Document:

Exhibit
10.2

 

COGENT
COMMUNICATIONS GROUP, INC.

 

THIRD
AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

 

July 31, 2003

 

To each of
the several holders of Series F Preferred Stock (the “Series F Purchasers”),
and Investors Preferred Stock (the “Investors Purchasers,” and together
with the Series F Purchasers, the “Purchasers”):

 

Dear Sirs:

 

This will
confirm that in consideration of the Series F Purchasers agreement to acquire
on the date hereof, subject to the terms and conditions set forth therein,
11,000 shares of Series F Preferred Stock pursuant to the Exchange Agreement
dated June 26, 2003, by and among the Series F Purchasers and the Company (the
“Exchange Agreement”) and as an inducement to the Series F Purchasers to
enter into the Exchange Agreement, and in consideration of the Investors
Purchasers agreement to acquire on the date hereof, subject to the terms and
conditions set forth therein, at least 41,000 shares of Investors Preferred
Stock,  pursuant to the Participating
Convertible Preferred Stock Purchase Agreement dated June 26, 2003, by and
among the Investors Purchasers and the Company (the “Purchase Agreement”)
and as an inducement to the Investors Purchasers to enter into the Purchase
Agreement, the Company covenants and agrees with each of you as follows:

 

1.                                       Certain Definitions.  As used in this Agreement, the following terms shall have the
following respective meanings:

 

“Commission”
shall mean the Securities and Exchange Commission, or any other federal agency
at the time administering the Securities Act.

 

“Common
Stock” shall mean the Common Stock, par value $.001 per share, of the
Company, as constituted as of the date of this Agreement.

 

“Company”
shall mean Cogent Communications Group, Inc.

 

“Conversion
Shares” shall mean shares of Common Stock issued or issuable upon
conversion of the Preferred Stock, and any shares of capital stock received in
respect thereof.

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934 or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.

 

“Investors
Preferred Stock” shall mean the Participating Convertible Preferred Stock
of the Company, issued pursuant to the Purchase Agreement, constituted as of
the date of this Agreement.

 

 

“Preferred
Stock” shall mean the Series F Preferred Stock, and the Investors Preferred
Stock.

 

“Registration
Expenses” shall mean the expenses so described in Section 8.

 

“Restricted
Stock” shall mean (i) the Conversion Shares, excluding Conversion Shares
which have been (a) registered under the Securities Act pursuant to an
effective registration statement filed thereunder and disposed of in accordance
with the registration statement covering them or (b) publicly sold pursuant to
Rule 144 under the Securities Act, and (ii) any shares of Common Stock issued
or distributed in respect of the securities described in clause (i).

 

“Securities
Act” shall mean the Securities Act of 1933 or any similar federal statute,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.

 

“Selling
Expenses” shall mean the expenses so described in Section 8.

 

“Series
F Preferred Stock” shall mean the Series F Participating Convertible
Preferred Stock, par value $.001 per share, of the Company, as constituted as
of the date of this Agreement.

 

2.                                       Restrictive Legend.  Each certificate representing Preferred Stock, Conversion Shares
or Restricted Stock shall, except as otherwise provided in this Section 2 or in
Section 3, be stamped or otherwise imprinted with a legend substantially in the
following form:

 

“The securities represented by this certificate have not
been registered under the Securities Act of 1933 or applicable state securities
laws.  These securities have been
acquired for investment and not with a view to distribution or resale, and may
not be sold mortgaged, pledged, hypothecated or otherwise transferred without
an effective registration statement for such securities under the Securities
Act of 1933 and applicable state securities laws, or the availability of an
exemption from the registration provisions of the Securities Act of 1933 and
applicable state securities laws.”

 

A certificate shall not bear
such legend if in the opinion of counsel reasonably satisfactory to the Company
the securities being sold thereby may be publicly sold without registration
under the Securities Act.

 

3.                                       Notice of Proposed Transfer.  Prior to any proposed transfer of any Preferred Stock, Conversion
Shares or Restricted Stock (other than under the circumstances described in
Sections 4, 5 or 6), the holder thereof shall give written notice to the
Company of its intention to effect such transfer.  Each such notice shall describe the manner of the proposed
transfer and, if requested by the Company, shall be accompanied by an opinion
of counsel reasonably satisfactory to the Company to the effect that the
proposed transfer may be effected without registration under the Securities
Act, whereupon the holder of such stock shall be entitled to transfer such
stock in accordance with the terms of its notice; provided, however,
that no such

 

 

opinion of counsel shall be required for a transfer to one
or more partners of the transferor (in the case of a transferor that is a
partnership), to one or more members of the transferor (in the case of a
transferor that is a limited liability company) or to an affiliated corporation
(in the case of a transferor that is a corporation);  provided, further, however, that any
transferee other than a partner, member or affiliate of the transferor shall
execute and deliver to the Company a representation letter in form reasonably
satisfactory to the Company’s counsel to the effect that the transferee is
acquiring Restricted Stock for its own account, for investment purposes and
without any view to distribution thereof. 
Each certificate for Preferred Stock or Conversion Shares transferred as
above provided shall bear the legend set forth in Section 2, except that such
certificate shall not bear such legend if (i) such transfer is in accordance
with the provisions of Rule 144 (or any other rule permitting public sale
without registration under the Securities Act) or (ii) the opinion of counsel
referred to above is to the further effect that the transferee and any
subsequent transferee (other than an affiliate of the Company) would be
entitled to transfer such securities in a public sale without registration
under the Securities Act.  The
restrictions provided for in this Section 3 shall not apply to securities which
are not required to bear the legend prescribed by Section 2 in accordance with
the provisions of that Section.

 

4.                                       Required Registration.

 

(a)                                  Subject to Section 13(f) of
this Agreement, at any time after the earlier of (i) the date which is three
years after the date hereof and (ii) the date that is six (6) months after the
first public offering after the date hereof of securities by the Company,
holders of Restricted Stock constituting more than 50% of the total number of
shares of Restricted Stock then outstanding may request the Company to register
under the Securities Act all or any portion of the shares of Restricted Stock
held by such requesting holder or holders for sale in the manner specified in
such notice.  For purposes of this
Section 4 and Sections 5, 6, 13(a) and 13(d), the term “Restricted Stock” shall
be deemed to include the number of shares of Restricted Stock which would be
issuable to a holder of Preferred Stock upon conversion of all shares of
Preferred Stock held by such holder at such time; provided, however,
that the only securities which the Company shall be required to register
pursuant hereto shall be shares of Common Stock; provided, further,
however, that, in any underwritten public offering contemplated by this
Section 4 or Sections 5 and 6, the holders of Preferred Stock shall be entitled
to sell such Preferred Stock to the underwriters for conversion and sale of the
shares of Common Stock issued upon conversion thereof and holders of a majority
of the Preferred Stock being so registered shall have the right to approve the
managing underwriter(s) selected by the Company in connection with such
underwritten public offering. 
Notwithstanding anything to the contrary contained herein, the Company
shall not be obligated to effect a registration (i) during the 180 day period
commencing with the effective date of a registration statement filed by the
Company covering the first firm commitment underwritten public offering after
the date hereof or (ii) if the Company delivers notice to the holders of the
Restricted Stock within thirty (30) days of any registration request of the
Company’s intent to file a registration statement for an underwritten public
offering within ninety (90) days.

 

(b)                                 Following receipt of any
notice under this Section 4, the Company shall immediately notify all holders
of Restricted Stock and Preferred Stock from whom notice has not been received
and such holders shall then be entitled within 30 days thereafter to request
the Company to include in the requested registration all or any portion of
their shares of Restricted

 

 

Stock.  The Company
shall use its best efforts to register under the Securities Act, for public
sale in accordance with the method of disposition described in paragraph (a)
above, the number of shares of Restricted Stock specified in such notice (and
in all notices received by the Company from other holders within 30 days after
the giving of such notice by the Company). 
The Company shall be obligated to register Restricted Stock pursuant to
this Section 4 on three occasions only; provided, however, that
such obligation shall be deemed satisfied only when a registration statement
covering all shares of Restricted Stock specified in notices received as
aforesaid for sale in accordance with the method of disposition specified by
the requesting holders shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering, all such shares
shall have been sold pursuant thereto.

 

(c)                                  The Company (or at the
option of the Company, the holders of Common Stock) shall be entitled to
include in any registration statement referred to in this Section 4, for sale
in accordance with the method of disposition specified by the requesting
holders, shares of Common Stock to be sold by the Company or such other holders
for its own account, except as and to the extent that, in the opinion of the
managing underwriter (if such method of disposition shall be an underwritten
public offering), such inclusion would adversely affect the marketing of the
Restricted Stock to be sold.  Subject to
Section 4(a) and except for registration statements on Form S-4, S-8 or any
successor thereto, the Company will not file with the Commission any other
registration statement with respect to its Common Stock, whether for its own
account or that of other stockholders, from the date of receipt of a notice
from requesting holders pursuant to this Section 4 until the completion of the
period of distribution of the registration contemplated thereby.

 

(d)                                 If, in the opinion of the
managing underwriter, the inclusion of all of the Restricted Stock requested to
be registered under this Section would adversely affect the marketing of such
shares, the Company shall only include the number of shares that, in the
reasonable opinion of such underwriter, can be sold without having an adverse
effect on the marketing of such shares, to be allocated to each stockholder of
the Company on a pro rata basis
based on the total number of shares held by such holder and requested to be
included in the registration; provided, however, that the number
of shares of Restricted Stock to be included in such underwriting and
registration shall not be reduced unless all other securities of the Company
are first excluded from the underwriting and registration.

 

5.                                       Incidental Registration.  Subject to Section 13(f) of this Agreement, if the Company at any
time (other than pursuant to Section 4 or Section 6) proposes to register any
of its securities under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both (except
with respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Restricted Stock for sale to the public), each
such time it will give written notice to all holders of outstanding Restricted
Stock of its intention so to do.  Upon
the written request of any such holder, received by the Company within 30 days
after the giving of any such notice by the Company, to register any of its
Restricted Stock, the Company will use its best efforts to cause the Restricted
Stock as to which registration shall have been so requested to be included in
the securities to be covered by the registration statement proposed to be filed
by the Company, all to the extent requisite to permit the sale or other
disposition by the holder (in accordance with its written request) of such
Restricted Stock so registered.  In the
event that any registration pursuant to this Section 5 shall

 

 

be, in whole or in part, an underwritten public offering of
Common Stock, if the managing underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the holders of Restricted
Stock invoking the rights under this Section 5 on a pro rata basis based on the total number of shares of
Restricted Stock held by such holders; and third, to any stockholder of the
Company (other than such holders) on a pro
rata basis.  No such
reduction shall reduce the amount of securities of the selling holders included
in the registration below thirty percent (30%) of the total amount of
securities included in such registration. 
In no event will shares of any other selling stockholder be included in
such registration that would reduce the number of shares which may be included
by holders of Restricted Stock without the written consent of the holders of
not less than sixty-six and two-thirds percent (66 2/3%) of the Restricted
Stock proposed to be sold in the offering. 
If any such holder disapproves of the terms of any such underwriting,
such holder may elect to withdraw therefrom by written notice to the Company
and the underwriter, delivered at least ten (10) business days prior to the
effective date of the registration statement. 
Any shares of Restricted Stock excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration.  For any holder which is a partnership or
corporation, the partners, retired partners and stockholders of such holder, or
the estates and family members of any such partners and retired partners and
any trusts for the benefit of any of the foregoing person shall be deemed to be
a single holder, and any pro rata
reduction with respect to such holder shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such holder, as defined in this sentence.  Notwithstanding the foregoing provisions, the Company may
withdraw any registration statement referred to in this Section 5 without
thereby incurring any liability to the holders of Restricted Stock.

