Document:

Unassociated Document

    Exhibit 10.2

     

    Lock-Up
Agreement

     

    
      
        	 
      	
                August 2, 2010

              

      

    

    

    Capital
Gold Corporation

    76 Beaver
Street, 14th
Floor

    New York,
New York 10005

    

    
      	
               
      

            	
              Re:

            	
              Lock-Up
      Agreement

            

    

    

    Ladies
and Gentlemen:

    

    This
letter agreement (this “Agreement”) relates to the
shares of common stock (the “Closing Stock Consideration”)
of Capital Gold Corporation, a Delaware corporation (the “Company”), issued to the
former shareholders of Nayarit Gold Inc. (“Nayarit”) in connection with
Business Combination Agreement, dated February 10, 2010, as amended (the “Definitive
Agreement”).

    

    As of the date hereof the undersigned
beneficially owns and controls an aggregate of _______ common shares of Nayarit,
which in accordance with the terms of the Definitive Agreement, shall be
exchangeable into _______ shares of common stock of the Company (the
“Shares”) and options to purchase an aggregate
of _______ common shares of Nayarit, which in accordance with the terms of the
Definitive Agreement, shall be exchangeable into options to purchase
_______  shares of common stock of the Company (the “Underlying
Shares”, together with the
Shares, the “Locked-Up
Shares”), each on the basis
of 0.134048 shares of common stock of the Company for each one common share of
Nayarit.

    

    In order
to induce the Company to consummate the transactions contemplated by the
Definitive Agreement, the undersigned hereby agrees that, during the Lock-Up
Period (which is defined herein) the undersigned: (a) will not, directly or
indirectly, on his, her or its own behalf, or on behalf of entities, family
members or trusts affiliated with or controlled by him, offer, sell, agree to
offer or sell, solicit offers to purchase, grant any call option or purchase any
put option with respect to, pledge, borrow or otherwise dispose of the Locked-Up
Shares, and (b) will not establish or increase any “put equivalent position” or
liquidate or decrease any “call equivalent position” with respect to any of the
Locked-Up Shares (in each case within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder), or otherwise enter into any swap, derivative or other
transaction or arrangement that transfers to another, in whole or in part, any
economic consequence of ownership of the Locked-Up Shares, whether or not such
transaction is to be settled by delivery of Locked-Up Shares, other securities,
cash or other consideration.  For purposes of this agreement, “Lock-Up Period” shall mean a
period of six (6) months from the Closing Date (as defined in the Definitive
Agreement).

    

    The
undersigned hereby authorizes the Company during the Lock-Up Period to cause any
transfer agent for the Closing Stock Consideration to decline to transfer, and
to note stop transfer restrictions on the stock register and other records
relating to, the Locked-Up Shares and to note stop transfer restrictions on the
stock register and other records relating to the Locked-Up Shares.

    

    The
undersigned hereby further agrees that during the Lock-Up Period the undersigned
will not: (x) file or participate in the filing with the Securities and Exchange
Commission of any registration statement, or circulate or participate in the
circulation of any preliminary or final prospectus or other disclosure document
with respect to any proposed offering or sale of the Closing Stock
Consideration, and (y) exercise any rights the undersigned may have to require
registration with the Securities and Exchange Commission of any proposed
offering or sale of the Closing Stock Consideration.

     

    
      
        
        

      

      
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    Notwithstanding
the foregoing, and subject to the conditions below, the undersigned may transfer
the Locked-Up Shares in the transactions described in clauses (i) through (vi)
below without the prior written consent of the Company, provided that (1) the
Company receives a signed lock-up agreement for the balance of the Lock-Up
Period from each donee, trustee, distributee, or transferee, as the case may be,
(2) any such transfer shall not involve a disposition for value, (3) such
transfers are not required to be reported in any public report or filing with
the Securities and Exchange Commission, or otherwise during the Lock-Up Period,
and (4) the undersigned does not otherwise voluntarily effect any public filing
or report regarding such transfers during the lock-up period:

     

    
      	
               
      

            	
              (i)

            	
              as
      a bona fide gift or gifts; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              to
      any trust for the direct or indirect benefit of the undersigned or the
      immediate family of the undersigned;
or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              as
      a distribution to members, partners or stockholders of the undersigned;
      or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              to
      the undersigned’s affiliates or to any investment fund or other entity
      controlled or managed by the undersigned, provided that such affiliate,
      investment fund or other entity controlled or managed by the undersigned
      shall not be formed for the sole purpose of transferring, for value or
      otherwise, the Locked-Up Shares; or

            

    

     

    
      	
               
      

            	
              (v)

            	
              to
      any beneficiary of the undersigned pursuant to a will or other
      testamentary document or applicable laws of descent;
  or

            

    

     

    
      	
               
      

            	
              (vi)

            	
              to
      any corporation, partnership, limited liability company or other entity
      all of the beneficial ownership interests of which are held by the
      undersigned or immediate family of the undersigned,
  or

            

    

     

    
      	
               
      

            	
              (vii)

            	
              pursuant
      to a bona fide third party take-over bid, merger, plan of arrangement or
      other transaction where an offer is made to all holders of shares of
      common stock of the Company  in order to allow the undersigned
      to have the same ability to participate as any other holder of shares of
      common stock of the Company.

            

    

     

    For
purposes of this Agreement, “immediate family” shall mean any relationship by
blood, marriage or adoption, not more remote than first cousin.

     

    Furthermore,
notwithstanding the foregoing, during the Lock-Up Period, the undersigned may sell shares of common stock of the Company purchased by the
undersigned on the open market following the consummation of the Definitive
Agreement if and only if
(i) such sales are not required to be reported in any public report or filing
with the Securities
Exchange Commission or
otherwise, and (ii) the undersigned does not
otherwise voluntarily effect any public filing or report regarding such
sales.

    

    The
undersigned hereby represents and warrants to the Company that the undersigned
has full power and authority to enter into this Agreement and that this
Agreement constitutes the legal, valid and binding obligation of the
undersigned, enforceable in accordance with its terms.  Upon request,
the undersigned will execute any additional documents necessary in connection
with enforcement hereof.  Any obligations of the undersigned shall be
binding upon the successors and assigns of the undersigned from the date first
above written.

    

    This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to the conflicts of laws principles
thereof.  Delivery of a signed copy of this letter by facsimile
transmission shall be effective as delivery of the original hereof.

     

    
      
        
        

      

      
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                Very
      truly yours,

              	 
	 	 	 	 
	
              	
              	 	 
	 	 	[Name]	 

      

       

    

    
      
        
        

      

      
        3Unassociated Document

    EXHIBIT
10.1

     

    DEBTOR
IN POSSESSION LOAN AND SECURITY AGREEMENT

     

    THIS DEBTOR IN POSSESSION LOAN AND
SECURITY AGREEMENT (this “Agreement”) dated as of the
Effective Date among DOWNTOWN
CP-CGSY, LLC (the “Tranche A Lender”), the
Pre-Petition Debenture Lenders, and any investor that is not a current holder of
any of the Borrowers’ debentures and is approved by the Pre-Petition Debenture
Lenders, signing this Agreement as Tranche B Lenders (the “Tranche B Lenders”, together
with the Tranche A Lender, collectively, the “Lenders”), GLOBAL CAPACITY GROUP, INC., 20/20
TECHNOLOGIES, INC., CAPITAL GROWTH SYSTEMS, INC., CENTREPATH, INC., AND GLOBAL
CAPACITY DIRECT, LLC fka VANCO DIRECT USA, LLC, 2020 TECHNOLOGIES I, LLC, NEXVU
TECHNOLOGIES, LLC, FNS 2007, INC. fka FRONTRUNNER NETWORK SYSTEMS, CORP. AND
GLOBAL CAPACITY HOLDCO, LLC AND CAPITAL GROWTH ACQUISITION, INC.,
(collectively, the “Borrowers”), and MAGENTA NETLOGIC LIMITED
(U.K.) (“MNL”)
provides the terms on which Lenders shall lend to Borrowers and Borrowers shall
repay Lenders.  The parties agree as follows:

     

    RECITALS

     

    WHEREAS,
on July 23, 2010 (the “Petition
Date”), the Borrowers filed voluntary petitions for relief under Chapter
11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the
United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”);
and

     

    WHEREAS,
the Borrowers have asked Lenders to make post-petition loans and advances to the
Borrowers consisting of a debtor-in-possession credit facility in an aggregate
principal amount of the Tranche Limits; and

     

    WHEREAS,
the Borrowers are unable to obtain funds or credit on better terms;
and

     

    WHEREAS,
the Lenders are willing to provide such financing, subject to the terms and
conditions set forth herein, including that all of the Obligations hereunder and
under the other Loan Documents constitute allowed superpriority administrative
expense claims pursuant to Sections 364(c) and 364(d) of the Bankruptcy Code in
the Chapter 11 Cases and are secured by a priming first priority lien on
substantially all of Borrowers’ property, in each case as set forth herein and
in the Financing Orders;

     

    NOW
THEREFORE, in consideration of the premises and the covenants and agreements
contained herein, the parties hereto agree as follows:

     

    1.           ACCOUNTING AND OTHER
TERMS

     

    Accounting
terms not defined in this Agreement shall be construed following
GAAP.  Calculations and determinations must be made following GAAP
consistently applied.  Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in Section 15.  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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    2.           LOAN AND TERMS OF
PAYMENT

     

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

     

    2.1.1           Advances.

     

    (a)           Availability.  Subject
to the terms and conditions of this Agreement, Lenders will make Advances to
Borrowers up to the Availability Amount as follows: (i) upon entry of the
Interim Order, an initial Advance by the Tranche A Lender in the amount of
$3,000,000 or such greater amount as it shall agree and an initial Advance by
the Tranche B Lenders in the aggregate amount not to exceed $6,250,000 and (ii)
thereafter, additional Advances in the aggregate amount of $1,000,000 by the
Tranche B Lenders in accordance with the Budget.  Advances by the
Tranche B Lenders shall be made by each of them in proportion to and to the
extent of their participation in the Tranche B Loan.  The Lenders
shall have no obligation to make an Advance to the extent that after giving
effect to the requested Advance the outstanding principal balance of the Loan
exceeds (i) the amount set forth in the Budget for the date on which such
Advance is to be made or (ii) the Maximum Loan Amount, in accordance with the
Budget.  The Lenders shall deposit any Advances required to be made
hereunder into an escrow with an escrow holder reasonably satisfactory to the
Lenders and the Debtors prior to the hearing on the Interim Order.

     

    (b)           Termination;
Repayment.  The Loan and all obligations of the Lenders to make
Advances shall terminate on the Termination Date, at which time the principal
amount of all Advances, the unpaid interest thereon, and all other Obligations
relating to the Loan shall be immediately due and payable.

     

    (c)           Joint and Several
Liability.  The Obligations of the Borrowers under this
Agreement shall be joint and several.

     

    2.1.2           Termination or Reduction of the Loan
by the Borrowers.  Except as otherwise provided herein, the
Borrowers may prepay the Advances in whole at any time or from time to time in
part.  The Borrowers may terminate the Loan or reduce the Loan at any
time upon at least five (5) Business Days advance written notice prior to the
Termination Date.  Any reduction in the Loan shall be in multiples of
$50,000, and with a minimum reduction of at least $100,000.  If the
Borrowers terminate the Loan, all Obligations shall be immediately due and
payable, and if the Borrowers give the Lenders less than the required five (5)
Business Days advance written notice, then the interest rate applicable to
borrowings under the Loan shall be the Default Rate for the period of time
commencing five (5) Business Days prior to the proposed Termination Date through
the date that the Lenders actually receive such written notice.

     

    2.1.3           Mandatory
Prepayment.

     

    (a)           Mandatory
prepayments of the Advances and a permanent reduction of the Loan shall be
required in an amount equal to (i) 100% of the net sale proceeds from
non-ordinary course asset sales, and (ii) 100% of insurance and condemnation
proceeds and tax refunds, in each case received by the Borrowers or any of the
Guarantors.  If the foregoing proceeds exceed the outstanding balance
of the Loan at the time they are received by the Borrowers, then any excess
proceeds shall be used to repay the Pre-petition Debenture Obligations, to the
extent outstanding.  The foregoing mandatory repayments will result in
a permanent reduction of the Loan, and nothing herein shall constitute an assent
to any proposed asset sale.

     

    
      
        
        

      

      
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    2.2           Payment of Interest on the Credit
Extensions.

     

    (a)           Interest
Rate.  Subject to Section 2.2(b), the
principal amount outstanding under the Loan shall bear interest at the interest
rate of twelve percent (12%) per annum.

     

    (b)           Default
Rate.  Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is two percentage points (2%) above the rate in effect
immediately before the Event of Default (the “Default
Rate”).  Payment or acceptance of the increased interest rate
provided in this Section 2.2(b)
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of Lenders.

     

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

     

    (d)           Payment; Interest
Computation; Float Charge.  Interest on Advances made by the
Tranche A Lender shall be payable to the Tranche A Lender monthly, in cash, on
the last calendar day of each month.  Interest on Advances made by the
Tranche B Lenders shall accrue and be added to principal on a monthly basis and
be payable to the Tranche B Lenders upon the first to occur of (i) the effective
date of a Plan of Reorganization, (ii) an Event of Default or (iii) the Maturity
Date.  In computing interest on the Obligations, all Payments received
after 12:00 p.m. Eastern time on any day shall be deemed received on the next
Business Day.

     

    2.3           Fees.  Borrowers
shall pay to Lenders:

     

    (a)           Structuring
Fee.  The Tranche A Lender has previously received a fully
earned, non-refundable structuring fee of $15,000, all of which has been fully
earned and payable prior to the Petition Date.

     

    (b)           Commitment
Fee.  The Tranche A Lender has previously received a commitment
fee of $60,000, which has been fully earned prior to the Petition
Date.

     

    (c)           Maturity Date Extension
Fee.  Borrowers will pay the Tranche A Lender an extension fee
of one percent (1%) of the Tranche A Loan in connection with each of the two (2)
sixty (60) day extensions of the Maturity Date.

     

    2.4           Use of
Proceeds.  The Borrowers shall use the proceeds of Credit
Extensions, subject to the Budget, solely to pay:

     

    (i)           deposits
to utilities and payments to critical vendors approved by Lenders in their
reasonable discretion and by the Court;

     

    (ii)           amounts
necessary to cure executory contracts assumed with the written consent of
Lenders;

     

    (iii)           payment
of the Pivotal Global Capacity, LLC pre-petition secured indebtedness (the
“Pivotal
Loan”);

     

    
      
        
        

      

      
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    (iv)           the
Carve-Out;

     

    (v)           principal,
interest and fees on the Obligations;

     

    (vi)           payment
of Lenders’ Expenses;

     

    (vii)           working
capital reasonable and necessary for operation of the Borrowers’ business and
preservation and enhancement of the Collateral and meeting the Borrowers’
Obligations and responsibilities under Bankruptcy Court orders and contracts;
and

     

    (viii)           expenses
of the administration of the Chapter 11 Cases (including the payment of
professional fees and costs, and United States Trustee fees), and similar costs,
with any unpaid amounts in category (viii) subordinated in priority to (i)-(vi)
above if the Loan terminates and Borrowers lack sufficient funds to pay in full
all amounts required under (i) -(vi) above.

     

    The
proceeds of any Advance and the Collateral, including the cash collateral, may
not be used to (A) object, contest or raise any defense to, the validity,
perfection, priority, extent or enforceability of any amount due under this
Agreement and the Loan Documents or the liens or claims granted under Financing
Orders, (B) object, contest or raise any defenses to, the validity, priority,
extent or enforceability or any amount due with respect to the Pre-Petition
Debenture Agreements or related documents, (C) assert any claims, counterclaims,
defenses, causes of action, objections or contests (including, without
limitation, any claims or causes of action arising under chapter 5 of the
Bankruptcy Code) against the Lenders, the Pre-Petition Debenture Lenders, or
their respective agents, affiliates, representatives, attorneys or advisors,
arising out of the Pre-Petition Debenture Agreements or this Agreement or (D)
seek to modify any of the rights granted to the Lenders under this Agreement,
the Loan Documents, the Pre-Petition Debenture Agreements or related
documents.

