Exhibit 10.2

STOCK PURCHASE AGREEMENT

BY AND AMONG

ZAYO GROUP, LLC,

LATISYS-CHICAGO HOLDINGS CORP.,

LATISYS HOLDINGS CORP.,

LATISYS-ASHBURN HOLDINGS CORP.

AND

LATISYS HOLDINGS, LLC

Dated as of January 13, 2015

 

 

 

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Table of Contents

 

 

 

 

Page

Article I

 

DEFINITIONS

2

 

1.1

Certain Definitions

2

Article II

 

THE SHARE SALE

10

 

2.1

Sale and Purchase of Shares

10

 

2.2

Purchase Price

10

 

2.3

Purchase Price Adjustment

10

Article III

 

CLOSING

11

 

3.1

Closing Date

11

 

3.2

Deliveries by Seller

12

 

3.3

Deliveries by Purchaser

12

Article IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANIES

12

 

4.1

Organization and Good Standing

12

 

4.2

Authorization of Agreement

13

 

4.3

Conflicts; Consents of Third Parties

13

 

4.4

Capitalization

13

 

4.5

Subsidiaries

13

 

4.6

Financial Statements

14

 

4.7

No Undisclosed Liabilities

14

 

4.8

Absence of Certain Developments

14

 

4.9

Taxes

14

 

4.10

Assets

15

 

4.11

Intellectual Property

15

 

4.12

Material Contracts

16

 

4.13

Employee Benefits Plans

17

 

4.14

Labor; Business Employees

17

 

4.15

Litigation

18

 

4.16

Compliance with Laws; Permits

18

 

4.17

Environmental Matters

18

 

4.18

Real Property

19

 

4.19

Financial Advisors

19

 

4.20

Banks; Powers of Attorney

20

 

4.21

Insurance

20

 

4.22

Transactions with Affiliates, Stockholders, Officers, Directors and Others

20

Article V

 

REPRESENTATIONS AND WARRANTIES OF SELLER

20

 

5.1

Organization and Good Standing

20

 

5.2

Authorization of Agreement

20

 

5.3

Conflicts; Consents of Third Parties

20

 

5.4

Ownership

21

 

5.5

Financial Advisors

21

Article VI

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

21

 

6.1

Organization and Good Standing

21

 

6.2

Authorization of Agreement

21

 

6.3

Conflicts; Consents of Third Parties

21

 

6.4

Investment Intention

21

 

6.5

Financial Advisors

22

 

6.6

Financing

22

 

6.7

Informed Decision

22

 

6.8

Litigation

22

 

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Article VII

 

COVENANTS

23

 

7.1

Contact with Customers and Suppliers

23

 

7.2

Conduct of the Business Pending the Closing

23

 

7.3

Regulatory Approvals

24

 

7.4

Further Assurances

25

 

7.5

Confidentiality

25

 

7.6

D&O Protections

25

 

7.7

Public Announcements

26

 

7.8

Access and Information

26

 

7.9

Tax Matters

26

 

7.10

Acquisition Proposals

29

 

7.11

No Other Representations or Warranties

29

 

7.12

Financing

29

Article VIII

 

CONDITIONS TO CLOSING

31

 

8.1

Conditions Precedent to Obligations of Purchaser

31

 

8.2

Conditions Precedent to Obligations of Seller

32

Article IX

 

TERMINATION

33

 

9.1

Termination of Agreement

33

 

9.2

Procedure Upon Termination

33

 

9.3

Effect of Termination

33

Article X

 

INDEMNIFICATION

33

 

10.1

Indemnification of Purchaser

33

 

10.2

Indemnification of Seller

35

 

10.3

Notice of Claim

35

 

10.4

Defense of Third-Party Claims

35

 

10.5

Contents of Notice of Claim

35

 

10.6

Survival of Covenants, Representations and Warranties

36

 

10.7

Exclusive Remedy; Source of Recovery; Mitigation

36

 

10.8

Tax Treatment of Indemnification Payments

37

Article XI

 

MISCELLANEOUS

37

 

11.1

Payment of Sales, Use or Similar Taxes

37

 

11.2

Expenses

37

 

11.3

Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury Trial

37

 

11.4

Entire Agreement; Amendments and Waivers

38

 

11.5

Governing Law

38

 

11.6

Notices

38

 

11.7

Severability

38

 

11.8

Binding Effect; Assignment

39

 

11.9

No Recourse or Personal Liability

39

 

11.10

Remedies

39

 

11.11

Retention of Counsel

39

 

11.12

Protected Communication

39

 

11.13

No Waiver of Privilege, Protection from Disclosure or Use

40

 

11.14

Counterparts

40

 

11.15

Time of Essence

40

 

 

 

 

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Schedules and Exhibits

 

Schedule 1.1

Permitted Liens

Schedule 2.3(a)

Purchase Price Calculations

Schedule 4.3

Consents

Schedule 4.5(a)

Company Subsidiaries

Schedule 4.6

Financial Statements

Schedule 4.8

Absence of Certain Developments

Schedule 4.9

Taxes

Schedule 4.11

Intellectual Property

Schedule 4.12

Material Contracts

Schedule 4.13(a)

Business Employee Benefit Plans

Schedule 4.14(c)

Business Employees

Schedule 4.15

Litigation

Schedule 4.17

Environmental Matters

Schedule 4.18(a)

Owned Real Property

Schedule 4.18(b)

Leased Real Property

Schedule 4.18(c)

Leased Real Property (Latisys as Lessor)

Schedule 4.19

Company Financial Advisors

Schedule 4.20

Banks; Powers of Attorney

Schedule 4.21

Insurance

Schedule 4.22

Transactions with Affiliates, Stockholders, Officers, Directors and Others

Schedule 6.5

Purchaser Financial Advisors

Schedule 7.2(a)

Conduct of the Business Pending the Closing

Schedule 7.2(b)

Conduct of the Business Pending the Closing

 

 

Exhibit A

Escrow Agreement

Exhibit B

Debt Commitment Letter

Exhibit C

Form or Estoppel Letter

Exhibit D

Required Information

 

 

 

 

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STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT, dated as of January 13, 2015 (the “Agreement”), by and
among Zayo Group, LLC, a limited liability company existing under the laws of
Delaware (“Purchaser”), Latisys Holdings Corp., a Delaware corporation
(“Irvine/Denver Holdings”), Latisys-Chicago Holdings Corp., a Delaware
corporation (“Chicago Holdings”), Latisys-Ashburn Holdings Corp., a Delaware
corporation (“Ashburn Holdings”) (each of Irvine/Denver Holdings, Chicago
Holdings and Ashburn Holdings, a “Company” and together the “Companies”), and
Latisys Holdings, LLC, a Delaware limited liability company (“Seller”).

R E C I T A L S:

Seller owns all of the issued and outstanding shares of capital stock of each of
the Companies (such shares, the “Shares”), and desires to sell such Shares to
Purchaser (the “Share Sale”), and Purchaser desires to purchase the Shares, all
upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1Certain Definitions.

(a)For purposes of this Agreement, the following terms shall have the meanings
specified in this Section 1.1:

“Accounting Firm” has the meaning set forth in Section 2.3(c).

“Adjusted Purchase Price” has the meaning set forth in Section 2.3(e)(i).

“Adjustment Time” means 12:01 a.m., New York, New York time, on the Closing
Date.

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise.

“Agreement” has the meaning set forth in the introduction to this Agreement.

“Antitrust Laws” has the meaning set forth in Section 7.3(a).

“Ashburn Holdings” has the meaning set forth in the introduction to this
Agreement.

“Assets” has the meaning set forth in Section 4.10.

“Available Financing” has the meaning set forth in Section 7.12(b).

“Balance Sheet Date” has the meaning set forth in Section 4.6.

“Bank Financing” has the meaning set forth in Section 7.12(b).

“Base Price” has the meaning set forth in Section 2.2(a).

“Basket” has the meaning set forth in Section 10.1(c).

“Books and Records” means all books, files, reports, plans, records, manuals,
maps and engineering data and test results held by any Latisys Company.

 

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“Business Day” means any day of the year on which national banking institutions
in New York, New York, are open to the public for conducting business and are
not required or authorized to close.

“Business Employee” means any individual (x) employed by any Latisys Company as
of the date hereof or (y) hired by any Latisys Company between the date hereof
and the Closing Date, but excluding any individual who ceases to be employed by
any Latisys Company prior to the Closing Date.

“Cap” has the meaning set forth in Section 10.1(c).

“Chicago Holdings” has the meaning set forth in the introduction to this
Agreement.

“Claim” has the meaning set forth in Section 10.3.

“Closing” has the meaning set forth in Section 3.1.

“Closing Cash” means, as of the Adjustment Time, all cash and cash equivalent
assets (including marketable securities) held by the Latisys Companies.

“Closing Date” has the meaning set forth in Section 3.1.

“Closing Statement” has the meaning set forth in Section 2.3(b).

“Closing Working Capital” means, without duplication, the aggregate amount of
the combined and consolidated current assets of the Latisys Companies less the
combined and consolidated current liabilities of the Latisys Companies, in each
case as determined in accordance with Section 2.3(a), as of the Adjustment Time
and after giving effect to the transactions contemplated by this Agreement that
are to occur at the Closing.  Closing Working Capital shall consist solely of
those line items set forth on Schedule 2.3(a) attached hereto.  For purposes of
determining Closing Working Capital, (i) current assets shall be deemed to
exclude Closing Cash, deferred Tax assets, prepaid income Taxes, and prepaid
interest and (ii) current liabilities shall be deemed to exclude deferred
revenue, accrued income Taxes, deferred Tax Liabilities, Company Indebtedness
(including any current portion thereof) and Company Transaction Expenses (other
than any Company Transaction Expense that will remain a liability of one or more
of the Latisys Companies after the Closing).

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” has the meaning set forth in Section 4.4(a).

“Company” and “Companies” has the meaning set forth in the introduction to this
Agreement.

“Company Benefit Plan” has the meaning set forth in Section 4.13(a).

“Company Breaches” has the meaning set forth in Section 10.1(a).

“Company Closing Bonuses” means the aggregate amount of bonuses that will be
paid or owed at the Closing, as a result of the consummation of the Share Sale,
by any Latisys Company as W-2 wages through a payroll distribution to certain
Business Employees in the amounts set forth on a schedule to be delivered by the
Companies to Purchaser prior to the Closing Date.

“Company Documents” has the meaning set forth in Section 4.2.

“Company Indebtedness” means, with respect to the Latisys Companies, on a
combined and consolidated basis and without duplication, all (A) indebtedness
for borrowed money (including all principal, accreted value, interest,
prepayment or other premiums, penalties, and breakage fees), (B) obligations
evidenced by drawn letters of credit, notes, bonds, debentures, banker’s
acceptance or similar instruments or transactions (expressly excluding any
undrawn letters of credit and performance bonds) or pursuant to any guaranty or
any similar obligation of another Person, (C) obligations (including breakage
costs) payable under interest rate protection agreements, (D) obligations for
deferred purchase price and conditional sale obligations (other than trade
accounts payable in the Ordinary Course of Business), (E) obligations under
leases that are required to be capitalized in accordance with GAAP, and (F)
obligations to make earnout payments under that certain Material Contract
identified on Schedule 4.12(xii).

“Company Subsidiary” means each Subsidiary of any Company.

 

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“Company Transaction Expenses” means the fees and expenses incurred on or before
the Closing Date and payable by any Latisys Company to third parties related to,
or arising out of, the transactions contemplated by this Agreement, including
travel, legal and investment banking fees and expenses and any Company Closing
Bonuses, in each case that either (i) will be paid at Closing pursuant to
Section 2.2(b) or (ii) will remain a liability of one or more of the Latisys
Companies after the Adjustment Time.

“Confidentiality Agreement” has the meaning set forth in Section 7.5.

“Consent” means, with respect to any Person, any approval, authorization,
exemption, waiver, permission or consent of any kind of such Person required in
order to consummate the Share Sale and other transactions contemplated by this
Agreement.

“Consolidated Group” means an “affiliated group” as that term is defined
pursuant to Section 1504(a)(1) and (a)(2) of the Code (or any similar provision
of state, local or non-U.S. Tax Law) of corporations or entities that file Tax
Returns on a consolidated, unified, combined or group basis.

“Consolidated Tax Return” has the meaning set forth in Section 7.9(a)(i).

“Contract” means any contract, lease, commitment or other agreement.

“Copyrights” has the meaning set forth in Section 1.1 in the Intellectual
Property definition.

“Credit Facilities” means, collectively, the Fourth Amended and Restated Credit
and Guaranty Agreement, dated as of March 6, 2013, as amended, and related
agreements thereto or thereunder (in each case, as supplemented, amended,
restated, or otherwise modified (including by waiver or consent) from time to
time) by and among the Latisys Companies and Royal Bank of Canada (as a lender
and as the administrative agent).

“Damages” has the meaning set forth in Section 10.1(a).

“Debt Commitment Letter” has the meaning set forth in Section 6.6.

“Debt Financing” has the meaning set forth in Section 6.6.

“Disclosure Schedules” has the meaning set forth in the introductory paragraph
to Article IV.

“D&O Indemnitees” has the meaning set forth in Section 7.6(a).

“Environmental Law” means any applicable federal, state or local statute,
regulation, ordinance, or other legal requirement currently in effect relating
to the protection of the environment or natural resources, including the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App.
§ 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et
seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act
(42 U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et
seq.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
§ 136 et seq.), as each has been amended and the regulations promulgated
pursuant thereto.

“ERISA” has the meaning set forth in Section 4.13(a).

“Escrow Agent” means Bank New York Mellon Trust Company.

“Escrow Agreement” means that certain Escrow Agreement between Purchaser, Seller
and the Escrow Agent, dated as of the date hereof, and attached hereto as
Exhibit A.

“Estimated Closing Cash” has the meaning set forth in Section 2.3(a).

“Estimated Closing Working Capital” has the meaning set forth in Section 2.3(a).

“Estimated Purchase Price” has the meaning set forth in Section 2.2(b).

“Filing Party” has the meaning set forth in Section 7.9(a)(iii).

 

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“Final Closing Cash” has the meaning set forth in Section 2.3(b).

“Final Closing Working Capital” has the meaning set forth in Section 2.3(b).

“Final Determination” has the meaning set forth in Section 10.7(d).

“Financial Statements” has the meaning set forth in Section 4.6.

“Financing Sources” means the Persons that have committed to provide or
otherwise entered into agreements in connection with the Debt Financing, or
alternative debt financings in connection with the transactions contemplated by
this Agreement, and any joinder agreements, indentures or credit agreements
entered into pursuant thereto or relating thereto together with their
Affiliates, officers, directors, employees and representatives involved in the
Debt Financing and their successors and assigns.

“FTC” means U.S. Federal Trade Commission.

“Fundamental Representations” has the meaning set forth in Section 10.6.

“GAAP” means United States generally accepted accounting principles and
practices as in effect from time to time and applied consistently throughout the
periods involved applying the respective historical accounting principles,
policies, practices and methods of the Latisys Companies.

“Governmental Body” means any government or governmental department, commission,
board, bureau, agency, court or regulatory body thereof, or other political
subdivision thereof, whether U.S. or foreign, and whether federal, state, or
local, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).

“Hazardous Material” means any substance, material or waste which is regulated
by any Governmental Body including petroleum and its by-products, asbestos, and
any material or substance which is defined as a “hazardous waste,” “hazardous
substance,” “hazardous material,” “restricted hazardous waste,” “industrial
waste,” “solid waste,” “contaminant,” “pollutant,” “toxic waste” or “toxic
substance” under any provision of Environmental Law.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

“Indemnitee” has the meaning set forth in Section 10.3.

“Indemnitor” has the meaning set forth in Section 10.3.

“Indemnity Escrow Account” has the meaning set forth in Section 2.2(b)(C).

“Indemnity Escrow Amount” means an amount equal to Thirty Million Three Hundred
Seventy Five Thousand ($30,375,000) to satisfy any post-Closing indemnification
claims in Purchaser’s favor in accordance with Article X.

“Intellectual Property” means all intellectual property rights used by any
Latisys Company arising from or in respect of the following: (i) all patents and
applications therefor, including continuations, divisionals,
continuations-in-part, or reissues of patent applications and patents issuing
thereon (collectively, “Patents”), (ii) all trademarks, service marks, trade
names, service names, brand names, trade dress rights, logos, Internet domain
names and corporate names, together with the goodwill associated with any of the
foregoing, and all applications, registrations and renewals thereof,
(collectively, “Marks”), (iii) copyrights and registrations and applications
therefor, works of authorship and mask work rights (collectively, “Copyrights”)
and (iv) all Software and Technology.

“Interim Balance Sheet” has the meaning set forth in Section 4.6.

“IRS” means the Internal Revenue Service.

“Irvine/Denver Holdings” has the meaning set forth in the introduction to this
Agreement.

“IT Systems” has the meaning set forth in Section 4.11(b).

 

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“Knowledge of the Companies”, “to the Companies’ Knowledge” or similar phrases
means the actual knowledge of Peter Stevenson, Douglas Butler, Wm. Evans Mullan
or Randal Thompson, after inquiry of other employees, if any, of the Latisys
Companies who the foregoing reasonably determine may have actual knowledge of
the subject  matter in question.

“Knowledge of the Purchaser” means the actual knowledge, after reasonable
investigation, of Scott Beer, Scott Reardon, Matt Erickson and Tim Gentry.

“Latisys Companies” mean the Companies and the Company Subsidiaries, each of
which shall be referred to individually as a “Latisys Company.”

“Law” means any federal, state, local or non-U.S. law, statute, code, ordinance,
rule or regulation.

“Leased Real Property” has the meaning set forth in Section 4.18(c).

“Legal Proceeding” means any judicial, administrative or arbitral actions,
claims, suits or proceedings (public or private) by or before a Governmental
Body.

“Lenders” has the meaning set forth in Section 6.6.

“Licenses” has the meaning set forth in Section 4.11.

“Lien” means any lien, encumbrance, pledge, mortgage, other possessory interest,
conditional sale or other title retention agreement, deed of trust, voting
agreement, voting trust, proxy agreement, security interest, claim, lease,
charge, option, covenant, restriction, right of first refusal, assessment,
easement, servitude, encroachment, other burden or encumbrance of any kind, or
transfer restriction.

“Marketing Period” means a period of fifteen (15) consecutive Business Days
commencing on the first Business Day following the date of this Agreement,  
provided that the Marketing Period shall be deemed not to have commenced if,
prior to the completion of such fifteen (15) consecutive Business Day period,
(i) the Latisys Companies’ independent accounting firm shall have withdrawn its
audit opinion with respect to any of the financial statements contained in the
Required Information or (ii) the Latisys Companies shall have determined to
restate any material financial information included in the Required Information
or that any such restatement is under consideration, in which case the Marketing
Period shall be deemed not to commence unless and until such restatement has
been completed or the Latisys Companies have determined that no restatement
shall be required under GAAP.

“Marks” has the meaning set forth in Section 1.1 in the Intellectual Property
definition.

“Material Adverse Effect” means a, or a reasonably expected, material adverse
effect on the financial condition, business, properties, liabilities or results
of operations of the Latisys Companies and its Subsidiaries, taken as a whole,
excluding any change, occurrence, event or effect resulting directly or
indirectly from (i) international, national, regional, local or industry-wide
political, economic or business conditions (including financial, banking,
securities and capital market conditions and any disruption thereof), (ii) acts
of war (whether or not declared), sabotage or terrorism, military actions or the
escalation thereof or other force majeure events, (iii) any change, occurrence,
event or effect applicable to the data center industry generally and competition
in such industry, (iv) actual or proposed changes in the Law or changes in
accounting regulations or principles (including GAAP) or interpretations thereof
after the date hereof, (v) any changes in regulatory requirements, (vi) any
failure by any Latisys Company to meet any internal or published projections,
forecasts or revenue or earnings predictions for any period, (vii) action(s)
consented to in writing by Purchaser or (viii) the execution or announcement of
this Agreement or of the Closing or the taking of any action required by this
Agreement, or the consummation of the transactions contemplated hereby.

