Exhibit 10.1

 

Execution Version

 

 

 

 

STOCK PURCHASE AGREEMENT

 

by and among

 

GTT COMMUNICATIONS, INC.

 

GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC.,

 

MEGAPATH GROUP, INC.

 

AND

 

MEGAPATH CORPORATION

 

February 19, 2015

 

 

 

 

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Table of Contents

 

ARTICLE I PURCHASE AND SALE OF THE SHARES

2

 

 

1.1

Sale and Purchase of Stock

2

1.2

Purchase Price

2

1.3

Payment of the Closing Purchase Price

2

1.4

Closing

3

1.5

Post-Closing Purchase Price Adjustment

4

1.6

Tax Withholding

6

 

 

 

ARTICLE II REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY

7

 

 

2.1

Existence; Good Standing

7

2.2

Capitalization

7

2.3

Authority; Enforceability

8

2.4

No Conflict; Consents

8

2.5

Subsidiaries

9

2.6

Financial Statements and Related Matters

9

2.7

Absence of Certain Changes

10

2.8

Customers and Suppliers; Accounts Receivable

12

2.9

Title to Tangible Personal Property

13

2.10

Significant Contracts

13

2.11

Intellectual Property

16

2.12

Real Property

19

2.13

Litigation

19

2.14

Employee Benefit Plans

20

2.15

Compliance with Law; Permits

22

2.16

Environmental Matters

23

2.17

Taxes

24

2.18

Insurance

26

2.19

Employees

27

2.20

Powers of Attorney

28

2.21

Absence of Certain Practices

28

2.22

Transactions with Related Persons

29

2.23

Books and Records

29

2.24

Bank Accounts

29

2.25

Brokers

29

2.26

No Other Representations or Warranties

30

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING SELLER

30

 

 

3.1

Existence; Good Standing

30

3.2

Authority; Enforceability

30

3.3

No Conflicts

31

3.4

Consents

31

3.5

Litigation

31

3.6

Title to Shares

31

3.7

Certain Relationships

32

3.8

No Other Representations or Warranties

32

 

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Table of Contents

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT

32

 

 

4.1

Existence; Good Standing

32

4.2

Authority; Enforceability

32

4.3

No Conflicts

33

4.4

Consents

33

4.5

Litigation

33

4.6

Financial Ability to Perform

33

4.7

Investment Representations

33

4.8

Brokers Fees

34

4.9

No Other Representations or Warranties

34

 

 

 

ARTICLE V PRE-CLOSING COVENANTS

34

 

 

 

5.1

Conduct of Seller and Purchaser

34

5.2

Conduct of the Company

35

5.3

Control of Operations

36

5.4

Regulatory and Other Approvals

36

5.5

Access

38

5.6

Exclusivity

38

5.7

Notification

39

5.8

Purchaser Financing

40

5.9

Outstanding Letters of Credit and Guarantees

40

5.10

Publicity

41

5.11

280G Matters

41

5.12

Cooperation with Audit

42

5.13

The Divestiture

42

5.14

Shared Contracts

44

5.15

Commercial Agreements and Shared Services

44

 

 

 

ARTICLE VI POST-CLOSING COVENANTS

44

 

 

6.1

Tax Election

44

6.2

Tax Matters

46

6.3

Transfer Taxes

47

6.4

Access to Books and Records

48

6.5

Restrictive Covenants of Seller

48

6.6

Further Assurances

50

6.7

Netco Transaction

51

6.8

Use of Trademarks; Name Change

51

6.9

Financial Statements for the Acquired Business

51

 

 

 

ARTICLE VII CONDITIONS TO CLOSING

52

 

 

7.1

Conditions to the Obligation of Purchaser

52

7.2

Conditions to the Obligation of the Company and Seller

53

7.3

Closing Deliveries of Seller

54

7.4

Closing Deliveries of Purchaser

55

 

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Table of Contents

 

ARTICLE VIII INDEMNIFICATION

56

 

 

 

8.1

Survival Period

56

8.2

Expiration of Indemnification

56

8.3

Indemnification by the Parties

56

8.4

Indemnification Claim Procedure

57

8.5

Defense of Third Party Claims

58

8.6

Limitations on Indemnification

60

8.7

Determination of Loss Amount

62

8.8

Source of Recovery; Payment of Amounts Due

62

8.9

Exclusive Remedy

63

8.10

Treatment of Indemnification Payments

64

 

 

 

ARTICLE IX TERMINATION

64

 

 

9.1

Termination

64

9.2

Effect of Termination

65

 

 

 

ARTICLE X GENERAL PROVISIONS

66

 

 

 

10.1

Expenses

66

10.2

Notices

66

10.3

Assignment; Successors

67

10.4

Amendment and Waiver

68

10.5

Entire Agreement

68

10.6

Severability

68

10.7

Headings

69

10.8

Counterparts

69

10.9

Governing Law

69

10.10

Consent to Jurisdiction; Waiver of Jury Trial

69

10.11

Remedies

70

10.12

Third Party Beneficiaries

71

10.13

Interpretation

71

10.14

Construction

72

10.15

Deliveries to Purchaser

72

 

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Table of Contents

 

Annex A — Definitions

 

Exhibits:

 

A - Subscription Agreement

 

B - Transition Services Agreement

 

C — Form of Contribution Agreement

 

D — Summary Terms for Commercial Agreements

 

E — Form of Release Agreement

 

Schedules:

 

1.2(g) — Certain Indebtedness

1.5 — Working Capital Calculation

7.1(d) — Required Consents

7.3(b)(ii) — State Good Standings

 

Seller Disclosure Schedules

Purchaser Disclosure Schedules

 

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STOCK PURCHASE AGREEMENT

 

This STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of
February 19, 2015, by and among GTT Communications, Inc., a Delaware corporation
(“Parent”), Global Telecom & Technology Americas, Inc., a Virginia corporation
(“Purchaser”), MegaPath Group, Inc., a Delaware corporation (“Seller”), and
MegaPath Corporation, a Virginia corporation (the “Company”).  Purchaser, Seller
and the Company are sometimes referred to herein individually as a “Party” and,
collectively, as the “Parties”.  Capitalized terms used and not otherwise
defined herein have the meanings set forth in Annex A.

 

RECITALS

 

A.                                    Seller owns beneficially and of record all
of the issued and outstanding shares of capital stock and other equity interests
in the Company (collectively, the “Shares”).

 

B.                                    Parent owns all of the outstanding capital
stock of Purchaser.

 

C.                                    Prior to December 31, 2014, the Company
conducted three lines of business, which it referred to as (1) Network Services,
(2) Cloud & Hosted Services and (3) Managed Services.

 

D.                                    The Managed Services business of the
Company includes the provision of (1) virtual private network (VPN) services,
including MPLS VPN, IP Sec, Hybrid VPN and Remote Access SSL VPN, (2) managed
security services, including network- and CPE-based unified management,
firewall, intrusion detection and prevention, managed logging, anti-virus,
anti-spam and content filtering, and (3) other managed services, consisting of
compliancy solutions, proactive network monitoring, customer portal, Cos/QoS and
managed broadband (such business, the “Business” and as conducted by the
Company, the “Acquired Business”).

 

E.                                     On December 31, 2014, the Company
consummated the sale of its Network Services business to Global Capacity, which
was structured as a contribution of the relevant assets and liabilities of the
Network Services business to a new entity and the sale of that entity to Global
Capacity.  Prior to the Closing, the Company will transfer to an Affiliate of
the Company (“CloudCo”) all of the assets and liabilities of the Company that
are not directly related to the Acquired Business (such business, the “Cloud &
Hosted Services Business”) and such transfer, the “Divestiture”).  Accordingly,
immediately prior to the Closing, the business of the Company will consist only
of the Acquired Business and the employees, assets and liabilities of the
Company will consist only of employees, assets and liabilities directly related
to the Acquired Business.

 

F.                                      Subject to consummation of the
Divestiture, Purchaser desires to acquire from Seller all of the Shares, and
Seller desires to sell, assign, transfer and convey to Purchaser all of the
Shares, pursuant to the terms and conditions of this Agreement.

 

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AGREEMENT

 

Now, therefore, in consideration of the premises and the representations and
warranties and mutual covenants and agreements contained in this Agreement and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the Parties agree as
follows:

 

ARTICLE I
PURCHASE AND SALE OF THE SHARES

 

1.1                               Sale and Purchase of Stock.  Upon the terms
and subject to the conditions contained in this Agreement, at the Closing Seller
shall sell, assign, transfer and convey to Purchaser, and Purchaser shall
purchase and acquire from Seller, all of the Shares, free and clear of all
Liens, in exchange for the payment by Purchaser, in accordance with Section 1.2,
of the Purchase Price.

 

1.2                               Purchase Price.  The aggregate purchase price
for the Shares shall be: (a) One Hundred Thirty- Four Million, Eight Hundred
Thousand Dollars ($134,800,000), (b) plus Six Hundred Ten Thousand Eight Hundred
Forty Three (610,843) shares of the common stock, par value $0.0001 per share,
of Parent (such shares, the “Parent Stock”), (c) plus the amount of Estimated
Closing Cash, (d) plus Ten Million Dollars ($10,000,000) in cash (the “Deferred
Cash Payment”), (e) plus the amount, if any, by which Estimated Working Capital
exceeds Target Working Capital, (f) minus the amount, if any, by which Estimated
Working Capital is less than Target Working Capital and (g) minus the aggregate
amount described on Schedule 1.2(g) with respect to Company Indebtedness
identified on Schedule 1.2(g), determined in the manner contemplated by Schedule
1.2(g) (the amount set forth in the preceding clause (a), as adjusted pursuant
to clauses (c), (g) and (e) or (f), as applicable, is the “Closing Cash
Consideration”; and the result of the calculation set forth in the preceding
clauses (a) through (g) is the “Closing Purchase Price”, and as adjusted
pursuant to Section 1.5, is the “Purchase Price”).

 

1.3                               Payment of the Closing Purchase Price.

 

(a)                                 Payment of Closing Cash Consideration.  At
the Closing, upon the terms and subject to the conditions set forth in this
Agreement, Purchaser shall pay, or cause to be paid, the Closing Cash
Consideration by wire transfer of immediately available funds as follows:

 

(i)                                     to each holder of Company Indebtedness
outstanding immediately prior to the Closing, other than any such Indebtedness
identified on Schedule 1.2(g), the amount necessary to pay off the Company
Indebtedness held by such holder;

 

(ii)                                  to each Person identified in the Closing
Statement, any Company Transaction Expenses remaining unpaid to such Person in
accordance with the Closing Statement; and

 

(iii)                               the balance to Seller.

 

2

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(b)                                 Payment of Parent Stock.  At the Closing,
upon the terms and subject to the conditions set forth in this Agreement, Parent
shall deliver, or cause to be delivered to Seller, the Parent Stock by
electronic deposit of such shares in an account designated by Seller reasonably
in advance of the Closing or, if requested by Seller or if Seller fails to so
identify such an account, by delivery to Seller of a physical certificate for
such shares.  Notwithstanding the forgoing, the provisions of Section 1.2(b) or
any other provision of this Agreement, in the event that (i) the Parent Stock is
not listed on the New York Stock Exchange immediately prior to the Closing Date
or (ii) the representations and warranties of Parent set forth in
Section 2(e) or Section 2(f) of the Subscription Agreement would be untrue when
made if Parent executes and delivers the Subscription Agreement at the Closing,
then (A) Parent will not deliver the Parent Stock at the Closing and instead the
amount referred to in Section 1.2(a) shall be increased to One Hundred Forty
Million Dollars ($140,000,000) and (B) the Parties shall not, and shall not be
obligated to, execute and deliver the Subscription Agreement at the Closing.

 

(c)                                  Payment of Deferred Cash Payment.  On the
first anniversary of the Closing Date, upon the terms and subject to the
conditions set forth in this Agreement (including Article VIII), Purchaser shall
pay, or cause to be paid, the Deferred Cash Payment (as reduced by any prior
application of Section 8.8 and any amounts subject to unresolved indemnification
claims pursuant to Article VIII in favor of Purchaser) to Seller by wire
transfer of immediately available funds.

 

(d)                                 Closing Statement.  In order to facilitate
the payments contemplated by Section 1.3(a), not less than three (3) Business
Days nor more than five (5) Business Days prior to the Closing Seller shall
prepare and deliver to Purchaser a statement (the “Closing Statement”) setting
forth: (i) the Company’s good faith estimate of (A) the aggregate amount of all
Actual Cash of the Company as of the opening of business on the Closing Date
(the “Estimated Closing Cash”), (B) the Working Capital as of the opening of
business on the Closing Date (the “Estimated Working Capital”), (C) the Company
Indebtedness as of the opening of business on the Closing Date (the “Estimated
Closing Indebtedness”) and (D) the aggregate amount of any Company Transaction
Expenses required to be paid pursuant to Section 1.3(a)(ii) (the “Estimated
Company Transaction Expenses”), in each case under this clause (i) together with
supporting work papers, (ii) the name of each Person to receive a payment at the
Closing under Section 1.3(a), (iii) the amount payable to each such Person and
(iv) wire instructions for each such Person.  There shall be appended to the
Closing Statement (I) payoff letters for the Company Indebtedness referred to in
Section 1.3(a)(i) and (II) invoices of the advisors, legal counsel, accountants
and other professionals for the fees and expenses to be paid at the Closing
pursuant to Sections 1.3(a)(ii).  Purchaser shall have the right to review and
comment on the Closing Statement, and Seller shall give consideration in good
faith to any such comments, but the failure or refusal of Seller to accept any
such comments shall not delay the Closing.  The Closing Statement shall be
prepared (and the estimates, determinations and calculations contained therein
shall be made) in accordance with this Agreement, including Section 1.5(e).

 

1.4                               Closing.  The closing of the purchase and sale
of the Shares (the “Closing”) shall take place: (a) at the offices of Goodwin
Procter LLP, located at 901 New York Avenue NW, Washington, DC 20001, (b) at
10:00 a.m. (New York time) on the later of (i) the fourth (4th)

 

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Business Day after the date on which the last to be satisfied or waived of the
conditions set forth in Article VII (other than conditions which, by their
nature, are to be satisfied at the Closing, but subject to the waiver or
satisfaction of those conditions) has been satisfied or waived in accordance
with this Agreement or (ii) April 1, 2015; or (c) at such other place, time and
date as Purchaser and Seller shall mutually agree in writing.  The “Closing
Date” shall be the date upon which the Closing occurs.

 

1.5                               Post-Closing Purchase Price Adjustment.

 

(a)                                 Closing Statement.  As soon as practicable
after the completion of the audit of the Unaudited Financial Statements, but no
earlier than ninety (90) days after the Closing Date or later than one hundred
twenty (120) days after the Closing Date, Purchaser shall deliver to Seller a
statement (the “Final Closing Statement”) setting forth Purchaser’s good faith
determination of: (i) the aggregate amount of all Actual Cash (the “Actual
Cash”), (ii) the Working Capital as of the opening of business on the Closing
Date (the “Actual Working Capital”), (iii) the aggregate amount of all Company
Indebtedness, as of immediately prior to the Closing (“Actual Company
Indebtedness”), (iv) the aggregate amount of all Company Transaction Expenses as
of immediately prior to the Closing (the “Actual Company Transaction Expenses”),
and (v) the amount by which the sum (which may be a negative number) of the
Actual Cash, plus Actual Working Capital (which may be a negative number), minus
Actual Company Transaction Expenses and minus Actual Company Indebtedness
exceeds or is less than the sum (which may be a negative number) of the
Estimated Closing Cash, plus the Estimated Working Capital (which may be a
negative number), minus the Estimated Closing Indebtedness and minus the
Estimated Company Transaction Expenses (the amount of such excess (including any
decrease in a negative sum) being a “Net Increase”, and the amount of such
shortfall (including any increase in a negative sum) being a “Net Decrease”),
which statement shall also set forth in reasonable detail Purchaser’s
calculation of such amounts.  The Final Closing Statement and the determinations
and calculations contained therein shall be prepared in accordance with this
Agreement, including Section 1.5(e).

 

(b)                                 Seller Review.

 

(i)                                     Within sixty (60) days after receipt by
Seller of the Final Closing Statement, Seller shall deliver written notice (a
“Dispute Notice”) to Purchaser of any dispute it has with respect to the
preparation or content of the Final Closing Statement, which Dispute Notice
shall include a written description of the basis for and dollar amount of such
disputed items (to the extent reasonably possible), all in reasonable detail.  
If during such sixty (60)-day period Seller notifies Purchaser that it does not
dispute the Final Closing Statement, then the Actual Cash, Actual Working
Capital, Actual Company Indebtedness, Actual Company Transaction Expenses and
Net Increase or Net Decrease, as applicable, as set forth in the Final Closing
Statement, shall become final, conclusive and binding on Purchaser and Seller at
the time such notice is delivered.  If Seller does not deliver a Dispute Notice
within such sixty (60)-day period, then Seller shall be conclusively deemed to
have waived any right to object to the Final Closing Statement delivered by
Purchaser and the Actual Cash, Actual Working Capital, Actual Company
Indebtedness, actual Company Transaction Expenses and Net Increase or Net
Decrease,

 

4

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as applicable, as set forth in the Final Closing Statement shall become final,
conclusive and binding on Purchaser and Seller.

 

(ii)                                  During the sixty (60)-day period referred
to in Section 1.5(b)(i) and any subsequent time period in which the Final
Closing Statement is being disputed as provided in Section 1.5(c), Purchaser
shall cause the Company to (A) provide Seller and its representatives with
reasonable access, upon reasonable notice and during times mutually and
reasonably agreeable to Purchaser and Seller, to the books, records and working
papers of the Company that are directly related to the Final Closing Statement
and necessary for Seller to undertake is review of the Final Closing Statement
and (B) undertake commercially reasonable efforts to cause its employees to
confer with Seller regarding the foregoing, in the case of each of the preceding
clauses (A) and (B) for purposes of review by Seller and its representatives of
the Final Closing Statement and the calculations set forth thereon.

 

(c)                                  Disputed Final Adjustment.  If a Dispute
Notice is timely delivered within the sixty (60)-day period referred to in
Section 1.3(b)(i), (i) any amount set forth in the Final Closing Statement and
not disputed in such Dispute Notice shall be final, conclusive and binding on
Purchaser and Seller; and (ii) Purchaser and Seller shall negotiate in good
faith during the thirty (30)-day period after delivery of such Dispute Notice to
resolve each dispute raised therein (each, an “Objection”), and if any Objection
is resolved, the item so resolved shall be deemed final, conclusive and binding
on Purchaser and Seller.  If Purchaser and Seller resolve all of the disputed
items in such Dispute Notice during such thirty (30)-day period, the Final
Closing Statement shall be revised to reflect such resolution, and as so revised
shall be final, conclusive and binding on Purchaser and Seller.  If Purchaser
and Seller, notwithstanding such good faith efforts, fail to resolve all of the
Objections within such thirty (30)-day period (or such longer period as they may
mutually agree), then at the end of such period Purchaser and Seller shall
jointly engage BDO Siedman LLP or, if such firm is unwilling to serve in such
capacity, another nationally-recognized accounting firm reasonably acceptable to
both Purchaser and Seller (the “Accounting Arbitrator”), and shall instruct such
firm to review and resolve exclusively all of the unresolved Objections (and no
other matters contained in the Final Closing Statement) (acting as an expert and
not an arbitrator) in accordance with this Agreement (including Section 1.5(e))
as soon as practicable thereafter (but in any event within thirty (30) days
after engagement of the Accounting Arbitrator).  Purchaser and Seller shall
instruct the Accounting Arbitrator to deliver a written report containing its
calculation of the disputed Objections within such thirty (30)-day period. 
Purchaser and Seller shall instruct the Accounting Arbitrator to not assign a
dollar amount to any Objection greater than the greatest dollar amount for such
item assigned by Purchaser, on the one hand, or Seller, on the other hand, or
lower than the lowest dollar amount for such item assigned by Purchaser, on the
one hand, or Seller, on the other hand.  All Objections that are determined by
the Accounting Arbitrator shall be deemed final, conclusive and binding on
Purchaser and Seller, absent manifest error, effective as of the date the
Accounting Arbitrator’s written determination is received by Purchaser and
Seller and shall be enforceable by any court of competent jurisdiction.  The
Final Closing Statement shall be revised to reflect such resolution and the
Final Closing Statement, as finally determined in accordance with this
Section 1.5(b)(i) shall be final, conclusive and binding on Purchaser and
Seller.  The fees and expenses of the Accounting Arbitrator incurred in
connection with the resolution of

 

5

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disputes pursuant to this Section 1.5(c) shall be borne entirely by
(A) Purchaser, if (I) the difference between the Net Increase or Net Decrease
(as applicable) based on Purchaser’s position with respect to each Objection
submitted to the Accounting Arbitrator for resolution, and the amount of the Net
Increase or Net Decrease determined based upon the Final Closing Statement is
greater than (II) the difference between the Net Increase or Net Decrease (as
applicable) based on Seller’s position with respect to each Objection submitted
to the Accounting Arbitrator for resolution, and the amount of the Net Increase
or Net Decrease determined based upon the Final Closing Statement or (B) by
Seller in all other cases.

 

(d)                                 Payment following Calculation of Final
Closing Statement.

 

(i)                                     If the Final Closing Statement includes
a Net Increase, Purchaser shall pay to Seller cash in the amount of such Net
Increase within five (5) Business Days after it becomes final, conclusive and
binding on Purchaser and Seller by wire transfer of immediately available funds
to such account as Seller may designate to Purchaser reasonably in advance of
such payment.

 

(ii)                                  If the Final Closing Statement includes a
Net Decrease, Seller shall pay to Purchaser cash in the amount of such Net
Decrease within five (5) Business Days after it becomes final, conclusive and
binding on Purchaser and Seller by wire transfer of immediately available funds
to such account as Purchaser may designate to Seller reasonably in advance of
such payment.

 

If any Party fails to pay any amount when due under this Section 1.5(d), such
unpaid amount shall thereafter bear simple interest at a rate equal to the prime
rate in effect from time to time (as published in The Wall Street Journal) plus
two (2) percentage points, until paid in full.

 

(e)                                  Accounting Procedures.  The Closing
Statement, the Final Closing Statement and the determinations and calculations
contained therein shall be prepared and calculated in accordance with the
accounting methods, practices, policies and principles set forth on Schedule
1.5.  Such statements, calculations and determinations (i) shall not include any
purchase accounting or other adjustment arising out of the consummation of the
transactions contemplated by this Agreement, (ii) shall follow the defined terms
contained in this Agreement whether or not such terms are consistent with GAAP
and (iii) shall calculate any reserves, accruals or other non-cash expense items
on a pro rata (as opposed to monthly accrual) basis to account for a Closing
that occurs on any date other than the last day of a calendar month.  By way of
example, the calculation of Working Capital (forecasted) as of March 31, 2015 is
also set forth on Schedule 1.5.

 

(f)                                   Treatment of Payments.  Any payments made
pursuant to this Section 1.5 shall be treated for all Tax purposes as
adjustments to the Purchase Price.

 

1.6                               Tax Withholding.  Notwithstanding anything to
the contrary in this Agreement, each of Parent, Purchaser and the Company shall
be entitled to deduct and withhold from any payments of consideration with
respect to the Shares pursuant to this Agreement such amounts as Parent,
Purchaser or the Company is required to deduct and withhold under the Code or
any other applicable Tax Law.  To the extent that amounts are so withheld by
Parent, Purchaser or

 

6

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the Company and properly deposited with the applicable Governmental Authority,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the Person in respect of whom such deduction and withholding
were made.

 

ARTICLE II
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY

 

As a material inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, the Company and
Seller hereby represent and warrant to Purchaser, as of the date of this
Agreement and as of the Closing Date, as follows:

 

2.1                               Existence; Good Standing.  The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Virginia.  The Company is duly qualified to do business and
is in good standing as a foreign corporation under the laws of each jurisdiction
where such qualification is required, except where such failure to qualify would
not reasonably be expected have a Material Adverse Effect.  Section 2.1 of the
Seller Disclosure Schedule sets forth an accurate and complete list of each
jurisdiction in which the Company is qualified to do business as a foreign
corporation.  The Company has all required corporate power and authority to
conduct the businesses in which it is engaged, to own and use the assets and
properties that it purports to own or use and to perform its obligations.  The
Company is not in violation of any of its Organizational Documents.

 

2.2                               Capitalization.  The authorized capital stock
of the Company consists of shares of common stock, no par value per share, of
which an aggregate of 1,987 shares are issued and outstanding on the date of
this Agreement.  All of the issued and outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable and none of such shares are subject to or were issued in
violation of any pre-emptive rights, rights of first offer or first refusal or
similar rights, or in violation of the Securities Act or any other applicable
securities law.  There are no outstanding subscriptions, pre-emptive rights,
options, warrants or other agreements or commitments or other rights of any kind
to acquire (including securities exercisable or exchangeable for or convertible
into), or obligating the Company to issue, any shares of capital stock of the
Company, or giving any Person the right to receive any benefits or rights
similar to any rights enjoyed by or accruing to the benefit of the holders of
any shares of the capital stock of the Company (solely in their capacity as a
holder).  The Company is not subject to any obligation (contingent or otherwise)
to repurchase, redeem, call or otherwise retire, or to register, any shares of
its capital stock.  The Shares collectively constitute all of the issued and
outstanding shares of capital stock of the Company, and as of the date of this
Agreement the Shares are owned of record and beneficially by Seller.  The
Company is not a party to or bound by any Contract granting any stock
appreciation or similar right or any participation right in the revenue or
profits of the Company.  Except for Contracts that will be terminated at or
prior to the Closing and the Contracts set forth in Section 2.2 of the Seller
Disclosure Schedule, there are no Contracts with respect to the: (a) voting of
any shares of capital stock of the Company (including any proxy or director
nomination rights) or (b) transfer of, or transfer restrictions on, any shares
of capital stock of the Company.

 

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2.3                               Authority; Enforceability.  The Company has
all requisite corporate power and authority to execute and deliver this
Agreement and each of the other Transaction Documents to which it will be a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.  The execution and delivery of
this Agreement and each such Transaction Document by the Company, the
performance by the Company of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of the Company.  This Agreement
is, and when executed and delivered by the Company each other Transaction
Document to which the Company will be a party will be, duly and validly executed
and delivered by the Company and, assuming the due and valid authorization,
execution and delivery by Purchaser of this Agreement and each such Transaction
Document (if Purchaser is a party thereto), and constitutes legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting
creditors’ rights generally and by general equitable principles).

 

2.4                               No Conflict; Consents.

 

(a)                                 Except as set forth in Section 2.4(a) of the
Seller Disclosure Schedule, the execution and delivery by the Company of this
Agreement and each other Transaction Document to which it will be a party, the
performance by the Company under this Agreement and each such Transaction
Document, and the consummation of the transactions contemplated hereby and
thereby, will not (i) violate or conflict with any Organizational Document of
the Company, (ii) violate or conflict with any Law applicable to the Company or
any of its assets or properties or the Shares, (iii) with or without the passage
of time or the giving of notice, or both, violate, conflict with or result in a
breach of the terms or conditions or provisions of, or constitute a default (or
an event which might, with the passage of time or the giving of notice or both,
constitute a default) under, or result in or give rise to a right of
termination, modification, acceleration or cancellation of any obligation under,
any Contract to which the Company is a Party or by which any of its assets or
properties or the Shares are bound, (iv) result in the creation or imposition of
any Lien upon any of the assets or properties of the Company or upon the Shares
(other than any Liens arising due to actions of Purchaser) or (v) result in the
termination, suspension, revocation, impairment, forfeiture, nonrenewal or other
adverse modification of any Company Permit or give any Governmental Authority
the right to revoke, suspend, modify or terminate any Company Permit. 
Notwithstanding the foregoing, solely with respect to any consent to assignment
that would be required to assign a Contract to CloudCo under the Contribution
Agreement, on or before the Allocation Date the Company or Seller may deliver to
Purchaser an updated Section 2.4(a) of the Seller Disclosure Schedule with
respect to the foregoing clause (iii), solely to add any such consents, and such
update shall be deemed to have been made and modify such representation for all
purposes under this Agreement as of the date of this Agreement.

 

(b)                                 Except as set forth in Section 2.4(b) of the
Seller Disclosure Schedule, no material consent, approval, waiver, order, Permit
or authorization of, or material registration, application, qualification,
designation, declaration, filing or notification with or to, any Governmental
Authority or any other Person, including a party to a Contract to which the

 

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Company is a party or by which any of the Company’s material assets or
properties are bound, is required to be obtained or made by the Company in
connection the execution, delivery and performance by the Company of this
Agreement and each other Transaction Document to which it will be a party, the
performance by the Company under this Agreement and each such Transaction
Document, and the consummation of the transactions contemplated hereby and
thereby.

 

2.5                               Subsidiaries.  The Company does not own,
directly or indirectly, any equity securities of any Person.  Except as set
forth in Section 2.5 of the Seller Disclosure Schedule, the Company is not the
successor to the business of any Person (including by acquisition, merger,
consolidation or business combination).

 

2.6                               Financial Statements and Related Matters.

 

(a)                                 Attached as Section 2.6(a)(i) of the Seller
Disclosure Schedule are correct and complete copies of: (i) the audited
consolidated balance sheet of MegaPath Holding Corporation, a Delaware
corporation (“MegaPath Holding Corporation”), as at December 31, 2012 and 2013,
together with the related audited consolidated statements of income,
stockholder’s equity and cash flows of MegaPath Holding Corporation for the year
ended December 31, 2013 (the “Audited Financial Statements”), (ii) the unaudited
consolidated balance sheet of MegaPath Holding Corporation as at December 31,
2014, together with the related unaudited consolidated statement of income of
MegaPath Holding Corporation for the twelve (12)-month period then ended (the
“Unaudited Financial Statements”), and (iii) the unaudited balance sheet of the
Acquired Business as at December 31, 2014 (such balance sheet as at December 31,
2014, the “Latest Balance Sheet” and such date the “Balance Sheet Date”),
together with the related unaudited statement of income of the Acquired Business
for the year ended December 31, 2014 (the “Latest Carve-Out Financial
Statements”).  Each of the Audited Financial Statements and the Unaudited
Financial Statements (A) was prepared in accordance with GAAP consistently
applied as at the dates thereof and for the periods covered thereby, except in
the case of the Unaudited Financial Statements for the absence of footnote
disclosure required by GAAP and normal year-end adjustments, none of which
adjustments will, individually or in the aggregate, be material, (B) was
prepared, in all material respects, based upon the books and records of the
Company consistent with past practices of the Company and (C) presents fairly
the financial condition of the Company as of its respective date and the results
of operations and cash flows of the Company for the periods then ended, as
applicable.  Except as set forth in Section 2.6(a)(ii) of the Seller Disclosure
Schedule, each of the Latest Carve-Out Financial Statements was (I) prepared in
accordance with the accounting methods, practices, policies and principles set
forth on Schedule 1.5 consistently applied as at the dates thereof and for the
periods covered thereby, and (II) prepared, in all material respects, based upon
the books and records of the Company, and each of the Latest Carve-Out Financial
Statements presents fairly the financial condition of the Acquired Business as
of its respective date and the results of operations and cash flows of the
Acquired Business for the periods then ended, as applicable.  The Company is not
a party to, and it does not have any commitment to become a party to, any
off-balance sheet arrangements.  Schedule 1.5 has been prepared in accordance
with the provisions of Section 1.5.

 

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(b)                                 As of the Latest Balance Sheet Date, the
Company had no Liabilities except (i) as set forth in in Section 2.6(b) of the
Seller Disclosure Schedule, (ii) as reflected in the Latest Balance Sheet,
(iii) liabilities arising under Contracts, and (iv) liabilities related to
Company Intellectual Property.  As of the Closing, the Company will have no
Liabilities except (A) as set forth in Section 2.6(b) of the Seller Disclosure
Schedule, (B) as reflected in the Final Closing Statement, (iii) liabilities
arising under Contracts (other than those assumed by CloudCo under the
Contribution Agreement) and (iv) liabilities related to Company Intellectual
Property.

 

(c)                                  The Company maintains books and records
that accurately and completely reflect in all material respects its assets and
liabilities of a type normally reflected in such books and records.  The Company
maintains proper and adequate internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed only in accordance with
management’s authorization, (ii) transactions are recorded as necessary to
permit preparation of the consolidated financial statements of the Company in
accordance with GAAP and to maintain accountability for the material assets and
liabilities of the Company, (iii) receipts and expenditures of the Company are
executed only in accordance with management’s authorization, (iv) unauthorized
acquisition, disposition or use of assets is prevented or timely detected and
(v) accounts, notes and other receivables are recorded accurately, and proper
and adequate procedures are implemented to effect the collection thereof on a
current and timely basis.  To the Knowledge of the Company, such internal
accounting controls are appropriate for a private company with operations of the
size and scope of the operations of the Company.  There are no weaknesses in the
design or operation of such internal accounting controls that could materially
adversely affect the ability of the Company to initiate, record, process and
report financial data.  None of the Company, the Company’s independent auditors
or, to the Knowledge of the Company, any current or former employee, consultant
or director of the Company, has identified or been made aware of any fraud,
whether or not material, that involves Company’s management or other current or
former employees, consultants directors of Company who have a role in the
preparation of financial statements or the internal accounting controls utilized
by the Company, or any claim or allegation regarding any of the foregoing. 
Neither the Company nor, to the Knowledge of the Company, any Affiliate or
representative of the Company has received any material complaint, allegation,
assertion or claim, whether written or oral, in each case, regarding deficient
accounting or auditing practices, procedures, methodologies or methods of the
Company or its internal accounting controls or any material inaccuracy in the
Company’s financial statements.

 

2.7                               Absence of Certain Changes.  Since June 30,
2014 there has not been any Material Adverse Effect.  Except as set forth in
Section 2.7 of the Seller Disclosure Schedule or as contemplated by this
Agreement, since June 30, 2014, (a) the Acquired Business has been conducted
only in, and the Company has not taken any action except in, the Ordinary Course
of Business, and (b) the Company has not:

 

(i)                                     merged or consolidated with any Person,
acquired any equity interest in any Person, entered into a business combination
with any Person, or acquired or agreed to acquire any material assets or
properties of any Person, except for the purchase of inventory and supplies in
the Ordinary Course of Business;

 

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(ii)                                  sold, leased or subleased to another
party, encumbered, assigned or otherwise disposed of any of its assets or
properties related to the Acquired Business, other than sales of inventory in
the Ordinary Course of Business or returns of obsolete or surplus equipment in
the Ordinary Course of Business;

 

(iii)                               authorized, recommended, proposed or
announced an intention to adopt a plan of complete or partial liquidation or
dissolution;

 

(iv)                              except as required by Law, any Company Benefit
Plan or any Employment Agreement, (A) paid or agreed to pay any pension,
retirement allowance or other employee benefit to any officer, management
employee or key employee of the Company, whether past or present, (B), entered
into any new, or materially amended any existing, Employment Agreement or
(C) become obligated under any new Employee Benefit Plan that was not in
existence on June 30, 2014 or amended any Company Benefit Plan in existence on
such date if such amendment would have the effect of materially enhancing any
participant benefits thereunder;

 

(v)                                 (A) assumed or incurred any Indebtedness
other than (I) capital lease obligations incurred in the Ordinary Course of
Business which, individually or in the aggregate, do not exceed One Hundred
Thousand Dollars ($100,000) and (II) Indebtedness under and in compliance with
the revolving loan provisions of the Company’s credit agreement dated June 20,
2012 with Societe Generale as in effect on the date of this Agreement that will
be paid off prior to or at the Closing or (B) created any Lien on the assets or
properties of the Company, except for Permitted Liens;

 

(vi)                              made any loan or advance to, or guaranteed any
Liabilities of, any Person that has not been repaid (except for (A) advances to
employees for travel and other business expenses in the Ordinary Course of
Business in accordance with the Company’s expense advancement and reimbursement
policies and (B) trade debt incurred in the Ordinary Course of Business);

 

(vii)                           defaulted on or otherwise failed to satisfy any
material obligation or material Liability of the Company;

 

(viii)                        other than in the Ordinary Course of Business,
(A) entered into any Material Contract or Company Permit or (B) modified,
rescinded, terminated, waived, released or otherwise amended in any material
respect any of the terms or provisions of any Material Contract or Company
Permit, in each case except for any Material Contract or Material Permit that
relates solely to the Cloud & Hosted Services Business and is being assigned to
and assumed by CloudCo pursuant to the Contribution Agreement;

 

(ix)                              made any material change in its accounting
methods, practices, policies or principles, whether for general, financial
reporting or Tax purposes (including its practices with respect to the
collection of accounts receivable and the payment of accounts payable, and its
methods for calculating depreciation or amortization or any bad debt,
contingency or other reserve), other than such changes as are required by GAAP
or applicable Law;

 

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(x)                                 made or changed any Tax election, filed any
amended Tax Return, entered into any closing agreement or similar agreement with
respect to Taxes, surrendered any right to claim a refund of Taxes, consented to
any extension or waiver of the limitations period applicable to any Tax claim or
assessment, made or requested any Tax ruling, entered into any Tax sharing or
similar agreement or arrangement, entered into any transactions giving rise to a
deferred gain or loss, or settled any audit or other Proceeding or claim with
respect to Taxes;

 

(xi)                              except in the Ordinary Course of Business and
as would not adversely affect the Company’s relationship with vendors or
suppliers, delayed payment on or failed to pay when due the trade accounts
payable or other recurring expenses of the Company, in each case except for any
such trade accounts payable or other recurring expenses that relate solely to
the Cloud & Hosted Services Business and are being assigned to and assumed by
CloudCo pursuant to the Contribution Agreement;

 

(xii)                           modified the terms of, discounted, set off or
accelerated the collection of, any accounts receivable, in each case other than
in the Ordinary Course of Business;

 

(xiii)                        settled, released or forgiven any material
Proceeding or claim or waived any right thereto, other than any Proceeding,
claim or right solely related to the Cloud & Hosted Services Business;

 

(xiv)                       incurred any material damage, destruction or loss,
or made or filed any claim concerning any such damage, destruction or Loss
(whether or not covered by insurance), or experienced any condemnation or other
taking, in each case with respect to any asset or property of the Company, other
than any asset or property solely used in the Cloud & Hosted Services Business;
or

 

(xv)                          entered into any Contract to take any of the
actions set forth in this Section 2.7.

 

2.8                               Customers and Suppliers; Accounts Receivable.

 

(a)                                 Section 2.8(a)(i) of the Seller Disclosure
Schedule sets forth a correct and complete list of the twenty five (25) largest
(by dollar volume) customers of the Acquired Business during the years ended
December 31, 2013 and December 31, 2014, respectively (such customers, the
“Significant Customers”), and sets forth for each Significant Customer the
amount of revenue received by the Company from such customer during the years
ended December 31, 2013 and December 31, 2014, respectively. 
Section 2.8(a)(ii) of the Seller Disclosure Schedule sets forth a correct and
complete list of the twenty five (25) largest (by dollar volume) suppliers of
the Company during the years ended December 31, 2013 and December 31, 2014,
respectively (such suppliers, the “Significant Suppliers”), and sets forth for
each Significant Supplier the amount paid by the Company to such supplier during
the years ended December 31, 2013 and December 31, 2014, respectively.  To the
Knowledge of the Company, the Company has a good relationship with each of the
Significant Customers and Significant Suppliers, and the Company has not been
involved in any material dispute with any Significant Customer or Significant
Supplier during the last two (2) years.  Except as set forth in

 

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Section 2.8(a)(i) or Section 2.8(a)(ii) of the Seller Disclosure Schedule, as
applicable, no Significant Customer or Significant Supplier has (i) since
December 31, 2013, canceled or otherwise terminated, or, to the Knowledge of the
Company, threatened in writing to cancel or otherwise terminate or not renew,
its relationship with the Company or (ii) since December 31, 2013 made a
material adverse change in, or, to the Knowledge of the Company, threatened in
writing to make a material adverse change in, the dollar amount of its business
with the Company.  The Company has not received any written or, to the Knowledge
of the Company, oral notice stating that the transactions contemplated by this
Agreement and the other Transaction Documents will adversely affect the
relations of the Company with any Significant Customer or Significant Supplier.

 

(b)                                 The accounts receivable of the Company arose
from bona fide transactions entered into in the Ordinary Course of Business and,
except as set forth in Section 2.8(b) of the Seller Disclosure Schedule, are not
subject to any right of setoff under any Contract with any account debtor. 
Since December 31, 2013, the Company has not materially modified its accounts
receivable collection policies or practices.  No Contract concerning any
deduction, discount or other deferred price or quantity adjustment has been
entered into with respect to any of the accounts receivable of the Company,
except accounts receivable that relate solely to the Cloud & Hosted Services
Business and are being assigned to CloudCo pursuant to the Contribution
Agreement.  Except as set forth in Section 2.8(b) of the Seller Disclosure
Schedule, no accounts receivable of the Company have been outstanding for more
than ninety (90) days.

 

2.9                               Title to Tangible Personal Property.  Except
as set forth in Section 2.9 of the Seller Disclosure Schedule, the Company owns
and has good title to or, in the case of leased property and assets, has valid
leasehold interests in, all personal property necessary for the conduct of the
Acquired Business as presently conducted, free and clear of all Liens other than
(a) Permitted Liens or (b) in the case of leased assets and properties, Liens
securing rental payments, to the extent related to the asset or property
leased.  All of such personal property is either reflected on the Latest Balance
Sheet or was acquired after the Balance Sheet Date in the Ordinary Course of
Business, except for items of personal property sold since the Balance Sheet
Date in the Ordinary Course of Business.  Such personal property, as a whole,
together with the services to be provided by Seller under the Transition
Services Agreement, is sufficient for the conduct of the Acquired Business as
currently conducted.  Such personal property taken as a whole is in all material
respects in good operating condition and repair, ordinary wear and tear excepted
and is adequate for the purpose for which it is currently used.  There are no
pending or, to the Knowledge of the Company, threatened, condemnation or similar
Proceedings or claims against the Company or any item of such personal
property.  The Company has made available to Purchaser, an accurate and complete
copy of each lease for any leased personal property, other than leases having an
annual rental payment of less than $2,500 individually or $35,000 in the
aggregate, and all amendments, waivers, supplements or modifications thereto.