     

    3.           CONDITIONS OF
LOANS

     

    3.1           Conditions Precedent to Initial
Credit Extension.  The Lenders’ obligation to make the initial
Credit Extension shall be subject to the condition precedent that all of the
following events shall have occurred and the Lenders shall have received all of
the following documents, each properly executed by the appropriate party and in
form and substance satisfactory to the Lenders:

     

    (a)           This
Agreement;

     

    (b)           The
Note;

     

    (c)           The
Plan Support Agreement shall have been executed and delivered by the parties
thereto;

     

    (d)           The
Interim Order, in form and substance acceptable to the Lenders, shall have been
entered by the Bankruptcy Court not later than July 27, 2010, and the Lenders
shall have received a certified copy of such order, and such order shall be in
full force and effect and shall not have been reversed, modified, amended,
subject to a pending appeal, stayed or vacated absent the prior written consent
of the Lenders and the Borrowers;

     

    
      
        
        

      

      
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    (e)           Certified
copies of all documents evidencing any necessary corporate (or other similar)
action, consents and governmental approvals (if any) required for the execution,
delivery and performance by Borrowers of the documents referred to in this Section
3.1;

     

    (f)           A
certificate of the Secretary or an Assistant Secretary of each Borrower as of
the date hereof certifying the names of the officer or officers of such entity
authorized to sign the Loan Documents to which such entity is a party, together
with a sample of the true signature of each such officer (it being understood
that Lenders may conclusively rely on each such certificate until formally
advised by a like certificate of any changes therein);

     

    (g)           A
Customer Identification Information form and such other forms and verifications
as the Lenders may need to comply with the U.S.A. Patriot Act;

     

    (h)           On
or before the Effective Date, Lenders shall have received the Budget, in form
and substance satisfactory to the Lenders.  The Budget will be in the
form of the 18-week Budget annexed hereto as Exhibit
A, with such modifications (if any) as are agreed to by the Borrowers and
Lenders;

     

    (i)           There
shall have occurred no Material Adverse Effect;

     

    (j)           There
shall exist no action, suit, investigation, litigation or proceeding (other than
the Chapter 11 Cases) pending or threatened in any court or before any
arbitrator or governmental instrumentality that (i) could reasonably be expected
to result in a Material Adverse Effect or (ii) restrains, prevents or imposes or
can reasonably be expected to impose materially adverse conditions upon the Loan
or the transactions contemplated thereby;

     

    (k)           All
necessary governmental and third party consents and approvals necessary in
connection with the Loan and the transactions contemplated hereby shall have
been obtained (without the imposition of any conditions that are not reasonably
acceptable to the Lenders) and shall remain in effect; and no law or regulation
shall be applicable, in the judgment of the Lenders, that restrains, prevents or
imposes materially adverse conditions upon the Loan or the transactions
contemplated hereby;

     

    (l)           Nothing
contained in any information disclosed to the Lenders by the Borrowers or any of
their subsidiaries after the date hereof shall lead the Lenders to determine
that, and the Lenders shall not have become aware of any fact or condition not
disclosed to them prior to the date hereof which shall lead the Lenders to
determine that, the Borrowers or any of their subsidiaries’ condition (financial
or otherwise), operations, performance, properties or prospects are different in
any material adverse respect from that disclosed to the Lenders prior to the
date hereof;

     

    (m)           The
Lenders shall be satisfied with the amount, types and terms and conditions of
all insurance and bonding maintained by the Borrowers and their
subsidiaries.  The Lenders shall have received endorsements naming the
Lenders as an additional insured and loss payee under all insurance policies to
be maintained with respect to the properties of the Borrowers and their
Subsidiaries forming part of the Collateral;

     

    
      
        
        

      

      
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    (n)           Borrowers
shall acknowledge the full amount of the debt under the Pre-petition Debenture
Agreements and execute releases in favor of the pre-petition Lenders thereunder
with respect to any and all claims, defenses, etc. that may be asserted by
Borrowers (provided, however, that the official creditors’ committee appointed
in the Chapter 11 Cases will have the ability to investigate such matters and
the foregoing releases and acknowledgements shall be binding on the Borrowers’
estate if the creditors’ committee does not initiate an adversary proceeding
within sixty (60) days after its appointment; and provided further, that any
party in interest, other than any Debtor or any of its respective affiliates,
may file a complaint pursuant to Bankruptcy Rule 7001 seeking to invalidate,
subordinate, or otherwise challenge the Prepetition Debenture Obligations or the
Prepetition Liens within the later of 60 days after appointment of the Committee
(but in no event later than 75 days after entry of the Interim Order) or any
subsequent date that may be agreed to in writing by the Prepetition Debenture
Lenders with respect to the time to file any such complaint relating to the
Prepetition Debenture Obligations and/or the Prepetition Liens);

     

    (o)           The
Lenders have received confirmation satisfactory to Lenders in their sole
discretion that the total amount of necessary critical vendor payments,
executory contract cures and utility deposits do not exceed
$12,500,000;

     

    (p)           The
initial Advance required to be funded by the Tranche B Lenders shall be placed
in escrow prior to the funding of the Tranche A Loan; and

     

    (q)           The
Debt Subordination and Intercreditor Agreement shall be executed and delivered
by the Lenders and the Borrowers.

     

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

     

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

     

    (b)           the
making of any Credit Extension shall not violate any requirement of law and
shall not be enjoined, temporarily, preliminarily or permanently;

     

    (c)           in
Lenders’ reasonable discretion, since the date of this Agreement, there has not
been a Material Adverse Effect;

     

    (d)           subsequent
to the initial Advance, Advances shall be made only to the extent the Borrowers’
aggregate cash balance is below $700,000 when the Advance request is
made;

     

    
      
        
        

      

      
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    (e)           if
the requested funding date of the Credit Extension is after August 14, 2010, the
Bankruptcy Court shall have entered the Final Order, in form and substance
satisfactory to the Lenders, entered on notice to such parties as may be
satisfactory to the Lenders, (i) authorizing and approving the Loan and the
transactions contemplated hereby and by the Interim Order or Final Order, as
applicable, including, without limitation, the granting of the super-priority
status, security interests and liens, and the payment of all fees, referred to
herein, and (ii) authorizing the lifting of the automatic stay to permit the
Lenders to exercise their rights and remedies with respect to the Loan upon the
occurrence of an Event of Default, which Final Order shall be in full force and
effect, shall not have been reversed, vacated or stayed and shall not have been
amended, supplemented or otherwise modified without the prior written consent of
the Lenders;

     

    (f)           all
costs, fees and expenses billed by and owing to the Lenders, including, without
limitation the Lenders’ Expenses and the fees set forth in Section 2.3, have
been paid;

     

    (g)           prior
to the Effective Date, counsel to the Tranche A Lender has received $25,000 as
an additional retainer, counsel to the Tranche B Lenders has received $50,000
and local counsel to the Tranche B Lenders has received $25,000 as an additional
retainer toward payment of the Lenders’ Expenses;

     

    (h)           the
Budget has been approved by the Lenders; and

     

    (i)           after
the initial Credit Extension, the Lenders have received evidence satisfactory to
the Lenders in their sole discretion, that the Pivotal Loan has been paid in
full and there are no outstanding obligations of any of the Borrowers with
respect thereto.

     

    3.3           Covenant to
Deliver.  Borrowers agree to deliver to Lenders each item
required to be delivered to Lenders under this Agreement as a condition to any
Advance.  Borrowers expressly agree that the extension of a Credit
Extension prior to the receipt by Lenders of any such item shall not constitute
a waiver by Lenders of Borrowers’ obligation to deliver such item, and any such
extension in the absence of a required item shall be in Lenders’ reasonable
discretion.

     

    3.4           Procedures for
Borrowing.  Subject to the prior satisfaction of all other
applicable conditions to the making of a Credit Extension set forth in this
Agreement, to obtain a Credit Extension, Borrowers shall notify Lenders (which
notice shall be irrevocable), by delivering to them a Borrowing Request by
courier, electronic mail or facsimile not later than 12:00 p.m. Eastern Standard
time on the Business Day that is at least three (3) Business Days prior to the
proposed Funding Date of the applicable Credit Extension.  The
Borrowers shall not deliver a Borrowing Request more frequently than once weekly
unless the Tranche B Lenders otherwise agree.  The Lenders will make
Credit Extensions solely from the escrow established in accordance with this
Agreement.  Subsequent to making the initial Advance, additional
Advances by the Tranche B Lenders may be funded in multiples of $100,000, with
each such Advance not to exceed the lesser of (i) $500,000 and (ii) the amount
necessary to bring the Borrowers’ cash on hand to at least
$900,000.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    4.           CREATION
OF SECURITY INTEREST

     

    4.1           Grant of Security
Interest.  To secure the payment and performance in full of all
of the Obligations, Borrowers and their affiliate, Magenta Netlogic Limited
(U.K.) (“MNL”) hereby
grant to the Lenders a continuing first priority security interest in, and
pledge to Lenders, the Collateral, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof and grant
to the Pre-Petition Debenture Lenders the Adequate Protection Liens (as defined
in the Interim Order).  Borrowers and MNL represent, warrant, and
covenant that the security interest granted herein is and shall at all times
continue to be a first priority perfected security interest in the Collateral
(subject only to Permitted Liens and subject to the Carve-Out).  If
Borrowers shall acquire a commercial tort claim in excess of $50,000, Borrowers
shall promptly notify Lenders in a writing signed by Borrowers of the general
details thereof and grant to Lenders in such writing a security interest therein
and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to
Lenders.  The security interests granted herein may not be used as a
basis to recover any payments made pursuant to the Budget in the ordinary course
of business or pursuant to any variance in the Budget authorized by the Lenders
in accordance with the terms of this Agreement.

     

    Upon
payment in full of the Obligations (other than indemnification obligations for
which no claim has been made) and at such time as Lenders’ obligation to make
Credit Extensions has terminated, Lenders shall release and terminate their
liens and security interests in the Collateral and all rights therein shall
revert to Borrowers.

     

    4.2           Subordination of Tranche B Lenders
Security Interest.  All obligations due and owing to the
Tranche B Lenders and liens granted in the Collateral shall be subject to the
terms and conditions of the Intercreditor Agreement, which Intercreditor
Agreement is incorporated herein by reference.  To the extent of any
conflicts between this Agreement and the Intercreditor Agreement, the terms of
the Intercreditor Agreement shall control.

     

    4.3           Authorization to File Financing
Statements.  Borrowers hereby authorize Lenders to file
financing statements, without notice to Borrowers, with all appropriate
jurisdictions to perfect or protect Lenders’ interest or rights hereunder,
including a notice that any disposition of the Collateral (other than in
accordance with this Agreement), by either Borrowers or any other Person, shall
be deemed to violate the rights of Lenders under the Code.  Without
limiting the foregoing, Borrowers hereby authorize Lenders to file financing
statements which describe the collateral as “all assets” and/or “all personal
property” of Borrowers or words of similar import.

     

    5.           REPRESENTATIONS AND
WARRANTIES

     

    Each
Borrower represents and warrants as follows:

     

    5.1           Existence and Power; Name; Chief
Executive Office; Inventory and Equipment Locations; Federal Employer
Identification Number and Organizational Identification
Number.  Each Borrower is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization and is duly
licensed or qualified to transact business in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification
necessary.  Except for the approval of the Bankruptcy Court, each
Borrower has all requisite power and authority to conduct its business, to own
its properties and to execute and deliver, and to perform all of its obligations
under, the Loan Documents.  During its existence for the five years
prior to the Petition Date, each Borrower has done business solely under the
names set forth in Schedule
5.1.  The Borrowers’ chief executive office and principal place
of business is located at the address set forth in Schedule 5.1, and all
of the Borrowers’ records relating to its business or the Collateral are kept at
that location.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    5.2           [Intentionally
Omitted]

     

    5.3           Authorization of Borrowing; No
Conflict as to Law or Agreements.  The execution, delivery and
performance by each Borrower of the Loan Documents and the borrowings from time
to time hereunder have been duly authorized by all necessary corporate action
and do not and will not (i) require any consent or approval of any of the
Borrowers’ owners; (ii) other than the entry of Financing Orders, require any
authorization, consent or approval by, or registration, declaration or filing
with, or notice to, any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or any third party, except such
authorization, consent, approval, registration, declaration, filing or notice as
has been obtained, accomplished or given prior to the date hereof; (iii) violate
any provision of any law, rule or regulation (including Regulation X of the
Board of Governors of the Federal Reserve System) or of any order, writ,
injunction or decree presently in effect having applicability to any of the
Borrowers or of the Borrowers’ Constituent Documents; (iv) result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other material agreement, lease or instrument to which the Borrowers are parties
or by which they or their properties may be bound or affected; or (v) result in,
or require, the creation or imposition of any Lien (other than the security
interest granted hereunder) upon or with respect to any of the properties now
owned or hereafter acquired by the Borrowers.

     

    5.4           Legal
Agreements.  This Agreement constitutes and, upon due execution
by each of the Borrowers, the other Loan Documents will constitute the legal,
valid and binding obligations of each Borrower, enforceable against each
Borrower in accordance with their respective terms.

     

    5.5           Subsidiaries.  Except
as set forth in Schedule 5.5 hereto,
the Borrowers have no Subsidiaries.

     

    5.6           Budget.  Borrowers
have furnished the Budget to the Lenders.  The Budget has been
prepared on a reasonable basis and in good faith by the Borrowers, and is based
on assumptions believed by the Borrowers to be reasonable.  The
Borrowers are not be aware of any facts or information that would lead them to
believe that the Budget is incorrect or misleading in any material
respect.

     

    5.7           Litigation.  There
are no actions, suits or proceedings pending or, to the Borrowers’ knowledge,
threatened against or affecting any of the Borrowers or the properties of the
Borrowers and their management before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, if determined adversely to the Borrowers, would result in a final
judgment or judgments against the Borrowers that would cause a Material Adverse
Effect.

     

    5.8           Regulation U.  The
Borrowers are not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Advance 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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    5.9           Taxes.  Each
Borrower has paid or caused to be paid to the proper authorities when due all
federal, state and local taxes required to be withheld by each of
them.  Each Borrower has filed all federal, state and local tax
returns which to the knowledge of the Officers of the Borrowers, as the case may
be, are required to be filed, and each Borrower has paid or caused to be paid to
the respective taxing authorities all taxes as shown on said returns or on any
assessment received by any of them to the extent such taxes have become
due.

     

    5.10           Title and
Liens.  The Borrowers have good and absolute title to all
Collateral free and clear of all Liens other than Permitted Liens.  No
financing statement naming a Borrower as debtor is on file in any office except
to perfect Permitted Liens.

     

    5.11           Intellectual Property
Rights.

     

    (a)           Owned Intellectual Property
Rights.  Schedule 5.11 is a
complete list of all patents, applications for patents, trademarks, applications
to register trademarks, service marks, applications to register service marks,
mask works, trade dress and copyrights for which any Borrower is the owner of
record (the “Owned Intellectual
Property”).  Except as disclosed on Schedule 5.11, (i)
such Borrower owns its Owned Intellectual Property free and clear of all
restrictions (including covenants not to sue a third party), court orders,
injunctions, decrees, writs and Liens, whether by written agreement or
otherwise, (ii) no Person other than the Borrowers owns or has been granted any
right in its Owned Intellectual Property, (iii) all Owned Intellectual Property
is valid, subsisting and enforceable and (iv) the Borrowers have taken all
commercially reasonable action necessary to maintain and protect the Owned
Intellectual Property.

     

    (b)           Intellectual Property Rights Licensed
from Others.  Schedule 5.11 is a
complete list of all agreements under which a Borrower has licensed Intellectual
Property Rights from another Person (“Licensed Intellectual
Property”) other than readily available, non-negotiated licenses of
computer software and other intellectual property used solely for performing
accounting, word processing and similar administrative tasks (“Off-the-Shelf Software”) and a
summary of any ongoing payments the Borrower is obligated to make with respect
thereto.  The Borrowers’ licenses to use the Licensed Intellectual
Property are free and clear of all restrictions, Liens, court orders,
injunctions, decrees, or writs, whether by written agreement or
otherwise.  No Borrower is obligated or under any liability whatsoever
to make any payments of a material nature by way of royalties, fees or otherwise
to any owner of, licensor of, or other claimant to, any Intellectual Property
Rights.

     

    (c)           Other Intellectual Property Needed
for Business.  The Owned Intellectual Property and the Licensed
Intellectual Property constitute all Intellectual Property Rights used or
necessary to conduct the Borrowers’ business as it is presently conducted or as
the Borrowers reasonably foresee conducting it.