“Material Contracts” has the meaning set forth in Section 4.12.

“Non-Filing Party” has the meaning set forth in Section 7.9(a)(iii).

“Notice of Claim” has the meaning set forth in Section 10.3.

“NYSE” means the New York Stock Exchange.

“Order” means any order, injunction, judgment, decree, ruling, writ, assessment
or arbitration award of a Governmental Body.

 

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“Ordinary Course of Business” means the ordinary and usual course of the Latisys
Companies’ business.

“Owned Real Property” has the meaning set forth in Section 4.18(a).

“Patents” has the meaning set forth in Section 1.1 in the Intellectual Property
definition.

“Payoff Letters” means (i) a payoff letter in customary form from Royal Bank of
Canada, as agent under the Credit Facilities, reflecting all amounts required to
be paid under or in connection with Company Indebtedness outstanding under the
Credit Facilities to discharge such Company Indebtedness in full, and (ii) such
other payoff letters in customary form reflecting any other amounts required to
be paid in order to pay in full all other outstanding Company Indebtedness.

“Permits” means any approvals, authorizations, consents, licenses, permits,
variances, exemptions, Orders, franchises or certificates of a Governmental
Body.

“Permitted Liens” means (i) all defects, exceptions, restrictions, easements,
rights of way and encumbrances disclosed in policies of title insurance that
have been made available to Purchaser in writing prior to the date hereof that
do not materially impair or interfere with the use of any property affected
thereby; (ii) statutory liens for current Taxes, assessments or other
governmental charges not yet delinquent or the amount or validity of which is
being contested in good faith by appropriate proceedings and identified on
Schedule 1.1 (Permitted Liens); (iii) inchoate mechanics’, carriers’, workers’,
repairers’ and similar statutory Liens arising or incurred in the Ordinary
Course of Business; (iv) zoning, entitlement and other land use regulations by
any Governmental Body that do not materially impair or interfere with the use of
any property affected thereby; (v) Liens described in Schedule 1.1 (Permitted
Liens); (vi) landlord liens and title of a lessor under those capital or
operating leases set forth on Schedule 1.1 (Permitted Liens) and other capital
or operating leases involving annual payments of $25,000 or less; (vii) Liens
related to any letters of credit outstanding as of Closing that support any
obligation of a Latisys Company until such letters of credit are terminated,
which letters of credit are set forth on Schedule 1.1 (Permitted Liens), (viii)
such other imperfections in title and Liens arising in the Ordinary Course of
Business (and not securing Company Indebtedness) that are not material in amount
and do not interfere with the use of the property encumbered thereby; and (ix)
matters that would be disclosed by a physical inspection of each parcel of Real
Property or that are disclosed on title commitments or accurate surveys of each
parcel of Real Estate that have been made available to Purchaser prior to the
date hereof that do not materially impair or interfere with the use of any
property affected thereby.

“Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.

“Policies” has the meaning set forth in Section 4.21.

“Post-Closing Tax Period” has the meaning set forth in Section 7.9(g).

“Pre-Basket Amount” has the meaning set forth in Section 10.1(c).

“Pre-Closing Tax Period” has the meaning set forth in Section 7.9(g).

“Protected Communications” means, at any time, any and all communications in
whatever form, whether written, oral, video, electronic or otherwise, that shall
have occurred between or among any of the Latisys Companies, Seller, or any of
their respective Affiliates, equity or holders, directors, officers, employees,
agents, advisors (including DH Capital, LLC and Bank Street Group) and attorneys
(including Locke Lord LLP, or any successor law firm) to the extent relating to
this Agreement, the events and negotiations leading to this Agreement, and of
the transactions contemplated herein or any other potential sale or transfer of
control transaction involving the Latisys Companies.

“Purchase Price” has the meaning set forth in Section 2.2(a).

“Purchaser” has the meaning set forth in the introduction to this Agreement.

“Purchaser Documents” has the meaning set forth in Section 6.2.

“Purchaser Indemnified Person(s)” has the meaning set forth in Section 10.1(a).

“Real Property” means, collectively, the Owned Real Property and the Leased Real
Property.

 

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“Real Property Leases” has the meaning set forth in Section 4.18(b).

“Registered Intellectual Property” means all Patents and Patent applications,
all Copyright registrations, and all registrations for Marks that, in each case,
are owned by any Latisys Company and all Intellectual Property underlying such
registrations and applications

“Release” means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, or leaching into the environment.

“Remedial Action” means all actions required by Environmental Laws to clean up,
remove, treat or address any Hazardous Material in the environment at levels
exceeding those allowed by applicable Environmental Laws, including pre-remedial
studies and investigations or post-remedial monitoring and care.

“Required Information” has the meaning set forth in Section 7.12(b).

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” has the meaning set forth in Section 6.4.

“Seller” has the meaning set forth in the introduction to this Agreement.

“Seller Documents” has the meaning set forth in Section 5.2.

“Seller Indemnified Person(s)” has the meaning set forth in Section 10.2.

“Shares” has the meaning set forth in the Recitals.

“Share Sale” has the meaning set forth in the Recitals.

“Software” means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise,
(iii) descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, screens, user interfaces, report
formats, firmware, development tools, templates, menus, buttons and icons, and
(iv) all documentation including user manuals and other training documentation
related to any of the foregoing.

“Standard Survival Termination Date” has the meaning set forth in Section 10.6.

“Straddle Period” has the meaning set forth in Section 7.9(e).

“Subsidiary” means any Person of which fifty percent (50%) or more of the
outstanding voting securities or other voting equity interests are owned,
directly or indirectly, by the pertinent Person.

“Survival Date” has the meaning set forth in Section 10.6.

“Target Working Capital Range” means a range between Four Million Five Hundred
Fifty Three Thousand Seven Hundred Sixty Three Dollars ($4,553,763) and Four
Million Six Hundred Three Thousand Seven Hundred Sixty Three Dollars
($4,603,763).

“Tax Dispute” has the meaning set forth in Section 7.9(a)(iii).

“Tax Dispute Date” has the meaning set forth in Section 7.9(a)(iii).

“Taxes” means (i) all federal, state, local or non-U.S. taxes, charges, fees,
imposts, levies or other assessments, including, without limitation, all net
income, alternative or add-on minimum, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, and (ii) all
interest, penalties, fines, additions to tax or additional amounts imposed by
any Taxing Authority in connection with any item described in clause (i).

 

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“Taxing Authority” means each national, state, provincial or local government or
any governmental, administrative or regulatory authority, agency, court,
commission, tribunal, body or instrumentality of any government that imposes,
regulates, administers, collects or regulates the collection of Taxes in any
applicable jurisdiction.

“Tax Representations” means the representations and warranties set forth in
Section 4.9.

“Tax Return” means any return, declaration, report, claim for refund, estimate,
information return or statement, including any schedule or attachment thereto
and including any amendment thereof required to be filed in respect of any
Taxes.

“Technology” means, collectively, all designs, formulae, algorithms, procedures,
methods, techniques, ideas, know-how, research and development, technical data,
programs, subroutines, tools, materials, specifications, processes, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
apparatus, creations, improvements, works of authorship and other similar
materials, and all recordings, graphs, drawings, reports, analyses, and other
writings, and other tangible embodiments of the foregoing, in any form whether
or not specifically listed herein, and all related technology, that are used in,
incorporated in, embodied in, displayed by or relate to, or are used by any
Latisys Company with respect to the business of such Latisys Company.

“Third-Party Claim” has the meaning set forth in Section 10.3.

“Unresolved Claims” has the meaning set forth in Section 10.7(f)(ii).

“Working Capital Escrow Account” has the meaning set forth in Section 2.2(b)(B).

“Working Capital Escrow Amount” means One Million Dollars ($1,000,000).

(b)Other Definitional and Interpretive Matters.  Unless otherwise expressly
provided, for purposes of this Agreement, the following rules of interpretation
shall apply:

(i)Calculation of Time Period.  When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded.  If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business Day.

(ii)Dollars.  Any reference in this Agreement to $ shall mean U.S. dollars.

(iii)Exhibits/Schedules.  The Exhibits and Schedules to this Agreement are
hereby incorporated and made a part hereof and are an integral part of this
Agreement.  All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein.  Any capitalized terms used in any Schedule or Exhibit but not otherwise
defined therein shall be defined as set forth in this Agreement.

(iv)Gender and Number.  Any reference in this Agreement to gender shall include
all genders, and words imparting the singular number only shall include the
plural and vice versa.

(v)Headings.  The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement.  All references in this
Agreement to any “Section” are to the corresponding Section of this Agreement
unless otherwise specified.

(vi)Herein.  The words such as “herein,” “hereinafter,” “hereof,” and
“hereunder” refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.

(vii)Including.  The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.

 

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(c)The parties hereto have participated jointly in the negotiation and drafting
of this Agreement and, in the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as jointly drafted by
the parties hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.

ARTICLE II

THE SHARE SALE

2.1Sale and Purchase of Shares.  At the Closing (a) Seller shall sell, assign
and transfer to Purchaser all of the Shares, free and clear of all Liens, and
(b) Purchaser shall pay and deliver the Purchase Price to Seller and take the
other actions described in this Article II.

2.2Purchase Price.

(a)In full consideration for the transfer of the Shares, Purchaser shall pay in
cash an aggregate amount (such amount, the “Purchase Price”) equal to (i) Six
Hundred Seventy-Five Million Dollars ($675,000,000) (the “Base Price”) plus (ii)
the Closing Cash, plus or minus, as applicable, (iii) the amount determined
pursuant to Section 2.3 based on the Closing Working Capital.

(b)Closing Payments.  At the Closing, Purchaser will pay an amount equal to (i)
the Base Price plus (ii) the Estimated Closing Cash, plus or minus, as
applicable, (iii) the amount determined pursuant to Section 2.3(a) based on the
Estimated Closing Working Capital (the sum of such amounts, the “Estimated
Purchase Price”), by making the following disbursements in cash (items (D) and
(E) being paid on behalf of the Latisys Companies):

(A)to Seller, an amount equal to the Estimated Purchase Price, less the sum of
the amounts paid pursuant to subsections (B), (C), (D) and (E) below;

(B)to the Escrow Agent, the Working Capital Escrow Amount into an escrow account
(the “Working Capital Escrow Account”) to be held by the Escrow Agent in
accordance with the terms of the Escrow Agreement;

(C)to the Escrow Agent, the Indemnity Escrow Amount into an escrow account (the
“Indemnity Escrow Account”) to be held by the Escrow Agent in accordance with
the terms of the Escrow Agreement;

(D)to the holders of Company Indebtedness, an amount sufficient to pay in full
the Company Indebtedness outstanding immediately prior to the Closing, pursuant
to the Payoff Letters; and

(E)to the Persons entitled thereto, the Company Transaction Expenses pursuant to
instructions delivered to Purchaser no later than three (3) Business Days prior
to the Closing.

2.3Purchase Price Adjustment.

(a)Estimated Statement.  No fewer than  three (3) Business Days prior to the
Closing Date, the Companies shall prepare, or cause to be prepared, and
delivered to Purchaser an estimate of (i) the Closing Working Capital in
accordance with the principles set forth on Schedule 2.3(a) (the “Estimated
Closing Working Capital”), and (ii) the Closing Cash (the “Estimated Closing
Cash”).  If the Estimated Closing Working Capital is less than the bottom of the
Target Working Capital Range, the Purchase Price payable at the Closing will be
reduced by the amount of such shortfall, subject to further adjustment after the
Closing as provided in this Section 2.3.  If the Estimated Closing Working
Capital is greater than the top of the Target Working Capital Range, the
Purchase Price payable at the Closing will be increased by the amount of such
excess, subject to further adjustment after the Closing as provided in this
Section 2.3.  If the Estimated Closing Working Capital is within the Target
Working Capital Range, the Purchase Price payable at the Closing will not be
adjusted pursuant to this Section 2.3(a), but will be subject to adjustment
after the Closing as otherwise provided in this Section 2.3.

(b)Closing Statement.  Within sixty (60) days after the Closing Date, Purchaser
shall cause to be prepared and delivered to Seller a statement (the “Closing
Statement”) setting forth in reasonable detail its calculation of (i) the
Closing Working Capital (the “Final Closing Working Capital”) prepared in
accordance with the principles set forth on Schedule 2.3(a), and (ii) the
Closing Cash (the “Final Closing Cash”).  If Purchaser does not deliver a
Closing Statement within such sixty (60)-day period, then the Estimated Closing
Working Capital and the Estimated Closing Cash delivered by Seller prior to
Closing will, at the option of Seller, be final, conclusive and binding on the
parties.

 

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(c)Dispute.  Within thirty (30) days following receipt by Seller of the Closing
Statement, Seller shall deliver written notice to Purchaser if Seller disputes
any of the Closing Statement.  If Seller does not notify Purchaser of a dispute
with respect to the Closing Statement within such thirty (30)-day period, such
Closing Statement will be final, conclusive and binding on the parties.  In the
event of a notification of such dispute, Purchaser and Seller shall negotiate in
good faith to resolve such dispute.  If Purchaser and Seller, notwithstanding
such good faith effort, fail to resolve such dispute within thirty (30) days
after Seller advises Purchaser of its objections, then Purchaser and Seller
jointly shall engage Ernst & Young, provided that if Ernst & Young is not
willing or unable to accept such engagement, then Purchaser and Seller shall
jointly engage another  nationally or regionally recognized accounting firm that
is not presently providing and has not provided either party or their Affiliates
with services in the last two (2) years, as mutually agreed upon by Purchaser
and Seller (the “Accounting Firm”) to resolve such dispute.  As promptly as
practicable thereafter, Purchaser and Seller shall each prepare and submit a
presentation to the Accounting Firm.  As soon as practicable thereafter,
Purchaser and Seller shall cause the Accounting Firm to choose one of the
parties’ positions based solely upon the presentations by Purchaser and
Seller.  The party whose position is not accepted by the Accounting Firm shall
be responsible for all of the fees and expenses of the Accounting Firm.  All
determinations made by the Accounting Firm will be final, conclusive and binding
on the parties.

(d)Access.  For purposes of complying with the terms set forth in this
Section 2.3, each party shall cooperate with and make available to the other
parties and their respective representatives all information, records, data and
working papers, and shall permit access to its facilities and personnel, as may
be reasonably required in connection with the preparation and analysis of the
Closing Statement and the resolution of any disputes thereunder.

(e)Adjustment.  Within five (5) Business Days after the date on which the Final
Closing Working Capital and the Final Closing Cash are finally determined
pursuant to Section 2.3(c), Seller and Purchaser shall jointly determine the
amount by which the Purchase Price would have been adjusted pursuant to Section
2.3(a) had the Final Closing Working Capital and the Final Closing Cash (as
finally determined pursuant to Section 2.3(c)) been substituted for the
Estimated Closing Working Capital and the Estimated Closing Cash, respectively,
as of the Closing.

(i)If such substitutions would have resulted in a Purchase Price (the “Adjusted
Purchase Price”) that is less than the Purchase Price that was paid on the
Closing Date, then Seller and Purchaser shall deliver a joint written
authorization to the Escrow Agent within two (2) Business Days from the date on
which the Final Closing Working Capital and the Final Closing Cash are finally
determined, authorizing the Escrow Agent to release from the Working Capital
Escrow Account (i) to Purchaser an amount in cash equal to such shortfall and
(ii) to Seller the remainder, if any, of the funds in the Working Capital Escrow
Account; provided that if the Working Capital Escrow Account is reduced to zero
($0) and an amount remains outstanding to Purchaser under this Section 2.3(e),
then the Seller and Purchaser shall deliver a joint written authorization to the
Escrow Agent to release from the Indemnity Escrow Account the amount of such
remaining obligation.  The amount payable to Purchaser after the Closing
pursuant to this Section 2.3 shall be limited solely to the available funds in
the Working Capital Escrow Account and, if applicable, the Indemnity Escrow
Account.

(ii)If the Adjusted Purchase Price is greater than the Purchase Price that was
paid on the Closing Date, then, within two (2) Business Days from the date on
which the Final Closing Working Capital and the Final Closing Cash are finally
determined, (i) Purchaser shall pay, or cause to be paid, to Seller an amount in
cash equal to such excess by wire transfer of immediately available funds to an
account or accounts designated in writing by Seller to Purchaser prior to the
date such payment is due hereunder, and (ii) Seller and Purchaser shall deliver
a joint written authorization to the Escrow Agent authorizing the Escrow Agent
to release to Seller all of funds in the Working Capital Escrow Account.

(iii)If the Adjusted Purchase Price is equal to the Purchase Price that was paid
on the Closing Date, there will be no adjustment to the Purchase Price pursuant
to this Section 2.3(e).

ARTICLE III

CLOSING

3.1Closing Date.  Subject to the satisfaction of the conditions set forth in
Sections 8.1 and 8.2 hereof (or the waiver thereof by the party entitled to
waive that condition), the consummation of the Share Sale as contemplated hereby
(the “Closing”) shall take place at the offices of Locke Lord LLP located at
111 Huntington Avenue, Boston, Massachusetts (or at such other place as the
parties may designate in writing) at 10:00 a.m. (Boston time) on a date to be
specified by the parties, which date shall be the later of (a) the third
Business Day after the satisfaction or waiver of the conditions to the Closing
set forth in Sections 8.1 and 8.2 hereof, and (b) the earlier of (i) a date
during the Marketing Period to be specified by Purchaser on no fewer than two
(2) Business Days’ notice to the Seller and (ii) the first Business Day
following the final day of the Marketing Period, unless another time and/or date
are

 

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agreed to in writing by the parties hereto.  The date on which the Closing shall
be held is referred to in this Agreement as the “Closing Date”.

3.2Deliveries by Seller.  At the Closing, Seller shall deliver or cause to be
delivered to Purchaser the following items:

(a)Stock certificates representing the Shares, with duly executed stock powers
attached in proper form for transfer;

(b)A certificate of an officer of each Company, given by him or her on behalf of
such Company and not in his or her individual capacity, certifying as to the
resolutions of the Board of Directors of such Company authorizing this Agreement
and the transactions contemplated hereby; and

(c)A certificate of an officer of Seller, given by him or her on behalf of
Seller and not in his or her individual capacity, certifying as to the
resolutions of the Board of Managers of Seller authorizing this Agreement and
the transactions contemplated hereby.

3.3Deliveries by Purchaser.  At the Closing, Purchaser shall deliver to Seller
the following items:

(a)The Estimated Purchase Price, paid in accordance with Section 2.2 to the
Persons specified by Seller in accordance therewith; and

(b)A certificate of an officer of Purchaser, given by him or her on behalf of
Purchaser and not in his or her individual capacity, certifying as to the
resolutions of the Board of Directors or comparable governing body of Purchaser
authorizing this Agreement and the transactions contemplated hereby.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANIES

The Companies hereby represent and warrant to Purchaser as of the date hereof as
hereafter set forth in this Article IV.  Each item disclosed in the schedules to
this Agreement (the “Disclosure Schedules”) shall constitute an exception to the
representations and warranties to which it makes reference and shall be deemed
to be disclosed with respect to each Disclosure Schedule to this Agreement
and/or representation and warranty herein given to which it relates, without the
necessity of repetitive disclosure or cross-reference, so long as such item is
fairly described and its applicability to such other representation or warranty
is reasonably apparent on the face of such disclosure.  The Disclosure Schedules
may include items or information that the Companies are not required to disclose
under this Agreement.  Disclosure of such items or information shall not affect,
directly or indirectly, the interpretation of this Agreement or the scope of the
disclosure obligations of the Companies under this Agreement, and inclusion of
information in the Disclosure Schedules shall not be construed as an admission
that such information is material.  Capitalized terms used and not otherwise
defined in the Disclosure Schedules shall have the meanings specified in this
Agreement.