 

2.10                        Significant Contracts.

 

(a)                                 Section 2.10(a) of the Seller Disclosure
Schedule sets forth a correct and complete list of each Contract described
below, other than Contracts that solely relate to the

 

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Cloud & Hosted Services Business are being assigned to and assumed by CloudCo
pursuant to the Contribution Agreement:

 

(i)                                     each Contract not fully performed
providing for the performance of services or delivery of goods or materials by
or to the Company and which requires consideration to be furnished, or which
would reasonably be expected to result in consideration to be furnished, to or
by the Company having a value in excess of Six Hundred Thousand Dollars
($600,000), in the aggregate, during the twelve (12)-month period either ending
on or commencing on the date of this Agreement, in each case identifying each
such Contract that, to the Knowledge of the Company, is with a sole source
supplier;

 

(ii)                                  each Contract that contains a covenant
restricting the ability of the Company to compete with any Person, to solicit
any Person, or to solicit or hire employees or other Persons, or to engage in
any business or activity in any geographic area or pursuant to which any benefit
is required to be given or lost as a result of such competing or engaging;

 

(iii)                               each Contract relating to Indebtedness of
the Company or to mortgaging, pledging or otherwise placing a Lien on any of the
Company’s assets or properties to secure the payment of such Indebtedness;

 

(iv)                              each Contract providing for the guaranty by
the Company of any Liability of any Person; or any Contract that includes any
requirement that the Company provide indemnification to or otherwise support the
business or Liabilities of any other Person (other than in the Ordinary Course
of Business in connection with provision of services to customers and the
procurement of services and equipment from suppliers);

 

(v)                                 each Contract which, when taken together
with all purchase orders issued thereunder, involves or results in a commitment
of the Company to make a capital expenditure or to purchase a capital asset
involving at least Fifty Thousand Dollars ($50,000);

 

(vi)                              each Real Property Lease;

 

(vii)                           each Contract with any Governmental Authority;

 

(viii)                        each Contract under which the Company is lessee
of, or holds or operates any personal property for which the annual rental
payments exceed Fifty Thousand Dollars ($50,000);

 

(ix)                              each Contract (A) providing for the license,
sublicense or other grant to the Company of the right to use any Company
Intellectual Property (other than software that (I) is commercially available
without customization, (II) has general applicability to businesses and
(III) requires aggregate payments during any calendar year of any kind,
including upfront, maintenance or support fees, of less than Ten Thousand
Dollars

 

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($10,000) or (B) providing for the license, sublicense or other grant by the
Company to any Person of the right to use any Intellectual Property;

 

(x)                                 each Contract providing for the acquisition
by the Company of, or disposition by the Company or any predecessor to the
business of the Company of, any Person or any business, operating division,
business unit or product line thereof (whether by merger, consolidation or other
business combination, recapitalization, acquisition of stock or assets, or
otherwise), or any equity or debt investment by the Company or any predecessor
to the business of the Company in any other Person, in each case which
acquisition, disposition, or investment was consummated since August 25, 2010;

 

(xi)                              each joint venture, partnership or Contract
involving a sharing of profits, losses, costs or liabilities with any other
Person;

 

(xii)                           each Contract that obligates the Company to
obtain all or a substantial portion of its requirements for any goods or
services from, or supply all or a substantial portion of the requirements for
any goods or services of, any other Person;

 

(xiii)                        each Contract of the Company that includes any
“most-favored pricing” provision;

 

(xiv)                       (A) other than the Company Benefit Plans, each
Contract relating to employment, change in control, severance, retention,
termination, non-competition, non-solicitation and similar matters between any
Company and any employee, other than at-will employment Contracts that do not
provide for severance or change-in-control benefits (each, an “Employment
Agreement”), and (B) each Contract for the engagement of any Contractor who has
provided services to the Company since March 31, 2014 (in this case limited to
Contractors who are either individuals or where the services of a particular
individual on behalf of such Contractor are contemplated by such Contract) if
the compensation payable to such Contractor is in excess of Fifty Thousand
Dollars ($50,000) per year;

 

(xv)                          each collective bargaining agreement with any
labor union or other employee representative of a group of employees relating to
wages, hours and other conditions of employment;

 

(xvi)                       each Contract of the Company that includes that
contains “take or pay” provisions that require (A) minimum periodic payments or
payment commitments of more than Twenty-Five Thousand Dollars ($25,000) to
vendors or suppliers; and

 

(xvii)                    each Contract to enter into any of the foregoing.

 

(b)                                 Each of the Contracts required to be
disclosed pursuant to Section 2.10(a) or Section 2.22 (collectively, the
“Material Contracts”) is the valid, legal and binding obligation of the Company,
in full force and effect and enforceable against the Company and, to the
Knowledge of the Company, each Material Contract is enforceable against the
other parties thereto, in accordance with its respective terms (but subject to
the Enforceability Exceptions).

 

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Section 2.10(b)(i) of the Seller Disclosure Schedule sets forth a description of
each oral modification to any of the Material Contracts.  Except as set forth
Section 2.10(b)(ii) of the Seller Disclosure Schedule, the Company is not
currently renegotiating any Material Contract or paying liquidated damages in
lieu of performance thereunder.  The Company is not in breach or default under,
or in receipt of any claim of default or breach under, any Material Contract
and, to the Knowledge of the Company, none of the counterparties to any Material
Contract is in breach of or default thereunder; no event has occurred which,
with the passage of time or the giving of notice, or both, would result in a
default, breach or event of noncompliance by the Company or, to the Knowledge of
the Company, any other party thereto, under any Material Contract; and to the
Knowledge of the Company there is no anticipated breach by any of the other
parties to any Material Contract.  Except as set forth is
Section 2.10(b)(iii) of the Seller Disclosure Schedule, since December 31, 2013,
the Company has not received any written notice, or, to the Knowledge of the
Company, oral notice, or advice of termination, modification, acceleration,
cancellation, nonrenewal or material adverse price adjustment of any Material
Contract other than, solely with respect to Material Contracts described in
clauses (i), (vii), (viii), (ix), (xiii) or (xiv)(B) of Section 2.10(a), in the
Ordinary Course of Business.

 

(c)                                  The Company has made available to Purchaser
an accurate and complete copy of each written Material Contract, including all
amendments, waivers, supplements or modifications thereto, along with a summary
of each of the material terms of each oral Material Contract.

 

2.11                        Intellectual Property.

 

(a)                                 Section 2.11(a) of the Seller Disclosure
Schedule sets forth a list of all (i) trademark and service mark registrations
and pending registration applications, unregistered trademarks or service
marks, Internet domain name registrations and trade names, (ii) patents and
pending patent applications, and (iii) copyright registrations and pending
registration applications, in each case, that are owned by the Company,
including, to the extent applicable, the date of registration or application and
name of registration body where the registration or application was made, but
excluding any such registered Intellectual Property that is used solely in
connection with the Cloud & Hosted Services Business and being assigned to and
assumed by CloudCo pursuant to the Contribution Agreement.  With respect to each
item of registered Intellectual Property identified in Section 2.11(a) of the
Seller Disclosure Schedule, all necessary registration, issuance, maintenance
and renewal documentation and fees have been filed with the appropriate
authorities.

 

(b)                                 Except for Intellectual Property that is
owned by third parties (as identified in Section 2.11(c)(i) of the Seller
Disclosure Schedule) and Commercial Software, the Company has valid title and
interest in and to each item of Intellectual Property that is owned or purported
to be owned by the Company or used in the conduct of the business of the Company
as currently conducted, in each case, other than Intellectual Property used
solely in the conduct of the Cloud & Hosted Services Business and being assigned
to and assumed by CloudCo pursuant to the Contribution Agreement (such
Intellectual Property, other than the Intellectual Property used solely in the
conduct of the Cloud & Hosted Services Business and being assigned to and
assumed by CloudCo pursuant to the Contribution Agreement, is collectively,
“Company

 

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Intellectual Property”), free and clear of any Liens other than Permitted
Liens.  All Company Intellectual Property owned by the Company is herein
collectively referred to as “Company Owned Intellectual Property.”  Each item of
Company Intellectual Property is in full force and effect, and to the Knowledge
of the Company, is valid and subsisting.

 

(c)                                  Section 2.11(c)(i) of the Seller Disclosure
Schedule sets forth an accurate and complete list of all licenses with respect
to any Company Intellectual Property to which the Company is a party (other than
any Commercial Software), and pursuant to which the Company is authorized or
otherwise granted rights by a third-party to use, modify, create derivative
works based on, distribute, sell, resell, license or sublicense any of the
Company Intellectual Property.  Section 2.11(c)(i) of the Seller Disclosure
Schedule also sets forth an accurate and complete list of all licenses to
Intellectual Property that have been granted by the Company to any Person other
than to customers in the Ordinary Course of Business.  All the foregoing
licenses, including the Commercial Software, are in full force and effect and,
to the Knowledge of the Company, there is no default or breach thereunder by the
Company, any counter-party thereto, or by any third party.  The consummation of
the transactions contemplated by this Agreement or the other Transaction
Documents will not result in the loss or impairment of any Company Intellectual
Property.  Except as set forth in Section 2.11(c)(ii) of the Seller Disclosure
Schedule, the Company is not obligated to provide any consideration (whether
financial or otherwise) to any Person, nor is any Person entitled to receive any
consideration from the Company, with respect to any exercise or use by the
Company of any Intellectual Property owned, licensed, or used by the Company
other than pursuant to the terms of the licenses set forth in
Section 2.11(c)(i) of the Seller Disclosure Schedule.

 

(d)                                 Except as set forth in Section 2.11(d) of
the Seller Disclosure Schedule, to the Knowledge of the Company (i) neither the
Company nor any of its products, processes, business or operations are
infringing, misappropriating, diluting, or otherwise violating the Intellectual
Property of any third party and (ii) no third party is infringing,
misappropriating, diluting, or otherwise violating any Company Owned
Intellectual Property, and the Company is not a party to, and has not
threatened, any suit, action or proceeding against a third party with respect to
the alleged infringement, misappropriation or other violation of any Company
Intellectual Property.  There is no suit, action or proceeding pending or, to
the Knowledge of the Company, threatened against the Company challenging the
ownership or the validity or effectiveness of any Company Intellectual Property
or with respect to any alleged infringement, misappropriation, or other
violation by the Company of any third party’s Intellectual Property. 
Notwithstanding any other representation or warranty in this Agreement, the
representations and warranties in the first sentence of this
Section 2.11(d) constitute the sole and exclusive representations and warranties
with respect to the matters to which they specifically relate.

 

(e)                                  The Company has taken reasonable steps to
preserve and protect the confidentiality and ownership of all Company
Intellectual Property which would reasonably be considered to be confidential
and proprietary, whether owned or licensed by the Company from a third party. 
No current or former employee, officer or, director, or independent contractor
of the Company has any proprietary, financial or other interest, direct or
indirect, in any Company Owned Intellectual Property.  Without limiting the
generality of the foregoing, the Company has entered into written agreements
(correct and complete copies of which have been made available

 

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by the Company to Purchaser) with each current and former employee and
independent contractor of the Company first engaged or hired on or after
August 25, 2010 who has been involved with the development or creation of any
Company Intellectual Property, whereby such employees and independent
contractors, as applicable, have: (i) assigned exclusively to the Company
(pursuant to a present assignment thereof) all right, title, and interest they
have or may have in the Company Owned Intellectual Property; and (ii) agreed to
maintain the confidentiality of the Company Intellectual Property and other
proprietary information of the Company.  To the Knowledge of the Company, no
other current or former employee or independent contractor of the Company first
engaged or hired before August 25, 2010 who has been involved with the
development or creation of any Company Intellectual Property has refused to
enter into such an agreement.  To the Knowledge of the Company, no current or
former employee or current or former independent contractor of the Company who
has been involved with the development or creation of any Company Intellectual
Property is in violation or breach of any term of any such Contract.

 

(f)                                   No Company Owned Intellectual Property or,
to the Knowledge of the Company, any other Company Intellectual Property, is
subject to any proceeding or order that (i) restricts in any manner the use,
sale, assignment, license or lease thereof by the Company; or (ii) may affect,
in full or in part, the validity, subsistence, enforceability or force and
effect thereof.  Except in the Ordinary Course of Business or as set forth in
Section 2.11(f) of the Seller Disclosure Schedule, the Company is not subject to
any Contract or other obligation requiring the Company to indemnify or hold
harmless any Person with respect to any Intellectual Property, including any
Intellectual Property that was formerly owned or licensed by the Company.

 

(g)                                  The computer systems, including software,
hardware, networks and/or interfaces, that are owned, licensed, leased or
otherwise used by the Company are sufficient, in all material respects, for the
conduct of the Acquired Business as currently conducted.  In the last
twenty-four (24) months, there have been no failures, breakdowns or continued
substandard performance in such systems that have caused any material disruption
or interruption in or to the conduct of the Acquired Business.

 

(h)                                 The Company maintains policies and
procedures regarding data security, privacy, and personal information that are
commercially reasonable and, in any event, comply in all material respects with
all obligations to its customers or to other data subjects, and with all
applicable Laws. The use and dissemination of personal information by the
Company is in compliance in all material respects with applicable privacy
policies, terms of use, customer agreements and applicable Law. The transactions
contemplated to be consummated hereunder as of the Closing will not violate any
agreement between the Company and any third party with regard to the use,
dissemination or transfer of any personal information. To the Knowledge of the
Company, there has been no security breach relating to, no violation of any
security policy regarding, and no unauthorized access to or unauthorized use of,
any personal information stored by or on behalf of the Company.

 

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2.12                        Real Property.

 

(a)                                 Leased Real Property.  Section 2.12(a) of
the Seller Disclosure Schedule sets forth (i) an accurate and complete list of
all leases, subleases or other Contracts, together with all amendments, waivers,
supplements or modifications thereto (collectively, the “Real Property Leases”),
under which the Company uses or occupies or has the right to use or occupy the
real property that is leased or subleased to the Company (collectively, the
“Leased Real Property”); provided, however, that the Leased Real Property does
not include any real property solely used or occupied in connection with the
Cloud & Hosted Services Business for which the underlying leases will be
assigned to and assumed by CloudCo pursuant to the Contribution Agreement and
the Real Property Leases do not include such leases, and (ii) an accurate and
complete list of all other Contracts with landlords or other Persons with
respect to the Company’s occupancy of the Leased Real Property, including any
and all subordination, non-disturbance and attornment agreements with any
mortgagees of the landlords.  With respect to each Real Property Lease, except
as set forth in Section 2.12(a) of the Seller Disclosure Schedule, (A) the
Company has not received written notice from any insurance carrier or landlord
for any Leased Real Property that the Company needs to undertake any material
repairs, alterations or construction or to take any other corrective action with
respect to any Leased Real Property, (B) neither the Company nor, to the
Knowledge of the Company, any landlord of the Leased Real Property has received
written or, to the Knowledge of the Company, oral notice of any violations
(zoning or otherwise) from any Governmental Authority having jurisdiction over
the Leased Real Property, (C) the zoning of the Leased Real Property permits the
continuation of the Acquired Business as currently being conducted on such
Leased Real Property, (D) to the Knowledge of the Company, there are no
existing, pending or threatened zoning, building code or other moratorium
proceedings, or similar matters which could reasonably be expected to adversely
affect the ability to operate the Acquired Business on any Leased Real Property,
(E) the Company has not entered into discussions with any landlord to further
amend, supplement or modify any of the Real Property Leases and (F) the Company
is in actual, exclusive possession of the Leased Real Property (other than any
common areas thereto) and has good, valid and indefeasible title to all
leasehold estates created under the Real Property Leases, free and clear of all
Liens except for Permitted Liens.

 

(b)                                 Owned Real Property.  The Company does not
own any real property and neither the Company nor any predecessor to the
business of the Company has ever owned any real property.

 

2.13                        Litigation.  Except as set forth on Section 2.13 of
the Seller Disclosure Schedule, there are no, and since August 25, 2010 there
have not been, any Proceedings pending or, to the Knowledge of the Company,
threatened in writing against the Company, any of its assets or properties, the
Shares or any of its officers or directors, or to the Knowledge of the Company,
any of its employees or equityholders, in their capacities as such.  There are
no Proceedings pending in which the Company is the plaintiff or complainant. 
Neither the Company nor any of its assets or properties, other than such assets
or properties solely related to the Cloud & Hosted Services Business that are
being transferred to CloudCo pursuant to the Contribution Agreement, is subject
to any Order.  To the Knowledge of the Company, none of the Company’s employees,
officers, directors or equityholders, in their capacities as such, is a party to
or bound or affected

 

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by any Order which would reasonably be expected to have a material adverse
impact on the Company or the ability of the Company to conduct the Acquired
Business.  There are no Proceedings pending or, to the Knowledge of the Company,
threatened, that question the validity of this Agreement or any of the other
Transaction Documents, or the right of Seller or the Company to enter into this
Agreement or any of the other Transaction Documents or to consummate the
transactions contemplated hereby and thereby.  To the Knowledge of the Company,
no investigation by a Governmental Authority exists with respect to the Company
or the Acquired Business.

 

2.14                        Employee Benefit Plans.

 

(a)                                 Section 2.14(a) of the Seller Disclosure
Schedule sets forth an accurate and complete list of each Employee Benefit Plan
maintained by the Company or to which the Company is obligated to contribute or
for which the Company has, or may have, any liability (collectively, the
“Company Benefit Plans”).  The Company has made available to Purchaser an
accurate and complete copy of (i) each Company Benefit Plan, including all
documents that constitute such plan, (ii) the most recent determination letter,
ruling or notice issued by any Governmental Authority with respect to each
Company Benefit Plan, if any, (iii) the Form 5500 Annual Report (or evidence of
any applicable exemption) for the three most recent plan years (to the extent
such forms are required for any Company Benefit Plan), (iv) copies of all
material documents and correspondence related to any Company Benefit Plan
received from, or provided to, any Governmental Authority during the three
(3) year period prior to the date hereof, (v) nondiscrimination testing and
supporting materials for the most recent plan year for each Company Benefit Plan
required to undertake nondiscrimination testing and (vi) the most recent summary
plan description relating to any Company Benefit Plan.  A description of the
material terms of any unwritten Company Benefit Plan in existence on the date
hereof is set forth in Section 2.14(a) of the Seller Disclosure Schedule. 
Section 2.14(a) of the Seller Disclosure Schedule contains an accurate and
complete list of any and all employment, change in control, severance,
non-competition, non-solicitation and other similar employment arrangements or
policies, whether written or oral, generally covering the Company’s employees. 
Section 2.14(a) of the Seller Disclosure Schedule also includes a summary of the
offer letters issued by the Company to individuals who have not yet begun
employment with the Company and their approximate start dates.

 

(b)                                 Except as set forth in Section 2.14(b) of
the Seller Disclosure Schedule:

 

(i)                                     Each Company Benefit Plan has been
maintained, funded and administered in all material respects in compliance with
its terms and all applicable Laws (including, to the extent applicable, the
applicable requirements of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”), and the Code).

 

(ii)                                  Other than routine claims for benefits,
there is no Proceeding pending or, to the Knowledge of the Company, threatened
in writing against the Company arising out of any Company Benefit Plan and, to
the Knowledge of the Company, there are no facts that would reasonably be
expected to give rise to any such Proceedings against any Company Benefit Plan.

 

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(iii)                               Each Company Benefit Plan that is intended
to meet the requirements of a “qualified plan” under Code section 401(a) has
received a favorable determination letter or may rely on a prototype opinion
letter from the IRS and, to the Knowledge of the Company, there are no facts or
circumstances that would reasonably be expected to cause the loss of such
qualification.

 

(iv)                              No Company Benefit Plan is, and none of the
Company or any of its current or former ERISA Affiliates has maintained, any
“employee benefit plan” (as such term is defined in Section 3(3) of ERISA) that
is or was a defined benefit pension plan or is or has been subject to the
minimum funding requirements of Code section 412, 430, 431, 432 or 436 or
Section 302, 303, 304 or 305 of ERISA or Title IV of ERISA.

 

(v)                                 All contributions and premium payments that
are due under any Company Benefit Plan have been made within the time periods
prescribed by ERISA and the Code, and all contributions and premium payments for
any period ending on or before the Closing Date that are not yet due have been
made to each Company Benefit Plan or will be accrued in the Estimated Working
Capital.

 

(vi)                              The Company does not contribute to or have any
obligation to contribute to, and neither the Company nor any of its current or
former ERISA Affiliates has contributed to or had any obligation to contribute
to, any Multiemployer Plan.

 

(vii)                           With respect to each Company Benefit Plan, all
material reports, returns, notices and other documentation that are required to
have been filed with or furnished to any Governmental Authority, or to the
participants or beneficiaries of such Employee Benefit Plan, have been timely
filed or furnished.

 

(viii)                        Neither the Company nor any “party in interest” or
any “disqualified person” with respect to any Company Benefit Plan has engaged
in a non-exempt “prohibited transaction” within the meaning of Code section 4975
or Section 406 of ERISA, or in a similar transaction with respect to any Company
Benefit Plan and neither the Company nor any fiduciary of any Company Benefit
Plan has any Liability with respect to any transaction in violation of
Section 404 or 406 of ERISA.

 

(ix)                              The Company has not participated in a
violation of Part 4 of Title 1, Subtitle B of ERISA by any plan fiduciary of any
Company Benefit Plan.

 

(x)                                 The per share exercise price of each option
to purchase shares of capital stock of the Company, Seller or MegaPath Holding
Corporation is no less than the fair market value of the applicable share of
capital stock on the date of grant of such option determined in a manner
consistent with Section 409A of the Code.  No Company Benefit Plan is a
non-qualified deferred compensation plan within the meaning of Code section
409A.  No payment to be made under any Company Benefit Plan is, or to the
Knowledge of the Company, will be, subject to the penalties of
Section 409A(a)(1) of the Code.

 

(xi)                              Neither the Company nor any of its ERISA
Affiliates has any obligation to provide postretirement medical or life
insurance benefits to its current or former

 

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employees, officers, consultants, agents, equityholders or directors, or any
dependent or beneficiary thereof, except as otherwise required under state or
federal benefits continuation Laws.

 

(xii)                           No Company Benefit Plan is, and neither the
Company nor any of its ERISA Affiliates has ever maintained, sponsored or
contributed to, or been required to contribute to, a “multiple employer plan”
within the meaning of Section 4063 or 4064 of ERISA.

 

(xiii)                        No Company Benefit Plan that is an “employee
welfare benefit plan” under Section 3(1) of ERISA is or was (A) a “multiple
employer welfare arrangement” within the meaning of Section 3(40) of ERISA,
(B) a “voluntary employees’ beneficiary association” within the meaning of Code
section 501(c)(9) or other funding arrangement for the provision of welfare
benefits or (C) self-insured in whole or in part by the Company.

 

(xiv)                       No individual who has been classified by the Company
as a non-employee (such as an independent contractor, leased employee,
consultant, or any employee of any of the foregoing) shall have a claim against
the Company for eligibility to participate in any Company Benefit Plan if such
individual is later reclassified as an employee of the Company.  No employee of
the Company is a “leased employee” within the meaning of Code section 414(n).

 

(xv)                          Except as set forth in Section 2.14(b)(xv) of the
Seller Disclosure Schedule, the execution and delivery by the Company of this
Agreement and each other Transaction Document to which it will be a party, the
performance by the Company of this Agreement and each such Transaction Document,
and the consummation of the transactions contemplated hereby and thereby will
not (either alone or in combination with another event) (A) result in any
payment becoming due, or create any obligation, absolute or contingent, to pay,
or increase the amount of compensation due to any current or former employee or
other service provider of the Company, whether with respect to any equity or
equity-related grant, bonus, severance, termination, “change in control” or
similar payment or otherwise, (B) increase any benefits otherwise payable under
any Company Benefit Plan, (C) result in the acceleration of the time of payment
or vesting of any such compensation or benefits, (D) result in any “parachute
payment,” as defined in Section 280G(b)(2) of the Code or (E) result in the
triggering or imposition of any restrictions or limitations on the rights of the
Company to amend or terminate any Company Benefit Plan.

 

(c)                                  The Company has no Contract with any
employee to maintain any Company Benefit Plan for any period of time.

 

2.15                        Compliance with Law; Permits.

 

(a)                                 Except as set forth in Section 2.15(a) of
the Seller Disclosure Schedule (a) the Company is, and since August 25, 2010 the
Company and any predecessor to the business of the Company has been, in
compliance with all applicable Laws, except for violations that would

 

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not reasonably be expected to have, individually or in the aggregate, a material
impact on the Company or the Acquired Business and (b) neither the Company nor
any predecessor to the business of the Company has received any written or, to
the Knowledge of the Company, oral notice from any Governmental Authority since
August 25, 2010 to the effect that (i) the Company is not in compliance with, or
the Company or any predecessor to the business of the Company has in the past
not been in compliance with, any applicable Laws or (ii) any Governmental
Authority intends to initiate any Proceeding against the Company or any of its
assets or properties, in the case of this clause (ii), which could reasonably be
expected to result in any material Liability to the Company.

 

(b)                                 The Company is in possession of all
franchises, authorizations, accreditations, licenses, permits, certificates,
approvals, clearances, variances, waivers, consents, registrations, certificates
of authority, Orders or similar rights issued, granted or obtained by or from
any Governmental Authority (collectively, “Permits”) that are necessary for the
Company to own, lease and operate its assets and properties and conduct the
Acquired Business as currently conducted in compliance with applicable Law and
any Orders applicable to the Company or any of its assets or properties
(collectively, the “Company Permits”).  Section 2.15(b) of the Seller Disclosure
Schedule sets forth an accurate and complete list of the Company Permits.  Each
of the Company Permits is in full force and effect and the Company is not in
default of, or violation in any material respect under, any of the Company
Permits.  No suspension, cancellation or modification is pending or, to the
Knowledge of the Company, threatened, with respect to any of the Company
Permits.  To the Knowledge of the Company, there is no reason to expect that any
Company Permit that will not be renewable upon expiration after payment of
routine filing fees and compliance with routine qualification procedures.  There
are no Proceedings pending or, to the Knowledge of the Company, threatened that
(i) question or contest the validity of, or seek the revocation, nonrenewal or
suspension of, any Company Permit or (ii) seek the imposition of any condition,
administrative sanction, modification or amendment with respect to any Company
Permit.  No Permit held by the Company or any predecessor to the business of the
Company since August 25, 2010 has been revoked, or, to the Knowledge of the
Company, is threatened to be revoked or otherwise terminated or adversely
modified.  The Company has made available to Purchaser accurate and complete
copies of each Company Permit, including all amendments, waivers, supplements or
modifications thereto.  The Company does not provide any “telecommunications
services,” as defined in Section 3(53) of the Communications Act, 47 U.S.C. Sec.
153, subject to the jurisdiction of the Federal Communications Commission or any
state commission.

 

2.16                        Environmental Matters.  Except as set forth in
Section 2.16 of the Seller Disclosure Schedule:

 

(a)                                 The Company is, and at all times since
August 25, 2010  the Company and any predecessor to the business of the Company
has been, in compliance in all material respects with all applicable
Environmental Laws, and to the Knowledge of the Company there are no conditions
or circumstances that would either (i) prevent the continued compliance of the
Company with Environmental Laws after the Closing or (ii) require additional
material capital improvement expenditures in order to maintain the continued
compliance of the Company with Environmental Laws after the Closing.

 

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(b)                                 The Company possesses all Permits required
under applicable Environmental Laws to be possessed by it with respect to the
conduct of its business as presently conducted, and, as of the date hereof, is
in compliance in all material respects with the requirements of such Permits. 
None of Seller, the Company or any of their Affiliates has disposed of, or
arranged to dispose of, any Hazardous Substances in a manner, or to a location
that would reasonably be expected to result in a material liability to the
Company under any Environmental Laws.

 

(c)                                  Since August 25, 2010, none of the Company,
any predecessor to the business of the Company or any of their respective
Affiliates has received any written or, to the Knowledge of the Company, oral
notice from any Governmental Authority that alleges that the Company or any of
its present or former Affiliates is in violation of any Environmental Law or has
or may have any liability arising under, or is subject to any investigation by
any Governmental Authority regarding, applicable Environmental Laws, the subject
of which is unresolved.

 

(d)                                 Neither the Company nor any of its
Affiliates is subject to any (i) outstanding judgment, order or decree of any
Governmental Authority under Environmental Laws with respect to which the
Company has any future liability or obligations or (ii) any Contract pursuant to
which the Company or any of its Affiliates have accepted responsibility for the
investigation, removal or remediation of (or pay for the cost of investigating,
removing and/or remediating) Hazardous Materials at the Leased Real Property or
any other property.

 

(e)                                  To the Knowledge of the Company, there are
no Hazardous Materials on, in, under or emanating from the Leased Real Property,
whether contained in soils, groundwater, surface water, building components,
barrels, tanks, sumps, equipment (moveable or fixed), or other containers other
than those Hazardous Materials that are (i) in full compliance with
Environmental Laws and (ii) would not reasonably be expected to give rise to
liability or any obligation to investigate and/or remediate the same under
Environmental Laws.

 

2.17                        Taxes.

 

(a)                                 All Tax Returns required to have been filed
by the Company have been timely filed (taking into account applicable extensions
of time to file), and all such Tax Returns are true, complete and correct in all
material respects.  All Taxes due and owing by the Company (whether or not shown
on any Tax Return) have been timely paid.  The Company is not currently the
beneficiary of an extension of time within which to file any Tax Return required
to be filed.

 

(b)                                 Except as set forth in Section 2.17(b) of
the Seller Disclosure Schedule, no audits or other Proceedings are in progress,
pending or threatened with regard to any Taxes or Tax Returns of, or with
respect to, the Company.  Neither the Seller nor the Company has a request for a
private letter ruling, a request for administrative relief, a request for
technical advice, a request for a change of any method of accounting, or any
other request that is pending with any Governmental Authority that relates to
Taxes or Tax Returns of the Company.  No power of attorney granted by the
Company with respect to any Taxes is currently in force.  No claim has ever been
made by a Governmental Authority in a jurisdiction where the Company does not
file Tax Returns that the Company is or may be subject to taxation in such
jurisdiction.

 

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(c)                                  There are no waivers or extensions of any
statute of limitations currently in effect with respect to a Tax assessment or
deficiency of the Company.

 

(d)                                 There are no Liens for Taxes (other than
Permitted Liens) upon any of the Company’s assets.

 

(e)                                  The unpaid Taxes of the Company did not, as
of the Balance Sheet Date, exceed the accruals and reserves for Taxes (excluding
accruals and reserves for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the Latest
Balance Sheet (rather than in any notes thereto) and will not exceed that
reserve as adjusted for operations and transactions entered into in the ordinary
course of business through the Closing Date in accordance with the past custom
and practice of the Company in filing its Tax Returns.

 

(f)                                   The Company has made available to
Purchaser true, correct and complete copies of each of the Company’s income Tax
Returns and all other material Tax Returns relating to the Company for each of
the preceding four (4) taxable years.

 

(g)                                  The Company has timely and properly
withheld (i) all required amounts from payments to its employees, agents,
contractors, nonresidents, shareholders, lenders and other Persons and (ii) all
sales, use, ad valorem, and value added Taxes.  The Company timely remitted and
reported all withheld Taxes to the proper Governmental Authority in accordance
with all applicable Laws.

 

(h)                                 Except as set forth in Section 2.17(h) of
the Seller Disclosure Schedule, the Company is neither a party to nor bound by
any Tax sharing, Tax allocation, Tax indemnity or similar agreement or
arrangement.

 

(i)                                     The Company will not be 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:  (i) change in method of accounting for a taxable period
ending on or prior to the Closing Date, (ii) use of an improper method of
accounting for a taxable period ending on or prior to the Closing Date, other
than the accounting method for deferred rent, (iii) “closing agreement” as
described in Code Section 7121 (or any corresponding or similar provision of
U.S. state, local or non-U.S. Law) executed on or prior to the Closing Date,
(iv) intercompany transactions or any excess loss account described in Treasury
Regulations under Code Section 1502 (or any corresponding or similar provision
of U.S. state, local or non-U.S. Law), (v) installment sale or open transaction
disposition made on or prior to the Closing Date, (vi) prepaid amount or any
other income eligible for deferral under the Code or Treasury Regulations
promulgated thereunder (including, without limitation, pursuant to Code Sections
455 or 456, Treasury Regulations Section 1.451-5 and Revenue Procedure 2004-34,
2004-33 I.R.B. 991) received on or prior to the Closing Date, (vii) election
made under Code Section 108(i) prior to the Closing, or (viii) any similar
election, action, or agreement that would have the effect of deferring any
liability for Taxes of the Company from any period ending on or before the
Closing Date to any period ending after such date.

 

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(j)                                    The Company (and any predecessor of the
Company) (i) has never been a member of a combined, consolidated, affiliated or
unitary group for Tax purposes (other than an affiliated group that includes the
Seller and the Company) and (ii) has no liability for Taxes of any Person (other
than other members of an affiliated group that includes the Seller and the
Company) under Treasury Regulations Section 1.1502-6 (or any comparable
provision of local, state or non-U.S. Law), as a transferee or successor, by
Contract, or otherwise.

 

(k)                                 The Company is not a party to, has not
participated in, or is not currently participating in, a “listed transaction”
(as defined in Code Section 6707A(c)(2) and Treasury Regulations
Section 1.6011-4(b)(2).

 

(l)                                     The Company is and always has been taxed
as a C corporation for U.S. federal Income Tax purposes.  The Company does not
have a permanent establishment or conduct business through any branch other than
its country of formation.

 

(m)                             The Company has never been either a
“distributing corporation” or a “controlled corporation” within the meaning of
Section 355 of the Code and the Treasury Regulations promulgated thereunder.

 

(n)                                 The Company has never been party to any
joint venture, partnership or other arrangement or Contract treated as a
partnership for federal income Tax purposes.

 

(o)                                 The Company is not (and has never been) a
“United States real property holding company” within the meaning of Code
Section 897(c)(2).

 

(p)                                 The Company is not subject to a Tax holiday
or Tax incentive or grant in any jurisdiction (collectively, a “Tax Incentive”)
that will terminate (or be subject to a clawback or recapture) as a result of
the transactions contemplated by this Agreement.  There is no potential for any
Tax Incentive that was realized on or prior to the Closing Date to be subject to
recapture as a result of any action or activities following the Closing Date.

 

2.18                        Insurance.  Section 2.18 of the Seller Disclosure
Schedule sets forth an accurate and complete list of all insurance policies
maintained by the Company.  The Company has made available to Purchaser accurate
and complete copies of such insurance policies, including all amendments,
waivers, supplements or modifications thereto.  Such insurance policies are
currently effective, and are of such types and amounts as are consistent with
customary practices and standards of companies engaged in businesses similar to
that of the Company, and the Company does not rely on self-insurance (other than
customary deductibles, co-insurance and retentions).  All premiums with respect
to such insurance policies are currently paid in accordance with the terms of
such policies and are not subject to renegotiation or retroactive adjustment
(except for adjustments based on worker’s compensation payroll adjustments). 
The Company is in compliance in all material respects with all other terms and
conditions of such insurance policies and (a) no material dispute with any
insurance carrier exists with respect to the scope of any insurance coverage,
(b) the Company has not received any written or, to the Knowledge of the
Company, oral notice of cancellation, termination non-renewal or reduction in
coverage or any other written or, to the Knowledge of the Company, oral
indication that any insurance policy is no longer in full force and effect or
will not be renewed, and (c) the Company

 

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has not received any written or, to the Knowledge of the Company, oral refusal
of coverage or any written notice that a defense will be afforded with
reservation of rights (other than a general reservation of rights with respect
to a claim (that, to the Knowledge of the Company, is a covered claim)).  An
accurate and complete list of material insurance claims covering the period
since December 31, 2014 and through the date of this Agreement is attached to
Section 2.18 of the Seller Disclosure Schedule.

 

2.19                        Employees.

 

(a)                                 Section 2.19(a) of the Seller Disclosure
Schedule separately sets forth all of the employees of the Acquired Business
(the “Acquired Business Employees”) as of the date of this Agreement, and for
each such Acquired Business Employee the Company has made available to Purchaser
the following information: name, job title, Fair Labor Standards Act
designation, current base compensation and visa and green card application
status.  To the Knowledge of the Company, no Acquired Business Employee is a
party to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality or non-competition agreement, that in any way adversely affects
or restricts the performance of such Acquired Business Employee’s duties. 
Except as provided in the Employment Agreements set forth in
Section 2.10(a)(xiv) of the Seller Disclosure Schedule pursuant to clause
(xiv) of Section 2.10, all employees of the Acquired Business are employees at
will.

 

(b)                                 Except as set forth in Section 2.19(b) of
the Seller Disclosure Schedule, to the Knowledge of the Company, each Employee
is (i) a United States citizen, (ii) a lawful permanent resident of the United
States or (iii) an alien authorized to work in the United States either
specifically for the Company or for any United States employer.  The Company has
completed a Form I-9 (Employment Eligibility Verification) for each Employee and
each such Form I-9 has since been updated as required by applicable Law and is
correct and complete in all material respects.  With respect to each Employee,
an authorized official of the Company has reviewed the original documents
relating to the employment eligibility and authorization of such Employee to be
employed in the United States in compliance with applicable Law and such
documents appeared, to such official, to be genuine on their face.

 

(c)                                  The Company has withheld all amounts
required by Law or agreement to be withheld from the wages or salaries of its
Employees and is not liable for the payment of any arrears of wages or other
Taxes, penalties, fines or other compensation of any kind, however designated,
for failure to comply with any of the foregoing.  Except as set forth in
Section 2.19(c) of the Seller Disclosure Schedule, the Company has properly
classified its Employees pursuant to the Fair Labor Standards Act.

 

(d)                                 Since December 31, 2011, the Company has not
experienced any strike, walkout, strike, union activity, picketing, work
stoppage, work slowdown, lockout, sit-in, grievance, labor dispute, boycott,
collective bargaining dispute or any other similar occurrence or, to the
Knowledge of the Company, any attempt to organize or represent the labor force
of the Company.  The Company is, and since December 31, 2011 the Company and any
predecessor to the business of the Company has been, in compliance in all
material respects with all applicable Laws regarding employment and employment
practices.  There is no labor strike, work stoppage

 

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or slowdown pending or, to the Knowledge of the Company, threatened against the
Company with respect to its employees.  There are no controversies pending or
threatened between the Company, on the one hand, and any of its Employees (or
former employees), or any labor union or other collective bargaining unit
representing any of their Employees, on the other hand.  No Order of or
Proceeding by any Governmental Authority or employee or former employee with
respect to the Company in relation to any actual or alleged violation of any
employment-related Laws is pending or, to the Knowledge of the Company,
threatened, nor has the Company received any written or, to the Knowledge of the
Company, oral notice from any Governmental Authority indicating an intention to
conduct the same.  The Company is not a party to or otherwise bound by any
consent decree, settlement or conciliation agreement with any Governmental
Authority relating to prospective, current or former employees or employment
practices.  In the past year, the Company has not implemented any layoff of
employees that would implicate the Worker Adjustment and Retraining Notification
(WARN) Act and the rules and regulations promulgated thereunder or any similar
Law (considered independently from any layoffs that may occur after the
Closing).

 

(e)                                  The Company is not a party to, or bound by,
any collective bargaining or other Contract with a labor organization
representing any of the Employees.  No union or other collective bargaining
unit, employee organizing entity, works council or employee representative has
been certified or recognized by the National Labor Relations Board, any
Governmental Authority or the Company as representing any of the Employees.

 

2.20                        Powers of Attorney.  Section 2.20 of the Seller
Disclosure Schedule sets forth an accurate and complete list of the names of all
Persons holding general or special powers of attorney from the Company and a
summary of the terms thereof.

 

2.21                        Absence of Certain Practices.  Neither the Company
nor any of its employees, officers, directors, equityholders, representatives or
agents, has, directly or indirectly, made, given or incurred or agreed to make,
give or incur any contribution, payment, gift or entertainment or other expense
or similar benefit to any customer, vendor, supplier, governmental employee or
other Person who is or may be in a position to help or hinder the business or
operations of the Company (or assist the Company in connection with any actual
or proposed transaction relating to the Acquired Business), (a) that subjected
or would reasonably be expected to subject the Company to any damage or penalty
in any criminal or governmental Proceeding, (b) that subjected or would
reasonably be expected to subject the Company to any adverse consequences with
any Governmental Authority or regarding the ability of the Company, or any of
them, to continue doing business as it is currently conducted by the Company, or
(c) that in case of a payment made directly or indirectly to an official or
employee of any Governmental Authority, constitutes an illegal bribe or kickback
(or if made to an official or employee of a foreign government, is unlawful
under the Foreign Corrupt Practices Act of 1977, as amended) or, in the case of
a payment made directly or indirectly to a Person other than an official or
employee of a government or Governmental Authority, constitutes an illegal
bribe, illegal kickback or other illegal payment under any Law of the United
States or under the Law of any other Governmental Authority that could subject
the payor to a criminal penalty or the loss of a license or privilege to engage
in a trade or business.

 

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2.22                        Transactions with Related Persons.  Except as set
forth in Section 2.22 of the Seller Disclosure Schedule, since December 31,
2011, no (a) Affiliate of the Company, (b) officer, director or holder of more
than ten percent (10%) of the voting capital stock of the Company, Seller,
CloudCo or MegaPath Holdco Corporation or, to the Knowledge of the Company,
member of the “immediate family” (as such term is defined under Rule 16a-1(e) of
the Securities Exchange Age of 1934) of any such Person, (c) to the Knowledge of
the Company, officer, director or equityholder of any other Affiliate of the
Company or (d) corporation, partnership, limited liability company or other
entity in which any officer or director of the Company, Seller, CloudCo or
MegaPath Holdco Corporation or, to the Knowledge of the Company, any member of
their immediate family or any other Affiliate of the Company has a direct or
indirect interest in more than thirty percent (30%) of the voting capital stock
of such entity, has:

 

(i)                                     purchased any goods or services from, or
sold or furnished any goods or services (including management services) to, the
Company;

 

(ii)                                  a beneficial interest in any Contract to
which the Company is a party or by which the Company or any of its assets or
properties may be bound or affected (except, with respect to employees of the
Company, for written employment contracts listed in Section 2.10(a) of the
Seller Disclosure Schedule pursuant to Section 2.10(a)(xiv)); or otherwise
receives any rights or benefits from, or is the beneficiary of any obligations
of, the Company (except, with respect to employees of the Company, for
employment-related obligations incurred in the Ordinary Course of Business on
arms-length terms that are fair to the Company); or

 

(iii)                               any interest or claim against the Company or
any of its assets or properties which could materially and adversely affect the
Company’s assets or properties or title to or right to use its assets or
properties, or to conduct the Acquired Business.