     

    (d)           Infringement.  The
Borrowers have no knowledge of, and have not received any written claim or
notice alleging, any Infringement of another Person’s Intellectual Property
Rights (including any written claim that the Borrowers must license or refrain
from using the Intellectual Property Rights of any third party) nor, to the
Borrowers’ knowledge, is there any threatened claim or any reasonable basis for
any such claim.

     

    5.12           Default.  Except as
set forth on Schedule
5.12, each Borrower is in compliance with all provisions of all
agreements, instruments, decrees and orders to which it is a party or by which
it or its property is bound or affected, the breach or default of which could
have a Material Adverse Effect as to such Borrower.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    5.13           Submissions to
Lenders.  All financial and other information provided to the
Lenders by or on behalf of the Borrowers in connection with the Borrowers’
request for the Loan  (i) is true and correct in all material
respects, (ii) does not omit any material fact necessary to make such
information not misleading and, (iii) as to projections, valuations or proforma
financial statements, present a good faith opinion as to such projections,
valuations and proforma condition and results.

     

    5.14           Financing
Statements.  The Borrowers have authorized the filing of
financing statements sufficient when filed to perfect the security interest
granted hereunder and the other security interests created by the Loan
Documents.  Upon the entry of the Interim Order, the Lenders will have
a valid and perfected security interest in all Collateral which is capable of
being perfected by filing financing statements.  None of the
Collateral is or will become a fixture on real estate, unless a sufficient
fixture filing is in effect with respect thereto.

     

    5.15           Rights to
Payment.  Each right to payment and each instrument, document,
chattel paper and other agreement constituting or evidencing Collateral is (or,
in the case of all future Collateral, will be when arising or issued) the valid,
genuine and legally enforceable obligation, subject to no defense, setoff or
counterclaim (other than in the ordinary course of business or as reserved on
the Borrowers’ books and records), of the account Borrowers or other obligor
named therein or in the Borrowers’ records pertaining thereto as being obligated
to pay such obligation.

     

    5.16           Administrative Priority; Lien
Priority.

     

    (a)           The
Obligations of the Borrowers will, at all times after the Effective Date,
constitute allowed administrative expenses in the Chapter 11 Cases, having
priority in payment over all other administrative expenses and unsecured claims
against the Borrowers now existing or hereafter arising, of any kind or nature
whatsoever, including without limitation all administrative expenses of the kind
specified in, or arising or ordered under, Sections 105, 326, 327, 328, 330,
503(b), 506(c), 507(a), 507(b), 546(c), 726 and 1114 of the Bankruptcy Code,
except as to the Carve-Out;

     

    (b)           Pursuant
to Section 364(d)(1) of the Bankruptcy Code, the Interim Order and the Final
Order, all Obligations will be secured by a perfected priming first priority
Lien on the Collateral, except as to the Carve-Out and Permitted
Liens;

     

    (c)           On
the Effective Date and upon entry of the Interim Order and the Final Order, the
Interim Order and the Final Order shall be, in full force and effect and have
not been reversed, vacated, modified, amended or stayed, except for
modifications and amendments that are reasonably acceptable to the Lenders and
are not subject to a pending appeal or stayed in any respect; and

     

    (d)           The
Pre-Petition Debenture Obligations will be secured by a replacement Lien on all
postpetition assets (but excluding Avoidance Action Recoveries), to the extent
of any diminution of value of any prepetition collateral and the use of cash
collateral, in each case, junior only to the liens of the Lenders with respect
to the Obligations and the Carve-Out.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    (e)           The
Pre-Petition Debenture Lenders shall receive the Adequate Protection rights set
forth in the proposed Interim Order annexed hereto as Exhibit C.

     

    5.17           Appointment of Examiner;
Liquidation.  No order has been entered or is pending in the
Chapter 11 Cases (i) for the appointment of an examiner with enlarged powers
(beyond those set forth in Sections 1106(a)(3) and (4) of the Bankruptcy Code)
under Sections 1104(d) and 1106(b) of the Bankruptcy Code or (ii) to convert the
Chapter 11 Cases to Chapter 7 cases or to dismiss the Chapter 11
Cases.

     

    5.18           The Chapter 11
Cases.  The Chapter 11 Cases were commenced on the Petition
Date in accordance with applicable law and proper notice thereof and have not
been dismissed as of the date of this Agreement.  The motion for
approval of this Agreement was proper and sufficient pursuant to the Bankruptcy
Code, the Bankruptcy Rules and the rules and procedures of the Bankruptcy
Court.

     

    6.           AFFIRMATIVE
COVENANTS

     

    Each
Borrower covenants and agrees that until payment in full of all Obligations,
each Borrower shall perform all of the following covenants:

     

    6.1           Government
Compliance.  Except as permitted by Section 7.2, maintain
their legal existence and good standing in their respective jurisdictions of
formation and maintain qualification in each jurisdiction in which the failure
to so qualify would reasonably be expected to have a Material Adverse
Effect.  Borrowers shall comply, with all laws, ordinances and
regulations to which they are subject, the noncompliance with which could have a
Material Adverse Effect.

     

    6.2           Plan
Confirmation.  Borrowers shall use their best efforts to cause
a Plan of Reorganization to be confirmed in accordance with the terms of the
Plan Support Agreement.

     

    6.3           Financial Statements, Reports,
Certificates.

     

    (a)           Borrowers
shall provide Lenders with the following:

     

    (i)           within
two (2) Business Days after the end of each week, a reconciliation, in form and
substance consistent with Borrowers’ practices prior to the Petition Date, or as
otherwise acceptable to the Lenders in their reasonable discretion, and
substantially consistent with the Budget, of the actual cash receipts and
disbursements of the Borrowers and existing Credit Extensions under this
Agreement for such week to the budgeted line item amounts set forth in the
Budget for such week;

     

    (ii)           within
fifteen (15) days after the end of each month, (A) monthly accounts receivable
agings, aged by invoice date, (B) monthly accounts payable agings, aged by
invoice date, and outstanding or held check registers, if any, and (C) monthly
reconciliations of accounts receivable agings (aged by invoice date),
transaction reports, deferred revenue report and general ledger;

     

    (iii)           within
two (2) Business Days after the end of each week, the management weekly
operational report (evidencing weekly circuit connects and disconnect] for such
week;

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    (iv)           as
soon as available, and in any event within thirty (30) days after the end of
each month, monthly unaudited financial statements (including, without
limitation, projections, forecasts and consolidated balance sheets, statements
of income and statement of cash flows);

     

    (v)           as
soon as available, and in any event within thirty (30) days after the end of
each quarter, quarterly unaudited financial statements (including, without
limitation, projections, forecasts and consolidated balance sheets, statements
of income and statement of cash flows);

     

    (vi)           within
thirty (30) days after the end of each month a monthly Compliance Certificate
signed by a Responsible Officer, (A) setting forth a schedule of all checks and
disbursements and (B) certifying that as of the end of such month, Borrowers
were in full compliance with all of the terms and conditions of this Agreement,
and setting forth calculations showing compliance with the financial covenants
set forth in this Agreement and such other information as Lenders shall
reasonably request, including, without limitation, a statement that at the end
of such month there were no held checks;

     

    (vii)           within
twenty (20) days after the end of each month, an analysis of all capital
expenditures for such month;

     

    (viii)           prompt
written notice of significant changes to material contracts with customers,
suppliers, contractors, utility providers, governmental authorities, merchant
builders and any material contract (including lot, unit and parcel purchasers),
including new material contracts and contract renewals or cancellation or
reduction of any existing customer agreements;

     

    (ix)           within
thirty (30) days prior to the end of each fiscal year of Borrowers, (A) annual
operating budgets (including income statements, balance sheets and cash flow
statements, by month) for the upcoming fiscal year of Borrowers, and (B) annual
financial projections for the following fiscal year (on a quarterly basis) as
approved by Borrowers’ board of directors, together with any related business
forecasts used in the preparation of such annual financial
projections;

     

    (x)           as
soon as available, and in any event within one hundred eighty (180) days
following the end of Borrowers’ fiscal year, annual financial statements
certified by an independent certified public accountants reasonably acceptable
to Lenders;

     

    (xi)           on
an as-requested basis, all other information reasonably requested by the
Lenders.

     

    (b)           In
the event that Borrowers are or become subject to the reporting requirements
under the Securities Exchange Act of 1934, as amended, within five (5) days
after filing, all reports on Form 10-K, 10-Q and 8-K filed with the Securities
and Exchange Commission or a link thereto on Borrowers’ or another website on
the Internet.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

    (c)           Prompt
written notice of (i) any material change in the composition of the Intellectual
Property, (ii) the registration of any copyright, including any subsequent
ownership right of Borrowers in or to any copyright, patent or trademark not
previously disclosed to Lenders, (iii) the occurrence of any Default or Event of
Default and the action(s) the Borrowers proposes to take to remedy such Default
or Event of Default, or (iv) Borrowers’ knowledge of an event that
materially adversely affects the value of the Intellectual
Property.

     

    6.4           Financial Covenants; Compliance with
Budget.

     

    (a)           Borrowers
shall at all times comply with the Budget on a line-item by line-item basis
provided, however, that the
Borrowers shall be entitled to deviate from the Budget without prior approval of
the Lenders or notice to other parties secured by the Collateral, provided that
all reasonable and necessary expenditures to maintain the Collateral are made
and that any negative expense variance for a line item does not exceed ten
percent (10%) of such line item on a rolling two (2) week basis, exclusive of
Lenders’ Expenses, without prior approval of the Lenders, and as long as the
Borrowers’ aggregate cash balance plus the undrawn portion of the Loan is not
below $700,000.  Within two (2) Business Days after the end of each
week, a Responsible Officer of the Borrowers shall submit to the Lenders a
report showing (i) actual collections and disbursements, on a weekly and
cumulative basis through the previous Friday for the prior two (2) week period,
and (ii) a comparison to the same periods in the Budget.  To the
extent that disbursements set forth in the Budget for a Budget period are not,
in fact, disbursed during the Budget period, the budgeted disbursements for
subsequent Budget periods shall be amended so that the Borrowers may carry
forward any unspent budgeted disbursements from prior periods, which may be used
by the Borrowers to reduce expense variances.  Notwithstanding the
foregoing, in the event that Lenders agree to any deviation(s) from projections
contained in the Budget that otherwise could constitute an impermissible
variance, the Budget shall be amended on a go forward basis to include the
variance waived by the Lenders.

     

    (b)           Borrowers
shall make only those disbursements approved by George King (or in the event
George King no longer holds the position of CFO, his replacement, which
replacement shall be reasonably acceptable to the Lenders) or authorized by
Court order which disbursements shall be listed on a Disbursements Register
certified by George King (or his replacement, as applicable), provided that such
Disbursements Register shall be submitted to Lenders for review, but not
approval, prior to the Borrowers making any disbursements listed
therein.

     

    (c)           Borrowers
shall achieve on a consolidated basis, EBITDA of at least the amount set forth
below for the applicable indicated:

     

    
      	
              Period

            	
              Applicable
      Amount

            
	
              For
      the month then ended on August 31, 2010

            	
              $100,000

            
	
              For
      the two months then ended on September 30, 2010

            	
              $200,000

            
	
              For
      the three months then ended on October 31, 2010

            	
              $300,000

            
	
              For
      the four months then ended on November 30, 2010

            	
              $450,000

            

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

    (d)           Borrowers
shall achieve, on a consolidated basis, Monthly Recurring Circuit Revenue of at
least the amount set forth below for the applicable indicated:

     

    
      	
              Period

            	
              Monthly Recurring
      Circuit Revenue

            
	
              For
      the month ending August 31, 2010

            	
              $3,650,000

            
	
              For
      the month ending September 30, 2010

            	
              $3,650,000

            
	
              For
      the month ending October 31, 2010

            	
              $3,650,000

            
	
              For
      the month ending November 30, 2010

            	
              $3,650,000

            

    

    

    (e)           Borrowers
shall achieve, on a consolidated basis, Monthly Recurring Circuit Margin
Percentage of at least the amount set forth below for the applicable
period:

     

    
      	
              Period

            	
              Monthly Recurring
      Circuit Margin %

            	
              Cumulative Monthly
      Recurring Circuit Margin %

            
	
              For
      the month ending August 31, 2010

            	
              19.5%

            	
              19.5%

            
	
              For
      the month & two months ending September 30, 2010,
      respectively

            	
              19.5%

            	
              20.0%

            
	
              For
      the month & three months ending October 31, 2010,
      respectively

            	
              19.5%

            	
              20.0%

            
	
              For
      the month & four months ending November 30, 2010,
      respectively

            	
              19.5%

            	
              20.0%

            

    

    

    (f)           Borrowers
shall not have, on a consolidated basis, outstanding Accounts Payable of more
than the amount set forth below for the applicable period:

     

    
      	
              Period

            	
              A/P
      Balance

            
	
              As
      at August 31, 2010

            	
              $4,100,000

            
	
              As
      at September 30, 2010

            	
              $4,100,000

            
	
              As
      at October 31, 2010

            	
              $4,100,000

            
	
              As
      at November 30, 2010

            	
              $4,100,000

            

    

    

     

    6.5           Accounts
Receivable.

     

    (a)           Schedules and Documents
Relating to Accounts.
Borrowers shall deliver to Lenders transaction reports and schedules of
collections, as provided in Section 6.2; provided, however, that
Borrowers’ failure to execute and deliver the same shall not affect or limit
Lenders’ Lien and other rights in all of Borrowers’ Accounts, nor shall Lenders’
failure to advance or lend against a specific Account affect or limit Lenders’
Lien and other rights therein.  If reasonably requested by Lenders,
after the occurrence and during the continuance of an Event of Default,
Borrowers shall furnish Lenders with copies (or, at Lenders’ reasonable request,
originals) of all contracts, orders, invoices, and other similar documents, and
all shipping instructions, delivery receipts, bills of lading, and other
evidence of delivery, for any goods the sale or disposition of which gave rise
to such Accounts.  In addition, Borrowers shall deliver to Lenders, on
its reasonable request after the occurrence and during the continuance of an
Event of Default, the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Accounts, in the same form as received, with all necessary endorsements, and
copies of all credit memos.

     

    
      
        
        

      

      
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    (b)           Disputes.  Borrowers
shall promptly notify Lenders of all disputes or claims relating to Accounts in
excess of $25,000 in the aggregate or that could reasonably be expected to have
a material adverse effect on Borrowers’ business.  Borrowers shall not
forgive (completely or partially), compromise, or settle any Account having a
face amount in excess of the $25,000 in the aggregate for less than payment in
full, or agree to do any of the foregoing, without the Lenders’ prior written
consent, except as to adjustments made in the ordinary course or as reflected on
the Borrowers’ books and records.

     

    (c)           Collection of
Accounts.  Borrowers shall have the right to collect all
Accounts, unless and until a Default or an Event of Default has occurred and is
continuing.

     

    (d)           Verification.  Lenders may,
from time to time, verify directly with the respective Account Debtors the
validity, amount and other matters relating to the Accounts, either in the name
of Borrowers or Lenders or such other name as Lenders may
choose.  Lenders agree that so long as no Event of Default has
occurred and is continuing, Lenders shall endeavor to provide Borrowers with
notice of their intention to conduct verifications prior to conducting such
verifications.

     

    (e)           No Liability. Lenders 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 Lenders be deemed to be responsible for any of Borrowers’ obligations
under any contract or agreement giving rise to an Account.  Nothing
herein shall, however, relieve Lenders from liability for their own gross
negligence or willful misconduct.

     

    6.6           Remittance of
Proceeds.  Except as otherwise provided in Section 6.4(c)
hereof, deliver to Lenders, in kind, all proceeds arising from the disposition
of any Collateral in the original form in which received by Borrowers not later
than one (1) Business Day after receipt by Borrowers, to be applied to the
Obligations pursuant to the terms of Sections 9.5 and 13.14
hereof.  Borrowers agree that they will not commingle proceeds of
Collateral with any of Borrowers’ other funds or property, but will hold such
proceeds separate and apart from such other funds and property and in an express
trust for Lenders.  Nothing in this Section 6.6 limits the
restrictions on disposition of Collateral set forth elsewhere in this
Agreement.

