Document:

Exhibit 10.90

 

Notice of Conversion

 

To:

VCampus Corporation

1850
Centennial Park Drive

Suite 200

Reston,
Virginia 20191

Attention:  Christopher L. Nelson, Chief Financial
Officer

 

From:

 

Name of Preferred
Stockholder:                                                            

 

Class and Number of Preferred
Shares Being Converted:

 

	
  Series C: 

  	
                                                     

  
	
  Series D:

  	
                                                     

  
	
  Series E:

  	
                                                     

  
	
  Series F:

  	
                                                     

  
	
  Series F-1:

  	
                                                     

  
	
  Series F-2:

  	
                                                     

  
	
  Series G:

  	
                                                     

  

 

In consideration for the
agreement by VCampus Corporation (“VCampus”) to issue warrants as provided
herein, and pursuant to the conversion terms and procedures set forth in the
Certificate of Designations of each applicable class of VCampus preferred
stock, the undersigned stockholder hereby exercises its right to convert all of
its shares of VCampus preferred stock, as identified above (the “Designated
Preferred Shares”), into shares of the common stock of VCampus, effective
immediately; provided, however, that with respect to any shares of VCampus
Series G preferred stock held by the undersigned, VCampus shall only be
required to issue, on a pro rata basis upon the conversion thereof, the maximum
number of shares of common stock then permitted by the rules of the Nasdaq
SmallCap Market (hereinafter, the “Exchange Cap,” which equals 19.9% of the
shares outstanding at the time of the Series G financing); provided further,
however, that both VCampus and the undersigned hereby agree that all shares of
Series G preferred stock held by the undersigned which are not currently being
converted hereunder because of the Exchange Cap shall automatically convert
into common stock pursuant to the applicable conversion terms set forth herein
immediately upon approval of the Series G financing by the stockholders of
VCampus.  VCampus plans to solicit
stockholder approval for the Series G financing at its 2003 annual meeting,
currently scheduled for June 2003.  Any
and all rights and preferences of preferred stockholders of VCampus existing
under the applicable Certificate of Designations or otherwise relating to
ownership of the Designated Preferred Shares being converted hereunder,
including any future dividends and anti-dilution protections, shall terminate effective
immediately upon the applicable conversions effected hereby.

 

 

Upon execution and delivery of
this Conversion Notice, and as a condition to the issuance and sale of the
shares of the VCampus common stock upon conversion of the Designated Preferred
Shares pursuant hereto, the undersigned delivers and surrenders herewith all
stock certificates representing the Designated Preferred Shares, and VCampus
shall promptly thereafter deliver to the undersigned certificates representing
the common stock issued in exchange. 
Unless otherwise requested in writing by the undersigned, VCampus will
hold in trust certificates representing the unconverted portion of any shares
of Series G preferred stock until the date of its 2003 annual stockholders
meeting, following stockholder approval at which such certificates will be
cancelled and exchanged for common stock as provided herein. In the event any
preferred certificate has been lost, stolen or destroyed, VCampus shall issue
in exchange for such lost, stolen or destroyed preferred certificates, the
shares of common stock available upon conversion thereof, subject to execution
by the holder thereof and delivery to VCampus of an affidavit and indemnity of
such loss, theft or destruction, in the form attached hereto.

 

VCampus
Agreement to Issue Warrants

 

Subject to approval by the
VCampus Board of Directors, in consideration for the conversion by the
undersigned of shares of preferred stock into common stock of VCampus as
provided herein, VCampus agrees to issue a 5-year warrant to the undersigned,
in substantially the form attached hereto as Exhibit A, to purchase a number of
shares of VCampus common stock equal to 20% of the number of shares of common
stock issuable to the undersigned upon the conversion of the undersigned’s
preferred stock as provided herein, at a per share exercise price equal to [40%
premium to average closing sale price of the common stock on Nasdaq over the
five most recent trading days prior to conversion].

 

Issuance
and Delivery Instructions:

 

Please issue and deliver
certificates for the shares of VCampus common stock being issued hereunder as
follows:

 

	
  Issued in
  the name of:

  	
   

  	
   

  
	
   

  	
   

  
	
  Delivered to
  the following address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Preferred
  Stockholder Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
								

 

2

 

	
  Acknowledged,
  agreed to and accepted:

  	
   

  
	
   

  	
   

  
	
  VCampus
  Corporation

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
						

 

3

 

AFFIDAVIT OF LOST CERTIFICATE

 

The undersigned, being duly sworn, deposes and says as follows:

 

3.                                       That
the undersigned is the sole owner and record holder of 

                            
(                   )
shares of Series
              Preferred
Stock (the “Shares”) of VCampus Corporation, a Delaware corporation (the
“Company”), which Shares were represented by Stock Certificate
No.         (hereinafter, the
“Certificate”).

 

3.                                       That
the undersigned has never endorsed, delivered, transferred, assigned or
otherwise disposed of the Certificate in any manner that would give any other
person any interest therein; that the undersigned has searched diligently for
the Certificate but has been unable to

locate the same; that the Certificate has been lost, destroyed or
stolen; and that the undersigned was the unconditional owner of the Certificate
at the time of loss.

 

3.                                       In
order to induce the Company to accept this Affidavit of Lost Certificate in
lieu of the surrender of the Certificate, the undersigned agrees: (a) to
indemnify, defend and save harmless the Company, and its shareholders,
directors, officers and agents from any and all claims, loss, damage or
liability whatsoever arising out of or related in any manner to the lost or
destroyed Certificate and arising out of the acceptance of this Affidavit of
Lost Certificate, and (b) to promptly deliver or cause the Certificate to be
delivered to the Company in order to be cancelled in the event that the
Certificate is found or comes under the control of the undersigned or its agents.

 

Dated: 
                         ,
2003

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

4

 

Exhibit A

 

Form of Warrant

 

 

THIS WARRANT AND
THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.  THEY MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

 

WARRANT TO PURCHASE
COMMON STOCK

of

VCAMPUS CORPORATION

 

This Warrant
(the “Warrant”) is issued to
                        or
his permitted assigns (“Holder”) by VCampus Corporation, a Delaware corporation
(the “Company”), on June 6, 2003 (the “Warrant Issue Date”) in consideration of
the Holder’s conversion of preferred stock into common stock, receipt of which
consideration is hereby acknowledged.

 

1.             Purchase Shares.  Subject to the terms and conditions
hereinafter set forth, the Holder is entitled, upon surrender of this Warrant
at the principal office of the Company (or at such other place as the Company
shall notify the holder hereof in writing), to purchase from the Company up to                 
shares of Common Stock of the Company (the “Warrant Shares”) at the Exercise
Price (defined below), subject to adjustment as provided in Section 8 (and
subject to adjustment as provided in Section 5 in the event the Holder elects
the “cashless exercise” procedure in Section 5).

 

2.             Exercise Price.  The purchase price for the Shares shall be
$3.85 per Warrant Share, as adjusted from time to time pursuant to
Section 8 hereof (the “Exercise Price”).

 

3.             Exercise Period.

 

(a)           This Warrant shall
be exercisable commencing immediately upon issuance and ending at 5:00 p.m. on
the earlier of: (i) the fifth anniversary of the Warrant Issue Date; or (ii)
fifteen (15) days after the Company notifies the Holder in writing that the
average closing bid price of the Company’s Common Stock on its Principal Market
for twenty (20) consecutive trading days was a price equal to at least three
(3) times the Exercise Price.

 

5

 

(b)           Notwithstanding any
other provision herein, the Company shall not be obligated to issue any Warrant
Shares upon exercise of this Warrant if and to the extent the issuance of such
Warrant Shares would exceed the number of shares of the Company’s Common Stock
(the “Exchange Cap”) then permitted to be issued without violation of the rules
or regulations of the Principal Market, except that such limitation shall not
apply in the event that the Corporation obtains the approval of its
stockholders as required by applicable rules and regulations of the Principal
Market for issuances of the Company’s Common Stock in excess of the Exchange
Cap.  If and to the extent the Exchange
Cap applies, no Holder shall be issued, upon exercise of this Warrant, shares
of Common Stock in an amount greater than the product of (x) the Exchange Cap
amount multiplied by (y) a fraction, the numerator of which is the number of
Warrant Shares originally obtainable upon exercise of this Warrant and the
denominator of which is the aggregate amount of all Warrant Shares obtainable
upon exercise by all holders of warrants of like tenor issued in connection
with the conversion of preferred stock into common stock of the Company (the “Cap
Allocation Amount”).  In the event
that any Holder shall sell or otherwise transfer all or a portion of this
Warrant, the transferee shall be allocated a pro rata portion of such Holder’s
Cap Allocation Amount.  In the event
that a requested exercise would violate the aforementioned rules, the
Corporation agrees to undertake best efforts to obtain such approval within 180
days of such request for exercise.  For
the purposes of this Warrant, “Principal Market” shall mean the American Stock
Exchange, the New York Stock Exchange, the Nasdaq National Market, or the Nasdaq
Smallcap Market, whichever is at the applicable time the principal trading
exchange or market for the Company’s Common Stock, based upon share volume.

 

4.             Method of Exercise.  While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise,
in whole or in part, the purchase rights evidenced hereby.  Such exercise shall be effected by:

 

(a)           the surrender of the
Warrant, together with a duly executed copy of the form of Notice of Exercise
attached hereto, to the Secretary of the Company at its principal offices; and

 

(b)           the payment to the
Company of an amount equal to the aggregate Exercise Price for the number of
Warrant Shares being purchased.

 

5.             Net Exercise.  In lieu of exercising this Warrant pursuant
to Section 4, the Holder may elect to receive, without the payment by the
Holder of any additional consideration, Warrant Shares equal to the value of
this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with the Notice of
Exercise attached hereto indicating such election, in which event the Company
shall issue to the holder hereof a number of Warrant Shares computed using the
following formula:

 

Y (A - B)

X =                 A

 

6

 

Where:         X =          The number of Warrant Shares to be
issued to the Holder pursuant to this net exercise;

 

Y =          The number of Warrant Shares in
respect of which the net issue election is made;

 

A =         The fair market value of one Warrant
Share at the time the net issue election is made;

 

B =          The Exercise Price (as adjusted to the
date of the net issuance).

 

For purposes of this Section 5, the fair
market value of one Warrant Share as of a particular date shall be determined
as follows:  (i) if traded on a
securities exchange or through the Nasdaq National Market or the Nasdaq
SmallCap Market, the value shall be deemed to be the average of the closing
sale prices of the securities on such exchange over the five (5) trading day
period ending one day prior to the net exercise election; (ii) if traded
over-the-counter, the value shall be deemed to be the average of the closing
bid or sale prices (whichever is applicable) over the five (5) trading day
period ending one day prior to the net exercise; and (iii) if there is no
active public market, the value shall be the fair market value thereof, as
determined in good faith by the Board of Directors of the Company.

 

6.             Certificates
for Shares.  Upon the exercise of
the purchase rights evidenced by this Warrant, one or more certificates for the
number of Warrant Shares so purchased shall be issued as soon as practicable
thereafter (with appropriate restrictive legends, if applicable), and in any
event within ten (10) days of the delivery of the subscription notice.

 

7.             Issuance
of Shares.  The Company covenants
that the Warrant Shares, when issued pursuant to the exercise of this Warrant,
will be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens, and charges with respect to the issuance thereof.

 

8.             Adjustment
of Exercise Price and Kind and Number of Shares.  The number and kind of securities purchasable upon exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time to
time as follows:

 

(a)           Subdivisions,
Combinations and Other Issuances. 
If the Company shall at any time prior to the expiration of this Warrant
(i) subdivide its Common Stock, by split-up or otherwise, or combine its Common
Stock, (ii) issue additional shares of its Common Stock or other equity securities
as a dividend with respect to any shares of its Common Stock, or (iii) declare
a cash dividend with respect to any shares of its Common Stock, the number of
shares of Common Stock issuable on the exercise of this Warrant shall forthwith
be proportionately increased in the case of a subdivision or stock or cash
dividend, or proportionately decreased in the case of a combination.  Appropriate adjustments shall also be made
to the purchase price payable per share, but the aggregate purchase price payable
for the total number of Warrant Shares purchasable under this Warrant (as
adjusted) shall remain the same.  Any
adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.

 

7

 

(b)           Reclassification,
Reorganization and Consolidation. 
In case of any reclassification, capital reorganization, or change in
the Common Stock of the Company (other than as a result of a subdivision,
combination, or stock dividend provided for in Section 8(a) above), then,
as a condition of such reclassification, reorganization, or change, lawful
provision shall be made, and duly executed documents evidencing the same from
the Company or its successor shall be delivered to the Holder, so that the
Holder shall have the right at any time prior to the expiration of this Warrant
to purchase, at a total price equal to that payable upon the exercise of this
Warrant (subject to adjustment of the Exercise Price as provided in Section 8),
the kind and amount of shares of stock and other securities and property
receivable in connection with such reclassification, reorganization, or change
by a holder of the same number of shares of Common Stock as were purchasable by
the Holder immediately prior to such reclassification, reorganization, or
change.  In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to
any shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.

 

(c)           Notice
of Adjustment.  When any adjustment
is required to be made in the number or kind of shares purchasable upon
exercise of the Warrant, or in the Exercise Price, the Company shall promptly
notify the holder of such event and of the number of shares of Common Stock or
other securities or property thereafter purchasable upon exercise of this
Warrant.

 

(d)           Issuance
of New Warrant.  Upon the occurrence
of any of the events listed in this Section 8 that results in an adjustment of
the type, number or exercise price of the securities underlying this Warrant,
the Holder shall have the right to receive a new warrant reflecting such adjustment
upon the Holder tendering this Warrant in exchange.  The new warrant shall otherwise have terms identical to this
Warrant.

 

8

 

9.             No
Impairment.  Pursuant to the terms
and conditions of this Warrant, the Company shall: (i) reserve an appropriate
number of shares of the Company’s Common Stock to facilitate the issuance of
shares to Holder pursuant to this Warrant, (ii) not amend its articles or take
any other action that would materially impair Company’s ability to comply with
the terms of the Warrant or otherwise unfairly impair the rights of the Holder,
and (iii) provide Holder with reasonable notice before Company undertakes any
significant corporate action that would have a material impact upon Holder’s
rights under the Warrant or upon the rights of the holders of Common Stock
generally.

 

10.           Representations
and Warranties.  Pursuant to the
terms and conditions of this Warrant, the Company represents and warrants that
(i) the Company is properly organized and structured  pursuant to all applicable corporate laws of the State of
Delaware, (ii) the issuance of this Warrant has been duly authorized by all
necessary corporate action of the Company and does not conflict with the terms
any of the bylaws, articles of incorporation or material agreements of the
Company, and (iii) all reports and other information filed with the United
States Securities Exchange Commission were, on the date they were filed,  complete and accurate in all material
respects, and do not make any material misstatement or omit to state any facts
that are material to the operations, financial results or prospects of the
Company.

                

11.           No
Fractional Shares or Scrip.  No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant, but in lieu of such fractional shares the Company
shall make a cash payment therefor on the basis of the Exercise Price then in
effect.

                

12.           No
Stockholder Rights.  Prior to
exercise of this Warrant, the Holder shall not be entitled to any rights of a
stockholder with respect to the shares of Common Stock issuable on the exercise
hereof, including (without limitation) the right to vote such shares of Common
Stock, receive dividends or other distributions thereon, exercise preemptive
rights or be notified of stockholder meetings, and such holder shall not be
entitled to any notice or other communication concerning the business or
affairs of the Company.  However,
nothing in this Section 12 shall limit the right of the Holder to be provided
the Notices required under this Warrant.

 

13.           Successors
and Assigns.  The terms and
provisions of this Warrant shall inure to the benefit of, and be binding upon,
the Company and the Holder and their respective successors and assigns.

                

14.           Amendments
and Waivers.  Any term of this
Warrant may be amended and the observance of any term of this Warrant may be
waived (either generally or in a particular instance and either retroactively
or prospectively), with the written consent of the Company and the Holder.  Any waiver or amendment effected in
accordance with this Section shall be binding upon each holder of any shares of
Common Stock purchased under this Warrant at the time outstanding (including
securities into which such shares have been converted), each future holder of
all such Shares, and the Company.

                

15.           Notices.  All notices required under this Warrant and
shall be deemed to have been given or made for all purposes (i) upon
personal delivery, (ii) upon confirmation receipt

 

9

 

that the communication was successfully sent
to the applicable number if sent by facsimile; (iii) one day after being
sent, when sent by professional overnight courier service, or (iv) five
days after posting when sent by registered or certified mail.  Notices to the Company shall be sent to the
principal office of the Company (or at such other place as the Company shall
notify the Holder hereof in writing). 
Notices to the Holder shall be sent to the address of the Holder on the
books of the Company (or at such other place as the Holder shall notify the
Company hereof in writing).

                

16.           Attorneys’
Fees.  If any action of law or
equity is necessary to enforce or interpret the terms of this Warrant, the
prevailing party shall be entitled to its reasonable attorneys’ fees, costs and
disbursements in addition to any other relief to which it may be entitled.

                

17.           Captions.  The section and subsection headings of this
Warrant are inserted for convenience only and shall not constitute a part of
this Warrant in construing or interpreting any provision hereof.

                

18.           Governing Law.  This Warrant shall be governed by the laws
of the State of Delaware as applied to agreements among Delaware residents made
and to be performed entirely within the State of Delaware.

 

10

 

IN WITNESS WHEREOF, VCampus Corporation
caused this Warrant to be executed by an officer thereunto duly authorized.

                

	
   

  	
  VCAMPUS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:
  1850 Centennial Park Drive, Suite 200

  
	
   

  	
  Reston, Virginia 20191

  
	
   

  	
   

  
	
   

  	
  Fax Number:
  (703) 654-7311

  

 

11

 

 

NOTICE OF EXERCISE

To:

The
undersigned hereby elects to [check applicable subsection]:

 

o                                    (a)           Purchase
               
shares of Common Stock of
               ,
pursuant to the terms of the attached Warrant and payment of the Exercise Price
per share required under such Warrant accompanies this notice;

 

OR

 

o                                    (b)           Exercise the attached Warrant for [all of the shares]
[               
of the shares]  [cross out inapplicable phrase]
purchasable under the Warrant pursuant to the net exercise provisions of
Section 5 of such Warrant.