 

Except as set forth Section 2.22 of the Seller Disclosure Schedule, no assets or
properties (whether tangible or intangible) of any of the Persons described in
this Section 2.22 are used by the Company in the conduct of the Acquired
Business.

 

2.23                        Books and Records.  The minute books of the Company
contain accurate records of all meetings and other corporate actions of its
board of directors and any committees thereof and of its stockholders.

 

2.24                        Bank Accounts.  Section 2.24 of the Seller
Disclosure Schedule sets forth the names and locations of all banks, trust
companies, savings and loan associations and other financial institutions at
which the Company maintains any deposit or checking account, the account numbers
of all such accounts and the names of all persons authorized to draw thereon or
make withdrawals therefrom.

 

2.25                        Brokers.  Except as set forth in Section 2.25 of the
Seller Disclosure Schedule, no agent, broker, finder or investment or commercial
banker or other Person engaged by or acting on behalf of the Company or any of
its representatives or Affiliates in connection with the negotiation, execution
or performance of this Agreement or the other Transaction Documents or the
consummation of the transactions contemplated hereby or thereby, is or will be
entitled to

 

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any brokerage or finder’s or similar fee or other commission from the Company as
a result of this Agreement or the other Transaction Documents or the
consummation of the transactions contemplated hereby and thereby.

 

2.26                        No Other Representations or Warranties.  EXCEPT FOR
THE REPRESENTATIONS AND WARRANTIES (a) OF THE COMPANY CONTAINED IN THIS
ARTICLE II, IN THE OTHER TRANSACTION DOCUMENTS OR IN ANY DOCUMENT DELIVERED IN
CONNECTION WITH THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS AND (b) OF
SELLER CONTAINED IN THIS ARTICLE II OR ARTICLE III, IN THE OTHER TRANSACTION
DOCUMENTS OR IN ANY DOCUMENT DELIVERED IN CONNECTION WITH THIS AGREEMENT OR
OTHER TRANSACTION DOCUMENTS, NEITHER THE COMPANY NOR SELLER MAKES ANY EXPRESS OR
IMPLIED REPRESENTATION OR WARRANTY REGARDING THE COMPANY OR ITS BUSINESS, ASSETS
OR LIABILITIES, AND THE COMPANY AND SELLER HEREBY DISCLAIM ANY SUCH
REPRESENTATIONS OR WARRANTIES.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING SELLER

 

As a material inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Seller hereby
represents and warrants to Purchaser, as of the date of this Agreement and as of
the Closing Date, as follows:

 

3.1                               Existence; Good Standing.  Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all required corporate power and authority
to own or lease its properties and assets and to conduct its business as
presently conducted.  Seller is duly licensed or qualified to do business as a
foreign entity and is in good standing under the laws of each other jurisdiction
in which such licensing or qualification is necessary, except where the failure
to be so licensed or qualified or to be in good standing would not reasonably be
expected to have a material adverse effect on the ability of Seller to perform
its obligations under this Agreement and the other Transaction Documents to
which it will be a party or to consummate the transactions contemplated by this
Agreement and such Transaction Documents.

 

3.2                               Authority; Enforceability.

 

(a)                                 Seller has all required power and authority
to execute and deliver this Agreement and the other Transaction Documents to
which it will be a party, to perform its obligations hereunder and thereunder,
and to consummate the transactions contemplated hereby and thereby.  The
execution, delivery and performance by Seller of this Agreement and the other
Transaction Documents to which it will be a party, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all required action on the part of Seller.

 

(b)                                 This Agreement has been duly and validly
executed and delivered by Seller and each other Transaction Document to which it
will be a party will be, at and as of the Closing, duly and validly executed and
delivered by Seller and (assuming due authorization,

 

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execution and delivery by Purchaser) this Agreement constitutes, and each such
Transaction Document will constitute, a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except for the
Equitable Exceptions, and Seller has full right, power and authority to
transfer, sell and deliver the Shares to Purchaser pursuant to this Agreement.

 

3.3                               No Conflicts.  Except as set forth in
Section 3.3 of the Seller Disclosure Schedule, the execution and delivery of
this Agreement by Seller does not, the execution and delivery of the other
Transaction Documents to be executed and delivered by Seller will not, the
performance by Seller of its obligations under this Agreement and such other
Transaction Documents will not, and the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents will not
(a) violate Seller’s Organizational Documents, (b) violate or conflict in any
material respect with any Law applicable to Seller or by which Seller or the
Shares are bound or affected, (c) with or without the passage of time or the
giving of notice, or both, violate, conflict with or result in a breach of the
terms or conditions or provisions of, or constitute a default (or an event which
might, with the passage of time or the giving of notice or both, constitute a
default) under, or result in or give rise to a right of termination,
modification, acceleration or cancellation of any obligation under, any Contract
to which Seller is a party or by which Seller or any of the Shares are bound or
(d) result in the creation or imposition of a Lien upon any of the Shares.

 

3.4                               Consents.  Except as required under the HSR
Act or as set forth in Section 3.4 of the Seller Disclosure Schedule, no notice
to or consent of or with any Governmental Authority or third Person is required
to be obtained by Seller in connection with Seller’s execution and delivery of
this Agreement and the other Transaction Documents to which it will be a party
or the performance of its obligations hereunder or thereunder.

 

3.5                               Litigation.  There are no Proceedings pending
or, to the Knowledge of Seller, threatened against Seller or any of the Shares
or Seller’s other assets or properties, or any Orders outstanding against
Seller, in each case that (a) questions the validity of this Agreement or any
other Transaction Document to which Seller will be a party or any action taken
or to be taken by Seller in connection herewith or therewith, (b) seeks to
enjoin the consummation of the transactions contemplated by this Agreement and
the other Transaction Documents to which Seller will be a party; or (c) would
reasonably be expected to, either individually or in the aggregate, delay,
hinder, prevent or otherwise adversely affect Seller’s ability to perform
Seller’s obligations under this Agreement or such Transaction Documents or to
consummate the transactions contemplated hereby or thereby.

 

3.6                               Title to Shares.  Seller is the beneficial and
lawful record owner of the Shares and has good, valid and marketable title to
the Shares, free and clear of any and all Liens.  On the date of this Agreement
the Shares collectively constitute, and on the Closing Date the Shares will
constitute, all of the issued and outstanding shares of capital stock of the
Company.  There are no Contracts to which Seller is a party with respect to the
acquisition, disposition or voting of, or any other matters pertaining to, any
of the Shares or any other equity interests of the Company.  Seller has the
power and authority to sell, transfer, assign, exchange and deliver its Shares,
as provided in this Agreement, and such sale, transfer, assignment, exchange and
delivery will

 

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convey to Purchaser at the Closing good, valid, enforceable and marketable title
to the Shares, free and clear of any and all Liens and restrictions other than
restrictions of general applicability imposed by federal or state securities
Laws and those imposed on the Shares by Purchaser.

 

3.7                               Certain Relationships.  Seller is not subject
to any Contract that would require Seller to pay any amount to any person that
will be an employee of the Company following the Closing as a result of the
consummation of the transactions contemplated by this Agreement or the other
Transaction Documents.

 

3.8                               No Other Representations or Warranties. 
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN ARTICLE II
OR THIS ARTICLE III, IN ANY TRANSACTION DOCUMENT OR IN ANY DOCUMENT DELIVERED IN
CONNECTION WITH THIS AGREEMENT OR OTHER TRANSACTION DOCUMENTS, SELLER MAKES NO
EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY REGARDING SELLER, AND SELLER
HEREBY DISCLAIMS ANY SUCH REPRESENTATIONS OR WARRANTIES.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT

 

As a material inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Purchaser and Parent
hereby jointly and severally represent and warrant to Seller, as of the date of
this Agreement and as of the Closing Date, as follows:

 

4.1                               Existence; Good Standing.  Parent and
Purchaser are corporations duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and the State of Virginia,
respectively, and have all required corporate power and authority to own or
lease their respective properties and assets and to conduct its business as
presently conducted.  Purchaser is duly licensed or qualified to do business as
a foreign entity and is in good standing under the laws of each other
jurisdiction in which such licensing or qualification is necessary, except where
the failure to be so licensed or qualified or to be in good standing would not
reasonably be expected to have a material adverse effect on the ability of
Purchaser to perform its obligations under this Agreement and any other
Transaction Documents to which it will be a party or to consummate the
transactions contemplated hereby and thereby.

 

4.2                               Authority; Enforceability.

 

(a)                                 Each of Parent and Purchaser has all
required power and authority to execute and deliver this Agreement and the other
Transaction Documents to which it will be a party, to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby.  The execution, delivery and performance by each of Parent and
Purchaser of this Agreement and the other Transaction Documents to which it will
be a party, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized and approved by all required action on the
part of Parent and Purchaser.

 

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(b)                                 This Agreement has been duly and validly
executed and delivered by each of Parent and Purchaser and each Transaction
Document to which Purchaser will be a party will be, at and as of the Closing,
duly and validly executed and delivered by Purchaser and (assuming due
authorization, execution and delivery by the Company and Seller) this Agreement
constitutes, and each such Transaction Document will constitute, a legal, valid
and binding obligation of Parent and Purchaser (to the extent that they are a
party thereto), enforceable against Parent and Purchaser (to the extent that
they are a party thereto) in accordance with its terms, except for the Equitable
Exceptions.

 

4.3                               No Conflicts.  Except as set forth in
Section 4.3 of the Purchaser Disclosure Schedule, the execution and delivery of
this Agreement by Parent and Purchaser does not, the execution and delivery of
the other Transaction Documents to be executed and delivered by Purchaser will
not, and the consummation of the transactions contemplated by this Agreement and
the other Transaction Documents to which Purchaser will be a party will not
(a) violate Parent’s or Purchaser’s Organizational Documents, respectively,
(b) violate any Law applicable to Parent or Purchaser or (c) solely with respect
to Purchaser, with or without the passage of time or the giving of notice, or
both, violate, conflict with or result in a breach of the terms or conditions or
provisions of, or constitute a default (or an event which might, with the
passage of time or the giving of notice or both, constitute a default) under, or
result in or give rise to a right of termination, modification, acceleration or
cancellation of any obligation under, any Contract to which Purchaser is a party
or by which it or its properties or assets are bound.

 

4.4                               Consents.  Except as required under the HSR
Act or as set forth in Section 4.4 of the Purchaser Disclosure Schedule, no
notice to or consent of or with any Governmental Authority or third Person is
required to be obtained by Parent or Purchaser in connection with Parent or
Purchaser’s execution and delivery of this Agreement and the other Transaction
Documents to which it will be a party or the performance of its obligations
hereunder or thereunder.

 

4.5                               Litigation.  There is no Proceeding pending
or, to the Knowledge of Purchaser, threatened against Parent or Purchaser, that
(a) questions the validity of this Agreement or any other Transaction Document
to which Purchaser will be a party or any action taken or to be taken by
Purchaser in connection herewith or therewith, (b) seeks to enjoin the
consummation of the transactions contemplated by this Agreement or such other
Transaction Documents or (c) which would reasonably be expected to have,
individually or together with any other such Proceedings, a material adverse
effect on the ability of Parent or Purchaser to consummate the transactions
contemplated by this Agreement and such other Transaction Document.

 

4.6                               Financial Ability to Perform.  At the Closing,
Purchaser will have cash, available lines of credit or other resources of
immediately available funds sufficient to be able to consummate the transactions
contemplated by this Agreement and the other Transaction Documents, upon the
terms contemplated by this Agreement and such other Transaction Documents, and
to pay its transaction fees and expenses.

 

4.7                               Investment Representations.  The Purchaser is
purchasing the Shares for investment purposes and not with a present view to, or
for sale in connection with, any

 

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distribution thereof, within the meaning of the Securities Act.  The Purchaser
acknowledges that the Shares have not been registered under the Securities Act
or qualified under applicable state securities laws and understands the
restrictions on resale of the Shares imposed by the Securities Act and such
applicable state securities laws.  The Purchaser also acknowledges that Seller
has no obligation to register the Shares, that there is presently no public
market for the Shares, that there may never be a public market for the Shares,
and that, even if such a market develops, Purchaser may never be able to sell or
dispose of the Shares and, accordingly, Purchaser must bear the economic risk of
this investment potentially indefinitely.  Purchaser is an “accredited
investor,” as that term is defined in Rule 501 under Regulation D promulgated
under the Securities Act.

 

4.8                               Brokers Fees.  No agent, broker, finder or
investment or commercial banker, or other Person engaged by or acting on behalf
of Purchaser or any of Purchaser’s representatives or Affiliates in connection
with the negotiation, execution or performance of this Agreement or the other
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby, is or will be entitled to any brokerage or finder’s or
similar fee or other commission from Seller as a result of this Agreement, the
other Transaction Documents or the transactions contemplated hereby or thereby.

 

4.9                               No Other Representations or Warranties. 
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT CONTAINED
IN THIS ARTICLE IV, IN THE OTHER TRANSACTION DOCUMENTS OR IN ANY DOCUMENT
DELIVERED IN CONNECTION WITH THIS AGREEMENT OR OTHER TRANSACTION DOCUMENTS,
NEITHER PURCHASER NOR PARENT MAKES ANY EXPRESS OR IMPLIED REPRESENTATION OR
WARRANTY, AND EACH OF PARENT AND PURCHASER HEREBY DISCLAIMS ANY SUCH
REPRESENTATIONS OR WARRANTIES.

 

ARTICLE V
PRE-CLOSING COVENANTS

 

5.1                               Conduct of Seller and Purchaser.

 

(a)                                 Except as consented to by Purchaser in
writing (such consent not to be unreasonably withheld, conditioned or delayed),
during the period from the date of this Agreement until the Closing (the
“Pre-Closing Period”), Seller shall, subject to the terms and conditions of this
Agreement (A) not sell or otherwise dispose of any of the Shares, (B) not permit
any Lien to encumber the Shares, (C) not waive or relinquish any material right
or claim with respect to the Shares that would adversely impact Purchaser and
(D) use commercially reasonable efforts to satisfy all conditions set forth in
Section 7.1.

 

(b)                                 Except as consented to by Seller in writing
(such consent not to be unreasonably withheld, conditioned or delayed), during
the Pre-Closing Period, Purchaser shall, subject to the terms and conditions of
this Agreement, use commercially reasonable efforts to satisfy all conditions
set forth in Section 7.2.

 

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5.2                               Conduct of the Company.

 

(a)                                 Except: (i) as set forth in
Section 5.2(a) of the Seller Disclosure Schedule, (ii) to the extent required
under this Agreement, (iii) to the extent required by applicable Law (after
consultation with Purchaser) or (iv) as otherwise consented to by Purchaser in
writing (such consent to not be unreasonably withheld, conditioned or delayed),
during the Pre-Closing Period the Company shall (A) conduct the Acquired
Business in the Ordinary Course of Business, (B) use commercially reasonable
efforts to preserve substantially intact its present business organization and
its relationships with customers, suppliers and others having business dealings
with it, and to keep available the services of the Company’s present officers
and significant employees, (C) use commercially reasonable efforts to satisfy
all conditions set forth in Section 7.1 and (D):

 

(1)                                 not declare, set aside or pay any dividend
or distribution in respect of any capital of the Company (except dividends and
distributions paid in cash prior to the Closing from funds legally available for
distribution), or redeem, purchase or otherwise acquire any securities of the
Company;

 

(2)                                 not permit any Lien to encumber any of its
assets, or otherwise subject any such assets to any Lien, other than
(i) Permitted Liens or (ii) any Lien to be removed at or prior to Closing;

 

(3)                                 not issue, grant, sell or encumber any
equity interest in the Company, or any right relating thereto, or make any other
changes in the equity capital structure of the Company;

 

(4)                                 not make any capital expenditures except in
amounts not to exceed One Million Five Hundred Thousand Dollars ($1,500,000) in
the aggregate in any thirty (30) consecutive day period, or fail to make or
materially delay any necessary capital expenditures;

 

(5)                                 not hire any new management-level employees
that will continue to be employees of the Company following the Closing (other
than to fill vacancies created by the termination of employment of current
management-level employees);

 

(6)                                 not enter into any new Contract, business
arrangement or relationship that would be required to be set forth in
Section 2.22 of the Seller Disclosure Schedule (unless the same will be
terminated on or before the Closing without liability, after the Closing, to the
Company);

 

(7)                                 not make any change in its annual accounting
period;

 

(8)                                 not cancel any debts owed to or claims held
by it, other than in the Ordinary Course of Business;

 

(9)                                 not take any action or fail to take any
action that would result in any of the representations and warranties of the
Company and Seller set forth in Section 2.7 (other

 

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than clause (xiv) thereof) becoming not true and correct in all material
respects (in the case of representations and warranties not qualified as to
materiality or Material Adverse Effect) or true and correct in all respects (in
the case of representations and warranties qualified as to materiality or
Material Adverse Effect) as of the Closing; and

 

(10)         not make or change any Tax election, not file any amended Tax
Return, not enter into any closing agreement or similar agreement with respect
to Taxes, not surrender any right to claim a refund of Taxes, not consent to any
extension or waiver of the limitations period applicable to any Tax claim or
assessment, not make or request any Tax ruling, not enter into any Tax sharing
or similar agreement or arrangement, not enter into any transactions giving rise
to a deferred gain or loss, or not settle any audit or other Proceeding or claim
with respect to Taxes; and

 

(11)         not enter into any Contract or otherwise become obligated to do any
action prohibited under the foregoing clauses (1) — (10).

 

5.3          Control of Operations.  Nothing contained in this Article V shall
give Purchaser, directly or indirectly, the right to control or direct the
operations of the Company prior to the Closing.  Prior to the Closing, the
Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.

 

5.4          Regulatory and Other Approvals.

 

(a)           General.  During the Pre-Closing Period, Seller shall, and shall
cause its Affiliates (including the Company) to, and Purchaser shall, and shall
cause its Affiliates to, in a timely manner and subject to the terms and
conditions of this Section 5.4, use its commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
reasonably necessary, proper or advisable, and execute and deliver such
documents upon reasonable request, to carry out the provisions of this
Agreement, consummate the Closing hereunder and make effective the transactions
contemplated by this Agreement, including all filings with any Governmental
Authority (including the HSR Act filings discussed in Section 5.4(c)) and
obtaining all necessary waivers, consents and approvals from, and taking all
necessary actions to avoid any Proceeding by, any Governmental Authority.

 

(b)           Without limiting the generality of Section 5.4(a), during the
Pre-Closing Period (i) Seller shall, and shall cause the Company to, in a timely
manner use commercially reasonable efforts to (A) obtain all consents,
approvals, waivers, orders, Permits and authorizations of, and make all
registrations, applications, qualifications, designations, declarations, filings
and notifications with or to, each Governmental Authority necessary in
connection with the execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby (collectively, the “Governmental Approvals”) and (B) obtain
all consents, waivers, approvals and authorizations of counterparties under the
Contracts to which any of the Companies are a party or by which any of their
respective assets or properties are bound which are required under the terms and
conditions of such Contracts to be obtained in connection with the execution and
delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, other than
such consents, waivers, approvals and

 

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authorizations not required by Purchaser as set forth in a written notice
(collectively, the “Contract Consents”), (ii) Purchaser shall use all
commercially reasonable efforts to obtain all Governmental Approvals to which
Purchaser is required to be the applicant of record, and (iii) Purchaser shall,
upon written request from Seller or the Company, use commercially reasonable
efforts to assist Seller and the Company in connection with such matters in the
manner so requested; provided, however, that such assistance shall not require
Purchaser to (I) expend any out-of-pocket costs or expenses (other than costs of
counsel and other advisors to Purchaser incurred in providing information and
otherwise cooperating with Seller and the Company), (II) provide any other
financial accommodation by way of guarantee, security deposit, letter of credit
or otherwise or (III) agree to any material or commercially unreasonable
amendment, alteration, modification or waiver of or with respect to any Permit
or Contract.  Notwithstanding any other provision of this Agreement, including
the foregoing provisions of this Section 5.4, Seller shall not, and shall cause
the Company not to, enter into any Contract that places additional obligations
or limitations on Purchaser or any of the Companies following the Closing as a
condition for obtaining any Contract Consent or Governmental Approval, except
with the prior written consent of Purchaser, and Purchaser shall not be required
to consent to any divestiture or other structural or conduct relief applicable
to the assets, properties or business of the Company or the business of
Purchaser and its Affiliates.  Except to the extent that Governmental Approvals
require Purchaser to make submissions as applicant of record, Seller shall have
primary responsibility to make application for and to pursue the grant of each
of the Governmental Approvals and Contract Consents.

 

(c)           Each of Purchaser and Seller shall file or cause to be filed with
the United States Federal Trade Commission (the “FTC”) and the United States
Department of Justice (the “DOJ”), in each case pursuant to the HSR Act (i) the
notification and report form, if any, required for the transactions contemplated
hereby, which form shall be filed not later than ten (10) Business Days
following the date of this Agreement and (ii) any supplemental information
requested in connection therewith, which information shall be filed as soon as
reasonably practicable after the request therefor.  Any such notification and
report form and supplemental information shall be in substantial compliance with
the requirements of the HSR Act.

 

(d)           Subject to applicable Laws relating to the exchange of
information, the Company and Seller, on the one hand, and Purchaser, on the
other hand, shall furnish to the other such necessary information and reasonable
assistance as any Party may reasonably request in connection with preparation of
the notices and requests referred to in this Section 5.4 and any filing or
approval process that is necessary to obtain any Governmental Approvals.  Except
to the extent limited by applicable Law, the Company and Seller, on the one
hand, and Purchaser, on the other hand, shall (i) keep each other apprised of
the status of any communications with, and any inquiries or requests for
additional information from, any Governmental Authority in connection with this
process, (ii) furnish the other with copies of all correspondence and
communications between such Party and its Affiliates and their respective
representatives, on the one hand, and any Governmental Authority or members of
its staff, on the other hand, with respect to this Agreement and the
transactions contemplated hereby (excluding documents and communications which
are subject to preexisting confidentiality agreements and to attorney client
privilege), (iii) provide each other the right to review in advance, and to the
extent applicable consult with each other on, all the information that appears
in any filing made with, or

 

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written materials submitted to, any Governmental Authority in connection with
this Agreement and the transactions contemplated hereby (in exercising the
foregoing right, each of the parties shall act reasonably and as promptly as
reasonably practicable) and (iv) comply as promptly as reasonably practicable
and in any event in accordance with applicable Law with any such inquiry or
request.

 

(e)           Limitation on Obligations.  Notwithstanding the foregoing, nothing
in this Section 5.4 shall obligate any Party to waive or amend any condition set
forth in Article VII or any underlying representation, warranty, covenant or
agreement.

 

5.5          Access.  During the Pre-Closing Period, Seller shall cause the
Company to (a) provide to Purchaser and the employees, directors, officers,
agents or representatives of Purchaser (collectively, the “Purchaser
Representatives”), upon reasonable prior notice to the Company, reasonable
access, during normal business hours, and in such a manner as not to
unreasonably interfere with the conduct of the Acquired Business, to (i) the
facilities, assets, properties, books and records of the Company and (ii) the
employees, directors, officers, agents or representatives of the Company or
Seller (collectively, the “Seller Representatives”), (b) furnish to Purchaser
and the Purchaser Representatives such documents, additional financial and
operating data and other information related to the Acquired Business as
Purchaser and the Purchaser Representatives may reasonably request and (c) with
the prior consent of Seller (such consent not to not be unreasonably withheld,
delayed or conditioned) permit Purchaser and the Purchaser Representatives to
contact and discuss the affairs and accounts of the Company with the customers,
third party payors, vendors, suppliers and other business relations of the
Company (it being acknowledged that Purchaser and the Purchaser Representatives
are not prohibited from contacting any such Person with respect to any matter
unrelated to the transactions contemplated by this Agreement or the other
Transaction Documents).  Prior to the Closing, all information disclosed by or
on behalf of Seller and the Company to Purchaser or any of the Purchaser
Representatives shall be received and held in accordance with the
Confidentiality Agreement.  No investigation by Purchaser or any of the
Purchaser Representatives pursuant to this Section 5.5 shall affect, add to or
subtract from any representations and warranties of the Company or Seller or the
conditions to the obligations of the Parties to consummate the transactions
contemplated by this Agreement or the other Transaction Documents.

 

5.6          Exclusivity.  During the Pre-Closing Period, Seller shall not, and
shall cause the Company and each of the Seller Representatives not to, directly
or indirectly, solicit, initiate, encourage, entertain, facilitate or
participate in any inquiries, proposals or offers from, discuss or negotiate
with, provide any information to, consider the merits of any inquiries,
proposals or offers from, or enter into any letter of intent, term sheet or
Contract with, any Person (other than Purchaser), in each case relating to
(a) any sale, assignment or transfer of any of the Shares or any direct or
indirect interest therein, (b) any merger, consolidation, recapitalization,
business combination or other similar transaction involving Seller or the
Company, (c) any sale of any assets or properties of the Company outside of the
Ordinary Course of Business, other than solely with respect to the Divestiture
or the Cloud & Hosted Services Business, or (d) any issue by the Company of any
capital stock or other equity securities, or any securities convertible into or
exercisable or exchangeable for (including any rights, warrants or options to
acquire) any such capital stock, other equity securities or other securities,
(any such transaction referred to in the

 

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preceding clauses (a), (b), (c) or (d), an “Alternative Transaction”).  If,
during the Pre-Closing Period, Seller or any of the Seller Representatives
receives any inquiry, offer or proposal concerning a proposed Alternative
Transaction, Seller shall not (and shall cause the Seller Representatives to
not) make any written or oral response to such inquiry, offer or proposal (other
than to state that a contractual obligation precludes a substantive response)
and shall provide written notice to Purchaser, promptly (and in any event within
two (2) Business Days) of receipt or awareness of such inquiry, offer or
proposal by Seller or any of the Seller Representatives, which notice shall
include a reasonable description of the material terms and conditions of the
proposed Alternative Transaction (including the identity of the Person making
the inquiry, offer or proposal) and accurate and complete copies of any
documents supplied by such Person in connection with the proposed Alternative
Transaction.  Seller shall, and shall cause the Seller Representatives to, cease
immediately any discussions regarding any potential Alternative Transactions
that were ongoing as of the date of this Agreement.

 

5.7          Notification.  During the Pre-Closing Period, the Company and
Seller, on the one hand, and Purchaser, on the other hand, shall notify the
other as soon are reasonably practicable (and in any event within five
(5) Business Days) after becoming aware of (a) any breach of, or inaccuracy in,
any of its or their representations and warranties contained in this Agreement
that is qualified by materiality or Material Adverse Effect, (b) any material
breach of, or inaccuracy in, any of its or their representations and warranties
contained in this Agreement that is not qualified by materiality or Material
Adverse Effect, (c) any breach or non-fulfillment of any of its or their
covenants or agreements contained in this Agreement or (d) any change, effect,
matter, event, fact, condition, circumstance, occurrence or development that,
individually or in the aggregate, is or would reasonably be expected to cause a
condition to the other Parties’ obligation to consummate the Closing set forth
in Article VII to not be satisfied prior to the Termination Date.  Except as
provided in the next sentence, such notice shall not (i) be deemed to supplement
or amend the Seller Disclosure Schedule or the Purchaser Disclosure Schedule or
any such representation and warranty or covenant and agreement of the Company,
Seller or Purchaser for the purpose of determining whether any of the conditions
set forth in Article VII have been satisfied or (ii) affect the right of any
Purchaser Indemnified Party or Seller Indemnified Party to indemnification
pursuant to Article VIII.  Notwithstanding the foregoing, to the extent such
notice is from Seller and (A) relates to Section 2.8(a)(i) or
Section 2.8(a)(ii) of the Seller Disclosure Schedule (relating to customers and
suppliers), Section 2.8(b) of the Seller Disclosure Schedule (ageing of accounts
receivable), Section 2.10 of the Seller Disclosure Schedule (relating to
Material Contracts, but solely with respect to the additions to or deletions of
any Material Contracts thereon arising in the Ordinary Course of Business),
Section 2.14 of the Seller Disclosure Schedule (relating to employment
agreements and offer letters, but solely with respect to the additions to or
deletions of any Contracts or offer letters thereon arising in the Ordinary
Course of Business) or Section 2.18 of the Seller Disclosure Schedule (relating
to the list of insurance policies, but solely with respect to the additions to
or deletions of any insurance policies thereon arising in the Ordinary Course of
Business) and (B) the disclosure in such notice is only as to changes that do
not result from a non-fulfillment or breach of any covenant of the Company or
Seller set forth in this Agreement (or, with respect to deletions from
Section 2.10 of the Seller Disclosure Schedule, that do not result from or
relate to any breach or other non-performance of any Contract), from and after
the Closing, Purchaser shall be deemed to have waived any and all rights it and
all other Purchaser Indemnified Parties may have arising from or

 

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relating to a breach of representation or warranty with respect to such sections
that is described in such notice (including any right to indemnification
pursuant to Article VIII); provided, however, that no such waiver shall apply if
and to the extent the breach described in such notice related to the failure of
a representation or warranty of the Company or Seller to be true and correct on
and as of the date of this Agreement.

 

5.8          Purchaser Financing.

 

(a)           During the Pre-Closing Period, Purchaser shall use commercially
reasonable efforts to take, or cause to be taken, all actions and do, or cause
to be done, all things necessary in order to obtain debt financing to provide
funding for the transactions contemplated by this Agreement and the other
Transaction Documents (the “Financing”), it being acknowledged by Purchaser that
obtaining the Financing is not a condition to the Closing.  During the
Pre-Closing Period, Purchaser shall keep Seller reasonably apprised of the
status of the Financing.

 

(b)           Seller and the Company shall from time to time as and when
requested by Purchaser, provide reasonable cooperation to Purchaser in
connection with Purchaser’s efforts to obtain the Financing, as Purchaser may
reasonably request.  Without limiting the generality of the foregoing, the
Company and Seller shall, and shall use their commercially reasonable efforts to
cause the other Seller Representatives to, at the request of Purchaser
(i) participate in meetings, drafting sessions and due diligence sessions,
(ii) (A) furnish Purchaser, as promptly as reasonably practicable following
Purchaser’s request, with such pertinent and customary information, to the
extent reasonably available to the Company or Seller, regarding the Company and
the Acquired Business, as may be reasonably requested by Purchaser to consummate
the Financing and with information regarding the Company and the Acquired
Business (including information to be used in the preparation of one or more
information packages regarding the business, operations, financial projections
and prospects of the Company and the Acquired Business), in each case, which is
reasonable and customary for the arrangement of loans contemplated by the
Financing and to the extent reasonably available to the Company, Seller or the
Seller Representatives (collectively, the “Required Information”) and
(iii) execute and deliver customary certificates or other documents and
instruments relating to guarantees (but not any personal guarantees of any
Seller or Affiliates other than the Company), the pledge of collateral and other
matters ancillary to the Financing as may be reasonably requested by Purchaser;
provided, however, that no obligation under any such certificate, document or
instrument shall be effective until the Closing and Seller shall not and, prior
to the Closing, the Company shall not, be required to pay any commitment or
other fee or other amount in connection with the Financing.

 

5.9          Outstanding Letters of Credit and Guarantees.

 

(a)           Section 5.9(a) of the Seller Disclosure Schedule sets forth a
complete list of the letters of credit and corporate guarantees issued in
support of the Acquired Business by or on behalf of Seller or its Affiliates
(other than the Company) for the benefit of third parties (the “Scheduled
Guarantees”).

 

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(b)           Purchaser shall use its commercially reasonable efforts to provide
a replacement guarantee, letter of credit, security or other collateral from
Purchaser to the third party beneficiary of each Scheduled Guarantee, and to
obtain from the respective beneficiary of such Scheduled Guarantee, in form and
substance reasonably satisfactory to Seller, valid and binding written releases
of Seller and its Affiliates (other than the Company), as applicable, from any
liability arising after the Closing Date under such Scheduled Guarantees with
effect as of the Closing.  If, after expending its commercially reasonable
efforts, Purchaser is unable to procure such a release prior to the Closing,
then Purchaser shall continue to expend such efforts after the Closing, and
until such time as Purchaser is able to obtain such a release, or if earlier
until such time as (i) the end of the then current term of the Contract
associated with such Scheduled Guarantee in accordance with its terms, if
applicable, or (ii) the satisfaction of the underlying obligations which such
Scheduled Guarantee supports, if applicable, Seller shall, or shall cause its
Affiliate to, use commercially reasonable efforts to maintain and not terminate
such Scheduled Guarantee.

 

(c)           Purchaser shall after the Closing indemnify and hold harmless
Seller and its Affiliates from any liabilities to the extent arising out of or
related to a claim against any Scheduled Guarantees  related to events or
circumstances occurring after the Closing.

 

(d)           Notwithstanding anything to the contrary in this Agreement, no
breach or violation of any agreement as the result of any failure to replace any
such letter of credit or corporate guarantee shall constitute a breach of any
representation or warranty under this Agreement or cause any condition precedent
set forth in Section 7.1 not to be satisfied.

 

5.10        Publicity.  Except and solely to the extent otherwise required by
applicable Law or by obligations pursuant to any listing agreement with or
rules of any securities exchange or permitted by this Section 5.10, no Party
shall make or permit any press release or other public announcement with respect
to the existence of or subject matter of this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby without the prior
written consent of Purchaser and Seller.  If Purchaser and Seller agree on a
press release, then each of the Company, Seller, Purchaser and their respective
Affiliates may issue further press releases and similar announcements without
the consent of Purchaser or Seller; provided that each such press release or
similar announcement contains, with respect to the information concerning this
Agreement, the other Transaction Documents and the transactions contemplated
hereby and thereby, solely the information that is contained in the initial
press release.  To the extent any such press release or other public
announcement is required by applicable Law or by obligations pursuant to any
listing agreement with or rules of any securities exchange, the disclosing party
shall provide reasonable advance written notice thereof to Purchaser and Seller
and consult with the non-disclosing parties concerning the contents of the
public announcement.

 

5.11        280G Matters.  Before the Closing Date, the Company shall (a) submit
to all Persons entitled to vote (within the meaning of the Treasury Regulations
under Section 280G of the Code) the material facts concerning all payments and
benefits that, in the absence of shareholder approval of such payments and
benefits, would constitute “parachute payments” within the meaning
Section 280G(b)(2) of the Code (“Parachute Payments”), in form and substance
reasonably satisfactory to Purchaser and its counsel, which will satisfy all

 

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requirements of Section 280G(b)(5)(B)of the Code and the Treasury Regulations
thereunder, and (b) take all necessary actions (including soliciting any
required waivers of any such Parachute Payments or other consents from any
applicable “disqualified individuals,” within the meaning of the Treasury
Regulations under Section 280G of the Code) in order to solicit the approval and
consent of all such Persons with respect to any Parachute Payments (the “280G
Stockholder Approval”).  Purchaser shall have the right to review and approve
(which approval shall not be unreasonably withheld, conditioned or delayed) all
documents and materials relating to the 280G Stockholder Approval in advance of
the 280G Stockholder Approval.

 

5.12        Cooperation with Audit.  The Company and Seller acknowledge that
following the date of this Agreement Purchaser may conduct, at Purchaser’s
expense, an audit of the financial statements for the Acquired Business or of
the Company after giving effect to the disposition of its Network Services and
Cloud & Hosted Services businesses.  The Company (prior to the Closing) and
Seller (after the Closing) shall, and each of them shall cause their respective
Affiliates (including for Seller, CloudCo after the Closing) to, use
commercially reasonable efforts to cooperate with Purchaser and its accountants
in connection with such audit and to provide Purchaser and its accountants with
such assistance as may reasonably be requested by Purchaser or its accountants
in connection with such audit, which assistance may include (a) assistance in
the preparation of books and records of the Company separating the Acquired
Business from the Company’s Network Services and Cloud & Hosted Services
Businesses and making appropriate allocations of accounting and financial items
among such businesses and (b) making employees, information, records and other
reasonably requested materials available on a mutually convenient basis to
assist in the conduct of such audit.  The Company (prior to the Closing) and
Seller (after the Closing) shall, and shall cause its Affiliates (including for
Seller, CloudCo after the Closing) to, use commercially reasonable efforts to
also provide such additional information available to Seller and its Affiliates
which is relevant and reasonably necessary to enable Purchaser and its
accountants to prepare and audit such financial statements in compliance with
the rules of the Securities and Exchange Commission applicable to Parent, and
any registration statement, report or disclosure statement filed with the
Securities and Exchange Commission by, or on behalf of, Parent.  In connection
with the foregoing audit(s), and in furtherance of the obligations of the
Company and Seller to assist Purchaser pursuant to this Section 5.12, the
Company (prior to the Closing) and Seller (after the Closing) covenants and
agrees to execute and deliver or cause to be executed and delivered to
Purchaser’s accountants audit representation letters with respect to the period
prior to the Closing as reasonably requested by Purchaser or its accountants.

 

5.13        The Divestiture.

 

(a)           The Divesture shall be consummated by (i) the contribution by the
Company of certain assets to CloudCo as provided in the Contribution Agreement
(the “Contributed Assets”), (ii) the assumption by CloudCo of certain
liabilities of the Company as provided in the Contribution Agreement (the
“Assumed Liabilities”), (iii) the transferring by the Company of certain
employees to CloudCo or an Affiliate of Cloudco as contemplated by the
Contribution Agreement (the “Transferred Employees”) and (iv) following the
completion of the foregoing transactions, the distribution by the Company of the
memberships in CloudCo to Seller prior to the Closing.

 

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(b)           Seller and Purchaser shall, and Seller shall cause the Company and
CloudCo to, work together in good faith to mutually determine on or before the
date that is fourteen (14) days following the date of this Agreement (the
“Allocation Date”) (i) the assets of the Company that will be Contributed
Assets, (ii) the liabilities of the Company that will be Assumed Liabilities,
and (iii) the employees of the Company who will be Transferred Employees.

 

(c)           For the purposes of the allocations required by Section 5.13(b),
Seller and Purchaser agree as follows:

 

(i)            all Employees other than the Acquired Company Employees will be
Transferred Employees and any severance liabilities associated with such
Employees will be Assumed Liabilities;

 

(ii)           all of the Company’s office leases other than those for the
Company’s facilities at Costa Mesa, California and Austin, Texas will be
Contributed Assets;

 

(iii)          the determination of the current assets and the current
liabilities of the Company that will be Contributed Assets and Assumed
Liabilities will be made in a manner consistent with the manner in which
Purchaser and Seller ultimately determine Actual Working Capital;

 

(iv)          any asset (including any Contract, other than the office leases
that are addressed in the preceding clause (ii)) that is used exclusively in or
relates exclusively to the Cloud & Hosted Services Business will be a
Contributed Asset;

 

(vi)          any liability that arises exclusively from or relates exclusively
to the Cloud & Hosted Services Business (or that arises exclusively from or
relates exclusively to any Contributed Asset) shall be an Assumed Liability; and

 

(vii)         with respect to any asset (including any Contract, other than the
office leases that are addressed in the preceding clause (ii)) that is not used
exclusively in or relate exclusively to either the Cloud & Hosted Services
Business or the Acquired Business (any such asset, a “Shared Asset”) or any
liability that does not arise exclusively from or relate exclusively to the
Cloud & Hosted Services Business or the Acquired Business (any such liability, a
“Shared Liability”), Seller and Purchaser will work together in good faith to
allocate such assets and liabilities in a fair and equitable manner, taking into
account (A) the business in which such Shared Asset is primarily used or to
which such Shared Asset primarily relates, (B) the business from which such
Shared Liability primarily arose or to which such Shared Liability primarily
relates, (C) the relative value and importance of such Shared Asset to the
Cloud & Hosted Services Business as compared to its value and importance to the
Acquired Business after the Closing, (D) in the case of any Contract that is a
Shared Asset, the ease of allocating the benefits and obligations under such
Contract to one business or the other as contemplated by Section 5.14, (E) the
relative costs which the Cloud & Hosted Services Business and the Acquired
Business will incur to replace such Shared Asset if such Shared Asset is not
allocated to it and (F) such other considerations they may deem appropriate.

 

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5.14        Shared Contracts.  Seller and Purchaser shall, and Seller shall
cause the Company and CloudCo to, work together in good faith to mutually
determine on or before the Allocation Date (a) all of the Contracts that relate
to both the Acquired Business and the Cloud and Hosted Services Business (the
“Shared Contracts”) and (b) for each Shared Contract, whether such Shared
Contract is to be retained by the Company or to be assigned to CloudCo as part
of the Divestiture pursuant to the Contribution Agreement.  For each Shared
Contract, the Transition Services Agreement shall provide for a mutually
agreeable arrangement by which each applicable Party that is not a party to such
Contract following the Closing would be able to obtain the benefits and assume
the obligations to or under such Contract in accordance with such Contract with
respect to the business operated by such Party (including by subcontracting,
sub-licensing or sub-leasing to the applicable Party that is not a party to such
Contract, or by an arrangement under which the Party that is a party to such
Contract would enforce for the benefit of such other Party, any and all rights
of such Party that is a party to the Contract against a third party thereto), in
each case without mark-up or premium except as except as expressly provided in
the Transition Services Agreement, with the Party that is not a party to such
Contract assuming the obligations to such third party thereto with respect to
the business operated by such Party, in each case without mark-up or premium
except as expressly provided in the Transition Services Agreement. 
Notwithstanding the foregoing, (i) with respect to any Contract other than a
Shared Contract that was intended to be assigned to CloudCo pursuant to the
Contribution Agreement but was not so assigned in accordance with Section 2.1
thereof, Cloudco will reimburse to the Company all costs incurred by the Company
in maintaining such Contract, without mark-up or premium, and (ii) with respect
to any Shared Contract that was intended to be assigned to CloudCo pursuant to
the Contribution Agreement but was not so assigned in accordance with
Section 2.1 thereof, Cloudco will reimburse to the Company all incremental costs
incurred by the Company in maintaining such Contract, without mark-up or
premium, that would not have been incurred by the Company if such Contract had
been assigned to CloudCo.

 

5.15        Commercial Agreements and Shared Services.  Purchaser shall, and
Seller and the Company shall cause CloudCo to, work together in good faith to
negotiate and prepare (a) mutually agreeable commercial agreements incorporating
terms and conditions consistent with those set forth on Exhibit D attached
hereto and (b) the schedules to the Transition Services Agreement (including the
services to be provided and the terms and conditions upon which such services
shall be provided).