4.1Organization and Good Standing.  Each Latisys Company is a corporation or
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate or
limited liability company, as applicable, power and authority to own, lease and
operate its properties and to carry on its business as now conducted.  Each
Latisys Company is duly qualified or authorized to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in which
it owns or leases real property and each other jurisdiction in which the conduct
of its business or the ownership of its properties requires such qualification
or authorization, except where the failure to be so qualified, authorized or in
good standing would not reasonably be expected to have a Material Adverse
Effect.    The Companies have delivered or otherwise made available to Purchaser
or its representatives true, correct and complete copies of (a) each Latisys
Company’s certificate of incorporation and bylaws, or other equivalent
organizational documents, as in effect on the date of this Agreement, (b) minute
books, and (c) equity transfer records or other comparable ownership or
membership records.  Such books and records reflect the formal meetings of the
stockholders or members, as applicable, of each Latisys Company, the boards of
directors and any committees, or comparable bodies, and such minutes contained
therein accurately reflect the events of and actions taken at such meetings in
all material respects.  Such ownership records accurately reflect all issuances,
transfers, and cancellations of shares of stock, or other comparable equity
interests, of each Latisys Company.  None of the Latisys Companies is in
violation of any of the material provisions of its respective certificate of
incorporation and bylaws, or other equivalent organizational documents.

 

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4.2Authorization of Agreement.  Each Company has all requisite power and
authority to execute and deliver this Agreement and each other agreement,
document, or instrument or certificate contemplated by this Agreement or to be
executed by such Company in connection with the consummation of the transactions
contemplated by this Agreement (the “Company Documents”), and to consummate the
transactions contemplated hereby and thereby.  The execution, delivery and
performance by the Companies of this Agreement and the Company Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of each Company.  No
other proceeding on the part of any Company is necessary to authorize this
Agreement and the other Company Documents to which such Company is a party, for
such Company to perform its respective obligations hereunder or thereunder, or
for such Company to consummate the transactions contemplate hereby and
thereby.  This Agreement has been, and each of the Company Documents will be at
or prior to the Closing, duly and validly executed and delivered by the
Companies and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto other than the Seller) this Agreement
constitutes, and each of the Company Documents when so executed and delivered
will constitute, a legal, valid and binding obligation of each Company,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).

4.3Conflicts; Consents of Third Parties.

(a)Except as set forth on Schedule 4.3, the execution, delivery and performance
by each Company of this Agreement or the Company Documents does not, and the
consummation of the transactions contemplated hereby or thereby, or compliance
by each Company with any of the provisions hereof or thereof, will not (i)
conflict with or result in any violation of or default (with or without notice
or lapse of time, or both) under any provision of (A) the certificate of
incorporation and by-laws of such Company or (B) any Material Contract to which
any Latisys Company or by which any of the properties or assets of any Latisys
Company are bound; (ii) result in the creation of any Lien upon any properties
or assets of any Latisys Company or give to any Person any right of termination,
amendment, acceleration or cancellation of, any Material Contract; or (iii)
subject to obtaining the Consents, providing notice to or making the
registrations, declarations or filings set forth in Section 4.3(b), violate any
applicable Law binding upon any Latisys Company or by which a material portion
of any Latisys Company’s assets are bound.

(b)No Consent, Order or Permit of, or declaration or filing with,
or notification to, any Governmental Body is required on the part of any Latisys
Company in connection with the execution, delivery and performance of this
Agreement or the Company Documents or the compliance by the Latisys Companies
with any of the provisions hereof or thereof, or the consummation of the
transactions contemplated hereby or thereby, except for (i) compliance with the
applicable requirements of the HSR Act, and (ii) such Consents, Orders or
Permits that, if not obtained, would not reasonably be expected to have a
Material Adverse Effect.

4.4Capitalization.

(a)The authorized capital stock of each Company consists of three thousand
(3,000) shares of common stock, $0.01 par value per share (the “Common
Stock”).  There are one hundred (100) shares of Common Stock of each Company
issued and outstanding and held beneficially and of record by Seller, and no
shares of Common Stock are held by any Company as treasury stock.  All of the
issued and outstanding shares of Common Stock of each Company have been duly
authorized for issuance, are validly issued, fully paid and non-assessable, and
were issued in compliance with all applicable federal and state securities laws
and are referred to in this Agreement as the “Shares”.  No shares of Common
Stock have been issued or transferred in violation of any rights, agreements,
commitments or arrangements under applicable Law, the certificate of
incorporation or bylaws of any Company or any contract to which such Company is
a party or by which it is bound.

(b)There is no existing option, warrant, call, right, or Contract of any
character to which any Company or the Seller is a party requiring, and there are
no securities of any Company outstanding that upon conversion or exchange would
require, the issuance of any shares of capital stock of such Company or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase shares of capital stock of such Company.  No Company
or the Seller is a party to any voting trust or other Contract with respect to
the voting, redemption, sale, transfer or other disposition of the capital stock
of such Company.

4.5Subsidiaries.

(a)Schedule 4.5(a) sets forth the name of each Company Subsidiary, together with
each Company Subsidiary’s record and beneficial owner and authorized and issued
outstanding capital stock or other equity securities, as applicable.  Except as
set forth on Schedule 4.5(a), the Companies do not own, directly or indirectly,
any capital stock or other equity securities in any Person.  All of the issued
and outstanding shares of (i) capital stock of the Company Subsidiaries that are
corporations have been duly authorized for issuance, are validly issued, fully
paid and non-assessable, and were issued in compliance with all applicable
federal and state securities laws and (ii) equity securities of the Company
Subsidiaries that are limited liability companies have been

 

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duly authorized and validly issued, and were issued in compliance with all
applicable federal and state securities laws.  All of the issued and outstanding
shares of capital stock or equity securities, as applicable, of each Company
Subsidiary are owned, directly or indirectly, by the Companies, free and clear
of all Liens (other than Liens under the Credit Facilities that will be
terminated at Closing in connection with the consummation of the transactions
contemplated by this Agreement) and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such equity or
voting interest) that would prevent such Company Subsidiary from conducting its
business in substantially the same manner such business is conducted on the date
hereof.  No shares of capital stock or other equity securities, as applicable,
have been issued or transferred in violation of any rights, agreements,
commitments or arrangements under applicable Law, the certificate of
incorporation or bylaws of any Company Subsidiary or any contract to which such
Company Subsidiary is a party or by which it is bound.

(b)There is no existing option, warrant, call, right, or Contract of any
character to which any Company Subsidiary is a party requiring, and there are no
securities of any Company Subsidiary outstanding that upon conversion or
exchange would require, the issuance of any shares of capital stock of such
Company Subsidiary or other securities convertible into, exchangeable for or
evidencing the right to subscribe for or purchase shares of capital stock of any
Company Subsidiary.  No Company Subsidiary is a party to any voting trust or
other Contract with respect to the voting, redemption, sale, transfer or other
disposition of the capital stock of such Company Subsidiary.

4.6Financial Statements.  The Companies have delivered to Purchaser true and
complete copies of (i) the audited consolidated balance sheets of Seller and the
Latisys Companies as at December 31, 2012 and December 31, 2013 and the related
audited statements of income of Seller and the Latisys Companies for the years
then ended and (ii) the unaudited consolidated balance sheet of Seller and the
Latisys Companies as at November 30, 2014 (the “Interim Balance Sheet”; and
November 30, 2014 is referred to as the “Balance Sheet Date”) and the related
unaudited consolidated statements of income of Seller and the Latisys Companies
for the eleven (11)-month period then ended (such unaudited statements,
including the related notes and schedules thereto, are referred to herein as the
“Financial Statements”).  Except as set forth in the notes thereto and as
disclosed in Schedule 4.6, each of the Financial Statements has been prepared in
accordance with GAAP consistently applied and presents fairly in all material
respects the financial position, results of operations and cash flows of Seller
and the Latisys Companies as at the dates and for the periods indicated therein;
provided that the Financial Statements described in clause (ii) are subject to
adjustments with respect to depreciation and amortization, normal year-end
adjustments and lack footnotes and other non-material presentation items.  As of
the date of this Agreement, none of the Latisys Companies have received any
material written complaint or allegation regarding deficient accounting
practices, procedures or methods of the Latisys Companies or their internal
accounting controls, it being understood and agreed, for clarity, that the
foregoing shall not apply to any notes or recommendations contained in audit
letters and reports that have been made available to Purchaser prior to the date
hereof.  During the periods covered by the Financial Statements, the Seller has
not conducted operations, and has had no material liabilities or assets, other
than the Shares, cash and cash equivalents, and intercompany loans which are no
longer outstanding as of the date hereof.

4.7No Undisclosed Liabilities.  The Latisys Companies do not have any material
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise, whether known or unknown, that would have been required to be
reflected in, reserved against or otherwise described on the Interim Balance
Sheet or in the notes thereto in accordance with GAAP and were not so reflected,
reserved against or described, other than (i) liabilities incurred in the
Ordinary Course of Business after the Balance Sheet Date, and (ii) Liabilities
incurred in connection with the transactions contemplated hereby.  The Latisys
Companies do not have any indebtedness other than the Company Indebtedness
included in the Financial Statements.

4.8Absence of Certain Developments.  Except as contemplated by this Agreement or
as set forth on Schedule 4.8, since the Balance Sheet Date (i) the Latisys
Companies have conducted their respective businesses only in the Ordinary Course
of Business, (ii) there has not been any event, change, occurrence or
circumstance that has had or is reasonably likely to have a Material Adverse
Effect, (iii) none of the Latisys Companies have suffered any loss, damage,
destruction or other casualty affecting any of their material properties or
assets, whether or not covered by insurance, and (iv) none of the Latisys
Companies have taken any action that, if taken after the date of this Agreement,
would constitute a breach of any of the covenants set forth in Section 7.2.

4.9Taxes.  Except as set forth on Schedule 4.9:

(a)Each Latisys Company has timely filed all income Tax Returns and all other
material non-income Tax Returns and reports required to be filed by it, and all
Taxes shown as due thereon have been paid or reserved for.  Any requests for
extensions to file such Tax Returns or reports have been timely filed, granted
and have not expired, except to the extent that such failures to file, to pay or
to have extensions granted that remain in effect individually or in the
aggregate have not had and would not reasonably be expected to have a Material
Adverse Effect, and the Financial Statements reflect an adequate reserve for all
Taxes payable by each Latisys Company for all taxable periods and portions
thereof through the date of such Financial Statements and the Taxes due and
payable will not exceed that reserve as adjusted for operations and transactions
through the Closing Date in the ordinary course of business and in accordance
with the past custom and practice of such Latisys Company in filing Tax
Returns.  All

 

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material Taxes required to be withheld by each Latisys Company have been
withheld and have been (or will be) duly and timely paid to the proper Taxing
Authority.  There are no Liens for Taxes upon any Latisys Company’s assets,
other than Permitted Liens.  No Latisys Company is required to include any item
of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any: change in method of accounting made prior to the Closing Date, including
under Section 481 of the Code, closing agreement as described in Section 7121
(or any similar provision of state, local, or foreign Tax law) executed prior to
the Closing Date, installment sale or open transaction disposition made prior to
the Closing Date, or prepaid amount received prior to the Closing Date.

(b)None of the Tax Returns filed by any Latisys Company or Taxes payable by any
Latisys Company have been the subject of an audit, action, suit, proceeding,
claim, examination, deficiency or assessment by any Taxing Authority within the
past three (3) years, and no such audit, action, suit, proceeding, claim,
examination, deficiency or assessment is currently pending or, to the Knowledge
of the Companies, threatened.  None of the Latisys Companies has waived any
statute of limitation with respect to any Tax or agreed to any extension of time
with respect to a Tax assessment or deficiency that remains outstanding.

(c)The Latisys Companies have not been members of any Consolidated Group other
than a group the common parent of which was a Latisys Company.  No Latisys
Company is liable for the Taxes of any person under any Tax sharing, Tax
allocation, Tax gross-up or similar agreement or arrangement, other than
agreements in the nature of leases, licenses, loan agreements or similar
agreements entered into in the ordinary course of business and the primary
subject of which is not Taxes.

(d)The representations and warranties set forth in this Section 4.9 are the sole
and exclusive representations and warranties hereunder pertaining or relating to
Tax matters, and no other representation or warranty set forth herein shall be
read or construed so as to address Tax matters.

4.10Assets.  The Latisys Companies own, lease or have the legal right to use all
of the material properties and assets used in the conduct of their business (all
such material properties and assets of the Latisys Companies, being the
“Assets”).  The Latisys Companies have good title to, or, in the case of leased
Assets, valid and subsisting leasehold interests in, all of their respective
Assets, free and clear of all Liens, except for Permitted Liens and Liens
securing Company Indebtedness.  Such Assets are sufficient and adequate to
conduct the operations of the business of the Latisys Companies as currently
conducted, are in all material respects in reasonable operating condition and
repair, normal wear and tear excepted, are compliant in all material respects
with applicable certifications and are suitable for the purposes for which they
are currently used.

4.11Intellectual Property.

(a)Schedule 4.11 lists all Registered Intellectual Property and all material
unregistered Intellectual Property owned by any Latisys Company.  Except as set
forth on Schedule 4.11, all such Registered Intellectual Property and material
unregistered Intellectual Property is owned solely by one of the Latisys
Companies.  Schedule 4.11 sets forth a complete list of all licenses to
Intellectual Property to which any Latisys Company is a party (the “Licenses”),
excluding non-exclusive licenses to “off the shelf” or commercially available
software.  Such Licenses are in full force and effect and no material default
exists on the part of the Latisys Company party thereto or, to the Knowledge of
the Companies, on the part of the other parties thereto.  The Latisys Companies
own, license or otherwise have a valid and enforceable right to use, develop,
make, offer for sale, sell, import, copy, distribute, license, or dispose of all
Intellectual Property used in and necessary for the Latisys Companies to conduct
their business and operations as currently conducted.  None of such Intellectual
Property is subject to any licensing terms requiring the distribution of source
code in connection with the distribution of any portion of such Intellectual
Property or that prohibits the Latisys Companies from charging a fee or
otherwise limits the Latisys Companies freedom of action with regard to seeking
compensation in connection with sublicensing or distributing any portion of such
Intellectual Property or similar obligations that require the disclosure,
redistribution or licensing of any source code underlying any such Intellectual
Property. To the Knowledge of the Companies, the conduct of the Latisys
Companies’ business as it is currently conducted does not infringe or
misappropriate the Intellectual Property existing as of the date hereof of any
third party.  There are no current or, to the Knowledge of the Companies,
threatened claims by any third party that one of the Latisys Companies has
infringed, violated, or misappropriated the Intellectual Property of such third
party.  To the Knowledge of the Companies, there is no continuing infringement,
violation or misappropriation by any third party of any Intellectual Property
owned by or exclusively licensed to any Latisys Company.

(b)The Latisys Companies own or have rights to access and use, all computer
systems (including all computer programs, software, databases, firmware,
hardware and related documentation) and Internet websites and related content
(collectively, “IT Systems”) used to process, store, maintain and operate data,
information and functions used in connection with the business of the Latisys
Companies as currently conducted.  The Latisys Companies have taken all
commercially reasonable steps to secure the IT Systems from unauthorized access
or use by any Person and to ensure the continued, uninterrupted and error-free
operation of the IT Systems.  The IT Systems are adequate in all material
respects for their current intended use and for the operation of the business of
the Latisys Companies as currently operated, and are in good working condition
(normal wear and tear excepted), and, to the

 

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Knowledge of the Companies, are free of all viruses, worms, Trojan horses, bugs,
errors or problems of a nature that would materially disrupt their operation or
have a material adverse impact on the operation of the IT Systems.

(c)The Latisys Companies are in material compliance with, and during the past
three (3) years have complied in all material respects with, all applicable Laws
and applicable privacy policies of the Latisys Companies relating to the use,
collection, storage, disclosure and transfer of any personally identifiable
information collected or obtained in the conduct of the business of the Latisys
Companies.  During the past three (3) years, none of the Latisys Companies have
received any written notice or claim that the Latisys Companies’ use,
collection, storage, disclosure or transfer of personally identifiable
information or other data is or may be in material violation of applicable Laws.
The execution, delivery and performance of this Agreement and the transactions
contemplated hereby will not result in any material violation of the Latisys
Companies’ privacy policies or any applicable Laws governing the acquisition,
sharing, use or security from unauthorized disclosure of personally identifiable
information.

(d)Each product or service of the Latisys Companies that is currently
commercially available conforms in all material respects with its documentation.

4.12Material Contracts.

(a)Schedule 4.12 lists the following Contracts to which a Latisys Company is a
party or by which it is bound (collectively, the “Material Contracts”) a true
and complete copy of each of which has been made available to Purchaser:

(i)Contracts with any current officer or director, any direct or indirect
shareholder or Affiliate of any Latisys Company other than any Contracts that
will be terminated simultaneously with the Closing without liability or any
ongoing obligation to any Latisys Company;

(ii)Contracts with any labor union or association representing any Business
Employee;

(iii)Contracts for the pending sale of any of the Assets of any Latisys Company
other than in the Ordinary Course of Business, for consideration in excess of
$250,000;

(iv)Contracts granting a Lien upon any Assets or relating to the Company
Indebtedness, the borrowing of money, or the making of any loans, in each case
involving amounts in excess of $250,000;

(v)management agreements or Contracts for the employment of any director,
officer, Business Employee or other Person on a full-time, part-time,
consulting, agency, sales representative, independent contractor or other basis
(A) providing annual base cash compensation in excess of $100,000, and which
cannot be terminated without penalty upon ninety (90) days (or less) written
notice, (B) providing for the payment of any cash or other compensation or
benefits upon the consummation of the transactions contemplated hereby or (C)
containing noncompete, nondisclosure, or confidentiality provisions (other than
customer Contracts entered into the Ordinary Course of Business);

(vi)Contracts for services, other vendor or buy-side arrangements or Contracts
for the purchase, rental or use of real property or personal property, including
equipment, vehicles, and other personal property or fixtures, in each case
pursuant to which a Latisys Company has ongoing or future payment obligations of
greater than $500,000 annually, except for any such Contracts that can be
terminated without penalty upon ninety (90) days (or less) written notice;

(vii)Contracts (A) restricting any Latisys Company from engaging in any line of
business or competing with any Person or in any geographical area or from freely
setting prices for its products, services or technologies (including most
favored customer pricing provisions), (B) granting any exclusive rights, rights
of refusal, rights of first negotiation or similar rights to any party or (C)
containing any revenue sharing or earnout provision (other than agreements
entered into in the Ordinary Course of Business providing for the payment of
bonuses or commissions (including commissions payable to the referral
partners));

(viii)Contracts for the thirty (30) largest customers as of the date hereof,
based on monthly recurring revenues;

(ix)the Real Property Leases;

 

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(x)joint venture or partnership agreements;

(xi)Contracts pursuant to which any Latisys Company provides indemnification of
any Person with respect to any product or service offered by such Latisys
Company or with respect to losses relating to any current or former business of
any Latisys Company (other than standard indemnification provisions entered into
in the Ordinary Course of Business and other than indemnification arrangements
contained in customer Contracts); and

(xii)Contracts relating to the acquisition of an equity interest in, or all or
substantially all of the assets or business of, any other Person, under which
there remain material obligations of any Latisys Company to be performed after
the Closing Date (for clarity, excluding purchases of Owned Real Property and
excluding obligations with respect to “fundamental” representations that survive
the closing under such Contracts, except to the extent that an unresolved claim
has been made with respect thereto).

