Document:

Exhibit
10.1

 

ALLEGIANT TRAVEL COMPANY

2006 LONG-TERM INCENTIVE PLAN

 

1.                                       PURPOSES OF THE
PLAN:  The purposes of the Plan are to (a) promote
the long-term success of the Company and its Subsidiaries and to increase
stockholder value by providing Eligible Individuals with incentives to
contribute to the long-term growth and profitability of the Company by offering
them an opportunity to obtain a proprietary interest in the Company through the
grant of equity-based awards and (b) assist the Company in attracting,
retaining and motivating highly qualified individuals who are in a position to
make significant contributions to the Company and its Subsidiaries.

 

2.                                       DEFINITIONS AND
RULES OF CONSTRUCTION:

 

(a)                                  Definitions.  For purposes of the Plan, the following capitalized
words shall have the meanings set forth below:

 

“Award” means an Option,
Restricted Stock, Restricted Stock Unit, Stock Appreciation Right or Other
Award granted by the Committee pursuant to the terms of the Plan.

 

“Award Document” means an
agreement, certificate or other type or form of document or documentation
approved by the Committee that sets forth the terms and conditions of an Award.
An Award Document may be in written, electronic or other media, may be limited
to a notation on the books and records of the Company and, unless the Committee
requires otherwise, need not be signed by a representative of the Company or a
Participant.

 

“Board” means the Board of
Directors of the Company, as constituted from time to time. “CEO” means the
Chief Executive Officer of the Company.

 

“Change in Control” means: (i) The
consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, if more than 50% of the combined
voting power of the continuing or surviving entity’s securities outstanding
immediately after such merger, consolidation or other reorganization is owned
by persons who were not stockholders of the Company immediately prior to such
merger, consolidation or other reorganization; (ii) The sale, transfer or
other disposition of all or substantially all of the Company’s assets; (iii) Any
transaction as a result of which any person is the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing at least 50% of the total voting power
represented by the Company’s then outstanding voting securities. For purposes
of this subsection (iii), the term “person” shall have the same meaning as when
used in Sections 13(d) and 14(d) of the Exchange Act but shall
exclude a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or of a Parent or Subsidiary and (B) a
corporation owned directly or 

 

 

indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the common stock of the Company. A
transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company’s incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who
held the Company’s securities immediately before such transaction.
Notwithstanding the foregoing, with respect to an Award that is subject to Section 409A
of the Code, and payment or settlement of the Award will accelerate upon a
Change in Control, no event set forth in an agreement applicable to a
Participant or clauses (i), (ii) or (iii) will constitute a Change in
Control for purposes of the Plan and any Award Document unless such event also
constitutes a “Change in Ownership”, “Change in Effective Control” or “Change
in the ownership of a substantial portion of the Company’s assets” as defined
under Section 409A of the Code and the regulations and guidance
promulgated thereunder.

 

“Code” means the Internal
Revenue Code of 1986, as amended, and the applicable rulings and regulations
thereunder.

 

“Committee” means the
committee of the Board, any successor committee thereto or any other committee
appointed from time to time by the Board to administer the Plan. The Committee
shall serve at the pleasure of the Board and shall meet the requirements of Section 162(m) of
the Code and Section 16(b) of the Exchange Act; provided, however,
that the Board may perform any duties delegated to the Committee and in such
instances, any reference to the Board shall be deemed a reference to the
Committee.

 

“Common Stock” means the
common stock of the Company, par value $0.001 per share, or such other class of
share or other securities as may be applicable under Section 12(b) of
the Plan.

 

“Company” means Allegiant
Travel Company, a Nevada corporation, or any successor to all or substantially
all of its business that adopts the Plan.

 

“Effective Date” means the
date on which the Plan is approved by the stockholders of the Company.

 

“Eligible Individuals” means
the individuals described in Section 4(a) of the Plan who are
eligible for Awards under the Plan.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.

 

“Fair Market Value” means
that market value of a share of Common Stock on a particular date determined as
follows. In the event the Company’s Common Stock is listed on an established
stock exchange, Fair Market Value shall be deemed to be the closing price of
the Company’s Common Stock on such stock exchange on such date or, if no sale
of the Company’s Common Stock shall have been made on any stock exchange 

 

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on that day the Fair Market Value shall be determined at such price for
the next preceding day upon which a sale shall have occurred. In the event the
Company’s Common Stock is not listed upon an established system, but is quoted
on the National Association of Securities Dealer Automated Quotation System (“Nasdaq”),
the Fair Market Value shall be deemed to be the closing sale price (if included
in the national market list) or the mean between the closing dealer “bid” and “asked”
prices for the Company’s Common Stock as quoted on Nasdaq for such date, and if
no closing sale price or “bid” and “asked” prices are quoted for that day, the
Fair Market Value shall be determined by reference to such prices on the next
preceding day on which such prices are quoted. In the event the Company’s said
Common Stock is neither listed on an established stock exchange not quoted on
Nasdaq, the Fair Market Value on such date shall be determined by the
Committee.

 

“Incentive Stock Option”
means an Option that is intended to comply with the requirements of Section 422
of the Code or any successor provision thereto.

 

“Misconduct” shall mean the
commission of any act of fraud, embezzlement or dishonesty by the Participant,
any unauthorized use or disclosure by such person of confidential information
or trade secrets of the Company (or any Subsidiary), or any other intentional
misconduct by such person adversely affecting the business or affairs of the
Company (or any Subsidiary) in a material manner.  The foregoing definition shall not in any way
preclude or restrict the right of the Company (or any Subsidiary) to discharge
or dismiss any Participant or other person in the service of the Company (or
any Subsidiary) for any other acts or omissions, but such other acts or
omissions shall not be deemed, for purposes of the Plan, to constitute grounds
for termination for Misconduct.

 

“Nonqualified Stock Option”
means an Option that is not intended to comply with the requirements of Section 422
of the Code or any successor provision thereto. “Option” means an Incentive Stock
Option or Nonqualified Stock Option granted pursuant to Section 7 of the
Plan.

 

“Other Award” means any form
of Award other than an Option, Restricted Stock, Restricted Stock Unit or Stock
Appreciation Right granted pursuant to Section 10 of the Plan.

 

“Parent” means any
corporation which at the time qualifies as a parent of the Company under the
definition of “parent corporation” contained in Section 424(c) of the
Code.

 

“Participant” means an
Eligible Individual who has been granted an Award under the Plan.

 

“Performance Period” means
the period established by the Committee and set forth in the applicable Award
Document over which Performance Targets are measured.

 

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“Performance Target” means
the targets established by the Committee and set forth in the applicable Award
Document.

 

“Plan” means the Allegiant
Travel Company 2006 Long-Term Incentive Plan, as may be amended from time to
time.

 

“Plan Limit” means the
maximum aggregate number of Shares that may be issued for all purposes under
the Plan as set forth in Section 5(a) of the Plan.

 

“Prior Plan” means that
certain Allegiant Travel Company, LLC 2005 Share Option Plan under which
389,000 options have been granted and remain outstanding as of the Effective
Date.

 

“Restricted Stock” means
stock granted or sold to a Participant pursuant to Section 8 of the Plan.

 

“Restricted Stock Unit”
means a right to receive a Share (or cash, if applicable) in the future,
granted pursuant to Section 8 of the Plan.

 

“Shares” means shares of
Common Stock.

 

“Stock Appreciation Right”
means a right to receive all or some portion of the appreciation on Shares
granted pursuant to Section 9 of the Plan.

 

“Subsidiary” means (i) a
domestic or foreign corporation or other entity with respect to which the
Company, directly or indirectly, has the power, whether through the ownership
of voting securities, by contract or otherwise, to elect at least a majority of
the members of such corporation’s board of directors or analogous governing
body, or (ii) any other domestic or foreign corporation or other entity in
which the Company, directly or indirectly, has an equity or similar interest
and which the Committee designates as a Subsidiary for purposes of the Plan.
For purposes of determining eligibility for the grant of Incentive Stock
Options under the Plan, the term “Subsidiary” shall be defined in the manner
required by Section 424(f) of the Code. (b) Rules of
Construction. The masculine pronoun shall be deemed to include the feminine pronoun,
and the singular form of a word shall be deemed to include the plural form,
unless the context requires otherwise. Unless the text indicates otherwise,
references to sections are to sections of the Plan.

 

3.                                       ADMINISTRATION:

 

(a)                                  Committee.  The Plan shall be administered by the
Committee, which shall have full power and authority, subject to the express
provisions hereof, to: (i) select the Participants from the Eligible
Individuals; (ii) grant Awards in accordance with the Plan; (iii) determine
the number of Shares subject to each Award or the cash amount payable in
connection with an Award; (iv) determine the terms and conditions of each 

 

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Award, including, without limitation, those related to term,
permissible methods of exercise, vesting, forfeiture, payment, settlement,
exercisability, Performance Periods, Performance Targets, and the effect, if
any, of a Participant’s termination of employment with the Company or any of
its Subsidiaries or a Change in Control of the Company, and including the
authority; (v) subject to Section 15, amend the terms and conditions
of an Award after the granting thereof; (vi) specify and approve the
provisions of the Award Documents delivered to Participants in connection with
their Awards; (vii) construe and interpret any Award Document delivered
under the Plan; (viii) make factual determinations in connection with the
administration or interpretation of the Plan; (ix) prescribe, amend and
rescind administrative regulations, rules and procedures relating to the
Plan; (x) employ such legal counsel, independent auditors and consultants
as it deems desirable for the administration of the Plan and to rely upon any
opinion or computation received therefrom; (xi) vary the terms of Awards to
take account of tax, securities law and other regulatory requirements of
foreign jurisdictions or to procure favorable tax treatment for participants;
and (xii) make all other determinations and take any other action desirable or
necessary to interpret, construe or implement properly the provisions of the
Plan or any Award Document.

 

(b)                                 Plan
Construction and Interpretation. The Committee shall have
full power and authority, subject to the express provisions hereof, to construe
and interpret the Plan.

 

(c)                                  Determinations
of Committee Final and Binding.  All determinations by the Committee or its
delegate in carrying out and administering the Plan and in construing and
interpreting the Plan shall be final, binding and conclusive for all purposes
and upon all persons interested herein.

 

(d)                                 Delegation of
Authority.  To the
extent not prohibited by applicable laws, rules and regulations, the
Committee may, from time to time, delegate some or all of its authority under
the Plan to a subcommittee or subcommittees thereof or other persons or groups
of persons it deems appropriate under such conditions or limitations as it may
set at the time of such delegation or thereafter, except that the Committee may
not delegate its authority pursuant to Section 15 to amend the Plan. For
purposes of the Plan, reference to the Committee shall be deemed to refer to
any subcommittee, subcommittees, or other persons or groups of persons to whom
the Committee delegates authority pursuant to this Section 3(d).

 

(e)                                  Liability of
Committee.  Subject to
applicable laws, rules or regulations, (i) no member of the Board or
Committee, the CEO, or any officer or employee of the Company to whom any
duties or responsibilities are delegated hereunder shall be liable for any action
or determination made in connection with the operation, administration or
interpretation of the Plan, and (ii) the Company shall indemnify, defend
and hold harmless each such person from any liability arising from or in
connection with the Plan, except where such liability results directly from
such person’s fraud, willful misconduct or failure to act in good faith. In the
performance of its responsibilities with respect to the Plan, the Committee
shall be entitled to rely upon information and/or advice furnished by the
Company’s officers or employees, the Company’s accountants, the Company’s
counsel 

 

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and any other party the Committee deems necessary, and no member of the
Committee shall be liable for any action taken or not taken in reliance upon
any such information and/or advice.

 

(f)                                    Action by the
Board. Anything in the Plan to the contrary notwithstanding, any authority
or responsibility that, under the terms of the Plan, may be exercised by the
Committee may alternatively be exercised by the Board.

 

4.                                       ELIGIBILITY:

 

(a)                                  Eligible
Individuals.  Awards may
be granted to officers, employees, directors and consultants of the Company or
any of its Subsidiaries or joint ventures, partnerships or business organizations
in which the Company or its Subsidiaries have an equity interest. The Committee
shall have the authority to select the persons to whom Awards may be granted
and to determine the number and terms of Awards to be granted to each such
Participant. Under the Plan, references to “employment” or “employed” include
Participants who are consultants of the Company or its Subsidiaries.

 

(b)                                 Grants to
Participants.  The
Committee shall have no obligation to grant any Eligible Individual an Award or
to designate an Eligible Individual as a Participant solely by reason of such
Eligible Individual having received a prior Award or having been previously
designated as a Participant. The Committee may grant more than one Award to a
Participant and may designate an Eligible Individual as a Participant for
overlapping periods of time.

 

5.                                       SHARES SUBJECT
TO THE PLAN:

 

(a)                                  Plan Limit.  Subject to Section 12 of the Plan, the
maximum aggregate number of Shares that may be issued for all purposes under
the Plan shall be 3,000,000 (which includes options outstanding under the Prior
Plan). Shares to be issued under the Plan may be authorized and unissued
shares, issued shares that have been reacquired by the Company (in the
open-market or in private transactions) and that are being held in treasury, or
a combination thereof.

 

(b)                                 Rules Applicable
to Determining Shares Available for Issuance. For purposes of
determining the number of Shares that remain available for issuance under the
Plan, the number of Shares corresponding to Awards under the Plan that are
forfeited or expire for any reason without having been exercised or settled,
the number of Shares tendered or withheld to pay the exercise price of an Award
(if applicable) and the number of shares withheld from any Award to satisfy a
Participant’s tax withholding obligations (if applicable) shall be added back
to the Plan Limit and again be available for the grant of Awards. The number of
Shares remaining for issuance will be reduced by the number of Shares subject
to outstanding Awards and for Awards that are not denominated by Shares, by the
number of Shares delivered upon settlement or payment of the Award.

 

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(c)                                  Special Limits. Anything to
the contrary in Section 5(a) above notwithstanding, but subject to Section 12(b) of
the Plan, the maximum number of Shares that may be subject to Options and/or
other Awards granted to any Eligible Individual in any calendar year shall not
exceed 100,000 Shares.

 

6.                                       AWARDS IN
GENERAL:

 

(a)                                  Types of Awards.  Awards under the Plan may consist of Options,
Restricted Stock Units, Restricted Stock, Stock Appreciation Rights and Other
Awards. Any Award described in Sections 7 through 10 of the Plan may be granted
singly or in combination or tandem with any other Awards, as the Committee may
determine. Awards under the Plan may be made in combination with, in
replacement of, or as alternatives to awards or rights under any other
compensation or benefit plan of the Company, including the plan of any acquired
entity.

 

(b)                                 Terms Set Forth
in Award Document.  The terms
and conditions of each Award shall be set forth in an Award Document in a form
approved by the Committee for such Award, which shall contain terms and
conditions not inconsistent with the Plan. Notwithstanding the foregoing, and
subject to applicable laws, the Committee may, in its sole discretion,
accelerate (i) the vesting or payment of any Award, (ii) the lapse of
restrictions on any Award or (iii) the date on which any Award first becomes
exercisable. The terms of Awards may vary among Participants, and the Plan does
not impose upon the Committee any requirement to make Awards subject to uniform
terms. Accordingly, the terms of individual Award Documents may vary.