 

ARTICLE VI
POST-CLOSING COVENANTS

 

6.1          Tax Election.

 

(a)           Seller shall (and, as necessary, cause any Person that is treated
as the owner of such Shares for Income Tax purposes to) join with Purchaser in
making, and Seller and Purchaser shall take any and all action necessary to
effect, a timely election under Code Section 338(h)(10) (and any corresponding
election under applicable state, local or foreign Tax Law) with respect to the
purchase by the Purchaser of the Shares (the “338(h)(10) Election”).  The
following provisions shall govern certain Tax matters relating to or resulting
from the 338(h)(10) Election, notwithstanding anything to the contrary in
Section 6.2.

 

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(b)           Purchaser shall prepare IRS Form 8023 (“Form 8023”) and any
corresponding state, local or foreign Tax forms and shall furnish such forms to
Seller, for Seller’s completion and execution, no less than ten (10) days prior
to the date such forms are required to be filed with any Governmental Authority;
provided, that Purchaser shall deliver Form 8023 to Seller, for Seller’s
completion and execution, no less than three (3) Business Days prior to the
Closing Date.  Seller shall (and, as necessary, cause any Person that is treated
as the owner of such Shares for Income Tax purposes to) promptly and properly
complete and execute all such forms Purchaser provides to Seller and return the
appropriately completed and executed copies to Purchaser for timely filing by
Purchaser with the applicable Governmental Authority no less than five (5) days
prior to the date such forms are required to be filed with any Governmental
Authority; provided, that Seller shall return the appropriately completed and
executed copy of Form 8023 to Purchaser on or prior to the Closing Date, in a
form reasonably acceptable to Purchaser.

 

(c)           The Purchase Price, the liabilities of the Company and any other
relevant items (the “338(h)(10) Consideration”) shall be allocated among the
assets of the Company (the “Assets”) in accordance with this Section 6.1(c) (the
“Allocation”).  As promptly as practicable after the Closing Date, but in any
event within one hundred eighty (180) days thereof, Purchaser shall cause to be
prepared and delivered to Seller a draft Allocation in accordance with Code
Section 338(h)(10) and the Treasury Regulations thereunder (the “Draft
Allocation”).  If Seller does not deliver to Purchaser a written objection to
the Draft Allocation, setting forth in reasonable detail the basis for any such
objection, within thirty (30) days after their receipt of the Draft Allocation,
then the Draft Allocation shall become final and binding upon the Parties (the
“Final Allocation”).  If Seller timely delivers such objection to Purchaser,
then Seller and Purchaser shall work in good faith to resolve any dispute, and
if all items of dispute are so resolved, then the Draft Allocation shall be
amended accordingly and shall become the Final Allocation.  If any dispute with
respect to the Draft Allocation remains unresolved for a period of twenty (20)
days after Purchaser receives Seller’s objection notice, then Purchaser and
Seller shall submit only the remaining disputed items to a the Accounting
Arbitrator for determination.  The Accounting Arbitrator’s determination as to
each such disputed item shall be binding on the Parties, and the Draft
Allocation shall be amended in accordance with the Accounting Arbitrator’s
determination and shall become the Final Allocation.  Purchaser shall prepare
IRS Form 8883 (and any similar form for purposes of state, local or foreign Tax
Law) for each of “Old Target” and “New Target” (as defined for purposes of
Treasury Regulations 1.338(h)(10)-1) consistent with the Final Allocation, and
Purchaser, on behalf of the Company, shall timely file or cause to be filed such
Form 8883 and other forms with the appropriate Governmental Authority.  If any
adjustment is subsequently made to the 338(h)(10) Consideration pursuant to the
terms of this Agreement, Seller agrees to execute and deliver promptly to
Purchaser such other Tax forms relating to the 338(h)(10) Election as Purchaser
may reasonably request, and Seller hereby authorizes Purchaser to file any and
all forms with respect to the 338(h)(10) Election.  The Form 8883 and other
forms shall be binding on Seller, the Company and their respective Affiliates
for all Tax purposes, and each such Person shall file all Tax Returns in a
manner consistent with the Form 8883 and other forms; provided, however, that
(i) the amount realized by Seller may differ from the amount allocated hereunder
to reflect transaction costs that reduce the amount realized for Income Tax
purposes and (ii) Purchaser’s cost for the assets that it is deemed to acquire
may differ from the amount allocated hereunder to reflect the inclusion in

 

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the total cost of items (for example, capitalized acquisition costs) not
included in the amount so allocated.  None of Seller, the Company, Purchaser or
their respective Affiliates shall take any position on any Tax Return, before
any Governmental Authority or in any Proceeding relating to Taxes that is in any
way inconsistent with the Form 8883.

 

(d)                                 Seller shall include any income, gain, loss,
deduction or other Tax item resulting from the 338(h)(10) Election on Seller’s
Tax Returns to the extent and in the manner required by applicable Law, and
shall timely file such Tax Returns and pay the Taxes reported on such Tax
Returns.  Seller shall also be responsible for and shall pay any Tax imposed on
the Company attributable to the making of the 338(h)(10) Election, including any
Tax imposed under Treasury Regulations Section 1.338(h)(10)-1(d)(2).

 

6.2                               Tax Matters.

 

(a)                                 Preparation of Tax Returns.

 

(i)                                     Seller, at its sole cost and expense,
shall (A) prepare and timely file (or cause the Company to prepare and timely
file) all Tax Returns of the Company due (after taking into account all
appropriate extensions) on or prior to the Closing Date (the “Pre-Closing Tax
Returns”), all consolidated, combined or unitary Tax Returns with respect to
Income Taxes that include Seller and the Company (the “Consolidated Returns”)
and all other Tax Returns with respect to Income Taxes of the Company with a
taxable year ending on or prior to the Closing Date (the “Other Income Tax
Returns”, and, together with the Consolidated Returns and the Pre-Closing Tax
Returns, the “Seller Prepared Returns”) and (B) timely pay (or cause the Company
to timely pay) all Taxes that are shown as payable with respect to such Seller
Prepared Returns.  All Seller Prepared Returns shall be prepared in accordance
with existing procedures, practices, and accounting methods of the Company,
unless otherwise required by applicable Law.  Each Seller Prepared Return shall
be submitted to Purchaser for Purchaser’s review and comment at least twenty
(20) days prior to the due date of such Seller Prepared Return (taking into
account extensions); provided, that with respect to any Consolidated Return,
Seller shall only be required to deliver a pro forma Tax Return for the
Company.  Seller shall incorporate any reasonable comments made by Purchaser in
such Seller Prepared Return prior to filing.

 

(ii)                                  Purchaser shall cause the Company to
prepare and timely file all Tax Returns of the Company for Pre-Closing Tax
Periods (other than the Consolidated Returns and the Other Income Tax Returns)
that are due after the Closing Date (the “Purchaser Prepared Returns”).  To the
extent that a Purchaser Prepared Return relates solely to a taxable period
ending on or before the Closing Date, such Tax Return shall be prepared in
accordance with existing procedures, practices, and accounting methods of the
Company, unless otherwise required by applicable Law.  Each Purchaser Prepared
Return shall be submitted to the Seller for the Seller’s review and comment at
least twenty (20) days prior to the due date of such Purchaser Prepared Return
(taking into account extensions).  Purchaser shall consider any comments of the
Seller in good faith.  No failure or delay in the Purchaser providing Purchaser
Prepared Returns for Seller to

 

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review shall reduce or otherwise affect the obligations or liabilities of Seller
pursuant to this Agreement.

 

(iii)                               Seller shall claim all Income Tax deductions
permitted to be claimed by applicable Law with respect to the payment of any
Company Transaction Expenses and the payment of any Company Indebtedness at or
after the Closing pursuant to Section 1.3(a) (except with respect to any
Indebtedness identified on Schedule 1.2(g)) in the final Tax Returns of the
Company for the taxable period ending on the Closing Date, and Purchaser shall
not take any action, or permit the Company to take any action, inconsistent
therewith, unless otherwise required by applicable Law.

 

(b)                                 Apportionment of Taxes.  In the case of any
Straddle Period, the amount of any Taxes of the Company (i) based on or measured
by income or receipts, sales or use, employment, or withholding for the
Pre-Closing Tax Period shall be determined based on an interim closing of the
books as of the close of business on the Closing Date (and for such purpose, the
taxable period of any partnership or other pass-through entity in which the
Company holds a beneficial interest shall be deemed to terminate at such time)
and (ii) the amount of other Taxes of the Company for a Straddle Period for the
Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the
entire taxable period multiplied by a fraction, the numerator of which is the
number of days in the Straddle Period prior to and including the Closing Date
and the denominator of which is the number of days in such Straddle Period.

 

(c)                                  Cooperation.  Purchaser, the Company and
Seller shall (and shall cause their respective Affiliates to) (i) assist in the
preparation and timely filing of any Tax Return of the Company, (ii) assist in
any audit or other Proceeding with respect to Taxes or Tax Returns of the
Company, (iii) make available any information, records or other documents
relating to any Taxes or Tax Returns of the Company, and (iv) provide any
information necessary or reasonably requested to allow Purchaser or the Company
to comply with any information reporting or withholding requirements contained
in the Code or other applicable Law.

 

(d)                                 Tax Contests.  Purchaser shall notify Seller
within thirty (30) days upon the receipt of any notice, or becoming aware, of
any audit or other similar examination with respect to Taxes for which Seller
would reasonably be expected to be liable pursuant to this Agreement (a “Tax
Contest”); provided, however, no failure or delay of Purchaser in providing such
notice shall reduce or otherwise affect the obligations of Seller pursuant to
this Agreement, except to the extent that Seller is materially and adversely
prejudiced as a result of such failure or delay.  Purchaser shall control, or
cause the Company to control, the conduct of any Tax Contest; provided, however,
that Seller, at its sole cost and expense, shall have the right to participate
in any such Tax Contest to the extent it relates solely to a Pre-Closing Tax
Period.  Notwithstanding the foregoing, to the extent any Tax Contest relates
solely to a Consolidated Return, Seller shall have the right to control such Tax
Contest.

 

6.3                               Transfer Taxes.  Purchaser and Seller shall
each be liable for one-half (1/2) of all sales, use, transfer, stamp, duties,
documentary, registration, recording and other similar Taxes and related fees
and penalties incurred as a result of the transactions contemplated by this
Agreement (collectively, “Transfer Taxes”).  Purchaser shall file or shall cause
the Company to

 

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file all required Tax Returns relating to Transfer Taxes.  To the extent
practicable, the amount of such Transfer Taxes shall be calculated prior to the
Closing Date, and payment shall be made by Purchaser or Seller, as applicable,
to settle the obligations provided in this Section 6.3.  To the extent Seller,
on the one hand, or Purchaser or the Company, on the other hand, pays or becomes
obligated to pay any such Transfer Taxes after the Closing that was not
identified and paid at the Closing in accordance with the preceding sentence,
Seller or Purchaser may, from time to time or at any time, notify the other of
such unpaid Transfer Taxes, which notice shall be accompanied by evidence of
such the payment or obligation to pay such Transfer Taxes and the amount of such
Transfer Taxes.  Promptly, and in any event within five (5) Business Days after
receipt of such notice, Seller or Purchaser, as applicable, shall pay to the
Party that delivered such notice its proportionate share of such Transfer Taxes.

 

6.4                               Access to Books and Records.  From and after
the Closing until the seventh (7th) anniversary of the Closing Date, Purchaser
shall, and shall cause the Company to, provide Seller and its authorized
representatives with reasonable access, during normal business hours, to the
books, records (including accountants’ work papers), properties, facilities and
employees of the Company with respect to periods prior to the Closing Date in
connection with financial reporting, Tax Return preparation or Tax compliance
matters of Seller (whether or not relating to periods prior to the Closing
Date).  Purchaser and Seller agree that any access or other rights under this
Section 6.4 shall be provided only after reasonable advance written request by
Seller, and Seller shall reasonably cooperate with Purchaser and the Company so
that such access or other rights do not unreasonably disrupt the operations of
the Company.  Subject to Section 6.2, the Parties agree and acknowledge that
Purchaser may condition its obligations under this Section 6.4 on receipt from
Seller of a customary agreement restricting use and disclosure by Seller of the
information provided by Purchaser or the Company to Seller or otherwise obtained
by Seller in exercising its rights under this Section 6.4.  Unless otherwise
consented to in writing by Seller, Purchaser shall not permit the Company, for a
period of seven (7) years following the Closing Date, to destroy, alter or
otherwise dispose of any of its material books and records, or any material
portions thereof, relating to periods prior to the Closing Date and matters
relating to this Agreement and the transactions contemplated hereby without
first giving at least thirty (30) days’ prior written notice to Seller and
offering to surrender to Seller such books and records or such portions thereof.

 

6.5                               Restrictive Covenants of Seller.  As a
material inducement to Purchaser to enter into this Agreement and to consummate
the transactions contemplated by this Agreement, Seller hereby agrees as
follows:

 

(a)                                 Confidentiality.  Seller shall not, and
shall cause each of Seller’s Affiliates to not, at any time after the Closing,
disclose to any Person or use for any purpose other than exercising Seller’s
rights and performing Seller’s obligations under this Agreement and the other
Transaction Documents to which Seller is a party, any Confidential Information;
provided, however, that Seller and Seller’s Affiliates may make such disclosures
of Confidential Information as are required under applicable Law, in each case
as long as Seller (i) provides reasonable advance notice of such requirement to
Purchaser so that Purchaser may seek a protective order or other appropriate
remedy, (ii) reasonably cooperates with Purchaser to obtain an appropriate
protective order or other reliable assurance that confidential treatment shall
be

 

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accorded to such information and (iii) discloses only such information as Seller
is advised by outside legal counsel in writing that Seller is legally required
to disclose.

 

(b)                                 Non-Solicitation.

 

(i)                                     Seller shall not, and shall cause each
of Seller’s Affiliates to not, directly or indirectly, at any time during the
period from the Closing Date through the first (1st) anniversary of the Closing
Date, (A) solicit for employment or in any other way induce or attempt to induce
to leave the employ of or engagement by Purchaser or the Company, any Person who
is, on the date of such solicitation or attempted inducement, a director,
officer, employee or consultant to Purchaser or the Company; or (B) induce or
attempt to induce any Person who is a director, officer, employee or consultant
to Purchaser or the Company to leave the employ of or terminate or breach their
respective agreements with Purchaser or the Company, or in any other way
deliberately interfere with the relationship between Purchaser or the Company
and any such Person;  provided, however, that no general advertisement or
general solicitation of employment not targeted to the directors, officers,
employees or consultants of Purchaser or the Company shall be deemed to be a
solicitation of such individuals in violation of this Section 6.5(b)(i); or

 

(ii)                                  Seller shall not, and shall cause each of
MegaPath Holding Corporation, CloudCo and any future Subsidiary of MegaPath
Holding Corporation to not, directly or indirectly, at any time during the
period from the Closing Date through the third (3rd) anniversary of the Closing
Date (A) solicit, attempt to solicit, or assist any other Person in soliciting
or attempting to solicit, any business of the type conducted by the Acquired
Business or by Parent or any of its Subsidiaries as of the Closing Date from any
Person who is a customer or referral source of the Company with respect to the
Acquired Business as of the Closing Date or who was a customer or referral
source of the Company with respect to the Acquired Business at any time during
the six (6)-month period preceding the Closing Date or (B) take any action to
deliberately interfere with the relationship between the Company and Person who
is a lessor, licensor, customer, supplier, licensee or other business associate
or relation of the Company with respect to the Acquired Business prior to the
Closing Date; provided, however, that the provisions of this
Section 6.5(b)(ii) shall not apply with respect to VoIP services (and only VoIP
services) provided by CloudCo.

 

(c)                                  Authority for Judicial Enforcement and
Revision.  Seller agrees and acknowledges that the covenants of Seller set forth
in this Section 6.5 (i) are reasonable in geographic and temporal scope and in
all other respects and (ii) have been made in order to induce Purchaser to enter
into this Agreement and consummate the transactions contemplated hereby, and
Purchaser would not have entered into this Agreement or consummated the
transactions contemplated hereby, in each case but for the covenants of Seller
contained in this Section 6.5.  If, at any time of enforcement of any of the
provisions of this Section 6.5, a Governmental Authority determines that the
duration, scope or area restrictions stated herein are not enforceable under
applicable Law, the Parties agree that the maximum duration, scope or area (as
applicable) permitted by applicable Law shall be substituted for the duration,
area or scope (as applicable) stated herein and the Governmental Authority shall
be authorized by the Parties to revise the restrictions contained herein to
cover such maximum duration, area or scope

 

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(as applicable).  This Section 6.5(c) shall be read in conjunction with (and not
to the exclusion of) Section 10.6 (Severability).

 

(d)                                 Injunctive Relief.  The Parties agree that
any breach or attempted breach of this Section 6.5 would cause irreparable
injury to Purchaser, which cannot be adequately compensated in monetary
damages.  Therefore, Purchaser shall have, in addition to, and not in lieu of,
any of the other rights and remedies available hereunder, the right to have the
provisions of this Section 6.5 specifically enforced by any court of competent
jurisdiction by way of an injunction or other equitable relief.  Purchaser shall
not be required to post a bond or other security or to prove actual damages or
the inadequacy of monetary damages in connection with its efforts to obtain
equitable relief concerning this Section 6.5.

 

(e)                                  Exercise of Certain Rights.  With respect
to each Person who is an executive of the Company on the date of this Agreement
and who will cease to be an employee of the Company at any time at or prior to
the Closing in order to become an employee of Seller, MegaPath Holding
Corporation or CloudCo, Seller shall take such actions as shall be necessary and
appropriate to either (i) ensure that the Company will remain an express third
party beneficiary of any contractual covenant not to compete, covenant not to
solicit or similar agreement that is in effect with the Company on the date of
this Agreement or (ii) enforce, or cause MegaPath Holding Corporation or CloudCo
to enforce, such restrictive covenants from time-to-time at the request of the
Company for the benefit of the Company as the same may be applicable to the
Acquired Business, and Seller shall not, and shall cause MegaPath Holding
Corporation and CloudCo not to, waive such restrictive covenants as the same may
be applicable to the Acquired Business.

 

6.6                               Further Assurances.  From time to time, as and
when requested by any Party, each other Party shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions as the requesting
Party may reasonably deem necessary or desirable (and at the cost and expense of
such requesting Party, except to the extent such cost or expense constitutes a
Loss for which such Party is entitled to indemnification pursuant to
Article VIII) to evidence and effectuate the transactions contemplated by this
Agreement and the other Transaction Documents.  Without limiting the generality
of the foregoing, if, after the Closing, Purchaser or the Company, on the one
hand, or Seller or any Affiliate of Seller identify (i) any tangible or
intangible property or other asset in the possession of Seller or its Affiliates
that is owned, or has been used or held for use in the operation of the Acquired
Business by the Company, other than any such property or asset that is shared
between the Acquired Business and the Cloud & Hosted Services Business and is
addressed in the Transition Services Agreement, or (ii) any Contract to which
Seller or its Affiliates is a party that Purchaser or the Company confirms is
intended to be for the benefit of the Company, other than any such Contract that
is shared between the Acquired Business and the Cloud & Hosted Services Business
and is addressed in the Transition Services Agreement, then, in each case,
unless specifically addressed in the Contribution Agreement, Seller shall, or
shall cause its Affiliate to, as the case may be, deliver or convey such
property or other asset, or assign such Contract, to the Company, accompanied by
appropriate instruments of transfer or assignment, as the case may be, but
without any further consideration being required from

 

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Purchaser or the Company in connection with such conveyance, delivery or
assignment, as the case may be.

 

6.7                               Netco Transaction.  For the avoidance of
doubt, all funds remaining in the third-party escrow account established in
connection with the transactions contemplated by the Netco Purchase Agreement
are for the benefit of, and shall be released to, Seller and its Affiliates
other than the Company, and are not for the benefit of the Company.  Subject to
the provisions of Article VIII, Seller and its Affiliates other than the Company
shall control any Proceeding related to such escrowed funds or any claim for
indemnification under the Netco Purchase Agreement, and Purchaser and the
Company shall use commercially reasonable efforts, at Seller’s expense, to
cooperate and assist Seller and its Affiliates in any such matter that arises
after the Closing, including providing such access to certain information in
accordance with in Section 6.4 as may be reasonably requested by Seller or its
Affiliates in connection with any such matter.

 

6.8                               Use of Trademarks; Name Change.  Purchaser
acknowledges that all rights of the Company in and to any of the MegaPath Marks
shall be transferred to an Affiliate of Seller as part of the Divestiture. 
Following the Closing, Purchaser shall take all actions necessary to (i) change
the legal name of the Company to a name that does not contain the word
“MegaPath” or any similar word and (ii) ensure that neither Purchaser, nor any
of its Affiliates (including the Company) market or brand any products or
services of the Company using any MegaPath Marks or otherwise use the MegaPath
Marks at any time for any reason; provided, however, that Purchaser and the
Company shall have the right, with respect to inventory, supplies, marketing
materials, signs and other items used in the Acquired Business immediately prior
to the Closing that contain or display MegaPath Marks, to use the MegaPath Marks
in the manner and to the extent used by the Acquired Business prior to the
Closing, and Seller hereby grants to Purchaser and the Company a non-exclusive,
royalty-free license and right to use the MegaPath Marks in such manner and to
such extent, for such period of time as is necessary to exhaust all such
inventory and supplies and replace such signs, marketing materials and other
items with similar assets that do not contain or display any MegaPath Marks. 
Purchaser shall take, and cause the Company to take, such actions as are
necessary to replace such signs, marketing materials and other items as soon as
reasonably practicable following the Closing and to exhaust such inventory and
supplies in the ordinary course of business.  All links between any domain name
included within the Acquired Business and any domain names of Seller or any of
its Affiliates shall be removed as soon as reasonably practicable after the
Closing, and after the Closing, Purchaser shall use commercially reasonable
efforts to cooperate with Seller in taking all actions necessary to complete
these actions.

 

6.9                               Financial Statements for the Acquired
Business.  On or before April 15, 2015, Seller shall deliver or cause to be
delivered to Purchaser (a) the unaudited balance sheets of the Acquired Business
as at December 31, 2012 and 2013, together with the related unaudited statements
of income, stockholder’s equity and cash flows of the Acquired Business for the
years then ended and (b) the unaudited statements of stockholder’s equity and
cash flows of the Acquired Business for the year ended December 31, 2014
(collectively, the “Prior Carve-Out Financial Statements”).   Except as set
forth in Section 2.6(a)(ii) of the Seller Disclosure Schedule, each of the Prior
Carve-Out Financial Statements when delivered will have been, (a)

 

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prepared in accordance with the accounting methods, practices, policies and
principles set forth on Schedule 1.5 consistently applied as at the dates
thereof and for the periods covered thereby, and (b) prepared, in all material
respects, based upon the books and records of the Company, and each of the Prior
Carve-Out Financial Statements when delivered will present, fairly the financial
condition of the Acquired Business as of its respective date and the results of
operations and cash flows of the Acquired Business for the periods then ended,
as applicable.

 

ARTICLE VII
CONDITIONS TO CLOSING

 

7.1                               Conditions to the Obligation of Purchaser. 
The obligation of Purchaser to consummate the transactions contemplated by this
Agreement in connection with the Closing shall be subject to the satisfaction or
waiver by Purchaser on or prior to the Closing Date of each of the following
conditions:

 

(a)                                 The representations and warranties of the
Company and Seller contained in Article II and Article III (i) that are
Fundamental Representations shall be true and correct in all respects on the
date made and as of the Closing (except with respect to  those representations
and warranties that are made as of a specific date, only as of such date) and
(ii) that are other than Fundamental Representations shall be true and correct
in all respects on the date made and as if made at and as of the Closing (except
with respect to  those representations and warranties that are made as of a
specific date, only as of such date), except, with respect to this clause
(ii) for such failures to be true and correct as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(b)                                 No disclosure made by Seller pursuant to
Section 5.7 with respect to changes, developments, conditions, events or
circumstances occurring after the date of this Agreement shall have caused the
representations and warranties of the Company or Seller set forth in Article II
or Article III to which such disclosure pertains to not be true and correct in
all respects (if qualified by materiality or Material Adverse Effect) or true
and correct in all material respects (if not qualified by materiality or
Material Adverse Effect) as if made at and as of the Closing (except with
respect to  those representations and warranties that are made as of a specific
date, only as of such date).

 

(c)                                  The Company and Seller shall have duly
performed and complied in all material respects with all covenants and
agreements contained herein required to be performed or complied with by Seller
at or before the Closing.

 

(d)                                 The waiting period applicable to the
consummation of the transaction contemplated by this Agreement under the HSR Act
shall have expired or been terminated and each of the Governmental Approvals and
Contract Consents set forth on Schedule 7.1(d) shall have been received.

 

(e)                                  There shall not be in effect any litigation
involving the Shares or Seller, whether pending or threatened in writing, that
seeks to enjoin, delay, restrain, prohibit or impair the consummation of the
transactions contemplated by this Agreement, or any injunction or other

 

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Order issued by a court of competent jurisdiction restraining or prohibiting the
consummation of the transactions contemplated by this Agreement.

 

(f)                                   Seller shall have delivered to Purchaser
customary payoff letters or other evidence reasonably satisfactory to Purchaser
providing for the release of any Liens securing the Company Indebtedness upon
payoff in full of such Company Indebtedness (other than the Company Indebtedness
identified on Schedule 1.2(g)), and the release of any other Liens on the Shares
as of the Closing.

 

(g)                                  Seller shall have delivered to Purchaser
evidence reasonably satisfactory to Purchaser of the termination of each of the
contracts set forth on Schedule 2.22, if any, designated by Purchaser to the
Company not less than ten (10) days prior to the Closing, in each case without
any Liability to the Company after the Closing.

 

(h)                                 The Divestiture shall have been completed.

 

(i)                                     The Marketing Period shall have been
completed.

 

(j)                                    Seller shall have delivered to Purchaser
the Form 8023 in accordance with Section 7.3(b)(xiii).

 

7.2                               Conditions to the Obligation of the Company
and Seller.  The obligations of the Company and Seller to consummate the
transactions contemplated by this Agreement in connection with the Closing shall
be subject to the satisfaction or waiver by Seller on or prior to the Closing
Date of each of the following conditions:

 

(a)                                 The representations and warranties of
Purchaser contained in Article IV (i) that are Fundamental Representations shall
be true and correct in all respects on the date made and as of the Closing
(except with respect to  those representations and warranties that are made as
of a specific date, only as of such date) and (ii) that are other than
Fundamental Representations shall be true and correct in all respects on the
date made and as if made at and as of the Closing (except with respect to  those
representations and warranties that are made as of a specific date, only as of
such date), except, with respect to this clause (ii), for such failures to be
true and correct as would not reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the ability of Purchaser or Parent
to perform their obligations under this Agreement.

 

(b)                                 Purchaser shall have duly performed and
complied in all material respects with all covenants and agreements contained
herein required to be performed or complied with by Purchaser at or before the
Closing.

 

(c)                                  The waiting period applicable to the
consummation of the transaction contemplated by this Agreement under the HSR Act
shall have expired or been terminated.

 

(d)                                 There shall not be in effect any injunction
or other order issued by a court of competent jurisdiction restraining or
prohibiting the consummation of the transactions contemplated by this Agreement.

 

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(e)                                  The Divestiture shall have been completed.

 

7.3                               Closing Deliveries of Seller.  At the Closing:

 

(a)                                 Seller shall assign and transfer to
Purchaser all of its right, title and interest in and to the Shares by
delivering to Purchaser the certificates representing the Shares, duly endorsed
in blank or accompanied by duly executed stock powers endorsed in blank; and

 

(b)                                 Seller shall deliver, or cause to be
delivered, to Purchaser:

 

(i)                                     a certificate, dated as of the Closing
Date and executed by a duly authorized representative of Seller, as to the
fulfillment of the conditions set forth in Section 7.1(a), (b) and (c);

 

(ii)                                  a certificate of the secretary of the
Company, dated as of the Closing Date, certifying (A) that a correct and
complete copy of the Certificate of Incorporation of the Company as in effect
immediately prior to the Closing is attached thereto, with a copy of such
Certificate of Incorporation certified by the Secretary of State of the
Commonwealth of Virginia as of a date not more than ten (10) days prior to the
Closing Date also attached thereto, (B) that a correct and complete copy of the
by-laws of the Company as in effect immediately prior to the Closing is attached
thereto, (C) that a Certificate of Good Standing of the Company issued by the
Secretary of State of the Commonwealth of Virginia and each of the other states
set forth on Schedule 7.3(b)(ii), each dated as of a date not more than ten
(10) days prior to the Closing Date, are attached thereto, (D) the resolutions
of the Company’s board of directors approving the execution, delivery and
performance of this Agreement and (E) to the incumbency and signature of the
officer of the Company executing this Agreement and the other Transaction
Documents to which the Company will be a party.

 

(iii)                               a certificate of the secretary of Seller,
dated as of the Closing Date, certifying (A) resolutions of the Seller’s board
of directors and shareholders approving the execution, delivery and performance
of this Agreement and (B) to the incumbency and signature of the officer of
Seller executing this Agreement and the other Transaction Documents to which
Seller will be a party;

 

(iv)                              the resignation of each director of the
Company from his or her position as a director and, to the extent requested by
Purchaser in writing at least twenty (20) Business Days prior to the Closing
Date, the resignation of each officer of the Company so requested by Purchaser
from his or her position as an officer, in each case effective as of the
Closing;

 

(v)                                 the seal, minute book and stock transfer
records of the Company, and deliver all original corporate records and documents
of the Company not then in possession of the Company but in the possession of
Seller;

 

(vi)                              an IRS Form W-9 or W-8, as applicable,
together with all required supporting documentation, properly completed and duly
executed by Seller in accordance

 

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with applicable IRS requirements, certifying that Seller is not subject to
backup withholding of federal Tax or to withholding of federal Tax at source on
interest income;

 

(vii)                           a properly completed and executed certificate of
non-foreign status from Seller that complies with Treasury Regulations
Section 1.1445-2(b)(2);

 

(viii)                        a subscription agreement with respect to the
Parent Stock, in substantially the form of Exhibit A hereto (the “Subscription
Agreement”), duly executed by Seller;

 

(ix)                              a transition services agreement, between
Seller and the Company , in substantially the form of Exhibit B hereto (the
“Transition Services Agreement”), duly executed by Seller;

 

(x)                                 a contribution agreement with respect to the
Divestiture, in substantially the form of Exhibit C hereto (the “Contribution
Agreement”), duly executed by Seller, the Company and Cloudco;

 

(xi)                              a release of obligations from the Seller in
favor of the Company, in substantially the form of Exhibit E hereto (the “Seller
Release”), duly executed by Seller;

 

(xii)                           a copy of each of the payoff letters related to
the Company Indebtedness to be paid at the Closing, duly executed by the parties
thereto and dated within a reasonable time prior to the Closing Date, including
the agreement of the holders of Liens to terminate all UCC financing statements
filed in connection therewith;

 

(xiii)                        a properly completed and executed Form 8023, in a
form reasonably acceptable to Purchaser, in accordance with Section 6.1(b); and

 

(xiv)                       such other documents, instruments or agreements as
Purchaser reasonably requests and are reasonably necessary to consummate the
transactions contemplated by this Agreement.

 

7.4                               Closing Deliveries of Purchaser.  At the
Closing:

 

(a)                                 Purchaser shall pay the Closing Cash
Consideration and deliver the Parent Stock in accordance with Section 1.3.

 

(b)                                 Purchaser shall deliver, or cause to be
delivered, to Seller:

 

(i)                                     a certificate, dated as of the Closing
Date and signed by an officer of Purchaser, as to the fulfillment of the
conditions set forth in Sections 7.2(a) and (b);

 

(ii)                                  a certificate of the secretary of each of
Purchaser and Parent, dated as of the Closing Date, certifying (A) resolutions
of the board of directors approving the execution, delivery and performance of
this Agreement and (B) to the incumbency and signature of the officer of Seller
executing this Agreement and the other Transaction Documents to which Seller
will be a party;

 

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(iii)                               the Subscription Agreement, duly executed by
Purchaser; and

 

(iv)                              the Transition Services Agreement, duly
executed by Purchaser.

 

ARTICLE VIII
INDEMNIFICATION

 

8.1                               Survival Period.  The representations and
warranties set forth in this Agreement shall survive the Closing and shall
terminate on the twelve (12) month anniversary of the Closing Date; provided,
however, that: (a) the representations and warranties contained in Section 2.17
(Tax) shall survive the Closing until sixty (60) days after expiration of the
applicable statute of limitations (after giving effect to any extension or
tolling thereof) for the matters described in such representations and
warranties and (b) the representations and warranties contained in Section 2.1
(Existence; Good Standing), Section 2.2 (Capitalization), Section 2.3
(Authority; Enforceability), Section 2.5 (Subsidiaries), Section 2.25 (Brokers),
Section 3.1 (Existence; Good Standing), Section 3.2 (Authority; Enforceability),
Section 3.6 (Title to Shares), Section 4.1 (Existence; Good Standing),
Section 4.2 (Authority; Enforceability), and Section 4.8 (Brokers Fees) shall
survive the Closing indefinitely (the representations and warranties referred to
in this clause (b) and the preceding clause (a) are collectively the
“Fundamental Representations”).  Each covenant and agreement of the Parties
contained in this Agreement shall each survive the Closing and shall terminate
on the date sixty (60) days after the running of the applicable statute of
limitations (after giving effect to any extension or tolling thereof) with
respect to the subject matter of such covenant and agreement, except for those
covenants and agreements that contain specific survival periods (which shall
each survive the Closing and shall terminate on the last day of such specific
survival period).

 

8.2                               Expiration of Indemnification.  No Notice of
Claim (a) concerning a breach of or inaccuracy in a representation and warranty
contained in this Agreement or a non-fulfillment or breach of any covenant or
agreement made by or to be performed by a Party set forth in this Agreement may
be delivered by a Person seeking indemnification after expiration of the
representation and warranty or covenant and agreement with respect to which such
indemnification claim is being made, as provided in Section 8.1, or
(b) concerning any of the matters set forth in Section 8.3(a)(iv), (v) or
(vi) may be delivered by a Person seeking indemnification after the date ninety
(90) days after the running of the applicable statute of limitations with
respect to the subject matter of such indemnification; provided, however, in the
case of each of the preceding clauses (a) and (b), if a Notice of Claim
concerning any of the foregoing matters has been delivered in accordance with
Section 8.4(a) or Section 8.5(a) by a Person seeking indemnification prior to
the expiration of the period set forth in the preceding clauses (a) or (b), as
applicable, the right to indemnification with respect to the matter set forth in
such Notice of Claim and any other claim(s) arising out of, resulting from or
relating to the facts giving rise to such claim for indemnification shall
survive until such later date as each such claim for indemnification has been
fully and finally resolved in accordance with this Article VIII.

 

8.3                               Indemnification by the Parties.

 

(a)                                 Subject to the terms and conditions of this
Article VIII, Seller hereby agrees, from and after the Closing, to indemnify,
defend and hold harmless Purchaser, Parent,

 

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each of Purchaser’s and Parent’s Affiliates and each of the officers, directors,
managers, members, partners, equityholders, employees, representatives, agents,
successors and assigns of Purchaser, Parent and such Affiliates (collectively,
the “Purchaser Indemnified Parties”) from and against, and pay on behalf of and
reimburse each Purchaser Indemnified Party in respect of, any and all Losses
incurred, suffered, sustained or required to be paid, directly or indirectly, by
any Purchaser Indemnified Party arising out of, resulting from or relating to
(i) any breach of or inaccuracy in any representation and warranty made by the
Company or Seller in Article II or by Seller in Article III, (ii) any
non-fulfillment or breach of any covenant or agreement made by or to be
performed by Seller set forth in this Agreement, (iii) any non-fulfillment or
breach of any covenant or agreement made by or to be performed by the Company at
or prior to the Closing, (iv) any Indemnified Taxes, (v) any Liability of the
Company arising or relating to the Pre-Closing Period that is not primarily
related to the conduct of the Acquired Business, (vi) any Liabilities that are
“Assumed Liabilities” as that term is defined in the Contribution Agreement or
(vii) any Liability of the Company arising out of or relating to the claims
referred to in Section 2.13 of the Seller Disclosure Schedule under the heading
“Open Litigation” and identified as “Enqwest, LLC” in the column titled “Name”. 
Notwithstanding the foregoing, and for the avoidance of doubt, no Seller
Indemnified Party will be a Purchaser Indemnified Party by reason of such Seller
Indemnified Party’s position with the Company or otherwise.

 

(b)                                 Subject to the terms and conditions of this
Article VIII, Parent and Purchaser hereby agree, from and after the Closing, to
jointly and severally indemnify, defend and hold harmless Seller, each of
Seller’s Affiliates and each of its and their respective officers, directors,
managers, members, partners, equityholders, employees, representatives, agents,
successors and assigns (collectively, the “Seller Indemnified Parties”) from and
against, and pay on behalf of and reimburse each Seller Indemnified Party in
respect of, any and all Losses incurred, suffered, sustained or required to be
paid, directly or indirectly, by any Seller Indemnified Party arising out of,
resulting from or relating to (i) any breach of or inaccuracy in any
representation and warranty made by Parent or Purchaser in Article IV or
(ii) any non-fulfillment or breach of any covenant or agreement made by or to be
performed by Parent or Purchaser set forth in this Agreement.

 

8.4                               Indemnification Claim Procedure.

 

(a)                                 If any Purchaser Indemnified Party or Seller
Indemnified Party, as applicable (in the capacity as a Person seeking
indemnification under this Article VIII, the “Indemnified Party”), obtains
actual knowledge of any matter not involving a Third Party Claim that the
Indemnified Party reasonably believes will entitle the Indemnified Party to
indemnification from Purchaser or Seller under this Article VIII (in the
capacity as a Person against whom indemnification is sought under this
Article VIII, the “Indemnifying Party”), the Indemnified Party shall promptly
thereafter deliver to the Indemnifying Party a notice thereof (a “Notice of
Claim”) describing such matter in reasonable detail and, to the extent
reasonably estimable, the estimated Losses resulting therefrom; provided,
however, that any failure to give such notification on a timely basis or to
provide any particular details therein shall not relieve the Indemnifying Party
of its obligation to indemnify any Indemnified Party hereunder except to the
extent that such failure to provide, delay in providing or omission of any
particular detail actually prejudices the ability of the Indemnifying Party to
defend against such matter.

 

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(b)                                 The Indemnifying Party shall respond to the
Indemnified Party within twenty (20) Business Days following the date that the
Notice of Claim is delivered to pursuant to Section 8.4(a) (the “Response
Period”), specifying whether or not the Indemnifying Party disputes the
claim(s) described in the Notice of Claim, describe in reasonable detail the
basis for each such dispute and include reasonable supporting materials (a
“Claim Response”).  If the Indemnifying Party fails to give a Claim Response
within the Response Period, the Indemnifying Party shall be deemed not to
dispute the claim(s) described in the related Notice of Claim.  If the
Indemnifying Party gives a Claim Response within the Response Period but does
not in such Claim Response dispute all of the claim(s) made in the related
Notice of Claim, the Indemnifying Party shall be deemed not to dispute the
undisputed claim(s) described in the related Notice of Claim.  If the
Indemnifying Party elects not to dispute any claim described in a Notice of
Claim, whether by failing to give a timely Claim Response or otherwise, then,
subject to the limitations set forth in Section 8.6, the amount of Losses
alleged in such Notice of Claim shall be conclusively deemed to be an obligation
of the Indemnifying Party and the Indemnified Party shall be paid the amount
specified in the Notice of Claim as provided in Section 8.8 (it being
acknowledged that the amount of any estimated Losses shall be revised by the
Indemnified Party from time to time as the same are determined, all of which
Losses shall be indemnified by the Indemnifying Party).  If the Indemnifying
Party delivers a Claim Response within the Response Period indicating that the
Indemnifying Party disputes one or more of the matters identified in the Notice
of Claim, Purchaser and Seller shall promptly meet in good faith to resolve the
dispute.  If Purchaser and Seller do not resolve a dispute regarding a claim
within thirty (30) days after the delivery of the Claim Response, either the
Indemnifying Party or the Indemnified Party may submit the dispute to a court of
competent jurisdiction for resolution.  Upon resolution of such dispute, whether
by agreement or by a court of competent jurisdiction, if it is determined that
any indemnification payment is required pursuant to this Article VIII such
amount shall be paid to the Indemnified Party as provided in Section 8.8.

 

8.5                               Defense of Third Party Claims.

 

(a)                                 With respect to any matter for which an
Indemnified Party is entitled to indemnification from an Indemnifying Party
under this Article VIII that relates to a Proceeding or Claim by a third party
(a “Third Party Claim”), the Indemnified Party shall provide to the Indemnifying
Party a Notice of Claim relating to such Third Party Claim promptly after
receiving written notification of such Proceeding or Claim; provided, however,
that any failure to give such notification on a timely basis shall not relieve
the Indemnifying Party of its obligation to indemnify any Indemnified Party
hereunder except to the extent that such failure to provide or delay in
providing actually prejudices the ability of the Indemnifying Party to defend
against such Third Party Claim.

 

(b)                                 The Indemnifying Party shall have the right
to assume and pursue the defense of any Third Party Claim with counsel selected
by it and reasonably acceptable to the Indemnified Party, upon delivery to the
Indemnified Party, within thirty (30) days after notice of the Third Party Claim
has been delivered to the Indemnifying Party, of an acknowledgement and
agreement that (i) any Losses resulting therefrom are indemnifiable Losses for
which the Indemnified Party is entitled to indemnification under this
Article VIII (subject to the limitations set forth in Section 8.6) and (ii) that
the Indemnifying Party shall post any bond or other security

 

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to the extent required in connection with the defense or appeal of such Third
Party Claim (an “Assumption of Defense Notice”), provided that the Indemnifying
Party shall have an additional ninety (90) days after the delivery of such
notice to revoke such acknowledgement and agreement with respect to any portion
of such Losses based on matters that become known to the Indemnifying Party
during such period and which indicate that such Losses would not be
indemnifiable Losses for which the Indemnified Party is entitled to
indemnification under this Article VIII (and if a notice of such revocation is
not delivered by the Indemnifying Party during such ninety (90) day period, such
Losses shall conclusively be deemed indemnifiable Losses).  Notwithstanding the
foregoing, the Indemnifying Party shall not be entitled to assume the defense of
a Third Party Claim if (i) such Third Party Claim involves a purported class
action, (ii) such Third Party Claim involves criminal allegations, (iii) such
Third Party Claim demands injunctive or other equitable relief that, if granted,
would have an adverse effect on any of the Purchaser Indemnified Parties or
their respective businesses (if a Purchaser Indemnified Party is the Indemnified
Party) or any of the Seller Indemnified Parties or their respective businesses
(if a Seller Indemnified Party is the Indemnified Party), (iv) the Indemnified
Party reasonably determines that the Losses associated with such Third Party
Claim are likely to exceed the then-remaining amount of the Indemnification Cap
or (v) the Indemnified Party reasonably determines that it would be
inappropriate for a single counsel to represent both the Indemnifying Party and
the Indemnified Party in connection with such Third Party Claim under applicable
standards of legal ethics.