(b)Except as set forth on Schedule 4.12, all Material Contracts are valid,
binding and enforceable in accordance with their terms against the Latisys
Companies, as applicable, and to the Knowledge of the Companies, each other
party thereto, and are in full force and effect.  No Latisys Company has
received any written notice that any party to a Material Contract intends to
cancel, terminate, materially modify or refuse to perform such Material Contract
or of any default or breach by any Latisys Company under any Material Contract,
except for defaults that have been cured or otherwise would not reasonably be
expected to result in any material Damages to a Latisys Company.  Each Latisys
Company, as applicable, has performed all material obligations imposed on it
under such Material Contracts, and none of the Latisys Companies, nor any other
party thereto is in material default thereunder, nor is there any event that
with notice or lapse of time, or both, (A) would constitute a material default
by any Latisys Company or, to the Knowledge of the Companies, any other party
thereunder, (B) would allow or give rise to the limitation, revocation,
modification, or termination of any Material Contract, or (C) would result in
the impairment of any material rights of any Latisys Company under any Material
Contract; nor has any Latisys Company received any written notice regarding the
matters described in (A) through (C).  Accurate and complete copies of each
written Material Contract (and written summaries of the terms of any oral
Material Contract) have been delivered or otherwise made available to Purchaser.

4.13Employee Benefits Plans.

(a)Schedule 4.13(a) lists each “employee benefit plan” (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)) and any other material employee benefit plan or agreement sponsored
and maintained by any Latisys Company for the benefit of any Business Employee
(including their eligible dependents and beneficiaries) (each, a “Company
Benefit Plan”).  Each Latisys Company has made available to Purchaser correct
and complete copies of (i) each Company Benefit Plan (or, in the case of any
such Company Benefit Plan that is unwritten, descriptions thereof), (ii) the
most recent annual reports on Form 5500 required to be filed with the IRS with
respect to each Company Benefit Plan (if any such report was required), (iii)
the most recent summary plan description for each Company Benefit Plan for which
such summary plan description is required and (iv) each trust agreement and
insurance or group annuity contract relating to any Company Benefit Plan.  Each
Company Benefit Plan has been administered in all respects in accordance with
its terms and the applicable provisions of ERISA, the Code and all other
applicable Laws, except for any noncompliance that would not reasonably be
expected to have a Material Adverse Effect, and the Latisys Companies have
performed and complied in all material respects with all of their obligations
under or with respect to each Company Benefit Plan.

(b)(i) Each Company Benefit Plan that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service or is comprised of a master or prototype plan that has
received a favorable opinion letter from the IRS, and (ii) no event has occurred
since the date of the most recent determination letter or application therefor
relating to any such Company Benefit Plan that would reasonably be expected to
adversely affect the qualified status of such Company Benefit Plan.

(c)None of the Company Benefit Plans is subject to Title IV of ERISA or the
minimum funding requirements of Section 412 of the Code or Section 302 of
ERISA.  None of the Company Benefit Plans is a “multiemployer plan” within the
meaning of Section 3(37) of ERISA.

(d)The representations and warranties set forth in this Section 4.13 are the
sole and exclusive representations and warranties pertaining or relating to
employee benefit matters, and no other representation or warranty set forth
herein shall be read or construed as to address employee benefit matters.

 

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4.14Labor; Business Employees.  With respect to the Business Employees:

(a)No Latisys Company is a party to any labor or collective bargaining
agreement.

(b)There are no (i) strikes, work stoppages, work slowdowns or lockouts existing
or, to the Knowledge of the Companies, threatened in writing against or
involving the Business Employees, or (ii) unfair labor practice charges,
grievances or complaints pending or, to the Knowledge of the Companies,
threatened in writing by or on behalf of any Business Employee or group of
Business Employees, except in each case as would not reasonably be expected to
have a Material Adverse Effect.

(c)Attached as Schedule 4.14(c) is a list as of the date hereof of (i) all
Business Employees whose base salary is in excess of $150,000 or whose aggregate
wages (on an annualized basis through December 31, 2014) exceed $250,000, and
(ii) such Business Employees’ rate of base salary or hourly wage compensation as
of the date hereof.

4.15Litigation.  Except as set forth on Schedule 4.15, as of the date hereof
there are no Legal Proceedings pending or, to the Knowledge of the Companies,
threatened against any Latisys Company before any Governmental Body, nor, to the
Knowledge of the Companies, are there any pending or threatened investigations
relating to any Latisys Company before any Governmental Body.  No Latisys
Company is subject to any outstanding Order.

4.16Compliance with Laws; Permits.

(a)The Latisys Companies are in compliance in all material respects with all
Laws of any Governmental Body applicable to its businesses or operations.  As of
the date hereof, no Latisys Company has received any written notice of or been
charged with the violation of any Laws, and, to the Knowledge of the
Companies,  no investigation or review by any Governmental Body with respect to
any Latisys Company is pending or threatened.

(b)The Latisys Companies have all material Permits that are required for the
lawful operation of their businesses as presently conducted.  No Latisys Company
is in material default or violation (and no event has occurred that, with notice
or the lapse of time or both, would constitute a default or violation) of any
term, condition or provision of any material Permit to which it is a party.

4.17Environmental Matters.  The representations and warranties set forth in this
Section 4.17 are the sole and exclusive representations and warranties hereunder
pertaining or relating to any environmental, health or safety matters, including
any arising under any Environmental Laws, and no other representation or
warranty set forth herein shall be read or construed as to address
environmental, health or safety matters.  Except as set forth on Schedule 4.17
hereto:

(a)the operations of the Latisys Companies are in compliance in all material
respects with all Environmental Laws applicable to their Owned Real Property,
Leased Real Property, all buildings, structures and fixtures thereon, operations
at and occupation of the Real Property, which compliance includes obtaining,
maintaining and complying with any material Permits required under applicable
Environmental Laws necessary to operate its business as currently conducted;

(b)none of the Latisys Companies are, or have been, the subject of any Order of
any Governmental Body respecting (i) Environmental Laws, (ii) Remedial Action or
(iii) any Release or threatened Release of a Hazardous Material;

(c)none of the Latisys Companies has received written notice from any
Governmental Body regarding any actual or alleged violation of or liability
under Environmental Law;

(d)the Latisys Companies are not subject to any pending or, to the Knowledge of
the Companies, threatened claim alleging that the Latisys Companies may be in
violation of any Environmental Law or any Environmental Permit or may have any
liability under any Environmental Law; and

(e)to the Knowledge of the Companies, there are no pending or threatened
investigations of the business of any Latisys Company, or any currently or
previously owned or leased property of any Latisys Company under Environmental
Laws, which would reasonably be expected to result in such Latisys Company
incurring any material liability pursuant to any Environmental Law as a result
of any action taken by any Latisys Company.

 

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4.18Real Property.

(a)Owned Real Property.  A Latisys Company owns each parcel of real property set
forth on Schedule 4.18(a) (the “Owned Real Property”).  A Latisys Company holds
sole and valid title to the Owned Real Property, free and clear of all Liens,
other than Permitted Liens.  Except as set forth on Schedule 4.18(a), the Owned
Real Property is not subject to any option, lease, license, sublease or other
similar agreement granting to any third party any right to use, occupy or enjoy
any portion of the Owned Real Property or to obtain title to any portion of the
Owned Real Property.  To the Knowledge of the Companies, no condemnation,
requisition or taking by any public authority has been threatened or
contemplated, and no Latisys Company has received any written notice of any such
condemnation, requisition or taking by a Governmental Body with respect to any
part of the Owned Real Property that is material to the Latisys Companies or the
operation or use of such Owned Real Property (as currently operated or
used).  To the Knowledge of the Companies, all improvements on the Owned Real
Property were constructed in compliance in all material respects with applicable
Laws affecting such Owned Real Property.  Each structure and fixture on the
Owned Real Property is, to the Knowledge of the Companies, structurally sound
with no known structural defects, and in good operating condition and repair
(normal wear and tear excepted) and is sufficient for the operation of the
Latisys Companies, as such Owned Real Property is currently being operated by
the Latisys Companies.  The complete and accurate deeds with respect to the
Owned Real Property have been made available to Purchaser.

(b)Leased Real Property.  Schedule 4.18(b) includes a complete and accurate list
of all leases, subleases, licenses, or other occupancy agreements of the Latisys
Companies (the “Leased Real Property”), all of which is held under real property
leases (the “Real Property Leases”).  Schedule 4.18(b) includes list of all of
the Real Property Leases, complete and accurate copies of which have been made
available to Purchaser.  The activities carried on by a Latisys Company as
tenant under any of the Real Property Leases in all buildings, plants,
facilities, installations, fixtures and other structures or improvements
included as part of, or located on or at, the Real Property are not in material
violation of, or in material conflict with, any applicable Law (including,
zoning regulations or ordinances).  To the Knowledge of the Companies, the
buildings, plants, facilities, installations, fixtures and other structures or
improvements themselves included as part of, or located on or at, the Real
Property, and/or the Real Property, are not in material violation of, or in
material conflict with, any applicable Law (including, zoning regulations or
ordinances without any special exception or permit).  All covenants or other
restrictions (if any) to which the use by any Latisys Company of any of the Real
Property is subject are being in all material respects properly performed and
observed, and no Latisys Company has received any notice of any material
violation (or claimed violation) thereof.

(c)All the Real Property Leases are in full force and effect, valid and
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors’ rights generally and by limitations on the availability of equitable
remedies and by equitable principles.  There exist no material defaults on the
part of any Latisys Company under any Real Estate Lease nor any state of facts
which, upon notice or lapse of time, or both, would constitute a material
default under any Real Property Lease or, in either case, that would give the
other party thereto the right to terminate such Real Property Lease as a result
of such default.  Except for (i) customer agreements entered into in the
Ordinary Course of Business and (ii) the agreements set forth on
Schedule 4.18(c) hereto, no Latisys Company has entered into any lease of any of
the Leased Real Property where any Latisys Company is the lessor or sublessor or
is otherwise similarly situated.

(d)All material apparatus, equipment, appliances and other fixtures used in
connection with the operation of the Latisys Companies, including, generators,
chillers, power distribution units, static transfer switches, racks and computer
air conditioners, have been operated, maintained, repaired and replaced in
accordance with the Companies’ Ordinary Course of Business.

(e)During the past three (3) years, except as disclosed on Schedule 4.18, the
Latisys Companies’ datacenters have not: (i) experienced any material
interruption in the provision of services to customers at the datacenters or
(ii) experienced any material security breaches at any of the datacenters.

(f)To the Latisys Companies Knowledge, there is no circumstance anticipated by
any Latisys Company or threatened against any Latisys Company, which would or
may result in the termination or impairment of access to and/or from the Owned
Real Property and Leased Real Property, and no Latysis Company is in violation
of any material easement, right-of-way, condition, covenant, or restriction,
license or other agreement burdening or benefitting any Owned Real Property or
Leased Real Property.

4.19Financial Advisors.  Except for DH Capital, LLC and Bank Street Group, Inc.,
no Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Latisys Companies in connection with the transactions
contemplated by this Agreement and no Person is entitled to any fee or
commission or like payment from Purchaser in respect thereof.

 

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4.20Banks; Powers of Attorney.  Schedule 4.20 lists the names and locations of
all banks in which any Latisys Company has accounts or safe deposit boxes and
the names of all persons authorized to draw thereon or to have access
thereto.  Except as set forth on Schedule 4.20, no person holds a power of
attorney to act on behalf of any Latisys Company.

4.21Insurance.  Schedule 4.21 lists all material insurance policies and fidelity
bonds for the current policy year maintained by any Latisys Company as of the
date hereof, with respect to the Latisys Companies’ businesses (the
“Policies”).  Except as set forth on Schedule 4.21, no Latisys Company is in
material default with respect to the Policies, no Latisys Company has reached or
exceeded its policy limits for any Policy, and the Latisys Companies have not
received any written notice of a cancellation with respect to any of the
Policies.  There are no claims by any Latisys Company under any of the Policies
or bonds pending for amounts in excess of $250,000.  All premiums with respect
to the Policies covering all periods up to and including the Closing Date have
or will be paid as of the Closing Date.  The Seller has previously provided to
the Purchaser true and complete copies of all Policies, together with the claim
history during the period that is two years prior to the date of this Agreement
that could give rise to a claim for any Latisys Company.

4.22Transactions with Affiliates, Stockholders, Officers, Directors and
Others.  Except as set forth in Schedule 4.22 or with respect to any amounts to
be repaid or Contracts to be terminated at Closing, no Latisys Company has any
liabilities for indebtedness for borrowed money owing to any Affiliate,
director, officer, member, stockholder, consultant or Business Employee of such
Person (except for amounts due as normal salaries, wages, benefits or
reimbursements of ordinary business expenses).  Except with respect to any
amounts to be repaid prior to the Adjustment Time, no Affiliate, director,
officer, member, stockholder, consultant or Business Employee of any Latisys
Company now has, or on the Closing Date will have, any liability for any
indebtedness for borrowed money owing to any Latisys Company except for ordinary
business expense advances.  Except as set forth in Schedule 4.22, no officer,
director, shareholder, member, consultant, Business Employee or Affiliate of any
Latisys Company or any entity which any such Person or individual owns any
beneficial interest, is a party to any Contract or other transaction with any
Latisys Company that will survive Closing, or has any material interest in any
property used by any Latisys Company (including any Intellectual Property).

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents to Purchaser as follows as of the date of this
Agreement and as of the Closing Date:

5.1Organization and Good Standing.  It is a limited liability company duly
formed, validly existing and in good standing under the laws of Delaware and has
all requisite limited liability company power and authority to own the Shares
and to carry on its business as now conducted.

5.2Authorization of Agreement.  It has all requisite power, authority and legal
capacity to execute and deliver this Agreement and each other agreement,
document, or instrument or certificate contemplated by this Agreement or to be
executed in connection with the consummation of the transactions contemplated by
this Agreement (the “Seller Documents”), and to consummate the transactions
contemplated hereby and thereby.  The execution, delivery and performance by
Seller of this Agreement and each Seller Document, and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
limited liability company action on the part of Seller.  No other proceeding on
the part of Seller is necessary to authorize this Agreement and the other Seller
Documents to which Seller is a party, for Seller to perform its respective
obligations hereunder or thereunder, or for Seller to consummate the
transactions contemplate hereby and thereby.  This Agreement has been and each
Seller Document will be at or prior to the Closing, duly and validly executed
and delivered by Seller, and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto other than the Companies) this
Agreement constitutes, and each Seller Document when so executed and delivered
will constitute, the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).

5.3Conflicts; Consents of Third Parties.

(a)The execution, delivery and performance by Seller of this Agreement or the
Seller Documents, the consummation of the transactions contemplated hereby or
thereby, or compliance by Seller with any of the provisions hereof or thereof,
will not conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, any provision of (i) the
certificate of formation or operating agreement of Seller; (ii) any Contract or
Permit to which Seller is a party or by which any of the properties or assets of
Seller are bound; (iii) any Order of any Governmental Body applicable to Seller
or by which any of the properties or assets of Seller are bound; or (iv) any Law
applicable to Seller.

 

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(b)No Consent, Order or Permit of, or declaration or filing with,
or notification to, any Governmental Body is required on the part of Seller in
connection with the execution, delivery and performance of this Agreement or the
Seller Documents or the compliance by Seller with any of the provisions hereof
or thereof, or the consummation of the transactions contemplated hereby or
thereby, except for (i) compliance with the applicable requirements of the HSR
Act, and (ii) such Consents, Orders or Permits that, if not obtained, would not
reasonably be expected to have a Material Adverse Effect on Seller’s ability to
consummate the transactions contemplated hereby.

5.4Ownership.  Seller is the record and beneficial owner of all of the Shares,
free and clear of any and all Liens.  Seller has the right, authority and power
to sell, assign and transfer the Shares to Purchaser.  Upon delivery to
Purchaser of the stock certificates representing the Shares (with duly executed
stock powers attached in proper form for transfer) and Purchaser’s payment of
the Purchase Price, Purchaser shall acquire good, valid and marketable title to
the Shares, free and clear of any and all Liens.

5.5Financial Advisors.  Except for DH Capital, LLC and Bank Street Group, Inc.,
no Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Seller in connection with the transactions contemplated by this
Agreement and no Person is entitled to any fee or commission or like payment in
respect thereof.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows as of the date
hereof and as of the Closing Date:

6.1Organization and Good Standing.  Purchaser is a limited liability company
duly formed, validly existing and in good standing under the laws of the State
of Delaware and has all requisite limited liability company power and authority
to own, lease and operate its properties and carry on its business.

6.2Authorization of Agreement.  Purchaser has all requisite power and authority
to execute and deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
Purchaser in connection with the consummation of the transactions contemplated
hereby and thereby (the “Purchaser Documents”), and to consummate the
transactions contemplated hereby and thereby.  The execution, delivery and
performance by Purchaser of this Agreement and each Purchaser Document have been
duly authorized by all necessary limited liability company action on behalf of
Purchaser.  This Agreement has been, and each Purchaser Document will be at or
prior to the Closing, duly executed and delivered by Purchaser and (assuming the
due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each Purchaser Document when so
executed and delivered will constitute, the legal, valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).

6.3Conflicts; Consents of Third Parties.

(a)The execution and delivery by Purchaser of this Agreement or the Purchaser
Documents does not, and the consummation of the transactions contemplated hereby
or thereby, or compliance by Purchaser with any of the provisions hereof or
thereof will not, conflict with, or result in any violation of or default (with
or without notice or lapse of time, or both) under, any provision of (i) the
certificate of formation or operating agreement of Purchaser; (ii) any Contract
or Permit to which Purchaser is a party or by which any of the properties or
assets of Purchaser are bound; (iii) any Order of any Governmental Body
applicable to Purchaser or by which any of the properties or assets of Purchaser
are bound; or (iv) any Law applicable to Purchaser.

(b)No Consent, Order or Permit of, or declaration or filing with, or
notification to, any Governmental Body is required on the part of Purchaser in
connection with the execution and delivery of this Agreement or the Purchaser
Documents or the compliance by Purchaser with any of the provisions hereof or
thereof or the consummation of the transactions contemplated hereby or thereby,
except for (i) compliance with the applicable requirements of the HSR Act and
(ii) such Consents, Orders or Permits that, if not obtained, would not have a
material and adverse effect on Purchaser’s ability to consummate the
transactions contemplated hereby.

6.4Investment Intention.  Purchaser is acquiring the Companies pursuant to the
Share Sale for its own account, for investment purposes only and not with a view
to the distribution (as such term is used in Section 2(11) of the Securities Act
of 1933, as amended (the “Securities Act”) of the Companies’ capital
securities.  Purchaser understands that the Common Stock has not been

 

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registered under the Securities Act and cannot be sold under the Securities Act
unless subsequently registered under the Securities Act or an exemption from
such registration is available.  Purchaser has such knowledge and experience in
financial and business matters and investments in general that make it capable
of evaluating the merits and risks of this Agreement.  Purchaser acknowledges
that it has been afforded:  (a) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Latisys
Companies concerning the merits and risks of investing in the Latisys Companies;
(b) access to information about the Latisys Companies, its results of
operations, financial condition and cash flow, and its businesses generally, in
each case sufficient to Purchaser’s satisfaction to enable Purchaser to evaluate
whether or not to proceed with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby; and (c) the
opportunity to obtain such additional information that Purchaser believes is
necessary to make an informed investment decision with respect to the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.  Purchaser is an “accredited investor” within the meaning
of Regulation D promulgated under the Securities Act.

6.5Financial Advisors.  Except as set forth on Schedule 6.5 hereto, no Person
has acted, directly or indirectly, as a broker, finder or financial advisor for
Purchaser in connection with the transactions contemplated by this Agreement and
no Person is entitled to any fee or commission or like payment in respect
thereof.

