and Silicon: (i) agrees
that all actions and proceedings relating directly or indirectly to this
Agreement shall be litigated in state or federal courts located within the
Commonwealth of Virginia; (ii) consents to the jurisdiction and venue of any
such court and consents to service of process in any such action or proceeding
by personal delivery or any other method permitted by law; and (iii) waives any
and all rights such party may have to object to the jurisdiction of any such
court, or to transfer or change the venue of any such action or proceeding,
provided, however, that if for any reason either party cannot avail itself of
such courts in the Commonwealth of Virginia, each party accepts jurisdiction of
the courts and venue in Santa Clara, California.

 

9.18  Mutual Waiver of Jury Trial. 
BORROWER AND SILICON EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO,
THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF SILICON OR BORROWER
OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER
PERSONS AFFILIATED WITH SILICON OR BORROWER, IN ALL OF THE FOREGOING CASES,
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

25

 

	
  Borrower:

  	
   

  
	
   

  	
   

  
	
  COGENT COMMUNICATIONS,
  INC.

  	
  COGENT CANADA, INC.

  
	
   

  	
   

  
	
  By:

  	
   /s/David Schaeffer

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David Schaeffer

  	
  By:

  	
  By: 

  	
  /s/David Schaeffer

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  	
  Name: 

  	
  David Schaeffer

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
  NETWORK EQUIPMENT
  SOLUTIONS, LLC

  	
   

  
	
   

  	
   

  
	
  By:

  	
  By: 

  	
  /s/David Schaeffer

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David Schaeffer

  	
   

  
	
   

  	
  Title:

  	
  President

  	
  Silicon:

  
	
   

  	
   

  
	
  UFO GROUP, INC.,

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  
	
  By: 

  	
  By: 

  	
  /s/David Schaeffer

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  David Schaeffer

  	
  By:

  	
  /s/ Peter Bendoris

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  	
  Name: Peter
  Bendoris

  
	
   

  	
   

  	
  Title: Relationship Mgr.

  
	
  ALLIED RISER
  COMMUNICATIONS

  	
   

  
	
  CORPORATION

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  By: 

  	
  /s/David Schaeffer

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  David Schaeffer

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
  ALLIED RISER OPERATIONS
  CORPORATION

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  By: 

  	
  /s/David Schaeffer

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  David Schaeffer

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
  COGENT
  CANADA HOLDINGS, INC.

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  By: 

  	
  /s/David Schaeffer

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  David Schaeffer

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
																	

 

26

 

Silicon
Valley Bank

 

Schedule to

 

Amended and Restated Loan and Security Agreement

 

	
  Borrower:

  	
  COGENT
  COMMUNICATIONS, INC., a Delaware corporation (the
  “Company”)

  
	
   

  	
  COGENT
  COMMUNICATIONS GROUP, INC., a Delaware corporation (the
  “Parent”)

  
	
   

  	
  NETWORK
  EQUIPMENT SOLUTIONS, LLC, a Delaware limited liability
  company (“NES”)

  
	
   

  	
  UFO
  GROUP, INC., a Delaware corporation

  
	
   

  	
  ALLIED
  RISER COMMUNICATIONS CORPORATION, a Delaware corporation

  
	
   

  	
  ALLIED
  RISER OPERATIONS CORPORATION, a Delaware corporation

  
	
   

  	
  COGENT
  CANADA HOLDINGS, INC., a Nova Scotia corporation

  
	
   

  	
  COGENT
  CANADA, INC., a Canadian Federal corporation; and certain Additional Borrowers added to this Agreement from time to
  time.

  

 

	
  Address
  for

  	
   

  
	
  all
  Borrowers

  	
   

  
	
  except
  NES:

  	
  1015 31st
  Street, NW, Washington, DC 20007

  
	
   

  	
   

  
	
  Address

  	
   

  
	
  for
  NES:

  	
  2711
  Centerville Road, Suite 400

  
	
   

  	
  Wilmington,
  Delaware 19808

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  December 16,
  2005

  
			

 

This Schedule forms an integral part of the Amended and Restated
Loan and Security Agreement between Silicon Valley Bank and the above-borrower
of even date.

 

	
  1.  CREDIT
  LIMIT

  (Section 1.1):

  	
   

  	
  “Credit Limit” means the lesser of (a) sum of the then
  applicable Formula Amount and the Non-Formula Amount, all as calculated
  below, or (b) Twenty Million Dollars ($20,000,000), provided, however,
  until such time as Silicon receives evidence satisfactory to it that

  

 

 

	
   

  	
   

  	
  all Liens in favor of Cisco Systems Capital Corporation have been
  released and terminated, Credit Limit shall mean Ten Million Dollars
  ($10,000,000).

  
	
   

  	
   

  	
   

  
	
  For
  purposes hereof, “Formula Amount” means the following amounts at the
  following times:

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  When Borrower’s unencumbered cash held at Silicon is greater than
  $15,000,000, “Formula Amount” shall mean eighty-five percent (85%) of
  Borrower’s Eligible Accounts, plus the lesser of (i) fifty
  percent (50%) of Borrower’s Eligible Foreign Accounts or (ii) $2,000,000,
  provided, however, Silicon may, from time to time, modify the above
  percentage, in its good faith business judgment, upon notice to the Borrower,
  based on changes in collection experience with respect to Accounts or other
  issues or factors relating to the Accounts or other Collateral;

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  When Borrower’s unencumbered cash held at Silicon is less than
  $15,000,000 but greater than $9,000,000, “Formula Amount” shall mean the sum
  seventy-five percent (75%) of Borrower’s Eligible Accounts, plus the
  lesser of (i) fifty percent (50%) of Borrower’s Eligible Foreign
  Accounts or (ii) $2,000,000, provided, however, Silicon may, from time
  to time, modify the above percentages, in its good faith business judgment,
  upon notice to the Borrower, based on changes in collection experience with
  respect to Accounts or other issues or factors relating to the Accounts or
  other Collateral; and

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  When Borrower’s unencumbered cash held at Silicon is less than
  $9,000,000, “Formula Amount” shall mean seventy-five percent (75%) of
  Borrower’s Eligible Accounts, provided, however, Silicon may, from time to
  time, modify the above percentage, in its good faith business judgment, upon
  notice to the Borrower, based on changes in collection experience with
  respect to Accounts or other issues or factors relating to the Accounts or
  other Collateral.

  

 

2

 

	
  For
  purposes hereof, “Non Formula Amount” means the following amounts at the
  following times:

  
	
   

  
	
   

  	
  •

  	
  When Borrower’s unencumbered cash held at Silicon is greater than or
  equal to $20,000,000, “Non Formula Amount” shall mean $10,000,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  When Borrower’s unencumbered cash held at Silicon is greater than or
  equal to $19,000,000, but less than $20,000,000, “Non Formula Amount” shall
  mean $9,000,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  When Borrower’s unencumbered cash held at Silicon is greater than or
  equal to $18,000,000, but less than $19,000,000, “Non Formula Amount” shall
  mean $8,000,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  When Borrower’s unencumbered cash held at Silicon is greater than or
  equal to $17,000,000, but less than $18,000,000, “Non Formula Amount” shall
  mean $7,000,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  When Borrower’s unencumbered cash held at Silicon is greater than or
  equal to $16,000,000, but less than $17,000,000, “Non Formula Amount” shall
  mean $6,000,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  When Borrower’s unencumbered cash held at Silicon is greater than or
  equal to $15,000,000, but less than $16,000,000, “Non Formula Amount” shall
  mean $5,000,000;

  
	
   

  	
   

  	
   

  
	
  Letter
  of Credit Sublimit

  	
   

  	
   

  
	
  (Section 1.7):

  	
   

  	
  Two Million Dollars ($2,000,000)

  
	
   

  	
   

  	
   

  
	
  Cash
  Management Sublimit

  	
   

  	
   

  
	
  (Section 1.8):

  	
   

  	
  Three Hundred Thousand Dollars ($300,000)

  
	
   

  	
   

  	
   

  
	
  Foreign
  Exchange Sublimit

  	
   

  	
   

  
	
  (Section 1.9):

  	
   

  	
  Five Hundred Thousand Dollars ($500,000)

  
	
   

  	
   

  	
   

  
	
  2.              INTEREST.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Interest
  Rate (Section 1.2):

  	
   

  	
   

  
	
   

  	
   

  	
  All Loans and all other Obligations shall bear interest at a rate
  equal to the Prime Rate, plus 1.50% per annum.  Upon Borrower achieving three (3) consecutive
  months of positive EBITDA and provided positive EBITDA

  

 

3

 

	
   

  	
   

  	
  continues to be achieved monthly, interest shall be reduced to the
  Prime Rate, plus 1.00% per annum.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  During any period when Borrower’s unencumbered cash held at Silicon
  is greater than $15,000,000, then the Obligations shall bear interest at a
  rate equal to the Prime Rate plus 0.50% per annum.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All interest shall be calculated on the basis of a 360-day year for
  the actual number of days elapsed.  “Prime
  Rate” means the rate announced from time to time by Silicon as its “prime
  rate;” it is a base rate upon which other rates charged by Silicon are based,
  and it is not necessarily the best rate available at Silicon.  The interest rate applicable to the
  Obligations shall change on each date there is a change in the Prime Rate.