 

(c)                                  Unless and until the Indemnified Party
receives, with respect to any Third Party Claim, an Assumption of Defense Notice
from the Indemnifying Party within the thirty (30)-day period provided above or
if, at any time after the Indemnifying Party has assumed the defense of a Third
Party Claim, the Indemnifying Party fails diligently to defend such Third Party
Claim (i) the Indemnified Party may, but shall not be obligated to, fully
assume, commence and pursue its defense of such Third Party Claim in any such
manner as it may deem appropriate, (ii) the Indemnified Party shall thereafter
promptly inform the Indemnifying Party of all material developments related to
such Third Party Claim (including copying the Indemnifying Party on court
filings and correspondence); provided, however, that the Indemnified Party shall
not be obligated to turn over any attorney-client privileged information,
(iii) the Indemnifying Party shall reasonably cooperate in the defense or
prosecution of such Third Party Claim, including the retention and (upon the
Indemnified Party’s request) the provision to the Indemnified Party of records
and information which are reasonably relevant to such Third Party Claim, and
making employees and other representatives and advisors available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder and (iv) the Indemnified Party shall not settle any
such Third Party Claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld, conditioned or
delayed.  For the avoidance of doubt, any attorneys’ fees and expenses and other
costs and expenses incurred by the Indemnified Party in connection with a Third
Party Claim prior to the time at which such Third Party Claim has been assumed
by the Indemnifying Party as provided herein or during any subsequent time in
which the Indemnified Party is conducting its own defense of a Third Party Claim
in accordance with this Section 8.5 shall be Losses hereunder.

 

(d)                                 If the Indemnifying Party assumes the
defense of a Third Party Claim, it shall control and direct the defense of such
Third Party Claim and the cost of such defense shall

 

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constitute Losses of the Indemnified Party, with the indemnification by the
Indemnifying Party against all such Losses being subject to the limitations set
forth in Section 8.6, to the extent applicable, but the Indemnified Party shall
have the right to participate in the defense of such Third Party Claim and to
employ counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party.  During any time period in which the Indemnifying Party is
defending a Third Party Claim (i) the Indemnifying Party shall promptly inform
the Indemnified Party of all material developments related to such Third Party
Claim (including copying the Indemnified Party on court filings and
correspondence) and (ii) the Indemnified Party shall reasonably cooperate in the
defense or prosecution of such Third Party Claim, including the retention and
(upon the Indemnifying Party’s request) the provision to the Indemnifying Party
of records and information which are reasonably relevant to such Third Party
Claim, and making employees and other representatives and advisors available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder.  Notwithstanding anything to the contrary
herein, the Indemnifying Party shall not settle any Third Party Claim without
the prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld, conditioned or delayed) unless (A) the compromise or
settlement does not involve any statement, finding or admission of any fault of,
breach of Contract by, or violation of Law by, the Indemnified Party, (B) the
sole relief provided in the compromise or settlement is monetary damages that
are paid in full by the Indemnifying Party and does not include any requirement
that the Indemnified Party take or refrain from taking any actions other than
compliance with any non-disclosure obligations related to the terms of such
settlement contained in the settlement agreement, (C) the compromise or
settlement includes an unconditional and irrevocable release of the Indemnified
Party, (D) the settlement agreement includes a reasonable confidentiality
obligation by the Third Party claimant of the terms of the settlement and
(E) the Indemnified Party is a party to, or an express Third Party beneficiary
of, the settlement agreement, entitled to enforce such settlement agreement. 
The Indemnified Party shall have no Liability with respect to any compromise or
settlement of any Third Party Claims made without its consent (if such consent
is required by this Section 8.5) and any such compromise or settlement shall be
void.

 

(e)                                  This Section 8.5 shall not apply to Tax
Contests, which shall be governed by Section 6.2(d).

 

8.6                               Limitations on Indemnification.

 

(a)                                 Purchaser Limitations.

 

(i)                                     Subject to Section 8.6(e), the Purchaser
Indemnified Parties shall not be entitled to indemnification with respect to any
claim for indemnification made pursuant to Section 8.3(a)(i) if the Losses
associated with such claim (or group of related claims arising out of the same
or similar circumstances) are less than Twenty Thousand Dollars ($20,000) (the
“De Minimus Claim Amount”).

 

(ii)                                  Subject to Section 8.6(e), the Purchaser
Indemnified Parties shall not be entitled to indemnification with respect to any
claim for indemnification made pursuant to Section 8.3(a)(i) unless and until
the aggregate dollar amount of all Losses of the

 

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Purchaser Indemnified Parties for all claims relating to Losses that would
otherwise be indemnifiable pursuant to Section 8.3(a)(i) exceeds One Million
Dollars ($1,000,000) (the “Threshold Amount”), after which point Seller shall be
required to provide indemnification with respect to all indemnifiable Losses
with respect to any such claim for indemnification made pursuant to
Section 8.3(a)(i) from dollar one.  In addition, subject to Section 8.6(e), the
Purchaser Indemnified Parties shall not be entitled to indemnification with
respect to any claim for indemnification made pursuant to Section 8.3(a)(i),
Section 8.3(a)(iii) or Section 8.3(a)(iv) to the extent that all claims made
under any or all of such Sections are in an aggregate amount in excess of Ten
Million Dollars ($10,000,000) (the “Indemnification Cap”).

 

(b)                                 Seller Limitations.  Subject to
Section 8.6(e), the Seller Indemnified Parties shall not be entitled to
indemnification with respect to any claim for indemnification made pursuant to
Section 8.3(b)(i) (i) unless the Losses associated with such claim (or group of
related claims arising out of the same or similar circumstances) exceed the De
Minimus Claim Amount, (ii) unless and until the Losses associated with all
claims for indemnification made pursuant to Section 8.3(b)(i) incurred by the
Seller Indemnified Parties aggregate at least the Threshold Amount, after which
point Purchaser shall be required to provide indemnification with respect to all
indemnifiable Losses with respect to any claim for indemnification made pursuant
to Section 8.3(b)(i) from dollar one or (iii) in an aggregate amount in excess
of the Indemnification Cap.

 

(c)                                  Other Limitations.  Notwithstanding
anything to the contrary in this Article VIII or elsewhere in this Agreement, in
no event shall any Indemnified Party be entitled to receive indemnification
under this Article VIII for any Losses relating to (i) any multiple of any
direct Losses or (ii) any special, exemplary or punitive damages; provided,
however, that this limitation shall not apply if, and solely to the extent that,
an Indemnified Party is seeking to obtain through indemnification reimbursement
of such Losses resulting from an award in a Third Party Claim against such
Indemnified Party of such Losses.

 

(d)                                 No Double Recovery.  Notwithstanding the
fact that any Indemnified Party may have the right to assert claims for
indemnification under or in respect of more than one provision of this Agreement
in respect of any fact, event, condition or circumstance, no Indemnified Party
shall be entitled to recover the amount of any Losses suffered by such
Indemnified Party or its Affiliates more than once, regardless of whether such
Losses may be as a result of a breach of more than one representation, warranty
or covenant.  Without limiting the generality of the foregoing, no Indemnified
Party shall be able to recover any Loss for which it is otherwise entitled to
indemnification under this Agreement if such Loss has already been taken into
account in determining the Closing Cash Consideration or in determining the Net
Increase or Net Decrease, as finally determined in accordance with Section 1.5.

 

(e)                                  Exceptions; Overall Indemnity Cap. 
Notwithstanding anything in this Agreement to the contrary, the Parties
acknowledge and agree that (i) the provisions of Sections 8.6(a) and (b) shall
not apply with respect to any Losses arising out of, resulting from or relating
to any action or inaction that constitutes fraud, willful misconduct or
intentional misrepresentation, (ii) the De Minimus Claim Amount and the
Threshold Amount shall not apply

 

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to any indemnification claims made with respect to the Fundamental
Representations and (iii) the Indemnification Cap shall not apply to any
indemnification claims made with respect to the Fundamental Representations and
any such indemnification with respect to Fundamental Representations shall be
excluded in calculating when the Indemnification Cap is reached, and instead the
maximum aggregate amount of Losses for which indemnification is required to be
made with respect to a Fundamental Representation by Seller pursuant to
Section 8.3(a)(i) or Purchaser pursuant to Section 8.3(b)(i) shall be the
Purchase Price.

 

8.7                               Determination of Loss Amount.

 

(a)                                 For purposes of determining (i) whether
there has been a breach of any representation and warranty of Seller set forth
in Article II or Article III and (ii) the Losses for any such breach, all
materiality qualifications contained in such representations and warranties
(however they may be phrased and including the word “material”, the term
“Material Adverse Effect” and words or terms of similar import) shall be ignored
and not given any effect; provided, however, that materiality qualifications
shall not be ignored, and they shall be given effect, for purposes of the
definition of Permitted Liens or Material Contracts and any use of such terms in
this Agreement.

 

(b)                                 Purchaser shall, and shall cause the Company
to, in good faith, diligently seek recovery, at its or their own expense, of all
insurance proceeds from insurers with respect to all Losses with respect to
which any Purchaser Indemnified Party makes a claim for indemnification under
this Article VIII; provided that (i) the expenses incurred by Purchaser or the
Company in connection with such recovery and the net present value of any
increase in premiums of the applicable insurance policies relating to the claims
so made shall be a Loss related to such claim for indemnification and (ii) no
Indemnifying Party shall delay making any payment under this Article VIII
pending resolution of any such insurance claim.  To the extent that Purchaser or
the Company receives any amount under insurance coverage with respect to a
matter for which a Purchaser Indemnified Party has previously obtained payment
in indemnification under this Article VIII from Seller, Purchaser shall, as soon
as reasonably practicable after receipt of such insurance proceeds, pay and
reimburse to Seller for any prior indemnification payment (up to the amount of
the insurance proceeds) by deliver of cash in such amount.

 

(c)                                  The representations and warranties made by
the Company and Seller, on the one hand, and Purchaser and Parent, on the other
hand, in this Agreement are made with the knowledge and expectation that Seller
is (in the case of representations and warranties made by Purchaser and Parent)
and Purchaser is (in the case of representations and warranties made by the
Company and Seller) placing reliance thereon in entering into, and performing
its obligations under, this Agreement.

 

8.8                               Source of Recovery; Payment of Amounts Due.

 

(a)                                 Subject to the application of Section 8.6,
within five (5) Business Days after it is determined pursuant to this
Article VIII that any amount is due to any Purchaser Indemnified Party under
Section 8.3(a), such amount shall be satisfied (i) if the amount of such payment
is less than the aggregate amount of the Deferred Cash Payment (as reduced by
any

 

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prior application of this Section 8.8 prior to the time of such payment), then
by a dollar-for-dollar reduction in the Deferred Cash Payment to be made
pursuant to Section 1.3(d) and (ii) if the amount of such payment is equal to or
greater than the aggregate amount of the Deferred Cash Payment (as reduced by
any prior application of this Section 8.8 prior to the time of such payment),
then by a dollar-for-dollar reduction in the remainder of the Deferred Cash
Payment to be made pursuant to Section 1.3(d), with the amount of any excess
paid by Seller to Purchaser within such five (5)-Business Day period, by wire
transfer of immediately available funds.  For the avoidance of doubt if there
are any unresolved indemnification claims by the Purchaser Indemnified Parties
outstanding on the first anniversary of the Closing Date, Purchaser may defer
until the resolution thereof the payment to Seller of that portion of the
Deferred Cash Payment equivalent to reduction that would occur therein if all
such unresolved indemnification claims were resolved in favor of Purchaser.

 

(b)                                 Subject to the application of Section 8.6,
within five (5) Business Days after it is determined pursuant to this
Article VIII that any amount is due to any Seller Indemnified Party hereunder,
such amount shall be paid by Purchaser to such Seller Indemnified Party by wire
transfer of immediately available funds.

 

(c)                                  If any payment required under this
Section 8.8 is not made in full within five (5) Business Days after it is
determined under this Article VIII that such payment is due, the unpaid payment
shall thereafter bear simple interest at a rate equal to the prime rate in
effect from time to time (as published in The Wall Street Journal) plus six
(6) percentage points, until paid in full.

 

8.9                               Exclusive Remedy.  The Parties agree that,
from and after the Closing, the sole and exclusive remedies of (a) the Purchaser
Indemnified Parties for any breach of or inaccuracy in any of the
representations and warranties of the Company and Seller contained in this
Agreement or any non-fulfillment or breach of any of the covenants and
agreements of the Company or Seller contained in this Agreement and (b) the
Seller Indemnified Parties for any breach of or inaccuracy in any of the
representations and warranties of Purchaser contained in this Agreement or any
non-fulfillment or breach of any of the covenants and agreements of Purchaser
contained in this Agreement, in each case, whether based in contract or tort or
any other theory of liability, are the indemnification and reimbursement
obligations of the Parties set forth in this Article VIII.  The provisions of
this Section 8.9 shall not, however, prevent or limit the remedies
(i) contemplated by Section 1.5, (ii) contemplated by Section 10.12 with respect
to specific performance or injunctive relief for breaches of covenants,
(iii) contemplated by Section 6.2 with respect to Taxes or (iv) for any claim
based upon fraud, willful misconduct or intentional misrepresentation.  For the
avoidance of doubt, (A) the limitation set forth in this Section 8.9 shall not
apply to any of the Transaction Documents other than this Agreement and (B) to
the extent that any matter is subject to indemnification under alternative
provisions of this Agreement, an Indemnified Party may seek such indemnification
under such alternative provisions of this Agreement, but such Indemnified Party
may not recover duplicate amounts for its Losses relating to such matter.

 

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8.10                        Treatment of Indemnification Payments.  Any
indemnification payments made pursuant to this Article VIII shall be treated as
adjustments to the Purchase Price, unless otherwise required under applicable
Law.

 

ARTICLE IX
TERMINATION

 

9.1                               Termination.  This Agreement may be terminated
and the transactions contemplated herein may be abandoned at any time prior to
the Closing:

 

(a)                                 by the written mutual consent of Purchaser
and Seller;

 

(b)                                 By Purchaser, upon a breach of or inaccuracy
in any representation and warranty of the Company or Seller set forth in
Article II or Article III, or upon a upon a breach of any covenant or agreement
of the Company or Seller set forth in this Agreement, in each case such that the
conditions to Closing set forth in Sections 8.1(a), (b) or (c) would not be
satisfied as of the time of such breach or inaccuracy; provided, however, that
if such breach or inaccuracy is curable by the Company or Seller through the
exercise of commercially reasonable efforts within twenty (20) days after
written notice thereof is delivered to the Seller, then Purchaser may not
terminate this Agreement under this Section 9.1(b) prior to the end of such
twenty (20)-day period so long as the Company and Seller, as applicable,
continue to exercise commercially reasonable efforts to cure such breach,
inaccuracy or non-fulfillment (and then only if such breach, inaccuracy or
non-fulfillment has not been cured);

 

(c)                                  by Seller, (I) upon a breach of or
inaccuracy in any of the representations or warranties of Purchaser set forth in
Article IV, or upon a breach of any covenant or agreement of Purchaser set forth
in this Agreement, in each case such that the condition to Closing set forth in
Section 7.2(a) or (b) would not be satisfied as of the time of such breach or
inaccuracy; provided, however, that if such breach or inaccuracy is curable by
Purchaser through the exercise of commercially reasonable efforts within twenty
(20) days after written notice thereof is delivered to Purchaser, then Seller
may not terminate this Agreement under this Section 9.1(c) prior to the end of
such twenty (20)-day period so long as Purchaser continues to exercise
commercially reasonable efforts to cure such breach, inaccuracy or
non-fulfillment (and then only if such breach, inaccuracy or non-fulfillment has
not been cured) or (II) if the Marketing Period has been completed and the
conditions to Closing set forth in Sections 7.1 and Sections 7.2(c) and (d) are
satisfied (other than those conditions that by their nature can only be
satisfied at the Closing, provided that such conditions are reasonably capable
of being satisfied) and Purchaser is unable to satisfy its obligation to effect
the Closing by the date the Closing is required to have occurred pursuant to
Section 1.4 because of a failure to have obtained the Financing;

 

(d)                                 by either Purchaser or Seller, if the
Closing shall not have occurred on or before June 30, 2015 (or such other date
to which Purchaser and Seller may agree in writing) (the “Termination Date”);
provided, however, that the right to terminate this Agreement under this
Section 9.1(d) shall not be available (i) to Purchaser at any time that there is
a material breach of or inaccuracy in any of the representations and warranties
of Purchaser contained in this Agreement or Purchaser is in material breach or
non-fulfillment of any covenant or agreement of

 

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Purchaser set forth in this Agreement, in each case such that the Seller’s
conditions to Closing under Section 7.2 are not satisfied or (ii) to Seller at
any time that there is a material breach of or inaccuracy in any of the
representations and warranties of the Company or Seller contained in this
Agreement or the Company or Seller is in material breach or non-fulfillment of
any covenant or agreement of the Company or Seller set forth in this Agreement,
in each case such that Purchaser’s conditions to Closing under Section 7.1 are
not satisfied; or

 

(e)                                  by either Seller or Purchaser, if any
Governmental Authority shall have issued an Order or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Closing and such
Order or other action shall have become final and nonappealable; provided that
(i) if Purchaser is the Party seeking to terminate this Agreement pursuant to
this Section 9.1(e), Purchaser shall have used commercially reasonable efforts
to remove such Order or other action and such Order or other action shall not
have been principally caused by the breach by Purchaser of its covenants or
agreements under this Agreement, and (ii) if Seller is the Party seeking to
terminate this Agreement pursuant to this Section 9.1(e), Seller shall have used
commercially reasonable efforts to remove such Order or other action, and such
Order or other action shall not have been principally caused by the breach by
the Company or Seller of the covenants or agreements of the Company and Seller
under this Agreement.

 

9.2                               Effect of Termination.  Purchaser or Seller,
as applicable, shall give written notice to the other of any termination by it
of this Agreement pursuant to Sections 10.1(b), (c), (d) or (e), which notice
shall identify the clause pursuant to which the termination is being effected. 
Upon delivery of such notice or upon a termination of this Agreement pursuant to
Section 9.1(a), this Agreement will become null and void, and there will be no
liability on the part of any Party, any of their respective Affiliates or any of
their respective officers, directors, employees, equityholders, representatives,
agents or advisors, except that:

 

(a)                                 any such termination shall not affect the
Parties’ respective rights and obligations under Section 5.9 (publicity), this
Section 9.2, Article X or the Confidentiality Agreement, all of which shall
survive such termination; and

 

(b)                                 if such termination results from the fraud
of the Company or Seller, the willful or intentional failure of the Company or
Seller to perform a covenant or agreement set forth in this Agreement or the
willful or intentional breach by the Company or Seller of any of their
respective representations and warranties set forth in this Agreement, the
Company and Seller shall be fully liable for any and all Losses incurred or
suffered by Purchaser as a result of such fraud, failure or breach; and

 

(c)                                  if such termination results from the fraud
of Purchaser, the willful or intentional failure of Purchaser to perform a
covenant or agreement set forth in this Agreement or the willful or intentional
breach by Purchaser of any of its respective representations and warranties set
forth in this Agreement, Purchaser shall be fully liable for any and all Losses
incurred or suffered by the Company and Seller as a result of such fraud,
failure or breach.

 

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ARTICLE X
GENERAL PROVISIONS

 

10.1                        Expenses.

 

(a)                                 Except as otherwise specifically provided
for in this Agreement or the Other Transaction Documents, (i) Seller shall bear
all costs and expenses (including fees and disbursements of counsel, financial
advisors and accountants and financing fees, if any) incurred by or on behalf of
Seller in connection with this Agreement, the Other Transaction Documents and
the transactions contemplated hereby and thereby, (ii) Seller shall bear all
costs and expenses (including fees and disbursements of counsel, financial
advisors and accountants and financing fees, if any) incurred prior to the
Closing (or at the Closing pursuant to a Contract of the Company existing prior
to the Closing) by or on behalf of the Company in connection with this
Agreement, the Other Transaction Documents and the transactions contemplated
hereby and thereby and (iii) except to the extent reflected in the Final Closing
Statement, Seller shall pay all transaction bonuses, change-in-control payments
and similar obligations to Employees that were committed to prior to the
Closing, even if such amounts are payable after the Closing (such costs and
expenses, collectively, the “Company Transaction Expenses”).  Any Company
Transaction Expenses that are not paid at or prior to the Closing or included in
the Final Closing Statement, as finally determined in accordance with
Section 1.5, shall be paid in full by Seller promptly after written notice
thereof has been provided to Seller.

 

(b)                                 Except as otherwise specifically provided
for in this Agreement or the Other Transaction Documents, (i) Purchaser shall
bear all costs and expenses (including fees and disbursements of counsel,
financial advisors and accountants and financing fees, if any) incurred by or on
behalf of Purchaser in connection with this Agreement, the Other Transaction
Documents and the transactions contemplated hereby and thereby and (ii) the
Company shall bear all costs and expenses (including fees and disbursements of
counsel, financial advisors and accountants and financing fees, if any) incurred
after the Closing (or at the Closing pursuant to a Contract of the Company that
Purchaser causes the Company to enter into at the Closing) by or on behalf of
the Company in connection with this Agreement, the Other Transaction Documents
and the transactions contemplated hereby and thereby.

 

(c)                                  If this Agreement is terminated prior to
the Closing, the obligation of each Party to pay its own expenses shall be
subject to any rights of such Party arising from a breach of this Agreement by
another Party pursuant to Section 9.2.

 

10.2                        Notices.  All notices, requests, demands, waivers
and other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed using certified or registered United States mail with
postage prepaid or (c) sent by next-day or overnight mail or delivery using a
nationally recognized overnight courier service, as follows:

 

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If to the Company (prior to the Closing) or Seller:

 

MegaPath Group, Inc.

6800 Koll Center Parkway, Suite 200

Pleasington, CA  94566

Attention:  Steven B. Chisholm

 

with a copy (which shall not constitute notice, request, demand, waiver or other
communication to Seller) to:

 

Morgan Lewis & Bockius LLP

600 Anton Blvd., Suite 1800

Costa Mesa, CA  92626

Attention:  Timothy Rupp

 

If to Purchaser:

 

GTT Communications, Inc.

7900 Tysons One Place

Suite 1450

McLean, VA 22102

Attention:  Chris McKee

 

With a copy (which shall not constitute notice, request, demand, waiver or other
communication to Purchaser) to:

 

Goodwin Procter, LLP
901 New York Avenue, NW

Washington, DC 20001

Attention: Jay Schifferli

 

A Party may designate a new address to which notices, requests, demands, waivers
and other communications shall thereafter be transmitted by providing written
notice to that effect to the other Parties.  Each notice, request, demand,
waiver or other communication transmitted in the manner described in this
Section 10.2 shall be deemed to have been provided, received and become
effective for all purposes hereunder (i) when delivered personally to the
recipient, if delivered personally, (ii) three (3) Business Days after being
mailed by certified or registered United States mail, postage prepaid, (iii) one
(1) Business Day after being sent by next day or overnight mail or delivery
using a nationally recognized overnight courier service, or (iv) when presented
for delivery to the addressee as so addressed during normal business hours, if
such delivery shall have been rejected, denied or refused for any reason.

 

10.3                        Assignment; Successors.  Neither this Agreement nor
any of the rights, interests or obligations hereunder may be assigned or
delegated (whether in whole or part, voluntarily or involuntarily, by operation
of Law, merger, consolidation, dissolution or otherwise) by (a) Parent or
Purchaser without the prior written consent of Seller; or (b) Seller, without
the prior written consent of Purchaser.  Notwithstanding the foregoing,
Purchaser or Parent shall have the right without the consent of Seller to
(i) assign its rights and delegate its obligations hereunder following the
Closing to any Affiliate of Purchaser that expressly assumes this Agreement,

 

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provided that such assigning party shall remain responsible for any failure of
the assignee to fulfill such obligations; provided that Purchaser provides
notice of such assignment to Seller, (ii) assign its rights and delegate its
obligations hereunder to any successor to all or substantially all of the
business and assets of Purchaser or Parent; or (iii) collaterally assign its
rights hereunder to any Person extending credit to Purchaser, Parent or any of
their respective Affiliates, in each case unless such assignment would delay the
consummation of the transactions contemplated hereby or cause Purchaser or
Parent to have to obtain the consent of any Person to the consummation of the
transactions contemplated hereby (other than the Consents set forth on
Section 4.3 of the Purchaser Disclosure Schedule).  Any purported assignment or
delegation of this Agreement or any rights, interests or obligations hereunder
in violation of this Section 10.3 shall be void and of no force or effect. 
Subject to the foregoing, this Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns.

 

10.4                        Amendment and Waiver.  This Agreement may not be
amended except by an instrument in writing executed by Purchaser and Seller,
which states that it constitutes an amendment to this Agreement and specifies
the provision(s) that are being amended.  Any provision of this Agreement may be
waived at any time by (a) Purchaser and Parent, by delivery to Seller of a
written instrument executed by Purchaser, which states that it constitutes a
waiver of this Agreement and specifies the provision(s) that are being waived
and (b) Seller and the Company (prior to the Closing), by delivery by Seller to
Purchaser of a written instrument executed by Seller, which states that it
constitutes a waiver of this Agreement and specifies the provision(s) that are
being waived.  Any such waiver shall be effective only to the extent
specifically set forth in such written instrument.  Neither the exercise (from
time to time and at any time) by a Party of, nor the delay or failure (at any
time or for any period of time) to exercise by a Party, any right, power or
remedy shall constitute a waiver of the right to exercise, or impair, limit or
restrict the exercise of, such right, power or remedy or any other right, power
or remedy at any time and from time to time thereafter.  No waiver of any right,
power or remedy of a Party shall be deemed to be a waiver of any other right,
power or remedy of such Party or shall, except to the extent so waived, impair,
limit or restrict the exercise of such right, power or remedy.

 

10.5                        Entire Agreement.  This Agreement, including the
annex, exhibits and schedules hereto, along with the other Transaction Documents
and the Confidentiality Agreement, constitute the entire agreement of the
Parties, and supersedes all other prior or contemporaneous Contracts (whether
written or oral), by or among the Parties with respect to the subject matter
hereof and thereof, including any letter of intent, term sheet or memorandum of
terms entered into or exchanged by the Parties or any of their respective
Affiliates.  The annex, exhibits and schedules specifically referred to herein,
and delivered pursuant hereto, are an integral part of this Agreement.

 

10.6                        Severability.  Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable Law, but if any provision of this Agreement shall hereafter be
held to be invalid, unenforceable or illegal, in whole or in part, in any
jurisdiction under any circumstances for any reason (a) such provision shall be
reformed to the minimum extent necessary to cause such provision to be valid,
enforceable and

 

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legal while preserving the intent of the Parties as expressed in, and the
benefits to such Parties provided by, such provision or (b) if such provision
cannot be so reformed, such provision shall be severed from this Agreement and
an equitable adjustment shall be made to this Agreement (including addition of
necessary further provisions to this Agreement) so as to give effect to the
intent as so expressed and the benefits so provided to the maximum extent
permitted by applicable Law.  Such holding shall not affect or impair the
validity, enforceability or legality of such provision in any other jurisdiction
or under any other circumstances.  Neither such holding nor such reformation or
severance shall affect or impair the legality, validity or enforceability of any
other provision of this Agreement.

 

10.7                        Headings.  The headings contained in this Agreement
are for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.

 

10.8                        Counterparts.  This Agreement may be executed in one
or more counterparts, all of which (when executed and delivered) shall be
considered one and the same Agreement and shall become effective when one or
more counterpart signature pages have been signed by each Party and delivered by
each Party to the other Parties, it being understood that the Parties need not
sign the same counterpart.  Counterparts may be delivered by facsimile or other
electronic transmission method (including pdf), and any counterpart so delivered
shall be deemed to have been duly and validly delivered and be valid and
effective for all purposes.

 

10.9                        Governing Law.  THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, ALL RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ALL
DISPUTES AND PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE FOREGOING SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, AND ENFORCED IN ACCORDANCE WITH, THE DOMESTIC LAWS OF THE STATE
OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR
RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD
CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
DELAWARE.

 

10.10                 Consent to Jurisdiction; Waiver of Jury Trial.

 

(a)                                 EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY DISPUTES WITH
RESPECT TO ANY OF THE FOREGOING SHALL BE COMMENCED AND PROSECUTED EXCLUSIVELY IN
THE FEDERAL AND STATE COURTS OF THE STATE OF DELAWARE AND ANY APPELLATE COURT
THEREFROM (COLLECTIVELY, THE “DELAWARE COURTS”).  EACH PARTY HEREBY IRREVOCABLY
AND UNCONDITIONALLY CONSENTS AND SUBMITS, FOR ITSELF AND ITS ASSETS, TO THE
EXCLUSIVE JURISDICTION OF ANY OF THE DELAWARE COURTS IN RESPECT OF ANY SUCH
PROCEEDING.  EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO
SERVICE

 

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OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.2.  NOTHING IN THIS
AGREEMENT SHALL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.

 

(b)                                 EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO
SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY
DISPUTES WITH RESPECT TO ANY OF THE FOREGOING IN ANY OF THE DELAWARE COURTS. 
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
PROCEEDING IN ANY OF THE DELAWARE COURTS.  EACH OF THE PARTIES AGREES THAT A
FINAL JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.

 

(c)                                  EACH PARTY AGREES THAT ANY PROCEEDING (IN
CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES
HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING WILL INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY SUCH PROCEEDING.

 

(d)                                 EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY
PROCEEDING ARISING UNDER OR RELATING TO THIS AGREEMENT, SEEK TO ENFORCE THE
FOREGOING WAIVERS, (ii) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (iii) SUCH PARTY MAKES SUCH WAIVERS VOLUNTARILY,
AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATION IN THIS SECTION 10.10.

 

10.11                 Remedies.

 

(a)                                 Subject to the provisions of Section 8.9,
each of the Parties shall have and retain all rights and remedies, at law or in
equity, including rights to specific performance and injunctive or other
equitable relief, arising out of or relating to a breach or threatened breach of
this Agreement.  Notwithstanding anything herein to the contrary, it is
acknowledged and agreed that the Company shall be entitled to seek specific
performance of Purchaser’s obligations to

 

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consummate the Closing only in the event that each of the following conditions
has been satisfied: (i) the Marketing Period has ended and all of the conditions
set forth in Section 7.1 and Sections 7.2(c) and 7.2(d) have been satisfied or
waived (other than those conditions that by their nature are to be satisfied or
waived at the Closing), (ii) Purchaser fails to complete the Closing by the date
the Closing is required to have occurred pursuant to Section 1.4 and (iii) the
Company has confirmed in a written notice delivered to Purchaser that if
specific performance is granted and the Financing is funded, then the Closing
will occur.

 

(b)                                 Without limiting the generality of
Section 10.11(a), each of the Parties acknowledges that money damages would not
be a sufficient remedy for any breach or threatened breach of this Agreement and
that the non-breaching Parties would be damaged irreparably and would have no
adequate remedy of law if any provision of this Agreement is not performed in
accordance with its specific terms or otherwise is breached.  Accordingly, each
Party agrees that the other Parties shall be entitled to a decree of specific
performance to enforce the rights and obligations of the Parties from any court
of competent jurisdiction, and appropriate injunctive relief may be applied for
and granted in connection therewith, without the necessity of posting a bond or
other security or proving actual damages and without regard to the adequacy of
any remedy at law.

 

10.12                 Third Party Beneficiaries.  No Person other than Purchaser
and Seller has, is intended to have, or shall have any rights, remedies,
obligations or benefits under any provision of this Agreement, other than
(a) any permitted successors and assigns of the Parties under Section 10.3 (who
are intended third party beneficiaries of this Agreement) and (b) the Purchaser
Indemnified Parties and the Seller Indemnified Parties (who are intended third
party beneficiaries of Article VIII).

 

10.13                 Interpretation.  All references in this Agreement to
annexes, exhibits, schedules, articles, sections, subsections and other
subdivisions refer to the corresponding annexes, exhibits, schedules, articles,
sections, subsections and other subdivisions of or to this Agreement unless
expressly provided otherwise.  Any capitalized term used but not defined in an
annex or schedule to this Agreement have the meaning set forth in this
Agreement.  The words “this Agreement,” “herein,” “hereby,” “hereunder” and
“hereof,” and words of similar import, refer to this Agreement as a whole and
not to any particular article, section, subsection or other subdivision hereof
unless expressly so limited herein.  The words “either,” “or,” “neither,” “nor,”
and “any” are not exclusive, and the word “or” is deemed to have the meaning
“and/or”.  The word “including” (in its various forms) means including without
limitation.  All references to “$” and dollars shall be deemed to refer to
United States currency unless otherwise specifically provided.  Pronouns in
masculine, feminine or neuter genders shall be construed to state and include
any other gender, and words, terms and titles (including terms defined
herein) in the singular form shall be construed to include the plural and vice
versa, unless the context otherwise requires.  Unless expressly stated to the
contrary, references in this Agreement or Annex A to any Contract are to that
Contract as amended, modified or supplemented from time to time in accordance
with the terms thereof.  References in this Agreement to a Person shall include
the successors and assigns thereof.  All references to materials in this
Agreement, including any report, record, file or other document, shall, in each
case, include any form or medium of such materials (including electronic form).

 

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10.14                 Construction.  The language used in this Agreement shall
be deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any Party
based on any claim that such Party or counsel to such Party drafted this
Agreement or any provision hereof.  The information contained in this Agreement
and in the schedules hereto is disclosed solely for purposes of this Agreement,
and no information contained herein or therein shall be deemed to be an
admission by any Party to any third party of any matter whatsoever (including
any violation of Law or breach of Contract).  Except for the limitation provided
in Section 2.11(d), each representation and warranty contained herein is
independent of all other representations and warranties contained herein
(whether or not covering an identical or a related subject matter) and must be
independently and separately complied with and satisfied.  Exceptions or
qualifications to any representations or warranties contained in the text
thereof or schedules thereto shall not be construed as exceptions or
qualifications to any other representation or warranty, except that the Parties
acknowledge and agree that with respect to the Seller Disclosure Schedule, any
exception to a representation and warranty of Seller that is disclosed in a
section thereof under a caption referencing such representation and warranty
shall be deemed to also be an exception to each other representation and
warranty of Seller contained in this Agreement for which a separate section is
provided in the Seller Disclosure Schedule, notwithstanding the absence of a
cross reference thereto, if and to the extent that it would be reasonably
apparent that such exception is applicable to such other representation and
warranty.

 

10.15                 Deliveries to Purchaser.  Any document or item shall be
deemed “provided” or “made available” by the Company to Purchaser for purposes
of Article II and Article III if such document or item is included prior to the
date of this Agreement in the electronic data rooms established by the Company
at https://bankstreet.firmex.com in connection with the transactions
contemplated by this Agreement.

 

[remainder of this page intentionally left blank; signature page follows]

 

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IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the date
written above.

 

 

 

PARENT:

 

 

 

GTT COMMUNICATIONS, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

PURCHASER:

 

 

 

GLOBAL TELECOM & TECHNOLOGY AMERICAS, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

SELLER:

 

 

 

 

 

MEGAPATH GROUP, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

THE COMPANY:

 

 

 

 

 

MEGAPATH CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[Signature Page to Stock Purchase Agreement]

 

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ANNEX A

 

DEFINITIONS

 

The terms defined in this Annex A, whenever used in this Agreement (including in
the Seller Disclosure Schedule and the Purchaser Disclosure Schedule), shall
have the respective meanings indicated below for all purposes of this Agreement.

 

“338(h)(10) Consideration” has the meaning set forth in Section 6.1(c).

 

“338(h)(10) Election” has the meaning set forth in Section 6.1(a).

 

“Accounting Arbitrator” has the meaning set forth in Section 1.5(c).

 

“Acquired Business” has the meaning set forth in the recitals.

 

“Acquired Business Employees” has the meaning set forth in Section 2.19(a).

 

“Actual Cash” means the Company’s amount of (a) cash, (b) marketable U.S.
government securities, including U.S. Treasury bills, notes and bonds, and
(c) investment grade money market securities and bank certificates of deposit
having original or remaining maturities of three months or less at date of
purchase and which are carried at cost; provided, however, that Actual Cash
(i) will be net of outstanding transfers and checks and (ii) include credit card
transactions processed and in transit, all as determined in accordance with
GAAP.

 

“Actual Company Indebtedness” has the meaning set forth in Section 1.5(a).

 

“Actual Company Transaction Expenses” has the meaning set forth in
Section 1.5(a).

 

“Actual Working Capital” has the meaning set forth in Section 1.5(a).

 

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

 

“Agreement” means this Stock Purchase Agreement, including the Exhibits,
Schedules and Annex hereto, as amended, supplemented and modified from time to
time in accordance with its provisions.

 

“Allocation” has the meaning set forth in Section 6.1(c).

 

“Allocation Date” has the meaning set forth in Section 5.13.

 

“Alternative Transaction” has the meaning set forth in Section 5.6.

 

“Assets” has the meaning set forth in Section 6.1(c).

 

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“Assumed Liabilities” has the meaning set forth in Section 5.13(a).

 

“Assumption of Defense Notice” has the meaning set forth in Section 8.5(b).

 

“Audited Financial Statements” has the meaning set forth in Section 2.6(a).

 

“Balance Sheet Date” has the meaning set forth in Section 2.6(a).

 

“Business” has the meaning set forth in the recitals.

 

“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in New York, New York are authorized
or obligated by law or executive order to close.

 

“Claim Response” has the meaning set forth in Section 8.4(b).

 

“Closing” has the meaning set forth in Section 1.4(a).

 

“Closing Date” has the meaning set forth in Section 1.4(a).

 

“Closing Purchase Price” has the meaning set forth in Section 1.2(a).

 

“Closing Statement” has the meaning set forth in Section 1.3(e).

 

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

 

“Commercial Software” means software programs generally available to the public,
which have been licensed to the Company pursuant to “click-wrap,” “click to
download,” “browsewrap” or “shrink-wrap” perpetual end-user licenses.

 

“Company” has the meaning set forth in the preamble.

 

“Company Benefit Plans” has the meaning set forth in Section 2.14(a).

 

“Company Intellectual Property” has the meaning set forth in Section 2.11(b).

 

“Company Owned Intellectual Property.” has the meaning set forth in
Section 2.11(b).

 

“Company Permits” has the meaning set forth in Section 2.15(b).

 

“Company Transaction Expense” has the meaning set forth in Section 10.1.

 

“Confidential Information” means any and all information and records, data and
other trade secrets of the Company, as they may exist from time to time, of any
Persons that hereafter are or become Subsidiaries of the Company or of
customers, suppliers, vendors, referral sources or other Persons that the
Company does business with, whether written, oral, electronic or in other
tangible or intangible form, including (a) corporate information (including
business plans, proposed products, expansion plans, designs and design projects,
strategies and policies), (b) marketing information (including strategies,
methods, customers, prospects, market research data

 

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and plans for trademarks, service marks and copyrighted materials),
(c) financial information (including cost, sales, pricing and performance data,
debt arrangements, investors, client financial information and credit files),
(d) operational and scientific information (including current and planned
distribution and supply methods and processes, techniques, contracts, business
records, trade secrets, computer programs and technical information) and
(e) personnel information (including personnel lists, resumes, personnel data,
organizational structure, compensation structure and performance evaluations). 
The term “Confidential Information”, however, does not include any information
which (i) is or becomes general public knowledge or general knowledge in the
industry in which the applicable business is operated through no fault of
Seller, (ii) was available to Seller on a non-confidential basis from a source
other than the Company or an Affiliate of Seller prior to being disclosed or
made available to Seller by or on behalf of Purchaser or the Company, as
evidenced by the contemporaneous written records of Seller or (iii) is disclosed
to or becomes available to Seller on a non-confidential basis by or from a
source other than the Company or its Affiliates or any of Seller’s Affiliates
after the disclosure of such information to Seller by or on behalf of the
Company or its Affiliates, which source does not have a duty of nondisclosure,
directly or indirectly, to the Company, its Affiliates or another Person with
respect to such information.

 

“Confidentiality Agreement” means the confidentiality agreement dated March 4,
2014 by and between Parent and the Company.

 

“Consolidated Returns” has the meaning set forth in Section 6.2(a)(i).

 

“Contract” means any oral or written contract, agreement, license, lease,
contract, note, mortgage, indenture, commitment, instrument, arrangement or
other obligation that is binding or enforceable on at least one of the parties
thereto (for the avoidance of doubt, any purchase order that is issued under a
master purchase agreement shall not be deemed to be a separate Contract, but,
instead shall be deemed to be part of such master purchase agreement).

 

“Contract Consents” has the meaning set forth in Section 5.4(b).

 

“Contractor” means any independent contractor, consultant, freelancer or other
service provider providing services to, or who has provided services since
December 31, 2011, the Company or any predecessor to the business of the
Company.

 

“Contributed Assets” has the meaning set forth in Section 5.13(a).

 

“Contribution Agreement” has the meaning set forth in Section 7.3(b)(x).

 

“De Minimus Claim Amount” has the meaning set forth in Section 8.6(a)(i).

 

“Delaware Courts” has the meaning set forth in Section 10.11(a).

 

“Deferred Cash Payment” has the meaning set forth in Section 1.2(a).

 

“Dispute Notice” has the meaning set forth in Section 1.5(b).

 

“Divestiture” has the meaning set forth in the recitals.

 

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“DOJ” has the meaning set forth in Section 5.4(c).