 

The
undersigned hereby represents and warrants that the undersigned is acquiring
such shares for its own account for investment purposes only, and not for
resale or with a view to distribution of such shares or any part thereof.

 

	
   

  	
  WARRANTHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  

 

Date:

 

 

Name in which shares should be registered:

 

12EXHIBIT 10.5

 

 

 

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

 

Dated as
of July 31, 2003

 

among

 

 

COGENT COMMUNICATIONS, INC.,

as
Borrower,

 

 

COGENT INTERNET, INC.,

as
Additional Borrower,

 

 

CISCO SYSTEMS CAPITAL CORPORATION,

as Agent

 

and

 

The
Other Lenders Party Hereto

 

 

THIRD A&R CREDIT AGREEMENT

 

 

TABLE OF CONTENTS

 

	
  1.1

  	
   

  	
  Definitions

  
	
  1.2

  	
   

  	
  Interpretation

  
	
  1.3

  	
   

  	
  Accounting Principles

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.

  	
   

  	
  THE LOANS

  
	
  2.1

  	
   

  	
  Termination of the Commitments

  
	
  2.2

  	
   

  	
  The Loans, Paydown and Conversion

  
	
  2.3

  	
   

  	
  Evidence of Indebtedness

  
	
  2.4

  	
   

  	
  Repayment Provisions

  
	
  2.5

  	
   

  	
  Computations

  
	
  2.6

  	
   

  	
  Highest Lawful Rate

  
	
  2.7

  	
   

  	
  Prepayments.

  
	
  2.8

  	
   

  	
  Increased Costs; Regulatory Changes

  
	
  2.9

  	
   

  	
  Rights of CSCC/Assignee

  
	
  2.10

  	
   

  	
  Intentionally Omitted

  
	
  2.11

  	
   

  	
  Obligation to Mitigate

  
	
  2.12

  	
   

  	
  Payments

  
	
  2.13

  	
   

  	
  Set Off

  
	
  2.14

  	
   

  	
  Pro rata Treatment

  
	
  2.15

  	
   

  	
  Sharing

  
	
  2.16

  	
   

  	
  Taxes

  
	
  2.17

  	
   

  	
  Substitute Basis for Determining Interest

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  CONDITIONS PRECEDENT.

  
	
  3.1

  	
   

  	
  Conditions Precedent to the Restructuring

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES.

  
	
  4.1

  	
   

  	
  Representations and Warranties of Holdings
  and Borrower

  
	
  4.2

  	
   

  	
  Representations and Warranties of Lenders

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  COVENANTS.

  
	
  5.1

  	
   

  	
  Covenants

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.

  	
   

  	
  EVENTS OF DEFAULT.

  
	
  6.1

  	
   

  	
  Events
  of Default

  
	
  6.2

  	
   

  	
  Effect of Event of Default

  
	
  6.3

  	
   

  	
  Certain Agreements Regarding the Collateral.

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  THE
  AGENT.

  
	
  7.1

  	
   

  	
  Appointment and Authorization; “Agent”

  
	
  7.2

  	
   

  	
  Delegation of Duties

  
	
  7.3

  	
   

  	
  Liability of Agent

  
	
  7.4

  	
   

  	
  Reliance by Agent

  
	
  7.5

  	
   

  	
  Notice of Default

  
	
  7.6

  	
   

  	
  Credit Decisions

  

 

i

 

	
  7.7

  	
   

  	
  Indemnification of Agent

  
	
  7.8

  	
   

  	
  Agent in Individual Capacity

  
	
  7.9

  	
   

  	
  Collateral Matters

  
	
  7.10

  	
   

  	
  Successor Agent

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.

  	
   

  	
  MISCELLANEOUS.

  
	
  8.1

  	
   

  	
  Amendments

  
	
  8.2

  	
   

  	
  Notices

  
	
  8.3

  	
   

  	
  No Waiver; Cumulative Remedies

  
	
  8.4

  	
   

  	
  Costs and Expenses; Indemnification

  
	
  8.5

  	
   

  	
  Survival

  
	
  8.6

  	
   

  	
  Benefits of Agreement

  
	
  8.7

  	
   

  	
  Binding Effect; Successors and Assigns

  
	
  8.8

  	
   

  	
  Confidentiality

  
	
  8.9

  	
   

  	
  Governing
  Law

  
	
  8.10

  	
   

  	
  Submission to Jurisdiction

  
	
  8.11

  	
   

  	
  Waiver of Jury Trial

  
	
  8.12

  	
   

  	
  Entire Agreement

  
	
  8.13

  	
   

  	
  Severability

  
	
  8.14

  	
   

  	
  Counterparts

  
	
  8.15

  	
   

  	
  Third Amended and Restated Credit Agreement

  
	
  8.16

  	
   

  	
  Joint and Several Liability

  

 

	
  SCHEDULE OF INFORMATION

  
	
   

  
	
  LENDER
  ANNEX

  
	
   

  
	
  EXHIBITS

  
	
   

  
	
  A

  	
  Form of
  Assignment and Acceptance Agreement

  

 

ii

 

CREDIT AGREEMENT

 

THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this
“Agreement”) is entered into as of
                 ,
2003, among COGENT COMMUNICATIONS, INC., a Delaware corporation (“Borrower”),
COGENT INTERNET, INC. (“Additional Borrower”), the several financial
institutions from time to time party hereto (“Lenders”) and CISCO SYSTEMS
CAPITAL CORPORATION, as administrative agent for itself and the other Lenders
(in such capacity, “Agent”).

 

WHEREAS, pursuant to this Agreement and the Exchange
Agreement (as defined below) Borrower and the Lenders have agreed to
restructure the indebtedness under the Second Amended and Restated Credit
Agreement (as defined below) on the terms and conditions set forth herein and
therein;

 

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

 

SECTION
1.                                DEFINITIONS AND ACCOUNTING TERMS.

 

1.1         Definitions

 

As used in this Agreement, the following terms shall
have the following meanings:

 

“Additional Borrower” means Cogent Internet,
Inc.

 

“Affected Lender” has the meaning set forth in
Section 2.8.

 

“Affiliates” means, as to any Person, any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of the
other Person, whether through the ownership of voting securities, membership
interests, by contract, or otherwise.

 

“Agent-Related Persons” means CSCC and any
successor agent arising under Section 7.10, together with their respective
Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.

 

“Allied Riser” means Allied Riser
Communications Corporation.

 

“Allied Riser Subsidiaries” means each and any
Subsidiary of Allied Riser.

 

 “Annex”
means the Lender Annex attached hereto.

 

“Approved Fund” means with respect to any
Lender which is a fund primarily engaged in making, purchasing or otherwise
investing in commercial loans, any other fund which is primarily engaged in
making, purchasing or otherwise investing in commercial loans or

 

 

extending, or investing in extensions of, credit for
its own account in the ordinary course of its business and which is managed or
advised by the same investment advisor as such Lender or by an Affiliate of
such investment advisor; provided, however, that Approved Fund
shall not include any Affiliate of Holdings.

 

“Assignee” has the meaning set forth in Section
8.7(a).

 

“Assignment and Acceptance” has the meaning set
forth in Section 8.7(a).

 

“Banking Day” means a day other than a Saturday or Sunday on which commercial banks are
not required or authorized by law to close in San Jose, California, except that
if the applicable Banking Day relates to any determination of LIBOR, “Banking
Day” means such a day on which dealings are carried out in the applicable
offshore U.S. Dollar interbank market.

 

“Bankruptcy Code” means Title 11 of the United
States Code entitled “Bankruptcy”.

 

“Borrower” means Cogent Communications, Inc.
(subject to Section 8.16).

 

“Casualty Event” means, with respect to any property of any Person, any loss of or damage
to, or any condemnation or other taking of, such property for which such Person
or any of its Subsidiaries receives insurance proceeds, or proceeds of a
condemnation award or other compensation.

 

“Cisco Systems” means Cisco Systems, Inc. or
any subsidiary or Affiliate thereof

 

“Cisco Products” means networking and
telecommunications equipment and other goods, spare parts, accessories,
software and services which Cisco Systems manufactures, assembles, sells,
licenses or provides, including any such equipment and other goods, spare
parts, accessories, software and services manufactured, assembled, sold,
licensed or provided by Cisco Systems through a Vendor other than Cisco
Systems.

 

“Closing Date” means the Closing Date as such
term is defined in the Exchange Agreement.

 

 “Collateral”
means the property described in the Collateral Documents, and all other
property now existing or hereafter acquired which may at any time be or become
subject to a Lien in favor of Agent or Lenders pursuant to the Collateral
Documents or otherwise, securing the payment and performance of the
Obligations.

 

“Collateral Documents” means (i) each and any of the following,
as amended by that certain Omnibus Consent and Amendment dated concurrently
herewith, by and among Lender, Agent, Borrower, Holdings, Additional Borrower,
and each other party that is a signatory thereto:  (A) Amended and Restated
Security Agreement between Agent (on behalf of each Lender) and Borrower; (B)
Amended and Restated Security Agreement between Agent (on behalf of each
Lender) and Holdings; (C) Amended and Restated Security Agreement between Agent
(on behalf of each Lender) and Additional Borrower; (D) Security Agreement
between

 

2

 

Agent (on
behalf of each Lender) and Allied Riser; (E) Security Agreement between Agent
(on behalf of each Lender) and each Allied Riser Subsidiary (other than Cogent
Communications of California, Inc. and Cogent Fiber Services of Georgia, Inc.);
(F) Security Agreement between Agent (on behalf of each Lender) and Cogent
Communications of California, Inc.; (G) Security Agreement between Agent (on
behalf of each Lender) and Cogent Fiber Services of Georgia, Inc.; (H) General
Security Agreement between Agent (on behalf of each Lender) and Allied Riser
Communications Corporation of Canada Inc.;
(I) General Security Agreement between Agent (on behalf of each Lender)
and Shared Technologies of Canada, Inc.; (J) General Security Agreement between
Agent (on behalf of each Lender) and Fiber Services of Canada, Ltd.; (K) Amended and Restated Stock Pledge Agreement
between Agent (on behalf of each Lender) and Holdings; (L) Amended and Restated
Stock Pledge Agreement between Agent (on behalf of each Lender) and Borrower;
(M) Stock Pledge Agreement between Agent
(on behalf of each Lender) and Allied Riser; and (N) any security
agreement provided under Section 5.1(n), and (ii) any other agreement pursuant
to which any Loan Party or any other Person provides a Lien on its assets in
favor of Agent or Lenders, including any intellectual property security
agreements and deposit and securities account control agreements, and all
filings, documents and agreements made or delivered pursuant thereto, in each
case, as the same from time to time may be supplemented, amended, restated or
otherwise modified.

 

“CSCC” means Cisco Systems Capital Corporation,
a Nevada corporation.

 

“Customer Information” has the meaning set
forth in Section 8.8.

 

“Default” means an Event of Default or an event
or condition which with notice or lapse of time or both would constitute an
Event of Default.

 

“Dollars” and the sign “$” each means
lawful money of the United States.

 

“Eligible Assignee” means (a) a commercial
bank organized under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000; (b) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development (the “OECD”), or a
political subdivision of any such country, and having a combined capital and
surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States; (c) a Person that
is primarily engaged in the business of commercial banking and having a
combined capital and surplus of at least $100,000,000 and that is (i) a
Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is
a Subsidiary, or (iii) a Person of which a Lender is a Subsidiary;
(d) any Approved Fund; (e) any other Person which is an “accredited
investor” (as defined in Regulation D under the Securities Exchange Act of
1934) which extends credit or buys loans as one of its businesses, including
insurance companies, mutual funds and lease financing companies and having a
combined capital and surplus of at least $100,000,000; and (f) any other
Person approved by Agent as a Lender hereunder, provided that such Person, if
an individual, has a net worth of at least $50,000,000 (and Agent reasonably
believes that such individual has the ability to perform its obligations as a
Lender in accordance with the terms of this Agreement), and, if not an
individual, has a combined capital and surplus of at least $100,000,000; provided
that neither Holdings nor any Affiliate of Holdings shall be an Eligible

 

3

 

Assignee; provided further that each Eligible Assignee
shall become a party to the Option Agreement as defined in the Exchange
Agreement.

 

“Equity Documents” means each and any of the
following documents, each dated as of the respective dates set forth
therein:  (a) the Exchange Agreement; (b) the Participating
Convertible Stock Purchase Agreement among Holdings and Investors; (c) the
Certificates of Designation for Series F, G and H Preferred Stock; (d) the
Third Amended and Restated Registration Rights Agreement; (e) the Second
Amended and Restated Stockholders Agreement among Holdings, David Schaeffer and
Purchasers, and (f) any other agreement or document executed or delivered in
connection with the issuance of equity by Holdings with respect to the
Restructuring, provided that the term Equity Documents does not include
Loan Documents.

 

“Equity Value” means (a) with respect to a
Person whose common stock is publicly traded, the market capitalization (the
closing price per share of such Person’s common stock on the applicable date
multiplied by the number of shares of outstanding common stock) of such Person,
and (b) with respect to a Person whose common stock is not publicly traded, the
aggregate fair market value of all such Person’s common stock at the close of
business on the applicable date, as determined in good faith by the Board of
Directors of such Person.  With respect
to any good faith valuation made in accordance with subsection (b) above, Agent
shall have the right, within ten (10) days of its receipt of any such
valuation, to give notice to Borrower that it disagrees with such valuation.  Agent and Borrower shall then have ten (10)
days from the date of such notice by Agent to discuss and mutually agree upon
such valuation.  If, upon the expiration
such ten (10) day period, Agent and Borrower have not mutually agreed upon such
valuation, then an appraisal of the fair market value of such consideration
shall be conducted in accordance with this paragraph.  The Appraiser shall be mutually agreed upon by Agent and Borrower
within ten (10) days of the end of the ten (10) day period set forth in the
previous sentence.  In the event that
Agent and Borrower are unable to mutually agree upon the Appraiser within such
ten (10) day period, then the Appraiser shall be selected by the President of
the American Arbitration Association (the “AAA”) in New York, New York,
who shall utilize the criteria set forth in the definition of “Appraiser” to
make such a selection.  Upon being
selected by the parties or the President of the AAA, as the case may be, the
Appraiser shall have twenty (20) days to make a determination with respect to
the fair market value of such Person’s common stock as of the applicable
date.  Such valuation by the Appraiser
shall be conclusive and binding on Agent, Lenders, Holdings, Borrower and
Additional Borrower.  All costs arising
out of or related to such appraisal shall be borne by CSCC and Borrower
equally.

 

 “ERISA”
means the Employee Retirement Income Security Act of 1974, including (unless
the context otherwise requires) any rules or regulations promulgated
thereunder.

 

“Event of Default” has the meaning set forth in
Section 6.1.

 

“Exchange Agreement” means the Exchange Agreement, dated as of June 26,
2003, among Holdings, Borrower, Additional Borrower, CSCC and Cisco Systems.

 

“FCC” means the Federal Communications
Commission, or any successor thereto, administering the Communications Act of
1934.

 

4

 

“FCC License” means any license granted by the
FCC to Holdings, Borrower or any Subsidiary of Holdings or Borrower.

 

“FRB” means the Board of Governors of the
Federal Reserve System, and any Governmental Authority succeeding to its
principal functions.

 

“Federal Funds Rate” means, for any day, the
rate set forth in the weekly statistical release designated as H-15(519), or
any successor publication, published by the Federal Reserve Bank of New York
with respect to the preceding Banking Day opposite the caption “Federal Funds
(Effective)”; or, if for any relevant day such rate is not so published with
respect to any such preceding Banking Day, the rate for such day will be the
arithmetic mean as determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by Agent.

 

“First Amended and Restated Agreement” means
that certain Amended and Restated Credit Agreement by and between CSCC, as
lender, and Borrower, dated as of March 14, 2001, which was amended and
restated in its entirety by the Second Amended and Restated Agreement.

 

“GAAP” means generally accepted accounting
principles as in effect from time to time.

 

“Governmental Authority” means any national
government, or any state, province or other political subdivision thereof or
therein, or any governmental ministry, department, body, commission, board,
bureau, agency, central bank, court, tribunal or other instrumentality or
authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

 

“Guarantor” means Holdings or any direct or
indirect Subsidiary of Holdings becoming a guarantor as provided under Section
5.1(o) and any guarantor identified in the Schedule.

 

“Guarantor Documents” means any Guaranty and all
other documents, agreements and instruments delivered to Agent and the Lenders
by a Guarantor under or in connection with any Guaranty.

 

“Guaranty” means each and any of the following
documents as reaffirmed and amended by that certain Omnibus Consent and
Amendment dated concurrently herewith, by and among Lender, Agent, Borrower,
Holdings, Additional Borrower, and each other party that is a signatory
thereto: (i) Amended and Restated Guaranty,
made by Holdings in favor of Agent and Lenders; (ii) Amended and Restated
Guaranty, made by Additional Borrower in favor of Agent and Lenders; (iii)
Guaranty made by Borrower in favor of Agent and Lenders; (iv) Guaranty, made by
Allied Riser in favor of Agent and Lenders; (v) Guaranty, made by each Allied
Riser Subsidiary (other than Cogent Communications of California, Inc. and
Cogent Fiber Services of Georgia, Inc.) in favor of Agent and Lenders; (vi)
Guaranty, made by Cogent Communications of California, Inc. in favor of Agent
and Lenders; (vii) Guaranty, made by Cogent Fiber Services

 

5

 

of Georgia, Inc. in favor of
Agent and Lenders; (viii) Guarantee and Indemnity Agreement, made by
Allied Riser Communications Corporation of Canada Inc. in favor of Agent and
Lenders; (ix) Guarantee and Indemnity Agreement, made by Shared Technologies of
Canada Inc. in favor of Agent and Lenders; (x) Guarantee and Indemnity
Agreement, made by Fiber Services of Canada, Ltd. in favor of Agent and
Lenders; (xi) the guaranty of any
Guarantor, as provided under Section 5.1(n), in each case, as the same from
time to time may be supplemented, amended, restated or otherwise modified.