  
	
   

  	
   

  	
   

  
	
  3.              FEES (Section 1.4):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Loan
  Fee:

  	
   

  	
  In consideration of Silicon’s agreement to amend and restate the
  Original Loan Agreement, a non-refundable fee in the amount of $28,150.68
  payable on the closing date.

  
	
   

  	
   

  	
   

  
	
  Collateral
  Monitoring Fee:

  	
   

  	
  $1,000, per month, payable in arrears (prorated for any partial month
  at the beginning and at termination of this Agreement), provided that during
  any Streamline Reporting Period this fee will be waived.

  
	
   

  	
   

  	
   

  
	
  Unused
  Portion Fee:

  	
   

  	
  The Borrower shall pay to Silicon a fee (collectively, the “Unused
  Line Fees” and individually, a “Unused Line Fee”) in an amount equal to
  three-eighths of one percent (0.375%) per annum of the average daily unused
  and undisbursed portion of the Credit Limit accruing during each month;
  provided, however, Borrower’s unencumbered cash held at Silicon is greater
  than $15,000,000, the Unused Line Fee shall be an amount equal to one quarter
  of one percent (0.25%) per annum of the average daily unused and undisbursed
  portion of the Credit Limit accruing during each month.  The accrued and unpaid portion of the
  Unused Line Fee shall be paid by the Borrower to Silicon on the last day of
  each month, commencing on the first such date following the date hereof, and
  on the Maturity Date.

  

 

4

 

	
  4.              MATURITY DATE

  	
   

  	
   

  
	
  (Section 6.1):

  	
   

  	
  January 31, 2007.

  
	
   

  	
   

  	
   

  
	
  5.              FINANCIAL COVENANTS

  	
   

  	
   

  
	
  (Section 5.1):

  	
   

  	
  Borrower shall comply with each of the following covenants.  Compliance shall be determined as of the
  end of each month, except as otherwise specifically provided below:

  
	
  EBITDA, less unfunded

  	
   

  	
   

  
	
  Capital
  Expenditures:

  	
   

  	
  Borrower shall maintain, tested as of the end of each month, EBIDTA,
  less Unfunded Capital Expenditures of not less than the following amounts at
  the following times:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EBITDA:

  	
   

  	
  Period Ending:

  	
   

  
	
   

  	
   

  	
  $

  	
  (2,500,000

  	
  )

  	
  December 31, 2005 through March 31, 2006;

  	
   

  
	
   

  	
   

  	
  $

  	
  (1,500,000

  	
  )

  	
  April 30, 2006 through June 30, 2006;

  	
   

  
	
   

  	
   

  	
  $

  	
  (1,000,000

  	
  )

  	
  July 31, 2006 through September 30, 2006; and

  	
   

  
	
   

  	
   

  	
  $

  	
  0

  	
   

  	
  October 31, 2006 and thereafter.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For purposes hereof, “Unfunded Capital Expenditures” means the
  purchase of a fixed asset, the purchase price of which has not been funded
  through a capital lease or debt.

  
	
   

  	
   

  	
   

  
	
  6.              REPORTING.

  	
   

  	
   

  
	
  (Section 5.3):

  	
  Borrower shall provide Silicon with the following:

  
	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  For Domestic Accounts Only: Weekly transaction reports and schedules
  of collections, on Silicon’s standard form.

  
	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  For Eligible Accounts and Eligible Foreign Accounts (if borrowing
  against Eligible Foreign Accounts): 
  Monthly accounts receivable agings, aged by invoice date, within
  twenty five (25) days after the end of each month.

  
	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  For Eligible Accounts and Eligible Foreign Accounts (if borrowing against
  Eligible Foreign Accounts):  Monthly
  accounts payable agings, aged by invoice date, and outstanding or held check
  registers, if any, within twenty five (25) days after the end of each month.

  

 

5

 

	
   

  	
  4.

  	
  For Domestic Accounts Only: Monthly reconciliations of accounts
  receivable agings (aged by invoice date), transaction reports, and general
  ledger, within twenty five (25) days after the end of each month.

  
	
   

  	
   

  	
   

  
	
   

  	
  5.

  	
  Monthly unaudited financial statements, as soon as available, and in
  any event within thirty (30) days after the end of each month.

  
	
   

  	
   

  	
   

  
	
   

  	
  6.

  	
  Monthly Compliance Certificates, within thirty (30) days after the
  end of each month, in the form of Exhibit A, signed by the Chief
  Financial Officer of Borrower, certifying that as of the end of such month
  whether Borrower was in full compliance with all of the terms and conditions
  of this Agreement, and setting forth calculations showing whether Borrower is
  then in compliance with the financial covenants set forth in this Agreement
  and such other information as Silicon shall reasonably request, including,
  without limitation, a statement that at the end of such month there were no
  held checks.

  
	
   

  	
   

  	
   

  
	
   

  	
  7.

  	
  Annual operating budgets (including income statements, balance sheets
  and cash flow statements, by month) for the upcoming fiscal year of Borrower
  within thirty (30) days prior to the end of each fiscal year of Borrower.

  
	
   

  	
   

  	
   

  
	
   

  	
  8.

  	
  Annual financial statements, as soon as available, and in any event
  within one hundred twenty (120) days following the end of Borrower’s fiscal
  year, certified by, and with an unqualified opinion of, independent certified
  public accountants acceptable to Silicon.

  
	
   

  	
   

  	
   

  
	
   

  	
  Streamline Reporting Period

  
	
   

  	
   

  
	
   

  	
  Notwithstanding anything to the contrary set forth in this Agreement,
  during any Streamline Reporting Period Borrower
  shall provide Silicon with transaction reports on Silicon’s standard form,
  including, sales, credit memos and collections journals within thirty (30)
  days after the end of each month (rather than weekly as per Section 6(1) above).

  
	
   

  	
   

  
	
   

  	
  Request for Loans. 
  Borrower shall provide Silicon with at least fifteen (15) days’ prior
  written notice (or such lesser notice as Silicon may agree to accept) of
  Borrower’s desire to have Silicon make any Loan to Borrower which causes the
  principal balance to exceed $1,000,000. 
  Such Loans, if any, shall be made in accordance with the terms and
  conditions of this Agreement.

  

 

6

 

	
  7.              BORROWER INFORMATION:

  	
   

  
	
   

  	
   

  
	
   

  	
  Borrower represents and warrants that the information set forth in
  the Collateral Information Sheet of the Borrower dated December 15, 2005
  previously submitted to Silicon (the “Representations”) is true and correct
  in all material respects as of the date hereof.

  
	
   

  	
   

  	
   

  
	
  8.              ADDITIONAL PROVISIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Banking Relationship.  Borrower shall at all times maintain a banking relationship with
  Silicon. Without limiting the generality of the foregoing, Borrower shall, at
  all times, maintain not less than sixty percent (60%) of its total
  unrestricted cash and investments maintained with institutions in the United
  States and Canada on deposit with Silicon. 
  As to any Deposit Accounts and investment accounts maintained with
  another institution (other than the lockbox account of Borrower held at
  SunTrust Bank or any accounts which are required to secure letters of credit
  issued by such institution), Borrower shall cause such institution, within
  thirty (30) days after the date of this Agreement, to enter into a control
  agreement in form acceptable to Silicon in its good faith business judgment
  in order to perfect Silicon’s first-priority security interest in said
  Deposit Accounts and investment accounts.

