VECTOR CAPITAL
One Market Street
Steuart Tower, 23rd Floor
San Francisco, California 94105

 
May 4, 2018
 
 
 
CONFIDENTIAL
 
Fusion Connect, Inc.
420 Lexington Avenue, Suite 1718
New York, New York 10170
Attention: James P. Prenetta, Jr., EVP and General Counsel
 
James P. Prenetta, Jr.:
 
Reference is made to that certain First Lien Credit and Guaranty Agreement dated
as of May 4, 2018, among Fusion Connect, Inc., a Delaware corporation (the
“Borrower”), certain subsidiaries of the Borrower, as Guarantor Subsidiaries,
Vector Capital V, L.P., Vector Entrepreneur Fund V, L.P.,VC4 Debt Investments
(U.S.), L.L.C., Vector Fusion Holdings (Cayman), Ltd. and Vector Trading
(Cayman), L.P. (each, a “Vector Capital Lender” and, collectively, “Vector
Capital”), as Lenders, the other Lenders party thereto and Goldman Sachs Bank
USA, as Administrative Agent and Collateral Agent (such agreement, as may be
amended, modified, restated, supplemented and extended from time to time, the
“Credit Agreement”).
 
This letter (the “Side Letter”) expressly sets out the agreement between the
Borrower and Vector Capital with respect to Vector Capital’s observation rights
on the Board of Directors (as defined below), as further described in Section 1
herein. Capitalized terms used herein without definition are used as defined in
the Credit Agreement.
 
1.           Board Observation Rights.  Until the earlier of (a) such date on
which neither Vector Capital nor any of its affiliates under common control
holds any Loans under the Credit Agreement, and (b) the Subordinated Note
Mandatory Prepayment Date (as defined in the Credit Agreement, dated as of May
4, 2018, by and among Vector Fusion Holdings (Cayman), Ltd., Goldman Sachs
Lending Partners LLC, Goldman Sachs, and the other lenders parties thereto),
Vector Capital (or its affiliate, including limited partners of Vector, holding
a Loan) shall have the right to appoint one observer (the “Observer”) to the
board of directors of the Borrower (the “Board of Directors”), who shall be
entitled to attend (or at the option of such Observer, monitor by telephone) one
(1) regularly scheduled meeting per fiscal quarter (the “Quarterly Meetings”) of
the Board of Directors (other than any portions of any Quarterly Meeting that
(x) involve the exchange of privileged attorney-client information or work
product, or (y) are subject to a conflict of interest with a Vector Capital
Lender or other Lenders, in the reasonable discretion of Borrower) but shall not
be entitled to vote, and who shall receive all reports, meeting materials
(including copies of all board presentations), notices, written consents,
minutes and other materials with respect to such Quarterly Meetings (in each
case other than any portions of such reports or materials that contain
information (i) that is subject to a conflict of interest with a Vector Capital
Lender or other Lenders or (ii) that is subject to the attorney-client
privilege, in the reasonable discretion of Borrower) as and when provided to the
members of the Board of Directors. The Borrower shall reimburse the Observer for
the reasonable and documented out-of-pocket travel expenses incurred by any such
Observer in connection with such attendance at any in-person Quarterly Meetings,
to the extent consistent with the Borrower’s policies of reimbursing directors
generally for such expenses. The Board of Directors shall use reasonable
commercial efforts to hold at least one regularly scheduled meeting each fiscal
quarter, but to the extent that the Board of Directors does not convene
(telephonically, in-person or otherwise) during a fiscal quarter, the Observer
shall not have any observation rights during such quarter. The Observer shall
not have any observer, information, notice or other rights with respect to the
meetings of any committees or sub-committees of the Board of Directors, any
special meetings of the Board of Directors, or any meetings of the Board of
Directors other than the Quarterly Meetings; provided, that if the matters that
would normally be discussed by the Board of Directors at the Quarterly Meeting
(i.e., the periodic financial health and performance of Borrower) are instead
discussed by the Board of Directors at a special meeting, or by a committee or
sub-committee of the Board of Directors, then the Observer shall have observer
and information rights for such special meeting or committee or sub-committee
meeting, as applicable. The rights set forth in this paragraph 1 are the
“Observer Rights.”
 