 

“Holdings” means Cogent Communications Group,
Inc., a corporation organized and existing under the laws of the State of
Delaware.

 

“Indebtedness” means, for any Person,
(i) all indebtedness or other obligations of such Person for borrowed
money, or for the deferred purchase price of property or services (acquired or
obtained other than on normal trade credit terms); (ii) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses; (iii) all non-contingent reimbursement and
other obligations of such Person in respect of letters of credit and bankers
acceptances and all net obligations in respect of interest rate swaps, caps,
floors and collars, currency swaps, or other similar financial products;
(iv) all obligations under leases which shall have been or should be, in
accordance with GAAP, recorded as capital leases; and (v) all indebtedness
of another Person of the types referred to in clauses (i) through (iv)
guaranteed directly or indirectly in any manner by the Person for whom Indebtedness
is being determined.

 

“Indemnified Liabilities” has the meaning set
forth in Section 8.4.

 

“Indemnified Person” has the meaning set forth
in Section 8.4.

 

“Insolvency Proceeding” means (i) any
case, action or proceeding before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (ii) any general
assignment for the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its creditors generally
or any substantial portion of its creditors, in each case undertaken under U.S.
federal, state or foreign law, including the Bankruptcy Code.

 

“Lender” means each lending institution from
time to time party to this Agreement.

 

“LIBOR” means the rate of interest per annum
determined by the Agent to be the rate of interest per annum (rounded upward,
if necessary, to the nearest 1/100 of 1%) for deposits in Dollars for three
months appearing on “Telerate Page 3750”, at or about 11:00 a.m. (London time)
on the second Banking Day preceding the first day of the applicable calendar
quarter, provided that if no, or only one, offered quotation appears on such
page, LIBOR shall be determined by reference to the Reuters Screen LIBOR Page
of the Reuters Monitor Money Rates Service (or any replacement page thereof or
other applicable Reuters display page) or other comparable source of interest
quotations for such interbank rates selected by Holder.  For purposes hereof, “Telerate Page 3750”
means the display designated as “3750” by Bridge

 

6

 

Information Systems, Inc. (formerly known as Dow Jones
Market Service) or any replacement page thereof.

 

“License Subsidiary” has the meaning set forth
in Section 5.1(u).

 

“Lien” means any mortgage, pledge, security
interest, assignment, deposit arrangement, charge or encumbrance, lien or other
type of preferential arrangement (other than a financing statement filed by a
lessor in respect of an operating lease not intended as security).

 

“Liquidity
Event” means (a) the sale of all or substantially all of the assets of the
Borrower to any Person which is not an Affiliate of Borrower; (b) any change in
the composition of the shareholders of Holdings (as such composition exists as
of the date hereof) which results in the acquisition of beneficial ownership,
directly or indirectly, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof) other than Persons who
are shareholders of Holdings as of the Closing Date (after giving effect to the
transactions contemplated herein and in the Equity Documents), of shares
representing more than 50% of the aggregate ordinary voting power represented
by the issued and outstanding capital stock of Holdings; (c) Holdings shall
cease to own 100% of the stock of Borrower; (d) Holdings or any wholly-owned
subsidiary thereof ceases to own 100% of Additional Borrower; or (e) the
obtaining by any Person or group (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission thereunder
as in effect on the date hereof) other than Persons who are shareholders of
Holdings as of the Closing Date (after giving effect to the transactions
contemplated herein and in the Equity Documents), of control of Holdings.  For purposes of this definition, any such
Person or group shall be deemed to control Holdings if such Person or group
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of Holdings, whether through the ownership of
voting securities, membership interests, by contract, or otherwise.

 

“Loan Documents” means this Agreement, the
Note, any Collateral Documents, any Guaranty, any Guarantor Documents and all
other certificates, documents, agreements and instruments delivered to Agent or
Lenders under or in connection with this Agreement.  Loan Documents shall not include any Equity Document; provided, however,
that this sentence shall not be construed to nullify the incorporation by
reference of the representations and warranties made in the Exchange Agreement
pursuant to Section 4.1 hereof.

 

“Loan Party” means Holdings, Borrower, each
Additional Borrower and each Guarantor.

 

“Loans” has the meaning set forth in Section
2.1.

 

“Majority Lenders” means at any time Lenders
then holding in excess of 50% of the then aggregate unpaid principal amount of
the Loans.

 

“Mandatory Prepayment Event” has the meaning
set forth in Section 2.7(b).

 

“Material Adverse Change” means any event,
matter, condition or circumstance which (i) would materially impair in any way
(A) the ability of Holdings, Borrower or their

 

7

 

respective Subsidiaries or any other Loan Party to
timely fulfill any payment Obligation or Mandatory Prepayment Obligation under
the Loan Documents, or (B) the value of the Collateral, or (C) the validity,
priority or perfection of Agent’s or Lenders’ security interests in or liens on
the Collateral, or (ii) affects the legality, validity, binding effect or
enforceability of the Loan Documents.

 

“Material Subsidiary” means a “significant
subsidiary” as defined in Rule 1-102(w) of Regulation S-X as promulgated by the
Securities and Exchange Commission.

 

“Maturity Date” has the meaning set forth in
the definition of “New Subsidiary Pre-Existing Indebtedness” in this Section
1.1.

 

“New Subsidiary Pre-Existing Indebtedness”
means pre-existing Indebtedness which is either unsecured or secured by Liens
on some or all of the assets that are pre-existing Liens and not created in
anticipation of a subsequent acquisition of a Person who becomes a Subsidiary
of the Borrower after the Closing Date or is a new subsidiary organized by the
Borrower to acquire such assets (each, a “New Subsidiary”), complying with each
of the following requirements: (A) the final maturity date of such Indebtedness
shall be after the first anniversary of the scheduled final maturity date of
the Loans (“Maturity Date”); (B) the terms of such Indebtedness specify that no
principal repayments in respect thereof are required until the Maturity Date;
(C) if secured, the Indebtedness is recourse to the assets of the New
Subsidiary only; (D) the Indebtedness is not guaranteed by Holdings, Borrower,
Additional Borrower or any other Subsidiary (except to the extent permitted by
Section 5.1(j)(ix)); (E) none of Holdings, Borrower, Additional Borrower or any
other Subsidiary is a co-borrower of the Indebtedness; (F) the Indebtedness,
when combined with the amount of all outstanding Subordinated Debt, does not
exceed in the aggregate the sum of $200,000,000; and (G) the acquisition of any
such Person is permitted hereby. 
Nothing contained in this definition shall be construed to limit the
right of the Borrower or its Subsidiaries, including any newly acquired
Subsidiaries, to be liable with respect to Indebtedness permitted by Section
5.1(j)(vii) or to incur Liens permitted by clause (viii) of the definition of
Permitted Liens.

 

“Note” means that certain Amended and Restated
Promissory Note dated as of the date of this Agreement by Borrower and
Additional Borrower in favor of CSCC in the original principal amount of
$17,000,000, and each Promissory Note that may be issued pursuant to Section
8.7, in each case, as the same may be amended, restated or otherwise modified
from time to time.

 

“Obligations” means the indebtedness,
liabilities and other obligations of all Loan Parties to Agent and Lenders
under or in connection with the Loan Documents, including all Loans, all
interest accrued thereon, all fees due under this Agreement and all other
amounts payable by any Loan Party to Agent or Lenders thereunder or in
connection therewith.

 

“Operating
Cash Flow” means, for any period with respect to Borrower, net income
(excluding extraordinary items), plus (except to the extent attributable to
extraordinary items) the amount of any interest, taxes, depreciation,
amortization and other non-cash charges deducted in determining such net
income, plus (to the extent not included in such net income) the amount of any
net cash (including payments on promissory notes) proceeds received from the

 

8

 

sale of surplus assets in
accordance with Section 5.1(h), minus all “non-discretionary” capital
expenditures, all of the foregoing, except the addition of proceeds from the
sale of surplus assets, as determined in conformity with GAAP.  As used in this provision, the term
“non-discretionary” means capital leases, capitalized labor, capitalized
maintenance and other capital expenditures made or incurred only to operate or
maintain Borrower’s network and not to expand Borrower’s network.

 

“Original Credit Agreement” means that certain
Credit Agreement dated as of March 24, 2000, between Borrower and CSCC, as
lender, as amended and restated by the First Amended and Restated Agreement.

 

“Original Notes” means the promissory notes
issued by Borrower in favor of Lenders under and pursuant to the Second Amended
and Restated Credit Agreement.

 

“Other Charges” has the meaning set forth in
Section 2.16(b).

 

“Participant” has the meaning set forth in
Section 8.7(d).

 

“Permitted Liens” means: (i) Liens in
favor of Agent, Lenders or Cisco Systems, (ii) the existing Liens
disclosed in writing to Lenders on or prior to the date hereof or incurred in
connection with any extension, renewal or refinancing of the Indebtedness secured
by such existing Liens permitted hereunder, provided that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the Indebtedness being extended,
renewed or refinanced does not increase; (iii) Liens securing Indebtedness
permitted under this Agreement; (iv) Liens on accounts (as such term is defined
in Article 9 of the Uniform Commercial Code-Secured Transactions) that are from
time to time owned by Borrower, Additional Borrower or any Subsidiary currently
held or hereafter obtained from time to time by any accounts receivable
lender(s) or factor(s) or their respective agents, in connection with loans or
other credit provided by such lender(s) or sales of accounts to such factor(s)
(or agent(s)) (for the avoidance of doubt, (a) “accounts” used in this clause
(iv) (and in Sections 5.1(h), 5.1(i) and 5.1(j) and other related provisions of
this Agreement and in the Subordination Agreement referred to in such Section
5.1(i)) shall include not only accounts as so defined in such Article 9 but
also any promissory note or other instrument evidencing obligations which were
originally accounts, any supporting obligations (as defined in such Article 9)
for such accounts, any collateral (given by the account debtor or other Persons
except the Borrower, the Additional Borrower or any of their Subsidiaries)
securing such accounts, notes or supporting obligations, any contractual rights
giving rise to or otherwise relating to such account, note or other instrument,
any lock-box account, blocked account or other deposit account established
solely for the purpose of holding the proceeds of such accounts, and all
proceeds (as defined in such Article 9) of such accounts, notes, supporting
obligations, collateral, contract rights or such deposit accounts, and (b) from
time to time the Borrower, Additional Borrower or their Subsidiaries may enter
into different accounts receivable or factoring facilities, or agree to become
co-borrowers or co-sellers with each other provided that the terms and
conditions of such facilities comply with the second or third sentence of
Section 5.1(i) hereof; (v) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in
good faith by appropriate proceedings and which are adequately reserved for in
accordance with GAAP, provided that such Liens do not have automatic
priority over the Liens

 

9

 

of any Lender; (vi) Liens of landlords,
materialmen, mechanics, warehousemen, carriers or employees or other similar
Liens provided for by mandatory provisions of law and securing obligations
either not delinquent or being contested in good faith by appropriate
proceedings and which do not in the aggregate materially impair the use or
value of the property or risk the loss or forfeiture thereof, (vii) Liens
consisting of deposits or pledges to secure the performance of bids, trade
contracts, letters of credit, leases, public or statutory obligations,
including on account of workers compensation and unemployment insurance, or
other obligations of a like nature incurred in the ordinary course of business,
(other than for Indebtedness) and Liens to secure appeals bonds;
(viii) Liens upon or in any tangible assets including software acquired or
held by Borrower or any of its Subsidiaries to secure the purchase price of
such tangible assets including software or Indebtedness incurred solely for the
purpose of financing the acquisition of such tangible assets including
software; provided that (A) the aggregate outstanding amount of
Indebtedness secured by such Liens shall not exceed $20,000,000 in any fiscal
year of Borrower, (B) any such Lien attaches to such tangible assets including
software concurrently with or within 20 days after the acquisition thereof,
(C) such Lien attaches solely to the tangible assets including software so
acquired in such transaction, (D) the principal amount of the Indebtedness
secured thereby does not exceed 100% of the cost of such tangible assets
including software, and (E) no Default would occur hereunder as a result
of the incurrence of such Indebtedness; (ix) Liens consisting of judgment
or judicial attachment Liens, provided that either the enforcement of such
Liens is effectively stayed within 30 days of such judgment or judicial
attachment of such Liens, or the underlying judgment is vacated, satisfied or
discharged or bonded in such 30 day period or Liens arising by law from claims
for labor, materials and supplies if same are not being enforced or, if
enforced, said enforcement is effectively stayed within 30 days of the
attempted enforcement; (x) easements, rights-of-way, restrictions and
other similar encumbrances on the use of real property which do not interfere
with the ordinary conduct of the business of such Person, or similar Liens
incidental to the conduct of the business of such Person or to the ownership of
its properties which were not incurred in connection with Indebtedness or other
extensions of credit and which do not in the aggregate materially detract from
the value of such properties or materially impair their use in the operation of
the business of such Person; (xi) any Liens reflected by Uniform
Commercial Code financing statements filed in respect of true leases; (xii)
involuntary and non-consensual Liens in addition to those permitted under other
clauses of this definition in an individual amount not to exceed $1,000,000 per
Person and in an aggregate amount not to exceed under this clause (xii)
$5,000,000; provided, that such Liens under this clause (xii) do not have
priority over the Liens of Lender or Agent with respect to any material portion
of the Collateral; and (xiii) Liens securing New Subsidiary Pre-Existing
Indebtedness; provided that the term “Permitted Liens” shall not include
any Liens on any Collateral consisting of Cisco Products or any identifiable
proceeds thereof except to the extent that (1) Majority Lenders have
consented in writing to the existence of such Liens (or such Liens are in favor
of Agent, Lenders or Cisco Systems), and (2) such Liens are junior and
subordinate to the Liens of Agent in such Collateral pursuant to a lien
subordination agreement in form and substance satisfactory to Agent; and provided
further that neither Holdings nor Borrower shall, nor shall either
permit any of its respective Subsidiaries to, create any Lien on any FCC
License or on any capital stock of or other ownership interest in or assets of
any License Subsidiary.

 

10

 

“Person” means an individual, corporation,
partnership, joint venture, trust, unincorporated organization or any other
entity of whatever nature or any Governmental Authority.

 

“Prime Rate” means for any day the rate of interest in effect for such day as publicly
announced from time to time by Citibank, N.A., in New York, New York, as its
base rate.  Each change in the interest
rate on the Obligations based on a change in the Prime Rate shall be effective
at the opening of business on the day specified in the public announcement of
such change.

 

“Pro Rata Share” means, as to any Lender at any
time, the percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of such Lender’s Loans divided by the aggregate
principal amount of the Loans then held by all Lenders.

 

“Public Disclosure” has the meaning set forth
in Section 8.8(b).

 

“Regulatory Change” has the meaning set forth
in Section 2.8.

 

“Replacement Lender” has the meaning set forth
in Section 2.8.

 

“Requirement of Law” means, as to any Person,
any law, treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is
subject.

 

“Responsible Officer” means, as to any Person,
the chief financial officer or treasurer of such Person (or any other senior
officer of such Person involved principally in the financial administration or
controllership function of such Person).

 

“Restructuring” means the restructuring of the
Indebtedness under the Second Amended and Restated Agreement and the issuance
by Holdings of Series F, G and H Preferred Stock resulting in gross proceeds of
at least $41,000,000, as such transactions are more fully set forth in the Loan
Documents and Equity Documents.

 

“Schedule” means the Schedule of Information
attached hereto.

 

“Second Amended and Restated Agreement” means
that certain Second Amended and Restated Credit Agreement dated as of
October 24, 2001 among Borrower, Additional Borrower, lenders party
thereto from time to time, and CSCC, as administrative agent for lenders, which
is being amended and restated in its entirety by this Agreement.

 

“Securities Act” has the meaning set forth in
Section 4.2.

 

“Series F Preferred Stock” means the Series F
Participating Convertible Preferred Stock issued by Holdings pursuant to the
terms and conditions of the Equity Documents.

 

“Subordinated Debt” means (i) the Indebtedness
of Allied Riser under the Indenture dated as of June 28, 2000, as amended,
by and between Allied Riser Communications

 

11

 

Corporation and Wilmington Trust Company, as trustee,
assumed by Holdings in connection with the AR Merger Agreement (the “Allied
Riser Subordinated Debt”), and (ii) unsecured Indebtedness of Holdings or any
direct or indirect subsidiary of Holdings in an aggregate amount not to exceed
$200,000,000 complying with each of the following requirements: (A)  the
final maturity date of such unsecured Indebtedness shall be after the first
anniversary of the Maturity Date (as defined in the definition of “New
Subsidiary Pre-Existing Indebtedness” in Section 1); (B) the terms of such
Indebtedness shall specify that no principal repayments in respect thereof are
required until the Maturity Date; and (C) such unsecured Indebtedness
shall be subordinated to the payment of the Obligations on terms that are usual
and customary for unsecured Indebtedness issued under similar circumstances and
for similar amounts in the high yield subordinated debt market.

 

“Subsidiary” means any corporation, limited
liability company, association, partnership, joint venture or other business
entity of which more than 50% of the voting stock or other equity interest is
owned directly or indirectly by any Person or one or more of the other
Subsidiaries of such Person or a combination thereof.

 

“Taxes” has the meaning set forth in Section
2.16(a).

 

“Transfer” has the meaning set forth in Section
5.1(i)

 

“United States” and “U.S.” each means
the United States of America.

 

“Vendor” means Cisco Systems, or any
distributor or other reseller or provider of Cisco Products reasonably
satisfactory to Cisco Systems.

 

“Warrants” means the two Stock Subscription
Warrants dated as of October 24, 2001 and issued to CSCC, for the purchase
of an aggregate of 710,216 shares of common stock of the Company.