 

(c)                                  Termination of
Employment.  The
Committee shall specify at or after the time of grant of an Award the
provisions governing the disposition of an Award in the event of a Participant’s
termination of employment with the Company or any of its Subsidiaries. Subject
to applicable laws, rules and regulations, in connection with a
Participant’s termination of employment, the Committee shall have the
discretion to accelerate the vesting, exercisability or settlement of,
eliminate the restrictions and conditions applicable to, or extend the
post-termination exercise period of an outstanding Award. Such provisions may
be specified in the applicable Award Document or determined at a subsequent
time.  Should a Participant’s service
with the Company be terminated for Misconduct or should a Participant otherwise
engage in Misconduct while holding one or more outstanding options under this
Plan, then all those options shall terminate immediately and cease to be
outstanding.

 

(d)                                 Change in
Control.  The Committee shall have full
authority to determine the effect, if any, of a Change in Control of the
Company on the vesting, exercisability, settlement, payment or lapse of
restrictions applicable to an Award, which effect may be specified in the
applicable Award Document or determined at a subsequent time. Except as
otherwise specified in an Award Document (or in a Participant’s employment
agreement), and subject to applicable laws, rules and regulations, the
Board or the Committee shall in its sole discretion, at any time prior to,
coincident with or after the time of a Change in Control, take such actions as
it may consider appropriate to maintain

 

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the rights of a Participant in an Award granted under the Plan,
including, without limitation: (i) providing for the acceleration of any
vesting conditions relating to the exercise or settlement of an Award or that
an Award may be exercised or settled in full on or before a date fixed by the
Board or the Committee; (ii) making such other adjustments to the Awards
then outstanding as the Board or the Committee deems appropriate to reflect
such Change in Control; or (iii) causing the Awards then outstanding to be
assumed, or new rights substituted therefor, by the surviving corporation in
such Change in Control.

 

(e)                                  Dividends and
Dividend Equivalents.  The
Committee may provide Participants with the right to receive dividends or
payments equivalent to dividends or interest with respect to an outstanding
Award, which payments can either be paid currently or deemed to have been
reinvested in Shares, and can be made in Shares, cash or a combination thereof,
as the Committee shall determine.

 

(f)                                    Rights of a
Shareholder.  A
Participant shall have no rights as a shareholder with respect to Shares
covered by an Award until the date the Participant or his nominee becomes the
holder of record of such Shares. No adjustment shall be made for dividends or
other rights for which the record date is prior to such date, except as
provided in Section 12(b) of the Plan.

 

(g)                                 Performance-Based
Awards.  The Committee may determine
whether any Award under the Plan is intended to be “performance-based
compensation” as that term is used in Section 162(m) of the Code. Any
such Awards designated to be “performance-based compensation” shall be
conditioned on the achievement of one or more Performance Targets to the extent
required by Section 162(m) of the Code and will be subject to all
other conditions and requirements of Section 162(m). The Performance
Targets that may be used by the Committee for such Awards will be based on
measurable and attainable financial goals for the Company, one or more of its
operating divisions or Subsidiaries or any combination of the above such as net
income, total revenues, operating cash flow, operating margin, operating
revenue, revenue growth rates, pretax income, pretax operating income,
operating or gross margin, growth rates, operating income growth, return on
assets, total shareholder return, share price, return on equity, operating
earnings, diluted earnings per share or earnings per share growth, or a
combination thereof as selected by the Committee, and quantifiable nonfinancial
goals. The applicable Performance Targets will be established by the Committee
prior to the commencement of the applicable performance period (or such later
date permitted by Section 162(m) of the Code). Each Participant is
assigned a target number of Shares (subject to the limitations set forth in Section 5(c))
payable if Performance Targets are achieved. Any payment of an Award granted
with Performance Targets shall be conditioned on the written certification of
the Committee in each case that the Performance Targets and any other material
conditions were satisfied. If a Participant’s performance exceeds such
Participant’s Performance Targets, Awards may be greater than the target
number, but may not exceed two hundred percent (200%) of such Participant’s
target number. The Committee retains the right to reduce any Award if it
believes that individual performance does not warrant the Award calculated by
reference 

 

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to the result. In the event all members of the Committee are not “outside
directors” as that term is defined in Section 162(m) of the Code, the
grant and terms of Awards intended to qualify as “performance-based
compensation” will be made by a subcommittee appointed in accordance with Section 3(d) of
the Plan consisting of two or more “outside directors” for purposes of Section 162(m) of
the Code.

 

7.                                       TERMS AND
CONDITIONS OF OPTIONS:

 

(a)                                  General.  The Committee, in its discretion, may grant
Options to eligible Participants and shall determine whether such Options shall
be Incentive Stock Options or Nonqualified Stock Options. Each Option shall be
evidenced by an Award Document that shall expressly identify the Option as an
Incentive Stock Option or Nonqualified Stock Option, and be in such form and
contain such provisions as the Committee shall from time to time deem
appropriate.

 

(b)                                 Exercise Price.  The exercise price of an Option shall be
fixed by the Committee at the time of grant or shall be determined by a method
specified by the Committee at the time of grant. Payment of the exercise price
of an Option shall be made in any form approved by the Committee at the time of
grant.

 

(c)                                  Term.  An Option shall be effective for such term as
shall be determined by the Committee and as set forth in the Award Document relating
to such Option, and the Committee may extend the term of an Option after the
time of grant; provided, however, that the term of an Option may in no event
extend beyond the tenth anniversary of the date of grant of such Option.

 

(d)                                 Payment of
Exercise Price.  Subject to
the provisions of the applicable Award Document, the exercise price of an
Option may be paid (i) in cash, (ii) by actual delivery or
attestation to ownership of freely transferable Shares already owned by the
person exercising the Option, (iii) by a combination of cash and Shares
equal in value to the exercise price, (iv) through net share settlement or
similar procedure involving the withholding of Shares subject to the Option
with a value equal to the exercise price or (v) by such other means as the
Committee, in its discretion, may authorize. In accordance with the rules and
procedures authorized by the Committee for this purpose, the Option may also be
exercised through a “cashless exercise” procedure authorized by the Committee
that permits Participants to exercise Options by delivering a properly executed
exercise notice to the Company together with a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale or loan
proceeds necessary to pay the exercise price and the amount of any required tax
or other withholding obligations.

 

(e)                                  Incentive Stock
Options.  The exercise price per Share
of an Incentive Stock Option shall be fixed by the Committee at the time of
grant or shall be determined by a method specified by the Committee at the time
of grant, but in no event shall the exercise price of an Incentive Stock Option
be less than one hundred percent (100%) of the Fair Market Value of a Share on
the date of grant. No Incentive Stock Option may be 

 

9

 

issued pursuant to the Plan to any individual who, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any of its Subsidiaries, unless (i) the exercise price determined as of
the date of grant is at least one hundred ten percent (110%) of the Fair Market
Value on the date of grant of the Shares subject to such Incentive Stock Option
and (ii) the Incentive Stock Option is not exercisable more than five
years from the date of grant thereof. No Participant shall be granted any
Incentive Stock Option which would result in such Participant receiving a grant
of Incentive Stock Options that would have an aggregate Fair Market Value in
excess of one hundred thousand dollars ($100,000), determined as of the time of
grant, that would be exercisable for the first time by such Participant during
any calendar year. The terms of any Incentive Stock Option granted under the
Plan shall comply in all respects with the provisions of Section 422 of
the Code, or any successor provision thereto, and any regulations promulgated
thereunder.

 

8.                                       TERMS AND
CONDITIONS OF RESTRICTED STOCK UNITS AND RESTRICTED STOCK:

 

(a)                                  Restricted
Stock Units.  The
Committee is authorized to grant Restricted Stock Units to Eligible
Individuals. A Restricted Stock Unit shall entitle a Participant to receive,
subject to the terms, conditions and restrictions set forth in the Plan and the
applicable Award Document, one or more Shares in consideration of the
Participant’s employment with the Company or any of its Subsidiaries. The
Restricted Stock Units shall be paid in Shares, cash, or a combination of cash
and Shares, with a value equal to the Fair Market Value of the Shares at the
time of payment.

 

(b)                                 Restricted
Stock.  An Award of Restricted Stock
shall consist of one or more shares of Common Stock granted or sold to an
Eligible Individual, and shall be subject to the terms and conditions
established by the Committee in connection with the Award and specified in the
applicable Award Document. Restricted Stock may, among other things, be subject
to restrictions on transferability, vesting requirements or other specified circumstances
under which it may be canceled.

 

9.                                       STOCK
APPRECIATION RIGHTS:

 

(a)                                  General.  The Committee is authorized to grant Stock
Appreciation Rights to Eligible Individuals. A Stock Appreciation Right shall
entitle a Participant to receive, upon satisfaction of the conditions to
payment specified in the applicable Award Document, an amount equal to the
excess, if any, of the Fair Market Value on the exercise date of the number of
Shares for which the Stock Appreciation Right is exercised over the grant price
for such Stock Appreciation Right specified in the applicable Award Document.
The grant price per share of Shares covered by a Stock Appreciation Right shall
be fixed by the Committee at the time of grant or, alternatively, shall be
determined by a method specified by the Committee at the time of grant, but in
no event shall the grant price of a Stock Appreciation Right be less than one
hundred percent (100%) of the Fair Market Value of a Share on the date of
grant. At the sole 

 

10

 

discretion of the Committee, payments to a Participant upon exercise of
a Stock Appreciation Right may be made in cash or Shares, or in a combination
of cash and Shares, having an aggregate Fair Market Value as of the date of exercise
equal to such cash amount.

 

(b)                                 Methods of
Exercise.  In
accordance with the rules and procedures established by the Committee for
this purpose, and subject to the provisions of the applicable Award Document
and all applicable laws, the Committee shall determine the permissible methods
of exercise for a Stock Appreciation Right.

 

(c)                                  Stock
Appreciation Rights in Tandem with Options.  A Stock Appreciation Right granted in tandem
with an Option may be granted either at the same time as such Option or subsequent
thereto. If granted in tandem with an Option, a Stock Appreciation Right shall
cover the same number of Shares as covered by the Option (or such lesser number
of shares as the Committee may determine) and shall be exercisable only at such
time or times and to the extent the related Option shall be exercisable, and
shall have the same term as the related Option. The grant price of a Stock
Appreciation Right granted in tandem with an Option shall equal the per share
exercise price of the Option to which it relates. Upon exercise of a Stock
Appreciation Right granted in tandem with an Option, the related Option shall
be canceled automatically to the extent of the number of Shares covered by such
exercise; conversely, if the related Option is exercised as to some or all of
the shares covered by the tandem grant, the tandem Stock Appreciation Right
shall be canceled automatically to the extent of the number of Shares covered
by the Option exercise.

 

10.                                 OTHER
AWARDS:  The Committee shall have the
authority to specify the terms and provisions of other forms of equity-based or
equity-related Awards not described above that the Committee determines to be
consistent with the purpose of the Plan and the interests of the Company, which
Awards may provide for cash payments based in whole or in part on the value or
future value of Shares, for the acquisition or future acquisition of Shares, or
any combination thereof.

 

11.                                 CERTAIN
RESTRICTIONS:

 

(a)                                  Transfers. Unless the
Committee determines otherwise on or after the date of grant, no Award shall be
transferable other than by last will and testament or by the laws of descent
and distribution or pursuant to a domestic relations order, as the case may be;
provided, however, that the Committee may, in its discretion and subject to
such terms and conditions as it shall specify, permit the transfer of an Award
for no consideration (i) to a Participant’s family member, (ii) to
one or more trusts established in whole or in part for the benefit of one or
more of such family members, (iii) to one or more entities which are
beneficially owned in whole or in part by one or more such family members or (iv) to
any other individual or entity permitted under law and the rules of Nasdaq or
any other exchange that lists the Shares (collectively, “Permitted
Transferees”). Any Award transferred to a Permitted Transferee shall be further
transferable only by last will and testament or the laws of descent and
distribution or, for no consideration, to another Permitted Transferee of the
Participant.

 

11

 

(b)                                 Award
Exercisable Only by Participant.  During the lifetime of a Participant, an
Award shall be exercisable only by the Participant or by a Permitted Transferee
to whom such Award has been transferred in accordance with Section 11(a) above.
The grant of an Award shall impose no obligation on a Participant to exercise
or settle the Award.

 

12.                                 RECAPITALIZATION
OR REORGANIZATION:

 

(a)                                  Authority of
the Company and Stockholders.  The existence of the Plan, the Award
Documents and the Awards granted hereunder shall not affect or restrict in any
way the right or power of the Company or the stockholders of the Company to
make or authorize any adjustment, recapitalization, reorganization or other change
in the Company’s capital structure or business, any merger or consolidation of
the Company, any issue of stock or of options, warrants or rights to purchase
stock or of bonds, debentures, preferred or prior preference stocks whose
rights are superior to or affect the Shares or the rights thereof or which are
convertible into or exchangeable for Shares, or the dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.

 

(b)                                 Change in
Capitalization.  Notwithstanding any provision of the Plan or
any Award Document, the number and kind of Shares authorized for issuance under
Section 5 of the Plan, including the maximum number of Shares available
under the special limits provided for in Section 5(c), shall be equitably
adjusted in the event of a stock split, stock dividend, combination or similar
exchange of Shares, recapitalization, reorganization, merger or consolidation
and may be equitably adjusted in the sole discretion of the Committee in the
event of an extraordinary dividend, split-up, spin-off, warrants or rights
offering to purchase Shares at a price substantially below Fair Market Value or
other similar corporate event affecting the Shares, in each case in order to
preserve, but not increase, the benefits or potential benefits intended to be
made available under the Plan. In addition, upon the occurrence of a stock
split, stock dividend, combination or similar exchange of Shares,
recapitalization, reorganization, merger or consolidation, the number of
outstanding Awards and the number and kind of Shares subject to any outstanding
Award and the exercise price per Share (or the grant price per Share, as the
case may be), if any, under any outstanding Award shall be equitably adjusted
in order to preserve the benefits or potential benefits intended to be made
available to Participants granted Awards. Upon the occurrence of any of the
other events described above, the number of outstanding Awards and the number
and kind of Shares subject to any outstanding Award and the exercise price per
Share (or the grant price per Share, as the case may be), if any, under any
outstanding Award may be equitably adjusted (including by payment of cash to a
Participant) in the sole discretion of the Committee in order to preserve the
benefits or potential benefits intended to be made available to Participants
granted Awards. With respect to any such adjustments to be 

 

12

 

made in the discretion of the Committee, such adjustments shall be made
by the Committee, in its sole discretion, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final. Unless otherwise
determined by the Committee, such adjusted Awards shall be subject to the same
restrictions and vesting or settlement schedule to which the underlying Award
is subject.

 

13.                                 TERM OF THE
PLAN:  Unless earlier terminated pursuant
to Section 15 of the Plan, the Plan shall terminate on March 31,
2016, except with respect to Awards then outstanding. No Awards may be granted
under the Plan after March 31, 2016.

 

14.                                 EFFECTIVE
DATE:  The Plan shall become effective on
the Effective Date; provided, however, that if the Plan is not approved by the
stockholders upon submission to them for approval, the Plan shall be void ab initio.

 

15.                                 AMENDMENT AND
TERMINATION:  Subject to applicable laws,
rules and regulations, the Board may at any time terminate or, from time
to time, amend, modify or suspend the Plan; provided, however, that no
termination, amendment, modification or suspension of the Plan shall materially
and adversely alter or impair the rights of a Participant in any Award
previously made under the Plan without the consent of the holder thereof.
Notwithstanding the foregoing, the Committee shall have broad authority to
amend the Plan or any Award under the Plan without the consent of a Participant
to the extent it deems necessary or desirable (a) to comply with, or take
into account changes in, applicable tax laws, securities laws, accounting rules and
other applicable laws, rules and regulations or (b) to ensure that an
Award is not subject to interest and penalties under Section 409A of the
Code.