 

6.                                       Registration on Form S-3.  Subject to Section 13(f) of this Agreement, if at any time (i) a
holder or holders of Restricted Stock then outstanding request that the Company
file a registration statement on Form S-3 or any successor thereto for a public
offering of all or any portion of the shares of Restricted Stock held by such
requesting holder or holders, and (ii) the Company is a registrant entitled to
use Form S-3 or any successor thereto to register such shares, then the Company
shall use its best efforts to register under the Securities Act on Form S-3 or
any successor thereto for public sale in accordance with the method of
disposition specified in such notice, the number of shares of Restricted Stock
specified in such notice.  Whenever the
Company is required by this Section 6 to use its best efforts to effect the
registration of Restricted Stock, each of the procedures and requirements of
Section 4 (including but not limited to the requirement that the Company notify
all holders of Restricted Stock from whom notice has not been received and
provide them with the opportunity to participate in the offering) shall apply
to such registration; provided, however, that there shall be no
limitation on the number of registrations on Form S-3 which may be requested
and obtained under this Section 6 and registrations effected pursuant to this
Section 6 shall not be counted as demands for registration or registrations
effected pursuant to Sections 4 or 5, respectively.

 

(b)                                 Notwithstanding anything to
the contrary set forth in this Agreement, the Company’s obligation under this
Agreement to register Restricted Stock under the Securities Act on registration
statements (“Registration Statements”) may, upon the reasonable
determination of the Board of Directors made not more than twice in the aggregate
(and not more than once with respect to a Registration Statement on Form S-1
and not more than once with respect to a

 

 

Registration Statement on Form S-3 and including any delay
pursuant to the last sentence of Section 4(a)) during any 12-month period, be
suspended in the event and during such period as unforeseen circumstances
(including without limitation (i) an underwritten primary offering by the
Company (which includes no secondary offering) if the Company is advised in
writing by its underwriters that the registration of the Restricted Stock would
have a material adverse effect on the Company’s offering, or (ii) pending
negotiations relating to, or consummation of, a transaction or the occurrence
of an event which would require additional disclosure of material information
by the Company in Registration Statements or such other filings, as to which
the Company has a bona fide business purpose for preserving confidentiality or
which renders the Company unable to comply with the Commission’s requirements)
exist (such unforeseen circumstances being hereinafter referred to as a “Suspension
Event”) which would make it impractical or unadvisable for the Company to
file the Registration Statements or such other filings or to cause such to
become effective.  Such suspension shall
continue only for so long as such event is continuing but in no event for a
period longer than (i) one hundred and twenty (120) days, in the case of a
Registration Statement on Form S-1 (or any successor thereto) or (ii) ninety
(90) days, in the case of a Registration Statement on Form S-3 (or any
successor thereto).  The Company shall
notify the Purchasers of the existence and nature of any Suspension Event.

 

7.                                       Registration Procedures.  If and whenever the Company is required by the provisions of
Sections 4, 5 or 6 to use its best efforts to effect the registration of any
shares of Restricted Stock under the Securities Act, the Company will, as
expeditiously as possible:

 

(a)                                  prepare and file with the
Commission a registration statement (which, in the case of an underwritten
public offering pursuant to Section 4, shall be on Form S-1 or other form of
general applicability satisfactory to the managing underwriter selected as
therein provided) with respect to such securities and use its best efforts to
cause such registration statement to become and remain effective for the period
of the distribution contemplated thereby (determined as hereinafter provided);

 

(b)                                 prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for the period specified in paragraph (a)
above and comply with the provisions of the Securities Act with respect to the
disposition of all Restricted Stock covered by such registration statement in
accordance with the sellers’ intended method of disposition set forth in such
registration statement for such period;

 

(c)                                  furnish to each seller of
Restricted Stock and to each underwriter such number of copies of the
registration statement and each such amendment and supplement thereto (in each
case including all exhibits) and the prospectus included therein (including
each preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Restricted Stock covered
by such registration statement;

 

(d)                                 use its best efforts to
register or qualify the Restricted Stock covered by such registration statement
under the securities or “blue sky” laws of such jurisdictions as the sellers of
Restricted Stock or, in the case of an underwritten public offering, the
managing underwriter reasonably shall request; provided, however,
that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any

 

 

jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;

 

(e)                                  use its best efforts to list
the Restricted Stock covered by such registration statement with any securities
exchange on which the Common Stock of the Company is then listed;

 

(f)                                    immediately notify each
seller of Restricted Stock and each underwriter under such registration
statement, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event of which the
Company has knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly prepare and furnish to such seller a
reasonable number of copies of a prospectus supplemented or amended so that, as
thereafter delivered to the purchasers of such Restricted Stock, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;

 

(g)                                 if the offering is
underwritten and at the request of any seller of Restricted Stock, use its best
efforts to furnish on the date that Restricted Stock is delivered to the
underwriters for sale pursuant to such registration:  (i) an opinion dated such date of counsel representing the
Company for the purposes of such registration, addressed to the underwriters
and to such seller, to such effect as reasonably may be requested by counsel
for the underwriters, and (ii) a letter dated such date from the independent
public accountants retained by the Company, addressed to the underwriters and
to such seller, stating that they are independent public accountants within the
meaning of the Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereof, comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act, and such letter shall additionally cover such other financial
matters (including information as to the period ending no more than five business
days prior to the date of such letter) with respect to such registration as
such underwriters reasonably may request;

 

(h)                                 make available for
inspection by each seller of Restricted Stock, any underwriter participating in
any distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by such seller or underwriter, reasonable
access to all financial and other records, pertinent corporate documents and
properties of the Company, as such parties may reasonably request, and cause
the Company’s officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;

 

(i)                                     cooperate with the selling
holders of Restricted Stock and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Restricted Stock to be sold, such certificates to be in such denominations and
registered in such names as such holders or the managing underwriters may
request at least two business days prior to any sale of Restricted Stock; and

 

 

(j)                                     permit any holder of
Restricted Stock which holder, in the sole and exclusive judgment, exercised in
good faith, of such holder, might be deemed to be a controlling person of the
Company, to participate in good faith in the preparation of such registration
or comparable statement and to require the insertion therein of material,
furnished to the Company in writing, which in the reasonable judgment of such
holder and its counsel should be included and to permit any other holder of
Restricted Stock participating in the registration to review such registration
or comparable statement during its preparation.

 

For
purposes of Section 7(a) and 7(b) and of Section 4(c), the period of
distribution of Restricted Stock in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of Restricted Stock in any other registration shall be deemed to extend until
the earlier of the sale of all Restricted Stock covered thereby and 180 days
after the effective date thereof.

 

In
connection with each registration hereunder, the sellers of Restricted Stock
will furnish to the Company in writing such information requested by the
Company with respect to themselves and the proposed distribution by them as
reasonably shall be necessary in order to assure compliance with federal and
applicable state securities laws and to make the registration statement
correct, accurate and complete in all respects with respect to such sellers; provided,
however, that this requirement shall not be deemed to limit any
disclosure obligation arising out of any seller’s relationship to the Company
if one of such seller’s agents or affiliates is an officer, director or control
person of the Company.  In addition, the
sellers shall, if requested by the Company, execute such other agreements,
which are reasonably satisfactory to them and which shall contain such
provisions as may be customary and reasonable in order to accomplish the
registration of the Restricted Stock.

 

In
connection with each registration pursuant to Sections 4, 5 or 6 covering an underwritten
public offering, the Company and each seller agree to enter into a written
agreement with the managing underwriter selected in the manner herein provided
in such form and containing such provisions as are customary in the securities
business for such an arrangement between such underwriter and companies of the
Company’s size and investment stature.

 

8.                                       Expenses.  All expenses incurred by the Company in complying with Sections
4, 5 and 6, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or “blue sky” laws,
fees and expenses of one counsel for the selling holders of Restricted Stock in
connection with the registration of Restricted Stock, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer
agents and registrars, costs of any insurance which might be obtained, but
excluding any Selling Expenses, are called “Registration Expenses.”  All underwriting discounts and selling
commissions applicable to the sale of Restricted Stock and the fees and
expenses of more than one counsel for the selling holders of Restricted Stock
in connection with the registration of Restricted Stock are called “Selling
Expenses.”

 

 

The Company
will pay all Registration Expenses incurred in connection with each of the
first five Registration Statements filed pursuant to Sections 4, 5 or 6.  All Selling Expenses incurred in connection
with each of the first five Registration Statements filed pursuant to Sections
4, 5 or 6, and all Selling Expenses and Registration Expenses incurred in
connection with each Registration Statement filed pursuant to Sections 4, 5 or
6 thereafter, shall be borne by the participating sellers in proportion to the
number of shares sold by each, or by such participating sellers other than the
Company (except to the extent the Company shall be a seller) as they may agree.

 

9.                                       Indemnification.

 

(a)                                  To the extent permitted by
law, in the event of a registration of any of the Restricted Stock under the
Securities Act pursuant to Sections 4, 5 or 6, the Company will indemnify and
hold harmless each holder of Restricted Stock, its partners, members, officers
and directors, each underwriter of such Restricted Stock thereunder and each
other person, if any, who controls such seller or underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder, officer, director,
underwriter or controlling person may become subject under the Securities Act,
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such Restricted Stock was registered
under the Securities Act pursuant to Sections 4, 5 or 6, any preliminary
prospectus (but only to the extent not corrected in the final prospectus) or
final prospectus contained therein, or any amendment or supplement thereof,
(ii) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by
the Company filed in any state or other jurisdiction in order to qualify any or
all of the Restricted Stock under the securities laws thereof (any such
application, document or information herein called a “Blue Sky Application”),
(iii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (iv) any violation by the Company or its agents of any rule or
regulation promulgated under the Securities Act or Exchange Act applicable to
the Company or its agents and relating to action or inaction required of the
Company in connection with such registration, or (v) any failure to register or
qualify the Restricted Stock in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company (the undertaking
of any underwriter chosen by the Company being attributed to the Company) will
undertake such registration or qualification on the seller’s behalf (provided
that in such instance the Company shall not be so liable if it has undertaken
its best efforts to so register or qualify the Restricted Stock) and will
reimburse each such holder, and such partner, member, officer and director,
each such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company will not be
liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by any such seller, any such underwriter or any such
controlling person in writing specifically for use in such registration
statement, prospectus or Blue Sky Application.

 

 

(b)                                 To the extent permitted by
law, in the event of a registration of any of the Restricted Stock under the
Securities Act pursuant to Sections 4, 5 or 6, each seller of such Restricted
Stock thereunder, severally and not jointly, will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of
the Securities Act, each officer of the Company who signs the registration
statement, each director of the Company, each other holder of Restricted Stock,
each underwriter and each person who controls any underwriter within the
meaning of the Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
other seller, underwriter or controlling person may become subject under the
Securities Act, Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Restricted Stock
was registered under the Securities Act pursuant to Sections 4, 5 or 6, any
preliminary prospectus (but only to the extent not corrected in the final
prospectus) or final prospectus contained therein, or any amendment or
supplement thereof, or any Blue Sky Application or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer, director,
other seller, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that such seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such seller, as such, furnished in writing to the Company by such seller
specifically for use in such registration statement, prospectus or Blue Sky
Application; and provided, further, however, that the
liability of each seller hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of the shares sold by such seller under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the net proceeds
received by such seller from the sale of Restricted Stock covered by such registration
statement.

 

(c)                                  Promptly after receipt by an
indemnified party hereunder of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party hereunder, notify the indemnifying party in writing
thereof, but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to such indemnified party other than
under this Section 9 and shall only relieve it from any liability which it may
have to such indemnified party under this Section 9 if and to the extent the
indemnifying party is prejudiced by such omission.  In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent
it shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 9 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
however, that, if the

 

 

defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that the interests of the indemnified party reasonably may
be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred. No indemnifying party, in the defense of any such claim or litigation
shall, except with the consent of each indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation, and no indemnified party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld.