 

1.2         Interpretation.

 

(a)          In the
Loan Documents, except to the extent the context otherwise requires:
(i) any reference to an Article, a Section, a Schedule or an Exhibit is a
reference to an article or section thereof, or a schedule or an exhibit
thereto, respectively, and to a subsection or a clause is, unless otherwise
stated, a reference to a subsection or a clause of the Section or subsection in
which the reference appears; (ii) the words “hereof,” “herein,” “hereto,”
“hereunder” and the like mean and refer to this Agreement or any other Loan
Document as a whole and not merely to the specific Article, Section,
subsection, paragraph or clause in which the respective word appears;
(iii) the meaning of defined terms shall be equally applicable to both the
singular and plural forms of the terms defined; (iv) the words
“including,” “includes” and “include” shall be deemed to be followed by the
words “without limitation;” (v) references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments
and other modifications thereto; (vi) references to statutes or regulations
are to be construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation referred to;
(vii) any table of contents, captions and headings are for convenience of
reference only and shall not affect the construction of this Agreement or any
other Loan

 

12

 

Document; and
(viii) in the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including”; the words
“to” and “until” each mean “to but excluding”; and the word “through” means “to
and including.”

 

(b)         This
Agreement and the other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements
are cumulative and shall be performed in accordance with their terms.  Unless otherwise expressly provided, any reference
to any action of Agent or Lender by way of consent, approval or waiver shall be
deemed modified by the phrase “in its/their discretion.”

 

(c)          This
Agreement and the other Loan Documents are the product of negotiations among
and have been reviewed by counsel to Agent, Lenders, Holdings, Borrower, each
Additional Borrower (if any), each Guarantor and the other parties hereto, and
are the product of all such parties. 
Accordingly, this Agreement and the other Loan Documents shall not be
construed against Agent or any other Lender merely because of Agent’s or such
Lender’s involvement in their preparation.

 

1.3         Accounting Principles.  Unless the context
otherwise clearly requires, all accounting terms not expressly defined herein
shall be construed, and all financial computations required under this
Agreement shall be made, in accordance with GAAP, consistently applied;
provided, however, that, if GAAP shall have been modified after the Closing
Date and the application of such modified GAAP shall have a material effect on
such financial computations, then such computations shall be made and such
financial statements, certificates and reports shall be prepared, and all
accounting terms not otherwise defined herein shall be construed, in accordance
with GAAP as in effect prior to such modification, unless and until Majority
Lenders, Holdings and Borrower shall have agreed upon the terms of the
application of such modified GAAP.

 

SECTION
2.                                THE LOANS

 

2.1         Termination of the Commitments.  As of the date of
this Agreement, all Commitments (under and as defined in the Second Amended and
Restated Credit Agreement) are hereby terminated and Lenders shall not be
obligated to make any further Loans to Borrower.  

 

2.2         The Loans, Paydown and Conversion.  Pursuant to the
Second Amended and Restated Credit Agreement, each Lender made loans (each a “Loan”
and, collectively, the “Loans”) to Borrower and Additional Borrower in an
aggregate principal amount of approximately $265,000,000.  On the Closing Date, and pursuant to the
terms of the Exchange Agreement and this Agreement (a) Borrower shall cause to
be released to Agent, on behalf of Lenders, $20,000,000 in immediately
available funds, (b) Borrower shall issue the Note, (c) Lenders shall exchange
all other amounts owed under the Original Notes for Series F Preferred Stock,
and (d) Lenders shall deliver the Warrants to Holdings and all rights of
Lenders thereunder shall be extinguished.  

 

2.3         Evidence
of Indebtedness.  As additional evidence of the Indebtedness of Borrower and
Additional Borrower to Lenders resulting from the Loans, Borrower and Additional
Borrower shall execute and deliver the Note. 
Additionally, payments made by Borrower and Additional Borrower with
respect to the Note shall be evidenced by the records of Agent and one

 

13

 

or more loan
accounts maintained by each Lender in the ordinary course of business.  The loan accounts and records maintained by
Agent and each Lender shall be conclusive absent manifest error of the amount
of the Loans made by Lenders to Borrower and the interest and payments thereon,
if any.  Any failure so to record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of Borrower hereunder to pay any amount owing with respect to the Loans.

 

2.4         Repayment Provisions

 

(a)          Principal
and Interest.  Borrower shall repay
to Lenders the aggregate principal amount of the outstanding Loans as
follows:  (i) $7,000,000 in principal,
together with interest, if any, that shall have accrued (but have not been
paid) pursuant to this Agreement, shall be due and payable on
            (1),
(ii) $5,000,000 in principal, together with interest that shall have accrued
(but have not been paid), shall be due and payable on             (2),
and (iii) $5,000,000 in principal , together with interest that shall have
accrued (but have not been paid), shall be due and payable on
            (3).

 

(1)  Insert the first day of the thirty-first
(31st) month after the date of this Agreement.

 

(2)  Insert the first day of the forty-third
(43rd) month after the date of this Agreement.

 

(3)  Insert the first day of the fifty-fifth
(55th) month after the date of this Agreement.

 

(b)         Interest Rate and
Accrual.  Borrower agrees to pay interest on the unpaid principal
amount of the Loans at a rate per annum equal at all times to LIBOR plus
4.5%; provided, that so long as no Event of Default has occurred
and is continuing, the accrual of such interest on the principal amount of the
Loans shall not commence until
            (4).  After such date, and without notice to Borrower,
interest shall accrue on the outstanding principal amount of the Loans at such
rate until such time as all amounts due and owing by Borrower under this
Agreement shall have been paid in full. 
In the event that during the period of time prior to
            (5) an
Event of Default occurs and is continuing, the accrual of interest at such rate
shall commence upon notice from Agent to Borrower of an Event of Default and
shall continue to accrue so long as such Event of Default shall be continuing.

 

(4)  Insert the first day of the thirty-first
(31st) month after the date of this Agreement.

 

(5)  Insert the first day of the thirty-first
(31st) month after the date of this Agreement.

 

2.5         Computations.  All computations of fees and interest
hereunder shall be made on the basis of a year of 360 days for the actual number
of days occurring in the period for which any such interest or fee is payable.

 

2.6         Highest Lawful Rate.  Anything herein to the contrary
notwithstanding, if during any period for which interest is computed hereunder,
the applicable interest rate, together with all fees, charges and other
payments which are treated as interest under applicable law, as provided for
herein or in any other Loan Document, would exceed the maximum rate of interest
which may be charged, contracted for, reserved, received or collected by Agent
or any Lender in

 

14

 

connection with this Agreement under applicable law
(the “Maximum Rate”), Borrower shall not be obligated to pay, and neither Agent
nor any Lender shall be entitled to charge, collect, receive, reserve or take,
interest in excess of the Maximum Rate, and during any such period the interest
payable hereunder shall be limited to the Maximum Rate.

 

2.7         Prepayments.

 

(a)          Voluntary
Prepayment.  Borrower may prepay the
outstanding amount of the Loans in whole or in part, in a principal amount of
at least $100,000 or any amount in excess thereof.  Any such prepayment shall not be subject to any fees, premiums,
penalties or other charges of any kind or nature whatsoever.

 

(b)         Mandatory Prepayment.  The Loans shall be subject to mandatory prepayment, in full, upon the occurrence of
any of the following events (each a “Mandatory Prepayment Event”):  (i) the closing of any transaction or series
of related transactions which results in a Liquidity Event; (ii) the
consummation by Holdings of one or more equity or debt financings after the
date of this Agreement (excluding the transactions contemplated by the Equity
Documents, including the Rights Offering referred to therein) that generate
gross proceeds in an aggregate amount of at least $30,000,000 (other than gross
proceeds from refinancings of existing indebtedness to the extent not in excess
of the principal amount of such existing indebtedness and other than issuances
of equity securities to officers, directors, employees or consultants in the
ordinary course of business), in each case, whether in one transaction or a
series of transactions; provided, that in the event that Holdings
completes an equity financing after the date hereof (and excluding the
transactions contemplated by the Equity Documents) in any amount less than
$30,000,000 (other than issuances of equity securities to officers, directors,
employees or consultants in the ordinary course of business), the Amended Note
shall be subject to partial mandatory prepayment in an amount equal to the
lesser of (a) $2,000,000 or (b) the aggregate amount of the proceeds of such
equity financing (“Partial Mandatory Prepayment”), it being understood and
agreed that the maximum aggregate amount of Partial Mandatory Prepayments shall
not exceed $2,000,000; (iii) Borrower shall have four (4) consecutive calendar
quarters in which it achieves Operating Cash Flow in an aggregate amount of at
least $5,000,000 with respect to each such quarter; (iv) the Company
consummates any merger, consolidation or any other combination with
another Person in which the resulting entity has an Equity Value of at least
$100,000,000 upon the consummation of such; or (v) any Casualty Event with respect to any of Holdings’, Borrower’s or their
respective Subsidiaries’ properties or assets in an amount exceeding $100,000,
or any of the Cisco Products, in which case, the Loans shall be subject to mandatory
prepayment on the date Holdings, Borrower or such Subsidiary receives the net
proceeds therefrom, in the amount of such proceeds, unless Holdings or Borrower
(or such Subsidiary) applies all or a portion of such proceeds to the repair or
replacement thereof or enters into a binding agreement for the repair or
replacement thereof within six months of such Casualty Event and completes such
repair or replacement within one year of such Casualty Event; provided that
in the case of Holdings, any such proceeds along with any asset being repaired
or replaced with such proceeds shall be contributed to Borrower as common
equity pursuant to the terms of this Agreement and the Guaranty executed by
Holdings in connection herewith.

 

15

 

(c)          Notice of Prepayment.  Borrower shall give prior notice to Lenders
(through Agent) of any prepayment identifying the amounts to be prepaid and
specifying the date of the prepayment.

 

2.8         Increased Costs; Regulatory Changes.  (a) If, due to either (i) the
adoption of, or any change in, any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority charged with the interpretation or administration thereof (a “Regulatory
Change”), or (ii) compliance by any Lender with any request, guideline or
directive (whether or not having the force of law) of any such Governmental
Authority, there shall be any increase in the cost to any Lender of agreeing to
make or making, or funding or maintaining, any Loan, or any reduction of any
amount received or receivable by such Lender under this Agreement or any Note
with respect thereto (except for changes in the rate or method of calculation
of tax on the overall net income of Lender), then from time to time, within 15
days after demand by such Lender (through Agent), Borrower shall pay to such
Lender such additional amounts as shall compensate such Lender for such
increased cost or reduction.  The
applicable Lender will use reasonable efforts promptly to notify the Borrower
if such Lender becomes aware of any event occurring after the date hereof which
shall entitle it to compensation pursuant to this Section 2.8 and will take
commercially reasonable steps to reduce the amount of such compensation.  (b) If any Lender shall have determined
that any Regulatory Change regarding capital adequacy, or compliance by such
Lender (or any Person controlling such Lender) with any request, guideline or
directive regarding capital adequacy (whether or not having the force of law)
of any Governmental Authority, has or shall have the effect of reducing the
rate of return on such Lender’s or such Person’s capital as a consequence of
such Lender’s obligations hereunder to a level below that which such Lender or
such corporation would have achieved but for such adoption, change or
compliance (taking into consideration such Lender’s or such Person’s policies
with respect to capital adequacy), then from time to time, within 15 days after
demand by such Lender, through Agent, Borrower shall pay to such Lender such
additional amounts as shall compensate such Lender for such reduction.  (c) Any such request for compensation
by any Lender under this Section 2.8 shall set forth in reasonable detail the
basis of calculation thereof and shall, in the absence of manifest error, be
conclusive and binding for all purposes. 
In determining the amount of such compensation, Lender may use any
reasonable averaging and attribution methods. 
(d) Upon the receipt by Borrower from any Lender (an “Affected
Lender”) of a claim for compensation under this Section 2.8, Borrower may:
(i) request one or more of the other Lenders to acquire and assume all or
part of such Affected Lender’s Loans; or (ii) designate a replacement
lending institution (which shall be an Eligible Assignee) to acquire and assume
all or a ratable part of such Affected Lender’s Loans (a “Replacement
Lender”).  Any such designation of a
Replacement Lender under clause (i) or (ii) shall be effected in
accordance with, and subject to the terms and conditions of, the assignment
provisions contained in Section 8.7, and shall in any event be subject to the
prior written consent of Agent (which consent shall not be unreasonably
withheld or delayed).

 

2.9         Rights of CSCC/Assignee.  Notwithstanding anything to the contrary in
Sections 2.8 and 2.16, such Sections shall not apply to any Loans held by CSCC
(or an Affiliate thereof), as Lender, but shall be in full force and effect
with respect to any Loans held by a Lender other than CSCC (or an Affiliate
thereof) and shall inure to the benefit of any assignee (other than an

 

16

 

Affiliate of CSCC)
receiving the assignment of a Loan (or any portion thereof) under the terms of
this Agreement.

                                                           

2.10  Intentionally
Omitted.

 

2.11  Obligation
to Mitigate.

 

Each Lender agrees
that as promptly as practicable after it becomes aware of the occurrence of an
event that would entitle it to give notice pursuant to Section 2.8, and in any
event if so requested by Borrower, each Lender shall use reasonable efforts to
make, fund or maintain its affected Loans through another lending office if as
a result thereof the increased costs would be avoided or materially reduced or
the illegality would thereby cease to exist and if, in the reasonable opinion
of such Lender, the making, funding or maintaining of such Loans through such
other lending office would not in any material respect be disadvantageous to
such Lender or contrary to such Lender’s normal lending practices.

 

2.12  Payments.

 

(a)          Borrower
shall make each payment under the Loan Documents unconditionally in full and
free and clear of, and without reduction for or on account of, any present and
future taxes or withholdings, and all liabilities with respect thereto,
excluding, in the case of Agent and each Lender, income, gross receipts and
franchise taxes imposed on it by the jurisdiction under the laws of which it is
organized or in which its principal executive offices may be located or any political
subdivision or taxing authority thereof or therein and excluding, in the case
of a non-U.S. Person, any required withholding taxes.  Each such payment shall be made without set-off, counterclaim or,
to the extent permitted by applicable law, other defense, including without any
deduction or setoff arising out of or in connection with the purchase of the
Cisco Products, all of which rights of Borrower are hereby expressly waived by
Borrower; provided, however, that no payment hereunder shall be
deemed to be a waiver of any right or claim that Borrower may have against
Cisco Systems or other Vendor with respect to the Cisco Products.  Each such payment shall be made on the day
when due to Agent in Dollars and in immediately available funds by wire transfer
in accordance with the wire transfer instructions set forth on the Schedule, or
in such manner and at such other place as Agent shall designate in writing to
Borrower, no later than 11:00 a.m. (New York City time) on the date specified
herein.  Agent will promptly distribute
to each Lender its Pro Rata Share (or other applicable share as expressly
provided herein) of such payment in like funds as received.  Any payment received by Agent later than
11:00 a.m. (New York City time) shall be deemed to have been received on the
following Banking Day and any applicable interest or fee shall continue to
accrue.

 

(b)         Except to
the extent otherwise provided in this Agreement or any other Loan Document,
whenever any payment hereunder or under any other Loan Document shall be stated
to be due, or whenever any other date specified hereunder or thereunder would
otherwise occur, on a day other than a Banking Day, then such payment shall be
made, and such other date shall occur, on the next succeeding Banking Day.

 

17

 

(c)          Each
payment by or on behalf of Borrower or any other Person under the Loan
Documents shall, unless a specific determination is made by Agent or Majority
Lenders with respect thereto, be applied in the following order: (i) first,
to any fees, costs, expenses and other amounts due Agent; (ii) second,
to any fees, costs, expenses and other amounts (other than principal and
interest) due Lenders under the Loan Documents; (iii) third, to
accrued and unpaid interest due Lenders; and (iv) fourth, to
principal due Lenders.

 

(d)         Unless
Agent receives notice from Borrower prior to the date on which any payment is
due to Lenders that Borrower will not make such payment in full as and when
required, Agent may assume that Borrower has made such payment in full to Agent
on such date in immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender.  If and to the extent Borrower has not made
such payment in full to Agent, each Lender shall repay to Agent on demand such
amount distributed to such Lender, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Lender
until the date repaid.

 

2.13  Set Off.  In addition to any rights and remedies of
Lenders provided by law, if an Event of Default exists or the Loans have been accelerated,
each Lender is authorized at any time and from time to time, without prior
notice to Holdings, Borrower or any Guarantor (any such notice being expressly
waived by any such Person to the fullest extent permitted by law), to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held by, and other Indebtedness at any time owed by, such
Lender to or for the credit or the account of any such Person against any and
all Obligations owing to such Lender, now or hereafter existing, irrespective of
whether or not Agent or such Lender shall have made demand under this Agreement
or any Loan Document and although such Obligations may be contingent or
unmatured.  Each Lender agrees promptly
to notify any such Person after any such set-off and application made by such
Lender; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application.

 

2.14  Pro rata
Treatment.  Except as otherwise
provided in this Agreement, each payment (including each prepayment) by Borrower
or any other Person on account of the Obligations, shall be made ratably in
accordance with the respective Pro Rata Shares of the Lenders.

 

2.15  Sharing.  If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Obligations in its
favor any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Lender shall immediately (a) notify Agent of
such fact, and (b) purchase from the other Lenders such participations in
the Loans made by them as shall be necessary to cause such purchasing Lender to
share the excess payment pro rata with each of them; provided, however,
that if all or any portion of such excess payment is thereafter recovered from
the purchasing Lender, such purchase shall to that extent be rescinded and each
other Lender shall repay to the purchasing Lender the purchase price paid
therefor, together with an amount equal to such paying Lender’s ratable share
(according to the proportion of (i) the amount of such paying Lender’s
required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender

 

18

 

in respect of the total
amount so recovered.  Borrower agrees
that any Lender so purchasing a participation from another Lender may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 2.13) with respect to such
participation as fully as if such Lender were the direct creditor of Borrower
in the amount of such participation. 
Agent will keep records (which shall be conclusive and binding in the
absence of manifest error) of participations purchased under this Section and
will in each case notify Lenders following any such purchases or repayments.