 

16.                                 MISCELLANEOUS:

 

(a)                                  Tax Withholding.  The Company or a Subsidiary, as appropriate,
may require any individual entitled to receive a payment in respect of an Award
to remit to the Company, prior to such payment, an amount sufficient to satisfy
any applicable tax withholding requirements. In the case of an Award payable in
Shares, the Company or a Subsidiary, as appropriate, may permit such individual
to satisfy, in whole or in part, such obligation to remit taxes by directing
the Company to withhold shares that would otherwise be received by such
individual or to repurchase shares that were issued to such individual to
satisfy the minimum statutory withholding rates for any applicable tax
withholding purposes, in accordance with all applicable laws and pursuant to
such rules as the Committee may establish from time to time. The Company
or a Subsidiary, as appropriate, shall also have the right to deduct from all
cash payments made to a Participant (whether or not such payment is made in
connection with an Award) any applicable taxes required to be withheld with
respect to such payments.

 

(b)                                 No Right to
Awards or Employment.  No person
shall have any claim or right to receive Awards under the Plan. Neither the
Plan, the grant of Awards under the Plan nor any action taken or omitted to be
taken under the Plan shall be deemed to create or confer on any Eligible
Individual any right to be retained in the employ of the 

 

13

 

Company or any Subsidiary or other affiliate thereof, or to interfere
with or to limit in any way the right of the Company or any Subsidiary or other
affiliate thereof to terminate the employment of such Eligible Individual at
any time. No Award shall constitute salary, recurrent compensation or contractual
compensation for the year of grant, any later year or any other period of time.
Payments received by a Participant under any Award made pursuant to the Plan
shall not be included in, nor have any effect on, the determination of
employment-related rights or benefits under any other employee benefit plan or
similar arrangement provided by the Company and the Subsidiaries, unless
otherwise specifically provided for under the terms of such plan or arrangement
or by the Committee.

 

(c)                                  Securities Law
Restrictions.  An Award
may not be exercised or settled and no Shares may be issued in connection with
an Award unless the issuance of such shares has been registered under the
Securities Act of 1933, as amended, and qualified under applicable state “blue
sky” laws and any applicable foreign securities laws, or the Company has
determined that an exemption from registration and from qualification under
such state “blue sky” laws is available. The Committee may require each
Participant purchasing or acquiring Shares pursuant to an Award under the Plan
to represent to and agree with the Company in writing that such Eligible
Individual is acquiring the Shares for investment purposes and not with a view
to the distribution thereof. All certificates for Shares delivered under the
Plan shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any exchange upon which
the Shares are then listed, and any applicable securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

 

(d)                                 Section 162(m) of
the Code.  The Plan is
intended to comply in all respects with Section 162(m) of the Code.

 

(e)                                  Awards to
Individuals Subject to Laws of a Jurisdiction Outside of the United States.  To the extent that Awards under the Plan are
awarded to individuals who are domiciled or resident outside of the United
States or to persons who are domiciled or resident in the United States but who
are subject to the tax laws of a jurisdiction outside of the United States, the
Committee may adjust the terms of the Awards granted hereunder to such person (i) to
comply with the laws of such jurisdiction and (ii) to permit the grant of
the Award not to be a taxable event to the Participant. The authority granted
under the previous sentence shall include the discretion for the Committee to
adopt, on behalf of the Company, one or more sub-plans applicable to separate
classes of Eligible Individuals who are subject to the laws of jurisdictions
outside of the United States.

 

(f)                                    Satisfaction of
Obligations. Subject to applicable law, the Company may apply
any cash, Shares, securities or other consideration received upon exercise or
settlement of an Award to any obligations a Participant owes to the Company and
the Subsidiaries in connection with the Plan or otherwise, including, without
limitation, any tax obligations or obligations under a currency facility
established in connection with the Plan.

 

14

 

(g)                                 Unfunded Plan.  The Plan is intended to constitute an
unfunded plan for incentive compensation. Prior to the issuance of Shares in
connection with an Award, nothing contained herein shall give any Participant
any rights that are greater than those of a general unsecured creditor of the
Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Shares with respect to awards hereunder.

 

(h)                                 Award Document.  In the event of any conflict or inconsistency
between the Plan and any Award Document, the Plan shall govern and the Award
Document shall be interpreted to minimize or eliminate any such conflict or
inconsistency.

 

(i)                                     Application of
Funds.  The proceeds received by the
Company from the sale of Shares pursuant to Awards will be used for general
corporate purposes.

 

(j)                                     Headings.  The headings of sections herein are included
solely for convenience of reference and shall not affect the meaning of any of
the provisions of the Plan.

 

(k)                                  Section 409A
of the Code.  If any
provision of the Plan or an Award Agreement contravenes any regulations or
Treasury guidance promulgated under Section 409A of the Code or could
cause an Award to be subject to the interest and penalties under Section 409A
of the Code, such provision of the Plan or any Award Agreement shall be
modified to maintain, to the maximum extent practicable, the original intent of
the applicable provision without violating the provisions of Section 409A
of the Code. Moreover, any discretionary authority that the Committee may have
pursuant to the Plan shall not be applicable to an Award that is subject to Section 409A
of the Code to the extent such discretionary authority will contravene Section 409A
or the regulations or guidance promulgated thereunder.

 

(l)                                     Governing Law.  Except as to matters of federal law, the Plan
and all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Nevada (other than its conflict of law
rules).

 

AS APPROVED BY THE BOARD OF
DIRECTORS AND STOCKHOLDERS OF ALLEGIANT TRAVEL COMPANY ON MAY 1, 2006.

 

AS AMENDED BY THE BOARD OF
DIRECTORS ON JULY 17, 2009

 

15Exhibit 10.1

 

	
  

  	
   

  	
  Commercial Note  

  Maryland

  
	
   

  	
   

  	
   

  
	
  Borrower
  Cogent Communications Group, Inc.

  	
   

  	
  Date
  October 15, 2009

  
	
  Borrower’s
  Address 1015 31st Street, NW, Washington DC 20007

  	
   

  	
   

  
	
  Loan
  Amount Twenty Million Dollars and no / 100

  	
   

  	
  Dollars
  ($20,000,000)

  
	
  Account
  Number 6026747

  	
  Note
  Number

  	
  Officer
  W.W. Palmer / 15077

  
					

 

For value received, the borrower(s) named above,
whether one or more (the “Borrower”), jointly and severally promise to pay to
the order of SunTrust Bank, a Georgia banking corporation (“SunTrust”) at any
of its offices, or at such place as SunTrust may in writing designate, without
offset in U.S. Dollars in immediately available funds, the Loan Amount shown
above, or the total of all amounts advanced under this commercial note and any
modifications, renewals, extensions or replacements thereof (this “Note”) if
less than the full Loan Amount is advanced, plus interest and any other amounts
due, upon the terms specified below.

 

	
  Note Type

  	
   

  	
  Repayment Terms

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  Demand

  Note

  	
   

  	
  This obligation is payable on demand.  SunTrust shall have the right to demand
  payment at any time in its sole and absolute discretion. Principal is payable
  on demand; accrued interest will be payable on the       day of each

                                  beginning on                                ,               ,
  and on demand.

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  Time
  Note

  	
   

  	
  o One payment
  of all principal, interest and any other amounts owed will be due and payable
  on

                                     ,              .  

  o Accrued
  interest will be payable on the
              day
  of each
                                             
  beginning on  

                                 ,                  .
  Principal plus any accrued and unpaid interest and any other amounts owed
  will be due and payable on                             ,                                           .

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  Fixed

  Payment

  Term Note

  	
   

  	
  Fixed
  payment schedule consisting of
                    
  consecutive
                    
  installments of principal and interest of

  $                                   each,
  payable on the        day of
  each                   ,
  beginning  

                       ,                     ,
  and a final payment equal to the unpaid balance of principal plus accrued and
  unpaid interest and any other amounts owed due and payable on                ,                        .

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  Variable

  Payment

  Term Note

  	
   

  	
  Variable
  payment schedule consisting of
                    
  consecutive
                    
  installments of principal of  

  $                                      each,
  plus accrued interest, payable on
  the           day of
  each                               ,  beginning                                   ,       ,
  and a final payment of
  $           plus
  accrued

  and
  unpaid interest and any other amounts owed due and payable
  on                        ,         .

  
	
   

  	
   

  	
   

  	
   

  
	
  x

  	
  Revolving

  Master

  Borrowing

  Note With

  Maturity

  Date

  	
   

  	
  This
  is an open end revolving line of credit. Borrower may borrow an aggregate
  principal amount up to the Loan Amount outstanding at any one time.

   

  Principal
  is due and payable in full on the Maturity Date, but the Borrower shall be
  liable for only so much of the Loan Amount as shall be equal to the total
  amount advanced to the Borrower by SunTrust from time to time, less all
  payments made by or for the Borrower and applied by SunTrust to principal.
   Advances under this Note shall be recorded and maintained by SunTrust
  in its internal records and such records shall be conclusive of the principal
  and interest owed by Borrower unless there is a material error in such records.
   Accrued interest will be payable on the first
  day of each month beginning on November 1, 2009, with all unpaid accrued interest due and payable on the
  Maturity Date.  

  “Maturity
  Date” means October 14, 2010, or such date to which this Note may be
  extended or renewed in the sole discretion of SunTrust by written notice from
  SunTrust to Borrower.

  

 

1

 

	
  o

  	
  Revolving

  Master

  Borrowing

  Note  

  Payable 

  On 

  Demand

  	
   

  	
  This is an open end revolving line of credit; Borrower may borrow an
  aggregate principal amount up to the Loan Amount outstanding at any one time.  

  This obligation is payable on demand,  but the
  Borrower shall be liable for only so much of the Loan Amount as shall be
  equal to the total amount advanced to the Borrower by SunTrust from time to
  time, less all payments made by or for the Borrower and applied by SunTrust
  to principal, plus interest on each such advance, and any other amounts
  due.  Advances under this Note shall be
  recorded and maintained by SunTrust in its internal records and such records
  shall be conclusive of the principal and interest owed by Borrower unless
  there is a material error in such records.  SunTrust shall have no
  obligation to make advances and all amounts outstanding are due on demand.  

  Accrued interest will be payable on the       day of each             beginning on      ,      ,
  and on demand. This Master Borrowing Note may be terminated without notice to
  the undersigned by SunTrust.

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  Closed 

  End  

  Master  

  Borrowing  

  Note With 

  Maturity 

  Date

  	
   

  	
  This is a closed end transaction; Borrower may borrow up to the Loan
  Amount but may not reborrow amounts that have been repaid.  

  Principal is due and payable in full on             ,                  (the “maturity date”), but the Borrower
  shall be liable for only so much of the Loan Amount as shall be equal to the
  total amount advanced to the Borrower by SunTrust from time to time, less all
  payments made by or for the Borrower and applied by SunTrust to principal.
   Advances under this Note shall be recorded and maintained by SunTrust
  in its internal records and such records shall be conclusive of the principal
  and interest owed by Borrower unless there is a material error in such
  records.  

  Accrued interest will be payable on the       day
  of each             beginning
  on      ,      ,
  with all unpaid accrued interest due and payable on the maturity date.
   This Note will terminate on the maturity date.

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  Closed 

  End  

  Master  

  Borrowing  

  Note 

  Payable 

  On 

  Demand

  	
   

  	
  This is a closed end transaction; Borrower may borrow up to the Loan
  Amount but may not reborrow amounts that have been repaid.  

  This obligation is payable on demand,  but the
  Borrower shall be liable for only so much of the Loan Amount as shall be
  equal to the total amount advanced to the Borrower by SunTrust from time to
  time, less all payments made by or for the Borrower and applied by SunTrust
  to principal, plus interest on each such advance, and any other amounts
  due.  Advances under this Note shall be
  recorded and maintained by SunTrust in its internal records and such records
  shall be conclusive of the principal and interest owed by Borrower unless
  there is a material error in such records.  SunTrust shall have no
  obligation to make advances and all amounts outstanding are due on demand.  

  Accrued interest will be payable on the       day
  of each             beginning
  on      ,      ,
  and on demand.  This Master Borrowing Note
  may be terminated without notice to the undersigned by SunTrust.

  
	
  o

  	
  Irregular  

  Payment  

  Schedule  

  Note

  	
   

  	
   

  

 

o Payout
Requirement for Revolving Line.  Borrower agrees that for each twelve-month or
364-day period that this Master Revolving line is available, beginning with the
date of this Note, Borrower shall maintain a zero balance outstanding on the
line for at least one 30 consecutive day period

 

x Additional Terms And Conditions

 

This Note is governed by additional terms and conditions contained in an
Agreement to Commercial Note between the Borrower and SunTrust dated October 15, 2009 and any modifications, renewals, extensions or replacements
thereof (the “Agreement”), which is incorporated herein by reference. In the
event of a conflict between any term or condition contained in this Note and in
the Agreement, such term or condition of the Agreement shall control.

 

Interest

 

Interest will accrue on aactual / 360 basis
(actual days elapsed to a 360- day year).  Interest shall accrue from the date of
disbursement on the unpaid balance and shall continue to accrue until this Note
is paid in full.

 

Subject to the above, interest per annum payable on
this Note (the “Rate”) shall be:

 

o Fixed:                           %
per annum fixed for the term of the loan.

x Variable:  This is a variable rate transaction. The
interest rate is prospectively subject to increase or decrease without prior

 

2

 

notice and is based on the following Index.

o SunTrust Prime
Rate, the Prime Rate as established from time to time by SunTrust.

o Wall Street
Journal Prime, the Prime Rate published in the Money Rates section of the Wall Street Journal from time to time.

x The LIBOR Rate
as defined on the attached Addendum A.

o                                                                                                                                                                                                                           
..

 

Note:  The “Prime
Rate” is a reference for fixing the lending rate for commercial loans. The
Prime Rate is a reference rate only and does not necessarily represent the
lowest rate of interest charged for commercial borrowings. If the Index is the
SunTrust Prime Rate, the Index is subject to increase or decrease at the sole
option of SunTrust.

 

The Rate shall equal  o the Index.

x the greater of (a) 3.00%
per annum and (b) the Index plus 2.50 % per annum.

o                                   %
of the Index plus                                %
per annum.

o                                                                                                                                                                   .

 

Adjustments to the Rate shall be effective:

o as of the date the Index
changes.

x as of the date referenced on
the attached Addendum A.

o                                                                                                                                                                   .

The Rate shall not exceed the maximum rate permitted by applicable law.

 

o Renewal

 

This Note represents a renewal and amendment of note number           dated or last renewed or extended as
of        ,       executed by Borrower and does not, and is not
intended to, constitute a novation of the indebtedness evidenced by such note.

 

Collateral

 

The collateral for this Note is the following:

 

Accounts and General Intangibles of Borrower and of
Cogent Communications, Inc., a Delaware corporation wholly owned by
Borrower, and of Cogent Canada, Inc., a Nova Scotia corporation wholly
owned by Borrower (each a “Guarantor”) as more particularly defined in the
Security Agreement dated October 15, 2009, individually executed and
delivered by Borrower and each Guarantor.

 

All of the foregoing security is referred to
collectively as the “Collateral”.  The
proceeds of any Collateral may be applied against the liabilities of the
Borrower to SunTrust under this Note in such order as SunTrust deems proper.