6.6Financing.  Attached hereto as Exhibit B is a true, correct and complete
copies, as of the date of this Agreement, of an executed commitment letter (the
“Debt Commitment Letter”), pursuant to which the lenders party thereto
(collectively, the “Lenders”) have committed, subject to the terms and
conditions set forth therein, debt financing in the amounts set forth therein
for the purposes of financing the transactions contemplated by this Agreement
and related fees (being collectively referred to as the “Debt Financing”).  The
Debt Commitment Letter has not been amended or modified prior to the date of
this Agreement and as of the date of this Agreement, no such amendment or
modification is contemplated (other than amendments or modifications that are
permitted by Section 7.12), and as of the date of this Agreement, the respective
obligations and commitments contained in the Debt Commitment Letter have not
been withdrawn or rescinded in any respect.  Except for fee letters and
engagement letters with respect to the Debt Financing, as of the date hereof,
there are no side letters or agreements (whether written or oral) to which
Purchaser or any of its Affiliates is a party related to the funding or
investing, as applicable, of the Debt Financing that could affect the
availability of the Debt Financing, or which include conditions precedent to the
obligations of the parties thereunder, other than as expressly set forth in the
Debt Commitment Letter.  Purchaser has fully paid or caused to be fully paid any
and all commitment fees or other fees in connection with the Debt Commitment
Letter that are payable on or prior to the date hereof, and as of the date
hereof, the Debt Commitment Letter is in full force and effect and is the legal,
valid, binding and enforceable obligation of Purchaser, and, to the Knowledge of
Purchaser, each of the other parties thereto.  There are no conditions precedent
or other contingencies related to the funding of the full amount of the Debt
Financing, other than as expressly set forth in the Debt Commitment Letter.  As
of the date hereof, no event has occurred which, with or without notice, lapse
of time or both, would reasonably be expected to constitute a default or breach
on the part of Purchaser or, to the Knowledge of Purchaser, any other party
thereto under the Debt Commitment Letter.  As of the date hereof, Purchaser has
no reason to believe that any of the conditions to the Debt Financing
contemplated by the Debt Commitment Letter applicable to it will not be
satisfied.  Assuming the Debt Financing is funded in accordance with the Debt
Commitment Letter, Purchaser, in the aggregate and together with the available
cash and cash equivalents of Purchaser, has as of the date hereof, and will have
at and after the Closing funds sufficient to (i) pay the Purchase Price, (ii)
finance the repayment or refinancing of debt contemplated by this Agreement or
the Debt Commitment Letter, (iii) pay any and all fees and expenses required to
be paid by Purchaser in connection with the Share Sale and the Debt Financing,
and (iv) satisfy all of the other payment obligations of Purchaser contemplated
hereunder.

6.7Informed Decision.  Purchaser (i) has conducted its own independent review
and analysis of, and, based thereon, has formed an independent judgment
concerning, the business, assets, condition, operations and prospects of the
Latisys Companies, and (ii) has been furnished with or given access to such
documents and information about the Latisys Companies and their respective
businesses and operations as it and its representatives and advisors have deemed
necessary to enable it to make an informed decision with respect to the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby.  Purchaser has received all materials relating to the
business of the Latisys Companies that it has requested and has been afforded
the opportunity to obtain any additional information necessary to verify the
accuracy of any such information or to otherwise evaluate the merits of the
transactions contemplated hereby.  Seller and the Companies have answered to
Purchaser’s satisfaction all inquiries that Purchaser and its representatives
and advisors have made concerning the business of the Latisys Companies or
otherwise relating to the transactions contemplated hereby.  Purchaser
acknowledges that any announcement by Seller of its intention to sell the
Companies (as well as the execution of this Agreement and the consummation of
the transactions contemplated hereby) might affect one or more of the customer
relationships of the Latisys Companies, and that such effects do not and will
not constitute a breach of any of the Companies’ representations and warranties
in Article IV.

6.8Litigation.  There is no legal, administrative arbitral or other proceeding
by or before any Governmental Body or, to the knowledge of Purchaser, threatened
against Purchaser, nor to the knowledge of Purchaser is there any pending
investigation by any Governmental Body, which would give any third party the
right to enjoin or rescind the transactions contemplated hereby or

 

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otherwise prevent Purchaser from complying with the terms and provision of this
Agreement.  Purchaser shall promptly notify Seller if any change, event or
condition arises or occurs after the date hereof that would have made the
foregoing representation untrue had such change, event or condition arisen or
occurred on or prior to the date hereof or that could possibly materially delay
the Closing.

ARTICLE VII

COVENANTS

7.1Contact with Customers and Suppliers.  Notwithstanding anything to the
contrary contained herein, prior to the Closing, without the prior written
consent of Seller, which may be withheld for any reason, (i) Purchaser shall not
contact any suppliers to, or customers of, any Latisys Company, and (ii)
Purchaser shall have no right to perform invasive or subsurface investigations
of the properties or facilities of any Latisys Company.

7.2Conduct of the Business Pending the Closing.

(a)Prior to the Closing, except (i) as set forth on Schedule 7.2(a), (ii) as
required by applicable Law, (iii) as otherwise contemplated by this Agreement in
connection with, or in furtherance of, the consummation of the transactions
contemplated hereby (including any repayment and termination of the Credit
Facilities), or (iv) with the prior written consent of Purchaser (which consent
shall not be unreasonably withheld, delayed or conditioned), each Company shall:

(A)use commercially reasonable efforts to conduct the respective businesses of
the Latisys Companies only in the Ordinary Course of Business; and

(B)use commercially reasonable efforts to preserve the present business
operations, organization and goodwill of the Latisys Companies.

(b)Prior to the Closing, except (i) as set forth on Schedule 7.2(b), (ii) as
required by applicable Law, (iii) as otherwise contemplated by this Agreement in
connection with, or in furtherance of, the consummation of the transactions
contemplated hereby (including any repayment or termination of the Credit
Facilities), or (iv) with the prior written consent of Purchaser (which consent
shall not be unreasonably withheld, delayed or conditioned), no Company shall:

(A)transfer, pledge, encumber, issue, sell or dispose of any shares of capital
stock or other securities of any Latisys Company or grant options, warrants,
calls or other rights to purchase or otherwise acquire shares of the capital
stock or other securities of any Latisys Company;

(B)effect any recapitalization, reclassification or like change in the
capitalization of any Latisys Company;

(C)amend the certificate of incorporation or by-laws or similar governance
documents of any Latisys Company;

(D)mortgage, pledge or knowingly subject to any Lien, any of the Real Property
or Assets (whether tangible or intangible) of any Latisys Company, except for
Permitted Liens and Liens under the Credit Facilities that will be released at
or in connection with the Closing;

(E)other than in the Ordinary Course of Business, and except with respect to
matters addressed in subsection (G) below, acquire any material properties or
assets or sell, assign, license, transfer, convey, lease or otherwise dispose of
any of the Real Property or assets of any Latisys Company (except for the
purpose of disposing of obsolete or worthless assets or to the extent such
assets are replaced with like assets of equivalent value);

(F)other than in the Ordinary Course of Business, pay, discharge, cancel, settle
or compromise any material debt or claim or waive or release any material right
of any Latisys Company;

(G)enter into any commitment for capital expenditures of any Latisys Company in
excess of $1,000,000 for any individual project, other than (i) as contemplated
by the Latisys Companies’ current budget or (ii) related to Contracts with
customers;

 

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(H)enter into, modify or terminate any labor or collective bargaining agreement
of any Latisys Company or, through negotiations or otherwise, make any
commitment or incur any liability to any labor organizations;

(I)cause or allow any Latisys Company to enter into or agree to enter into any
merger or consolidation with any corporation or other entity, or acquire the
securities of any other Person, or enter into any joint venture;

(J)excluding any Company Closing Bonuses, increase the compensation of any
employee of a Latisys Company, make any material change in employee benefits or
other compensation arrangements affecting any employee of a Latisys Company, or
institute any new (or modify any existing) severance or termination pay
practices affecting any director, officer or employee of a Latisys Company,
provided that the foregoing restrictions shall not apply to performance bonuses
relating to the 2014 calendar year, to the extent accrued in the Closing Working
Capital and provided further that the foregoing restrictions shall only apply
between the date of this Agreement and the thirtieth (30th) day after the date
of this Agreement, it being understood and agreed that if the Closing has not
occurred as of such thirtieth (30th) day, the Latisys Companies shall thereafter
be entitled to take any of the foregoing actions in the Ordinary Course of
Business without the Purchaser’s consent;

(K)except as required by GAAP or by applicable Law, change any of the material
accounting principles or practices used by the Latisys Companies;

(L)(1) except with respect to Material Contracts with customers in the Ordinary
Course of Business, enter into or amend any Material Contract or (2) terminate,
breach, or waive any material right under, any Material Contract;

(M)make any settlement of or compromise any material Tax liability, file any
amendment to any Tax Return, change in any material respect any Tax election or
Tax method of accounting or make any new Tax election or adopt any new Tax
method of accounting, or consent to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes;

(N)other than Ordinary Course of Business borrowings under the Credit
Facilities, incur or assume any Indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become liable or responsible for the obligations
of any other Person or make any loans, advances or capital contributions to, or
investments in, any Person, including among the Latisys Companies;

(O)declare, set aside, make or pay any dividend or other distribution, payable
in assets or other securities, property or otherwise, with respect to any equity
interests of any Latisys Company; or

(P)agree to do anything prohibited by this Section 7.2.

7.3Regulatory Approvals.

(a)Purchaser, Seller and each of the Companies, as necessary, shall (i) make or
cause to be made all filings required of each of them or any of their respective
Subsidiaries or Affiliates under the HSR Act (and shall seek early termination
of the applicable waiting period thereunder) or other Antitrust Laws with
respect to the transactions contemplated hereby as promptly as practicable and,
in any event, within four (4) Business Days after the date of this Agreement in
the case of all filings required under the HSR Act, (ii) comply at the earliest
practicable date with any request under the HSR Act, the Sherman Act, as
amended, the Clayton Act, as amended, the Federal Trade Commission Act, as
amended, and any other United States federal or state or foreign Laws, Orders or
administrative or judicial doctrines that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade (collectively, the “Antitrust Laws”) for additional information,
documents, or other materials received by each of them or any of their
respective Subsidiaries from the FTC, the Antitrust Division of the United
States Department of Justice or any other Governmental Body in respect of such
filings or such transactions, and (iii) cooperate with each other in connection
with any such filing (including, to the extent permitted by applicable Law,
providing copies of all such documents to the non-filing parties prior to filing
and considering all reasonable additions, deletions or changes suggested in
connection therewith) and in connection with resolving any investigation or
other inquiry of any of the FTC, the Antitrust Division or other Governmental
Body under any Antitrust Laws with respect to any such filing or any such
transaction.  Each such party shall use its commercially reasonable efforts to
furnish to each other all information required for any application or other
filing to be made pursuant to any applicable Law in connection with the
transactions contemplated by this Agreement.  Each such party shall promptly
inform the other parties hereto of any oral communication with, and provide
copies of written communications with, any Governmental Body regarding any such
filings or any such transaction.  Purchaser shall pay all filing fees related to
the filings under the HSR Act.

 

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(b)Without limiting the foregoing, (i) the Companies, Seller, Purchaser and
their respective Affiliates shall not extend any waiting period or comparable
period under the HSR Act or other Antitrust Laws or enter into any agreement
with any Governmental Body not to consummate the transactions contemplated
hereby, except with the prior written consent of the other Parties, and (ii)
Purchaser agrees to take all actions that are necessary or reasonably advisable
or as may be required by any Governmental Body to expeditiously consummate the
transactions contemplated by this Agreement, including (A) selling, licensing or
otherwise disposing of, or holding separate and agreeing to sell, license or
otherwise dispose of, any entities, assets or facilities of any Latisys Company
after the Closing or any entity, facility or asset of Purchaser or its
Affiliates, (B) terminating, amending or assigning existing relationships and
contractual rights and obligations (other than terminations that would result in
a material liability resulting from a breach of a contractual obligation to a
third party) and (C) amending, assigning or terminating existing licenses or
other agreements (other than terminations that would result in a material
liability resulting from a breach of a license or such other agreement with a
third party) and entering into such new licenses or other agreements.

(c)In the event any Legal Proceeding or investigation by any Governmental Body
or other Person is commenced, under the Antitrust Laws or otherwise, that
questions the validity or legality of the transactions contemplated hereby or
seeks damages in connection therewith, the parties hereto will cooperate and use
commercially reasonable efforts to defend against such Legal Proceeding or
investigation and, if an Order is issued in any such Legal Proceeding, will use
commercially reasonable efforts to have such Order lifted, and to cooperate
reasonably regarding any other impediment to the consummation of the
transactions contemplated hereby.

(d)Purchaser shall promptly reimburse Seller and the Companies for any costs or
expenses incurred by them in connection with any inquiries by, or negotiations
with, a Governmental Body or any Legal Proceedings regarding any necessary
approvals under the Antitrust Laws, including without limitation costs and
expenses related to a “second request” under the Antitrust Laws.

7.4Further Assurances.  Purchaser, Seller and each of the Companies shall use
its commercially reasonable efforts to (i) take all actions necessary to
consummate the transactions contemplated by this Agreement and (ii) cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement.

7.5Confidentiality.  Purchaser acknowledges that the information provided to it
in connection with this Agreement and the transactions contemplated hereby is
subject to the terms of the Confidentiality Agreement between Purchaser and
Seller dated October 6, 2014 (the “Confidentiality Agreement”), the terms of
which are incorporated herein by reference.  Effective upon, and only upon, the
Closing Date, the Confidentiality Agreement shall terminate.  Following the
Closing, Seller shall not, and shall cause its Affiliates not to, disclose any
of the confidential information of the Latisys Companies.

7.6D&O Protections.

(a)From and after the Closing Date, the Latisys Companies shall honor all
existing obligations to reimburse, indemnify, defend and hold harmless, to the
fullest extent permitted under applicable Law, the individuals who on or prior
to the Closing Date were directors, officers or employees of any Latisys Company
(collectively, the “D&O Indemnitees”) with respect to all acts or omissions by
them in their capacities as such, or taken at the request of a Latisys Company,
at any time prior to the Closing Date.  Purchaser agrees that all rights of the
D&O Indemnitees to indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Closing Date as provided in the
respective certificate of incorporation or by-laws or comparable organizational
documents of any Latisys Company as now in effect, and any indemnification
agreements or arrangements of each Latisys Company shall survive the Closing
Date and shall continue in full force and effect in accordance with their
terms.  Such rights shall not be amended, or otherwise modified in any manner
that would adversely affect the rights of the D&O Indemnitees, unless such
modification is required by Law.

(b)From and after the Closing Date, the Latisys Companies shall cause the
certificate of incorporation and by-laws or comparable organizational documents
of the Latisys Companies to not be amended, repealed or otherwise modified in a
manner that would adversely affect the rights thereunder of the D&O Indemnitees.

(c)For six years following the Closing Date, Purchaser shall maintain in effect
insurance sufficient to cover the current directors’ and officers’ liability for
acts or omissions occurring prior to the Closing with respect to those persons
who are currently covered by any Latisys Companies’ directors’ and officers’
liability insurance policy on terms with respect to such coverage and amount no
less favorable to the Latisys Companies’ directors and officers currently
covered by such insurance than those of such policy in effect on the date
hereof.

 

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(d)The provisions of this Section 7.6:  (i) are for the benefit of, and shall be
enforceable by, each D&O Indemnitee, his or her heirs and his or her
representatives; and (ii) are in addition to, and not in substitution for, any
other rights to indemnification or contribution that any such person may have by
Contract or otherwise.  The D&O Indemnitees to whom this Section 7.6 applies
shall be third party beneficiaries of this Section 7.6.

(e)In the event that Purchaser or any of its successors or assigns
(i) consolidates with or merges into any other Person and is not the continuing
or surviving Person of such consolidation or merger; or (ii) transfers or
conveys all or substantially all of its properties and assets to any Person,
then, and in each such case, proper provision shall be made so that the
successors and assigns of Purchaser shall assume all of the obligations thereof
set forth in this Section 7.6.

(f)The obligations of Purchaser under this Section 7.6 shall not be terminated
or modified in such a manner as to adversely affect any D&O Indemnitee to whom
this Section 7.6 applies without the consent of the affected D&O Indemnitee.

7.7Public Announcements.  Between the date of this Agreement and the Closing
Date, except to the extent required by Law or the rules of the NYSE, none of the
Companies, Purchaser, or Seller shall issue, or cause to be issued, any press
release or public announcement of any kind concerning the transactions
contemplated hereby without the consent of the other parties hereto (which
consent shall not be unreasonably withheld, conditioned or delayed); and in the
event any such press release, public announcement or other disclosure is
required by Law or the rules of the NYSE, the parties will consult prior to the
making thereof and use their best efforts to agree upon a mutually satisfactory
text.

7.8Access and Information.

(a)From the date of this Agreement until the Closing, subject to Section 7.1 and
to reasonable rules, regulations and policies of Seller and any applicable Laws,
Seller shall (i) afford Purchaser and its representatives reasonable access,
during regular business hours and upon reasonable advance notice to Seller, to
the Latisys Companies and to the employees reasonably requested by Purchaser or
as specified by Seller in connection with each such visit; provided, however,
access to such employees will only be available upon reasonable notice to Seller
to the attention of both Peter Stevenson and Douglas Butler and at such times
and places as they shall determine in their reasonable discretion.  Any access
shall be conducted (i) under the supervision of Seller’s or its Affiliate’s
personnel, (ii) subject to all of the standard protocols and procedures of the
Latisys Companies, including the requirement that visitors be escorted at all
times, (iii) subject to any additional procedures required by any landlord, and
(iv) in such a manner as does not unreasonably interfere with the normal
operations of the Latisys Companies.  All such access shall be at the risk of
Purchaser and its representatives and agents, and in connection therewith,
Purchaser hereby agrees to indemnify and hold harmless Seller Indemnified
Parties with respect to any Losses resulting from or arising out of such access.

(b)Following the Closing and until any applicable statute of limitations
(including periods of waiver) has run, Purchaser agrees to retain all Books and
Records in existence on the Closing Date and to grant to Seller and its
representatives during regular business hours and upon reasonable advance notice
to Purchaser, the right, at the expense of Seller, (i) to inspect and copy the
Books and Records and (ii) to have personnel of Purchaser made available to them
or to otherwise cooperate to the extent reasonably requested by Seller,
including in connection with (A) preparing and filing Tax returns and/or any Tax
inquiry, audit, investigation or dispute, or (B) any litigation, audit, dispute,
claim or investigation.  No Books and Records shall be destroyed by Purchaser
without first advising Seller in writing and giving Seller a reasonable
opportunity to obtain possession thereof at Seller’s expense.

7.9Tax Matters.

(a)Preparation and Filing of Tax Returns.

(i)Between the date hereof and the Closing Date, the Seller shall prepare or
cause to be prepared on a timely basis and in a manner consistent with past
practice and file or cause to be filed on a timely basis all Tax Returns for the
Companies for taxable periods that are required to be filed on or before the
Closing Date.  With respect to consolidated, unitary, combined or similar Tax
Returns (the “Consolidated Tax Returns”) that include the Latisys Companies for
the period through the Closing Date, and with respect to any other Tax Returns
for a Latisys Company for any period that ends prior to the Closing Date and
that is not described in the preceding sentence, the Seller shall prepare on a
timely basis and in a manner consistent with past practice such Tax Returns and,
to extent required by the Code and the Treasury Regulations, include the income
of the Latisys Companies that is allocable to the taxable period that is deemed
to end as of Closing, and such Tax Returns shall be executed and filed by Seller
if the filing date is on or before the Closing Date and executed by Purchaser if
the filing date is after the Closing Date.

 

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(ii)Except as provided in Section 7.9(a)(i), Purchaser shall prepare or cause to
be prepared and file or cause to be filed on a timely basis all Tax Returns with
respect to the Latisys Companies that are not described in Section 7.9(a)(i) as
being prepared and filed by the Latisys Companies or the Seller, as applicable.