     

    6.7           Taxes;
Pensions.  Make timely payment of all foreign, federal, state
and local taxes or assessments (other than taxes and assessment which Borrowers
are contesting pursuant to the terms of Section 5.9 hereof),
and shall deliver to Lenders, on demand, appropriate certificates attesting to
such payments, and pay all amounts necessary to fund all present pension, profit
sharing and deferred compensation plans in accordance with their
terms.

     

    6.8           Access to Collateral; Books and
Records.  At all reasonable times Lenders, or their agents,
shall have the right to inspect the Collateral and the right to audit and copy
Borrowers’ Books.  The foregoing inspections and audits shall be at
Borrowers’ expense, and the charge therefor shall be $750 per person per day (or
such higher amount as shall represent Lenders’ then-current standard charge for
the same), plus reasonable out-of-pocket expenses.

     

    
      
        
        

      

      
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    6.9           Insurance.  Keep
their business and the Collateral insured for risks and in amounts standard for
companies in Borrowers’ industry and location and as Lenders may reasonably
request.  Insurance policies shall be in a form, with companies, and
in amounts that are reasonably satisfactory to Lenders, it being agreed that the
insurance maintained by Borrowers as of the Effective Date is
satisfactory.  All property policies shall have a Lenders’ loss
payable endorsement showing Lenders as the sole loss payees and waive
subrogation against Lenders, and all liability policies shall show, or have
endorsements showing, Lenders as additional insureds.  All policies
(or the loss payable and additional insured endorsements) shall provide that the
insurer must give Lenders at least thirty (30) days notice before canceling,
amending, or declining to renew its policy.  At Lenders’ reasonable
request, Borrowers shall deliver certified copies of policies and evidence of
all premium payments.  Proceeds payable under any policy shall, at
Lenders’ option, be payable to Lenders on account of the
Obligations.  Notwithstanding the foregoing, (a) so long as no Event
of Default has occurred and is continuing, Borrowers shall have the option of
applying the proceeds of any casualty policy up to $50,000, in the aggregate,
toward the replacement or repair of destroyed or damaged property; provided that
any such replaced or repaired property (i) shall be of equal or like value as
the replaced or repaired Collateral and (ii) shall be deemed Collateral in
which Lenders has been granted a first priority security interest, and (b) after
the occurrence and during the continuance of an Event of Default, all proceeds
payable under such casualty policy shall, at the option of Lenders, be payable
to Lenders on account of the Obligations.  If Borrowers fail to obtain
insurance as required under this Section 6.7 or
to pay any amount or furnish any required proof of payment to third persons and
Lenders, Lenders may make all or part of such payment or obtain such insurance
policies required in this Section 6.7, and take
any action under the policies Lenders deems prudent.

     

    6.10           Operating
Accounts.

     

    (a)           Maintain,
primary domestic U.S. depository, operating accounts and securities accounts
with any bank or financial institution; provided, however, that for
each such operating account that Borrowers at any time maintain, Borrowers shall
cause the applicable bank or financial institution at or with which any
operating account is maintained to execute and deliver a Control Agreement or
other appropriate instrument with respect to such Collateral Account to perfect
Lenders’ Lien in such operating account in accordance with the terms
hereunder.

     

    (b)           Provide
Lenders ten (10) Business Days’ prior written notice before establishing any
Collateral Account at or with any bank or financial institution other than its
current book or financial institution.  In addition, for each
Collateral Account that Borrowers at any time maintain, Borrowers shall cause
the applicable bank or financial institution at or with which any Collateral
Account is maintained to execute and deliver a Control Agreement or other
appropriate instrument with respect to such Collateral Account to perfect
Lenders’ Lien in such Collateral Account in accordance with the terms
hereunder.  The provisions of the previous sentence shall not apply to
deposit accounts  (i) exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of Borrowers’
employees and identified to Lenders by Borrowers as such, and (ii) to deposit
accounts to the extent the aggregate average daily balance held in all such
accounts does not exceed $10,000.

     

    
      
        
        

      

      
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    6.11           Protection and Registration of
Intellectual Property Rights.  Borrowers shall:  (a)
protect, defend and maintain the validity and enforceability of their
intellectual property material to their business; (b) promptly advise Lenders in
writing of material infringements of their intellectual property; and (c) not
allow any intellectual property material to Borrowers’ business to be abandoned,
forfeited or dedicated to the public without Lenders’ written consent, which
consent shall not be unreasonably withheld or delayed.  If Borrowers
decide to register any copyrights or mask works in the United States Copyright
Office, Borrowers shall: (x) provide Lenders with at least fifteen (15) days
prior written notice of their intent to register such copyrights or mask works
together with a copy of the application they intend to file with the United
States Copyright Office (excluding exhibits thereto); (y) execute an
intellectual property security agreement or such other documents as Lenders may
reasonably request to maintain the perfection and priority of Lenders’ security
interest in the copyrights or mask works intended to be registered with the
United States Copyright Office; and (z) record such intellectual property
security agreement with the United States Copyright Office contemporaneously
with filing the copyright or mask work application(s) with the United States
Copyright Office.  Borrowers shall promptly provide to Lenders a copy
of the application(s) filed with the United States Copyright Office together
with evidence of the recording of the intellectual property security agreement
necessary for Lenders to maintain the perfection and priority of their security
interest in such copyrights or mask works.  Borrowers shall provide
written notice to Lenders of any application filed by Borrowers in the United
States Patent and Trademark Office for a patent or to register a trademark or
service mark within 30 days after any such filing.

     

    6.12           Litigation
Cooperation.  From the date hereof and continuing through the
termination of this Agreement, Borrowers shall make available to Lenders during
regular business hours and upon reasonable prior notice, without expense to
Lenders, Borrowers and their officers, employees and agents and Borrowers’ books
and records, to the extent that Lenders may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Lenders with respect to any Collateral or relating to Borrowers.

     

    6.13           Chapter 11 Case
Pleadings.  Promptly after filing thereof, Borrowers shall
provide Lenders with copies of all pleadings, motions, applications, financial
information and other papers and documents filed by the Borrowers in the Chapter
11 Cases, which papers and documents shall also be given or served on the
Lenders and the Lenders’ counsel.

     

    6.14           Committee
Reports.  Promptly after sending thereof, Borrowers shall
provide Lenders with copies of all written reports given by the Borrowers to any
official or unofficial Committee in the Chapter 11 Cases, other than any such
reports subject to privilege; provided that the Borrowers may redact any
confidential information contained in any such report if they provide to the
Lenders a summary of the nature of the information so redacted.

     

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

     

    6.16           Changes in Management/Labor
Agreements.  Borrowers shall promptly notify Lenders of any
changes to Borrowers’ management and of any material changes to any labor
agreements to which any of the Borrowers are a party.

     

    
      
        
        

      

      
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    6.17           Retention of
Consultant.  The Borrowers agree that the Lenders may
immediately hire and retain a financial advisor of their choosing to monitor the
orderly operation of the Borrowers’ business and compliance with the Budget
until a plan of reorganization is confirmed or the closing of a sale of all or
substantially all of the Borrowers’ assets, whichever is earlier.  The
Borrowers further agree to fully cooperate with such financial advisor and its
requests and provide complete transparency regarding all financial and
operational issues of the Borrowers.  The Borrowers further agree to
pay the fees and expenses of such financial advisor upon presentment of an
invoice, up to $25,000 per month.  In the event the fees and expenses
of such financial advisor are less than $25,000 in any given month, the
difference between $25,000 and the fees and expenses incurred for such month may
be applied to any other month(s) in which such financial advisor’s fees and
expenses exceed $25,000.

     

    6.18           Asset Sale and Unconditional Right to
Credit Bid.  Consistent with the terms of the Plan Support
Agreement, if, pursuant to a sale order issued by the Bankruptcy Court, the
Tranche B Lenders, or their designee, is the winning bidder, either the assets
of the Borrowers shall be sold to the Tranche B Lenders pursuant to a sale under
Section 363 of the Bankruptcy Code (a “363 Sale”) which sale shall be a
component of the Borrowers’ Plan of Reorganization for the consideration set
forth in the winning bid or a transaction having substantially the same effect
shall be consummated as a restructuring of the Borrowers pursuant to a Plan of
Reorganization; provided, however, that if a
Plan of Reorganization for the Borrowers is not confirmed by the Confirmation
Deadline (as defined in the Plan Support Agreement) or an Event of Default
occurs under the Loan Documents, then, if the Tranche B Lenders so elect, the
assets of the Borrowers shall be sold to the Tranche B Lenders or their designee
pursuant to a sale order as a 363 Sale outside of a Plan of Reorganization for
the consideration set forth in the winning bid.  Any 363 Sale, similar
transaction or a Plan of Reorganization having the same effect, shall permit the
Tranche B Lenders and the Pre-Petition Debenture Lenders to credit bid the full
amount of their debts, including the Tranche B Loan and/or
the  Pre-Petition Debenture Obligations.  The Tranche B
Lenders and Pre-Petition Debenture Lenders are and shall be qualified bidders
under any auction or sale procedures and may participate at any auction, sale or
other restructuring transaction.  Any winning bid by the Tranche B
Lenders and Pre-Petition Debenture Lenders, as applicable, is subject only to
the Tranche B Lenders and Pre-Petition Debenture Lenders providing adequate
assurances per the approval of the Bankruptcy Court and payment in full of the
Tranche A Loan.

     

    7.           NEGATIVE
COVENANTS

     

    Each
Borrower covenants and agrees that until payment in full of all Obligations,
each Borrower shall not perform any of the following without the without
Lenders’ prior written consent:

     

    7.1           Dispositions.  Convey,
sell, lease, transfer or otherwise dispose of (collectively, “Transfer”) all or any part of
its business or property, except for (a) Transfers of Inventory in the ordinary
course of business; (b) Transfers of used, worn-out, obsolete or surplus
Equipment; (c) dispositions of assets subject to any settlement or payment in
respect of any property or casualty insurance claim or any condemnation
proceeding; (d) any Transfer of all or substantially all of the assets of a
Subsidiary to the extent permitted by Section 7.3; (e) the
abandonment of any intellectual property that, in the commercially reasonable
judgment of Borrowers, is uneconomical, negligible, obsolete or otherwise not
material in the conduct of its business; (f) Transfers of property to the extent
that (I) such property is exchanged for credit against the purchase price of
similar replacement property or (II) the proceeds of such sale or other
disposition are promptly applied to the purchase price or such replacement
property; and (g) Transfers of assets by any Subsidiary of Borrowers to
Borrowers. Borrowers shall not enter into an agreement with any Person other
than Lenders which restricts the subsequent granting of a security interest in
Borrowers’ intellectual property.

     

    
      
        
        

      

      
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    7.2           Changes in Business, Management,
Ownership, Control, or Business Locations.  (a) Engage in
any business other than the businesses currently engaged in by Borrowers or
reasonably related thereto or reasonable extensions thereof; (b) liquidate or
dissolve; except as permitted pursuant to Section 7.3 below, or
(c) (i) have a material change in management or if any Key Person
ceases to hold such office with Borrowers or (ii) permit or suffer any Change in
Control.  Borrowers shall not, without at least thirty (30) days prior
written notice to Lenders: (1) add any new offices or business locations,
including warehouses (unless each such new office or business location contains
less than $100,000 in Borrowers’ assets or property), (2) change its
jurisdiction of organization, (3) change its organizational structure or
type, (4) change its legal name, or (5) change any organizational number
(if any) assigned by its jurisdiction of organization.

     

    7.3           Mergers or
Acquisitions.  Merge or consolidate with any other Person, or
acquire all or substantially all of the capital stock or property of another
Person; provided, that any Subsidiary may merge or consolidate into
Borrowers.

     

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

     

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

     

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

     

    7.7           Investments;
Distributions.  (a) Directly or indirectly make any Investment
other than Permitted Investments, or permit any of its Subsidiaries to do so; or
(b) pay any dividends or make any distribution or payment or redeem, retire or
purchase any capital stock.

     

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

     

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

     

    
      
        
        

      

      
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    7.10           Financing Orders; Administrative
Priority; Lien Priority; Payment of Claims.  The Borrowers will
not:

     

    (a)           at
any time, seek, consent to or suffer to exist any reversal, modification,
amendment, stay or vacation of the Interim Order or the Final Order, except for
modifications and amendments agreed to in writing by the Lenders;

     

    (b)           at
any time, suffer to exist a priority for any administrative expense or unsecured
claim against Borrowers (now existing or hereafter arising of any kind or nature
whatsoever, including without limitation any administrative expenses of the kind
specified in, or arising or ordered under, Sections 105, 326, 327, 328, 330,
503(b), 506(c), 507(a), 507(b), 546(c) 726 and 1114 of the Bankruptcy Code)
equal or superior to the priority of the Lenders in respect of the Obligations,
except for the Carve-Out;

     

    (c)           at
any time, suffer to exist any Lien on the Collateral having a priority equal or
superior to the Liens in favor of the Lenders or, as applicable, the Adequate
Protection Liens in favor of the Pre-Petition Debenture Lenders (which the
Pre-Petition Lenders hereby acknowledge are subject to the Lender’s Liens),
except for the Carve-Out and Permitted Liens; and

     

    (d)           prior
to the date on which all Obligations have been fully paid and satisfied, the
Borrowers shall not pay any administrative expense claims except (i) Obligations
due and payable hereunder and (ii) administrative expenses incurred in the
ordinary course of the Borrowers’ business as contemplated by this Agreement and
the Budget.

     

    7.11           Claims.  Use the
advances under the Loan or any cash collateral to assert claims against the
Lenders under the Pre-Petition Debenture Agreements or the Lenders.

     

    7.12           No Term-Out or Cram-Down of
Pre-Petition Lenders.  Neither the Borrowers nor any other
party shall file or support any Plan of Reorganization that seeks to impair the
Pre-Petition Debenture Lenders’ credit bid rights or terms-out, crams-down or
extends the Pre-Petition Debenture Obligations under Bankruptcy Code section
1129(b) or otherwise.

     

    7.13           Sale Motion; Credit
Bid.  Neither the Borrowers nor any other party shall file or
support any motion for a sale of assets under Section 363 of the Bankruptcy Code
or any Plan of Reorganization that is not consistent with the Plan Support
Agreement and Section 6.18 hereof.   Each of the Lenders and
Pre-Petition Debenture Lenders shall be deemed qualified bidders at any auction
sale and shall be entitled to credit bid all or a portion of the Tranche B Loan
and/or the Pre-Petition Debenture Obligations provided that such bid also
includes the payment of the Tranche A Loan in full in cash at the closing of
such sale.  Any Plan of Reorganization shall provide for the release
of all claims and caused of action that are held by or may be asserted by the
Borrowers against the Lenders or their Affiliates on account of the
Loans.