 

Loan Purpose And
Updated Financial Information Required

 

The Borrower warrants and represents that the loan
evidenced by this Note is being made solely for the purpose of acquiring or
carrying on a business, professional or commercial activity or acquiring real
or personal property as an investment (other than a personal investment) or for
carrying on an investment activity (other than a personal investment activity).
The Borrower agrees to provide to SunTrust updated financial information,
including, but not limited to, tax returns, current financial statements in
form satisfactory to SunTrust, as well as additional information, reports or
schedules (financial or otherwise), all as SunTrust may from time to time
request.

 

Representations and
Warranties

 

This Note has been duly executed and delivered by Borrower, constitutes
Borrower’s valid and legally binding obligations and is enforceable in
accordance with its terms against Borrower. 
The execution, delivery and performance of this Note and the
consummation of the transaction contemplated will not, with or without the
giving of notice or the lapse of time, (a) violate any material law
applicable to Borrower, (b) violate any judgment, writ, injunction or
order of any court or governmental body or officer applicable to Borrower, (c) violate
or result in the breach of any material agreement to which Borrower is a party
nor (d) violate Borrower’s charter or bylaws as applicable. No consent,
approval, license, permit or other authorization of any third party or any
governmental body or officer is required for the valid and lawful execution and
delivery of this Note.

 

3

 

Default, Acceleration
And Setoff

 

An “event of default” shall occur hereunder upon the
occurrence of any one or more of the following events or conditions:

 

a.               the failure by any Obligor (as defined below)
to pay when due, whether by acceleration or otherwise, any amount owed under
this Note;

b.              the occurrence of any event of default under any
agreement or loan document executed in conjunction with this Note or the
failure of any Obligor to perform any covenant, promise or obligation contained
in this Note or any other agreement to which any Obligor and SunTrust are
parties;

c.               the breach of any of any Obligor’s
representation or warranties contained in this Note or any other agreement with
SunTrust;

d.              the failure of any Obligor to pay when due any amount
in excess of $5,000,000 owed to any creditor other than SunTrust under a
written agreement calling for the payment of money;

e.               the death, declaration of incompetency,
dissolution, liquidation, merger, consolidation, termination or suspension of
usual business of any Obligor;

f.                 the occurrence of a Change in Control, which
shall mean the occurrence of one or more of the following events: (1) any
sale, lease, exchange or other transfer (in a single transaction or a series of
related transactions) of all or substantially all of the assets of Borrower to
any person or entity or “group” (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission
thereunder in effect on the date hereof), (2) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any person or
entity 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) of 35% or more of the outstanding shares of the voting
stock of Borrower; or (3) occupation of a majority of the seats (other
than vacant seats) on the board of directors of Borrower by persons who were
neither (i) nominated by the current board of directors or (ii) appointed
by directors so nominated;

g.              the insolvency or inability to pay debts as they
mature of any Obligor, the application for the appointment of a receiver for
any Obligor, the filing of a petition or the commencement of a proceeding by or
against any Obligor under any provision of any applicable Bankruptcy Code or
other insolvency law or statute, or any assignment for the benefit of creditors
by or against any Obligor;

h.              the entry of a judgment or the issuance or service of
any attachment, levy or garnishment, in each case in excess of $5,000,000
against any Obligor or the property of any Obligor or the repossession or
seizure of property of any Obligor;

i.                  any Obligor commits fraud or makes a material
misrepresentation at any time in connection with this Note or any Collateral;

j.                  any deterioration or impairment of the
Collateral or any decline or depreciation in the value of the Collateral which
causes the Collateral in the judgment of SunTrust to become unsatisfactory as
to character or value;

k.               the sale or transfer by any Obligor of all or
substantially all of such Obligor’s assets other than in the ordinary course of
business; or

l.                  the termination of any guaranty of this Note
by a guarantor; or

 

SunTrust shall not be obligated to fund this Note or
make any advance under this Note if an event of default exists or would exist
if such funding occurred or such advance made. Upon the occurrence of an event
of default, SunTrust shall, at its option, have the remedies provided herein
and by any other agreement between SunTrust and any Obligor or under applicable
law, including without limitation, declaring the entire outstanding principal
balance, together with all interest thereon and any other amounts due under
this Note, to be due and payable immediately without presentment, demand,
protest, or notice of any kind, except notice required by law.  Upon the occurrence of an event of default
under section g above, the entire outstanding principal balance, together with
all interest thereon and any other amounts due under this Note, shall
automatically become due and payable without presentment, demand, protest, or
notice of any kind except notice required by law, and SunTrust’s obligation to
make advances under this Note shall automatically terminate without notice or
further action by SunTrust.  Upon the
occurrence of an event of default, as of the date of such event of default,
SunTrust shall be entitled to interest on the unpaid balance of this Note at the
lesser of (a) the Rate plus 2.00% per annum or (b) the maximum rate
allowed by law (the “Default Rate”) until paid in full. To the extent permitted
by law, upon default SunTrust will have the right, in addition to all other
remedies provided herein, to set off the amount due under this Note or due
under any other obligation to SunTrust against any and all accounts, whether
checking or savings or otherwise, credits, money, stocks, bonds or other
security or property of any nature whatsoever on deposit with, held by, owed
by, or in the possession of, SunTrust to the credit of or for the account of
any Obligor, without notice to or consent by any Obligor. The remedies provided
in this Note and any other agreement between SunTrust and any Obligor and by
applicable law are cumulative and not exclusive of any other remedies provided
by law.

 

Late
Charges And Other Authorized Fees And Charges

 

As
used herein, the term “Obligor” shall individually and collectively refer to
the Borrower and any person or entity 

 

4

 

that
is primarily or secondarily liable on this Note and any person or entity that
has conveyed or may hereafter convey any security interest or lien to SunTrust
in any real or personal property to secure payment of this Note. If any portion
of a payment is at least ten fifteen (15) days past due, the Borrower agrees to
pay a late charge of 5% of the amount which is past due.  Unless prohibited by applicable law, the
Borrower agrees to pay a fee of $15.00 for returned checks if a payment is made
on this Note with a check and the check is dishonored for any reason after the
second presentment.  In addition to any
other amounts owed under the terms of this Note, the Borrower agrees to pay
those fees and charges disclosed in the attached Disbursements and Charges
Summary which is incorporated in this Note by reference and, as permitted by
applicable law, the Borrower agrees to pay the following: (a) all
expenses, including, without limitation, any and all costs incurred by SunTrust
related to default, all court costs and out-of-pocket collection expenses,,
whether suit be brought or not, incurred in collecting this Note; (b) all
costs incurred in evaluating, preserving or disposing of any Collateral granted
as security for the payment of this Note, including the cost of any audits,
appraisals, appraisal updates, reappraisals or environmental inspections which
SunTrust from time to time in its sole discretion may deem necessary; (c) any
premiums for property insurance purchased on behalf of the Borrower or on
behalf of the owner(s) of any Collateral pursuant to any security
instrument relating to any Collateral; (d) any expenses or costs incurred
in defending any claim arising out of the execution of this Note or the
obligation which it evidences, or otherwise involving the employment by
SunTrust of attorneys with respect to this Note and the obligations it
evidences; and (e) any other charges permitted by applicable law. The
Borrower agrees to pay such amounts on demand or, at SunTrust’s option, such
amounts may be added to the unpaid balance of the Note and shall accrue
interest at the stated Rate. Upon the occurrence of an event of default, or
after demand and failure to pay if this Note is payable on demand, interest
shall accrue at the Default Rate.

 

o Prepayment Provisions

 

This Note is subject to
prepayment conditions as described in the attached Prepayment Rider of even
date which is incorporated herein by reference.

 

Waivers

 

The Borrower and each other Obligor waive
presentment, demand, protest, notice of protest and notice of dishonor and
waive all exemptions, whether homestead or otherwise, as to the obligations
evidenced by this Note and waive any discharge or defenses based on suretyship
or impairment of Collateral or of recourse. 
The Borrower and each other Obligor waive any rights to require SunTrust
to proceed against any other Obligor or any Collateral before proceeding
against the Borrower or any of them, or any other Obligor, and agree that
without notice to any Obligor and without affecting any Obligor’s liability,
SunTrust, at any time or times, may grant extensions of the time for payment or
other indulgences to any Obligor or permit the renewal or modification of this
Note, or permit the substitution, exchange or release of any Collateral for
this Note and may add or release any Obligor primarily or secondarily liable.
The Borrower and each other Obligor agree that SunTrust may apply all monies
made available to it from any part of the proceeds of the disposition of any
Collateral or by exercise of the right of setoff either to the obligations
under this Note or to any other obligations of any Obligor to SunTrust, as
SunTrust may elect from time to time.

 

Waiver of Jury Trial

 

THE BORROWER AND SUNTRUST HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE AND ANY OTHER DOCUMENT OR
INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS NOTE, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY HERETO.  THIS
PROVISION IS A MATERIAL INDUCEMENT FOR SUNTRUST ENTERING INTO OR ACCEPTING THIS
NOTE.  FURTHER, THE BORROWER HEREBY
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF SUNTRUST, NOR SUNTRUST’S COUNSEL,
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUNTRUST WOULD NOT, IN THE EVENT
OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION.

 

Patriot Act Notice

 

SunTrust hereby notifies
Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of
Pub. L. 107-56 signed into law October 26, 2001), SunTrust may be required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow SunTrust to identify the Borrower in accordance with the Act.

 

Hold Harmless and Indemnification

 

Borrower hereby indemnifies
and agrees to hold SunTrust and its officers, directors, employees, agents and
affiliates (the “Indemnitees”) harmless from and against all claims, damages,
liabilities (including attorneys’ fees and legal expenses), causes of action,
actions, suits and other legal proceedings (collectively, “Claims”) in any
matter relating 

 

5

 

to or arising out of this
Note or any loan document executed in connection with this Note, or any act,
event or transaction related thereto or to the Collateral, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
Claims are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee.  Borrower
shall immediately provide SunTrust with written notice of any such Claim.  Upon request of SunTrust, Borrower shall
defend SunTrust from such Claims, and pay the attorneys’ fees, legal expenses
and other costs incurred in connection therewith, or in the alternative,
SunTrust shall be entitled to employ its own legal counsel to defend such
Claims at Borrower’s sole expense.

 

Miscellaneous

 

All amounts received by SunTrust shall be applied to
expenses, late fees and interest before principal or in any other order as
determined by SunTrust, in it sole discretion, as permitted by law.  Any provision of this Note which is prohibited
or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Note. No
amendment, modification, termination or waiver of any provision of this Note,
nor consent to any departure by the Borrower from any term of this Note, shall
in any event be effective unless it is in writing and signed by an authorized
officer of SunTrust, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.  If the interest Rate is tied to an external
index and the index becomes unavailable during the term of this loan, SunTrust
may, in its sole and absolute discretion, designate a substitute index with
notice to the Borrower. No failure or delay on the part of SunTrust to exercise
any right, power or remedy under this Note shall be construed as a waiver of
the right to exercise the same or any other right at any time.  The captions of the paragraphs of this Note
are for convenience only and shall not be deeded to constitute a part hereof or
used in construing the intent of the parties. 
All representations, warranties, covenants and agreements contained
herein or made in writing by Borrower in connection herewith shall survive the
execution and delivery of this Note and any other agreement, document or
writing relating to or arising out of any of the foregoing.  All notices or communications given to
Borrower pursuant to the terms of this Note shall be in writing and may be given
to Borrower at Borrower’s address as stated below or at the top of this Note
unless Borrower notifies SunTrust in writing of a different address.  Unless otherwise specifically provided herein
to the contrary, such written notices and communications shall be delivered by
hand or overnight courier service, or mailed by first class mail, postage
prepaid, addressed to the Borrower at the address referred to herein. Any
written notice delivered by hand or by overnight courier service shall be
deemed given or received upon receipt. Any written notice delivered by U.S.
Mail shall be deemed given or received on the third (3rd) business day after
being deposited in the U.S. Mail. Notwithstanding any provision of this Note or
any loan document executed in connection with this Note to the contrary, the
Borrower and SunTrust intend that no provision of this Note or any loan
document executed in connection with this Note be interpreted, construed,
applied, or enforced in a way that will permit or require the payment or
collection of interest in excess of the highest rate of interest permitted to
be paid or collected by the laws of the jurisdiction indicated below, or
federal law if federal law preempts the law of such jurisdiction with respect
to this transaction (the “Maximum Permitted Rate”).  If, however, any such
provision is so interpreted, construed, applied, or enforced, Borrower and
SunTrust intend (a) that such provision automatically shall be deemed
revised so as to require payment only of interest at the Maximum Permitted
Rate; and (b) if interest payments in excess of the Maximum Permitted Rate
have been received, that the amount of such excess shall be deemed credited
retroactively in reduction of the then-outstanding principal amount of this
obligation, together with interest at the Maximum Permitted Rate. In connection
with all calculations to determine the Maximum Permitted Rate, the Borrower and
SunTrust intend a that all charges be excluded to the extent they are properly
excludable under the usury laws of such jurisdiction or the United States, as
they from time to time are determined to apply to this obligation; and (b) that
all charges that may be spread in the manner provided by statute of the
jurisdiction indicated or any similar law, be so spread.

 

Liability, Successors
And Assigns And Choice Of Law

 

Each Borrower shall be
jointly and severally obligated and liable on this Note. This Note shall apply
to and bind each of the Borrower’s heirs, personal representatives, successors
and permitted assigns and shall inure to the benefit of SunTrust, its
successors and assigns. Notwithstanding the foregoing, Borrower shall not
assign Borrower’s rights or obligations under this Note without SunTrust’s
prior written consent. This Note shall be governed by applicable federal law
and the internal laws of the state of Maryland. The Borrower agrees that
certain material events and occurrences relating to this Note bear a reasonable
relationship to the laws of Maryland and the validity, terms, performance and
enforcement of this Note shall be governed by the internal laws of Maryland
which are applicable to agreements which are negotiated, executed, delivered
and performed solely in Maryland.  Unless
applicable law provides otherwise, in the event of any legal proceeding arising
out of or related to this Note, Borrower consents to the jurisdiction and venue
of any court located in the state of Maryland.

 

6

 

Transfer
of Loan

 

SunTrust
may, at any time, sell, transfer or assign the Note, the related security
instrument and any related loan documents, and any or all servicing rights with
respect thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the “Securities”).  SunTrust
may forward to each purchaser, transferee, assignee, servicer, participant, or
investor in such Securities or any Rating Agency (as hereinafter defined)
rating such Securities (collectively, the “Investor”) and each prospective
Investor, all documents and information which SunTrust now has or may hereafter
acquire relating to the Borrower, any loan to Borrower, any guarantor or the
property, whether furnished by Borrower, any guarantor or otherwise, as
SunTrust determines necessary or desirable.  The term “Rating Agency”
shall mean each statistical rating agency that has assigned a rating to the
Securities. The Borrower shall have the right to approve any transfer of the
Note if no event of default has occurred and is continuing, provided that such
approval shall not be unreasonably withheld.

 

By
signing below, the Borrower agrees to the terms of this Note and the
disbursement of proceeds as described in the Disbursements and Charges Summary
form provided in connection with this transaction.

 

 

	
   

  	
  Non-Individual
  Borrower:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Cogent Communications Group, Inc.

  
	
   

  	
  Borrower

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Thaddeus Weed

  
	
   

  	
   

  
	
   

  	
  Thaddeus
  Weed, CFO

  
	
   

  	
  Name
  and title, printed or typed

  

 

7

 

Borrower’s Billing Address,
if different from address indicated at the top of this Note:

 

 

 

 

8

 

	
  

  	
   

  	
  Addendum
  A To Note

  LIBOR Index Rate (104)

  

 

SECTION 1

 

Definitions. As used in this
Addendum, the following terms shall have the meanings set forth below:

 

“Bank” shall mean SunTrust
Bank and its successors and assigns.