  
	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Subordination of Inside Debt. 
  All present and future indebtedness for borrowed money of Borrower to
  its officers, directors and shareholders (“Inside Debt”) shall, at all times,
  be subordinated to the Obligations pursuant to a subordination agreement
  acceptable to Silicon in its reasonable discretion.  Borrower represents and warrants that there
  is no Inside Debt presently outstanding. 
  Prior to incurring any Inside Debt in the future, Borrower shall cause
  the person to whom such Inside Debt will be owed to execute and deliver to
  Silicon a subordination agreement as described above.

  
	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Subordination of Allied Riser Debt.  All
  Obligations hereunder shall be deemed “Designated Senior Debt” for purposes
  of that certain Indenture, dated as of June 28, 2000, between the Issuer
  and the Trustee, as amended from time to time.

  

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

7

 

	
  Borrower:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS, INC.

  	
   

  	
  COGENT CANADA,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  By:

  	
  /s/David
  Schaeffer

  	
   

  
	
  By:

  	
  By:

  	
  /s/David
  Schaeffer

  	
   

  	
   

  	
   

  	
  Name:

  	
  David Schaeffer

  	
   

  
	
   

  	
  Name:

  	
  David Schaeffer

  	
   

  	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NETWORK
  EQUIPMENT SOLUTIONS, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Silicon:

  
	
   

  	
   

  	
   

  
	
  By:

  	
  By:

  	
  /s/David
  Schaeffer

  	
   

  	
   

  	
  SILICON VALLEY
  BANK

  	
   

  
	
   

  	
  Name:

  	
  David Schaeffer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UFO GROUP, INC.,

  	
   

  	
   

  	
  By:

  	
  /s/ Peter
  Bendoris

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: Peter
  Bendoris

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:
  Relationship Mgr.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  By:

  	
  /s/David
  Schaeffer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David Schaeffer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ALLIED RISER
  COMMUNICATIONS

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CORPORATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  By:

  	
  /s/David
  Schaeffer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David Schaeffer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ALLIED RISER
  OPERATIONS CORPORATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  By:

  	
  /s/David
  Schaeffer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David Schaeffer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COGENT CANADA
  HOLDINGS, INC.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  By:

  	
  /s/David
  Schaeffer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David Schaeffer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
															

 

8

 

Exhibit A

 

COMPLIANCE CERTIFICATE

 

	
  To:

  	
  Silicon Valley Bank

  
	
   

  	
   

  	
   

  
	
  From:

  	
  Cogent Communications, Inc.

  
	
   

  	
  1015 31st Street, NW

  
	
   

  	
  Washington, DC 20007

  

 

The undersigned authorized officer of Cogent Communications, Inc.
(“Company”) certifies on behalf of Borrower that under the terms and conditions
of the Amended and Restated Loan and Security Agreement between Borrower and
Bank (the “Agreement”), (i) Borrower is in complete compliance for the
period ending                         with
all required covenants except as noted below and (ii) all representations
and warranties in the Agreement are true and correct in all material respects
on this date.  In addition, the
undersigned authorized officer of Borrower certifies that Borrower and each
Subsidiary (i) has timely
filed all required tax returns and paid, or made adequate provision to pay, all
material taxes, except those being contested in good faith with adequate
reserves under GAAP and (ii) does
not have any legal actions pending or threatened against Borrower or any
Subsidiary which Borrower has not previously notified in writing to Bank.  Attached are the required documents
supporting the certification.  In
addition, the undersigned certifies that (1) Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP and (ii) no liens has been levied or claims
made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits
which Borrower has not previously notified in writing to Bank.  The
Officer certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.  The Officer acknowledges that no borrowings
may be requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.

 

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

 

	
  REPORTING COVENANT

  	
   

  	
  REQUIRED

  	
   

  	
  COMPLIES

  
	
  Financials &
  Comp. Cert.

  	
   

  	
  Monthly w/in 30
  days

  	
   

  	
  YES/NO

  
	
  Reconciliations of Domestic and if applicable,
  Foreign Receivable agings (invoice date)

  	
   

  	
  Monthly w/in 25
  days

  	
   

  	
  YES/NO

  
	
  Reconciliations of Domestic and if applicable,
  Foreign A/R agings,

  	
   

  	
  Monthly w/in 25
  days

  	
   

  	
  YES/NO

  
	
  Transactions reports,
  G/L

  (Domestic Only)

  	
   

  	
  Weekly if not
  Streamline/

  	
   

  	
   

  
	
   

  	
   

  	
  Monthly w/in 30
  days if Streamline

  	
   

  	
  YES/NO

  

 

 

	
  Payables agings

  	
   

  	
  Monthly w/in 25
  days

  	
   

  	
  YES/NO

  
	
  Held Checks

  	
   

  	
   

  	
   

  	
  YES/NO

  
	
  If YES, Held Checks
  Register

  	
   

  	
  Monthly w/in 25
  days

  	
   

  	
  YES/NO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Audited Annual
  Financials

  	
   

  	
  FYE w/in 120
  days

  	
   

  	
  YES/NO

  
	
  Annual Operating Budget

  	
   

  	
  W/in 30 days
  prior to FYE

  	
   

  	
  YES/NO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FINANCIAL COVENANT

  	
   

  	
  REQUIRED

  	
   

  	
  ACTUAL

  
	
  Minimum Unencumbered
  Domestic Cash

  (At all times)

  	
   

  	
  60% of US &
  Canada Cash

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Complies?   YES/NO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EBITDA and
  unfunded Capital

  Expenditures:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  (2,500,000

  	
  )

  	
  December 31,
  2005 through March 31, 2006;

  	
   

  	
   

  
	
  $

  	
  (1,500,000

  	
  )

  	
  April 30,
  2006 through June 30, 2006;

  	
   

  	
   

  
	
  $

  	
  (1,000,000

  	
  )

  	
  July 31,
  2006 through September 30, 2006; and

  	
   

  	
   

  
	
  $

  	
  0

  	
   

  	
  October 31,
  2006 and thereafter.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Complies?   YES/NO

  
												

 

Terms are defined in the Schedule to
the Loan Agreement, Section 5.1.

 

Comments regarding
financial covenants:

 

 

	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Received:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								

 

 

Exhibit B

 

Non
Material Subsidiaries 

 

	
  COGENT
  COMMUNICATIONS OF CALIFORNIA, INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF D.C., INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF FLORIDA, INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF GEORGIA, INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF MARYLAND, INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF MASSACHUSETTS, INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF MISSOURI, INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF NEW YORK, INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF OHIO, INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF PENNSYLVANIA, INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF TEXAS, INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS OF VIRGINIA, INC.

  	
   

  	
  Virginia
  corporation

  
	
   

  	
   

  	
   

  
	
  FIBER SERVICES
  OF CANADA, LTD.

  	
   

  	
  Nova Scotia
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT EUROPE, SARL

  	
   

  	
  Luxembourg corporation

  
	
   

  	
   

  	
   

  
	
  COGENT COMMUNICATIONS FRANCE, SAS

  	
   

  	
  French corporation

  
	
   

  	
   

  	
   

  
	
  COGENT COMMUNICATIONS ESPANA S.A.

  	
   

  	
  Spanish corporation

  
	
   

  	
   

  	
   

  
	
  LAMBDANET
  SWITZERLAND GMBH

  	
   

  	
  Swiss
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT COMMUNICATIONS UK LTD.

  	
   

  	
  English
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS BELGIUM SPRL

  	
   

  	
  Belgian
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT
  COMMUNICATIONS NETHERLANDS B.V.

  	
   

  	
  Dutch
  corporation

  
	
   

  	
   

  	
   

  
	
  C.C.D. COGENT
  COMMUNICATIONS DEUTSCHLAND, GMBH

  	
   

  	
  German
  corporation

  
	
   

  	
   

  	
   

  
	
  SYMPOSIUM GAMMA,
  INC.

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT INTERNET, INC.