 
 

 
 
2.           Insider Trading Laws. At all times while the Observer Rights are in
effect, Vector Capital and its affiliates shall abide by all applicable insider
trading securities law and any related regulations.
 
3.           Confidential Information. At all times while the Observer Rights
are in effect, and for two (2) years thereafter, Vector Capital shall not use or
disclose any Confidential Information of Borrower obtained by the Observer in
such capacity on the Board of Directors, except to any directors, officers,
employees, attorneys, agents, or accountants of Vector Capital (collectively,
“Representatives”) in connection with its capacity as a Lender. Vector Capital
shall inform any Representative who receives Confidential Information of its
obligations hereunder. For purposes of this Side Letter, “Confidential
Information” includes any legal, commercial, financial, business, technical,
marketing or other information related to the Borrower. “Confidential
Information” will also be deemed to include all notes, analyses, compilations,
studies, interpretations or other documents prepared by recipient thereof which
contain, reflect or are based upon, in whole or in part, Confidential
Information. Notwithstanding the foregoing, “Confidential Information” does not
include information which (a) is generally available, or becomes generally
available, to the public other than as a result of disclosure by Vector Capital
or a Representatives (including information contained in the Borrower’s public
filings with the Securities and Exchange Commission), or (b) becomes available
to Vector Capital on a non-confidential basis from a source other than the
Borrower or its representatives; provided that the source of such information is
not bound by a confidentiality agreement with respect to such information or
other obligation to keep such information confidential.
 
4.           General. This Side Letter may be executed in any number of
counterparts which, when taken together, shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page of this Side
Letter by facsimile or electronic transmission shall be effective as delivery of
a manually executed counterpart of this Side Letter. Section headings used
herein are for convenience of reference only, are not part of this Side Letter
and are not to affect the construction of, or to be taken into consideration
when interpreting, this Side Letter. This Side Letter embodies the entire
agreement and understanding between Vector Capital, the other Lenders and you
with respect to the specific matters set forth herein and supersedes all prior
agreements and understandings relating to the subject matter hereof. No party
has been authorized by any Vector Capital Lender or any other Lender to make any
oral or written statements inconsistent with this Side Letter. This Side Letter
is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto. This Side Letter may not be amended or any
provision hereof waived or modified except by an instrument in writing signed by
Vector Capital and you. This Side Letter may not be assigned by you without the
prior written consent of Vector Capital and the other Lenders, and any attempted
assignment without such consent shall be null and void.
 
It is understood and agreed that this Side Letter shall not constitute or give
rise to any obligation on the part of any Lender (in each case, in any capacity)
to provide or arrange any financing; such an obligation will arise only under
the Credit Agreement, to the extent the Lenders are bound thereunder if accepted
in accordance with its terms.
 
[Signature page follows]
 

 
 
Very truly yours,
 
 
VECTOR CAPITAL V, L.P.
VECTOR ENTREPRENEUR FUND V, L.P.
VC4 DEBT INVESTMENTS (U.S.), L.L.C.
VECTOR TRADING (CAYMAN), L.P.
VECTOR FUSION HOLDINGS (CAYMAN), LTD.
 
 
By: /s/ James Murray______________________
Name:  James Murray
Title:    Director
 
 
 
 
 
[Signature Page to Side Letter]
 

 
 
Accepted and Agreed to in all respects:
 
 
FUSION CONNECT, INC., as Borrower
 
 
By:
/s/ James P. Prenetta, Jr.
 
Name: James P. Prenetta, Jr.
 
Title: EVP and General Counsel

 
 
 
 
 
 
 
 
 
[Signature Page to Side Letter]