WRITTEN WAIVER AND AMENDMENT NO. 5 TO CREDIT AND SECURITY AGREEMENT

THIS WRITTEN WAIVER AND AMENDMENT NO. 5 (this “Amendment”) is entered into as of November 14, 2006, by and among OBLIO TELECOM, INC., a Delaware corporation (“Oblio”), each of its direct and indirect subsidiaries signatory hereto (Oblio and each such subsidiary are referred to, individually and collectively, jointly and severally as the “Borrower”), the other Credit Parties signatory hereto and CAPITALSOURCE FINANCE LLC, a Delaware limited liability company (the “Lender”).

BACKGROUND

Borrower and Lender entered into a Credit and Security Agreement dated as of August 12, 2005, as amended by Waiver and Amendment No. 1 dated as of December 13, 2005, Waiver and Amendment No. 2 dated as of March 8, 2006, Waiver and Amendment No. 3 dated as of May 19, 2006 and Waiver and Amendment No. 4 dated as of August 7, 2006 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) pursuant to which Lender provided Borrower with certain financial accommodations.

The Borrower has requested that Lender make certain amendments to the Loan Agreement, and Lender is willing to do so on the terms and conditions hereafter set forth.

NOW, THEREFORE , in consideration of any loan or advance or grant of credit heretofore or hereafter made to or for the account of Borrower by Lender, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.    Definitions . All capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement.

2.    Acknowledgement . Each Credit Party hereby affirms and acknowledges that (a) as of November 13, 2006, there is presently due and owing to Lender the principal amounts of $7,083,286.68 with respect to the Revolving Facility, $3,283,333.33 with respect to Term Loan A and $2,666,670.00 with respect to Term Loan B, in each case together with interest, costs, fees (including without limitation, the accrued Non-Compliance Fee) and expenses (collectively, the “Amount”), (b) the Amount is due and owing without defense, offset or counterclaim of any kind or nature whatsoever, and (c) the Loan Documents are and shall continue to be legal, valid and binding obligations and agreements of such Credit Party enforceable in accordance with their respective terms and secured by first priority perfected Liens on the Collateral in favor of Lender.

3.    Waiver . From time to time, Borrower and Lender have had discussions regarding certain Events of Default (the “Designated Events of Default”) that have occurred under the Loan Agreement which Lender may have orally waived. Borrower and Lender desire to specify in writing the Designated Events of Default as (i) a breach of Section 8.1(i) as a result of Borrower’s suspension or termination of its prepaid phone card contract with AT&T over Borrower and AT&T’s dispute over Borrower’s payment of FET and USF payments to AT&T, (ii) Credit Parties’ noncompliance with Section 6.1(a)(ii) for the months of July, August and September, 2006 due to open audit issues in seeking concurrence from Borrower’s independent auditor related to the application of FET and USF tax recoveries in compliance with generally accepted accounting principals, and (iii) the failure of Borrower to accurately report Eligible Receivables due to Borrower’s unintentional understatement of ineligible Accounts prior to the date of this Amendment; upon Lender advising Borrower of this reporting error, Borrower promptly corrected its calculations. Subject to the provisions set forth in this Amendment, Lender hereby provides written waiver of the Designated Events of Default. This written waiver is limited to the Designated Events of Default and shall not constitute a written waiver of any other Event of Default. Except for the foregoing written waiver and the amendments set forth below, the Loan Agreement shall remain unchanged and in full force and effect and is hereby ratified and confirmed by Borrower.

4.    Amendment to Loan Agreement .

Subject to the satisfaction of the conditions precedent set forth in Section 7 below, the Loan Agreement is hereby amended as follows:

(a)    The definition of “Eligible Receivables” in Appendix A to the Loan Agreement is hereby amended by amending clause (h) thereof in its entirety to read as follows:

“(h) with respect to all Accounts owed by any particular Account Debtor and/or its Affiliates, if such Accounts exceed 20% of the net collectible dollar value of all Eligible Receivables at any one time (which percentage may, in Lender’s sole discretion, be increased or decreased); provided , however , from the Amendment No. 1 Effective Date through and including November 30, 2006, Accounts owed by Pacific Telecom shall not be deemed ineligible solely by virtue of this clause (h) so long as the aggregate net collectible value of such Accounts does not exceed $3,437,000;”

(b)    Appendix A to the Loan Agreement is hereby amended by inserting the following defined terms in their appropriate alphabetical order to provide as follows:

“ Amendment No. 5 ” shall mean Amendment No. 5 to Credit and Security Agreement dated as of November 14, 2006.

“ Amendment No. 5 Effective Date ” shall mean November 14, 2006.

5.    Additional Covenants . Borrower, jointly and severally, covenants and agrees that, until full performance and satisfaction, and indefeasible payment in full in cash, of all the Obligations and termination of the Loan Agreement, it shall satisfy and comply with each of the following covenants and agreements, and Borrower acknowledges and agrees that the failure to so comply as and when required herein shall result in an Event of Default:

(a)    Equity Raise . By not later than December 31, 2006, Borrower shall have raised and received additional cash equity (either via a cash equity contribution from Parent or otherwise) or subordinated debt, subordinated to the Obligations by written agreement in form and substance and subject to subordination or intercreditor terms acceptable to Lender, in an aggregate amount of not less than Five Million Dollars ($5,000,000) (the “Raise”). Borrower acknowledges and agrees that the Raise is consistent with the sound exercise of Borrower’s fiduciary duties based upon Borrower’s current business operations and financial condition, and in furtherance thereof, Borrower agrees to obtain Lender’s prior written consent with respect to the Borrower’s use of such Raise.

(b)    Budget; Consultant; Variances .

(i)    Borrower acknowledges and agrees that Lender may engage a management c