 

(d)                                 If the indemnification
provided for in this Section 9 is held by a court of competent jurisdiction to
be unavailable to an indemnified party with respect to any losses, claims,
damages or liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent permitted
by applicable law contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability in such proportion
as is appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection with the
violation that resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. 
The relative fault of the indemnifying party and of the indemnified
party shall be determined by a court of law by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission; provided, however,
that in no event shall any contribution by a holder of Restricted Stock
hereunder, when combined with amounts paid or payable pursuant to Section 9(b),
exceed the net proceeds from the offering received by such holder.

 

(e)                                  The obligations of the
Company and holders of Restricted Stock under this Section 9 shall survive
completion of any offering of Restricted Stock by a registration statement and
the termination of this Agreement.

 

10.                                 Changes in Common Stock,
Series F Preferred Stock or Investors Preferred Stock.  If, and as often as, there is any change in the Common Stock,
Series F Preferred Stock or Investors Preferred Stock by way of a stock split,
stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock, the Series F Preferred Stock or the Investors Preferred Stock as so
changed.

 

11.                                 Rule 144 Reporting.  With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of the
Restricted Stock to the public without registration, at all times after any
registration statement covering a public offering of securities of the Company
under the Securities Act shall have become effective, the

 

 

Company agrees to:

 

(a)                                  make and keep public
information available, as those terms are understood and defined in Rule 144
under the Securities Act;

 

(b)                                 use its best efforts to file
with the Commission in a timely manner all reports and other documents required
of the Company under the Securities Act and the Exchange Act; and

 

(c)                                  furnish to each holder of
Restricted Stock forthwith upon request a written statement by the Company as
to its compliance with the reporting requirements of such Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
by the Company as such holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing such holder to sell any
Restricted Stock without registration.

 

12.                                 Representations and
Warranties of the Company.  The Company represents and warrants to you
as follows:

 

(a)                                  The execution, delivery and
performance of this Agreement by the Company have been duly authorized by all
requisite corporate action and will not violate any provision of law, any order
of any court or other agency of government, the articles of organization or
By-laws of the Company or any provision of any indenture, agreement or other
instrument to which it or any or its properties or assets is bound, conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company.

 

(b)                                 This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms.

 

13.                                 Miscellaneous.

 

(a)                                  All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including without limitation transferees of any Preferred Stock
or Restricted Stock), whether so expressed or not; provided, however,
that registration rights conferred herein on the holders of Preferred Stock or
Restricted Stock shall only inure to the benefit of a transferee of Preferred
Stock or Restricted Stock if (i) there is transferred to such transferee at
least twenty five percent (25%) of the shares of Restricted Stock
(appropriately adjusted for any subdivision or combination) originally issued
to a Purchaser, (ii) such transferee is a member, former member, partner,
retired partner, family member or trust for the benefit of any individual
holder, stockholder or affiliate of a party hereto or (iii) such transferee acquires
at least 2,500,000 shares (appropriately adjusted for any subdivision or
combination) of Preferred Stock; provided, further, however,
that the Company is given written notice thereof.

 

 

(b)                                 All notices, requests,
consents and other communications hereunder shall be in writing and shall be
mailed by certified or registered mail, return 
receipt  requested, postage
prepaid, or by recognized overnight delivery service of international
reputation or, in the case of non-U.S. residents, telexed or sent by recognized
overnight delivery service of international reputation or, addressed as
follows:

 

If to the
Company, to:

 

Cogent
Communications Group, Inc.

1015 31st
Street, N.W.

Washington,
DC 20007,

Attention:  Robert Beury

 

with copies to:

 

Latham
& Watkins

555
Eleventh St., N.W., Suite 1000

Washington,
D.C. 20004

Attention:
David McPherson

 

If to any
other party hereto, to their respective addresses set forth on Schedule I
hereto;

 

If to any
subsequent holder of Preferred Stock or Restricted Stock, to it at such address
as may have been furnished to the Company in writing by such holder;

 

or, in any case, at such
other address or addresses as shall have been furnished in writing to the
Company (in the case of a holder of Preferred Stock or Restricted Stock) or to
the holders of Preferred Stock or Restricted Stock (in the case of the Company)
in accordance with the provisions of this paragraph.

 

(c)                                  This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of New York, without reference to its conflict of laws provisions.

 

(d)                                 This Agreement may not be
amended or modified, and no provision hereof may be waived, without the written
consent of the Company and the holders of at least two-thirds of the
outstanding shares of Restricted Stock. 
Notwithstanding the foregoing, no such amendment or modification shall
be effective if and to the extent that such amendment or modification either
(a) creates any additional affirmative obligations to be complied with by any
or all of the Purchasers or (b) grants to any one or more Purchasers any rights
more favorable than any rights granted to all other Purchasers or otherwise
treats any one or more Purchasers differently than all other Purchasers.

 

(e)                                  This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

 

 

(f)                                    If requested in writing by
the underwriters for the first underwritten public offering of securities of
the Company after the date hereof, each holder of Restricted Stock who is a
party to this Agreement shall agree not to sell publicly any shares of
Restricted Stock or any other shares of Common Stock (other than shares of
Restricted Stock or other shares of Common Stock being registered in such
offering or any shares purchased in the open market after the Company’s public
offering), without the consent of such underwriters, for a period of not more
than 180 days following the consummation of such public offering; provided,
however, that all holders of at least one percent (1%) of the then
outstanding Common Stock and all officers and directors of the Company shall
also have agreed not to sell publicly their Common Stock under the
circumstances and pursuant to the terms set forth in this Section 13(f).

 

(g)                                 If any provision of this
Agreement shall be held to be illegal, invalid or unenforceable, such
illegality, invalidity or unenforceability shall attach only to such provision
and shall not in any manner affect or render illegal, invalid or unenforceable
any other provision of this Agreement, and this Agreement shall be carried out
as if any such illegal, invalid or unenforceable provision were not contained
herein.

 

(h)                                 Upon and after the Closing
(as defined in the Exchange Agreement and the Purchase Agreement), this
Agreement shall amend and restate in its entirety the Second Amended
Registration Rights Agreement, dated March 6, 2003, by and among the Company
and the other parties thereto (the “Prior Registration Rights Agreement”),
the parties hereto constitute the Company and the holders of at least
two-thirds of the outstanding shares of Restricted Stock (as defined in the
Prior Registration Rights Agreement) immediately prior to the execution of this
Agreement.

 

(i)                                     After the date of this
Agreement, the Company shall not, without the prior written consent of the
holders of at least two-thirds of the Restricted Stock then outstanding, enter
into any agreement with any holder or prospective holder of any securities of
the Company that would grant such holder registration rights pari passu or senior to those granted to
the holders hereunder, other than a registration related to stock issued upon
conversion of debt securities assumed by the Company in connection with its
acquisition of Allied Riser Communications Corporation.

 

(j)                                     All registration rights
granted under Sections 4, 5, and 6 shall terminate and be of no further force
and effect upon the earlier of (i) three (3) years after the date the Company
first effects a registration pursuant to Section 4 or (ii) five (5) years from
the date hereof.  In addition, the
registration rights of a holder of Restricted Stock shall expire if all
Restricted Stock held by and issuable to such holder (and its affiliates) may
be sold under Rule 144 during any ninety (90) day period.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]

 

 

Please
indicate your acceptance of the foregoing by signing and returning the enclosed
counterpart of this letter, whereupon this Agreement shall be a binding
agreement between the Company and you.

 

Please indicate your
acceptance of the foregoing by signing and returning the enclosed counterpart
of this letter, whereupon this Agreement shall be a binding agreement between
the Company and you.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COGENT
  COMMUNICATIONS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/David Schaeffer

  
	
   

  	
  By:

  	
  David Schaeffer

  
	
   

  	
  Its:

  	
  President and Chief Executive Officer

  
				

 

 

	
   

  	
  PURCHASERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OAK
  INVESTMENT PARTNERS IX, LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Oak Associates
  IX, LLC,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Edward Glassmeyer

  
	
   

  	
  Name: Edward Glassmeyer

  
	
   

  	
  Title: Managing Member

  
	
   

  	
   

  
	
   

  	
  OAK IX
  AFFILIATES FUND, LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Oak IX
  Affiliates, LLC,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Edward Glassmeyer

  
	
   

  	
  Name: Edward Glassmeyer

  
	
   

  	
  Title: Managing Member

  
	
   

  	
   

  
	
   

  	
  OAK IX
  AFFILIATES FUND-A, LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Oak
  Associates IX, LLC,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Edward Glassmeyer

  
	
   

  	
  Name: Edward Glassmeyer

  
	
   

  	
  Title: Managing Member

  
				

 

 

[Signature Page to Registration Rights Agreement -
Continued]

 

	
   

  	
  JERUSALEM
  VENTURE PARTNERS III, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Jerusalem
  Partners III, L.P.,

  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Jerusalem
  Venture Partners Corporation,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Erel Margalit

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  JERUSALEM
  VENTURE PARTNERS III (ISRAEL), L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Jerusalem
  Venture Partners III

  (Israel) Management Company Ltd.,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Erel Margalit

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  JERUSALEM
  VENTURE PARTNERS ENTREPRENEURS FUND III, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Jerusalem
  Partners III, L.P.,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Jerusalem
  Venture Partners Corporation,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Erel Margalit

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

 

	
   

  	
  JERUSALEM
  VENTURE PARTNERS IV, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Jerusalem
  Partners IV, L.P.,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  JVP Corp
  IV, its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Erel Margalit

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JERUSALEM
  VENTURE PARTNERS IV (Israel), L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Jerusalem
  Partners IV – Venture

  Capital, L.P., its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  JVP Corp
  IV, its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Erel Margalit

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

 

	
   

  	
  JERUSALEM
  VENTURE PARTNERS IV-A, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Jerusalem
  Partners IV, L.P., its

  General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  JVP Corp
  IV, its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Erel Margalit

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JERUSALEM
  VENTURE PARTNERS ENTREPRENEURS FUND IV, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Jerusalem
  Partners IV, L.P.,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  JVP Corp
  IV,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Erel Margalit

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

 

	
  WORLDVIEW
  TECHNOLOGY PARTNERS III, L.P.

  	
   

  
	
   

  	
   

  
	
  WORLDVIEW
  TECHNOLOGY INTERNATIONAL III, L.P.

  	
   

  
	
   

  	
   

  
	
  WORLDVIEW
  STRATEGIC PARTNERS III, L.P.

  	
   

  
	
   

  	
   

  
	
  WORLDVIEW
  III CARRIER FUND, L.P.

  	
   

  
	
   

  	
   

  
	 
	
  By:

  	
  Worldview
  Capital III, L.P.,

  its General Partner

  	
   

  
	 
	
   

  	
   

  	
   

  
	 
	
  By:

  	
  Worldview
  Equity I, L.L.C.,

  its General Partner

  	
   

  
	 
	
   

  	
   

  	
   

  
	 
	
  By:

  	
  /s/James N. Strawbridge

  	
   

  	
   

  
	 
	
   

  	
  Name:
  James N. Strawbridge

  	
   

  
	 
	
   

  	
  Title:
  Attorney-in-fact for James Wei

  	
   

  
	 
	
   

  	
   

  	
   

  
	 
	
  WORLDVIEW
  TECHNOLOGY PARTNERS IV, L.P.

  	
   

  
	 
	
   

  	
   

  
	 
	
  WORLDVIEW
  TECHNOLOGY INTERNATIONAL IV, L.P.

  	
   

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	 
	
  WORLDVIEW
  STRATEGIC PARTNERS IV, L.P.