 

“Draft Allocation” has the meaning set forth in Section 6.1(c).

 

“Employees” means the employees of the Company.

 

“Employee Benefit Plan” means each “employee benefit plan” (as such term is
defined in Section 3(3) of ERISA) and each other employment, retention,
severance, change-in-control, bonus, incentive, equity-based, deferred
compensation, fringe benefit, disability, health or medical, life insurance or
other employee benefit plan, program, policy contract or arrangement.

 

“Employment Agreement” has the meaning set forth in Section 2.10(a)(xiv).

 

“Environmental Law” means any U.S. federal, state, county, regional, foreign or
local law, statute, rule, regulation, code, ordinance, order, decree or judgment
relating to:  (a) the manufacture, transport, use, treatment, storage, disposal
of Hazardous Substances, Release or threat of Release; (b) pollution or the
protection of human health, safety or the environment as they relate to
Hazardous Substances or the environment (including natural resources, air, and
surface or subsurface land or waters); or (c) natural resources, including laws
relating to Releases or threats of Releases or otherwise relating to the
manufacture, processing, distribution, use, presence, production, treatment,
storage, disposal, transport, or handling of Hazardous Substances, including the
Federal Water Pollution Control Act (33 U.S.C. §1251 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. §6901 et seq.), the Safe Drinking Water
Act (42 U.S.C. §3000(f) et seq.), the Toxic Substances Control Act (15 U.S.C.
§2601 et seq.), the Clean Air Act (42 U.S.C. §7401 et seq.), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
other similar state and local statutes, and any regulations promulgated thereto.

 

“Equitable Exceptions” means, with respect to enforcement of the terms and
provisions of this Agreement and the Transaction Documents, (a) the effect of
any applicable Law of general application relating to bankruptcy,
reorganization, insolvency, moratorium or similar Laws affecting creditors’
rights and relief of debtors generally and (b) the effect of general principles
of equity, including general principles of equity governing specific
performance, injunctive relief and other equitable remedies (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

“ERISA” has the meaning set forth in Section 2.14(b).

 

“ERISA Affiliate” means any employer that would be considered a single employer
with the Company under Code section 414(b), (c), (m) or (o).

 

“Estimated Closing Cash” has the meaning set forth in Section 1.3(e).

 

“Estimated Closing Indebtedness” has the meaning set forth in Section 1.3(e).

 

“Estimated Company Transaction Expenses” has the meaning set forth in
Section 1.3(e).

 

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“Estimated Working Capital” has the meaning set forth in Section 1.3(e).

 

“Final Allocation” has the meaning set forth in Section 6.1(c).

 

“Final Closing Statement” has the meaning set forth in Section 1.5(a).

 

“Financing” has the meaning set forth in Section 5.8(a).

 

“Form 8023”  has the meaning set forth in Section 6.1(b).

 

“FTC” has the meaning set forth in Section 5.4(c).

 

“Fundamental Representations” has the meaning set forth in Section 8.1(a).

 

“GAAP” means United States generally accepted accounting principles in effect as
of the date of this Agreement.

 

“Governmental Approvals” has the meaning set forth in Section 5.4(b).

 

“Governmental Authority” means any federal, state, regional, county, city,
municipal or local governmental or quasi-governmental authority, whether foreign
or domestic, of any nature or any agency, commission, department, board, bureau,
court, tribunal, arbitrator, arbitral body, agency, branch, official entity or
other administrative or regulatory body obtaining authority from any of the
foregoing, including courts, tribunals, judicial or arbitral bodies,
self-regulatory authorities, public utilities, sewer authorities and any
supra-national organization, state, county, city or other political subdivision;
or other Person exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature.

 

“Hazardous Substance” means any hazardous substance as defined in 42 U.S.C.
§ 9601(14), any hazardous waste as defined by 42 U.S.C. §6903(5), any pollutant
or contaminant as defined by 42 U.S.C. §9601(33), any toxic substance, oil or
hazardous material or other chemical or substance (including, without
limitation, any petroleum product or by-product, asbestos in any form,
polychlorinated biphenyls, urea formaldehyde or perchlorate) regulated by or
forming the basis of liability under any applicable Environmental Laws, or any
other material or substance that is listed or classified as hazardous pursuant
to any applicable Environmental Law.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.

 

“Income Tax” means any federal, state, local or foreign Tax measured by or based
upon income or receipts (whether denominated an income Tax, franchise Tax or
otherwise), including any interest, penalty or addition thereto, whether or not
disputed.

 

“Indebtedness” means, as to any Person, without duplication (a) all indebtedness
for borrowed money, (b) all obligations evidenced by bonds, debentures, notes or
other instruments, (c) all obligations upon which interest charges are
customarily paid or owed (other than trade

 

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payables incurred in the Ordinary Course of Business), (d) the amount of net
payments due upon settlement of obligations under interest rate cap agreements,
interest rate swap agreements, foreign currency exchange agreements and other
hedging agreements or arrangements, (e) any lease or similar arrangement that
would be required to be accounted for as a capital lease in accordance with U.S.
GAAP, (f) any obligations of any other Person secured by Liens (other than
Permitted Liens) on assets or property of the Company, (g) any amounts owed
under drawn letters of credit and (h) all obligations described in the foregoing
clauses of this definition of any other Person which are directly or indirectly
guaranteed by such Person or which such Person has agreed (contingently or
otherwise) to purchase or otherwise acquire or in respect of which it has
otherwise assured against loss.

 

“Indemnification Cap” has the meaning set forth in Section 8.6(a).

 

“Indemnified Party” has the meaning set forth in Section 8.4(a).

 

“Indemnified Taxes” means any and all Taxes (a) imposed on the Company for a
Pre-Closing Tax Period or the portion of any Straddle Period ending on or before
the Closing Date, (b) of any member of an affiliated, consolidated, combined or
unitary group of which the Company (or any predecessor) is or was a member on or
prior to the Closing Date, including pursuant to Treasury Regulations
Section 1.1502-6 or any analogous or similar state, local or non-U.S. Law,
(c) of any Person imposed on the Company as a transferee or successor, by
Contract, indemnification agreement or otherwise, or pursuant to any Law, which
Taxes relate to an event, agreement or transaction occurring on or before the
Closing Date, (d) any Transfer Taxes for which Seller is responsible pursuant to
Section 6.3, (e) any Taxes imposed on the Company as a result of the Divestiture
and (f) any Taxes as a result of the 338(h)(10) Election; provided,
however, Indemnified Taxes shall exclude any Taxes to the extent such Taxes were
included in the computation of Working Capital, as finally determined and
resulted in a reduction in Purchase Price.

 

“Indemnifying Party” has the meaning set forth in Section 8.4(a).

 

“Intellectual Property” means any or all of the following in any jurisdiction
throughout the world (a) trademarks, service marks, trade dress, trade names,
logos, corporate names, Internet domain names, and all other designations of
origin (together with the goodwill of the business symbolized by the foregoing),
including all registrations and registration applications therefor,
(b) inventions (whether or not patentable or reduced to practice), patents,
patent applications and patent disclosures (together with all reissuances,
continuations, continuations-in-part, divisionals, revisions, extensions and
reexaminations thereof), (c) copyrights mask works, and other works of
authorship, and registrations and registration applications therefor, (d) rights
or interests protected by non-statutory or common law evidenced by or embodied
in any idea, design, concept, process, technology, invention, discovery,
enhancement, improvement or information and data (including formulae,
procedures, protocols, techniques and results of experimentation and testing),
regardless of patentability, including trade secrets and know how, (e) computer
software, including operating systems, applications, routines, interfaces, and
algorithms, whether in source code or object code, (f) moral and economic rights
of authors and inventors, however denominated, (g) all other proprietary and
intellectual property rights however denominated, (h) all derivative works and
improvements of any of the foregoing and (i)

 

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all applications, registrations, extensions and renewals related to any of the
foregoing, regardless of whether any of such rights arise under the laws of the
United States or any other state, country or jurisdiction.

 

“IRS” means the Internal Revenue Service.

 

“Knowledge of Seller” means the actual knowledge of D. Craig Young, Steven B.
Chisholm and Paul Milley.

 

“Knowledge of Purchaser” means the actual knowledge of Richard D. Calder, Jr.,
Chris Mckee, Michael R. Bauer and Tony Hansel.

 

“Knowledge of the Company” means the actual knowledge of D. Craig Young, Steven
B. Chisholm, Paul Milley, David Williams and Michael Perusse, in each case after
inquiry by such individual to his direct reports with respect to the matter in
question.

 

“Latest Balance Sheet” has the meaning set forth in Section 2.6(a).

 

“Latest Carve-Out Financial Statements” has the meaning set forth in
Section 2.6(a).

 

“Law” means any constitutional provision, treaty, statute, ordinance, law
(including common law), Order, rule, regulation or code of any Governmental
Authority, or any legally binding regulatory policy statement, binding standard
or guidance, or general binding directive or decree of any Governmental
Authority, in each case as any of the foregoing may be in effect from time to
time or, as to Purchaser only, any securities exchange on which the securities
of Parent are listed from time to time.

 

“Leased Real Property” has the meaning set forth in Section 2.12(a).

 

“Liability” with respect to any Person, means any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person, including any liability for payment, Indebtedness, payment
obligation or other sum that is or may become due.

 

“Lien” means any lien (including any Tax lien), mortgage, security interest,
pledge,  option, charge, deed of trust, hypothecation, mortgage, contingent
sale, title retention, building or use restriction, adverse claim, easement,
encroachment or other similar defect affecting title, conditional sales
agreement, community property interest, or other similar encumbrance or
restriction (including a restriction on transfer such as a right of first
refusal) of any nature or kind, whether voluntarily or involuntarily incurred,
arising by operation of Law, by Contract or otherwise, and including any
Contract to give any of the foregoing in the future.

 

“Losses” means any and all Liabilities, Proceedings, losses, assessments,
awards, judgments, settlement payments, fines, penalties, Taxes, interest,
damages, costs, deficiencies, fees, charges and expenses, including any and all
reasonable expenses incurred in connection

 

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with investigating or defending any of the foregoing, or asserting any valid
claim against Seller for the indemnification of the foregoing pursuant to the
terms of this Agreement (including court filing fees, court costs, arbitration
fees or costs, witness fees, and reasonable fees and disbursements of legal
counsel, investigators, consultants, expert witnesses, accountants and other
professionals).

 

“Marketing Period” means the first period of twenty (20) consecutive Business
Days after the date hereof throughout which (a) Purchaser shall have the
Required Information that the Company is required to provide to Purchaser
pursuant to Section 5.8(b) in connection with any portion of the Financing to be
consummated on the Closing Date; provided, that if the Company shall in good
faith reasonably believe it has delivered the Required Information, it may
deliver to Purchaser a written notice to that effect (stating when it believes
it completed such delivery), in which case the Marketing Period shall be deemed
to have commenced on the date of such notice unless Purchaser in good faith
reasonably believes the Company has not completed delivery of the Required
Information and, within four (4) Business Days after the delivery of such notice
by the Company, delivers a written notice to the Company to that effect (stating
to the extent reasonably possible which Required Information the Company has not
delivered) and (b)  nothing has occurred and no condition exists that would
cause any of the conditions set forth in Section 7.1(a) and Section 7.1(e) to
fail to be satisfied assuming the Closing were to be scheduled for any time
during such 20-consecutive-Business Day period; provided, further, that the
Marketing Period shall not be deemed to have commenced if, prior to the
completion of such 20-consecutive-Business-Day period, (i) the Company’s auditor
shall have withdrawn its audit opinion with respect to any year end audited
financial statements set forth in the Audited Financial Statements, in which
case the Marketing Period shall be deemed not to commence unless and until a new
audit opinion is issued with respect thereto by the Company’s auditor or another
independent public accounting firm, (ii) the Company shall have determined that
it is necessary to restate any material financial information included in the
Required Information or that it is considering any such restatement, in which
case the Marketing Period shall be deemed not to commence unless and until such
restatement has been completed or the Company has determined that no restatement
shall be required, or (iii) the Required Information contains any untrue
statement of a material fact or omits to state any material fact, in each case
with respect to the Company or the Acquired Business, necessary in order to make
the statements contained in such Required information, in the context in which
they were made, not materially misleading, in which case the Marketing Period
will not be deemed to commence until all such Required Information has been
corrected or disclosed; provided, further, that the Marketing Period shall end
on any earlier date on which the entire Financing is consummated.

 

“Material Adverse Effect” means any fact, circumstance, development, change or
effect that, individually or in the aggregate, is, or would reasonably be
expected to be, materially adverse to the operations, condition (financial or
otherwise), results of operations, assets, liabilities or business of the
Company, except for any adverse effect resulting after the date of this
Agreement from (a) the announcement or disclosure of this Agreement or the
transactions contemplated by this Agreement, not made in breach of the terms of
this Agreement, (b) general economic or political conditions or changes that
affect the industry generally in which the Company operates, (c) military action
or any act of terrorism involving the United States, (d) changes in Law or
accounting requirements or principles required by GAAP, (e) compliance with the
terms of this Agreement or with any request of Purchaser and (f) the failure of
the

 

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Company to meet or achieve the results set forth in any projection, estimate,
forecast or plan (it being acknowledged that the underlying cause of such
failure may constitute a Material Adverse Effect), in the case of each of the
foregoing clauses (a) through (f), solely to the extent that it does not, and
would not reasonably be expected to have, a materially disproportionate adverse
effect on the Company relative to other participants in the industries in which
Company is operated; provided, that solely for purposes of the definition of
“Material Adverse Effect,” “Company” shall mean the Company as it exists
immediately after the consummation of the Divestiture and excluding the Cloud &
Hosted Services Business.

 

“Material Contracts” has the meaning set forth in Section 2.10(b).

 

“MegaPath Marks” means all marks, trade names, logos, names, and domain names
utilizing the name “MegaPath” or any abbreviations or derivatives thereof

 

“Multiemployer Plan” has the meaning set forth in Section 3(37) of ERISA.

 

“Net Decrease” has the meaning set forth in Section 1.5(a).

 

“Net Increase” has the meaning set forth in Section 1.5(a).

 

“Netco Purchase Agreement” means that certain Membership Interest Purchase
Agreement, dated as of September 5, 2014, by and among MegaPath Holding
Corporation, MPGC, LLC and GC Pivotal, LLC.

 

“Notice of Claim” has the meaning set forth in Section 8.4(a).

 

“Objection Notice” has the meaning set forth in Section 1.5(c).

 

“Order” means any judgment, writ, decree, directive, decision, injunction,
ruling, stipulation, award, order (including any consent decree or cease and
desist order) or determination of any kind issued, promulgated or entered by or
with any Governmental Authority.

 

“Ordinary Course of Business” means, with respect to any action take or omitted
to be taken by the Company that (a) is consistent in nature, scope and magnitude
with the past practices of the Company and is taken in the ordinary course of
the normal, day-to-day operations of the Company and (b) does not require
authorization by the board of directors or equityholders of the Company (or by
any Person or group of Persons exercising similar authority) and does not
require any other separate or special authorization of any nature.

 

“Organizational Documents” of a Person means (a) its articles of incorporation,
certificate of incorporation, certificate of formation or similar
document(s) filed with a Governmental Authority, which filing forms or organizes
the Person and (b) its bylaws, limited liability company operating agreement,
partnership agreement, trust agreement or similar document(s), whether or not
filed with a Governmental Authority, which organize or govern the internal
affairs of such Person, in the case of each of the preceding clause (a) and (b),
as amended to date and in effect at the time in question.

 

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“Other Income Tax Returns” has the meaning set forth in Section 6.2(a).

 

“Parent” has the meaning set forth in the Preamble.

 

“Parent Stock” has the meaning set forth in Section 1.2.

 

“Party” and “Parties” each has the meaning set forth in the Preamble.

 

“Permit” has the meaning set forth in Section 2.15(b).

 

“Permitted Liens” means (a) statutory Liens for current Taxes not yet due and
payable or the amount or validity of which is being contested in good faith by
the Company and are accrued in full on the Interim Balance Sheet,
(b) mechanic’s, materialmen’s, carriers’, workers’, repairers’ and similar
statutory Liens arising or incurred in the Ordinary Course of Business,
(c) liens securing rental payments under capital lease arrangements to the
extent related to the assets leased, (d) solely with respect to the Leased Real
Property (i) easements, rights of way or other similar matters or restrictions
or exclusions that would be shown by a current title report or other similar
report and which individually or in the aggregate do not materially interfere
with the use or possession thereof by the Company, (ii) zoning, planning and
other similar limitations and restrictions and all rights of any Government
Authority to regulate the Leased Real Property that are not violated by the
current use or occupancy of such Leased Real Property and (iii) any condition or
other matter, if any, that may be shown or disclosed by a current and accurate
survey that would not be reasonably likely to materially adversely affect the
operation of the Business at such location as the Business is currently being
conducted at such location and (e) Liens arising under worker’s compensation,
unemployment insurance, social security, retirement and similar legislation
arising or incurred in the Ordinary Course of Business (and without any
violation of applicable Law).

 

“Person” means any natural person, firm, partnership, association, corporation,
company, limited liability company, trust, business trust, Governmental
Authority or other entity.

 

“Pre-Closing Period” has the meaning set forth in Section 5.1(a).

 

“Pre-Closing Tax Period” means any taxable period that ends on or before the
Closing Date and the portion of any Straddle Period that ends on or before the
Closing Date.

 

“Pre-Closing Tax Returns” has the meaning set forth in Section 6.2(a)(i).

 

“Prior Carve-Out Financial Statements” has the meaning set forth in Section 6.9.

 

“Proceeding” means any suit, action, arbitration, audit, hearing, investigation,
litigation, claim, complaint, administrative or similar proceeding (whether
civil, criminal, administrative, judicial or investigative, whether formal or
informal, whether public or private), in each case commenced, brought, conducted
or heard by or before, or otherwise involving, any Governmental Authority.

 

“Purchase Price” has the meaning set forth in Section 1.2(a).

 

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“Purchaser” has the meaning set forth in the preamble.

 

“Purchaser Disclosure Schedule” means the disclosure schedule setting forth
disclosures of Purchaser, or qualifications or exceptions to, any of Purchaser’s
representations and warranties set forth in Article IV or Purchaser’s covenants
set forth in Article V delivered by Purchaser to Seller simultaneously with the
execution and delivery of this Agreement.

 

“Purchaser Indemnified Parties” has the meaning set forth in Section 8.3(a).

 

“Purchaser Prepared Returns” has the meaning set forth in Section 6.2(a)(ii).

 

“Purchaser Representatives” has the meaning set forth in Section 5.5.

 

“Real Property Leases” has the meaning set forth in Section 2.12(a).

 

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, migration, leaching, placing, discarding,
dumping or disposing of any Hazardous Substances into the environment (including
the abandonment of barrels, containers or other closed receptacles containing
any Hazardous Substances).

 

“Required Information” has the meaning set forth in Section 5.8(b).

 

“Response Period” has the meaning set forth in Section 8.4(b).

 

“Scheduled Guarantees” has the meaning set forth in Section 5.9(a).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Seller” has the meaning set forth in the preamble.

 

“Seller Disclosure Schedule” means the disclosure schedule setting forth
disclosures of Seller, or qualifications or exceptions to, any of to the
representations and warranties set forth in Article II and Article III, or
Seller’s covenants set forth in Article V delivered by Seller to Purchaser
simultaneously with the execution and delivery of this Agreement.

 

“Seller Indemnified Parties” has the meaning set forth in Section 8.3(b).

 

“Seller Prepared Returns” has the meaning set forth in Section 6.2(a)(i).

 

“Seller Release” has the meaning set forth in Section 7.3(b)(xi).

 

“Seller Representatives” has the meaning set forth in Section 5.5.

 

“Shared Asset” has the meaning set forth in Section 5.13(c).

 

“Shared Contracts” has the meaning set forth in Section 5.14.

 

“Shared Liability” has the meaning set forth in Section 5.13(c).

 

A-11

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“Shares” has the meaning set forth in Recital A.

 

“Significant Customers” has the meaning set forth in Section 2.8.

 

“Significant Suppliers” has the meaning set forth in Section 2.8.

 

“Straddle Period” means any taxable period that includes (but does not end on)
the Closing Date.

 

“Subscription Agreement” has the meaning set forth in Section 7.3(b)(viii).

 

“Subsidiary” means, with respect to any Person, any other Person (other than a
natural person), whether incorporated or unincorporated, of which at least a
majority of the securities or ownership interests having by their terms ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions is directly or indirectly owned or controlled by
the first Person or by one or more of its respective Subsidiaries.

 

“Target Working Capital” means Two Million Two Hundred Thousand Dollars
($2,200,000).

 

“Tax” or “Taxes” means any federal, state, local or foreign net or gross income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium (including taxes under Code Section 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, unclaimed property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax, governmental fee or like assessment, together with any
interest and penalties, additions to tax or additional amounts, whether disputed
or not, imposed by any Governmental Authority.

 

“Tax Contest” has the meaning set forth in Section 6.2(d).

 

“Tax Incentive” has the meaning set forth in Section 2.17(p).

 

“Tax Return” means all returns, reports, forms, declarations, statements,
estimated returns, claims for refund and information returns supplied or
required to be supplied to a Governmental Authority relating to Taxes, including
any schedule or attachment thereto or amendment thereof.

 

“Termination Date” has the meaning set forth in Section 10.1(b).

 

“Third Party Claim” has the meaning set forth in Section 8.5(a).

 

“Threshold Amount” has the meaning set forth in Section 8.6(a).

 

“Transaction Documents” means this Agreement, the Subscription Agreement, the
Transition Services Agreement, the Seller Release, [any commercial agreements]
and all other exhibits hereto and all documents and certificates referenced
herein to which any of the Parties is a party and which is required to be
delivered hereunder.

 

A-12

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“Transfer Taxes” has the meaning set forth in Section 6.3.

 

“Transferred Employees” has the meaning set forth in Section 5.13(a).

 

“Transition Services Agreement” has the meaning set forth in Section 7.3(b)(ix).

 

“Unaudited Financial Statements” has the meaning set forth in Section 2.6(a).

 

“WARN Act” means the United States Worker Adjustment and Retraining Act, 29
U.S.C. §2101, et seq., and the rules and regulations promulgated thereunder from
time to time.

 

“Working Capital” means the Current Assets of the Company minus the Current
Liabilities of the Company, determined as of the opening of business on the
Closing Date, where (a) “Current Assets” means accounts receivable (net of
allowance for doubtful accounts), inventory, short term investments (other than
those included in Actual Cash), accrued revenue, lease deposits and pre-paid
expenses, but excluding (i) the portion of any prepaid expense of which
Purchaser will not receive the benefit following the Closing, (ii) deferred and
Income Tax assets, (iii) receivables from any of the Company Affiliates,
directors, employees or stockholders and any of their respective Affiliates and
(iv) deferred non-recurring costs and (b) “Current Liabilities” means accounts
payable, accrued sales commissions, deferred revenue, the current portion of
long-term payables, accrued Taxes (other than one-half of any Transfer Taxes)
and accrued expenses, but excluding (A) deferred revenue in respect of services
to be provided after Closing, (B) deferred Tax liabilities, (C) accrued Income
Taxes required to be reflected on a Consolidated Return, (D) Company Transaction
Expenses, (E) any Indebtedness of the Company as of the opening of business on
the Closing Date, (F) any accrued non-Income Taxes and (G) deferred
non-recurring revenue, determined in accordance with GAAP.

 

“Working Capital” means the Current Assets of the Company minus the Current
Liabilities of the Company, determined as of the opening of business on the
Closing Date, where (a) “Current Assets” means accounts receivable (net of
allowance for doubtful accounts and sales allowance reserves), inventory, short
term investments (other than those included in Actual Cash), accrued revenue,
lease deposits and pre-paid expenses, but excluding (i) the portion of any
prepaid expense of which Purchaser will not receive the benefit following the
Closing, (ii) all deferred and non-deferred Tax assets, (iii) receivables from
any of the Company Affiliates, directors, employees or stockholders and any of
their respective Affiliates and (iv) deferred non-recurring costs and
(b) “Current Liabilities” means accounts payable, accrued sales commissions and
other compensation, deferred revenue, the current portion of long-term payables,
and accrued expenses, but excluding (A) all deferred and non-deferred Tax
liabilities, (B) accrued Income Taxes required to be reflected on a Consolidated
Return, (C) Company Transaction Expenses, (D) any Indebtedness of the Company as
of the opening of business on the Closing Date, and (E) deferred non-recurring
revenue, determined in accordance with GAAP.

 

*     *     *     *

 

A-13

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Exhibit A

 

GTT COMMUNICATIONS, INC.

 

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SUBSCRIPTION AGREEMENT

 

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This Subscription Agreement (this “Agreement”) is made and entered into as of
[                    ,     ], 2015, by and between GTT Communications, Inc., a
Delaware corporation (the “Company”), and MegaPath Group, Inc., a Delaware
corporation (“Investor”).

 

RECITALS

 

A.                                    The Company, Investor and certain other
Persons are parties to a Stock Purchase Agreement dated as of February [    ],
2015 (the “Stock Purchase Agreement”), pursuant to which Global Telecom &
Technology Americas Inc., a wholly-owned subsidiary of the Company (“Purchaser”)
will acquire from Investor all of the equity interests in MegaPath Corporation,
a wholly-owned subsidiary of Investor.

 

B.                                    As part of the consideration to be paid to
Investor at the closing under the Stock Purchase Agreement, the Company is
obligated to issue to Investor Six Hundred Ten Thousand Eight Hundred Forty
Three shares (the “Shares”) of common stock, par value $0.0001 per share, of the
Company.  This Agreement is being entered into at the closing under the Stock
Purchase Agreement in fulfillment of such obligation.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
covenants set forth herein and in the Stock Purchase Agreement and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties agree as follows:

 

1.                                      Issue of Shares.  Investor hereby
acquires from the Company in fulfillment of Section 1.3(b) of the Stock Purchase
Agreement, and the Company hereby issues to Investor in fulfillment of
Section 1.3(b) of the Stock Purchase Agreement, the Shares.  It is acknowledged
that the value of the Shares was determined as of the date of the Stock Purchase
Agreement, and such value was $12.28 per Share ($7,500,000 in the aggregate). 
On the date hereof, the Company shall record or cause to be recorded the name of
Investor as the owner of the Shares in the records of the Company and shall
deliver, or cause to be delivered, to Investor the Shares by electronic deposit
of the Shares into an account designated by Investor prior to the date of this
Agreement, or, if requested by Investor or if Investor has not identified such
an account prior to the date of this Agreement, by delivery to Investor of a
physical certificate for the Shares issued in the name of Investor.

 

2.                                      Company Representations.  The Company
represents and warrants to Investor as of the date hereof as follows:

 

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(a)                                 Organization and Corporate Power.  The
Company is a corporation validly existing and in good standing under the laws of
the State of Delaware.  The Company has all requisite corporate power and
authority to own its properties and to carry on its business as presently
conducted and as proposed to be conducted, and to execute and deliver this
Agreement and to perform its obligations hereunder.

 

(b)                                 Authorization and Enforceability.  All
corporate action required to be taken by the Company’s board of directors in
order to authorize the Company to enter into this Agreement, and to issue the
Shares has been taken.  This Agreement, when executed and delivered by the
Company, shall constitute the valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
(i) as limited by any applicable law of general application relating to
bankruptcy, reorganization, insolvency, moratorium or similar Laws affecting
creditors’ rights and relief of debtors generally or (ii) as limited by general
principles of equity, including general principles of equity governing specific
performance, injunctive relief and other equitable remedies (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

(c)                                  No Contravention.  The Company is not in
violation or default of any provisions of its certificate of incorporation or
bylaws.  The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereunder do not (and shall not with notice or lapse of time or both) conflict
with, result in the breach of, or constitute a default under (i) the certificate
of incorporation or bylaws of the Company, (ii) any order, injunction or
judgment applicable to the Company, (iii) any note, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which the Company is a
party or by which the Company is bound or to which the Company or any of the
Company’s assets are subject or (iv) any statute, decree, rule or regulation of
any court, regulatory authority or governmental body applicable to the Company.

 

(d)                                 Consents.  Except as contemplated by the
Stock Purchase Agreement, no consent or approval by any person is required to
authorize, or is required in connection with, the execution, delivery or
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereunder by the Company.

 

(e)                                  Valid Issuance of Securities;
Capitalization.  The Shares will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to, or issued in violation
of, any purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of law, the
Company’s certificate of incorporation, the Company’s bylaws or any contract or
agreement to which the Company is a party or otherwise bound.  Assuming the
accuracy of the representations of Investor in Section 3, no registration under
the Securities Act of 1933, as amended (the “Securities Act”), of the Shares is
required for the issuance of the Shares in the manner contemplated by the Stock
Purchase Agreement.  Except as set forth in the SEC Documents (as defined below)
and except for incentive equity compensation of the Company pursuant to plans
approved by the board of directors of the Company, there is no capital stock of
the Company issued and outstanding or reserved for issuance, there are no
securities of the Company convertible into or exchangeable or exercisable for
shares of capital stock of the Company and there are no outstanding obligations
(including warrants, calls, options or other rights to acquire from the Company)
of the Company

 

2

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to issue, deliver or sell, or cause to be issued, delivered or sold (by merger,
consolidation or otherwise) any capital stock of the Company or any securities
of the Company convertible into or exchangeable or exercisable for shares of
capital stock of the Company.

 

(f)                                   SEC Documents; Stock Exchange
Requirements.

 

(i)                                     The Company has furnished or filed all
reports, schedules, forms, statements and other documents (including exhibits
included therewith and financial statements and schedules thereto and other
information incorporated by reference therein) required to be furnished or filed
by the Company with the Securities and Exchange Commission (the “SEC”) since
January 1, 2014 (such documents, together with any documents filed with the SEC
during such period by the Company on a voluntary basis on a Current Report on
Form 8-K being collectively referred to as the “SEC Documents”).  The Company
has not received any written comments from the SEC staff with respect to the SEC
Documents that have not been resolved to the satisfaction of the SEC staff.  As
of their respective dates, the consolidated audited financial statements of the
Company included in the SEC Documents, including the notes thereto, complied as
to form in all material respects with applicable accounting requirements and the
securities laws with respect thereto.  Such consolidated audited financial
statements have been prepared in accordance with United States generally
accepted accounting procedures, consistently applied, during the periods
involved (except as may be otherwise indicated in such financial statements or
the notes thereto) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows, as applicable, for the periods then ended.

 

(ii)                                  The Company is, and since January 1, 2014
has been, in compliance in all material respects with the applicable listing and
corporate governance rules and requirements of the New York Stock Exchange.

 

3.                                      Investor Representations.  Investor
represents and warrants to the Company as of the date hereof as follows:

 

(a)                                 Authority; Address; Enforceability. 
Investor has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.  Investor’s address set
forth on the signature page of this Agreement is Investor’s correct primary
residence address and Investor has no present intention of changing such
address.  This Agreement, when executed and delivered by Investor, shall
constitute the valid and legally binding obligation of Investor, enforceable
against Investor in accordance with its terms, except (i) as limited by any
applicable law of general application relating to bankruptcy, reorganization,
insolvency, moratorium or similar Laws affecting creditors’ rights and relief of
debtors generally or (ii) as limited by general principles of equity, including
general principles of equity governing specific performance, injunctive relief
and other equitable remedies (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

(b)                                 No Contravention.  The execution, delivery
and performance of this Agreement by Investor and the consummation by Investor
of the transactions contemplated hereunder do not (and shall not with notice or
lapse of time or both) conflict with, result in the

 

3

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breach of, or constitute a default under (i) the certificate of incorporation or
bylaws of Investor, (ii) any order, injunction or judgment applicable to
Investor, (iii) any note, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which Investor is a party or by which Investor
is bound or to which Investor or any of Investor’s assets are subject or
(iv) any statute, decree, rule or regulation of any court, regulatory authority
or governmental body applicable to Investor.

 

(c)                                  Consents.  Except as contemplated by the
Stock Purchase Agreement, no consent or approval by any person is required to
authorize, or is required in connection with, the execution, delivery or
performance of this Agreement by Investor and the consummation of the
transactions contemplated hereunder by Investor.

 

(d)                                 Investment Representations.

 

(i)                                     Investor is acquiring the Shares for its
own account for investment only, and not with a view to the resale or
distribution thereof.

 

(ii)                                  Investor has had such opportunity as it
has deemed adequate to obtain from the Company such information as is necessary
to permit it to evaluate the merits and risks of the foregoing investment in the
Company and has consulted with its own advisers with respect to such investment
in the Company.

 

(iii)                               Investor is an “accredited investor” as such
term is defined in Rule 501 of Regulation D of the Securities Act, as in effect
on the date hereof.

 

(iv)                              Investor has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an investment in the Company and making an informed investment decision
with respect thereto.

 

(v)                                 Investor can afford a complete loss of the
value of the Shares and is able to bear the economic risk of holding such Shares
for an indefinite period.

 

(vi)                              Investor understands that the Shares are not
registered under the Securities Act or any applicable state securities or “blue
sky” laws and may not be sold or otherwise transferred or disposed of in the
absence of an effective registration statement under the Securities Act and
under any applicable state securities or “blue sky” laws (or exemptions from the
registration requirements thereof).  Investor further acknowledges that any
certificates representing the Shares will bear restrictive legends reflecting
the foregoing and that the Company may issue appropriate “stop transfer”
instructions to its transfer agent.

 

4.                                      Transfer Restrictions; Legend.

 

(a)                                 Any certificate representing the Shares
shall carry substantially the following legends:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS

 

4

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AMENDED, OR THE SECURITIES LAWS OF ANY STATE.  SUCH SECURITIES MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS AND UNTIL SUCH SHARES ARE REGISTERED UNDER SUCH
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED
TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(b)                                 Investor agrees that in order to ensure
compliance with the restrictions referred to herein the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

 

5.                                      Disclosure. Other than the
representations and warranties of the Company set forth in Section 2, neither
the Company nor any other person makes any representation or warranty, expressed
or implied, as to the accuracy or completeness of the information provided or to
be provided to Investor by or on behalf of the Company or related to the
transactions contemplated hereby, and nothing contained in any documents
provided or statements made by or on behalf of the Company to Investor is, or
shall be relied upon as, a promise or representation by the Company or any other
person that any such information is accurate or complete.

 

6.                                      IRS Form W-9.  Concurrently with the
execution and delivery of this Agreement, Investor is delivering to the Company
an Internal Revenue Service Form W-9, properly completed and duly executed.

 

7.                                      Bad Actor Covenant.  Investor hereby
agrees that at any time at which Investor is the beneficial owner of 20% or more
of the Company’s outstanding voting equity securities, calculated on the basis
of voting power, it shall notify the Company promptly in writing in the event
that a “Bad Actor” disqualifying event described in Rule 506(d)(1)(i) to
(viii) of the Securities Act is applicable to Investor or any of its
Rule 506(d) Related Parties (as defined below).  For purposes of this Agreement,
“Rule 506(d) Related Party” shall mean a person or entity that is a beneficial
owner of such Investor’s securities for purposes of Rule 506(d) of the
Securities Act.

 

8.                                      Miscellaneous.

 

(a)                                 Notices. All notices, requests, demands,
waivers and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
(i) delivered personally, (ii) mailed using certified or registered United
States mail with postage prepaid or (iii) sent by next-day or overnight mail or
delivery using a nationally recognized overnight courier service, as follows:

 

5

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If to the Company:

 

c/o GTT Communications, Inc.

7900 Tysons One Place

Suite 1450

McLean, VA 22102

Attention:  Chris McKee

 

With a copy (which shall not constitute notice, request, demand, waiver or other
communication to the Company) to:

 

Goodwin Procter, LLP
901 New York Avenue, NW

Washington, DC 20001

Attention: Jay Schifferli

 

If to Investor:

 

MegaPath Group, Inc.

6800 Koll Center Parkway, Suite 200

Pleasington, CA  94566

Attention: Steven B. Chisholm

 

with a copy (which shall not constitute notice, request, demand, waiver or other
communication to Investor) to:

 

Morgan Lewis & Bockius LLP

600 Anton Blvd., Suite 1800

Costa Mesa, CA  92626

Attention:  Timothy Rupp

 

A party may designate a new address to which notices, requests, demands, waivers
and other communications shall thereafter be transmitted by providing written
notice to that effect to the other party.  Each notice, request, demand, waiver
or other communication transmitted in the manner described in this
Section 8(a) shall be deemed to have been provided, received and become
effective for all purposes hereunder (A) when delivered personally to the
recipient, if delivered personally, (B) three (3) business days after being
mailed by certified or registered United States mail, postage prepaid, (C) one
(1) business day after being sent by next day or overnight mail or delivery
using a nationally recognized overnight courier service, or (D) when presented
for delivery to the addressee as so addressed during normal business hours, if
such delivery shall have been rejected, denied or refused for any reason.

 

(b)                                 Assignment; Successors.  Neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned or delegated (whether in whole or part, voluntarily or involuntarily,
by operation of law, merger, consolidation, dissolution or otherwise) by either
party without the prior written consent of the other party.  Any purported
assignment or delegation of this Agreement or any rights, interests or
obligations hereunder in violation of this Section 8(b) shall be void and of no
force or effect.  Subject to the foregoing, this Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their

 

6

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respective successors and permitted assigns.

 

(c)                                  Amendment and Waiver.  This Agreement may
not be amended except by an instrument in writing executed by each party, which
states that it constitutes an amendment to this Agreement and specifies the
provision(s) that are being amended.  Any provision of this Agreement may be
waived at any time by either party by delivery to the other party of a written
instrument executed by such party, which states that it constitutes a waiver of
this Agreement and specifies the provision(s) that are being waived.  Any such
waiver shall be effective only to the extent specifically set forth in such
written instrument.  Neither the exercise (from time to time and at any time) by
a party of, nor the delay or failure (at any time or for any period of time) to
exercise by a party, any right, power or remedy shall constitute a waiver of the
right to exercise, or impair, limit or restrict the exercise of, such right,
power or remedy or any other right, power or remedy at any time and from time to
time thereafter.  No waiver of any right, power or remedy of a party shall be
deemed to be a waiver of any other right, power or remedy of such party or
shall, except to the extent so waived, impair, limit or restrict the exercise of
such right, power or remedy.

 

(d)                                 Entire Agreement.  This Agreement, together
with the Stock Purchase Agreement, constitutes the entire agreement of the
parties, and supersedes all other prior or contemporaneous agreements (whether
written or oral), by or between the parties with respect to the subject matter
hereof.

 

(e)                                  Severability.  Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall hereafter be held to be invalid, unenforceable or illegal, in whole or in
part, in any jurisdiction under any circumstances for any reason (i) such
provision shall be reformed to the minimum extent necessary to cause such
provision to be valid, enforceable and legal while preserving the intent of the
parties as expressed in, and the benefits to the parties provided by, such
provision or (ii) if such provision cannot be so reformed, such provision shall
be severed from this Agreement and an equitable adjustment shall be made to this
Agreement (including addition of necessary further provisions to this Agreement)
so as to give effect to the intent as so expressed and the benefits so provided
to the maximum extent permitted by applicable law.  Such holding shall not
affect or impair the validity, enforceability or legality of such provision in
any other jurisdiction or under any other circumstances.  Neither such holding
nor such reformation or severance shall affect or impair the legality, validity
or enforceability of any other provision of this Agreement.

 

(f)                                   Headings.  The headings contained in this
Agreement are for purposes of convenience only and shall not affect the meaning
or interpretation of this Agreement.

 

(g)                                  Counterparts.  This Agreement may be
executed in one or more counterparts, all of which (when executed and delivered)
shall be considered one and the same Agreement and shall become effective when
one or more counterpart signature pages have been signed by each party and
delivered by each party to the other party, it being understood that the parties
need not sign the same counterpart.  Counterparts may be delivered by facsimile
or other electronic transmission method (including pdf), and any counterpart so
delivered shall be deemed to have been duly and validly delivered and be valid
and effective for all purposes.

 

(h)                                 Governing Law.  THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREBY, ALL RELATIONSHIPS BETWEEN THE PARTIES
HEREUNDER AND ALL DISPUTES AND PROCEEDINGS (IN CONTRACT, IN TORT OR

 

7

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OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE FOREGOING SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH, AND ENFORCED IN ACCORDANCE WITH, THE
DOMESTIC LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF DELAWARE.

 

(i)                                     Consent to Jurisdiction; Waiver of Jury
Trial.

 

(A)                               EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY DISPUTES WITH
RESPECT TO ANY OF THE FOREGOING SHALL BE COMMENCED AND PROSECUTED EXCLUSIVELY IN
THE FEDERAL AND STATE COURTS OF THE STATE OF DELAWARE AND ANY APPELLATE COURT
THEREFROM (COLLECTIVELY, THE “DELAWARE COURTS”).  EACH PARTY HEREBY IRREVOCABLY
AND UNCONDITIONALLY CONSENTS AND SUBMITS, FOR ITSELF AND ITS ASSETS, TO THE
EXCLUSIVE JURISDICTION OF ANY OF THE DELAWARE COURTS IN RESPECT OF ANY SUCH
PROCEEDING.  EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 8(a).  NOTHING
IN THIS AGREEMENT SHALL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

(B)                               EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO
SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY
DISPUTES WITH RESPECT TO ANY OF THE FOREGOING IN ANY OF THE DELAWARE COURTS. 
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
PROCEEDING IN ANY OF THE DELAWARE COURTS.  EACH OF THE PARTIES AGREES THAT A
FINAL JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.

 

(C)                               EACH PARTY AGREES THAT ANY PROCEEDING (IN
CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES
HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING WILL INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY IRREVOCABLY AND

 

8

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UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY SUCH PROCEEDING.

 

(D)                               EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY
PROCEEDING ARISING UNDER OR RELATING TO THIS AGREEMENT, SEEK TO ENFORCE THE
FOREGOING WAIVERS, (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (III) SUCH PARTY MAKES SUCH WAIVERS VOLUNTARILY,
AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATION IN THIS SECTION 8(i).

 

(j)                                    Remedies.  each of the parties shall have
and retain all rights and remedies, at law or in equity, including rights to
specific performance and injunctive or other equitable relief, arising out of or
relating to a breach or threatened breach of this Agreement.

 

(k)                                 Third Party Beneficiaries.  No person other
than the Company and Investor has, is intended to have, or shall have any
rights, remedies, obligations or benefits under any provision of this Agreement,
other than any permitted successors and assigns of the parties under
Section 8(b).

