Lease Equipment Agreement

Master Agreement No. 1094


MASTER AGREEMENT TO LEASE EQUIPMENT


THIS MASTER AGREEMENT TO LEASE EQUIPMENT (this "Agreement") is entered into as of January 13, 1998 by and between CISCO SYSTEMS CAPITAL CORPORATION ("Lessor") having its principal place of business at 3535 Garrett Drive, Santa Clara, California 95054 and ABOVENET COMMUNICATIONS, INC., a California corporation ("Lessee"), having a principal place of business at 50 W. San Fernando Street, Suite 1010, San Jose, CA 95113. In consideration of the covenants set forth herein, Lessor and Lessee have agreed as follows:


I. THE LEASE


1.1 LEASE OF EQUIPMENT. In accordance with the terms and conditions of this
Agreement, Lessor shall lease to Lessee, and Lessee shall lease from
Lessor, the units of personal property (individually, a "Unit," and,
collectively, the "Equipment") described in the lease schedule(s) (each,
a "Lease") to be entered into from time to time into which this Agreement
is incorporated. Each Lease shall constitute a separate, distinct, and
independent lease and contractual obligation of Lessee. Lessor or its
assignee shall at all times retain the full legal title to the Equipment,
it being expressly agreed by both parties that each Lease is an agreement
of lease only. Notwithstanding any provision to the contrary contained in
this Agreement, Lessee shall be deemed to accept the Equipment on the
Commencement Date (as specified in each Lease).


1.2 TERM OF LEASE. The original term (the "Original Term") of each Unit shall
commence on the Commencement Date and, subject to Sections 3.3 and 3.5
below, shall terminate on the date specified in such Lease.
Notwithstanding the foregoing, the Original Term for each Unit shall
automatically extend for successive 30-day periods after its expiration
unless either party gives the other party written notice, at least 90
days prior to the expiration of the Original Term or the then extended
term, as the case may be, of its intent not to so extend the applicable
Lease. Except as specifically provided in this Section 1.2, no Lease may
be terminated by Lessor or Lessee, for any reason whatsoever, prior to
the end of the Original Term or any extended term.


1.3 RENTAL PAYMENTS. Lessee shall pay Lessor rent ("Rent") for each Unit in
the amounts and at the times specified in the Lease. The Lease Term for
each Unit shall commence on the Commencement Date and shall continue for
the period specified in the Lease, [unless otherwise extended pursuant to
Section __ below]. The Lease Term as to any Unit may not be terminated by
Lessee unless otherwise expressly provided in the Lease. All rental and
other amounts payable by Lessee to Lessor hereunder shall be paid to
Lessor at the address specified above, or at such other place as Lessor
may designate in writing to Lessee from time to time.


1.4 RETURN OF EQUIPMENT. Upon expiration of the Original Term of a Unit,
Lessee shall immediately return such Unit to Lessor as provided in
Section 3.3 below. Except as provided in Section 1.2 above, should Lessee
not return any Unit at the end of its Original Term, Lessee shall
continue to pay Rent to Lessor with respect to such Unit in the sum and
on the due dates set out in the applicable Lease, as a month-to-month
lease, until such Unit is returned by Lessee. If Lessee fails to return
any of the Equipment upon demand therefor by Lessor, Lessee shall pay
Lessor, as the measure of Lessor's damages, the Casualty Value (as
defined in the applicable Lease) of such Equipment.


II. DISCLAIMERS AND WARRANTIES; INTELLECTUAL PROPERTY


2.1 DISCLAIMERS; WARRANTIES. Lessee represents and acknowledges that each
Unit is of a size, design, capacity and manufacture selected by it, and
that it is satisfied that each Unit is suitable for its purposes. LESSOR
SUPPLIES THE EQUIPMENT AS IS, AND, NOT BEING THE MANUFACTURER OF THE
EQUIPMENT, THE MANUFACTURER'S AGENT OR THE SELLER'S AGENT, MAKES NO
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN OR CONDITION
OF THE EQUIPMENT, LESSOR SHALL NOT BE RESPONSIBLE FOR ANY LOSS OR DAMAGE
RESULTING FROM THE INSTALLATION, OPERATION OR OTHER USE, OR
DEINSTALLATION OF THE EQUIPMENT, INCLUDING, WITHOUT LIMITATION, ANY
DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGE OR LOSS. Lessee
shall look solely to the manufacturer or the supplier of Equipment for
correction of any problems that may arise with respect thereto, and all
warranties made by the manufacturer or such supplier are, to the degree
possible, hereby assigned to Lessee for the term of the applicable Lease.
To the extent any such warranty requires performance of any kind by the
beneficiary of the warranty, Lessee shall perform in accordance
therewith.