  	
   

  	
  Delaware
  corporation

  

 

 

Exhibit C

 

Dissolving
Subsidiaries

 

	
  COGENT GREAT
  LAKES COMMUNICATIONS, INC. [Dissolved]

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT POTOMAC,
  INC. [Dissolved]

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  SFX ACQUISITION,
  INC. [Dissolved]

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  COGENT INTERNET, INC. [Dissolved]

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
  SYMPOSIUM OMEGA, INC. [Dissolved]

  	
   

  	
  Delaware
  corporation

  

 

 

Exhibit D

 

Form of
Joinder Agreement

 

ADDITIONAL BORROWER JOINDER SUPPLEMENT

 

THIS ADDITIONAL
BORROWER JOINDER SUPPLEMENT (this “Agreement”) is made this        day
of             ,
200  , by and among, COGENT COMMUNICATIONS, INC., a Delaware
corporation (“Company”), the other “Existing Borrowers” (as that term is
defined below),                                                         ,
a                                    corporation
(the “Additional Borrower”), and wholly-owned subsidiary of Company, and SILICON
VALLEY BANK, a California chartered bank (the “Bank”).

 

NOW, THEREFORE,
for value received the undersigned agree as follows:

 

1.                                       Reference is hereby made to the Amended and
Restated Loan and Security Agreement dated as of December     ,
2005 (as amended, modified, restated, substituted, extended and renewed at any
time and from time to time, the “Loan Agreement”) by and between the Company,
each Person which is included in the definition of “Borrower” (as that term is
defined in the Loan Agreement) immediately prior to the date of this Agreement
(together with Company, the “Existing Borrowers”), and the Bank.  Capitalized terms not otherwise defined in
this Agreement shall have the meanings given to them in the Loan Agreement.

 

2.                                       (a)  The Additional Borrower and the
Existing Borrowers hereby acknowledge, confirm and agree that on and as of the
date of this Agreement the Additional Borrower has become a “Borrower” (as that
term is defined in the Loan Agreement), and, along with the Existing Borrowers,
is included in the definition of “Borrower” under the Loan Agreement and the
other Loan Documents for all purposes thereof, and as such shall be jointly and
severally liable, as provided in the Loan Documents, for all Obligations
thereunder (whether incurred or arising prior to, on, or subsequent to the date
hereof) and otherwise bound by all of the terms, provisions and conditions
thereof.

 

(b)                                 Without
in any way implying any limitation on any of the provisions of this Agreement,
the Loan Agreement, or any of the other Loan Documents, the Additional Borrower
hereby assigns, pledges and grants to the Bank as security for the Obligations,
and agrees that the Bank shall have a perfected and continuing security
interest in, and Lien on, (i) all of the Additional Borrower’s Collateral,
whether now owned or existing or hereafter acquired or arising, (ii) all
returned, rejected or repossessed goods, the sale or lease of which shall have
given or shall give rise to an account or chattel paper, (iii) all
insurance policies relating to the foregoing, (iv) all books and records
in whatever media (paper, electronic or otherwise) recorded or stored, with
respect to the foregoing and all equipment and general intangibles necessary or
beneficial to retain, access and/or process the information contained in those
books and records, and (v) all cash and non-cash proceeds and products of
the foregoing.  The Additional Borrower
further agrees that the Bank, shall have in respect thereof all of the rights
and remedies of a secured party under the Uniform Commercial Code as well as

 

 

those provided in
this Agreement, under each of the other Loan Documents and under applicable
laws.

 

(c)                                  Without
in any way implying any limitation on any of the provisions of this Agreement,
the Additional Borrower agrees to execute such financing statements,
instruments, and other documents as the Bank may require.

 

(d)                                 Without
in any way implying any limitation on any of the provisions of this Agreement,
the Additional Borrower hereby represents
and warrants that all of the representations and warranties contained in the
Loan Documents are true and correct on and as of the date hereof as if made on
and as of such date, both before and after giving effect to this Joinder
Supplement, and that no Event of Default or Default has occurred and is
continuing or exists or would occur or exist after giving effect to this
Joinder Supplement.

 

3.               Each Person included in the term “Borrower”
hereby covenants and agrees with the Bank as follows:

 

(a)                                  The Obligations include all present and future
indebtedness, duties, obligations, and liabilities, whether now existing or
contemplated or hereafter arising, of any one or more of the Additional
Borrower or the Existing Borrowers.

 

(b)                                 Reference in this Agreement to the Loan Agreement
and the other Loan Documents to the “Borrower” or otherwise with respect to any
one or more of the Persons now or hereafter included in the definition of “Borrower”
or “Borrowers” shall mean each and every such Person and any one or more of such
Persons, jointly and severally, unless the context requires otherwise (by way
of example, and not limitation, if only one such Person is the owner of the
real property which is the subject of a mortgage).

 

(c)                                  Each Person included in the term “Borrower” in
the discretion of its respective management is to agree among themselves as to
the allocation of the benefits of any Credit Extensions, provided, however,
that each such Person be deemed to have represented and warranted to the Bank
at the time of allocation that each benefit and use of proceeds is permitted
under the terms of the Loan Agreement and Loan Documents.

 

(d)                                 For administrative convenience, each Person
included in the term “Borrower” hereby irrevocably appoints Company as the
Borrower’s attorney-in-fact, with power of substitution (with the prior written
consent of the Bank in the exercise of its sole and absolute discretion), in
the name of Company or in the name of the Borrower or otherwise to take any and
all actions with respect to the this Agreement, the other Loan Documents, the
Obligations and/or the Collateral (including, without limitation, the proceeds
thereof) as Company may so elect from time to time, including, without
limitation, actions to (i) request, any Credit Extensions, apply for and
direct the benefits of Letters of Credits, and direct the Bank to disburse or
credit the proceeds of any Credit Extensions directly to an account of Company,
any one or more of such Persons or otherwise, which direction shall evidence
the making of such Credit Extension and shall constitute the acknowledgement by
each such Person of the receipt of the proceeds of such Credit Extension or the
benefit of such Letter of Credit, (ii) enter into, execute, deliver,
amend, modify, restate, substitute, extend and/or renew this Agreement, any

 

 

Additional Borrower Joinder Supplement, any other Loan Documents,
security agreements, mortgages, deposit account agreements, instruments,
certificates, waivers, letter of credit applications, releases, documents and
agreements from time to time, and (iii) endorse any check or other item of
payment in the name of such Person or in the name of Company.  The foregoing appointment is coupled with an
interest, cannot be revoked without the prior written consent of the Bank, and
may be exercised from time to time through Company’ duly authorized officer,
officers or other Person or Persons designated by Company to act from time to
time on behalf of Company.

 

(e)                                  Each Person included in the term “Borrower”
hereby irrevocably authorizes the Bank to make Advances to any one or more of
such Person, and hereby irrevocably authorizes the Bank to issue or cause to be
issued Letters of Credit for the account of any or all of such Persons,
pursuant to the provisions of this Agreement upon the written, oral or
telephone request any one or more of the Persons who is from time to time a
Responsible Officer of a Borrower under the provisions of the most recent
certificate of corporate resolutions and/or incumbency of the Person included
in the term “Borrower” on file with the Bank and also upon the written, oral or
telephone request of any one of the Persons who is from time to time a
Responsible Officer of Company under the provisions of the most recent
certificate of corporate resolutions and/or incumbency for Company on file with
the Bank.

 

(f)                                    The Bank assumes no responsibility or liability
for any errors, mistakes, and/or discrepancies in the oral, telephonic, written
or other transmissions of any instructions, orders, requests and confirmations
between the Bank and any one or more of the Persons included in the term “Borrower”
or the Bank in connection with any Credit Extension, any Letter of Credit or
any other transaction in connection with the provisions of this Agreement.