     

    
      
        
        

      

      
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    8.           EVENTS OF
DEFAULT

     

    The
occurrence of any one of the following shall constitute an event of default (an
“Event of Default”)
under this Agreement, upon written notice to Borrowers pursuant to the
provisions of Section 10:

     

    8.1           The
occurrence of any of the following events, with no cure period, without the
prior written consent of Lenders:

     

    8.1.1           Default
in the payment of any amount owed by the Borrowers to the Lenders as and when
due hereunder;

     

    8.1.2           The
rendering against the Borrowers of an arbitration award, a final judgment,
decree or order, in each case requiring the payment of money in excess of
$25,000 in the aggregate or a postpetition lien on any of the Collateral, and
the continuance of such arbitration award, judgment, decree or order unsatisfied
and in effect for any period of 30 consecutive days, provided however that this
Section 8.1.2 shall not apply to unsecured claims;

     

    8.1.3           The
filing by any of the Borrowers of any motion or proceeding that could reasonably
be expected to result in material impairment of the Lenders’ rights under this
Agreement, including any motion to surcharge the Lenders, the Loan or the
Collateral under 11 U.S.C. § 506(c) or otherwise;

     

    8.1.4           the
filing of a motion by any of the Borrowers for entry of an order staying or
otherwise prohibiting the prosecution of any enforcement action or any motion or
pleading seeking to challenge the Lenders’ or the Pre-Petition Debenture
Lenders’ Liens or otherwise commencing any cause of action against the Lenders
or the Pre-Petition Debenture Lenders;

     

    8.1.5           The
Borrowers (except following the Lenders’ prior written request or with the
Lenders’ express prior written consent) shall file a motion with the Bankruptcy
Court or any other court with jurisdiction in the matter seeking an order, or an
order is otherwise entered, modifying, reversing, revoking, staying, rescinding,
vacating, or amending the Financing Orders or any of the Loan Documents, without
the Lenders’ express prior written consent (and no such consent shall be implied
from any other action, inaction, or acquiescence of the Lenders);

     

    8.1.6           The
Borrowers shall file, or any other person shall obtain Bankruptcy Court approval
of a disclosure statement for a Plan of Reorganization that does not (i) comply
with this Agreement, including, without limitations, Sections 6.18, 7.12 and
7.13 of this Agreement and (ii) pay in full the Tranche A and Tranche B
Loans;

     

    8.1.7           The
Interim Order has not been entered by the Bankruptcy Court on or before July 27,
2010 or the Final Order has not been entered by the Bankruptcy Court on or
before August 14, 2010 or any of the Milestone Requirements have not been
met;

     

    8.1.8           The
Borrowers shall file any motion or application, or the Bankruptcy Court allows
the motion or application of any other Person, which seeks approval for or
allowance of any claim, lien, security interest ranking equal or senior in
priority to the claims, liens and security interests granted to the Lenders
under the Financing Orders or the Loan Documents or any such equal or prior
claim, lien, or security interest shall be established in any manner, except, in
any case, as expressly permitted under the Financing Orders;

     

    
      
        
        

      

      
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    8.1.9           The
Financing Orders shall cease to be in full force and effect at any time after
the date of entry thereof by the Bankruptcy Court;

     

    8.1.10           The
occurrence of any Default or Event of Default pursuant to the terms of the
Financing Orders;

     

    8.1.11           Conversion
of any of the Chapter 11 Cases to Chapter 7 cases under the Bankruptcy Code, or
dismissal of any of the Chapter 11 Cases or any subsequent Chapter 7 cases
either voluntarily or involuntarily;

     

    8.1.12           Either
of the Financing Orders shall be modified, reversed, revoked, remanded, stayed,
rescinded, vacated or amended on appeal or by the Bankruptcy Court without the
prior written consent of Lenders (and no such consent shall be implied from any
other authorization or acquiescence by Lenders);

     

    8.1.13           Entry
of an order in any of the Chapter 11 Cases appointing a chapter 11 trustee or
appointing an examiner with the power to take any action other than to
investigate and report;

     

    8.1.14           Expiration
or termination of the Borrowers’ exclusive periods to file and confirm a Plan of
Reorganization upon the earlier of the period set forth in the Plan Support
Agreement or as ordered by the Bankruptcy Court;

     

    8.1.15           Entry
of an order granting any other super-priority claim or lien equal or superior to
that granted to the Lenders prior to full and indefeasible repayment of the
Obligations and the Adequate Protection Obligations (as defined in the Interim
Order);

     

    8.1.16           Default
in the performance, or breach, of any covenant or agreement of the Borrowers
contained in this Agreement, any of the Loan Documents, or any term or condition
of either of the Financing Orders;

     

    8.1.17           Any
Borrower shall fail to comply in any material respect with the Budget (after
accounting for any variances permitted under Section 6.4(a) above) or, without
prior approval of the Lenders, the Borrowers’ cash balance plus the undrawn
portion of the Loan drops below $700,000;

     

    8.1.18           Breach
of any of the obligations of the Borrowers under the Plan Support Agreement,
including, without limitation, failure to adhere to the timetable set forth in
the Plan Support Agreement; or

     

    8.1.19           The
entry of an order (a) which provides relief from the automatic stay otherwise
imposed pursuant to Section 362 of the Bankruptcy Code with respect to any
material contract, lease, or obligation or against any critical vendor; (b)
allowing a third party to proceed against any material assets or contracts of
the Borrowers; (c) staying or otherwise prohibiting the prosecution of any
Enforcement Action; (d) otherwise adversely affecting the Lenders’ or
Prepetition Debenture Holders’ liens.

     

    8.1.20           With
the exception of the termination or suspension of operations contemplated by the
Budget, any of the Borrowers shall liquidate, dissolve, terminate or suspend its
business operation or otherwise fail to operate its business in the ordinary
course or merge with another Person unless such Borrower is the surviving entity
or the Borrowers consummate a sale of all or a material portion of such
Borrower’s assets without paying the aggregate amount of the Obligations due to
Lenders, unless the Lenders have consented or the Borrowers have otherwise
satisfied the provisions of 11 U.S.C. §363(f);

     

    
      
        
        

      

      
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    8.1.21           Any
representation or warranty made by the Borrowers in this Agreement, by any
Guarantor in any Guaranty delivered to the Lenders, or by the Borrowers (or any
of their Officers) or any Guarantor in any agreement, certificate, instrument or
financial statement or other statement contemplated by or made or delivered
pursuant to or in connection with this Agreement or any such Guaranty shall
prove to have been incorrect in any material respect when deemed to be
effective;

     

    8.1.22           The
Lenders believe in good faith that the prospect of payment in full of any part
of the Obligations, or that full performance by the Borrowers under the Loan
Documents, is impaired, or that there has occurred any Material Adverse Effect
in the business or financial condition of the Borrowers;

     

    8.1.23           If
any creditor of the Borrowers receives any adequate protection payment, other
than utility deposits reclassified as adequate protection payments or deposits
or payments to a utility covered by utility order provided payment does not
exceed the utility order amount and Budget, which is not fully acceptable to the
Lenders in their sole discretion, or any Lien is granted as adequate protection
other than as set forth in the Financing Orders.

     

    8.1.24           A
Change in Control occurs with respect to any Borrower;

     

    8.1.25           Borrowers’
failure to pay any post-petition obligation when due;

     

    8.1.26           Any
material impairment of the Collateral or the termination of any state or federal
license or authorization or material contract; or

     

    8.1.27           The
Borrowers fail to comply with any of the covenants, conditions and agreements
contained herein or in any other agreement, document or instrument at any time
executed by Borrowers in connection herewith.

     

    9.           LENDERS’ RIGHTS AND
REMEDIES

     

    9.1           Upon
the occurrence of an event of default, the Lenders shall be entitled to
immediately exercise any or all of the following rights and remedies, and the
automatic stay provided under Section 362 of the Bankruptcy Code shall be deemed
lifted or modified to the extent necessary to allow the Lender to take the
actions described in this Section 9.1 without further order of any Court or need
for filing a motion for relief or modification of the automatic stay or any
other pleading:

     

    (a)           Declare
the Loan to be terminated, whereupon the same shall forthwith
terminate;

     

    (b)           Declare
the Obligations to be forthwith due and payable, whereupon all Obligations shall
become and be forthwith due and payable, without presentment, notice of
dishonor, protest or further notice of any kind, all of which the Borrowers
hereby expressly waive;

     

    
      
        
        

      

      
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    (c)           Declare
the Lenders’ right to use Cash Collateral to be terminated, where upon the same
shall forthwith terminate, provided that, (i) with the written agreement of the
Lenders or (ii) pursuant to an order of the Court upon emergency motion and upon
no less than three full business days’ notice to Lenders (which may be filed by
Borrowers or the Committee), the Debtors may use only that amount of Cash
Collateral necessary to preserve and protect the Collateral, which may include
ongoing operations for a period not to exceed thirty (30) days or such
additional period of time to which Lenders agree in their sole discretion;
and

     

    (d)           Charge
the default rate of interest on all Obligations.

     

    9.2           Upon
the occurrence of an Event of Default, upon three (3) days’ notice to the
Borrowers of Lenders’ intention to exercise the remedies provided in this
Section 9.2, the Lenders shall be entitled to immediately exercise any or all of
the following rights and remedies, and the automatic stay provided under Section
362 of the Bankruptcy Code shall be deemed lifted or modified to the extent
necessary to allow the Lenders to take the actions described in this Section 9.2
without further order of any Court or need for filing a motion for relief or
modifications of the automatic stay or any other pleading:

     

    (a)           Lenders
may apply any and all money owing by the Lenders to the Borrowers to the payment
of the Obligations, in the Lenders’ sole discretion, subject to and in
accordance with Section 9.5 hereof;

     

    (b)           The
Lenders may exercise and enforce any and all rights and remedies available upon
default to a secured party under the UCC, including the right to take possession
of Collateral, or any evidence thereof, proceeding without judicial process or
by judicial process, and the right to sell, lease or otherwise dispose of any or
all of the Collateral (with or without giving any warranties as to the
Collateral, title to the Collateral or similar warranties), and, in connection
therewith, the Borrowers will on demand assemble the Collateral and make it
available to the Lenders at a place to be designated by the Lenders which is
reasonably convenient to all parties;

     

    (c)           The
Lenders may exercise and enforce their rights and remedies under the Loan
Documents;

     

    (d)           The
Lenders may without regard to any waste, adequacy of the security or solvency of
the Borrowers, apply for the appointment of a receiver of the Collateral, to
which appointment the Borrowers hereby consent, whether or not foreclosure
proceedings have been commenced under the Loan Documents and whether or not a
foreclosure sale has occurred;

     

    (e)           The
Lenders may exercise any other rights and remedies available to them by law or
agreement; and/or

     

    (f)           If
the Lenders sell any of the Collateral on credit, the Obligations will be
reduced only to the extent of payments actually received.  If the
purchaser fails to pay for the Collateral, the Lenders may resell the Collateral
and shall apply any proceeds actually received to the Obligations.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

       

    

    9.3           If,
pursuant to an order of the Bankruptcy Court, the Tranche B Lenders or their
designee have been designated as the winning bidder for the assets of the
Borrowers (to be effected in an asset sale pursuant to Section 363 of the
Bankruptcy Act or by a similar transaction pursuant to a Plan of Reorganization)
and an Event of Default occurs and is continuing, the Tranche B Lenders may
elect to consummate such sale under Section 363 of the Bankruptcy Code upon not
less than three (3) business days’ notice thereof to the Borrowers and the
Tranche A Lender upon the payment of the consideration recited in the Plan
Support Agreement and the funding of the wind down budget contemplated
thereby.  Any sale shall provide for the payment in full of the
Tranche A Loan.

     

    9.4           Power of
Attorney.  Borrowers hereby irrevocably appoint Lenders as
their lawful attorneys-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to:  (a) endorse Borrowers’ names
on any checks or other form of payment or security; (b) sign Borrowers’ names on
any invoice or bill of lading for any Account or drafts against or notices to
Account Debtors; (c) settle and adjust disputes and claims about the Accounts
directly with Account Debtors, for amounts and on terms Lenders determine
reasonable; (d) make, settle, and adjust all claims under Borrowers’ insurance
policies; (e) pay, contest or settle any Lien, charge, encumbrance, security
interest, and adverse claim in or to the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; and
(f) transfer the Collateral into the name of Lenders or a third party as the
Code permits.  Borrowers hereby appoint Lenders as their lawful
attorneys-in-fact to sign Borrowers’ names on any documents necessary to perfect
or continue the perfection of any security interest after an Event of Default
has occurred until all Obligations (other than contingent obligations for which
no claim has been made) have been satisfied in full and Lenders are under no
further obligation to make Credit Extensions hereunder.  Lenders’
foregoing appointment as Borrowers’ attorneys-in-fact, and all of Lenders’
rights and powers, are coupled with an interest and are irrevocable until all
Obligations (other than contingent obligations for which no claim has been made)
have been fully repaid and performed and Lenders’ obligation to provide Credit
Extensions terminates.

     

    9.5           Protective
Payments.  If Borrowers fail to obtain the insurance called for
by Section 6.7
or fail to pay any premium thereon or fail to pay any other amount which
Borrowers are obligated to pay under this Agreement or any other Loan Document,
or any other amounts the Lenders believe, in their sole discretion, are needed
to protect the Collateral, Lenders may obtain such insurance or make such
payment, and all amounts so paid by Lenders are Lenders’ Expenses and
immediately due and payable, bearing interest at the then highest applicable
rate, and secured by the Collateral.  Lenders will make reasonable
efforts to provide Borrowers with notice of Lenders obtaining such insurance at
the time it is obtained or within a reasonable time thereafter.  No
payments by Lenders are deemed an agreement to make similar payments in the
future or Lenders’ waiver of any Event of Default.

     

    9.6           Application of Payments and
Proceeds.  If an Event of Default has occurred and is
continuing, Lenders may apply any funds in their possession, whether from
Borrowers account balances, payments, proceeds realized as the result of any
collection of Accounts or other disposition of the Collateral, or
otherwise:  (a)  first to the Obligations outstanding with
respect to Tranche A; (b)  second to the Obligations outstanding with
respect to Tranche B; (c) third to the Pre-Petition Debenture Loans; and
(d)  any surplus shall be paid to Borrowers or to other Persons
legally entitled thereto.  Borrowers shall remain liable to Lenders
for any deficiency.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

       

    

    9.7           Lenders’ Liability for
Collateral.  So long as Lenders comply with applicable law and
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Lenders, Lenders shall not be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
to the Collateral; (c) any diminution in the value of the Collateral; or (d) any
act or default of any carrier, warehouseman, bailee, or other
Person.  Borrowers bear all risk of loss, damage or destruction of the
Collateral, except to the extent caused by Lenders’ gross negligence or willful
misconduct.

     

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

     

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

     

    10.           NOTICES

     

    All
notices, consents, requests, approvals, demands, or other communication
(collectively, “Communication”), other than
Advance requests made pursuant to Section 3.4, by any
party to this Agreement or any other Loan Document must be in writing and be
delivered or sent by facsimile at the addresses or facsimile numbers listed
below.  Lenders or Borrowers may change their notice address by giving
the other party written notice thereof.  Each such Communication shall
be deemed to have been validly served, given, or delivered: (a) upon the earlier
of actual receipt and three (3) Business Days after deposit in the U.S. mail,
registered or certified mail, return receipt requested, with proper postage
prepaid; (b) upon transmission, when sent by facsimile transmission (with such
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States mail as otherwise provided in this Section 10); (c) one
(1) Business Day after deposit with a reputable overnight courier with all
charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of
which shall be addressed to the party to be notified and sent to the address or
facsimile number indicated below.  Advance requests made pursuant to
Section 3.4
must be in writing and may be in the form of electronic mail, delivered to
Lenders by Borrowers at the e-mail addresses of Lenders provided below and shall
be deemed to have been validly served, given, or delivered when sent (with such
electronic mail promptly confirmed by delivery of a copy by personal delivery or
United States mail as otherwise provided in this Section
10).  Any Lender or Borrower may change its address, facsimile
number, or electronic mail address by giving the other parties hereto written
notice thereof in accordance with the terms of this Section 10.

     

    
      	
               
      

            	
              If
      to Borrowers:

            	
              GLOBAL
      CAPACITY GROUP, INC., ET AL.

            

    

    
      	
               
      

            	
              Attn:
      George A. King

            

    

    
      	
               
      

            	
              Vice
      Chairman/President & Chief Financial
Officer

            

    

    
      	
               
      

            	
              Global
      Capacity

            

    

    
      	
               
      

            	
              49
      East 52nd Street, 7th Floor

            

    

    
      	
               
      

            	
              New
      York, New York 10022

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

       

    

    
      	
               
      

            	
              with
      a copy to:

            	
              Heller,
      Draper, Hayden, Patrick & Horn,
L.L.C.

            

    

    
      	
               
      

            	
              650
      Poydras St., Suite 2500

            

    

    
      	
               
      

            	
              New
      Orleans, LA 70130

            

    

    
      	
               
      

            	
              Attn:  Douglas
      S. Draper

            

    

    
      	
               
      

            	
              Fax:

            

    

    
      	
               
      

            	
            	
              

                Email:
      ddraper@hellerdraper.com

              

            

    

     

    
      	
               
      

            	
              If
      to Lenders:

            	
              DOWNTOWN
      CP-CGSY, LLC

            

    

    
      	
               
      

            	
              c/o
      DOWNTOWN CAPITAL PARTNERS, LLC

            

    

    
      	
               
      

            	
              One
      Barker Avenue, Suite 260

            

    

    
      	
               
      

            	
              White
      Plains, New York 10601

            

    

    
      	
               
      

            	
              Attn:  Gary
      Katz

            

    

    
      	
               
      

            	
              Fax:

            

    

    
      	
               
      

            	
              Email:  gkatz@downtownlp.com

            

    

     

    
      	
            	
              

                -and-

              

            	 

    

    

    
      	
               
      

            	
              Black
      River Global Equity Fund Ltd.