 

2.16  Taxes.

 

(a)          All
payments by Borrower to Agent and Lenders of principal, interest, fees and
other amounts due under this Agreement and any other Loan Document shall be
made free and clear of and without deduction for any and all present and future
taxes, levies, imposts, duties, fees, assessments, charges, deductions or withholdings
and all liabilities with respect thereto excluding, in the case of Agent and
each Lender, income, gross receipts and franchise taxes imposed on it by the
jurisdiction under the laws of which it is organized or in which its principal
executive offices may be located or any political subdivision or taxing
authority thereof or therein and excluding, in the case of a non-U.S. Person,
any required withholding taxes (all such non-excluded taxes, levies, imposts,
duties, fees, assessments, charges, deductions, withholdings and liabilities
being hereinafter referred to as “Taxes”). 
Borrower agrees to cause all such Taxes to be paid on behalf of Agent
and each Lender directly to the appropriate Governmental Authority.  If at any time Borrower is required by law
or is otherwise compelled to withhold or deduct any such Taxes from any payment
to be made by Borrower in respect of the Loan Documents, Borrower shall
increase the amount paid so that Agent and each Lender receives when due (and
is entitled to retain), after deduction or withholding for or on account of
such Taxes (including deductions or withholdings applicable to additional sums
payable under this Section 2.16), the full amount of the payment provided for
in the Loan Documents.

 

(b)         Borrower
further agrees to pay any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies and any notarial fees
that any Governmental Authorities may impose on this Agreement, on the issuance
of any Note hereunder or on any other Loan Document, including any stamp taxes
or any other similar taxes which may be required for enforcement purposes (the
“Other Charges”).  Borrower hereby
indemnifies and holds Agent and each Lender harmless for any and all payments
made by Agent or any Lender of any Taxes and Other Charges and for any
liabilities (including penalties, interest, legal costs and expenses) incurred
by Agent or any Lender or which may be imposed on Agent or any Lender in
connection therewith or any delays in their payment.

 

(c)          Borrower
shall provide Agent and each Lender with original tax receipts, notarized
copies of tax receipts, or such other documentation as Agent or any Lender
shall reasonably request, for all Taxes and Other Charges paid by Borrower
pursuant to this Section 2.16.  Borrower
shall deliver such receipts or other documentation to Agent or the requesting
Lender, as the case may be, within 30 days after the due date, including any
extensions, for the related Tax or Other Charge.

 

(d)         Each Lender
that is incorporated under the laws of any jurisdiction outside the United
States agrees to deliver to the Agent and Borrower on or prior to the Closing
Date, and in

 

19

 

a timely fashion
thereafter, IRS Form W-8BEN, IRS Form W-8ECI or such other documents and forms
of the U.S. Internal Revenue Service, duly executed and completed by such
Lender, as are required under United States law to establish such Bank’s status
for United States withholding tax purposes.

 

(e)          Notwithstanding
the foregoing subsections (a) through (d) of this Section 2.16, Borrower
shall not be required to pay any additional amounts to any Lender in respect of
United States withholding tax pursuant to such subsections (i) if the
obligations to pay such additional amounts would not have arisen but for the
failure by such Lender to comply with the requirements of Section 2.16 (d) or
(ii) at any time that such Lender shall not have furnished the Borrower
with such forms listed in subsection 2.16(d).

 

(f)            Each
Lender agrees that as promptly as practicable after it becomes aware of the
occurrence of an event that would cause the Borrower to make any payment in
respect of Taxes or Other Charges to such Lender or a payment in
indemnification with respect to any Taxes or Other Charges, and in any event if
so requested by the Borrower following such occurrence, each Lender shall use
reasonable efforts to make, fund or maintain its affected Loan (or relevant
part thereof) through another lending office if as a result thereof the
additional amounts so payable by Borrower would be avoided or materially
reduced and if, in the reasonable opinion of such Lender, the making, funding
or maintaining of such Loan (or relevant part thereof) through such other lending
office would not in any material respect be disadvantageous to such Lender or
contrary to such Lender’s normal lending practices.

 

(g)         Upon the
receipt by Borrower from any Affected Lender of a claim for compensation under
this Section 2.16, Borrower may: (i) request one or more of the other
Lenders to acquire and assume all or part of such Affected Lender’s Loans; or
(ii) designate a Replacement Lender. 
Any such designation of a Replacement Lender under clause (i) or
(ii) shall be effected in accordance with, and subject to the terms and
conditions of, the assignment provisions contained in Section 8.7, and shall in
any event be subject to the prior written consent of Agent (which consent shall
not be unreasonably withheld or delayed).

 

2.17  Substitute Basis for Determining
Interest.  If Agent or Majority
Lenders shall determine that adequate and reasonable means do not exist for
determining LIBOR; then, Agent will promptly so notify Borrower.  Thereafter, the obligation of Lenders to
maintain Loans accruing interest at LIBOR hereunder shall be suspended until
Agent (upon the instruction of Majority Lenders) revokes such notice in
writing, and all outstanding Loans shall accrue interest at the Prime Rate plus
two and a half percent (2.5%) per annum.

 

SECTION
3.                                CONDITIONS
PRECEDENT.

 

3.1         Conditions Precedent to the
Restructuring.  The obligation
of Agent and each Lender to consummate the Restructuring shall be subject to
the satisfaction or waiver of each of the conditions precedent set forth in
Section 5.2 of the Exchange Agreement by Lenders and the other parties to the
Exchange Agreement.

 

20

 

SECTION
4.                                REPRESENTATIONS
AND WARRANTIES.

 

4.1         Representations and Warranties of
Holdings, Borrower and Additional Borrower.  Each of the representations and warranties of Holdings, Borrower
and Additional Borrower to any Person under the Exchange Agreement is hereby
made to each Lender and Agent under this Agreement on the date of this
Agreement and is incorporated herein by this reference as if fully set forth
herein.

 

4.2         Representations and Warranties of
Lenders.  Each Lender represents and
warrants to Borrower that such Lender: (i) will acquire the Note for its
own account for investment and (subject to the disposition of its property
being at all times within its control) not with a view to any resale or other
distribution of such Note in a transaction constituting a public offering or
otherwise requiring registration under the Securities Act of 1933 (the “Securities
Act”) or in a transaction that would result in noncompliance with applicable
state securities laws; (ii) has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and the risks of
its acquisition of the Note and credit extensions to Borrower and Additional
Borrower, (iii) is an accredited investor as such term is defined in Rule
501 of Regulation D under the Securities Act, and (iv) understands that
the Note has not been, and will not be, registered under the Securities Act or
any state securities laws.

 

SECTION
5.                                COVENANTS.

 

5.1         Covenants.  So long as any of
the Obligations shall remain unpaid, each of Holdings and Borrower agrees that:

 

(a)          Reporting
Obligation.  Holdings and Borrower
shall furnish to Agent, promptly after Holdings or Borrower has knowledge or
becomes aware thereof, notice of the occurrence of any Default or Event of
Default.

 

(b)         Preservation
of Existence.  Holdings and Borrower
shall, and shall cause each of their respective Subsidiaries to, maintain and
preserve its corporate (or equivalent) existence, except for the dissolution of
any shell or dormant Subsidiary and except in connection with any transactions
expressly permitted by Section 5.1(g).

 

(c)          Licenses.  Holdings and Borrower shall, and shall cause
each of their respective Subsidiaries to, obtain and maintain all licenses,
authorizations, consents, filings, exemptions, registrations and other
governmental approvals of any Governmental Authority necessary or desirable (i) in
connection with the execution, delivery and performance of the Loan Documents,
or the consummation of the transactions therein contemplated, or (ii) in
the normal course of its business and operations and the ownership of its
properties, except, in the case of this clause (ii), to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Change.

 

(d)         Compliance
with Laws.  Holdings and Borrower
shall comply, and shall cause each of their respective Subsidiaries to comply,
in all material respects with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business, except such as

 

21

 

may be contested in good
faith or as to which a bona fide dispute may exist or where noncompliance could
not reasonably be expected to result in a Material Adverse Change.

 

(e)          Payment
of Obligations.  Holdings and
Borrower shall, and shall cause each of their respective Subsidiaries to, pay
and discharge all federal and other material taxes, fees, assessments and
governmental charges or levies imposed upon it or upon its properties or assets
prior to the date on which penalties attach thereto, except to the extent such
taxes, fees, assessments or governmental charges or levies, or such claims, are
being contested in good faith by appropriate proceedings and are adequately
reserved against in accordance with GAAP.

 

(f)            Insurance.  Holdings and Borrower shall, and shall cause
each of their respective Subsidiaries to, carry and maintain in full force and
effect, at its own expense and with financially sound and reputable insurance
companies, casualty insurance, fidelity insurance and general liability
insurance in such amounts, with such deductibles and covering such risks as is
customarily carried by companies engaged in the same or similar businesses and
owning similar properties in the localities where Holdings, Borrower or such
Subsidiary operates.  Without limiting
the generality of the foregoing, Holdings and Borrower shall, and shall cause
each of their respective Subsidiaries to, comply with all requirements of the
Collateral Documents pertaining to maintenance of insurance.

 

(g)         Restrictions
on Fundamental Change.  Except with
respect to any event that shall be a Mandatory Prepayment Event or as permitted
by Section 5.1(h) hereof, Borrower shall not transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets, (including by merger of consolidation) except
that (i) any of Borrower’s wholly owned Subsidiaries which are not New
Subsidiaries (unless such New Subsidiary does not have any New Subsidiary
Pre-Existing Indebtedness, in which case such exclusion for New Subsidiaries shall
not apply) may merge with, consolidate into or transfer all or substantially
all of its assets to another of Borrower’s wholly owned Subsidiaries or to
Borrower and in connection therewith such Subsidiary may be liquidated or
dissolved (provided that if any such transaction shall be between a Subsidiary
which is a Guarantor and a Subsidiary which is not a Guarantor, and such
Subsidiary Guarantor is not the continuing or surviving Person, then the
continuing or surviving Person shall have assumed all of the obligations of
such Subsidiary Guarantor under the Loan Documents to which it is a party), and
(ii) a Subsidiary that has sold all or substantially all of its assets in a
transaction permitted by Section 5.1(h) may be liquidated or dissolved.

 

(h)         Sales of
Assets.

 

(i)                                     Holdings,
Borrower and Additional Borrower shall not, and shall not permit any of their
respective Subsidiaries to, sell, lease, transfer, or otherwise dispose of
(whether in one transaction or a series of transactions) any assets (including
any shares of stock in any Subsidiary or other Person) (each a “Transfer”), or
enter into or consummate any Transfer any assets, except surplus assets in an
aggregate amount not to exceed $2,500,000 in any fiscal year; provided,
that as a condition to consummating any permitted Transfer Borrower shall
provide prior written notice to Agent of the proposed Transfer.  For purposes of this Section 5.1(h) “surplus
assets” means assets that (i) are not necessary for the operation of the
network of Borrower, any other Loan Party, or any of their respective
Subsidiaries, and (ii) are not and do

 

22

 

not include Cisco
Products.  Agent shall execute,
acknowledge, file and deliver at Borrower’s expense, all such further
agreements, certificates, documents, and assurances and perform such other
acts, as the transferee of any Transfer permitted pursuant to this Section
5.1(h) deems reasonably necessary to effectuate the purposes of this Section
5.1(h).

 

(ii)                                  Notwithstanding
anything to the contrary contained herein, in the event that Holdings, Borrower
or any Loan Party acquires any assets of a business or division of any Person
which is not an Affiliate of any Loan Party (whether through the acquisition of
assets or equity) outside the ordinary course of business, and Holdings or the
Borrower determine that a portion of such acquired assets, business or division
should be disposed of, then such assets shall be permitted to be sold by the
applicable Loan party at such time and on such terms as the Borrower shall
determine in its sole discretion; provided, however, that if any assets
so acquired are Cisco Products, Borrower’s sale of any such Cisco Products
shall constitute an Event of Default hereunder unless the purchaser of any such
Cisco Product enters into a software license with Cisco Systems, Inc. for the
use of Cisco Systems, Inc.’s intellectual property associated with such Cisco
Product.

 

(iii)                               Any
sales of accounts pursuant to factoring arrangements of the type contemplated
by clause (iv) of the definition of Permitted Liens shall be permitted
hereunder, provided that the terms of such factoring arrangements otherwise are
in compliance with the second or third sentence of Section 5.1(i) hereof.

 

(iv)                              At
the written request from time to time of Borrower, Lender shall release its
Lien on any assets permitted to be sold or otherwise transferred under this
Section 5.1(h).  Agent shall execute,
acknowledge, file and deliver at Borrower’s expense, all such further agreements,
certificates, documents, and assurances and perform such other acts as the
transferee of any such Transfer permitted pursuant to this Section 5.1(h) deems
reasonable necessary to effectuate the purposes of this Section 5.1(h).

 

(i)             Negative
Pledge.  Holdings and Borrower shall
not, and shall not permit any of their respective Subsidiaries to, create,
incur, assume or suffer to exist any Lien upon or with respect to any of its
properties, revenues or assets, whether now owned or hereafter acquired, other
than Permitted Liens.  With respect to
Permitted Liens granted to an accounts receivable lender(s) or factor(s), or
their agent(s), as described in clause (iv) of the definition of “Permitted
Liens”, Agent shall subordinate its security interest in the accounts subject
to such Permitted Liens pursuant to a Subordination Agreement in the form
attached hereto as Exhibit B (for the avoidance of doubt, separate
Subordination Agreements shall be executed for separate factoring  or
accounts receivable facilities, as the case may be), which Agent shall modify
at the reasonable request of such accounts receivable lender(s) or factor(s),
or their agent(s) so long as such requested modification (i) is consistent with
the terms of this Agreement, and the security interest to be granted to such
lender(s) or factor(s), or their agent(s), or, if applicable, the sale,
transfer and assignment to such accounts receivable lender(s) or factor(s), or
their agent(s), of such accounts is permitted under clause (iv) of the definition
of “Permitted Liens” or Section 5.1(h)(iii), and (ii) does not expand the
collateral requested to be covered by the security interest in favor of such
lender(s) or factor(s) beyond that permitted under said clause (iv).  If required by such accounts receivable
lender(s) or factor(s), or their agent(s) as a condition to the establishment
of such accounts receivable financing, at the written request from time to time
of

 

23

 

such account receivable
lender(s) or factor(s), or their agent(s), Lender shall release its Lien on any
such accounts that are purchased by such factor(s) or its agent(s).  In addition, Agent shall execute,
acknowledge, deliver, file, notarize and register, at the expense of Borrower,
all such further agreements, instruments, certificates, documents and
assurances and perform such acts as Holdings and Borrower shall deem necessary
or appropriate to effectuate the purposes of this Section 5.1(i), and promptly
provide Holdings and Borrower with evidence of the foregoing satisfactory in
form and substance to Holdings and Borrower.

 

(j)             Indebtedness.  Borrower shall not, and shall not permit any
of its Subsidiaries to, create, incur, assume or otherwise become liable for or
suffer to exist any Indebtedness, other than: (i) Indebtedness of Borrower
and its Subsidiaries to Agent, Lenders or Cisco Systems; (ii) Indebtedness
of Borrower and its Subsidiaries existing on the date hereof and disclosed to
Lenders or extensions, renewals and refinancings of such Indebtedness, provided;
that the principal amount of such Indebtedness being extended, renewed or
refinanced does not increase; (iii) accounts payable to trade creditors for
goods and services and current operating liabilities (not the result of the
borrowing of money) incurred in the ordinary course of Borrower’s or such
Subsidiary’s business in accordance with customary terms and not overdue by
more than 90 days, unless contested in good faith by appropriate proceedings
and reserved for in accordance with GAAP; (iv) Indebtedness consisting of
guarantees resulting from endorsement of negotiable instruments for collection
by Borrower or any such Subsidiary in the ordinary course of business;
(v) Indebtedness of Borrower and its Subsidiaries under capital leases or
otherwise incurred under or in connection with any Liens of the type referred
to in clause (iv) or (viii) of the definition of Permitted Liens in Section 1;
(vi) Subordinated Debt; (vii) Indebtedness secured by Permitted Liens;
(viii) Indebtedness of Borrower to any of its wholly owned Subsidiaries or
any of its wholly owned Subsidiaries to another of its wholly owned
Subsidiaries or to Borrower (other than Indebtedness owed to a New Subsidiary
which has New Subsidiary Pre-Existing Indebtedness that is secured); (ix)
Indebtedness, (excluding any New Subsidiary Pre-Existing Indebtedness except to
the extent, if any, the same is guaranteed by Borrower or any of its
Subsidiaries other than the applicable New Subsidiary) incurred or assumed by Borrower
or any Subsidiary of Borrower in connection with a transaction or series of
related transactions for the purpose of or resulting, directly or indirectly,
in (A) the acquisition of all or substantially all of the assets of a Person,
or of any business or division of a Person, (B) the acquisition of all or any
of the capital stock, partnership interests, membership interests or equity of
any Person, or otherwise causing such Person to become a Subsidiary, or (C) a
merger or consolidation or any other combination with another Person; provided
that the aggregate amount of such Indebtedness so incurred or assumed under
this clause (ix), when combined with any cash consideration given in connection
with all such transactions described in clauses (A), (B), or (C) above does not
exceed in the aggregate the sum of $7,500,000; provided, however, that
in the event that Holdings consummates an equity financing after the date of
this Agreement (excluding the transactions contemplated by the Equity
Documents, including the Rights Offering referred to therein) that does not
trigger a full mandatory prepayment under Section 2.7(b) hereof, then after
payment of any required Partial Mandatory Prepayment, use of the balance of the
proceeds shall be permitted for the purposes set forth in subsections (A), (B),
or (C) of this Section 5.1(j)(ix); it being understood and agreed that nothing
contained in this clause (ix) shall be construed to limit the incurrence of
purchase money Indebtedness in connection with such transactions provided that
such incurrence complies with clause (viii) of the definition of Permitted
Liens or the incurrence of New Subsidiary Pre-Existing Indebtedness provided
that such incurrence complies

 

24

 

with the definition
thereof; (x) any additional unsecured Indebtedness of any kind or nature
whatsoever up to any aggregate amount of $1,000,000; and (xi) any New
Subsidiary Pre-Existing Indebtedness. 
For purposes of determining compliance with this Section 5.1(j), in the
event that an item of Indebtedness meets the criteria of more than one of the
categories hereof, the Borrower may, in its sole discretion, classify such item
of Indebtedness on the date of incurrence in any manner that complies with this
Section 5.1(j), and such item of Indebtedness will be treated as having been
incurred pursuant only to one of such clauses. 
Notwithstanding the foregoing, neither Holdings nor Borrower shall
permit any License Subsidiary to create, incur, assume or otherwise become
liable for or suffer to exist any Indebtedness, other than Indebtedness in
favor of Agent or any Lender arising under the Loan Documents.