 

4.               Without implying any limitation on the joint and
several nature of the Obligations, the Bank agrees that, notwithstanding any
other provision of this Agreement, the Persons included in the term “Borrower,”
may create reasonable inter-company indebtedness between or among the Borrowers
with respect to the allocation of the benefits and proceeds of any Credit
Extension under this Agreement.  The
Borrowers agree among themselves, and the Bank consents to that agreement, that
each Borrower shall have rights of contribution from all of the other Borrowers
to the extent such Borrower incurs Obligations in excess of the proceeds of any
Credit Extension received by, or allocated to purposes for the direct benefit
of, such Borrower.  All such indebtedness
and rights shall be, and are hereby agreed by the Borrowers to be, subordinate
in priority and payment to the indefeasible repayment in full in cash of the
Obligations, and, unless the Bank agrees in writing otherwise, shall not be
exercised or repaid in whole or in part until all of the Obligations have been
indefeasibly paid in full in cash.  The
Borrowers agree that all of such inter-company indebtedness and rights of
contribution are part of the Collateral and secure the Obligations.  Each Borrower hereby waives all rights of
counterclaim, recoupment and offset between or among themselves arising on
account of that indebtedness and otherwise. 
Each Borrower shall not evidence the inter-company indebtedness or
rights of contribution by note or other instrument, and shall not secure such
indebtedness or rights of contribution with any Lien or security.  Notwithstanding anything contained in this
Agreement to the contrary, the amount

 

 

covered by each Borrower under the Obligations
shall be limited to an aggregate amount (after giving effect to any collections
from, rights to receive contribution from or payments made by or on behalf of
any other Borrower in respect of the Obligations) which, together with other
amounts owing by such Borrowers to the Bank under the Obligations, is equal to
the largest amount that would not be subject to avoidance under any Insolvency
Proceeding or any applicable provisions of any applicable, comparable state or
other laws.

 

5.               (a)                                                          Each Person included in the term “Borrower”
hereby represents and warrants to the Bank that each of them will derive
benefits, directly and indirectly, from each Credit Extension, both in their
separate capacity and as a member of the integrated group to which each such
Person belongs and because the successful operation of the integrated group is
dependent upon the continued successful performance of the functions of the
integrated group as a whole, because (i) the terms of the consolidated
financing provided under this Agreement are more favorable than would otherwise
would be obtainable by such Persons individually, and (ii) the additional
administrative and other costs and reduced flexibility associated with
individual financing arrangements which would otherwise be required if
obtainable would substantially reduce the value to such Persons of the
financing.

 

(b)                                                         Each
Person included in the term “Borrower” hereby represents and warrants that all
of the representations and warranties contained in the Loan Documents are true
and correct on and as of the date hereof as if made on and as of such date,
both before and after giving effect to this Agreement, and that no Event of
Default or Default has occurred and is continuing or exists or would occur or
exist after giving effect to this Agreement.

 

6.               Guaranty.

 

(a)                                  Each
Person included in the term “Borrower” hereby unconditionally and irrevocably,
guarantees to the Bank:

 

(i)                                     the due and punctual payment in full (and not
merely the collectibility) by the other Persons included in the term “Borrower”
of the Obligations, including unpaid and accrued interest thereon, in each case
when due and payable, all according to the terms of this Agreement and the
other Loan Documents;

 

(ii)                                  the due and punctual payment in full (and not
merely the collectibility) by the other Persons included in the term “Borrower”
of all other sums and charges which may at any time be due and payable in
accordance with this Agreement or any of the other Loan Documents;

 

(iii)                               the due and punctual performance by the other
Persons included in the term “Borrower” of all of the other terms, covenants
and conditions contained in the Loan Documents; and

 

(iv)                              all the other Obligations of the other Persons
included in the term “Borrower”.

 

 

(b)                                 The
obligations and liabilities of each Person included in the term

 

“Borrower” as a
guarantor under this paragraph 6 shall be absolute and unconditional and joint
and several, irrespective of the genuineness, validity, priority, regularity or
enforceability of this Agreement or any of the Loan Documents or any other
circumstance which might otherwise constitute a legal or equitable discharge of
a surety or guarantor.  Each Person
included in the term “Borrower” in its capacity as a guarantor expressly agrees
that the Bank may, in its sole and absolute discretion, without notice to or
further assent of such Borrower and without in any way releasing, affecting or
in any way impairing the joint and several obligations and liabilities of such
Person as a guarantor hereunder:

 

(i)                                     grant extensions or renewals of or with respect
to any of the other Loan Documents;

 

(ii)                                  effect any release, subordination, compromise or
settlement in connection with this Agreement, or any of the other Loan
Documents;

 

(iii)                               agree to the substitution, exchange, release or
other disposition of the Collateral or any part thereof, or any other
collateral for the Obligations or to the subordination of any lien or security
interest therein;

 

(iv)                              make advances for the purpose of performing any
term, provision or covenant contained in this Agreement, or any of the other
Loan Documents with respect to which the Borrower shall then be in default;

 

(v)                                 make future advances pursuant to the Loan
Agreement or any of the other Loan Documents;

 

(vi)                              assign, pledge, hypothecate or otherwise transfer
the Obligations, any of the other Loan Documents or any interest therein, all
as and to the extent permitted by the provisions of this Agreement;

 

(vii)                           deal in all respects with the other Persons
included in the term “Borrower” as if this paragraph 6 were not in effect;

 

(viii)                        effect any release, compromise or settlement with
any of the other Persons included in the term “Borrower”, whether in their
capacity as a Borrower or as a guarantor under this paragraph 6 or any other
guarantor; and

 

(ix)                                provide debtor-in-possession financing or allow
use of cash collateral in proceedings under any Insolvency Proceeding, it being
expressly agreed by all Persons included in the term “Borrower” that any such
financing and/or use would be part of the Obligations.

 

(c)                The obligations
and liabilities of each Person included in the term “Borrower”, as guarantor
under this paragraph 6 shall be primary, direct and immediate, shall not be
subject to any counterclaim, recoupment, set off, reduction or defense based
upon any claim that such Person may have against any one or more of the other
Persons included in the term “Borrower”, the Bank and/or any other guarantor
and shall not be

 

 

conditional or
contingent upon pursuit or enforcement by the Bank of any remedies it may have
against Persons included in the term “Borrower” with respect to this Agreement,
or any of the other Loan Documents, whether pursuant to the terms thereof or by
operation of law.  Without limiting the
generality of the foregoing, the Bank shall not be required to make any demand
upon any of the Persons included in the term “Borrower”, or to sell the
Collateral or otherwise pursue, enforce or exhaust its or their remedies
against the Persons included in the term “Borrower” or the Collateral either
before, concurrently with or after pursuing or enforcing its rights and
remedies hereunder.  Any one or more
successive or concurrent actions or proceedings may be brought against each
Person included in the term “Borrower” under this paragraph 6, either in the
same action, if any, brought against any one or more of the Persons included in
the term “Borrower” or in separate actions or proceedings, as often as the Bank
may deem expedient or advisable.  Without
limiting the foregoing, it is specifically understood that any modification,
limitation or discharge of any of the liabilities or obligations of any one or
more of the Persons included in the term “Borrower”, any other guarantor or any
obligor under any of the Loan Documents, arising out of, or by virtue of, any
bankruptcy, arrangement, reorganization or similar proceeding for relief of
debtors under federal or state law initiated by or against any one or more of
the Persons included in the term “Borrower”, in their respective capacities as
borrowers and guarantors under this paragraph 6, or under any of the Loan
Documents shall not modify, limit, lessen, reduce, impair, discharge, or
otherwise affect the liability of each Borrower under this paragraph 6 in any
manner whatsoever, and this paragraph 6 shall remain and continue in full force
and effect.  It is the intent and purpose
of this paragraph 6 that each Person included in the term “Borrower” shall and
does hereby waive all rights and benefits which might accrue to any other
guarantor by reason of any such proceeding, and the Persons included in the
term “Borrower” agree that they shall be liable for the full amount of the
obligations and liabilities under this paragraph 6 regardless of, and
irrespective to, any modification, limitation or discharge of the liability of
any one or more of the Persons included in the term “Borrower”, any other
guarantor or any obligor under any of the Loan Documents, that may result from
any such proceedings.