(iii)With respect to any Tax Return required to be prepared or caused to be
prepared by the Seller or Purchaser pursuant to Section 7.9(a)(i) and (ii) with
respect to the Latisys Companies (such party, the “Filing Party”) and as to
which either Seller is the Filing Party or an amount of Tax is allocable to
Seller, the Filing Party shall provide the party that is not the Filing Party
(the “Non-Filing Party”) with a draft of such completed Tax Return or in the
case of a Consolidated Tax Return, a pro forma Tax Return for the Latisys
Companies (prepared on a separate company basis) and a statement certifying and
setting forth the calculation of the amount of Tax shown on such Tax Return or
Consolidated Tax Return that is allocable to such Non-Filing Party, together
with appropriate supporting information and schedules at least thirty (30)
Business Days prior to the due date (including any extension thereof) for the
filing of such Tax Return or Consolidated Tax Return, as the case may be, and
such Non-Filing Party shall have the right to review and comment on such Tax
Return or Consolidated Tax Return and statement, as the case may be, prior to
the filing of such Tax Return or Consolidated Tax Return and shall provide to
the Filing Party written notice of any objections it has with respect to such
Tax Return or Consolidated Tax Return (a “Tax Dispute”) no later than fifteen
(15) Business Days prior to the date when such Tax Return or Consolidated Tax
Return must be filed.  In the event of any such objections the parties shall in
good faith attempt to resolve such dispute for a period of five (5) Business
Days following the date on which the Filing Party was notified of the Tax
Dispute; provided, that if such dispute is not settled by such date (the “Tax
Dispute Date”) the parties shall submit all such disputed matters to the
Accounting Firm, within one (1) Business Day after the Tax Dispute Date.  The
decision by the Accounting Firm shall be final and binding on the parties with
respect to how any such Tax Return or Consolidated Tax Return should be
filed.  Notwithstanding anything in this Agreement to the contrary, the fees and
expenses relating to the Accounting Firm pursuant to this Section 7.9(a)(iii)
shall be paid one-half by Purchaser and one-half by the Seller.

(iv)The Purchaser shall not make any election under Code Section 338 (or any
similar provision under state, local, or foreign law) with respect to the
acquisition of the Companies and their Affiliates.

(b)Tax Refunds.

(i)Subject to paragraph (ii), below, rights and benefits relating to all credits
or refunds of Tax liabilities of the Latisys Companies no matter how secured
(including credits for overpayment of estimated Taxes) arising from or relating
to any taxable period (or portion thereof) ending on or prior to the Closing
Date shall remain with and be for the benefit of the Seller, and Purchaser shall
pay to the Seller within five (5) days of receipt by Purchaser, any Latisys
Company or any Affiliate of any of the foregoing the amount of any such Tax
refund or credit against Taxes plus any overpayment interest accruing from the
date the corresponding Tax liability was paid but only to the extent that such
refund or credit was not reflected on the Closing Statement.  Upon a reasonable
request from the Seller, Purchaser shall cooperate, and cause the Latisys
Companies to cooperate, in filing amended Tax Returns to obtain a refund or
credit that the Seller is entitled to pursuant to this Section 7.9(b), provided
that Purchaser shall not be required to file a request for any refund of Taxes
(or any amended Tax Return) if such refund could reasonably be expected to
materially adversely affect the Purchaser, or any Latisys Company (or any of
their respective Affiliates) in any Tax period commencing on or after the
Closing Date.

(ii)Notwithstanding any provision in this Agreement to the contrary, Purchaser
and Seller agree that the Companies may carry back any post-closing net
operating loss, post-closing loss from operations or any other post-closing Tax
attribute of the Companies to any taxable year that ends on or prior to the
Closing Date and Purchaser shall be entitled to receive any refund of Taxes
resulting from the carry back of such post-closing Tax attributes; provided,
however, that Purchaser must first agree that it will indemnify and hold
harmless the Seller against any Damages or liabilities for Taxes and expenses
related thereto that are attributable to, or result or arise from, any such
carry back.

(c)Consolidated Tax Return Claims.  Notwithstanding any other provision in this
Agreement to the contrary, the Seller and its Affiliates shall control the
conduct of any notice of deficiency, proposed adjustment, assessment, audit,
examination or other administrative or court proceeding, suit, dispute or other
claim involving a Consolidated Tax Return for periods on or before, and
including the Closing Date, that includes the Latisys Companies, and the Seller
shall have sole discretion in administering any such claims including the right
to settle such claims, provided that Purchaser has consented to the terms of
such settlement, which consent shall not be unreasonably withheld, conditioned
or delayed.  Seller shall keep Purchaser fully informed of the events that occur
in any such proceeding.  The Purchaser and its Affiliates shall control the
conduct of any notice of deficiency, proposed adjustment, assessment, audit,
examination or other administrative or court proceeding, suit, dispute or other
claim involving a Consolidated Tax Return for periods beginning after the
Closing Date, that includes the Latisys Companies, and the Purchaser shall

 

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have sole discretion in administering any such claims including the right to
settle such claims, except that Purchaser shall not settle any such claim for
which Seller may be responsible in whole or in part under applicable law or
under this Agreement without Seller’s prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed. Purchaser shall keep
Seller fully informed of the events that occur in any such proceeding if the
proceeding could result in liability for Seller under applicable Law or under
this Agreement.

(d)Cooperation and Controversies.  The Purchaser and the Seller shall reasonably
cooperate, and shall cause their respective Affiliates, agents, auditors,
representatives, officers and employees reasonably to cooperate, in preparing
and filing all Tax Returns (including amended returns and claims for refund),
including maintaining and making available to each other all records necessary
in connection with Taxes and with respect to any claim with respect to the Taxes
of the Latisys Companies, which cooperation shall include but not be limited to
(i) providing all relevant information that is available to Purchaser, Seller
and/or the Latisys Companies, as the case may be, with respect to such Tax
claim; (ii) making personnel available at reasonable times; and
(iii) preparation of responses to requests for information; provided, that the
foregoing shall be done in a manner so as to not unreasonably interfere with the
conduct of business by Purchaser, Seller, the Latisys Companies or any of their
Affiliates, as the case may be.  None of Purchaser, Seller, the Latisys
Companies or any of their Affiliates shall dispose of any Tax Returns, Tax
schedules, material Tax work-papers or any material books or records with
respect to the Latisys Companies unless it first offers in writing to the other
party the right to take possession of such materials at such other party’s sole
expense and the other party fails to accept such offer within fifteen (15) days
of the offer being made.  Any information obtained under this Section 7.9(d)
shall be kept confidential, except as may be otherwise necessary in connection
with the filing of Tax Returns or claims with respect to any Tax.

(e)Seller Obligations.  Except to the extent that any liability for Taxes is
specifically taken into account in determining Net Working Capital, the Seller
shall be responsible for and pay, and shall indemnify and hold harmless
Purchaser and the Latisys Companies with respect to (i) any and all Taxes
imposed on the Latisys Companies, or for which the Latisys Companies are liable
with respect to any periods ending on or before the Closing Date and the
Pre-Closing Tax Period with respect to any Straddle Period, and (ii) all Taxes
arising out of a breach of the representations, warranties or covenants
contained in Article IV and Article V, and (iii) any reasonable costs or
expenses with respect to Taxes indemnified hereunder.  Any claims for Damages
relating to the foregoing indemnity shall be governed by Section 10.3 through
Section 10.8 of this Agreement and any related Tax controversies shall be
subject to the provisions of Section 7.9(c) and Section 7.9(d), and, for
purposes of Section 10.6 of this Agreement this Section 7.9(e) shall expire on
the third anniversary of the Closing Date.

(f)Purchaser Obligations.  Except as otherwise provided in this Section 7.9,
from and after the Closing Date, Purchaser and the Latisys Companies shall be
solely responsible for the payment or discharge of all Taxes imposed on the
Latisys Companies for (i) all periods beginning after the Closing Date and the
Post-Closing Tax Period with respect to any Straddle Period, and (ii) any costs
or expenses with respect to Taxes indemnified hereunder.  Purchaser shall
indemnify, defend and hold the Seller and its Affiliates harmless from any and
all Taxes that are Purchaser’s responsibility pursuant to the immediately
preceding sentence.  Any claims for Damages relating to the foregoing indemnity
shall be governed by Section 10.3 through Section 10.8 of this Agreement and any
related Tax controversies shall be subject to the provisions of Section 7.9(c)
and Section 7.9(d), and, for purposes of Section 10.6 of this Agreement this
Section 7.9(f) shall expire on the third anniversary of the Closing Date.

(g)Straddle Periods.  For purposes of this Agreement, Taxes for a Tax period
that begins on or before the Closing Date and ends after the Closing Date (a
“Straddle Period”) shall be apportioned to the portion of the Straddle Period
that ends on the Closing Date (the “Pre-Closing Tax Period”) and the portion
that ends after the Closing Date (the “Post-Closing Tax Period”) using the
following conventions:  (A) in the case of property Taxes and other similar
Taxes imposed on a periodic basis, the amount apportioned to a Pre-Closing Tax
Period  shall be determined by multiplying the Taxes for the entire Straddle
Period by a fraction, the numerator of which is the number of calendar days in
the portion of the Straddle Period ending on the Closing Date and the
denominator of which is the number of calendar days in the entire Straddle
Period and the balance of such Taxes shall be apportioned to the Post-Closing
Tax Period; and (B) in the case of all other Taxes (including income Taxes,
employment Taxes, and sales and use Taxes) the amount apportioned to the
Pre-Closing Tax Period shall be determined as if the Company had filed a
separate Return with respect to such Taxes for the portion of the Straddle
Period ending on the end of the day on the Closing Date using a closing of the
books methodology, and the balance of such Taxes shall be apportioned to the
Post-Closing Tax Period.  For purposes of clause (B), any item determined on an
annual or periodic basis (including amortization and depreciation deductions and
the effects of graduated rates) shall be apportioned to the Pre-Closing Tax
Period based on the relative number of days in such portion of the Straddle
Period as compared to the number of days in the entire Straddle Period and the
balance of such items shall be apportioned to the Post-Closing Tax Period.

(h)Except as required by Law, without the prior written consent of Seller, none
of Purchaser, any Latisys Company, or any Affiliate of Purchaser shall file any
amended Tax Return with respect to an taxable period ending on or before the
Closing Date that would be reasonably likely to cause a materially adverse
effect to the Seller, unless Purchaser indemnifies and holds Seller harmless
from and against any potential adverse Tax effect.

 

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7.10Acquisition Proposals.

(a)From the date of this Agreement through the earlier of the termination of
this Agreement pursuant to Article IX and the Closing, as applicable, Seller
shall not and shall cause each of the Latisys Companies and its and their
representatives not to, directly or indirectly (except with respect to Purchaser
and its Affiliates), solicit or invite any inquiries, proposals or indications
of interest, or enter into any discussions, negotiations, understandings,
arrangements or contracts relating to the direct or indirect disposition,
whether by sale, merger or otherwise, of all or any material portion of the
Latisys Companies or their respective businesses or assets or the Shares.

(b)From the date of this Agreement through the earlier of the Closing Date and
the date of termination of this Agreement pursuant to Article IX, as applicable,
Seller shall not, and shall cause the Latisys Companies and representatives to,
cease and terminate immediately any existing discussions or negotiations with
respect to or in furtherance of any transaction described in clause (a) above.

7.11No Other Representations or Warranties.  Purchaser acknowledges and agrees
that (a) the Companies and Seller are not making any representations or
warranties whatsoever, express or implied, beyond those expressly given by the
Companies in Article IV (as qualified by the Disclosure Schedules hereto), those
expressly given by Seller in Article V (as qualified by the Disclosure Schedules
hereto) and those expressly given by any Company or Seller, as applicable, in
any of the Company Documents and Seller Documents, and (b) except for the
representations and warranties contained in such provisions of this Agreement
and in any of the Company Documents and Seller Documents, the Assets and the
business of the Latisys Companies are being transferred on a “where is” and, as
to condition, “as is” basis.  Any claims Purchaser may have for breach of
representation or warranty shall be based solely on the representations and
warranties of the Companies set forth in Article IV (as qualified by the
Disclosure Schedules hereto), the representations and warranties of Seller set
forth in Article V (as qualified by the Disclosure Schedules hereto) and the
representations and warranties of the Companies or Seller, as applicable, in any
of the Company Documents and Seller Documents.  Purchaser acknowledges and
agrees that none of the Latisys Companies, nor Seller or any of their respective
Affiliates nor any other Person has made any representation or warranty, express
or implied, as to the accuracy or completeness of any information regarding the
Latisys Companies, or the transactions contemplated by this Agreement not
expressly set forth within this Agreement, any Company Document or any Seller
Document, and Purchaser is not relying on anything other than the express
provisions of this Agreement, the Company Documents and the Seller Documents in
entering into this Agreement.  None of the Latisys Companies, nor Seller, any of
their respective Affiliates or any other Person will have or be subject to any
liability to Purchaser or any other Person resulting solely from the
distribution to Purchaser or its representatives of or Purchaser’s use of, any
such information, including any confidential memoranda distributed on behalf of
Seller or the Companies relating to the Latisys Companies or other publications,
representations, warranties, forecasts, statements or information, including any
information provided in a “data room”, “management presentation”, “break-out
session” or otherwise to Purchaser or its Affiliates or representatives, or any
other document or information in any form provided to Purchaser or its
representatives in connection with the Share Sale and the other transactions
contemplated hereby.  Purchaser acknowledges and agrees that the representations
and warranties made by the Companies and Seller in this Agreement (as qualified
by the Disclosure Schedules), the Company Documents and the Seller Documents
supersede, replace and nullify in every respect all other information, whether
written or oral, made available to Purchaser, its Affiliates or its
representatives. No Person is asserting the truth of any representation or
warranty set forth in this Agreement, any Company Document or any Seller
Document; rather the parties have agreed that should any representations and
warranties of any party prove untrue, the other party shall, subject to Article
X of this Agreement, have the specific rights and remedies herein specified as
the exclusive remedy therefor (except as provided under Section 10.7), but
(except as provided under Section 10.7) that no other rights, remedies or causes
of action (whether in law or in equity or whether in contract or in tort) are
permitted to any party hereto as a result of the untruth of any such
representation and warranty.

7.12Financing.

(a)(i) Subject to the terms and conditions of this Agreement, Purchaser shall
use its reasonable best efforts to obtain the Debt Financing on the terms and
conditions (including the flex provisions) described in the Debt Commitment
Letter pursuant to the terms thereof and satisfy the conditions to the Debt
Financing as described in the Debt Commitment Letter (including, without
limitation, the repayment of any indebtedness to the extent such repayment is a
condition to the Debt Financing) and shall not permit any termination, amendment
or modification to be made to, or any waiver of any provision under, or any
replacement of, the Debt Commitment Letter if such termination, amendment,
modification, waiver or replacement (A) reduces (or could have the effect of
reducing) the aggregate amount of the Debt Financing (including by increasing
the amount of fees to be paid or original issue discount unless (x) the Debt
Financing is increased by a corresponding amount or the Debt Financing is
otherwise made available to fund such fees or original issue discount and (y)
after giving effect to any of the transactions referred to in clause (x) above,
the representation and warranty set forth in Section 6.6 shall be true and
correct) or (B) imposes new or additional conditions or otherwise expands,
amends or modifies any of the conditions to the receipt of Debt Financing, or
otherwise expands, amends or modifies any other provision of the Debt Commitment
Letter, in a manner that would reasonably be expected to (x) delay or prevent or
make less

 

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likely the funding of the Debt Financing (or satisfaction of the conditions to
the Debt Financing) on the Closing Date or (y) adversely impact the ability of
Purchaser to enforce its rights against other parties to the Debt Commitment
Letter or the definitive agreements with respect thereto; provided that
Purchaser may amend the Debt Commitment Letter to add lenders, lead arrangers,
bookrunners, syndication agents or similar entities who had not executed the
Debt Commitment Letter as of the date hereof provided that such addition does
not have the effect set forth in subclauses (A) or (B) of this
sentence.  Purchaser shall promptly deliver to Seller copies of any such
termination, amendment, modification, waiver or replacement.

(ii)Purchaser shall use its reasonable best efforts (A) to maintain in effect
the Debt Commitment Letter, (B) to negotiate and enter into definitive
agreements with respect to the Debt Commitment Letter with, subject to the
restrictions contained in Section 7.12(a)(i), the conditions to funding
contained in the Debt Commitment Letter and on the terms (including the flex
provisions) contained in the Debt Commitment Letter (or on terms acceptable to
Purchaser and the Financing Sources that do not affect such conditions and will
not impair the Closing), (C) to satisfy on a timely basis (taking into account
the expected timing of the Marketing Period) all conditions to receipt of the
Debt Financing at the Closing set forth therein that are within its control
(other than any condition where the failure to be so satisfied is a direct
result of Seller’s failure to furnish information described in Section 7.12(b))
and, upon satisfaction of the conditions set forth in the Debt Commitment
Letter, to consummate the Debt Financing at or prior to the Closing, including
using its reasonable best efforts to cause the Lenders and the other persons
committing to fund the Debt Financing at the Closing no later than one (1)
Business Day after the expiration of the Marketing Period, (D) to enforce its
rights under the Debt Commitment Letter and (E) to comply with its obligations
under the Debt Commitment Letter.  Purchaser shall keep Seller informed on a
current basis and in reasonable detail of the status of its efforts to arrange
the Debt Financing and provide to Seller copies of drafts and definitive
agreements for the Debt Financing.  Without limiting the generality of the
foregoing, Purchaser shall give Seller prompt notice (x) of any breach or
default by any party to any of the Debt Commitment Letter or definitive
agreements related to the Debt Financing of which Purchaser becomes aware, (y)
of the receipt of any written notice or other written communication from any
Financing Source with respect to any (1) actual breach, default, termination or
repudiation by any party to any of the Debt Commitment Letter or definitive
agreements related to the Debt Financing of any provisions of the Debt
Commitment Letter or definitive agreements related to the Debt Financing or (2)
material dispute or disagreement relating to the Debt Financing with respect to
the obligation to fund the Debt Financing or the amount of the Debt Financing to
be funded at Closing, and (z) if at any time for any reason Purchaser believes
in good faith that it will not be able to obtain all or any portion of the Debt
Financing on the terms and conditions, in the manner or from the sources
contemplated by the Debt Commitment Letter or definitive agreements related to
the Debt Financing or no later than one (1) Business Day after the expiration of
the Marketing Period.  As soon as reasonably practicable, after the date Seller
delivers to Purchaser a written request, Purchaser shall provide information
reasonably requested by Seller relating to the circumstances referred to in
clause (x), (y) or (z) of the immediately preceding sentence.  If any portion of
the Debt Financing otherwise becomes unavailable, and such portion is reasonably
required to fund the aggregate Purchase Price and all fees, expenses and other
amounts contemplated to be paid by Purchaser pursuant to this Agreement,
Purchaser shall use its reasonable best efforts to arrange and obtain in
replacement thereof, as promptly as reasonably practicable, alternative
financing from alternative sources in an amount sufficient to consummate the
transactions contemplated by this Agreement with terms and conditions not
materially less favorable to Purchaser (or its Affiliates) than the terms and
conditions set forth in the Debt Commitment Letter, and no later than one (1)
Business Day after the expiration of the Marketing Period.  Purchaser shall
promptly deliver to Seller true and complete copies of all contracts pursuant to
which any such alternative source shall have committed to provide any portion of
the Debt Financing.  Purchaser acknowledges and agrees that the obtaining of the
Debt Financing, or any alternative financing, is not a condition to
Closing.  For purposes of this Section 7.12 and Section 6.6, references to “Debt
Financing” shall include the financing contemplated by the Debt Commitment
Letter as permitted by this Section 7.12 to be amended, modified or replaced and
references to “Debt Commitment Letter” shall include such documents as permitted
by this Section 7.12 to be amended, modified or replaced, in each case from and
after such amendment, modification and replacement.