            

    

    
      	
               
      

            	
              12700
      Whitewater Drive

            

    

    
      	
               
      

            	
              Minnetonka,
      Minnesota 55343

            

    

    
      	
               
      

            	
              Fax: 
      952.404.6107

            

    

    
      	
               
      

            	
              Attn:
      Richard Gammill

            

    

    

    
      	
               
      

            	
              with
      a copy to:

            	
              GREENBERG
      TRAURIG, LLP

            

    

    
      	
               
      

            	
              One
      International Place

            

    

    
      	
               
      

            	
              Boston,
      Massachusetts 02110

            

    

    
      	
               
      

            	
              Attn:
      Jeffrey M. Wolf, Esq.

            

    

    
      	
               
      

            	
              Fax:
      (617) 310-6001

            

    

    
      	
               
      

            	
              Email:
      wolfje@gtlaw.com

            

    

    
       

      
        	
              	
                

                  -and-

                

              	 

      

       

    

    
      	
               
      

            	
              OLSHAN
      GRUNDMAN FROME

            

    

    
      	
               
      

            	
              ROSENZWEIG
      & WOLOSKY, LLP

            

    

    
      	
               
      

            	
              Park
      Avenue Tower

            

    

    
      	
               
      

            	
              65
      East 55th
      Street

            

    

    
      	
               
      

            	
              New
      York, New York

            

    

    
      	
               
      

            	
              Attn:  Adam
      H. Friedman, Esq.

            

    

    
      	
               
      

            	
              Fax:  212-451-2222

            

    

    
      	
               
      

            	
              Email:  afriedman@olshanlaw.com

            

    

     

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

     

    New York
law governs the Loan Documents without regard to principles of conflicts of
law.  Borrowers and Lenders each submit to the exclusive jurisdiction
of the State and Federal courts in New York (and the Bankruptcy Court in
Delaware will have exclusive jurisdiction prior to any Event of Default and to
adjudicate whether an Event of Default has occurred); provided, however, that nothing
in this Agreement shall be deemed to operate to preclude Lenders from bringing
suit or taking other legal action in any other jurisdiction to realize on the
Collateral or any other security for the Obligations, or to enforce a judgment
or other court order in favor of Lenders.  Borrowers expressly submit
and consent in advance to such jurisdiction in any action or suit commenced in
any such court, and Borrowers hereby waive any objection that they may have
based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief
as is deemed appropriate by such court.  Borrowers hereby waive
personal service of the summons, complaints, and other process issued in such
action or suit and agrees that service of such summons, complaints, and other
process may be made by registered or certified mail addressed to Borrowers at
the address set forth in Section 10 of this
Agreement and that service so made shall be deemed completed upon the earlier to
occur of Borrowers’ actual receipt thereof or three (3) days after deposit in
the U.S. mails, proper postage prepaid.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

       

    

    TO THE
EXTENT PERMITTED BY APPLICABLE LAW, BORROWERS AND LENDERS EACH WAIVE THEIR RIGHT
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON
THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING
CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS.  THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT.  EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS
COUNSEL.

     

    12.           AGENT FOR TRANCHE B
LENDERS

     

    The
Tranche B Lenders have appointed the Tranche B Agent (as that term is defined in
Exhibit D hereto) to act as agent for the Tranche B Lenders in accordance with
the terms and subject to the conditions of Exhibit D hereto.

     

    13.           GENERAL
PROVISIONS

     

    13.1           Successors and
Assigns.  This Agreement binds and is for the benefit of the
successors and permitted assigns of each party.  Borrowers may not
assign this Agreement or any rights or Obligations under it without Lenders’
prior written consent (which may be granted or withheld in Lenders’
discretion).  The Tranche A Lender has the right, without the consent
of or notice to Borrowers or, except as provided in the Intercreditor Agreement,
the Tranche B Lenders, to sell, transfer, negotiate, or grant participation(s)
in all or any portion(s) of, or any interest in, the Tranche A Loan or rights,
and benefits under this Agreement and the other Loan Documents.  Each
of the Tranche B Lenders has the right, without the consent of or notice to
Borrowers or the Tranche A Lender, except as provided in the Intercreditor
Agreement, to sell, transfer, negotiate, or grant participation(s) in all or any
portion(s) of, or any interest in, the Tranche B Loan or rights, and benefits
under this Agreement and the other Loan Documents held by such Tranche B
Lender.  Notwithstanding anything herein to the contrary, the Borrower
and each Tranche B Lender, individually and not jointly, agree that for a period
of 120 days from the Petition Date, such Tranche B Lender will not directly or
indirectly offer, sell, transfer, assign or otherwise dispose of its
pre-petition debt or its respective Tranche B debt to any third party. other
than an Affiliate of such Tranche B Lender

     

    13.2           Indemnification.  Borrowers
agree to indemnify, defend and hold Lenders and their directors, officers,
employees, agents, attorneys, or any other Person affiliated with or
representing Lenders harmless against:  (a) all Obligations,
demands, claims, and liabilities (collectively, “Claims”) asserted by any other
party in connection with the transactions contemplated by the Loan Documents;
and (b) all losses or Lenders’ Expenses incurred, or paid by Lenders from,
following, or arising from transactions between Lenders and Borrowers (including
reasonable attorneys’ fees and expenses), except for Claims and/or losses
directly caused by Lenders’ gross negligence or willful misconduct and losses
resulting from a successful challenge by the Borrowers of the Lenders’ assertion
of an Event of Default.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

       

    

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

     

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

     

    13.5           Amendments; Waivers;
Integration.  Subject to the terms and conditions of the
Intercreditor Agreement, all amendments to this Agreement must be in writing
signed by the Lenders and Borrowers.  This Agreement and the Loan
Documents represent the entire agreement about this subject matter and supersede
prior negotiations or agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.  Any amendment or waiver
of, or any consent to deviation from, any provision of the terms of this
Agreement or any of the Loan Documents shall be in the sole and absolute
discretion of the Lenders, subject to the terms and conditions of the
Intercreditor Agreement.

     

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

     

    13.7           Survival.  All
covenants, representations and warranties made in this Agreement continue in
full force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations
which, by their terms, are to survive the termination of this Agreement) have
been satisfied.  The obligation of Borrowers in Section 13.2 to
indemnify Lenders shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.

     

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

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

       

    

    13.9           Attorneys’ Fees, Costs and
Expenses.  The Borrowers shall pay the reasonable fees and
disbursements of each of the Lenders’ respective counsel in connection with the
Loan, including but not limited to the preparation and negotiation of all term
sheets, this Agreement, the Loan Documents, the Plan Support Agreement, all
agreements, instruments, documents, pleadings related thereto and any amendments
thereto or to the Collateral, and any and all reasonable fees and expenses
related to the Collateral, including, without limitation, all expenses related
to any federal or state regulatory filings.  The Borrowers shall also
pay the reasonable costs of implementation and enforcement of the Loan and the
Financing Orders, including reasonable fees and disbursements of Lenders’
counsel and other professionals, periodic field audits, monitoring of assets,
and other miscellaneous disbursements.  The Borrowers shall pay all
reasonable out-of-pocket costs and expenses of the Lenders in connection with
the Loan and the Chapter 11 Cases, including, but not limited to reasonable
travel expenses.  The Borrowers shall pay the reasonable fees and
disbursements of each of the Lenders’ counsel for representation at all stages
and in all aspects of the Chapter 11 Cases including, but not limited to, the
first meeting of creditors, review of all pleadings whether filed by Lenders,
the Borrowers, or others, preparation for and appearance at hearings on all
motions and adversary proceedings whether or not filed or brought by Lenders or
the Borrowers, negotiations of all compromises or agreements, preparation of all
pleadings and motions, attendance at all depositions and examinations,
activities related to approval or objection to disclosure statements and plans
of reorganization (the “Bankruptcy Fees”). At the
sole discretion of Lenders, the Bankruptcy Fees may be added monthly to the
obligations rather than being paid monthly in cash.

     

    13.10           Right of Set
Off.  Borrowers hereby grant to Lenders, a lien, security
interest and right of set off as security for all Obligations to Lenders,
whether now existing or hereafter arising upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Lenders or any entity under the control of Lenders
(including a Lenders subsidiary) or in transit to any of them.  At any
time after the occurrence and during the continuance of an Event of Default,
without demand or notice, Lenders may set off the same or any part thereof and
apply the same to any Obligation of Borrowers then due and payable and
regardless of the adequacy of any other collateral securing the
Obligations.  ANY AND ALL RIGHTS TO REQUIRE LENDERS TO EXERCISE THEIR
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
OBLIGATIONS, PRIOR TO EXERCISING THEIR RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWERS ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.

     

    13.11           Lenders as
Party-in-Interest.  The Borrowers hereby stipulate and agree
that the Lenders are and shall remain parties in interest in the Chapter 11
Cases and shall have the right to participate, object and be heard in any motion
or proceeding in connection therewith.  Nothing in this Agreement or
any other Loan Document shall be deemed to be a waiver of any of the Lenders’
rights or remedies under applicable law or documentation.  Without
limitation of the foregoing, the Lenders shall have the right to make any motion
or raise any objection they deem to be in their interest (specifically including
but not limited to objections to use of proceeds of the Loan, to payment of
professional fees and expenses or the amount thereof, to sales or other
transactions outside the ordinary course of business or to assumption or
rejection of any executory contract or lease).

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

       

    

    13.12           Waiver of Right to Obtain Alternative
Financing.  In consideration of the Advances to be made to the
Borrowers by the Lenders, Borrowers hereby further waive any right they may have
to obtain an order by the Bankruptcy Court authorizing the Borrowers to obtain
financing pursuant to Section 364 of the Bankruptcy Code from any person other
than the Lenders, unless such financing would result in all of the Obligations
to the Lenders (whether arising before, on or after the date of this Agreement)
being paid in full, in cash, on or before the expiration of the term of this
Agreement.

     

    13.13           Credit Bids.  The
Lenders shall maintain their right to credit bid all or a portion of the
Lenders’ claims under this Agreement or the Financing Orders pursuant to Section
363(k) of the Bankruptcy Code.

     

    13.14           Application of Payments to
Obligations; Application of Proceeds of Collateral.  All
proceeds from the sale of, or other realization upon, all or any part of the
Collateral shall be immediately paid in cash by Borrowers to Lenders, and shall
by applied by Lenders:  (i) first, in satisfaction of outstanding
Obligations with respect to Tranche A, (ii)  second, in satisfaction
of outstanding Obligations with respect to Tranche B, and
(iii)  third, in satisfaction of the Pre-petition Debenture
Loan.

     

    13.15           Action by
Lenders.  Subject to the terms and conditions of the
Intercreditor Agreement, any and all consents, approvals or other actions
required or permitted to be taken by the Lenders hereunder shall require the
consent of the Tranche A Lender and of Tranche B Lenders entitled to at least
66.67% in principal amount of the Tranche B Loan (the “Required Tranche B Lenders”)
which consent of the Tranche B Lenders may be evidenced by a consent of the
Tranche B Agent (provided it has received the consent of the Required Tranche B
Lenders).

     

    14.           GUARANTY

     

    By its
execution and delivery of this Agreement, MNL hereby guarantees to the Lenders
the full payment and performance when due of each of the
Obligations.  This is a guarantee of payment and performance and not
merely of collection.  The Borrowers may seek payment or performance
from MNL or the property of MNL without first seeking payment or performance
form, or exhausting any remedy they may have against, any other Person or
property, including the Borrowers or their property.

     

    15.           DEFINITIONS

     

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

     

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

     

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

     

    “Accounts Payable” means for
Borrowers on a consolidated basis, any amounts owed as of a specified date for
expenses incurred post-petition where the Borrowers have received an invoice for
such expenses and for which they are obligated to make payment, determined in
accordance with GAAP and included in the Borrowers monthly balance
sheet.  Any accrued expenses or restructuring expenses as of such
specified date are specifically excluded from the definition of Accounts
Payable.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

       

    

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

     

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

     

    “Agreement” is defined in the
preamble hereof.

     

    “Availability Amount” means, at
any time, the Maximum Loan Amount minus the aggregate amount of all Obligations
outstanding at such time.  The aggregate amount of all Obligations
under this Agreement outstanding at any time shall not exceed the Maximum Loan
Amount.

     

    “Avoidance Action Recoveries”
shall mean causes of action arising or held by the Borrowers under Sections 502,
510, 541, 544, 545, 547, 548, 550 or 553 of the Bankruptcy Code, or under
related state or federal statutes and common law, including fraudulent transfer
laws.

     

    “Bankruptcy Code” is defined in
the preamble hereof.

     

    “Borrowers” are defined in the
preamble hereof.

     

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

     

    “Borrowing Request” means a
request and certification in substantially the form attached as Exhibit E hereto,
executed by a Responsible Officer of Borrower and delivered to the
Lenders.

     

    “Budget” means the Borrowers
eighteen (18) week cash flow budget showing all projected cash receipts and all
projected cash disbursements (with detail as to sources of cash receipts and
identification of cash disbursements) for the Borrowers delivered to the Lenders
pursuant to Section
6.1, covering the period commencing on the Closing Date and ending on
November 27, 2010.  The Budget shall be substantially in the form of
Exhibit
A annexed hereto and made a part hereof.

     

    “Business Day” is any day that
is not a Saturday, Sunday or a day on which Lenders is closed.

     

    “Carve-Out” has the meaning
specified in the Interim Order or the Final Order, as then in
effect.

     

    “Cash Balance” means, at any
time, unrestricted cash and Cash Equivalents of Borrowers, on deposit in a
Collateral Account and subject to a Control Agreement.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

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

     

    “Change in Control” means any
event, transaction, or occurrence as a result of which (a) any “person” (as such
term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as an amended (the “Exchange Act”)), other than
the owners as of the Effective Date and other than a trustee or other fiduciary
holding securities under an employee benefit plan of Borrowers, is or becomes a
beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of Borrowers, representing
twenty-five percent (25%) or more of the combined voting power of Borrowers’
then outstanding securities; or (b) during any period of twelve consecutive
calendar months, individuals who at the beginning of such period constituted the
Board of Directors of Borrowers (together with any new directors whose election
by the Board of Directors of Borrowers was approved by a vote of at least a
majority of the directors then still in office who either were directions at the
beginning of such period  or whose election or nomination for election
was previously so approved) cease for any reason other than death or disability
to constitute a majority of the directors then in office.

     

    “Chapter 11 Cases” means the
voluntary Chapter 11 cases commenced by the Borrowers on the Petition Date in
the Bankruptcy Court.

     

    “Code” is the Uniform
Commercial Code, as the same may, from time to time, be enacted and in effect in
the State of New York; provided, that, to the extent that the Code is used to
define any term herein or in any Loan Document and such term is defined
differently in different Articles or Divisions of the Code, the definition of
such term contained in Article or Division 9 shall govern; provided further,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection, or priority of, or remedies with respect to,
Lenders’ Lien on any Collateral is governed by the Uniform Commercial Code in
effect in a jurisdiction other than the State of New York, the
term “Code” shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes on the provisions thereof relating to such attachment,
perfection, priority, or remedies and for purposes of definitions relating to
such provisions.

     

    “Collateral” is any and all
properties, rights and assets of Borrowers and Guarantor described on Exhibit
B.

     

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

     

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

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

       

    

    “Communication” is defined in
Section
10.

     

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

     

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

     

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

     

    “Credit Extension” is any
Advance or any other extension of credit by Lenders for Borrowers’
benefit.

     

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

     

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

     

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

     

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

     

    “Effective Date” means the date
upon which the Interim Order has been entered and all conditions precedent to
the making of the first Credit Extension hereunder have been satisfied or
waived.  The Effective Date is endorsed at the end of the signature
pages hereto.

     

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

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

       

    

    “EBITDA” means for Borrowers on
a consolidated basis, net income (excluding non-recurring gains and
extraordinary gains) before provision for (a) interest expense, (b) taxes, (c)
depreciation, (d) amortization, (e) financing and transaction fees relating to
this Agreement, (f) non-recurring expenses and transaction fees related to
restructuring approved by the Lenders in their sole discretion (including, but
not limited to lease termination payments, discontinued operations, transitional
costs and employment termination costs), determined in accordance with GAAP, and
excluding, in any event, any non-cash impact on income or loss from application
of variable accounting rules or requirements, and any expenses associated with
original issue discounts and Stock based compensation.