2.2 INTELLECTUAL PROPERTY. Except as otherwise expressly provided in each
Lease, LESSOR MAKES NO WARRANTIES OR REPRESENTATIONS WHATSOEVER WITH
RESPECT TO THE INTELLECTUAL PROPERTY RIGHTS, INCLUDING, WITHOUT
LIMITATION, ANY PATENT, COPYRIGHT AND TRADEMARK RIGHTS, OF ANY THIRD
PARTY WITH RESPECT TO THE EQUIPMENT, WHETHER RELATING TO INFRINGEMENT OR
OTHERWISE. Lessor shall, at Lessee's cost and expense, exercise, when
requested by Lessee, rights of indemnification, if any, for patent,
copyright or other intellectual property infringement obtained from the
manufacturer under any agreement for purchase of the Equipment. If
notified promptly in writing of any action brought against Lessee based
on a claim that the Equipment infringes a United States patent, copyright
or other intellectual property right, Lessor shall promptly notify the
manufacturer thereof for purposes of exercising, for the benefit of
Lessee, Lessor's rights with respect to such claim under any such
agreement.


III. COVENANTS OF LESSEE


3.1 PAYMENTS UNCONDITIONAL; TAX BENEFITS; ACCEPTANCE. EACH LEASE SHALL BE A
NET LEASE, AND LESSEE'S OBLIGATION TO PAY ALL RENT AND OTHER SUMS
THEREUNDER, AND THE RIGHTS OF LESSOR IN AND TO SUCH PAYMENTS, SHALL BE
ABSOLUTE AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT,
REDUCTION, SETOFF, DEFENSE, COUNTERCLAIM, INTERRUPTION, DEFERMENT OR
RECOUPMENT, FOR ANY REASON WHATSOEVER. It is the intent of Lessor, and an
inducement to Lessor, to enter into each Lease, to claim all available
tax benefits of ownership with respect to the Equipment subject thereto.
Lessee acknowledges and represents that (a) no right, title or interest
in such Equipment has been or is intended to be passed to Lessee, other
than the right to maintain possession of and use of such Equipment for
the Original Term of such Lease, conditioned on Lessee's performance of
the terms and conditions of such Lease, (b) Lessee has not taken and will
not, at any time during the Original Term of such Lease, take any action
which could cause Lessor to lose any tax benefits of ownership, and (c)
the Casualty Value of each Unit (as defined in the applicable Lease)
includes an amount which provides for Lessor's recovery of the loss of
such tax benefits. Lessee's acceptance of the Equipment subject to a
Lease shall be conclusively and irrevocably evidenced by Lessee executing


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an Acceptance Certificate with respect to such Equipment, and,
upon acceptance, such Lease shall be noncancellable for its
Original Term unless otherwise agreed to in writing by Lessor.
Any nonpayment of Rent or other amounts payable under any Lease
shall result in Lessee's obligation to promptly pay Lessor as
additional Rent on such overdue payment, for the period of time
during which it is overdue (without regard to any grace period),
interest at a rate equal to the lesser of (a) 14% per annum, or
(b) the maximum rate of interest permitted by law.


3.2 USE OF EQUIPMENT. Lessee shall use the Equipment solely in the
conduct of its business, in a manner and for the use contemplated
by the manufacturer thereof, and in compliance with all laws,
rules and regulations of every governmental authority having
jurisdiction over the Equipment or Lessee and with the
provisions of all policies of insurance carried by Lessee
pursuant to Section 3.6 below; provided, however, Lessee shall
have the right to allow third parties, under Lessee's
supervision, to use the Equipment, so long as Lessee shall retain
uninterrupted possession and control of the Equipment. Lessee
shall pay all costs, expenses, fees and charges incurred in
connection with the use and operation of the Equipment.

3.3 DELIVERY; INSTALLATION; RETURN; MAINTENANCE AND REPAIR;
INSPECTION. Lessee shall be solely responsible, at its own
expense, for (a) the delivery of the Equipment to Lessee, (b) the
packing, rigging and delivery of the Equipment back to Lessor,
upon expiration of the Original Term, in good repair, condition
and working order, ordinary wear and tear excepted, at the
location(s) within the continental United States specified by
Lessor, and (c) the installation, de-installation, maintenance
and repair of the Equipment. During the term of the applicable
Lease, Lessee shall ensure that each Unit is covered by a
maintenance agreement, to the extent available, with the
manufacturer of such Unit or such other party, reasonably
acceptable to Lessor. Lessee shall, at its expense, keep the
Equipment in good repair, condition and working order, ordinary
wear and tear excepted, and, at the expiration of the Original
Term, or any renewal term, with respect to any of the Equipment,
have such Equipment inspected and certified acceptable for
maintenance service by the manufacturer. In the event any of the
Equipment, upon its return to Lessor, is not in good repair,
condition and working order, ordinary wear and tear excepted,
Lessee shall be obligated to pay Lessor for the out-of-pocket
expenses Lessor incurs in bringing such Equipment up to such
status, but not in excess of the Casualty Value (as defined in
the applicable Lease) for such Equipment, promptly after its
receipt of an invoice for such expenses. Lessor shall be entitled
to inspect the Equipment at Lessee's location at reasonable times.


3.4 TAXES. Lessee shall be obligated to pay, and hereby indemnifies
Lessor and its successors and assigns against, and holds each of
them harmless from, all license fees, assessments, and sales,
use, property, excise and other taxes and charges, other than
those measured by Lessor's net income, now or hereafter imposed
by any governmental body or agency upon or with respect to any of
the Equipment, or the possession, ownership, use or operation
thereof, or any Lease or the consummation of the transactions
contemplated in any Lease or this Agreement. Notwithstanding the
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