 

“Borrower” shall collectively
and individually refer to the maker of the attached note dated October 15, 2009
(“Note”).  The terms of this Addendum are
hereby incorporated into the Note and in the event of any conflict between the
terms of the Note and the terms of this Addendum, the terms of this Addendum
shall control.

 

“Business Day” shall mean,
with respect to Interest Periods applicable to the LIBOR Rate, a day on which
the Bank is open for business and on which dealings in U.S. dollar deposits are
carried on in the London Inter-Bank Market.

 

“Interest Period” shall mean
a period of one (1) month, provided that (i) the initial Interest Period may be
less than one month, depending on the initial funding date and (ii) no Interest
Period shall extend beyond the maturity date of the Note.

 

“Interest Rate Determination
Date” shall mean the date the Note is initially funded and the first Business
Day of each calendar month thereafter.

 

“LIBOR Rate” shall mean that
rate per annum effective on any Interest Rate Determination Date which is equal
to the quotient of:

 

(i) the rate per annum equal
to the offered rate for deposits in U.S. dollars for a one (1) month period,
which rate appears on that page of Bloomberg reporting service, or such similar
service as determined by the Bank, that displays British Bankers’ Association
interest settlement rates for deposits in U.S. Dollars, as of 11:00 A.M.
(London, England time) two (2) Business Days prior to the Interest Rate
Determination Date; provided, that if no such offered rate appears on such page,
the rate used for such Interest Period will be the per annum rate of interest
determined by the Bank to be the rate at which U.S. dollar deposits for the
Interest Period, are offered to the Bank in the London Inter-Bank Market as of
11:00 A.M. (London, England time), on the day which is two (2) Business Days
prior to the Interest Rate Determination Date, divided by

 

(ii) a percentage equal to
1.00 minus the maximum reserve percentages (including any emergency,
supplemental, special or other marginal reserves) expressed as a decimal
(rounded upward to the next 1/100th of 1%) in effect on any day to which the
Bank is subject with respect to any LIBOR loan pursuant to regulations issued
by the Board of Governors of the Federal Reserve System with respect to eurocurrency
funding (currently referred to as “eurocurrency liabilities “ under Regulation
D). This percentage will be adjusted automatically on and as of the effective
date of any change in any reserve percentage.

 

“Prime Rate” shall mean the
publicly announced prime lending rate of the Bank from time to time in effect,
which rate may not be the lowest or best lending rate made available by the
Bank or, if the Note is governed by Subtitle 10 of Title 12 of the Commercial
Law Article of the Annotated Code of Maryland, “Prime Rate” shall mean the Wall
Street Journal Prime Rate, which is the Prime Rate published in the “Money
Rates” section of the Wall Street Journal from time to time.

 

SECTION 2

 

Interest. The Borrower shall
pay interest upon the unpaid principal balance of the Note at the LIBOR Rate
plus the margin provided in the Note. Interest shall be due and payable as
provided in the Note and shall be calculated as described in the Note. The
interest rate shall remain fixed during each month based upon the interest rate
established pursuant to this Addendum on the applicable Interest Rate
Determination Date.

 

SECTION 3

 

Additional Costs. In the
event that any applicable law or regulation or the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) (i)shall change the basis of taxation of payments to the Bank of any
amounts payable by the Borrower hereunder (other than taxes imposed on the overall
net income of the Bank) or (ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by the Bank, or (iii) shall
impose any other condition with respect to the Note, and the result of any of
the foregoing is to increase the cost to the Bank of making or maintaining the
Note or to reduce any amount receivable by the Bank hereunder, and the Bank
determines that such increased costs or reduction in amount receivable was
attributable to the LIBOR Rate basis used to establish the interest rate
hereunder, then the Borrower shall from time to time, upon demand by the Bank,
pay to the Bank additional amounts sufficient to compensate the Bank for such
increased costs the “Additional 

 

1

 

Costs”). A detailed statement
as to the amount of such Additional Costs, prepared in good faith and submitted
to the Borrower by the Bank, shall be conclusive and binding in the absence of
manifest error.

 

SECTION 4

 

Unavailability Of Dollar
Deposits. If the Bank determines in its sole discretion at any time (the “Determination
Date”) that it can no longer make, fund or maintain LIBOR based loans for any
reason, including without limitation illegality, or the LIBOR Rate cannot be
ascertained or does not accurately reflect the Bank’s cost of funds, or the
Bank would be subject to Additional Costs that cannot be recovered from the
Borrower, then the Bank will notify the Borrower and thereafter will have no
obligation to make, fund or maintain LIBOR based loans. Upon such Determination
Date the Note will be converted to a variable rate loan based upon the Prime
Rate.  Thereafter the interest rate on
the Note shall adjust simultaneously with any fluctuation in the Prime Rate.

 

	
  Individual(s) Signature(s):

  	
  Non-Individual Signature:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   (Seal)

  	
  Cogent Communications
  Group, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   (Seal)

  	
  By:

  	
  /s/ Thaddeus Weed

  
	
   

  	
   

  
	
   

  	
  Thaddeus Weed, CFO

  
	
   

  	
  Name and title, printed or
  typed

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name and title, printed or
  typed

  

 

2

 

	
  

  	
  Agreement to Commercial Note

  

 

This
Agreement dated October 15, 2009 between Cogent Communications Group, Inc.
(“Borrower”) and SunTrust Bank (“SunTrust”) constitutes the “Agreement”
referenced under “Additional Terms and Conditions” in the Commercial Note dated
October 15, 2009 (the “Note”) in the Loan Amount equal to Twenty Million
Dollars ($20,000,000).  The terms and
conditions of this Agreement and the terms and conditions of the Note
constitute the entire agreement between Borrower and SunTrust.  All defined terms used herein that are not
defined herein shall have the meanings ascribed to such terms in the Note.  The Note is guaranteed by the Guaranty of
Note (each, a “Guaranty of Note”) executed and delivered by Cogent
Communications, Inc., a Delaware corporation wholly owned by Borrower, and
Cogent Canada, Inc., a Nova Scotia corporation wholly owned by Borrower,
each a “Guarantor” and collectively “Guarantors.”  Borrower and Guarantors may herein be
referred to individually as “Obligor” and collectively as “Obligors.”  The Note and each Guaranty of Note are each
secured by a Security Agreement executed and delivered by the respective
Obligor.

 

Borrower
and SunTrust hereby agree to the following terms and conditions:

 

I.                    AFFIRMATIVE
COVENANTS

 

A.               Financial
Information. Borrower shall deliver the following financial
information to SunTrust as indicated below:

 

Borrower’s Annual consolidated Financial Statement that has been audited
by a certified public accountant acceptable to SunTrust. Such Financial
Statement shall be prepared on a GAAP (generally accepted accounting
principles) basis and shall be delivered to SunTrust within ninety (90) days
after Borrower’s fiscal year-end, commencing with the fiscal year ending December 31,
2009.  “Financial Statement” shall
include at a minimum a balance sheet, income statement, statement of retained
earnings, statement of cash flows, footnotes, appropriate supporting schedules
and other information requested by SunTrust.

 

Borrower’s unaudited quarterly consolidated Financial Statement,
certified by an authorized officer of Borrower as to its accuracy, shall be
delivered to SunTrust within forty five (45) days after the close of each
fiscal quarter, commencing with the fiscal quarter ending September 30,
2009.

 

Obligors’ United States and Canadian accounts receivable aging report,
in form and substance acceptable to SunTrust, shall be delivered to SunTrust
within twenty (20) days after the close of each month, commencing with the
month ending September 30, 2009.

 

Borrower shall deliver within five (5) business days of such
request, any additional financial information with respect to Obligors as
SunTrust may reasonably request.

 

B.               Compliance
Certificate. Concurrently with the delivery of the financial
statements required hereunder, Borrower shall deliver to SunTrust a certificate
of a duly authorized officer of Borrower in a form satisfactory to SunTrust (as
set forth in Exhibit A hereto) (i) certifying as to whether there
exists an event of default or any circumstances which, with notice or the
passage of time or both, would constitute an event of default and if there
exists an event of default or any such circumstance, specifying the details
thereof and the action which Borrower has taken or proposes to take with respect
thereto, and (ii) setting forth in reasonable detail calculations
demonstrating compliance or noncompliance, as the case may be, with the
financial covenants included in this Agreement.

 

C.               Notification. Borrower shall immediately notify SunTrust of (i) the occurrence
of any event of default (or any circumstances which, with notice or the passage
of time or both, would constitute an event of default) under the Note, (ii) the
commencement of any action, suit or proceeding or any other matter that could
reasonably be expected to have a material adverse effect on the financial
condition, operations, assets or prospects of any Obligor, (iii) any event
or development that could reasonably be expected to have a material adverse
effect on the assets, operations or financial condition of any Obligor and (iv) any
change in the senior management of Borrower.

 

D.               Subsidiaries. 
Guarantors shall remain wholly owned subsidiaries of
Borrower.

 

E.                 Deposit
Accounts and Other Banking Business. Obligors
collectively shall for the term of the Note and any extensions thereof: (a) Maintain
cash or cash equivalents, as the case may be, in depository accounts or
certificates of deposit with or mutual funds obtained through SunTrust and
acceptable to SunTrust at all times equal to or greater than ten million
dollars ($10,000,000); (b) In good faith maintain with SunTrust, as at the
date hereof, the majority of Obligors’ domestic commercial 

 

1

 

bank deposit accounts and related treasury
management services, including but not limited to lockbox services; (c) In
good faith endeavor to place with SunTrust such of Obligors’ commercial bank
deposit accounts and related treasury management services not currently placed
with SunTrust, consistent with Obligors’ requirements for efficient and cost
effective operations; and (d) In good faith include SunTrust and
affiliated entities in Obligors’ formal and informal requests for proposal to
provide such financial services as may be provided from time to time by
SunTrust and affiliated entities. 
Borrower may or may not accept proposals from SunTrust or its
affiliates, as described in the preceding clause, based solely on Borrower’s
business requirements at the time.

 

F.                 Loan
Documentation and Additional Requirements. 
All required documentation as set forth in a
commitment letter dated September 28, 2009 issued by SunTrust, including
but not limited to articles of incorporation, bylaws, Corporate Borrowing
Resolution, Corporate Resolutions Authorizing Execution of Guaranty and Pledge
of Assets, Commercial Note, Agreement to Commercial Note, Guaranties of Note,
Commercial Security Agreements evidencing SunTrust’s first security interest in
Obligors’ Accounts and General Intangibles to be recorded in the appropriate
jurisdictions of the United States and Canada, and Opinion of Borrower’s
Counsel shall be delivered to SunTrust in form and substance satisfactory to
SunTrust.  A field examination,
satisfactory to SunTrust in its sole judgment, of the collateral subject to the
Security Agreements shall be completed by November 16, 2009 (“Field
Examination”).  Obligors shall upon
demand reimburse SunTrust for the cost of the Field Examination and all of
SunTrust’s costs in establishing this loan, including attorney fees and
expenses, the cost of public records searches and the cost of filing security
interests.  Obligors’ maximum
reimbursement liability for the Field Examination and SunTrust’s other closing
costs shall not exceed a total of six thousand dollars ($6,000).

 

G.               Loan
Fee. 
Borrower shall pay SunTrust a Loan Fee of three tenths of one percent
(0.30%) per annum of the Loan Amount, accruing daily from the date of the Note
through the termination thereof, payable in arrears either, at Borrower’s option,
monthly as an Analyzed Fee included in the Account Analysis Statement (as such
terms are defined below) or quarterly in cash on the first day of each calendar
quarter. The Account Analysis Statement is a monthly statement currently
provided by SunTrust to Borrower which includes an accounting whereby SunTrust
assigns by means of an earnings credit rate established from time to time by
SunTrust in its sole discretion a monetary value to designated collected
corporate demand deposits of Borrower, which value is used to offset fully or
partially as the case may be charges for certain commercial banking products
and services provided by SunTrust to Borrower. 
To the extent the value of such deposits is insufficient to cover such
charges, the Borrower pays the deficiency in cash; to the extent the value of
such deposits exceeds such charges, such excess accrues to SunTrust.  Analyzed Fees are fees appearing as charges
on the Account Analysis Statement.  Borrower
shall select the initial Loan Fee payment option by giving written notice
thereof to SunTrust within five business days after date of this
Agreement.  Thereafter Borrower may elect
on a quarterly basis to change the Loan Fee payment option by giving written
notice to SunTrust not less than thirty (30) days prior to the first day of the
calendar quarter in which such election is to become effective.

 

II.                NEGATIVE
COVENANTS

 

A.               Liens.  No Obligor shall create, incur,
assume or permit any lien, security interest or other type of encumbrance (a “Lien”),
except Liens granted to SunTrust and Permitted Liens, as hereinafter defined,
on any of its Accounts or General Intangibles, as such capitalized terms are
defined in the Security Agreements, dated October 15, 2009, from Obligors
in favor of SunTrust.  “Permitted
Liens” mean Liens securing taxes, assessments or governmental charges or levies
or the claims or demands of materialmen, mechanics, carriers, warehousemen, and
other like persons not yet due; and Liens incurred or deposits made in the
ordinary course of business in connection with workers’ compensation,
unemployment insurance, social security and other like laws, and liens that
arise by virtue of statutory or common law provisions relating to banker’s
liens, rights of set-off or similar rights.

 

B.               Dividend
Payments. Borrower will not declare or make, or agree to pay or
make, directly or indirectly, any cash dividend on any class of its stock if an
Event of Default or any event or condition that with the passage of time or the
giving of notice or both could become an Event of Default has occurred and is
continuing or would occur after giving effect thereto, or would have occurred
if such dividend had been paid as of the last day of the immediately preceding
fiscal quarter of Borrower.

 

III.           FINANCIAL
COVENANTS

 

All financial
covenants shall be calculated for Borrower and its subsidiaries on a
consolidated basis.

 

So long as any portion of the Loan Amount
under the Note remains unpaid or available for advances, Borrower covenants and
agrees as follows (unless otherwise indicated, all accounting terms used in the
following financial covenants shall be construed in conformity with generally
accepted accounting principles in the U.S. as in effect from time to time):

 

A.               Debt
Service Coverage Ratio

 

The
Debt Service Coverage Ratio of Borrower shall not at the end of its fiscal
quarters ending September 30, 2009 and December 31, 2009 be less than
0.9 to 1.0.  The Debt Service Coverage
Ratio of Borrower shall not at the end of each fiscal quarter commencing with
the fiscal quarter ending March 31, 2010 be less than 1.2 to 1.0.

 

“Debt Service Coverage Ratio” means, for each period of four
consecutive fiscal quarters ending on the last day of each fiscal quarter of
Borrower, the ratio the numerator of which is Adjusted EBITDA less Dividends
less Capital Expenditures for such period, and the denominator of which is Debt
Service for such period.

 

2

 

The following definitions apply to the determination
of Debt Service Coverage Ratio.

 

“Adjusted EBITDA” means EBITDA plus noncash equity based
compensation expense, each determined for such fiscal quarter and the prior
three fiscal quarters.

 

“Adjusted Interest Expense” means Interest Expense,
excluding the portion thereof representing amortization of discount on
convertible debt pursuant to FSP APB 14-1 or the amortization of other note
issuance costs, each determined for such fiscal quarter and the prior three
fiscal quarters.