     

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

     

    “Event of Default” is defined
in Section
8.

     

    “Final Order” means a final
order of the Bankruptcy Court pursuant to section 364 of the Bankruptcy Code,
approving this Agreement, the other Loan Documents, confirming the Interim
Order, and authorizing on a final basis the incurrence by the Borrowers of
permanent post-petition secured and super priority indebtedness in accordance
with this Agreement, and as to which no stay has been entered and which has not
been reversed, modified, vacated or overturned, in form and substance
satisfactory to the Lenders.

     

    “Financing Orders” means each
and both the Interim Order and the Final Order.

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

       

    

    “Intercreditor Agreement” means
that certain Debt Subordination and Intercreditor Agreement dated as of the date
hereof among the Lenders.

     

    “Interim Order” means that
certain order entered by the Bankruptcy Court in substantially the form of Exhibit
C hereto and otherwise in form and substance satisfactory to the
Lenders.

     

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

     

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

     

    “Key Person” is any of
Borrowers’ Chief Financial Officer or Chief Executive Officer who are, as of the
Effective Date, George King and Patrick Shutt.

     

    “Lenders” is defined in the
preamble hereof.

     

    “Lenders’ Expenses” means the
expenses set forth in Section 13.9.

     

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

     

    “Loan” is an Advance or
Advances in an aggregate amount of (A) upon entry of the Interim Order (i)
$9,250,000, (ii) such additional amount as may be agreed to by the Tranche A
Lender, in writing, and in its sole discretion, or (iii) such other sum as is
approved by the Bankruptcy Court, and (B) upon the entry of the Final Order, up
to $10,250,000, outstanding at anytime, in each case subject to the Tranche
Limits.

     

    “Loan Documents” are,
collectively, this Agreement, the Intercreditor Agreement, the Plan Support
Agreement, the Note, or notes or guaranties executed by Borrowers or any
Guarantor, the Financing Orders, and any other present or future agreement
between Borrowers, any Guarantor, the Lenders, and/or for the benefit of Lenders
in connection with this Agreement, all as amended, restated, or otherwise
modified.

     

    “Material Adverse Effect” is
(a) a material impairment in the perfection or priority of Lenders’ Lien in the
Collateral or in the value of such Collateral; (b) a Material Adverse Effect in
the business, operations, or condition (financial or otherwise) of Borrowers;
(c) a material impairment of the prospect of repayment of any portion of the
Obligations; (d) Lenders determine, based upon information available to them and
in their reasonable business judgment, that there is a reasonable likelihood
that Borrowers shall fail to comply with one or more of the financial covenants
in Section 6
during the next succeeding financial reporting period; or (e) Lenders determine,
based upon information available to them and in their reasonable business
judgment, that there is a reasonable likelihood that Lenders will not be able to
enforce their rights and remedies pursuant to this Agreement, the Financing
Orders and the Loan Documents.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

       

    

    “Maturity Date” means the date
which is the earliest of:

     

    
      	
               
      

            	
              (i)

            	
              (a)
      the occurrence of an Event of Default and (b) the Effective Date of a Plan
      of Reorganization; provided, that, so long
      as no Event of Default has occurred, subject to the Tranche B Lenders’
      written consent, or an Event of Default has occurred and such Event of
      Default has been waived by the Lenders, the Borrowers may extend such date
      by up to two (2) periods of sixty (60) days each (for the avoidance of
      doubt, the Borrowers shall not have such extension rights in the event
      that an Event of Default shall have occurred and has not been waived,
      including in the event that such Event of Default shall have been
      cured);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      date of the acceleration of any outstanding Credit
    Extensions;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              entry
      of an order reversing in any respect either of the Financing Orders
      (unless waived in writing by the
Lenders);

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the
      conversion of any of the Chapter 11 Cases to a case under Chapter 7 of the
      Bankruptcy Code;

            

    

     

    
      	
               
      

            	
              (v)

            	
              the
      appointment of a trustee or an examiner with special powers;
      and

            

    

     

    
      	
               
      

            	
              (vi)

            	
              the
      dismissal of any of the Chapter 11
Cases.

            

    

     

    “Maximum Loan Amount” means
$10,250,000, as provided in the definition of the “Tranche Limits”.

     

    “Milestone Requirements” shall
mean the following:  The Borrowers shall file the Reorganization Plan
and Disclosure Statement (as defined in the Plan Support Agreement) and motion
to approve bidding and sale procedures (including break-up fee, qualified bidder
requirements; bid, sale hearing, auction and closing deadlines, and bidding
rules), consistent with the Plan Support Agreement all in form and substance
acceptable to the Lenders, no later than 15 days after the Petition
Date.  The Borrowers shall obtain approval of the sale transaction
contemplated by the Plan Support Agreement no later than 90 days after the
Petition Date.  The Bankruptcy Court shall confirm the Plan no later
than 105 days after the Petition Date.  The Effective Date of the Plan
shall occur by no later than the later of (i) 125 days after the Petition Date
or (ii) the date as of which all conditions precedent to the Effective Date
under the Plan (as defined in the Plan Support Agreement) have been satisfied or
waived.

     

    “MNL” is defined in Section
4.1.

     

    “Monthly Recurring Circuit
Margin” means for a particular measurement period (i) the difference
between the Monthly Recurring Circuit Revenue for the months comprising such
measurement period and (ii) the direct cost to Borrowers of any circuits
included within Monthly Recurring Circuit Revenue for the months included within
such measurement period, but excluding any costs which are
non-recurring.

     

    “Monthly Recurring Circuit Margin
Percentage” means for a particular measurement period (i) the difference
between the Monthly Recurring Circuit Revenue for the months comprising such
measurement period and (ii) the direct cost to Borrowers of any circuits
included within Monthly Recurring Circuit Revenue for the months included within
such measurement period, but excluding any costs which are non-recurring; such
difference divided by the Monthly Recurring Circuit Revenue for the months
comprising such measurement period.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

       

    

    “Monthly Recurring Circuit
Revenue” means the aggregate monthly invoice amount for all monthly
billings issued by any of the Borrowers with respect to their circuit
business.  The monthly recurring circuit revenue will equal the total
monthly billing amount determined as of the date the Borrowers issue their
monthly invoices (usually the 1st day of
the month).

     

    “Note” means the Borrowers’
promissory note, payable to the order of the Lenders, in form and substance
acceptable to the Lenders, as same may be renewed and amended from time to time,
and all replacements thereof.

     

    “Obligations” are Borrowers’
obligations to pay when due any debts, principal, interest, Lenders’ Expenses
and other amounts Borrowers owe Lenders now or later, with respect to the Loan
and this Agreement and to perform Borrowers’ duties under the Loan
Documents.

     

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

     

    “Parent” means Global Capacity
Group, Inc.

     

    “Permitted Indebtedness”
is:

     

    Borrowers’
Indebtedness to Lenders under this Agreement and the other Loan
Documents;

     

    Indebtedness
under the Pre-Petition Debenture Agreements;

     

    Unsecured
Indebtedness to trade creditors incurred in the ordinary course of
business;

     

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

     

    Indebtedness
secured by Permitted Liens;

     

    (x)
Indebtedness in respect of performance bonds, surety bonds, appeal bonds,
completion guarantees or like instruments with respect to workers’ compensation
claims, in each case, incurred in the ordinary course of business, and (y)
letter of credit supporting obligations described clause (x) above;
and

     

    Extensions,
refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (g) above, provided that the principal amount
thereof is not increased or the terms thereof are not modified to impose more
burdensome terms upon Borrowers or their Subsidiary, as the case may
be.

     

    “Permitted Investments”
are:

     

    Cash and
Cash Equivalents;

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

       

    

    Investments
by Borrowers in their Subsidiaries in an amount not to exceed
$1,000,000  at any time outstanding, and Investments by Subsidiaries
in Borrowers;

     

    loans and
advances to employees in the ordinary course of business not to exceed $10,000
in the aggregate at any time outstanding;

     

    Investments
acquired in connection with the settlement of delinquent Accounts in the
ordinary course of business or in connection with the bankruptcy or
reorganization of suppliers or customers;

     

    Investments
consisting of lease, utility and other deposits or advances in the ordinary
course of business;

     

    Investments
consisting of extensions or credit in the nature of accounts receivable or notes
receivable arising from the grant of trade credit in the ordinary course of
business;

     

    Advances
in the form of a cash deposit or prepayment of expenses to vendors, suppliers
and trade creditors so long as such deposits are made and such expenses are
incurred in the ordinary course of business;

     

    Investments
that are otherwise permitted under Sections 7.3, 7.4, and 7.5; and

     

    Investments
consisting of the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
Borrowers.

     

    “Permitted Liens”
are:

     

    (i)           Liens
securing the obligations under the Pre-Petition Debenture
Agreements;

     

    (ii)           Liens
for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrowers maintain
adequate reserves on their Books, provided that no
notice of such Lien has been filed or recorded under the Internal Revenue Code
of 1986, as amended and the Treasury Regulations adopted
thereunder;

     

    (iii)           purchase
money Liens (x) on Equipment hereafter acquired or held by Borrowers incurred
for financing the acquisition of the Equipment securing no more than $100,000 in
the aggregate amount outstanding, or (y) existing on Equipment when acquired,
if the Lien is
confined to the property and improvements and the proceeds of the Equipment and
(ii) Liens securing capital lease obligations permitted under clause (h) of
Permitted Indebtedness;

     

    (iv)           Carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like liens
arising in the ordinary course of business which are not overdue for a period of
more than forty-five (45) days or which are being contested in good faith by
appropriate proceedings;

     

    (v)           Leases
or subleases and non-exclusive licenses or sublicenses granted in the ordinary
course of Borrowers’ business, if entering into such leases, subleases, licenses
and sublicenses do not violate the provisions of Section 4.1
hereof;

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

       

    

    (vi)           Liens
(other than any Lien imposed by ERISA) consisting of pledges or deposits
required in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation or to
secure the performance of tenders, statutory obligations, surety, stay, customs
and appeals bonds, bids, leases, governmental contract, trade contracts,
performance and return of money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money) or to secure liability to
insurance carriers;

     

    (vii)           Liens
consisting of judgment or judicial attachment liens, provided that all such
Liens secure claims in the aggregate at any time outstanding for the Borrowers
and their Subsidiaries that would not constitute an Event of
Default;

     

    (viii)           Liens
arising from precautionary uniform commercial code financing statements filed
under (and the precautionary grant of a security interest pursuant to) any lease
permitted by this Agreement;

     

    (ix)           Liens
(i) in favor of collecting banks arising under Section 4-210 of the UCC or (ii)
in favor of a banking institution arising as a matter of law encumbering
deposits (including the right of set-off) and which are within the general
parameters customary in the banking industry, in each case only to the extent
such bank accounts are permitted under Section
6.8(b);

     

    (x)           Liens
arising out of conditional sale, title retention, consignment or similar
arrangements for the sale of goods entered into by either Borrowers or any of
their Subsidiaries in the ordinary course of business;

     

    (xi)           Liens
in favor of customs and revenue authorities arising as a matter of law which
secure payment of customs duties in connection with the importation of goods in
the ordinary course of business securing liabilities in an aggregate amount not
to exceed $25,000;

     

    (xii)           Liens
incurred in the ordinary course of business in connection with the purchase or
shipping of goods or assets, which Liens are in favor of the seller or shipper
of such goods or assets and only attach to such goods or assets;
and

     

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

     

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

     

    “Petition Date” is defined in
the preamble hereof.

     

    “Pivotal Loan” is defined in
Section 2.4(iii).

     

    “Plan of Reorganization” means
any Chapter 11 plan or plans for the Borrowers to be filed with the Bankruptcy
Court in the Chapter 11 Cases; provided, however, that
notwithstanding anything to the contrary set forth herein, the Plan of
Reorganization (or any amendments or modifications thereto) shall provide for
the payment in full in cash of all outstanding obligations hereunder on the
effective date of the Plan of Reorganization.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

       

    

    “Plan Support Agreement” means
that certain Plan Support and Restructuring Agreement dated as of July 22, 2010
by and among the Borrowers, the Tranche B Lenders and the Tranche A Lender and
the Term Sheet annexed thereto and incorporated therein.

     

    “Pre-Petition Debenture
Agreements” means each of: (i) that certain Securities Purchase
Agreement, dated March 11, 2008, among the Parent and the Pre-Petition Debenture
Lenders party thereto;  (ii) that certain Note Purchase Agreement
dated as of September 25, 2008, between Parent and Aequitas Catalyst Fund, LLC
–Series B; (iii) that certain Securities Purchase Agreement dated November 19,
2008 among Parent and the Pre-Petition Debenture Lenders party thereto; (iv)
that certain Securities Purchase Agreement dated on or about July 31, 2009,
among the Parent and the Pre-Petition Debenture Lenders party thereto; (v) that
certain Securities Purchase Agreement dated on or about July 31, 2009 among the
Parent and the Pre-Petition Debenture Lenders party thereto; and (vi) any other
debentures issued by any of the Borrowers as set forth in the Interim Order,
together with any amendments, modifications, restatements or supplements from
time to time with respect to the documents referred to in clauses (i) through
(vi) above.

     

    “Pre-Petition Debenture
Lenders” means the Purchasers under and as defined in the Pre-Petition
Debenture Agreements and any successor holders of Pre-Petition Debenture
Obligations.

     

    “Pre-Petition Debenture
Obligations” means all obligations due and owing with respect to the
Pre-Petition Debenture Agreements as of the Petition Date.

     

    “Required Tranche B Lenders” is
defined in Section 13.15.

     

    “Responsible Officer” is any of
the Chief Executive Officer, President, Chief Financial Officer of
Borrowers.

     

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

     

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

     

    “Termination Date” means the
earliest of (i) the Maturity Date, (ii) the effective date of a Plan of
Reorganization confirmed by the Bankruptcy Court; (iii) the effective date of a
sale of all or substantially all of the assets of the Borrowers;
(iv)  the filing of a Plan of Reorganization that is not acceptable to
the Lenders or does not provide for the immediate payment, in full, in cash, of
all Obligations due under the Loan; (v) August 14, 2010, if the Final Order has
not been entered by that date; or (vi) the occurrence of an Event of Default,
pursuant to Section
8.

     

    “Tranche Limits” means (a)
with respect to the Tranche A Lender, the aggregate amount of $3,000,000 at any
time outstanding, or such additional amount as may be agreed to by the Tranche A
Lender, and (b) with respect to the Tranche B Lenders, the aggregate amount of
up to $7,250,000 at any time outstanding.

     

    “Tranche A Lender” means
Downtown CP-CGSY, LLC.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

       

    

    “Tranche A Loan” means all
Obligations due to the Tranche A Lender.

     

    “Tranche B Lenders” means the
Pre-Petition Debenture Lenders, and any investor that is not a current holder of
any of the Borrowers’ debentures and is approved by the Pre-Petition Debenture
Lenders, signing this Agreement as a Tranche B Lender.

     

    “Tranche B Loan” means all
Obligations due to the Tranche B Lenders, except Obligations due with respect to
the Pre-Petition Debenture Agreements.

     

    “Transfer” is defined in Section
7.1.

     

    [Signature pages follow.]

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

       

    

    IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as a sealed instrument
under the laws of the State of New York as of July __, 2010.

     

    
      	
              BORROWERS:

            
	 
      
	
              GLOBAL
      CAPACITY GROUP, INC.

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

     

    

    
      	
              20/20
      TECHNOLOGIES, INC..

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

     

    

    
      	
              CAPITAL
      GROWTH SYSTEMS, INC.

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

     

    

    
      	
              CENTREPATH,
      INC.

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

     

    

    
      	
              GLOBAL
      CAPACITY DIRECT, LLC FKA VANCO DIRECT USA, LLC

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              20/20
      TECHNOLOGIES I, LLC

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

     

    

    
      	
              NEXVU
      TECHNOLOGIES, LLC

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

     

    

    
      	
              FNS
      2007, INC. FKA FRONTRUNNER NETWORK SYSTEMS, CORP.

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

    
 

    
      	
              GLOBAL
      CAPACITY HOLDCO, LLC

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

     

    

    
      	
              CAPITAL
      GROWTH ACQUISITION, INC.

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

    

    
      	
              GUARANTOR:

            
	 
      
	
              MAGENTA
      NETLOGIC LIMITED (U.K.)