 

(d)         Each
Person included in the term “Borrower”, as guarantor under this paragraph 6,
hereby unconditionally, jointly and severally, irrevocably and expressly
waives:

 

(i)                                     presentment
and demand for payment of the Obligations and protest of non-payment;

 

(ii)                                  notice
of acceptance of this paragraph 6 and of presentment, demand and protest
thereof;

 

(iii)                               notice
of any default hereunder or any of the other Loan Documents and notice of all
indulgences;

 

(iv)                              notice
of any increase in the amount of any portion of or all of the indebtedness
guaranteed by this paragraph 6;

 

(v)                                 demand
for observance, performance or enforcement of any of the terms or provisions of
this paragraph 6, or any of the other Loan Documents;

 

 

(vi)                              all
errors and omissions in connection with the Bank’s administration of all
indebtedness guaranteed by this paragraph 6;

 

(vii)                           any
right or claim of right to cause a marshalling of the assets of any one or more
of the other Persons included in the term “Borrower”;

 

(viii)                        any
act or omission of the Bank which changes the scope of the risk as guarantor
hereunder; and

 

(ix)                                all
other notices and demands otherwise required by law which such Person may
lawfully waive.

 

(e)                                  Within
ten (10) days following any request of the Bank so to do, each Person
included in the term “Borrower” will furnish the Bank and such other persons as
the Bank may direct with a written certificate, duly acknowledged stating in
detail whether or not any credits, offsets or defenses exist with respect to
this paragraph 6.

 

7.                                       This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California, without
regard to principles of choice of law.

 

[Signatures Begin on Next Page]

 

 

WITNESS the due execution hereof as of the day and year first written
above.

 

	
  WITNESS:

  	
   

  	
  ADDITIONAL
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  COGENT
  COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  SILICON VALLEY
  BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
						

 

 

Exhibit E

 

SUBORDINATION
AGREEMENT

 

This Subordination Agreement (the “Agreement”) is made as of this           day
of                   ,
200  , by and between SILICON VALLEY BANK, a California-chartered
bank with its principal place of business at 3003 Tasman Drive, Santa Clara, CA
95054, (the “Bank”) and                                        .
(“Creditor”), a                          corporation,
having its principal place of business at                                               .

 

Recitals

 

A.                                 Bank and                                            (“Borrower”)
have entered into the Amended and Restated Loan and Security Agreement between
them, dated as of                                        as
such agreement is amended or otherwise modified from time to time (referred to
herein as the “Loan Agreement”), pursuant to which Bank has extended credit
accommodations to Borrower secured by the Collateral (as defined in the Loan
Agreement).

 

B.                                   Creditor has proposed the extension of a
subordinated credit facility to Borrower in the aggregate principal amount of $                        (the
“Creditor Facility”), which obligations shall also be secured by the
Collateral.

 

C.                                   In order to
induce Bank to continue to extend the credit accommodations to Borrower as the
Loan Agreement contemplates, Creditor is willing to subordinate (i) all of
Borrower’s indebtedness, liabilities, guarantees and all other obligations
owing to Creditor arising from time to time, including, without limitation,
with respect to the Creditor Facility (collectively the “Subordinated Debt”) to
and in favor of all of Borrower’s indebtedness, liabilities, guarantees and all
other obligations owing to Bank, now existing or hereafter arising, including
without limitation, under the Loan Agreement (the “Senior Debt”) and (ii) all
security interests, liens, encumbrances, ownership interests and all other
interests of similar import of Creditor now in existence and arising hereafter
with respect to any and all property of the Borrower now in existence or
hereafter arising (the “Subordinate Interest”) to and in favor of the rights
and interests of Bank in and to any and all of such property, in each of the
foregoing cases to the extent and as otherwise set forth herein.

 

Agreement

 

NOW, THEREFORE, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:

 

1.                                     Creditor hereby subordinates its Subordinate
Interest regarding any and all assets and property of the Borrower to and in
favor of Bank.  Further, notwithstanding
the respective dates of attachment or perfection of the Subordinate Interest
and the security interest and lien of Bank, the security interest and lien of
Bank in the assets and property of Borrower granted pursuant to the Loan
Agreement and otherwise arising from time to time in connection with the Senior
Debt shall at all times be prior and superior to the Subordinate Interest.

 

 

2.                                     On
the terms and conditions set forth herein, Creditor hereby subordinates all
Subordinated Debt in right of payment to and in favor of all Senior Debt.  Nothing herein shall be deemed to
subordinate, waive or restrict the performance of the obligations of Borrower
to issue capital stock of Borrower under any warrants that the Borrower may
have issued to Creditor from time to time.

 

3.                                     Subject
to and except as set forth in Section 4 below, Creditor will not:  (a) demand or receive from Borrower (and
Borrower will not pay to Creditor) all or any part of the Subordinated Debt, by
way of payment, prepayment, setoff, lawsuit or otherwise; (b) exercise any
right or remedy, or take any enforcement action regarding any property or
assets of Borrower; or (c) commence, or cause to be commenced, prosecute
or participate in any administrative, legal or equitable action against
Borrower or the Collateral, for the longer of such time as any Senior Debt
remains outstanding or any of the Loan Agreement remains effective and not
terminated; provided, however, Creditor may, during the existence
and continuance of any default in respect of the Subordinated Debt, and in
accordance with the terms thereof, take an enforcement or other remedial action
with respect to the Borrower or any of its property on and after the date that
is one hundred eighty (180) days after Creditor has given Bank written notice
of its intention to do any of the foregoing in a letter that specifically references
this section and indicates what actions are contemplated (and with the
understanding that any such written notice may be given during a Blockage
Period if Creditor so desires).

 

4.                                     (a) Notwithstanding anything to the
contrary contained in Sections 2 and 3 above, but expressly subject to (b) below,
Borrower shall be permitted to make, and Creditor shall be permitted to accept
or receive the following permitted payments (“Permitted Payments”) on the
Subordinated Debt: (i) scheduled repayments of principal when due (as
contemplated by the agreements in effect as of the date hereof) under the
Subordinated Debt facility (as long as the maximum principal amount of the
Subordinated Debt in the aggregate does not exceed $                        ),
(ii) scheduled payments of accrued interest when due under the
Subordinated Debt facility  (as
contemplated by the agreements in effect as of the date hereof), (iii) payments
of reimbursable expenses, costs and professional fees and expenses as and when
due under the Subordinated Debt facility (as contemplated by the agreements in
effect as of the date hereof), and (iv) other payments consented to in
writing by the Bank.

 

(b)                                 Notwithstanding anything to the contrary
contained in this Section 4 or elsewhere in this Agreement, if the Bank
delivers to Creditor written notice (a “Blockage Notice”) which states that
either:

 

(i)                                   a specific default by Borrower involving the
payment of the Senior Debt (a “Payment Default”) has occurred the Loan
Agreement and continues to exist after the giving of any notice, if any is so
required, and the expiration of any applicable grace or cure period, or

 

 

(ii)                                a specific default by Borrower not
involving the payment of Senior Debt (a “Non-Payment Default”) has occurred
under the Loan Agreement and continues to exist after the giving of any notice,
if any is so required, and the expiration of any applicable grace or cure
period, such notice to include all such defaults in existence at the time,

 

then,
from and after the date of delivery of any such Blockage Notice, (i) Creditor
shall not accept or receive any payment of any kind of or on account of the
Subordinated Debt (including any Permitted Payment), unless and until the
earlier of (A) the time such Payment Default or Non-Payment Default shall
have been cured by Borrower or waived in writing by Bank, or (B) the
expiration of the Blockage Period (as defined below) for such Blockage Notice,
and (ii) Creditor shall disgorge any Permitted Payments received, for a
period not to exceed two (2) months during the time commencing upon the
occurrence of a Payment Default or Non-Payment Default until the date of
receipt by Creditor of such Blockage Notice.

 

As used herein, “Blockage
Period” means a period of time beginning on the date a Blockage Notice is
delivered to Creditor and termination on the earlier to occur of:

 

(1)                                180 days following such date; provided
that if, prior to the expiration of such 180-day period, Bank has commenced a
judicial proceeding or non-judicial actions to collect or enforce the Senior
Debt or the collateral for the Senior Debt, or a case or proceeding by or
against Borrower is commenced under the federal Bankruptcy Code or any other
insolvency law, then such period shall be extended during the continuation of
such proceedings and actions under the payment in cash or other property or
securities in the full amount of the allowed claim of the Senior Debt; or

 

(2)                                  Bank’s written consent to such termination.