  	
   

  
	 
	
   

  	
   

  	
   

  
	 
	
  By:

  	
  Worldview
  Capital IV, L.P.,

  its General Partner

  	
   

  
	 
	
   

  	
   

  	
   

  
	 
	
  By:

  	
  Worldview
  Equity I, L.L.C.,

  its General Partner

  	
   

  
	 
	
   

  	
   

  	
   

  
	 
	
  By:

  	
  /s/James N. Strawbridge

  	
   

  	
   

  
	 
	
   

  	
  Name:
  James N. Strawbridge

  	
   

  
	 
	
   

  	
  Title:
  Attorney-in-fact for James Wei

  	
   

  
							

 

 

	
   

  	
  BROADVIEW
  CAPITAL PARTNERS L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Broadview
  Capital Partners

  Management LLC, its General

  Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Stephen J. Bachman

  
	
   

  	
  Name: Stephen J. Bachmann

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
  BROADVIEW
  CAPITAL PARTNERS QUALIFIED PURCHASER FUND L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Broadview
  Capital Partners

  Management LLC, its General

  Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Stephen J. Bachman

  
	
   

  	
  Name: Stephen J. Bachmann

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
  BROADVIEW
  CAPITAL PARTNERS AFFILIATES FUND LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Broadview
  Capital LLC,

  its Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Stephen J. Bachman

  
	
   

  	
  Name: Stephen J. Bachmann

  Title: Managing Director

  
				

 

 

	
   

  	
  BOULDER
  VENTURES III, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Andrew E.
  Jones

  
	
   

  	
  Name: Andrew E. Jones

  Title: General Partner

  
	
   

  	
   

  
	
   

  	
  BOULDER
  VENTURES III (ANNEX), L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Andrew E.
  Jones

  
	
   

  	
  Name: Andrew E. Jones

  Title: General Partner

  

 

 

	
   

  	
  NAS
  PARTNERS I L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Randall A. Hack

  
	
   

  	
  Name: Randall A. Hack

  Title: Sr. Managing Partner

  
	
   

  	
   

  
	
   

  	
  NASSAU
  CAPITAL PARTNERS IV L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Nassau
  Capital LLC,

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Randall A. Hack

  
	
   

  	
  Name: Randall A. Hack

  Title: Sr. Managing Partner

  
				

 

 

	
   

  	
  CISCO
  SYSTEMS CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/D.A. Rogan

  
	
   

  	
  Name: David A. Rogan

  
	
   

  	
  Title: President, Cisco Capital

  

 

 

	
   

  	
  APPLEGREEN
  CAPITAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/Brian Rich

  
	
   

  	
  Name:  Brian Rich

  
	
   

  	
  Title:
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/Bradley P. Griggs

  
	
   

  	
  Bradley
  P. Griggs, Trustee of the Griggs

  
	
   

  	
  Family
  Trust, dated 4/16/97

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/Gordon P. Griggs, Trustee

  
	
   

  	
  Gordon P.
  Griggs, Trustee, Declaration of Trust of

  Gordon P. Griggs, u/a dated 08/01/80

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/Behdad Eghbali

  
	
   

  	
  Behdad
  EghbaliExhibit
10.3

 

EXCHANGE
AGREEMENT

 

This Exchange Agreement
(this “Agreement”) is entered into as of June 26, 2003 by and among
Cogent Communications Group, Inc., a Delaware corporation (the “Company”),
Cogent Communications, Inc., a Delaware corporation (the “Borrower”),
Cogent Internet, Inc., a Delaware corporation (the “Additional Borrower”
and together with the Company and the Borrower, the “Borrowers”), Cisco
Systems, Inc., a California corporation (“Cisco”) and Cisco Systems
Capital Corporation, a Nevada corporation (“CSCC”).

 

W
I T N E S S E T H :

 

WHEREAS, CSCC, the
Company, the Borrower and the Additional Borrower have entered into that
certain Second Amended and Restated Credit Agreement, dated as of October 24,
2001, as amended on February 4, 2002, April 17, 2002, October 1, 2002 and
September 30, 2002 (the “Second Amended and Restated Agreement”),
pursuant to which CSCC extended credit to the Borrower and the Additional
Borrower;

 

WHEREAS, the Borrowers
owe CSCC an aggregate of approximately $263,000,000 pursuant to those certain
Tranche A, Tranche B and Tranche X Notes (the “Original Notes”)
evidencing borrowings under the Second Amended and Restated Agreement;

 

WHEREAS, CSCC is the
holder of a Stock Subscription Warrant dated as of June 8, 2001, and two Stock
Subscription Warrants dated as of October 24, 2001, for the purchase of an
aggregate of 710,216 shares of common stock of the Company, subject to their
terms (the “Warrants”);

 

WHEREAS, Cisco and the
Borrower have entered into that certain Service Provider Agreement, dated as of
March 15, 2000 (the “Original Service Provider Agreement”) relating to
the purchase of telecommunications equipment and license of software and
related services;

 

WHEREAS, CSCC and
Borrowers have agreed, among other things, that CSCC will restructure the
indebtedness owing under the Second Amended and Restated Agreement by amending
and restating the Second Amended and Restated Agreement and the Original Notes,
reducing the amount owing under the Original Notes to $17,000,000, and
exchanging the Warrants and the remaining obligations due under the Original
Notes for a cash payment and 11,000 shares of Company’s Series F Participating
Convertible Preferred Stock, par value $.001 per share (the “Series F
Preferred Stock”); and

 

WHEREAS, in connection
with the issuance of the CSCC Shares (as defined below) to CSCC, the Company
has authorized the sale and issuance of at least 41,000 shares of its
Participating Convertible Preferred Stock, par value $.001 per share (the “Investor
Shares” and together with the CSCC Shares, the “Shares”), in several
series to certain holders (the “Investors”) of the Company’s preferred
stock (the “Investors Preferred Stock”) pursuant to that certain Stock
Purchase Agreement dated of even date herewith (the “Investors Stock
Purchase Agreement”), and adopted the 2003 Incentive Award Plan of Cogent
Communications Group, Inc., (the “Cogent Employee Stock Plan”) for the
benefit of its eligible employees, consultants

 

1

 

and directors which provides for the issuance of up to 54,001 shares
its Series H Participating Convertible Preferred Stock (the “Series H
Preferred Stock”), par value $.001 per share;

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained in this
Agreement, the parties agree as follows:

 

ARTICLE
I

 

EXCHANGE

 

Section
1.1.  Exchange.  On the basis of the representations,
warranties, covenants and agreements contained herein and subject to the terms
and conditions of this Agreement, CSCC will (i) amend and restate the Second
Amended and Restated Agreement pursuant to the terms of that certain Third
Amended and Restated Credit Agreement in the form attached hereto as Exhibit
A (the “Third Amended and Restated Agreement”), (ii) amend certain
collateral documents and guaranties executed in connection with the Second
Amended and Restated Agreement, as set forth in that certain Omnibus Amendment
to Collateral Documents and Guaranties in the form attached hereto as Exhibit
B (the “Omnibus Amendment”); (iii) reduce the amount of the Original
Notes in the aggregate principal amount of approximately $263,000,000 to
$17,000,000 and amend and restate the Original Notes as set forth in an Amended
and Restated Promissory Note in the form attached hereto as Exhibit C
(the “Amended and Restated Note”), (iv) exchange the Warrants and the
remaining obligations under the Original Notes for (a) a cash payment of
$20,000,000 with respect to such remaining obligations (the “Cash Payment”),
and (b) 11,000 shares of the Series F Preferred Stock evidenced by certificates
in the name of CSCC  (the “CSCC
Shares”); and (v) enter into the General Release (as defined below).  The transactions referred to in this Section
1.1 are referred to herein as the “Exchange.”

 

Section
1.2.  General Release; Registration
Rights Agreement; Stockholders Agreement.  Subject to the terms and conditions of this
Agreement, each of (i) Cisco, CSCC, the Borrowers and the other parties set
forth as signatories thereto, shall execute a General Release in the form
attached hereto as Exhibit D (the “General Release”), (ii) CSCC,
the Company and certain other parties shall execute the Company’s Third Amended
and Restated Registration Rights Agreement in the form attached hereto as Exhibit
E (the “Registration Rights Agreement”), and (iii) the Company and
certain other parties shall execute the Company’s Second Amended and Restated
Stockholders Agreement in the form attached hereto as Exhibit F (the “Stockholders
Agreement”).

 

Section
1.3.  Service Provider Agreement.  Subject to the terms and conditions of this
Agreement, Cisco and the Borrower will terminate the Original Service Provider
Agreement, and will enter into a Service Provider Letter Agreement in the form
attached hereto as Exhibit G (the “New Service Provider Agreement”).

 

Section
1.4.  Option Agreement.  On the date hereof, CSCC, the Borrowers and
certain of the Company’s investors will enter into an Option Agreement in the
form attached hereto as Exhibit N (the “Option Agreement”).

 

2

 

Section
1.5.  Deposits Into Escrow.  Upon the execution of this
Agreement, the Company, certain of the Investors, Cisco, CSCC and Suntrust
Bank, a Georgia banking corporation (the “Escrow Agent”) shall enter
into an escrow agreement in the form attached hereto as Exhibit H (the “Escrow
Agreement”).

 

(a)                                  Immediately
upon execution of this Agreement, Borrowers shall deliver, and in the case of
the Cash Payment and Fee Payment (as defined herein) cause the Investors to
deliver, to Escrow Agent to hold pursuant to the Escrow Agreement the following
(collectively, the “Borrowers’ Deposits”):

 

(i)                                     the
Cash Payment;

 

(ii)                                  the
original Amended and Restated Note, duly executed by Borrower and Additional
Borrower;

 

(iii)                               original
counterpart signatures of the Third Amended and Restated Agreement, duly
executed by each of the Borrowers;

 

(iv)                              original
counterpart signatures of the Omnibus Amendment, duly executed by each of the
Borrowers;

 

(v)                                 original
counterpart signatures of the General Release, duly executed by each of the
Borrowers;

 

(vi)                              original
counterpart signatures of the New Service Provider Agreement, duly executed by
each of the Borrowers;

 

(vii)                           original
counterpart signatures of the Registration Rights Agreement, duly executed by
the Company;

 

(viii)                        original
counterpart signatures of the Stockholders Agreement, duly executed by the
Company and the other parties thereto;

 

(ix)                                original
counterpart signatures of the Option Agreement, duly executed by the Company
and the other parties thereto;

 

(x)                                   originals
of a certificate of the Secretary or other appropriate officer of Borrower,
dated as of the date hereof, certifying (A) copies of the certificate or
articles of incorporation and bylaws of Borrower and the resolutions adopted by
Borrower and other actions taken or adopted by Borrower (or any shareholders of
Borrower) authorizing the execution, delivery and performance of the Third
Amended and Restated Agreement and the other “Loan Documents”, under and as
defined therein, and (B) the incumbency, authority and signatures of each
officer of Borrower authorized to execute and deliver the Loan Documents and
act with respect thereto;

 

(xi)                                originals
of a certificate of the Secretary or other appropriate officer of the Company,
dated as of the date hereof, certifying (A) copies of the

 

3

 

certificate or articles
of incorporation and bylaws of the Company and the resolutions and other
actions taken or adopted by the Company authorizing the execution, delivery and
performance of any Loan Documents to which the Company is or shall become a
party, and (B) the incumbency, authority and signatures of each officer of the
Company authorized to execute and deliver any such Loan Documents and to act
with respect thereto;

 

(xii)                             originals
of a certificate of the Secretary or other appropriate officer of Additional
Borrower, dated as of the date hereof, certifying (A) copies of the respective
certificate or articles of incorporation and bylaws of Additional Borrower and
the resolutions and other actions taken or adopted by Additional Borrower
authorizing the execution, delivery and performance of any Loan Documents to
which Additional Borrower is or shall become a party, and (B) the incumbency,
authority and signatures of each officer of Additional Borrower authorized to
execute and deliver any such Loan Documents and to act with respect thereto;
and

 

(xiii)                          an
amount of cash sufficient to pay the reasonable attorney’s fee’s incurred by
CSCC in connection with the transactions contemplated hereby (the “Fee
Payment”).