 

(k)          Loans
and Investments.  Holdings and
Borrower shall not, and shall not permit any of their respective Subsidiaries
to, purchase or otherwise acquire the capital stock, assets (constituting a
business unit), obligations or other securities of or any interest in any
Person, or otherwise extend any credit to or make any additional investments in
any Person, other than in connection with: (i) stock or asset acquisitions
to the extent paid with stock; (ii) stock or asset acquisitions to the extent
paid for with cash or the incurrence of debt in an aggregate amount not
exceeding $7,500,000 or such greater amount as permitted by Section 5.1(j)
hereof; it being understood and agreed that nothing contained in this clause
(ii) shall be construed to limit the incurrence of purchase money Indebtedness
in connection with such transactions provided that such incurrence complies
with clause (viii) of the definition of Permitted Liens or the incurrence of
New Subsidiary Pre-Existing Indebtedness provided that such incurrence complies
with the definition thereof; (iii) extensions of credit in the nature of
accounts receivable or notes receivable arising from the sales of goods or
services in the ordinary course of business; (iv) extensions of credit or
other investments by Holdings or Borrower to or in any of their respective
wholly owned Subsidiaries or by any of their respective wholly owned
Subsidiaries to or in another of their respective wholly owned Subsidiaries,
Holdings or Borrower, provided that any extensions of credit or other
investments by Holdings, Borrower or any of their wholly owned Subsidiaries to
a New Subsidiary which has New Subsidiary Pre-Existing Indebtedness may not
exceed the amount necessary to pay (A) organizational and related expenses in
connection with its formation and existence in an aggregate amount not to
exceed $10,000 and (B) interest only (and not repayment of principal) on any
such New Subsidiary Pre-Existing Indebtedness; and provided  further
that such extensions of credit or other investments are otherwise not
prohibited by the terms of this Agreement; (v) employee loans and
guarantees in the ordinary course of business in accordance with Borrower’s or
any such Subsidiary’s usual and customary practices with respect thereto; and
(vi) short term, investment grade money market instruments, in accordance
with Borrower’s usual and customary treasury management policies.

 

(l)             Distributions.  Holdings and Borrower shall not declare or
pay any dividends in respect of their respective capital stock, or purchase,
redeem, retire or otherwise acquire for value (other than in consideration for
equity securities of Holdings) any shares of their respective capital stock, or
any warrants, rights or options to acquire such shares, now or hereafter
outstanding, return any capital to its shareholders as such, or make any
distribution of assets to their respective shareholders as such, or permit any
of their respective Subsidiaries to purchase, redeem, retire, or otherwise
acquire for value any shares of stock of Holdings or Borrower or any warrants,
rights or options to acquire such shares, except that (A) Holdings and
Borrower may

 

25

 

declare and deliver
dividends and distributions payable only in common stock of Holdings or
Borrower (as the case may be); (B) Holdings may purchase, redeem, retire,
or otherwise acquire shares of its capital stock or any warrants, rights or
options to acquire such shares with the proceeds received from a substantially
concurrent issue of new shares of its capital stock; (C) Holdings may
purchase, redeem, retire or otherwise acquire shares of its capital stock or
any warrants, rights or options to acquire such shares from any consultants or
employees of Borrower; (D) Borrower may make cash transfers to Holdings as
required by Holdings to pay: (1) regularly scheduled payments of interest
on Subordinated Debt, provided no Event of Default exists or would result
therefrom, (2) its tax obligations to any Governmental Authority, and
(3) accounts payable to trade creditors for goods and services and current
operating liabilities (not the result of borrowing of money) incurred in the
ordinary course of Holdings’ business in accordance with customary terms and in
amounts customary for similar holding companies; (E) Holdings may buy-back any
or all of its capital stock to become a privately held company; (F) Holdings or
Borrower may repurchase, redeem or retire outstanding Allied Riser Subordinated
Debt provided that the price at which each bond included within the Allied
Riser Subordinated Debt is redeemed from time to time shall not exceed fifteen
percent (15%) of the face amount of each such bond.  Additionally, Borrower shall not permit any Subsidiary of
Borrower to grant or otherwise agree to or suffer to exist any consensual
restrictions on the ability of such Subsidiary to pay dividends and make other
distributions to Borrower, or to pay any Indebtedness owed to Borrower or
transfer properties and assets to Borrower.

 

(m)       Subordinated
Debt.  Holdings shall not, and shall
not permit any of its Subsidiaries to, agree to or permit any material amendment,
modification or waiver of any provision of any document or instrument governing
or evidencing Subordinated Debt if such amendment, modification or waiver would
adversely affect the rights of the Lenders hereunder.

 

(n)         Additional
Subsidiaries.  (i) If Borrower
proposes to incorporate, create or acquire any additional Subsidiary, Borrower
shall provide Agent with prior notice thereof. After the incorporation,
creation or acquisition of any such Subsidiary, within five Banking Days
following receipt by Borrower from Agent of a security agreement, a stock
pledge agreement and a guaranty of the Obligations each in form and substance
satisfactory to Agent, Borrower shall (A) cause such Subsidiary to execute
and deliver such guaranty and security agreement to Agent and (B) pledge
(or cause to be pledged) the capital stock or ownership interest of such
Subsidiary to Agent and Lenders pursuant to such stock pledge agreement.  Majority Lenders may elect in their sole
discretion to waive any such requirement for any Subsidiary that will remain a
dormant or shell Subsidiary or in the case of any non-U.S. Subsidiary (or in
the case of a stock pledge, to require the pledge of not more than 65% of the
capital stock of any such Subsidiary). 
(ii) Within five Banking Days after receipt from Agent of any
request to do so, Borrower shall, or shall cause such Subsidiary to, have
executed and filed any UCC-1 financing statements furnished by Agent in each
jurisdiction in which such filing is necessary to perfect the security interest
of Agent in the Collateral of such Subsidiary and in which Agent requests that
such filing be made. 
(iii) Additionally, Borrower and such Subsidiary shall execute and
deliver to Agent such other items as reasonably may be requested by Agent in
connection with the foregoing, including resolutions, incumbency and officers’
certificates, opinions of counsel, search reports and other certificates and
documents.

 

26

 

(o)         Lease
Obligations.  Holdings and Borrower
shall not, and shall not suffer or permit any of their respective Subsidiaries
to, create or suffer to exist any obligations for the payment of rent for any
property under lease or agreement to lease (other than capital leases) which
would cause the direct or contingent liabilities of Holdings, Borrower and
their respective Subsidiaries, on a consolidated basis, in respect of all such
obligations together to exceed the greater of (i) $25,000,000 in any
fiscal year or (ii) 25% of revenue in any fiscal year.

 

(p)         Ownership
of Subsidiaries.  Holdings and
Borrower shall cause each of their Subsidiaries to remain and be a direct or
indirect wholly-owned Subsidiary.

 

(q)         Accounting
Changes.  Neither Borrower nor
Holdings shall, nor shall they suffer or permit any of their respective
Subsidiaries to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
Holdings or Borrower or of any of their respective Subsidiaries, except to
change the fiscal year of a Subsidiary to conform its fiscal year to
Borrower’s.

 

(r)            Books
and Records; Inspections.  Borrower
and Holdings shall, and they shall cause each of their respective Subsidiaries
to, keep adequate records and books of account, in which complete entries will
be made in accordance with GAAP. 
Holdings and Borrower shall provide Agent, each Lender and their
respective agents access to the premises of Holdings, Borrower and any of their
respective Subsidiaries at any time and from time to time, during normal
business hours and upon reasonable notice under the circumstances, and at any
time on and after the occurrence of a Default or Event of Default, for the
purposes of inspecting the Collateral and inspecting, copying and verifying all
records relating to the Collateral.

 

(s)          Capital
Contributions.  Holdings shall
contribute to Borrower, and Borrower shall accept, as common equity, within two
Banking Days of receipt, (i) all net proceeds received from the sale of
any of Holdings’ equity securities or debt instruments or securities (other
than issuances of equity securities to officers, directors, employees or
consultants of Borrower in the ordinary course of business and other than
proceeds of the sale of any of Holdings’ equity securities or debt instruments
or securities that are used to repurchase or repay any of Holdings’ equity
securities or debt instruments or securities), (ii) any cash or cash
equivalents generated or received by Holdings at any time and from time to time,
other than cash received by Holdings from Borrower pursuant to clause (D) of
Section 5.1(l) and (iii) any other asset acquired or received by Holdings
at any time and from time to time that is not reasonably necessary for Holdings
to perform its function as the holding company of Borrower.

 

(t)            Further
Assurances and Additional Acts. 
Holdings and Borrower shall execute, acknowledge, deliver, file,
notarize and register at its own expense all such further agreements,
instruments, certificates, documents and assurances and perform such acts as
Agent shall deem necessary or appropriate to effectuate the purposes of the
Loan Documents, and promptly provide Agent with evidence of the foregoing
satisfactory in form and substance to Agent.

 

(u)         FCC
Licenses and License Subsidiaries. 
Neither Holdings nor Borrower shall permit any FCC License to be owned
or acquired by any Person other than a Subsidiary that (i) is wholly owned
directly or indirectly by Borrower, (ii) does not engage in any business or
activity

 

27

 

other than the ownership
of FCC Licenses and activities directly incidental thereto, (iii) does not own
or acquire any assets other than FCC Licenses, and (iv) does not have or incur
any Indebtedness or other liabilities other than liabilities imposed by law,
including tax liabilities, other liabilities directly incidental to its
existence and permitted business and activities, and any liabilities to Agent
and Lenders arising pursuant to the Loan Documents (any Subsidiary satisfying
the foregoing requirements, a “License Subsidiary”).  No License Subsidiary may merge with or into any other Subsidiary
except another License Subsidiary.

 

SECTION
6.                                EVENTS OF DEFAULT.

 

6.1         Events
of Default.  Any of the
following events which shall occur shall constitute an “Event of Default”:

 

(a)          Payments.  Borrower shall fail to pay when due
(i) any amount of principal of any Loan or Note, or (ii) any amount
of interest on any Loan or Note, or any fee or other amount payable under any
of the Loan Documents, or Holdings or any other Loan Party shall fail to pay
when due any amount payable under any of the Loan Documents, and in the case of
this subsection (a) any such default shall remain unremedied for five
days.

 

(b)         Representations
and Warranties.  Any representation
or warranty by any Loan Party under or in connection with the Loan Documents
shall prove to have been incorrect in any material respect when made or deemed
made and the failure of such representation or warranty to be materially
correct would result in a Material Adverse Change.

 

(c)          Failure
of Holdings or Borrower to Perform Covenant Set Forth in Section 5.1(g).  Holdings or Borrower shall fail to perform
or observe any term, covenant or agreement contained in Section 5.1(g).

 

(d)         Failure
by Holdings or Borrower to Perform Covenants Set Forth in Sections 5.1(b),
5.1(c), 5.1(d) and 5.1(u). 
Holdings, Borrower or any Loan Party shall fail to perform or observe
any term, covenant or agreement contained in (i) Section 5.1(b) but only as it
applies to Subsidiaries and where the failure of such Subsidiary to comply with
Section 5.1(b) could not reasonably be expected to result in a Material Adverse
Change, or (ii) Sections 5.1(c), 5.1(d) and (5.1(u), and any covenants in the
Collateral Documents or Guaranties similar in nature to the aforementioned
covenants, and any such failure shall remain unremedied for a period of 20 days
from notice by Holdings, Borrower or any Loan Party to Agent, or by Lenders or
Agent to Holdings, Borrower or any Loan Party, of the occurrence of such
failure; provided that if in Agent’s reasonable opinion Holdings,
Borrower or other applicable Loan Party is diligently attempting to cure,
Holdings, Borrower or other applicable Loan Party shall have an additional 30
days to cure.

 

(e)          Failure
by Holdings or Borrower to Perform Certain Other Covenants.  Holdings, Borrower or any other Loan Party
shall fail to perform or observe any other term, covenant or agreement
contained in any Loan Document on its part to be performed or observed and any
such failure shall remain unremedied for a period of 20 days from notice by
Holdings, Borrower or any other Loan Party to Agent, or by Lenders or Agent to
Holdings or any other Loan Party, of the occurrence of such failure.

 

28

 

(f)            Insolvency.  (i) Holdings, Borrower, any Guarantor
or any of their respective Material Subsidiaries shall be dissolved,
liquidated, wound up or cease its corporate (or equivalent) existence, except
to the extent expressly permitted by Section 5.1; or (ii) Holdings,
Borrower, any Guarantor or any such Material Subsidiary (A) shall make a
general assignment for the benefit of creditors; (B) shall voluntarily
cease to conduct its business in the ordinary course, except as permitted by
Section 5.1; (C) shall commence any Insolvency Proceeding with respect to
itself, or (D) shall take any action to effectuate or authorize any of the
foregoing.

 

(g)         Involuntary
Proceedings.  (i) Any
involuntary Insolvency Proceeding is commenced or filed against Holdings,
Borrower, any Guarantor or any of their respective Material Subsidiaries, or
any writ, judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of Holdings’, Borrower’s, any
Guarantor’s or any such Material Subsidiary’s properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or fully
bonded within 60 days after commencement, filing or levy; (ii) Holdings,
Borrower, any Guarantor or any of their respective Material Subsidiaries admits
the material allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) Holdings, Borrower, any Guarantor or any
of their respective Material Subsidiaries acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial
portion of its property or business.

 

(h)         Defaults
Under Other Indebtedness.  Holdings,
Borrower, any Guarantor or any of their respective Subsidiaries shall fail
(i) to make any payment of any Indebtedness evidenced by or arising under
any Indebtedness in an aggregate principal amount for all such Indebtedness
together of at least $1,000,000 (or its equivalent in another currency) when
due (whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise), and such failure shall continue after the applicable grace or
notice period, if any, specified in the agreement or instrument relating to
such Indebtedness as of the date of such failure, or (ii) to perform or
observe any term, covenant or condition on its part to be performed or observed
under any agreement, note or instrument relating to any such Indebtedness, when
required to be performed or observed, or any other event shall occur or
condition shall exist thereunder, and such failure, event or condition shall
continue after the applicable grace or notice period, if any, specified in such
agreement, note or instrument, if the effect of such failure, event or
condition has been to accelerate the maturity of such Indebtedness.

 

(i)             Invalidity
of Guaranty.  Any defined “Event of
Default” as defined in any Guaranty shall have occurred and is continuing; or
any Guaranty or any other Guarantor Document shall for any reason be revoked or
invalidated, or otherwise cease to be in full force and effect, or any
Guarantor or any other Person shall contest in any manner the validity or
enforceability thereof or deny that it has any further liability or obligation
thereunder.

 

(j)             Default
under Other Documents.  Any defined
“Event of Default” (as defined in any other Loan Document) shall have occurred
and be continuing, and all applicable grace periods hereunder and thereunder
shall have expired.

 

29

 

(k)          Consents,
Etc.  Any law, decree, license,
consent, authorization, registration or approval now or hereafter necessary to
enable Borrower or any Loan Party to comply with its obligations incurred in
the Loan Documents shall be modified in a materially adverse manner, or shall
be revoked, withdrawn or withheld or shall cease to remain in full force and
effect if (i) such revocation, withdrawal, or withholding could reasonably be
expected to result in a Material Adverse Change, and (ii) and the modification,
revocation, withdrawal, withholding or cessation of such law, decree, license
consent, authorization, registration or approval shall continue in effect for a
period of 20 days from notice by Holdings, Borrower or any Loan Party to Agent,
or by Lenders or Agent to Holdings, Borrower or any Loan Party of the
occurrence of such modification, revocation, revocation, withdrawal,
withholding or cessation; provided that if in Agent’s reasonable opinion
Holdings, Borrower or other applicable Loan Party is diligently attempting to
cure, Holdings, Borrower or other applicable Loan Party shall have an
additional 30 days to cure.

 

(l)             Judgments.  A final judgment or order for the payment of
money in excess of $2,500,000 (or its equivalent in another currency) to the
extent not covered by third-party insurance shall be rendered against Borrower
or any Guarantor or any of their respective Subsidiaries; or (ii) any
non-monetary judgment or order shall be rendered against Borrower, any
Guarantor or any such Subsidiary which has resulted in or would reasonably be
expected to result in a Material Adverse Change; and in each case there shall
be any period of 30 consecutive days during which such judgment continues
unsatisfied and a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.

 

(m)       Subordination.  Except as permitted by Section 5.1(l), any
Loan Party shall make any voluntary or optional payment or repayment on,
redemption, exchange or acquisition for value of, or any sinking fund or
similar payment with respect to, any Subordinated Debt other than in
consideration for equity securities of Holdings or as permitted in the
applicable subordination agreement, or if any Person who has subordinated such
Subordinated Debt terminates or in any way limits its subordination agreement.

 

(n)         Loan
Documents.  Any of the Loan
Documents after delivery thereof shall for any reason be revoked or
invalidated, or otherwise cease to be in full force and effect, or any Loan Party
or any other Person shall contest in any manner the validity or enforceability
thereof, or any Loan Party or any other Person shall deny that it has any
further liability or obligation thereunder; or any Loan Party or any other
Person shall do or undertake any act evidencing an intent to repudiate the Loan
Documents, or any of the Collateral Documents for any reason, except to the
extent permitted by the terms hereof or thereof, shall cease to create a valid
and perfected Lien subject only to Permitted Liens in any material portion of
the Collateral purported to be covered thereby; or any of the Cisco Products
shall at any time be located outside of the United States; provided that
it shall not be an Event of Default if Lender ceases to have a perfected
security interest as a result of Agent’s failure to continue a financing
statement.