 

“EBITDA” means net income plus Interest Expense, income
tax expense, depreciation expense and amortization expense, each determined for
such fiscal quarter and the prior three fiscal quarters.

 

“Capital Expenditures” means, for any period, the
aggregate of all expenditures for the acquisition of fixed or capital assets or
additions to equipment (including replacements, capitalized repairs and
improvements during such period) which should be capitalized under GAAP on a
consolidated balance sheet.

 

“Debt Service” means the sum of (a) all amounts as of such fiscal quarter end
classified in accordance with GAAP as current maturities with respect to Funded
Debt, excluding amounts due under the Note, plus (b) Adjusted
Interest Expense determined for such fiscal quarter and the
prior three fiscal quarters.  Notwithstanding
the foregoing, as of September 30, 2009 only, Borrower’s obligations under
that certain lease by and between Cogent Communications Espana, S.A. and
Administrador de Infraestructuras Ferroviarias for optical fiber dated August 1,
2000, as subsequently amended shall be excluded shall be excluded from current
maturities with respect to funded debt for the purposes of calculating the Debt
Service Coverage Ratio.

 

“Dividends”
means the declaration or payment of a dividend by Borrower to its shareholders
on any class of Borrower’s capital stock, or any payment by Borrower on account
of, or setting apart assets of Borrower for a sinking or other analogous fund
for, the purchase, redemption, retirement, defeasance or other acquisition of,
any shares of its capital stock, or the making of any other distribution by
reduction of capital or otherwise in respect of any shares of the capital stock
of Borrower.

 

“Funded
Debt” means (1) all obligations for money
borrowed, (2) all obligations evidenced by a bond, indenture, note, letter
of credit or similar instrument, net of unamortized discount, (3) all
obligations under capital leases and (4) all other obligations upon which
interest charges are customarily paid.

 

“Interest Expense” means interest expense (including without limitation the interest
component of any payments in respect of capital leases capitalized or expensed
during such period) determined for such
fiscal quarter and the prior three fiscal quarters.

 

B.               Funded Debt Ratio

 

The Funded Debt Ratio of Borrower shall not at the
end of each fiscal quarter be more than 3.0 to 1.0, commencing with the fiscal
quarter ending September 30, 2009.

 

The following definitions apply to the
determination of the Funded Debt Ratio:

 

“Funded Debt Ratio” means the ratio of Funded
Debt as of the end of each fiscal quarter divided by Adjusted EBITDA for
the period of four consecutive fiscal quarters then ended.

 

IV.           CONDITION
PRECEDENT TO THE MAKING OF EACH ADVANCE

 

The
making of each advance under the Note is subject to the accuracy of
representations and warranties and the further condition that no Event of Default or event which with
the passing of time or the giving of notice or both would constitute an Event
of Default shall exist at such time.

 

V.               ADDITIONAL
EVENTS OF DEFAULT

 

A.               Any Guarantor terminates or
cancels or seeks to terminate or cancel its Guaranty of Note.

 

B.               Failure of Borrower to
satisfy any condition set forth in, or deliver any document required by, Section 1.F.
above on or before October 15, 2009. 
Notwithstanding the foregoing, the Field Examination shall be completed
no later than November 16, 2009.

 

3

 

VI.           BORROWING
BASE.  The Note will be governed by a
Borrowing Base (as defined below).

 

Borrower
shall not request any advance under the Note if, after giving effect to such
advance, the outstanding balance under the Note would exceed the lesser of the
Loan Amount or the Borrowing Base. If at any time the aggregate outstanding
balance under the Note does exceed the lesser of the Loan Amount and the
Borrowing Base (the “Excess Amount”), Borrower shall repay or prepay the Excess
Amount within three (3) days after demand from SunTrust.  The Borrowing Base at any time shall be
determined by reference to the most recent borrowing base certificate delivered
to SunTrust (absent any error in such borrowing base certificate). Borrower
covenants to deliver within twenty (20) days after the end of each calendar
month and at any other time it so elects a duly completed borrowing base
certificate in the form and substance satisfactory to SunTrust (as set forth in
Exhibit B hereto) the effective date of which shall be not more than
twenty (20) days old at the time of delivery, together with Obligors’ United
States and Canadian accounts receivable aging reports prepared as of the
effective date of such borrowing base certificate, and such other supporting
documentation and additional reports with respect to the Borrowing Base as
SunTrust shall request.

 

“Borrowing Base” shall mean the sum of, as applicable, one
hundred percent (100%) of cash on deposit with SunTrust and pledged to SunTrust
as security for the Note (“Cash Collateral”), plus the Receivables Base, plus
the Cash Base.  For the purpose of
determining the Borrowing Base, the same cash cannot simultaneously be in Cash
Collateral and used to meet Cash Base requirements.

 

“Receivables Base” shall mean at any time an
amount equal to eighty percent (80%) of amounts due with respect to Eligible Accounts.

 

“Eligible Accounts” shall mean, at any time, any United
States or Canadian account receivable of Obligors which (a) is a bona
fide, valid and legally enforceable obligation of the account debtor in respect
thereof, which is unconditionally owing by such account debtor and is not
subject to sale on consignment, sale on return, or any other similar
arrangement; (b) is subject to a perfected first priority security
interest in favor of SunTrust and is free and clear of any other liens,
security interests and encumbrances; (c) is not subject to any defense,
dispute, offset, counterclaim or other claim asserted in writing by the account
debtor; (d) is payable by an account debtor which is a solvent, going
concern that is unaffiliated with Obligors; (e) is not more than ninety
(90) days old from the original due date of the relevant invoice; (f) is
not subject to any “bill and hold” or other similar arrangement; (g) when
combined with any other Eligible Account due from the same  account debtor, constitutes less than ten
percent (10%) of total Eligible Accounts, and (h) is acceptable to
SunTrust in its sole discretion.

 

“Cash Base” shall mean the lesser of (a) the excess of the
Loan Amount over the sum of the Cash Collateral (if any) and the Receivables
Base, or (b) ten million dollars ($10,000,000).  After exhausting credit availability against
the Cash Collateral (if any) and the Receivables Base, Borrower may access
availability against the Cash Base, provided that Obligors collectively maintain
cash or cash equivalents, as the case may be, in depository accounts with
SunTrust or mutual funds obtained through SunTrust and acceptable to SunTrust
at all times equal to or greater than thirty million dollars ($30,000,000).

 

VII.       BORROWER’S
RIGHT TO TERMINATE.  Borrower may
terminate this credit facility without penalty at any time by giving SunTrust
written notice of not less than five calendar days and paying all amounts owing
under the Note.

 

IN
WITNESS WHEREOF, Borrower and SunTrust have caused this Agreement to be
executed as of the date first above written.

 

 

	
  Non-Individual
  Borrower(s):

  	
   

  
	
   

  	
   

  
	
  Cogent
  Communications Group, Inc.

  	
   

  
	
  Borrower

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Thaddeus Weed

  	
   

  
	
   

  	
   

  
	
  Thaddeus
  Weed, CFO

  	
   

  
	
  Name
  and title

  	
   

  
	
   

  	
   

  
	
  SunTrust
  Bank

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  William W. Palmer

  	
   

  
	
   

  	
   

  
	
  William
  W. Palmer III, Senior Vice President

  	
   

  
	
  Name
  and title

  	
   

  

 

4

 

	
  

  	
  Security Agreement 

  (Commercial)

  Blanket
  Lien; Accounts and General 

  Intangibles

  

 

This Security Agreement dated as of-October 15,
2009, by Cogent
Communications Group, Inc.(the “Owner”) in favor of SunTrust Bank,
its present and future affiliates and their successors and assigns (“SunTrust”)
provides:

 

In order to induce SunTrust from time to time to enter into agreements
with and to extend or continue to extend credit to Cogent Communications Group, Inc. (and any one or more and any
combination if more than one, the “Borrower”) and in consideration of any
credit so extended, the Owner (which may include the Borrower) hereby
grants, sells, assigns, transfers and conveys to SunTrust, a security interest
in the Collateral and all proceeds, products, rents and profits thereof and all
substitutions and replacements therefore and all revenues from the right to use
the Collateral to secure the prompt payment and performance of any and all
liabilities, obligations, agreements and undertakings of Borrower to SunTrust
(and, in addition, all liabilities, obligations, agreements and undertakings of
Owner, or any one or more of them, to SunTrust if Owner and Borrower are not
the same person or entity) in any amount, whether now existing or hereafter
arising, under or in connection with the $20,000,000 Commercial Note, of even
date herewith, made by the Borrower and payable to SunTrust, and all
amendments, renewals, extensions, supplements and replacements thereof, and all costs of collection and protection of
SunTrust’s rights, including attorneys’ fees allowed by law, whether such
collection or protection occurs prior to, during, or after any bankruptcy proceedings
filed by or against any Obligor (as such term is defined below) (all the
foregoing being hereinafter collectively referred to as the “Obligations”).

 

Collateral.  As used in this Security Agreement, the term “Collateral”
shall mean the following, whether now existing or hereafter acquired: All of the
Owner’s Accounts, chattel paper, documents, instruments and money, returned and
unearned insurance premiums, tax refunds, contract rights relating to Owner’s Accounts,
returned goods, reclaimed and repossessed goods  and all General Intangibles
(as all such terms are used herein and in the Uniform Commercial Code).

 

Representations and Warranties. The Owner represents and
warrants to SunTrust as follows:

 

a.               This Security Agreement has
been duly executed and delivered by Owner, constitutes Owner’s valid and
legally binding obligation and is enforceable in accordance with its terms
against Owner. Owner represents and warrants to SunTrust that it has rights in
all of the Collateral and/or has the power to transfer rights in all of the
Collateral.  The execution, delivery and
performance of this Security Agreement, the grant of the security interest in
the Collateral and the consummation of the transactions contemplated will not,
with or without the giving or notice of the lapse of time, (a) violate an
material law applicable to Owner, (b) violate any judgment, writ, injunction
or order of any court or governmental body or officer applicable to Owner, (c) violate
or result in the breach of any material agreement to which Owner is a party or
by which any of Owner’s property, including the Collateral, is bound or (d) violate
any restriction on the transfer of any of the Collateral.  The Owner is and will continue to be the
absolute owner of the Collateral and there are no other liens or security
interests affecting the Collateral other than the security interest granted in
this Security Agreement except those previously disclosed to SunTrust in
writing by the Owner; If the Owner is acting in the capacity of trustee,
administrator or executor of an estate, such fact shall be disclosed and
satisfactory evidence of capacity and authorization shall be provided to
SunTrust;

 

b.              The Owner is a corporation
duly organized and existing under the laws of the state of Delaware and the
Owner’s Organizational Identification Number is 3329461. The Owner is duly
qualified and in good standing as a foreign corporation in every jurisdiction
where such qualification is necessary; the execution and performance of this
Security Agreement have been duly authorized by action of its Board of
Directors, no action of its shareholders being necessary; the execution and
performance of this Security Agreement will not violate or contravene any
provisions of law or regulation or its Articles of Incorporation, Shareholder
Agreement, By-Laws or other agreements to which it is a party or by which it is
bound; and no consent or approval of any governmental agency or authority is
required in making or performing the obligations under this Security Agreement;

 

c.               Primary Collateral location
will be 1015 31st St., NW, Washington DC 20007 . The Owner will
maintain the Collateral in the above location(s). The Collateral shall not be
moved from the above location(s) without the prior written consent of
SunTrust;

 

d.              The Owner maintains its
books and records at 1015 31st St., NW,
Washington DC 20007 .

 

e.               All information supplied and
statements made to SunTrust in any financial statement are true, correct,
complete, valid and genuine in all material respects;

 

f.                 No part of the Collateral
has been, and never will be so long as this Security Agreement remains a lien
on the Collateral, used for the generation, collection, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous substance,
as those terms are defined in the Comprehensive 

 

1

 

Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C., Section 9601,
et seq. (“CERCLA”), Superfund Amendments and Reauthorization Act (“SARA”),
applicable state laws, or regulations adopted pursuant to either of the
foregoing. The Owner agrees to comply with any federal, state or local law,
statute, ordinance or regulation, court or administrative order or decree or
private agreement regarding materials which require special handling in
collection, storage, treatment or disposal because of their impact on the
environment (“Environmental Requirements”). The Owner agrees to indemnify and
hold SunTrust harmless against any and all claims, losses and expenses
resulting from a breach of this provision of this Security Agreement and the
Owner will pay or reimburse SunTrust for all costs and expense for expert
opinions or investigations required or requested by SunTrust which, in SunTrust’s
sole discretion, are necessary to ensure compliance with this provision of this
Security Agreement. The obligation to indemnify shall survive the payment of
the Obligations and the satisfaction of this Security Agreement; and

 

g.              All Collateral has been
produced in compliance with the Fair Labor Standards Act or other applicable
wage and employee law, rule, regulation or order, and that no existing or
future liability shall occur as a result thereof. The Owner may contest, in
good faith, the applicability of any such law, rule, regulation or order,
including prosecuting any appeals, so long as SunTrust’s interest in the
Collateral, in the opinion of SunTrust, is not jeopardized as a result.

 

Choice
of Law. Owner agrees that certain material events and occurrences relating to
this Security Agreement bear a reasonable relationship to the laws of State of Maryland  .
This Security Agreement shall be governed by the laws of such jurisdiction and,
unless applicable law provides otherwise, in the event of any legal proceeding
arising out of or related to this Security Agreement, Owner consents to the
jurisdiction and venue of any court located in such jurisdiction. Unless
otherwise specified, “Uniform Commercial Code” as used herein shall refer to
the Uniform Commercial Code of such jurisdiction, both current and as it may be
amended or revised from time to time in the future.

 

Covenants.

 

a.               The Owner shall furnish to
SunTrust such financial and business information and reports in form and
content satisfactory to SunTrust as and when SunTrust may from time to time
require.

 

b.              The Owner, if a corporation,
shall maintain its corporate existence, and if another entity shall maintain
such entity standing, in each case in good standing and shall not consolidate
or merge with or acquire the stock or other ownership interest of any other
corporation or entity without the prior written consent of SunTrust; the Owner
shall, at the request of SunTrust, qualify as a foreign corporation or other
applicable entity and obtain all requisite licenses and permits in each
jurisdiction where the Owner does business.

 

c.               The Owner shall notify
SunTrust in writing at least 30 days prior to any change of its name or
structure or change in its state of residence, jurisdiction of registration or
organization, principal place of business or chief executive office.

 

d.              The following shall apply if
the Collateral consists of tangible personal property: The Owner shall maintain
all of the Collateral in good condition and repair. SunTrust shall have the
right to inspect the Collateral at any reasonable time and shall have the right
to obtain such appraisals, reappraisals, appraisal updates or environmental
inspections as SunTrust, in its sole discretion, may deem necessary from time
to time. Owner will not use or permit any person or entity to use the
Collateral (i) in any manner inconsistent with the provisions of this
Security Agreement; or (ii) in violation of any policy of insurance issued
with respect to the Collateral; or (iii) in violation of any local, state
or federal law or regulation, including but not limited to any such law or
regulation pertaining to the protection of the environment or the protection of
the health or safety of persons or animals, and any such law or regulation
pertaining to the control of drugs, narcotics or other controlled substances.
If the Collateral has been used or is hereafter used in violation of the
covenants and agreements contained herein, Owner shall indemnify SunTrust and
hold SunTrust harmless against all claims, actions, causes of action, costs,
expenses, fees and penalties in connection with such use. Without the express
prior written consent of SunTrust, Owner shall not cause or permit all or any
part of the Collateral to be affixed to real property so as to become a fixture
as that term is defined or interpreted in the state in which the Collateral is
at any time located.