 

(b)                                 Immediately
upon execution of this Agreement, Borrowers shall cause each other party that
is a required signatory to the Omnibus Amendment, other than Cisco and CSCC,
(the “Other Loan Parties”) to deliver to Escrow Agent to hold pursuant
to the Escrow Agreement the following (the “Other Loan Party Deposits”):

 

(i)                                     original
counterpart signatures of the General Release, duly executed by each of the
Other Loan Parties;

 

(ii)                                  original
counterpart signatures of the Omnibus Amendment, duly executed by each of the
Other Loan Parties; and

 

(iii)                               original
counterpart signatures of the Option Agreement, duly executed by each of the
Other Loan Parties.

 

(c)                                  Immediately
upon execution of this Agreement, Cisco and CSCC shall deliver to Escrow Agent
to hold pursuant to the Escrow Agreement the following (“CSCC Deposits”):

 

(i)                                     the
Warrants;

 

(ii)                                  the
Original Notes;

 

(iii)                               original
counterpart signatures of the General Release duly executed by each of CSCC and
Cisco;

 

(iv)                              original
counterpart signature of the Amended and Restated Note, pursuant to which the
CSCC accepts the Amended and Restated Note;

 

4

 

(v)                                 original
counterpart signatures of the Third Amended and Restated Agreement, duly
executed by CSCC as “Agent” and “Lender”;

 

(vi)                              original
counterpart signatures of the Omnibus Amendment, duly executed by each of Cisco
and CSCC;

 

(vii)                           original
counterpart signatures of the New Service Provider Agreement duly executed by
Cisco;

 

(viii)                        original
counterpart signatures of the Stockholders Agreement duly executed by CSCC;

 

(ix)                                original
counterpart signatures of the Registration Rights Agreement duly executed by CSCC;
and

 

(x)                                   original
counterpart signatures of the Option Agreement duly executed by CSCC.

 

For the avoidance of
doubt, the Cash Payment and Fee Payment shall be taken from the Escrowed Cash
(as defined in the Escrow Agreement).

 

Section
1.6.  Delivery. Pursuant to, and subject to the terms
of, the Escrow Agreement, at the Closing (as defined below), (i) the Escrow
Agent shall deliver (A) to CSCC, the Cash Payment, the Fee Payment, the CSCC
Shares, the Amended and Restated Note, and the other Borrowers’ Deposits and
Other Loan Parties Deposits, and (B) to the Company, the Warrants, Original
Notes, and the other CSCC Deposits. 
Notwithstanding anything to the contrary in this Agreement, the Third
Amended and Restated Credit Agreement, the Amended Note, the General Release
and the Omnibus Amendment shall not be effective unless and until the Closing
Date has occurred, at which time such agreements shall be automatically
effective.

 

Section
1.7.  Closing.  The closing of the
Exchange (the “Closing”) shall be consummated at 10:00 A.M., local time,
on a date agreed upon by the parties hereto, occurring within two (2) business
days after the conditions set forth in Article V are satisfied, or
waived in writing, and the conditions contained in Section 2 of the Investors
Stock Purchase Agreement are satisfied or waived in writing by the parties to
the Investors Stock Purchase Agreement (disregarding for this purpose any such
conditions to be satisfied by actions to be taken at the Closing so long as
such actions are in fact taken at Closing), or such other date as may be agreed
upon by the parties hereto, at the offices of Latham & Watkins LLP, 555 11th
Street, N.W., Suite 1000, Washington, D.C. 20004, or at such other place or at
such other time as shall be agreed upon by the parties hereto (the actual day
on which the Closing occurs being hereinafter referred to as the “Closing
Date”).

 

Section
1.8.  Terms of the Shares.  Prior to the Closing, the Company shall file
with the Secretary of State of the State of Delaware an amended and restated
certificate of incorporation in the form set forth on Exhibit I hereto
authorizing the issuance of the Shares (the “Charter Amendment”) and a
certificate of designation in the form set forth on Exhibit J  hereto setting forth the rights and
preferences of the CSCC Shares (the “Certificate of Designation” and
together with the certificates of designation contemplated to be filed with the
Secretary of State

 

5

 

of the State of Delaware pursuant to Section 1.D. of
the Investors Stock Purchase Agreement, the “Certificates of Designation”).

 

Section
1.9.  Cancellation of Warrants and
Original Notes. 
CSCC hereby agrees that upon the Closing, the Warrants and Original
Notes shall be deemed cancelled and shall be of no further value, force or
effect.

 

ARTICLE II

 

REPRESENTATIONS
AND WARRANTIES OF THE BORROWERS

 

As an inducement to CSCC
to enter into this Agreement and to consummate the transactions contemplated
hereby, the Borrowers represent and warrant to CSCC as follows, except to the
extent (i) disclosed with reasonable specificity on the exhibits attached
hereto, and (ii) with respect to Sections 2.5, 2.6, 2.7 and 2.9, disclosed with
reasonable specificity on the SEC Filings (as defined below) other than (x)
those sections of the SEC Filings entitled or captioned “Risk Factors” and (y)
specific disclosures in those documents which are filed as exhibits to, or
incorporated by reference in, such SEC Filings.  Without limiting the generality of the foregoing clause (y), the
mere filing or incorporation by reference of an exhibit to such SEC Filings
shall not be deemed to adequately disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the exhibit itself, as opposed to the contents thereof).

 

Section
2.1.  Organization.
The Borrowers are duly organized, validly existing and in good standing under
the laws of the State of Delaware.  Each
of the Borrowers has full power and authority to own and operate its respective
properties and to conduct its respective business as currently conducted and
each is registered or qualified to do business and is in good standing in each
jurisdiction in which it owns or leases property or transacts business and
where the failure to be so qualified would have a material adverse effect upon
their financial condition, properties or operations taken as a whole.

 

Section
2.2.  Due Authorization.
Each of the Borrowers has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement and any other agreements and
instruments to which it is a party contemplated hereby or executed in
connection herewith, including, without limitation, the Loan Documents, the
General Release, the Stockholders Agreement and the Registration Rights
Agreement (collectively, the “Borrower Related Agreements”), to execute
and file the Charter Amendment and the Certificates of Designation after
receipt of the stockholder approval described in clause (i) of the second
following sentence, and to issue the Shares in accordance with the terms hereof
and thereof.  The Charter Amendment has
been duly authorized by the Company’s Board of Directors, which has recommended
that the Company’s stockholders approve the Charter Amendment.  The execution and delivery by each of the
Borrowers of this Agreement and the Borrower Related Agreements to which it is
a party and the execution and filing of the Certificates of Designation by the
Company and the consummation by each of the Borrowers of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the CSCC Shares and the reservation for issuance and the issuance of all
Conversion Shares (as defined below) issuable upon conversion of the CSCC
Shares, have been duly authorized by the Company’s Board of

 

6

 

Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders.  Each of the Borrowers have duly executed and
delivered this Agreement and the Borrower Related Agreements to which it is a
party and this Agreement and the Borrower Related Agreements constitute the valid
and binding obligations of each of the Borrowers party to such agreements,
enforceable against each of the Borrowers party to such agreements in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).  None of the Charter Amendment, the Company’s
Third Amended and Restated Certificate of Incorporation or the Certificates of
Designation shall have been amended prior to the Closing Date.

 

Section
2.3.  No Conflicts.  

 

(a)                                  Except
as set forth on Schedule 2.3, the execution, delivery and performance by
each of the Borrowers of this Agreement and the Borrower Related Agreements to
which it is a party, the performance by the Company of its obligations under
the Certificates of Designation and the consummation by the Borrowers of the
transactions contemplated hereby and thereby (including, without limitation,
the reservation for issuance and issuance of the Conversion Shares) will not:

 

(i)                                                             result
in a violation of the Charter Amendment (after giving effect to the
Certificates of Designations), the certificate of incorporation of either of
the Borrower or the Additional Borrower, or the bylaws of any of the Borrowers;

 

(ii)                                                          conflict
with, or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or incremental,
additional or varied rights under, any material agreement, indenture or
instrument (including, without limitation, any stock option, employee stock
purchase or similar plan or any employment or similar agreement) to which any
of the Borrowers is a party (including, without limitation, triggering the
application of any change of control or similar provision (whether “single
trigger” or “double trigger”));

 

(iii)                                                       result
in the creation or imposition of any lien, encumbrance, claim, security
interest or restriction whatsoever upon any of the material properties or
assets of any of the Borrowers; or

 

(iv)                                                      result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the American Stock Exchange) applicable to any of the Borrowers
or by which any property or asset of any of the Borrowers is bound or affected.

 

7

 

(b)                                 None
of the Borrowers is in violation of any term of its certificate of
incorporation or bylaws.

 

(c)                                  The
business of the Borrowers is not being conducted in violation of any law,
ordinance or regulation of any foreign, federal, state or local government or
governmental agency, department, or body, except where such violations would
not result, either individually or in the aggregate, in a material adverse
effect on the business or operations of the any of the Borrowers.

 

(d)                                 Except
for (A) the filing with the SEC and the dissemination to stockholders of the
Company’s information statement as required under the Exchange Act (as defined
below), (B) as may be required by any applicable state securities laws, or (C)
the filing of the Charter Amendment and the Certificates of Designation with
the Secretary of State of the State of Delaware, none of the Borrowers is
required to obtain any consent, authorization or order of, or make any filing
or registration with, any foreign, federal, state or local government or
governmental agency, department, or body in order for it to execute, deliver or
perform any of its obligations under or contemplated by this Agreement and the
Borrower Related Agreements to which it is a party or to perform its
obligations under the Certificates of Designation, in each case in accordance
with the terms hereof or thereof.  All
consents, authorizations, orders, filings and registrations which any of the
Borrowers is required to obtain as described in the preceding sentence shall
have been obtained or effected on or prior to the Closing Date and shall not be
the subject of any pending or, to the knowledge of the Borrowers, threatened
attack by appeal, direct proceeding or otherwise.  None of the Borrowers is, and as of the Closing Date will not be,
in violation of the listing requirements of the American Stock Exchange, and
the Conversion Shares shall be authorized for listing thereon.

 

Section
2.4.  Capitalization; Status of
Capital Stock.

 

(a)                                  Immediately
prior to the Closing and without giving effect to the issuance of the Company’s
capital stock contemplated by this Agreement, the Investors Stock Purchase
Agreement or the Cogent Employee Stock Plan, but giving effect to the
conversion of the Company’s outstanding preferred stock into common stock, the
Company will have a total authorized capitalization consisting of:

 

(i)             395,000,000 shares of common
stock, par value $.001 (the “Common Stock”) of which (a) 14,228,077
shares are issued and outstanding, (b) 1,490,000 shares remain reserved for
issuance pursuant to stock purchase, stock grant or stock option arrangements
for employees, directors or consultants of the Company, (c) 1,791,051 shares
remain reserved for issuance to holders of shares of the common stock of Allied
Riser, (d) 710,216 shares remain reserved for issuance pursuant to warrants
granted to Cisco Systems Capital Corporation in connection with the credit
agreement between the Company and Cisco Systems Capital Corporation,  (e) 155,809 shares remain reserved for
issuance pursuant to warrants granted in connection with certain agreements
between Allied Riser and certain landlords relating to building access rights,
(f) 68,199,901 shares are reserved for issuance upon conversion of the Series F
Preferred Stock, (g) 254,947,501 shares are reserved for issuance upon
conversion

 

8

 

of the Investors Preferred Stock, and (h) 41,539,253 shares
are reserved for issuance upon conversion of the Series H Preferred Stock).