(b)Prior to the Closing Date, Seller shall cause the Latisys Companies to
provide, and shall use its reasonable best efforts to cause its representatives,
including legal and accounting, to provide all cooperation reasonably requested
by Purchaser in connection with the Debt Financing or any permitted replacement,
amended, modified or alternative financing (collectively with the Debt
Financing, the “Available Financing”) (provided that such requested cooperation
does not unreasonably interfere with the ongoing operations of the Latisys
Companies), including (i) assisting in the preparation of pro forma financial
statements to be included in rating agency presentations, offering documents,
bank information memoranda, private placement memoranda, prospectuses and
similar documents required in connection with the Available Financing; (ii)
cooperating reasonably with the due diligence of the Financing Sources of the
Debt Financing, to the extent customary and reasonable and to the extent not
unreasonably interfering with the business of the Companies, (iii) performing
agreed upon procedures with respect to the Required Information and then obtain
accountant’s comfort letter with respect to the Required Information, (iv)
obtaining customary authorization letters with respect to the Required
Information included in any bank information memoranda and consents of
accountants to the use of their reports in any materials relating to the
Available Financing (subject to releases customarily requested by such
accountants), and (v) using reasonable best efforts to arrange for customary
payoff letters, lien terminations and instruments of discharge to be delivered
at Closing providing for the payoff, discharge and termination on the Closing
Date of all indebtedness contemplated by the Debt Commitment Letter to be paid
off, discharged and terminated on the Closing Date; provided, however, that none
of the Latisys

 

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Companies or representatives shall be required to pay any commitment or other
fee or incur any other liability in connection with the Available Financing
prior to the Closing; and provided further that, for clarity,  any failure by
the Seller or any Latisys Company to obtain any of the foregoing items from a
third party despite using reasonable best efforts shall not constitute a breach
of the foregoing covenant.  Purchaser shall promptly, upon request by the
Seller, reimburse the Seller and the Latisys Companies, as applicable, for all
reasonable out-of-pocket costs and expenses (including reasonable attorneys’
fees) incurred by the Seller or the Latisys Companies in connection with the
cooperation of the Seller and the Latisys Companies contemplated by this Section
7.12 and shall indemnify and hold harmless the Seller, the Latisys Companies and
their respective representatives from and against any and all losses, damages,
claims, costs or expenses suffered or incurred by any of them in connection with
the arrangement of the Debt Financing and any information (other than
information furnished by the Seller or on behalf of the Latisys Companies) used
in connection therewith.   The parties to this Agreement acknowledge and agree
that the Purchaser created the information listed on Exhibit D attached hereto
(which shall be referred to herein as the “Required Information”) based on
information that the Latisys Companies provided to the Purchaser in good faith,
it being understood and agreed that neither any Latisys Company nor Seller is
making any representation and warranty hereunder or in any other Company
Document about the Required Information or the information from which the
Required Information is derived; provided that the foregoing disclaimer does not
diminish or modify the representations and warranties contained in Section
4.6.  If the Closing occurs after February 15, 2015, the Seller shall provide
the Purchaser with the information necessary to update the Required Information
through December 31, 2014.

ARTICLE VIII

CONDITIONS TO CLOSING

8.1Conditions Precedent to Obligations of Purchaser.  The obligation of
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by Purchaser in whole or
in part to the extent permitted by applicable Law):

(a)The representations and warranties of the Companies contained in Article IV
of this Agreement and in the Company Documents and of Seller contained in
Article V of this Agreement and in the Seller Documents shall (i) in the case of
all representations of the Companies and the Seller other than the Fundamental
Representations, be true and correct as of the Closing Date (except to the
extent made with reference to an earlier date, in which case as of such earlier
date) except where the failure of any such representations or warranty to be
true and correct (without giving effect to any “materiality”, “material” or
“Material Adverse Effect” qualifier set forth therein) would not have a Material
Adverse Effect as of the Closing Date (or express earlier date) and (ii) in the
case of Fundamental Representations, be true and correct in all respects as of
the Closing Date, except for de minimis inaccuracies (except to the extent made
with reference to an earlier date, in which case as of such earlier date except
for de minimis inaccuracies);

(b)Seller and each Company shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by them on or prior to the Closing Date;

(c)Seller shall have delivered to Purchaser an Officer’s Certificate of Seller
certifying that the conditions set forth in Section 8.1(a) and Section 8.1(b)
have been met;

(d)there shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby and no action shall have been taken nor any
Law enacted by any Governmental Body that makes the consummation of the
transaction contemplated hereby illegal;

(e)the waiting period applicable to the transactions contemplated by this
Agreement under the HSR Act shall have expired or early termination shall have
been granted;

(f)the Companies or Seller shall have made, or caused to have been made, the
deliveries contemplated by Section 3.2;

(g)the Payoff Letters shall have been executed and delivered to Purchaser;

(h)each Company shall have either (i) delivered to Purchaser a properly executed
statement satisfying the requirements of Treasury Regulation Sections 1.897-2(h)
and 1.1445-2(c)(3) or (ii) caused Seller to have executed and delivered to
Purchaser a certificate of non-foreign status satisfying the requirements of
Treasury Regulation Section 1.1445-2(b);

(i)Seller has delivered to Purchaser such estoppel certificates with respect to
the Real Property Leases set forth on Schedule 4.18(b) and (c) in each case
substantially similar in substance to the form attached hereto as Exhibit C or,
with

 

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respect to such Real Property Leases that are marked with an asterisk (*) on
such Schedules,  in such form and substance as the applicable landlord under
each such Real Property Lease is required by such Real Property Lease to
deliver;

(j)Seller shall have delivered to Purchaser resignations of the directors,
managers, and officers (for clarity, only in their capacities as such), as
applicable, of each Latisys Company;

(k)Seller shall have delivered to Purchaser good standing certificates for each
Latisys Company and the Seller from its jurisdiction of formation dated within
three (3) Business Days of the Closing Date;

(l)Seller shall have delivered to Purchaser (A) evidence of the removal of the
Latisys Companies’ bank account signatories and the replacement of such
signatories effective as of the Closing with individuals to be designated by
Purchaser no less than five (5) Business Days prior to the Closing Date, (B)
bank statement and check register for the bank accounts setting forth all
outstanding checks drawn that have not cleared, and (C) sufficient funds to
cover such outstanding checks;

(m)Seller shall have delivered to Purchaser evidence of the termination of all
Liens on any assets or any capital stock (or other comparable equity interests)
of the Latisys Companies, other than Permitted Liens not securing Company
Indebtedness;

(n)the Consents identified on Schedule 4.3 shall have been executed and
delivered to Purchaser (other than with respect to the Credit Facilities); and

(o)since the date of this Agreement, there shall not have occurred a Material
Adverse Effect.

If the Closing occurs, all Closing conditions set forth in this Section 8.1 that
have not been fully satisfied as of the Closing shall be deemed to have been
waived by the Purchaser.

8.2Conditions Precedent to Obligations of Seller.  The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions (any or all of which may be waived by Seller in whole or in part to
the extent permitted by applicable Law):

(a)The representations and warranties of Purchaser contained in this Agreement
shall be true and correct as of the Closing Date (except to the extent made with
reference to an earlier date, in which case as of such earlier date), except
where the failure of any such representation or warranty to be true and correct
(without giving effect to any “materiality”, “material” or “Material Adverse
Effect” qualifier set forth therein) as of the Closing Date (or express earlier
date) would not have a material and adverse effect on Purchaser’s ability to
consummate the transactions contemplated hereby;

(b)Purchaser shall have performed and complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by Purchaser on or prior to the Closing Date;

(c)Purchaser shall have delivered to Seller an Officer’s Certificate of
Purchaser certifying that the conditions set forth in Section 8.2(a) and
Section 8.2(b) have been met;

(d)there shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby and no action shall have been taken nor any
Law enacted by any Governmental Body that makes the consummation of the
transactions contemplated hereby illegal;

(e)the waiting period applicable to the transactions contemplated by this
Agreement under the HSR Act shall have expired or early termination shall have
been granted; and

(f)Purchaser shall have made, or caused to have been made, the deliveries
contemplated by Section 3.3.

If the Closing occurs, all Closing conditions set forth in this Section 8.2 that
have not been fully satisfied as of the Closing shall be deemed to have been
waived by the Seller.

 

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ARTICLE IX

TERMINATION

9.1Termination of Agreement.  This Agreement may be terminated prior to the
Closing as follows:

(a)at the election of Seller on or after March 31, 2015, if the Closing shall
not have occurred by the close of business on such date, provided that Seller is
not then in material default of any of its obligations hereunder;

(b)at the election of Purchaser on or after May 1, 2015, if the Closing shall
not have occurred by the close of business of such date, provided that Purchaser
is not then in material default of any of its obligations hereunder;

(c)by mutual written consent of Seller and Purchaser;

(d)by Seller or Purchaser if there shall be in effect a final nonappealable
Order of a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
it being agreed that the parties hereto shall promptly appeal any adverse
determination that is not nonappealable (and pursue such appeal with reasonable
diligence);

(e)by Purchaser, if there has been a violation or breach by any Company or
Seller of any covenant, representation or warranty contained in this Agreement
which if not cured, would cause a condition to the obligations of Purchaser at
the Closing not to be satisfied, and such violation or breach has not been
waived by Purchaser or cured in all material respects by such Company or Seller
within forty-five (45) days after receipt by Seller of written notice thereof
from Purchaser; provided that the failure to deliver the certificates
representing the Shares at the Closing as required hereunder shall not be
subject to cure hereunder;

(f)by Seller, if there has been a violation or breach by Purchaser of any
covenant, representation or warranty contained in this Agreement which if not
cured, would cause a condition to the obligations of Seller and the Companies at
the Closing not to be satisfied, and such violation or breach has not been
waived by Seller or cured in all material respects by Purchaser within
forty-five (45) days after receipt by Purchaser of written notice thereof from
Seller; provided, that neither a breach by Purchaser of Section 6.6 hereof nor
the failure to deliver the Estimated Purchase Price at the Closing as required
hereunder shall be subject to cure hereunder.

9.2Procedure Upon Termination.  In the event of termination and abandonment by
Purchaser or Seller, or both, pursuant to Section 9.1 hereof, the terminating
party shall forthwith deliver notice thereof to the other party or parties, and
this Agreement shall terminate, and the Share Sale contemplated hereunder shall
be abandoned, without further action by Purchaser or Seller.

9.3Effect of Termination.  In the event that this Agreement is validly
terminated in accordance with Section 9.1, then each of the parties shall be
relieved of their duties and obligations arising under this Agreement after the
date of such termination and such termination shall be without liability to
Purchaser, Seller and the Latisys Companies provided, that no such termination
shall relieve any party hereto from liability for any breach of this Agreement
and, provided, further, that the obligations of the parties set forth in
Sections 7.5 and 7.7 and Article X hereof shall survive any such termination and
shall be enforceable hereunder.

ARTICLE X

INDEMNIFICATION

10.1Indemnification of Purchaser.

(a)The Seller shall, after the Closing Date, indemnify, defend and hold harmless
Purchaser, the Latisys Companies and the Latisys Companies’ officers, directors,
agents and representatives, and each Affiliate of Purchaser or the Latisys
Companies (each hereinafter referred to individually as a “Purchaser Indemnified
Person” and collectively as “Purchaser Indemnified Persons”), from and against,
any and all claims, demands, suits, actions, causes of action, losses, costs,
damages, liabilities and out-of-pocket expenses suffered, incurred or paid,
including reasonable attorneys’ fees, but specifically excluding punitive and
exemplary damages except to the extent that punitive or exemplary damages  are
included and awarded in a Third-Party Claim (hereinafter collectively referred
to as “Damages”), arising out of or resulting from an inaccuracy in, breach of,
default in, or failure to perform, any of the representations, warranties or
covenants given or made by the Companies or Seller in this Agreement or in any
Company Document or Seller Document (giving effect to any “materiality”,
“material” or “Material Adverse Effect” qualifier set forth therein

 

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for purposes of determining whether a breach has occurred but not for purposes
of determining the amount of Damages) (collectively, “Company Breaches”).  No
Purchaser Indemnified Person will be entitled to be indemnified pursuant to this
Section 10.1 for any liability or Company Indebtedness to the extent such
liability or Company Indebtedness is reflected in the Company Indebtedness,
Company Transaction Expenses or Closing Working Capital and used to determine
the Adjusted Purchase Price.

(b)Any claim for indemnification made by a Purchaser Indemnified Person under
this Section 10.1 must be raised in a writing delivered to Seller by no later
than the applicable Survival Date and, if raised by such date, such claim shall
survive such Survival Date, and the relevant representation, warranty, covenant
or agreement shall survive as to such claim, until final resolution thereof
without the requirement of commencing any action in order to extend such
Survival Date or preserve such claim.

(c)The aggregate liability on account of Company Breaches pursuant to this
Section 10.1 shall be limited to the Indemnity Escrow Amount (the “Cap”).  The
indemnification provided for in this Section 10.1 shall not apply unless and
until the aggregate Damages so determined to be due for which one or more
Purchaser Indemnified Persons seeks or has sought indemnification hereunder
exceeds a cumulative aggregate amount of $3,375,000 (the “Basket”), in which
event the Purchaser Indemnified Persons shall, subject to the Cap and the other
limitations herein, be indemnified for all such Damages in excess of the Basket;
provided that in no event shall Seller be liable for indemnification to
Purchaser Indemnified Persons under this Section 10.1 with respect to any
Company Breach or Company Breaches arising out of a single course of conduct or
related set of facts, events or circumstances where the Damages relating thereto
are less than $50,000 (the “Pre-Basket Amount”), it being understood that any
such claims for amounts less than the Pre-Basket Amount shall be ignored for
purposes of determining whether the Basket has been exceeded and
thereafter.  The Basket and Pre-Basket Amount shall not apply to any claims by
any Purchaser Indemnified Person based on Company Breaches of Fundamental
Representations or breaches of covenants, and therefore any claims based on
Fundamental Representations or breaches of covenants shall be ignored for
purposes of determining if the Basket has been exceeded.  Notwithstanding the
foregoing sentence of this Section 10.1(c), costs of investigation and
attorneys’ fees incurred in prosecuting the claim shall not count towards
achieving the Basket but shall count as Damages once such threshold has been
achieved and the breach proven.  The Cap shall not apply to any claims by any
Purchaser Indemnified Person based on Company Breaches of Fundamental
Representations or willful breaches of covenants, provided that in no event
shall Seller be obligated to indemnify the Purchaser Indemnified Persons with
respect to Fundamental Representations for Damages in excess of the amount of
the Purchase Price actually received by Seller.

(d)The amount to which a Purchaser Indemnified Person may become entitled under
this Article X shall be (i) net of the amount of any net reduction in Tax
liability actually realized by the Purchaser Indemnified Person in the year that
the Damages are incurred (calculated on a “with” and “without” basis), (ii) net
of any amount actually recovered (whether by way of payment, discount, credit,
off-set, counterclaim or otherwise) from a third party (including any insurer)
less any cost associated with receiving such recovery in respect of a Claim and
any increase in premium resulting therefrom, (iii) net of any reserves
established on the Latisys Companies’ closing balance sheet or liabilities that
in either case are taken into account in the calculation of Closing Working
Capital and (iv) determined without duplication of recovery by reason of the
state of facts giving rise to such Damages constituting a breach of more than
one representation, warranty, covenant or agreement.  To the extent that
insurance, “pass-through” warranty coverage from a manufacturer or vendor or
other form of recovery or reimbursement from a third party is available to any
Purchaser Indemnified Person to cover any item for which indemnification may be
sought hereunder, Purchaser will, or will cause Purchaser Indemnified Person to,
on a timely and expeditious basis, use commercially reasonable efforts to effect
recovery under applicable insurance policies and warranties and otherwise pursue
to conclusion available remedies or causes of action to recover the amount of
its claim as may be available from such other party.  To the extent a Purchaser
Indemnified Person is indemnified and paid the full amount of any claim,
Purchaser will assign, and Purchaser will cause any other Purchaser Indemnified
Person to assign, to Seller, to the fullest extent allowable, its claim against
such insurance, warranty coverage or third-party claim, or in the event
assignment is not permissible, but Purchaser or Purchaser Indemnified Person in
question is nonetheless permitted to pursue such claim on Seller’s behalf,
Purchaser shall pursue, or shall cause any other Purchaser Indemnified Person to
pursue, such Claim, at Seller’s direction and at Seller’s cost and expense, with
any recovery thereon to be transmitted promptly to Seller upon receipt.  To the
extent that any Purchaser Indemnified Person has not been indemnified on account
of any such claim, any Purchaser Indemnified Person may pursue recovery against
such insurance or warranty coverage or third party and will be entitled to
retain all recoveries made as a result of any such action.  Subject to any
applicable confidentiality agreement, Seller shall have the right, at mutually
agreeable times during normal business hours, after reasonable notice to
Purchaser and without undue disruption to their normal business activities, to
inspect the assets and properties of the Latisys Companies and to inspect and
make abstracts and reproductions of all books and records of the Latisys
Companies relating to any such Claims.  Subject to any applicable
confidentiality agreement, Purchaser shall, and shall cause the Latisys
Companies to, furnish Seller with such information respecting the assets,
business and financial records of the Latisys Companies relating to any such
claims as Seller may, from time to time, reasonably request.

 

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10.2Indemnification of Seller.  Purchaser and the Companies shall, after the
Closing Date, indemnify, defend and hold harmless Seller, its Affiliates and
their respective officers, directors, members, agents, representatives,
successors and assigns (the “Seller Indemnified Persons”), from and against any
and all Damages arising out of or resulting from an inaccuracy in, breach of,
default in, or failure to perform any representation, warranty or covenant made
by Purchaser in this Agreement or in any of the Purchaser Documents.

10.3Notice of Claim.  As used herein, the term “Claim” means a claim for
indemnification by Purchaser or any other Purchaser Indemnified Person or any
Seller Indemnified Person, as the case may be, for Damages under this Article X
(such Person making a Claim, an “Indemnitee”).  An Indemnitee shall give notice
of a Claim under this Agreement, whether for its own Damages or for Damages
incurred by any other Purchaser Indemnified Person or Seller Indemnified Person,
as applicable, pursuant to written notice of such Claim executed by an officer
of Purchaser or Seller, as applicable (a “Notice of Claim”), and delivered to
Seller or Purchaser, as applicable (such receiving party, the “Indemnitor”),
promptly after such Indemnitee becomes aware of the existence of any potential
claim by such Indemnitee for indemnification under this Article X, but in any
event before the applicable Survival Date, arising out of or resulting from: (a)
any item indemnified pursuant to the terms of 10.1 or 10.2, or (b) the
assertion, whether orally or in writing, against any Indemnitee of a claim,
demand, suit, action, arbitration, investigation, inquiry or proceeding brought
by a third party against any Indemnitee (in each such case, a “Third-Party
Claim”) that if successfully prosecuted, would give rise to a right hereunder on
the part of the Indemnitee to be indemnified by the Indemnitor with respect
thereto.  So long as such Notice of Claim is given on or prior to the applicable
Survival Date, no delay on the part of an Indemnitee in giving the Indemnitor a
Notice of Claim shall limit or reduce the Indemnitee’s right to indemnity
hereunder, nor relieve the Indemnitor from any of its obligations under this
Article X, unless (and then only to the extent that) the Indemnitor is
prejudiced thereby.

10.4Defense of Third-Party Claims.

(a)Subject to the provisions hereof, the Indemnitor on behalf of the Indemnitee
shall have the right to elect to defend any Third-Party Claim if the Indemnitor
acknowledges in writing (within 30 days after receipt of any Notice of Claim)
that, assuming the truth and accuracy of the material facts presented in the
Notice of Claim, the Indemnitor is obligated to indemnify the Indemnitee against
any and all Damages that may result from such Third-Party Claim; provided that
any such obligations of the Indemnitor shall continue to be subject to any
limitation on any Claims contained herein; provided, however, that the
Indemnitor shall not have the right to assume control of the defense of any
Third-Party Claim (i) to the extent that the object of such Third-Party Claim is
to obtain an injunction, restraining order, declaratory relief or other
non-monetary relief against the Indemnitee which, if successful, would
materially adversely affect the business, operations, assets, or financial
condition of the Indemnitee, or (ii) if the named parties to any such action or
proceeding (including any impleaded parties) include both the Indemnitee and the
Indemnitor and the former shall have been reasonably advised in writing by
counsel (with a copy to the Indemnitor) that there are one or more legal or
equitable defenses available to them that are different from or additional to
those available to Indemnitor.  If the Indemnitor does not give such notice
within the applicable 30-day period or either proviso in this Section 10.4(a)
applies, then the Indemnitee shall have the right to assume control of the
defense, and the Indemnitor shall be responsible for the reasonable cost and
expense thereof.  If the Indemnitor shall assume the control of the defense of
the Third-Party Claim in accordance with the provisions of this Section 10.4,
the Indemnitor shall obtain the prior written consent of the Indemnitee before
entering into any settlement, compromise, admission or acknowledgement of the
validity of such Third-Party Claim if the settlement does not unconditionally
release the Indemnitee from all liabilities and obligations with respect to such
Third-Party Claim or the settlement imposes injunctive or other equitable relief
against the Indemnitee.  The Indemnitee may participate, at the Indemnitee’s own
expense, through counsel of its own choice, in the defense of any Third-Party
Claim.  Such assumption of the conduct and control of the settlement or defense
shall not be deemed to be an admission or assumption of liability by the
Indemnitor.