 

6.2         Effect of Event of Default.  If any Event of Default shall occur and is
continuing, Agent shall, at the request of, or may, with the consent of,
Majority Lenders, by notice from Agent to Borrower, declare the entire unpaid
principal amount of the Loans and the Notes, all interest accrued and unpaid
thereon and all other Obligations to be forthwith due and payable, whereupon
the Loans and the Notes, all such accrued interest and all such other
Obligations shall

 

30

 

become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by Borrower, provided
that if an event described in Section 6.1(e) or 6.1(f) shall occur, the result
which would otherwise occur only upon giving of notice by Agent to Borrower as
specified in this Section 6.2 shall occur automatically, without the giving of
any such notice.  Additionally, Agent
and Lenders may exercise any or all of their respective rights and remedies
under the Collateral Documents, and proceed to enforce all other rights and
remedies available to them under the Loan Documents and applicable law.  Notwithstanding anything to the contrary
contained in this Agreement, Agent shall not issue or maintain in effect any
“orders” or give any “notices of exclusive control” or similar notices pursuant
to any account control agreement among Borrower, Agent and Lenders and a
securities intermediary, except upon the occurrence and continuation of an
Event of Default.

 

6.3         Certain Agreements Regarding the
Collateral.  Any provision
contained herein or in any Collateral Document to the contrary notwithstanding,
no action shall be taken hereunder or under any of the Collateral Documents by
Agent or Lenders with respect to any Collateral in the form of FCC Licenses or
the pledged stock of any License Subsidiary unless and until all applicable
requirements of the FCC, if any, under the Communications Act of 1934,
applicable state laws and the respective rules and regulations thereunder and
thereof, as well as any other laws, rules and regulations of any other
Governmental Authority applicable to or having jurisdiction over Holdings,
Borrower or the relevant Subsidiary, have in the reasonable judgment of Agent
been fully satisfied to the extent necessary to take such action and there have
been obtained such consents, approvals and authorizations, as may be required
to be obtained from the FCC, applicable state and local regulatory authorities
and municipalities and any other Governmental Authority under the terms of any
franchise, license or similar operating right held by Holdings, Borrower or the
relevant Subsidiary in order to take such action. It is the intention of the
parties hereto that the pledge in favor of Agent (on behalf of Lenders) of the
stock of any License Subsidiary, and the creation of a Lien (to the extent
permitted by law) in favor of Agent (on behalf of Lenders) in FCC Licenses, and
all rights and remedies by Agent and Lenders with respect to such pledged stock
and FCC Licenses, shall in all relevant aspects be subject to and governed by
said statutes, rules and regulations and that nothing in this Agreement shall
be construed to diminish the control exercised by Holdings, Borrower or the
relevant Subsidiary, except in accordance with the provisions of such statutory
requirements and rules and regulations. By its acceptance of this Agreement,
Agent and each Lender agrees that it will not take any action pursuant to this
Agreement or any other Collateral Document which constitutes or results in any
assignment of a license or franchise or any change of control over the
communications properties owned and operated by Holdings, Borrower or any
Subsidiary, if such assignment of license or franchise or change of control
would, under then existing law or under any franchise, require the prior
approval of a Governmental Authority, without first obtaining such approval.
Upon the exercise by Agent or any Lender of any power, right, privilege or
remedy pursuant to this Agreement or any Collateral Document which requires any
consent, approval, recording, qualification or authorization of any
Governmental Authority, Holdings or Borrower shall, or shall cause the relevant
Subsidiary to, execute and deliver all applications, certificates, instruments
and other documents and papers that Agent may reasonably require in order for
such governmental consent, approval, recording, qualification or authorization
to be obtained. Holdings and Borrower each agrees to use its best efforts to
cause

 

31

 

such governmental
consents, approvals, recordings, qualifications and authorizations to be
forthcoming.

 

SECTION
7.                                THE AGENT.

 

7.1         Appointment and Authorization; “Agent”.  Each Lender hereby irrevocably (subject to
Section 7.10) appoints, designates and authorizes Agent to take such action on
its behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document, Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
Agent have or be deemed to have any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent.  Without
limiting the generality of the foregoing sentence, the use of the term “agent”
in this Agreement with reference to Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. 
Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.

 

7.2         Delegation of Duties.  Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. 
Agent shall not be responsible for the negligence or misconduct of any
agent or attorney-in-fact that it selects with reasonable care.

 

7.3         Liability
of Agent.  None of Agent-Related
Persons shall (i) be liable for any action taken or omitted to be taken by
any of them under or in connection with this Agreement or any other Loan
Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to
any of Lenders for any recital, statement, representation or warranty made by
Holdings or Borrower or any Subsidiary or Affiliate of Borrower, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by Agent under or in connection with, this Agreement or any
other Loan Document, or for the value of or title to any Collateral, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Loan Party to
perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of Borrower or any of
Holdings, Borrower or any of their Subsidiaries or Affiliates.

 

7.4         Reliance
by Agent.  (a) Agent shall
be entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or

 

32

 

Persons, and upon advice
and statements of legal counsel (including counsel to Borrower), independent
accountants and other experts selected by Agent.  Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of Majority Lenders as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by
Lenders against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action.  Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of Majority Lenders and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all of Lenders. 
(b) For purposes of determining compliance with the conditions
specified in Section 3.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent (or made available) by Agent to such
Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
such Lender.

 

7.5         Notice
of Default.  Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to Agent for the account of Lenders, unless Agent
shall have received written notice from a Lender or Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a “notice of default”.  Agent
will notify Lenders of its receipt of any such notice.  Agent shall take such action with respect to
such Default or Event of Default as may be requested by Majority Lenders in
accordance with Article VI; provided, however, that unless and
until Agent has received any such request, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable or in
the best interest of Lenders.

 

7.6         Credit
Decisions.  Each Lender
acknowledges that none of Agent-Related Persons has made any representation or
warranty to it, and that no act by Agent hereinafter taken, including any
review of the affairs of Holdings, Borrower and their Subsidiaries, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender.  Each Lender represents
to Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of Holdings, Borrower and their Subsidiaries, the value of and
title to any Collateral, and all applicable regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower and Additional Borrower
hereunder.  Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of the Loan Parties. 
Except for notices, reports and other documents expressly herein
required to be furnished to Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the

 

33

 

business, prospects,
operations, property, financial and other condition or creditworthiness of
Holdings, Borrower or any Subsidiary which may come into the possession of any
of Agent-Related Persons.

 

7.7         Indemnification of Agent.  Whether or not the transactions contemplated
hereby are consummated, Lenders shall indemnify upon demand all Agent-Related
Persons (to the extent not reimbursed by or on behalf of Borrower and without
limiting the obligation of Borrower to do so), pro rata, from and against
any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to Agent-Related Persons of any portion
of such Indemnified Liabilities resulting solely from such Person’s gross
negligence or willful misconduct. 
Without limitation of the foregoing, each Lender shall reimburse Agent
upon demand for its ratable share of any costs or out-of-pocket expenses
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrower.  The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of Agent.

 

7.8         Agent in Individual Capacity.  CSCC and its Affiliates (including Cisco
Systems) may make loans to, enter into leases with, sell equipment and provide
related services to, acquire equity interests in and generally engage in any
kind of business with Holdings, Borrower and their Subsidiaries and Affiliates
as though CSCC were not Agent hereunder and without notice to or consent of
Lenders.  Lenders acknowledge that,
pursuant to such activities, CSCC or its Affiliates may receive information
regarding Holdings, Borrower or their Affiliates (including information that
may be subject to confidentiality obligations in favor of Holdings, Borrower or
such Affiliate) and acknowledge that Agent shall be under no obligation to provide
such information to them.  With respect
to its Loans, CSCC shall have the same rights and powers under this Agreement
as any other Lender and may exercise the same as though it were not Agent, and
the terms “Lender” and “Lenders” include CSCC in its individual capacity.

 

7.9         Collateral Matters.  (a) Agent is authorized on behalf of all Lenders, without
the necessity of any notice to or further consent from Lenders, from time to
time to take any action with respect to any Collateral or the Collateral Documents
which may be necessary to perfect and maintain perfected the security interest
in and Liens upon the Collateral granted pursuant to the Collateral
Documents.  (b) Lenders irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any Collateral (i) upon payment in full
of all Loans and all other Obligations known to Agent and payable under this
Agreement or any other Loan Document; (ii) constituting property sold or
to be sold or disposed of as part of or in connection with any disposition
permitted hereunder; (iii) constituting property in which a Loan Party
owned no interest at the time the Lien was granted or at any time thereafter;
(iv) constituting property leased to a Loan Party in a transaction
permitted under this Agreement; (v) consisting of an instrument evidencing
Indebtedness or other debt instrument, if the indebtedness evidenced thereby
has been paid in full; or (vi) if approved, authorized or ratified in
writing by Majority Lenders or all Lenders, as the case may be, as provided in
Section 8.1.  Upon request by Agent at
any time, Lenders will confirm in writing Agent’s authority to release
particular types or items of Collateral pursuant to this Section 7.9, provided
that the absence of

 

34

 

any such confirmation for
whatever reason shall not affect Agent’s rights under this Section 7.9.  (c) Each Lender agrees with and in favor of each other
(which agreement shall not be for the benefit of Borrower or any Subsidiary)
that the Obligations to such Lender are not and shall not be secured by any
real property collateral now or hereafter acquired by such Lender.

 

7.10  Successor Agent.  Agent may, and at the request of Majority
Lenders shall, resign as Agent upon 30 days’ notice to Lenders.  If Agent resigns under this Agreement,
Majority Lenders shall appoint from among Lenders a successor agent for
Lenders.  If no successor agent is
appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with Lenders and Borrower, a successor agent from
among Lenders.  Upon the acceptance of
its appointment as successor agent hereunder, such successor agent shall succeed
to all the rights, powers and duties of the retiring Agent and the term “Agent”
shall mean such successor agent and the retiring Agent’s appointment, powers
and duties as Agent shall be terminated. 
After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Article VII and Section 8.4 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement.  If no successor agent has
accepted appointment as Agent by the date which is 30 days following a retiring
Agent’s notice of resignation, the retiring Agent’s resignation shall
nevertheless thereupon become effective and Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as Majority Lenders appoint
a successor agent as provided for above.

 

SECTION
8.                                MISCELLANEOUS.

 

8.1         Amendments.  No material amendment or waiver (as
reasonably determined by Agent) of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by Holdings,
Borrower or any applicable Subsidiary therefrom, shall be effective unless the
same shall be in writing and signed by Majority Lenders (or by Agent at the
written request of Majority Lenders), Holdings and Borrower and acknowledged by
Agent, and then any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all Lenders, Holdings and Borrower and acknowledged by
Agent, do any of the following:

 

(a)          postpone
or delay any date fixed by this Agreement or any other Loan Document for any
payment of principal, interest, fees (other than any fees payable solely to
Agent, which fees Agent may, in its sole discretion and without further
consent, agree to amend or modify) or other amounts due to Lenders (or any of
them) hereunder or under, any other Loan Document (including the date of any
mandatory prepayment hereunder);

 

(b)         reduce the
principal of, or the rate of interest specified herein on any Loan, or any fees
or other amounts payable hereunder or under any other Loan Document (other than
any fees or other amounts payable solely to Agent, which fees and other amounts
Agent may, in its sole discretion and without further consent, agree to amend
or modify);

 

(c)          change the
percentage of the aggregate unpaid principal amount of the Loans which is
required for Lenders or any of them to take any action hereunder;

 

35

 

(d)         amend this
Section 8.1, Section 2.15, the definition of “Majority Lenders” herein, or any
provision herein providing for consent or other action by all Lenders or some
specified amount of Lenders; or

 

(e)          discharge
any Guarantor, or release any portion of the Collateral except as otherwise may
be provided in this Agreement or the Collateral Documents or except where the
consent of Majority Lenders only is specifically provided for;

 

and, provided  further, that no
amendment, waiver or consent shall, unless in writing and signed by Agent in
addition to Majority Lenders or all Lenders, as applicable, affect the rights
or duties of Agent under this Agreement or any other Loan Document.

 

8.2         Notices.

 

(a)          All
notices and other communications provided for hereunder and under the other
Loan Documents shall, unless otherwise stated herein, be in writing (including
by facsimile transmission) and mailed, sent or delivered to the respective
parties hereto at or to their respective addresses or facsimile numbers set forth
in the Schedule or the Annex, as the case may be, or at or to such other
address or facsimile number as shall be designated by any party in a written
notice to the other party hereto.  All
such notices and communications shall be effective (i) if delivered by
hand, when delivered; (ii) if sent by courier service, when delivered;
(iii) if sent by mail, upon the earlier of the date of receipt or five
Banking Days after deposit in the mail, first class (or air mail, with respect
to communications to be sent to or from the United States), postage prepaid;
and (iv) if sent by facsimile transmission, when sent; provided, however,
that notices and communications to Agent or Lenders pursuant to Section 2 shall
not be effective until received.

 

(b)         Any
agreement of Agent and Lenders herein to receive certain notices by telephone
or facsimile is solely for the convenience and at the request of Borrower.  Agent and Lenders shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by Borrower
to give such notice and Agent and Lenders shall not have any liability to
Borrower or other Person on account of any action taken or not taken in good
faith by Agent or Lenders in reliance upon such telephonic or facsimile notice.  The obligation of Borrower to repay the
Loans shall not be affected in any way or to any extent by any failure by Agent
and Lenders to receive written confirmation of any telephonic or facsimile
notice, or the receipt by Agent and Lenders of a confirmation which is at variance
with the terms understood by Agent and Lenders to be contained in the
telephonic or facsimile notice.

 

(c)          Each
Lender shall notify Agent in writing of any changes in the address to which
notices to Lender should be directed, of addresses of any lending office, of
payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as Agent shall reasonably request.

 

8.3         No Waiver; Cumulative Remedies.  No failure on the part of Agent or any
Lender to exercise, and no delay in exercising, any right, remedy, power or
privilege under any Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of 

 

36

 

any other right,
remedy, power or privilege.  The rights
and remedies under the Loan Documents are cumulative and not exclusive of any
rights, remedies, powers and privileges that may otherwise be available to
Agent or any Lender.

 

8.4         Costs and Expenses; Indemnification.  Borrower agrees to pay on demand by Agent
(i) the reasonable out-of-pocket costs and expenses of Agent and any of
its Affiliates, and the reasonable fees and disbursements of counsel to Agent
(excluding allocated costs and expenses for internal legal services), in
connection with the negotiation, preparation, execution and delivery of the
Loan Documents; (ii) all costs and expenses of Agent and its Affiliates,
and fees and disbursements of counsel (excluding allocated costs and expenses
for internal legal services), in connection with any amendments, modifications
or waivers of the terms of any Loan Documents, and (iii) all costs and
expenses of Agent, each Lender and their respective Affiliates, and fees and
disbursements of counsel (including allocated costs and expenses for internal
legal services), in connection with any Default or Event of Default that occurs
after the date of this Agreement, the enforcement or attempted enforcement
after the date of this Agreement of, and preservation of any rights or
interests under, the Loan Documents, and any out-of-court workout or other
refinancing or restructuring or any bankruptcy or insolvency case or proceeding.  In addition, whether or not the transactions
contemplated hereby shall be consummated, each of Holdings and Borrower hereby
agrees to indemnify each Agent-Related Person, each Lender, any Affiliate
thereof and their respective directors, officers, employees, agents, counsel
and other advisors (each an “Indemnified Person”) against, and hold each of
them harmless from, any and all liabilities, obligations, losses, claims,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever, including the reasonable fees and
disbursements of counsel to an Indemnified Person (including, to the extent
permitted herein, allocated costs and expenses for internal legal services),
which may be imposed on, incurred by, or asserted against any Indemnified
Person, in any way relating to or arising out of any of the Loan Documents, the
use or intended use of the proceeds of the Loans or the loan transactions
contemplated hereby or thereby, including with respect to any investigation,
litigation or other proceeding relating to any of the foregoing, irrespective
of whether the Indemnified Person shall be designated a party thereto (the
“Indemnified Liabilities”); provided that neither Holdings nor Borrower shall
be liable to any Indemnified Person for any portion of such Indemnified
Liabilities resulting from such Indemnified Person’s gross negligence or
willful misconduct.  If and to the
extent that the foregoing indemnification is for any reason held unenforceable,
each of Holdings and Borrower agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. 
Nothing contained in this Agreement shall, or shall be interpreted to,
limit the terms and conditions set forth in the General Release (as defined in
the Exchange Agreement).

 

8.5         Survival.  All covenants, agreements, representations
and warranties made in any Loan Documents shall, except to the extent otherwise
provided therein, survive the execution and delivery of this Agreement, the
making of the Loans and the execution and delivery of any Note, and shall
continue in full force and effect so long as any Loans remain outstanding or
any other Obligations remain unpaid or any obligation to perform any other act
hereunder or under any other Loan Document remains unsatisfied.  Without limiting the generality of the
foregoing, the obligations of Holdings and Borrower under Sections 2.8, 2.16
and 8.4, and all similar obligations under the other Loan Documents (including
all obligations to pay costs and expenses and all indemnity obligations), shall
survive the repayment of the Loans.

 

37

 

8.6         Benefits of Agreement.  The Loan Documents are entered into for the
sole protection and benefit of the parties hereto and their successors and
assigns and the Indemnified Persons referred to in Section 8.4, and no other
Person (other than Cisco Systems to the extent provided for in the Loan
Documents) shall be a direct or indirect beneficiary of, or shall have any
direct or indirect cause of action or claim in connection with, any Loan
Document.

 

8.7         Binding Effect; Successors and
Assigns.

 

(a)          Any Lender
may, with the written consent of the Agent (which shall not be unreasonably
withheld), at any time assign and delegate to one or more Eligible Assignees
(each an “Assignee”) all, or any ratable part of all, of the Loans and the
other rights and obligations of such Lender hereunder; provided, however,
that (i) no Lender may make any such assignment to any direct competitor
of Borrower, Holdings or Additional Borrower, whose primary business is
providing telecommunications services, (ii) no written consent of Agent shall
be required in connection with any assignment and delegation by a Lender to an
Eligible Assignee that is another Lender or an Affiliate of such Lender or an
Approved Fund; and (iii) except in connection with an assignment of all of
a Lender’s rights and obligations with respect to its  Loans, any such assignment to an Eligible Assignee that is not a
Lender hereunder shall be equal to or greater than $1,000,000; and provided
further, however, that Holdings, Borrower and Agent may continue
to deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (A) such Lender and its Assignee shall have
delivered to Holdings, Borrower and Agent an Assignment and Acceptance
Agreement substantially in the form of Exhibit A (an “Assignment and
Acceptance”), together with any Note subject to such assignment; (B) a
written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, in
substantially the form of the Notice of Assignment and Acceptance attached as
Schedule I to the Assignment and Acceptance, shall have been given to Holdings,
Borrower and Agent by such Lender and the Assignee; (C) the assignor
Lender or Assignee shall have paid to Agent a processing fee in the amount of
$4,000; and (D) Agent shall have provided any required consent to such
assignment in accordance with this Section.