 

(ii)          120,000 shares of the Company’s preferred stock, $.001 par
value per share (the “Preferred Stock”), of which (a) 13,999 shares are
authorized but unissued Preferred Stock, (b) 11,000 shares are designated as
Series F Preferred Stock, of which no shares are issued and outstanding, (c)
41,000 shares are designated as Series G Preferred Stock, of which no shares
are issued and outstanding, and (d) 54,001 shares are designated as Series H
Preferred Stock, of which no shares are issued and outstanding.

 

(b)                                 All the outstanding shares
of capital stock of the Company have been duly authorized, and are validly
issued, fully paid and non-assessable and were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.  The CSCC Shares, when issued and delivered
in accordance with the terms hereof, will be (i) duly authorized, validly
issued, fully-paid and non-assessable, (ii) free from all taxes, liens and
charges with respect to the issuance thereof and (iii) entitled to the rights
and preferences set forth in the Certificate of Designation.  Such shares of Common Stock issuable upon
conversion of the CSCC Shares, when issued and delivered upon conversion of any
of the CSCC Shares (the “Conversion Shares”), will be validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. 
Subject only to accuracy of the representations set forth in Article 3
hereof, the issuance by the Company of the CSCC Shares is exempt from
registration under the Securities Act (as defined below) and all applicable
state securities laws.

 

(c)                                  Except as otherwise set
forth in Schedule 2.4(c), no options, warrants, subscriptions,
convertible securities, phantom stock, stock appreciation rights or other
rights (contingent or otherwise) of any nature to acquire from the Company
shares of capital stock or other securities are authorized, issued or
outstanding, nor is the Company obligated in any other manner to issue shares
of its capital stock or other securities except as contemplated by this
Agreement.  Except as set forth in Schedule
2.4(c), there are no restrictions on the transfer of shares of capital
stock of the Company other than those imposed by relevant federal and state
securities laws and as otherwise contemplated by this Agreement, the Investors
Stock Purchase Agreement, the Stockholders Agreement and the Registration
Rights Agreement.

 

Section 2.5.  Legal Proceedings. Except as disclosed in the
SEC Filings (as defined below), there is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened or contemplated
to which the Company is or may be a party or of which the business or property
of the Company is or may be subject.

 

Section 2.6.  No Violations. Except as disclosed in the SEC Filings, the Company is not
in violation of its certificate of incorporation or its bylaws, in violation of
any law, administrative regulation, ordinance or order of any court or
governmental agency, arbitration panel or authority applicable to the Company,
which violation, individually or in the aggregate, would have a material
adverse effect on the business or financial condition of the Company, or in
default in any material respect in the performance of any obligation, agreement
or condition contained in any material bond, debenture, note or any other
evidence of indebtedness in any indenture,

 

9

 

mortgage,
deed of trust or any other agreement or instrument to which the Company is a
party or by which the Company is bound or by which the properties of the
Company are bound or affected.

 

Section 2.7.  Governmental Permits, Etc. Except as disclosed in the
SEC Filings, the Company has all necessary franchises, licenses, certificates
and other authorizations from any foreign, federal, state or local government
or governmental agency, department, or body that are currently necessary for
the operation of the business of the Company as currently conducted, the
absence of which would have a material adverse effect on the business or
operations of the Company.

 

Section 2.8.  No Brokers. The Borrowers represent that there are no brokers or
finders entitled to compensation in connection with the transactions
contemplated hereby.

 

Section 2.9.  Financial Statements. Except as disclosed in the
SEC Filings, the financial statements of the Company and the related notes
contained in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2002 and its Quarterly Reports on Form 10-Q for the quarter ended
March 31, 2003 present fairly the financial position of the Company as of the
dates indicated therein and its results of operations and cash flows for the
periods therein specified. Such financial statements (including the related
notes) have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis throughout the periods
therein specified.

 

Section 2.10.  Additional Information.  

 

(a)                                  The Company has filed in a
timely manner all documents that the Company was required to file (i) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and
(ii) under the Securities Act, as of the date hereof.  The following documents (including all exhibits included therein
and financial statements and schedules thereto and documents incorporated by
reference) (collectively, the “SEC Filings”) complied in all material
respects with the requirements of the Exchange Act as of their respective
filing dates, and the information contained therein was true and correct in all
material respects as of the date of such documents, and each of the following
documents as of the date thereof did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading:

 

(i)                                                             the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2002 and its Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2003; and

 

(ii)                                                          all other documents, if any,
filed by the Company with the Securities and Exchange Commission (the “SEC”)
since the filing of the Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2003 pursuant to the reporting requirements of the Exchange
Act.

 

(b)                                 As of their respective dates,
the financial statements of the Company included in the SEC Filings complied as
to form (and will comply as to form) in all material

 

10

 

respects with U.S. generally
accepted accounting principles (“GAAP”) and the published rules and
regulations of the SEC with respect thereto. 
Such financial statements have been prepared in accordance with GAAP,
consistently applied, during the periods involved (except in the case of
unaudited interim statements, to the extent they may exclude footnotes or may
be condensed or summary statements or as otherwise, in each case, may be
permitted by the SEC on Form 10-Q under the Exchange Act) and fairly present in
all material respects the consolidated financial position of the Company as of
the dates thereof and the consolidated results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).  Ernst
& Young LLP, which has examined certain of such financial statements, is an
independent certified public accounting firm within the meaning of the
Securities Act.

 

(c)                                  Since December 31, 2002,
except as specified in the SEC Filings, the Company has not incurred or
suffered any liability or obligation, matured or unmatured, contingent or
otherwise, except in the ordinary course of business and except any such
liability or obligation that has not had and could not reasonably be expected
to have, individually or in the aggregate, a material adverse effect on the
business or financial condition of the Company.  Without limiting the foregoing, except as specified in the SEC
Filings, the Company has no material liabilities or obligations that would
reasonably be expected to be disclosed in order to comply with Section 13(j) of
the Exchange Act or any proposed rules promulgated by the SEC thereunder,
including the rules regarding contractual commitments and contingent
liabilities and commitments proposed in SEC Release No. 33-8144; 34-46767.

 

Section 2.11.  No General Solicitation. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer
or sale of the Shares.

 

Section 2.12.  No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of the CSCC Shares under the Securities Act or cause this offering
of the CSCC Shares to be integrated with prior offerings by the Company for
purposes of the Securities Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
the American Stock Exchange, nor will the Company or any of its Subsidiaries
take any action or steps that would require registration of the CSCC Shares or
Conversion Shares under the Securities Act or cause the offering of the CSCC
Shares to be integrated with other offerings.

 

Section 2.13.  Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
and liability accountability, (iii) access to assets or incurrence of liability
is permitted only in accordance with management’s general or specific authorization
and (iv) the reported accountability for its assets is compared with existing
assets at reasonable intervals.

 

11

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF CISCO
AND CSCC

 

As an inducement to each of the Borrowers to enter into
this Agreement and to consummate the transactions contemplated hereby, each of
Cisco and CSCC hereby represents and warrants to, and covenants with, each of
the Borrowers as follows:

 

Section 3.1.  Due Organization and Authorization.  CSCC is duly organized, validly existing and in good standing
under the laws of the State of Nevada and Cisco is duly organized, validly
existing and in good standing under the laws of the State of California.  Each of Cisco and CSCC has all requisite
power and authority to execute, deliver and perform its obligations under this
Agreement and all of the other agreements and instruments to be executed and
delivered by Cisco or CSCC pursuant hereto (collectively, the “Cisco/CSCC
Related Agreements”), and this Agreement has been, and when delivered in
accordance with the terms hereof the Cisco/CSCC Related Agreements will be,
duly authorized and validly executed and delivered by each of Cisco and CSCC,
as appropriate, and this Agreement constitutes, and when delivered in
accordance with the terms hereof each Cisco/CSCC Related Agreement will
constitute, the valid and binding agreement of each of Cisco and CSCC, as
appropriate, enforceable against each of Cisco and CSCC, as appropriate, in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

Section 3.2.  Investment Representations.  As
of the date hereof and as of the Closing Date, each of Cisco and CSCC: (i) is
an “accredited investor” as defined in Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended (the “Securities Act”);
(ii) is acquiring the CSCC Shares for its own account for investment and with
no present intention of distributing any of such CSCC Shares other than to any
affiliate of Cisco or CSCC; (iii) will not, directly or indirectly, voluntarily
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the CSCC Shares,
except in compliance with the Securities Act and the rules and regulations
promulgated thereunder; (iv) has received and reviewed copies of the SEC
Filings to the extent it deems necessary to make its investment decision; (v)
has had an opportunity to ask questions and receive answers from the management
of the Company regarding the Company, its business and the offering of the CSCC
Shares; and (vi) in connection with each of Cisco’s and CSCC’s decision to
accept the CSCC Shares in connection with the Exchange, relied solely upon the
documents described in Section 2.10 and the representations and warranties of
the Company contained herein.

 

Section 3.3.  Restriction on Sale of the CSCC Shares.  Each of Cisco and  CSCC
agrees not to make any sale of the CSCC Shares or any Conversion Shares except
pursuant to an effective registration statement under the Securities Act or an
exemption from the registration requirements thereof, including without
limitation pursuant to Rule 144 of the Securities Act.

 

12

 

Section 3.4.  Legend.  Each of Cisco and
CSCC represents that it understands and agrees that, until registered under the
Securities Act or transferred pursuant to the provisions of Rule 144 promulgated
thereunder, all certificates evidencing the CSCC Shares and the Conversion
Shares, whether upon initial issuance or upon any transfer thereof, shall bear
a legend prominently stamped or printed therein, reading substantially as
follows:

 

“The securities represented by this
certificate have not been registered under the Securities Act of 1933 or
applicable state securities laws.  These
securities have been acquired for investment and not with a view to distribution
or resale, and may not be sold mortgaged, pledged, hypothecated or otherwise
transferred without an effective registration statement for such securities
under the Securities Act of 1933 and applicable state securities laws, or the
availability of an exemption from the registration provisions of the Securities
Act of 1933 and applicable state securities laws.”

 

Upon presentation by Cisco or CSCC of evidence reasonably
satisfactory to the Company that it is eligible to sell or otherwise transfer
its CSCC Shares or Conversion Shares pursuant to Rule 144(k) of the Exchange
Act, the Company shall remove or cause to be removed at its sole cost and
expense the legend from the certificate or certificates evidencing Cisco’s or
CSCC’s CSCC Shares or Conversion Shares, as appropriate.

 

Section 3.5.  Additional Representations.  Each of Cisco and CSCC further represents and warrants to and
covenants with the Borrowers that:

 

(a)                                  CSCC is the beneficial owner
of Warrants and the Original Notes; and

 

(b)                                 CSCC has good and valid
title to the Warrants and the Original Notes free and clear of any restrictions
on transfer, liens, claims, mortgages, encumbrances, pledges, security
interests, equities and charges of any kind other than by the operation of law.

 

Section 3.6.  No Brokers.  Each of Cisco and CSCC
represents that there are no brokers or finders entitled to compensation in
connection with the transactions contemplated hereby.

 

ARTICLE IV

 

COVENANTS

 

Section 4.1.  Subsequent Escrow Deposits.  As soon as reasonably practicable after the filing of the Charter
Amendment and the Certificate of Designation, the Company shall deliver to the
Escrow Agent certificates, in the name of CSCC, representing the CSCC Shares.

 

Section 4.2.  Stockholder Consent and Information Statement.  Promptly after the execution of this Agreement, the Company shall
file with the SEC an information statement relating to the stockholder approval
of the Charter Amendment, which shall have been

 

13

 

previously
reviewed by the Investors and their special counsel (and with respect to which
the Company shall use its reasonable efforts to accept the comments of the
Investors and counsel).  The Company
shall promptly notify the Investors and CSCC of any comments by the SEC on such
information statement and shall provide the Investors and CSCC with a copy of
such comments.  The Company shall cause
such information statement to be mailed to the holders of its common stock as
promptly as possible after such filing, all in accordance with applicable law and
the rules and regulations of the American Stock Exchange and the Exchange
Act.  The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section
4.1.