 

In no event shall
the Blockage Period during any period of 365 consecutive days exceed 180 days
in the aggregate, whether pursuant to one (1) Blockage Notice or multiple
Blockage Notices; provided, however, the foregoing limitation shall not apply
in the event that prior to the expiration of such 180 day period Bank has
commenced a judicial proceeding or non-judicial actions to collect or enforce
the Senior Debt or a case of proceeding by or against Borrower is commenced
under the federal Bankruptcy Code or any other insolvency law, then such period
shall be extended during the continuation of such proceedings and actions until
the payment in cash or other property or securities in the full amount of the
allowed claim of the Senior Debt.  After
termination of any Blockage Period pursuant to the conditions specified in (1) or
(2) above and until Creditor’s receipt of a subsequent Blockage Notice
from Bank, Creditor shall be entitled to receive all Permitted Payments.

 

5.                                     If
Creditor sends the Borrower a notice of default under the Creditor Facility,
Creditor shall use best efforts to promptly deliver a copy of the notice of
default to Bank, but failure to do so shall not, in and of itself, be a breach
of this Agreement nor affect any of Creditor’s rights in respect of the
Subordinated Debt.

 

 

6.                                     Creditor shall promptly deliver to Bank in
the form received (except for endorsement or assignment by Creditor where
required by Bank) for application to the Senior Debt any payment, distribution,
security or proceeds received by Creditor with respect to the Subordinated Debt
other than in accordance with this Agreement.

 

7.                                     In the event of Borrower’s insolvency,
reorganization or any case or proceeding under any bankruptcy or insolvency law
or laws relating to the relief of debtors, these provisions shall remain in
full force and effect, and Bank’s claims against Borrower and the estate of
Borrower shall be paid in full before any payment is made to Creditor.

 

8.                                     For so long as any of the Senior Debt remains
unpaid, Creditor irrevocably appoints Bank as Creditor’s attorney-in-fact, and
grants to Bank a power of attorney with full power of substitution, in the name
of Creditor or in the name of Bank, for the use and benefit of Bank, without
notice to Creditor, in any bankruptcy, insolvency or similar proceeding
involving Borrower to (i) file the appropriate claim or claims in respect
of the Subordinated Debt on behalf of Creditor if Creditor does not do so prior
to 30 days before the expiration of the time to file claims in such proceeding
and (ii) accept or reject any plan of reorganization or arrangement on
behalf of Creditor and otherwise to vote Creditor’s claims in respect of any
Subordinated Debt in any manner that Bank chooses.

 

9.                                     Creditor shall immediately affix a legend to
the instruments evidencing the Subordinated Debt stating that the instruments
are subject to the terms of this Agreement. 
No amendment of the documents evidencing or relating to the Subordinated
Debt shall directly or indirectly modify the provisions of this Agreement in
any manner which might terminate or impair the subordination of the
Subordinated Debt or the subordination of the security interest or lien that
Creditor may have in any property of Borrower. 
Additionally, no amendment of the documents evidencing the Subordinated
Debt may change the timing or amount of the regularly scheduled payments of
principal and interest without Bank’s consent.

 

10.                               All necessary action on the part of the
Creditor, its officers, directors, partners, members and shareholders, as
applicable, necessary for the authorization of this Agreement and the
performance of all obligations of the Creditor hereunder has been taken.  Additionally, the execution, delivery and
performance of and compliance with this Agreement will not result in any
material violation or default of any term of any of the Creditor’s charter,
formation or other organizational documents (such as Articles or Certificate of
Incorporation, bylaws, partnership agreement, operating agreement, etc.).

 

11.                               This
Agreement shall remain effective until the later to occur of the repayment in
full in cash of the Senior Debt or the termination of the Loan Agreement.  If, at any time after payment in full of the
Senior Debt any payments of the Senior Debt must be disgorged by Bank for any
reason (including, without limitation, the bankruptcy of Borrower), this
Agreement and the relative rights and priorities set forth herein shall be
reinstated as to all such disgorged payments as though such payments had not
been made and Creditor shall immediately pay over to Bank all payments received
with respect to the Subordinated Debt to the extent that such payments would
have been prohibited hereunder.  At any
time and from time to time, without notice to Creditor,

 

 

Bank may take such
actions with respect to the Senior Debt as Bank, in its sole discretion, may
deem appropriate, including, without limitation, terminating advances to
Borrower, extending the time of payment, increasing applicable interest rates,
renewing, compromising or otherwise amending the terms of any documents affecting
the Senior Debt and any collateral securing the Senior Debt, and enforcing or
failing to enforce any rights against Borrower or any other person.  Creditor waives the benefits, if any, of any
statutory or common law rule that may permit a subordinating creditor to
assert any defenses of a surety or guarantor, or that may give the
subordinating creditor the right to require a senior creditor to marshal
assets, and Creditor agrees that it shall not assert any such defenses or
rights.

 

12.                               This
Agreement shall bind any successors or assignees of Creditor and shall benefit
any successors or assigns of Bank.  This
Agreement is solely for the benefit of Creditor and Bank and not for the
benefit of Borrower or any other party.

 

13.                               This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument. 
This Agreement shall become effective only when it shall have been
executed by Creditor and Bank.

 

14.                               This Agreement shall be governed by and
construed in accordance with the laws of the State of California without giving
effect to conflicts of law principles. 
Creditor and Bank submit to the exclusive jurisdiction of the state and
federal courts located in Santa Clara County, California.  CREDITOR AND BANK WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.

 

15.                               This
Agreement represents the entire agreement with respect to the subject matter
hereof, and supersedes all prior negotiations, agreements and commitments.  Creditor is not relying on any
representations by Bank or Borrower in entering into this Agreement, and
Creditor has kept and will continue to keep itself fully apprised of the
financial and other condition of Borrower. 
This Agreement may be amended only by written instrument signed by
Creditor and Bank.

 

16.                               In
the event of any legal action to enforce the rights of a party under this
Agreement, the party prevailing in such action shall be entitled, in addition
to such other relief as may be granted, all reasonable costs and expenses,
including reasonable attorneys’ fees, incurred in such action.

 

17.                               Except
as otherwise provided herein, all notices required, contemplated, or permitted
under this Agreement or with respect to the subject matter hereof shall be in
writing, and shall be deemed to have been validly served, given, delivered, and
received upon the earlier of: (i) the first business day after
transmission by facsimile or hand delivery or deposit with an overnight express
service or overnight mail delivery service; or (ii) the third calendar day
after deposit in the United States mails, with proper first class postage
prepaid, and shall be sent to the address set forth above or to such other
address as each party may designate for itself by like notice

 

 

IN
WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first above written.

 

 

	
   

  	
  “BANK”

  
	
   

  	
   

  
	
   

  	
  SILICON
  VALLEY BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  “CREDITOR”

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Seen and Agreed:

  
	
   

  	
   

  
	
   

  	
  Borrower:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  

 

 

Exhibit F

 

Material Foreign Subsidiaries

 

COGENT COMMUNICATIONS FRANCE, SAS

 

COGENT COMMUNICATIONS ESPANA S.A.

 

C.C.D. COGENT COMMUNICATIONS DEUTSCHLAND, GMBHExhibit 10.1

 

AMENDED
AND RESTATED MOSSIMO GIANNULLI BONUS PLAN

 

1.                 PURPOSE OF
THE PLAN

 

The
Mossimo Giannulli Bonus Plan (the “Plan”) is designed to provide Mossimo
Giannulli (“Executive”) with bonus compensation for the accomplishment of
specific preestablished financial performance objectives (the “Performance
Objectives”) by the Company, based on objective business criteria that enhance
value for the Company’s stockholders. Such bonus compensation is intended to be
“qualified performance-based compensation” within the meaning of Section 162(m)
of the Internal Revenue Code of 1986, as amended (the “Code”), and the
regulations promulgated thereunder.

 

2.                 EFFECTIVE
DATE, TERM AND CONTRACT YEAR

 

The
Plan shall be effective as of February 1, 2002 and shall remain in effect
until January 31, 2007, or until such earlier time as it shall be
terminated by the Board of Directors of the Company (the “Board”) in accordance
with Section 9.

 

The
Plan year (the “Contract Year”) shall commence on each February 1 and end on
January 31 of the following year, during the term of the Plan.