 

(b)         From and
after the date that Agent notifies the assignor Lender that Agent has received
(and, if required, provided its consent with respect thereto) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, (ii) this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee, and (iii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Loan Documents; provided,
however, that the assignor Lender shall not relinquish its rights under
Sections 2.8, 2.13 or 2.16 (and any equivalent provisions of the other Loan
Documents) to the extent such rights relate to the time prior to the effective
date of the Assignment and Acceptance.

 

(c)          Within
five Banking Days after Borrower’s receipt of notice by Agent that it has
received an executed Assignment and Acceptance and payment of the processing
fee,

 

38

 

Borrower shall execute
and deliver to Agent any new Notes requested by such Assignee evidencing such
Assignee’s assigned Loans and, if the assignor Lender has retained a portion of
its Loans, replacement Notes as requested by the assignor Lender evidencing the
Loans retained by the assignor Lender (such Notes to be in exchange for, but
not in payment of, the Notes held by such Lender, if any).

 

(d)         Any Lender
may at any time sell to one or more lending institutions or other Persons not
Affiliates of Holdings (a “Participant”) participating interests in any Loans
and the other interests of that Lender (the “originating Lender”) hereunder and
under the other Loan Documents; provided, however, that (i) no Lender may make
any such sale to any direct competitor of Borrower, Holdings or Additional
Borrower, whose primary business is providing telecommunications services, (ii)
the originating Lender’s obligations under this Agreement shall remain
unchanged, (iii) the originating Lender shall remain solely responsible
for the performance of such obligations, (iv) Holdings, Borrower and Agent
shall continue to deal solely and directly with the originating Lender in
connection with the originating Lender’s rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Lender shall transfer
or grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment,
consent or waiver would require unanimous consent of Lenders as described in
the first proviso to Section 8.1.  In
the case of any such participation, the Participant shall be entitled to the
benefit of Sections 2.8, 2.16 and 8.4 as though it were also a Lender hereunder,
and if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement.

 

(e)          Notwithstanding
any other provision in this Agreement, any Lender may at any time create a
security interest in, or pledge, all or any portion of its rights under and
interest in this Agreement and the Notes held by it in favor of any Federal
Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 C.F.R. §203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.

 

8.8         Confidentiality.  Each of the Lenders and Agent agree to take
normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information respecting Holdings and Borrower and their
respective businesses (“Customer Information”) and not to use the Customer
Information other than for purposes under this Agreement or the other Loan
Documents.  Holdings and Borrower agree
that Agent or any Lender may disclose from time to time all Customer
Information in its possession to Agent’s or any such Lender’s legal counsel,
agents and other professional advisors, and to its Subsidiaries and Affiliates,
to any potential assignees or participants of the rights and/or obligations of
any such Lender hereunder, to any underwriters or placement agents for any
securities to be issued by any such Lender or any of its Subsidiaries or Affiliates
(or any transferee of any such Subsidiaries or Affiliates) and to any rating
agency rating such securities and to their respective legal counsel, agents and
other professional advisors; provided that such recipients agree not to
disclose such Customer

 

39

 

Information for any
purposes other than as contemplated herein. 
Holdings and Borrower also consent to the disclosure of Customer
Information by Lender, or any of its Subsidiaries or Affiliates, (i) at
the request of any Governmental Authority having jurisdiction over Agent or
such Lender or such Subsidiary or Affiliate, (ii) pursuant to subpoena or
other court process, (iii) to the extent reasonably required in connection
with any litigation to which Agent or such Lender or any of its Subsidiaries or
Affiliates is a party, (iv) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document, (v) when otherwise required to do so in accordance with
applicable law, and (vi)(A) to the extent such information is made
available by Holdings or Borrower or was or becomes generally available to the
public other than as a result of disclosure by Agent or such Lender, or
(B) was or becomes available on a non-confidential basis from a source
other than Holdings or Borrower, provided that such source is not bound by a
confidentiality agreement with Holdings or Borrower known to Agent or such
Lender; provided, however, that, to the extent that the
disclosure of any Customer Information is to be made by Agent or such Lender
pursuant to the immediately preceding clauses (i), (ii) or (iii) and Agent or
such Lender may lawfully do so, Agent or such Lender shall use commercially
reasonable efforts to first give Holdings or Borrower notice and a reasonable
opportunity to interpose an objection to such disclosure to obtain a protective
order requiring that the Customer Information so disclosed be held in
confidence by such court or government body or, if disclosed, be used only for
the purposes for which such disclosure is required and otherwise permitted
under such clauses.

 

(b)         Holdings
and Borrower each agree to take normal and reasonable precautions and exercise
due care to maintain the confidentiality of this Agreement and the terms and
provisions hereof and thereof.  Agent
and each Lender agree that Holdings and Borrower may disclose from time to time
the existence of this Agreement, the terms and provisions hereof to Holdings’
and Borrower’s legal counsel, agents and other professional advisors, and to
their respective Subsidiaries and Affiliates, as reasonably required in
connection with negotiations with a prospective acquirer of Holdings or
Borrower or substantially all of Holdings’ or Borrower’s assets or a prospective
merger partner, to any bank or other financial institution or any other Person
proposing to provide financing to Holdings or Borrower or any of their
respective Subsidiaries or Affiliates, to any underwriters or placement agents
for any securities to be issued by Holdings or Borrower or any of their
respective Subsidiaries or Affiliates and to any rating agency rating such
securities and to their respective legal counsel, agents and other professional
advisors.  Agent and each Lender also
consent to the disclosure of this Agreement and the terms and provisions hereof
by Holdings or Borrower, or any of their respective Subsidiaries or Affiliates,
(i) at the request of any Governmental Authority having jurisdiction over
Holdings, Borrower or such Subsidiary or Affiliate, (ii) pursuant to
subpoena or other court process, (iii) to the extent reasonably required
in connection with any litigation to which Holdings, Borrower or any of their
respective Subsidiaries or Affiliates is a party, and (iv) when otherwise
required to do so in accordance with applicable law.  The foregoing permitted disclosure does not include disclosure to any
other vendor providing vendor financing to Holdings, Borrower or any of their
respective Subsidiaries (whether directly or indirectly).  Holdings and Borrower shall provide prior notice to
Agent of any proposed public announcements or other public disclosure or
filings of or relating to this Agreement, and the terms and provisions hereof
and thereof as permitted by this subsection (b) (“Public Disclosure”), and no
Public Disclosure may be made in respect of the fees, interest rate and other
pricing information with respect hereto without Lender’s prior consent (such
consent

 

40

 

not to be unreasonably withheld).  Prior to making any required filing with the U.S.
Securities and Exchange Commission or any other federal, state, provincial or
foreign Governmental Authority as part of any Public Disclosure, Holdings or
Borrower shall request confidential treatment of the fees, interest rate and
other pricing information with respect hereto to the extent permitted by
applicable law.

 

8.9         Governing
Law.  This Agreement shall be governed by, and construed in accordance with,
the law of the State of New York.

 

8.10 Submission to Jurisdiction.

 

(a)          Each of
Holdings and Borrower each hereby (i) submits to the non-exclusive
jurisdiction of the courts of the State of New York and the Federal courts of
the United States sitting in the Borough of Manhattan (collectively, the “New
York Courts”), for the purpose of any action or proceeding arising out of or
relating to the Loan Documents, (ii) irrevocably waives (to the extent
permitted by applicable law) any objection which it now or hereafter may have
to the laying of venue of any such action or proceeding brought in any of the
New York Courts, and any objection on the ground that any such action or
proceeding in any New York Court has been brought in an inconvenient forum, and
(iii) agrees that (to the extent permitted by applicable law) a final
judgment in any such action or proceeding brought in a New York Court shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner permitted by law.

 

(b)         If a process
agent (the “Process Agent”) is specified in the Schedule, Holdings and Borrower
each hereby irrevocably appoints the Process Agent as its authorized agent with
all powers necessary to receive on its behalf service of copies of the summons
and complaint and any other process which may be served in any action or
proceeding arising out of or relating to the Loan Documents in any of the New
York Courts.  Such service may be made
by mailing or delivering a copy of such process to Holdings and Borrower in care
of the Process Agent at the Process Agent’s above address and Holdings and
Borrower each hereby irrevocably authorizes and directs the Process Agent to
accept such service on its behalf and agrees that the failure of the Process
Agent to give any notice of any such service to Holdings and Borrower shall not
impair or affect the validity of such service or of any judgment rendered in
any action or proceeding based thereon. 
As an alternative method of service, Holdings and Borrower each also
irrevocably consents to the service of any and all process in any such action
or proceeding by the mailing of copies of such process to Holdings and Borrower
at their respective address specified in the Schedule.  If for any reason the Process Agent
specified in the Schedule shall cease to act as such, Holdings and Borrower
each shall appoint forthwith, in the manner provided for herein, a successor
Process Agent qualified to act as an agent for service of process with respect
to all New York Courts and acceptable to Agent.

 

(c)          No
Limitation.  Nothing in this Section
8.10 shall affect the right of Agent or any Lender to serve legal process in
any other manner permitted by law or limit the right of Agent or any Lender to
bring any action or proceeding against Holdings or Borrower or its property in
the courts of other jurisdictions.

 

41

 

8.11  Waiver of Jury
Trial.  Each of Agent, Lenders, Holdings and Borrower hereby
knowingly, voluntarily and intentionally waives any rights it may have to a
trial by jury in respect of any litigation in connection with any Loan
Document.

 

8.12  Entire Agreement.  The Loan Documents reflect the entire
agreement among Holdings, Borrower, each Additional Borrower, if any, Agent and
Lenders with respect to the matters set forth therein and supersede any prior
agreements, commitments, drafts, communication, discussions and understandings,
oral or written, with respect thereto.

 

8.13  Severability.  Whenever possible, each provision of the
Loan Documents shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. 
If, however, any provision of any of the Loan Documents shall be
prohibited by or invalid under any such law or regulation in any jurisdiction,
it shall, as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed
so modified, it shall be ineffective and invalid only to the extent of such
prohibition or invalidity without affecting the remaining provisions of such
Loan Document, or the validity or effectiveness of such provision in any other
jurisdiction.

 

8.14  Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.

 

8.15  Third
Amended and Restated Credit Agreement. 
This Agreement amends and restates, in its entirety, the Second Amended
and Restated Credit Agreement, shall constitute a Loan Document and shall be
deemed in all respects to constitute the “Credit Agreement” for the purposes of
the Note, the Collateral Documents and the other Loan Documents.  The Borrower hereby expressly acknowledges,
ratifies and confirms each of its obligations under the Agreement and the other
Loan Documents and the liens and security interests granted to CSCC, as
collateral agent for the Lenders.

 

8.16  Joint
and Several Liability.  The
liability of Borrower and Additional Borrower shall be joint and several and,
except as the context otherwise requires, each reference herein to “Borrower”
shall mean and be a reference to each Borrower and Additional Borrower.  Borrower and Additional Borrower agree that
any and all of the Obligations shall be the joint and several responsibility of
each of them notwithstanding any absence herein or in any other Loan Document
of a reference such as “jointly and severally” with respect to such
Obligation.  The compromise of any claim
with, or the release of, Borrower shall not constitute a compromise with, or a
release of, Additional Borrower, and the compromise of any claim with, or the
release of, Additional Borrower shall not constitute a compromise with, or a
release of, Borrower.  Additional Borrower hereby irrevocably
appoints, designates and authorizes Borrower to act on Additional Borrower’s
behalf, and the action of Borrower in the name of Additional Borrower shall in
each case bind Additional Borrower. Agent and Lenders shall be fully entitled
to rely upon and act following receipt of any notice, request or instructions
by Borrower on behalf of Additional Borrower.

 

[remainder
of page intentionally left blank]

 

42

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first above written.

 

	
   

  	
  CISCO SYSTEMS CAPITAL
  CORPORATION,

  as Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/D.A.
  Rogan

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
    David A.
  Rogan

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
    President,
  Cisco Capital

  
	
   

  	
   

  
	
   

  	
  COGENT COMMUNICATIONS,
  INC., as

  Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/David
  Schaeffer

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
    David
  Schaeffer

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
    President

  
	
   

  	
   

  
	
   

  	
  COGENT INTERNET, INC.,

  as Additional Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/David
  Schaeffer

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
    David
  Schaeffer

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
    President

  
	
   

  	
   

  
	
  Acknowledged and Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COGENT COMMUNICATIONS
  GROUP, INC.,

  as Holdings

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/David
  Schaeffer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
    David
  Schaeffer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
    President

  	
   

  	
   

  	
   

  
						

 

43

 

 

As
of            , 2003

 

SCHEDULE OF INFORMATION

 

This Schedule of Information
(this “Schedule”) is an integral part of the Third Amended and Restated
Agreement dated as of                   ,
2003 (as amended, modified, renewed or extended from time to time, the
“Agreement”) among Cogent Communications, Inc., (“Borrower”), Cogent Internet,
Inc. (“Additional Borrower”), the several financial institutions from time to
time party thereto (“Lenders”) and Cisco Systems Capital Corporation, as
administrative agent for itself and the other Lenders (in such capacity,
“Agent”).  Capitalized terms used but
not otherwise defined herein shall have the respective meanings assigned to
such terms in the Third Amended and Restated Agreement.

 

1.                                      Subsidiaries and Guarantors:  See Exhibit A hereto. 
Unless otherwise noted on Exhibit A, each Subsidiary is also a
Guarantor.

 

2.                                      Governmental Licenses and Permits:  None.

 

3.                                      Other Required Consents:

 

[Consent of Shareholders of Holdings and Borrower
to the Loan Documents and such other consents of each Guarantor as Agent may
reasonably require.]

 

4.                                      Addresses for Notices:

 

(a)                                  Borrower:

 

Cogent Communications, Inc.

1015 31st Street, NW

Washington, D.C. 
20007

Attn: Mr. David Schaeffer

Fax No.: (202) 342-8269

 

(b)                                  Additional Borrower:

 

Cogent
Internet, Inc.

1015 31st
Street, NW

Washington,
D.C.  20007

Attn: Mr.
David Schaeffer

Fax No.: (202)
342-8269

 

1

 

(c)                                  Holdings

 

Cogent
Communications Group, Inc.

1015 31st
Street, NW

Washington,
D.C.  20007

Attn: Mr.
David Schaeffer

Fax No.: (202)
342-8269

 

(d)                                  Agent:

 

Cisco Systems
Capital Corporation

9850 Double R
Boulevard, Park Center East

Reno, NV 89521

Attn.:  Loan Operations

Fax:  (775) 789-5866

 

5.                                      Agent’s
Account for Payments:

 

	
  Bank name:

  	
   

  	
  Bank of America NA

  
	
   

  	
   

  	
   

  
	
  Bank
  address:

  	
   

  	
  1850 Gateway
  Boulevard

  
	
   

  	
   

  	
  Concord CA
  94520

  
	
  Account
  name:

  	
   

  	
  Cisco System
  Capital Corporation (Loan)

  
	
  Account
  number:

  	
   

  	
  1233102696

  
	
  SWIFT code:

  	
   

  	
  BOFAUS6S

  
	
  ABA
  number  121000358

  

 

6.                                      Process Agent:

 

CT Corporation System, 111 Eighth Avenue, New York, NY 10111

 

[remainder
of page intentionally left blank]

 

2

 

Acknowledged and
agreed:

 

	
  Cisco Systems Capital
  Corporation,

  	
   

  
	
  as Agent and as Lender

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/[JFAtr] for David
  Rogan

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Cogent Communications,
  Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/David Schaeffer

  	
   

  	
   

  
	
   

  	
  Title: David Schaeffer,
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Cogent Communications
  Group, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/David Schaeffer

  	
   

  	
   

  
	
   

  	
  Title: David Schaeffer,
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Cogent Internet, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/David Schaeffer

  	
   

  	
   

  
	
   

  	
  Title: David Schaeffer,
  President

  	
   

  

 

3

 

Exhibit A

To

Schedule of
Information

 

Subsidiaries and
Guarantors

 

Cogent Internet, Inc.

Cogent Communications of California, Inc.

Cogent Fiber Services of Georgia, Inc.

Allied Riser Communications Corporation

Allied Riser Operations Corporation

Cogent Communications Worldwide, Inc.

Cogent Communications of Arizona, Inc.

Allied Riser of California, Inc.

Cogent Communications of Connecticut, Inc.

Cogent Communications of D.C., Inc.

Cogent Communications of Florida, Inc.

Cogent Communications of Georgia, Inc.

Cogent Communications of Illinois, Inc.

Cogent Communications of Louisiana, Inc.

Cogent Communications of Maryland, Inc.

Cogent Communications of Massachusetts, Inc.

Cogent Communications of Michigan, Inc.

Cogent Communications of Minnesota, Inc.

Cogent Communications of Missouri, Inc.

Cogent Communications of New Jersey, Inc.

Cogent Communications of New York, Inc.

Cogent Communications of North Carolina, Inc.

Cogent Communications of Ohio, Inc.

Cogent Communications of Oklahoma, Inc.

Cogent Communications of Pennsylvania, Inc.

Cogent Communications of Tennessee, Inc.

Cogent Communications of Texas, Inc.

Cogent Communications of Utah, Inc.

Cogent Communications of Virginia, Inc.

Cogent Communications of Washington, Inc.

Cogent Communications of Wisconsin, Inc.

 

Allied Riser Communications Corporation of Canada Inc.

Shared Technologies of Canada, Inc.

Fiber Services of Canada, Ltd.

 

Cogent Great Lakes Communications, Inc.

 

4

 

LENDER ANNEX

 

ADDRESS FOR NOTICES TO LENDERS

 

Cisco Systems Capital Corporation

as Lender

 

Cisco Systems Capital
Corporation

9850 Double R Boulevard, Park
Center East

Reno, NV 89521

Attn.:  Loan Operations 

Fax:  (775) 789-5866

 

Annex 1

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