 

Section 4.3.  Additional Covenant.  The Borrowers, Cisco and CSCC agree and covenant to use their best
efforts to cause the consummation of the transactions contemplated by this
Agreement.  The Borrowers, Cisco and
CSCC agree and covenant not to take any action that is inconsistent with their
obligations under this Agreement in any material respect that could reasonably
be expected to hinder or delay the consummation of this transactions
contemplated by this Agreement.  In
furtherance of the foregoing, from the date of this Agreement through the
period ending on the Outside Date (as defined in Section 6.1 below), Cisco and
CSCC agree to forebear from taking any action under the Second Amended and
Restated Agreement, Original Notes or any security agreement, pledge agreement,
guaranty or other related agreement or instrument to accelerate, foreclose on
or otherwise realize on security or otherwise demand or seek payment of any
amounts owed thereunder or exercise any right or remedy that Cisco or CSCC
might otherwise have as a result of any default that exists under any of the
foregoing documents as of the date of this Agreement.  Without limiting the generality of the immediately preceding
sentence, until the Outside Date, neither Cisco nor CSCC shall file (or join in
the filing of) a Proceeding (as defined in Section 6.1 below) against the
Company or any of its Subsidiaries.  If
the Closing has not occurred on or before the Outside Date, CSCC and Cisco
shall be free to pursue whatever rights and remedies it has under the Second
Amended and Restated Agreement, any “Loan Documents” as defined therein, and
under applicable law.  If on or before
the Outside Date, the Closing occurs, all defaults existing under the Original
Notes and the Second Amended and Restated Agreement shall be deemed waived, and
the General Release shall be effective in accordance with its terms.  Nothing in this Section 4.3 shall limit the
rights CSCC has under the Third Amended and Restated Agreement, the other Loan
Documents and applicable law with respect to defaults that arise or events that
occur after the date of this Agreement.

 

Section 4.4.  Reservation of Conversion Shares After the Closing and for
so long as any CSCC Shares are outstanding, the Company covenants and agrees to
continue to reserve, free of preemptive rights and other preferential rights, a
sufficient number of its previously authorized but unissued shares of its
Common Stock to satisfy the rights of conversion of the holders of the CSCC
Shares.

 

Section 4.5.  Financial Information. 

 

(a)                                  The Company agrees to send
the following to CSCC: (A) unless the following are filed with the SEC through
EDGAR and are available to the public through EDGAR (in which case the Company
will endeavor to provide e-mail or other notice of such filing), within two (2)
days after the filing thereof with the SEC, a copy of its Annual Reports on

 

14

 

Form 10-K, its Quarterly Reports on
Form 10-Q, any Current Reports on Form 8-K and any registration statements
(other than on Form S-8) or amendments filed pursuant to the Securities Act;
(B) on the same day as the release thereof, copies of any notices and other
information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders; and (C) from time to time, such other financial data and
information relating to the Company and its Subsidiaries as CSCC may reasonably
request (subject to appropriate confidentiality procedures).

 

(b)                                 The Company shall permit
CSCC and its designated representatives, upon reasonable notice, to visit and
inspect any of the properties of the Company or any of its subsidiaries, to
examine the books of account of the Company and its subsidiaries (and to make
copies thereof and extracts therefrom), and to discuss the affairs, finances
and accounts of the Company and its subsidiaries with, and to be advised as to
the same by, their officers, all at such reasonable times and intervals during
normal business hours as CSCC may reasonably request.

 

Section 4.6.  Covenants Upon the Company No Longer Being a Reporting
Company.  Commencing upon the date
when the Company is no longer a reporting company under the Exchange Act, the
Company covenants and agrees to perform and observe each of the following covenants
and provisions.

 

(a)                                  Inspection.  Permit, upon reasonable request and notice, CSCC or any of its
agents or representatives to examine and make copies of and extracts from the
records and books of account of, and visit and inspect the properties of the
Company and any subsidiary, to discuss the affairs, finances and accounts of
the Company and any subsidiary with any of its officers, directors or executive
officers and independent accountants, and consult with and advise the
management of the Company and any subsidiary as to their affairs, finances and
accounts, all at reasonable times during normal business hours.

 

(b)                                 Monthly Reports.  As soon as available and in any event within thirty (30) days
after the end of each calendar month, provide to CSCC consolidated balance
sheets of the Company and its subsidiaries as of the end of such month and
consolidated statements of income and retained earnings of the Company and its
subsidiaries for such month and for the period commencing at the end of the previous
fiscal year and ending with the end of such month, duly certified (subject to
year-end audit adjustments) by the chief financial officer of the Company as
having been prepared in accordance with generally accepted accounting
principles, consistently applied.

 

(c)                                  Quarterly Reports.  As soon as available and in any event within forty-five (45) days
after the end of each of the first three quarters of each fiscal year of the
Company, provide to CSCC, in a form acceptable to CSCC, consolidated balance sheets
of the Company and its subsidiaries as of the end of such quarter and
consolidated statements of income and cash flows of the Company and its
subsidiaries for such quarter, duly certified (subject to year-end audit
adjustments) by the chief financial officer of the Company as having been
prepared in accordance with generally accepted accounting principles,
consistently applied.

 

(d)                                 Annual Reports.  As soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Company, provide to CSCC a copy of the
annual

 

15

 

audited financial statement for
such year for the Company and its subsidiaries, including therein consolidated
balance sheets of the Company and its subsidiaries as of the end of such fiscal
year and consolidated statements of income and of the Company and its
subsidiaries for such fiscal year, setting forth in each case in comparative
form the corresponding figures for the preceding fiscal year, all such consolidated
statements to be duly certified by the chief financial officer of the Company
and by such independent public accountants of recognized national standing
approved by the Audit Committee of the Board of Directors to prepare such
reports.

 

(e)                                  Annual Budget.  As soon as available, and in no event later than December 15th of
each calendar year, provide to CSCC a business plan, annual budget and monthly
operating budgets for the forthcoming fiscal year in a form and with such
detail as may be acceptable to CSCC.

 

(f)                                    Other Information.  Provide to CSCC such other information respecting the business,
properties or the condition or operations, financial or other, of the Company
or any of its subsidiaries as CSCC may from time to time reasonably request.

 

Section 4.7.  Extension of Outside Date.  If the Outside Date is extended pursuant to Section 6.1, CSCC,
Cisco and the Company shall provide notice to the Escrow Agent as provided in
the Escrow Agreement to extend the Outside Date thereunder.

 

ARTICLE V

 

CONDITIONS PRECEDENT

 

Section 5.1.  Conditions to Obligations of the Borrowers.  The obligation of the Borrowers to consummate the Closing
of the Exchange on the Closing Date is subject to the satisfaction or written
waiver by Borrowers, on or before the Closing Date, of the following
conditions:

 

(a)                                  The representations and
warranties contained in Article III shall be true, complete and correct in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date.

 

(b)                                 Each of Cisco and CSCC shall
have performed and complied with all agreements contained herein required to be
performed or complied with by it prior to or at the Closing Date.

 

(c)                                  The Company shall have received
the approval of its stockholders to the Charter Amendment.

 

(d)                                 The Cisco Deposits shall
have been released from escrow to the Company.

 

(e)                                  The Company shall have
received a certificate of Cisco and CSCC in the form attached hereto as Exhibit
K.

 

(f)                                    The transactions
contemplated by the Investors Stock Purchase Agreement shall have been
consummated.

 

16

 

(g)                                 The Company shall have
obtained all necessary consents of and made all required filings with any
governmental authority or agency or third party required to be obtained prior
to the Closing under applicable law and relating to the consummation of the
transactions contemplated hereby, including the filing of an information
statement with the SEC and the mailing of such information statement to the
Company’s stockholders.

 

(h)                                 The holders of at least two
thirds of the outstanding shares of the Company’s Series A Participating
Convertible Preferred Stock, par value $.001 per share (the “Series A Preferred
Stock”), the Company’s Series B Participating Convertible Preferred Stock,
par value $.001 per share (the “Series B Preferred Stock”), the
Company’s Series C Participating Convertible Preferred Stock, par value $.001
per share (the “Series C Preferred Stock”), the Company’s Series D
Participating Convertible Preferred Stock, par value $.001 per share (the “Series
D Preferred Stock”), and the Company’s Series E Participating Convertible
Preferred Stock, par value $.001 per share (the “Series E Preferred Stock”),
voting as a single class, shall have elected to convert all outstanding shares
of the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock
into Common Stock pursuant to Article 4(B)(3)(m) of the Company’s Third Amended
and Restated Certificate of Incorporation, and all such shares shall have been
converted into Common Stock pursuant thereto.

 

Section 5.2.  Conditions to Obligations of Cisco and CSCC.  The obligation of Cisco and CSCC to consummate the Closing
of the Exchange on the Closing Date is subject to the satisfaction, on or
before the Closing Date, of the following conditions:

 

(a)                                  The representations and
warranties contained in Article II shall be true, complete and correct in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date, and
the Chief Executive Officer and Chief Financial Officer of the Company shall
have certified to such effect to Cisco and CSCC in writing.

 

(b)                                 The Borrowers shall have
performed and complied with all agreements contained herein required to be
performed or complied with by it prior to or at the Closing Date, and the Chief
Executive Officer and Chief Financial Officer of the Company shall have
certified to Cisco and CSCC in writing to such effect.

 

(c)                                  The Borrowers’ Deposits
(including the Cash Payment and Fee Payment), the CSCC Shares and Other Loan
Party Deposits shall have been released from escrow to CSCC and the Cash
Payment and Fee Payment shall have been wired by the Escrow Agent to CSCC in
accordance with the wire instructions provided the Escrow Agent pursuant to the
Escrow Agreement; provided, however, that (i) the Company hereby
covenants and agrees that it shall not deliver the certificates representing
the CSCC Shares to the Escrow Agent or file the Charter Amendment and the
Certificates of Designation with the Secretary of State of the State of
Delaware unless and until the CSCC shall have confirmed to the Company in a
writing (making reference to this Section 5.2(c)) that all other conditions
contained in this Section 5.2 have been duly satisfied in full or waived in
writing by CSCC; and (ii) CSCC hereby covenants and agrees that, upon the
satisfaction or waiver all other conditions contained in this Section 5.2.,
that it will provide the foregoing written confirmation to the Company (it
being understood and

 

17

 

agreed that (x) CSCC shall in
connection therewith be entitled to rely upon any certificates,
representations, warranties or other statements made by the Company, including
any certificate provided under Section 5.2(a) hereof and (y) the Company shall
not be required pursuant to the foregoing clause (x) to provide any such
certificate, representation, warranty or other statement that is not otherwise
contemplated by another provision of this Agreement).

 

(d)                                 CSCC shall have received a
certificate of the Borrowers and the Investors in the forms attached hereto as Exhibit
L and Exhibit M respectively.

 

(e)                                  CSCC shall have received
opinions of  counsels to the Company in
form and substance acceptable to CSCC.

 

(f)                                    The Company shall have
delivered to the CSCC (1) a copy of the Charter Amendment, certified by the
Secretary of State of the State of Delaware, (2) a copy of its Bylaws (the “Bylaws”),
as certified by the Secretary of the Company, (3) resolutions approved by the
Board of Directors authorizing the transactions contemplated hereby and in full
force and effect at the time of Closing, (4) resolutions approved by the
Company’s stockholders authorizing the filing of the Charter Amendment and
approving the transactions contemplated hereby and in full force and effect at
the time of Closing, and (5) good standing certificates (including tax good
standing) with respect to the Company from the applicable authority in Delaware
dated a recent date before the closing.