 

(l)                                     Interpretation.  All references in this
Agreement to sections, subsections and other subdivisions refer to the
corresponding sections, subsections and other subdivisions of or to this
Agreement unless expressly provided otherwise.  The words “this Agreement,”
“herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer
to this Agreement as a whole and not to any particular article, section,
subsection or other subdivision hereof unless expressly so limited herein.

 

(m)                             Construction.  The language used in this
Agreement shall be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction shall be applied against
any party based on any claim that such party or counsel to such party drafted
this Agreement or any provision hereof.

 

(n)                                 Survival.  All the agreements,
representations and warranties made by the parties in this Agreement shall
survive the execution and delivery of this Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

9

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IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement
as of the date first set forth above.

 

 

 

COMPANY:

 

 

 

GTT COMMUNICATIONS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

INVESTOR:

 

 

 

MEGAPATH GROUP, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[signature page to Subscription Agreement]

 

--------------------------------------------------------------------------------

 

 

Exhibit B

 

FORM OF TRANSITION SERVICES AGREEMENT

 

This Transition Services Agreement (this “Agreement”) is made and entered into
as of                     , 2015 (the “Effective Date”), by and between MegaPath
Corporation, a Virginia Corporation (“MC”), and MegaPath Cloud Company, LLC, a
Delaware limited liability company (“CloudCo”), on the other hand.  MC and
CloudCo are sometimes referred to herein individually as a “Party” and
collectively as the “Parties”.

 

RECITALS

 

A.                                    Concurrently with the execution and
delivery of this Agreement, Global Telecom & Technology Americas, Inc., a
Virginia corporation (“GTT”), is acquiring all of the issued and outstanding
shares of capital stock and other equity interests in MC pursuant to that
certain Stock Purchase Agreement, dated February 19, 2015, by and among GTT, MC,
MegaPath Group, Inc., a Delaware corporation, and GTT Communications, Inc. (the
“Purchase Agreement”).  Capitalized terms used, but not defined, herein shall
have the respective meanings assigned to them in the Purchase Agreement.

 

B.                                    As a condition to the consummation of the
Closing under the Purchase Agreement, MC has contributed to CloudCo certain
assets and liabilities that were directly related to MC’s voice and cloud
services business (the “Cloud Business”) pursuant to a Contribution Agreement,
dated                 , 2015 by and between MC and CloudCo (the “Contribution
Agreement”).  In connection with such contribution, MC has retained certain
assets necessary for CloudCo to operate the Cloud Business on a stand-alone
basis and MC, in anticipation of migrating certain systems and services to GTT,
has transferred to CloudCo certain assets necessary for MC to conduct is
remaining business on a stand-alone basis.  Therefore, the Parties desire to
provide transition services to one another to afford an opportunity for CloudCo
to procure, on a stand-alone basis, the services to be provided by MC hereunder
and for MC to transition to GTT the services to be provided by CloudCo
hereunder.  Accordingly, as a further condition to the consummation of the
Closing under the Purchase Agreement, this Agreement is being entered into by
the Parties to define and to establish all transition services to be provided by
the Parties following the Closing under the Purchase Agreement.  This Agreement
is being entered into pursuant to Section 5.14 of the Purchase Agreement.

 

NOW THEREFORE, for and in consideration of the mutual covenants and agreements
contained in this Agreement and in the Purchase Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

 

1.              Transition Services.

 

a.              Joint Services by the Parties.   Subject to the terms and
conditions of this Agreement, each Party shall provide, or cause to be provided,
to the other Party those services set forth in the Joint Transition Service
Schedules (the “Joint Transition Service Schedules”) attached hereto as
Exhibit A and incorporated herein by reference (collectively, the “Joint
Transition Services”), for the period of time (unless otherwise terminated prior
to the

 

1

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conclusion of such period in accordance with the terms of this Agreement) (the
“Time Period”) set forth in each Joint Transition Schedule.

 

b.              CloudCo to MC Transition Services.  Subject to the terms and
conditions of this Agreement, CloudCo shall provide, or cause to be provided, to
MC and/or its Affiliates those services set forth in the CloudCo Transition
Service Schedules (the “CloudCo Transition Service Schedules”) attached hereto
as Exhibit B and incorporated herein by reference (collectively, the “CloudCo
Transition Services”), for the Time Period set forth in each CloudCo Transition
Schedule.

 

c.               MC to CloudCo Transition Services.  Subject to the terms and
conditions of this Agreement, MC shall provide, or cause to be provided, to
CloudCo and/or its Affiliates those services set forth in the MC Transition
Service Schedules (the “MC Transition Service Schedules”) attached hereto in
Exhibit C and incorporated herein by reference (collectively, the “MC Transition
Services” and, together with the CloudCo Transition Services and the Joint
Transition Services, the “Transition Services”), for the Time Period set forth
in each MC Transition Schedule.

 

d.              Identification of the Parties.  The Parties, in their respective
capacities as Transition Services providers (whether directly or indirectly)
under Sections 1(a), 1(b), and 1(c), as applicable, are referred to herein from
time to time as “Provider”, and in their (and on behalf of their respective
affiliates’) respective capacities as recipients of Transition Services under
Section 1(a), Section 1(b) and Section 1(c), as applicable, are referred to
herein from time to time as  “Recipient”.

 

e.               Cost for the Provision of the Transition Services.  For certain
of the Transition Services, there will be no charge between the Parties for the
work performed in connection with such Transition Services other than certain
pre-approved third party expenses that will be billed on a pass-through basis
with no mark-up and listed on the applicable Transition Service Schedules (the
“No Charge Transition Services”).  For certain of the Transition Services, the
Recipient shall bear the cost for the provision of such Transition Services (the
“Recipient Funded Transition Services”), and the applicable Transition Service
Schedule shall set forth the cost and/or methodology for calculating such cost. 
For certain of the other Transition Services, Provider shall bear the cost for
the provision of such Transition Services (the “Provider Funded Transition
Services”).  For each Transition Service, the applicable Transition Service
Schedule shall state whether such Transition Service is a No Charge Transition
Service, a Recipient Funded Transition Service or a Provider Funded Transition
Service.

 

f.                Additional Transition Services.  A Party may at any time
within one hundred and twenty (120) days from the Effective Date request that
the other Party provide to it services in addition to those specified in the
Transition Service Schedules, so long as such additional services are related to
the purpose of the transition services described in Recital B.  Any such request
shall be in writing and provided to the other Party’s Primary Coordinator, as
that term is defined in Section 3(a).  To the extent requested by Recipient and
consented to by Provider, which consent shall not be unreasonably withheld,
conditioned or delayed, the appropriate Transition Service Schedule shall be
revised to include such additional services and the Time

 

2

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Period, cost and other terms and conditions for the provision thereof.  If the
Parties are unable to agree within ten (10) days after delivery of a request for
additional services to the Term, cost and other terms and conditions for such
additional service, such Dispute (as defined below) shall be resolved in
accordance with Section 3.

 

g.               Party Performing Transition Services.  As of the Effective
Date, Provider has disclosed to Recipient, and Recipient has approved, all third
parties known to Provider that are retained and will continue to be retained by
Provider or its Affiliates to provide, directly or indirectly, some or part of
the Transition Services to Recipient.  Provider shall not, absent the prior
written consent of Recipient (such consent, not to be unreasonably withheld,
conditioned or delayed) or as expressly provided for in Section 2(c) or in any
Transition Service Schedule, subcontract, license, sublicense or otherwise
delegate or transfer any of the Transition Services to any other third party or
permit the use of any of the Transition Services by any Person other than by
Recipient, Provider and Affiliates of Provider.  Provider shall not use any
third party to provide some or part of the Transition Services under this
Agreement unless such third party shall provide the services in accordance with
the requirements under each applicable Transition Service Schedule (including
cost) and comply with the performance standards under Section 2(a).

 

2.              Performance of the Transition Services.

 

a.              Performance Standard.  Except for a higher or different
performance standard that may be set forth in a Transition Service Schedule,
Provider shall perform, or cause to be performed, the Transition Services to be
provided by it to Recipient in accordance with the instructions, guidelines and
requirements set forth in the applicable Transition Service Schedule, in a
manner consistent with the practices in effect prior to the date of the
Contribution Agreement, to the extent applicable, and with at least the same
degree of skill, attention and care as if such Transition Service were being
provided to Provider’s business; provided, however, that such skill, attention
and care shall at a minimum be timely, professional and in a workmanlike manner
and consistent with the level of care, skill, practice and judgment exercised by
other professionals in performing services of a similar nature.

 

b.                    Compliance with Laws.  Each Party shall comply with all
applicable laws with respect to its performance pursuant to this Agreement. 
Without limiting the foregoing, each Party shall secure and maintain all
governmental approvals, licenses and permits reasonably necessary for the
conduct by it and its employees of the actions contemplated by this Agreement in
compliance with applicable law.

 

c.                     Provider Responsibilities.  With respect to the
Transition Services, except as otherwise set forth in the applicable Transition
Service Schedule and in accordance with Section 1(g), Provider shall have the
right to select, employ, retain, pay, supervise, administer, direct and
discharge any of its employees, consultants, subcontractors, or third party
vendors or agents who will perform such Transition Services; provided, however,
Provider shall assign necessary and sufficient resources and qualified personnel
as are reasonably necessary to provide the Transition Services in accordance
with the standards set forth in this Section 2 and the other terms and
conditions of this Agreement.  Each Party shall be solely responsible for
payment of compensation to its employees.  Each Party shall have full
responsibility for payment of all

 

3

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federal, state and local taxes or contributions imposed under unemployment
insurance, social security and income tax laws with respect to its own
employees.

 

d.                    Third Party Agreement for Services. The Parties
acknowledge and agree that MC is a party to a Transition Services Agreement
entered into as of January 1, 2015 (“GC TSA”) with GC Pivotal, LLC (“Global
Capacity”) and that some of the Transition Services provided for under this
Agreement will be provided by CloudCo to MC for the benefit of Global Capacity
as part of MC’s obligations to Global Capacity under the GC TSA, and that
CloudCo may receive some of the Transition Services under this Agreement
directly from Global Capacity as part of Global Capacity’s obligations to MC
under the GC TSA.  This Agreement does not purport to restate all of the rights
and obligations under the GC TSA; however, the Parties agree and acknowledge
that it is implied that each of the Parties will perform certain services and
receive benefits under this Agreement which are related to the GC TSA.  Neither
CloudCo nor MC will be relieved on any obligations under this Agreement by
virtue of the fact that Global Capacity is the indirect or direct recipient of,
or provider of, any of the Transition Services under this Agreement.

 

3.              Governance.

 

a.              Executive Steering Committee.  Prior to the date hereof, each of
CloudCo and MC has designated at least one executive-level person to serve on an
Executive Steering Committee.  Such Executive Steering Committee shall meet in
person or telephonically, no less than one time per month during the Term to
receive briefings from the Primary Coordinators as to the status and progress of
each Transition Service.  Either Party may change its designated executive-level
designee upon giving the other Party notice to that effect in accordance with
Section 15(b).

 

b.              Primary Coordinators.  Prior to the date hereof, each of CloudCo
and MC has designated a primary contact person, who is and shall be a managerial
(or higher) level employee, to oversee the implementation and completion of the
Transition Services (the “Primary Coordinators”).  Either Party may change its
Primary Coordinator upon giving the other Party notice to that effect in
accordance with Section 15(b).  Each Primary Coordinator may delegate his or her
authority and responsibility hereunder with respect to any individual Transition
Service to an individual designated in the applicable Transition Service
Schedule (each, a “Service Coordinator”). Unless CloudCo and MC otherwise agree,
and except as set forth in a Transition Service Schedule with respect to a
particular Transition Service, all communications relating to this Agreement
and/or the Transition Services shall be directed to the Primary Coordinators in
accordance with this Section 3, except that (i) any communication with respect
to a breach or threatened breach of this Agreement, (ii) any notice under
Section 3(e) or (iii) any notice designating a new representative of a Party
pursuant to this Section 3 shall be directed to the persons designated pursuant
to Section 15(b).  Each Primary Coordinator and each Service Coordinator shall
devote such time as is reasonably necessary to fulfill the responsibility of the
position.

 

c.               Primary Coordinator Meetings.  Unless otherwise agreed to by
the Primary Coordinators from time to time, the Parties agree that the Primary
Coordinators shall be required to meet in person or telephonically, no less than
once per week during the first three (3) months

 

4

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of the Term (as defined below).  During the remainder of the Term, the Primary
Coordinators shall be required to meet in person or telephonically, no less
frequently than every other week.  At each scheduled meeting, the Primary
Coordinators shall review the progress on each Transition Service, including
actions to be taken to complete the transition of such service within the Time
Period set forth in the applicable Transition Service Schedule.  The Primary
Coordinators will notify their respective Service Coordinators of each in-person
meeting or telephone conference call that they will need to attend.

 

d.              Disputes.  If a dispute arises between the Parties with respect
to the terms and conditions of this Agreement or any Transition Services
Schedule, or any subject matter governed by this Agreement (excluding the
following disputes which are subject to Section 13:  (i) disputes regarding the
default in the payment when due of any fees or expenses with respect to a
Transition Service or group of Transition Services and such default is not the
subject of a bona-fide good faith dispute, (ii) disputes regarding a Party’s
compliance with the applicable confidentiality provisions, or (iii) suits to
compel compliance with this dispute resolution process or with the provisions of
this Section 3) (each, a “Dispute”), the Parties shall use and follow the
dispute resolution procedure set forth in Section 3(e) (the “Dispute Resolution
Process”) before seeking judicial relief or initiating arbitration pursuant to
Section 13.

 

e.               Dispute Resolution Process.  A Dispute shall initially be
submitted in writing to the Primary Coordinators for resolution.  The Primary
Coordinators shall promptly discuss and attempt to resolve any Dispute submitted
to them in good faith following such submission.  If by the end of the fifth
(5th) business day following such submission, the matter has not been resolved
to the satisfaction of both Primary Coordinators, then the Party that initiated
the claim may provide written notification to their Chief Executive Officer and
the Chief Executive Officer of the other Party, in the form of a claim
identifying the issue or amount disputed and including a reasonably detailed
reason for the claim. Upon receipt of such written notice, the Chief Executive
Officers shall promptly meet in person or by telephone and attempt to resolve in
good faith the Dispute within five (5) business days of receiving the written
request. If they can resolve the Dispute within that time period, such
resolution will be memorialized in writing.  If they cannot resolve the Dispute
within that time period, either of the Parties may seek specific performance or
initiate arbitration in accordance with Section 13. The Parties may vary the
duration and form of these procedures by mutual written agreement.

 

4.              Records.

 

a.              Records for Transition Services; Retention.  Provider shall keep
and maintain accurate and complete records and accounts regarding the provision,
directly or indirectly, of Transition Services by it, in a manner reasonably
consistent with the manner in which records and accounts regarding such
Transition Services were kept by MC prior to the date of the Contribution
Agreement and in accordance with all applicable laws, rules and regulations. 
For each Transition Service, Provider shall retain such records for a period of
three (3) years following the end of the Term, or such longer period as may be
required by law.

 

b.              Records for Recipient Funded Transition Services; Audit.  During
the Term and for three (3) years thereafter, Recipient shall have the right, at
its expense, during normal business hours and with reasonable advance notice, to
audit and inspect Provider’s records and

 

5

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accounts related to costs and expenses of Provider with respect to any Recipient
Funded Transition Services and to have access to Provider’s employees having
knowledge of such matters.  For each Recipient Funded Transition Service, no
such audit may cover the same time period more than one time.  Recipient
specifically agrees that all such books and records related to the documentation
of the Recipient Funded Transition Services shall be “Confidential Information”
(as that term is used in Section 9) and shall be treated as provided under
Section 9.

 

5.              Intellectual Property.

 

a.              Intellectual Property Approvals.   Each Party shall secure and
maintain all necessary intellectual property rights and approvals from third
parties reasonably necessary for the performance by such Party of its
obligations under this Agreement.

 

b.              No Joint or Derivative Works.  All copyrights, patents, trade
secrets, trademarks or other intellectual property rights of a Party (in this
capacity, the “Providing Party”) to which the Providing Party provides access to
the other Party (in this capacity, the “Receiving Party”) in connection with the
performance of this Agreement shall be and shall remain the sole and exclusive
property of the Providing Party and nothing in this Agreement shall be deemed to
create, or represent the intent of the Providing Party to authorize the creation
of, any joint work with the Receiving Party or allow any derivative work to be
created by the Receiving Party, in each case based on any intellectual property
rights of the Providing Party, or otherwise to confer upon the Receiving Party
any right or interest of ownership in any such intellectual property rights.

 

c.               No Grant of License. Each Party acknowledges that the other
Party is not by this Agreement granting any right or license whatsoever, by
implication, estoppel, or otherwise, to such Party to utilize any information,
know-how, proprietary data, trademarks, copyrights or patent rights which such
other Party may have or may secure in the future.

 

6.              Disaster Recovery; Backup.  During the Term, while and to the
extent any software, data, computer equipment, communications equipment and
other similar items are used by Provider to provide Transition Services,
Provider shall continue to have in place business continuity, disaster recovery
services and backup and archival services pursuant to a disaster recovery and
business continuity plan maintained by Provider, which plan shall be no less
comprehensive and robust than the plan maintained by MC prior to the date of the
Contribution Agreement.  A copy of Provider’s plan shall be promptly provided to
Recipient upon Recipient’s request.

 

7.              Time Period, Term and Termination of the Services.

 

a.              Time Period; Term.  With respect to the Transition Services,
each Transition Service shall have the Time Period set forth in the applicable
Transition Service Schedule, unless otherwise extended in accordance with
Section 7(b) or terminated early in accordance with Section 7(c).  This
Agreement shall remain in effect until the expiration of the last Time Period
set forth in any Transition Services Schedule, unless otherwise earlier
terminated in accordance with the terms hereof (the “Term”).

 

6

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b.              Extension of Time Period.  Recipient may at any time not less
than thirty (30) days prior to the scheduled termination date of a Transition
Service, as set forth in the applicable Transition Service Schedule, request in
writing to Provider to extend the Time Period for such Transition Service.  To
the extent requested by Recipient and consented to by Provider, which consent
shall not be unreasonably withheld, conditioned or delayed, Provider shall
provide such Transition Services during the extended Time Period (the “Extended
Transition Services”) on the terms and conditions set forth in this Agreement
(after taking into account any amendments or modifications to the terms and
conditions of this Agreement that are implemented in connection with such
extension), and for a such time period and at such cost as shall be mutually
agreed to in good faith by Provider and Recipient; provided, however, that any
Extended Transition Services shall not be provided after                unless
Provider has consented thereto, which consent may be given or withheld in
Provider’s sole and absolute discretion.  To the extent that the termination
date for any Transition Service has been extended pursuant to this Section 7(b),
the Time Period for such Service shall be deemed to be extended accordingly.  If
CloudCo and MC are unable to agree within ten (10) days of a request on the
terms and conditions of an extension of a Time Period, such Dispute shall be
resolved in accordance with Section 3.

 

c.               Early Termination of Transition Service.  Except as otherwise
set forth on the applicable Transition Service Schedule, at any time or from
time to time Recipient (and, for the avoidance of doubt, not Provider) may
terminate any individual Transition Service or group of Transition Services
prior to the end of the applicable Time Period(s) by providing thirty (30) days’
advance written notice to Provider of Recipient’s intention to terminate such
Transition Service(s).  All Transition Services shall end on the month-end of
such month of termination.  Except as provided in the Transition Service
Schedules, Recipient shall be responsible for (i) the cost of such Transition
Service up to the date such Transition Service is terminated, and (ii) any and
all expenses Provider contracted for and were approved by Recipient prior to the
notice to terminate in anticipation of providing such Transition Service until
the expiration of the applicable Time Period for such Transition Service, and
for which Provider cannot cancel for less than the cost of such expense.  All
such expenses shall be billed and paid in accordance with Section 8.

 

d.              Cessation of Transition Service Obligation.  Recipient agrees
and acknowledges that all obligations of Provider to provide Transition Services
shall immediately cease upon the earlier of (i) the expiration of the Time
Period for such Transition Service, (ii) the early termination of such
Transition Service in accordance with Section 7(c) or (c) any termination of the
Agreement as provided in Section 7(e).  Recipient shall bear sole responsibility
for instituting permanent services and/or obtaining replacement services in
respect of the Transition Services terminated in accordance with the provisions
hereof, and Provider shall have no liability for Recipient’s failure to
implement or to obtain such service or for any difficulties in transitioning
from the Transition Service to such permanent or replacement service.

 

e.               Termination of the Agreement.  The Time Period for any
Transition Service may be accelerated with respect to any individual Transition
Service or group of Transition Services by mutual written consent of the
Parties, and may be terminated with respect to any individual Transition Service
or group of Transition Services by (i) Provider in the event that a

 

7

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Bankruptcy Event occurs with respect to Recipient or Recipient Defaults in the
payment when due of any fees or expenses with respect to such individual
Transition Service or group of Transition Services and such Default (A) is not
the subject of a bona-fide good faith Dispute, and (B) continues uncured for a
period of thirty (30) days after such Recipient’s receipt of written notice of
such default or (ii) Recipient in the event that a Bankruptcy Event occurs with
respect to Provider or Provider materially breaches this Agreement and such
breach is not curable or, if curable, continues uncured for a period of thirty
(30) days after Provider’s receipt of written notice of such breach.  Any such
termination shall be effective immediately upon delivery of a notice of
termination by the terminating Party to the other Party (subject to the
foregoing cure periods).

 

f.                Definition of Bankruptcy Event.  For purposes of this
Agreement, a “Bankruptcy Event” means, with respect to a Party, that: (i) such
Party commences a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of such Party or any substantial part of its property, or
consents to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or makes a general assignment for the benefit of creditors, or fails generally
to pay its debts as they become due, or take any corporate action to authorize
any of the foregoing; or (ii) an involuntary case or other proceeding shall be
commenced against such Party seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of such Party or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of forty-five (45) days.

 

g.               Survival of Certain Provisions and Obligations. 
Notwithstanding any termination or expiration of this Agreement or any
Transition Service under this Agreement, Sections 4, 5, 8, 9, 13, 14 and 15 and
this Section 7(g) shall each survive termination or expiration of this
Agreement.  The termination or expiration of this Agreement or any Transition
Service hereunder shall not affect: (i) any outstanding payment obligations of
any Party under this Agreement as of such termination or expiration; or (ii) any
liability of a Party relating to any default or breach of this Agreement by such
Party prior to such termination or expiration.

 

8.              Consideration; Payment and Billing for the Transition Services.

 

a.              Payment.  As consideration for the Transition Services,
Recipient shall pay to Provider the amount specified for each such Transition
Service as set forth in the Transition Schedules in Exhibits A, B and C.  Any
out-of-pocket costs incurred by Provider and included in any invoice under this
Agreement shall be fully documented and reflect the actual reasonable cost
incurred (without mark-up).

 

b.              Billing.  Provider will bill Recipient on no more than a monthly
basis in arrears for the provision of the Transition Services.  Payment of any
such invoices by Recipient will be due and payable forty-five (45) days
following the date of receipt of such invoice by Recipient (except for Disputed
Amounts, which are addressed in Section 8(c)).  Any payments

 

8

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that are not paid within such forty-five (45) day period shall incur interest at
a rate of 1.0% percent per annum from the day following the day on which payment
was due and payable and ending on the day on which the amount is paid.  To the
extent that Transition Services are provided to an Affiliate of a Party, amounts
owed attributable to such Transition Services shall be paid, or caused to be
paid, by such Party on behalf of its Affiliate receiving such Transition
Services.  Recipient shall pay and reimburse Provider for any and all taxes and
government charges, including, without limitation, sales or use charges, imposed
on Provider so long as Provider has any obligation to collect with respect to,
in connection with or relating to its provision of the Transition Services,
other than income tax, gross receipts tax or similar taxes imposed on revenue or
income.

 

c.               Billing Disputes.  If the billed Party has a bona fide, good
faith dispute with any of the amounts on an invoice (“Disputed Amounts”), the
billed Party must pay all amounts not in dispute as set forth in this Section 8,
and provide the billing Party with a written request for a billing adjustment
together with a reasonably detailed explanation of the basis for such adjustment
within forty-five (45) days from the date of it received the invoice on which
the disputed amount first appeared.  If the billing Party denies, in good faith,
the billed Party’s dispute after reviewing the supporting documentation the
billed Party submits, either Party may seek arbitration to resolve the dispute
in accordance with the process described in Section 13.  For the avoidance of
doubt, failure to dispute an invoice within such forty-five (45) day period
shall not limit Recipient’s rights to subsequently challenge any invoice or
constitute a waiver of Recipient’s rights under this Agreement with respect to
the Transition Services covered by such invoice.

 

d.              Default.  If Recipient fails to pay the fees for a Transition
Service (other than fees related to Disputed Amounts) within forty-five (45)
days after it receives the invoice (a “Default”), Provider may send Recipient a
notice of such default and may, in its discretion and without further notice,
suspend or terminate such Transition Service if Recipient fails to cure the
non-payment within thirty (30) days after the notice of Default.  In that event,
Provider shall be entitled to pursue any remedy to which it may be entitled in
law or in equity to recover the amount owing.

 

9.              Confidentiality.

 

a.              Definitions.  For purposes of this Section 9: (i) the Party
providing access to its Confidential Information is referred to as the
“Information Disclosing Party” and the Party receiving access to the
Confidential Information of the other Party is referred to as the “Information
Receiving Party”; and (ii) “Confidential Information” means: (A) any and all
trade secrets concerning the business and affairs of the applicable Party,
product specifications, data, know-how, formulae, compositions, processes,
designs, sketches, photographs, graphs, drawings, samples, inventions and ideas,
past, current and planned research and development, current and planned
manufacturing and distribution methods and processes, customer lists, current
and anticipated customer requirements, price lists, market studies, business
plans, computer software and programs (including object code and source code),
database technologies, systems, structures architectures processes,
improvements, devices, know-how, discoveries, concepts, methods, proprietary
information of the applicable Party, and any other information, however
documented, of the applicable Party that is confidential or proprietary; (B) any
and all

 

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confidential or proprietary information concerning the applicable Party’s
business (which includes historical financial statements, financial projections
and budgets, historical and projected sales, capital spending budgets and plans,
the names and backgrounds of key personnel, contractors, agents, customers,
suppliers, personnel training and techniques and materials, and purchasing
methods and techniques); and (C) any and all notes, analysis, compilations,
studies, summaries and other material prepared by or for such Party containing
or based, in whole or in part, upon any information included in the foregoing,
in each case, whether tangible or intangible; provided, however, that
Confidential Information does not include any information that: (I) was
available to the general public at the time of disclosure to the Information
Receiving Party, (II) becomes available to the general public after the date of
this Agreement through no act of the Information Receiving Party, it Affiliates
or any of the agents, employees or contractors of it or its Affiliates (it being
acknowledged that this clause (II) shall only apply from and after such
availability to the general public) or (III) is disclosed to the Information
Receiving Party by a third party who lawfully obtained such information without
violation of any confidentiality obligation to the Information Disclosing Party.

 

b.              Non-Disclosure; Limited Use.  During the Term and thereafter,
the Information Receiving Party shall maintain in confidence and not disclose
any of the Information Disclosing Party’s Confidential Information, using the
same degree of care, but no less than reasonable care, as it uses to protect its
own Confidential Information of like nature.  The Information Receiving Party
may use Confidential Information only for the purposes of fulfilling its
obligations under this Agreement (the “Permitted Purpose”).  Notwithstanding the
preceding provisions of this Section 9(b), (i) the Information Receiving Party
may disclose Confidential Information to its Affiliates and its and their
respective agents, employees or contractors who have a need to know such
information for the Permitted Purpose and who are under an obligation to protect
confidential information and (ii) the each Party may use Confidential
Information in the conduct of its business after the termination of any
Transition Service under this Agreement, as may be necessary or appropriate for
such Party to perform such Transition Services directly; provided however, that
the confidentiality and non-disclosure provisions of this Section 9(b) shall
continue to apply to all such Confidential Information.  Each Information
Receiving Party shall implement and exercise commercially reasonable precautions
and measures to prevent disclosure or use of the Confidential Information by it
or its duly authorized representatives, attorneys or accountants in violation of
this Section 9.  Each Information Receiving Party shall be responsible for any
breaches of this Section 9 by its representatives to whom it discloses
Confidential Information.

 

c.               Ownership of Confidential Information.  All Confidential
Information of an Information Disclosing Party that is provided to an
Information Receiving Party shall remain the sole and exclusive property of the
Information Disclosing Party and no license in, or other rights with respect to,
such Confidential Information is or shall be deemed to have been granted by such
provision of Confidential Information (but subject to the provisions of the last
sentence of Section 9(b)).

 

d.              Required Disclosure.  Notwithstanding anything to the contrary
in Section 9(b), the Information Receiving Party may disclose Confidential
Information of the Information Disclosing Party if and to the extent required by
any third party subpoena or judicial order or decree or by applicable law,
regulation or stock exchange rule requiring disclosure of

 

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such Confidential Information, provided, however, that the Information Receiving
Party provides advance notice of such requirement (other than disclosure
required by the Securities and Exchange Commission or stock exchange rule) to
the Information Disclosing Party so that the Information Disclosing Party may
seek a protective order or other appropriate remedy and/or waive compliance with
the provisions of this Section 9 and if, in the absence of a protective order or
other remedy or the receipt of a waiver from the Information Disclosing Party,
the Information Receiving Party is legally required to disclose any Confidential
Information of the Information Disclosing Party, the Information Receiving
Party: (i) reasonably cooperates with the Information Disclosing Party to
obtain, at the Information Disclosing Party’s expense, an appropriate protective
order or other reliable assurance that confidential treatment shall be accorded
to such Confidential Information, and (ii) discloses only such Confidential
Information as the Information Receiving Party is advised by legal counsel that
such Information Receiving Party is legally required to disclose.

 

e.               Actions Upon Termination.  Upon termination of this Agreement,
the Information Receiving Party shall, within five (5) days of receipt of
written request from the Information Disclosing Party, either: (i) deliver to
the Information Disclosing Party or its representative all materials containing
Confidential Information of the Information Disclosing Party that were received
by the Information Receiving Party from the Information Disclosing Party; or
(ii) destroy all materials containing Confidential Information of the
Information Disclosing Party that were received by the Information Receiving
Party from the Information Disclosing Party and provide an officer’s certificate
to the Information Disclosing Party certifying, under penalty of perjury, such
destruction; provided, however, that (A) the Information Receiving Party may
retain Confidential Information in accordance with (i) the Information Receiving
Party’s document retention and disaster recovery policies and procedures and
(ii) applicable legal, governmental or regulatory requirements, (B) the
Information Receiving Party may retain one archival copy of such materials for
use by the Information Receiving Party solely in connection with any disputes
with the Information Disclosing Party concerning this Agreement, and (C) this
obligation shall not apply to any Confidential Information referred to in the
last sentence of Section 9(b); and provided, further that any Confidential
Information that is retained shall remain subject to the confidentiality and
non-use obligations (with respect to use, subject to the last sentence of
Section 9(b)) set forth in this Agreement for as long as such Confidential
Information is retained, notwithstanding the termination or expiration of this
Agreement. The Information Receiving Party shall not to remove any proprietary
rights legend from, and upon the Information Disclosing Party’s reasonable
request shall add such legend to, materials disclosing or embodying Confidential
Information.

 

f.                Injunctive Relief.  The Parties agree that money damages would
not be an adequate remedy for any breach of this Section 9, and any breach of
the terms of this Section 9 would result in irreparable injury and damage for
which neither Party would have an adequate remedy at law.  Therefore, in the
event of a breach or a threatened breach of this Section 9, each Party, in
addition to any other rights and remedies existing in its favor at law or in
equity, shall be entitled to specific performance or immediate injunctive or
other equitable relief from a court in order to enforce, or prevent any
violations of, the provisions of this Section 9 (without posting a bond or other
security), without having to prove damages.  The terms of this Section 9 shall
not

 

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prevent any Party from pursuing any other available remedies for any breach or
threatened breach of this Agreement.

 

g.               Non-Exclusive Obligation.  The foregoing provisions of this
Section 9 are in addition to, and in no way limit, any applicable rights or
obligations of the Parties under any other agreements by or among them.

 

10.                         Status of Parties; Adherence to Computer and other
Policies.

 

a.              Relationship of the Parties.  None of the provisions of this
Agreement is intended to create nor will it be deemed or construed to create a
partnership, employment, agency, franchise or joint venture or other
relationship between the Parties other than that of independent entities
contracting with each other under this Agreement solely for the purpose of
effecting the provisions of this Agreement.  Neither Party will be construed to
be the employer of the other.  Provider and its agents shall act under this
Agreement solely as an independent contractor and not as an agent of Recipient. 
Provider shall not incur any debts or make any commitments for Recipient, except
to the extent, if at all, specifically provided herein.  Neither Provider nor
any person working for or with Provider will be eligible for any employee
benefits from Recipient (nor does Provider or any such person desire any such
benefits) and any entitlement to such benefits is expressly waived.  Each Party
shall be solely responsible for the management, direction and control of its
employees.  Neither Party shall have any right, power or authority, express or
implied, to enter into any agreements on behalf of the other Party, assume or
create any obligations or responsibilities, or make any representation or
warranty, express or implied, for or on behalf of the other Party, or bind the
other Party in any way.

 

b.              Computer and other Policies.  Each Party gaining access to the
other Party’s employees, facilities or information technology systems (an
“Accessing Party”) shall cause all of its employees to adhere to all reasonable
and law abiding policies of the other Party that are communicated to the
Accessing Party pertaining to the other Party’s employees, facility and/or
information technology systems.

 

11.       Modification of Procedures.

 

a.              Right to Modify Procedures.  Subject to the procedure set forth
herein and to the extent applicable, Provider may make changes from time to time
in its standards and procedures for performing the Transition Services, provided
that the Transition Services provided with any such new standards or procedures
will be of a level that is comparable, or exceeds, those previously provided and
Provider provides written notice of such changes to Recipient.  Notwithstanding
the foregoing sentence, unless required by law, Provider shall not implement any
substantial changes affecting any Transition Services provided to Recipient
unless Provider gives Recipient written notice thereof and thirty (30) days
(i) to accept, and adapt its operations to accommodate, such changes or (ii) to
reject the proposed changes and terminate the applicable Transition Services.

 

b.              Process for Modification.  During the Term, Recipient shall,
within ten (10) Business Days after such plans are available, provide Provider
with a plan identifying any changes in Recipient’s business that may affect the
provision of the Transition Services in order

 

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for Provider to provide the Transition Services to Recipient; provided, however,
that Provider shall not be required to alter the method in which it provides the
Transition Services or increase the level of such Transition Service in any
material manner except as expressly provided herein; and provided, further, that
the failure of Recipient to provide such notice shall not alter or diminish
Provider’s obligation to provide the Transition Services on the terms set forth
herein.

 

12.       Representations and Warranties.  Each Party represents and warrants to
the other Party that:

 

a.              Such Party possesses, and shall continue to possess, the skill,
expertise, and knowledge to provide the Transition Services to be provided by it
hereunder, and further represents that it holds, or shall obtain at its sole
expense, all consents, licenses, permits, registrations or authorities necessary
to perform the Transition Services to be performed by it hereunder.

 

b.              Such Party is a corporation, duly organized, validly existing,
and in good standing under the laws of the state of its organization, and has
all requisite power and authority to own and operate its properties and to carry
on its business as now conducted in each jurisdiction where the failure to do so
would have a material adverse effect on its business, properties, or ability to
conduct the business currently conducted by it.

 

c.               (i) Such Party has the requisite power and authority to enter
into this Agreement and to carry out its obligations hereunder, (ii) the
execution and delivery of this Agreement and the consummation by such Party of
the transactions contemplated hereby has been duly authorized by its board of
directors, (iii) this Agreement has been duly executed and delivered by such
Party, and (iv) this Agreement constitutes a valid and binding obligation
against such Party, enforceable against such Party in accordance with its terms,
except as the enforceability of this Agreement may be limited by bankruptcy,
insolvency, reorganization or other similar laws relating to the enforcement of
creditors’ rights generally and by general principles of equity.

 

d.              No authorization, consent, or approval of, or filing with, any
Governmental Entity is necessary on the part of such Party for the consummation
by it of the transactions contemplated by this Agreement.

 

e.               No action by or against such Party is pending or, to the best
of such Party’s knowledge, threatened which could affect the legality, validity
or enforceability of this Agreement, or the consummation of the transactions
contemplated hereby.

 

13.       Dispute Resolution.

 

a.              Specific Performance.    The Parties shall be entitled to seek
specific performance without the necessity of proving the inadequacy of monetary
damages as a remedy and to obtain injunctive relief against any such breaches or
threatened breaches of the performance of Transition Services.

 

b.              Arbitration. The Parties agree that, with the exception of
seeking specific performance in accordance with Section 13(a) and the recovery
of unpaid fees as provided in

 

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Section 8(d), binding arbitration shall be the sole and exclusive remedy for
resolution of disputes between the Parties.  Such dispute shall be submitted for
arbitration in New York, New York, before a single arbitrator agreed upon by the
Parties, or, if they are unable to agree, a single arbitrator appointed by
American Arbitration Association (“AAA”).  Such arbitration shall be governed by
the commercial rules of the AAA.  The arbitrator’s decision will be final and
entered into any court of competent jurisdiction.  The prevailing party will be
entitled to recover its attorneys’ fees and costs in connection with such
arbitration.

 

14.       Indemnification; Limitation of Liability.

 

a.              Subject to Section 14(b), each Party shall be responsible for,
and shall indemnify, defend and hold harmless the other Party, each of its
Affiliates and each of its and their respective employees, officers, directors,
managers, members, stockholders, agents and representatives from and against,
any and all damages, fines, penalties, deficiencies, losses, liabilities
(including settlements and judgments), demands, claims, actions or causes of
action, assessments, taxes (including excise and penalty taxes), penalties and
expenses (including, without limitation, interest, court costs, reasonable fees
and expenses of attorneys, accountants and other experts and professionals or
other reasonable fees and expenses of investigation, litigation or other
proceedings) (collectively, “Losses”) incurred by such indemnified Person
resulting from, arising out of or relating to any (i) breach of any of the
representations and warranties of the indemnifying Party set forth in Section 12
or of any covenant or agreement of the indemnifying Party set forth in this
Agreement; (ii) violation of applicable law or willful misconduct by, or grossly
negligent act of, any such indemnifying Party, any of its Affiliates or any of
its and their respective employees, officers, directors, managers, members,
stockholders, agents or representatives in connection with performance, directly
or indirectly, of such indemnifying Party of any Transition Services to be
provided by such indemnifying Party under this Agreement; (iii) any material
misrepresentation or omission made to a third party by such indemnifying Party,
any of its Affiliates or any of its and their respective employees, officers,
directors, managers, members, stockholders, agents or representatives regarding
the Transition Services that was not authorized by the other Party in writing or
(iv) use of any materials supplied by, or receipt of any services from, the
indemnifying Party pursuant to this Agreement constituting or resulting in an
infringement of any patent, copyright or trademark of any third party or
resulting in any misappropriation of any trade secret of such third party.

 

b.              TO THE MAXIMUM EXTENT PERMISSIBLE UNDER APPLICABLE LAW, IN NO
EVENT SHALL EITHER PARTY BE LIABLE IN CONTRACT, TORT, FOR BREACH OF WARRANTY, OR
OTHERWISE, FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING
FROM ANY ACT OR OMISSION OF SUCH PARTY, OR ITS AFFILIATES, OFFICERS, AGENTS AND
EMPLOYEES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES
OR DAMAGES, EXCEPT TO THE EXTENT SUCH DAMAGES RESULT FROM THE WILLFUL MISCONDUCT
OR GROSS NEGLIGENCE OF A PARTY OR ITS EMPLOYEES.   FOR THE AVOIDANCE OF DOUBT,
THE LIMITATIONS OF THIS Section 14(b) SHALL NOT APPLY TO SUCH DAMAGES THAT A
PARTY IS REQUIRED TO PAY TO A THIRD PARTY IN RESOLUTION OF ANY CLAIM BY SUCH
THIRD PARTY AGAINST SUCH PARTY.

 

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c.               The indemnified Party agrees to promptly notify the
indemnifying Party in writing of any written claims or demands against the
indemnified Party for which the indemnified Party seeks indemnification from the
indemnifying party under this Section 14 (provided, however, that any failure to
give such notification on a timely basis shall not relieve the indemnifying
Party of its obligation to indemnify the indemnified Party hereunder except to
the extent that such failure to provide or delay in providing actually
prejudices the ability of the indemnifying Party to defend against such matter)
and the indemnifying Party will have the opportunity to direct the defense of
any such claims that relate solely to monetary damages.  The indemnified Party
will cooperate with the indemnifying Party in connection therewith; provided
that the indemnified Party will be entitled to participate therein through
counsel of its own choice and at its own expense.  The indemnifying Party shall
not settle any such claim or action without the prior written consent of the
indemnified Party (which consent will not be unreasonably withheld or delayed). 
The indemnifying Party agrees to accept liability for the indemnified Party’s
defense or settlement of any such claims or demands if the indemnifying Party
either does not have the right to assume the defense of such claim or demand
hereunder or, if it has such right, fails to timely assume the defense of such
claim or demand after being notified of such claim or demand.

 

15.       Miscellaneous Provisions.

 

a.              Expenses.  Except as otherwise specifically provided for in this
Agreement or any of the Transition Service Schedules, each Party shall bear all
costs and expenses (including fees and disbursements of counsel, financial
advisors and accountants and financing fees, if any) incurred by or on behalf of
such Party in connection with this Agreement and the transactions contemplated
hereby.

 

b.              Notices. All notices, requests, demands and other communications
required or permitted to be given in this Agreement shall be provided pursuant
to Section 10.2 of the Purchase Agreement.

 

c.               Assignment; Successors.  Neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned or delegated (whether
in whole or part, voluntarily or involuntarily, by operation of Law, merger,
consolidation, dissolution or otherwise) by (i) MC without the prior written
consent of CloudCo; or (ii) CloudCo, without the prior written consent of MC. 
Notwithstanding the foregoing, each Party shall have the right without the
consent of any other Party to assign its rights and delegate its obligations
hereunder to any successor to all or substantially all of the business and
assets of such Party; provided that the rights and obligations of the Parties
under this Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the Parties and that an assignment or
delegation of this Agreement by a Party or of any of a Party’s obligations under
this agreement shall not operate to release such Party from any of its
obligations under this Agreement or from the specific obligation assigned or
delegated by such Party.  Any purported assignment or delegation of this
Agreement or any rights, interests or obligations hereunder in violation of this
Section 15(c) shall be void and of no force or effect.  Subject to the
foregoing, this Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns.