            
	 
      
	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	
              LENDERS:

            
	 
      
	
              TRANCHE A
      LENDER:

            
	 
      
	
              DOWNTOWN
      CP-CGSY, LLC

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            

    

    

    

    
      	
              TRANCHE
      B LENDERS:

            
	 
      
	
              BLACK
      RIVER GLOBAL EQUITY

              FUND
      LTD.

              By:
      Black River Asset Management LLC

               Its: Investment
      Adviser

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              CARL
      C. GREER TRUST DTD 8/24/82

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

    

    

    
      	
              DAVID
      J. LIES

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

    

    

    
      	
              MICHAEL
      P. BALKIN

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

     

     

    
      	
              RICHARD
      A LEVY

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              MICRO
      PIPE FUND I, LLC

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

    

    

    
      	
              MIDSUMMER
      INVESTMENT LTD

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

    

    

    
      	
              ENABLE
      OPPORTUNITY PARTNERS, LP

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              ENABLE
      GROWTH PARTNERS LP

            
	 
      
	
              By:

            	 
      	 
      
	 
      	
              Name:

            	 
      	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      	 
      
	 
	 
	
              PIERCE
      DIVERSIFIED STRATGEY

              MASTER
      FUND LLC (ENABLE)

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

    

    

    
      	
              BISHOP
      CAPITAL LLC

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              AEQUITAS
      COMMERCIAL FINANCE, LLC

            
	 
      
	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

              Address:

               

              Phone:

              Fax:

              E-mail:

            	 
      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Table
of Exhibits and Schedules

    
    

     

    
      	Exhibit A	Initial Borrowers’
      Budget
	 	 
	Exhibit B	Collateral
	 	 
	Exhibit
      C 	Form of Interim
      Order
	 	 
	Exhibit D	Tranche B
      Agent
	 	 
	Exhibit E	Form of Borrowing
      Request
	 	 
	Schedule
    1.1	Operating
      Accounts
	 	 
	Schedule
    5.1	Trade Names, Chief
      Executive Office, Principal Place of Business, and Locations of
      Collateral
	 	 
	Schedule
    5.5	Subsidiaries
	 	 
	Schedule
    5.11	Intellectual
      Property Disclosures
	 	 
	Schedule
    5.12	Defaults

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
A

     

    Budget

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
B

     

    Collateral

     

    The
Collateral1 consists
of all of the right, title and interest of the Borrowers and their Affiliates,
including, but not limited to MNL, in and to all of their assets and real and
personal property, whether now owned or hereafter acquired, wherever located
(but excluding Avoidance Action Recoveries), including, but not limited
to:

     

    All
goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as provided below), commercial
tort claims, documents, instruments (including any promissory notes), chattel
paper (whether tangible or electronic), cash, deposit accounts, all pledged
certificates of deposit, fixtures, letters of credit rights (whether or not the
letter of credit is evidenced by a writing), securities, and all other
investment property, supporting obligations, and financial assets, all
Borrowers’ Books relating to the foregoing, and any and all claims, rights and
interests in any of the above and all substitutions for, additions, attachments,
accessories, accessions and improvements to and replacements, products, proceeds
and insurance proceeds of any or all of the foregoing, any copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, service marks and, to the extent
permitted under applicable law, any applications therefor, whether registered or
not, and the goodwill of the business of Borrowers connected with and symbolized
thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing; all Accounts, license and royalty fees and
other revenues, proceeds, or income arising out of or relating to any of the
foregoing, and any equity securities in any Person organized or formed in the
United States of America and/or a jurisdiction outside of the United States of
America that is owned or otherwise held by the Borrowers.

     

     

      
        

      

    

    1
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Debtor in Possession Loan and Security
Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
C

     

    Form
of Interim Order

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
D

    

    Tranche
B Agent

    

    1.           Appointment. The Tranche B
Lenders,2 by their
acceptance of the benefits of the Agreement, hereby designate Black River Global
Equity Fund Ltd. (the “Tranche
B Agent”) as the Tranche B Agent to act as specified herein and in the
Agreement. Each Tranche B Lender shall be deemed irrevocably to authorize the
Tranche B Agent to take such action on its behalf under the provisions of the
Agreement and any other Loan Document (as such term is defined in the Agreement)
and to exercise such powers and to perform such duties hereunder and thereunder
as are specifically delegated to or required of the Tranche B Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto.
The Tranche B Agent may perform any of its duties hereunder by or through its
agents or employees.  The provisions of this Exhibit D are solely for
the benefit of the Tranche B Agent and the other Tranche B Lenders and neither
the Borrowers nor the Tranche A Lender nor any other Person shall have any
rights, as third party beneficiary or otherwise, under any provision
hereof.  In performing its functions hereunder, the Tranche B Agent
shall be acting solely as an agent of the Tranche B Lenders and does not assume
and shall not be deemed to have assumed any obligation toward or relationship of
agency with the Borrowers or the Tranche A Lender or any other
Person.  The Tranche B Agent may assign any and all of its rights or
obligations under this Exhibit D to any of its Affiliates without the consent of
the Tranche B Lenders or any other party to the Agreement.

     

    2.           Nature of
Duties. The
Tranche B Agent shall have no duties or responsibilities except those expressly
set forth in the Agreement. Neither the Tranche B Agent nor any of its partners,
members, shareholders, officers, directors, employees or agents shall be liable
for any action taken or omitted by it as such under the Agreement or hereunder
or in connection herewith or therewith, be responsible for the consequence of
any oversight or error of judgment or answerable for any loss, unless caused
solely by its or their gross negligence or willful misconduct as determined by a
final judgment (not subject to further appeal) of a court of competent
jurisdiction. The duties of the Tranche B Agent shall be mechanical and
administrative in nature; the Tranche B Agent shall not have by reason of the
Agreement or any other Loan Document a fiduciary relationship in respect of any
Tranche B Lender; and nothing in the Agreement or any other Loan Document,
expressed or implied, is intended to or shall be so construed as to impose upon
the Tranche B Agent any obligations in respect of the Agreement or any other
Loan Document except as expressly set forth herein and therein.

     

     

      
        

      

    

    
      2
Capitalized terms used herein and not otherwise defined shall have the
respective meanings provided in the Debtor in Possession Loan and Security
Agreement to which this Exhibit D is attached (the “Agreement”).

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    3.           Lack of
Reliance on the Tranche B Agent. Independently and without reliance upon
the Tranche B Agent, each Tranche B Lender, to the extent it deems appropriate,
has made and shall continue to make (i) its own independent investigation of the
financial condition and affairs of the Borrowers in connection with such Tranche
B Lender’s advance of funds to the Borrowers, the creation and continuance of
the Obligations, the transactions contemplated by the Loan Documents, and the
taking or not taking of any action in connection therewith, and (ii) its own
appraisal of the creditworthiness of the Borrowers, and of the value of the
Collateral from time to time, and the Tranche B Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any
Tranche B Lender with any credit, market or other information with respect
thereto, whether coming into its possession before any Obligations are incurred
or at any time or times thereafter. The Tranche B Agent shall not be responsible
to the Borrowers, the Tranche A Lender or any Tranche B Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith, or for
the execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of the Agreement or any other Loan
Document, or for the financial condition of the Borrowers or the Tranche A
Lender or the value of any of the Collateral, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of the Agreement or any other Loan Document, or the financial
condition of the Borrowers, the Tranche A Lender, or the value of any of the
Collateral, or the existence or possible existence of any default or Event of
Default under the Agreement or any of the other Loan Documents.

     

    4.           Certain
Rights of the Tranche B Agent. The Tranche B Agent shall have the right
to take any action with respect to the Agreement or the Collateral, on behalf of
all of the Tranche B Lenders, that the Tranche B Lenders are entitled to take
thereunder. To the extent practical, the Tranche B Agent shall request
instructions from the Tranche B Lenders with respect to any material act or
action (including failure to act) in connection with the Agreement or any other
Loan Document, and shall be entitled to act or refrain from acting in accordance
with the instructions of the Required Tranche B Lenders; if such instructions
are not provided despite the Tranche B Agent’s request therefor, the Tranche B
Agent shall be entitled to refrain from such act or taking such action, and if
such action is taken, shall be entitled to appropriate indemnification from the
Tranche B Lenders in respect of actions to be taken by the Tranche B Agent; and
the Tranche B Agent shall not incur liability to any person or entity by reason
of so refraining. Without limiting the foregoing, (a) no Tranche B Lender shall
have any right of action whatsoever against the Tranche B Agent as a result of
the Tranche B Agent acting or refraining from acting hereunder in accordance
with the terms of the Agreement or any other Loan Document, and the Borrowers
and the Tranche A Lender shall have no right to question or challenge the
authority of, or the instructions given to, the Tranche B Agent pursuant to the
foregoing and (b) the Tranche B Agent shall not be required to take any action
which the Tranche B Agent believes (i) could reasonably be expected to expose it
to personal liability or (ii) is contrary to this Agreement, the Loan Documents
or applicable law.

     

    5.           Reliance.
The Tranche B Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, statement, certificate,
electronic mail, telex, teletype or telecopier message, cablegram, radiogram,
order or other document or telephone message signed, sent or made by the proper
person or entity, and, with respect to all legal matters pertaining to the
Agreement and the other Loan Documents and its duties thereunder, upon advice of
counsel selected by it and upon all other matters pertaining to this Agreement
and the other Loan Documents and its duties thereunder, upon advice of other
experts selected by it. Anything to the contrary notwithstanding, the Tranche B
Agent shall have no obligation whatsoever to any Tranche B Lender to assure that
the Collateral exists or is owned by the Borrowers or is cared for, protected or
insured or that the liens granted pursuant to the Agreement have been properly
or sufficiently or lawfully created, perfected, or enforced or are entitled to
any particular priority.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    6.           Indemnification. To the extent that the
Tranche B Agent is not reimbursed and indemnified by the Borrowers, the Tranche
B Lenders will jointly and severally reimburse and indemnify the Tranche B
Agent, in proportion to their interests in the Tranche B Loan, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Tranche
B Agent in performing its duties hereunder or under the Agreement or any other
Loan Document, or in any way relating to or arising out of the Agreement or any
other Loan Document except for those determined by a final judgment (not subject
to further appeal) of a court of competent jurisdiction to have resulted solely
from the Tranche B Agent’s own gross negligence or willful misconduct. Prior to
taking any action hereunder as Tranche B Agent, the Tranche B Agent may require
each Tranche B Lender to deposit with it sufficient sums as it determines in
good faith to be necessary to protect the Tranche B Agent for costs and expenses
associated with taking such action.

     

    7.           Resignation
by the Tranche B Agent. 

     

    (a)           The
Tranche B Agent may resign from the performance of all its functions and duties
under the Agreement and the other Loan Documents at any time by giving 10 days’
prior written notice (as provided in the Agreement) to the Borrowers, the
Tranche A Lender and the Tranche B Lenders. Such resignation shall take effect
upon the appointment of a successor Tranche B Agent pursuant to clauses (b) and
(c) below.

     

    (b)           Upon
any such notice of resignation, the Tranche B Lenders holding at least a
majority of the Tranche B Lenders’ interests in the Tranche B Loan shall appoint
a successor Tranche B Agent hereunder.

     

    (c)           If
a successor Tranche B Agent shall not have been so appointed within said 10-day
period, the Tranche B Agent shall then appoint a successor Tranche B Agent who
shall serve as Tranche B Agent until such time, if any, as the Tranche B Lenders
appoint a successor Tranche B Agent as provided above. If a successor Tranche B
Agent has not been appointed within such 10-day period, the Tranche B Agent may
petition any court of competent jurisdiction or may interplead the Borrowers,
the Tranche A Lender and the Tranche B Lenders in a proceeding for the
appointment of a successor Tranche B Agent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    8.           Rights
with respect to Collateral. Each Tranche B Lender
agrees with all other Tranche B Lenders and the Tranche B Agent (i) that it
shall not, and shall not attempt to, exercise any rights with respect to its
security interest in the Collateral, whether pursuant to any other agreement or
otherwise (other than pursuant to the Agreement), or take or institute any
action against the Tranche B Agent or any of the other Tranche B Lenders in
respect of the Collateral or its rights hereunder (other than any such action
arising from the breach of the Agreement) and (ii) that such Tranche B Lender
has no other rights with respect to the Collateral other than as set forth in
the Agreement and the other Loan Documents. Upon the acceptance of any
appointment as Tranche B Agent hereunder by a successor Tranche B Agent, such
successor Tranche B Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Tranche B Agent and
the retiring Tranche B Agent shall be discharged from its duties and obligations
under the Agreement. After any retiring Tranche B Agent’s resignation or removal
hereunder as Tranche B Agent, the provisions of the Agreement including this
Exhibit D shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Tranche B Agent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
E

     

    BORROWING
REQUEST

     

    Dated:
______ __, 2010

     

    Black
River Global Equity Fund Ltd.

    as
Tranche B Agent

    12700
Whitewater Drive

    Minnetonka,
Minnesota 55343

    Attn:
Richard Gammill

    

    Downtown
CP-CGSY, LLC

    c/o
Downtown Capital Partners, LLC

    One
Barker Avenue, Suite 260

    White
Plains, New York 10601

    Attn:  Gary
Katz

    

    Ladies
and Gentlemen:

     

    This
Borrowing Request is delivered to you pursuant to Section 3.4 of the
Debtor in Possession Loan and Security Agreement dated as of July __, 2010 (as
modified, amended or supplemented, the “Loan Agreement”), by and
among: Downtown CP-CGSY, LLC, as the Tranche A Lender; certain parties signing
such Agreement as Tranche B Lenders; Global Capacity Group, Inc., 20/20
Technologies, Inc., Capital Growth Systems, Inc., Centrepath, Inc., and Global
Capacity Direct, LLC f/k/a Vanco Direct USA, LLC, 2020 Technologies I, LLC,
Nexvu Technologies, LLC, FNS 2007, Inc. f/k/a Frontrunner Network Systems Corp.,
Global Capacity Holdco, LLC and Capital Growth Acquisition, Inc. (collectively,
the “Borrowers”); and
Magenta Netlogic Limited (U.K.), as Guarantor.  Unless otherwise
defined, terms used herein have the meanings provided in the Loan
Agreement.

     

    The
Borrowers hereby give you notice of and request a Credit Extension under the
Loan Agreement (the “Proposed
Borrowing”) for the account of the Borrowers, and in connection therewith
set forth below the information relating to such Proposed
Borrowing:

     

    ·      The
Funding Date of the Proposed Borrowing is ___________ __, 2010.

     

    ·      The
amount of the Proposed Borrowing is $_______________.

     

    In
support of the Proposed Borrowing, the reports required pursuant to Section
6.3(a) of the Loan Agreement have been electronically transmitted via email to
the Lenders.

     

    On behalf
of the Borrowers, the undersigned hereby certify that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing requested hereby, before and immediately after giving effect thereto
and to the application of the proceeds therefrom:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	
               
      

            	
              1.

            	
              no
      default or Event of Default has or shall have occurred and be continuing
      or would result from the making of such Proposed
  Borrowing;

            

    

     

    
      	
               
      

            	
              2.

            	
              the
      amount and intended use of proceeds of such Proposed Borrowing are in
      compliance with the Budget;

            

    

     

    
      	
               
      

            	
              3.

            	
              the
      representations and warranties made by the Borrowers in Article 5 of the
      Loan Agreement, and in each of the other Loan Documents, are true and
      complete on and as of the date hereof and as of the date of the making of
      such Proposed Borrowing with the same force and effect as if made on and
      as of such date (or, if any such representation or warranty is expressly
      stated to have been made as of a specific date, as of such specific date);
      and

            

    

     

    
      	
               
      

            	
              4.

            	
              each
      of the other conditions precedent set forth in Article 3 of the Loan
      Agreement have been satisfied.

            

    

     

    Please
wire transfer the proceeds of the Proposed Borrowing to the account set forth on
Schedule I
attached hereto.

     

    [Signature page
follows]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    IN
WITNESS WHEREOF, the undersigned has executed and delivered this Borrowing
Request as a Responsible Officer of the Borrowers on the date first set forth
above.

     

     

    
      	 	 
	 	Name:
	 	Title:

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule I to Borrowing
Request

     

    [Wire
Transfer instructions to be provided by Borrowers.]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]