 

(g)                                 The transactions
contemplated by the Investors Stock Purchase Agreement shall been consummated.

 

(h)                                 No Proceeding (as defined
below) shall be pending, this Agreement shall not have been terminated pursuant
to Section 6.1 below, and no temporary restraining order, preliminary or
permanent injunctions or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
the transactions contemplated hereby or materially limiting or restricting the
conduct or operation of the business of the Borrowers prior to or following the
Closing shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality seeking any of the foregoing be pending.

 

(i)                                     The stockholders of the Company
shall have approved the transactions contemplated hereby and by the Investor
Stock Purchase Agreement.

 

(j)                                     The Company shall have
obtained all necessary consents of and made all required filings with any
governmental authority or agency or third party required to be obtained prior
to the Closing under applicable law and relating to the consummation of the
transactions contemplated hereby, including the filing of an information
statement with the SEC, compliance with all requirements of the SEC with respect
thereto, the mailing of such information statement to the Company’s
stockholders and requisite time shall have passed since mailing.

 

(k)                                  The holders of at least two
thirds of the outstanding shares of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Series E Preferred Stock, voting as a single class, shall have elected to
convert all outstanding shares of the Series A Preferred Stock, the Series B
Preferred Stock, the

 

18

 

Series C Preferred Stock, the
Series D Preferred Stock and the Series E Preferred Stock into Common Stock
pursuant to Article 4(B)(3)(m) of the Company’s Third Amended and Restated
Certificate of Incorporation, and all such shares shall have been converted
into Common Stock pursuant thereto.

 

ARTICLE VI

 

TERMINATION AND REVIVAL

 

Section 6.1.  Termination.  This Agreement will
terminate and all of the obligations hereunder of the Borrowers, Cisco and CSCC
will be of no further force or effect upon the earlier of (i) the mutual
agreement between the Borrowers and CSCC, during the time prior to the Closing
Date, (ii) the expiration of the Outside Date (as defined below) if the Closing
has not occurred on or prior to the Outside Date, (iii) the day on which a
Proceeding (as defined below) shall occur if it occurs  prior to the Closing Date, or if the Escrow
Agent has not distributed the documents and property pursuant to Section I.B.1
of the Escrow Agreement on or prior to the Outside Date, (iv) the fifth (5th)
business day after the date of this Agreement if the Borrowers’ Deposits, the
Other Loan Party Deposits and the Investor’s Escrowed Cash has not been
received by the Escrow Agent and (v) the day on which the documents and
property are returned pursuant to Section I.B.2 of the Escrow Agreement.  “Proceeding” shall mean the
occurrence of any of the following:  (a)
a petition commencing any voluntary or involuntary case under any chapter of
the federal Bankruptcy Code is filed with respect to the Company or any of its
Subsidiaries, (b) the Company or any of its Subsidiaries is adjudicated an
insolvent or bankrupt, (c) any other case or proceeding, voluntary or
involuntary, is commenced with respect to the Company or any of its
Subsidiaries (as debtor) under any bankruptcy, insolvency, reorganization,
liquidation, composition, arrangement or similar statute, (d) any assignment
for the benefit of creditors is commenced with respect to the Company or any of
its Subsidiaries, or (e) any receiver, custodian, trustee or the like is
appointed with respect to all or a substantial part of the properties of the
Company or any of its Subsidiaries.  For
purposes hereof, “Outside Date” means that date which is forty-five (45)
days after the date of this Agreement, except that if the information statement
filed with the SEC pursuant to Section 4.2 hereof is not approved for mailing
to the stockholders of the Company by the SEC within 14 days of such filing,
the Outside Date shall be increased (but not beyond the date that is ninety
(90) days after the date of this Agreement) by one day for each day after the
14th day that elapses before the SEC approves the information
statement for mailing.  In addition, the
Borrowers and CSCC may extend the Outside Date by mutual written agreement; provided,
however, that the Outside Date may not be extended past that date which
is 120 days after the date of this Agreement without the prior written consent
of the Investors holding at least two-thirds of the Investor Shares (on an
as-if issued basis).

 

Section 6.2.  Revival of Obligations.  In the event that CSCC shall hereafter be required to refund or
disgorge all or any portion of the Cash Payment, pursuant to a final order of a
court of competent jurisdiction issued in connection with any Proceedings, then
(i) the entire liability of Borrowers under the Original Notes and the Second
Amended and Restated Agreement (less the amount of any Cash Payment retained by
CSCC) shall be automatically revived, reinstated and restored to its original
amount and shall exist as though the Exchange had never occurred, the Second
Amended and Restated Credit Agreement dated October 24,

 

19

 

2001, as
amended prior to the date hereof (the “Second Amended Credit Agreement”)
shall be reinstated, the modifications as set forth in or required by the
Omnibus Amendment to the “Collateral Documents” (as defined in the Second
Amended and Restated Credit Agreement) and the Guarantor Documents (as defined
in the Second Amended Credit Agreement) shall be null and void, (ii) those
provisions of the General Release that would (but for the operation of this
provision) impair, limit or otherwise adversely affect such revival, reinstatement
and restoration shall be deemed null, void and no effect whatsoever (the other
provisions of the General Release to remain effective), (iii) upon the
effectiveness of such revival, reinstatement and restoration, the Amended and
Restated Note shall no longer be of legal effect and (iv) Cisco shall return to
the Company and Borrower, respectively, the Shares and the Amended and Restated
Note, and the entire Exchange (except for the General Release which shall
remain effective except to the extent provided in clause (ii) above) shall be
reversed.  Nothing contained herein
shall, or shall be interpreted to, limit the right of CSCC to, in its sole
discretion, compromise or settle any claim for such refund or discouragement
provided it is understood and agreed that such compromise or settlement shall
not result in such a revival, reinstatement or restoration.  Nothing contained herein shall, or shall be
interpreted to, imply that there is any legal basis for any claim for such a
refund or discouragement.  In the event
of such revival, reinstatement and restoration, the Borrowers shall execute and
deliver such further agreements and instruments, and take such further actions,
as CSCC or Cisco shall reasonably request in order to further carry out such
revival, reinstatement and restoration and the intent of this Section 6.2.

 

ARTICLE VII

 

GENERAL PROVISIONS

 

Section 7.1.  Amendments.  This Agreement may not be
amended or modified, and no provisions hereof may be waived, without the prior
written consent of the Borrowers, CSCC, Cisco and the holders of at least
two-thirds of the outstanding Investor Shares (said holders having the right to
rely on this provision); provided, that Borrowers and Cisco may extend the
Outside Date to up to such date that is 120 days after the date of this
Agreement without the consent of the holders of any Investor Shares.

 

Section 7.2.  Notices.  Any notice, request, claim,
demand, waiver, consent, approval or other communication which is required or
permitted hereunder shall be in writing and shall be deemed given if delivered
personally, by facsimile transmission with receipt of delivery (one business
day after confirmation in the case of transmissions to non-U.S. residents), or
sent by registered or certified mail, postage prepaid, return receipt
requested, or by internationally recognized overnight courier service (two
business days after deposit with such overnight courier service in the case of
deliveries to non-U.S. residents), as follows: if to the Borrowers, to Cogent
Communications Group, Inc. 1015 31st Street, N.W., Suite 330,
Washington, DC 20007, Attn:  David
Schaeffer, fax number (202) 338-8798, if to Cisco, to Cisco Systems, Inc., 170
West Tasman Dr. San Jose, CA 95134, Attn. Legal Department, fax number (408)
525-4757, telephone number (800) 250-4800, and if to CSCC, to Cisco Systems
Capital Corporation, 9850 Double R Boulevard, Park Center East, Reno Nevada
89521, Attn: Loan Operations, fax number (775) 789-5866, telephone number (775)
789-5860.

 

20

 

Section 7.3.  Expenses.  Each of  the Borrowers shall pay its own expenses
in connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated. 
Borrowers shall reimburse CSCC for all reasonable fees and expenses of
counsel for CSCC incurred by CSCC in connection with the Exchange, and the
preparation and negotiation of documents and agreements in connection with the
Exchange.

 

Section 7.4.  Assignment.  The rights and obligations
of Cisco and CSCC under this Agreement shall not be assignable or delegable
without the written consent of the Borrowers. 
The rights and obligations of the Borrowers under this Agreement shall
not be assignable or delegable without the written consent of Cisco and CSCC.

 

Section 7.5.  Survival of Representations and Warranties.  All representations and warranties made in this Agreement
or any other instrument or document delivered in connection herewith or
therewith, shall survive the execution and delivery hereof or thereof.

 

Section 7.6.  Prior Agreements.  This Agreement, together
with the Escrow Agreement, the General Release, the Loan Documents, the Equity
Documents (as defined in the Third Amended and Restated Agreement)  and the other documents and agreements being
delivered pursuant to or in connection with this Agreement, constitute the
entire agreement between the parties and supersedes any prior understandings or
agreements concerning the Exchange.

 

Section 7.7.  Governing Law.  This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of New
York, without reference to its conflict of laws provisions.

 

Section 7.8.  Consent to Jurisdiction and Service.  Each of the Borrowers, Cisco and CSCC hereby absolutely and
irrevocably consents and submits to the jurisdiction of the Courts in the State
of New York and of any Federal court located in the State of New York in
connection with any actions or proceedings brought against any party hereto
arising out of or relating to the Exchange. 
In any such action or proceeding, each party hereto hereby absolutely
and irrevocably (i) waives any objection to jurisdiction or venue, (ii) waives
personal service or summons, complaint, declaration or other process, and (iii)
agrees that the service thereof may be made by certified or registered
first-class mail directed to such party, as the case may be, at their
respective addresses in accordance with Section 7.2 hereof;

 

Section 7.9.  California Securities Law.  THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT
HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE
ABSENCE OF AN EXEMPTION FROM SUCH QUALIFICATION IS UNLAWFUL.  PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY
THE COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH
QUALIFICATION BEING AVAILABLE.

 

21

 

Section 7.10.  Headings.  Section and subsection
headings in this Agreement are included herein for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose.

 

Section 7.11.  Counterparts.  This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may execute
this Agreement by signing any such counterpart.

 

Section 7.12.  Further Assurances. 
From
and after the date of this Agreement, upon the request of any of the Borrowers,
Cisco or CSCC, the Company, the Borrower, the Additional Borrower, Cisco or CSCC,
as the case may be, shall execute and deliver such instruments, documents and
other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement.

 

Section 7.13.  Severability.  The provisions of this
Agreement and the terms of the CSCC Shares are severable and, if any court of
competent jurisdiction shall determine that any one or more of the provisions
or part of a provision contained in this Agreement or the Share shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement or the terms of the CSCC Shares; but
this Agreement and the terms of the CSCC Shares shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of a
provision, had never been contained herein, and such provisions or part
reformed so that it would be valid, legal and enforceable to the maximum extent
possible.

 

22

 

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

 

 

	
   

  	
  COGENT COMMUNICATIONS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/David Schaeffer

  	
   

  
	
   

  	
  By: David Schaeffer

  
	
   

  	
  Its:  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COGENT COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/David Schaeffer

  	
   

  
	
   

  	
  By: David Schaeffer

  
	
   

  	
  Its:  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COGENT INTERNET, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/David Schaeffer

  	
   

  
	
   

  	
  By: David Schaeffer

  
	
   

  	
  Its:  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CISCO SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dennis D. Powell

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CISCO SYSTEMS CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/D.A. Rogan

  	
   

  
	
   

  	
  By: David A. Rogan

  
	
   

  	
  Its: President, Cisco Capital

  

 

 

Schedule 2.3

 

none

 

 

Schedule 2.4(c)

 

The Company has options, warrants and convertible
securities outstanding that are convertible into an aggregate 1,953,566 shares
of Common Stock.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00054-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00054-of-00352.parquet"}]]