 

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d.              Amendment and Waiver.  This Agreement may not be amended except
by an instrument in writing executed by each of the Parties, which states that
it constitutes an amendment to this Agreement and specifies the
provision(s) that are being amended.  Any provision of this Agreement may be
waived at any time by (i) MC, by delivery to CloudCo of a written instrument
executed by MC, which states that it constitutes a waiver of this Agreement and
specifies the provision(s) that are being waived and (ii) CloudCo, by delivery
by CloudCo to MC of a written instrument executed by CloudCo, which states that
it constitutes a waiver of this Agreement and specifies the provision(s) that
are being waived.  Any such waiver shall be effective only to the extent
specifically set forth in such written instrument.  Neither the exercise (from
time to time and at any time) by a Party of, nor the delay or failure (at any
time or for any period of time) to exercise by a Party, any right, power or
remedy shall constitute a waiver of the right to exercise, or impair, limit or
restrict the exercise of, such right, power or remedy or any other right, power
or remedy at any time and from time to time thereafter.  No waiver of any right,
power or remedy of a Party shall be deemed to be a waiver of any other right,
power or remedy of such Party or shall, except to the extent so waived, impair,
limit or restrict the exercise of such right, power or remedy.

 

e.               Entire Agreement.  This Agreement, including the schedules
hereto, along with the Purchase Agreement, constitute the entire agreement of
the Parties, and supersedes all other prior or contemporaneous agreements,
understandings and negotiations (whether written or oral), by or among the
Parties with respect to the subject matter hereof.  The schedules specifically
referred to herein are an integral part of this Agreement.

 

f.                Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall hereafter be held
to be invalid, unenforceable or illegal, in whole or in part, in any
jurisdiction under any circumstances for any reason (i) such provision shall be
reformed to the minimum extent necessary to cause such provision to be valid,
enforceable and legal while preserving the intent of the Parties as expressed
in, and the benefits to such Parties provided by, such provision or (ii) if such
provision cannot be so reformed, such provision shall be severed from this
Agreement and an equitable adjustment shall be made to this Agreement (including
addition of necessary further provisions to this Agreement) so as to give effect
to the intent as so expressed and the benefits so provided to the maximum extent
permitted by applicable Law.  Such holding shall not affect or impair the
validity, enforceability or legality of such provision in any other jurisdiction
or under any other circumstances.  Neither such holding nor such reformation or
severance shall affect or impair the legality, validity or enforceability of any
other provision of this Agreement.

 

g.               Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.

 

h.              Counterparts.  This Agreement may be executed in one or more
counterparts, all of which (when executed and delivered) shall be considered one
and the same Agreement and shall become effective when one or more counterpart
signature pages have been signed by each Party and delivered by each Party to
the other Parties, it being understood that the Parties need not sign the same
counterpart.  Counterparts may be delivered by facsimile or other electronic

 

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transmission method (including pdf), and any counterpart so delivered shall be
deemed to have been duly and validly delivered and be valid and effective for
all purposes.

 

i.                  Governing Law.  THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, ALL RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ALL
DISPUTES AND PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE FOREGOING SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, AND ENFORCED IN ACCORDANCE WITH, THE DOMESTIC LAWS OF THE STATE
OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR
RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD
CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
DELAWARE.

 

j.                 Remedies.  Each of the Parties shall have and retain all
rights and remedies, at law or in equity, including rights to specific
performance and injunctive or other equitable relief, arising out of or relating
to a breach or threatened breach of this Agreement.  Without limiting the
generality of the foregoing, each of the Parties acknowledges that money damages
would not be a sufficient remedy for any breach or threatened breach of this
Agreement and that the non-breaching Parties would be damaged irreparably and
would have no adequate remedy of law if any provision of this Agreement is not
performed in accordance with its specific terms or otherwise is breached. 
Accordingly, each Party agrees that the other Parties shall be entitled to a
decree of specific performance to enforce the rights and obligations of the
Parties from any court of competent jurisdiction, and appropriate injunctive
relief may be applied for and granted in connection therewith, without the
necessity of posting a bond or other security or proving actual damages and
without regard to the adequacy of any remedy at law.

 

k.              Third Party Beneficiaries.  No Person other than MP or CloudCo
has, is intended to have, or shall have any rights, remedies, obligations or
benefits under any provision of this Agreement, other than any permitted
successors and assigns of the Parties under Section 15(c) (who are intended
third party beneficiaries of this Agreement).

 

l.                  Interpretation.  All references in this Agreement to
schedules, sections, subsections and other subdivisions refer to the
corresponding schedules, sections, subsections and other subdivisions of or to
this Agreement unless expressly provided otherwise.  Schedules to this Agreement
are attached hereto and by this reference incorporated herein for all purposes. 
Any capitalized term used but not defined in an annex or schedule to this
Agreement have the meaning set forth in this Agreement.  The words “this
Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar
import, refer to this Agreement as a whole and not to any particular article,
section, subsection or other subdivision hereof unless expressly so limited
herein.  The words “either,” “or,” “neither,” “nor,” and “any” are not
exclusive, and the word “or” is deemed to have the meaning “and/or”.  The
word “including” (in its various forms) means including without limitation.  
All references to “$” and dollars shall be deemed to refer to United States
currency unless otherwise specifically provided.  Pronouns in masculine,
feminine or neuter genders shall be construed to state and include any other
gender, and words, terms and titles (including terms defined herein) in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise requires.  References in this

 

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Agreement to a Person shall include the successors and assigns thereof.  All
references to materials in this Agreement, including any report, record, file or
other document, shall, in each case, include any form or medium of such
materials (including electronic form).

 

m.          Construction.  The language used in this Agreement shall be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party based on any
claim that such Party or counsel to such Party drafted this Agreement or any
provision hereof.

 

n.              Force Majeure.  Any delay in or failure of performance by a
Party, other than payment of money, shall not constitute default hereunder if,
and solely to the extent, such delay or failure of performance is caused by
occurrences or circumstances beyond the reasonable control of such Party,
including: “acts of God”, acts of a public enemy, acts of terrorism, acts of a
nation or any state, territory, province or other political division thereof,
fires, floods, riots, quarantine restrictions or any other causes, whether or
not of the same class or kind as those specifically named above, in each case
which are not within the reasonably control of such Party and which in the
exercise of reasonable diligence, such Party would be unable to prevent (each, a
“Force Majeure Event”).  The Party whose performance is affected by a Force
Majeure Event shall: (i) provide prompt (under the circumstances) notice to the
other Party of the occurrence of such Force Majeure Event, including its good
faith estimate of the time required to rectify such Force Majeure Event and
(ii) use commercially reasonable efforts to minimize the effect of such Force
Majeure Event upon performance of its obligations under this Agreement, and upon
the receipt of such notice, the Parties shall promptly confer, in good faith, to
agree upon equitable, reasonable action to minimize the impact, on both Parties,
of such conditions.

 

o.              Conflicts in Provisions. If there is any conflict or
inconsistency between the terms and conditions set forth in the main body of
this Agreement and the Transition Service Schedules, the provisions of the main
body of this Agreement shall control. If there is any conflict or inconsistency
between the terms and conditions of this Agreement and the Purchase Agreement,
the provisions of this Agreement shall control solely with respect to the rights
and obligations of the parties regarding the Transition Services.

 

[signature page follows]

 

18

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IN WITNESS WHEREOF, the parties have executed this Transition Services Agreement
as of the date first written above.

 

 

MEGAPATH CLOUD COMPANY, LLC

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

MEGAPATH CORPORATION

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

[signature page to Transition Services Agreement]

 

--------------------------------------------------------------------------------

 

 

Exhibit C

 

FORM OF CONTRIBUTION AGREEMENT

 

This CONTRIBUTION AGREEMENT (this “Agreement”) is entered into as of
                         , 2015(1), by and among MegaPath Group, Inc., a
Delaware corporation (“MGI”), MegaPath Corporation, a Virginia corporation and a
wholly owned subsidiary of MGI (“MC” and, together with MGI, “Transferors”), and
MegaPath Cloud Company, LLC, a Delaware limited liability company and a wholly
owned subsidiary of MC (“Transferee”).  (Transferors and Transferee are
sometimes referred to herein collectively as the “Parties” and individually as a
“Party”.)

 

R E C I T A L S

 

A.            Transferors currently conduct two lines of business: (i) a managed
services business (the “Managed Services Business”) and (ii) a cloud and hosted
services business (the “Cloud & Hosted Services Business).

 

B.            Transferors have entered into a Stock Purchase Agreement, dated as
of February     , 2015 (the “Purchase Agreement”) with Global Telecom &
Technology Americas, Inc., a Virginia corporation (“Purchaser”), and GTT
Communications, Inc., a Delaware corporation, pursuant to which Purchaser will
acquire the Managed Services Business by means of the acquisition of all of the
outstanding shares of MC from MGI (the “Stock Purchase”).

 

C.            To facilitate the transactions contemplated by the Purchase
Agreement, Transferors desire to contribute to Transferee the Contributed Assets
(as defined below) in exchange for the assumption by Transferee of the Assumed
Liabilities (as defined below) on the terms and conditions set forth in this
Agreement, with the understanding that MC will distribute its ownership interest
in Transferee to MGI prior to the consummation of the Stock Purchase.

 

A G R E E M E N T

 

In consideration of the foregoing recitals and the respective covenants,
agreements, representations and warranties contained herein, the Parties,
intending to be legally bound, agree as follows:

 

ARTICLE 1

CONTRIBUTION

 

1.1          Contributed Assets.  Upon the terms and subject to the conditions
of this Agreement, Transferors hereby contribute, transfer and assign to
Transferee, effective as of 11:59 p.m. on the date of this Agreement (the
“Effective Time”), and Transferee hereby accepts and acquires from Transferors
as of the Effective Time, all of the following assets and rights of Transferors
(collectively, the “Contributed Assets”):

 

--------------------------------------------------------------------------------

(1)  The date of this Agreement will be one day prior to the Closing Date (as
defined in the Purchase Agreement).

 

--------------------------------------------------------------------------------

 

[To come](2)

 

All assets and rights of Transferors not included in the Contributed Assets are
being retained by Transferors.

 

1.2          Employees.  Prior to the date hereof, Transferors and Transferee
have taken all necessary steps to transfer the employment of each of the current
employees of MC identified on Schedule 1.3 (the “Transferred Employees”) from MC
to Transferee or to the parent of MGI effective as of the open of business on
the day following the Effective Date.

 

1.3          Assumption of Liabilities.  Upon the terms and subject to the
conditions of this Agreement, Transferors hereby assign and transfer to
Transferee as of the Effective Time, and Transferee hereby accepts and assumes
as of the Effective Time (and, as between Transferee and Transferors, Transferee
agrees to pay, perform, discharge and satisfy), all of the following liabilities
and obligations of Transferors (collectively, the “Assumed Liabilities”):

 

[To come](3)

 

All liabilities and obligations of Transferors not included in the Assumed
Liabilities are being retained by Transferors.

 

1.4          No Representations.  Transferee hereby acknowledges and agrees that
neither Transferor makes any representation or warranty whatsoever, express or
implied, with respect to any matter relating to this Agreement, the Contributed
Assets or the Assumed Liabilities.  Without limiting the foregoing, each
Transferor hereby disclaims any warranty (express or implied) of merchantability
or fitness for any particular purpose as to any portion of the Contributed
Assets.  Accordingly, Transferee accepts the Contributed Assets and the Assumed
Liabilities “AS IS,” “WHERE IS,” and “WITH ALL FAULTS.”

 

ARTICLE 2

SUPPORT OF TRANSFER

 

2.1          Non-Assignable Assets.  Notwithstanding anything to the contrary in
this Agreement, if any contract intended to be included in the assets to be
contributed to Transferee under this Agreement is not assignable without the
consent, approval or waiver by a third party, either as a result of the
provisions thereof or applicable law, and such consent, approval or waiver has
not been obtained on or prior to the Effective Time (each, a “Non-Assignable
Contract”), this Agreement and any related instruments of transfer shall not
constitute an assignment or transfer of such Non-Assignable Contract (and such
Non-Assignable Contract shall not be included in the Contributed Assets and the
obligations under such Non-Assignable Contract shall not be Assumed Liabilities)
unless and until the such required consent, approval or waiver is received;
provided, however, that Transferee shall and, to the extent requested by
Transferee, the applicable Transferor will use its commercially reasonable
efforts (at Transferee’s expense) for a period of at least six (6) months
following the Effective Date to

 

--------------------------------------------------------------------------------

(2)   To be completed prior to the Allocation Date (as such term is defined in
the Purchase Agreement) as contemplated by Section 5.13 of the Purchase
Agreement.

 

(3)   To be completed prior to the Allocation Date (as such term is defined in
the Purchase Agreement) as contemplated by Section 5.13 of the Purchase
Agreement.

 

2

--------------------------------------------------------------------------------

 

obtain all such consents, approvals or waivers and Transferee will cooperate
with such efforts.  Pending the receipt of any required consent, approval or
waivers, such Non-Assignable Contracts shall be treated as a Shared Contract
under Section 5.14 of the Purchase Agreement.

 

2.2          Updating of Schedules.

 

(a)           No later than 120 days after the Effective Time, MC shall deliver
to Transferee (i) one or more new schedules under Section 1.1 updating the
information thereon to accurately reflect the assets actually transferred by
Transferors to Transferee at the Effective Time.

 

(b)           The new schedules described in Section 2.3(a) shall be final and
binding on the Parties unless Transferee delivers to MC a written notice of
disagreement with such schedules within 60 days following the receipt thereof. 
Such written notice shall describe the nature of any such disagreement in
reasonable detail, identifying the specific items (whether included in, or
omitted from, such schedules) as to which Transferee disagrees and shall be
accompanied by reasonable supporting documentation.  During such 60 day period,
each of the Parties shall provide each of the other Parties and their respective
advisors with on-site access during regular business hours and upon reasonable
notice to all relevant books and records and employees of such Party to the
extent necessary to review the matters and information used to prepare such
schedules, all in a manner not unreasonably interfering with the business of
such Party.  If Transferee delivers a notice of disagreement in a timely manner,
then Transferee and MC shall attempt to resolve all such matters identified in
such notice.  If Transferee and MC are unable to resolve all such disagreements
within 30 days after the receipt by MC of the notice of disagreement (or such
longer period as may be agreed by the Parties), then either MC or Transferee may
submit the remaining disputed matters to the Delaware Courts for resolution.

 

2.3          Further Assurances.  Each Party will execute, acknowledge and
deliver such documents and instruments reasonably requested by any other Party,
and will take any other action consistent with the terms of this Agreement that
may reasonably be requested by any other Party, in each case at the expense of
the requesting Party, for the purpose of giving effect to the transactions
contemplated by this Agreement.  Without limiting the generality of the
foregoing, upon the request of Transferee at any time, Transferors shall execute
a separate assignment agreement evidencing the assignment of any intellectual
property assets for recording in the United States Patent and Trademark office
or with any other governmental entity.

 

ARTICLE 3

INDEMNIFICATION

 

3.1          Indemnification.  Each Party shall indemnify, defend and hold
harmless each other Party from and against, and pay on behalf of and reimburse
each other Party in respect of, any and all Losses (as such term is defined in
the Purchase Agreement) incurred, suffered, sustained or required to be paid,
directly or indirectly, by such other Party arising out of, resulting from or
relating to any breach of or inaccuracy in any representation or warranty made
by the indemnifying Party in this Agreement or any non-fulfillment or breach of
any covenant or agreement made by or to be performed by such indemnifying Party
set forth in this Agreement.

 

3

--------------------------------------------------------------------------------

 

ARTICLE 4

GENERAL PROVISIONS

 

4.1          Expenses.  Except as otherwise specifically provided for in this
Agreement or the Purchase Agreement, each Party shall bear all costs and
expenses incurred by or on behalf of such Party in connection with this
Agreement and the transactions contemplated hereby.

 

4.2          Notices.  All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed using certified or registered United States mail with
postage prepaid or (c) sent by next-day or overnight mail or delivery using a
nationally recognized overnight courier service, as follows:

 

If to MGI or Transferee:

 

MegaPath Group, Inc.

6800 Koll Center Parkway, Suite 200

Pleasington, CA  94566

Attention: Steven B. Chisholm

 

with a copy (which shall not constitute notice, request, demand, waiver or other
communication to MGI or Transferee) to:

 

Morgan, Lewis & Bockius LLP

600 Anton Blvd., Suite 1800

Costa Mesa, CA  92626

Attention:  Timothy Rupp

 

If to MC:

 

c/o GTT Communications, Inc.

7900 Tysons One Place

Suite 1450

McLean, VA 22102

Attention:  Chris McKee

 

With a copy (which shall not constitute notice, request, demand, waiver or other
communication to MC) to:

 

Goodwin Procter, LLP

901 New York Avenue, NW

Washington, DC 20001

Attention: Jay Schifferli

 

A Party may designate a new address to which notices, requests, demands, waivers
and other communications shall thereafter be transmitted by providing written
notice to that effect to the other Parties.  Each notice, request, demand,
waiver or other communication transmitted in the manner described in this
Section 4.2 shall be deemed to have been provided, received and become effective
for all purposes hereunder (i) when delivered personally to the recipient, if
delivered personally, (ii) three (3) business days after being mailed by
certified or registered

 

4

--------------------------------------------------------------------------------

 

United States mail, postage prepaid, (iii) one (1) business day after being sent
by next day or overnight mail or delivery using a nationally recognized
overnight courier service, or (iv) when presented for delivery to the addressee
as so addressed during normal business hours, if such delivery shall have been
rejected, denied or refused for any reason.

 

4.3          Assignment; Successors.  Neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned or delegated (whether
in whole or part, voluntarily or involuntarily, by operation of law, merger,
consolidation, dissolution or otherwise) by (a) MC without the prior written
consent of Transferee; or (b) Transferee or MGI, without the prior written
consent of MC.  Notwithstanding the foregoing, each of the Parties shall have
the right without the consent of any other Party to assign its rights and
delegate its obligations hereunder to any successor to all or substantially all
of the business and assets of such Party.  Any purported assignment or
delegation of this Agreement or any rights, interests or obligations hereunder
in violation of this Section 4.3 shall be void and of no force or effect. 
Subject to the foregoing, this Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns.

 

4.4          Amendment and Waiver.  This Agreement may not be amended except by
an instrument in writing executed by MC and Transferee, which states that it
constitutes an amendment to this Agreement and specifies the provision(s) that
are being amended.  Any provision of this Agreement may be waived at any time by
(a) MC, by delivery to Transferee of a written instrument executed by MC, which
states that it constitutes a waiver of this Agreement and specifies the
provision(s) that are being waived and (b) MGI or Transferee, by delivery by MGI
or Transferee, as the case may be, to MC of a written instrument executed by MGI
or Transferee, as the case may be which states that it constitutes a waiver of
this Agreement and specifies the provision(s) that are being waived.  Any such
waiver shall be effective only to the extent specifically set forth in such
written instrument.  Neither the exercise (from time to time and at any time) by
a Party of, nor the delay or failure (at any time or for any period of time) to
exercise by a Party, any right, power or remedy shall constitute a waiver of the
right to exercise, or impair, limit or restrict the exercise of, such right,
power or remedy or any other right, power or remedy at any time and from time to
time thereafter.  No waiver of any right, power or remedy of a Party shall be
deemed to be a waiver of any other right, power or remedy of such Party or
shall, except to the extent so waived, impair, limit or restrict the exercise of
such right, power or remedy.

 

4.5          Entire Agreement.  This Agreement, the schedules hereto and the
other agreements referred to herein constitute the entire agreement of the
Parties with respect to the subject matter hereof, and supersede all other prior
or contemporaneous agreements (whether written or oral) by or among the Parties
with respect to the subject matter hereof.  The schedules specifically referred
to herein, and delivered pursuant hereto, are an integral part of this
Agreement.

 

4.6          Severability.  Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall hereafter be held
to be invalid, unenforceable or illegal, in whole or in part, in any
jurisdiction under any circumstances for any reason (a) such provision shall be
reformed to the minimum extent necessary to cause such provision to be valid,
enforceable and

 

5

--------------------------------------------------------------------------------

 

legal while preserving the intent of the Parties as expressed in, and the
benefits to the Parties provided by, such provision or (b) if such provision
cannot be so reformed, such provision shall be severed from this Agreement and
an equitable adjustment shall be made to this Agreement (including addition of
necessary further provisions to this Agreement) so as to give effect to the
intent as so expressed and the benefits so provided to the maximum extent
permitted by applicable law.  Such holding shall not affect or impair the
validity, enforceability or legality of such provision in any other jurisdiction
or under any other circumstances.  Neither such holding nor such reformation or
severance shall affect or impair the legality, validity or enforceability of any
other provision of this Agreement.

 

4.7          Headings.  The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.

 

4.8          Counterparts.  This Agreement may be executed in one or more
counterparts, all of which (when executed and delivered) shall be considered one
and the same Agreement and shall become effective when one or more counterpart
signature pages have been signed by each Party and delivered by each Party to
the other Parties, it being understood that the Parties need not sign the same
counterpart.  Counterparts may be delivered by facsimile or other electronic
transmission method (including pdf), and any counterpart so delivered shall be
deemed to have been duly and validly delivered and be valid and effective for
all purposes.

 

4.9          Governing Law.  THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREBY, ALL RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ALL DISPUTES AND
PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE FOREGOING SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, AND
ENFORCED IN ACCORDANCE WITH, THE DOMESTIC LAWS OF THE STATE OF DELAWARE WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.

 

4.10        Consent to Jurisdiction; Waiver of Jury Trial.

 

(a)           EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN
THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING
SHALL BE COMMENCED AND PROSECUTED EXCLUSIVELY IN THE FEDERAL AND STATE COURTS OF
THE STATE OF DELAWARE AND ANY APPELLATE COURT THEREFROM (COLLECTIVELY, THE
“DELAWARE COURTS”).  EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS
AND SUBMITS, FOR ITSELF AND ITS ASSETS, TO THE EXCLUSIVE JURISDICTION OF ANY OF
THE DELAWARE COURTS IN RESPECT OF ANY SUCH PROCEEDING.  EACH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 4.2.  NOTHING

 

6

--------------------------------------------------------------------------------

 

IN THIS AGREEMENT SHALL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

(b)           EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY
RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY
OF THE FOREGOING IN ANY OF THE DELAWARE COURTS.  EACH OF THE PARTIES HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH PROCEEDING IN ANY OF THE DELAWARE
COURTS.  EACH OF THE PARTIES AGREES THAT A FINAL JUDGMENT IN ANY SUCH PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

 

(c)           EACH PARTY AGREES THAT ANY PROCEEDING (IN CONTRACT, IN TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY
DISPUTES WITH RESPECT TO ANY OF THE FOREGOING WILL INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH
PROCEEDING.

 

(d)           EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING ARISING UNDER OR
RELATING TO THIS AGREEMENT, SEEK TO ENFORCE THE FOREGOING WAIVERS, (ii) SUCH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS,
(iii) SUCH PARTY MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATION IN THIS SECTION 4.10.

 

4.11        Remedies.  Each of the Parties shall have and retain all rights and
remedies, at law or in equity, including rights to specific performance and
injunctive or other equitable relief, arising out of or relating to a breach or
threatened breach of this Agreement.  Without limiting the generality of the
foregoing, each of the Parties acknowledges that money damages would not be a
sufficient remedy for any breach or threatened breach of this Agreement and that
the non-breaching Parties would be damaged irreparably and would have no
adequate remedy of law if any provision of this Agreement is not performed in
accordance with its specific terms or otherwise is breached.  Accordingly, each
Party agrees that the other Parties shall be entitled to a decree of specific
performance to enforce the rights and obligations of the Parties from any court
of competent jurisdiction, and appropriate injunctive relief may be applied for
and granted in

 

7

--------------------------------------------------------------------------------

 

connection therewith, without the necessity of posting a bond or other security
or proving actual damages and without regard to the adequacy of any remedy at
law.

 

4.12        Third Party Beneficiaries.  No person or entity is intended to have,
or shall have any rights, remedies, obligations or benefits under any provision
of this Agreement, other than any permitted successors and assigns of the
Parties under Section 4.3 (who are intended third party beneficiaries of this
Agreement).

 

4.13        Interpretation.  All references in this Agreement to schedules and
sections refer to the corresponding schedules and sections of or to this
Agreement unless expressly provided otherwise.  The words “this Agreement,”
“herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer
to this Agreement as a whole and not to any particular article, section,
subsection or other subdivision hereof unless expressly so limited herein.  The
words “either,” “or,” “neither,” “nor,” and “any” are not exclusive, and the
word “or” is deemed to have the meaning “and/or”.  The word “including” (in its
various forms) means including without limitation.   Pronouns in masculine,
feminine or neuter genders shall be construed to state and include any other
gender, and words, terms and titles (including terms defined herein) in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise requires.

 

4.14        Construction.  The language used in this Agreement shall be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party based on any
claim that such Party or counsel to such Party drafted this Agreement or any
provision hereof.

 

 [signature page follows]

 

8

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each of the Parties has executed this Contribution Agreement
as of the date first set forth above.

 

“TRANSFERORS”

 

“TRANSFEREE”

 

 

 

MEGAPATH GROUP, INC.

 

MEGAPATH CLOUD COMPANY, LLC

 

 

 

 

 

By:

MegaPath Corporation

 

 

Its:

Sole Managing Member

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

 

 

 

 

 

 

MEGAPATH CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

9

--------------------------------------------------------------------------------

 

 

Exhibit D

 

Summary Terms for Commercial Agreements

 

Purchaser Purchasing and Support Agreement to CloudCo

 

·                  CloudCo will enter into a purchasing agreement with Purchaser
with a five year term covering product, pricing and all other terms

·                  The purchasing agreement will be based on the form of the
current MegaPath Corporation (“MP”) wholesale agreement

·                  For the term of the contract and any extensions thereof,
CloudCo will receive most favored nation pricing and terms

·                  All products and services necessary to support the existing
off net CloudCo base will be supplied with all of the existing features and
functionality on a pass through basis with only a small mark up for
administrative costs

·                  All MP managed services and ESA access products (the “MP
Products”) will be available to CloudCo for future or incremental purchase
(post-closing) at most favored nation wholesale pricing with price and terms to
be agreed upon;

·                  All Purchaser products, including wireline, cable and
wireless access along with managed router network services (the “GTT Products”)
will be made available to CloudCo at most favored nation wholesale pricing with
price and terms to be agreed upon

·                  The price lists and terms for both the MP Products and the
GTT Products will be adjusted from time to time to reflect most favored nation
pricing for new orders;

·                  Professional services (i.e. consulting work relating to
engineering, systems, IT, etc.) will be made available between the parties from
time to time as may be agreed upon and at a price to be agreed upon but not to
exceed fully loaded labor costs plus 15%

·                  Inventory procurement and supply chain management services
(consistent with those being provided by MP at the time of closing), for the
purchase, configuration and shipping of CPE, will be provided to CloudCo from
time to time as may be agreed upon, at wholesale prices not to exceed cost plus
15%

·                  Product descriptions and SLA’s will be consistent with those
currently in place

 

The most favored nation pricing and terms will be for customers similarly
situated; the availability of services will be subject to limitations under
third party provider agreements; and this agreement will contain other terms and
condition and representations, warranties, covenants and agreements customary
for agreements of this nature.

 

CloudCo Purchasing and Support Agreement to Purchaser

 

·                  Purchaser will enter into a purchasing agreement with CloudCo
with a five year term covering products and services (the “CloudCo Products”), 
pricing and all other terms;

 

--------------------------------------------------------------------------------

 

·                  If CloudCo acquires Purchaser’s VoIP business, CloudCo will
become the preferred provider to Purchaser of VoIP, and other cloud services not
offered by Purchaser;

·                  For the term of the contract and any extensions thereof,
Purchaser will receive most favored nation pricing and terms;

·                  All products and services necessary to support the existing
MP base will be supplied with all of the existing features and functionality on
a pass through basis with only a small mark up for administrative costs;

·                  The price list and terms for the CloudCo Products will be
adjusted from time to time to reflect most favored nation pricing for new
orders;

·                  Professional services (i.e. consulting work relating to
engineering, systems, IT, etc.) will be made available between the parties from
time to time as may be agreed upon and at a price to be agreed upon but not to
exceed fully loaded labor costs plus 15%;

·                  Product descriptions and SLA’s will be consistent with those
currently in place

 

The most favored nation pricing and terms will be for customers similarly
situated; the availability of services will be subject to limitations under
third party provider agreements; and this agreement will contain other terms and
condition and representations, warranties, covenants and agreements customary
for agreements of this nature.

 

--------------------------------------------------------------------------------

 

 

Exhibit E

 

FORM OF RELEASE AGREEMENT

 

This RELEASE AGREEMENT (this “Release”), dated as of [            ], 2015, is
entered into by and between MegaPath Corporation, a Virginia corporation (the
“Company”), and MegaPath Group, Inc., a Delaware corporation (“Releasor”).

 

W I T N E S S E T H

 

WHEREAS, this Release is being entered into in connection with, and is
conditioned upon, the closing of the transactions contemplated by, that certain
Stock Purchase Agreement (the “Purchase Agreement”), dated as of February [_],
2015, by and among GTT Communications, Inc., a Delaware corporation, Global
Telecom & Technology Americas, Inc., a Virginia corporation (“Purchaser”), the
Company and Releasor, pursuant to which, among other things, Purchaser will
acquire all of the issued and outstanding capital stock of the Company from
Releasor as set forth in the Purchase Agreement;

 

WHEREAS, Purchaser’s obligation to consummate the transactions contemplated by
the Purchase Agreement is contingent upon the execution and delivery of this
Release by Releasor; and

 

WHEREAS, in consideration of the benefits to Releasor of the consummation of the
transactions contemplated by the Purchase Agreement, Releasor desires to execute
and deliver this Release.

 

NOW, THEREFORE, in consideration of the foregoing and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree as follows:

 

1.             Release.

 

(a)           Release.  Releasor, for Releasor and its predecessors, successors
and assigns and for any and all other Persons now or hereafter asserting any
Released Claim (as defined below) on behalf of Releasor (each, a “Releasor
Person”), hereby unconditionally, fully, finally and irrevocably waives,
releases, acquits and forever discharges the Company and each of the Company’s
officers, directors and employees, and their respective successors and assigns
(collectively, the “Released Parties” and, individually, a “Released Party”)
from any and all claims, other than the Retained Claims (as defined in
Section 1(c), which Releasor or any Releasor Person has had, now has or may in
the future have against any Released Party of any kind or nature whatsoever
(i) existing on or before the date of this Release or (ii) existing after the
date of this Release and arising out of, resulting from or relating to any
action, omission, event or circumstance existing on or before the date of this
Release, in each case whether absolute or contingent, liquidated or
unliquidated, known or unknown, matured or unmatured and whether arising under
any Contract or otherwise (collectively, but excluding the Retained Claims, the
“Released Claims”).

 

(b)           Waiver of Claims.  Releasor agrees that (i) Releasor shall not
bring any Proceeding or make any claim on its own behalf or on behalf of any
Releasor Person against any

 

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Released Party with respect to any Released Claim and (ii) Releasor shall not
have any claim (including any right to contribution or indemnity from any
Released Party) with respect to any amounts paid by Releasor with respect to any
Released Claim pursuant to the Purchase Agreement or otherwise, without regard
to whether the action or inaction prior to Closing of the Company caused such
amounts to become payable.  Without limiting the generality of the foregoing,
Releasor acknowledges and agrees that in no event shall a Released Party have
any Liability to Releasor whatsoever with respect to any breaches or
inaccuracies in the representations and warranties of or regarding Releasor or
the Company set forth in the Purchase Agreement, any breaches or non-fulfillment
of the pre-Closing agreements and covenants of the Company set forth in the
Purchase Agreement, any breaches or non-fulfillment of the agreement and
covenants of Releasor set forth in the Purchase Agreement or any matter for
which Releasor is obligated to provide indemnification to a Purchaser
Indemnified Party pursuant to Article VIII of the Purchase Agreement.

 

(c)           Retained Claims.  The covenants, agreements, releases and waivers
provided in Section 1(a) and Section 1(b) shall not apply to (i) any rights of
Releasor or any Releasor Person under the Purchase Agreement, the Transition
Services Agreement, the Subscription Agreement or the Contribution Agreement or
(ii) any Retained Liability, as such term is defined in the Contribution
Agreement (collectively, the “Retained Claims”).

 

(d)           Certain Definitions.  Any capitalized terms used but not defined
in this Release have the respective meanings set forth in the Purchase
Agreement.

 

2.             Release to Stay in Effect.  Releasor, on behalf of Releasor and
all Releasor Persons, agrees and acknowledges that Releasor may hereafter
discover facts different from or in addition to those now known or believed to
be true regarding the Released Claims and agrees that this Release shall remain
in full force and effect, notwithstanding the existence or nature of any such
different or additional facts.

 

3.             Representations, Acknowledgements and Covenants of Releasor. 
Releasor hereby represents and warrants that (a) there has been no assignment or
other transfer by or on behalf of Releasor of any interest in any Released
Claim, (b) subject to the exclusions identified above, fully intends to release
all Released Claims against the Released Parties including, without limitation,
unknown and contingent Released Claims, (c) has had the opportunity to consult
with counsel with respect to the execution and delivery of this Release and has
been fully apprised of the consequences hereof and (d) has read and understands
the terms and conditions of this Release and has voluntarily agreed to such
terms and conditions without coercion or undue persuasion by the Company, the
Parent or their respective Affiliates.

 

4.             Miscellaneous.

 

(a)           Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Release shall be in
writing and shall be deemed to have been duly given if (i) delivered personally,
(ii) mailed using certified or registered United States mail with postage
prepaid or (iii) sent by next-day or overnight mail or delivery using a
nationally recognized overnight courier service, as follows:

 

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If to the Company:

 

c/o GTT Communications, Inc.

7900 Tysons One Place

Suite 1450

McLean, VA 22102

Attention:  Chris McKee

 

With a copy (which shall not constitute notice, request, demand, waiver or other
communication to the Company) to:

 

Goodwin Procter, LLP
901 New York Avenue, NW

Washington, DC 20001

Attention: Jay Schifferli

 

If to Releasor:

 

MegaPath Group, Inc.

6800 Koll Center Parkway, Suite 200

Pleasington, CA  94566

Attention:  Steven B. Chisholm

 

with a copy (which shall not constitute notice, request, demand, waiver or other
communication to Releasor) to:

 

Morgan, Lewis & Bockius LLP

600 Anton Blvd., Suite 1800

Costa Mesa, CA  92626

Attention:  Timothy Rupp

 

A party may designate a new address to which notices, requests, demands, waivers
and other communications shall thereafter be transmitted by providing written
notice to that effect to the other party.  Each notice, request, demand, waiver
or other communication transmitted in the manner described in this
Section 4(a) shall be deemed to have been provided, received and become
effective for all purposes hereunder (A) when delivered personally to the
recipient, if delivered personally, (B) three (3) business days after being
mailed by certified or registered United States mail, postage prepaid, (C) one
(1) business day after being sent by next day or overnight mail or delivery
using a nationally recognized overnight courier service, or (D) when presented
for delivery to the addressee as so addressed during normal business hours, if
such delivery shall have been rejected, denied or refused for any reason.

 

(b)           Assignment; Successors.  Neither this Release nor any of the
rights, interests or obligations hereunder may be assigned or delegated (whether
in whole or part, voluntarily or involuntarily, by operation of law, merger,
consolidation, dissolution or otherwise) by any party without the prior written
consent of the other parties.  Any purported assignment or delegation of this
Release or any rights, interests or obligations hereunder in violation of this
Section 4(b) shall be void and of no force or effect.  Subject to the foregoing,
this Release and all

 

3

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of the provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns.

 

(c)           Amendment and Waiver.  This Release may not be amended except by
an instrument in writing executed by each party, which states that it
constitutes an amendment to this Release and specifies the provision(s) that are
being amended.  Any provision of this Release may be waived at any time by
delivery by the waiving party to the other parties of a written instrument
executed by such waiving party, which states that it constitutes a waiver of
this Release and specifies the provision(s) that are being waived.  Any such
waiver shall be effective only to the extent specifically set forth in such
written instrument.  Neither the exercise (from time to time and at any time) by
a party of, nor the delay or failure (at any time or for any period of time) to
exercise by a party, any right, power or remedy shall constitute a waiver of the
right to exercise, or impair, limit or restrict the exercise of, such right,
power or remedy or any other right, power or remedy at any time and from time to
time thereafter.  No waiver of any right, power or remedy of a party shall be
deemed to be a waiver of any other right, power or remedy of such party or
shall, except to the extent so waived, impair, limit or restrict the exercise of
such right, power or remedy.

 

(d)           Entire Agreement.  This Release, the Purchase Agreement and the
other agreements referred to herein and therein constitute the entire agreement
of the parties with respect to the subject matter hereof, and supersede all
other prior or contemporaneous agreements (whether written or oral) by or among
the parties with respect to the subject matter hereof.

 

(e)           Severability.  Whenever possible, each provision of this Release
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Release shall hereafter be held to
be invalid, unenforceable or illegal, in whole or in part, in any jurisdiction
under any circumstances for any reason (i) such provision shall be reformed to
the minimum extent necessary to cause such provision to be valid, enforceable
and legal while preserving the intent of the parties as expressed in, and the
benefits to the parties provided by, such provision or (ii) if such provision
cannot be so reformed, such provision shall be severed from this Release and an
equitable adjustment shall be made to this Release (including addition of
necessary further provisions to this Release) so as to give effect to the intent
as so expressed and the benefits so provided to the maximum extent permitted by
applicable law.  Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other jurisdiction or under
any other circumstances.  Neither such holding nor such reformation or severance
shall affect or impair the legality, validity or enforceability of any other
provision of this Release.

 

(f)            Headings.  The headings contained in this Release are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Release.

 

(g)           Counterparts.  This Release may be executed in one or more
counterparts, all of which (when executed and delivered) shall be considered one
and the same agreement and shall become effective when one or more counterpart
signature pages have been signed by each party and delivered by each party to
the other party, it being understood that the parties need not sign the same
counterpart.  Counterparts may be delivered by facsimile or other electronic

 

4

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transmission method (including pdf), and any counterpart so delivered shall be
deemed to have been duly and validly delivered and be valid and effective for
all purposes.

 

(h)           Governing Law.  THIS RELEASE, THE TRANSACTIONS CONTEMPLATED
HEREBY, ALL RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ALL DISPUTES AND
PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE FOREGOING SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, AND
ENFORCED IN ACCORDANCE WITH, THE DOMESTIC LAWS OF THE STATE OF DELAWARE WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.

 

(i)            Consent to Jurisdiction; Waiver of Jury Trial.

 

(A)          EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS RELEASE, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN
THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING
SHALL BE COMMENCED AND PROSECUTED EXCLUSIVELY IN THE FEDERAL AND STATE COURTS OF
THE STATE OF DELAWARE AND ANY APPELLATE COURT THEREFROM (COLLECTIVELY, THE
“DELAWARE COURTS”).  EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS
AND SUBMITS, FOR ITSELF AND ITS ASSETS, TO THE EXCLUSIVE JURISDICTION OF ANY OF
THE DELAWARE COURTS IN RESPECT OF ANY SUCH PROCEEDING.  EACH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 4(a).  NOTHING IN THIS RELEASE SHALL AFFECT THE
RIGHT OF ANY PARTY TO THIS RELEASE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.

 

(B)          EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY PROCEEDING ARISING OUT
OF OR RELATING TO THIS RELEASE, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY
RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY
OF THE FOREGOING IN ANY OF THE DELAWARE COURTS.  EACH OF THE PARTIES HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH PROCEEDING IN ANY OF THE DELAWARE
COURTS.  EACH OF THE PARTIES AGREES THAT A FINAL JUDGMENT IN ANY SUCH PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

 

5

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(C)          EACH PARTY AGREES THAT ANY PROCEEDING (IN CONTRACT, IN TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS RELEASE, THE TRANSACTIONS
CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY
DISPUTES WITH RESPECT TO ANY OF THE FOREGOING WILL INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH
PROCEEDING.

 

(D)          EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING ARISING UNDER OR
RELATING TO THIS RELEASE, SEEK TO ENFORCE THE FOREGOING WAIVERS, (II) SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) SUCH
PARTY MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS RELEASE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATION IN THIS SECTION 4(i).

 

(j)            Remedies.  Each of the parties shall have and retain all rights
and remedies, at law or in equity, including rights to specific performance and
injunctive or other equitable relief, arising out of or relating to a breach or
threatened breach of this Release.

 

(k)           Construction.  The language used in this Release shall be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party based on any
claim that such party or counsel to such party drafted this Release or any
provision hereof.

 

(l)            Survival.  All the agreements, representations and warranties
made by the parties in this Agreement shall survive the execution and delivery
of this Release.

 

(m)          Interpretation.  All references in this Release to sections,
subsections and other subdivisions refer to the corresponding sections,
subsections and other subdivisions of or to this Release unless expressly
provided otherwise.  The words “this Release,” “herein,” “hereby,” “hereunder”
and “hereof,” and words of similar import, refer to this Release as a whole and
not to any particular article, section, subsection or other subdivision hereof
unless expressly so limited herein.  Each party has been represented by counsel
in connection with this Release and each provision of this Release shall be
interpreted and construed as if it were equally and jointly drafted by the
parties hereto.

 

(n)           Third Party Beneficiaries.  The parties hereto acknowledge and
agree that each of the Released Parties (other than the Company) is a third
party beneficiary of this Release and shall be entitled to enforce the
provisions herein against Releasor.  Except as provided in the  immediately
preceding sentence, this Release is not intended to, and shall not, confer any
rights or remedies on any other Person.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have caused this Release to be duly executed as
of the date first set forth above.

 

 

 

THE COMPANY:

 

 

 

MEGAPATH CORPORATION

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

RELEASOR:

 

 

 

MEGAPATH GROUP, INC.

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[Signature Page to Release Agreement]

 

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