(b)If the Indemnitee shall assume the control of the defense of any Third-Party
Claim in accordance with the provisions of this Section 10.4, the Indemnitee
shall have the sole right to assume the defense of and settle such Third-Party
Claim.  Notwithstanding the foregoing, the Indemnitor shall be entitled to
participate, at its cost and expense, in the defense of such Third-Party Claim
and to employ separate counsel of its choice for such purpose, and the
Indemnitor shall be entitled to contest the reasonableness of any such
settlement to which it does not consent.

10.5Contents of Notice of Claim.  Each Notice of Claim by an Indemnitee given
pursuant to Section 10.3 shall contain, to the extent known or reasonably
estimable, the following information:

(a)that Indemnitee has incurred or paid or, in good faith, believes it may have
to incur or pay, Damages in an aggregate stated amount (where practicable)
arising from such Claim (which amount may be the amount of damages claimed by a
third party in an action brought against any Indemnitee based on alleged facts,
which if true, would give rise to liability for Damages to such Indemnitee under
this Article X); and

 

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(b)a description, in reasonable detail, of the facts, circumstances or events
giving rise to the alleged Damages, including the identity and address of any
third‑party claimant (to the extent reasonably available to
Indemnitee).  Simultaneously with delivery of the Notice of Claim  the
Indemnitee shall deliver copies of any demand or complaint covered by clause (a)
of this Section 10.5, the estimated amount of Damages, the date each such item
was incurred or paid, or the basis for such anticipated liability, and the
specific nature of the breach to which such item is related.

10.6Survival of Covenants, Representations and Warranties.  All representations
and warranties and pre-Closing covenants of the Companies, Seller and Purchaser
contained in this Agreement or in any Company Document, Seller Document or
Purchaser Document, shall remain operative and in full force and effect until
the date that is twelve (12) months after the Closing Date (the “Standard
Survival Termination Date”), and all covenants of Seller and Purchaser to be
performed after the Closing Date shall survive in accordance with their
respective terms; provided that the representations set forth in Sections 4.1
(Organization and Good Standing), 4.2 (Authorization of Agreement), 4.4
(Capitalization), 4.5 (Subsidiaries), 5.1 (Organization and Good Standing), 5.2
(Authorization of Agreement), 5.4 (Ownership), 6.1 (Organization and Good
Standing), 6.2 (Authorization of Agreement), 6.4 (Investment Intention) and 6.7
(Informed Decision) (collectively, the “Fundamental Representations”) shall
survive until the third anniversary of the Closing Date (the applicable date as
set forth in this sentence, the “Survival Date”).

10.7Exclusive Remedy; Source of Recovery; Mitigation.

(a)Except as contemplated by Section 2.3 and as may be required to specifically
enforce post-closing covenants hereunder, after the Closing Date the
indemnification rights set forth in this Article X are and shall be the sole and
exclusive remedies of Purchaser, Purchaser Indemnified Persons, Seller and
Seller Indemnified Persons with respect to this Agreement and the transactions
contemplated hereby.  Notwithstanding anything in this Agreement to the
contrary, nothing herein is intended to limit the liability of any Person for
such Person’s own fraud under Delaware law.

(b)The provisions of Article X were specifically bargained for and reflected in
the amounts payable to Seller in connection with the transactions contemplated
hereby.

(c)Each Indemnitee shall use reasonable efforts to mitigate any Damages for
which it may claim indemnification under this Article X.  To the extent any
Indemnitee has been found by an arbitrator or by a court of competent
jurisdiction to have failed to use reasonable efforts to mitigate such Damages,
such arbitrator or court of competent jurisdiction, as the case may be, shall be
permitted to reduce the applicable Indemnitor’s indemnification obligation by
the portion of such Damages attributable to such failure.

(d)Within five (5) Business Days after a Final Determination (as defined below),
Purchaser and Seller shall deliver to the Escrow Agent joint written
instructions signed by both Purchaser and Seller (attaching a copy of such Final
Determination) instructing the Escrow Agent to disburse all or a portion of the
Indemnity Escrow Amount (to the extent there are funds remaining in the
Indemnity Escrow Account and only up to the amount of such remaining funds) in
accordance with such Final Determination, as contemplated by the Escrow
Agreement.

(e)Within five (5) Business Days after a Final Determination that a Seller
Indemnified Party has suffered Damages and is entitled to indemnification from
Purchaser pursuant to this Article X, the amount of such Damages shall be paid
by Purchaser, in cash by wire transfer of immediately available funds, to
Seller.

(f)(i) Except as provided in the last sentence of Section 10.1(c), the amount of
any Damages payable to the Purchaser Indemnified Persons under this Article X
shall, in each case, be paid to the applicable Purchaser Indemnified Persons
solely from the Indemnity Escrow Account to the extent of available funds in the
Indemnity Escrow Account.

(ii)  Within one (1) Business Day after the Standard Survival Termination Date,
the Purchaser and Seller shall deliver to the Escrow Agent joint written
instructions signed by both Purchaser and Seller instructing the Escrow Agent to
release the funds remaining in the Indemnity Escrow Account (including all
earnings thereon) minus the amount, if any, of claims for indemnification under
Article X, in each case properly asserted prior to such date by the Purchaser
Indemnified Persons in writing in accordance with this Article X but not yet
paid or resolved as of the Standard Survival Termination Date (the “Unresolved
Claims”), to Seller.

(iii)  Following the Standard Survival Termination Date, to the extent that a
Final Determination is reached with respect to any Unresolved Claim, within five
(5) Business Days after such Final Determination, the Purchaser and Seller shall
deliver to the Escrow Agent joint written instructions signed by both Purchaser
and Seller instructing the Escrow Agent to release to Seller

 

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any amount reserved in the Indemnity Escrow Account with respect to such
Unresolved Claim (including all earnings thereon) that is not payable to the
Purchaser Indemnified Persons pursuant to such Final Determination.

(iv)  Such amount shall be released from the Indemnity Escrow Account to the
Seller through wire transfer of immediately available funds to the account
designated by the Seller. The amounts retained in the Indemnity Escrow Account
in respect of any Unresolved Claim shall be released by the Escrow Agent upon
final resolution of any Unresolved Claim in respect of which such amounts had
been retained in accordance with the terms of the Escrow Agreement.

(g)For purposes of this Article X, a “Final Determination” shall exist when (i)
the Indemnitor and the Indemnitee have entered into a written settlement
agreement with respect to the subject matter of a Claim or a Third-Party Claim,
as the case may be or (ii) a final non-appealable order has been entered by a
court of competent jurisdiction with respect to the subject matter of a Claim or
a Third-Party Claim.

10.8Tax Treatment of Indemnification Payments.  Purchaser and Seller agree to
treat any indemnification payment made pursuant to this Agreement as an
adjustment to the Purchase Price for all Tax purposes, unless otherwise required
by Law.

ARTICLE XI

MISCELLANEOUS

11.1Payment of Sales, Use or Similar Taxes.  All sales, use, transfer,
intangible, recordation, documentary stamp or similar Taxes or charges, of any
nature whatsoever, applicable to, or resulting from, the transactions
contemplated by this Agreement shall be borne by Purchaser.

11.2Expenses.  Whether or not the transactions contemplated hereby are
consummated, all costs and expenses (including any brokerage commissions or any
finder’s or investment banker’s fees and including attorneys’ and accountants’
fees) incurred in connection with the negotiation and execution of this
Agreement and each other agreement, document and instrument contemplated hereby
and the consummation of the transactions contemplated hereby and thereby shall
be paid by the party incurring such expenses, except that all Company
Transaction Expenses shall be borne by Seller.

11.3Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury
Trial.

(a)The parties hereto hereby irrevocably submit to the exclusive jurisdiction of
any federal or state court located within the State of Delaware over any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action proceeding related thereto may be
heard and determined in such courts.  The parties hereby irrevocably waive, to
the fullest extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such
dispute.  Each of the parties hereto agrees that a judgment in any such dispute
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.

(b)Notwithstanding the foregoing, each of the parties hereto agrees that it
shall not, and it shall use its commercially reasonable efforts to not permit
any of its Affiliates to, bring or support anyone else in bringing any action,
cause of action, claim, cross-claim or third-party claim of any kind or
description, whether in law or in equity, whether in contract or in tort or
otherwise, against the Financing Sources in any way relating to this Agreement
or any of the transactions contemplated hereby, including but not limited to any
dispute arising out of or relating in any way to the Debt Commitment Letter, in
any forum other than any New York State court or federal court sitting in the
City of New York in the Borough of Manhattan (and appellate courts thereof).

(c)Each of the parties hereto hereby consents to process being served by any
party to this Agreement in any suit, action or proceeding by delivery of a copy
thereof in accordance with the provisions of Section 11.6.

(d)TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH
PARTY HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING IN WHOLE
OR IN PART UNDER, RELATED TO, BASED ON OR IN CONNECTION WITH THIS AGREEMENT OR
THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER
SOUNDING IN TORT OR CONTRACT OR OTHERWISE.  ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.3 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL
BY JURY.

 

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11.4Entire Agreement; Amendments and Waivers.  This Agreement (including the
Schedules and any exhibits hereto, the Company Documents, the Seller Documents
and the Purchaser Documents) and the Confidentiality Agreement represent the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof.  This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by Purchaser and Seller.  No
action taken pursuant to this Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein.  The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a further or continuing waiver of such breach or as a waiver of any
other or subsequent breach.  No failure on the part of any party to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of such right,
power or remedy by such party preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.

11.5Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
conflicts or choice of law provisions thereof or of any other jurisdiction that
would give rise to the application of the domestic substantive law of any other
jurisdiction.

11.6Notices.  All notices and other communications under this Agreement shall be
in writing and shall be deemed given (i) when delivered personally by hand (with
written confirmation of receipt), (ii) when sent by facsimile (with written
confirmation of transmission) or (iii) one business day following the day sent
by commercial overnight courier (with written confirmation of receipt), in each
case at the following addresses and facsimile numbers (or to such other address
or facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):

 

 

If to the Companies prior to the Closing or if to Seller, to:

 

 

 

Latisys Holdings, LLC

 

 

c/o Great Hill Partners

 

 

One Liberty Square

 

 

Boston, Massachusetts 02109

 

 

Attn:  John G. Hayes

 

 

Fax:  (617) 790-9401

 

 

 

 

With copies to:

 

 

 

Locke Lord LLP

 

 

111 Huntington Avenue

 

 

Boston, MA 02199

 

 

Attn:  Stephen O. Meredith, Esq.

 

 

Fax:  (888) 325-9120

 

 

 

 

If to Purchaser, to:

 

 

 

Zayo Group, LLC

 

 

1805 29th Street, Suite 2050

 

 

Boulder, CO 80301

 

 

Attn:  Scott Beer

 

 

Fax: (303) 226-5923

 

 

 

 

With a copy to:

 

 

 

Gibson, Dunn & Crutcher LLP

 

 

1801 California Street

 

 

Denver, CO 80202

 

 

Attn:  Steven K. Talley

 

 

Fax: (303) 298-5907

11.7Severability.  If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any law or public policy, all other
terms or provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.  Upon such determination that any term or other provision is invalid,
illegal, or incapable of being enforced, the parties hereto shall

 

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negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.

11.8Binding Effect; Assignment.  This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns.  Nothing in this Agreement shall create or be deemed to create any
third party beneficiary rights in any person or entity not a party to this
Agreement except as contemplated by Section 7.6 and Article X; and provided that
the Financing Sources shall be express third party beneficiaries and entitled to
rely on Section 11.3(b) and (d).  No assignment of this Agreement or of any
rights or obligations hereunder may be made by either Seller or Purchaser,
directly or indirectly (by operation of law or otherwise), without the prior
written consent of the other parties hereto and any attempted assignment without
the required consents shall be void.  No assignment of any obligations hereunder
shall relieve the parties hereto of any such obligations.  Upon any such
permitted assignment, the references in this Agreement to Purchaser shall also
apply to any such assignee unless the context otherwise requires.

11.9No Recourse or Personal Liability.  Except as set forth in Section 10.7(a),
Purchaser agrees and acknowledges, both for itself and its Affiliates, that no
recourse under this Agreement or any documents or instruments delivered in
connection with this Agreement shall be had against any current or future
director, officer, employee, stockholder, member of any Company, Seller, or of
any Affiliate or assignee thereof, whether in their capacity as such or
otherwise, whether by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any statute, regulation or other
applicable Law, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
any current or future director, officer, employee, stockholder, or member of any
Company, Seller or any Affiliate or assignee thereof, whether in their capacity
as such or otherwise, for any obligation of any Company or Seller under this
Agreement or any documents or instruments delivered in connection with this
Agreement for any claim based on, in respect of or by reason of such obligations
or their creation.

11.10Remedies.  Except as otherwise expressly provided herein, any and all
remedies provided herein will be deemed cumulative with and not exclusive of any
other remedy conferred hereby, or by law or equity upon such party, and the
exercise by a party of any one remedy will not preclude the exercise of any
other remedy.  The parties hereto agree that irreparable damage for which
monetary damages, even if available, would not be an adequate remedy, would
occur in the event that one of the parties hereto does not perform its
obligations under the provisions of this Agreement (including failing to take
such actions as are required of them hereunder to consummate the transactions
contemplated by this Agreement) in accordance with their specific terms or
otherwise breaches such provisions.  It is accordingly agreed that, prior to the
valid termination of this Agreement pursuant to Section 9.1(e) or
Section 9.1(f), the parties hereto shall be entitled to an injunction or
injunctions, specific performance and other equitable relief to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this
Agreement, in each case without posting a bond or undertaking, this being in
addition to any other remedy to which they are entitled at law or in
equity.  Each of the parties hereto agrees that it will not oppose the granting
of an injunction, specific performance and other equitable relief when expressly
available pursuant to the terms of this Agreement on the basis that the other
Parties have an adequate remedy at law or an award of specific performance is
not an appropriate remedy for any reason at law or equity.

11.11Retention of Counsel.  In any dispute or proceeding arising under or in
connection with this Agreement following the Closing, Seller and its owners
shall have the right, at their election, to retain Edwards Wildman Palmer LLP to
represent them in such matter, even if such representation shall be adverse to
Purchaser and/or the Companies.  Purchaser and the Companies, for themselves and
for their respective Affiliates, successors and assigns, hereby irrevocably
consent to any such representation in any such matter.  Purchaser and the
Companies, for themselves and for their respective Affiliates, successors and
assigns, hereby irrevocably waive any actual or potential conflict arising from
any such representation in the event of: (1) any adversity between the interests
of Seller and its owners on the one hand and Purchaser and the Companies on the
other hand, in any such matter; and/or (2) any communication between Edwards
Wildman Palmer LLP and any Company, its Affiliates or employees, whether
privileged or not, or any other information known to such counsel, by reason of
such counsel’s representation of any of the Latisys Companies prior to Closing.

11.12Protected Communication.  The parties to this Agreement agree that,
immediately prior to the Closing, without the need for any further action (a)
all right, title and interest of any Latisys Company in and to all Protected
Communications shall thereupon transfer to and be vested solely in Seller and
its successors in interest, and (b) any and all protections from disclosure,
including, but not limited to, attorney client privileges and work product
protections, associated with or arising from any Protected Communications that
would have been exercisable by any Latisys Company shall thereupon be vested
exclusively in Seller and its successors in interest and shall be exercised or
waived solely as directed by Seller or its successors in interest.  None of the
Latisys Companies, Purchaser or any Person acting on any of their behalf shall,
without the prior written consent of Seller or its successors in interest,
assert or waive or attempt to assert or waive any such protection against
disclosure, including, but not limited to, the attorney-client privilege or work
product protection, or to discover, obtain, use or disclose or attempt to
discover, obtain, use or disclose any Protected Communications in any manner,
including in connection with any dispute or legal proceeding relating to or in
connection with this Agreement, the events and negotiations leading to this
Agreement, or any of the transactions contemplated herein, provided,

 

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however, the foregoing shall neither prohibit Purchaser from seeking proper
discovery of such documents nor Seller from asserting that such documents are
not discoverable to the extent that applicable attorney client privileges and
work product protections have attached thereto.  Seller and its successors in
interest shall have the right at any time prior to or following the Closing to
remove, erase, delete, disable, copy or otherwise deal with any Protected
Communications in whatever way they desire, and the Companies and Purchaser
shall provide full access to all Protected Communications in their possession or
within their direct or indirect control and shall provide reasonable assistance
at the expense of the Person requesting such assistance in order to give full
force and effect to the rights of Seller and its successors in interest
hereunder.

11.13No Waiver of Privilege, Protection from Disclosure or Use.  The parties
hereto understand and agree that nothing in this Agreement, including the
foregoing provisions regarding the assertions of protection from disclosure and
use, privilege and conflicts of interest, shall be deemed to be a waiver of any
applicable attorney-client privilege or other protection from disclosure or
use.  Each of the parties understands and agrees that it has undertaken
reasonable efforts to prevent the disclosure of Protected
Communications.  Notwithstanding those efforts, the parties understand and agree
that the consummation of the transactions contemplated by this Agreement could
result in the inadvertent disclosure of information that may be confidential,
eligible to be subject to a claim of privilege, or otherwise protected from
disclosure.  The parties further understand and agree that any disclosure of
information that may be confidential, subject to a claim of privilege, or
otherwise protected from disclosure will not constitute a waiver of or otherwise
prejudice any claim of confidentiality, privilege, or protection from
disclosure, including, but not limited to, with respect to information involving
or concerning the same subject matter as the disclosed information.  The parties
agree to use reasonable best efforts to return any inadvertently disclosed
information to the disclosing party promptly upon becoming aware of its
existence.  The parties further agree that promptly after the return of any
inadvertently disclosed information, the party returning such information shall
destroy any and all copies, summaries, descriptions and/or notes of such
inadvertently disclosed information, including electronic versions thereof, and
all portions of larger documents or communications that contain such copies,
summaries, descriptions or notes.

11.14Counterparts.  This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.

11.15Time of Essence.  With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.

** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK **

 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.

 

 

PURCHASER:

 

 

ZAYO GROUP, LLC

 

By:

/s/

 

 

Name: Scott E. Beer

 

 

Title:  General Counsel & Secretary

 

 

 

 

SELLER:

 

 

LATISYS HOLDINGS, LLC

 

By:

/s/

 

 

Name:  Peter K. Stevenson

 

 

Title:  President and Chief Executive Officer

 

 

 

 

COMPANIES:

 

 

LATISYS-CHICAGO HOLDINGS CORP.

 

By:

/s/

 

 

Name:  Peter K. Stevenson

 

 

Title:  President and Chief Executive Officer

 

 

 

 

LATISYS HOLDINGS CORP.

 

By:

/s/

 

 

Name:  Peter K. Stevenson

 

 

Title:  President and Chief Executive Officer

 

 

 

 

LATISYS-ASHBURN HOLDINGS CORP.

 

By:

/s/

 

 

Name:  Peter K. Stevenson

 

 

Title:  President and Chief Executive Officer

 

 

[Signature Page to Stock Purchase Agreement]