 

e.               The Owner will not pledge or
grant any security interest in any of the Collateral to any person or entity
except SunTrust, or permit any lien or encumbrance to attach to any of the
Collateral, other than Permitted Liens, as hereinafter defined, or any levy to
be made on the Collateral, or any financing statement (except financing
statements in favor of SunTrust) to be on file against the Collateral.  “Permitted Liens” mean liens securing taxes,
assessments or governmental charges or levies or the claims or demands of
materialmen, mechanics, carriers, warehousemen, and other like persons not yet
due; and liens incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance, social security
and other like laws.

 

f.                 Owner hereby constitutes and
appoints any officer or employee of SunTrust as its true and lawful
attorney-in-fact upon the occurrence of an Event of Default, as hereinafter
defined: (i) to transfer the Collateral into SunTrust’s name or the name
of its nominee, but SunTrust’s failure to do so shall not be interpreted to be
a waiver of any interest, and (ii) to do and perform all other acts and
things necessary, proper and requisite to carry out the intent of this Security
Agreement. The power herein granted shall be deemed to be coupled 

 

2

 

with an interest and may not
be revoked until the Obligations have been paid in full, including all expenses
payable by Owner and no amounts may be re-borrowed.

 

g.              The Owner agrees to pay on
demand all legal expenses and reasonable attorneys’
fees (in the amount of 15% of the principal and interest secured hereby if this
agreement is governed by the laws of Georgia), as permitted by
applicable law, any appraisal fees and all expenses incurred or paid by
SunTrust in protecting and enforcing the rights of SunTrust under this Security
Agreement, including SunTrust’s right to take possession of the Collateral and
its proceeds, and to hold, prepare for sale, sell and dispose of the
Collateral.

 

h.              This Security Agreement
shall be a continuing agreement and shall remain in full force and effect
irrespective of any interruptions in the business relations of the Borrower
with SunTrust and shall apply to any ultimate balance which shall remain due by
the Borrower to SunTrust; provided, however, that the Owner may by written
notice terminate this Security Agreement with respect to all Obligations of the
Borrower incurred or contracted by the Borrower or acquired by SunTrust after
the date on which such notice is personally delivered to or mailed via
registered mail to the SunTrust address set forth below and accepted by
SunTrust.

 

i.                  The Owner will defend the
Collateral against the claims and demands of all parties. The Owner will not,
without prior written consent of SunTrust, grant any security interest in the
Collateral and will keep it free from any lien, encumbrance or security
interest;

 

Accounts. If the Collateral includes Accounts, the following
shall apply.

 

a.               The Owner warrants that each
and every Account, now owned or hereafter acquired, is a bona fide existing
obligation, valid and enforceable against the account debtor, for goods sold or
leased and delivered or services rendered in the ordinary course of business;
the Owner has good title to the Account and has full right and power to grant
SunTrust a security interest in the Accounts and the Owner will immediately
notify SunTrust of any Account to which these warranties are or become untrue;
the Owner agrees that it will not permit any return of merchandise, the sale of
which gave rise to any of the Accounts, except in the usual and regular course
of business;

 

b.              The Owner shall maintain
complete and accurate books and records, and its principal books and records,
including all records concerning Accounts, shall be kept and maintained at the
place(s) specified above. The Owner shall not move such books and records
without giving SunTrust at least 30 days prior written notice. All accounting
records and financial reports furnished to SunTrust shall be maintained and
prepared in accordance with generally accepted accounting principles
consistently applied. It is specifically agreed that SunTrust shall have and
the Owner hereby grants to SunTrust a security interest in all books and
records of the Owner and shall have access to them at any time for inspection,
verification, examination and audit;

 

c.               The Owner will prepare and
deliver to SunTrust, at SunTrust’s request from time to time, a listing and
aging of all Accounts and any further schedules or information with respect to
Accounts that SunTrust may require;

 

d.              SunTrust shall have the
right at any time to notify account debtors of its security interest in the
Accounts and supporting obligations and require payments to be made directly to
SunTrust.  Upon the occurrence of an
Event of Default, the Owner hereby appoints SunTrust and any officer or
employee of SunTrust, as SunTrust may from time to time designate, as its
attorneys-in-fact for the Owner, to sign and endorse in the name of the Owner,
to give notice in the name of the Owner, and to perform all other actions
necessary or desirable in the reasonable discretion of SunTrust to effect these
provisions and carry out the intent hereof, all at the cost and expense of the
Owner. The Owner hereby ratifies and approves all acts of such
attorneys-in-fact and neither SunTrust nor any other such attorneys-in-fact
will be liable for any acts of commission or omission nor for any error of judgment.
This power being coupled with an interest is irrevocable so long as any Account
or General Intangible pledged to SunTrust remains unpaid and the Borrower has
any unpaid Obligations to SunTrust. The costs of such collection and
enforcement, including reasonable attorneys’ fees and out-of-pocket expenses,
shall be borne solely by the Owner whether the same are incurred by SunTrust or
the Owner;

 

e.               At the option of SunTrust
upon the occurrence of an Event of Default, all payments on the Accounts received
by the Owner shall be remitted to SunTrust in their original form on the day of
receipt; all notes, checks, drafts and other instruments so received shall be
duly endorsed to the order of SunTrust. At SunTrust’s election, the payments
shall be deposited into a special deposit account (“Special Account”)
maintained with SunTrust. SunTrust may designate with each such deposit the
particular Account upon which payment was made. The Special Account shall be
held by SunTrust as additional security for the Obligations. Prior to
depositing payments on the Accounts into the Special Account, the Owner agrees
that it will not commingle such payments with any of the Owner’s funds or
property, but will hold them separate and apart and in trust for SunTrust.
SunTrust will have the power to withdraw funds from the Special Account.
SunTrust may at any time and from time to time, in its sole discretion, apply
any part of the funds in the Special Account to the Obligations whether or not
the same is due. Upon full and final satisfaction of the Obligations (including
without limitation all fees and expenses owing to SunTrust or its attorneys),
plus termination of any commitment to extend additional funds, SunTrust will
pay to the Owner any excess funds, 

 

3

 

whether received by SunTrust as a deposit in the Special Account or as
a direct payment on any of the Accounts;

 

f.                 If any of the Owner’s
Accounts arise out of contracts with the United States or any department,
agency, or instrumentality thereof, the Owner will immediately notify SunTrust
in writing and execute any instruments and take any steps required by SunTrust
in order that all moneys due and to become due under such contracts shall be
assigned to SunTrust and in order that proper notice be given under the Federal
Assignment of Claims Act;

 

g.              SunTrust shall not be liable
and shall suffer no loss on account of loss or depreciation of any Account due
to acts or omissions of SunTrust unless SunTrust’s conduct is willful and
malicious, and SunTrust shall have no duty to take any action to preserve the
Collateral or collect Accounts;

 

h.              Upon request by SunTrust,
the Owner will note on its records concerning the Accounts, a notation of the
security interest under this Security Agreement, which notation must be
satisfactory to SunTrust in both form and content;

 

i.                  Upon the occurrence of an
Event of Default, SunTrust may enforce collection of any Account and supporting
obligation by suit or otherwise and may surrender, release or exchange all or
any part thereof, or compromise, extend or renew the same for any period. All
monies so received by SunTrust may in SunTrust’s sole discretion, be either (i) applied
by SunTrust directly toward payment of all or any part of the Obligations,
whether or not then due, in such order of application as SunTrust may
determine; or (ii) deposited to the credit of Borrower or in an account
with SunTrust as security for payment of the Obligations and SunTrust may, from
time to time, in its sole discretion, permit Borrower to use all or any part of
the funds on deposit in said account in the normal course of business. Owner
will promptly reimburse SunTrust for all expenses, including reasonable
attorneys’ fees and legal expenses, incurred by SunTrust in seeking to collect
on or enforce collection of such amounts; and

 

j.                  After notice from SunTrust
following the occurrence of an Event of Default, Owner will forthwith, upon
receipt, transmit and deliver to SunTrust, in the form received, all cash, checks,
drafts, items, chattel paper and other instruments or writing for the payment
of money (properly endorsed, where required, so that such items may be
collected by SunTrust) which may be received by Owner at any time in full or
partial payment or otherwise as proceeds of any of the Accounts. After such
notice from SunTrust, Owner will not commingle any such proceeds with any other
of its funds or property, but will hold them separate and apart from Owner’s
own funds or property and in express trust for SunTrust until delivery is made
to SunTrust, and

 

k.               To protect SunTrust’s rights
hereunder, upon the occurrence of an Event of Defualt, Owner hereby constitutes
any officer or employee of SunTrust its true and lawful attorney-in-fact with
full power of substitution to endorse or sign the name of Owner upon any
invoice, freight or express bill, or bill of lading relating to any Account
covered hereby and to notify the post office authorities to change the address
for delivery of Owner’s mail relating to the Accounts to an address designated
by SunTrust and to receive, open, and dispose of all mail relating to the
Accounts addressed to Owner and to do and perform all other acts and things
necessary, proper and requisite to carry out the intent of this Security Agreement.
This power shall be deemed to be coupled with an interest and may not be
revoked by Owner until the Obligations have been paid in full.

 

Inventory. If the Collateral includes Inventory, the following
shall apply:

 

a.               The Owner agrees to maintain
books and records pertaining to the Inventory in such detail, form and scope as
SunTrust shall require. The Owner shall promptly advise SunTrust of any
substantial changes relating to the type, or quantity of the Inventory or any
event which would have a material effect on the value of the Inventory or on
the security interest granted to SunTrust.

 

b.              If the Inventory remains in
the possession or control of any of the Owner’s agents or processors, the Owner
shall notify such agents or processors of SunTrust’s security interest, and
upon request, instruct them to hold such Inventory for SunTrust’s account and
subject to SunTrust’s instruction.

 

c.               The Owner will prepare and
deliver to SunTrust, at SunTrust’s request from time to time, a listing of all
Inventory and such information regarding the Inventory as SunTrust may require.

 

d.              SunTrust may require the
Owner to assemble the Inventory and make it available to SunTrust at a place to
be designated by SunTrust which is reasonably convenient. SunTrust may take
possession of the Inventory without a court order.

 

e.               Until default hereunder,
Owner may, unless otherwise provided in this Security Agreement, in the
ordinary course of business, at its own expense, sell, lease or furnish under
contract of service any of the Inventory normally held by Owner for such
purpose.

 

Insurance,
Taxes and Assessments. The Owner shall at all times keep insurable
Collateral insured against any and all risks, including, without limitation,
fire, and such other insurance, including but not limited to flood insurance,
as may be required by SunTrust from time to time, and in such amounts as may be
satisfactory to SunTrust. Insurance may be purchased from an insurer of the
Owner’s choice, except as otherwise required by law. All such insurance
policies are to be made payable to SunTrust, in the event of loss, under a
standard non-contributory “mortgagees”, “lenders”, or “secured party” clause
and shall contain a breach of warranty provision acceptable to SunTrust which 

 

4

 

shall
establish SunTrust’s right to be paid the insurance proceeds irrespective of
any action, inaction, breach of warranty or conditions, or negligence of Owner
or any other person or entity with respect to such policies. All such insurance
policies shall provide for a minimum of thirty days written notice to SunTrust
prior to cancellation. Upon the occurrence of an Event of Default, Owner
appoints SunTrust attorney-in-fact to file claims under any insurance policies,
to receive, receipt and give acquittance for any payments that may be payable
to Owner hereunder, and to execute any and all endorsements, receipts,
releases, assignments, reassignments, or other documents that may be necessary
to effect the collection, compromise or settlement of any claims under any such
insurance policies, which power of attorney shall be deemed coupled with an
interest and irrevocable so long as SunTrust has a security interest in any of
the Collateral. Owner shall provide proof of such insurance as requested by
SunTrust. The Owner shall pay and discharge all taxes, assessments and charges
of every kind prior to the date when such taxes, assessments or charges shall
become delinquent and provide proof of such payments to SunTrust, upon request.
However, nothing contained in this Security Agreement shall require the Owner
to pay any such taxes, assessments and charges so long as it shall contest its
validity in good faith and shall post any bond or security required by SunTrust
against the payment. Upon the failure of the Owner to purchase required
insurance or to pay such required amounts, SunTrust, at its option, and at the
Owner’s expense, may obtain such insurance or pay such taxes, assessments, and
charges. In addition, SunTrust may from time to time, in its sole discretion,
perform any undertakings of the Owner which the Owner shall fail to perform and
take any other action which SunTrust deems necessary for the maintenance or
preservation of any of the Collateral. Any amounts so paid shall be included in
the Obligations secured by the Collateral. At SunTrust’s request, the Owner
agrees to promptly reimburse SunTrust on demand for all such expenses incurred
by SunTrust, together with interest thereon from the date paid by SunTrust at
the highest rate payable on the Obligations. Any insurance obtained by
SunTrust, at its option, may be single or dual interest, protecting its rights,
rights of the Owner or joint rights. Any insurance obtained by SunTrust may
provide, at its option, that such insurance will pay the lesser of the unpaid
balance of the Obligations or the repair or replacement value of the
Collateral. SunTrust may use the proceeds of any insurance obtained by Owner or
by SunTrust to repair or replace the Collateral or, if SunTrust elects to do
so, to repay part or all of the Obligations, whether or not then due, and in
such order as SunTrust may determine, and the Borrower will still be
responsible to repay any remaining unpaid balance of the Obligations. The whole
or partial loss or destruction of all or any part of the Collateral shall not
affect or impair the obligation of any person or entity liable under the
Obligations.

 

Additional Covenants and Agreements if Borrower is Different than
Owner.  If Borrower is different
than Owner, then so long as any of the Obligations remain outstanding or so
long as this Security Agreement shall remain in effect Owner covenants and
agrees as follows: (a) Owner hereby expressly consents to and adopts any
agreements which Borrower has entered into or will enter into with SunTrust
regarding any of the Obligations or the Collateral; (b) Owner hereby
agrees that the Collateral shall be subject to disposition in accordance with
the terms and conditions of this Security Agreement and any agreements executed
by Borrower in connection with any of the Obligations or the Collateral; (c) Owner
will not be subrogated to SunTrust’s rights to any other collateral and any
proceeds thereof in which SunTrust holds a security interest to secure payment
of any of the Obligations; (d) Owner agrees that SunTrust may at any time
and from time to time, without notice to, or the consent of, Owner: (i) retain
any of the Collateral in satisfaction of any of the Obligations to the extent
permitted by applicable law, (ii) retain or obtain a security interest or
lien in any property in addition to the Collateral to secure payment or
performance of any of the Obligations, (iii) allow or cause any
Obligations to be incurred, (iv) retain or obtain persons or entities that
are primarily or secondarily obligated upon any of the Obligations other than
the Borrower, (v) extend or renew any of the Obligations for any period
(whether or not longer than the original term), (vi) release, compromise
or modify any of the Obligations, (vii) release, in whole or in part, any
person or entity primarily or secondarily obligated upon any of the Obligations
or enter into any compromise with respect to the obligation of any such person
or entity relative to any of the Obligations, (viii) release, with or
without consideration, SunTrust’s security interest or lien in any property
other than the Collateral which may at any time secure payment or performance
of any of the Obligations, (ix) accept substitutions or exchanges for any
property other than the Collateral which may at any time secure payment or
performance of any of the Obligations, (x) exercise its rights as a
secured party and dispose of the Collateral without having first resorted to
any property securing any of the Obligations other than the Collateral and
without having first proceeded against or demanded payment from any person or
entity primarily or secondarily obligated upon any of the Obligations; and (e) Owner
specifically waives any and all rights pursuant to O.C.G.A. Sec. 10-7-24 or
T.C.A. Sec. 47-12-101 et seq. if this Security Agreement is governed by the
laws of Georgia or Tennessee and the same or similar provision contained in the
Uniform Commercial Code of any other state or states which may govern this
Security Agreement.