 

3.                 ELIGIBILITY

 

Executive
shall be eligible to participate in the Plan during such time as Executive is
employed by the Company, unless otherwise determined by the Committee. No other
person shall be eligible to participate in the Plan.

 

4.                 BUSINESS
CRITERIA AND BONUS FORMULA

 

At
the discretion of the Compensation Committee (the “Committee”) of the Board of
Directors, Executive shall be eligible to earn an annual bonus (the “Annual
Bonus”) based on the achievement of the Performance Objectives by the Company,
as determined by the Committee of the Board. The Performance Objectives shall
be based on any of the following objective business criteria, either alone or
in any combination, and measured either on an absolute basis, on a relative
basis against one or more pre-established targets, peer group performance, or
past Company performance, as the Committee, in its sole discretion, determines:

 

•       revenue,

 

•       cash flow,

 

•       return on equity,

 

•       total stockholder return,

 

•       return on capital,

 

•       return on assets or net assets,

 

•       income or net income,

 

•       operating income or net operating income,

 

•       operating profit or net operating profit,

 

•       operating margin,

 

•       market share,

 

•       earnings per share, or

 

1

 

•       royalties earned by, or paid to, the
Company pursuant to one or more license agreements entered into by the Company,

 

Any
such Performance Objectives shall apply in determining Executive’s Annual
Bonus, or in determining any designated portion or portions of the Annual
Bonus, as the Committee, in its sole discretion, determines.

 

The
Annual Bonus payable may be an amount up to and not in excess of nineteen and
thirty-three hundredths percent (19.33%) of the excess (if any) of:  (i) the royalties paid to the Company
under Section 5.1 of the Target Agreement for the contract year (as
defined in the Target Agreement), less (ii) $5,293,750.

 

5.                 PERFORMANCE
OBJECTIVES

 

By
no later than the latest time permitted by Section 162(m) of the
Code, and the regulations promulgated thereunder (generally, for performance
periods of one year or more, no later than 90 days after the commencement of
the performance period) and while the achievement of the Performance Objectives
remains substantially uncertain within the meaning of Section 162(m) of
the Code, and the regulations promulgated thereunder, the Committee shall
establish, in writing, the specific Performance Objectives which must be
achieved in order for the Annual Bonus (or designated portion thereof) to be
earned and the objective bonus formula for computing the Annual Bonus (or
designated portion thereof) if such Performance Objectives are achieved. The
Performance Objectives established in writing by the Committee shall apply to a
Contract Year, as determined by the Committee.

 

Performance
Objectives for computing the Annual Bonus with respect to each Contract Year
shall be set forth on an exhibit to the Plan which shall be incorporated into
and made a part of the Plan. The Committee shall determine whether the
Performance Objectives for a Contract Year are achieved, and, if so, the
Committee shall certify in writing, prior to the payment of any Annual Bonus
(or designated portion thereof) for such Contract Year, that such Performance
Objectives were satisfied. No Annual Bonus (or designated portion thereof) for
such Contract Year shall be paid to Executive unless and until the Committee
makes a certification in writing with respect to the achievement of the
Performance Objectives for such Contract Year as required by Section 162(m) of
the Code, and the regulations promulgated thereunder.

 

Once
the Committee has established, in writing, the Performance Objectives which
must be achieved in order for the Annual Bonus (or designated portion thereof)
to be earned and the objective bonus formula for computing the Annual Bonus (or
designated portion thereof), with respect to a Contract Year, the Committee
shall not have the authority to modify such Performance Objectives or objective
bonus formula for computing the Annual Bonus with respect to such Contract
Year. However, pursuant to Section 9, for each Contract Year commencing on
or after February 1, 2004, the Committee may reserve the authority to
terminate Executive’s right to an Annual Bonus with respect, to such Contract
Year at any time on or prior to the first day of such Contract Year.

 

6.                 SPECIAL
AWARDS AND OTHER PLAN

 

Nothing
contained in the Plan shall prohibit the Company from granting awards or
authorizing other compensation to Executive under any other plan or authority
or limit the authority of the Company to establish other special awards or
incentive compensation plans providing for the payment of incentive
compensation to Executive.

 

7.                 CHANGE IN
EMPLOYMENT STATUS

 

If
Executive’s employment with the Company is terminated for any reason other than
death or disability prior to the end of a Contract Year, Executive’s rights to
an Annual Bonus under the Plan with respect to such Contract Year and subsequent
Contract Years shall terminate. The Committee shall determine whether all or a
portion of Executive’s Annual Bonus under the Plan for the Contract Year in
which his death or disability occurs shall be paid if Executive’s employment
has been terminated by reason of death or disability.

 

2

 

8.                 METHOD OF
PAYMENT

 

Annual
bonuses shall be paid to Executive in cash within 60 days following the end of
the Contract Year with respect to which such Annual Bonus is earned.

 

9.                 ADMINISTRATION,
TERMINATION AND INTERPRETATION

 

The
Plan is administered by the Committee. The Committee shall consist solely of
two (2) or more directors who are considered “outside directors” for
purposes of Section 162(m) of the Code, and the regulations
promulgated thereunder.

 

Subject
to Section 162(m) of the Code, the regulations promulgated
thereunder, and Section 5 of the Plan, the Committee shall have full power
to construe and interpret the Plan, establish and amend rules and
regulations for its administration, and perform all other acts relating to the
Plan, including the delegation of administrative responsibilities, that it
believes reasonable and proper and in conformity with the purposes of the Plan.

 

For
each Contract Year commencing on or after February 1, 2004, the Committee
may reserve the authority to terminate the Executive’s right to an Annual Bonus
with respect to such Contract Year at any time on or prior to the first day of
such Contract Year.

 

Any
decision made, or action taken, by the Committee arising out of or in
connection with the interpretation and/or administration of the Plan shall be
final, conclusive and binding on all persons affected thereby.

 

The
Board shall have the right to amend the Plan from time to time or to terminate
the Plan; provided, however, no such action shall adversely affect any Annual
Bonus with respect to which the Performance Objectives have been established in
writing by the Committee in accordance with Section 5.

 

10.          STOCKHOLDER
APPROVAL

 

This
Plan shall be approved by the stockholders if, in a separate vote, a majority
of the votes cast on the issue by the stockholders of the Company (including
abstentions to the extent abstentions are counted as voting under applicable
state law) are cast in favor of approval. The material terms of the Plan,
including the Performance Objectives shall be disclosed to the stockholders of
the Company, in accordance with section 162(m) of the Code, and the
regulations promulgated thereunder. No Annual Bonus shall be payable under the
Plan with respect to any Contract Year prior to the approval of the Plan (and
the Performance Objectives by the stockholders of the Company). In the event
that this Plan is not so approved by the stockholders at the Annual Meeting, no
Annual Bonus shall be payable under the Plan and the Plan shall terminate and
shall be null and void in its entirety.

 

11.          MISCELLANEOUS

 

The
Company shall deduct all federal, state and local taxes required by law or
Company policy from any Annual Bonus paid to Executive hereunder.

 

In
no event shall the Company be obligated to pay to Executive an Annual Bonus for
any Contract Year by reason of the Company’s payment of an Annual Bonus to
Executive in any other Contract Year.

 

The
Plan shall be unfunded. Amounts payable under the Plan are not and will not be
transferred into a trust or otherwise set aside. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Annual Bonus under the Plan.

 

It
is the intent of the Company that the Plan and the Annual Bonus paid hereunder
shall satisfy and shall be interpreted in a manner that satisfies any
applicable requirements as qualified performance-based compensation within the
meaning of Section 162(m) of the Code, and the regulations
promulgated thereunder. Any provision, application or interpretation of the
Plan that is inconsistent with this intent to

 

3

 

satisfy the standards in
Section 162(m) of the Code, and the regulations promulgated
thereunder, shall be disregarded.

 

Any
provision of the Plan that is prohibited or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of the Plan.

 

The
Plan and the rights and obligations of the parties to the Plan shall be
governed by, and construed and interpreted in accordance with, the law of the
State of California (without regard to principles of conflicts of law).

 

*
* *

 

I
hereby certify that the foregoing Plan was approved by the stockholders of
Mossimo, Inc, on                 ,
2005.

 

Executed
on this        day of                 ,
2005.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Secretary

  

 

4

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