 

Events
of Default. As used herein the term “Obligor” shall
individually, collectively, jointly and severally refer to Borrower, Owner and
any other person or entity that is primarily or secondarily liable upon all or
any part of the Obligations secured hereby and any person or entity that has
conveyed or may hereafter convey any security interest or lien to SunTrust in
any real or personal property to secure payment of all or any part of the
Obligations. Unless prohibited by applicable law, an “Event of Default” shall
occur hereunder upon the occurrence of any one or more of the following events
or conditions:

 

a.               the failure by any Obligor
to pay when due, whether by acceleration or otherwise, any sum constituting all
or any part of the Obligations;

 

5

 

b.              the failure of any Obligor
to perform any covenant, promise or obligation contained in this Security
Agreement, any document evidencing any of the Obligations, or any other
agreement to which any Obligor and SunTrust are parties;

 

c.               the breach of any of any
Obligor’s representations or warranties in this Security Agreement or any other
agreement with SunTrust;

 

d.              the failure of any Obligor
to pay when due any amount in excess of $5,000,000 owed to any creditor other
than SunTrust under a written agreement calling for the payment of money;

 

e.               the death, declaration of
incompetency, dissolution, liquidation, merger, consolidation, termination or
suspension of usual business of any Obligor;

 

f.                 the occurrence of a Change in
Control, which shall mean the occurrence of one or more of the following
events: (1) any sale, lease, exchange or other transfer (in a single
transaction or a series of related transactions) of all or substantially all of
the assets of Borrower to any person or entity or “group” (within the meaning
of the Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder in effect on the date hereof), (2) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any person or entity 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) of 35% or more of the outstanding
shares of the voting stock of Borrower; or (3) occupation of a majority of
the seats (other than vacant seats) on the board of directors of Borrower by
persons who were neither (i) nominated by the current board of directors
or (ii) appointed by directors so nominated;

 

g.              the insolvency or inability
to pay debts as they mature of any Obligor, the filing of any petition or the
commencement of any proceeding by an Obligor for relief under any bankruptcy or
insolvency law, or any law relating to the relief of debtors, readjustment of
indebtedness, debtor reorganization, or composition or extension of debt;

 

h.              the entry of a judgment or
the issuance or service of any attachment, levy or garnishment, in each case in
excess of $5,000,000, against any Obligor or the property of any Obligor or the
repossession or seizure of property of any Obligor;

 

i.                  any deterioration or
impairment of the Collateral or any decline or depreciation in the value of the
Collateral (whether actual or reasonably anticipated) which causes the
Collateral in the judgment of SunTrust to become unsatisfactory as to character
or value;

 

j.                  any Obligor commits fraud or
makes a material misrepresentation at any time in connection with this Security
Agreement, the Obligations or the Collateral;

 

k.               the Collateral or any part
thereof is located for more than thirty consecutive days outside the state or
states in which the Collateral is to be located pursuant to this Security
Agreement or if the Collateral or any part hereof is removed from such state with
the intent that it will be located outside such state for more than thirty
days; or

 

l.                  should the state of
organization or registration of Owner (if an entity) change.

 

Remedies
Upon Default;  Acceleration of
Obligations. Unless prohibited by applicable law, the Obligations
secured hereby shall automatically and simultaneously mature and become due and
payable, without notice or demand, upon the filing of any petition or the
commencement of any proceeding by or against an Obligor for relief under any bankruptcy
or insolvency law, or any law relating to the relief of debtors, readjustment
of indebtedness, debtor reorganization, or composition or extension of
debt.  Unless prohibited by applicable
law, upon the occurrence of any one or more of the other Events of Default
described above, the Obligations secured hereby shall, at the option of
SunTrust, immediately mature and become due and payable, without notice or
demand. If all or any part of the Obligations secured hereby are not paid as
and when due and payable, whether by acceleration or otherwise, then SunTrust
may, at its option, without notice or demand of any kind: (a) transfer all
or any part of the Collateral into the name of SunTrust or its nominee, at
Owner’s expense, with or without disclosing that such Collateral is subject to
SunTrust’s security interest; (b) enter upon premises upon which the
Collateral is located and, to the extent permitted by law without legal
process, take exclusive possession of the Collateral, and redeem the
Collateral, or any part thereof (irrespective of redemption penalty); (c) appropriate
and apply toward payment of such of the Obligations, and in such order of
application, as SunTrust may from time to time elect, all or any part of any
balances, credits, items or monies in any bank deposit or deposit account
constituting a part of the Collateral; (d) sell the Collateral at public
or private sale, either in whole or in part, and SunTrust may purchase the
Collateral at any such public sale and at any private sale as permitted by law.
Such sale shall result in the sale, conveyance and disposition of all right,
title and interest of Owner in all or any part of the Collateral which is the
subject of such a disposition and SunTrust is authorized as attorney-in-fact
for Owner to sign and execute any transfer, conveyance or instrument in writing
that may be necessary or desirable to effectuate any such disposition of the
Collateral, which power shall be coupled with an interest; and (e) exercise
all other rights of a secured party under the Uniform Commercial Code and all
other rights under law or pursuant to this Security Agreement, all of which
shall be cumulative. If any notification of intended disposition of any
Collateral is required by law, reasonable notification shall be deemed given if
written notice is deposited in the U.S. Mail, first class or certified postage
prepaid, addressed to Owner and such other persons or entities as SunTrust
deems to be appropriate, stating all items required by applicable statutes,
including the time and place of any public sale or the time after which any
private sale or disposition is to be made, at least ten (10) days 

 

6

 

prior
thereto. The proceeds of any disposition of the Collateral shall be applied in
the following order (i) First, to pay all costs and expenses associated
with the retaking, holding, preparation and disposition of the Collateral; (ii) Then
to pay attorneys’ fees; (iii) Next, to pay all accrued but unpaid interest
upon the Obligations in such order as SunTrust may determine in its discretion;
and (iv) Finally, to all unpaid principal outstanding upon the
Obligations, whether or not due and payable, in such order as SunTrust may
determine in its discretion. Any remaining surplus shall be paid to Owner or
otherwise in accordance with law. If the proceeds of such disposition are
insufficient to pay the Obligations in full, Borrower and all other persons or
entities liable thereon shall remain fully obligated to SunTrust for the unpaid
balance thereof.

 

Execution
by More than One Party.  To
the extent prohibited by applicable law, the term “Owner” as used in this
Security Agreement shall, if this instrument is signed by more than one party,
mean the “Owner and each of them” and each shall be jointly and severally
obligated and liable. If any party is a partnership or limited liability
company, the agreements and obligations on the part of the Owner shall remain
in force and applicable regardless of any changes in the parties composing the
partnership or limited liability company and the term “Owner” shall include any
altered or successive partnership or limited liability company and the
predecessor partnership or limited liability company and its partners or
members/managers shall not be released from any obligation or liability.

 

Waivers
by the Owner. The Owner hereby waives (a) notice of
acceptance of this Agreement and of any extensions or renewals of credit by
SunTrust to the Borrower; (b) presentment and demand for payment of the
Obligations; (c) protest and notice of dishonor or default to the Owner or
to any other party with respect to the Obligations; (d) all other notices
to which the Owner might otherwise be entitled; and (e) if for business
purposes, the benefit of any homestead exemption. To the extent permitted by
applicable law, the Owner further waives any right to require that any action
be brought against the Borrower or any other party, the right to require that
resort be had to any security or to any balance of any deposit account or
credit on the books of SunTrust in favor of the Borrower or any other party,
the right to redeem the Collateral and to object to SunTrust’s proposal to
retain the Collateral in satisfaction of any of Obligations and any right to
obtain injunctive or other relief relative to SunTrust’s sale or other
disposition of the Collateral and to recover losses caused by SunTrust’s
failure to approve or correct any list of Collateral provided to SunTrust for
any purpose by any person or entity. Owner waives all rights, claims and
defenses based on principles of suretyship.

 

No
Obligation to Extend Credit. This Security Agreement
shall not be construed to impose any obligation on SunTrust to extend or
continue to extend any credit at any time.

 

Indemnity. The Owner
agrees to indemnify and hold harmless SunTrust, its subsidiaries, affiliates,
successors, and assigns and their respective agents, directors, employees, and
officers (the “Indemnitees”) from and against any and all complaints, claims,
defenses, demands, actions, bills, causes of action (including, without
limitation, costs and attorneys’ fees), and losses of every nature and kind
whatsoever (the “Claims”), which may be raised or sustained by any directors,
officers, employees, shareholders, creditors, regulators, successors in
interest, or receivers of the Borrower or any third party as a result of or
arising out of, directly or indirectly, SunTrust extending credit as evidenced
by the Obligations to the Borrower, and taking the Collateral as security for
the Obligations, and the Owner agrees to be liable for any and all judgments
which may be recovered in any such action, claim, proceeding, suit, or bill,
including any compromise or settlement thereof, and defray any and all
expenses, including, without limitation, costs and attorneys’ fees, that may be
incurred in or by reason of such actions, claims, proceedings, suits, or bills;
provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such Claims are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee. This
obligation to indemnify shall survive the payment of the Obligations and the
satisfaction of this Security Agreement.

 

Financing
Statements and Additional Documentation. SunTrust is authorized to
file such financing statements and amendments as SunTrust deems necessary to
perfect, continue or assure its security interest in the Collateral and the
Owner hereby ratifies any financing statement filed previously by SunTrust. The
Owner will deliver such instruments of future assignment or assurance, and such
other agreements, as SunTrust may from time to time request to carry out the
intent of this Security Agreement, and will join with SunTrust in executing any
documents in form satisfactory to SunTrust, and hereby authorizes SunTrust to
sign for Owner, or to file without signature, any financing statements,
amendments and other documents and instruments from time to time as SunTrust
may deem advisable, and pay any cost of filing the same, including all
recordation, transfer, indebtedness and other taxes and fees, deemed advisable
by SunTrust.

 

Successor
in Interest: SunTrust as Collateral Agent. This Security Agreement
shall be binding upon the Owner, its successors and assigns, and the benefits
hereof shall inure to SunTrust, its successors and assigns. Notwithstanding the
foregoing, Owner shall not assign Owner’s rights or obligations under this Security
Agreement without SunTrust’s prior written consent. SunTrust Bank shall serve
as collateral agent on behalf of itself and present and future affiliates.

 

Miscellaneous.
(a) Each and every power given herein is coupled with an interest
and is irrevocable by death or otherwise. (b) The captions of the
paragraphs of this Security Agreement are for convenience only and shall not be
deemed to constitute a part hereof or used in construing the intent of the
parties. (c) If any part of any provision of this Security Agreement shall
be invalid or unenforceable under applicable law, such part shall be
ineffective to the extent 

 

7

 

of
such invalidity only, without in any way affecting the remaining parts of such
provision or the remaining provisions of this Security Agreement. (d) This
Security Agreement shall not be modified or amended except in a writing signed
by Owner and SunTrust. (e) All representations, warranties, covenants and
agreements contained herein or made in writing by Owner in connection herewith
shall survive the execution and delivery of this Security Agreement and any and
all notes, other agreements, documents and writings relating to or arising out
of any of the foregoing or any of the Obligations. (f) All rights and
remedies of SunTrust expressed herein are in addition to all other rights and
remedies possessed by SunTrust under applicable law or other agreements,
including rights and remedies under any other agreement or instrument relating to
any of the Obligations or any security therefor. (g) No waiver by SunTrust
of any of its rights or remedies or of any default shall operate as a waiver of
any other right or remedy or of any other default or of the same right or
remedy or of the same default on a future occasion. No delay or omission on the
part of SunTrust in exercising any right or remedy shall operate as a waiver
thereof, and no single or partial exercise by SunTrust of any right or remedy
shall preclude any other or further exercise thereof or the exercise of any
other right or remedy. No action of SunTrust permitted hereunder or under any
agreement or instrument relating to any of the Obligations or any security
therefor shall impair or affect the rights of SunTrust in and to the Collateral.
(h) All terms as defined herein shall include both the plural and
singular, where applicable. (i) All notices or communications given to
Owner or SunTrust pursuant to the terms of this Security Agreement shall be in
writing and given to Owner and SunTrust at the address set forth below. Unless
otherwise specifically provided herein to the contrary, such written notices
and communications shall be delivered by hand or overnight courier service, or
mailed by first class mail, postage prepaid, addressed to the parties hereto at
the addresses referred to herein or to such other addresses as either party may
designate to the other party by a written notice given in accordance with the
provisions of this Security Agreement. Any written notice delivered by hand or
by overnight courier service shall be deemed given or received upon receipt.
Any written notice delivered by U.S. Mail shall be deemed given or received on
the third (3rd) business day after being deposited in the U.S. Mail. (j) SunTrust
shall not be responsible or liable for its failure to give notice to Owner of
any default in the payment of any amounts that might become due and owing with
respect to the Collateral nor shall SunTrust be responsible or liable for
SunTrust’s failure to collect any amounts payable with respect to the
Collateral. (k) SunTrust shall be under no obligation to monitor the
market value of any Collateral, to advise the Owner of such market value, or to
take any action whatsoever to preserve the value of any Collateral by selling,
exchanging or otherwise disposing of such Collateral in order to avoid any loss
to the Owner resulting from a decline in the market value of such Collateral. (l) SunTrust
shall be under no obligation to pay any amounts owing with respect to any Collateral.
(m) This Agreement is in addition to and not in replacement of any other
agreement between Owner and SunTrust. (n) The term Owner shall include all
persons signing below as Owner and the obligation of such Owners hereunder
shall be their joint and several obligations.

 

WAIVER
OF JURY TRIAL.  OWNER AND SUNTRUST HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT EITHER OF THEM MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY LITIGATION, WHETHER IN CONTRACT OR TORT, AT LAW
OR IN EQUITY, BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
SECURITY AGREEMENT AND ANY OTHER DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION WITH THIS SECURITY AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR SUNTRUST ENTERING
INTO OR ACCEPTING THIS SECURITY AGREEMENT. FURTHER, OWNER HEREBY CERTIFIES THAT
NO REPRESENTATIVE OR AGENT OF SUNTRUST, NOR SUNTRUST’S COUNSEL, HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUNTRUST WOULD NOT, IN THE EVENT OF
SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.

 

 

The undersigned have executed this Security
Agreement as of the date first written above.

 

 

	
  Signature(s) of
  Individual Owner(s)

  	
   

  	
  Signature(s) of
  Non-Individual Owner(s)

  
	
   

  	
   

  	
   

  
	
   

  	
  (Seal)

  	
  Cogent Communications Group, Inc.

  
	
   

  	
   

  	
  Owner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Seal)

  	
  By

  	
  /s/
  Thaddeus Weed

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Seal)

  	
  Thaddeus
  Weed, CFO

  
	
   

  	
   

  	
  Name
  and Title ( Printed or Typed)

  

 

8

 

Addresses

 

	
  Owner
  Address for Purpose of Notice

  	
  1015 31st St., NW, Washington DC 20007

  
	
   

  	
   

  
	
  SunTrust
  Address for Purpose of Notice

  	
  1445 Research Boulevard, Suite 400

  
	
   

  	
  Rockville, MD 20850

  

 

9

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